Exhibit 2.1
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AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
among:
Vitria Technology, Inc.,
a Delaware corporation;
Victorious Acquisition Sub, Inc.,
a Delaware corporation;
and
XMLSolutions Corporation,
a Virginia corporation.
___________________________
Dated as of March 25, 2001
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TABLE OF CONTENTS
Page
SECTION 1. Description of Transaction.............................................1
1.1 Merger of Merger Sub into the Company.........................1
1.2 Effect of the Merger..........................................1
1.3 Closing; Effective Time.......................................2
1.4 Articles of Incorporation and Bylaws; Directors and Officers..2
1.5 Conversion of Shares..........................................2
1.6 Employee Stock Options........................................3
1.7 Closing of the Company's Transfer Books.......................3
1.8 Exchange of Certificates......................................3
1.9 Dissenting Shares.............................................4
1.10 Accounting Treatment..........................................4
1.11 Further Action................................................4
SECTION 2. Representations and Warranties of the Company..........................4
2.1 Due Organization; Subsidiaries; Etc...........................5
2.2 Articles of Incorporation and Bylaws; Records.................5
2.3 Capitalization, Etc...........................................6
2.4 Financial Statements..........................................7
2.5 Absence of Changes............................................8
2.6 Title to Assets...............................................10
2.7 Bank Accounts; Receivables....................................10
2.8 Equipment; Leasehold..........................................11
2.9 Proprietary Assets............................................11
2.10 Contracts.....................................................13
2.11 Liabilities...................................................16
2.12 Compliance with Legal Requirements............................16
2.13 Governmental Authorizations...................................16
2.14 Tax Matters...................................................16
2.15 Employee and Labor Matters; Benefit Plans.....................17
2.16 Environmental Matters.........................................20
2.17 Insurance.....................................................20
2.18 Related Party Transactions....................................21
2.19 Legal Proceedings; Orders.....................................21
2.20 Authority; Binding Nature of Agreement........................22
2.21 Non-Contravention; Consents...................................22
2.22 Full Disclosure...............................................23
2.23 Vote Required.................................................23
2.24 No Brokers....................................................23
2.25 No Existing Discussions.......................................23
SECTION 3. Representations and Warranties of Parent and Merger Sub................23
3.1 Corporate Existence and Power.................................24
3.2 Authority; Binding Nature of Agreement........................24
3.3 Non-Contravention; Consents...................................24
SECTION 4. Certain Covenants of the Company.......................................24
4.1 Access and Investigation......................................24
4.2 Operation of the Acquired Corporations' Business..............25
4.3 Notification; Updates to Disclosure Schedule..................26
4.4 No Negotiation................................................27
SECTION 5. Additional Covenants of the Parties....................................27
5.1 Filings and Consents..........................................28
5.2 Company Shareholders' Consent.................................28
5.3 Public Announcements..........................................28
5.4 Commercially Reasonable Efforts...............................28
5.5 Reserved......................................................28
5.7 Release.......................................................28
5.8 Termination of Employee Plans.................................28
5.9 Reserved......................................................29
5.10 Reserved......................................................29
5.11 Warrants......................................................29
5.12 Audit.........................................................29
SECTION 6. Conditions Precedent to Obligations of Parent and Merger Sub...........29
6.1 Accuracy of Representations...................................29
6.2 Performance of Covenants......................................29
6.3 Shareholder Approval..........................................29
6.4 Consents......................................................29
6.5 Agreements and Documents......................................30
6.7 Absence of Material Adverse Effect............................31
6.8 No Restraints.................................................31
6.9 No Legal Proceedings..........................................31
6.10 Termination of Employee Plans.................................31
SECTION 7. Conditions Precedent to Obligations of the Company.....................31
7.1 Accuracy of Representations...................................31
7.2 Performance of Covenants......................................32
7.3 No Restraints.................................................32
SECTION 8. Termination............................................................32
8.1 Termination Events............................................32
8.2 Termination Procedures........................................32
8.3 Effect of Termination.........................................33
SECTION 9. RESERVED...............................................................33
SECTION 10. Miscellaneous Provisions..............................................33
10.1 Shareholders' Agent...........................................33
10.2 Further Assurances............................................33
10.3 Fees and Expenses.............................................33
10.4 Attorneys' Fees...............................................34
10.5 Notices.......................................................34
10.6 Time of the Essence...........................................35
10.7 Headings......................................................35
10.8 Counterparts..................................................35
10.9 Governing Law.................................................35
10.10 Successors and Assigns........................................35
10.11 Remedies Cumulative; Specific Performance.....................36
10.12 Waiver........................................................36
10.13 Amendments....................................................36
10.14 Severability..................................................36
10.15 Parties in Interest...........................................37
10.16 Entire Agreement..............................................37
10.17 Construction..................................................37
EXHIBITS
Exhibit A - Certain definitions
Exhibit B - Form of Voting Agreement
Exhibit C - Reserved
Exhibit D-1 - Reserved
Exhibit D-2 - Reserved
Exhibit E - Persons to sign Releases
Exhibit F - Form of Release
Exhibit G - Form of legal opinion of Xxxxx Xxxxx
Exhibit H - Reserved
Exhibit I - Reserved
AGREEMENT AND PLAN
OF MERGER AND REORGANIZATION
This Agreement and Plan of Merger and Reorganization ("Agreement") is made
and entered into as of March 25, 2001 by and among: Vitria Technology, Inc., a
Delaware corporation ("Parent"); Victorious Acquisition Sub Inc., a Delaware
corporation and a wholly owned subsidiary of Parent ("Merger Sub"); and
XMLSolutions Corporation, a Virginia corporation (the "Company"). Certain other
capitalized terms used in this Agreement are defined in Exhibit A.
Recitals
A. Parent, Merger Sub and the Company intend to effect a merger of Merger
Sub with and into the Company in accordance with this Agreement, the Delaware
General Corporation Law and the Virginia Stock Corporation Act (the "Merger").
Upon consummation of the Merger, Merger Sub will cease to exist, and the Company
will become a wholly owned subsidiary of Parent.
B. For accounting purposes, it is intended that the Merger be treated as a
"purchase."
C. This Agreement has been approved by the respective boards of directors
of Parent, Merger Sub and the Company.
D. At the time of or prior to the execution and delivery of this
Agreement, certain shareholders of the Company (i) representing the Required
Vote (as defined in Section 2.23 of this Agreement) and (ii) holding an
aggregate of at least 90% of the outstanding shares of Company Common Stock,
Series A Preferred Stock and Series B Preferred Stock (each as defined in
Section 2.3 of this Agreement), taken together as a single class, are executing
and delivering to Parent a voting agreement (a "Voting Agreement") substantially
in the form of Exhibit B.
Agreement
The parties to this Agreement agree as follows:
SECTION 1. Description of Transaction
1.1 Merger of Merger Sub into the Company. Upon the terms and subject to
the conditions set forth in this Agreement, at the Effective Time (as defined in
Section 1.3), Merger Sub shall be merged with and into the Company, and the
separate existence of Merger Sub shall cease. The Company will continue as the
surviving corporation in the Merger (the "Surviving Corporation").
1.2 Effect of the Merger. The Merger shall have the effects set forth in
this Agreement and in the applicable provisions of the Delaware General
Corporation Law and the Virginia Stock Corporation Act.
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1.3 Closing; Effective Time. The consummation of the transactions
contemplated by this Agreement (the "Closing") shall take place at the offices
of Xxxxxx Godward llp, One Freedom Square, Reston Town Center, 00000 Xxxxxxx
Xxxxx, Xxxxxx, XX 00000, on a date to be designated by Parent, which shall be as
soon as practicable after, but no later than the third business day after, the
satisfaction or waiver of the latest to occur of the conditions set forth in
Sections 6 and 7. (The date on which the Closing actually takes place is
referred to in this Agreement as the "Closing Date.") Contemporaneously with or
as promptly as practicable after the Closing, a properly executed certificate of
merger conforming to the requirements of the Delaware General Corporation Law
shall be filed with the Secretary of State of the State of Delaware, and
properly executed articles of merger conforming to the requirements of the
Virginia Stock Corporation Act shall be filed with the State Corporation
Commission of the Commonwealth of Virginia. The Merger shall become effective
at the time such articles of merger are filed with the State Corporation
Commission of the Commonwealth of Virginia (the "Effective Time").
1.4 Articles of Incorporation and Bylaws; Directors and Officers. Unless
otherwise determined by Parent and the Company prior to the Effective Time:
(a) the Articles of Incorporation of the Surviving Corporation shall
be amended and restated as of the Effective Time in a form acceptable to
Parent;
(b) the Bylaws of the Surviving Corporation shall be amended and
restated as of the Effective Time in a form acceptable to Parent; and
(c) the directors and officers of the Surviving Corporation
immediately after the Effective Time shall be the individuals identified by
Parent.
1.5 Conversion of Shares.
(a) Subject to Section 1.9, at the Effective Time, by virtue of the
Merger and without any further action on the part of Parent, Merger Sub,
the Company or any shareholder of the Company:
(i) each share of Company Common Stock (as defined in Section 2.3)
outstanding immediately prior to the Effective Time shall be canceled and
shall no longer represent any interest in the Company nor any interest in
the Surviving Corporation, Parent or Merger Sub:
(ii) each share of Series A Preferred Stock (as defined in Section
2.3) outstanding immediately prior to the Effective Time shall be converted
into the right to receive $.385962;
(iii) each share of Series B Preferred Stock (as defined in
Section 2.3) outstanding immediately prior to the Effective Time shall be
converted into the right to receive $1.737; and
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(iv) each share of the common stock ($0.001 par value per share)
of Merger Sub outstanding immediately prior to the Effective Time shall be
converted into one share of common stock of the Surviving Corporation.
1.6 Employee Stock Options. At the Effective Time, each stock option that
is then outstanding under the Company's 1999 Stock Option/Stock Issuance Plan
(the "Stock Plan"), whether vested or unvested (a "Company Option"), shall be
terminated in accordance with the provisions of the Stock Plan, and all rights
with respect to Company Common Stock under outstanding Company Options shall
thereupon be terminated. The Company and Parent shall take all action that may
be necessary (under the Company's Stock Plan and related stock option agreements
and otherwise) to effectuate the provisions of this Section 1.6.
1.7 Closing of the Company's Transfer Books. At the Effective Time,
holders of certificates representing shares of the Company's capital stock that
were outstanding immediately prior to the Effective Time shall cease to have any
rights as shareholders of the Company, and the stock transfer books of the
Company shall be closed with respect to all shares of such capital stock
outstanding immediately prior to the Effective Time. No further transfer of any
such shares of the Company's capital stock shall be made on such stock transfer
books after the Effective Time. If, after the Effective Time, a valid
certificate previously representing any of such shares of the Company's capital
stock (a "Company Stock Certificate") is presented to the Surviving Corporation
or Parent, such Company Stock Certificate shall be canceled and shall be
exchanged as provided in Section 1.8.
1.8 Exchange of Certificates.
(a) Within two business days following the execution of this
Agreement, Parent will provide the Company with a letter of transmittal in
customary form and containing such provisions as Parent may reasonably
specify and (ii) instructions for use in effecting the surrender of Company
Stock Certificates in exchange for a cash payment pursuant to Section 1.5
of this Agreement. The Company will distribute such letter of transmittal
and instructions to each Company shareholder that does not perfect its
dissenters' rights and is otherwise entitled to receive cash pursuant to
Section 1.5 (a "Merger Shareholder"). Upon surrender of a Company Stock
Certificate to Parent for exchange, together with a duly executed letter of
transmittal and such other documents as may be reasonably required by
Parent, from and after the Effective Time, the holder of such Company Stock
Certificate shall be entitled to receive in exchange therefor a check in
the amount that such holder has the right to receive pursuant to the
provisions of Section 1.5 of this Agreement, and the Company Stock
Certificate so surrendered shall be canceled. Within one business day after
Parent receives oral confirmation from the State Corporation Commission of
the Commonwealth of Virginia that the articles of merger have been accepted
for filing, Parent will (i) release and pay the amounts due to all holders
of Company Stock Certificates who have surrendered their certificates along
with their properly executed letters of transmittal prior to the Effective
Time and (ii) repay the Investor Notes (as defined in Section 6.5(k)).
Until surrendered as contemplated by this Section 1.8, each Company Stock
Certificate shall be deemed, from and after the Effective Time, to
represent only the right to receive upon such surrender a cash payment
pursuant to Section 1.5 of this Agreement. If any Company Stock Certificate
shall have been lost, stolen or destroyed, Parent may, in its discretion
and as a condition precedent to the making of any cash payment pursuant to
this Agreement,
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require the owner of such lost, stolen or destroyed Company Stock
Certificate to provide an appropriate affidavit of loss and indemnity
against any claim that may be made against Parent or the Surviving
Corporation with respect to such Company Stock Certificate.
(b) Neither Parent nor the Surviving Corporation shall be liable to
any holder or former holder of capital stock of the Company for any cash
amounts delivered to any public official pursuant to any applicable
abandoned property, escheat or similar law.
1.9 Dissenting Shares.
(a) Notwithstanding anything to the contrary contained in this
Agreement, any shares of capital stock of the Company that, as of the
Effective Time, are or may become held by a "dissenter" within the meaning
of Section 13.1-729 of the Virginia Stock Corporation Act shall not be
converted into or represent the right to receive cash in accordance with
Section 1.5 of this Agreement, and the holder or holders of such shares
shall be entitled only to such rights as may be granted to such holder or
holders under Article 15 of the Virginia Stock Corporation Act; provided,
however, that if the status of the holder of any such shares as a
"dissenter" shall not be perfected, or if the holder of any such shares
shall lose such holder's status as a "dissenter," then, as of the later of
the Effective Time or the time of the failure to perfect such status or the
loss of such status, such shares shall automatically be converted into and
shall represent only the right to receive (upon the surrender of the
certificate or certificates representing such shares) cash in accordance
with Section 1.5.
(b) The Company shall give Parent (i) prompt notice of any written
demand received by the Company prior to the Effective Time to require the
Company to purchase shares of capital stock of the Company pursuant to
Article 15 of the Virginia Stock Corporation Act and of any other demand,
notice or instrument delivered to the Company prior to the Effective Time
pursuant to the Virginia Stock Corporation Act and (ii) the opportunity to
participate in all negotiations and proceedings with respect to any such
demand, notice or instrument. The Company shall not make any payment or
settlement offer prior to the Effective Time with respect to any such
demand unless Parent shall have consented in writing to such payment or
settlement offer.
1.10 Accounting Treatment. For accounting purposes, the Merger is intended
to be treated as a "purchase."
1.11 Further Action. If, at any time after the Effective Time, any further
action is determined by Parent to be necessary or desirable to carry out the
purposes of this Agreement or to vest the Surviving Corporation or Parent with
full right, title and possession of and to all rights and property of Merger Sub
and the Company, the officers and directors of the Surviving Corporation and
Parent shall be fully authorized (in the name of Merger Sub, in the name of the
Company and otherwise) to take such action.
SECTION 2. Representations and Warranties of the Company
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The Company represents and warrants, to and for the benefit of Parent, as
follows:
2.1 Due Organization; Subsidiaries; Etc.
(a) The Company does not own a controlling interest in any Entity
other than the Entities identified in Part 2.1(a) of the Disclosure
Schedule. The Entities identified in Part 2.1(a) of the Disclosure Schedule
are referred to in this Agreement as the "Subsidiaries," and the Company
and the Subsidiaries, collectively, are referred to in this Agreement as
the "Acquired Corporations." Each of the Acquired Corporations is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has all necessary power and
authority: (i) to conduct its business in the manner in which its business
is currently being conducted; (ii) to own and use its assets in the manner
in which its assets are currently owned and used; and (iii) to perform its
obligations under all Company Contracts to which it is a party.
(b) Except as set forth in Part 2.1(b) of the Disclosure Schedule,
none of the Acquired Corporations has conducted any business under or
otherwise used, for any purpose or in any jurisdiction, any fictitious
name, assumed name, trade name or other name, other than the names
"XMLSolutions Corporation" and "XML Solutions."
(c) None of the Acquired Corporations is, and has not been required to
be, qualified, authorized, registered or licensed to do business as a
foreign corporation in any jurisdiction other than the jurisdictions
identified in Part 2.1(c) of the Disclosure Schedule, except where the
failure to be so qualified, authorized, registered or licensed has not had
and will not have a Material Adverse Effect on the Acquired Corporations.
The Acquired Corporations are in good standing as foreign corporations in
each of the jurisdictions identified in Part 2.1(c) of the Disclosure
Schedule.
(d) Part 2.1(d) of the Disclosure Schedule accurately sets forth (i)
the names of the members of each of the Acquired Corporations' board of
directors, (ii) the names of the members of each committee of each of the
Acquired Corporations' board of directors and (iii) the names and titles of
each of the Acquired Corporations' officers.
(e) None of the Acquired Corporations owns any controlling interest in
any Entity and, except for the equity interests identified in Part 2.1(e)
of the Disclosure Schedule, none of the Acquired Corporations has ever
owned, beneficially or otherwise, any shares or other securities of, or any
direct or indirect equity interest in, any Entity. None of the Acquired
Corporations has agreed, and none of the Acquired Corporations is obligated
to make, any future investment in or capital contribution to any Entity.
None of the Acquired Corporations has guaranteed and is not responsible or
liable for any obligation of any of the Entities in which it owns or has
owned any equity interest.
2.2 Articles of Incorporation and Bylaws; Records. The Company has
delivered to Parent accurate and complete copies of: (1) each of the Acquired
Corporations' articles of incorporation and bylaws (or similar organizational
documents), including all amendments thereto; (2) the stock records of each of
the Acquired Corporations; and (3) the minutes and other records of the meetings
and other proceedings (including any actions taken by written consent or
otherwise without a meeting) of the shareholders of each of the Acquired
Corporations, the board
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of directors of each of the Acquired Corporations and all committees of the
board of directors of each of the Acquired Corporations. There have been no
formal meetings or other proceedings of the shareholders of any of the Acquired
Corporations, the board of directors of any of the Acquired Corporations or any
committee of the board of directors of any of the Acquired Corporations that are
not fully reflected in such minutes or other records. There has not been any
violation of any of the provisions of any of the Acquired Corporations' articles
of incorporation or bylaws (or similar organizational documents), and none of
the Acquired Corporations has taken any action that is inconsistent in any
material respect with any resolution adopted by any of the Acquired
Corporations' shareholders, any of the Acquired Corporations' board of directors
or any committee of any of the Acquired Corporations' board of directors. The
books of account, stock records, minute books and other records of the Acquired
Corporations are accurate, up-to-date and complete in all material respects, and
have been maintained in accordance with prudent business practices.
2.3 Capitalization, Etc.
(a) The authorized capital stock of the Company consists of thirty-six
million five hundred fifty thousand (36,550,000) shares, of which thirty
million (30,000,000) shares are of a class designated Common Stock with a
par value of $.001 per share ("Company Common Stock") (of which 4,467,713
shares have been issued and are outstanding as of the date of this
Agreement), and six million five hundred fifty thousand (6,550,000) shares
are of a class designated Preferred Stock, of which three million two
hundred forty thousand (3,240,000) shares are of a series designated
"Series A Preferred Stock", restated par value $0.001 per share (of which
3,240,000 shares have been issued and are outstanding as of the date of
this Agreement), and three million three hundred ten thousand (3,310,000)
shares are of a series designated "Series B Preferred Stock", par value
$0.001 per share (of which 3,310,000 shares have been issued and are
outstanding as of the date of this Agreement). Each outstanding share of
Series A Preferred Stock and Series B Preferred Stock is convertible into
one share of Company Common Stock. The board of directors of the Company
has not at any time declared, and, in connection with the transactions
contemplated by this Agreement, the holders of Series A Preferred Stock and
Series B Preferred Stock are not entitled to, any dividends with respect to
the Series A Preferred Stock and Series B Preferred Stock. All of the
outstanding shares of Company Common Stock, Series A Preferred Stock and
Series B Preferred Stock have been duly authorized and validly issued, and
are fully paid and non-assessable. Part 2.3(a) of the Disclosure Schedule
provides an accurate and complete description of the terms of each
repurchase option which is held by the Company and to which any of such
shares is subject.
(b) The Company has reserved 4,500,000 shares of Company Common Stock
for issuance under its Stock Plan, of which options to purchase 434,985
shares are outstanding as of the date of this Agreement. Part 2.3(b) of the
Disclosure Schedule accurately sets forth, with respect to each Company
Option that is outstanding as of the date of this Agreement: (i) the name
of the holder of such Company Option and (ii) the total number of shares of
Company Common Stock that are subject to such Company Option and the number
of shares of Company Common Stock with respect to which such Company Option
is immediately exercisable. At the Effective Time, each Company Option,
whether vested or unvested, shall be terminated, and all rights with
respect to Company Common Stock under outstanding Company Options shall
thereupon be terminated, and the Company Options shall no longer represent
any interest in the
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Company, the Surviving Corporation or Parent or any right to receive any
other consideration from the Company, the Surviving Corporation or Parent.
Except as set forth in Part 2.3(b) of the Disclosure Schedule, there is no:
(i) outstanding subscription, option, call, warrant or right (whether or
not currently exercisable) to acquire any shares of the capital stock or
other securities of the Company; (ii) outstanding security, instrument or
obligation that is or may become convertible into or exchangeable for any
shares of the capital stock or other securities of the Company; (iii)
Contract under which the Company is or may become obligated to sell or
otherwise issue any shares of its capital stock or any other securities; or
(iv) to the knowledge of the Company, condition or circumstance that may
give rise to or provide a basis for the assertion of a claim by any Person
to the effect that such Person is entitled to acquire or receive any shares
of capital stock or other securities of the Company.
(c) All outstanding shares of Company Common Stock, Series A Preferred
Stock and Series B Preferred Stock, and all outstanding Company Options,
have been issued and granted in compliance with (i) all applicable
securities laws and other applicable Legal Requirements and (ii) all
requirements set forth in applicable Contracts.
(d) Except as set forth in Part 2.3(d) of the Disclosure Schedule, all
outstanding shares of capital stock or other securities of the Subsidiaries
are owned of record and beneficially by the Company and have been issued
and granted in compliance with (i) all applicable securities laws and other
applicable Legal Requirements and (ii) all requirements set forth in
applicable Contracts. There is no: (i) outstanding subscription, option,
call, warrant or right (whether or not currently exercisable) to acquire
any shares of the capital stock or other securities of any of the
Subsidiaries; (ii) outstanding security, instrument or obligation that is
or may become convertible into or exchangeable for any shares of the
capital stock or other securities of any of the Subsidiaries; (iii)
Contract under which any of the Subsidiaries is or may become obligated to
sell or otherwise issue any shares of its capital stock or any other
securities; or (iv) to the knowledge of the Company, condition or
circumstance that may give rise to or provide a basis for the assertion of
a claim by any Person to the effect that such Person is entitled to acquire
or receive any shares of capital stock or other securities of any of the
Subsidiaries.
(e) Except as set forth in Part 2.3(d) of the Disclosure Schedule,
none of the Acquired Corporations has ever repurchased, redeemed or
otherwise reacquired any shares of capital stock or other securities of any
of the Acquired Corporations. All securities so reacquired by the Company
were reacquired in compliance with (i) all applicable Legal Requirements
and (ii) all requirements set forth in applicable restricted stock purchase
agreements and other applicable Contracts.
2.4 Financial Statements.
(a) The Company has delivered to Parent the following financial
statements and notes (collectively, the "Company Financial Statements"):
(i) The audited balance sheet of the Acquired Corporations as of
December 31, 1999, and the related audited income statement, statement of
shareholders' equity and statements of cash flows of the Acquired
Corporations for the year then ended, together with the notes thereto and
the unqualified report and opinion of KPMG Peat Marwick relating thereto;
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(ii) the unaudited balance sheet of the Acquired Corporations as
of December 31, 2000, and the related audited income statement, statement
of shareholders' equity and statement of cash flows of the Acquired
Corporations for the year then ended, together with the notes thereto; and
(iii) the unaudited balance sheet of the Acquired Corporations as
of February 28, 2001 (the "Unaudited Interim Balance Sheet"), and the
related unaudited income statement of the Acquired Corporations for the two
months then ended.
(b) The Company Financial Statements are accurate and complete in all
material respects and present fairly the financial position of the Acquired
Corporations as of the respective dates thereof and the results of
operations and (in the case of the financial statements referred to in
Sections 2.4(a)(i)and 2.4(a)(ii)) cash flows of the Acquired Corporations
for the periods covered thereby. The Company Financial Statements have been
prepared in accordance with generally accepted accounting principles
applied on a consistent basis throughout the periods covered (except that
the financial statements referred to in Section 2.4(a)(iii) do not contain
footnotes and are subject to normal and recurring year-end audit
adjustments, which will not, individually or in the aggregate, be material
in magnitude).
2.5 Absence of Changes. Except as set forth in Part 2.5 of the Disclosure
Schedule, since December 31, 2000:
(a) there has not been any material adverse change in the Acquired
Corporations' business, condition, assets, liabilities, operations,
financial performance or prospects, and, to the knowledge of the Company,
no event has occurred that will, or could reasonably be expected to, have a
Material Adverse Effect on the Acquired Corporations;
(b) there has not been any material loss, damage or destruction to, or
any material interruption in the use of, any of the Acquired Corporations'
assets (whether or not covered by insurance);
(c) none of the Acquired Corporations has declared, accrued, set aside
or paid any dividend or made any other distribution in respect of any
shares of capital stock, and has not repurchased, redeemed or otherwise
reacquired any shares of capital stock or other securities;
(d) none of the Acquired Corporations has sold, issued or authorized
the issuance of (i) any capital stock or other security (except for Company
Common Stock issued upon the exercise of outstanding Company Options), (ii)
any option or right to acquire any capital stock or any other security
(except for Company Options described in Part 2.3(b) of the Disclosure
Schedule) or (iii) any instrument convertible into or exchangeable for any
capital stock or other security;
(e) none of the Acquired Corporations has amended or waived any of its
rights under (i) any provision of the Company's Stock Plan, (ii) any
provision of any agreement evidencing any outstanding Company Option or
(iii) any restricted stock purchase agreement;
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(f) there has been no amendment to any of the Acquired Corporations'
articles of incorporation or bylaws (or similar organizational documents),
and none of the Acquired Corporations has effected or been a party to any
Acquisition Transaction, recapitalization, reclassification of shares,
stock split, reverse stock split or similar transaction;
(g) none of the Acquired Corporations has formed any subsidiary or
acquired any equity interest or other interest in any other Entity;
(h) none of the Acquired Corporations has made any capital expenditure
which, when added to all other capital expenditures made on behalf of the
Acquired Corporations since December 31, 2000, exceeds $50,000;
(i) none of the Acquired Corporations has (i) entered into or
permitted any of the assets owned or used by it to become bound by any
Contract that is or would constitute a Material Contract (as defined in
Section 2.10(a)) or (ii) amended or prematurely terminated, or waived any
material right or remedy under, any such Contract;
(j) none of the Acquired Corporations has (i) acquired, leased or
licensed any right or other asset from any other Person, (ii) sold or
otherwise disposed of, or leased or licensed, any right or other asset to
any other Person or (iii) waived or relinquished any right, except for
rights or other assets acquired, leased, licensed or disposed of in the
ordinary course of business and consistent with the Acquired Corporations'
past practices;
(k) none of the Acquired Corporations has written off as
uncollectible, or established any extraordinary reserve with respect to,
any account receivable or other indebtedness;
(l) none of the Acquired Corporations has made any pledge of any of
its assets or otherwise permitted any of its assets to become subject to
any Encumbrance, except for pledges of immaterial assets made in the
ordinary course of business and consistent with the Acquired Corporations'
past practices;
(m) none of the Acquired Corporations has (i) lent money to any Person
(other than pursuant to routine travel advances made to employees in the
ordinary course of business) or (ii) incurred or guaranteed any
indebtedness for borrowed money;
(n) none of the Acquired Corporations has (i) established or adopted
any Employee Benefit Plan, (ii) paid any bonus or made any profit-sharing
or similar payment to, or increased the amount of the wages, salary,
commissions, fringe benefits or other compensation or remuneration payable
to, any of its directors, officers or employees or (iii) hired any new
employee;
(o) none of the Acquired Corporations has changed any of its methods
of accounting or accounting practices in any respect;
9
(p) none of the Acquired Corporations has made any Tax election;
(q) none of the Acquired Corporations has commenced or settled any
Legal Proceeding;
(r) none of the Acquired Corporations has entered into any material
transaction or taken any other material action outside the ordinary course
of business or inconsistent with its past practices; and
(s) none of the Acquired Corporations has agreed or committed to take
any of the actions referred to in clauses "(c)" through "(r)" above.
2.6 Title to Assets.
(a) The Acquired Corporations own, and have good, valid and marketable
title to, all assets purported to be owned by them, including: (i) all
assets reflected on the Unaudited Interim Balance Sheet; (ii) all assets
referred to in Parts 2.1, 2.7(b) and 2.9 of the Disclosure Schedule and all
of the Acquired Corporations' rights under the Contracts identified in Part
2.10 of the Disclosure Schedule; and (iii) all other assets reflected in
the Acquired Corporations' books and records as being owned by the Acquired
Corporations. Except as set forth in Part 2.6(a) of the Disclosure
Schedule, all of said assets are owned by the Acquired Corporations free
and clear of any liens or other Encumbrances, except for (x) any lien for
current taxes not yet due and payable and (y) minor liens that have arisen
in the ordinary course of business and that do not (in any case or in the
aggregate) materially detract from the value of the assets subject thereto
or materially impair the operations of the Acquired Corporations.
(b) Part 2.6(b) of the Disclosure Schedule identifies all assets that
are material to the business of the Acquired Corporations and that are
being leased or licensed to any of the Acquired Corporations.
2.7 Bank Accounts; Receivables.
(a) Part 2.7(a) of the Disclosure Schedule provides accurate
information with respect to each account maintained by or for the benefit
of any of the Acquired Corporations at any bank or other financial
institution.
(b) Part 2.7(b) of the Disclosure Schedule provides an accurate and
complete breakdown and aging of all accounts receivable, notes receivable
and other receivables of the Acquired Corporations. Except as set forth in
Part 2.7(b) of the Disclosure Schedule, all existing accounts receivable of
the Acquired Corporations (including those accounts receivable reflected on
the Unaudited Interim Balance Sheet that have not yet been collected and
those accounts receivable that have arisen since February 28, 2001 and have
not yet been collected) (i) represent valid obligations of customers of the
Acquired Corporations arising from bona fide transactions entered into in
the ordinary course of business and (ii) to the knowledge of the Company,
are current and will be collected in full when due, without any
counterclaim or set off (net of an allowance for doubtful accounts not to
exceed $500,000 in the aggregate).
10
2.8 Equipment; Leasehold.
(a) All material items of equipment and other tangible assets owned by
or leased to the Acquired Corporations are adequate for the uses to which
they are being put, are in good condition and repair (ordinary wear and
tear excepted) and are adequate for the conduct of the Acquired
Corporations' business in the manner in which such business is currently
being conducted.
(b) None of the Acquired Corporations owns any real property or any
interest in real property, except for the leasehold created under the real
property lease identified in Part 2.10 of the Disclosure Schedule.
2.9 Proprietary Assets.
(a) Part 2.9(a)(i) of the Disclosure Schedule identifies and provides
a brief description of each Proprietary Asset owned by the Acquired
Corporations. Part 2.9(a)(ii) of the Disclosure Schedule identifies and
provides a brief description of each Proprietary Asset that is owned by any
other Person and that is licensed to or used by any of the Acquired
Corporations (except for any Proprietary Asset that is licensed to any of
the Acquired Corporations under any third party software license that (i)
is generally available to the public and (ii) imposes no future monetary
obligation on any of the Acquired Corporations) and identifies the license
agreement or other agreement under which such Proprietary Asset is being
licensed to or used by any of the Acquired Corporations. Except as to the
security interest granted to Silicon Valley Bank by the Company, the
Acquired Corporations have good and valid title to all of the Proprietary
Assets identified in Part 2.9(a)(i) of the Disclosure Schedule, free of any
Encumbrances, and have a valid right to use and otherwise exploit, and to
license others to use and otherwise exploit, all Proprietary Assets
identified in Part 2.9(a)(ii) of the Disclosure Schedule. Except as set
forth in Part 2.9(a)(iii) of the Disclosure Schedule, the Acquired
Corporations are not obligated to make any payment to any Person for the
use or other exploitation of any Company Proprietary Asset. Except as set
forth in Part 2.9(a)(iv) of the Disclosure Schedule, the Acquired
Corporations are free to use, modify, copy, distribute, sell, license or
otherwise exploit each of the Company Proprietary Assets on an exclusive
basis (other than Proprietary Assets consisting of software licensed to any
of the Acquired Corporations under third party licenses generally available
to the public, with respect to which the Acquired Corporations' rights are
not exclusive). Except as set forth in Part 2.9(a)(v) of the Disclosure
Schedule, no action, suit, proceeding, hearing, investigation, charge,
complaint, claim or demand is pending or, to the knowledge of the Company,
is threatened which challenges the legality, validity, enforceability, use,
or ownership of any Company Proprietary Asset, and none of the Acquired
Corporations has ever agreed to indemnify any Person for or against any
interference, infringement, misappropriation, or other conflict with
respect to any Company Proprietary Asset.
(b) The Acquired Corporations have taken all reasonably prudent
measures and precautions necessary to protect and maintain the
confidentiality, value and secrecy of all Company Proprietary Assets
(except those Company Proprietary Assets whose value would be unimpaired by
public disclosure) and otherwise to maintain and protect the value of all
Company Proprietary Assets. Except as set forth on Part 2.9(b)(i) of the
Disclosure Schedule, other than the respective directors, officers and
employees, none of the Acquired Corporations has disclosed or delivered or
permitted to be disclosed or delivered to any Person, and no Person has
access to
11
or has any rights with respect to, any trade secrets comprising Company
Proprietary Assets or the source code, or any portion or aspect of the
source code, of any Company Proprietary Asset. Except as set forth in Part
2.9(b)(ii) of the Disclosure Schedule, all current and former employees,
consultants and independent contractors that are or were involved in the
creation, invention, research or development of the Company Proprietary
Assets have executed and delivered to the Company or another Acquired
Corporation an agreement that is substantially identical to the form of the
Confidential Information and Invention Assignment Agreement for Employee
previously delivered to Parent.
(c) All patents, trademarks, service marks, copyrights and other such
Proprietary Assets that are registered with any Governmental Body and held
by the Acquired Corporations are valid and subsisting. To the knowledge of
the Company, none of the Company Proprietary Assets infringes or conflicts
with any Proprietary Asset owned or used by any other Person. Except as set
forth in Part 2.9(c) of the Disclosure Schedule, none of the Acquired
Corporations has received any written notice or other communication of any
actual, alleged, possible or potential infringement, misappropriation or
unlawful use of, any Proprietary Asset owned or used by any other Person.
Notwithstanding the written notice or other communications identified in
Part 2.9(c) of the Disclosure Schedule, to the knowledge of the Company,
none of the Acquired Corporations is infringing, misappropriating or making
any unlawful use of, and, to the knowledge of the Company, none of the
Acquired Corporations has at any time infringed, misappropriated or made
any unlawful use of, any Proprietary Asset owned or used by any other
Person. To the knowledge of the Company, no other Person is infringing,
misappropriating or making any unlawful use of, and no Proprietary Asset
owned or used by any other Person infringes or conflicts with, any Company
Proprietary Asset.
(d) The Proprietary Assets identified in Part 2.9 of the Disclosure
Schedule constitute all the Proprietary Assets necessary to enable the
Acquired Corporations to conduct its business in the manner currently
conducted and in the manner currently proposed to be conducted. None of the
Acquired Corporations has licensed any Company Proprietary Assets to any
Person with any exclusive terms whatsoever. None of the Acquired
Corporations has entered into any covenant not to compete or Contract
limiting its ability to exploit fully any Company Proprietary Assets or to
transact business in any market or geographical area or with any Person.
Each Company Proprietary Asset shall be available to the Surviving
Corporation immediately after the Closing on terms and conditions identical
to the terms and conditions to which the Company Proprietary Assets are
available to the Acquired Corporations immediately prior to the Closing.
(e) Except as set forth in Part 2.9(e) of the Disclosure Schedule,
none of the Acquired Corporations has entered into nor is bound by any
Contract under which any Person has the right to modify, distribute or
license any Company Proprietary Asset. Except as set forth on Part 2.9(e)
of the Disclosure Schedule, none of the Acquired Corporations has disclosed
or delivered to any Person, or permitted the disclosure or delivery to any
Person, of the source code, or any portion or aspect of the source code, or
any
12
proprietary information or algorithm contained in any source code, of any
Company Proprietary Asset. To the knowledge of the Company, no event has
occurred, and no circumstance or condition exists, that (with or without
notice or lapse of time) will, or could reasonably be expected to, result
in the disclosure or delivery to any Person of the source code, or any
portion or aspect of the source code, or any proprietary information or
algorithm contained in any source code, of any Company Proprietary Asset.
(f) Except with respect to demonstration or trial copies, no product,
system, program or software module designed, developed, sold, licensed or
otherwise made available by the Acquired Corporations to any Person
contains any "back door," "time bomb," "Trojan horse," "worm," "drop dead
device," "virus" or other software routines or hardware components designed
to permit unauthorized access or to disable or erase software, hardware or
data without the consent of the user.
(g) Reasonably promptly following the execution of this Agreement, the
Company shall deliver or make available to Parent correct and complete
copies of all Proprietary Assets (as amended to date) and shall make
available to Parent correct and complete copies of all other written
documentation evidencing ownership and prosecution (if applicable) of each
such item.
2.10 Contracts.
(a) Part 2.10 of the Disclosure Schedule identifies:
(i) each Company Contract relating to the employment of, or the
performance of services by, any employee, consultant or independent
contractor;
(ii) each Company Contract relating to the acquisition, transfer,
use, development, sharing or license of any technology or any Proprietary
Asset;
(iii) each Company Contract relating to the grant of rights to
manufacture, produce, assemble, license, market, or sell the Acquired
Corporations' products to any other person or otherwise affecting the
Acquired Corporations' exclusive right to develop, manufacture, assemble,
distribute, market or sell its products;
(iv) each Company Contract relating to product support
obligations, obligations to supply product, OEM and reseller arrangements
and obligations for product development and supply;
(v) each Company Contract relating to indemnification by any of
the Acquired Corporations with respect to infringements of proprietary
rights (other than indemnification obligations arising from purchase or
sale agreements entered into in the ordinary course of business);
(vi) each Company Contract imposing any restriction on the
Acquired Corporations' right or ability (A) to compete with any other
Person, (B) to acquire any product or other asset or any services from any
other Person, to sell any product or other asset to or perform any services
for any other Person or to transact business or deal in any other manner
with any other Person, or (C) develop or distribute any technology;
(vii) each Company Contract creating or involving any agency
relationship, distribution arrangement or franchise relationship;
13
(viii) each Company Contract relating to the acquisition, issuance
or transfer of any securities;
(ix) each Company Contract relating to the creation of any
Encumbrance with respect to any asset of any of the Acquired Corporations;
(x) each Company Contract involving or incorporating any guaranty,
any pledge, any performance or completion bond, any indemnity or any surety
arrangement;
(xi) each Company Contract creating or relating to any partnership
or joint venture or any sharing of revenues, profits, losses, costs or
liabilities;
(xii) each Company Contract relating to the purchase or sale of
any product or other asset by or to, or the performance of any services by
or for, any Related Party (as defined in Section 2.18);
(xiii) each Company Contract constituting or relating to a
Government Contract or Government Bid;
(xiv) any other Company Contract that was entered into outside the
ordinary course of business or was inconsistent with the Acquired
Corporations' past practices;
(xv) any other Company Contract that has a term of more than 60
days and that may not be terminated by any of the Acquired Corporations
(without penalty) within 60 days after the delivery of a termination notice
by any of the Acquired Corporations;
(xvi) any other Company Contract that contemplates or involves (A)
the payment or delivery of cash or other consideration in an amount or
having a value in excess of $10,000 in the aggregate, or (B) the
performance of services having a value in excess of $10,000 in the
aggregate; and
(xvii) any other Company Contract that is material to the
business of the Acquired Corporations. (Contracts in the respective
categories described in clauses "(i)" through "(xvii)" above are referred
to in this Agreement as "Material Contracts.")
(b) The Company has delivered or made available to Parent accurate and
complete copies of all written Contracts identified in Part 2.10 of the
Disclosure Schedule, including all amendments thereto. No Company Contract
required to be disclosed in Part 2.10 of the Disclosure Schedule is an oral
contract. Each Contract identified in Part 2.10 of the Disclosure Schedule is
valid and in full force and effect, and is enforceable by the Acquired
Corporations in accordance with its terms, subject to (i) laws of general
application relating to bankruptcy, insolvency and the relief of debtors, and
(ii) rules of law governing specific performance, injunctive relief and other
equitable remedies.
14
(c) Except as set forth in Part 2.10 of the Disclosure Schedule:
(i) none of the Acquired Corporations has materially violated or
breached, or committed any material default under, any Company Contract,
and, to the knowledge of the Company, no other Person has materially
violated or breached, or committed any material default under, any Company
Contract;
(ii) to the knowledge of the Company, no event has occurred, and
no circumstance or condition exists, that (with or without notice or lapse
of time) will, or could reasonably be expected to, (A) result in a
violation or breach of any of the provisions of any Company Contract, (B)
give any Person the right to declare a default or exercise any remedy under
any Company Contract, (C) give any Person the right to accelerate the
maturity or performance of any Company Contract, or (D) give any Person the
right to cancel, terminate or modify any Company Contract;
(iii) since December 31, 1999, none of the Acquired Corporations
has received any notice or other communication regarding any actual or
possible violation or breach of, or default under, any Company Contract
other than as otherwise disclosed in Part 2.19 of the Disclosure Schedule;
and
(iv) none ofthe Acquired Corporations has waived any of its
material rights under any Material Contract.
(d) No Person is renegotiating, or has a right pursuant to the terms
of any Company Contract to renegotiate, any amount paid or payable to the
Acquired Corporations under any Material Contract or any other material term or
provision of any Material Contract.
(e) The Contracts identified in Part 2.10 of the Disclosure Schedule
collectively constitute all of the Contracts necessary to enable each of the
Acquired Corporations to conduct its business in the manner in which its
business is currently being conducted.
(f) Part 2.10 of the Disclosure Schedule identifies and provides a
brief description of each proposed Contract as to which any bid, offer, award,
written proposal, term sheet or similar document has been submitted or received
by any of the Acquired Corporations since January 1, 2000.
(g) Part 2.10 of the Disclosure Schedule provides an accurate
description and breakdown of the Acquired Corporations' backlog under Company
Contracts.
(h) Except as set forth in Part 2.10(h) of the Disclosure Schedule:
(i) none of the Acquired Corporations has had any determination of
noncompliance, entered into any consent order or undertaken any internal
investigation relating directly or indirectly to any Government Contract or
Government Bid; and
(ii) each of the Acquired Corporations has complied in all
material respects with all Legal Requirements with respect to all
Government Contracts and Government Bids.
15
2.11 Liabilities. The Acquired Corporations have no accrued, contingent or
other liabilities of any nature, either matured or unmatured (whether or not
required to be reflected in financial statements in accordance with generally
accepted accounting principles, and whether due or to become due), except for:
(a) liabilities identified as such in the "liabilities" column of the Unaudited
Interim Balance Sheet; (b) accounts payable or accrued salaries that have been
incurred by the Acquired Corporations since February 28, 2001 in the ordinary
course of business and consistent with the Acquired Corporations' past
practices; (c) liabilities under the Company Contracts identified in Part 2.10
of the Disclosure Schedule, to the extent the nature and magnitude of such
liabilities can be specifically ascertained by reference to the text of such
Company Contracts; and (d) the liabilities identified in Part 2.11 of the
Disclosure Schedule.
2.12 Compliance with Legal Requirements. Each of the Acquired
Corporations is, and has at all times since December 31, 1998 been, in
compliance with all applicable Legal Requirements, except where the failure to
comply with such Legal Requirements has not had and will not have a Material
Adverse Effect on the Acquired Corporations. Except as set forth in Part 2.12 of
the Disclosure Schedule, since December 31, 1998, none of the Acquired
Corporations has received any notice or other communication from any
Governmental Body regarding any actual or possible violation of, or failure to
comply with, any Legal Requirement.
2.13 Governmental Authorizations. Part 2.13 of the Disclosure Schedule
identifies each material Governmental Authorization held by the Acquired
Corporations, and the Company has delivered to Parent accurate and complete
copies of all Governmental Authorizations identified in Part 2.13 of the
Disclosure Schedule. The Governmental Authorizations identified in Part 2.13 of
the Disclosure Schedule are valid and in full force and effect, and collectively
constitute all Governmental Authorizations necessary to enable each of the
Acquired Corporations to conduct its business in the manner in which its
business is currently being conducted. Each of the Acquired Corporations is, and
at all times since December 31, 1998 has been, in substantial compliance with
the terms and requirements of the respective Governmental Authorizations
identified in Part 2.13 of the Disclosure Schedule. Since December 31, 1998,
none of the Acquired Corporations has received any notice or other communication
from any Governmental Body regarding (a) any actual or possible violation of or
failure to comply with any term or requirement of any Governmental
Authorization, or (b) any actual or possible revocation, withdrawal, suspension,
cancellation, termination or modification of any Governmental Authorization.
2.14 Tax Matters.
(a) All Tax Returns required to be filed by or on behalf of any of the
Acquired Corporations with any Governmental Body with respect to any taxable
period ending on or before the Closing Date (the "Company Returns") (i) have
been or, if due prior to the Closing, will be, filed on or before the applicable
due date (including any extensions of such due date), and (ii) have been, or
will be when filed, accurately and completely prepared in all material respects
in compliance with all applicable Legal Requirements. All amounts shown on the
Company Returns to be due on or before the Closing Date have been or will be
paid on or before the Closing Date. The Company has delivered to Parent accurate
and complete copies of all Company Returns filed since December 31, 1994 which
have been requested by Parent.
16
(b) The Company Financial Statements fully accrue all actual and
contingent liabilities for Taxes with respect to all periods through the dates
thereof in accordance with generally accepted accounting principles. The
Acquired Corporations will establish, in the ordinary course of business and
consistent with its past practices, reserves adequate for the payment of all
Taxes for the period from December 31, 2000 through the Closing Date, and the
Company will disclose the dollar amount of such reserves to Parent on or prior
to the Closing Date.
(c) No Company Return relating to income Taxes has ever been examined
or audited by any Governmental Body. There have been no examinations or audits
of any Company Return. No extension or waiver of the limitation period
applicable to any of the Company Returns has been granted (by any of the
Acquired Corporations or any other Person), and no such extension or waiver has
been requested from any of the Acquired Corporations.
(d) No claim or Proceeding is pending or has been threatened against
or with respect to any of the Acquired Corporations in respect of any Tax. There
are no unsatisfied liabilities for Taxes (including liabilities for interest,
additions to tax and penalties thereon and related expenses) with respect to any
notice of deficiency or similar document received by any of the Acquired
Corporations with respect to any Tax (other than liabilities for Taxes asserted
under any such notice of deficiency or similar document which are being
contested in good faith by any of the Acquired Corporations and with respect to
which adequate reserves for payment have been established). There are no liens
for Taxes upon any of the assets of any of the Acquired Corporations except
liens for current Taxes not yet due and payable. None of the Acquired
Corporations has entered into or become bound by any agreement or consent
pursuant to Section 341(f) of the Code. None of the Acquired Corporations has
been, and none of the Acquired Corporations will be, required to include any
adjustment in taxable income for any tax period (or portion thereof) pursuant to
Section 481 or 263A of the Code or any comparable provision under state or
foreign Tax laws as a result of transactions or events occurring, or accounting
methods employed, prior to the Closing.
(e) There is no agreement, plan, arrangement or other Contract
covering any employee or independent contractor or former employee or
independent contractor of any of the Acquired Corporations that, considered
individually or considered collectively with any other such Contracts, will, or
could reasonably be expected to, give rise directly or indirectly to the payment
of any amount that would not be deductible pursuant to Section 280G or Section
162 of the Code. None of the Acquired Corporations is, and has never been, a
party to or bound by any tax indemnity agreement, tax sharing agreement, tax
allocation agreement or similar Contract.
2.15 Employee and Labor Matters; Benefit Plans.
(a) Part 2.15(a) of the Disclosure Schedule identifies each salary,
bonus, deferred compensation, incentive compensation, stock purchase, stock
option, severance pay, termination pay, hospitalization, medical, life or other
insurance, supplemental unemployment benefits, profit-sharing, pension or
retirement plan, program or agreement (collectively, the "Plans") sponsored,
maintained, contributed to or required to be contributed to by any of the
Acquired Corporations for the benefit of any employee of any of the Acquired
Corporations ("Employee"), except for Plans which would not require any of the
Acquired Corporations to make payments or provide benefits having a value in
excess of $25,000 in the aggregate.
17
(b) Except as set forth in Part 2.15(a) of the Disclosure Schedule,
none of the Acquired Corporations maintains, sponsors or contributes to, and has
not at any time in the past maintained, sponsored or contributed to, any
employee pension benefit plan (as defined in Section 3(2) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), whether or not
excluded from coverage under specific Titles or Merger Subtitles of ERISA) for
the benefit of Employees or former Employees (a "Pension Plan").
(c) The Acquired Corporations maintain, sponsor or contribute only to
those employee welfare benefit plans (as defined in Section 3(1) of ERISA,
whether or not excluded from coverage under specific Titles or Merger Subtitles
of ERISA) for the benefit of Employees or former Employees which are described
in Part 2.15(c) of the Disclosure Schedule (the "Welfare Plans"), none of which
is a multiemployer plan (within the meaning of Section 3(37) of ERISA).
(d) With respect to each Plan, the Company has delivered to Parent:
(i) an accurate and complete copy of such Plan (including all
amendments thereto);
(ii) an accurate and complete copy of the annual report, if
required under ERISA, with respect to such Plan for the last two years;
(iii) an accurate and complete copy of the most recent summary
plan description, together with each Summary of Material Modifications, if
required under ERISA, with respect to such Plan, and all material employee
communications relating to such Plan;
(iv) if such Plan is funded through a trust or any third party
funding vehicle, an accurate and complete copy of the trust or other
funding agreement (including all amendments thereto) and accurate and
complete copies the most recent financial statements thereof;
(v) accurate and complete copies of all Contracts relating to such
Plan, including service provider agreements, insurance contracts, minimum
premium contracts, stop-loss agreements, investment management agreements,
subscription and participation agreements and recordkeeping agreements; and
(vi) an accurate and complete copy of the most recent
determination letter received from the Internal Revenue Service with
respect to such Plan (if such Plan is intended to be qualified under
Section 401(a) of the Code).
(e) None of the Acquired Corporations is required to be, and has never
been required to be, treated as a single employer with any other Person under
Section 4001(b)(1) of ERISA or Section 414(b), (c), (m) or (o) of the Code. None
of the Acquired Corporations has ever been a member of an "affiliated service
group" within the meaning of Section 414(m) of the Code. To the knowledge of the
Company, none of the Acquired Corporations has ever made a complete or partial
withdrawal from a multiemployer plan, as such term is defined in Section 3(37)
of ERISA, resulting in "withdrawal liability," as such term is defined in
18
Section 4201 of ERISA (without regard to subsequent reduction or waiver of such
liability under either Section 4207 or 4208 of ERISA).
(f) None of the Acquired Corporations has any plan or commitment to
create any additional Welfare Plan or any Pension Plan, or to modify or change
any existing Welfare Plan or Pension Plan (other than to comply with applicable
law) in a manner that would affect any Employee.
(g) Except as set forth in Part 2.15(g) of the Disclosure Schedule, no
Welfare Plan provides death, medical or health benefits (whether or not insured)
with respect to any current or former Employee after any such Employee's
termination of service (other than (i) benefit coverage mandated by applicable
law, including coverage provided pursuant to Section 4980B of the Code, (ii)
deferred compensation benefits accrued as liabilities on the Unaudited Interim
Balance Sheet, and (iii) benefits the full cost of which are borne by current or
former Employees (or the Employees' beneficiaries)).
(h) With respect to each of the Welfare Plans constituting a group
health plan within the meaning of Section 4980B(g)(2) of the Code, the
provisions of Section 4980B of the Code ("COBRA") have been complied with in all
material respects.
(i) Each of the Plans has been operated and administered in all
material respects in accordance with applicable Legal Requirements, including
but not limited to ERISA and the Code. (j) Each of the Plans intended to be
qualified under Section 401(a) of the Code has received a favorable
determination from the Internal Revenue Service, and none of the Acquired
Corporations is aware of any reason why any such determination letter should be
revoked.
(k) Except as set forth in Part 2.15(k) of the Disclosure Schedule,
neither the execution, delivery or performance of this Agreement, nor the
consummation of the Merger or any of the other transactions contemplated by this
Agreement, will result in any payment (including any bonus, golden parachute or
severance payment) to any current or former Employee or director of any of the
Acquired Corporations (whether or not under any Plan), or materially increase
the benefits payable under any Plan, or result in any acceleration of the time
of payment or vesting of any such benefits.
(l) Part 2.15(l) of the Disclosure Schedule contains a list of all
salaried employees of the Acquired Corporations as of the date of this
Agreement, and correctly reflects, in all material respects, their salaries, any
other compensation payable to them (including compensation payable pursuant to
bonus, deferred compensation or commission arrangements), their dates of
employment and their positions. None of the Acquired Corporations is a party to
any collective bargaining contract or other Contract with a labor union
involving any of its Employees. All of the Acquired Corporations' employees are
"at will" employees.
(m) Part 2.15(m) of the Disclosure Schedule identifies each Employee
who is not fully available to perform work because of disability or other leave
and sets forth the basis of such leave and the anticipated date of return to
full service.
19
(n) Each of the Acquired Corporations is in compliance in all material
respects with all applicable Legal Requirements and Contracts relating to
employment, employment practices, wages, bonuses and terms and conditions of
employment, including employee compensation matters.
(o) Except as set forth in Part 2.15(o) of the Disclosure Schedule,
each of the Acquired Corporations has good labor relations, and none of the
Acquired Corporations has reason to believe that (i) the consummation of the
Merger or any of the other transactions contemplated by this Agreement will have
a material adverse effect on the Acquired Corporations' labor relations, or (ii)
any of the Acquired Corporations' employees intends to terminate his or her
employment with any of the Acquired Corporations.
2.16 Environmental Matters. Each of the Acquired Corporations is in
compliance in all material respects with all applicable Environmental Laws,
which compliance includes the possession by each of the Acquired Corporations of
all permits and other Governmental Authorizations required under applicable
Environmental Laws, and compliance with the terms and conditions thereof. None
of the Acquired Corporations has received any notice or other communication (in
writing or otherwise), whether from a Governmental Body, citizens group,
employee or otherwise, that alleges that any of the Acquired Corporations is not
in compliance with any Environmental Law, and, to the knowledge of the Company,
there are no circumstances that may prevent or interfere with the Acquired
Corporations' compliance with any Environmental Law in the future. To the
knowledge of the Company, no current or prior owner of any property leased or
controlled by any of the Acquired Corporations has received any notice or other
communication (in writing or otherwise), whether from a Government Body,
citizens group, employee or otherwise, that alleges that such current or prior
owner or any of the Acquired Corporations is not in compliance with any
Environmental Law. All Governmental Authorizations currently held by any of the
Acquired Corporations pursuant to Environmental Laws are identified in Part 2.16
of the Disclosure Schedule. (For purposes of this Section 2.16: (i)
"Environmental Law" means any federal, state, local or foreign Legal Requirement
relating to pollution or protection of human health or the environment
(including ambient air, surface water, ground water, land surface or subsurface
strata), including any law or regulation relating to emissions, discharges,
releases or threatened releases of Materials of Environmental Concern, or
otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Materials of Environmental Concern;
and (ii) "Materials of Environmental Concern" include chemicals, pollutants,
contaminants, wastes, toxic substances, petroleum and petroleum products and any
other substance that is now or hereafter regulated by any Environmental Law or
that is otherwise a danger to health, reproduction or the environment.)
2.17 Insurance. Part 2.17 of the Disclosure Schedule identifies all
insurance policies maintained by, at the expense of or for the benefit of each
of the Acquired Corporations and identifies any material claims made thereunder,
and the Company has delivered to Parent accurate and complete copies of the
insurance policies identified on Part 2.17 of the Disclosure Schedule. Each of
the insurance policies identified in Part 2.17 of the Disclosure Schedule is in
full force and effect. Since December 31, 1998, none of the Acquired
Corporations has received any notice or other communication regarding any actual
or possible (a) cancellation or invalidation of any insurance policy, (b)
refusal of any coverage or rejection of any claim under
20
any insurance policy, or (c) material adjustment in the amount of the premiums
payable with respect to any insurance policy.
2.18 Related Party Transactions. Except as set forth in Part 2.18 of the
Disclosure Schedule: (a) no Related Party has, and no Related Party has at any
time since December 31, 1998 had, any direct or indirect interest in any
material asset used in or otherwise relating to the business of the Acquired
Corporations; (b) no Related Party is, or has at any time since December 31,
1998 been, indebted to any of the Acquired Corporations; (c) since December 31,
1998, no Related Party has entered into, or has had any direct or indirect
financial interest in, any material Contract, transaction or business dealing
involving any of the Acquired Corporations; (d) no Related Party is competing,
or has at any time since December 31, 1998 competed, directly or indirectly,
with any of the Acquired Corporations; and (e) no Related Party has any claim or
right against any of the Acquired Corporations (other than rights under Company
Options and rights to receive compensation for services performed as an employee
of any of the Acquired Corporations). (For purposes of the Section 2.18 each of
the following shall be deemed to be a "Related Party": (i) each of the
shareholders of the Company; (ii) each individual who is, or who has at any time
since December 31, 1998 been, an executive officer of the Company; (iii) each
member of the immediate family of each of the individuals referred to in clauses
"(i)" and "(ii)" above; and (iv) any trust or other Entity (other than the
Company) in which any one of the individuals referred to in clauses "(i)",
"(ii)" and "(iii)" above holds (or in which more than one of such individuals
collectively hold), beneficially or otherwise, a material voting, proprietary or
equity interest.)
2.19 Legal Proceedings; Orders.
(a) Except as set forth in Part 2.19 of the Disclosure Schedule, there
is no pending Legal Proceeding, and (to the knowledge of the Company) no Person
has threatened to commence any Legal Proceeding: (i) that involves any of the
Acquired Corporations or any of the assets owned or used by any of the Acquired
Corporations or any Person whose liability any of the Acquired Corporations has
or may have retained or assumed, either contractually or by operation of law; or
(ii) that challenges, or that may have the effect of preventing, delaying,
making illegal or otherwise interfering with, the Merger or any of the other
transactions contemplated by this Agreement. To the knowledge of the Company,
except as set forth in Part 2.19 of the Disclosure Schedule, no event has
occurred, and no claim, dispute or other condition or circumstance exists, that
will, or that could reasonably be expected to, give rise to or serve as a basis
for the commencement of any such Legal Proceeding.
(b) Except as set forth in Part 2.19 of the Disclosure Schedule, no
Legal Proceeding of a material or potentially material nature has ever been
commenced by or has ever been pending against any of the Acquired Corporations.
(c) There is no order, writ, injunction, judgment or decree to which
any of the Acquired Corporations, or any of the assets owned or used by any of
the Acquired Corporations, is subject. To the knowledge of the Company, no
officer or other employee of any of the Acquired Corporations is subject to any
order, writ, injunction, judgment or decree that prohibits such officer or other
employee from engaging in or continuing any conduct, activity or practice
relating to the Acquired Corporations' business.
21
2.20 Authority; Binding Nature of Agreement. The Company has the absolute
and unrestricted right, power and authority to enter into and to perform its
obligations under this Agreement; and the execution, delivery and performance by
the Company of this Agreement have been duly authorized by all necessary action
on the part of the Company and its board of directors. This Agreement
constitutes the legal, valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms, subject to (i) laws of general
application relating to bankruptcy, insolvency and the relief of debtors, and
(ii) rules of law governing specific performance, injunctive relief and other
equitable remedies.
2.21 Non-Contravention; Consents. Except as set forth in Part 2.21 of the
Disclosure Schedule, neither (1) the execution, delivery or performance of this
Agreement or any of the other agreements referred to in this Agreement, nor (2)
the consummation of the Merger or any of the other transactions contemplated by
this Agreement, will directly or indirectly (with or without notice or lapse of
time):
(a) contravene, conflict with or result in a violation of (i) any of
the provisions of any of the Acquired Corporations' articles of
incorporation or bylaws (or similar organizational documents), or (ii) any
resolution adopted by any of the Acquired Corporations' shareholders, any
of the Acquired Corporations' board of directors or any committee of any of
the Acquired Corporations' board of directors;
(b) contravene, conflict with or result in a violation of, or give any
Governmental Body or other Person the right to challenge any of the
transactions contemplated by this Agreement or to exercise any remedy or
obtain any relief under, any Legal Requirement or any order, writ,
injunction, judgment or decree to which any of the Acquired Corporations,
or any of the assets owned or used by any of the Acquired Corporations, is
subject;
(c) contravene, conflict with or result in a violation of any of the
terms or requirements of, or give any Governmental Body the right to
revoke, withdraw, suspend, cancel, terminate or modify, any Governmental
Authorization that is held by any of the Acquired Corporations or that
otherwise relates to any of the Acquired Corporations' business or to any
of the assets owned or used by any of the Acquired Corporations;
(d) contravene, conflict with or result in a violation or breach of,
or result in a default under, any provision of any Company Contract that is
or would constitute a Material Contract, or give any Person the right to
(i) declare a default or exercise any remedy under any such Company
Contract, (ii) accelerate the maturity or performance of any such Company
Contract, or (iii) cancel, terminate or modify any such Company Contract;
or
(e) result in the imposition or creation of any lien or other
Encumbrance upon or with respect to any asset owned or used by any of the
Acquired Corporations (except for minor liens that will not, in any case or
in the aggregate, materially detract from the value of the assets subject
thereto or materially impair the operations of any of the Acquired
Corporations).
22
Except as set forth in Part 2.21 of the Disclosure Schedule, none of the
Acquired Corporations is and will not be required to make any filing with or
give any notice to, or to obtain any Consent from, any Person in connection with
(x) the execution, delivery or performance of this Agreement or any of the other
agreements referred to in this Agreement, or (y) the consummation of the Merger
or any of the other transactions contemplated by this Agreement.
2.22 Full Disclosure.
(a) This Agreement (including the Disclosure Schedule) does not, and
the Company Closing Certificate will not, (i) contain any representation,
warranty or information that is false or misleading with respect to any material
fact, or (ii) omit to state any material fact or necessary in order to make the
representations, warranties and information contained and to be contained herein
and therein (in the light of the circumstances under which such representations,
warranties and information were or will be made or provided) not false or
misleading in any material respect.
(b) The information supplied by the Company to its shareholders in
connection with the solicitation of the written consent of its shareholders as
provided in Section 5.2 of this Agreement will not (i) contain any statement
that is inaccurate or misleading with respect to any material fact or (ii) omit
to state any material fact necessary in order to make such information (in the
light of the circumstances under which it is provided) not false or misleading.
2.23 Vote Required. The affirmative vote of the holders of (i) more than
two-thirds of the outstanding shares of Company Common Stock, Series A Preferred
Stock and Series B Preferred Stock, voting together as a single class; (ii) more
than two-thirds of the outstanding shares of Series A Preferred Stock and Series
B Preferred Stock, voting together as a single class; and (iii) more than two-
thirds of the outstanding shares of Company Common Stock, voting together as a
separate class (collectively, the "Required Vote") is the only vote of the
holders of any class or series of the Company's capital stock or other
securities necessary to adopt this Agreement and to approve the Merger and the
other transactions contemplated by this Agreement.
2.24 No Brokers. No broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based on arrangements made by or on
behalf of any of the Acquired Corporations or any affiliate of the Company.
2.25 No Existing Discussions. Except as set forth in Part 2.25 of the
Disclosure Schedule, neither any of the Acquired Corporations nor any
Representative of any of the Acquired Corporations is engaged, directly or
indirectly, in any discussions or negotiations with any other Person relating to
any Acquisition Transaction.
SECTION 3. Representations and Warranties of Parent and Merger Sub
Parent and Merger Sub jointly and severally represent and warrant to the
Company as follows:
23
3.1 Corporate Existence and Power. Each of Parent and Merger Sub is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware, and has all corporate power required to conduct
its business as now conducted, and is duly qualified to do business and is in
good standing in each jurisdiction in which the conduct of its business or the
ownership or leasing of its properties requires such qualification, except where
the failure to be so qualified would not have a material adverse effect on
Parent's business, financial condition or results of operations.
3.2 Authority; Binding Nature of Agreement. Parent and Merger Sub have the
absolute and unrestricted right, power and authority to perform their
obligations under this Agreement; and the execution, delivery and performance by
Parent and Merger Sub of this Agreement have been duly authorized by all
necessary action on the part of Parent and Merger Sub and their respective
boards of directors. No vote of Parent's stockholders is needed to approve the
Merger. This Agreement constitutes the legal, valid and binding obligation of
Parent and Merger Sub, enforceable against them in accordance with its terms,
subject to (i) laws of general application relating to bankruptcy, insolvency
and the relief of debtors, and (ii) rules of law governing specific performance,
injunctive relief and other equitable remedies.
3.3 Non-Contravention; Consents. Neither (1) the execution, delivery or
performance of this Agreement or any of the other agreements referred to in this
Agreement, nor (2) the consummation of the Merger or any of the other
transactions contemplated by this Agreement, will directly or indirectly (with
or without notice or lapse of time):
(a) contravene, conflict with or result in a violation of (i) any of
the provisions of Parent's or Merger Sub's certificate of incorporation or
bylaws, or (ii) any resolution adopted by Parent's stockholders or Merger
Sub's shareholders, Parent's or Merger Sub's board of directors or any
committee of Parent's or Merger Sub's board of directors; or
(b) give any Governmental Body or other Person the right to challenge
any of the transactions contemplated by this Agreement.
Except for the filing of a certificate of merger conforming to the requirements
of the Delaware General Corporation Law with the Secretary of State of the State
of Delaware and the filing of articles of merger conforming to the requirements
of the Virginia Stock Corporation Act with the State Corporation Commission of
the Commonwealth of Virginia, neither Parent or Merger Sub is or will be
required to make any filing with or give any notice to, or to obtain any Consent
from, any Person in connection with (x) the execution, delivery or performance
of this Agreement or any of the other agreements referred to in this Agreement,
or (y) the consummation of the Merger or any of the other transactions
contemplated by this Agreement.
SECTION 4. Certain Covenants of the Company
4.1 Access and Investigation. During the period from the date of this
Agreement through the Effective Time (the "Pre-Closing Period"), the Company
shall, and shall cause its Representatives to: (a) provide Parent and Parent's
Representatives with reasonable access to the Acquired Corporations'
Representatives, personnel and assets and to all existing books, records, Tax
Returns, work papers and other documents and information relating to the
Acquired Corporations; and (b) provide Parent and Parent's Representatives with
copies of such existing
24
books, records, Tax Returns, work papers and other documents and information
relating to the Acquired Corporations, and with such additional financial,
operating and other data and information regarding the Acquired Corporations, as
Parent may reasonably request.
4.2 Operation of the Acquired Corporations' Business. During the Pre-
Closing Period:
(a) each of the Acquired Corporations shall conduct its business and
operations in the ordinary course and in substantially the same manner as
such business and operations have been conducted prior to the date of this
Agreement;
(b) each of the Acquired Corporations shall use reasonable efforts to
preserve intact its current business organization, keep available the
services of its current officers and employees and maintain its relations
and good will with all suppliers, customers, landlords, creditors,
employees and other Persons having business relationships with the Acquired
Corporations;
(c) each of the Acquired Corporations shall keep in full force all
insurance policies identified in Part 2.17 of the Disclosure Schedule;
(d) the Company shall cause its officers to report regularly (but in
no event less frequently than weekly) to Parent upon its request concerning
the status of the Acquired Corporations' business;
(e) none of the Acquired Corporations shall declare, accrue, set aside
or pay any dividend or make any other distribution in respect of any shares
of its capital stock, and shall not repurchase, redeem or otherwise
reacquire any shares of capital stock or other securities (except that the
Company may repurchase Company Common Stock from former employees pursuant
to the terms of existing restricted stock purchase agreements);
(f) none of the Acquired Corporations shall sell, issue or authorize
the issuance of (i) any capital stock or other security, (ii) any option or
right to acquire any capital stock or other security, or (iii) any
instrument convertible into or exchangeable for any capital stock or other
security (except that the Company shall be permitted (x) to issue Company
Common Stock to employees upon the exercise of outstanding Company Options
and (y) to issue shares of Company Common Stock upon the conversion of
shares of Series A Preferred Stock and Series B Preferred Stock);
(g) none of the Acquired Corporations shall amend or waive any of its
rights under, or permit (other than as required by the Company's Stock
Plan) the acceleration of vesting under, (i) any provision of the Company's
Stock Plan, (ii) any provision of any agreement evidencing any outstanding
Company Option, or (iii) any provision of any restricted stock purchase
agreement;
(h) none of the Acquired Corporations shall amend or permit the
adoption of any amendment to its articles of incorporation or bylaws (or
similar organizational documents), or effect or permit any of the Acquired
Corporations to become a party to
25
any Acquisition Transaction, recapitalization, reclassification of shares,
stock split, reverse stock split or similar transaction (except that the
Company may issue shares of Company Common Stock upon the conversion of
shares of Series A Preferred Stock and Series B Preferred Stock);
(i) none of the Acquired Corporations shall form any subsidiary or
acquire any equity interest or other interest in any other Entity;
(j) none of the Acquired Corporations shall make any capital
expenditure;
(k) none of the Acquired Corporations shall (i) enter into, or permit
any of the assets owned or used by it to become bound by, any Contract that
is or would constitute a Material Contract or (ii) amend or prematurely
terminate, or waive any material right or remedy under, any such Contract,
without the prior approval of Parent;
(l) none of the Acquired Corporations shall (i) acquire, lease or
license any right or other asset from any other Person, (ii) sell or
otherwise dispose of, or lease or license, any right or other asset to any
other Person or (iii) waive or relinquish any right, except for assets
acquired, leased, licensed or disposed of by the Acquired Corporations
pursuant to Contracts that are not Material Contracts;
(m) none of the Acquired Corporations shall (i) lend money to any
Person or (ii) other than from Parent or Silicon Valley Bank pursuant to
the terms of the existing credit facility, incur or guarantee any
indebtedness for borrowed money;
(n) none of the Acquired Corporations shall (i) establish, adopt or
amend any Employee Benefit Plan, (ii) pay any bonus or make any profit-
sharing payment, cash incentive payment or similar payment to, or increase
the amount of the wages, salary, commissions, fringe benefits or other
compensation or remuneration payable to, any of its directors, officers or
employees, or (iii) hire any new employee;
(o) none of the Acquired Corporations shall change any of its methods
of accounting or accounting practices in any material respect;
(p) none of the Acquired Corporations shall make any Tax election;
(q) none of the Acquired Corporations shall commence or settle any
material Legal Proceeding; and
(r) none of the Acquired Corporations shall agree or commit to take
any of the actions described in clauses "(e)" through "(q)" above.
4.3 Notification; Updates to Disclosure Schedule.
(a) During the Pre-Closing Period, the Company shall promptly notify
Parent in writing of:
(i) the discovery by the Company of any event, condition, fact or
circumstance that occurred or existed on or prior to the date of this
Agreement and that
26
caused or constitutes an inaccuracy in or breach of any representation or
warranty made by the Company in this Agreement;
(ii) any event, condition, fact or circumstance that occurs,
arises or exists after the date of this Agreement and that would cause or
constitute an inaccuracy in or breach of any representation or warranty
made by the Company in this Agreement if (A) such representation or
warranty had been made as of the time of the occurrence, existence or
discovery of such event, condition, fact or circumstance, or (B) such
event, condition, fact or circumstance had occurred, arisen or existed on
or prior to the date of this Agreement;
(iii) any breach of any covenant or obligation of the Company; and
(iv) any event, condition, fact or circumstance that would make
the timely satisfaction of any of the conditions set forth in Section 6 or
Section 7 impossible or unlikely.
(b) If any event, condition, fact or circumstance that is required to be
disclosed pursuant to Section 4.3(a) requires any change in the Disclosure
Schedule, or if any such event, condition, fact or circumstance would
require such a change assuming the Disclosure Schedule were dated as of the
date of the occurrence, existence or discovery of such event, condition,
fact or circumstance, then the Company shall promptly deliver to Parent an
update to the Disclosure Schedule specifying such change. No such update
shall be deemed to supplement or amend the Disclosure Schedule for the
purpose of (i) determining the accuracy of any of the representations and
warranties made by the Company in this Agreement, or (ii) determining
whether any of the conditions set forth in Section 6 has been satisfied.
4.4 No Negotiation. During the Pre-Closing Period, unless the Company
shall have the right to terminate this Agreement under Section 8.1(e), the
Company shall not, directly or indirectly:
(a) solicit or encourage the initiation of any inquiry, proposal or offer
from any Person (other than Parent) relating to a possible Acquisition
Transaction;
(b) participate in any discussions or negotiations or enter into any
agreement with, or provide any non-public information to, any Person (other
than Parent) relating to or in connection with a possible Acquisition
Transaction; or
(c) consider, entertain or accept any proposal or offer from any Person
(other than Parent) relating to a possible Acquisition Transaction.
The Company shall promptly notify Parent in writing of any material inquiry,
proposal or offer relating to a possible Acquisition Transaction that is
received by the Company or any of its affiliates during the Pre-Closing Period
if, at the time of such receipt, the restrictions imposed upon the Company under
this section are in effect.
SECTION 5. Additional Covenants of the Parties
27
5.1 Filings and Consents. As promptly as practicable after the
execution of this Agreement, each party to this Agreement (a) shall make all
filings (if any) and give all notices (if any) required to be made and given by
such party in connection with the Merger and the other transactions contemplated
by this Agreement, and (b) shall use all commercially reasonable efforts to
obtain no later than April 4, 2001, or as soon thereafter as practicable, all
Consents (if any) required to be obtained (pursuant to any applicable Legal
Requirement or Contract, or otherwise) by such party in connection with the
Merger and the other transactions contemplated by this Agreement. The Company
shall (upon request) promptly deliver to Parent a copy of each such filing made,
each such notice given and each such Consent obtained by the Company during the
Pre-Closing Period.
5.2 Company Shareholders' Consent. The Company shall, in accordance
with its articles of incorporation and bylaws and the applicable requirements of
the Virginia Stock Corporation Act, solicit the written consent of its
shareholders (to be effective on or prior to April 4, 2001) approving the
adoption of this Agreement, the Merger and the other transactions contemplated
by this Agreement. The written consent shall be in a form reasonably acceptable
to Parent and shall include a waiver of any rights of the shareholders (under
the articles of incorporation or bylaws of the Company, agreements to which the
shareholders are party or otherwise) that Parent reasonably determines to be
necessary to carry out the purposes of this Agreement or to vest the Surviving
Corporation or Parent with full right, title and possession of and to all rights
and property of Merger Sub and the Company.
5.3 Public Announcements. During the Pre-Closing Period, (a) none of
the Acquired Corporations shall (and the Company shall not permit any of its
Representatives to) issue any press release or make any public statement
regarding this Agreement or the Merger, any of the other transactions
contemplated by this Agreement, or pending or signed customer contracts without
Parent's prior written consent and (b) Parent will use reasonable efforts to
consult with the Company prior to issuing any press release or making any public
statement regarding the Merger.
5.4 Commercially Reasonable Efforts. During the Pre-Closing Period,
(a) the Company shall use its commercially reasonable efforts to cause the
conditions set forth in Section 6 to be satisfied no later than April 4, 2001,
or as soon thereafter as practicable and (b) Parent and Merger Sub shall use
their commercially reasonable efforts to cause the conditions set forth in
Section 7 to be satisfied no later than April 4, 2001, or as soon thereafter as
practicable.
5.5 Reserved.
5.6 Reserved.
5.7 Release. The Company shall use all commercially reasonable efforts
to cause each of the Merger Shareholders who executes the written consent of the
Company's shareholders contemplated by Section 5.2 of this Agreement, and each
of the individuals identified on Exhibit E, to execute and deliver to the
Company a Release in the form of Exhibit F.
5.8 Termination of Employee Plans. At the Closing, the Company shall
terminate its Bonus Plan, and shall ensure that no employee or former employee
of the Company has any
28
rights under such Plan and that any liabilities of the Company under such Plan
(including any such liabilities relating to services performed prior to the
Closing) are fully extinguished at no cost to the Company other than the payment
of bonuses accrued prior to the Closing and identified on Part 5.8 of the
Disclosure Schedule.
5.9 Reserved.
5.10 Reserved.
5.11 Warrants. The Company shall (i) use all commercially reasonable
efforts to cause, without payment of any consideration, Silicon Valley Bank to
terminate the warrant to purchase 11,000 shares of Company Common Stock held by
Silicon Valley Bank (the "SVB Warrant") and (ii) the holders of the Company's
Series B Preferred Stock to terminate the warrants to purchase an aggregate of
662,000 shares of Company Common Stock held by such holders (the "Series B
Warrants").
5.12 Audit. The Company shall use all commercially reasonable efforts to
cause KPMG Peat Marwick to issue on or prior to the Closing an audit report with
respect to the Company's financial statements for the year ended December 31,
2000.
SECTION 6. Conditions Precedent to Obligations of Parent and Merger Sub
The obligations of Parent and Merger Sub to effect the Merger and
otherwise consummate the transactions contemplated by this Agreement are subject
to the satisfaction, at or prior to the Closing, of each of the following
conditions, any of which Parent and Merger Sub shall have the right to waive:
6.1 Accuracy of Representations. The representations and warranties made
by the Company in Section 2.3 and Section 2.20 of this Agreement shall have been
accurate in all respects as of the date of this Agreement and as of the Closing
as if made at the Closing (without giving effect to any update to the Disclosure
Schedule). Each of the other representations and warranties made by the Company
in this Agreement shall have been accurate in all material respects as of the
date of this Agreement (without giving effect to any "Material Adverse Effect"
or other materiality qualifications, or any similar qualifications, contained or
incorporated directly or indirectly in such representations and warranties, and
without giving effect to any update to the Disclosure Schedule).
6.2 Performance of Covenants. All of the covenants and obligations that
the Company are required to comply with or to perform at or prior to the Closing
shall have been complied with and performed in all material respects.
6.3 Shareholder Approval. The principal terms of the Merger shall have
been duly approved by the Required Vote and the affirmative vote of the holders
of at least 90% of the shares of Company Common Stock, Series A Preferred Stock
and Series B Preferred Stock entitled to vote with respect thereto, voting as a
single class.
6.4 Consents. All Consents required to be obtained in connection with the
Merger and the other transactions contemplated by this Agreement (including the
Consents identified in
29
Part 2.21 of the Disclosure Schedule) shall have been obtained and shall be in
full force and effect.
6.5 Agreements and Documents. Parent and the Company shall have received
the following agreements and documents, each of which shall be in full force and
effect:
(a) Reserved;
(b) a Release in the form of Exhibit F, executed by each of the Merger
Shareholders who executes the written consent of the Company's shareholders
contemplated by Section 5.2 of this Agreement, and each of the individuals
or entities identified on Exhibit E;
(c) Reserved;
(d) Reserved;
(e) a legal opinion of Xxxxx Xxxxx, dated as of the Closing Date, in
the form of Exhibit G;
(f) a certificate executed by the Chief Executive Officer of the
Company containing the representation and warranty of the Company that each
of the conditions set forth in Sections 6.1, 6.2, 6.3, 6.4, 6.7 and 6.9
have been duly satisfied (the "Company Closing Certificate");
(g) written resignations of all directors and officers of the Acquired
Corporations, effective as of the Effective Time;
(h) the valid and effective termination as of the Effective Time of
provisions in Contracts that provide any Person with rights of any nature
with respect to their election to the board of directors of the Company or
their right to observe or attend board of directors' meetings;
(i) articles of merger executed by the Company to be filed with the
State Corporation Commission of the Commonwealth of Virginia in accordance
with Section 1.3 and a certificate of merger executed by the Company to be
filed with the Secretary of State of the State of Delaware in accordance
with Section 1.3;
(j) Reserved;
(k) evidence, reasonably satisfactory to Parent, pursuant to which the
holders of the Company's promissory notes issued in March 2001 in the
aggregate principal amount of $250,000 and identified in Part 2.5(d) of the
Disclosure Schedule (the "Investor Notes") have amended the Investor Notes
to remove (effective as of the Effective Time): (i) the provision in the
Investor Notes that provides that the Investor Notes will be prepaid at
200% in the event of a change of control of the Company; (ii) the provision
in the Investor Notes obligating the Company to comply with certain
covenants identified on Schedule B of each of the Investor Notes; (iii)
Schedule B of each of the
30
Investor Notes and (iv) the provisions of the Investor Notes that provide
for their convertibility into equity of the Company; and
(l) evidence, reasonably satisfactory to Parent, providing for the
termination of the SVB Warrant and the Series B Warrants.
6.6 Reserved.
6.7 Absence of Material Adverse Effect. There shall have been no change in
the business, condition, assets, liabilities, operations, financial performance
or prospects of the Acquired Corporations since the date of this Agreement which
has had or would reasonably be expected to have a Material Adverse Effect on the
Acquired Corporations, other than changes that arise from matters expressly
disclosed on the Disclosure Schedule.
6.8 No Restraints. No temporary restraining order, preliminary or
permanent injunction or other order preventing the consummation of the Merger
shall have been issued by any court of competent jurisdiction and remain in
effect, and there shall not be any Legal Requirement enacted or deemed
applicable to the Merger that makes consummation of the Merger illegal.
6.9 No Legal Proceedings. Other than Legal Proceedings that arise from
matters expressly disclosed on the Disclosure Schedule, no Person shall have
commenced or threatened to commence any Legal Proceeding (a) challenging the
Merger, (b) seeking the recovery of a material amount of damages in excess of
the amount of the claims identified in Part 2.19 of the Disclosure Schedule, (c)
seeking to prohibit or limit the exercise by Parent of any material right
pertaining to its ownership of stock of the Surviving Corporation or (d)
claiming to own any capital stock of the Company, or option or other right to
acquire capital stock of the Company, or right to receive consideration as a
result of the Merger.
6.10 Termination of Employee Plans. The Company shall have provided Parent
with evidence, reasonably satisfactory to Parent, as to the termination of the
bonus plan referred to in Section 5.8.
SECTION 7. Conditions Precedent to Obligations of the Company
The obligations of the Company to effect the Merger and otherwise
consummate the transactions contemplated by this Agreement are subject to the
satisfaction, at or prior to the Closing, of the following conditions:
7.1 Accuracy of Representations. Each of the representations and
warranties made by Parent and Merger Sub in this Agreement shall have been
accurate in all material respects as of the date of this Agreement (without
giving effect to any materiality or similar qualifications contained in such
representations and warranties), and shall be accurate in all material respects
as of the Closing as if made at the Closing (without giving effect to any
materiality or similar qualifications contained in such representations and
warranties).
31
7.2 Performance of Covenants. All of the covenants and obligations that
Parent and Merger Sub are required to comply with or to perform at or prior to
the Closing shall have been complied with and performed in all material
respects.
7.3 No Restraints. No temporary restraining order, preliminary or
permanent injunction or other order preventing the consummation of the Merger
shall have been issued by any court of competent jurisdiction and remain in
effect, and there shall not be any Legal Requirement enacted or deemed
applicable to the Merger that makes consummation of the Merger illegal.
SECTION 8. Termination
8.1 Termination Events. This Agreement may be terminated prior to the
Closing:
(a) by Parent if Parent reasonably determines that the timely
satisfaction of any condition set forth in Section 6 has become impossible
(other than as a result of any failure on the part of Parent or Merger Sub
to comply with or perform any covenant or obligation of Parent or Merger
Sub set forth in this Agreement);
(b) by the Company if the Company reasonably determines that the
timely satisfaction of any condition set forth in Section 7 has become
impossible (other than as a result of any failure on the part of the
Company to comply with or perform any covenant or obligation set forth in
this Agreement or in any other agreement or instrument delivered to
Parent);
(c) by Parent if the Closing has not taken place on or before April
30, 2001 (other than as a result of any failure on the part of Parent to
comply with or perform any covenant or obligation of Parent set forth in
this Agreement);
(d) by the Company if the Closing has not taken place on or before
April 30, 2001 (other than as a result of the failure on the part of the
Company to comply with or perform any covenant or obligation set forth in
this Agreement or in any other agreement or instrument delivered to
Parent); or
(e) by the Company, if Parent has breached its obligation to fund Loan
B under that certain promissory note issued by the Company to Parent on
March 15, 2001; or
(f) by the mutual consent of Parent and the Company.
8.2 Termination Procedures. If Parent wishes to terminate this Agreement
pursuant to Section 8.1(a), Section 8.1(c) or Section 8.1(e), Parent shall
deliver to the Company a written notice stating that Parent is terminating this
Agreement and setting forth a brief description of the basis on which Parent is
terminating this Agreement. If the Company wishes to terminate this Agreement
pursuant to Section 8.1(b), Section 8.1(d) or Section 8.1(e), the Company shall
deliver to Parent a written notice stating that the Company is terminating this
Agreement and
32
setting forth a brief description of the basis on which the Company is
terminating this Agreement.
8.3 Effect of Termination. If this Agreement is terminated pursuant to
Section 8.1, all further obligations of the parties under this Agreement shall
terminate; provided, however, that: (a) neither the Company nor Parent shall be
relieved of any obligation or liability arising from any prior breach by such
party of any provision of this Agreement; (b) the parties shall, in all events,
remain bound by and continue to be subject to the provisions set forth in
Section 10; and (c) the Company shall, in all events, remain bound by and
continue to be subject to Section 5.4.
SECTION 9. RESERVED.
SECTION 10. Miscellaneous Provisions
10.1 Shareholders' Agent. By virtue of their approval of the Merger and
this Agreement, the Merger Shareholders shall have approved, among other
matters, the expense reimbursement provisions in Section 10.3 and shall appoint
Hadar Pedhazur as their agent for purposes of the transactions contemplated by
this Agreement (the "Shareholders' Agent"), and Hadar Pedhazur hereby accepts
his appointment as the Shareholders' Agent. Parent shall be entitled to deal
exclusively with the Shareholders' Agent on all matters relating to the
transactions contemplated by this Agreement, and shall be entitled to rely
conclusively (without further evidence of any kind whatsoever) on any document
executed or purported to be executed on behalf of any Merger Shareholder by the
Shareholders' Agent, and on any other action taken or purported to be taken on
behalf of any Merger Shareholder by the Shareholders' Agent, as fully binding
upon such Merger Shareholder. If the Shareholders' Agent shall die, become
disabled or otherwise be unable to fulfill his responsibilities as agent of the
Merger Shareholders, then the Merger Shareholders shall, within ten days after
such death or disability, appoint a successor agent and, promptly thereafter,
shall notify Parent of the identity of such successor. Any such successor shall
become the "Shareholders' Agent" for purposes of this Section 10.1. If for any
reason there is no Shareholders' Agent at any time, all references herein to the
Shareholders' Agent shall be deemed to refer to the Merger Shareholders.
10.2 Further Assurances. Each party hereto shall execute and cause to be
delivered to each other party hereto such instruments and other documents, and
shall take such other actions, as such other party may reasonably request (prior
to, at or after the Closing) for the purpose of carrying out or evidencing any
of the transactions contemplated by this Agreement.
10.3 Fees and Expenses. Each party to this Agreement shall bear and pay
all fees, costs and expenses (including legal fees and accounting fees) that
have been incurred or that are incurred by such party in connection with the
transactions contemplated by this Agreement, including all fees, costs and
expenses incurred by such party in connection with or by virtue of (a) the
investigation and review conducted by Parent and its Representatives with
respect to the Acquired Corporations' business (and the furnishing of
information to Parent and its Representatives in connection with such
investigation and review), (b) the negotiation, preparation and review of this
Agreement (including the Disclosure Schedule) and all agreements, certificates,
opinions and other instruments and documents delivered or to be
33
delivered in connection with the transactions contemplated by this Agreement,
(c) the preparation and submission of any filing or notice required to be made
or given in connection with any of the transactions contemplated by this
Agreement, and the obtaining of any Consent required to be obtained in
connection with any of such transactions, and (d) the consummation of the
Merger; provided, however, that, to the extent the total amount of all such
fees, costs and expenses incurred by or for the benefit of the Company
(including all such fees, costs and expenses incurred prior to the date of this
Agreement) exceeds $50,000 in the aggregate, such fees, costs and expenses shall
be borne and paid by the Merger Shareholders and not by the Company.
10.4 Attorneys' Fees. If any action or proceeding relating to this
Agreement or the enforcement of any provision of this Agreement is brought
against any party hereto, the prevailing party shall be entitled to recover
reasonable attorneys' fees, costs and disbursements (in addition to any other
relief to which the prevailing party may be entitled).
10.5 Notices. Any notice or other communication required or permitted to
be delivered to any party under this Agreement shall be in writing and shall be
deemed properly delivered, given and received when delivered (by hand, by
registered mail, by courier or express delivery service or by facsimile) to the
address or facsimile telephone number set forth beneath the name of such party
below (or to such other address or facsimile telephone number as such party
shall have specified in a written notice given to the other parties hereto):
if to Parent:
Vitria Technology, Inc.
000 Xxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Facsimile number: (000) 000-0000
Attn: General Counsel
34
with a copy to:
Cooley Godward LLP
Attn: Xxxxxxx Xxxxxxxx Xxxxxx
0000 Xx Xxxxxx Xxxx
Five Xxxx Xxxx Xxxxxx
Xxxx Xxxx, XX 00000-0000
Facsimile: (000) 000-0000
if to the Company:
XMLSolutions Corporation
0000 Xxxxxxxx Xxxxx, Xxxxx 000
XxXxxx, XX 00000
Facsimile number: (000) 000-0000
with copy to:
Xxxxx Xxxxx Xxxxx Xxxxxx Xxxxxxx and Xxxxx, P.C.
Attn: Xxxx Xxxxxxx
One Fountain Square
00000 Xxxxxxx Xxxxx
Xxxxx 000
Xxxxxx, XX 00000
Facsimile: (000) 000-0000
if to any of the Merger Shareholders or the Shareholders' Agent:
x/x Xxxxx Xxxxxxxx
00 Xxxxxxx Xxxx Xxxx
Xxxxxxxxxx, XX 00000
10.6 Time of the Essence. Time is of the essence of this Agreement.
10.7 Headings. The underlined headings contained in this Agreement are for
convenience of reference only, shall not be deemed to be a part of this
Agreement and shall not be referred to in connection with the construction or
interpretation of this Agreement.
10.8 Counterparts. This Agreement may be executed in several counterparts,
each of which shall constitute an original and all of which, when taken
together, shall constitute one agreement.
10.9 Governing Law. This Agreement shall be construed in accordance with,
and governed in all respects by, the internal laws of the State of Delaware
(without giving effect to principles of conflicts of laws).
10.10 Successors and Assigns. This Agreement shall be binding upon: the
Company and its successors and assigns (if any); Parent and its successors and
assigns (if any); and Merger
35
Sub and its successors and assigns (if any). This Agreement shall inure to the
benefit of: the Company; the Company's shareholders (to the extent set forth in
Section 1.5); Parent; Merger Sub; and the respective successors and assigns (if
any) of the foregoing. Parent may freely assign any or all of its rights under
this Agreement, in whole or in part, to any other Person without obtaining the
consent or approval of any other party hereto or of any other Person.
10.11 Remedies Cumulative; Specific Performance. The rights and remedies
of the parties hereto shall be cumulative (and not alternative). The parties to
this Agreement agree that, in the event of any breach or threatened breach by
any party to this Agreement of any covenant, obligation or other provision set
forth in this Agreement for the benefit of any other party to this Agreement,
such other party shall be entitled (in addition to any other remedy that may be
available to it) to (a) a decree or order of specific performance or mandamus to
enforce the observance and performance of such covenant, obligation or other
provision, and (b) an injunction restraining such breach or threatened breach.
10.12 Waiver.
(a) No failure on the part of any Person to exercise any power, right,
privilege or remedy under this Agreement, and no delay on the part of any Person
in exercising any power, right, privilege or remedy under this Agreement, shall
operate as a waiver of such power, right, privilege or remedy; and no single or
partial exercise of any such power, right, privilege or remedy shall preclude
any other or further exercise thereof or of any other power, right, privilege or
remedy.
(b) No Person shall be deemed to have waived any claim arising out of
this Agreement, or any power, right, privilege or remedy under this Agreement,
unless the waiver of such claim, power, right, privilege or remedy is expressly
set forth in a written instrument duly executed and delivered on behalf of such
Person; and any such waiver shall not be applicable or have any effect except in
the specific instance in which it is given.
(c) Nothing in this Agreement or in the Release required of any Merger
Shareholder shall waive or be deemed to have waived any indemnification right to
which such Merger Shareholder, or any affiliate thereof, was entitled to obtain
in his capacity as a director or officer of the Company immediately prior to the
Merger.
10.13 Amendments. This Agreement may not be amended, modified, altered or
supplemented other than by means of a written instrument duly executed and
delivered on behalf of all of the parties hereto.
10.14 Severability. In the event that any provision of this Agreement, or
the application of any such provision to any Person or set of circumstances,
shall be determined to be invalid, unlawful, void or unenforceable to any
extent, the remainder of this Agreement, and the application of such provision
to Persons or circumstances other than those as to which it is determined to be
invalid, unlawful, void or unenforceable, shall not be impaired or otherwise
affected and shall continue to be valid and enforceable to the fullest extent
permitted by law.
36
10.15 Parties in Interest. Except for the provisions of Sections 1.5, none
of the provisions of this Agreement is intended to provide any rights or
remedies to any Person other than the parties hereto and their respective
successors and assigns (if any).
10.16 Entire Agreement. This Agreement and the other agreements referred
to herein set forth the entire understanding of the parties hereto relating to
the subject matter hereof and thereof and supersede all prior agreements and
understandings among or between any of the parties relating to the subject
matter hereof and thereof; provided, however, that the letter agreement between
Parent on and the Company dated as of March 9, 2001 with respect to the
treatment of confidential information shall not be superseded by this Agreement
and shall remain in effect in accordance with its terms until the earlier of (a)
the Effective Time or (b) the date on which such letter agreement is terminated
in accordance with its terms.
10.17 Construction.
(a) For purposes of this Agreement, whenever the context requires: the
singular number shall include the plural, and vice versa; the masculine gender
shall include the feminine and neuter genders; the feminine gender shall include
the masculine and neuter genders; and the neuter gender shall include the
masculine and feminine genders.
(b) The parties hereto agree that any rule of construction to the
effect that ambiguities are to be resolved against the drafting party shall not
be applied in the construction or interpretation of this Agreement.
(c) As used in this Agreement, the words "include" and "including,"
and variations thereof, shall not be deemed to be terms of limitation, but
rather shall be deemed to be followed by the words "without limitation."
(d) Except as otherwise indicated, all references in this Agreement to
"Sections" and "Exhibits" are intended to refer to Sections of this Agreement
and Exhibits to this Agreement.
37
The parties hereto have caused this Agreement to be executed and delivered
as of March 25, 2001.
Vitria Technology, Inc.,
a Delaware corporation
By: /s/ XxXxx Xxxxx
___________________________________
Name: XxXxx Xxxxx
Title: President and Chief
Executive Officer
Victorious Acquisition Sub, Inc.,
a Delaware corporation
By: /s/ XxXxx Xxxxx
___________________________________
Name: XxXxx Xxxxx
Title: President and Chief
Executive Officer
XMLSolutions Corporation,
a Virginia corporation
By: /s/ Xxxxx Xxxx
___________________________________
Name: Xxxxx Xxxx
Title: President
38
Exhibit A
CERTAIN DEFINITIONS
For purposes of the Agreement (including this Exhibit A):
Acquisition Transaction. "Acquisition Transaction" shall mean any
transaction involving:
(a) the sale, license, disposition or acquisition of all or a material
portion of the Acquired Corporations' business or assets;
(b) the issuance, disposition or acquisition of (i) any capital stock
or other equity security of the Acquired Corporations (other than common
stock issued to employees of the Acquired Corporations, upon exercise of
Company Options or otherwise, in routine transactions in accordance with
the Acquired Corporations' past practices), (ii) any option, call, warrant
or right (whether or not immediately exercisable) to acquire any capital
stock or other equity security of the Acquired Corporations (other than
stock options granted to employees of the Acquired Corporations in routine
transactions in accordance with the Acquired Corporations' past practices),
or (iii) any security, instrument or obligation that is or may become
convertible into or exchangeable for any capital stock or other equity
security of the Acquired Corporations; or
(c) any merger, consolidation, business combination, reorganization or
similar transaction involving the Acquired Corporations.
Agreement. "Agreement" shall mean the Agreement and Plan of Merger and
Reorganization to which this Exhibit A is attached (including the Disclosure
Schedule), as it may be amended from time to time.
Company Contract. "Company Contract" shall mean any Contract: (a) to
which any of the Acquired Corporations is a party; (b) by which any of the
Acquired Corporations or any of its assets is or may become bound or under which
any of the Acquired Corporations has, or may become subject to, any obligation;
or (c) under which any of the Acquired Corporations has or may acquire any right
or interest.
Company Proprietary Asset. "Company Proprietary Asset" shall mean any
Proprietary Asset owned by or licensed to any of the Acquired Corporations or
otherwise used by any of the Acquired Corporations.
Company Source Code. "Company Source Code" shall mean any source code, or
any portion, aspect or segment of any source code, relating to any Company
Proprietary Asset.
Consent. "Consent" shall mean any approval, consent, ratification,
permission, waiver or authorization (including any Governmental Authorization).
Contract. "Contract" shall mean any written, oral or other agreement,
contract, subcontract, lease, understanding, instrument, note, warranty,
insurance policy, benefit plan or legally binding commitment or undertaking of
any nature.
Damages. "Damages" shall include any loss, damage, injury, decline in
value, lost opportunity, liability, claim, demand, settlement, judgment, award,
fine, penalty, Tax, fee (including reasonable attorneys' fees), charge, cost
(including costs of investigation) or expense of any nature.
Disclosure Schedule. "Disclosure Schedule" shall mean the schedule (dated
as of the date of the Agreement) delivered to Parent on behalf of the Company.
Encumbrance. "Encumbrance" shall mean any lien, pledge, hypothecation,
charge, mortgage, security interest, encumbrance, claim, infringement,
interference, option, right of first refusal, preemptive right, community
property interest or restriction of any nature (including any restriction on the
voting of any security, any restriction on the transfer of any security or other
asset, any restriction on the receipt of any income derived from any asset, any
restriction on the use of any asset and any restriction on the possession,
exercise or transfer of any other attribute of ownership of any asset).
Entity. "Entity" shall mean any corporation (including any non-profit
corporation), general partnership, limited partnership, limited liability
partnership, joint venture, estate, trust, company (including any limited
liability company or joint stock company), firm or other enterprise,
association, organization or entity.
Government Bid. "Government Bid" shall mean any quotation, bid or proposal
submitted to any Governmental Body or any proposed prime contractor or higher-
tier subcontractor of any Governmental Body.
Government Contract. "Government Contract" shall mean any prime contract,
subcontract, letter contract, purchase order or delivery order executed or
submitted to or on behalf of any Governmental Body or any prime contractor or
higher-tier subcontractor, or under which any Governmental Body or any such
prime contractor or subcontractor otherwise has or may acquire any right or
interest.
Governmental Authorization. "Governmental Authorization" shall mean any:
(a) permit, license, certificate, franchise, permission, clearance,
registration, qualification or authorization issued, granted, given or otherwise
made available by or under the authority of any Governmental Body or pursuant to
any Legal Requirement; or (b) right under any Contract with any Governmental
Body.
Governmental Body. "Governmental Body" shall mean any: (a) nation, state,
commonwealth, province, territory, county, municipality, district or other
jurisdiction of any nature; (b) federal, state, local, municipal, foreign or
other government; or (c) governmental or quasi-governmental authority of any
nature (including any governmental division, department, agency, commission,
instrumentality, official, organization, unit, body or Entity and any court or
other tribunal).
Knowledge. Information shall be deemed to be known to or to the
"knowledge" of the Company if that information is actually known or reasonably
should be known by any officer or director of the Company.
Legal Proceeding. "Legal Proceeding" shall mean any action, suit,
litigation, arbitration, proceeding (including any civil, criminal,
administrative, investigative or appellate proceeding), hearing, inquiry, audit,
examination or investigation commenced, brought, conducted or heard by or
before, or otherwise involving, any court or other Governmental Body or any
arbitrator or arbitration panel.
Legal Requirement. "Legal Requirement" shall mean any federal, state,
local, municipal, foreign or other law, statute, constitution, principle of
common law, resolution, ordinance, code, edict, decree, rule, regulation, ruling
or requirement issued, enacted, adopted, promulgated, implemented or otherwise
put into effect by or under the authority of any Governmental Body.
Material Adverse Effect. A violation or other matter will be deemed to
have a "Material Adverse Effect" on the Acquired Corporations if such violation
or other matter (considered together with all other matters that would
constitute exceptions to the representations and warranties set forth in the
Agreement or in the Company Closing Certificate but for the presence of
"Material Adverse Effect" or other materiality qualifications, or any similar
qualifications, in such representations and warranties) would have a material
adverse effect on the Acquired Corporations' business, condition, assets,
liabilities, operations, financial performance or prospects.
Person. "Person" shall mean any individual, Entity or Governmental Body.
Proprietary Asset. "Proprietary Asset" shall mean any: (a) patent, patent
application, trademark (whether registered or unregistered), trademark
application, trade name, fictitious business name, service xxxx (whether
registered or unregistered), service xxxx application, copyright (whether
registered or unregistered), copyright application, maskwork, maskwork
application, trade secret, know-how, customer list, franchise, system, computer
software, computer program, invention, design, blueprint, engineering drawing,
proprietary product, technology, proprietary right or other intellectual
property right or intangible asset; or (b) right to use or exploit any of the
foregoing.
Representatives. "Representatives" shall mean officers, directors,
employees, agents, attorneys, accountants, advisors and representatives.
Tax. "Tax" shall mean any tax (including any income tax, franchise tax,
capital gains tax, gross receipts tax, value-added tax, surtax, excise tax, ad
valorem tax, transfer tax, stamp tax, sales tax, use tax, property tax, business
tax, withholding tax or payroll tax), levy, assessment, tariff, duty (including
any customs duty), deficiency or fee, and any related charge or amount
(including any fine, penalty or interest), imposed, assessed or collected by or
under the authority of any Governmental Body.
Tax Return. "Tax Return" shall mean any return (including any information
return), report, statement, declaration, estimate, schedule, notice,
notification, form, election, certificate
or other document or information filed with or submitted to, or required to be
filed with or submitted to, any Governmental Body in connection with the
determination, assessment, collection or payment of any Tax or in connection
with the administration, implementation or enforcement of or compliance with any
Legal Requirement relating to any Tax.
