--------------------------------------------------------------------------------
AGREEMENT AND PLAN OF REORGANIZATION
BY AND AMONG
XXXXX INC.,
ODI ACQUISITION CORPORATION
AND
ONTRACK DATA INTERNATIONAL, INC.
--------------------------------------------------------------------------------
APRIL 1, 2002
TABLE OF CONTENTS
Page
----
ARTICLE I. THE MERGER.............................................................................................1
1.1 The Merger..........................................................................................1
1.2 Closing; Effective Time.............................................................................2
1.3 Effect of the Merger................................................................................2
1.4 Articles of Incorporation; Bylaws...................................................................2
1.5 Directors and Officers..............................................................................3
1.6 Effect on Capital Stock.............................................................................3
1.7 Surrender of Certificates...........................................................................4
1.8 No Further Ownership Rights in Target Common Stock..................................................6
1.9 Lost, Stolen or Destroyed Certificates..............................................................7
1.10 Tax Consequences....................................................................................7
1.11 Return of Exchange Fund.............................................................................7
1.12 Taking of Necessary Action; Further Action..........................................................7
ARTICLE II. REPRESENTATIONS AND WARRANTIES OF TARGET..............................................................8
2.1 Organization, Standing and Power....................................................................8
2.2 Capital Structure...................................................................................8
2.3 Authority..........................................................................................10
2.4 SEC Documents; Target Financial Statements.........................................................11
2.5 Absence of Certain Changes.........................................................................12
2.6 Absence of Undisclosed Liabilities.................................................................13
2.7 Contracts..........................................................................................14
2.8 Litigation.........................................................................................15
2.9 Restrictions on Business Activities................................................................15
2.10 Governmental Authorization.........................................................................15
2.11 Title to Property..................................................................................16
2.12 Intellectual Property..............................................................................16
2.13 Environmental Matters..............................................................................19
2.14 Taxes..............................................................................................20
2.15 Employee Benefit Plans.............................................................................21
2.16 Employees and Consultants..........................................................................23
2.17 Related-Party Transactions.........................................................................25
2.18 Insurance..........................................................................................25
2.19 Compliance with Laws...............................................................................26
2.20 Brokers' and Finders' Fees.........................................................................26
2.21 Vote Required......................................................................................26
2.22 Registration Statement; Proxy Statement/Prospectus.................................................26
2.23 Complete Copies of Materials.......................................................................27
2.24 Opinion of Financial Advisor.......................................................................27
2.25 Board Approval.....................................................................................27
2.26 Illegal Payments...................................................................................27
2.27 Customers..........................................................................................27
-i-
2.28 Section 673 of Minnesota Law Not Applicable........................................................28
2.29 Representations Complete...........................................................................28
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF ACQUIROR AND MERGER SUB...........................................28
3.1 Organization, Standing and Power...................................................................28
3.2 Capital Structure..................................................................................29
3.3 Authority..........................................................................................29
3.4 SEC Documents; Acquiror Financial Statements.......................................................30
3.5 Absence of Undisclosed Liabilities.................................................................31
3.6 Absence of Certain Changes.........................................................................32
3.7 Intellectual Property..............................................................................32
3.8 Environmental Matters..............................................................................33
3.9 Employee Benefit Plans.............................................................................33
3.10 Litigation.........................................................................................34
3.11 Taxes..............................................................................................34
3.12 Restrictions on Business Activities................................................................34
3.13 Compliance with Laws...............................................................................34
3.14 Registration Statement; Proxy Statement............................................................35
3.15 Brokers' and Finders' Fees.........................................................................35
3.16 Vote Required......................................................................................35
3.17 Complete Copies of Materials.......................................................................36
3.18 Illegal Payments...................................................................................36
3.19 Board Approval.....................................................................................36
3.20 Representations Complete...........................................................................36
ARTICLE IV. CONDUCT PRIOR TO THE EFFECTIVE TIME..................................................................36
4.1 Conduct of Business of Target and Acquiror.........................................................36
4.2 Conduct of Business................................................................................37
4.3 Notices............................................................................................41
ARTICLE V. ADDITIONAL AGREEMENTS.................................................................................41
5.1 No Solicitation....................................................................................41
5.2 Proxy Statement/Prospectus; Registration Statement.................................................43
5.3 Stockholders Meetings..............................................................................43
5.4 Access to Information..............................................................................44
5.5 Confidentiality....................................................................................45
5.6 Public Disclosure..................................................................................45
5.7 Consents; Cooperation..............................................................................45
5.8 Stockholder Lists..................................................................................46
5.9 Indemnification....................................................................................46
5.10 Irrevocable Proxies................................................................................48
5.11 Notification of Certain Matters....................................................................48
5.12 Tax-Free Reorganization............................................................................48
5.13 Stock Options and Stock Purchase Plan..............................................................49
5.14 Listing of Additional Shares.......................................................................50
-ii-
5.15 Additional Agreements.....................................................50
5.16 Employee Benefits.........................................................50
5.17 Financial Statements......................................................51
ARTICLE VI. CONDITIONS TO THE MERGER....................................................51
6.1 Conditions to Obligations of Each Party to Effect the Merger..............51
6.2 Additional Conditions to the Obligations of Target........................52
6.3 Additional Conditions to the Obligations of Acquiror and Merger Sub.......53
ARTICLE VII. TERMINATION, EXPENSES, AMENDMENT AND WAIVER................................54
7.1 Termination...............................................................54
7.2 Effect of Termination.....................................................56
7.3 Expenses and Termination Fees.............................................57
7.4 Amendment.................................................................57
7.5 Extension; Waiver.........................................................57
ARTICLE VIII. GENERAL PROVISIONS........................................................58
8.1 Effectiveness of Representations, Warranties and Agreements...............58
8.2 Notices...................................................................58
8.3 Interpretation............................................................59
8.4 Counterparts..............................................................59
8.5 Entire Agreement; No Third Party Beneficiaries............................60
8.6 Severability..............................................................60
8.7 Remedies Cumulative.......................................................60
8.8 Governing Law.............................................................60
8.9 Assignment................................................................61
8.10 Rules of Construction.....................................................61
SCHEDULES
Schedule A Definitions
EXHIBITS
Exhibit A Articles of Merger
Exhibit B Voting Agreement
-iii-
AGREEMENT AND PLAN OF REORGANIZATION
This AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is
made and entered on April 1, 2002, by and among Xxxxx Inc., an Ohio corporation
("Acquiror"), ODI Acquisition Corporation, a Minnesota corporation ("Merger
Sub"), and ONTRACK Data International, Inc., a Minnesota corporation ("Target").
RECITALS
A. The Boards of Directors of Target, Acquiror and Merger Sub
believe it is in the best interests of their respective companies and the
stockholders of their respective companies that Target and Merger Sub combine
into a single company through the statutory merger of Merger Sub with and into
Target (the "Merger") and, in furtherance thereof, have declared the
advisability of and approved the Merger and the Merger Agreement.
B. Pursuant to the Merger, among other things, each
outstanding share of common stock, $.01 par value, of Target ("Target Common
Stock"), shall be converted into shares of common stock, $.01 par value, of
Acquiror ("Acquiror Common Stock"), at the rate and on the other terms and
conditions set forth herein.
C. Target, Acquiror and Merger Sub desire to make certain
representations and warranties and other agreements in connection with the
Merger.
D. The parties intend, by executing this Agreement, to adopt a
plan of reorganization within the meaning of Section 368 of the Internal Revenue
Code of 1986, as amended (the "Code"), and to cause the Merger to qualify as a
reorganization under Section 368(a) of the Code.
E. Concurrent with the execution of this Agreement and as an
inducement to Acquiror to enter into this Agreement, certain affiliates of
Target are entering into an agreement to vote the shares of Target Common Stock
owned by such affiliates to approve the Merger and against competing proposals
in accordance with the terms thereof.
F. Certain defined terms not otherwise defined herein shall
have the meanings ascribed thereto in Schedule A hereto.
NOW, THEREFORE, in consideration of the covenants and
representations set forth herein, and for other good and valuable consideration,
the parties agree as follows:
ARTICLE I.
THE MERGER
1.1 THE MERGER
At the Effective Time and subject to and upon the terms and
conditions of this Agreement and the Articles of Merger attached hereto as
Exhibit A (the "Articles of Merger")
and the applicable provisions of the Minnesota Business Corporation Act
("Minnesota Law"), Merger Sub shall be merged with and into Target, the separate
corporate existence of Merger Sub shall cease and Target shall continue as the
surviving corporation under the name "ONTRACK Data International, Inc." Target
as the surviving corporation after the Merger is hereinafter sometimes referred
to as the "Surviving Corporation."
1.2 CLOSING; EFFECTIVE TIME
Unless this Agreement shall have been terminated and the
transactions herein contemplated shall have been abandoned pursuant to Section
7.1, the closing of the transactions contemplated hereby (the "Closing") shall
take place as soon as practicable (but in any event within two (2) Business
Days) after the satisfaction or waiver of each of the conditions set forth in
Article VI hereof or at such other time as the parties hereto agree (the date on
which the Closing shall occur, the "Closing Date"). The Closing shall take place
at the offices of Torys LLP, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or at
such other location as the parties hereto agree. On the Closing Date, the
parties hereto shall cause the Merger to be consummated by filing the Articles
of Merger with the Secretary of State of the State of Minnesota, in accordance
with the relevant provisions of Minnesota Law (the time and date of such filing,
or such later time or date as is provided in the Articles of Merger, being the
"Effective Time" and the "Effective Date," respectively).
1.3 EFFECT OF THE MERGER
At the Effective Time, the effect of the Merger shall be as
provided in this Agreement, the Articles of Merger and the applicable provisions
of Minnesota Law. Without limiting the generality of the foregoing, and subject
thereto, at the Effective Time, all the property, rights, privileges, powers and
franchises of Target and Merger Sub shall vest in the Surviving Corporation, and
all debts, liabilities and duties of Target and Merger Sub shall become the
debts, liabilities and duties of the Surviving Corporation.
1.4 ARTICLES OF INCORPORATION; BYLAWS
(a) At the Effective Time, the Articles of Incorporation of
Target shall be amended in their entirety to read as the Articles of
Incorporation of Merger Sub as in effect immediately prior to the Effective
Time, and shall be the Articles of Incorporation of the Surviving Corporation
until thereafter amended as provided by Minnesota Law, except that as of the
Effective Time, Article I of the Articles of Incorporation shall be amended to
read: "The name of the corporation shall be "ONTRACK Data International, Inc.,"
and such Articles of Incorporation shall contain the indemnification provision
set forth in Section 5.9(a).
(b) The Bylaws of Merger Sub, as in effect immediately prior
to the Effective Time, and which shall contain the indemnification provisions
set forth in Section 5.9(a), shall be the Bylaws of the Surviving Corporation
until thereafter amended as provided by Minnesota Law, the Articles of
Incorporation of the Surviving Corporation and such Bylaws.
-2-
1.5 DIRECTORS AND OFFICERS
At the Effective Time, the directors of Merger Sub immediately
prior to the Effective Time shall be the initial directors of the Surviving
Corporation, to hold office until such time as such directors resign, are
removed or their respective successors are duly elected or appointed in
accordance with Minnesota Law and the Articles of Incorporation and Bylaws of
the Surviving Corporation. The officers of Merger Sub immediately prior to the
Effective Time shall be the initial officers of the Surviving Corporation, to
hold office until such time as such officers resign, are removed or their
respective successors are duly elected or appointed in accordance with Minnesota
Law and the Articles of Incorporation and Bylaws of the Surviving Corporation.
1.6 EFFECT ON CAPITAL STOCK
By virtue of the Merger and without any action on the part of
Acquiror, Merger Sub, Target or the holders of any of Target's securities:
(a) Conversion of Target Common Stock. (i) Subject to Sections
1.6(a)(ii) and 1.6(a)(iii) below and subject to Section 7.1(j) hereof, at the
Effective Time, each share of Target Common Stock issued and outstanding
immediately prior to the Effective Time (other than any shares of Target Common
Stock to be canceled pursuant to Section 1.6(b) or any shares of Target Common
Stock to which dissenters' rights have been exercised pursuant to Section
1.6(g)) will be converted automatically into the right to receive the fraction
of one fully paid and non-assessable share of Acquiror Common Stock equal to the
product of (x) one (1) and (y) a fraction (rounded to four (4) decimal places,
with the number five (5) and below being rounded down), the numerator of which
is $12.50 and the denominator of which is the Average Stock Price (subject to
Sections 1.6(a)(ii), 1.6(a)(iii) and 7.1(j), such product being the "Exchange
Ratio"); provided, however,
(ii) if the Average Stock Price is equal to or less than
$15.8634, the Exchange Ratio shall, for the purposes of this Agreement, be
deemed to equal 0.7880, except as may be otherwise provided in Section 7.1(j);
and
(iii) if the Average Stock Price is equal to or greater than
$19.3886, the Exchange Ratio shall, for the purposes of this Agreement, be
deemed to equal 0.6447.
(b) Cancellation of Target Common Stock Owned by Acquiror or
Target. At the Effective Time, all shares of Target Common Stock that are owned
by Target as treasury stock, and each share of Target Common Stock owned by
Acquiror or any direct or indirect wholly owned subsidiary of Acquiror or of
Target immediately prior to the Effective Time shall be by virtue of the Merger
and without any action on the part of the holder thereof canceled and
extinguished without any conversion thereof or consideration therefor.
(c) Conversion of Merger Sub Common Stock. At the Effective Time,
each share of common stock, $.01 par value, of Merger Sub will be converted
automatically into one fully paid and nonassessable share of common stock of the
Surviving Corporation.
-3-
(d) Target Stock Option Plans. At the Effective Time, Target's
Non-Qualified Stock Option Plan and Target's 1996 Stock Incentive Plan
(collectively, the "Target Stock Option Plans") and all options to purchase
Target Common Stock then outstanding under the Target Stock Option Plans shall
be automatically assumed by Acquiror in accordance with, and subject to the
terms and conditions of, Section 5.13.
(e) Adjustments to Exchange Ratios. The Exchange Ratio shall be
adjusted to reflect fully the effect of any stock split, reverse split, stock
dividend (including any dividend or distribution of securities convertible into
Acquiror Common Stock or Target Common Stock), reorganization, recapitalization
or other like change with respect to Acquiror Common Stock or Target Common
Stock having a record date after the date hereof and prior to the Effective
Time.
(f) Fractional Shares. No fraction of a share of Acquiror Common
Stock will be issued, but in lieu thereof each holder of shares of Target Common
Stock who would otherwise be entitled to a fraction of a share of Acquiror
Common Stock (after aggregating all fractional shares of Acquiror Common Stock
to be received by such holder) shall receive from Acquiror an amount of cash
(rounded down to the nearest whole cent, without interest) equal to the product
of (x) such fraction, multiplied by (y) the Average Stock Price.
(g) Dissenters' Rights. Notwithstanding any provisions of this
Agreement to the contrary, any Target Common Stock outstanding immediately prior
to the Effective Time held by a holder who has demanded and perfected the right,
if any, to receive fair value for such Target Common Stock ("Dissenting Shares")
in accordance with the provisions of Sections 302A.471 and 302A.473 of Minnesota
Law and as of the Effective Time has not withdrawn or lost such dissenter's
rights shall not be converted into or represent a right to receive the
consideration pursuant to Section 1.6(a) (the "Merger Consideration"), but the
stockholder shall only be entitled to such rights as are granted by Minnesota
Law. If a holder of Target Common Stock who asserts dissenter's rights under
Minnesota Law withdraws or loses such rights (through failure to perfect or
otherwise), then, as of the Effective Time or the occurrence of such event,
whichever last occurs, those shares (the "Unperfected Shares") shall be
converted into and represent only the right to receive the Merger Consideration
as provided in Section 1.6(a), without interest, upon the surrender of the
certificate or certificates formerly representing those Unperfected Shares.
Target shall give Acquiror (i) prompt notice of any written notice of intent to
demand fair value for any Unperfected Shares, attempted withdrawals of such
demands, the deposit of any shares for which payment is demanded, and any other
instruments served pursuant to Minnesota Law received by the Target relating to
dissenters' rights and (ii) the opportunity to direct all negotiations and
proceedings with respect to the assertion of dissenters' rights under Minnesota
Law. Target shall not, except with the prior written consent of Acquiror, given
in its sole discretion, voluntarily make any payment with respect to any such
demands for payment of fair value, offer to settle or settle any such demands or
approve any withdrawal of any such demands.
1.7 SURRENDER OF CERTIFICATES
(a) Exchange Agent; Acquiror to Provide Common Stock and Cash.
Promptly after the Effective Time, but in no event later than three (3) Business
Days after the Effective Date, Acquiror shall make available to or for such bank
or trust company as shall be designated
-4-
by Acquiror and reasonably acceptable to Target (the "Exchange Agent") for
exchange in accordance with this Article I, through such reasonable procedures
as Acquiror may adopt, the shares of Acquiror Common Stock issuable pursuant to
Section 1.6(a) in exchange for shares of Target Common Stock outstanding
immediately prior to the Effective Time, plus cash in an amount sufficient to
permit payment of cash in lieu of fractional shares pursuant to Section 1.6(e)
(such cash amount and certificates being hereinafter referred to as the
"Exchange Fund").
(b) Exchange Procedures. Promptly after the Effective Time, but no
later than five (5) Business Days after the Effective Date, Acquiror shall cause
to be mailed to each holder of record of a certificate or certificates (the
"Certificates") that immediately prior to the Effective Time represented
outstanding shares of Target Common Stock, whose shares were converted into the
right to receive shares of Acquiror Common Stock and cash in lieu of fractional
shares pursuant to Section 1.6, (i) a letter of transmittal (which shall specify
that delivery shall be effected, and risk of loss and title to the Certificates
shall pass, only upon receipt of the Certificates by the Exchange Agent, and
shall be in such form and have such other provisions as Acquiror may reasonably
specify) and (ii) instructions for use in effecting the surrender of the
Certificates in exchange for certificates representing shares of Acquiror Common
Stock and cash in lieu of fractional shares. Upon surrender of a Certificate for
cancellation to the Exchange Agent, together with such letter of transmittal,
duly completed and validly executed in accordance with the instructions thereto
and such other customary documents as may be required pursuant to such
instructions, the holder of such Certificate shall be entitled to receive in
exchange therefor, and Acquiror shall cause the Exchange Agent to promptly send
to the holder, one or more certificates as requested by the holder (properly
issued, executed and countersigned, as appropriate) representing the number of
whole shares of Acquiror Common Stock and payment of cash in lieu of fractional
shares that such holder has the right to receive pursuant to Section 1.6 and any
dividends or other distributions to which such holder is entitled pursuant to
Section 1.7(c), and the Certificate so surrendered shall forthwith be canceled.
In the event of a transfer of ownership of shares of Target Common Stock which
is not registered in the transfer records of Target as of the Effective Time,
shares of Acquiror Common Stock, dividends, distributions and cash in respect of
fractional shares may be issued and paid in accordance with this Article I to a
transferee if the Certificate evidencing such shares of Target Common Stock is
presented to the Exchange Agent, accompanied by all documents required to
evidence and effect such transfer pursuant to Section 1.7(d) and by evidence
that any applicable stock transfer taxes have been paid. Until so surrendered,
each outstanding Certificate that, prior to the Effective Time, represented
shares of Target Common Stock will be deemed from and after the Effective Time,
for all corporate purposes, to evidence only the right to receive shares of
Acquiror Common Stock into which such shares of Target Common Stock shall have
been so converted and an amount in cash in lieu of the issuance of any
fractional shares in accordance with Section 1.6.
(c) Distributions with Respect to Unexchanged Shares. No dividends
or other distributions with respect to Acquiror Common Stock with a record date
after the Effective Time shall be paid to the holder of any unsurrendered
Certificate with respect to the shares of Acquiror Common Stock represented
thereby until the holder of record of such Certificate surrenders such
Certificate. Subject to applicable law, following surrender of any such
Certificate, there shall be paid to the record holder of such Certificate one or
more certificates representing whole shares of
-5-
Acquiror Common Stock issued in exchange therefor, plus payments of cash in lieu
of fractional shares, plus the amount of any such dividends or other
distributions with a record date after the Effective Time that would have been
previously payable (but for the provisions of this Section 1.7(c)) with respect
to such shares of Acquiror Common Stock. No interest shall be paid in connection
with the issuance of Acquiror Common Stock and payments of cash contemplated by
the preceding sentence.
(d) Transfers of Ownership. If any certificate for shares of
Acquiror Common Stock is to be issued in a name other than that in which the
Certificate surrendered in exchange therefor is registered, it shall be a
condition of the issuance thereof that the Certificate so surrendered is
properly endorsed and otherwise in proper form for transfer and that the person
requesting such exchange will have paid to Acquiror or any agent designated by
it any transfer or other taxes required by reason of the issuance of a
certificate for shares of Acquiror Common Stock in any name other than that of
the registered holder of the Certificate surrendered, or established to the
satisfaction of Acquiror or the Exchange Agent that such tax has been paid or is
not payable.
(e) No Liability. Notwithstanding anything to the contrary in this
Section 1.7, none of the Exchange Agent, the Surviving Corporation or any party
hereto shall be liable to any person or entity for any amount properly paid to a
public official pursuant to any applicable abandoned property, escheat or
similar law.
(f) Withholding Rights. Acquiror or the Exchange Agent shall be
entitled to deduct and withhold from the Merger Consideration and any dividends
or other distributions to which such holder is entitled pursuant to Section
1.7(c) otherwise payable pursuant to this Agreement to any holder of Target
Common Stock such amounts as Acquiror or the Exchange Agent is required to
deduct and withhold with respect to the making of such payment under the Code,
or any provision of state, local or foreign tax law. To the extent that amounts
are so withheld by Acquiror or the Exchange Agent, such withheld amounts shall
be treated for all purposes of this Agreement as having been paid to the holder
of the shares of Target Common Stock in respect of which such deduction and
withholding was made by Acquiror or the Exchange Agent.
1.8 NO FURTHER OWNERSHIP RIGHTS IN TARGET COMMON STOCK
All shares of Acquiror Common Stock issued upon the surrender
for exchange of shares of Target Common Stock in accordance with the terms
hereof (including any cash paid in lieu of fractional shares) shall be deemed to
have been issued in full satisfaction of all rights pertaining to such shares of
Target Common Stock, and there shall be no further registration of transfers on
the records of the Surviving Corporation of shares of Target Common Stock that
were outstanding immediately prior to the Effective Time. If, after the
Effective Time, Certificates are presented to the Surviving Corporation for any
reason, they shall be promptly canceled and exchanged as provided in this
Article I.
-6-
1.9 LOST, STOLEN OR DESTROYED CERTIFICATES
In the event any Certificates shall have been lost, stolen or
destroyed, the Exchange Agent shall issue in exchange for such lost, stolen or
destroyed Certificates, upon the making of an affidavit of that fact by the
holder thereof, such shares of Acquiror Common Stock (and cash in lieu of
fractional shares) as may be required pursuant to Section 1.6; provided,
however, that Acquiror may, in its discretion and as a condition precedent to
the issuance thereof, require the owner of such lost, stolen or destroyed
Certificates to deliver a bond in such sum as it may reasonably direct as
indemnity against any claim that may be made against Acquiror, the Surviving
Corporation or the Exchange Agent with respect to the Certificates alleged to
have been lost, stolen or destroyed.
1.10 TAX CONSEQUENCES
It is intended by the parties hereto that the Merger shall
constitute a reorganization within the meaning of Section 368(a) of the Code. No
party shall take any action that would, to such party's knowledge, cause the
Merger to fail to qualify as a "reorganization" within the meaning of Section
368(a) of the Code. In the event the status of the Merger as a reorganization
under Sections 368(a) is challenged by the IRS on a basis of a technical
deficiency, this Agreement will be deemed amended to the extent the amendment
does not materially change the position of the parties as of the date of its
execution, to correct any such technical deficiency. The parties hereto hereby
adopt this Agreement as a "plan of reorganization" within the meaning of
sections 1.368-2(g) and 1.368-1(c) of the United States Treasury Regulations.
1.11 RETURN OF EXCHANGE FUND
Any portion of the Exchange Fund that remains unclaimed by
stockholders of Target for six (6) months after the Effective Time shall be
returned to Acquiror, upon demand, and any holder of Target Common Stock as of
the Effective Time who has not theretofore complied with Section 1.7 shall
thereafter look only to Acquiror for issuance of the number of shares of
Acquiror Common Stock and cash in lieu of fractional shares to which such holder
has become entitled, subject to Section 1.7(f).
1.12 TAKING OF NECESSARY ACTION; FURTHER ACTION
If, at any time after the Effective Time, any further action
is necessary or desirable to carry out the purposes of this Agreement and to
vest the Surviving Corporation with full right, title and possession to all
assets, property, rights, privileges, powers and franchises of Target and Merger
Sub, the officers and directors of Target and Merger Sub immediately prior to
the Effective Time are fully authorized in the name of their respective
corporations or otherwise to take, and shall take, all such lawful and necessary
action, so long as such action is not inconsistent with this Agreement.
-7-
ARTICLE II.
REPRESENTATIONS AND WARRANTIES OF TARGET
Target represents and warrants to Acquiror and Merger Sub that
the statements contained in this Article II are true and correct, except as set
forth in the disclosure letter delivered by Target to Acquiror on the date of
the execution and delivery of this Agreement (the "Target Disclosure Letter").
The Target Disclosure Letter shall be arranged in paragraphs corresponding to
the numbered and lettered paragraphs contained in this Agreement, and the
disclosure in any paragraph shall qualify only the corresponding paragraph in
this Agreement unless a cross-reference is made to another paragraph which such
disclosure also qualifies. Any reference in this Article II to an agreement
being "enforceable" shall be deemed to be qualified to the extent such
enforceability is subject to (a) laws of general application relating to
bankruptcy, insolvency, moratorium and the relief of debtors, and (b) the
availability of specific performance, injunctive relief and other equitable
remedies.
2.1 ORGANIZATION, STANDING AND POWER
Except as set forth in Section 2.1 of the Target Disclosure
Letter, each of Target and its subsidiaries is a corporation duly organized,
validly existing and in good standing under the laws of its jurisdiction of
organization. Target and its subsidiaries have the corporate power to own their
respective properties and to carry on their respective businesses as now being
conducted and except as set forth in Section 2.1 of the Target Disclosure
Letter, are duly qualified to do business and are in good standing in each
jurisdiction in which the failure to be so qualified and in good standing would
have a Material Adverse Effect on Target. Target has made available to Acquiror
a true and correct copy of the Articles of Incorporation and Bylaws or other
charter documents, as applicable, of Target and each of its subsidiaries, each
as amended to date. Neither Target nor any of its subsidiaries are in violation
of any of the provisions of its Articles of Incorporation or Bylaws or
equivalent organizational documents.
2.2 CAPITAL STRUCTURE
(a) Except as set forth in Section 2.2(a) of the Target
Disclosure Letter, Target is the record and beneficial owner of all outstanding
shares of capital stock of each of its subsidiaries and all such shares are duly
authorized, validly issued, fully paid and nonassessable. All of the outstanding
shares of capital stock of each such subsidiary are owned by Target free and
clear of any Liens. There are, and as of the Effective Time will be, no
outstanding subscriptions, options, warrants, puts, calls, rights, exchangeable
or convertible securities or other commitments or agreements of any character
relating to the issued or unissued capital stock or other securities of any such
subsidiary, or otherwise obligating Target, any such subsidiary or any other
person or entity to issue, transfer, sell, purchase, redeem or otherwise acquire
any such securities. Target does not directly or indirectly own any equity or
similar interest in, or any interest convertible or exchangeable or exercisable
for, any equity or similar interest in, any corporation, partnership, joint
venture or other business association or entity other than the subsidiaries set
forth in Section 2.2(a) of the Target Disclosure Letter.
(b) The authorized capital stock of Target consists of
25,000,000 shares of Target Common Stock and 1,000,000 shares of Preferred
Stock, $.01 par value, of which there were
-8-
issued and outstanding as of the date of this Agreement 10,463,149 shares of
Common Stock and no shares of Preferred Stock. There are no other outstanding
shares of capital stock or voting securities and no outstanding commitments to
issue any shares of capital stock or voting securities after the date of this
Agreement, other than pursuant to the exercise of (i) options outstanding as of
the date of this Agreement under the Target Stock Option Plans or (ii)
subscription rights outstanding as of the date of this Agreement under the
Target Employee Stock Purchase Plan ("Target ESPP"). All outstanding shares of
Target Common Stock are duly authorized, validly issued, fully paid and
non-assessable and are free of any Liens other than any Liens created by or
imposed upon the holders thereof, and are not subject to preemptive rights,
rights of first refusal, rights of first offer or similar rights created by
statute, the Articles of Incorporation or Bylaws of Target or any agreement to
which Target is a party or by which it is bound. As of the date of this
Agreement, Target has reserved (i) 2,800,000 shares of Target Common Stock for
issuance pursuant to the Target Stock Option Plans, of which 632,447 shares have
been issued pursuant to option exercises or direct stock purchases, and
1,754,941 shares are subject to outstanding, unexercised options and (ii)
250,000 shares of Target Common Stock for issuance to employees pursuant to the
Target ESPP, none of which have been issued and approximately 20,672 shares are
subject to outstanding subscription rights based on withholdings through March
15, 2002 and Target stock price as of March 15, 2002. Except for (i) the rights
created pursuant to this Agreement, (ii) Target's right to repurchase any
unvested shares under the Target Stock Option Plans or (iii) acceleration of
vesting of stock options outstanding as of the date of this Agreement pursuant
to the Target Stock Option Plans or agreements or grants entered into thereunder
or relating thereto, including without limitation, employment agreements, change
of control agreements, employment letters and similar agreements or commitments
(all of which agreements, grants, letters and commitments are set forth in
Section 2.2(b) of the Target Disclosure Letter), there are no other
subscriptions, options, warrants, puts, calls, rights, exchangeable or
convertible securities or other commitments or agreements of any character to
which Target or any of its subsidiaries is a party or by which any such entity
is bound obligating Target or any of its subsidiaries to issue, deliver, sell,
repurchase or redeem, or cause to be issued, delivered, sold, repurchased or
redeemed, any shares of Target capital stock (including Target Common Stock) or
other securities or obligating Target to grant, extend, accelerate the vesting
of, change the price of, or otherwise amend or enter into any such option,
warrant, call, right, commitment or agreement. There are no contracts,
commitments or agreements relating to the voting, purchase or sale of Target
Common Stock (i) between or among Target and any of its stockholders and (ii) to
Target's knowledge, among any of Target's stockholders or between any of
Target's stockholders and any third party, except for the Voting Agreements. The
Target Stock Option Plans (i) do not prohibit the assumption of such Target
Stock Option Plans (and the options granted thereunder) by Acquiror and the
substitution of Acquiror Common Stock as provided in Section 5.13 of this
Agreement and do not require the consent or approval of the holders of the
outstanding options under the Target Stock Option Plans, the Target
stockholders, or otherwise in order to effect such assumption and substitution
and (ii) require the acceleration of the exercise schedule or vesting provisions
in effect for such options, except with respect to Target's Non-Qualified Stock
Option Plan, provided however, Target's Board of Directors shall accelerate the
vesting schedule of all options outstanding thereunder which do not otherwise
accelerate pursuant to separate stock option agreements (constituting options to
purchase 1,000 shares of Target Common Stock). The current "Purchase Periods"
(as defined in the Target ESPP) commenced under the Target ESPP on October 1,
2001 and January 1, 2002, and each
-9-
Purchase Period will end at the ESPP Termination Date, and except for the
purchase rights granted on such commencement dates to participants in the
current Purchase Periods, there are no other purchase rights or options
outstanding under the Target ESPP. True and complete copies of all agreements
and instruments (or representative forms thereof) relating to or issued under
the Target Stock Option Plans and Target ESPP have been made available to
Acquiror, and such agreements and instruments have not been amended, modified or
supplemented, and there are no agreements to amend, modify or supplement such
agreements or instruments from the forms made available to Acquiror. All
outstanding shares of Target Common Stock and all options granted pursuant to
the Target Stock Option Plans were issued in compliance with all applicable
federal and state securities laws.
(c) On or prior to the date hereof (i) Target (and Target's
Board of Directors or appropriate committees thereof) have taken the action
contemplated by the last sentence of Section 5.13(c) hereof and (ii) Target (and
Target's Board of Directors or appropriate committees thereof) have taken all
necessary action to give effect to the terms and conditions set forth in Section
5.13(a) hereof. True and complete copies of all such actions have heretofore
been delivered to Acquiror.
2.3 AUTHORITY
(a) Target has all requisite corporate power and authority to
enter into this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Target, subject only to the approval and
adoption of the Merger and this Agreement by Target's stockholders as
contemplated by Section 6.1(a). This Agreement has been duly executed and
delivered by Target and constitutes the valid and binding obligation of Target,
enforceable against Target in accordance with its terms.
(b) Except as set forth in Section 2.3(b) of the Target
Disclosure Letter, neither the execution, delivery and performance of this
Agreement by Target, nor the consummation by Target of the transactions
contemplated hereby, will (i) conflict with, or result in a breach or violation
of, any provision of the articles of incorporation or bylaws (or similar
organizational documents) of Target or any of its subsidiaries; (ii) conflict
with, result in a breach or violation of, give rise to a default or loss of
benefits, or result in the acceleration of performance, or permit the
acceleration of performance, under (whether or not after the giving of notice or
lapse of time or both) any note, bond, indenture, guaranty, lease, license,
agreement, instrument, writ, injunction, order, judgement or decree to which
Target or any of its subsidiaries is a party or any of their respective
properties or assets is subject; (iii) give rise to a declaration or imposition
of any Lien upon any of the properties or assets of Target or any of its
subsidiaries; or (iv) adversely affect any Target Governmental License necessary
to enable Target and its subsidiaries to carry on their businesses as presently
conducted, except, in the case of clauses (ii), (iii) or (iv), for any conflict,
breach, violation, default, acceleration, declaration, imposition, impairment or
effect that could not individually or in the aggregate reasonably be expected to
have a Material Adverse Effect on Target.
-10-
(c) No approval, authorization, consent, license, clearance or
order of, declaration or notification to, or filing or registration with, any
Governmental Entity or other regulatory authority is required in order to (i)
permit Target to consummate the Merger or perform its obligations under this
Agreement or (ii) prevent the termination or modification of any governmental
right, privilege, authority, franchise, license, permit or certificate of Target
or any of its subsidiaries (collectively, "Target Governmental Licenses") to
enable Target and its subsidiaries to own, operate and lease their respective
properties and assets as and where such properties and assets are owned, leased
or operated and to provide service and carry on their respective businesses as
presently provided and conducted, or (iii) prevent any material loss or
disadvantage to the business of Target and its subsidiaries, by reason of the
Merger, except for (the following in clauses (A), (B) and (E), collectively, the
"Target Governmental Approvals") (A) the filing of the Articles of Merger, as
provided in Section 1.2; (B) the filing of the Proxy Statement with the SEC in
accordance with the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and clearance thereof by the Securities and Exchange Commission (the
"SEC"); (C) any other filings or notices required pursuant to the Exchange Act
and the rules promulgated thereunder, including under Regulation M-A; (D) the
filing of a report on Form 8-K in accordance with the Exchange Act disclosing
the existence and terms of this Agreement; (E) such filings as may be required
under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended
("HSR") (and the expiration of the waiting period thereunder) and such filings,
consents and approvals as are required under applicable foreign law (including
antitrust or competition law); or (F) such other consents, authorizations,
filings, approvals and registrations of or with any Governmental Entity that, if
not obtained or made, would not have a Material Adverse Effect on Target, would
not prevent or materially alter or delay the transactions contemplated by this
Agreement, or would not prevent the Surviving Corporation from owning or
operating any material portion of Target's or any of its subsidiaries'
businesses.
2.4 SEC DOCUMENTS; TARGET FINANCIAL STATEMENTS
(a) Target has made available to Acquiror a true and complete
copy of each statement, report, registration statement (with the prospectus in
the form filed pursuant to Rule 424(b) of the Securities Act of 1933, as amended
(the "Securities Act")), definitive proxy statement, and other filings filed
with the SEC by Target since January 1, 1997, and, prior to the Effective Time,
Target will have promptly made available to Acquiror true and complete copies of
any additional documents filed with the SEC by Target prior to the Effective
Time (collectively, the "Target SEC Documents"). In addition, Target has made
available to Acquiror all current exhibits to the Target SEC Documents filed
prior to the date hereof, and will promptly make available to Acquiror all
exhibits to any additional Target SEC Documents filed prior to the Effective
Time. All documents required to be filed as exhibits to the Target SEC Documents
have been so filed (and such exhibits are true, correct and complete copies of
such documents), and all contracts so filed as exhibits are in full force and
effect, except those that have expired in accordance with their terms or those
that have been terminated without default by any party thereto, and neither
Target nor any of its subsidiaries, nor to Target's knowledge any other party,
is in default thereunder except for any such default that individually or in the
aggregate could not reasonably be expected to have a Material Adverse Effect on
Target. As of their respective filing dates, (i) the Target SEC Documents
complied as to form in all material respects with the requirements of the
Exchange Act and the Securities Act, as applicable, and (ii) none of the
-11-
Target SEC Documents contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements made therein, in light of the circumstances in which they
were made, not misleading, except to the extent corrected by a subsequently
filed Target SEC Document. None of Target's subsidiaries is required to file any
forms, reports or other documents with the SEC.
(b) Target has delivered to Acquiror complete and correct
copies of the following consolidated financial statements (the "Target Financial
Statements"), all of which have been prepared from the books and records of
Target in accordance with United States generally accepted accounting principles
("GAAP") consistently applied and maintained throughout the periods indicated
(except as may be indicated in the notes thereto) and fairly present in all
material respects the consolidated financial condition of Target and its
subsidiaries as at their respective dates and the consolidated results of their
operations and cash flows for the periods covered thereby: (i) audited
consolidated balance sheets at December 31, 2001 (the "Target Balance Sheet"),
2000 and 1999 and audited consolidated statements of income, cash flows and
stockholders' equity of Target and its subsidiaries for the fiscal years then
ended, audited by Xxxxx Xxxxxxxx LLP, independent public accountants; and (ii)
an unaudited consolidated balance sheet at February 28, 2002 and unaudited
consolidated statements of income, cash flows and stockholders' equity for the
two months then ended.
(c) Except as set forth in Section 2.4(c) of the Target
Disclosure Letter, the statements of income contained in the Target Financial
Statements do not contain any items of special or nonrecurring revenue or income
or any revenue or income not earned in the ordinary course of business, except
as expressly specified therein.
(d) Except as set forth in Section 2.4(d) of the Target
Disclosure Letter, to Target's knowledge, the carrying value of the Target's
assets and properties is not impaired based on Target's use of such assets and
properties.
2.5 ABSENCE OF CERTAIN CHANGES
Except as set forth in Section 2.5 of the Target Disclosure
Letter, since December 31, 2001 (the "Target Balance Sheet Date"), Target and
each of its subsidiaries have conducted their respective businesses in the
ordinary course consistent with past practice and there has not occurred:
(a) any change, event or condition (whether or not covered by
insurance) that has resulted in, or could reasonably be expected to result in, a
Material Adverse Effect on Target;
(b) any acquisition, sale or transfer of any material asset of
Target and its subsidiaries taken as a whole;
(c) any change in accounting methods or practices (including
any change in depreciation or amortization policies or rates) by Target or any
of its subsidiaries, except as required by GAAP, or any revaluation by Target or
any of its subsidiaries of any of their assets;
-12-
(d) any declaration, setting aside, or payment of a dividend
or other distribution with respect to any shares of capital stock of Target or
any of its subsidiaries (except to Target or to other parent entities wholly
owned by Target), or any direct or indirect redemption, purchase or other
acquisition by Target or any of its subsidiaries of any of their shares of
capital stock;
(e) any material contract entered into by Target or any of its
subsidiaries, other than as made available to Acquiror (without limiting
Sections 4.1 and 4.2(A) hereof, promptly as and when entered into), or any
material amendment or termination of, or default under, any material contract to
which Target or any of its subsidiaries is a party or by which any of them are
bound;
(f) any amendment or change to the Articles of Incorporation
or Bylaws (or similar organizational documents) of Target or any of its
subsidiaries;
(g) any increase in or modification of the compensation or
benefits payable or to become payable by Target or any of its subsidiaries to
any of their respective directors, officers, employees or consultants (other
than amendments that may be required to maintain the present tax treatment of
such benefits or otherwise to comply with applicable law), other than with
respect to non-officer employees and consultants only, any increases in the
ordinary course of business consistent with past practice;
(h) any incurrence of indebtedness or Liens (excluding
Permitted Liens) on any of Target's or any of its subsidiary's assets, or
issuance of any debt securities or options, warrants, calls, convertible
securities or other rights to acquire any debt securities of Target or any of
its subsidiaries;
(i) any commencement of any lawsuit or arbitration proceeding
by or against Target or any of its subsidiaries, other than for the routine
collection of bills and other litigation not material to the business of Target
and its subsidiaries taken as whole, or any settlement or compromise of any
claim by or against or obligation of Target or any of its subsidiaries of a
material nature; or
(j) any negotiation or agreement by Target or any of its
subsidiaries to do any of the things described in the preceding clauses (a)
through (i) (other than negotiations with Acquiror and its representatives
regarding the transactions contemplated by this Agreement).
2.6 ABSENCE OF UNDISCLOSED LIABILITIES
Except as set forth in Section 2.6 of the Target Disclosure
Letter, Target and its subsidiaries have no material obligations or liabilities
of any nature (matured or unmatured, fixed or contingent) other than (a) those
set forth or adequately provided for in the Target Balance Sheet (including the
notes thereto), (b) those obligations or liabilities (including contractual
obligations) incurred in the ordinary course of business since the Target
Balance Sheet Date in amounts consistent with prior periods, which obligations
or liabilities have not had and could not reasonably be expected to have a
Material Adverse Effect on Target, (c) those incurred in connection with the
execution of this Agreement, and (d) those disclosed in the Target SEC
-13-
Documents.
2.7 CONTRACTS
(a) Set forth in Section 2.7 of the Target Disclosure Letter
is a complete and correct list of each of the following agreements, leases and
other instruments, both oral and written, to which Target or any of its
subsidiaries is a party or by which Target or any of its subsidiaries or their
respective properties or assets are bound:
(i) each material license or other agreement under
which any Target Intellectual Property is licensed by or to
Target or any of its subsidiaries;
(ii) each agreement that restricts the operation of the
business of Target or any of its subsidiaries or the ability
of Target or any of its subsidiaries to solicit customers or
employees;
(iii) each operating lease (as lessor, lessee, sublessor
or sublessee) relating to any real or tangible personal
property or assets that are material to Target and its
subsidiaries, taken as a whole;
(iv) each agreement (including capital leases) under
which any money has been or may be borrowed or loaned or any
note, bond, indenture or other evidence of indebtedness has
been issued or assumed (other than those under which there
remain no ongoing obligations of Target or any of its
subsidiaries), and each guaranty of any evidence of
indebtedness or other obligation, or of the net worth, of any
person or entity (other than endorsements for the purpose of
collection in the ordinary course of business), and each
agreement granting or creating a Lien (other than Permitted
Liens) on any of Target's assets or any of its subsidiary's
assets;
(v) each agreement providing for accelerated or
special payments as a result of the Merger, including any
severance or "golden parachute" agreement or any stockholder
rights plan or other instrument referred to as a "poison
pill";
(vi) each written (and a description of any oral)
employment agreement, consulting agreement, non-compete
agreement, confidentiality agreement or termination or
severance agreement; and
(vii) each agreement with any Governmental Entity or
otherwise which requires Target, any of its subsidiaries
and/or any of their respective employees to have been granted
security or similar clearances.
A complete and correct copy of each written agreement, lease
or other type of document (or representative forms thereof), and a true,
complete and correct summary of each oral agreement, lease or other type of
document, required to be disclosed pursuant to this Section 2.7 has been made
available to Acquiror.
-14-
(b) Each agreement, lease or other type of document required
to be disclosed pursuant to this Section 2.7, each agreement or other type of
document required to be filed with the SEC pursuant to Item 601 of Regulation
S-K under the Securities Act, and each agreement or other type of document which
is material to the Target and its subsidiaries taken as a whole (collectively,
the "Target Contracts") is valid, binding and in full force and effect and is
enforceable by Target or its applicable subsidiary in accordance with its terms.
Neither Target nor any of its subsidiaries that is a party to such Target
Contract is (with or without the lapse of time or the giving of notice, or both)
in breach of or in default under any of the Target Contracts, and, to the
knowledge of Target, no other party to any of the Target Contracts is (with or
without the lapse of time or the giving of notice, or both) in breach of or in
default under any of the Target Contracts, except where such breach or default
could not reasonably be expected to have a Material Adverse Effect on Target.
Except as set forth in Section 2.7(b) of the Target Disclosure Letter, no
existing or completed agreement to which Target or any of its subsidiaries is a
party, is subject to renegotiation with any Governmental Entity.
2.8 LITIGATION
All litigation to which Target or any of its subsidiaries is a
party (or, to the knowledge of Target, threatened to become a party) is
disclosed in Section 2.8 of the Target Disclosure Letter. Except as set forth in
Section 2.8 of the Target Disclosure Letter, there is no private or governmental
action, suit, proceeding, claim, arbitration or investigation pending before any
agency, court or tribunal, foreign or domestic, or, to the knowledge of Target,
threatened (including allegations that could form the basis for future action)
against Target or any of its subsidiaries or their properties or officers or
directors (in their capacities as such), which, if adversely determined could
reasonably be expected to have a Material Adverse Effect on Target. There is no
judgment, decree or order against Target or its subsidiaries, or, to the
knowledge of Target, any of their directors or officers (in their capacities as
such), that could prevent, enjoin, or materially alter or delay any of the
transactions contemplated by this Agreement, or that could reasonably be
expected to have a Material Adverse Effect on Target. Neither Target nor any of
its subsidiaries has any plans to initiate any litigation, arbitration or other
proceeding against any third party, other than litigation related to the routine
collection of past due receivables and other litigation not material to the
business of Target or any of its subsidiaries.
2.9 RESTRICTIONS ON BUSINESS ACTIVITIES
Except as set forth in Section 2.9 of the Target Disclosure
Letter, there is no agreement, judgment, injunction, order or decree binding
upon Target that has or could reasonably be expected to have the effect of
prohibiting or impairing in any material respect any current business practice
of Target or its subsidiaries, any acquisition of property by Target or its
subsidiaries or the conduct of business by Target and its subsidiaries as
currently conducted.
2.10 GOVERNMENTAL AUTHORIZATION
Target and each of its subsidiaries have obtained each
federal, state, county, local or foreign governmental consent, license, permit,
grant, or other authorization of a Governmental Entity (a) pursuant to which
Target or any of its subsidiaries currently operate or hold any
-15-
interest in any of their properties or (b) that is required for the operation of
the business of Target or any of its subsidiaries or the holding of any such
interest ((a) and (b) herein collectively called "Target Authorizations"), and
all of such Target Authorizations are in full force and effect, except where the
failure to obtain or have any such Target Authorizations could not reasonably be
expected to have a Material Adverse Effect on Target.
2.11 TITLE TO PROPERTY
Target and its subsidiaries have good and marketable title to
all of their properties, interests in properties and assets, real and personal,
necessary for the conduct of their businesses as presently conducted or which
are reflected in the Target Balance Sheet or acquired after the Target Balance
Sheet Date (except properties, interests in properties and assets sold or
otherwise disposed of in the ordinary course of business since the Target
Balance Sheet Date), or, with respect to leased properties and assets, valid
leasehold interests therein, in each case free and clear of all Liens of any
kind or character, except (a) Liens for current taxes not yet due and payable,
(b) such imperfections of title, Liens and easements as do not and will not
materially detract from or interfere with the use or value of the properties
subject thereto or affected thereby, or otherwise materially impair business
operations of Target and its subsidiaries, taken as a whole and as currently
conducted, involving such properties (c) Liens securing debts that are reflected
on the Target Balance Sheet and (d) Liens securing obligations of Target (of
which obligations there are on the date hereof, and at the Effective Time will
be, none outstanding) pursuant to the Revolving Loan Agreement, dated July 31,
1996, with Xxxxx Fargo Bank, National Association, as amended. The plants,
property and equipment of Target and each of its subsidiaries that are used in
the operations of their respective businesses are in good operating condition
and repair (normal wear and tear excepted). All properties used in the
operations of Target or any of its subsidiaries are reflected in the Target
Balance Sheet to the extent GAAP require the same to be reflected. Except as set
forth in Section 2.11 of the Target Disclosure Letter, Target and its
subsidiaries do not own or lease any real property. For purposes of this Section
2.11, the term "property" or "properties" does not include intellectual
property.
2.12 INTELLECTUAL PROPERTY
Except as set forth in Section 2.12 of the Target Disclosure
Letter:
(a) All registrations and applications for registrations
comprising Target Intellectual Property are completely and correctly listed in
Section 2.12(a) of the Target Disclosure Letter.
(b) All programs for Developed Software are completely and
correctly described in Schedule 2.12(b) (wherein only the core programs need be
identified without identifying the modification or updates thereto).
(c) Target and its subsidiaries have not conveyed, assigned or
encumbered any of their rights to the Target Intellectual Property.
(d) Target or its subsidiaries have the right to use, or are
the sole and exclusive owners of, all right, title and interest in and to the
Target Intellectual Property (with no breaks in
-16-
the chain of the title thereof) required for the carrying on of the business of
Target and its subsidiaries in the manner currently conducted except where such
failure to have such right or ownership would not have a Material Adverse Effect
on Target.
(e) The Target Intellectual Property is in full force and
effect and has not been used or enforced or failed to be used or enforced in a
manner that would result in the abandonment, cancellation or unenforceability of
such Target Intellectual Property except where such abandonment, cancellation or
unenforceability would not have a Material Adverse Effect on Target.
(f) Neither Target nor any of its subsidiaries have knowledge
of nor has received any notice of any claim of adverse ownership, invalidity or
other opposition to or conflict with any Target Intellectual Property nor, to
the knowledge of Target, is there any impending or threatened suit, proceeding,
claim, demand, action or investigation of any nature or kind against Target or
any of its subsidiaries relating to the Target Intellectual Property that, if
determined adversely, could be reasonably expected to have a Material Adverse
Effect on Target.
(g) Other than for Target Contracts, neither Target nor its
subsidiaries are required to pay any royalty, fee or other payment to any third
party in connection with their use of the Target Intellectual Property except
where the failure to pay such royalty, fee or other payment and the resulting
inability to use such Target Intellectual Property could not reasonably be
expected to have a Material Adverse Effect on Target.
(h) No activity in which Target or its subsidiaries are
engaged nor any product that Target or its subsidiaries manufacture, use, sell,
license or offer, nor any process, method, packaging, advertising, or any
material that Target or its subsidiaries employ in the manufacture, marketing,
sale, licensing or offering of any such product or service, nor the use of any
of the Target Intellectual Property by Target or its subsidiaries, each to the
knowledge of Target, breaches, violates, infringes or interferes with any rights
of any third party.
(i) Target and its subsidiaries have taken commercially
reasonable steps (including measures to protect secrecy and confidentiality) to
protect all their right, title and interest in and to all Target Intellectual
Property. All employees, agents, consultants and other representatives of Target
and its subsidiaries who have access to confidential or proprietary information
of Target and its subsidiaries have a legal obligation of confidentiality to
Target or its subsidiaries with respect to such information.
(j) All employees, consultants and independent contractors
employed or engaged by Target and its subsidiaries have duly executed and
delivered agreements to Target or its subsidiaries pertaining to the assignment
to Target or its subsidiaries of all Target Intellectual Property, conceived or
reduced to practice by them during the course of their employment or engagement
by Target or its subsidiaries.
(k) To the knowledge of Target, there has been no public
disclosure, sale or offer for sale of any invention forming a part of any patent
application (in preparation or filed) or patent for an invention within the
Target Intellectual Property owned by Target or one of its subsidiaries, that
was directly or indirectly derived from the inventor(s) (such as a non-
-17-
confidential publication or presentation by an inventor, employee, officer,
director or other representative of Target or its subsidiaries) that could
reasonably be expected to affect the ability of Target or its subsidiaries to
obtain or sustain valid patent rights to such invention in any jurisdiction
where it is desirable and commercially reasonable for Target or its subsidiaries
to obtain patent protection.
(l) To the knowledge of Target, there is no publication, such
as a patent, published or laid-open patent application, journal article,
catalogue, promotion, or specification, of another person which may prevent
Target or its subsidiaries from obtaining or sustaining valid patent rights to
any patent application (in preparation or filed) or patent for an invention
within the Target Intellectual Property owned by Target or its subsidiaries in
any jurisdiction where it is desirable and commercially reasonable for Target or
its subsidiaries to obtain patent protection.
(m) In relation to each patent application (in preparation or
filed) or patent for an invention within the Target Intellectual Property owned
by Target or one of its subsidiaries, Target is not aware of any professional
opinion, such as the opinion of a patent agent or patent attorney, whether
preliminary in nature or in any other manner qualified, to the effect that the
chances of obtaining or sustaining valid patent rights to the invention are
considered to be unlikely, or less than even, or about even, or in any other
manner doubtful in any jurisdiction where it is desirable and commercially
reasonable for Target or its subsidiaries to obtain patent protection.
(n) To the knowledge of the Target, and except as otherwise
evidenced by or described in a Target Contract, (i) each item of Developed
Software was written by employees of the Target or its subsidiaries, or, if by a
third party, was properly assigned to Target, (ii) each item of Developed
Software is an original work, (iii) no portion of the Developed Software uses,
copies or comprises the work owned by any third party and (iv) no royalty or
other consideration is due to any third party arising out of the creation,
copying or distribution of the Developed Software.
(o) Target and its subsidiaries have not provided the source
code for the Developed Software to any other person, directly or indirectly, by
license, transfer, sale, escrow, or otherwise. The Target and its subsidiaries
have not permitted any other person or entity to reverse engineer, disassemble
or decompile the Developed Software to create such source code.
(p) To the knowledge of Target, the Target Intellectual
Property has not been imported or exported in violation of any export or import
restrictions in any jurisdictions where Target or any of its subsidiaries
conducts business.
(q) To the knowledge of Target, neither the past nor current
use of any data bases related to the business of Target or any of its
subsidiaries or the information contained therein: (i) has violated or infringed
upon, or is violating or infringing upon, the legal rights of any person; (ii)
breaches any legal duty or legal obligation owed to any person; or (iii)
violates any law relating to the privacy of any person.
(r) No Target Intellectual Property was conceived or developed
jointly with a third party or directly or indirectly with or pursuant to
government funding or a government
-18-
contract in a manner that would result in the creation of "March-in" rights
under 35 U.S.C. Section 203.
(s) To the knowledge of the Target, there has been no
unauthorized use, disclosure, infringement or misappropriation of any Target
Intellectual Property by any third party including, without limitation any
employee or former employee of Target or its subsidiaries, except where such
unauthorized use, disclosure, infringement or misappropriation would not have a
Material Adverse Effect on Target.
2.13 ENVIRONMENTAL MATTERS
Target and its subsidiaries have at all times operated their
businesses in material compliance with all Environmental Laws and all permits,
licenses and registrations required under applicable Environmental Laws
("Environmental Permits") and, to Target's knowledge, no material expenditures
are or will be required by Target or its subsidiaries in order to comply with
such Environmental Laws. Neither Target nor any of its subsidiaries has received
any written communication from any Governmental Entity or other person or entity
that alleges that Target or its subsidiaries have violated or is, or may be,
liable under any Environmental Law. There are no material Environmental Claims
pending or, to the knowledge of Target, threatened (a) against Target or any of
its subsidiaries, or (b) against any person or entity whose liability for any
Environmental Claim Target or any of its subsidiaries has retained or assumed,
either contractually or by operation of law. Neither Target nor any of .its
subsidiaries have contractually retained or assumed any liabilities or
obligations that could reasonably be expected to provide the basis for any
material Environmental Claim.
"Environmental Laws" means all applicable statutes, rules,
regulations, ordinances, orders, decrees, judgments, permits, licenses,
consents, approvals, authorizations, and governmental requirements or directives
or other obligations lawfully imposed by governmental authority under federal,
state or local law pertaining to the protection of the environment, protection
of public health, protection of worker health and safety, the treatment,
emission and/or discharge of gaseous, particulate and/or effluent pollutants,
and/or the handling of hazardous materials, including without limitation, the
Clean Air Act, 42 U.S.C. ss. 7401, et seq., the Comprehensive Environmental
Response, Compensation and Liability Act of 1980 ("CERCLA"), 42 U.S.C. ss. 9601,
et seq., the Federal Water Pollution Control Act, 33 U.S.C. ss. 1321, et seq.,
the Hazardous Materials Transportation Act, 49 U.S.C. ss. 1801, et seq., the
Resource Conservation and Recovery Act, 42 U.S.C. ss. 6901, et seq. ("RCRA"),
and the Toxic Substances Control Act, 15 U.S.C. ss. 2601, et seq. "Environmental
Claims" means any and all actions, orders, decrees, suits, demands, directives,
claims, liens, investigations, proceedings or notices of violation by any
Governmental Entity or other person or entity alleging potential responsibility
or liability arising out of, based on or related to (a) the presence, release or
threatened release of, or exposure to, any Hazardous Materials (as defined under
applicable Environmental Laws) or (b) circumstances forming the basis of any
violation or alleged violation of any Environmental Law.
-19-
2.14 TAXES
(a) Target and each of its subsidiaries has timely filed
(including after giving effect to any extensions) all tax returns (as defined
below in clause (l)) required to be filed by them. Target and each of its
subsidiaries have timely paid or caused to be timely paid all taxes due with
respect to the taxable periods covered by such tax returns and all other taxes
as are due, and the Target Balance Sheet reflects an adequate reserve (in
addition to any reserve for deferred taxes established to reflect timing
differences between book and tax income) for all taxes payable by Target or its
subsidiaries for all taxable periods and portions thereof through the Target
Balance Sheet Date.
(b) Except as set forth in Section 2.14(b) of the Target
Disclosure Letter, no tax return of Target is under audit or, to the knowledge
of Target, examination by any taxing authority, and no notice of such an audit
or examination has been received by Target or its subsidiaries. Except as set
forth in Section 2.14(b) of the Target Disclosure Letter there is no deficiency,
litigation, proposed adjustment or matter in controversy with respect to any
taxes due and owing by Target or its subsidiaries. Except as set forth in
Section 2.14(b) of the Target Disclosure Letter, each deficiency resulting from
any completed audit or examination relating to taxes by any taxing authority has
been timely paid. Except as set forth in Section 2.14(b) of the Target
Disclosure Letter, no issues relating to taxes were raised by the relevant
taxing authority in any completed audit or examination that could reasonably be
expected to recur in a later taxable period. The United States federal income
tax returns of Target and its subsidiaries have either been examined and settled
with the Internal Revenue Service or closed by virtue of the expiration of the
applicable statute of limitations for all years through 1997.
(c) Except as set forth in Section 2.14(c) of the Target
Disclosure Letter, there is no currently effective agreement or other document
extending, or having the effect of extending, the period of assessment or
collection of any taxes and no power of attorney (other than powers of attorney
authorizing employees of Target or its subsidiaries to act on behalf of Target
or such subsidiaries) with respect to any taxes has been executed or filed with
any taxing authority.
(d) No Liens for taxes exist with respect to any assets or
properties of Target or any of its subsidiaries, except for statutory Liens for
taxes not yet due.
(e) Neither Target nor any of its subsidiaries will be
required to include in a taxable period ending after the Effective Time any
material taxable income attributable to income that accrued in a prior taxable
period but was not recognized for tax purposes in any prior taxable period as a
result of the installment method of accounting, the completed contract method of
accounting, the long-term contract method of accounting, the cash method of
accounting or Section 481 of the Code or comparable provisions of any other,
domestic or foreign (whether national, federal, state, provincial, local or
otherwise) tax laws, or for any other reason.
(f) Target and each of its subsidiaries has complied in all
material respects with all applicable statutes, laws, ordinances, rules and
regulations relating to the payment and withholding of taxes (including
withholding of taxes pursuant to Sections 1441, 1442, 3121 and 3402 of the Code
and similar provisions under any other domestic or foreign (whether national,
-00-
xxxxxxx, xxxxx, xxxxxxxxxx, local or otherwise) tax laws) and have in all
material respects, within the time and the manner prescribed by law, withheld
from and paid over to the proper Governmental Entities all amounts required to
be so withheld and paid over under applicable laws.
(g) Target has not constituted either a "distributing
corporation" or a "controlled corporation" (in each case, within the meaning of
Section 355(a)(1)(A) of the Code) in a distribution of stock qualifying for
tax-free treatment under Section 355(e) of the Code (A) in the two years prior
to the date of this Agreement or (B) in a distribution that could otherwise
constitute part of a "plan" or "series of related transactions" (within the
meaning of Section 355(c) of the Code) in conjunction with the Merger.
(h) Target was not, at any time during the period specified in
Section 897(c)(1)(A)(ii) of the Code, a United States real property holding
corporation within the meaning of Section 897(c)(2) of the Code.
(i) Target has not taken any action, or failed to take any
action, and does not have knowledge of any fact, agreement, plan or other
circumstance that could reasonably prevent the Merger from qualifying as a
reorganization within the meaning of Section 368(a) of the Code.
(j) Except as set forth in Section 2.14(j) of the Target
Disclosure Letter, there is no agreement, contract or arrangement to which
Target or any of its subsidiaries is a party that could, individually or
collectively, result in the payment of any amount that would not be deductible
by reason of Sections 280G (as determined without regard to Section 280G(b)(4))
of the Code.
(k) Except as set forth in Section 2.14(k) of the Target
Disclosure Letter, neither Target nor any of its subsidiaries is a party to or
bound by any tax indemnity, tax sharing or tax allocation agreement nor does
Target or any of its subsidiaries owe any amount under any such agreement.
(l) As used in this Agreement, (i) "taxes" shall include (A)
any and all taxes, whenever created or imposed, and whether domestic or foreign,
and whether imposed by a national, federal, state, provincial, local or other
Governmental Entity, including all interest, penalties and additions imposed
with respect to such amounts, (B) liability for the payment of any amounts of
the type described in clause (A) as a result of being a member of an affiliated,
consolidated, combined or unitary group and (C) liability for the payment of any
amounts as a result of being party to any tax sharing agreement or as a result
of any express or implied obligation to indemnify any other person with respect
to the payment of any amount described in clause (A) or (B) and (ii) "tax
returns" shall mean all domestic or foreign (whether national, federal, state,
provincial, local or otherwise) returns, declarations, statements, reports,
schedules, forms and information returns relating to taxes and any amended tax
return.
2.15 EMPLOYEE BENEFIT PLANS
Set forth in Section 2.15 of the Target Disclosure Letter is a correct
and complete list of each "employee benefit plan" within the meaning of Section
3(3) of the Employee Retirement
-21-
Income Security Act of 1974, as amended ("ERISA") (each, an "ERISA Plan").
Section 2.15 of the Target Disclosure Schedule also sets forth any other bonus,
profit sharing, pension, compensation, deferred compensation, stock option,
stock purchase, fringe benefit, severance, post-retirement, scholarship,
disability, sick leave, vacation or retention plan sponsored or maintained by
Target or any of its subsidiaries, or to which Target or any of its subsidiaries
is required to make contributions (such plans and related trusts, insurance and
annuity contracts, funding media and related agreements and arrangements being
hereinafter referred to as the "Benefit Plans"), and which are governed by the
laws of the United States or any State thereof (those Benefit Plans which are so
governed and all ERISA Plans, collectively, the "Target Benefit Plans"). Target
has made available to Acquiror copies of all Target Benefit Plans and all
financial statements, actuarial reports and annual reports and returns filed
with the Internal Revenue Service or Department of Labor with respect to such
Target Benefit Plans for a period of three (3) years prior to the date hereof.
In addition, except as set forth in Section 2.15 of the Target Disclosure
Letter:
(a) Each Target Benefit Plan and Non-U.S. Benefit Plan has
been operated and administered in compliance with its terms in all material
respects;
(b) Each Target Benefit Plan complies in all material respects
with all requirements of ERISA and the Code, except with respect to written
amendments to the plan documents for which the remedial amendment period as
defined in Code Section 401(b) and related regulations and notices, has not
expired as of the Closing Date, and each Target Benefit Plan and Non-U.S.
Benefit Plan complies in all material respects with all applicable laws and
regulations;
(c) Each Target Benefit Plan intended to qualify under Section
401(a) of the Code has received a favorable determination letter from the
Internal Revenue Service as to its qualification under Section 401(a) of the
Code;
(d) Neither Target nor any of its subsidiaries maintains,
sponsors or contributes to, and neither Target nor any of its subsidiaries has
maintained, sponsored or contributed in the past six years to, any "defined
benefit plan" (within the meaning of Section 3(35) of ERISA) or any
"multiemployer plan" (within the meaning of Section 3(37) of ERISA) or any other
plan subject to Title IV of ERISA;
(e) No "prohibited transaction" (within the meaning of Section
406 of ERISA or Section 4975(c) of the Code) has occurred with respect to any
Target Benefit Plan;
(f) No provision of any Target Benefit Plan or Non-U.S.
Benefit Plan limits the right of Target to amend or terminate any Target Benefit
Plan on no more than ninety (90) days notice, subject to the requirements of
applicable law;
(g) All contributions required to have been made to trusts in
connection with any Target Benefit Plan that would constitute a "defined
contribution plan" (within the meaning of Section 3(34) of ERISA) through the
date hereof have been made;
-22-
(h) Other than claims in the ordinary course for benefits with
respect to the Target Benefit Plans or the Non-U.S. Benefit Plans, there are no
actions, suits or claims pending, or, to Target's knowledge, threatened, with
respect to any Target Benefit Plan or any Non-U.S. Benefit Plan;
(i) All reports, returns and similar documents with respect to
the Target Benefit Plans and the Non-U.S. Benefit Plans required to be filed
with any Governmental Entity have been timely filed;
(j) Except as set forth in Section 2.15(j) of the Target
Disclosure Letter, neither Target nor any of its subsidiaries has any obligation
to provide health or other welfare benefits to former, retired or terminated
employees, except as specifically required under Section 4980B of the Code or
Section 601 of ERISA. Target and each of its subsidiaries have complied in all
material respects with the notice and continuation requirements of Section 4980B
of the Code and Section 601 of ERISA and the regulations thereunder;
(k) All contributions, insurance premiums, taxes, or other
liabilities or charges with respect to any Target Benefit Plan or any Non-U.S.
Benefit Plan required to be paid on or prior to the Closing Date have been or
will be paid in full on or prior to the Closing Date. All unpaid contributions,
insurance premiums, taxes, or other liabilities or charges with respect to any
Target Benefit Plan or any Non-U.S. Benefit Plan attributable to periods prior
to the Closing Date, including, to the extent required to be accrued on the
Target Financial Statements under GAAP consistently applied, the pre-Closing
portion of any period ending after the Closing Date, have been accrued and
properly reflected as liabilities on Target Financial Statements. Contributions
for purposes of this Section 2.15 shall include, without limitation, any
matching or employer profit sharing contributions required or customarily made
under a "defined contribution plan" (within the meaning of Section 3(34) of
ERISA) sponsored by Target;
(l) All amendments required to bring the Target Benefit Plans
into conformity with applicable law, including, without limitation, ERISA and
the Code, have been or will be timely adopted;
(m) No Target Benefit Plan or Non-U.S. Benefit Plan is under
audit or investigation by the IRS or the DOL or any other Governmental Entity,
and no such completed audit, if any, has resulted in the imposition of any tax,
interest or penalty that remains unpaid as of the Closing Date; and
(n) Neither Target nor any of its subsidiaries is subject to
any Liens (except Permitted Liens), or excise or other taxes, under ERISA, the
Code or other applicable law relating or with respect to any Target Benefit Plan
or any Non-U.S. Benefit Plan.
2.16 EMPLOYEES AND CONSULTANTS
(a) Target has made available to Acquiror a complete list of
all individuals employed by Target and each of its subsidiaries as of the date
hereof and the position and base compensation payable to each such individual.
-23-
(b) Neither Target nor any of its subsidiaries is a party to
or subject to a labor union or a collective bargaining agreement or arrangement
or party to any general labor or employment dispute. There are no labor unions
representing, purporting to represent or, to Target's knowledge, attempting to
represent any employee of Target or any of its subsidiaries.
(c) Except as set forth in Section 2.16(c) of the Target
Disclosure Letter, the consummation of the transactions contemplated herein will
not result in (i) any amount becoming payable to any employee, director or
independent contractor of Target or its subsidiaries, (ii) the acceleration of
payment or vesting of any benefit, option or right to which any employee,
director or independent contractor of Target or its subsidiaries may be
entitled, (iii) the forgiveness of any indebtedness of any employee, director or
independent contractor of Target or its subsidiaries, or (iv) any cost becoming
due or accruing to Target or its subsidiaries with respect to any employee,
director or independent contractor of Target or its subsidiaries, other than as
accrued on the Target Financial Statements.
(d) To the knowledge of Target, no employee of Target or any
of its subsidiaries has been injured in the work place or in the course of his
or her employment except for: (i) injuries that are covered by insurance, or
(ii) injuries for which a claim has been made under workers' compensation or
similar laws.
(e) Target and each of its subsidiaries has complied in all
material respects with the verification requirements and the record-keeping
requirements of the Immigration Reform and Control Act of 1986 ("IRCA"). To the
knowledge of Target, the information and documents on which Target and its
subsidiaries relied to comply with IRCA are true and correct, and there have not
been any discrimination complaints filed against Target or its subsidiaries
pursuant to IRCA, and, to the knowledge of Target, there is no basis for the
filing of such a complaint that could reasonably be expected to have a Material
Adverse Effect on Target.
(f) Neither Target nor any of its subsidiaries has received or
been notified of any written complaint by any employee, applicant, union or
other party of any discrimination or other conduct forbidden by law or contract,
nor to the knowledge of Target, is there a basis for any complaint, except such
complaints as could not reasonably be expected to have a Material Adverse Effect
on Target.
(g) Target's action in complying with the terms of this
Agreement will not violate any agreements with any of the employees of Target or
any of its subsidiaries.
(h) Target and each of its subsidiaries has filed or will file
all required reports and information with respect to their employees that are
due prior to the Closing Date and otherwise have complied in their hiring,
employment, promotion, termination and other labor practices with all applicable
federal, state and foreign law and regulations, including without limitation
those within the jurisdiction of the United States Equal Employment Opportunity
Commission, United States Department of Labor and state and local human rights
or civil rights agencies, except to the extent that any such failure to file or
comply would not have a Material Adverse Effect on Target.
-24-
(i) To the knowledge of Target, none of its or its
subsidiaries' employees or contractors is obligated under any agreement,
commitments, judgment, decree, order or otherwise (an "Employee Obligation")
that could reasonably be expected to interfere with the use of his or her best
efforts to promote the interests of Target and its subsidiaries or that could
reasonably be expected to have a Material Adverse Effect on Target. Neither the
execution nor delivery of this Agreement nor the conduct of the business after
the Closing Date of Target and its subsidiaries in the manner currently
conducted, will, to Target's knowledge, conflict with or result in a material
breach of the terms, conditions or provisions of, or constitute a default under,
any Employee Obligation.
(j) There are no strikes, slowdowns or work stoppages pending
or, to the knowledge of Target, threatened with respect to the employees of
Target or its subsidiaries, nor has any such strike, slowdown or work stoppage
occurred or, to the knowledge of Target, been threatened since January 1, 1997.
There is no representation claim or petition or complaint pending before the
National Labor Board or any state or local agency and, to Target's knowledge, no
question concerning representation has been raised or threatened since January
1, 1997 respecting the employees of Target and its subsidiaries. (k) Except as
set forth in Section 2.16(k) of the Target Disclosure Letter, Target is not a
contractor or subcontractor under any federal, state, local or foreign
government contract.
2.17 RELATED-PARTY TRANSACTIONS
No employee, officer, or director of Target or any of its
subsidiaries or member of his or her immediate family is indebted to Target or
any of its subsidiaries, nor is Target or any of its subsidiaries indebted (or
committed to make loans or extend or guarantee credit) to any of them. To the
knowledge of Target, none of such persons has any direct or indirect ownership
interest in any firm or corporation with which Target or any of its subsidiaries
is affiliated or with which Target or any of its subsidiaries have a business
relationship, or any firm or corporation that competes with Target or any of its
subsidiaries, except to the extent that employees, officers, or directors of
Target or any of its subsidiaries and members of their immediate families own
less than 1% of the outstanding stock in publicly traded companies. No member of
the immediate family of any officer or director of Target and its subsidiaries
is directly or indirectly interested in any Target Contract.
2.18 INSURANCE
Target has made available to Acquiror copies of all policies
of insurance and bonds of Target and its subsidiaries. Such policies and bonds
are with reputable insurers, provide adequate coverage for all normal risks
incident to the assets, properties and business operations of Target and its
subsidiaries and are in character and amount (including deductibles) at least
substantially equivalent to that carried by persons and entities engaged in a
business subject to the same or similar perils or hazards. There is no material
claim pending under any of such policies or bonds as to which coverage has been
questioned, denied or disputed by the underwriters of such policies or bonds.
All premiums due and payable under all such policies and bonds have been paid
and Target and its subsidiaries are otherwise in compliance with the terms of
such policies and bonds in all material respects. Except as set forth in Section
2.18 of
-25-
the Target Disclosure Letter, Target has no knowledge of any threatened
termination of, or material premium increase with respect to, any of such
policies.
2.19 COMPLIANCE WITH LAWS
Target and each of its subsidiaries have complied with, are
not in violation of, and have not received any written notices of violation with
respect to, any federal, state, local or foreign statute, law or regulation with
respect to the conduct of their respective businesses, or the ownership or
operation of their respective businesses, assets or properties, except for such
violations or failures to comply as could not be reasonably expected to have a
Material Adverse Effect on Target.
2.20 BROKERS' AND FINDERS' FEES
Except for the fees payable to RBC Xxxx Xxxxxxxx, Inc.
("RBC"), a member company of RBC Capital Markets, Target's financial advisor,
neither Target nor any of its subsidiaries has incurred, nor will any such
entity incur, directly or indirectly, any liability for brokerage or finders'
fees or agents' commissions or investment bankers' fees or any similar charges
in connection with this Agreement or any transaction contemplated hereby.
2.21 VOTE REQUIRED
The affirmative vote of the holders of a majority of the
Target Common Stock outstanding on the record date set for the Target
Stockholders Meeting is the only vote of the holders of any of Target's capital
stock necessary to adopt and approve this Agreement, the Merger and the other
transactions contemplated hereby.
2.22 REGISTRATION STATEMENT; PROXY STATEMENT/PROSPECTUS
The written information supplied by Target expressly for the
purpose of inclusion in the registration statement on Form S-4 (or such other or
successor form as shall be appropriate) pursuant to which the issuance of the
shares of Acquiror Common Stock to be issued in connection with the Merger will
be registered with the SEC (the "Registration Statement") shall not at the time
the Registration Statement (including any amendments or supplements thereto) is
filed or declared effective by the SEC contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements therein not misleading. The written information supplied by Target
expressly for the purpose of inclusion in the proxy statement/prospectus to be
sent to the stockholders of Target and Acquiror in connection with the meetings
of Target's stockholders (the "Target Stockholder Meeting") and Acquiror's
stockholders (the "Acquiror Stockholder Meeting" and together with the Target
Stockholder Meeting, individually a "Stockholder Meeting" or together the
"Stockholder Meetings") to be held in connection with the Merger (such proxy
statement/prospectus as amended or supplemented is referred to herein as the
"Proxy Statement") shall not, on the date the Proxy Statement is first mailed to
Target's stockholders and Acquiror's stockholders and, at the time of each of
the Stockholder Meetings, contain any untrue statement of a material fact, or
omit to state any material fact necessary in order to make the statements made
therein, in light of the circumstances under which they were made, not
misleading. If at any time prior to the
-26-
Effective Time any event or information should be discovered by Target that
should be set forth in an amendment to the Registration Statement or a
supplement to the Proxy Statement, Target shall promptly inform Acquiror and
Merger Sub. Notwithstanding the foregoing, Target makes no representation,
warranty or covenant with respect to any information supplied by Acquiror or
Merger Sub that is contained in any of the foregoing documents.
2.23 COMPLETE COPIES OF MATERIALS
Each document that has been requested by Acquiror or its
counsel, and made available by Target, in connection with Acquiror's technical,
legal and accounting review of Target and its subsidiaries is true and complete
in all material respects.
2.24 OPINION OF FINANCIAL ADVISOR
Target has been advised in writing by its financial advisor,
RBC, that in RBC's opinion, as of the date of such opinion, the price to be paid
per share of Target Common Stock under the Exchange Ratio provisions of this
Agreement is fair, from a financial point of view, to the holders of Target
Common Stock. Target has delivered, or promptly upon receipt will deliver, to
Acquiror a true and complete copy of such written opinion.
2.25 BOARD APPROVAL
The Board of Directors of Target unanimously has (a) declared
the advisability and approved this Agreement and the Merger, (b) determined that
the Merger is in the best interest of the stockholders of Target and is on terms
that are fair to such stockholders and (c) recommended that the stockholders of
Target adopt and approve this Agreement and the Merger.
2.26 ILLEGAL PAYMENTS
Neither Target nor any of its subsidiaries, nor any director,
officer, agent, or employee thereof, nor, to the knowledge of Target, any other
person or entity associated with or acting for or on behalf of Target or any of
its subsidiaries, has directly or indirectly in violation of any legal
requirement (a) made any contribution, gift, bribe, rebate, payoff, influence
payment, kickback or other payment to any person or entity, private or public,
regardless of form, whether in money, property, or services (i) to obtain
favorable treatment in securing business, (ii) to pay for favorable treatment
for business secured, or (iii) to obtain special concessions or for special
concessions already obtained, for or in respect to Target or its subsidiaries,
or (b) established or maintained any fund or asset that has not been recorded in
the books and records of Target or its subsidiaries.
2.27 CUSTOMERS
Set forth in Section 2.27 of the Target Disclosure Letter is a
complete list of (a) the twenty-five (25) largest clients and customers of
Target and its subsidiaries, taken as a whole, and (b) the ten (10) largest
clients and customers of Target and its subsidiaries, taken as a whole, which
are located or carry on business with Target or any of its subsidiaries in the
United Kingdom, in each case in each of the last three (3) fiscal years,
including the amounts such
-27-
customers paid to Target and its subsidiaries, taken as a whole, in each such
year. To the knowledge of Target and its subsidiaries, there are no facts or
circumstances that are reasonably likely to result in the loss of any such
client or customer of Target or any of its subsidiaries or a material adverse
change in the relationship of Target or any of its subsidiaries with any such
client or customer prior to the completion of the applicable current engagement.
2.28 SECTION 673 OF MINNESOTA LAW NOT APPLICABLE
The Board of Directors of Target has taken all actions so that
the restrictions contained in Section 302A.673 of the Minnesota Law applicable
to a "business combination" (as defined in Section 302A.673) will not apply to
the execution, delivery or performance of this Agreement or the Voting
Agreements or the consummation of the Merger or the other transactions
contemplated by this Agreement or the Voting Agreements. True and complete
copies of all such actions have been delivered to Acquiror.
2.29 REPRESENTATIONS COMPLETE
None of the representations or warranties made by Target
herein or in any Schedule hereto, including the Target Disclosure Letter, or in
any certificate furnished by Target pursuant to this Agreement, or in the Target
SEC Documents, when all such documents are read together in their entirety,
contains any untrue statement of a material fact, or omits to state any material
fact necessary in order to make the statements contained herein or therein, in
the light of the circumstances under which made, not misleading.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF ACQUIROR AND MERGER SUB
Acquiror and Merger Sub represent and warrant to Target that
the statements contained in this Article III are true and correct, except as set
forth in the disclosure letter delivered by Acquiror to Target on the date of
the execution and delivery of this Agreement (the "Acquiror Disclosure Letter").
The Acquiror Disclosure Letter shall be arranged in paragraphs corresponding to
the numbered and lettered paragraphs contained in this Agreement, and the
disclosure in any paragraph shall qualify only the corresponding paragraph in
this Agreement unless a cross reference is made to another paragraph which such
disclosure also qualifies. Any reference in this Article III to an agreement
being "enforceable" shall be deemed to be qualified to the extent such
enforceability is subject to (a) laws of general application relating to
bankruptcy, insolvency, moratorium and the relief of debtors, and (b) the
availability of specific performance, injunctive relief and other equitable
remedies.
3.1 ORGANIZATION, STANDING AND POWER
Each of Acquiror and its subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization. Acquiror and each of its subsidiaries have the
corporate power to own their properties and to carry on their respective
businesses as now being conducted and are duly qualified to do business and are
in good standing in each jurisdiction in which the failure to be so qualified
and in good standing would have a Material Adverse Effect on Acquiror. Acquiror
has made available a true and
-28-
correct copy of the Certificate of Incorporation and Bylaws (or similar
organizational documents) of Acquiror, as amended to date, to Target. Neither
Acquiror nor any of its subsidiaries are in violation of any of the provisions
of their Certificate of Incorporation or Bylaws (or equivalent organizational
documents).
3.2 CAPITAL STRUCTURE
(a) Set forth in Section 3.2(a) of the Acquiror Disclosure
Letter is a list of subsidiaries, direct and indirect, of Acquiror, which list
accurately reflects the beneficial ownership of all outstanding shares of
capital stock of each such subsidiary.
(b) The authorized capital stock of Acquiror consists of
50,000,000 shares of Common Stock and 1,000,000 shares of Preferred Stock, $.01
par value, of which there were issued and outstanding as of the date of this
Agreement, 22,903,647 shares of Common Stock and no shares of Preferred Stock.
The authorized capital stock of Merger Sub consists of 12,100,000 shares of
Common Stock, $.01 par value, all of which were issued and outstanding as of the
date of this Agreement. All outstanding shares of Common Stock of Merger Sub are
held by Acquiror. All outstanding shares of Acquiror Common Stock and Merger Sub
Common Stock are duly authorized, validly issued, fully paid and non-assessable
and are free of any Liens other than any Liens created by or imposed upon the
holders thereof, and are not subject to preemptive rights, rights of first
refusal, rights of first offer or similar rights created by statute, the
Articles of Incorporation or the Bylaws (or similar organizational documents) of
Acquiror or Merger Sub or any agreement to which Acquiror or Merger Sub is a
party or by which it is bound. The shares of Acquiror Common Stock to be issued
pursuant to the Merger will, upon their issuance, be duly authorized, validly
issued, fully paid, and non-assessable, and will not be subject to any statutory
preemptive rights of Acquiror's stockholders and will be free of any Liens other
than any Liens created by or imposed on the holders thereof.
3.3 AUTHORITY
(a) Each of Acquiror and Merger Sub has all requisite
corporate power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. Subject to the Acquiror Stockholder Approval,
the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of each of Acquiror and Merger Sub. This Agreement
has been duly executed and delivered by each of Acquiror and Merger Sub and
constitutes the valid and binding obligations of each of Acquiror and Merger
Sub, enforceable against Acquiror and Merger Sub in accordance with its terms.
(b) Neither the execution, delivery and performance of this
Agreement by Acquiror or Merger Sub, nor the consummation by Acquiror and Merger
Sub of the transactions contemplated hereby, will (i) conflict with, or result
in a breach or violation of, any provision of the articles of incorporation or
bylaws (or similar organizational documents) of Acquiror or any of its
subsidiaries; (ii) conflict with, result in a breach or violation of, give rise
to a default or loss of benefits, or result in the acceleration of performance,
or permit the acceleration of performance, under (whether or not after the
giving of notice or lapse of time or both) any note, bond, indenture, guaranty,
lease, license agreement, instrument, writ, injunction, order, judgment
-29-
or decree to which Acquiror or any of its subsidiaries is a party or any of
their respective properties or assets is subject; (iii) give rise to a
declaration or imposition of any Lien upon any of the properties or assets of
Acquiror or any of its subsidiaries; or (iv) adversely affect any Acquiror
Governmental License necessary to enable Acquiror or its subsidiaries to carry
on their businesses as presently conducted, except, in the case of clauses (ii),
(iii) or (iv), for any conflict, breach, violation, default, declaration,
acceleration, imposition, impairment or effect that could not individually or in
the aggregate reasonably be expected to have a Material Adverse Effect on
Acquiror.
(c) No approval, authorization, consent, license, clearance or
order of, declaration or notification to, or filing or registration with, any
Governmental Entity or other regulatory authority is required in order to (i)
permit Acquiror and Merger Sub to consummate the Merger or perform their
obligations under this Agreement, (ii) prevent the termination or modification
of any governmental right, privilege, authority, franchise, license, permit or
certificate of Acquiror or any of its subsidiaries (collectively, "Acquiror
Governmental Licenses") to enable Acquiror and its subsidiaries to own, operate
and lease their respective properties and assets as and where such properties
and assets are owned, leased or operated and to provide service and carry on
their respective businesses as presently provided and conducted, or (iii)
prevent any material loss or disadvantage to the business of Acquiror and its
subsidiaries, by reason of the Merger, except for (the following in clauses (A),
(B), (E) and (F), collectively, the "Acquiror Governmental Approvals") (A) the
filing of the Articles of Merger, as provided in Section 1.2; (B) the filing of
the Registration Statement and Proxy Statement with the SEC in accordance with
the Securities Act and the Exchange Act and clearance thereof by the SEC; (C)
any other filings or notices required pursuant to the Securities Act or the
Exchange Act and the rules promulgated thereunder, including under Regulation
M-A; (D) the filing of a report on Form 8-K in accordance with the Exchange Act
disclosing the existence and terms of this Agreement; (E) such filings as may be
required under the HSR (and the expiration of the waiting period thereunder) and
such filings, consents and approvals as are required under applicable foreign
law (including antitrust or competition law); (F) the filing with the Nasdaq
National Market of a Notification Form for Listing of Additional Shares with
respect to the shares of Acquiror Common Stock to be issued pursuant to the
Merger and pursuant to stock options to purchase shares of Target Common Stock
which have been assumed by Acquiror in accordance with Section 5.13 hereof; or
(G) such other consents, authorizations, filings, approvals and registrations of
or with any Governmental Entity that, if not obtained or made, would not have a
Material Adverse Effect on Acquiror, and that would not prevent or materially
alter or delay the transactions contemplated by this Agreement, or would not
prevent the Surviving Corporation from owning or operating any material portion
of Target's or any of its subsidiaries' businesses.
3.4 SEC DOCUMENTS; ACQUIROR FINANCIAL STATEMENTS
(a) Acquiror has made available to Target a true and complete
copy of each statement, report, registration statement (with the prospectus in
the form filed pursuant to Rule 424(b) of the Securities Act), definitive proxy
statement, and other filings filed with the SEC by Acquiror since January 1,
1999, and, prior to the Effective Time, Acquiror will have promptly made
available to Target true and complete copies of any additional documents filed
with the SEC by Acquiror prior to the Effective Time (collectively, the
"Acquiror SEC Documents"). In
-30-
addition, Acquiror has made available to Target all current exhibits to the
Acquiror SEC Documents filed prior to the date hereof, and will promptly make
available to Target all exhibits to any additional Acquiror SEC Documents filed
prior to the Effective Time. All documents required to be filed as exhibits to
the Acquiror SEC Documents have been so filed (and such exhibits are true,
correct and complete copies of such documents), and all contracts so filed as
exhibits are in full force and effect, except those that have expired in
accordance with their terms or those that have been terminated without default
by any party thereto, and neither Acquiror nor any of its subsidiaries, nor to
Acquiror's knowledge any other party, is in default thereunder except for any
such default that individually or in the aggregate could not reasonably be
expected to have a Material Adverse Effect on Acquiror. As of their respective
filing dates, (i) the Acquiror SEC Documents complied as to form in all material
respects with the requirements of the Exchange Act and the Securities Act, as
applicable, and (ii) none of the Acquiror SEC Documents contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements made therein, in light of the
circumstances in which they were made, not misleading, except to the extent
corrected by a subsequently filed Acquiror SEC Document. None of Acquiror's
subsidiaries is required to file any forms, reports or other documents with the
SEC.
(b) Acquiror has delivered to Target complete and correct
copies of the following consolidated financial statements (the "Acquiror
Financial Statements"), all of which have been prepared from the books and
records of Acquiror in accordance with GAAP consistently applied and maintained
throughout the periods indicated (except as may be indicated in the notes
thereto) and fairly present in all material respects the consolidated financial
condition of Acquiror and its subsidiaries as at their respective dates and the
consolidated results of their operations and cash flows for the periods covered
thereby: (i) audited consolidated balance sheets at December 31, 2001 (the
"Acquiror Balance Sheet"), 2000 and 1999 and audited consolidated statements of
income, cash flows and stockholders' equity of Acquiror and its subsidiaries for
the fiscal years then ended, audited by Deloitte & Touche LLC, with respect to
2001, and Xxxxxx Xxxxxxxx LLP with respect to 2000 and 1999, both as independent
public accountants; and (ii) an unaudited consolidated balance sheet at February
28, 2002, as well as unaudited consolidated statements of income, cash flows and
stockholders' equity of Acquiror for the two months then ended. The statements
of income included in the Acquiror Financial Statements do not contain any items
of special or nonrecurring revenue or income or any revenue or income not earned
in the ordinary course of business, except as expressly specified therein.
3.5 ABSENCE OF UNDISCLOSED LIABILITIES
Except as set forth in Section 3.5 of the Acquiror Disclosure
Letter, Acquiror and its subsidiaries have no material obligations or
liabilities of any nature (matured or unmatured, fixed or contingent) other than
(a) those set forth or adequately provided for in the Acquiror Balance Sheet
(including the notes thereto), (b) those obligations or liabilities (including
contractual obligations) incurred in the ordinary course of business since the
Acquiror Balance Sheet Date in amounts consistent with prior periods, which
obligations or liabilities have not had and could not reasonably be expected to
have a Material Adverse Effect on Acquiror, (c) those incurred in connection
with the execution of this Agreement, and (d) those disclosed in the Acquiror
SEC Documents.
-31-
3.6 ABSENCE OF CERTAIN CHANGES
Except as set forth in Section 3.6 of the Acquiror Disclosure
Letter, since December 31, 2001 (the "Acquiror Balance Sheet Date"), Acquiror
and each of its subsidiaries have conducted their respective businesses in the
ordinary course consistent with past practice and there has not occurred:
(a) any change, event or condition (whether or not
covered by insurance) that has resulted in, or could reasonably be expected to
result in, a Material Adverse Effect on Acquiror;
(b) any acquisition, sale or transfer of any material
asset of Acquiror and its subsidiaries taken as a whole;
(c) any change in accounting methods or practices
(including any change in depreciation or amortization policies or rates) by
Acquiror or any of its subsidiaries, except as required by GAAP, or any
revaluation by Acquiror or any of its subsidiaries of any of their assets;
(d) any declaration, setting aside, or payment of a
dividend or other distribution with respect to any shares of capital stock of
Acquiror or its subsidiaries (except to Acquiror or other parent entity or as
required by any agreement in effect on the date hereof), or any direct or
indirect redemption, purchase or other acquisition by Acquiror or any of its
subsidiaries of any of their shares of capital stock;
(e) any material contract entered into by Acquiror or any
of its subsidiaries, other than as made available to Target (without limiting
Sections 4.1 and 4.2(B) hereof, promptly as and when entered into), or any
material amendment or termination of, or default under, any material contract to
which Acquiror or any of its subsidiaries is a party or by which any of them are
bound;
(f) any amendment or change to the Articles of
Incorporation or Bylaws (or similar organizational documents) of Acquiror or any
of its subsidiaries;
(g) any issuance of any debt securities or options,
warrants, calls or other rights to acquire any debt securities of Acquiror or
any of its subsidiaries;
(h) any commencement of any lawsuit or arbitration
proceeding by or against Acquiror or any of its subsidiaries other than for the
routine collection of bills and other litigation not material to the business of
Acquiror and its subsidiaries taken as a whole; or
(i) any negotiation or agreement by Acquiror or any of
its subsidiaries to do any of the things described in the preceding clauses (a)
through (h).
3.7 INTELLECTUAL PROPERTY
(a) Acquiror and its subsidiaries own or are licensed for
and in any event possess sufficient rights with respect to all Acquiror
Intellectual Property necessary to the conduct of business of Acquiror and its
subsidiaries, as currently conducted, except to the extent that the
-32-
failure to have such rights have not had and could not reasonably be expected to
have a Material Adverse Effect on Acquiror.
(b) Neither Acquiror nor any of its subsidiaries has
knowledge of, or received any notice of, any claim of adverse ownership,
invalidity or other opposition to or conflict with any Acquiror Intellectual
Property nor, to the knowledge of Acquiror, is there any impending or threatened
suit, proceeding, claim, demand, action or investigation of any nature or kind
against Acquiror or any of its subsidiaries relating to the Acquiror
Intellectual Property that, if determined adversely could be reasonably expected
to have a Material Adverse Effect on Acquiror.
(c) Acquiror and its subsidiaries have taken commercially
reasonable steps (including measures to protect secrecy and confidentiality) to
protect all their right, title and interest in and to all Acquiror Intellectual
Property. All employees, agents, consultants and other representatives of
Acquiror and its subsidiaries who have access to confidential or proprietary
information of Acquiror and its subsidiaries have a legal obligation of
confidentiality to Acquiror or its subsidiaries with respect to such
information, except where a lack of such legal obligation could not reasonably
be expected to have a Material Adverse Effect on Acquiror.
3.8 ENVIRONMENTAL MATTERS
Acquiror and each of its subsidiaries are in material
compliance with all Environmental Laws and to Acquiror's knowledge, no material
expenditures are or will be required by Acquiror or any of its subsidiaries in
order to comply with such Environmental Laws.
3.9 EMPLOYEE BENEFIT PLANS
Acquiror has made available to Target copies of all ERISA
Plans and Benefit Plans sponsored or maintained by Acquiror, or to which
Acquiror is required to make contributions, and which are governed by the laws
of the United States (hereinafter referred to as the "Acquiror Benefit Plans").
In addition:
(a) Each Acquiror Benefit Plan has been operated and
administered in compliance with its terms in all material respects;
(b) Each Acquiror Benefit Plan complies in all material
respects with all requirements of ERISA and the Code and with all other
applicable law, except with respect to written amendments to the plan documents
for which the remedial amendment period (as defined in Code Section 401(b) and
related regulations and notices) has not expired as of the Closing Date; and
(c) Neither Acquiror nor its subsidiaries maintain,
sponsor or contribute to, and, to Acquiror's knowledge, neither Acquiror nor its
subsidiaries have maintained, sponsored or contributed in the past six (6) years
to, any "defined benefit plan" (within the meaning of Section 3(35) of ERISA) or
any "multiemployer plan" (within the meaning of Section 3(37) of ERISA) or any
other plan subject to Title IV of ERISA.
-33-
3.10 LITIGATION
Except as disclosed in the Acquiror SEC Documents or Section
3.10 of the Acquiror Disclosure Letter, there is no private or governmental
action, suit, proceeding, claim, arbitration or investigation pending before any
agency, court or tribunal, foreign or domestic, or, to the knowledge of
Acquiror, threatened (including allegations that could form the basis for future
action) against Acquiror or any of its subsidiaries or any of their properties
or officers or directors (in their capacities as such) that, individually or in
the aggregate, could reasonably be expected to have a Material Adverse Effect on
Acquiror. There is no judgment, decree or order against Acquiror or its
subsidiaries or, to the knowledge of Acquiror, any of their directors or
officers (in their capacities as such) that could prevent, enjoin, or materially
alter or delay any of the transactions contemplated by this Agreement, or that
could reasonably be expected to have a Material Adverse Effect on Acquiror.
3.11 TAXES
(a) Acquiror and each of its subsidiaries has timely
filed (including after giving effect to any extensions) all tax returns required
to be filed by them. Except as set forth in Section 3.11 of the Acquiror
Disclosure Letter, Acquiror and each of its subsidiaries have timely paid or
caused to be timely paid all taxes due with respect to the taxable periods
covered by such tax returns and all other taxes as are due, and the Acquiror
Balance Sheet reflects an adequate reserve (in addition to any reserve for
deferred taxes established to reflect timing differences between book and tax
income) for all taxes payable by Acquiror or its subsidiaries for all taxable
periods and portions thereof through the Acquiror Balance Sheet Date.
(b) Acquiror and each of its subsidiaries has complied in
all material respects with all applicable statutes, laws, ordinances, rules and
regulations relating to the payment and withholding of taxes.
(c) Acquiror has not taken any action, or failed to take
any action, and does not have knowledge of any fact, agreement, plan or other
circumstance that could reasonably prevent the Merger from qualifying as a
reorganization within the meaning of Section 368(a) of the Code.
3.12 RESTRICTIONS ON BUSINESS ACTIVITIES
There is no agreement, judgment, injunction, order or decree
binding upon Acquiror that has or could reasonably be expected to have the
effect of prohibiting or impairing in any material respect any current business
practice of Acquiror or its subsidiaries, any acquisition of property by
Acquiror or its subsidiaries or the conduct of business by Acquiror and its
subsidiaries as currently conducted.
3.13 COMPLIANCE WITH LAWS
Acquiror and each of its subsidiaries have complied with, are
not in violation of, and have not received any written notices of violation with
respect to, any federal, state, local or foreign statute, law or regulation with
respect to the conduct of their respective businesses, or the
-34-
ownership or operation of their respective businesses, assets or properties,
except for such violations or failures to comply as could not be reasonably
expected to have a Material Adverse Effect on Acquiror.
3.14 REGISTRATION STATEMENT; PROXY STATEMENT
The written information supplied by Acquiror and Merger Sub
expressly for the purpose of inclusion in the Registration Statement shall not
at the time the Registration Statement (including any amendments or supplements
thereto) is filed or declared effective by the SEC contain any untrue statement
of a material fact or omit to state any material fact necessary in order to make
the statements therein not misleading. The written information supplied by
Acquiror and Merger Sub expressly for the purpose of inclusion in the Proxy
Statement shall not, on the date the Proxy Statement is first mailed to
Acquiror's stockholders and Target's stockholders and at the time of each of the
Stockholder Meetings, contain any untrue statement of a material fact, or omit
to state any material fact necessary in order to make the statements made
therein, in light of the circumstances under which they were made, not
misleading. If at any time prior to the Effective Time any event or information
should be discovered by Acquiror or Merger Sub that should be set forth in an
amendment to the Registration Statement or a supplement to the Proxy Statement,
Acquiror and Merger Sub shall promptly inform Target. Notwithstanding the
foregoing, Acquiror and Merger Sub make no representation, warranty or covenant
with respect to any information supplied by Target that is contained in any of
the foregoing documents.
3.15 BROKERS' AND FINDERS' FEES
Except for the fees payable to Xxxxxx Xxxxx Xxxxxxx & Xxx,
Inc., Acquiror's financial advisor, Acquiror has not incurred, nor will it
incur, directly or indirectly, any liability for brokerage or finders' fees or
agents' commissions or investment bankers' fees or any similar charges in
connection with this Agreement or any transaction contemplated hereby.
3.16 VOTE REQUIRED
The affirmative vote of the holders of (a) a majority of the
Acquiror Common Stock outstanding on the record date set for the Acquiror
Stockholders Meeting, and (b) a majority of the Merger Sub Common Stock
outstanding are the only votes of the holders of any of Acquiror's and Merger
Sub's capital stock necessary to approve the issuance of the Acquiror Common
Stock in the Merger (in the case of Acquiror) or to approve the Merger (in the
case of Merger Sub).
-35-
3.17 COMPLETE COPIES OF MATERIALS
Each document that has been requested by Target or its
counsel, and made available by Acquiror, in connection with Target's technical,
legal and accounting review of Acquiror and its subsidiaries is true and
complete in all material respects.
3.18 ILLEGAL PAYMENTS
Neither Acquiror nor any of its subsidiaries, nor any
director, officer, agent, or employee thereof, nor, to the knowledge of
Acquiror, any other person or entity associated with or acting for or on behalf
of Acquiror or any of its subsidiaries, has directly or indirectly, in violation
of any legal requirement (a) made any contribution, gift, bribe, rebate, payoff,
influence payment, kickback or other payment to any person or entity, private or
public, regardless of form, whether in money, property, or services (i) to
obtain favorable treatment in securing business, (ii) to pay for favorable
treatment for business secured, or (iii) to obtain special concessions or for
special concessions already obtained, for or in respect to Target or its
subsidiaries, or (b) established or maintained any fund or asset that has not
been recorded in the books and records of Target or its subsidiaries.
3.19 BOARD APPROVAL
The Board of Directors of Acquiror and Merger Sub have
unanimously (a) approved this Agreement and the Merger and (b) recommended that
the stockholders of Acquiror approve the issuance of the shares of Acquiror
Common Stock contemplated by this Agreement and the Merger.
3.20 REPRESENTATIONS COMPLETE
None of the representations, warranties or statements made by
Acquiror or Merger Sub herein or in any Schedule hereto, including the Acquiror
Disclosure Letter, or in any certificate furnished by Acquiror pursuant to this
Agreement, or in the Acquiror SEC Documents, when all such documents are read
together in their entirety, contains any untrue statement of a material fact, or
omits to state any material fact necessary in order to make the statements
contained herein or therein, in the light of the circumstances under which made,
not misleading.
ARTICLE IV.
CONDUCT PRIOR TO THE EFFECTIVE TIME
4.1 CONDUCT OF BUSINESS OF TARGET AND ACQUIROR
During the period from the date of this Agreement and
continuing until the earlier of the termination of this Agreement or the
Effective Time, except as expressly contemplated by this Agreement, or as set
forth in Section 4.1 of the Target Disclosure Letter or in Section 4.1 of the
Acquiror Disclosure Letter, as applicable, or as previously expressly consented
to in writing by the other party, each of Target and Acquiror agree to carry on
its and its subsidiaries' respective businesses in the usual, regular and
ordinary course in substantially the same manner
-36-
as heretofore conducted, including without limitation, to use all commercially
reasonable efforts consistent with past practice and policies to preserve intact
its and its subsidiaries' present business organizations, keep available the
services of its and its subsidiaries' present officers and key employees and
preserve its and its subsidiaries' relationships with customers, suppliers,
distributors, licensors, licensees, and others having business dealings with it
or any of its subsidiaries, to the end that its and its subsidiaries' goodwill
and ongoing businesses shall be unimpaired at the Effective Time in any material
respect.
4.2 CONDUCT OF BUSINESS
(A) Without limiting the foregoing provisions of Section 4.1,
except as set forth in Section 4.2 of the Target Disclosure Letter, Target shall
not do, cause or permit any of the following, or allow, cause or permit any of
its subsidiaries to do, cause or permit any of the following, without the prior
written consent of Acquiror:
(a) Charter Documents. Cause or permit any amendments to its
Articles of Incorporation or Bylaws (or similar organizational documents);
(b) Dividends; Changes in Capital Stock. Declare or pay any
dividends on or make any other distributions (whether in cash, stock or
property) in respect of any of its capital stock (provided that Target's
subsidiaries may pay dividends and make other distributions to Target), or
split, combine, recapitalize or reclassify any of its capital stock, or issue or
authorize the issuance of any other securities in respect of, in lieu of, or in
substitution for, shares of its capital stock, or repurchase or otherwise
acquire, directly or indirectly, any shares of its capital stock;
(c) Contracts. (i) Enter into, modify, amend or terminate any
contract, agreement, license, instrument, document or commitment ("Contract")
which if so entered into, modified, amended or terminated could be reasonably
expected to (A) have a Material Adverse Effect on Target, (B) impair in any
material respect the ability of Target to perform its obligations under this
Agreement or (C) prevent or materially delay the consummation of the
transactions contemplated by this Agreement, (ii) enter into any material
Contract to the extent consummation of the transactions contemplated by this
Agreement or compliance by Target or any of its subsidiaries with the provisions
of this Agreement could reasonably be expected to conflict with, or result in a
violation or breach of, or default (with or without notice or lapse of time, or
both) under, or give rise to a right of, or result in, termination, cancellation
or acceleration of any obligation or to a loss of a benefit under, or result in
the creation of any Lien in or upon any of the properties or assets of Target or
any of its subsidiaries under, or give rise to any increased, additional,
accelerated, or guaranteed right or entitlements of any third party under, or
result in any material alteration of, any provision of such Contract; or (iii)
enter into any Contract containing any restriction on the ability of the Target
or any of its subsidiaries to assign its rights, interests or obligations
thereunder, unless such restriction expressly excludes any assignment to
Acquiror or any of its subsidiaries in connection with or following the
consummation of the Merger, or to compete in any line of business;
(d) Stock Option Plans, etc. Adopt any stock option or similar
plan, amend either of the Target Stock Options Plans, or, except as provided in
Section 5.13 hereof or pursuant to
-37-
the terms of the Target Stock Option Plans, accelerate, amend or change the
period of exercisability or vesting of options or other rights granted under
either of the Target Stock Option Plans or authorize cash payments in exchange
for any options or other rights granted under any of such plans;
(e) Issuance of Securities. Issue, deliver or sell or
authorize or propose the issuance, delivery or sale of, or purchase or propose
the purchase of, any shares of its capital stock or securities convertible into,
or subscriptions, rights, warrants or options to acquire, or other agreements or
commitments of any character (including stock appreciation rights or other
rights that are linked in any way to the price of Acquiror Common Stock or
Target Common Stock), or amend the terms of any of the foregoing, obligating it
to issue any such shares or other securities, other than the issuance of shares
of Target Common Stock pursuant to the exercise of stock options under the
Target Stock Option Plans outstanding on the date of this Agreement or pursuant
to the Target ESPP as in effect on the date of this Agreement;
(f) Intellectual Property. Transfer to or license any person
or entity or otherwise extend, amend or modify in any material respect any
rights to any Target Intellectual Property, other than the grant of
non-exclusive licenses in the ordinary course of business and consistent with
past practice;
(g) Exclusive Rights. Enter into or amend any agreements
pursuant to which any person or entity is granted exclusive or restrictive
marketing, manufacturing or other exclusive or restrictive rights of any type or
scope with respect to any of its products, services or technology;
(h) Dispositions. Directly or indirectly sell, lease, license,
mortgage or otherwise dispose of or encumber any of its properties or assets
that are material, individually or in the aggregate, to its and its
subsidiaries' businesses, taken as a whole, or sell, assign, transfer or
otherwise dispose of any of its properties or assets at a discount from the fair
market value thereof;
(i) Indebtedness; Liens. Repurchase, prepay or incur any
indebtedness or guarantee any indebtedness of another person or entity or issue
or sell any debt securities or options, warrants, calls or other rights to
acquire any debt securities of Target or any of its subsidiaries, enter into any
"keep well" or other agreement to maintain any financial statement condition of
another person or entity or enter into any arrangement having the economic
effect of any of the foregoing, make any loans, advances (other than in respect
of travel expenses advanced to employees in the ordinary course of business) or
capital contributions to or investments in, any other person or entity, other
than Target and any of its respective subsidiaries, or incur any Liens
(excluding Permitted Liens);
(j) Leases. Enter into operating leases requiring payments in
excess of $100,000 annually in the aggregate;
(k) Payment of Obligations. Pay, discharge or satisfy in an
amount in excess of $100,000 in any one case or $250,000 in the aggregate, any
claim, liability or obligation (absolute, accrued, asserted or unasserted,
contingent or otherwise) arising other than in the ordinary course of business,
other than the payment, discharge or satisfaction of liabilities
-38-
reflected or reserved against in the Target Financial Statements and the payment
of reasonable professional fees related to the transactions contemplated by this
Agreement;
(l) Capital Expenditures. Incur or commit to incur any capital
expenditures in excess of $300,000 in any one case, or $600,000 in the
aggregate;
(m) Insurance. Reduce in any material manner in any instance
the amount of any insurance coverage provided by existing insurance policies as
of the date hereof;
(n) Termination or Waiver. Terminate or waive any right of
substantial value other than upon notice to Acquiror and in the ordinary course
of business and consistent with past practice;
(o) Employee Benefits; Severance. Take any of the following
actions: (i) increase or agree to increase the compensation payable or to become
payable to its officers or employees, except for increases in salary or wages of
non-officer employees in the ordinary course of business and consistent with
past practices, (ii) grant any severance or termination pay to, or enter into,
modify or amend any employment or severance agreements with, any officer or
employee, (iii) enter into any collective bargaining agreement, or (iv)
establish, adopt, enter into, modify or amend (other than amendments required to
maintain the present tax treatment of such plan or program) any bonus, profit
sharing, thrift, compensation, stock option, restricted stock, pension,
retirement, deferred compensation, employment, termination, severance or other
plan, trust, fund, policy, agreement or arrangement for the benefit of any
director, officer or employee;
(p) Lawsuits. Commence a lawsuit or arbitration proceeding
other than (i) for the routine collection of bills and other litigation not
material to the business of Target and its subsidiaries, taken as a whole, (ii)
in such cases where it in good faith determines that failure to commence suit
would result in the material impairment of a valuable asset of its business,
provided that Target consults with Acquiror prior to the filing of such a suit,
or (iii) for a breach of this Agreement;
(q) Acquisitions. Directly or indirectly 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, association or other business organization or division thereof, or
otherwise acquire or agree to acquire any assets that are material, individually
or in the aggregate, to its and its subsidiaries' businesses, taken as a whole;
(r) Taxes. Make any tax election other than in the ordinary
course of business and consistent with past practice, change any tax election,
adopt any tax accounting method other than in the ordinary course of business
and consistent with past practice, change any tax accounting method, file any
tax return (other than any required estimated tax returns, information returns,
payroll tax returns or sales tax returns) or any amendment to a tax return,
enter into any closing agreement, settle any tax claim or assessment or consent
to any tax claim or assessment, provided that Acquiror shall not unreasonably
withhold or delay approval of any of the foregoing actions;
-39-
(s) Revaluation; Change of Fiscal Year. Revalue any of its
assets, including without limitation writing down the value of inventory or
writing off notes or accounts receivable other than in the ordinary course of
business consistent with past practice, or change its fiscal year;
(t) Accounts Payable and other Obligations. Prepay or
otherwise accelerate the payment of, any accounts payable or other obligation
(other than reasonable professional fees payable in connection with the
transactions contemplated hereby) or, except as contested in good faith and
provided that adequate reserves are established in accordance with GAAP, fail to
pay any of its accounts payable or other obligations in a timely manner and
otherwise in the ordinary course of business consistent with past practice; and
(u) Other. Take or agree in writing or otherwise to take, any
of the actions described in Sections 4.2(A)(a) through (t) above, or any action
that would make any of its representations or warranties contained in this
Agreement untrue or incorrect in any material respect or prevent it from
performing or cause it not to perform any of its covenants hereunder.
(B) Without limiting the foregoing provisions of Section
4.1, except as set forth in Section 4.2 of the Acquiror Disclosure Letter,
Acquiror shall not do, cause or permit any of the following, or allow, cause or
permit any of its subsidiaries to do, cause or permit any of the following,
without the prior written consent of Target:
(a) Charter Documents. Cause or permit any amendments to
its Articles of Incorporation or Bylaws (or similar organizational documents),
except that Acquiror and its applicable subsidiaries may take all action
necessary to reincorporate (whether by merger or otherwise) the Acquiror in the
State of Delaware and except as shall not adversely affect the rights of holders
of Acquiror Common Stock;
(b) Dividends; Changes in Capital Stock. Declare or pay
any cash dividends on or make any other cash distributions in respect of any of
its capital stock (provided that Acquiror's subsidiaries may pay cash dividends
and make other cash distributions to Acquiror or other parent entities or as may
be required by any agreement in effect on the date hereof), or split, combine,
recapitalize or reclassify any of its capital stock, or issue or authorize the
issuance of any other securities in respect of, in lieu of, or in substitution
for, shares of its capital stock;
(c) Contracts. (i) Enter into, modify, amend or terminate
any contract, agreement, license, instrument, document or commitment which if so
entered into, modified, amended or terminated could reasonably be expected to
(A) have a Material Adverse Effect on Acquiror, (B) impair in any material
respect the ability of Acquiror or Merger Sub to perform its obligations under
this Agreement or (C) prevent or materially delay the consummation of the
transactions contemplated by this Agreement; or (ii) enter into any material
contract, agreement, license, instrument, document or commitment to the extent
consummation of the transactions contemplated by this Agreement or compliance by
Acquiror or any of its subsidiaries with the provisions of this Agreement could
reasonably be expected to conflict with, or result in a violation or breach of,
or default (with or without notice or lapse of time, or both) under, or give
rise to a right of, or result in, termination, cancellation or acceleration of
any obligation or to a
-40-
loss of a benefit under, in or upon any of the properties or assets of Acquiror
or any of its subsidiaries under, or give rise to any increased, additional,
accelerated, or guaranteed right or entitlements of any third party under, or
result in any material alteration of, any provision of such contract, agreement,
license, instrument, document or commitment; and
(d) Other. Take or agree in writing or otherwise to take,
any of the actions described in Sections 4.2(B)(a) through (c) above, or any
action that would make any of its representations or warranties contained in
this Agreement untrue and incorrect in any material respect or prevent it from
performing or cause it not to perform any of its covenants hereunder.
4.3 NOTICES
Target and its subsidiaries shall give all notices and other
information required to be given to the employees of Target or its subsidiaries,
any collective bargaining unit representing any group of employees of Target or
its subsidiaries, and any applicable Governmental Entity under the National
Labor Relations Act, the Code, and other applicable law in connection with the
transactions provided for in this Agreement.
ARTICLE V.
ADDITIONAL AGREEMENTS
5.1 NO SOLICITATION
(a) Upon execution of this Agreement, Target shall immediately
terminate any discussions with any Third Party concerning an Acquisition
Proposal (as defined below). Target shall not, directly or indirectly, through
any officer, director, employee, stockholder, financial advisor, attorney,
representative, subsidiary or agent of such person or entity (i) take any action
to solicit, initiate, facilitate, continue or encourage any inquiries or
proposals that constitute, or could reasonably be expected to lead to, a
proposal or offer for a merger, consolidation, business combination, sale of
substantial assets, sale of shares of capital stock or other securities
(including by way of a tender offer) or similar transaction involving Target or
any of its subsidiaries, other than the transactions contemplated by this
Agreement (any of the foregoing inquiries or proposals being referred to as an
"Acquisition Proposal"), (ii) engage in negotiations or discussions (whether
such discussions or negotiations are initiated by Target, such other person or
entity or otherwise) concerning, or provide any non-public information to any
person or entity relating to, any possible Acquisition Proposal, (iii) enter
into an agreement with any person or entity providing for a possible Acquisition
Proposal or make or authorize any statement, recommendation or solicitation in
support of any possible Acquisition Proposal by any person or entity, in each
case other than Acquiror, or (iv) agree to, enter into a letter of intent or
similar document or recommend any Acquisition Proposal; provided, however, that
nothing contained in this Agreement shall prevent Target, or its Board of
Directors, to the extent such Board of Directors determines, in good faith
(after consultation with independent legal advisors), that such Board of
Directors' fiduciary duties under applicable law require it to do so, from (A)
furnishing non-public information to, or entering into discussions or
negotiations with, any person or entity in connection with an unsolicited, bona
fide, written Acquisition Proposal by such person or entity or recommending an
unsolicited, bona fide, written Acquisition Proposal by
-41-
such person or entity to the stockholders of Target, if and only to the extent
that (1) the Board of Directors of Target determines in good faith (after
consultation with independent financial and legal advisors) that such
Acquisition Proposal is reasonably capable of being completed on the terms
proposed and, after taking into account the strategic benefits anticipated to be
derived from the Merger and the long-term prospects of Acquiror and Target as a
combined company, would, if consummated, result in a transaction more favorable
to Target's stockholders from a financial point of view than the transaction
contemplated by this Agreement (any such more favorable Acquisition Proposal
being referred to in this Agreement as a "Superior Proposal") and the Board of
Directors of Target determines in good faith (after consultation with
independent legal advisors) that such action is necessary for such Board of
Directors to comply with its fiduciary duties to stockholders under applicable
law and (2) prior to furnishing such non-public information to, or entering into
discussions or negotiations with, such person or entity, (x) such Board of
Directors receives from such person or entity an executed confidentiality
agreement with terms no less favorable to Target and no more favorable to such
person or entity than those terms contained in the Mutual Confidentiality and
Non-Disclosure Agreement dated October 1, 2001 between Acquiror and Target (the
"Nondisclosure Agreement"), (y) such non-public information has been previously
delivered to Acquiror, and (z) Target advises Acquiror in writing of such
disclosure or discussions or negotiations, including the person or entity to
whom disclosed or with whom discussions or negotiations will occur; or (B)
complying with Rules 14d-9 and 14e-2 promulgated under the Exchange Act with
regard to an Acquisition Proposal. Target shall ensure that the officers,
directors and Affiliates of Target and its subsidiaries and any investment
banker or other financial advisor or representative retained by Target or any of
its subsidiaries are aware of the restrictions described in this Section 5.1.
Without limiting the foregoing, it is understood that any violations of the
restrictions set forth in this Section 5.1 by any officer, director, employee,
financial advisor, attorney, representative, subsidiary or agent of Target, when
acting on behalf of Target or any of its subsidiaries, shall be deemed to be a
breach of this Section 5.1 by Target.
(b) Target shall notify Acquiror immediately after receipt by
Target (or its advisors) of any Acquisition Proposal or any request for
non-public information in connection with an Acquisition Proposal or for access
to the properties, books or records of Target or any of its subsidiaries by any
person or entity that informs such party that it is considering making, or has
made, an Acquisition Proposal. Such notice shall be made orally and in writing
and shall indicate in reasonable detail the identity of the person or entity and
the terms and conditions of such proposal, inquiry or contact. Target shall
continue to keep Acquiror informed, on a current basis, of the status of any
such discussions or negotiations and the terms being discussed or negotiated.
(c) In addition to the foregoing, Target shall not accept or
enter into any agreement, letter of intent or similar document concerning an
Acquisition Proposal for a period of not less than seventy two (72) hours after
Acquiror's receipt of a notice of the material terms of such Acquisition
Proposal and the identity of the person or entity making such Acquisition
Proposal, and during such seventy two (72) hour period Target shall negotiate
with Acquiror in good faith any proposal submitted to Target by Acquiror which
addresses such Acquisition Proposal.
-42-
5.2 PROXY STATEMENT/PROSPECTUS; REGISTRATION STATEMENT
As promptly as practicable after the execution of this
Agreement, Target and Acquiror shall prepare proxy materials relating to the
adoption and approval of this Agreement and the Merger and the other
transactions contemplated hereby by the stockholders of Target and the issuance
of the Acquiror Common Stock pursuant to this Agreement by the stockholders of
Acquiror and, as promptly as practicable, Acquiror shall file with the SEC the
Registration Statement, which complies in form in all material respects with
applicable law and SEC requirements and each of Target and Acquiror shall use
all commercially reasonable efforts to cause the Registration Statement to
become effective as soon thereafter as practicable. Each of Target and Acquiror
shall use all commercially reasonable efforts to respond as promptly as
practicable to any comments of the SEC with respect thereto and to cause the
Proxy Statement to be mailed to the stockholders of Target and Acquiror as
promptly as practicable after the Registration Statement is declared effective
under the Securities Act. Each of Target and Acquiror shall furnish all
information concerning it (and its respective subsidiaries) to the other as may
be reasonably requested in connection with any such action and the preparation,
filing and distribution of the Registration Statement and the Proxy Statement.
Each of Target and Acquiror shall promptly notify the other upon the receipt of
any comments from the SEC or its staff or any request from the SEC or its staff
for amendments or supplements to the Registration Statement or the Proxy
Statement and shall promptly provide the other with copies of all correspondence
between it and its representatives, on the one hand, and the SEC and its staff,
on the other hand. Notwithstanding the foregoing, prior to filing the
Registration Statement (or any amendment or supplement thereto) or filing or
mailing the Proxy Statement (or any amendment or supplement thereto) or
responding to any comments of the SEC with respect thereto, each of Target and
Acquiror, as the case may be, (a) shall provide the other party with a
reasonable opportunity to review and comment on such document or response, (b)
shall include in such document or response all comments reasonably proposed by
such other party and (c) shall not file or mail such document or respond to the
SEC prior to receiving such other party's approval, which approval shall not be
unreasonably withheld or delayed. Subject to the provisions of Section 5.1, the
Proxy Statement shall include the unanimous recommendation of the Board of
Directors of Acquiror in favor of the issuance of shares of Acquiror Common
Stock pursuant to the Merger and the unanimous recommendation of the Board of
Directors of Target in favor of the Merger; provided that the recommendation of
Target's Board of Directors may not be included or may be withdrawn if
previously included if Target's Board of Directors believes in good faith (after
consultation with independent financial and legal advisors) that a Superior
Proposal has been made and shall determine in good faith (after consultation
with independent legal advisors) that to include such recommendation or not
withdraw such recommendation if previously included would constitute a breach of
the Target's Board of Directors' fiduciary duty under applicable law.
5.3 STOCKHOLDERS MEETINGS
(a) Target shall promptly after the date hereof take all
actions necessary to call a meeting of its stockholders to be held as promptly
as practicable for the purpose of voting upon this Agreement and the Merger, as
well the approval of the Target ESPP, which meeting shall be held (to the extent
permitted by law) within forty-five (45) days of the date on which the
-43-
Registration Statement is declared effective, provided that, Target may adjourn
the Target Stockholder Meeting until such time as its conditions to the
consummation of the transactions contemplated hereby set forth in Sections
6.1(b), (c) and (e) and 6.2(d) hereof have been, or within two (2) Business Days
are reasonably expected to be, satisfied or waived by Target. Subject to Section
5.1, Target shall, through its Board of Directors, unanimously recommend to its
stockholders approval of such matters. Target shall use all commercially
reasonable efforts to solicit from its stockholders proxies in favor of or,
subject to Section 5.1, approval of such matters (whether or not the Board of
Directors of Target shall have withdrawn or modified its recommendation of this
Agreement or the Merger).
(b) Acquiror shall promptly after the date hereof take all
actions necessary to call a meeting of its stockholders to be held as promptly
as practicable for the purpose of approving the issuance of the Acquiror Common
Stock contemplated by this Agreement and the Merger, which meeting shall be held
(to the extent permitted by law) within forty-five (45) days of the date on
which the Registration Statement is declared effective, provided that, Acquiror
may adjourn the Acquiror Stockholder Meeting until such time as its conditions
to the consummation of the transactions contemplated hereby set forth in
Sections 6.1(b) and (c) and 6.3(e) hereof have been, or within two (2) Business
Days are reasonably expected to be, satisfied or waived by Acquiror. Acquiror
shall, through its Board of Directors, unanimously recommend to its stockholders
approval of such matter. Acquiror shall use all commercially reasonable efforts
to solicit from its stockholders proxies in favor of such issuance.
5.4 ACCESS TO INFORMATION.
(a) Each party shall afford the other party and its
accountants, counsel and other representatives, access during normal business
hours and upon reasonable prior notice during the period prior to the Effective
Time to (i) all of such party's and its subsidiaries' properties, books,
contracts, commitments and records, and (ii) all other information concerning
the business, properties and personnel of such party and its subsidiaries as the
other party may reasonably request. Each party agrees to provide to the other
party and its accountants, counsel and other representatives copies of available
internal financial statements promptly upon request. Each party and its
representatives shall keep such information confidential in accordance with the
terms of the Nondisclosure Agreement.
(b) Subject to compliance with applicable law and the terms of
the Nondisclosure Agreement, from the date hereof until the Effective Time, the
parties shall confer on a regular and frequent basis with one or more
representatives of the other party to report operational matters of materiality
and the general status of ongoing operations.
(c) Acquiror and Target shall promptly furnish or make
available to each other a copy of each report, schedule, registration statement
or other document filed by it after the date of this Agreement pursuant to the
requirements of Federal or state securities laws.
(d) No information or knowledge obtained in any investigation
pursuant to this Section 5.4 or otherwise shall affect or be deemed to modify
any representation or warranty contained herein or the conditions to the
obligations of the parties to consummate the Merger.
-44-
5.5 CONFIDENTIALITY
The parties acknowledge that Acquiror and Target have
previously executed the Nondisclosure Agreement, which Nondisclosure Agreement
shall continue in full force and effect in accordance with its terms.
5.6 PUBLIC DISCLOSURE
Unless otherwise permitted by this Agreement, Acquiror and
Target shall consult with each other before issuing any press release or
otherwise making any public statement or making any other public (or
non-confidential) disclosure (whether or not in response to an inquiry)
regarding the terms of this Agreement and the transactions contemplated hereby,
and neither shall issue any such press release or make any such statement or
disclosure without the prior approval of the other (which approval shall not be
unreasonably withheld or delayed), except as may be required by applicable law
or to comply with the rules and regulations of the SEC or any obligations
pursuant to any listing agreement with any national securities exchange or with
the NASD, in which event, if reasonably practicable, the party who is required
to make disclosure shall notify the other party as soon as reasonably possible
of the nature and timing of the required disclosure.
5.7 CONSENTS; COOPERATION.
(a) Each of Acquiror and Target shall promptly apply for or
otherwise seek, and use all commercially reasonable efforts to obtain, all
consents and approvals (including, without limitation, all consents and
approvals required by United States and foreign governmental or regulatory
agencies) required to be obtained by it for the consummation of the Merger,
including those required under HSR, and shall use all commercially reasonable
efforts to obtain all necessary consents, waivers and approvals under, or to
deliver notice of the Merger as required by, any of their respective material
contracts in connection with the Merger for the assignment thereof or otherwise.
The parties hereto will consult with, and provide the necessary information to,
one another, in connection with any analyses, appearances, presentations,
memoranda, briefs, arguments, opinions and proposals made or submitted by or on
behalf of any party hereto in connection with proceedings under or relating to
HSR or any other federal, state or foreign antitrust or fair trade law.
(b) Each of Acquiror and Target shall use all commercially
reasonable efforts to resolve such objections, if any, as may be asserted by any
Governmental Entity with respect to the transactions contemplated by this
Agreement under HSR, the Xxxxxxx Act, as amended, the Xxxxxxx Act, as amended,
the Federal Trade Commission Act, as amended, and any other Federal, state or
foreign statutes, rules, regulations, orders or decrees that are designed to
prohibit, restrict or regulate actions having the purpose or effect of
monopolization or restraint of trade (collectively, "Antitrust Laws"). In
connection therewith, if any administrative or judicial action or proceeding is
instituted (or threatened to be instituted) challenging any transaction
contemplated by this Agreement as violative of any Antitrust Law, each of
Acquiror and Target shall cooperate and use all commercially reasonable efforts
vigorously to contest and resist any such action or proceeding and to have
vacated, lifted, reversed, or overturned any decree, judgment, injunction or
other order, whether temporary, preliminary or permanent (each an
-45-
"Order"), that is in effect and that prohibits, prevents, conditions or
restricts consummation of the Merger or any such other transactions, unless by
mutual agreement Acquiror and Target decide that litigation is not in their
respective best interests. Notwithstanding the provisions of the immediately
preceding sentence, it is expressly understood and agreed that neither Acquiror
nor Target shall have any obligation to litigate or contest any administrative
or judicial action or proceeding or any Order beyond the earlier of (i) August
31, 2002, or (ii) the date of a ruling preliminarily enjoining the Merger issued
by a court of competent jurisdiction. Each of Acquiror and Target shall use all
commercially reasonable efforts to take such action as may be required to cause
the expiration of the notice periods under the HSR or other Antitrust Laws with
respect to such transactions as promptly as possible after the execution of this
Agreement.
(c) Notwithstanding the foregoing, neither Acquiror nor Target
shall be required to agree, as a condition to any approval, to divest itself of
or hold separate any subsidiary, division or business unit that is material to
the business of such party and its subsidiaries, taken as a whole, or the
divestiture or holding separate of which would be reasonably likely to have a
Material Adverse Effect on such party or a material adverse effect on the
benefits intended to be derived as a result of the Merger.
5.8 STOCKHOLDER LISTS
Section 5.8 of the Target Disclosure Letter sets forth a list
of those persons or entities who are on the date hereof and who are anticipated
at the time of the Stockholder Meetings to be, "affiliates" of Target within the
meaning of Rule 145 under the Securities Act ("Rule 145"). Each such person or
entity who is an "affiliate" of Target within the meaning of Rule 145 is
referred to herein as an "Affiliate". Target shall provide such information and
documents as Acquiror shall reasonably request for purposes of reviewing such
list and shall notify Acquiror in writing regarding any change in the identity
of its Affiliates prior to the Closing Date. Target shall use its commercially
reasonable efforts to cause each person or entity who is identified as an
Affiliate of Target to deliver to Acquiror, no less than twenty (20) Business
Days prior to the date of the Target Stockholders Meeting, a written agreement
in connection with restrictions on Affiliates under Rule 145, in form reasonably
acceptable to Acquiror.
5.9 INDEMNIFICATION
(a) The Bylaws and Articles of Incorporation of the Surviving
Corporation shall contain provisions no less favorable with respect to
indemnification of present and former directors, officers and employees of
Target than those set forth in Target's Bylaws and Articles of Incorporation on
the date of this Agreement, which provisions shall not be amended, repealed or
otherwise modified for a period of six (6) years from the Effective Time in any
manner that would adversely affect the rights thereunder as of the Effective
Time of individuals who at the Effective Time are present or former directors,
officers or employees of Target, unless such modification is required after the
Effective Time by applicable law.
(b) From and after the Effective Time, the Surviving
Corporation and the Acquiror jointly and severally shall indemnify and hold
harmless each present and former director, officer and employee of Target (each,
together with each such person's heirs, executors
-46-
or administrators, an "Indemnified Party" and collectively, the "Indemnified
Parties") against any costs or expenses (including, prior to the final
disposition of any claim, suit, proceeding or investigation to each Indemnified
Party, to the fullest extent permitted by applicable law, reasonable attorneys'
fees), judgments, fines, losses, claims, damages, liabilities and amounts paid
in settlement in connection with any claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or investigative
(collectively, "Actions"), (i) arising out of or pertaining to the transactions
contemplated by this Agreement, or (ii) otherwise with respect to any acts or
omissions occurring at or prior to the Effective Time, in each case, to the
extent provided in Target's Articles of Incorporation or By-Laws as in effect on
the date hereof, in each case for a period of six (6) years after the Effective
Time; provided, however, that, any claim or claims for indemnification in
accordance with this Section 5.9(b) shall continue until the disposition of any
such claims. In the event of any Action (whether arising before or after the
Effective Time), the Indemnified Parties shall promptly notify the Surviving
Corporation in writing, and the Surviving Corporation shall have the right to
assume the defense thereof, including the employment of counsel reasonably
satisfactory to such Indemnified Parties. The Indemnified Parties shall have the
right to employ separate counsel, in any such Action and to participate in (but
not control) the defense thereof, but the fees and expenses of such counsel
shall be at the expense of such Indemnified Parties unless (i) the Surviving
Corporation has agreed to pay such fees and expenses, (ii) the Surviving
Corporation shall have failed to assume the defense of such Action or (iii) the
named parties to any such Action (including any impleaded parties) include both
the Surviving Corporation and the Indemnified Parties and such Indemnified
Parties shall have been reasonably advised in writing by counsel that there may
be one or more legal defenses available to the Indemnified Parties which are in
conflict with those available to the Surviving Corporation. In the event such
Indemnified Parties employ separate counsel at the expense of the Surviving
Corporation pursuant to clauses (ii) or (iii) of the previous sentence, (w) any
counsel retained by the Indemnified Parties for any period after the Effective
Time shall be reasonably satisfactory to the Surviving Corporation; (x) the
Indemnified Parties as a group may retain only one law firm to represent them in
each applicable jurisdiction with respect to any single Action unless there is,
under applicable standards of professional conduct, a conflict on any
significant issue between the positions of any two or more Indemnified Parties,
in which case each Indemnified Person with respect to whom such a conflict
exists (or group of such Indemnified Persons who among them have no such
conflict) may retain one separate law firm in each applicable jurisdiction; (y)
after the Effective Time, the Surviving Corporation shall pay the reasonable
fees and expenses of such counsel, promptly after statements therefore are
received; and (z) the Surviving Corporation will cooperate in the defense of any
such Action. Neither the Acquiror or the Surviving Corporation shall be liable
for any settlement of any such Action effected without their prior written
consent.
(c) For a period of six (6) years after the Effective Time,
Acquiror and the Surviving Corporation shall use commercially reasonable efforts
to cause to be maintained in effect directors and officers liability insurance
covering those persons who are currently covered by policies of directors and
officers liability insurance maintained by Target on terms substantially similar
to those applicable under such current policies with respect to claims arising
from and related to facts or events which occurred at or before the Effective
Time provided, however, that in no event will Acquiror or the Surviving
Corporation be required to expend in
-47-
excess of $300,000 in the aggregate (i.e. for six years coverage) for such
coverage (or such coverage as is available for such $300,000).
(d) In the event Acquiror, the Surviving Corporation or any
successor to Acquiror or the Surviving Corporation (i) consolidates with or
merges into any other person or entity 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 or assets to any person or
entity, then, and in each case, proper provision shall be made so that the
successors of the Acquiror or the Surviving Corporation honor the obligations of
the Acquiror and the Surviving Corporation set forth in this Section 5.9.
(e) The provisions of this Section 5.9 shall survive the
consummation of the Merger and expressly are intended to benefit each of the
Indemnified Parties.
5.10 IRREVOCABLE PROXIES
Target shall use its best efforts, on behalf of Acquiror and
pursuant to the request of Acquiror, to cause Xxxxxxx X. Xxxxxx, Xxxxxx Family
Limited Partnership, Xxxx X. Xxxxx and Xxxxx Family Limited Partnership to
execute and deliver to Acquiror, a Voting Agreement in the form of Exhibit B
attached hereto (each, a "Voting Agreement") concurrently with the execution and
delivery of this Agreement.
5.11 NOTIFICATION OF CERTAIN MATTERS
Target shall give prompt notice to Acquiror, and Acquiror
shall give prompt notice to Target, of (a) any event or occurrence of which
could reasonably be expected to have a Material Adverse Effect or to cause any
representation or warranty by such party contained in this Agreement to be
materially untrue or inaccurate, or (b) any failure of Target, Acquiror or
Merger Sub, as the case may be, materially to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder; provided, however, that the delivery of any notice pursuant to this
Section 5.11 shall not limit or otherwise affect the remedies available
hereunder to the party receiving such notice; and provided further that failure
to give such notice shall not be treated as a breach of covenant for the
purposes of this Agreement unless the failure to give such notice results in
material prejudice to the other party.
5.12 TAX-FREE REORGANIZATION
Neither Target, Acquiror nor Merger Sub will, either before or
after consummation of the Merger, take any action that, to the knowledge of such
party, would cause the Merger to fail to constitute a "reorganization" within
the meaning Section 368(a) of the Code.
5.13 STOCK OPTIONS AND STOCK PURCHASE PLAN
(a) At the Effective Time, the Target Stock Option Plans and
each outstanding option to purchase shares of Target Common Stock under the
Target Stock Option Plans, whether vested or unvested, shall be, and they hereby
are, assumed by Acquiror. Section 5.13 of
-48-
the Target Disclosure Letter sets forth a true and correct schedule (the "Option
Schedule") as of the date hereof of all holders of outstanding options under the
Target Stock Option Plans, the number of shares of Target Common Stock subject
to each such option, the exercise or vesting schedule of each such option, the
exercise price per share of each such option, and the term of each such option.
On the Closing Date, Target shall deliver to Acquiror an updated Option Schedule
current as of such date. Each such option so assumed by Acquiror under this
Agreement shall continue to have, and be subject to, the same terms and
conditions set forth in (1) the Target Stock Option Plans, (2) the terms and
conditions of each grant and (3) the option agreements evidencing, or other
agreements relating to, such options (the items set forth clauses (2) and (3),
an "Option Agreement") immediately prior to the Effective Time, except that (i)
such option shall be exercisable for that number of whole shares of Acquiror
Common Stock equal to the product of the number of shares of Target Common Stock
that were issuable upon exercise of such option immediately prior to the
Effective Time multiplied by the Exchange Ratio, and rounded down to the nearest
whole number of shares of Acquiror Common Stock, (ii) the per share exercise
price for the shares of Acquiror Common Stock issuable upon exercise of such
option shall be equal to the quotient determined by dividing the exercise price
per share of Target Common Stock at which such option was exercisable
immediately prior to the Effective Time, by the Exchange Ratio, rounded up to
the nearest whole cent, and (iii) such options shall be fully vested on and
after the Effective Date. The options so assumed by Acquiror are intended to
qualify following the Effective Time as incentive stock options as defined in
Section 422 of the Code to the extent such options qualified as incentive stock
options prior to the Effective Time. As soon as practicable, and in any event
within thirty (30) days, after the Effective Time, Acquiror will issue to each
person whose option was assumed in accordance with this Section 5.13, a document
evidencing the foregoing assumption of such option by Acquiror.
(b) Acquiror shall take all corporate action necessary to
reserve and make available for issuance a sufficient number of shares of
Acquiror Common Stock for delivery under Target Stock Options assumed in
accordance with this Section 5.13. Within ten (10) Business Days after the
Effective Time, Acquiror shall file a registration statement on Form S-8 (or any
successor or other appropriate forms) which will register the shares of Acquiror
Common Stock subject to assumed options to the extent permitted by Federal
securities laws and shall use its commercially reasonable efforts to maintain
the effectiveness of such registration statement or registration statements (and
maintain the current status of the prospectus or prospectuses contained therein)
for so long as such options remain outstanding.
(c) Outstanding purchase rights under the Target ESPP shall be
exercised immediately prior to the Effective Time, and each participant in the
Target ESPP accordingly shall be issued shares of Target Common Stock at that
time in accordance with the terms and conditions of this Section 5.13(c) and the
Target ESPP, which shares of Target Common Stock shall be converted into the
right to receive shares of Acquiror Common Stock in the Merger in accordance
with the terms hereof. On or prior to the Effective Time, Target shall have
taken all action necessary to terminate the Target ESPP on the last Business Day
of the pay period immediately preceding the Effective Time (such Business Day,
the "ESPP Termination Date"), and, for all purposes, notwithstanding the terms
of the Target ESPP, no purchase rights shall be granted or exercised under the
Target ESPP subsequent to the ESPP Termination Date.
-49-
5.14 LISTING OF ADDITIONAL SHARES
Prior to the Effective Time, Acquiror shall file with Nasdaq
National Market a Notification Form for Listing of Additional Shares with
respect to the shares of Acquiror Common Stock referred to in Section 6.1(e)
below.
5.15 ADDITIONAL AGREEMENTS
Each of the parties agrees to use all commercially reasonable
efforts to take, or cause to be taken, all action and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions contemplated by
this Agreement, subject to the appropriate vote of stockholders of Target and
Acquiror described in Section 6.1(a), including cooperating fully with the other
party, including by provision of information. In case at any time after the
Effective Time any further action is necessary or desirable to carry out the
purposes of this Agreement or to vest the Surviving Corporation with full title
to all properties, assets, rights, approvals, immunities and franchises of
either of the constituent corporations, the proper officers and directors of
each party to this Agreement shall take all such necessary action.
5.16 EMPLOYEE BENEFITS
(a) As of the Effective Time and until December 31, 2002, to
the extent permitted by applicable law and the terms of the applicable Target
Benefit Plans, the eligible employees of Target and its subsidiaries shall
continue to participate in the Target Benefit Plans in which they are
participating on the date of this Agreement (other than the Target ESPP).
(b) For the year ending December 31, 2002, the Surviving
Corporation shall continue in force and honor all incentive compensation plans
in effect on the date of this Agreement and set forth on Schedule 5.16(b) of the
Target Disclosure Schedule. Calculation of incentive compensation payable under
such incentive compensation plans shall be based on the stand-alone results of
operations and financial condition of the Surviving Corporation following the
Effective Time, excluding the effect of all Merger related costs and benefits on
the results of operations and financial condition of the Surviving Corporation.
(c) As of Effective Time, each of the employees of Target set
forth on Schedule 5.16(c) of the Target Disclosure Letter (the "Identified
Employees") shall receive a grant of nonqualified stock options to purchase
shares of Acquiror Common Stock, exercisable at the market price of Acquiror
Common Stock on the date of grant, which stock options shall otherwise be
subject to Acquiror's 2000 Stock Option Plan, as amended. So long as the
Identified Employees are employed by the Surviving Corporation, their annual
base salaries shall not be reduced below their annual base salaries in effect on
date of this Agreement.
(d) Acquiror and Target acknowledge that the transactions
contemplated pursuant to this Agreement shall trigger the change in control
severance obligations due Xxxx X. Xxxxx in accordance with his Offer of
Employment dated February 28, 1996, as amended on February 2, 2000 and June 28,
2001 (the "Xxxxx Employment Agreement"). In satisfaction of all such change in
control severance obligations, Target shall pay Xx. Xxxxx $295,985 in cash on
the
-50-
Closing Date against receipt by Target of a written release from Xx. Xxxxx
releasing the Target and the Surviving Corporation from all liabilities and
obligations to make severance, change in control or similar payments to Xx.
Xxxxx for any reason and otherwise terminating the Xxxxx Employment Agreement.
The parties hereto acknowledge and agree that all Target stock options granted
to Xx. Xxxxx, as assumed by Acquiror pursuant to Section 5.13 hereof, shall be
exercisable for a period of three years following the Effective Date. Xx. Xxxxx
will continue as an employee of the Surviving Corporation following the
Effective Date in an "at-will" status for the compensation and upon such terms
and conditions as may be agreed between the Surviving Corporation and Xx. Xxxxx
following the Effective Date.
5.17 FINANCIAL STATEMENTS
Target shall cooperate with Acquiror in all reasonable
respects in connection with the preparation and filing with the SEC of the
Registration Statement and Proxy Statement (and any amendment or supplement to
either thereof). Without limiting the foregoing, Target shall (a) prepare
interim financial statements for Target and its subsidiaries ("Interim
Financials"), if required in connection with the Registration Statement or Proxy
Statement that are suitable for inclusion by Acquiror in the Public Filings (as
defined below), including compliance with the applicable provisions of
Regulation S-X, (b) use its best efforts to obtain written consents of its
independent public accountants, when required, with respect to the Target
Financial Statements and any Interim Financials so that such financial
statements can be used in registration statements filed under the Securities Act
and reports under the Securities Exchange Act ("Public Filings"), issued or
filed by Acquiror, and (c) cooperate with Acquiror so Acquiror can obtain
information sufficient for Acquiror to comply with the requirements of the
Management's Discussion and Analysis portion of the Public Filings, as it may
relate to Target and its subsidiaries.
ARTICLE VI.
CONDITIONS TO THE MERGER
6.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY TO EFFECT THE MERGER
The respective obligations of each party to this Agreement to
consummate and effect this Agreement and the transactions contemplated hereby
shall be subject to the satisfaction at or prior to the Effective Time of each
of the following conditions, any of which may be waived, in writing, by
agreement of all the parties hereto:
(a) Stockholder Approval. (i) This Agreement and the Merger
shall have been approved and adopted by the holders of at least a majority of
the shares of Target Common Stock outstanding as of the record date set for the
Target Stockholder Meeting and (ii) the issuance of the shares of Acquiror
Common Stock contemplated by this Agreement shall have been approved by the
holders of at least a majority of the shares of Acquiror Common Stock
outstanding on the record date set for the Acquiror Stockholders Meeting.
-51-
(b) No Injunctions or Restraints; Illegality. No temporary
restraining order, preliminary or permanent injunction or other order issued by
any court of competent jurisdiction, or other valid and binding legal or
regulatory restraint or prohibition of a Governmental Entity, preventing the
consummation of the Merger shall be in effect, nor shall any proceeding brought
by a Governmental Entity seeking any of the foregoing be pending; nor shall
there be any action taken, nor any statute, rule or regulation enacted, enforced
or deemed applicable to the Merger, by a Governmental Entity, which makes the
consummation of the Merger illegal. In the event an injunction or other order
shall have been issued, each party agrees to use its commercially reasonable
efforts to have such injunction or other order lifted.
(c) Governmental Approval. Acquiror and Target and their
respective subsidiaries shall have timely obtained from each Governmental Entity
all approvals, authorizations, consents, clearances, waivers and consents that
are either Acquiror Governmental Approvals or Target Governmental Approvals.
(d) Tax Opinion. Each of Target and Acquiror shall have
received a written opinion from their respective counsel to the effect that the
Merger will constitute a reorganization within the meaning of Section 368(a) of
the Code, which opinions shall be substantially identical in substance. In
preparing the tax opinion, such counsel may rely on reasonable assumptions and
may also rely on (and, to the extent reasonably required, the parties shall
make) reasonable and customary representations related thereto.
(e) Listing of Additional Shares. The filing with the Nasdaq
National Market of a Notification Form for Listing of Additional Shares with
respect to the shares of Acquiror Common Stock issuable to holders of Target
Common Stock and Target stock options in connection with the Merger shall have
been made.
(f) Registration Statement. The Registration Statement shall
have become effective under the Securities Act and shall not be the subject of
any stop order or proceedings by a Governmental Entity seeking a stop order. The
Proxy Statement shall have been delivered to the stockholders of Acquiror and
Target in accordance with the requirements of the Securities Act and the
Exchange Act.
6.2 ADDITIONAL CONDITIONS TO THE OBLIGATIONS OF TARGET
The obligations of Target to consummate and effect this
Agreement and the transactions contemplated hereby shall be subject to the
satisfaction at or prior to the Effective Time of each of the following
conditions, any of which may be waived, in writing, by Target:
(a) Representations, Warranties and Covenants. (i) The
representations and warranties of Acquiror in this Agreement shall be true and
correct in all material respects (except for such representations and warranties
that are qualified by their terms by a reference to materiality, which
representations and warranties as so qualified shall be true in all respects) on
and as of the Effective Time as though such representations and warranties were
made on and as of such time except that the accuracy of representations and
warranties that by their terms speak as of a specified date will be determined
as of such date, and (ii) Acquiror and Merger Sub shall have performed and
complied in all material respects with all covenants, obligations and
-52-
conditions of this Agreement required to be performed and complied with by them
as of the Effective Time.
(b) Certificate of Acquiror. Target shall have been provided
with a certificate executed on behalf of Acquiror by an executive officer of
Acquiror to the effect that, as of the Effective Time, the conditions set forth
in Section 6.2(a) have been satisfied.
(c) No Material Adverse Changes. Since December 31, 2001,
there shall not have occurred any material adverse change in the condition
(financial or otherwise), properties, assets, (including intangible assets),
liabilities, businesses, operations or results of operations of Acquiror and its
subsidiaries taken as a whole.
(d) No Litigation. There shall not be pending any suit, action
or proceeding brought by any Governmental Entity seeking (i) to prohibit or
limit in any material respect the ownership or operation by Target, Acquiror or
any of their respective Affiliates of a material portion of the business or
assets of Target and its subsidiaries, taken as a whole, or of Acquiror and its
subsidiaries, taken as a whole, or to require any such entity to dispose of or
hold separate any material portion of the business or assets of Target and its
subsidiaries, taken as a whole, or of Acquiror and its subsidiaries, taken as a
whole, as a result of the Merger, or (ii) to prohibit Acquiror or any of its
affiliates from effectively controlling in any material respect a material
portion of the business or operations of Target or its subsidiaries.
(e) Board of Directors. As of the Effective Time, Xxx X. Xxxxx
shall be appointed as a member of the Board of Directors of Acquiror.
6.3 ADDITIONAL CONDITIONS TO THE OBLIGATIONS OF ACQUIROR AND MERGER SUB
The obligations of Acquiror and Merger Sub to consummate and
effect this Agreement and the transactions contemplated hereby shall be subject
to the satisfaction at or prior to the Effective Time of each of the following
conditions, any of which may be waived, in writing, by Acquiror:
(a) Representations, Warranties and Covenants. (i) The
representations and warranties of Target in this Agreement shall be true and
correct in all material respects (except for such representations and warranties
that are qualified by their terms by a reference to materiality, which
representations and warranties as so qualified shall be true in all respects) on
and as of the Effective Time as though such representations and warranties were
made on and as of such time except that the accuracy of representations and
warranties that by their terms speak as of a specified date will be determined
as of such date, and (ii) Target shall have performed and complied in all
material respects with all covenants, obligations and conditions of this
Agreement required to be performed and complied with by it as of the Effective
Time.
(b) Certificate of Target. Acquiror shall have been provided
with a certificate executed on behalf of Target by an executive officer of
Target to the effect that, as of the Effective Time, the conditions set forth in
Section 6.3(a) have been satisfied.
-53-
(c) No Material Adverse Changes. Since December 31, 2001,
there shall not have occurred any material adverse change in the condition
(financial or otherwise), properties, assets (including intangible assets),
liabilities, businesses, operations or results of operations of Target and its
subsidiaries taken as a whole.
(d) Resignation of Directors. The directors of Target and each
of Target's subsidiaries in office immediately prior to the Effective Time shall
have resigned as directors of Target and each of Target's subsidiaries effective
as of the Effective Time.
(e) No Litigation. There shall not be pending any suit, action
or proceeding brought by any Governmental Entity seeking (i) to prohibit or
limit in any material respect the ownership or operation by Target, Acquiror or
any of their respective Affiliates of a material portion of the business or
assets of Target and its subsidiaries, taken as a whole, or of Acquiror and its
subsidiaries, taken as a whole, or to require any such entity to dispose of or
hold separate any material portion of the business or assets of Target and its
subsidiaries, taken as a whole, or of Acquiror and its subsidiaries, taken as a
whole, as a result of the Merger, (ii) to prohibit Acquiror or any of its
Affiliates from effectively controlling in any material respect a material
portion of the business or operations of Target or its subsidiaries, or (iii) to
impose material limitations on the ability of Acquiror or any of its Affiliates
to acquire or hold, or exercise full rights of ownership of, any shares of
Target Common Stock, including the right to vote the Target Common Stock on all
matters properly presented to the stockholders of Target.
(f) Option Schedule. Target shall have delivered to Acquiror
the updated Option Schedule as required by Section 5.13.
ARTICLE VII.
TERMINATION, EXPENSES, AMENDMENT AND WAIVER
7.1 TERMINATION
This Agreement may be terminated at any time prior to the
Effective Time (with respect to Sections 7.1(b) through 7.1(k), by written
notice by the terminating party to the other party), whether before or after
approval of the matters presented in connection with the Merger by the
stockholders of Target and Acquiror:
(a) by mutual written consent of Target and Acquiror;
(b) by either Target or Acquiror, if the Merger shall not have
been consummated by August 31, 2002 (the "Outside Date") (provided that the
right to terminate this Agreement under this Section 7.1(b) shall not be
available to any party whose failure to fulfill any obligation under this
Agreement has been a significant cause of or resulted in the failure of the
Merger to occur on or before the Outside Date);
(c) by either Acquiror or Target, if a Governmental Entity
shall have issued a nonappealable final order, decree or ruling or taken any
other nonappealable final action, in each case, having the effect of permanently
restraining, enjoining or otherwise prohibiting the Merger;
-54-
(d) by either Acquiror or Target, if at the Target Stockholder
Meeting (including any adjournment or postponement), the requisite vote of the
stockholders of Target in favor of this Agreement and the Merger (the "Target
Stockholder Approval") shall not have been obtained (provided that the right to
terminate this Agreement under this Section 7.1(d) shall not be available to
Target where the failure to obtain Target Stockholder Approval shall have been
caused by the action or failure to act of Target and such action or failure to
act constitutes a material breach by Target of this Agreement). A material
breach by Target of Sections 5.1, 5.2 or 5.3 hereof will constitute a material
breach hereunder;
(e) by either Acquiror or Target, if at the Acquiror
Stockholder Meeting (including any adjournment or postponement), the requisite
vote of the stockholders of Acquiror in favor of the issuance of the shares of
Acquiror Common Stock contemplated by this Agreement (the "Acquiror Stockholder
Approval") shall not have been obtained (provided that the right to terminate
this Agreement under this Section 7.1(e) shall not be available to Acquiror
where the failure to obtain Acquiror Stockholder Approval shall have been caused
by the action or failure to act of Acquiror and such action or failure to act
constitutes a material breach by Acquiror of this Agreement). A material breach
by Acquiror of Sections 5.2 or 5.3 hereof will constitute a material breach
hereunder;
(f) by Acquiror, if (i) the Board of Directors of Target shall
have withdrawn or modified its recommendation of this Agreement or the Merger in
a manner adverse to Acquiror; (ii) the Board of Directors of Target fails to
reaffirm its recommendation of this Agreement or the Merger within ten (10)
Business Days after Acquiror requests in writing that such recommendation be
reaffirmed at any time following the public announcement of an Acquisition
Proposal; (iii) the Board of Directors of Target shall have recommended to the
stockholders of Target an Alternative Transaction; (iv) a tender offer or
exchange offer for 15% or more of the outstanding shares of Target Common Stock
is commenced (other than by Acquiror or an affiliate of Acquiror) and the Board
of Directors of Target shall not have sent to its security holders pursuant to
Rule 14e-2 within forty five (45) days after such tender or exchange offer is
first published, sent or given, a statement disclosing that Target recommends
rejection of such tender or exchange offer; or (v) for any other reason Target
fails to call and hold the Target Stockholder Meeting within 45 days after the
Registration Statement is declared effective under the Securities Act if such
date is on or before the Outside Date;
(g) by Acquiror, if any representation or warranty of Target
shall have become untrue such that the condition set forth in Section 6.3(a)(i)
would not be satisfied (a "Target Terminating Change"), or by Target, if any
representation or warranty of Acquiror and Merger Sub shall have become untrue
such that the condition set forth in Section 6.2(a)(i) would not be satisfied (a
"Acquiror Terminating Change" and together with a Target Terminating Change, a
"Terminating Change"); provided, however, that if any such Terminating Change is
curable prior to the date first established by Target or Acquiror, as the case
may be, for the first of the Stockholders Meetings to occur through the exercise
of Target's or Acquiror's commercially reasonable efforts, as the case may be,
and for so long as Target or Acquiror, as the case may be, continues to exercise
such commercially reasonable efforts, neither Acquiror nor Target, respectively,
may terminate this Agreement under this Section 7.1(g) until at least fifteen
(15)
-55-
days (or the remaining number of days prior to the Outside Date, if shorter)
have elapsed following receipt of the written notice of termination pursuant to
this Section 7.1(g);
(h) by Target or Acquiror, if there has been a breach of any
covenant or agreement on the part of the other party set forth in this
Agreement, which breach (i) would cause the condition set forth in Section
6.2(a)(ii) (in the case of termination by Target) or in 6.3(a)(ii) (in the case
of termination by Acquiror) not to be satisfied, and (ii) except in the case of
a breach of any covenant or agreement set forth in Section 5.1 (as to which
breach this clause (ii) shall not be applicable), shall not have been cured
within fifteen (15) days (or prior to the Outside Date, if earlier) following
receipt by the breaching party of written notice of such breach from the other
party;
(i) by Target, if it proposes to accept a Superior Proposal;
provided that simultaneously with such termination Target complies with Section
7.3(b)(ii) hereof;
(j) by Target, if (i) the Average Stock Price is less than
$15.8634, (ii) at or before 5:00 P.M. (Eastern Time) on the date which is two
(2) trading days (on the Nasdaq National Market) prior to the Target Stockholder
Meeting Target delivers to Acquiror written notice, subject to the following
clause (iii), terminating this Agreement (the "Target's Notice") and (iii)
Acquiror has not agreed, by written notice to Target (the "Acquiror's Notice")
given at or before 5:00 P.M. (Eastern Time) one (1) trading day prior to the
Target Stockholder Meeting, to convert, in the Merger, each share of Target
Common Stock (other than any shares of Target Common Stock to be canceled
pursuant to Section 1.6(b) or any shares of Target Common Stock to which
dissenters' rights have been exercised pursuant to Section 1.6(g)) into the
right to receive the fraction of one fully paid and non-assessable share of
Acquiror Common Stock equal to, at minimum, the product of (x) one (1) and (y) a
fraction (rounded to four decimal places, with the number five (5) and below
being rounded down), the numerator of which is $12.50 and the denominator of
which is the Average Stock Price (subject to Section 1.6(f) hereof). In the
event that Acquiror delivers an Acquiror's Notice, Target shall not have the
right to terminate this Agreement pursuant to this Section 7.1(j), and the
Target's Notice shall have no force or effect; or
(k) by Target, if the Board of Directors of Acquiror shall
have withdrawn or modified its recommendation of the issuance of Acquiror Common
Stock in connection with the Merger in a manner adverse to Target.
7.2 EFFECT OF TERMINATION
In the event of termination of this Agreement as provided in
Section 7.1, this Agreement shall forthwith become void, the Merger shall be
abandoned and there shall be no liability or obligation on the part of Acquiror,
Merger Sub or Target or their respective officers, directors, stockholders or
other Affiliates, except as otherwise set forth in Section 7.3 and except to the
extent that such termination results from the intentional breach by a party
hereto of any of its representations, warranties or covenants set forth in this
Agreement (in which case the nonbreaching party may seek any and all remedies
available to it under applicable law); provided that, the provisions of Section
5.5, Section 7.3 and this Section 7.2 shall remain in full force and effect and
survive any termination of this Agreement.
-56-
7.3 EXPENSES AND TERMINATION FEES
(a) Except as set forth in this Section 7.3, all fees and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses, whether
or not the Merger is consummated; provided, however, that Acquiror and Target
shall share equally all fees and expenses, other than their respective
accountants and attorneys' fees, incurred in relation to the filing and printing
of the Proxy Statement (including any related preliminary materials) and the
Registration Statement (including financial statements and exhibits) and any
amendments or supplements; provided, further, that Acquiror shall pay the SEC
registration fee with respect to the Registration Statement and that each party
shall bear the expenses of mailing the Proxy Statement and any other materials
to its own stockholders.
(b) Target shall pay Acquiror a termination fee of $4,200,000
in immediately available funds (i) within two (2) Business Days after the
termination of this Agreement by Acquiror pursuant to Section 7.1(f) or (ii)
simultaneously with the termination of this Agreement by Target pursuant to
Section 7.1(i).
(c) Acquiror shall pay Target's out-of-pocket expenses
incurred in connection with this Agreement (and the transactions contemplated
hereby), including the fees and expenses of financial advisors, accountants and
legal counsel and printing and filing and mailing fees and expenses
(collectively, "Termination Expenses"), in immediately available funds within
two (2) Business Days following termination of this Agreement by Target pursuant
to Section 7.1(g), Section 7.1(h) or Section 7.1(k), and Target shall pay
Acquiror's and Merger Sub's Termination Expenses in immediately available funds
within two (2) Business Days following termination of this Agreement by Acquiror
pursuant to Section 7.1(g) or Section 7.1(h).
7.4 AMENDMENT
This Agreement may be amended by the parties hereto by action
taken by or on behalf of their respective boards of directors at any time prior
to the Effective Time; provided, however, that, after the Target Stockholder
Approval and the Acquiror Stockholder Approval, no amendment may be made which
by applicable law requires further approval by such stockholders, as applicable,
without such further approval. This Agreement may not be amended except by an
instrument in writing signed by the parties hereto.
7.5 EXTENSION; WAIVER
At any time prior to the Effective Time any party hereto may,
to the extent legally allowed, (a) extend the time for the performance of any of
the obligations or other acts of the other parties hereto, (b) waive any
inaccuracies in the representations and warranties made to such party contained
herein or in any document delivered pursuant hereto, and (c) waive compliance
with any of the agreements or conditions for the benefit of such party contained
herein. Any agreement on the part of a party hereto to any such extension or
waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party.
-57-
ARTICLE VIII.
GENERAL PROVISIONS
8.1 EFFECTIVENESS OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS
Except as otherwise provided in this Section 8.1, the
representations, warranties, covenants and agreements of each party hereto shall
remain operative and in full force and effect regardless of any investigation
made (or knowledge obtained) by or on behalf of any other party hereto, any
person or entity controlling any such party or any of their officers, directors
or representatives, whether prior to or after the execution of this Agreement.
The representations, warranties and agreements in this Agreement and in the
Target Disclosure Letter and the Acquiror Disclosure Letter shall terminate at
the earlier to occur of the Effective Time or upon the termination of this
Agreement pursuant to Article VII, except that the covenants and agreements set
forth in Article I, Section 5.9, Section 5.12, Section 5.13, Section 5.15 and
Section 5.16 shall survive the Effective Date and the covenants and agreements
set forth in Section 5.5, Section 7.2 and Section 7.3 shall survive such
termination.
8.2 NOTICES
All notices and other communications hereunder shall be in
writing and shall be deemed given when actually received if delivered
personally, or by commercial delivery service, or mailed by registered or
certified mail (return receipt requested), or sent via facsimile (with
confirmation of receipt), to the parties at the following address (or at such
other address for a party as shall be specified by like notice):
(a) if to Acquiror or Merger Sub, to:
Xxxxx Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: General Counsel
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
with a copy to:
Torys LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Cost, Esq.
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
-58-
(b) if to Target, to:
ONTRACK Data International, Inc.
0000 Xxxxxxxxx Xxxx
Xxxx Xxxxxxx, Xxxxxxxxx 00000
Attention: Chief Executive Officer
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
with a copy to:
Robins, Kaplan, Xxxxxx & Xxxxxx L.L.P.
0000 XxXxxxx Xxxxx
000 XxXxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxx X. Xxxxxxx, Esq.
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
8.3 INTERPRETATION
When a reference is made in this Agreement to Exhibits, such
reference shall be to an Exhibit to this Agreement unless otherwise indicated.
The words "include", "includes" and "including" when used herein shall be deemed
in each case to be followed by the words "without limitation." In this
Agreement, any reference to any event, change, condition or effect being
"material" with respect to any entity or group of entities means any material
event, change, condition or effect related to the condition (financial or
otherwise), properties, assets (including intangible assets), liabilities,
business, operations or results of operations of such entity or group of
entities. In this Agreement, any reference to a party's "knowledge" means such
party's actual knowledge after due and diligent inquiry of officers, directors
and other employees of such party and its subsidiaries reasonably believed to
have knowledge of such matters. The phrase "made available" in this Agreement
shall mean that the information referred to has been made available if requested
by the party to whom such information is to be made available. The phrases "the
date of this Agreement", "the date hereof", and terms of similar import, unless
the context otherwise requires, shall be deemed to refer to the date set forth
on the cover page of this Agreement. The table of contents and headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement.
8.4 COUNTERPARTS
This Agreement may be executed by facsimile signature and in
one or more counterparts, all of which shall be considered one and the same
agreement and shall become effective when one or more counterparts have been
signed by each of the parties and delivered to the other parties, it being
understood that all parties need not sign the same counterpart.
-59-
8.5 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES
This Agreement, and the documents and instruments and other
agreements specifically referred to herein or delivered pursuant hereto,
including the Exhibits, the Schedules, including the Target Disclosure Letter
and the Acquiror Disclosure Letter (a) constitute the entire agreement among the
parties with respect to the subject matter hereof and supersede all prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter hereof, except for the Nondisclosure Agreement,
which shall continue in full force and effect, and shall survive any termination
of this Agreement or the Closing, in accordance with its terms and (b) do not,
and are not intended to, confer upon any other person or entity any rights or
remedies hereunder or otherwise, except for the rights of the holders of Target
Common Stock to receive the consideration set forth in Article I, and except for
the provisions of Section 5.9.
8.6 SEVERABILITY
In the event that any provision of this Agreement, or the
application thereof, becomes or is declared by a court of competent jurisdiction
to be illegal, void or unenforceable, the remainder of this Agreement will
continue in full force and effect and the application of such provision to other
persons or circumstances will be interpreted so as reasonably to effect the
intent of the parties hereto. The parties further agree to replace such void or
unenforceable provision of this Agreement with a valid and enforceable provision
that will achieve, to the extent possible, the economic, business and other
purposes of such void or unenforceable provision.
8.7 REMEDIES CUMULATIVE
Except as otherwise provided herein, any and all remedies
herein expressly conferred upon a party will be deemed cumulative with and not
exclusive of any other remedy conferred hereby, or by law or equity upon such
party, and the exercise by a party of any one remedy will not preclude the
exercise of any other remedy.
8.8 GOVERNING LAW
This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware without regard to applicable
principles of conflicts of law. Each of the parties hereto irrevocably consents
to the exclusive jurisdiction of any court located within the State of Delaware,
in connection with any matter based upon or arising out of this Agreement or the
matters contemplated herein, agrees that process may be served upon them in any
manner authorized by the laws of the State of Delaware for such persons and
waives and covenants not to assert or plead any objection that they might
otherwise have to such jurisdiction and such process. Each of the parties to
this Agreement hereby irrevocably and unconditionally, to the extent such party
is not otherwise subject to service of process in the State of Delaware,
appoints RL&F Service Corp. which is located at One Xxxxxx Square, 10th Floor,
Tenth and King Streets, in the City of Wilmington, County of New Castle, 19801,
as such party's agent in the State of Delaware for acceptance of legal process
in connection with any matter based upon or arising out of this Agreement or the
matters contemplated herein and agrees that service made on any such
-60-
agent shall have the same legal force and effect as if served upon such party
personally within the State of Delaware.
8.9 ASSIGNMENT
Neither this Agreement nor any of the rights, interests or
obligations hereunder shall 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 Agreement will be binding upon,
inure to the benefit of, and be enforceable by the parties and their respective
successors and permitted assigns.
8.10 RULES OF CONSTRUCTION
The parties hereto agree that they have been represented by
counsel during the negotiation, preparation and execution of this Agreement and,
therefore, waive the application of any law, regulation, holding or rule of
construction providing that ambiguities in an agreement or other document will
be construed against the party drafting such agreement or document.
* * *
-61-
IN WITNESS WHEREOF, Target, Acquiror and Merger Sub have
caused this Agreement to be executed and delivered by their respective officers
thereunto duly authorized, all on the date first written above.
ONTRACK DATA INTERNATIONAL, INC.
By: /s/ Xxx X. Xxxxx
--------------------------------------------
Name: Xxx X. Xxxxx
Title: President and Chief Executive Officer
XXXXX INC.
By: /s/ Xxxxxxx X. Xxxxxxxxx
---------------------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: President and Chief
Executive Officer
ODI ACQUISITION CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxxxx
---------------------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title:
SIGNATURE PAGE TO AGREEMENT AND PLAN OF REORGANIZATION
-62-
SCHEDULE A
DEFINITIONS
"Acquiror" shall have the meaning set forth in the Preamble hereof.
"Acquiror Balance Sheet" shall have the meaning set forth in Section 3.4(b)
hereof.
"Acquiror Balance Sheet Date" shall have the meaning set forth in Section 3.6
hereof.
"Acquiror Benefit Plans" shall have the meaning set forth in Section 3.9 hereof.
"Acquiror Common Stock" shall have the meaning set forth in Section B of the
Recitals hereof.
"Acquiror Disclosure Letter" shall have the meaning set forth in the first
paragraph of Article III hereof.
"Acquiror Financial Statements" shall have the meaning set forth in Section
3.4(b) hereof.
"Acquiror Governmental Approvals" shall have the meaning set forth in Section
3.3(c) hereof.
"Acquiror Governmental Licenses" shall have the meaning set forth in Section
3.3(c) hereof.
"Acquiror Intellectual Property" shall mean Intellectual Property owned or held
by Acquiror or any of its subsidiaries or used in connection with carrying on
the Acquiror's or such subsidiary's business.
"Acquiror SEC Documents" shall have the meaning set forth in Section 3.4(a)
hereof.
"Acquiror Stockholder Approval" shall have the meaning set forth in Section
7.1(e) hereof.
"Acquiror Stockholder Meeting" shall have the meaning set forth in Section 2.22
hereof.
"Acquisition Proposal" shall have the meaning set forth in Section 5.1(a)
hereof.
"Actions" shall have the meaning set forth in Section 5.9(b) hereof.
"Affiliate(s)" shall have the meaning set forth in Section 5.8 hereof.
"Alternative Transaction" means either (i) a transaction pursuant to which any
person or entity (or group of persons or entities) other than Acquiror or its
respective affiliates (a "Third Party"), acquires more than 15% of the
outstanding shares of Target Common Stock pursuant to a tender offer or exchange
offer or otherwise, (ii) a merger or other business combination involving Target
pursuant to which any Third Party acquires more than 15% of the outstanding
equity securities of Target or the entity surviving such merger or business
combination, (iii) any other transaction pursuant to which any Third Party
acquires control of assets (including for this purpose the outstanding equity
securities of subsidiaries of Target, and the entity surviving any
-63-
merger or business combination including any of them) of Target and its
subsidiaries having a fair market value (as determined by the Board of Directors
of Acquiror in good faith) equal to more than 15% of the fair market value of
all the assets of Target and its subsidiaries, taken as a whole, immediately
prior to such transaction, or (iv) any public announcement by a Third Party of a
proposal, plan or intention to do any of the foregoing or any agreement to
engage in any of the foregoing.
"Antitrust Laws" shall have the meaning set forth in Section 5.7(b) hereof .
"Articles of Merger" shall have the meaning set forth in Section 1.1 hereof.
"Average Stock Price" shall mean the volume weighted average price of Acquiror
Common Stock on the Nasdaq National Market for the twenty (20) consecutive
trading days ending three (3) trading days prior to the Target Stockholder
Meeting as calculated on the VAP screen on the Bloomberg ProfessionalTM Service
and shown as VWAP for such period, as adjusted for any stock split,
recapitalization, reorganization or other similar corporate transaction.
"Benefit Plans" shall have the meaning set forth in Section 2.15 hereof.
"Business Day" shall mean a day other than a Saturday or Sunday or other day on
which commercial banks in New York, New York are authorized or required to
close.
"CERCLA" shall have the meaning set forth in Section 2.13 hereof.
"Certificates" shall have the meaning set forth in Section 1.7(b) hereof.
"Closing Date" shall have the meaning set forth in Section 1.2 hereof.
"Closing" shall have the meaning set forth in Section 1.2 hereof.
"Code" shall have the meaning set forth in Section D of the Recitals hereof.
"Developed Software" means all computer programs developed by or for Target or
its subsidiaries and currently utilized in a product or service offering of
Target or its subsidiaries, in each format and medium in which such computer
programs is recorded or stored, including: (i) all source and all object code
versions of such programs; (ii) all design specifications, flow chats,
programmers' notes, tests and test results; (iii) all documentation of the
features of such software; and (iv) all associated instruction manuals,
documentation and supporting material made available to users of the software.
"Dissenting Shares" shall have the meaning set forth in Section 1.6(f) hereof.
"Effective Date" shall have the meaning set forth in Section 1.2 hereof.
"Effective Time" shall have the meaning set forth in Section 1.2 hereof.
"Employee Obligation" shall have the meaning set forth in Section 2.16(i)
hereof.
-64-
"Environmental Claims" shall have the meaning set forth in Section 2.13 hereof.
"Environmental Laws" shall have the meaning set forth in Section 2.13 hereof.
"Environmental Permit" shall have the meaning set forth in Section 2.13 hereof.
"ERISA" shall have the meaning set forth in Section 2.15 hereof.
"ERISA Plans" shall have the meaning set forth in Section 2.15 hereof.
"ESPP Termination Date" shall have the meaning set forth in Section 5.13(c)
hereof.
"Exchange Act" shall have the meaning set forth in Section 2.3(c) hereof.
"Exchange Agent" shall have the meaning set forth in Section 1.7(a) hereof.
"Exchange Fund" shall have the meaning set forth in Section 1.7(a) hereof.
"Exchange Ratio" shall have the meaning set forth in Section 1.6(a) hereof.
"GAAP" shall have the meaning set forth in Section 2.4(b) hereof.
"Governmental Entity" shall mean the collective reference to any court of
competent jurisdiction, administrative agency, tribunal, authority, commission
or other governmental or administrative agency, authority or instrumentality,
whether Federal, state, local or foreign.
"HSR" shall have the meaning set forth in Section 2.3(c) hereof.
"Indemnified Parties" shall have the meaning set forth in Section 5.9(b) hereof.
"Intellectual Property" shall mean (I) any and all subject matter that is
entitled to protection of rights under (i) patent law; (ii) copyright law
(including moral rights); (iii) trademark law (including common law protection);
(iv) design patent or industrial design law; (v) semi-conductor chip or mask
work law; or (vi) any other statutory provision or common law principle in any
jurisdiction, including legal provisions governing the protection of
confidential information and trade secrets, which may provide a right in any of
ideas, formulae, algorithms, computer programs, data, databases, concepts,
inventions, know-how, business methods, brands or indicia of the source of goods
and services or the expression or use of such ideas, formulae, algorithms,
computer programs, data, databases, concepts, inventions, know-how, business
methods, brands or indicia of the source of goods or services and (II) all
registrations and applications for registration of the subject matter identified
in (I) above.
"IRCA" shall have the meaning set forth in Section 2.16(e) hereof.
"knowledge" shall have the meaning set forth in Section 8.3 hereof.
"Lien" shall mean any mortgage, charge, security interest, encumbrance, claim,
or other lien of any kind or nature whatsoever.
-65-
"made available" shall have the meaning set forth in Section 8.3 hereof.
"material" shall have the meaning set forth in Section 8.3 hereof.
"Material Adverse Effect" with respect to any entity or group of entities means
any event, change, condition or effect that is materially adverse to the
condition (financial or otherwise), properties, assets (including intangible
assets), liabilities, businesses, operations or results of operations of such
entity and its subsidiaries, taken as a whole.
"Merger" shall have the meaning set forth in Section A of the Recitals hereof.
"Merger Consideration" shall have the meaning set forth in Section 1.6(g)
hereof.
"Merger Sub" shall have the meaning set forth in the Preamble hereof.
"Minnesota Law" shall have the meaning set forth in Section 1.1 hereof.
"Nondisclosure Agreement" shall have the meaning set forth in Section 5.1(a)
hereof.
"Non-U.S. Benefit Plan" shall mean all Benefit Plans, contracts and arrangements
(statutory, regulatory or otherwise) covering or applicable to non-U.S.
employees of Target or any of its subsidiaries.
"Option Schedule" shall have the meaning set forth in Section 5.13(a) hereof.
"Order" shall have the meaning set forth in Section 5.7(b) hereof.
"Outside Date" shall have the meaning set forth in Section 7.1(b) hereof.
"Permitted Liens" shall mean (a) Liens for taxes, assessments or other
governmental charges not delinquent or being contested in good faith and by
appropriate proceedings and with respect to which proper reserves have been
taken; (b) deposits or pledges to secure obligations under worker's
compensation, social security or similar laws, or under unemployment insurance;
(c) deposits or pledges to secure bids, tenders, contracts (other than contracts
for the payment of money), eases, statutory obligations, surety and appeal bonds
and other obligations of like nature arising in the ordinary course of business;
(d) judgment Liens that have been stayed or bonded; and (e) mechanics',
workers', materialmen's or other like Liens arising in the ordinary course of
business with respect to obligations which are not due or which are being
contested in good faith.
"Plan of Reorganization" shall have the meaning set forth in Section 1.10
hereof.
"Prohibited Transaction" shall have the meaning set forth in Section 2.15(e)
hereof.
"Proxy Statement" shall have the meaning set forth in Section 2.22 hereof.
"Purchase Periods" shall have the meaning set forth in Section 2.2(b) hereof.
"RBC" shall have the meaning set forth in Section 2.20 hereof.
-66-
"RCRA" shall have the meaning set forth in Section 2.13 hereof.
"Registration Statement" shall have the meaning set forth in Section 2.22
hereof.
"Rule 145" shall have the meaning set forth in Section 5.8 hereof.
"SEC" shall have the meaning set forth in Section 2.3(c) hereof.
"Securities Act" shall have the meaning set froth in Section 2.4(a) hereof.
"Stockholder Meetings" shall have the meaning set forth in Section 2.22 hereof.
"Superior Proposal" shall have the meaning set forth in Section 5.1(a) hereof.
"Surviving Corporation" shall have the meaning set forth in Section 1.1. hereof.
"Target" shall have the meaning set forth in the Preamble hereof.
"Target Authorizations" shall have the meaning set forth in Section 2.10 hereof.
"Target Balance Sheet Date" shall have the meaning set forth in Section 2.5
hereof.
"Target Balance Sheet" shall have the meaning set forth in Section 2.4 hereof.
"Target Benefit Plan" shall have the meaning set forth in Section 2.15 hereof.
"Target Contracts" shall have the meaning set forth in Section 2.7. hereof.
"Target Disclosure Letter" shall have the meaning set forth in the first
paragraph of Article II hereof.
"Target ESPP" shall have the meaning set forth in Section 2.2(b) hereof.
"Target Financial Statements" shall have the meaning set forth in Section 2.4(b)
hereof.
"Target Governmental Approvals" shall have the meaning set forth in Section
2.3(c) hereof.
"Target Governmental Licenses" shall have the meaning set forth in Section
2.3(c) hereof.
"Target Intellectual Property" shall mean Intellectual Property owned or held by
the Target or any of its subsidiaries or used in connection with carrying on the
Target's or such subsidiary's business.
"Target SEC Documents" shall have the meaning set forth in Section 2.4 hereof.
"Target Stock Option Plans" shall have the meaning set forth in Section 1.6
hereof.
"Target Stockholder Meeting" shall have the meaning set forth in Section 2.22
hereof.
-67-
"taxes" shall have the meaning set forth in Section 2.14(l) hereof.
"tax returns" shall have the meaning set forth in Section 2.14(l) hereof.
"Third Party" shall have the meaning set forth in the definition of Alternative
Transaction.
"Unperfected Shares" shall have the meaning set forth in Section 1.6(f) hereof.
"Voting Agreement" shall have the meaning set forth in Section 5.10 hereof.
* * *
-68-
