EXHIBIT 2.1
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AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
among:
DOCUMENTUM, INC.,
a Delaware corporation;
RTI ACQUISITION CORP,
a Delaware corporation
RELEVANCE TECHNOLOGIES, INC.,
a Delaware corporation;
and
XXXXXXXX X. XXXXXXX,
as Agent
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Dated as of July 16, 1998
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TABLE OF CONTENTS
PAGE
SECTION 1. DESCRIPTION OF TRANSACTION...................................... 1
1.1 Merger of the Company into Merger Sub........................... 1
1.2 Effect of the Merger............................................ 2
1.3 Closing; Effective Time......................................... 2
1.4 Certificate of Incorporation and Bylaws; Directors and Officers. 2
1.5 Conversion of Shares............................................ 2
1.6 Employee Stock Options.......................................... 5
1.7 Closing of the Company's Transfer Books......................... 6
1.8 Exchange of Certificates........................................ 7
1.9 Appraisal Rights................................................ 8
1.10 Escrow.......................................................... 8
1.11 Tax Consequences................................................ 9
1.12 Further Action.................................................. 9
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY................... 9
2.1 Due Organization; No Subsidiaries; Etc.......................... 9
2.2 Certificate of Incorporation and Bylaws; Records................10
2.3 Capitalization, Etc.............................................10
2.4 Financial Statements............................................11
2.5 Absence of Changes..............................................12
2.6 Title to Assets.................................................13
2.7 Bank Accounts; Receivables......................................14
2.8 Equipment; Leasehold............................................14
2.9 Proprietary Assets..............................................14
2.10 Contracts.......................................................15
2.11 Liabilities.....................................................17
2.12 Compliance with Legal Requirements..............................17
2.13 Governmental Authorizations.....................................18
2.14 Tax Matters.....................................................18
2.15 Employee and Labor Matters; Benefit Plans.......................19
2.16 Environmental Matters...........................................21
2.17 Insurance.......................................................22
2.18 Related Party Transactions......................................22
i.
TABLE OF CONTENTS
(CONTINUED)
PAGE
2.19 Legal Proceedings; Orders....................................... 22
2.20 Authority; Binding Nature of Agreement.......................... 23
2.21 Non-Contravention; Consents..................................... 23
2.22 Full Disclosure................................................. 24
SECTION 3. REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB......... 24
3.1 SEC Filings; Financial Statements............................... 24
3.2 Authority; Binding Nature of Agreement.......................... 24
3.3 Valid Issuance.................................................. 24
3.4 Organization, Standing and Power................................ 25
3.5 Authorizations.................................................. 25
3.6 Absence of Certain Changes...................................... 25
SECTION 4. ADDITIONAL COVENANTS OF THE PARTIES............................. 25
4.1 Filings and Consents............................................ 25
4.2 Public Announcements............................................ 25
4.3 Termination of Agreements....................................... 26
4.4 FIRPTA Matters.................................................. 26
4.5 Release......................................................... 26
4.6 Investment Representation Letter................................ 26
4.7 Registration Rights Agreement................................... 26
4.8 Amendments to Company Options................................... 26
4.9 Termination of 401(k) Plan...................................... 27
4.10 Indemnification................................................. 27
4.11 Tax-Free Reorganization......................................... 27
4.12 Blue Sky Laws................................................... 27
4.13 Employee Benefits............................................... 27
4.14 Tax Matters..................................................... 27
SECTION 5. CONDITIONS PRECEDENT TO OBLIGATIONS OF PARENT AND MERGER SUB.... 28
5.1 Accuracy of Representations..................................... 28
5.2 Performance of Covenants........................................ 28
5.3 Stockholder Approval............................................ 28
5.4 Consents........................................................ 28
5.5 Agreements and Documents........................................ 28
ii.
TABLE OF CONTENTS
(CONTINUED)
PAGE
5.6 FIRPTA Compliance............................................... 29
5.7 No Restraints................................................... 29
5.8 No Legal Proceedings............................................ 29
5.9 Termination of 401(k) Plan...................................... 29
SECTION 6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY.............. 30
6.1 Accuracy of Representations..................................... 30
6.2 Performance of Covenants........................................ 30
6.3 Documents....................................................... 30
6.4 Listing......................................................... 30
6.5 No Restraints................................................... 30
SECTION 7. INDEMNIFICATION, ETC............................................ 31
7.1 Survival of Representations, Etc................................ 31
7.2 Indemnification by Stockholders................................. 31
7.3 Threshold; Ceiling.............................................. 32
7.4 Satisfaction of Indemnification Claim........................... 32
7.5 No Contribution................................................. 32
7.6 Defense of Third Party Claims................................... 33
7.7 Exercise of Remedies by Indemnitees Other Than Parent........... 33
SECTION 8. MISCELLANEOUS PROVISIONS........................................ 33
8.1 Agent........................................................... 33
8.2 Further Assurances.............................................. 34
8.3 Fees and Expenses............................................... 34
8.4 Attorneys' Fees................................................. 34
8.5 Notices......................................................... 34
8.6 Confidentiality................................................. 35
8.7 Time of the Essence............................................. 35
8.8 Headings........................................................ 35
8.9 Counterparts.................................................... 35
8.10 Governing Law................................................... 36
8.11 Successors and Assigns.......................................... 36
8.12 Remedies Cumulative; Specific Performance....................... 36
8.13 Waiver.......................................................... 36
iii.
TABLE OF CONTENTS
(CONTINUED)
PAGE
8.14 Amendments...................................................... 36
8.15 Severability.................................................... 36
8.16 Parties in Interest............................................. 37
8.17 Entire Agreement................................................ 37
8.18 Construction.................................................... 37
iv.
LIST OF EXHIBITS
Exhibit A Certain Definitions
Exhibit B Schedule of Stockholders
Exhibit C Form of Release
Exhibit D Form of Investment Representation Letter
Exhibit E Form of Registration Rights Agreement
Exhibit F Form of Amendment to Company Options
Exhibit G Form of Escrow Agreement
v.
AGREEMENT AND PLAN
OF MERGER AND REORGANIZATION
This Agreement and Plan of Merger and Reorganization ("Agreement") is made
and entered into as of July 16, 1998, by and among: Documentum, Inc., a
Delaware corporation ("Parent"); RTI Acquisition Corp, a Delaware corporation
("Merger Sub"); Relevance Technologies, Inc., a Delaware corporation (the
"Company"); and Xxxxxxxx X. Xxxxxxx, as agent for the stockholders of the
Company (the "Agent"). Certain other capitalized terms used in this Agreement
are defined herein and in Exhibit A.
Recitals
A. Parent, Merger Sub and the Company intend to effect a merger of the
Company into Merger Sub in accordance with this Agreement and the Delaware
General Corporation Law (the "Merger"). Upon consummation of the Merger, the
Company will cease to exist, and Merger Sub will continue as a wholly owned
subsidiary of Parent.
B. It is intended that the Merger qualify as a tax-free reorganization
within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as
amended (the "Code").
C. This Agreement has been approved by the respective boards of directors
of Parent, Merger Sub and the Company, and by the sole stockholder of Merger Sub
and the stockholders of the Company.
D. The stockholders of the Company (other than Parent) listed on Exhibit
B (each a "Stockholder" and, collectively, the "Stockholders") own a total of
4,102,892 shares of the Common Stock (par value $.001 per share) of the Company
("Company Common Stock") constituting all of the outstanding common stock, and a
total of 1,689,124 shares of the Series A Preferred Stock of the Company
("Series A Preferred Stock") and 1,655,629 shares of the Series B Preferred
Stock of the Company ("Series B Preferred Stock") constituting, together with
the 862,068 outstanding shares of the Series C Preferred Stock of the Company
("Series C Preferred Stock") held by Parent, all of the outstanding preferred
stock of the Company. The Series A Preferred Stock, Series B Preferred Stock
and Series C Preferred Stock are collectively referred to as "Company Preferred
Stock."
Agreement
The parties to this Agreement agree as follows:
SECTION 1. DESCRIPTION OF TRANSACTION
1.1 Merger of the Company into Merger Sub. Upon the terms and subject
to the conditions set forth in this Agreement, at the Effective Time (as defined
in Section 1.3), the Company shall be merged with and into Merger Sub, and the
separate existence of the Company shall cease. Merger Sub 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 ("DGCL").
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, 0000 Xxxx Xxxx Xxxx, Xxxxxxxx 0, Xxxxx 000, Xxxxx Xxxx,
Xxxxxxxxxx 00000 at 10:00 a.m. on the date of this Agreement. 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 Section 251 of the Delaware General Corporation Law shall be
filed with the Secretary of State of the State of Delaware. The Merger shall
become effective at the time such certificate of merger is filed with and
accepted by the Secretary of State of the State of Delaware (the "Effective
Time").
1.4 Certificate of Incorporation and Bylaws; Directors and Officers.
Unless otherwise determined by Parent and the Company prior to the Effective
Time:
(a) the Certificate of Incorporation of the Surviving Corporation
shall be the Certificate of Incorporation of Merger Sub as in effect immediately
prior to the Effective Time;
(b) the Bylaws of the Surviving Corporation shall be the Bylaws of
Merger Sub as in effect immediately prior to the Effective Time; and
(c) the directors and officers of the Surviving Corporation
immediately after the Effective Time shall be the directors and officers of
Merger Sub immediately prior to the Effective time.
1.5 Conversion of Shares.
(a) Subject to Section 1.8(c), 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 Stockholder of the Company:
(i) each share of Company Common Stock outstanding immediately
prior to the Effective Time (including shares of Company Common Stock
issuable upon conversion of Company Preferred Stock which the holder
has elected to convert immediately prior to the Effective Time but
excluding shares of Company Common Stock held by Parent or issuable
upon conversion of shares of Series C Preferred Stock held by Parent)
shall be converted into the right to receive: (A) the "Applicable
Fraction" (as defined in Section 1.5(b)(i)) of a share of the common
stock (par value $.001 per share) of Parent ("Parent Common Stock");
and (B) the "Per Share Cash Amount" (as defined in Section 1.5(b)(v));
(ii) each share of Series A Preferred Stock (if any)
outstanding immediately prior to the Effective Time (excluding shares
of Series A Preferred Stock which the holder has elected to convert to
Company Common Stock immediately prior to the Effective Time) shall be
converted into the right to receive the fraction of a share of Parent
Common Stock (A) having a numerator equal to $1.085 (representing the
"Liquidation Preference" of each share of Series A Preferred Stock
under the Company's Certificate of Incorporation), and (B) having a
denominator equal to the Parent Stock Price (as defined in Section
1.5(b)(iv));
(iii) each share of Series B Preferred Stock (if any)
outstanding immediately prior to the Effective Time (excluding shares
of Series B Preferred Stock which the
2.
holder has elected to convert to Company Common Stock immediately
prior to the Effective Time) shall be converted into the right to
receive the fraction of a share of Parent Common Stock (A) having a
numerator equal to $3.775 (representing the "Liquidation Preference"
of each share of Series B Preferred Stock under the Company's
Certificate of Incorporation), and (B) having a denominator equal to
the Parent Stock Price (as defined in Section 1.5(b)(iv));
(iv) each share of Series C Preferred Stock (if any) outstanding
immediately prior to the Effective Time (excluding (1) shares of
Series C Preferred Stock which the holder has elected to convert to
Company Common Stock immediately prior to the Effective Time and (2)
shares of Series C Preferred Stock held by Parent immediately prior to
the Effective Time) shall be converted into the right to receive the
fraction of a share of Parent Common Stock (A) having a numerator
equal to $1.74 (representing the "Liquidation Preference" of each
share of Series C Preferred Stock under the Company's Certificate of
Incorporation), and (B) having a denominator equal to the Parent Stock
Price (as defined in Section 1.5(b)(iv)); and
(v) each share of the common stock (par value $.001 per share) of
Merger Sub outstanding immediately prior to the Effective Time shall
remain outstanding.
Notwithstanding the foregoing, (i) shares of Company Common Stock or
Series C Preferred Stock held by Parent immediately prior to the Effective Time
or at the Effective Time shall not be converted into or represent the right to
receive Parent Common Stock in accordance with this Section 1.5(a) (or cash in
lieu of fractional shares in accordance with Section 1.8(c)), and any such
shares shall be canceled, and (ii) Appraisal Shares (as defined in Section
1.9(c)) (if any) shall not be converted into or represent the right to receive
Parent Common Stock in accordance with this Section 1.5(a) (or cash in lieu of
fractional shares in accordance with Section 1.8(c)), and each holder of
Appraisal Shares shall be entitled only to such rights with respect to such
Appraisal Shares as described in Section 1.9 below.
(b) For purposes of this Agreement:
(i) The "Applicable Fraction" shall be the fraction: (A) having
a numerator equal to the amount by which $31,500,000 exceeds the sum
of (1) the Aggregate Preferred Stock Liquidation Preference (as
defined in Section 1.5(b)(ii)) and (2) the Aggregate Option Preference
(as defined in Section 1.5(b)(vi)); and (B) having a denominator equal
to the amount determined by multiplying (1) the Adjusted Fully Diluted
Company Share Amount (as defined in Section 1.5(b)(iii)) by (2) the
Parent Stock Price (as defined in Section 1.5(b)(iv)).
(ii) The "Aggregate Preferred Stock Liquidation Preference"
shall be the amount determined by multiplying the applicable
Liquidation Preference of each share of Company Preferred Stock under
the Company's Certificate of Incorporation by (B) the aggregate number
of shares of such series of Company Preferred Stock outstanding
immediately prior to the Effective Time (excluding (1) shares of
Company Preferred Stock held by Parent at the Effective Time, and (2)
shares of Company Preferred Stock which the holder has elected to
convert to Company Common Stock immediately prior to the Effective
Time).
3.
(iii) The "Adjusted Fully Diluted Company Share Amount" shall be
the sum of (A) the aggregate number of shares of Company Common Stock
outstanding immediately prior to the Effective Time (including (1)
shares of Company Preferred Stock which the holder has elected to
convert to Company Common Stock immediately prior to the Effective
Time, and (2) any such shares that are subject to a repurchase option
or risk of forfeiture under any restricted stock purchase agreement or
other agreement and excluding (3) shares of Company Common Stock or
Series C Preferred Stock held by Parent immediately prior to the
Effective Time), and (B) the aggregate number of shares of Company
Common Stock purchasable under or otherwise subject to all Company
Options (as defined in Section 1.6(a)) outstanding immediately prior
to the Effective Time (including all shares of Company Common Stock
that may ultimately be purchased under Company Options that are
unvested or are otherwise not then exercisable).
(iv) The "Parent Stock Price" shall be equal to the average
closing sale price of a share of Parent Common Stock on the Nasdaq
National Market for the twenty (20) trading days up to and including
June 26, 1998. The Company and Parent acknowledge and agree that the
Parent Stock Price shall be $48.30475.
(v) The "Per Share Cash Amount" shall be the quotient obtained
by dividing (A) $3,500,000 by (B) the aggregate number of shares of
Company Common Stock outstanding immediately prior to the Effective
Time (including (1) shares of Company Preferred Stock which the holder
has elected to convert to Company Common Stock immediately prior to
the Effective Time, and (2) any such shares that are subject to a
repurchase option or risk of forfeiture under any restricted stock
purchase agreement or other agreement and excluding (3) shares of
Company Common Stock or Series C Preferred Stock held by Parent
immediately prior to the Effective Time).
(vi) The "Aggregate Option Preference" shall be the Per Share
Cash Amount multiplied by the aggregate number of shares of Company
Common Stock purchasable under or otherwise subject to all Company
Options outstanding immediately prior to the Effective Time (including
all shares of Company Common Stock that may ultimately be purchased
under Company Options that are unvested or are otherwise not then
exercisable).
(c) If any shares of Company Common Stock outstanding immediately
prior to the Effective Time are unvested or are subject to a repurchase option,
risk of forfeiture or other condition under any applicable restricted stock
purchase agreement or other agreement with the Company, then, except as set
forth on Part 1.5(c) of the Disclosure Schedule, the shares of Parent Common
Stock issued in exchange for such shares of Company Common Stock will also be
unvested and subject to the same repurchase option, risk of forfeiture or other
condition, and the certificates representing such shares of Parent Common Stock
may accordingly be marked with appropriate legends.
(d) The Per Share Cash Amount shall be paid to each Stockholder in
cash at the Closing; provided, however, that no such payment shall be made to
any Stockholder until such Stockholder has delivered all Company Stock
Certificates for exchange as provided in Section 1.8 below.
(e) Parent will file a registration statement on Form S-3 as required
by the terms of the Registration Rights Agreement attached hereto as Exhibit E
on the day following the date of this
4.
Agreement, and in the event such registration statement has not been declared
effective by the SEC by July 29, 1998 as a result of the action or inaction of
Parent (it being understood that in the event the SEC (i) fails to notify Parent
after timely inquiry by Parent at least three (3) days prior to such date as to
whether it intends to review such registration statement or any document
incorporated therein, or (ii) elects to review the registration statement or any
document incorporated therein, then the failure to be effective by such date
shall not be deemed to be the result of the action or inaction of Parent), the
Parent Stock Price shall be re-calculated to equal the average closing sale
price of a share of Parent Common Stock on the Nasdaq National Market for the
ten (10) trading days preceding the effective date of such registration
statement. Parent shall promptly thereafter issue to the Stockholders a number
of additional shares of Parent Common Stock equal to the difference between (i)
the number of shares of Parent Common Stock issuable pursuant to this Section
1.5 based on the Parent Stock Price as re-calculated in this Section 1.5(e) and
(ii) the number of shares of Parent Common Stock issuable pursuant to this
Section 1.5 based on the Parent Stock Price as defined in Section 1.5(b). Parent
shall also promptly thereafter issue to holders of Parent Common Stock issued
upon the exercise after the date of this Agreement of any Company Options a
number of shares of Parent Common Stock as provided in the preceding sentence as
if such Company Options had been exercised immediately prior to the Effective
Time. Parent shall also promptly file an additional Form S-3 registration
statement registering the additional shares of Parent Common Stock issuable
pursuant to this Section 1.5(e). The Option Applicable Fraction shall similarly
be adjusted (so that the number of shares of Parent Common Stock subject to each
assumed option shall be proportionately adjusted) and Parent shall (i) send a
notice required by Section 1.6 to holders of Company Options outstanding at such
time reflecting such adjustment and (ii) promptly register the additional shares
of Parent Common Stock issuable pursuant to this Section 1.5(e) upon the
exercise of such Company Options on a registration statement on Form S-8 in
accordance with the provisions of Section 1.6. Notwithstanding the foregoing, in
no event shall the number of additional shares of Parent Common Stock issuable
as a result of this Section 1.5(e) exceed the number of shares of Parent Common
Stock issuable pursuant to this Agreement without regard to this Section 1.5(e).
No additional shares of Parent Common Stock shall be issued pursuant to this
Section 1.5(e) in the event the Parent Stock Price calculated pursuant to this
Section 1.5(e) exceeds the Parent Stock Price as defined in Section 1.5(b).
Parent will not impose a Blackout Period (as defined in Section 2.2 of the
Registration Rights Agreement) during the five (5) trading days following
effectiveness of the registration statement filed the day after the date of this
Agreement. In no event will the Stockholders be required to return shares of
Parent Common Stock to Parent as a result of the operation of this Section
1.5(e). Any disputes arising under this Section 1.5(a) shall be resolved by
Parent and the Agent.
1.6 Employee Stock Options.
(a) At the Effective Time, each stock option that is then outstanding
under the Company's 1996 Stock Plan (the "Stock Option Plan"), whether vested or
unvested (a "Company Option"), shall be assumed by Parent in accordance with the
terms (as in effect as of the date of this Agreement) of the Company's Stock
Option Plan and the stock option agreement by which such Company Option is
evidenced in such manner that Parent (i) is "assuming a stock option in a
transaction to which Section 424(a) applied" within the meaning of Section 424
of the Code, or (ii) to the extent that Section 424 of the Code does not apply
to any such Company Option, would be a transaction within Section 424 of the
Code. All rights with respect to Company Common Stock under outstanding Company
Options shall thereupon be converted into rights with respect to Parent Common
Stock, and the status as an "incentive stock option" under Section 422 of the
Code of any Company Option shall be unchanged. Accordingly, from and after the
Effective Time, (a) each Company Option assumed by Parent may be exercised
solely for shares of Parent Common Stock, (b) the number of shares of Parent
Common Stock subject to each such assumed Company Option shall be equal to the
number of shares of
5.
Company Common Stock that were subject to such Company Option immediately prior
to the Effective Time multiplied by the Option Applicable Fraction (as defined
in Section 1.6(b)), rounded down to the nearest whole number of shares of Parent
Common Stock, (c) the per share exercise price for the Parent Common Stock
issuable upon exercise of each such assumed Company Option shall be determined
by dividing the exercise price per share of Company Common Stock subject to such
Company Option, as in effect immediately prior to the Effective Time, by the
Option Applicable Fraction, and rounding the resulting exercise price up to the
nearest whole cent, and (d) all restrictions on the exercise of each such
assumed Company Option shall continue in full force and effect, and the term,
exercisability, vesting schedule and other provisions of such Company Option
shall otherwise remain unchanged; provided, however, that each such assumed
Company Option shall, in accordance with its terms, be subject to further
adjustment as appropriate to reflect any stock split, reverse stock split, stock
dividend, recapitalization or other similar transaction effected by Parent after
the Effective Time; and provided further, that certain assumed Company Options
(including certain exercised Company Options) shall be amended as provided for
by the Option Amendment described in Section 4.8 below. The Company and Parent
shall take all action that may be necessary (under the Company's Stock Option
Plan and otherwise) to effectuate the provisions of this Section 1.6. Following
the Closing, Parent will send to each holder of an assumed Company Option
(together with, if applicable, the Option Amendment described in Section 4.8
below) a written notice setting forth (i) the number of shares of Parent Common
Stock subject to such assumed Company Option, and (ii) the exercise price per
share of Parent Common Stock issuable upon exercise of such assumed Company
Option. Parent shall file with the SEC, within two (2) business days of the
Closing Date, a registration statement on Form S-8 registering the exercise of
the Company Options assumed by Parent pursuant to this Section 1.6.
(b) The "Option Applicable Fraction" shall be the fraction: (A) having
a numerator equal to the amount by which $35,000,000 exceeds the Aggregate
Preferred Stock Liquidation Preference (as defined in Section 1.5(b)(ii)); and
(B) having a denominator equal to the amount determined by multiplying (1) the
Adjusted Fully Diluted Company Share Amount (as defined in Section 1.5(b)(iii))
by (2) the Parent Stock Price (as defined in Section 1.5(b)(iv)).
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 stockholders 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) At or as soon as practicable after the Effective Time, Parent will
send to the holders of Company Stock Certificates (i) 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 certificates representing Parent Common Stock.
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, the holder of such Company Stock Certificate
shall be entitled to receive in exchange therefor a certificate representing the
number of whole shares of Parent Common Stock that such holder has the right to
receive pursuant to the
6.
provisions of this Section 1, and the Company Stock Certificate so surrendered
shall be canceled. 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 certificate
representing shares of Parent Common Stock (and cash in lieu of any fractional
share of Parent Common Stock) as contemplated by this Section 1. If any Company
Stock Certificate shall have been lost, stolen or destroyed, Parent may, in its
discretion and as a condition precedent to the issuance of any certificate
representing Parent Common Stock, require the owner of such lost, stolen or
destroyed Company Stock Certificate to provide an appropriate affidavit and to
deliver a bond (in such sum as Parent may reasonably direct) as indemnity
against any claim that may be made against Parent or the Surviving Corporation
with respect to such Company Stock Certificate.
(b) No dividends or other distributions declared or made with respect
to Parent Common Stock with a record date after the Effective Time shall be paid
to the holder of any unsurrendered Company Stock Certificate with respect to the
shares of Parent Common Stock represented thereby, and no cash payment in lieu
of any fractional share shall be paid to any such holder, until such holder
surrenders such Company Stock Certificate in accordance with this Section 1.8
(at which time such holder shall be entitled to receive all such dividends and
distributions and such cash payment).
(c) No fractional shares of Parent Common Stock shall be issued in
connection with the Merger, and no certificates for any such fractional shares
shall be issued. In lieu of such fractional shares, any holder of capital stock
of the Company who would otherwise be entitled to receive a fraction of a share
of Parent Common Stock (after aggregating all fractional shares of Parent Common
Stock issuable to such holder) shall, upon surrender of such holder's Company
Stock Certificate(s), be paid in cash the dollar amount (rounded to the nearest
whole cent), without interest, determined by multiplying such fraction by the
Parent Stock Price.
(d) Parent and the Surviving Corporation shall be entitled to deduct
and withhold from any consideration payable or otherwise deliverable to any
holder or former holder of capital stock of the Company pursuant to this
Agreement such amounts as Parent or the Surviving Corporation may be required to
deduct or withhold therefrom under the Code or under any provision of state,
local or foreign tax law. To the extent such amounts are so deducted or
withheld, such amounts shall be treated for all purposes under this Agreement as
having been paid to the Person to whom such amounts would otherwise have been
paid.
(e) Neither Parent nor the Surviving Corporation shall be liable to
any holder or former holder of capital stock of the Company for any shares of
Parent Common Stock (or dividends or distributions with respect thereto), or for
any cash amounts, delivered to any public official pursuant to any applicable
abandoned property, escheat or similar law.
1.9 Appraisal Rights.
(a) Notwithstanding anything to the contrary contained in this
Agreement, Appraisal Shares (as defined in Section 1.9(c)) shall not be
converted into or represent the right to receive Parent Common Stock in
accordance with Section 1.5(a) (or cash in lieu of fractional shares in
accordance with Section 1.8(c)), and each holder of Appraisal Shares shall be
entitled only to such rights with respect to such Appraisal Shares as may be
granted to such holder in Section 262 of the DGCL and (if the Company is subject
to Section 2115 of the California Corporations Code) such rights as may be
granted to such holder in Chapter 13 of the California General Corporation Law.
From and after the Effective
7.
Time, a holder of Appraisal Shares shall not have and shall not be entitled to
exercise any of the voting rights or other rights of a stockholder of the
Surviving Corporation. If any holder of Appraisal Shares shall fail to perfect
or shall waive, rescind, withdraw or otherwise lose such holder's right of
appraisal under Section 262 of the DGCL and such holder's rights (if any) under
Chapter 13 of the California General Corporation Law, then (i) any right of such
holder to require the Company to purchase the Appraisal Shares for cash shall be
extinguished and (ii) 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) Parent Common Stock in accordance with
Section 1.5(a) (and cash in lieu of any fractional share in accordance with
Section 1.8(c)).
(b) The Company (i) shall give Parent prompt written notice of any
demand by any Stockholder of the Company for appraisal of such Stockholder's
shares of Company Capital Stock pursuant to the DGCL and of any other notice,
demand or instrument delivered to the Company pursuant to the DGCL or the
California General Corporation Law, and (ii) shall give Parent's Representatives
the opportunity to participate in all negotiations and proceedings with respect
to any such notice, demand or instrument. The Company shall not make any
payment or settlement offer with respect to any such notice or demand unless
Parent shall have consented in writing to such payment or settlement offer.
(c) For purposes of this Agreement, "Appraisal Shares" shall refer to
any shares of Company Common Stock or Company Preferred Stock outstanding
immediately prior to the Effective Time that (i) are held by Stockholders who
are entitled to demand and who properly demand appraisal of such shares pursuant
to, and who comply with the applicable provisions of, Section 262 of the DGCL or
(ii) are or may become "dissenting shares" within the meaning of Chapter 13 of
the California General Corporation Law. Notwithstanding anything to the
contrary contained in this Agreement, no holder of any shares of Company Common
Stock or Company Preferred Stock shall be entitled to exercise any rights under
Chapter 13 of the California General Corporation Law unless the Company is
subject to Section 2115 of the California Corporations Code.
1.10 ESCROW.
(a) As soon as practicable after the Effective Time, the Escrow Shares
(as defined in Section 1.10(c)), without any act of any Stockholder of the
Company, will be deposited by Parent into an escrow fund (the "Escrow Fund") to
be governed by the terms set forth herein and the Escrow Agreement in the form
of Exhibit G (the "Escrow Agreement"). The Escrow Fund shall be available to
indemnify the Indemnitees as provided in Section 7.
(b) Subject to the following requirements, the Escrow Fund shall
remain in existence until the expiration of one year from the Effective Time
(the "Escrow Period"). Upon the expiration of such Escrow Period, the Escrow
Fund shall terminate with respect to all Escrow Shares; provided, however, that
the number of Escrow Shares, which, in the reasonable judgment of Parent,
subject to the objection of the Agent (as defined in Section 8.1) and the
subsequent resolution of the claim in the manner provided in the Escrow
Agreement, are necessary to satisfy any unsatisfied claims specified in any
Claim Notice (as defined in the Escrow Agreement) delivered to the Agent prior
to the expiration of such Escrow Period shall remain in the Escrow Fund (and the
Escrow Fund shall remain in existence) until such claims have been resolved. As
soon as all such claims have been resolved, Parent shall deliver to the
Stockholders all Parent Common Stock remaining in the Escrow Fund and not
required to satisfy such claims. Deliveries of Parent Common Stock to the
Stockholders pursuant to this Section 1.10(b) and the Escrow Agreement shall be
made in proportion to their respective original contributions to the Escrow
Fund.
8.
(c) For purposes of this Agreement, "Escrow Shares" shall mean the
number of shares of Parent Common Stock to be issued in the Merger to the
Stockholders which equals eleven and one-tenth percent (11.10%) of the total
number of shares of Parent Common Stock issuable in the Merger (including shares
of Parent Common Stock issuable upon the exercise of Company Options). The
number of shares to be contributed to the Escrow Fund by each Stockholder shall
be equal to the ratio of (A) the number of shares of Parent Common Stock to be
issued in the Merger to such Stockholder to (B) the number of shares of Parent
Common Stock to be issued in the Merger to all Stockholders. Shares of Parent
Common Stock to be issued in the Merger which are subject to a repurchase option
in favor of Parent shall be placed into the Escrow Fund only if, in the case of
any Stockholder, an insufficient number of shares of Parent Common Stock which
are not subject to such a repurchase option are available to satisfy the Escrow
Fund.
1.11 Tax Consequences. For federal income tax purposes, the Merger is
intended to constitute a reorganization within the meaning of Section 368 of the
Code. The parties to this Agreement hereby adopt this Agreement as a "plan of
reorganization" within the meaning of Sections 1.368-2(g) and 1.368-3(a) of the
United States Treasury Regulations.
1.12 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
The Company represents and warrants, to and for the benefit of the
Indemnitees, and except as set forth on the Disclosure Schedule attached hereto,
as follows:
2.1 Due Organization; No Subsidiaries; Etc.
(a) The Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware 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.
(b) The Company has not 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 name "Relevance Technologies, Inc."
(c) The Company is not 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 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 Company. The Company is in good standing as a foreign corporation in
each of the jurisdictions identified in Part 2.1 of the Disclosure Schedule.
9.
(d) Part 2.1 of the Disclosure Schedule accurately sets forth: (i) the
names of the members of the Company's board of directors; (ii) the names of the
members of each committee of the Company's board of directors; and (iii) the
names and titles of the Company's officers.
(e) The Company does not own any controlling interest in any Entity
and the Company has never owned, beneficially or otherwise, any shares or other
securities of, or any direct or indirect equity interest in, any Entity. The
Company has not agreed and is not obligated to make any future investment in or
capital contribution to any Entity. The Company has not 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 Certificate of Incorporation and Bylaws; Records. The Company has
delivered or made available to Parent accurate and complete copies of: (a) the
Company's Certificate of Incorporation and bylaws, including all amendments
thereto; (b) the stock records of the Company; and (c) 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 stockholders of the
Company, the board of directors of the Company and all committees of the board
of directors of the Company. There has not been any violation of any of the
provisions of the Company's Certificate of Incorporation or bylaws, and the
Company has not taken any action that is inconsistent in any material respect
with any resolution adopted by the Company's stockholders, the Company's board
of directors or any committee of the Company's board of directors. The books of
account, stock records, minute books and other records of the Company are
accurate, up-to-date and complete in all material respects.
2.3 Capitalization, Etc.
(a) The authorized capital stock of the Company consists of: (i)
20,000,000 shares of Common Stock (par value $.001 per share), of which
4,102,892 shares have been issued and are outstanding as of the date of this
Agreement; and (ii) 7,500,000 shares of Preferred Stock (par value $.001 per
share), 1,689,124 of which have been designated "Series A Preferred Stock," of
which 1,689,124 shares have been issued and are outstanding as of the date of
this Agreement, 1,700,000 of which have been designed "Series B Preferred
Stock," of which 1,655,629 shares have been issued and are outstanding as of the
date of this Agreement, and 900,000 of which have been designated "Series C
Preferred Stock," of which 862,068 have been issued and are outstanding as of
the date of this Agreement. Each outstanding share of Company Preferred Stock
is convertible into one share of Company Common Stock. All of the outstanding
shares of Company Common Stock and Company Preferred Stock have been duly
authorized and validly issued, and are fully paid and non-assessable. Part 2.3
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 2,268,915 shares of Company Common Stock
for issuance under its Stock Option Plan, of which options to purchase 865,570
shares are outstanding as of the date of this Agreement. Part 2.3 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; (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; (iii) the date on which such Company Option was granted and the
term of such Company Option; (iv) the vesting schedule for such Company Option;
(v) the exercise price per share of Company Common Stock purchasable under such
Company Option; and (vi) whether such Company Option has been designated an
"incentive stock option" as defined in Section 422
10.
of the Code. Except as set forth above, 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 best of 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 and Company
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) The Company has never repurchased, redeemed or otherwise
reacquired any shares of capital stock or other securities of the Company.
2.4 Financial Statements.
(a) The Company has delivered to Parent the following financial
statements (collectively, the "Company Financial Statements"). The audited
balance sheet of the Company as of May 31, 1998 (the "Balance Sheet"), and the
related audited income statement, statement of stockholders' equity and
statement of cash flows of the Company for the fiscal year then ended, together
with the notes thereto and the unqualified audit report of Price Waterhouse LLP
relating thereto.
(b) The Company Financial Statements present fairly the financial
position of the Company as of the respective dates thereof and the results of
operations and (in the case of the financial statements referred to in Section
2.4(a)(i)) cash flows of the Company for the period 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)(ii) do not contain footnotes and are subject to normal and recurring
year-end adjustments, which will not, individually or in the aggregate, be
material in magnitude).
2.5 Absence of Changes. Since May 31, 1998:
(a) there has not been any material adverse change in the Company's
business, condition, assets, liabilities, operations or financial performance,
and, to the best of the knowledge of the Company, no event has occurred that
will, or could reasonably be expected to, have a Material Adverse Effect on the
Company;
(b) there has not been any material loss, damage or destruction to, or
any material interruption in the use of, any of the Company's assets (whether or
not covered by insurance);
(c) the Company has not 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;
11.
(d) the Company has not 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, or (iii) any instrument
convertible into or exchangeable for any capital stock or other security;
(e) except as contemplated by this Agreement, the Company has not
amended or waived any of its rights under, or permitted the acceleration of
vesting under, (i) any provision of its Stock Option Plan, (ii) any provision of
any agreement evidencing any outstanding Company Option, or (iii) any restricted
stock purchase agreement;
(f) there has been no amendment to the Company's Certificate of
Incorporation or bylaws, and the Company has not effected or been a party to any
Acquisition Transaction, recapitalization, reclassification of shares, stock
split, reverse stock split or similar transaction;
(g) the Company has not formed any subsidiary or acquired any equity
interest or other interest in any other Entity;
(h) the Company has not made any capital expenditure which, when added
to all other capital expenditures made on behalf of the Company since May 31,
1998, exceeds $50,000;
(i) the Company has not (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) the Company has not (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 (as to (i), (ii) or (iii) above) for immaterial
rights or other immaterial assets acquired, leased, licensed, sold or disposed
of in the ordinary course of business and consistent with the Company's past
practices;
(k) the Company has not written off as uncollectible, or established
any extraordinary reserve with respect to, any account receivable or other
indebtedness;
(l) the Company has not 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 Company's past practices;
(m) the Company has not (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) the Company has not (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) the Company has not changed any of its methods of accounting or
accounting practices in any respect;
12.
(p) the Company has not made any material Tax election;
(q) the Company has not commenced or settled any Legal Proceeding;
(r) the Company has not 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) the Company has not agreed or committed to take any of the actions
referred to in clauses "(c)" through "(r)" above.
2.6 Title to Assets.
(a) Except for assets covered by Section 2.9 below, the Company owns,
and has good, valid and marketable title to, all assets purported to be owned by
it, including: (i) all assets reflected on the Balance Sheet; (ii) all
assets referred to in Parts 2.7(b) of the Disclosure Schedule and all of the
Company's rights under the Contracts identified in Part 2.10 of the Disclosure
Schedule; and (iii) all other assets reflected in the Company's books and
records as being owned by the Company. All of said assets are owned by the
Company 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 Company.
(b) Part 2.6 of the Disclosure Schedule identifies all assets that are
material to the business of the Company and that are being leased or licensed to
the Company (except for any asset licensed to the Company under any third party
license generally available to the public at a cost of less than $25,000).
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 the
Company 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 Company as of May 31, 1998. All existing accounts
receivable of the Company (including those accounts receivable reflected on the
Balance Sheet that have not yet been collected and those accounts receivable
that have arisen since May 31, 1998 and have not yet been collected) (i)
represent valid obligations of customers of the Company arising from bona fide
transactions entered into in the ordinary course of business, (ii) 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 $25,000 in the aggregate).
2.8 Equipment; Leasehold.
(a) All material items of equipment and other tangible assets owned by
or leased to the Company 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 Company's business in the manner in which such
business is currently being conducted.
13.
(b) The Company does not own 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 sets forth, with respect
to each Company Proprietary Asset owned by the Company and registered with any
Governmental Body or for which an application has been filed with any
Governmental Body, (i) a brief description of such Proprietary Asset, and (ii)
the names of the jurisdictions covered by the applicable registration or
application. Part 2.9(a)(ii) of the Disclosure Schedule identifies and provides
a brief description of all other Company Proprietary Assets, excluding know-how
and trade secrets, owned by the Company. Part 2.9(a)(iii) of the Disclosure
Schedule identifies and provides a brief description of each Proprietary Asset
licensed to the Company by any Person (except for any Proprietary Asset that is
licensed to the Company under any third party license generally available to the
public at a cost of less than $25,000), and identifies the license agreement
under which such Proprietary Asset is being licensed to the Company. To the
best of the knowledge of the Company, the Company has good, valid and marketable
title to all of the Company Proprietary Assets identified in Parts 2.9(a)(i) and
2.9(a)(ii) of the Disclosure Schedule, free and clear of all liens and other
Encumbrances, and has a valid right to use all Proprietary Assets identified in
Part 2.9(a)(iii) of the Disclosure Schedule. The Company is not obligated to
make any payment to any Person for the use of any Company Proprietary Asset.
The Company has not developed jointly with any other Person any Company
Proprietary Asset with respect to which such other Person has any rights.
(b) The Company has taken reasonable measures and precautions
necessary to protect and maintain the confidentiality and secrecy of all Company
Proprietary Assets (except Company Proprietary Assets whose value would not be
materially impaired by public disclosure) and otherwise to maintain and protect
the value of all Company Proprietary Assets. The Company has not (other than
pursuant to license agreements identified in Part 2.10 of the Disclosure
Schedule or otherwise under a customary license, escrow, maintenance, support,
non-disclosure or similar agreement in the ordinary course of business)
disclosed or delivered to any Person, or permitted the disclosure or delivery to
any Person of, (i) the source code, or any portion or aspect of the source code,
of any Company Proprietary Asset, or (ii) the object code, or any portion or
aspect of the object code, of any Company Proprietary Asset.
(c) To the best of 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. To the best of the knowledge of the Company, the
Company is not infringing, misappropriating or making any unlawful use of, and
the Company has not at any time infringed, misappropriated or made any unlawful
use of, or received any notice or other communication (in writing or otherwise)
of any actual, alleged, possible or potential infringement, misappropriation or
unlawful use of, any Proprietary Asset owned or used by any other Person. To
the best of 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) To the best of the knowledge of the Company, the Company
Proprietary Assets constitute all the Proprietary Assets necessary to enable the
Company to conduct its business in the manner in which such business has been
and is being conducted. (i) The Company has not licensed any of the Company
Proprietary Assets to any Person on an exclusive basis, and (ii) the Company has
not
14.
entered into any covenant not to compete or Contract limiting its ability to
exploit fully any of its owned Proprietary Assets or to transact business in any
market or geographical area or with any Person.
(e) (i) All current and former employees of the Company have executed
and delivered to the Company an agreement (containing no exceptions to or
exclusions from the scope of its coverage) that is substantially identical to
the form of Proprietary Information and Invention Assignment Agreement
previously delivered to Parent, and (ii) all current and former consultants and
independent contractors to the Company have executed and delivered to the
Company an agreement (containing no exceptions to or exclusions from the scope
of its coverage) that is substantially identical to the form of Consultant
Confidential Information and Invention Assignment Agreement previously delivered
to Parent.
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 imposing any restriction on the
Company's 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;
(iv) each Company Contract creating or involving any agency
relationship, distribution arrangement or franchise relationship;
(v) each Company Contract relating to the acquisition, issuance
or transfer of any securities;
(vi) each Company Contract relating to the creation of any
Encumbrance with respect to any asset of the Company;
(vii) each Company Contract involving or incorporating any
guaranty, any pledge, any performance or completion bond, any
indemnity or any surety arrangement;
(viii) each Company Contract creating or relating to any
partnership or joint venture or any sharing of revenues, profits,
losses, costs or liabilities;
(ix) 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);
(x) each Company Contract constituting or relating to a
Government Contract or Government Bid;
15.
(xi) any other Company Contract that was entered into outside the
ordinary course of business or was inconsistent with the Company's
past practices;
(xii) any other Company Contract that has a term of more than 60
days and that may not be terminated by the Company (without penalty)
within 60 days after the delivery of a termination notice by the
Company; and
(xiii) 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.
(Contracts in the respective categories described in clauses "(i)" through
"(xiii)" above are referred to in this Agreement as "Material Contracts.")
(b) The Company has delivered to Parent accurate and complete copies
of all written Contracts identified in Part 2.10 of the Disclosure Schedule,
including all amendments thereto. Part 2.10 of the Disclosure Schedule provides
an accurate description of the terms of each Company Contract that is not in
written form. Each Contract identified in Part 2.10 of the Disclosure Schedule
is valid and in full force and effect, and, to the best of the knowledge of the
Company, is enforceable by 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.
(c) Except as set forth in Part 2.10 of the Disclosure Schedule:
(i) the Company has not violated or breached, or committed any
default under, any Company Contract, and, to the best of the knowledge
of the Company, no other Person has violated or breached, or committed
any default under, any Company Contract;
(ii) to the best of 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 inception, the Company has not received any notice
or other communication regarding any actual or possible violation or
breach of, or default under, any Company Contract; and
(iv) the Company has not 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
Company under any Material Contract or any other material term or provision of
any Material Contract.
16.
2.11 Liabilities. The Company has 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 Balance Sheet;
(b) accounts payable or accrued salaries that have been incurred by the Company
since May 31, 1998 in the ordinary course of business and consistent with the
Company's 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. The Company is, and has at all
times since inception 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 Company. Since
inception, the Company has not 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 Company, 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 the Company to conduct its
business in the manner in which its business is currently being conducted. The
Company is, and at all times since inception 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 inception, the Company
has not 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 the
Company with any Governmental Body with respect to any taxable period ending on
or before the Closing Date (the "Company Returns") (i) have been or will be
filed on or before the applicable due date (including any extensions of such due
date), and (ii) except to the extent a reserve is established on the Balance
Sheet, 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 true and complete copies of all Company Returns filed since
inception.
(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
Company 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 May 31, 1998 through the Closing Date, and the Company will disclose
the dollar amount of such reserves to Parent on or prior to the Closing Date.
17.
(c) To the best of the knowledge of the Company, no Company Return
relating to income Taxes has ever been examined or audited by any Governmental
Body. To the best of the knowledge of the Company, there have been no
examinations or audits of any Company Return. The Company has delivered to
Parent true and complete copies of all audit reports and similar documents (to
which the Company has access) relating to the Company Returns. No extension or
waiver that is still in effect of the limitation period applicable to any of the
Company Returns has been granted (by the Company or any other Person), and no
such extension or waiver has been requested from the Company.
(d) No claim or Legal Proceeding is pending or, to the best of the
knowledge of the Company, has been threatened against or with respect to the
Company 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 the Company 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 the Company and with respect to which adequate
reserves for payment have been established). There are no liens for Taxes upon
any of the assets of the Company except liens for current Taxes not yet due and
payable. The Company has not entered into or become bound by any agreement or
consent pursuant to Section 341(f) of the Code. The Company has not been, and,
other than by reason of the Merger, the Company will not 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 the Company 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 of the Code. The Company
is not, 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 the Company for
the benefit of any employee of the Company ("Employee"), except for Plans which
would not require the Company to make payments or provide benefits having a
value in excess of $10,000 in the aggregate.
(b) The Company does not maintain, sponsor or contribute to, and, to
the best of the knowledge of the Company, 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 Subtitles of ERISA) for the benefit of Employees or former Employees
(a "Pension Plan").
(c) The Company maintains, sponsors or contributes 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 Subtitles of ERISA) for the
benefit of Employees or former Employees which are
18.
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) The Company is not required to be, and, to the best of the
knowledge of the Company, 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. The Company has never been a member of an
"affiliated service group" within the meaning of Section 414(m) of the Code. To
the best of the knowledge of the Company, the Company has never 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 Section 4201 of ERISA (without regard to subsequent reduction or
waiver of such liability under either Section 4207 or 4208 of ERISA).
(f) The Company does not have 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) 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 Balance Sheet, and (iii) benefits the full cost of which are borne by
current or former Employees (or the Employees' beneficiaries)).
19.
(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 the Company is not aware of any reason why any such determination
letter should be revoked.
(k) 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
the Company (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 Company 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. The Company is not a party to any collective bargaining
contract or other Contract with a labor union involving any of its Employees.
All of the Company's 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.
(n) The Company 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) The Company has good labor relations, and the Company has no
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 Company's labor relations, or (ii) any of the Company's employees intends
to terminate his or her employment with the Company.
2.16 Environmental Matters. To the best of the knowledge of the
Company, the Company is in compliance in all material respects with all
applicable Environmental Laws, which compliance includes the possession by the
Company of all permits and other Governmental Authorizations required under
applicable Environmental Laws, and compliance with the terms and conditions
thereof. The Company has not received any notice or other communication (in
writing or otherwise), whether from a Governmental Body, citizens group,
employee or otherwise, that alleges that the Company is not in compliance with
any Environmental Law. To the best of the knowledge of the Company, no current
or prior owner of any property leased or controlled by the Company has received
any notice or other communication (in writing or otherwise), whether from a
Governmental Body, citizens group, employee or otherwise, that alleges that such
current or prior owner or the Company is not in compliance with any
Environmental Law. All Governmental Authorizations currently held by the
Company pursuant to
20.
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 the
Company 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 inception, the Company has not 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 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. (a) No Related Party has, and no
Related Party has at any time since inception had, any direct or indirect
interest in any material asset used in or otherwise relating to the business of
the Company; (b) no Related Party is, or has at any time since inception been,
indebted to the Company; (c) since inception, no Related Party has entered into,
or has had any direct or indirect financial interest in, any material Contract,
transaction or business dealing involving the Company; (d) no Related Party is
competing, or has at any time since inception competed, directly or indirectly,
with the Company; and (e) no Related Party has any claim or right against the
Company (other than rights under Company Options and rights to receive
compensation for services performed as an employee of the Company). (For
purposes of this Section 2.18 each of the following shall be deemed to be a
"Related Party": (i) each of the Stockholders; (ii) each individual who is,
or who has at any time since inception been, an 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) There is no pending Legal Proceeding, and (to the best of the
knowledge of the Company) no Person has threatened to commence any Legal
Proceeding: (i) that involves the Company or any of the assets owned or used by
the Company or any Person whose liability the Company 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 best of the knowledge of the Company, 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.
21.
(b) No Legal Proceeding has ever been commenced by or has ever been
pending against the Company.
(c) There is no order, writ, injunction, judgment or decree to which
the Company, or any of the assets owned or used by the Company, is subject.
None of the Stockholders is subject to any order, writ, injunction, judgment or
decree that relates to the Company's business or to any of the assets owned or
used by the Company. To the best of the knowledge of the Company, no officer or
other employee of the Company 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 Company's
business.
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, its board of directors and
stockholders. 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. 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 the Company's Certificate of Incorporation or bylaws, or (ii)
any resolution adopted by the Company's stockholders, the Company's board of
directors or any committee of the Company's 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 the Company, or any of the assets owned or used by the Company, 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 the Company or that otherwise relates to the Company's business
or to any of the assets owned or used by the Company;
(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 the Company
(except for minor liens that will not, in any case
22.
or in the aggregate, materially detract from the value of the assets subject
thereto or materially impair the operations of the Company).
The Company is not 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. This Agreement (including the Disclosure
Schedule) does 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 required to be stated herein or necessary in order to make the
representations, warranties and information contained herein (in the light of
the circumstances under which such representations, warranties and information
were or will be made or provided) not false or misleading.
Section 3. Representations and Warranties of Parent and Merger Sub
Parent and Merger Sub jointly and severally represent and warrant to
the Company and the Stockholders as follows:
3.1 SEC Filings; Financial Statements.
(a) Parent has delivered to the Company accurate and complete copies
(and made available copies of exhibits) of each report, registration statement
(on a form other than Form S-8), definitive proxy statement and other filing
filed by Parent with the SEC between January 1, 1998 and the date of this
Agreement (the "Parent SEC Documents"). As of the time it was filed with the
SEC (or, if amended or superseded by a filing prior to the date of this
Agreement, then on the date of such filing): (i) each of the Parent SEC
Documents complied in all material respects with the applicable requirements of
the Securities Act or the Exchange Act (as the case may be); and (ii) none of
the Parent SEC Documents contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading.
(b) The consolidated financial statements contained in the Parent SEC
Documents: (i) complied as to form in all material respects with the published
rules and regulations of the SEC applicable thereto; (ii) were prepared in
accordance with generally accepted accounting principles applied on a consistent
basis throughout the periods covered, except as may be indicated in the notes to
such financial statements and (in the case of unaudited statements) as permitted
by Form 10-Q of the SEC, and except that unaudited financial statements may not
contain footnotes and are subject to year-end audit adjustments (none of which
are expected to be material); and (iii) fairly present the consolidated
financial position of Parent and its subsidiaries as of the respective dates
thereof and the consolidated results of operations and cash flows of Parent and
its subsidiaries for the periods covered thereby.
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 (including the contemplated issuance of
Parent Common Stock in the Merger in accordance with this Agreement) have been
duly authorized by all necessary action on the part of Parent and Merger Sub and
their respective
23.
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. Parent is qualified to use Form
S-3 as contemplated by this Agreement and the Registration Rights Agreement.
3.3 Valid Issuance. Subject to Section 1.5(c), the Parent Common Stock
to be issued in the Merger will be, when issued in accordance with the
provisions of this Agreement, validly issued, fully paid and nonassessable, and,
subject in part to the representations of the Stockholders contained in the
Investment Representation Letters (as defined in Section 4.6), issued in
compliance with all applicable federal and state securities laws.
3.4 Organization, Standing and Power. Each of Parent and Merger Sub is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware. Each of Parent and Merger Sub has the corporate
power to own its properties and to carry on its business as now being conducted
and is duly qualified to do business and is in good standing in each
jurisdiction in which the failure to be so qualified and in good standing would
have a Material Adverse Effect on Parent.
3.5 Authorizations. No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity, is required
by or with respect to Parent or Merger Sub in connection with the execution and
delivery of this Agreement by Parent or Merger Sub or the consummation by Parent
or Merger Sub of the transactions contemplated hereby or thereby, except for the
filing of (i) the certificate of merger, together with the required officers'
certificates, with the Secretary of State of the State of Delaware, (ii)
registration statements on Forms S-3 and S-8 with the SEC, (iii) a Notification
of Listing of Additional Shares with the Nasdaq National Market, and (iv) any
required blue sky filings.
3.6 Absence of Certain Changes. Since March 31, 1998 (the "Parent
Balance Sheet Date"), Parent has conducted its business in the ordinary course
consistent with past practice and there has not occurred any change, event or
condition (whether or not covered by insurance) that has resulted in or might
reasonably be expected to result in a material adverse effect on the business,
financial condition or results of operations of Parent and its subsidiaries,
taken as a whole.
SECTION 4. ADDITIONAL COVENANTS OF THE PARTIES
4.1 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 all Consents (if any) not already obtained and 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. Each party shall (upon request) promptly deliver to any other
party a copy of each such filing made, each such notice given and each such
Consent obtained by the Company.
24.
4.2 Public Announcements. Neither Parent nor the Company shall (and
shall not permit any of their Representatives to) issue any press release or
make any public statement regarding this Agreement or the Merger, or regarding
any of the other transactions contemplated by this Agreement, without the other
party's prior written consent.
4.3 Termination of Agreements. The Company, Parent, the holders of the
Company's Series A Preferred Stock and Series B Preferred Stock (the
"Investors") and certain of the Stockholders shall enter into an agreement,
reasonably satisfactory in form and content to Parent (and conditioned and
effective upon the Closing), terminating (i) the Amended and Restated Investors'
Rights Agreement dated as of May 12, 1998 and among the Company, Parent and the
Investors, and (ii) the Amended and Restated Co-Sale Agreement dated as of May
12, 1998 by and among the Company, Parent, the Investors and such Stockholders.
4.4 FIRPTA Matters. At the Closing, (a) the Company shall deliver to
Parent a statement (in such form as may be reasonably requested by counsel to
Parent) conforming to the requirements of Section 1.897 - 2(h)(1)(i) of the
United States Treasury Regulations, and (b) the Company shall deliver to the
Internal Revenue Service the notification required under Xxxxxxx 0.000 - 0(x)(0)
xx xxx Xxxxxx Xxxxxx Treasury Regulations.
4.5 Release. At the Closing, each of the Stockholders shall execute and
deliver to the Company and Parent a Release in the form of Exhibit C.
4.6 Investment Representation Letter. At the Closing, each of the
Stockholders shall execute and deliver to Parent an Investment Representation
Letter in the form of Exhibit D.
4.7 Registration Rights Agreement. At the Closing, Parent and each of
the Stockholders shall execute and deliver the Registration Rights Agreement in
the form of Exhibit E. Parent shall promptly file a registration statement on
Form S-3 pursuant to the terms of the Registration Rights Agreement.
4.8 Amendments to Company Options. At the Closing, the Company shall
execute and deliver to Parent and each holder of a Company Option currently
engaged by the Company (including holders of shares of Company Common Stock
issued upon the exercise of an option granted by the Company, but excluding
Xxxxxxxx Xxxxxxx and Xxxxx Xxxxxx) an amendment in substantially the form of
Exhibit F (the "Option Amendment"). Following the Closing, Parent will send the
Option Amendment to each such holder with the written notice required to be
delivered pursuant to Section 1.6.
4.9 Termination of 401(k) Plan. At the Closing, the Company shall
terminate its 401(k) Plan, and shall ensure that no employee or former employee
of the Company has any 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.
4.10 Indemnification. From and after the Effective Time, Parent shall
indemnify, defend and hold harmless each person who is now, or has been at any
time prior to the date of this Agreement or who becomes prior to the Effective
Time, an officer, director or employee of the Company (the "Indemnified
Parties") in respect of acts or omissions occurring on or prior to the Effective
Time to the extent provided under the Company's Certificate of Incorporation,
Bylaws and indemnification agreements in effect on the date hereof; provided
that such indemnification shall be subject to any limitation imposed from time
to time under applicable law.
25.
4.11 Tax-Free Reorganization. Neither the Company, Parent nor Merger
Sub will, either before or after consummation of the Merger, take any action
which, to the best of the knowledge of such party, would cause the Merger to
fail to constitute a "reorganization" within the meaning of Code Section 368.
4.12 Blue Sky Laws. Parent shall take such steps as may be necessary to
comply with the securities and blue sky laws of all jurisdictions that are
applicable to the issuance of the Parent Common Stock in connection with the
Merger. The Company shall use its best efforts to assist Parent as may be
necessary to comply with the securities and blue sky laws of all jurisdictions
which are applicable in connection with the issuance of Parent Common Stock in
connection with the Merger.
4.13 Employee Benefits. Parent shall take such reasonable actions, to
the extent permitted by Parent's benefits program, as are necessary to allow
eligible employees of the Company to participate in the benefit programs of
Parent, or alternative benefits programs in the aggregate substantially
comparable to those applicable to similarly situated employees of Parent, as
soon as practicable after the Effective Time of the Merger. For purposes of
satisfying the terms and conditions of such programs, to the extent permitted by
Parent's benefit programs, Parent shall use reasonable efforts to give full
credit for eligibility, or vesting for each participant's period of service with
the Company and for purposes of vacation accrual after the Effective Time as if
such service with the Company was service with Parent. Parent and the Company
agree that where applicable with respect to any medical or dental benefit plan
of Parent, Parent shall waive, or shall cause its insurance carrier to waive,
any pre-existing condition exclusion and actively-at-work requirements
(provided, however, that no such waiver shall apply to a pre-existing condition
of any employee of the Company who was, as of the Effective Time, excluded from
participation in a plan by virtue of such pre-existing condition) and provided
that any covered expenses incurred on or before the Effective Time by an
employee or an employee's covered dependents shall be taken into account for
purposes of satisfying applicable deductible, coinsurance and maximum out-of-
pocket provisions after the Effective Time to the same extent as such expenses
are taken into account for the benefit of similarly situated employees of
Parent.
4.14 Tax Matters. Prior to the Closing, Parent and the Company shall
execute and deliver, to Xxxxxx Godward LLP and to Xxxxxxxxx Xxxxxxx Xxxxxx
Xxxxxxxxxx Xxxxxxxx & Xxxxxxxxx, LLP, tax representation letters in a form
reasonably acceptable to such counsel (which will be used in connection with the
legal opinions contemplated by Sections 5.5(k) and 6.3(d)).
SECTION 5. 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:
5.1 Accuracy of Representations. Each of the representations and
warranties made by the Company in this Agreement and in each of the other
agreements and instruments delivered to Parent in connection with the
transactions contemplated by this Agreement shall be accurate in all respects as
of the Closing.
5.2 Performance of Covenants. All of the covenants and obligations that
the Company and the Stockholders are required to comply with or to perform at or
prior to the Closing shall have been complied with and performed in all
respects.
26.
5.3 Stockholder Approval. The principal terms of the Merger shall have
been duly approved by the affirmative vote of (a) 97% of the shares of Company
Common Stock entitled to vote with respect thereto, and (b) 97% of the shares of
the Company Preferred Stock entitled to vote with respect thereto.
5.4 Consents. All Consents required to be obtained in connection with
the Merger and the other transactions contemplated by this Agreement (including
those Consents identified in Part 2.21 of the Disclosure Schedule that Parent
desires to obtain) shall have been obtained and shall be in full force and
effect.
5.5 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) a Release in the form of Exhibit C, executed by the Stockholders;
(b) an Investment Representation Letter in the form of Exhibit D,
executed by the Stockholders;
(c) the Registration Rights Agreement in the form of Exhibit E,
executed by the Agent;
(d) the Escrow Agreement in the form of Exhibit G, executed by the
Stockholders;
(e) the agreement referred to in Section 4.3, executed by the parties
thereto;
(f) confidential invention and assignment agreements, reasonably
satisfactory in form and content to Parent, executed by all employees and former
employees of the Company and by all consultants and independent contractors and
former consultants and former independent contractors to the Company who have
not already signed such agreements (including the individuals identified in Part
2.9(f) of the Disclosure Schedule);
(g) an estoppel certificate, dated as of a date not more than five
days prior to the Closing Date and satisfactory in form and content to Parent,
executed by Innovations International, Inc.;
(h) a legal opinion of Xxxxxxxxx Xxxxxxx Xxxxxx Xxxxxxxxxx Xxxxxxxx &
Xxxxxxxxx, LLP, dated as of the Closing Date, in a form reasonably acceptable to
Parent and its counsel;
(i) a certificate executed by the Company and containing the
representation and warranty of the Company that each of the representations and
warranties set forth in Section 2 is accurate in all respects as of the Closing
Date as if made on the Closing Date and that the conditions set forth in
Sections 5.1, 5.2, 5.3 and 5.4 have been duly satisfied (the "Closing
Certificate");
(j) a legal opinion of Cooley Godward LLP, in a form reasonably
acceptable to Parent, dated as of the Closing Date, to the effect that the
Merger will constitute a reorganization within the meaning of Section 368 of the
Code (it being understood that, in rendering such opinion, such counsel may rely
upon the tax representation letters referred to in Section 4.14); and
(k) written resignations of all directors of the Company, effective as
of the Effective Time.
27.
5.6 FIRPTA Compliance. The Company shall have filed with the Internal
Revenue Service the notification referred to in Section 4.4.
5.7 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.
5.8 No Legal Proceedings. No Person shall have commenced or threatened
to commence any Legal Proceeding challenging or seeking the recovery of a
material amount of damages in connection with the Merger or seeking to prohibit
or limit the exercise by Parent of any material right pertaining to its
ownership of stock of the Surviving Corporation.
5.9 Termination of 401(k) Plan. The Company shall have provided Parent
with evidence, reasonably satisfactory to Parent, as to the termination of its
401(k) Plan.
SECTION 6. 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:
6.1 Accuracy of Representations. Each of the representations and
warranties made by Parent and Merger Sub in this Agreement shall be accurate in
all respects as of the Closing.
6.2 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 respects.
6.3 Documents. The Company shall have received the following documents:
(a) the Registration Rights Agreement in the form of Exhibit E,
executed by Parent;
(b) the Option Amendments in the form of Exhibit F, executed by
Parent;
(c) a legal opinion of Cooley Godward LLP, dated as of the Closing
Date, in a form reasonably acceptable to the Company and its counsel;
(d) a legal opinion of Xxxxxxxxx Xxxxxxx Xxxxxx Xxxxxxxxxx Xxxxxxxx &
Xxxxxxxxx, LLP, in a form reasonably acceptable to the Company, dated as of the
Closing Date, to the effect that the Merger will constitute a reorganization
within the meaning of Section 368 of the Code (it being understood that, in
rendering such opinion, such counsel may rely upon the tax representation
letters referred to in Section 4.14); and
(e) the Escrow Agreement in the form of Exhibit G, executed by Parent.
6.4 Listing. The shares of Parent Common Stock to be issued in the
Merger shall have been approved for listing (subject to notice of issuance) on
the Nasdaq National Market.
28.
6.5 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 7. INDEMNIFICATION, ETC.
7.1 Survival of Representations, Etc.
(a) The representations and warranties made by the Company
(including the representations and warranties set forth in Section 2) shall
survive the Closing and shall expire on the first anniversary of the Closing
Date; provided, however, that if, at any time prior to the first anniversary of
the Closing Date, any Indemnitee (acting in good faith) delivers to the Agent a
written notice alleging the existence of an inaccuracy in or a breach of any of
the representations and warranties made by the Company (and setting forth in
reasonable detail the basis for such Indemnitee's belief that such an inaccuracy
or breach may exist) and asserting a claim for recovery under Section 7.2 based
on such alleged inaccuracy or breach, then the claim asserted in such notice
shall survive the first anniversary of the Closing until such time as such claim
is fully and finally resolved. The representations and warranties made by Parent
and Merger Sub (including the representations and warranties set forth in
Section 3) shall survive the Closing and shall expire on the first anniversary
of the Closing Date; provided, however, that if, at any time prior to the first
anniversary of the Closing Date, the Agent (acting in good faith) delivers to
Parent a written notice alleging the existence of an inaccuracy in or a breach
of any of the representations and warranties made by Parent and Merger Sub (and
setting forth in reasonable detail the basis for the Agent's belief that such an
inaccuracy or breach may exist) and asserting a claim for recovery based on such
alleged inaccuracy or breach, then the claim asserted in such notice shall
survive the first anniversary of the Closing until such time as such claim is
fully and finally resolved. Notwithstanding the preceding sentence, the
representations and warranties of Parent and Merger Sub set forth in Sections
3.1 and 3.6 shall terminate and expire at the Closing and any liability of
Parent or Merger Sub with respect to such representations and warranties shall
thereupon cease.
(b) The representations, warranties, covenants and obligations of
the Company, and the rights and remedies that may be exercised by the
Indemnitees, shall not be limited or otherwise affected by or as a result of any
information furnished to, or any investigation made by or knowledge of, any of
the Indemnitees or any of their Representatives.
(c) For purposes of this Agreement, each statement or other item of
information set forth in the Disclosure Schedule shall be deemed to be a
representation and warranty made by the Company in this Agreement.
7.2 Indemnification by Stockholders.
(a) From and after the Effective Time (but subject to Section
7.1(a)), the Stockholders, pro rata from the Escrow Fund, shall hold harmless
and indemnify each of the Indemnitees from and against, and shall compensate and
reimburse each of the Indemnitees for, any Damages which are directly or
indirectly suffered or incurred by any of the Indemnitees or to which any of the
Indemnitees may otherwise become subject (regardless of whether or not such
Damages relate to any third-party claim) and which arise from or as a result of,
or are directly or indirectly connected with: (i) any inaccuracy in or breach of
any representation or warranty set forth in Section 2 or in the Closing
Certificate (without giving effect to any "Material Adverse Effect" or other
materiality qualification or
29.
any similar qualification contained or incorporated directly or indirectly in
such representation or warranty; (ii) any breach of any covenant or obligation
of the Company or any of the Stockholders (including the covenants set forth in
Section 4); or (iii) any Legal Proceeding relating to any inaccuracy or breach
of the type referred to in clause "(i)" or "(ii)" above (including any Legal
Proceeding commenced by any Indemnitee for the purpose of enforcing any of its
rights under this Section 7).
(b) The Stockholders acknowledge and agree that, if the Surviving
Corporation suffers, incurs or otherwise becomes subject to any Damages as a
result of or in connection with any inaccuracy in or breach of any
representation, warranty, covenant or obligation, then (without limiting any of
the rights of the Surviving Corporation as an Indemnitee) Parent shall also be
deemed, by virtue of its ownership of the stock of the Surviving Corporation, to
have incurred Damages as a result of and in connection with such inaccuracy or
breach.
7.3 Threshold; Ceiling.
(a) The Stockholders shall not be required to make any
indemnification payment pursuant to Section 7.2(a) for any inaccuracy in or
breach of any of their representations and warranties set forth in Section 2
until such time as the total amount of all Damages (including the Damages
arising from such inaccuracy or breach and all other Damages arising from any
other inaccuracies in or breaches of any representations or warranties) that
have been directly or indirectly suffered or incurred by any one or more of the
Indemnitees, or to which any one or more of the Indemnitees has or have
otherwise become subject, exceeds $300,000 in the aggregate. (If the total
amount of such Damages exceeds $300,000, then the Indemnitees shall be entitled
to be indemnified against and compensated and reimbursed only for the portion of
such Damages exceeding $300,000.)
(b) Except for acts constituting fraud, the maximum liability of each
Stockholder under Section 7.2(a) shall be equal to the dollar value of such
Stockholder's Escrow Shares (valued at the Parent Stock Price) and such
Stockholder's liability shall be limited to such Stockholder's pro rata portion
of the Escrow Fund. The rights of Parent, the Surviving Corporation and any
other Indemnitee to make claims upon the Escrow Fund in accordance with this
Section 7 shall be the sole and exclusive remedy of Parent, the Surviving
Corporation and any other Indemnitee after the Closing with respect to any
representation, warranty, covenant or agreement made by the Company or any
Stockholder under this Agreement and no former stockholder, optionholder or
warrantholder (in their capacity as a stockholder, optionholder or
warrantholder, as appropriate) shall have any personal liability to Parent, the
Surviving Corporation or any Indemnitee after the Closing in connection with the
Merger.
7.4 Satisfaction of Indemnification Claim. In the event any Stockholder
shall have any liability (for indemnification or otherwise) to any Indemnitee
under this Section 7, such Stockholder shall satisfy such liability by
delivering to such Indemnitee in accordance with the terms of the Escrow
Agreement the number of shares of Parent Common Stock determined by dividing (a)
the aggregate dollar amount of such liability by (b) the Parent Stock Price (as
defined in Section 1.5(b)(iv) and as adjusted as appropriate to reflect any
stock split, reverse stock split, stock dividend, recapitalization or other
similar transaction effected by Parent between the Effective Time and the date
such liability is satisfied).
7.5 No Contribution. Each Stockholder waives, and acknowledges and agrees
that he shall not have and shall not exercise or assert (or attempt to exercise
or assert), any right of contribution, right of indemnity or other right or
remedy against the Surviving Corporation in connection with any
30.
indemnification obligation or any other liability to which he may become subject
under or in connection with this Agreement.
7.6 Defense of Third Party Claims. In the event of the assertion or
commencement by any Person of any claim or Legal Proceeding (whether against the
Surviving Corporation, against Parent or against any other Person) with respect
to which any of the Stockholders may become obligated to hold harmless,
indemnify, compensate or reimburse any Indemnitee pursuant to this Section 7,
Parent shall have the right, at its election, to proceed with the defense of
such claim or Legal Proceeding on its own. If Parent so proceeds with the
defense of any such claim or Legal Proceeding:
(a) all reasonable expenses relating to the defense of such claim or
Legal Proceeding (as contemplated by Section 7.1) shall be borne and paid
exclusively by the Stockholders (provided that any expenses so paid shall be
paid from the Escrow Fund and shall reduce the Escrow Fund accordingly and shall
be subject to the ceiling described in Section 7.3(b));
(b) each Stockholder shall make available to Parent any documents and
materials in his possession or control that may be necessary to the defense of
such claim or Legal Proceeding; and
(c) Parent shall have the right to settle, adjust or compromise such
claim or Legal Proceeding with the consent of the Agent (as defined in Section
8.1); provided, however, that such consent shall not be unreasonably withheld.
Parent shall give the Agent prompt notice of the commencement of any such Legal
Proceeding against Parent or the Surviving Corporation; provided, however, that
any failure on the part of Parent to so notify the Agent shall not limit any of
the obligations of the Stockholders under this Section 7 (except to the extent
such failure materially prejudices the defense of such Legal Proceeding).
7.7 Exercise of Remedies by Indemnitees Other Than Parent. No Indemnitee
(other than Parent or any successor thereto or assign thereof) shall be
permitted to assert any indemnification claim or exercise any other remedy under
this Agreement unless Parent (or any successor thereto or assign thereof) shall
have consented to the assertion of such indemnification claim or the exercise of
such other remedy.
SECTION 8. MISCELLANEOUS PROVISIONS
8.1 Agent. The Stockholders hereby irrevocably appoint Xxxxxxxx X. Xxxxxxx
as their agent for purposes of Section 7 (the "Agent"), and Xxxxxxxx X. Xxxxxxx
hereby accepts his appointment as the Agent. Parent shall be entitled to deal
exclusively with the Agent on all matters relating to Section 7, 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
Stockholder by the Agent, and on any other action taken or purported to be taken
on behalf of any Stockholder by the Agent, as fully binding upon such
Stockholder. If the Agent shall die, become disabled or otherwise be unable to
fulfill his responsibilities as agent of the Stockholders, then the Stockholders
representing a majority in interest of the Escrow Shares 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 "Agent" for purposes of Section 8 and this Section
8.1. If for any reason there is no Agent at any time, all references herein to
the Agent shall be deemed to refer to the Stockholders. The Agent shall not be
liable for any act done or omitted hereunder as Agent while acting in good faith
and in the exercise of reasonable judgment, and any act done or omitted pursuant
to either (i) the advice of counsel
31.
or (ii) the vote of a majority in interest of the Stockholders, shall be
conclusive evidence of such good faith. The Stockholders of the Company shall
severally indemnify the Agent and hold him harmless against any loss, liability
or expense incurred without gross negligence or bad faith on the part of the
Agent and arising out of or in connection with the acceptance or administration
of his duties hereunder.
8.2 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.
8.3 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 Company's 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 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 legal fees, costs and expenses incurred by or for the
benefit of the Company exceeds $175,000 in the aggregate, such fees, costs and
expenses shall be borne and paid by the Stockholders and not by the Company.
8.4 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).
8.5 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: Documentum, Inc.
0000 Xxxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000-0000
Attention: Xxxx Xxxxxxx
Facsimile: (000) 000-0000
with a copy to: Cooley Godward LLP
0000 Xxxx Xxxx Xxxx
Xxxxxxxx 0, Xxxxx 000
Xxxxx Xxxx, XX 00000
32.
Attention: Xxxx X. Xxxxxxx, Esq.
Facsimile: (000) 000-0000
if to the Company Relevance Technologies, Inc.
or the Agent: 00 Xxxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxxxxxx, XX 00000
Attention: Xxxxxxxx X. Xxxxxxx
Facsimile: (000) 000-0000
(correspondence should be marked as "Confidential")
with a copy to: Xxxxxxxxx Xxxxxxx Xxxxxx
Xxxxxxxxxx Xxxxxxxx & Xxxxxxxxx, LLP
000 Xxxxxxxxxxxx Xxxxx
Xxxxx Xxxx, XX 00000
Attention: Xxxxxx X. X'Xxxxxx, Esq.
Facsimile: (000) 000-0000
8.6 Confidentiality. Without limiting the generality of anything contained
in Section 4.2, on and at all times after the Closing Date, each Stockholder
shall keep confidential, and shall not use or disclose to any other Person, any
non-public document or other non-public information in such Stockholder's
possession that relates to the business of the Company or Parent.
8.7 Time of the Essence. Time is of the essence of this Agreement.
8.8 Headings. The 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.
8.9 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.
8.10 Governing Law. This Agreement shall be construed in accordance with,
and governed in all respects by, the internal laws of the State of California
(without giving effect to principles of conflicts of laws).
8.11 Successors and Assigns. This Agreement shall be binding upon: the
Company and its successors and assigns (if any); the Stockholders and their
respective personal representatives, executors, administrators, estates, heirs,
successors and assigns (if any); Parent and its successors and assigns (if any);
and Merger Sub and its successors and assigns (if any). This Agreement shall
inure to the benefit of: the Company; the Stockholders (to the extent set forth
in Section 1.5); the holders of assumed Company Options (to the extent set forth
in Section 1.6); Parent; Merger Sub; the other Indemnitees (subject to Section
7.7); and the respective successors and assigns (if any) of the foregoing.
8.12 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
33.
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.
8.13 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.
8.14 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.
8.15 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.
8.16 Parties in Interest. Except for the provisions of Sections 1.5, 1.6
and 7, 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).
8.17 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 any Non-Disclosure Agreements
between Parent and the Company 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 Non-Disclosure Agreement is
terminated in accordance with its terms; and provided further that the
information provided to the Stockholders in connection with the Company's
solicitation of the Stockholders' approval of the Merger shall not be superseded
by this Section 8.17 except to the extent such information purports to summarize
the subject matter of this Agreement.
34.
8.18 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.
(e) References herein to capital stock of the Company owned by Parent
shall include shares of the Company's capital stock transferred by Parent to any
third party.
35.
The parties hereto have caused this Agreement to be executed and delivered
as of July 16, 1998.
Documentum, Inc.,
a Delaware corporation
By: /s/ Xxxx X. Xxxxxxx
-----------------------------------------
Title: Chief Financial Officer
--------------------------------------
RTI Acquisition Corp,
a Delaware corporation
By: /s/ Xxxx X. Xxxxxxx
-----------------------------------------
Title: Chief Financial Officer
--------------------------------------
Relevance Technologies, Inc.,
a Delaware corporation
By: /s/ Xxxxxxxx X. Xxxxxxx
-----------------------------------------
Title: President and Chief Executive Officer
--------------------------------------
Agent:
/s/ Xxxxxxxx X. Xxxxxxx
--------------------------------------------
Xxxxxxxx X. Xxxxxxx
SIGNATURE PAGE
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 Company's business or assets;
(b) the acquisition of (i) more than fifty percent (50%) of the
capital stock of the Company, (ii) any option, call, warrant or right
(whether or not immediately exercisable) to acquire more than fifty percent
(50%) of the capital stock of the Company, or (iii) any security,
instrument or obligation that is or may become convertible into or
exchangeable for more than fifty percent (50%) of the capital stock of the
Company; or
(c) any merger, consolidation, business combination, reorganization or
similar transaction involving the Company.
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 the Company is a party; (b) by which the Company or any of its assets is
or may become bound or under which the Company has, or may become subject to,
any obligation; or (c) under which the Company has or may acquire any right or
interest.
Company Proprietary Asset. "Company Proprietary Asset" shall mean any
Proprietary Asset owned by or licensed to the Company or otherwise used by the
Company.
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, liability,
claim, demand, settlement, judgment, award, fine, penalty, fee (including
reasonable attorneys' fees but excluding in-house counsel 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,
A-1
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.
Exchange Act. "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
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).
Indemnitees. "Indemnitees" shall mean the following Persons: (a) Parent;
(b) the Surviving Corporation; and (c) the respective successors and assigns of
the Persons referred to in clauses "(a)" and "(b)" above.
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.
A-2.
Material Adverse Effect. A violation or other matter will be deemed to
have a "Material Adverse Effect" on the Company if such violation or other
matter would have a material adverse effect on the Company's business,
condition, assets, liabilities, operations or financial performance.
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.
SEC. "SEC" shall mean the United States Securities and Exchange
Commission.
Securities Act. "Securities Act" shall mean the Securities Act of 1933, as
amended.
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.
A-3.
EXHIBIT B
SCHEDULE OF STOCKHOLDERS
NAME NUMBER OF SHARES OF STOCK
----------------------------------- -----------------------------------
Common Holders
--------------
Xxxxxxxx X. Xxxxxxx 1,118,321
Xxxxx X. Xxxxxx 1,118,321
CE Software Holdings, Inc. 1,470,000
Xxxx Xxxx 70,000
Xxxxx Xxxxx 35,000
Xxxxxxxx Xxxxxxx 125,000
Xxxxxxx Xxxxx 135,000
Xxxxxx Law 5,000
Xxxxxxx Xxxxxxx 26,250
Series A Holders
----------------
Crosspoint Venture Partners (1996) 1,612,903
G & H Partners 32,258
Xxxxxxx X. Xxxxxx 20,000
Venture Lending & Leasing 23,963
Series B Holders
----------------
Crosspoint Venture Partners (1996) 496,689
IAI U.S. Venture Fund II, L.P. 1,117,566
Eagle Ventures II, LLC 41,374
B-1
