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EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
i2 TECHNOLOGIES, INC.,
TSC ACQUISITION CORPORATION
AND
THINK SYSTEMS CORPORATION
May 15, 1997
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TABLE OF CONTENTS
Page
ARTICLE I - THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1 The Merger . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Closing; Effective Time . . . . . . . . . . . . . . . . . 2
1.3 Effect of the Merger . . . . . . . . . . . . . . . . . . . 2
1.4 Certificate of Incorporation; Bylaws . . . . . . . . . . . 2
1.5 Directors and Officers . . . . . . . . . . . . . . . . . . 2
1.6 Effect on Capital Stock . . . . . . . . . . . . . . . . . 3
1.7 Surrender of Certificates . . . . . . . . . . . . . . . . 4
1.8 No Further Ownership Rights in Target Capital Stock . . . 6
1.9 Lost, Stolen or Destroyed Certificates . . . . . . . . . . 6
1.10 Tax and Accounting Consequences . . . . . . . . . . . . . 6
1.11 Exemption from Registration. . . . . . . . . . . . . . . . 6
1.12 Taking of Necessary Action; Further Action . . . . . . . . 7
ARTICLE II - REPRESENTATIONS AND WARRANTIES OF TARGET . . . . . . . . . . . 7
2.1 Organization, Standing and Power . . . . . . . . . . . . . 7
2.2 Capital Structure . . . . . . . . . . . . . . . . . . . . 8
2.3 Authority . . . . . . . . . . . . . . . . . . . . . . . . 9
2.4 Financial Statements . . . . . . . . . . . . . . . . . . . 10
2.5 Absence of Certain Changes . . . . . . . . . . . . . . . . 10
2.6 Absence of Undisclosed Liabilities . . . . . . . . . . . . 10
2.7 Litigation . . . . . . . . . . . . . . . . . . . . . . . . 11
2.8 Restrictions on Business Activities . . . . . . . . . . . 11
2.9 Governmental Authorization . . . . . . . . . . . . . . . . 11
2.10 Title to Property . . . . . . . . . . . . . . . . . . . . 11
2.11 Intellectual Property . . . . . . . . . . . . . . . . . . 12
2.12 Environmental Matters . . . . . . . . . . . . . . . . . . 13
2.13 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.14 Employee Benefit Plans . . . . . . . . . . . . . . . . . . 16
2.15 Employee Matters . . . . . . . . . . . . . . . . . . . . . 18
2.16 Interested Party Transactions . . . . . . . . . . . . . . 18
2.17 Insurance . . . . . . . . . . . . . . . . . . . . . . . . 18
2.18 Compliance With Laws . . . . . . . . . . . . . . . . . . . 19
2.19 Minute Books . . . . . . . . . . . . . . . . . . . . . . . 19
2.20 Contracts. . . . . . . . . . . . . . . . . . . . . . . . 19
2.21 Pooling of Interests . . . . . . . . . . . . . . . . . . . 19
2.22 Brokers' and Finders' Fees . . . . . . . . . . . . . . . . 19
2.23 Board and Shareholder Approval . . . . . . . . . . . . . . 19
2.24 Section 14A:10A-4 of the NJBCA Not Applicable . . . . . . 19
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2.25 Accounts Receivable . . . . . . . . . . . . . . . . . . . 19
2.26 Customers and Suppliers . . . . . . . . . . . . . . . . . 20
2.27 Affiliates . . . . . . . . . . . . . . . . . . . . . . . . 20
2.28 Representations Complete . . . . . . . . . . . . . . . . . 20
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF ACQUIROR AND MERGER SUB . . 20
3.1 Organization, Standing and Power . . . . . . . . . . . . . 20
3.2 Capital Structure . . . . . . . . . . . . . . . . . . . . 21
3.3 Authority . . . . . . . . . . . . . . . . . . . . . . . . 21
3.4 SEC Documents; Financial Statements . . . . . . . . . . . 22
3.5 Absence of Certain Changes . . . . . . . . . . . . . . . . 23
3.6 Absence of Undisclosed Liabilities . . . . . . . . . . . . 23
3.7 Litigation . . . . . . . . . . . . . . . . . . . . . . . . 24
3.8 Pooling of Interests . . . . . . . . . . . . . . . . . . . 24
3.9 Brokers' and Finders' Fees . . . . . . . . . . . . . . . . 24
3.10 Fairness Opinion . . . . . . . . . . . . . . . . . . . . . 24
3.11 Affiliates . . . . . . . . . . . . . . . . . . . . . . . . 24
3.12 Election of Director . . . . . . . . . . . . . . . . . . . 24
3.13 Representations Complete . . . . . . . . . . . . . . . . . 24
3.14 Section 368(a) of the Code . . . . . . . . . . . . . . . . 25
3.15 Intellectual Property . . . . . . . . . . . . . . . . . . 25
ARTICLE IV - ADDITIONAL AGREEMENTS . . . . . . . . . . . . . . . . . . . . 25
4.1 Confidentiality . . . . . . . . . . . . . . . . . . . . . 25
4.2 Public Disclosure . . . . . . . . . . . . . . . . . . . . 25
4.3 Pooling Accounting . . . . . . . . . . . . . . . . . . . . 26
4.4 Legal Requirements . . . . . . . . . . . . . . . . . . . . 26
4.5 Blue Sky Laws . . . . . . . . . . . . . . . . . . . . . . 26
4.6 Employee Benefit Plans . . . . . . . . . . . . . . . . . . 26
4.7 Forms S-8 . . . . . . . . . . . . . . . . . . . . . . . . 27
4.8 Listing of Additional Shares . . . . . . . . . . . . . . . 27
4.9 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . 27
4.10 Certain Notices. . . . . . . . . . . . . . . . . . . . . . 27
4.11 Reasonable Commercial Efforts and Further Assurances . . . 28
4.12 Target Director and Officer Indemnification . . . . . . . 28
ARTICLE V - CLOSING DELIVERIES . . . . . . . . . . . . . . . . . . . . . . 28
5.1 Closing Deliveries to Target and Target Shareholders . . . 28
5.2 Closing Deliveries to Acquiror and Merger Sub . . . . . . 29
ARTICLE VI - ESCROW . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.1 Escrow Fund. . . . . . . . . . . . . . . . . . . . . . . . 30
6.2 Exclusivity . . . . . . . . . . . . . . . . . . . . . . . 30
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6.3 Damage Thresholds. . . . . . . . . . . . . . . . . . 30
6.4 Escrow Period. . . . . . . . . . . . . . . . . . . . 30
6.5 Claims upon Escrow Fund. . . . . . . . . . . . . . . 31
6.6 Objections to Claims. . . . . . . . . . . . . . . . 31
6.7 Resolution of Conflicts; Arbitration. . . . . . . . 31
6.8 Shareholders' Agent. . . . . . . . . . . . . . . . . 32
6.9 Actions of the Shareholders' Agent. . . . . . . . . 33
6.10 Third-Party Claims. . . . . . . . . . . . . . . . . 33
ARTICLE VII - GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . 34
7.1 Survival at Effective Time . . . . . . . . . . . . . 34
7.2 Notices . . . . . . . . . . . . . . . . . . . . . . 34
7.3 Interpretation . . . . . . . . . . . . . . . . . . . 35
7.4 Counterparts . . . . . . . . . . . . . . . . . . . . 35
7.5 Entire Agreement; Nonassignability; Parties in
Interest; Amendment . . . . . . . . . . . . . . . . 35
7.6 Severability . . . . . . . . . . . . . . . . . . . . 36
7.7 Remedies Cumulative . . . . . . . . . . . . . . . . 36
7.8 Governing Law . . . . . . . . . . . . . . . . . . . 36
7.9 Rules of Construction . . . . . . . . . . . . . . . 36
SCHEDULES
Target Disclosure Schedule
Acquiror Disclosure Schedule
EXHIBITS
Exhibit A - Certificate of Merger
Exhibit B - Affiliate and Shareholder Agreement
Exhibit C - Acquiror Affiliate Agreement
Exhibit D - FIRPTA Notice
Exhibit E - Escrow Agreement
Exhibit F - Shareholder's Representation Agreement
Exhibit G - Acquiror's Legal opinion
Exhibit H - Registration Rights Agreement
Exhibit I - Target's Legal opinion
Exhibit J - Employment and Noncompetition Agreement
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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (the "Agreement") is made
and entered into as of May 15, 1997, by and among i2 Technologies, Inc., a
Delaware corporation ("Acquiror"), TSC Acquisition Corporation, a New Jersey
corporation ("Merger Sub") and wholly owned subsidiary of Acquiror, and Think
Systems Corporation, a New Jersey corporation ("Target").
RECITALS
A. The Boards of Directors of Target, Acquiror and
Merger Sub believe it is in the best interests of their respective companies
and the shareholders of their respective companies that Target and Merger Sub
combine into a single company through the statutory merger of Merger Sub with
and into Target (the "Merger") and, in furtherance thereof, have approved the
Merger.
B. Pursuant to the Merger, among other things, the
outstanding shares of Target capital stock ("Target Capital Stock") shall be
converted into shares of Acquiror common stock, par value $0.00025 per share
("Acquiror Common Stock"), at the rates set forth herein.
C. Think Systems Private, Ltd., an Indian corporation
("TSP"), Acquiror and the security holders of TSP have proposed to enter into
a certain Agreement for Purchase of Shares pursuant to which the security
holders of TSP would convey, subject to the conditions contained therein, all
of the capital stock of TSP to Acquiror in exchange for 35,663 shares of
Acquiror Common Stock.
D. Target, Acquiror and Merger Sub desire to make
certain representations and warranties and other agreements in connection with
the Merger.
E. The parties intend, by executing this Agreement, to
effect a reorganization within the meaning of Section 368 of the Internal
Revenue Code of 1986, as amended (the "Code"), and to cause the Merger to
qualify as a reorganization under the provisions of Sections 368(a)(1)(A) and
368(a)(2)(E) of the Code.
F. The parties intend to cause the Merger to be
accounted for as a "pooling of interests" pursuant to APB Opinion No. 16,
related interpretations and technical bulletins issued by the Financial
Accounting Standards Board ("FASB") and positions set forth by the FASB
Emerging Issues Task Force.
NOW, THEREFORE, in consideration of the covenants and
representations set forth herein, and for other good and valuable
consideration, the parties agree as follows:
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ARTICLE I
THE MERGER
1.1 The Merger. At the Effective Time (as defined in
Section 1.2) and subject to and upon the terms and conditions of this
Agreement, the Certificate of Merger attached hereto as Exhibit A (the
"Certificate of Merger") and the applicable provisions of the New Jersey
Business Corporation Act (the "NJBCA"), Merger Sub shall be merged with and
into Target, the separate corporate existence of Merger Sub shall cease and
Target shall continue as the surviving corporation. Target as the surviving
corporation after the Merger is hereinafter sometimes referred to as the
"Surviving Corporation."
1.2 Closing; Effective Time. The closing of the
transactions contemplated hereby (the "Closing") shall take place
simultaneously with the execution and delivery of this Agreement at the offices
of Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP, 0000 Xxxxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx
Xxxx 00000, or at such other location as the parties hereto agree. In
connection with the Closing, the parties hereto shall (i) execute and deliver,
or cause to be executed and delivered, the documents referred to in Article V
hereof and (ii) cause the Merger to be consummated by filing the Certificate of
Merger, together with any required officers' certificates, with the Secretary
of State of the State of New Jersey, in accordance with the relevant provisions
of the NJBCA (the time of such filing being the "Effective Time").
1.3 Effect of the Merger. At the Effective Time, the
effect of the Merger shall be as provided in this Agreement, the Certificate of
Merger and the applicable provisions of the NJBCA. Without limiting the
generality of the foregoing, and subject thereto, at the Effective Time, all
the properties, rights, privileges, powers and franchises of Target and Merger
Sub shall vest in the Surviving Corporation, and all debts, liabilities and
duties of Target and Merger Sub shall become the debts, liabilities and duties
of the Surviving Corporation.
1.4 Certificate of Incorporation; Bylaws.
(a) At the Effective Time, the Certificate of
Incorporation of Target, as in effect immediately prior to the Effective Time,
as amended by the Certificate of Merger, shall be the Certificate of
Incorporation of the Surviving Corporation until thereafter amended as provided
by the NJBCA and such Certificate of Incorporation.
(b) The Bylaws of Target, as in effect
immediately prior to the Effective Time, shall be the Bylaws of the Surviving
Corporation until thereafter amended.
1.5 Directors and Officers. At the Effective Time, the
directors of Merger Sub, as in effect immediately prior to the Effective Time,
shall be the directors of the Surviving Corporation, until their respective
successors are duly elected or appointed and qualified. The officers of Merger
Sub, as in effect immediately prior to the Effective Time, shall be the
officers
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of the Surviving Corporation, until their respective successors are duly
elected or appointed and qualified.
1.6 Effect on Capital Stock. By virtue of the Merger and
without any action on the part of Merger Sub, Target or the holders of any
shares of Target Capital Stock:
(a) Conversion of Target Capital Stock.
(i) Each share of Target Common Stock, no par
value ("Target Common Stock") issued and outstanding
immediately prior to the Effective Time (other than shares to
be cancelled pursuant to Section 1.6(c)) shall be converted
into the right to receive 0.286596 of a share of Acquiror
Common Stock (the "Common Exchange Ratio").
(ii) Each share of Target Series A Convertible
Preferred Stock, no par value ("Series A Preferred"), issued
and outstanding immediately prior to the Effective Time (other
than shares to be cancelled pursuant to Section 1.6(c)) shall
be converted into the right to receive 0.582349 of a share of
Acquiror Common Stock.
(iii) Each share of Target Series B Convertible
Preferred Stock, no par value ("Series B Preferred"), issued
and outstanding immediately prior to the Effective Time (other
than shares to be cancelled pursuant to Section 1.6(c)) shall
be converted into the right to receive 0.573192 of a share of
Acquiror Common Stock.
(iv) Each share of Target Series C Convertible
Preferred Stock, no par value ("Series C Preferred" and,
collectively with the Series A Preferred and Series B
Preferred, the "Target Preferred Stock"), issued and
outstanding immediately prior to the Effective Time (other
than shares to be cancelled pursuant to Section 1.6(c)) shall
be converted into the right to receive 0.573192 of a share of
Acquiror Common Stock.
(b) Target Stock Option Plans. At the Effective
Time, Target's 1996 Incentive Stock Option Plan, as amended, and 1997 Incentive
Stock Option Plan, as amended (collectively, the "Target Stock Option Plans"),
and all options to purchase Target Common Stock then outstanding under the
Target Stock Option Plans and all other options listed on Schedule 4.6 to the
Target Disclosure Schedule (as defined in Article II hereof) (collectively,
"Target Options") shall be assumed by Acquiror in accordance with Section 4.6.
(c) Cancellation of Target Capital Stock Owned by
Acquiror or Target. At the Effective Time, all shares of Target Capital Stock
that are owned by Target as treasury stock, each share of Target Capital Stock
owned by Acquiror or any direct or indirect wholly
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owned subsidiary of Acquiror or of Target immediately prior to the Effective
Time shall be canceled and extinguished without any conversion thereof.
(d) Maximum Number of Shares to be Issued. The
maximum number of shares of Acquiror Common Stock to be issued (including
Acquiror Common Stock to be reserved for issuance upon the exercise of the
Target Options assumed by Acquiror) in exchange for the acquisition by Merger
Sub of all outstanding Target Capital Stock and all unexpired and unexercised
options to acquire Target Capital Stock shall be 3,823,337 shares of Acquiror
Common Stock. Certain of such shares of Acquiror Common Stock shall be
deposited in the Escrow Fund (as hereinafter defined) in accordance with
Article VI hereof.
(e) Capital Stock of Merger Sub. At the
Effective Time, each share of common stock of Merger Sub ("Merger Sub Common
Stock") issued and outstanding immediately prior to the Effective Time shall be
converted into and exchanged for one validly issued, fully paid and
nonassessable share of common stock of the Surviving Corporation. Each stock
certificate of Merger Sub evidencing ownership of any such shares shall
continue to evidence ownership of such shares of capital stock of the Surviving
Corporation.
(f) Fractional Shares. No fraction of a share of
Acquiror Common Stock will be issued, but in lieu thereof each holder of shares
of Target Capital Stock who would otherwise be entitled to a fraction of a
share of Acquiror Common Stock (after aggregating all fractional shares of
Acquiror Common Stock to be received by such holder) shall receive from
Acquiror an amount of cash (rounded to the nearest whole cent) equal to the
product of (i) such fraction, multiplied by (ii) the average closing "sale"
price of a share of Acquiror Common Stock for the 30 most recent days that
Acquiror Common Stock has traded ending on May 9, 1997, as reported on the
Nasdaq National Market (the "Closing Price").
1.7 Surrender of Certificates.
(a) Delivery of Acquiror Common Stock and Cash at
Closing. At the Closing, Acquiror shall deliver to the Shareholder's Agent (as
defined in Article VI hereof), on behalf of the holders of record of
certificates (the "Certificates") which immediately prior to the Effective Time
represented outstanding shares of Target Capital Stock whose shares were
converted into the right to receive shares of Acquiror Common Stock (and cash
in lieu of fractional shares) pursuant to Section 1.6 and whose shares are
delivered for exchange at the Closing, (i) certificates evidencing the shares
of Acquiror Common Stock issuable pursuant to Section 1.6(a) in exchange for
shares of Target Capital Stock outstanding immediately prior to the Effective
Time less 148,655 shares of Acquiror Common Stock to be deposited into an
escrow fund (the "Escrow Fund") pursuant to the requirements of Article VI and
(ii) cash in an amount sufficient to permit payment of cash in lieu of
fractional shares pursuant to Section 1.6(f). At the Closing, and subject to
and in accordance with the provisions of Article VI hereof, Acquiror shall
cause to be distributed to the Escrow Agent (as defined in Article VI hereof) a
certificate or certificates representing 148,655 shares of Acquiror Common
Stock which shall be registered in the name of the Escrow Agent as nominee for
the holders of
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Certificates cancelled pursuant to this Section 1.7. Such shares shall be
beneficially owned by such holders and shall be held in escrow and shall be
available to compensate Acquiror for certain damages as provided in Article VI.
To the extent not used for such purposes, such shares shall be released, all as
provided in Article VI hereof.
(b) Post-Closing Exchange Procedures. Promptly
after the Effective Time, the Surviving Corporation shall cause to be mailed to
each holder of record of a Certificate not delivered for Acquiror Common Stock
(and cash in lieu of fractional shares) at the Closing (i) a letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon receipt of the
Certificates by such person designated by Acquiror to act as exchange agent in
the Merger (the "Exchange Agent"), and shall be in such form and have such
other provisions as Acquiror may reasonably specify) and (ii) instructions for
use in effecting the surrender of the Certificates in exchange for certificates
representing shares of Acquiror Common Stock (and cash in lieu of fractional
shares). Upon surrender of a Certificate for cancellation to the Exchange
Agent, together with such letter of transmittal, duly completed and validly
executed in accordance with the instructions thereto, the holder of such
Certificate shall be entitled to receive in exchange therefor a certificate
representing the number of whole shares of Acquiror Common Stock less the
number of shares of Acquiror Common Stock to be deposited in the Escrow Fund on
such holder's behalf pursuant to Article VI hereof and payment in lieu of
fractional shares which such holder has the right to receive pursuant to
Section 1.6, and the Certificate so surrendered shall forthwith be canceled.
Until so surrendered, each outstanding Certificate that, prior to the Effective
Time, represented shares of Target Capital Stock will be deemed from and after
the Effective Time, for all corporate purposes, other than the payment of
dividends, to evidence the ownership of the number of full shares of Acquiror
Common Stock into which such shares of Target Capital Stock shall have been so
converted and the right to receive an amount in cash in lieu of the issuance of
any fractional shares in accordance with Section 1.6.
(c) Distributions With Respect to Unexchanged
Shares. No dividends or other distributions with respect to Acquiror Common
Stock with a record date after the Effective Time will be paid to the holder of
any unsurrendered Certificate with respect to the shares of Acquiror Common
Stock represented thereby until the holder of record of such Certificate shall
surrender such Certificate. Subject to applicable law, following surrender of
any such Certificate, there shall be paid to the record holder of the
certificates representing whole shares of Acquiror Common Stock issued in
exchange therefor, without interest, at the time of such surrender, the amount
of any such dividends or other distributions with a record date after the
Effective Time theretofore payable (but for the provisions of this Section
1.7(c)) with respect to such shares of Acquiror Common Stock.
(d) Transfers of Ownership. If any certificate
for shares of Acquiror Common Stock is to be issued in a name other than that
in which the Certificate surrendered in exchange therefor is registered, it
will be a condition of the issuance thereof that the Certificate so surrendered
will be properly endorsed and otherwise in proper form for transfer and that
the person requesting such exchange will have paid to Acquiror or any agent
designated by it any
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transfer or other taxes required by reason of the issuance of a certificate for
shares of Acquiror Common Stock in any name other than that of the registered
holder of the Certificate surrendered, or established to the satisfaction of
Acquiror or any agent designated by it that such tax has been paid or is not
payable.
(e) No Liability. Notwithstanding anything to
the contrary in this Section 1.7, none of the Exchange Agent, the Surviving
Corporation or any party hereto shall be liable to any person for any amount
properly paid to a public official pursuant to any applicable abandoned
property, escheat or similar law.
1.8 No Further Ownership Rights in Target Capital Stock.
All shares of Acquiror Common Stock issued upon the surrender for exchange of
shares of Target Capital Stock in accordance with the terms hereof (including
any cash paid in lieu of fractional shares) shall be deemed to have been issued
in full satisfaction of all rights pertaining to such shares of Target Capital
Stock, and there shall be no further registration of transfers on the records
of the Surviving Corporation of shares of Target Capital Stock which were
outstanding immediately prior to the Effective Time. If, after the Effective
Time, Certificates are presented to the Surviving Corporation for any reason,
they shall be canceled and exchanged as provided in this Article I.
1.9 Lost, Stolen or Destroyed Certificates. In the event
any Certificates shall have been lost, stolen or destroyed, Acquiror shall
cause to be issued in exchange for such lost, stolen or destroyed Certificates,
upon the making of an affidavit of that fact by the holder thereof, such shares
of Acquiror Common Stock (and cash in lieu of fractional shares) as may be
required pursuant to Section 1.6; provided, however, that Acquiror may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed Certificates to deliver a bond in such
sum as it may reasonably direct as indemnity against any claim that may be made
against Acquiror, the Surviving Corporation or the Exchange Agent with respect
to the Certificates alleged to have been lost, stolen or destroyed.
1.10 Tax and Accounting Consequences. It is intended by
the parties hereto that the Merger shall (i) constitute a reorganization within
the meaning of Section 368 of the Code and (ii) qualify for accounting
treatment as a pooling of interests.
1.11 Exemption from Registration. The shares of Acquiror
Common Stock to be issued in connection with the Merger will be issued in a
transaction exempt from registration under (i) the Securities Act of 1933, as
amended (the "Securities Act"), by reason of Section 4(2) thereof and (ii)
applicable state securities laws. The Acquiror Common Stock issued in
connection with the Merger will be "restricted securities" under the Securities
Act and Rule 144 promulgated thereunder and may only be sold or otherwise
transferred pursuant to an effective registration statement under the
Securities Act or an exemption from the registration requirements of the
Securities Act.
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1.12 Taking of Necessary Action; Further Action. If, at
any time after the Effective Time, any further action is necessary or desirable
to carry out the purposes of this Agreement and to vest the Surviving
Corporation with full right, title and possession to all assets, properties,
rights, privileges, powers and franchises of Target and Merger Sub, the
officers and directors of Target and Merger Sub are fully authorized in the
name of their respective corporations or otherwise to take, and will take, all
such lawful and necessary action, so long as such action is not inconsistent
with this Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF TARGET
In this Agreement, any reference to any event, change,
condition or effect being "material" with respect to any entity means any
material event, change, condition or effect related to the financial condition,
properties, assets (including intangible assets), liabilities, business,
operations or results of operations of such entity and its subsidiaries, taken
as a whole. In this Agreement, any reference to a "Material Adverse Effect"
with respect to any entity means any event, change or effect that is materially
adverse to the financial condition, properties, assets, liabilities, business,
operations or results of operations of such entity and its subsidiaries, taken
as a whole; provided, however, that a "Material Adverse Effect" with respect to
such entity shall not include (i) any adverse effect attributable to general
economic conditions or to other changes generally affecting companies in the
same industry as such entity and its subsidiaries and (ii) any adverse effect
attributable to any announcement, dissemination or disclosure of this Agreement
or the transactions contemplated hereby (including without limitation any delay
of, reduction in or cancellation or change in the terms of product orders by
customers).
In this Agreement, any reference to a party's "knowledge"
means such party's actual knowledge after reasonable inquiry of officers and
directors of such party believed to have knowledge of such matters.
Except as disclosed in a document of even date herewith and
delivered by Target to Acquiror prior to the execution and delivery of this
Agreement and referring to the representations and warranties in this Agreement
(the "Target Disclosure Schedule"), Target represents and warrants to Acquiror
and Merger Sub as follows:
2.1 Organization, Standing and Power. Each of Target and
its subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization. Each of Target
and its subsidiaries has the corporate power to own its properties and to carry
on its business as now being conducted and as proposed to be 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 Target. Target has delivered a true and correct copy of the
Certificate of Incorporation and
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Bylaws or other charter documents, as applicable, of Target and each of its
subsidiaries, each as amended to date, to Acquiror. Neither Target nor any of
its subsidiaries is in violation of any of the provisions of its Certificate of
Incorporation or Bylaws or equivalent organizational documents. Target is the
owner of all outstanding shares of capital stock of each of its subsidiaries
and all such shares are duly authorized, validly issued, fully paid and
nonassessable. All of the outstanding shares of capital stock of each
subsidiary are owned by Target free and clear of all liens, charges, claims or
encumbrances or rights of others. There are no outstanding subscriptions,
options, warrants, puts, calls, rights, exchangeable or convertible securities
or other commitments or agreements of any character relating to the issued or
unissued capital stock or other securities of any such subsidiary, or otherwise
obligating Target or any such subsidiary to issue, transfer, sell, purchase or
redeem or otherwise acquire any such securities. Target does not directly or
indirectly own any equity or similar interest in, or any interest convertible
or exchangeable or exercisable for, any equity or similar interest in, any
corporation, partnership, joint venture or other business association or
entity, except as set forth on Schedule 2.1 to the Target Disclosure Schedule.
2.2 Capital Structure. The authorized capital stock of
Target consists of 35,000,000 shares of Target Common Stock and 2,500,000
shares of Target Preferred Stock, of which there are currently issued and
outstanding 8,000,000 shares of Target Common Stock, 691,824 shares of Series A
Preferred that are convertible into 1,405,751 shares of Target Common Stock,
472,589 shares of Series B Preferred that are convertible into 945,178 shares
of Target Common Stock, and 11,287 shares of Series C Preferred that are
convertible into 22,574 shares of Target Common Stock. There are no other
outstanding shares of capital stock or voting securities or commitments to
issue any shares of capital stock or voting securities other than pursuant to
the exercise of options outstanding under the Target Stock Option Plans or
otherwise, all of which options are listed on Schedule 4.6 to the Target
Disclosure Schedule. Schedule 2.2 to the Target Disclosure Schedule lists the
name, address and stock holdings of each record holder of Target Capital Stock.
All outstanding shares of Target Capital Stock are duly authorized, validly
issued, fully paid and non-assessable and are free of any liens or encumbrances
other than any liens or encumbrances created by or imposed upon the holders
thereof, and, except as described in the Target Disclosure Schedule, are not
subject to preemptive rights or rights of first refusal created by statute, the
Certificate of Incorporation or Bylaws of Target or any agreement to which
Target is a party or by which it is bound. Target has reserved (i) sufficient
shares of Target Common Stock for issuance upon conversion of the Target
Preferred Stock and (ii) 3,050,000 shares of Target Common Stock for issuance
to employees and consultants pursuant to the Target Stock Option Plans and
options granted outside of such Plans, of which no shares have been issued
pursuant to option exercises and 2,967,000 shares are subject to outstanding,
unexercised options. Except for (i) the rights created pursuant to this
Agreement and (ii) options referred to in this Section 2.2, there are no
options, warrants, calls, rights, commitments or agreements of any character to
which Target is a party or by which it is bound obligating Target to issue,
deliver, sell, repurchase or redeem, or cause to be issued, delivered, sold,
repurchased or redeemed, any shares of capital stock of Target or obligating
Target to grant, extend, accelerate the vesting of, change the price of, or
otherwise amend or enter into any such option, warrant, call, right, commitment
or agreement. There are
8.
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no other contracts, commitments or agreements relating to voting, purchase or
sale of Target's capital stock (i) between or among Target and any of its
shareholders and (ii) to Target's knowledge, between or among any of Target's
shareholders. The terms of the Target Stock Option Plans and other options
listed on Schedule 4.6 to the Target Disclosure Schedule permit the assumption
or substitution of options to purchase Acquiror Common Stock as provided in
this Agreement, without the consent or approval of the holders of such
securities, the Target shareholders, or otherwise. True and complete copies of
all agreements and instruments relating to options issued under the Target
Stock Option Plans or outside of such Plans and listed on Schedule 4.6 to the
Target Disclosure Schedule have been made available to Acquiror and such
agreements and instruments have not been amended, modified or supplemented, and
there are no agreements to amend, modify or supplement such agreements or
instruments in any case from the forms made available to Acquiror. All
outstanding Target Common Stock and Target Preferred Stock were issued in
compliance with all applicable federal and state securities laws.
2.3 Authority. Target has all requisite corporate power
and authority to enter into this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by all necessary corporate action on the part of Target. This Agreement has
been duly executed and delivered by Target and constitutes the valid and
binding obligation of Target enforceable against Target in accordance with its
terms, except that such enforceability may be limited by bankruptcy,
insolvency, moratorium or other similar laws affecting or relating to
creditors' rights generally, and is subject to general principles of equity.
The execution and delivery of this Agreement by Target does not, and the
consummation of the transactions contemplated hereby will not, conflict with,
or result in any violation of, or default under (with or without notice or
lapse of time, or both), or give rise to a right of termination, cancellation
or acceleration of any obligation or loss of any benefit under (i) any
provision of the Certificate of Incorporation or Bylaws of Target, or any of
its subsidiaries, as amended, or (ii) any mortgage, indenture, lease, contract
or other agreement or instrument, permit, concession, franchise, license,
judgment, order, decree, statute, law, ordinance, rule or regulation applicable
to Target or any of its subsidiaries or any of their properties or assets,
except where such conflict, violation, default, termination, cancellation or
acceleration with respect to the foregoing provisions of (ii) would not,
individually or in the aggregate, have a Material Adverse Effect on Target. No
consent, approval, order or authorization of, or registration, declaration or
filing with, any court, administrative agency or commission or other
governmental authority or instrumentality ("Governmental Entity") is required
by or, to the knowledge of Target, with respect to Target or any of its
subsidiaries in connection with the execution and delivery of this Agreement or
the consummation of the transactions contemplated hereby, except for (i) the
filing of the Certificate of Merger, together with the required officers'
certificates, as provided in Section 1.2, (ii) such consents, approvals,
orders, authorizations, registrations, declarations and filings as may be
required under applicable state securities laws and the securities laws of any
foreign country; and (iii) such other consents, authorizations, filings,
approvals and registrations which, if not obtained or made, would not have a
Material Adverse Effect on Target and would not prevent, or materially alter or
delay, any of the transactions contemplated by this Agreement.
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2.4 Financial Statements. Target has delivered to
Acquiror its audited financial statements for fiscal years ended December 31,
1995 and 1996, and its unaudited financial statements (balance sheet, statement
of operations and statement of cash flows) on a consolidated basis as at, and
for the three-month period ended March 31, 1997 (collectively, the "Financial
Statements"). The Financial Statements were complete and correct in all
material respects as of their respective dates, and were prepared in accordance
with generally accepted accounting principles (except that the unaudited
financial statements do not have notes thereto) applied on a consistent basis
throughout the periods indicated and with each other (except as may be
indicated in the notes thereto). The Financial Statements fairly present in
all material respects the consolidated financial condition and operating
results of Target and its subsidiary as of the dates, and for the periods,
indicated therein, subject to normal year-end audit adjustments. Target
maintains and will continue to maintain a standard system of accounting
established and administered in accordance with generally accepted accounting
principles.
2.5 Absence of Certain Changes. Since March 31, 1997
(the "Target Balance Sheet Date"), Target has conducted its business in the
ordinary course consistent with past practice and there has not occurred: (i)
any change, event or condition (whether or not covered by insurance) that has
resulted in, or would reasonably be expected to result in, a Material Adverse
Effect to Target; (ii) any acquisition, sale or transfer of any material asset
of Target or any of its subsidiaries other than in the ordinary course of
business and consistent with past practice; (iii) any material change in
accounting methods or practices (including any change in depreciation or
amortization policies or rates) by Target or any material revaluation by Target
of any of its or any of its subsidiaries assets; (iv) any declaration, setting
aside, or payment of a dividend or other distribution with respect to the
shares of Target, or any direct or indirect redemption, purchase or other
acquisition by Target of any of its shares of capital stock; (v) any material
contract entered into by Target or any of its subsidiaries, other than in the
ordinary course of business and as provided to Acquiror, (vi) any material
amendment or termination of, or default under, any contract to which Target or
any of its subsidiaries is a party or by which it is bound which would
reasonably be expected to have a Material Adverse Effect on Target; (vii) any
amendment or change to the Certificate of Incorporation or Bylaws of Target;
(viii) any material increase in or modification of the compensation or benefits
payable or to become payable by Target to any of its directors or employees or
(ix) any negotiation or agreement by Target or any of its subsidiaries to do
any of the things described in the preceding clauses (i) through (viii) (other
than negotiations with Acquiror and its representatives regarding the
transactions contemplated by this Agreement).
2.6 Absence of Undisclosed Liabilities. Target has no
material obligations or liabilities of any nature (matured or unmatured, fixed
or contingent) other than (i) those set forth or adequately provided for in its
Balance Sheet as of March 31, 1997 (the "Target Balance Sheet"), (ii) those not
required to be set forth in the Target Balance Sheet under generally accepted
accounting principles, (iii) those incurred in the ordinary course of business
since the Target Balance Sheet Date and consistent with past practice; and (iv)
those incurred in connection with the execution of this Agreement.
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2.7 Litigation. There is no private or governmental
action, suit, proceeding, claim, arbitration or investigation pending before
any agency, court or tribunal, foreign or domestic, or, to the knowledge of
Target or any of its subsidiaries, threatened against Target or any of its
subsidiaries or any of their respective properties or any of their officers or
directors (in their capacities as such) that, individually or in the aggregate,
would reasonably be expected to have a Material Adverse Effect on Target. All
litigation to which Target is a party (or, to the knowledge of Target,
threatened to become a party) is disclosed in the Target Disclosure Schedule.
There is no judgment, decree or order against Target or any of its subsidiaries
or, to the knowledge of Target and its subsidiaries, any of their respective
directors or officers (in their capacities as such), that would prevent,
enjoin, or materially alter or delay any of the transactions contemplated by
this Agreement.
2.8 Restrictions on Business Activities. There is no
agreement, judgment, injunction, order or decree binding upon Target or any of
its subsidiaries which would reasonably be expected to have the effect of
prohibiting or materially impairing any current business practice of Target or
any of its subsidiaries, any acquisition of property by Target or any of its
subsidiaries or the conduct of business by Target or any of its subsidiaries as
currently conducted by Target or any of its subsidiaries.
2.9 Governmental Authorization. Target and each of its
subsidiaries have obtained each federal, state, county, local or foreign
governmental consent, license, permit, grant, or other authorization of a
Governmental Entity (i) pursuant to which Target or any of its subsidiaries
currently operates or holds any interest in any of its properties or (ii) that
is required for the operation of Target's or any of its subsidiaries business
or the holding of any such interest ((i) and (ii) herein collectively called
"Target Authorizations"), and all of such Target Authorizations are in full
force and effect, except where the failure to obtain or have any such Target
Authorizations would not reasonably be expected to have a Material Adverse
Effect on Target.
2.10 Title to Property. Target and its subsidiaries have
good and valid title to all of their respective properties, interests in
properties and assets, real and personal, reflected in the Target Balance Sheet
or acquired after the Target Balance Sheet Date (except properties, interests
in properties and assets sold or otherwise disposed of since the Target Balance
Sheet Date in the ordinary course of business), or with respect to leased
properties and assets, valid leasehold interests in, free and clear of all
mortgages, liens, pledges, charges or encumbrances of any kind or character,
except (i) the lien of current taxes not yet due and payable, (ii) such
imperfections of title, liens and easements as do not and will not materially
detract from or interfere with the use of the properties subject thereto or
affected thereby, or otherwise materially impair business operations involving
such properties, (iii) liens securing debt which is reflected on the Target
Balance Sheet, and (iv) those which would not have a Material Adverse Effect on
Target. The plants, property and equipment of Target and its subsidiaries that
are used in the operations of their business are in good operating condition
and repair. All properties used in the operations of Target are reflected in
the Target Balance Sheet to the extent generally accepted accounting principles
require the same to be reflected. Schedule 2.10 to the
11.
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Target Disclosure Schedule identifies each parcel of real property owned or
leased by Target or any of its subsidiaries.
2.11 Intellectual Property.
(a) Target and its subsidiaries own, or are
licensed or otherwise possesses legally enforceable rights to use, all patents,
trademarks, trade names, service marks, copyrights, and any applications
therefor, maskworks, net lists, schematics, technology, know-how, trade
secrets, inventory, ideas, algorithms, processes, computer software programs or
applications (in both source code and object code form), and tangible or
intangible proprietary information or material ("Intellectual Property") that
are used or proposed to be used in the business of Target and its subsidiaries
as currently conducted or as proposed to be conducted by Target and its
subsidiaries; provided, however, that to the extent the foregoing
representation and warranty relates to Intellectual Property proposed to be
used in the business of Target, such representation and warranty is made to the
knowledge of Target.
(b) Schedule 2.11 to the Target Disclosure
Schedule lists (i) all patents and patent applications and all registered and
unregistered trademarks, trade names and service marks, registered and
unregistered copyrights, and maskworks, included in the Intellectual Property,
including the jurisdictions in which each such Intellectual Property right has
been issued or registered or in which any application for such issuance and
registration has been filed, (ii) all licenses, sublicenses and other
agreements as to which Target is a party and pursuant to which any person is
authorized to use any Intellectual Property, and (iii) all licenses,
sublicenses and other agreements as to which Target is a party and pursuant to
which Target is authorized to use any third party patents, trademarks,
copyrights or other Intellectual Property, including software ("Third Party
Intellectual Property Rights") which are incorporated in, are, or form a part
of any Target product.
(c) To the knowledge of Target and its
subsidiaries, there is no material unauthorized use, disclosure, infringement
or misappropriation of any Intellectual Property rights of Target or any of its
subsidiaries, any trade secret material to Target or any of its subsidiaries,
or any Intellectual Property right of any third party to the extent licensed by
or through Target or any of its subsidiaries, by any third party, including any
employee or former employee of Target. Neither Target nor any of its
subsidiaries has entered into any material agreement to indemnify any other
person against any charge of infringement of any Intellectual Property, other
than indemnification provisions contained in license agreements arising in the
ordinary course of business.
(d) Target is not, nor will it be as a result of
the execution and delivery of this Agreement or the performance of its
obligations under this Agreement, in breach of any license, sublicense or other
agreement relating to the Intellectual Property or Third Party Intellectual
Property Rights the breach of which would have a Material Adverse Effect on
Target or its business as presently conducted and as proposed to be conducted.
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(e) To the knowledge of Target, all patents,
registered trademarks, service marks and copyrights held by Target are valid
and subsisting although some of such items of Intellectual Property have been
the subject of finally concluded proceedings in which the validity or
enforceability of such item was unsuccessfully challenged. Target (i) is not a
party to any suit, action or proceeding, nor to the best of Target's knowledge
is any such action, suit or proceeding threatened, which involves a claim of
infringement of any patents, trademarks, service marks, copyrights or violation
of any trade secret or other proprietary right of any third party, except where
such infringement would not have a Material Adverse Effect on Target or its
business as presently conducted or as proposed to be conducted; (ii) has no
knowledge that the manufacturing, marketing, licensing or sale of its products
and services infringes any patent, trademark, service xxxx, copyright, trade
secret or other proprietary right of any third party; and (iii) has not brought
any action, suit or proceeding for infringement of Intellectual Property or
breach of any license or agreement involving Intellectual Property against any
third party.
(f) Target has secured valid written assignments
from all consultants and employees who contributed to the creation or
development of Intellectual Property of the rights to such contributions that
Target does not already own by operation of law.
(g) To the best of Target's knowledge, Target has
taken all reasonable and appropriate steps to protect and preserve the
confidentiality of all Intellectual Property not otherwise protected by
patents, patent applications or copyright ("Confidential Information"). To the
best of Target's knowledge, all use, disclosure or appropriation of
Confidential Information owned by Target by or to a third party has been
pursuant to the terms of a written agreement between Target and such third
party. To the best of Target's knowledge, all use, disclosure or appropriation
of Confidential Information not owned by Target has been pursuant to the terms
of a written agreement between Target and the owner of such Confidential
Information, or is otherwise lawful.
2.12 Environmental Matters.
(a) The following terms shall be defined as
follows:
(i) "Environmental and Safety Laws" shall
mean any federal, state, local or foreign laws, ordinances, codes, regulations,
rules and orders relating to the protection of the environment, or that
classify, regulate, call for the remediation of, require reporting with respect
to, or list or define air, water, groundwater, solid waste, hazardous or toxic
substances, materials, wastes, pollutants or contaminants, or which relate to
the health and safety of employees, workers or other persons, including the
public, as in effect on the date hereof.
(ii) "Hazardous Materials" shall mean any
toxic or hazardous substance, material or waste or any pollutant or
contaminant, or infectious or radioactive substance or material, including
without limitation, such substances, materials, wastes, pollutants defined in
or regulated under any Environmental and Safety Laws.
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(iii) "Property" shall mean all real property leased or
owned by Target or any subsidiary either currently or in the past.
(iv) "Facilities" shall mean all buildings and
improvements on the Property of Target or any subsidiary.
(b) Target represents and warrants as follows: (i) to its
knowledge, no methylene chloride or asbestos is contained in or has been used at
or released from the Facilities; (ii) all Hazardous Materials and wastes have
been used, handled and disposed of in material compliance with all Environmental
and Safety Laws; and (iii) Target and its subsidiaries have received no written
notice of any noncompliance of the Facilities or of its past or present
operations with Environmental and Safety Laws (except for such matters which
have been resolved without material liability to Target); (iv) no notices,
administrative actions or suits are pending, or, to the best of Target's
knowledge, threatened relating to a violation of any Environmental and Safety
Laws; (v) Neither Target nor any of its subsidiaries has received written
notice that it is a potentially responsible party under the federal
Comprehensive Environmental Response, Compensation and Liability Act (CERCLA),
or analogous state statute or any similar foreign law or regulation requiring
assessment or clean up, arising out of events occurring prior to the Closing
Date; (vi) to the best of Target's knowledge, there have not been in the past,
and are not now, any Hazardous Materials on, under or migrating to or from the
Facilities or Property, for which Target could reasonably be expected to have a
material liability; (vii) to the best of Target's knowledge, there have not been
in the past, and are not now, any underground tanks at, on or under the Property
including without limitation, treatment or storage tanks, sumps, or water, gas
or oil xxxxx; (viii) to the best of Target's knowledge, there are no
polychlorinated biphenyls ("PCBs") deposited, stored, disposed of or located on
the Property or Facilities or any equipment on the Property containing PCBs at
levels in excess of 50 parts per million; (ix) to the best of Target's
knowledge, there is no formaldehyde on the Property or in the Facilities, nor
any insulating material containing urea formaldehyde in the Facilities; (x) to
the best of Target's knowledge, the Facilities and Target's activities and its
subsidiaries' therein have at all times been in material compliance with all
Environmental and Safety Laws; (xi) Target and its subsidiaries have all the
permits and licenses required to be issued for its operations and are in full
compliance with the terms and conditions of those permits, except where the
failure to have or comply with such permits or licenses would not have a
Material Adverse Effect on Target; and (xii) Target is not aware of or in
possession of any written environmental assessments of its current or past
Properties or Facilities that have not been made available to Acquiror.
2.13 Taxes. Target and each of its subsidiaries, and any
consolidated, combined or unitary group for Tax purposes of which Target or any
of its subsidiaries is or has been a member have timely filed all Tax Returns
required to be filed by them. Such returns were correct and complete in all
material respects as filed. Target has paid all Taxes whether or not shown
thereon to be due. The Financial Statements (i) fully accrue all actual and
contingent liabilities for Taxes with respect to all periods through March 31,
1997 and Target and each of its subsidiaries have not and will not incur any
material Tax liability in excess of the amount
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reflected on the Financial Statements with respect to such periods, and (ii)
properly accrue in accordance with generally accepted accounting principles all
liabilities for Taxes payable after March 31, 1997 with respect to all
transactions and events occurring on or prior to such date. No material Tax
liability since March 31, 1997 has been incurred by Target or its subsidiaries
other than in the ordinary course of business and adequate provision has been
made in the Financial Statements for all Taxes since that date in accordance
with generally accepted accounting principles on at least a quarterly basis.
Target and each of its subsidiaries have withheld and paid to the applicable
financial institution or Tax Authority all amounts required to be withheld. No
notice of deficiency or similar document of any Tax Authority has been received
by either Target or any of its subsidiaries, and there are no liabilities for
Taxes with respect to the issues that have been raised (and are currently
pending) by any Tax Authority that could, if determined adversely to Target and
its subsidiaries, materially and adversely affect the liability of Target and
its subsidiaries for Taxes. There is (i) no material claim for Taxes that is a
lien against the property of Target or any of its subsidiaries other than liens
for Taxes not yet due and payable, (ii) no Tax Return of Target or any of its
subsidiaries has been audited by a Tax Authority and Target has received no
notification of any audit of any Tax Return of Target or any of its
subsidiaries being conducted, pending or threatened by a Tax authority, (iii)
no extension or waiver of the statute of limitations on the assessment of any
Taxes granted by Target or any of its subsidiaries and currently in effect, and
(iv) no agreement, contract or arrangement to which Target or any of its
subsidiaries is a party that may result in the payment of any material amount
that would not be deductible by reason of Section 280G or 404 of the Code.
Neither Target nor any of its subsidiaries is a party to any tax sharing or tax
allocation agreement nor does Target or any of its subsidiaries owe any amount
under any such agreement. For purposes of this Agreement, the following terms
have the following meanings: "Tax" (and, with correlative meaning, "Taxes" and
"Taxable") means (i) any net income, alternative or add-on minimum tax, gross
income, gross receipts, sales, use, ad valorem, transfer, franchise, profits,
license, withholding, payroll, employment, excise, severance, stamp,
occupation, premium, property, environmental or windfall profit tax, custom,
duty or other tax governmental fee or other like assessment or charge of any
kind whatsoever, together with any interest or any penalty, addition to tax or
additional amount imposed by any Governmental Entity (a "Tax Authority")
responsible for the imposition of any such tax (domestic or foreign), (ii) any
liability for the payment of any amounts of the type described in (i) as a
result of being a member of an affiliated, consolidated, combined or unitary
group for any Taxable period and (iii) any liability for the payment of any
amounts of the type described in (i) or (ii) as a result of any express or
implied obligation to indemnify any other person. As used herein, "Tax Return"
shall mean any return, statement, report or form (including, without
limitation) estimated Tax returns and reports, withholding Tax returns and
reports and information reports and returns required to be filed with respect
to Taxes. Target and each of its subsidiaries are in full compliance with all
terms and conditions of any Tax exemptions or other Tax-sparing agreement or
order of a foreign government applicable to them and the consummation of the
Merger shall not have any adverse effect on the continued validity and
effectiveness of any such Tax exemptions or other Tax-sparing agreement or
order.
15.
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2.14 Employee Benefit Plans.
(a) Schedule 2.14 to the Target Disclosure Schedule
lists, with respect to Target, any subsidiary of Target, and any trade or
business (whether or not incorporated) which is treated as a single employer
with Target (an "ERISA Affiliate") within the meaning of Section 414(b), (c),
(m) or (o) of the Code, (i) all material employee benefit plans (as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), (ii) each loan to a non-officer employee in excess of $10,000, loans
to officers and directors and any stock option, stock purchase, phantom stock,
stock appreciation right, supplemental retirement, severance, sabbatical,
medical, dental, vision care, disability, employee relocation, cafeteria benefit
(Code Section 125) or dependent care (Code Section 129), life insurance or
accident insurance plans, programs or arrangements, (iii) all bonus, pension,
profit sharing, savings, deferred compensation or incentive plans, programs or
arrangements, (iv) other fringe or employee benefit plans, programs or
arrangements that apply to senior management of Target and that do not generally
apply to all employees, and (v) any current or former employment or executive
compensation or severance agreements, written or otherwise, as to which
unsatisfied obligations of Target of greater than $10,000 remain for the benefit
of, or relating to, any present or former employee, consultant or director of
Target (together, the "Target Employee Plans").
(b) Target has furnished to Acquiror a copy of each of
the Target Employee Plans and related plan documents (including trust documents,
insurance policies or contracts, employee booklets, summary plan descriptions
and other authorizing documents, and, to the extent still in its possession, any
material employee communications relating thereto) and has, with respect to each
Target Employee Plan which is subject to ERISA reporting requirements, filed all
Forms 5500 required to be filed and provided to Acquiror copies of the Form 5500
reports filed for the last three plan years. Any Target Employee Plan intended
to be qualified under Section 401(a) of the Code has either obtained from the
Internal Revenue Service a favorable determination letter as to its qualified
status under the Code, including all amendments to the Code effected by the Tax
Reform Act of 1986 and subsequent legislation, or has applied to the Internal
Revenue Service for such a determination letter prior to the expiration of the
requisite period under applicable Treasury Regulations or Internal Revenue
Service pronouncements in which to apply for such determination letter and to
make any amendments necessary to obtain a favorable determination, or has been
established under a standardized prototype plan for which an Internal Revenue
Service opinion letter has been obtained by the plan sponsor and is valid as to
the adopting employer. Target has also furnished Acquiror with the most recent
Internal Revenue Service determination or opinion letter issued with respect to
each such Target Employee Plan, and nothing has occurred since the issuance of
each such letter which could reasonably be expected to cause the loss of the
tax-qualified status of any Target Employee Plan subject to Code Section
401(a).
(c) (i) None of the Target Employee Plans promises or
provides retiree medical or other retiree welfare benefits to any person; (ii)
there has been no "prohibited transaction," as such term is defined in Section
406 of ERISA and Section 4975 of the Code,
16.
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with respect to any Target Employee Plan, which could reasonably be expected to
have, in the aggregate, a Material Adverse Effect; (iii) each Target Employee
Plan has been administered in accordance with its terms and in compliance with
the requirements prescribed by any and all statutes, rules and regulations
(including ERISA and the Code), except as would not have, in the aggregate, a
Material Adverse Effect, and Target and each subsidiary or ERISA Affiliate have
performed all material obligations required to be performed by them under, are
not in any material respect in default under or violation of, and have no
knowledge of any material default or violation by any other party to, any of
the Target Employee Plans; (iv) neither Target nor any subsidiary or ERISA
Affiliate is subject to any liability or penalty under Sections 4976 through
4980 of the Code or Title I of ERISA with respect to any of the Target Employee
Plans; (v) all material contributions required to be made by Target or any
subsidiary or ERISA Affiliate to any Target Employee Plan have been made on or
before their due dates and amounts required to have been accrued for
contributions to each Target Employee Plan for the current plan years have been
made; (vi) with respect to each Target Employee Plan, no "reportable event"
within the meaning of Section 4043 of ERISA (excluding any such event for which
the thirty (30) day notice requirement has been waived under the regulations to
Section 4043 of ERISA) nor any event described in Section 4062, 4063 or 4041 or
ERISA has occurred; and (vii) no Target Employee Plan is covered by, and
neither Target nor any subsidiary or ERISA Affiliate has incurred or expects to
incur any liability under Title IV of ERISA or Section 412 of the Code. With
respect to each Target Employee Plan subject to ERISA as either an employee
pension plan within the meaning of Section 3(2) of ERISA or an employee welfare
benefit plan within the meaning of Section 3(1) of ERISA, Target has prepared
in good faith and timely filed all requisite governmental reports (which were
true and correct as of the date filed) and has properly and timely filed and
distributed or posted all notices and reports to employees required to be
filed, distributed or posted with respect to each such Target Employee Plan.
No suit, administrative proceeding, action or other litigation has been
brought, or to the best knowledge of Target is threatened, against or with
respect to any such Target Employee Plan, including any audit or inquiry by the
IRS or United States Department of Labor. Neither Target nor any subsidiary or
other ERISA Affiliate is a party to, or has made any contribution to or
otherwise incurred any obligation under, any "multiemployer plan" as defined in
Section 3(37) of ERISA.
(d) With respect to each Target Employee Plan, Target
and each of its subsidiaries have complied with (i) the applicable health care
continuation and notice provisions of the Consolidated Omnibus Budget
Reconciliation Act of 1985 ("COBRA") and the proposed regulations thereunder and
(ii) the applicable requirements of the Family Leave Act of 1993 and the
regulations thereunder, except to the extent that such failure to comply would
not, in the aggregate, have a Material Adverse Effect.
(e) The consummation of the transactions contemplated
by this Agreement will not (i) entitle any current or former employee or other
service provider of Target or any subsidiary or ERISA Affiliate to severance
benefits or any other payment (including, without limitation, unemployment
compensation, golden parachute or bonus), except as expressly provided in this
Agreement, or (ii) accelerate the time of payment or vesting of any such
benefits, or increase the amount of compensation due any such employee or
service
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provider, except for the acceleration of vesting under options listed on
Schedule 4.6 to the Target Disclosure Schedule.
(f) There has been no amendment to, written
interpretation or announcement (whether or not written) by Target, any Target
subsidiary or other ERISA Affiliate relating to, or change in participation or
coverage under, any Target Employee Plan which would materially increase the
expense of maintaining such Plan above the level of expense incurred with
respect to that Plan for the most recent fiscal year included in Target's
financial statements.
2.15 Employee Matters. Target and each of its subsidiaries
are in compliance with all currently applicable laws and regulations respecting
employment, discrimination in employment, terms and conditions of employment,
wages, hours and occupational safety and health and employment practices, and
are not engaged in any unfair labor practice, except where the failure to be in
compliance or the engagement in unfair labor practices would not have a Material
Adverse Effect on Target. There are no pending claims against Target or any of
its subsidiaries under any workers compensation plan or policy or for long term
disability which would have a Material Adverse Effect on Target. Neither Target
nor any of its subsidiaries has any material obligations under COBRA with
respect to any former employees or qualifying beneficiaries thereunder. There
are no proceedings pending or, to the knowledge of Target or any of its
subsidiaries, threatened, between Target or any of its subsidiaries and any of
their respective employees, which proceedings have had or could reasonably be
expected to have a Material Adverse Effect on Target. Neither Target nor any of
its subsidiaries is a party to any collective bargaining agreement or other
labor union contract nor does Target nor any of its subsidiaries know of any
activities or proceedings of any labor union to organize any such employees. In
addition, Target has provided each of its employees with all relocation
benefits, stock options, bonuses and incentives, and all other compensation to
which such employees are entitled.
2.16 Interested Party Transactions. Neither Target nor any of
its subsidiaries is indebted to any director, officer, employee or agent of
Target or any of its subsidiaries (except for amounts due as normal salaries and
bonuses and in reimbursement of ordinary expenses), and no such person is
indebted to Target or any of its subsidiaries.
2.17 Insurance. Target and each of its subsidiaries have
policies of insurance and bonds of the type and in amounts customarily carried
by persons conducting businesses or owning assets similar to those of Target
and its subsidiaries. There is no material claim pending under any of such
policies or bonds as to which coverage has been questioned, denied or disputed
by the underwriters of such policies or bonds. All premiums due and payable
under all such policies and bonds have been paid and Target and its
subsidiaries are otherwise in compliance with the terms of such policies and
bonds. Target has no knowledge of any threatened termination of, or material
premium increase with respect to, any of such policies.
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2.18 Compliance With Laws. Each of Target and its
subsidiaries have complied with, are not in violation of, and have not received
any notices of violation with respect to, any federal, state, local or foreign
statute, law or regulation with respect to the conduct of its business, or the
ownership or operation of its business, except for such violations or failures
to comply as would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on Target.
2.19 Minute Books. The minute books of Target and its
subsidiaries made available to Acquiror contain accurate summaries of the
material actions taken at all meetings of directors and shareholders (or
actions by or pursuant to written consent) reflected therein.
2.20 Contracts. The material contracts and agreements to
which Target is a party or any of its properties is affected (each in an amount
equal to or exceeding $25,000) are listed in Schedule 2.20 to the Target
Disclosure Schedule.
2.21 Pooling of Interests. To the best knowledge of
Target, neither Target nor any of its subsidiaries, any of their respective
directors, officers or shareholders has taken any action which would interfere
with Acquiror's ability to account for the Merger as a pooling of interests.
2.22 Brokers' and Finders' Fees. Target has not incurred,
nor will it incur, directly or indirectly, any liability for brokerage or
finders' fees or agents' commissions or investment bankers' fees or any similar
charges in connection with this Agreement or any transaction contemplated
hereby, except for fees arising from Target's engagement of Deutsche Xxxxxx
Xxxxxxxx Inc.
2.23 Board and Shareholder Approval. The Board of
Directors of Target has unanimously (i) approved this Agreement and the Merger,
(ii) determined that in its opinion the Merger is in the best interests of the
shareholders of Target and is on terms that are fair to such shareholders and
(iii) recommended that the shareholders of Target approve this Agreement and
the Merger. This Agreement, the Merger, the Certificate of Merger, and the
transactions contemplated hereby and thereby have been approved in the manner
required by the NJBCA by the unanimous vote of the holders of the shares of
Target Capital Stock outstanding.
2.24 Section 14A:10A-4 of the NJBCA Not Applicable. The
restrictions contained in Section 14A:10A-4 of the NJBCA applicable to a
"business combination" (as defined in said Section 14A:10A-4) do not apply to
the execution, delivery or performance of this Agreement or the consummation of
the Merger or the other transactions contemplated by this Agreement.
2.25 Accounts Receivable. The accounts receivable shown
on the Target Balance Sheet arose from bona fide transactions entered into in
the ordinary course of business of Target.
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2.26 Customers and Suppliers. As of the date hereof, no
customer which individually accounted for more than 5% of Target's gross
revenues during the 12 month period preceding the date hereof, and no material
supplier of Target, has canceled or otherwise terminated, or indicated to
Target that it will cancel or otherwise terminate its relationship with Target,
or has at any time on or after March 31, 1997 decreased materially its services
or supplies to Target in the case of any such supplier, or its usage of the
services or products of Target in the case of such customer. Target has not
knowingly breached, so as to provide a benefit to Target that was not intended
by the parties, any agreement with, or engaged in any fraudulent conduct with
respect to, any customer or supplier of Target.
2.27 Affiliates. Schedule 2.27 to the Target Disclosure
Schedule sets forth those persons who are, in Target's reasonable judgment,
"Affiliates" of Target within the meaning of Rule 144 promulgated under the
Securities Act ("Rule 144").
2.28 Representations Complete. None of the
representations or warranties made by Target herein or in any Schedule hereto,
including the Target Disclosure Schedule, or certificate furnished by Target
pursuant to this Agreement, when all such documents are read together in their
entirety, contains any untrue statement of a material fact, or omits to state
any material fact necessary in order to make the statements contained herein or
therein, in the light of the circumstances under which made, not misleading.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF ACQUIROR AND MERGER SUB
Except as disclosed in a document of even date herewith and
delivered by Acquiror to Target prior to the execution and delivery of this
Agreement and referring to the representations and warranties in this Agreement
(the "Acquiror Disclosure Schedule"), Acquiror and Merger Sub represent and
warrant to Target as follows:
3.1 Organization, Standing and Power. Each of Acquiror
and its subsidiaries, including Merger Sub, is a corporation duly organized,
validly existing and in good standing under the laws of its jurisdiction of
organization. Each of Acquiror and its subsidiaries has the corporate power to
own its properties and to carry on its business as now being conducted and as
proposed to be 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 Acquiror. Acquiror has
delivered a true and correct copy of the Certificate of Incorporation and
Bylaws or other charter documents, as applicable, of Acquiror and Merger Sub,
each as amended to date, to Target. Neither Acquiror nor Merger Sub is in
violation of any of the provisions of its Certificate of Incorporation or
Bylaws or equivalent organizational documents. Acquiror is the owner of all
outstanding shares of capital stock of each of its subsidiaries and all such
shares are duly authorized, validly issued, fully paid and nonassessable. All
of the outstanding shares of capital stock of each such subsidiary are owned by
Acquiror free
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and clear of all liens, charges, claims or encumbrances or rights of others.
There are no outstanding subscriptions, options, warrants, puts, calls, rights,
exchangeable or convertible securities or other commitments or agreements of
any character relating to the issued or unissued capital stock or other
securities of any such subsidiary, or otherwise obligating Acquiror or any such
subsidiary to issue, transfer, sell, purchase, redeem or otherwise acquire any
such securities. Except as disclosed in the Acquiror SEC Documents (as defined
in Section 3.4), Acquiror does not directly or indirectly own any equity or
similar interest in, or any interest convertible or exchangeable or exercisable
for, any equity or similar interest in, any corporation, partnership, joint
venture or other business association or entity that is material to Acquiror.
3.2 Capital Structure. The authorized capital stock of
Acquiror consists of 50,000,000 shares of common stock, par value $0.00025 per
share, and 5,000,000 shares of preferred stock, par value $0.001 per share, of
which there were issued and outstanding as of the close of business on May 13,
1997, 25,029,630 shares of Acquiror Common Stock and no shares of preferred
stock. There are no other outstanding shares of capital stock or voting
securities of Acquiror other than shares of Acquiror Common Stock issued after
May 13, 1997 upon the exercise of options issued under the Acquiror 1995 Stock
Option/Stock Issuance Plan (the "Acquiror Stock Option Plan") and stock
purchases under Acquiror's Employee Stock Purchase Plan and International
Employee Stock Purchase Plan. The authorized capital stock of Merger Sub
consists of 1,000 shares of common stock, par value $0.01 per share, all of
which are issued and outstanding and are held by Acquiror. All outstanding
shares of Acquiror and Merger Sub have been duly authorized, validly issued,
fully paid and are nonassessable and free of any liens or encumbrances other
than any liens or encumbrances created by or imposed upon the holders thereof.
Acquiror has reserved (i) 12,000,000 shares of Acquiror Common Stock for
issuance pursuant to the Acquiror Stock Option Plan, of which, as of the close
of business on May 13, 1997, 6,587,142 shares have been issued pursuant to
option exercises and 4,023,303 shares are subject to outstanding, unexercised
options (vested and unvested), (ii) 400,000 shares of Acquiror Common Stock
pursuant to its Employee Stock Purchase Plan, of which 92,924 shares have been
issued pursuant to purchases by employees and 307,076 shares are available for
future purchase, and (iii) 100,000 shares of Acquiror Common Stock pursuant to
its International Employee Stock Purchase Plan, of which no shares have been
issued pursuant to purchases by employees and 100,000 shares are available for
future purchase. Other than this Agreement, there are no other options,
warrants, calls, rights, commitments or agreements of any character to which
Acquiror or Merger Sub is a party or by which either of them is bound
obligating Acquiror or Merger Sub to issue, deliver, sell, repurchase or
redeem, or cause to be issued, delivered, sold, repurchased or redeemed, any
shares of the capital stock of Acquiror or Merger Sub or obligating Acquiror or
Merger Sub to grant, extend or enter into any such option, warrant, call,
right, commitment or agreement. The shares of Acquiror Common Stock to be
issued pursuant to the Merger will be duly authorized, validly issued, fully
paid, and nonassessable, and no stockholder of Acquiror will have any
preemptive right of subscription or purchase in respect thereof.
3.3 Authority. Acquiror and Merger Sub have all
requisite corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated
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hereby. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Acquiror and Merger Sub. This Agreement has
been duly executed and delivered by Acquiror and Merger Sub and constitutes the
valid and binding obligations of Acquiror and Merger Sub enforceable against
Acquiror and Merger Sub in accordance with its terms, except that such
enforceability may be limited by bankruptcy, insolvency, moratorium or other
similar laws affecting or relating to creditors' rights generally, and is
subject to general principles of equity. The execution and delivery of this
Agreement do not, and the consummation of the transactions contemplated hereby
will not, conflict with, or result in any violation of, or default under (with
or without notice or lapse of time, or both), or give rise to a right of
termination, cancellation or acceleration of any obligation or loss of a
benefit under (i) any provision of the Certificate of Incorporation or Bylaws
of Acquiror or Merger Sub, as amended, or (ii) any mortgage, indenture, lease,
contract or other agreement or instrument, permit, concession, franchise,
license, judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to Acquiror or any of its subsidiaries or their properties or
assets, except where such conflict, violation, default, termination,
cancellation or acceleration with respect to the foregoing provisions of (ii)
would not, individually or in the aggregate, have a Material Adverse Effect on
Acquiror. No consent, approval, order or authorization of, or registration,
declaration or filing with, any Governmental Entity, is required by or, to the
knowledge of Acquiror, with respect to Acquiror or any of its subsidiaries in
connection with the execution and delivery of this Agreement by Acquiror and
Merger Sub or the consummation by Acquiror and Merger Sub of the Merger and the
other transactions contemplated hereby, except for (i) the filing of the
Certificate of Merger, together with any required officers' certificates, as
provided in Section 1.2, (ii) the filing of a Form 8-K and a Form 10-C with the
Securities and Exchange Commission ("SEC") and National Association of
Securities Dealers, Inc. ("NASD") within 15 days and 10 days respectively,
after the Closing Date, (iii) any filings as may be required under applicable
state securities laws and the securities laws of any foreign country, (iv) the
filing with the Nasdaq National Market of a Notification Form for Listing of
Additional Shares with respect to the shares of Acquiror Common Stock issuable
upon conversion of the Target Common Stock in the Merger and upon exercise of
the options under the Target Stock Option Plans or otherwise assumed by
Acquiror, and (v) such other consents, authorizations, filings, approvals and
registrations which, if not obtained or made, would not have a Material Adverse
Effect on Acquiror and would not prevent, materially alter or delay any of the
transactions contemplated by this Agreement.
3.4 SEC Documents; Financial Statements. Acquiror has
made available to Target a true and complete copy of each statement, report,
registration statement (with the prospectus in the form filed pursuant to Rule
424(b) of the Securities Act), definitive proxy statement, and other filing
filed with the SEC by Acquiror since February 28, 1996 (collectively, the
"Acquiror SEC Documents"). In addition, Acquiror has made available to Target
all exhibits to the Acquiror SEC Documents filed prior to the date hereof. All
documents required to be filed as exhibits to the Acquiror SEC Documents have
been so filed. As of their respective filing dates, the Acquiror SEC Documents
complied in all material respects with the applicable requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
22.
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the Securities Act, and none of the Acquiror SEC Documents contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements made therein, in light of
the circumstances in which they were made, not misleading, except to the extent
corrected by a subsequently filed Acquiror SEC Document. The financial
statements of Acquiror, including the notes thereto, included in the Acquiror
SEC Documents (the "Acquiror Financial Statements") were complete and correct
in all material respects as of their respective dates, complied as to form in
all material respects with applicable accounting requirements and with the
published rules and regulations of the SEC with respect thereto as of their
respective dates, and were prepared in accordance with generally accepted
accounting principles applied on a basis consistent throughout the periods
indicated and consistent with each other (except as may be indicated in the
notes thereto or, in the case of unaudited statements included in Quarterly
Reports on Form 10-Q, as permitted by Form 10-Q under the Exchange Act). The
Acquiror Financial Statements fairly present in all material respects the
consolidated financial condition and operating results of Acquiror and its
subsidiaries at the dates and during the periods indicated therein (subject, in
the case of unaudited statements, to normal, recurring year-end audit
adjustments). There has been no change in Acquiror's accounting policies
except as described in the notes to the Acquiror Financial Statements.
3.5 Absence of Certain Changes. Since March 31, 1997
(the "Acquiror Balance Sheet Date") and except as set forth in the Acquiror SEC
Documents, Acquiror has conducted its business in the ordinary course
consistent with past practice and there has not occurred: (i) any change, event
or condition (whether or not covered by insurance) that has resulted in, or
would reasonably be expected to result in, a Material Adverse Effect to
Acquiror; (ii) any acquisition, sale or transfer of any material asset of
Acquiror or any of its subsidiaries other than in the ordinary course of
business and consistent with past practice; (iii) any material change in
accounting methods or practices (including any change in depreciation or
amortization policies or rates) by Acquiror or any material revaluation by
Acquiror of any of its assets; (iv) any declaration, setting aside, or payment
of a dividend or other distribution with respect to the shares of Acquiror, or
any direct or indirect redemption, purchase or other acquisition by Acquiror of
any of its shares of capital stock; or (v) any negotiation or agreement by
Acquiror or any of its subsidiaries to do any of the things described in the
preceding clauses (i) through (iv) (other than negotiations with Target and its
representatives regarding the transactions contemplated by this Agreement).
3.6 Absence of Undisclosed Liabilities. Acquiror has no
material obligations or liabilities of any nature (matured or unmatured, fixed
or contingent) other than (i) those set forth or adequately provided for in the
Balance Sheet included in Acquiror's Quarterly Report on Form 10-Q for the
period ended March 31, 1997 (the "Acquiror Balance Sheet"), (ii) those not
required to be set forth in the Acquiror Balance Sheet under generally accepted
accounting principles, (iii) those incurred in the ordinary course of business
since the Acquiror Balance Sheet Date and consistent with past practice, and
(iv) those incurred in connection with the execution of this Agreement.
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3.7 Litigation. There is no private or governmental
action, suit, proceeding, claim, arbitration or investigation pending before
any agency, court or tribunal, foreign or domestic, or, to the knowledge of
Acquiror, threatened against Acquiror or any of its subsidiaries or any of
their respective properties or any of their respective officers or directors
(in their capacities as such) that, individually or in the aggregate, would
reasonably be expected to have a Material Adverse Effect on Acquiror. There is
no judgment, decree or order against Acquiror or any of its subsidiaries or, to
the knowledge of Acquiror, any of their respective directors or officers (in
their capacities as such) that could prevent, enjoin, or materially alter or
delay any of the transactions contemplated by this Agreement, or that would
reasonably be expected to have a Material Adverse Effect on Acquiror.
3.8 Pooling of Interests. To the best knowledge of
Acquiror, neither Acquiror nor any of its subsidiaries nor any of their
respective directors, officers or shareholders has taken any action which would
interfere with Acquiror's ability to account for the Merger as a pooling of
interests.
3.9 Brokers' and Finders' Fees. Acquiror has not
incurred, nor will it incur, directly or indirectly, any liability for
brokerage or finders' fees or agents' commissions or investment bankers' fees
or any similar charges in connection with this Agreement or any transaction
contemplated hereby, except for fees arising from Acquiror's engagement of
Xxxxxxx, Xxxxx & Co.
3.10 Fairness Opinion. Acquiror has received the written
opinion of Xxxxxxx, Sachs & Co. that the consideration payable by Acquiror in
the Merger is fair to Acquiror from a financial point of view.
3.11 Affiliates. Schedule 3.11 of the Acquiror Disclosure
Schedule sets forth those persons who are, in Acquiror's reasonable judgment,
"Affiliates" of Acquiror within the meaning of Rule 144.
3.12 Election of Director. The Board of Directors of
Acquiror has taken all such action as necessary to expand its membership to
five directors and appoint Xxxxxxx Xxxxxxx as a Class II Director to fill the
resulting vacancy.
3.13 Representations Complete. None of the
representations or warranties made by Acquiror or Merger Sub herein or in any
Schedule hereto, including the Acquiror Disclosure Schedule, or certificate
furnished by Acquiror or Merger Sub pursuant to this Agreement, when all such
documents are read together in their entirety, contains any untrue statement of
a material fact, or omits to state any material fact necessary in order to make
the statements contained herein or therein, in the light of the circumstances
under which made, not misleading.
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3.14 Section 368(a) of the Code.
(a) Acquiror and Merger Sub intend that the
Merger will qualify as a reorganization under the provisions of Sections
368(a)(1) and 368(a)(2)(e) of the Code. As of the Effective Time of the
Merger, Acquiror (i) is in control of Merger Sub within the meaning of Section
368(c) of the Code; (ii) has no plan or intention to liquidate Target, to merge
Target with or into another corporation, to sell or otherwise dispose of the
stock of Target or to cause Target to sell or otherwise dispose of any of its
assets or of any of the assets acquired from Merger Sub; (iii) has no plan or
intention to cause Target to issue additional shares of its stock that would
result in Acquiror losing control of Target within the meaning of Section
368(c) of the Code and (iv) has no plan or intention to discontinue the
historic business of Target.
(b) Following the Effective Time, Acquiror will
not knowingly take any action, and will not knowingly permit Target to take any
action, which would cause the Merger to fail to qualify as a reorganization
under the provisions of Sections 368(a)(1) and 368(a)(2)(e) of the Code.
3.15 Intellectual Property. Acquiror and its subsidiaries
own, or are licensed or otherwise possesses legally enforceable rights to use,
all patents, trademarks, trade names, service marks, copyrights, and any
applications therefor, maskworks, net lists, schematics, technology, know-how,
trade secrets, inventory, ideas, algorithms, processes, computer software
programs or applications (in both source code and object code form), and
tangible or intangible proprietary information or material ("Intellectual
Property") that are used or proposed to be used in the business of Acquiror and
its subsidiaries as currently conducted or as proposed to be conducted by
Acquiror and its subsidiaries; provided, however, that to the extent the
foregoing representation and warranty relates to Intellectual Property proposed
to be used in the business of Acquiror, such representation and warranty is
made to the knowledge of Acquiror.
ARTICLE IV
ADDITIONAL AGREEMENTS
4.1 Confidentiality. The parties acknowledge that
Acquiror and Target have previously executed a non-disclosure agreement dated
February 3, 1997 (the "Confidentiality Agreement"), which Confidentiality
Agreement shall continue in full force and effect in accordance with its terms.
4.2 Public Disclosure. Unless otherwise permitted by
this Agreement, Acquiror and Target shall consult with each other before
issuing any press release or otherwise making any public statement or making
any other public (or non-confidential) disclosure (whether or not in response
to an inquiry) regarding the terms of this Agreement and the transactions
contemplated hereby, and neither shall issue any such press release or make any
such statement or disclosure without the prior approval of the other (which
approval shall not
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be unreasonably withheld), except as may be required by law or by obligations
pursuant to any listing agreement with any national securities exchange or with
the NASD.
4.3 Pooling Accounting. Acquiror and Target shall each
use reasonable commercial efforts to cause the business combination to be
effected by the Merger to be accounted for as a pooling of interests. Each of
Acquiror and Target shall use its best efforts to cause its "Affiliates" not to
take any action that would adversely affect the ability of Acquiror to account
for the business combination to be effected by the Merger as a pooling of
interests.
4.4 Legal Requirements. Each of Acquiror, Merger Sub and
Target will, and will cause their respective subsidiaries to, take all
reasonable actions necessary to comply promptly with all legal requirements
which may be imposed on them with respect to the consummation of the
transactions contemplated by this Agreement and will promptly cooperate with
and furnish information to any party hereto necessary in connection with any
such requirements imposed upon such other party in connection with the
consummation of the transactions contemplated by this Agreement and will take
all reasonable actions necessary to obtain (and will cooperate with the other
parties hereto in obtaining) any consent, approval, order or authorization of,
or any registration, declaration or filing with, any Governmental Entity or
other person, required to be obtained or made in connection with the taking of
any action contemplated by this Agreement.
4.5 Blue Sky Laws. Acquiror shall take such steps as may
be necessary to comply with the securities and blue sky laws of all
jurisdictions which are applicable to the issuance of the Acquiror Common Stock
in connection with the Merger. Target shall use its best efforts to assist
Acquiror 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
Acquiror Common Stock in connection with the Merger.
4.6 Employee Benefit Plans. At the Effective Time, the
Target Stock Option Plans, each outstanding option to purchase shares of Target
Common Stock under the Target Stock Option Plans and all other options listed
on Schedule 4.6 to the Target Disclosure Schedule, whether vested or unvested,
will be assumed by Acquiror. Schedule 4.6 to the Target Disclosure Schedule
sets forth a true and complete list as of the date hereof of all holders of
each such option including the number of shares of Target capital stock subject
to each such option, the exercise or vesting schedule, the exercise price per
share, the term of each such option and the Target Stock Option Plan under
which such option was granted or the fact that such option was granted outside
of such Plans. Each such option so assumed by Acquiror under this Agreement
shall continue to have, and be subject to, the same terms and conditions set
forth in the Target Stock Option Plans or, if such option was granted outside
of such Plans, the terms and conditions of the written option agreement
immediately prior to the Effective Time, except that (i) such option will be
exercisable for that number of whole shares of Acquiror Common Stock equal to
the product of the number of shares of Target Common Stock that were issuable
upon exercise of such option immediately prior to the Effective Time multiplied
by the Common Exchange Ratio and rounded down to the nearest whole number of
shares of Acquiror Common
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Stock, and (ii) the per share exercise price for the shares of Acquiror Common
Stock issuable upon exercise of such assumed option will be equal to the
quotient determined by dividing the exercise price per share of Target Common
Stock at which such option was exercisable immediately prior to the Effective
Time by the Common Exchange Ratio, rounded up to the nearest whole cent.
Consistent with the terms of the Target Stock Option Plans and the documents
governing the outstanding options under such Plans, the Merger will not
terminate any of the outstanding options under the Target Stock Option Plans.
It is the intention of the parties that the options so assumed by Acquiror
qualify following the Effective Time as incentive stock options as defined in
Section 422 of the Code to the extent such options qualified as incentive stock
options prior to the Effective Time. As soon as reasonably practical but in no
event more than 15 days after the Effective Time, Acquiror will issue to each
person who, immediately prior to the Effective Time was a holder of an
outstanding option listed on Schedule 4.6 to the Target Disclosure Schedule a
document evidencing the foregoing assumption of such option by Acquiror.
4.7 Forms S-8. Acquiror agrees to file, within 15 days
following the Closing, a registration statement on Form S-8 covering fifty
percent (50%) of the shares of Acquiror Common Stock issuable pursuant to
outstanding options listed on Schedule 4.6 to the Target Disclosure Schedule
assumed by Acquiror. Acquiror agrees to file, within 15 days following the
first anniversary of the Closing, a registration statement on Form S-8 covering
the remaining unregistered shares of Acquiror Common Stock issuable pursuant to
outstanding options listed on Schedule 4.6 assumed by Acquiror.
4.8 Listing of Additional Shares. Within 15 days
following the Effective Time, Acquiror shall file with the Nasdaq National
Market a Notification Form for Listing of Additional Shares with respect to the
shares of Acquiror Common Stock issuable upon conversion of the Target Common
Stock in the Merger and upon exercise of the options assumed by Acquiror under
the Target Stock Option Plans or otherwise.
4.9 Expenses. Whether or not the Merger is consummated,
all costs and expenses incurred in connection with this Agreement, the
Certificate of Merger and the transactions contemplated hereby and thereby
shall be paid by the party incurring such expense.
4.10 Certain Notices. Acquiror covenants and agrees that,
for a period of 60 days after the Closing, Acquiror shall not take any action
which would have the effect of triggering any responsibility on behalf of
Target to provide or to have provided notice to employees under the Worker
Adjustment and Retaining Notification Act (WARN"). Specifically, Acquiror
agrees that as of and for a period of 90 days subsequent to the Closing, it
will conduct no termination, layoff, or reduction of hours of work of any
employee(s) which, under the statutory 30-day or 90-day aggregation periods set
forth in Sections 2(a) or 3(d) of WARN, would result in a plant closing or mass
layoff as those terms are defined under WARN, and which require or would have
required that Target provide to any employee at any time the notice mandated by
WARN.
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4.11 Reasonable Commercial Efforts and Further Assurances.
Each of the parties to this Agreement shall use reasonable commercial efforts
to effectuate the transactions contemplated hereby. Each party hereto, at the
reasonable request of the other party hereto, shall execute and deliver such
other instruments and do and perform such other acts and things as may be
necessary or desirable for effecting completely the consummation of this
Agreement and the transactions contemplated hereby.
4.12 Target Director and Officer Indemnification.
(a) After the Effective Time, Acquiror will, and
will cause the Surviving Corporation to, indemnify and hold harmless the
present and former officers, directors, employees and agents of Target in
respect of acts or omissions occurring on or prior to the Effective Time to the
extent provided under Target's Certificate of Incorporation and Bylaws, in each
case as in effect on the date hereof; provided that such indemnification shall
be subject to any limitation imposed from time to time under applicable law.
(b) The provisions of this Section 4.12 are
intended to be for the benefit of, and shall be enforceable by, each such
indemnified party.
ARTICLE V
CLOSING DELIVERIES
5.1 Closing Deliveries to Target and Target Shareholders.
(a) At the Closing, Target shall receive the
following:
(i) Letter of Accountants. A letter of
Ernst & Young LLP, independent auditors, to the effect that
the Merger qualifies for pooling of interests accounting
treatment if consummated in accordance with this Agreement.
(ii) Affiliate Agreements. An Affiliate
Agreement executed by each "Affiliate" of Acquiror in the form
attached hereto as Exhibit C.
(iii) Tax Opinion. The written opinion of
Dechert Price & Xxxxxx to the effect that the Merger will
constitute a reorganization within the meaning of Section
368(a) of the Code.
(b) At the Closing, the Target shareholders shall
receive the following:
(i) Legal Opinion. A legal opinion from
Acquiror's legal counsel in the form attached hereto as Exhibit G.
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(ii) Registration Rights Agreement. A
Registration Rights Agreement executed by Acquiror in the form
attached hereto as Exhibit H.
5.2 Closing Deliveries to Acquiror and Merger Sub. At
the Closing, Acquiror and Merger Sub shall receive the following:
(a) Legal Opinion. A legal opinion from Target's
legal counsel in the form attached hereto as Exhibit I.
(b) Letter of Accountants. A letter of Ernst &
Young LLP, independent auditors, to the effect that the Merger qualifies for
pooling of interests accounting treatment if consummated in accordance with
this Agreement.
(c) Affiliate and Shareholder Agreements. An
Affiliate and Shareholder Agreement executed by each "Affiliate" of Target in
the form attached hereto as Exhibit B.
(d) Shareholder's Representation Agreements. A
Shareholder's Representation Agreement executed by all holders of Target
Capital Stock who are not "Affiliates" of Target in the form attached hereto as
Exhibit F.
(e) FIRPTA Certificate. A Foreign Investment and
Real Property Tax Act of 1980 ("FIRPTA") Notification Letter properly executed
by Target in the form attached hereto as Exhibit D and a form of notice to the
Internal Revenue Service in accordance with the requirements of Treasury
Regulation Section 1.897-2(h)(2) executed by Target in the form attached hereto
as Exhibit D.
(f) Resignation of Directors. A letter signed by
each director of Target in office immediately prior to the Effective Time to
the effect that such individual shall resign as director of the Surviving
Corporation effective as of the Effective Time.
(g) Employment and Non-Competition Agreements.
An Employment and Non-Competition Agreement executed by each of the employees
of Target set forth on Schedule 5.2(g) to the Acquiror Disclosure Schedule in
the form attached hereto as Exhibit J.
(h) Escrow Agreement. An Escrow Agreement
executed by the Escrow Agent and the Shareholders' Agent in the form attached
hereto as Exhibit E.
(i) Fairness Opinion. A written opinion from
Xxxxxxx, Xxxxx & Co., Acquiror's financial advisor, to the effect that the
consideration payable by Acquiror in the Merger is fair to Acquiror's
shareholders from a financial point of view.
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ARTICLE VI
ESCROW
6.1 Escrow Fund. As soon as practicable after the
Effective Time, 148,655 shares (the "Escrow Shares") of Acquiror Common Stock
shall be registered in the name of, and be deposited with, Texas Commerce Bank
National Association as escrow agent (the "Escrow Agent"), such deposit to
constitute the Escrow Fund and to be governed by the terms set forth herein and
in the Escrow Agreement attached hereto as Exhibit E. The Escrow Fund shall be
available to compensate Acquiror for any and all losses, costs, damages,
liabilities and expenses arising from claims, demands, actions, causes of
action, including, without limitation, reasonable legal fees, net of any
recoveries under existing insurance policies, tax benefits received by Acquiror
or its affiliates as a result of such damages, indemnities from third parties
or in the case of third party claims, by any amount actually recovered by
Acquiror or its affiliates pursuant to counterclaims made by any of them
directly relating to the facts giving rise to such third party claims
(collectively, "Damages") arising out of any breach of any of the
representations or warranties given or made by Target in this Agreement or the
Target Disclosure Schedules. Acquiror and Target each acknowledge that such
Damages, if any, would relate to unresolved contingencies existing at the
Effective Time, which if resolved at the Effective Time would have led to a
reduction in the total number of shares Acquiror would have agreed to issue in
connection with the Merger.
6.2 Exclusivity. The rights of Acquiror pursuant to this
Article VI and the Escrow Agreement shall be the exclusive remedy of Acquiror
for Damages hereunder except for any claims based on fraud or intentional
misrepresentation, for which Acquiror shall have all other remedies available
under law or in equity; provided, however, that amounts recoverable for claims
based on fraud or intentional misrepresentation, if any, shall not exceed for
any shareholder of Target such shareholder's pro-rata portion of $139,368,000
based upon such shareholder's percentage ownership of Target Capital Stock just
prior to the Effective Time.
6.3 Damage Thresholds. Notwithstanding Section 6.1,
Acquiror may not receive any shares from the Escrow Fund unless and until an
Officer's Certificate or Certificates (as defined in Section 6.5 below)
satisfying the requirements of Section 6.5(a)(i) and (ii) and identifying
Damages the aggregate amount of which exceeds $375,000 has been delivered to
the Escrow Agent as provided in Section 6.5 below and such amount is determined
pursuant to this Article VI to be payable, in which case Acquiror shall receive
shares equal in value to the full amount of Damages in excess of $375,000;
provided, however, that the $375,000 threshold will not be applicable to claims
based upon fraud or intentional misrepresentations.
6.4 Escrow Period. The Escrow Period shall terminate
upon the first anniversary of the Effective Time.
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6.5 Claims upon Escrow Fund.
(a) Upon receipt by the Escrow Agent on or before
the last day of the Escrow Period of a certificate signed by any officer of
Acquiror (an "Officer's Certificate"):
(i) stating (A) that Damages exist in an
aggregate amount greater than $375,000 and/or (B)
that Damages exist for claims based upon fraud or
intentional misrepresentation (for which no minimum
dollar amount threshold shall apply), and
(ii) specifying in reasonable detail the
individual items of such Damages included in the
amount so stated, the date each such item was paid,
or properly accrued or arose, and the nature of the
misrepresentation, breach or default to which such
item is related,
the Escrow Agent shall, subject to the provisions of this Article VI, deliver
to Acquiror out of the Escrow Fund, as promptly as practicable, Acquiror Common
Stock or other assets held in the Escrow Fund having a value equal to such
Damages in excess of $375,000, or a value equal to such Damages for claims
based upon fraud or intentional misrepresentation.
(b) For the purpose of compensating Acquiror for its
Damages pursuant to this Agreement, the Acquiror Common Stock in the Escrow
Fund shall be valued at the Closing Price.
6.6 Objections to Claims. At the time of delivery of any
Officer's Certificate to the Escrow Agent, a duplicate copy of such Officer's
Certificate shall be delivered to the Shareholders' Agent (defined in Section
6.8 below) and for a period of twenty-five (25) days after such delivery, the
Escrow Agent shall make no delivery of Acquiror Common Stock or other property
pursuant to Section 6.5 hereof unless the Escrow Agent shall have received
written authorization from the Shareholders' Agent to make such delivery.
After the expiration of such twenty-five (25) day period, the Escrow Agent
shall make delivery of the Acquiror Common Stock or other property in the
Escrow Fund in accordance with Section 6.5 hereof, provided that no such
payment or delivery may be made if the Shareholders' Agent shall object in a
written statement to the claim made in the Officer's Certificate, and such
statement shall have been delivered to the Escrow Agent and to Acquiror prior
to the expiration of such twenty-five (25) day period.
6.7 Resolution of Conflicts; Arbitration.
(a) In case the Shareholders' Agent shall so object
in writing to any claim or claims by Acquiror made in any Officer's Certificate,
Acquiror shall have twenty-five (25) days to respond in a written statement to
the objection of the Shareholders' Agent. If after such twenty-five (25) day
period there remains a dispute as to any claims, the Shareholders' Agent and
Acquiror shall attempt in good faith for sixty (60) days to agree upon the
rights of
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the respective parties with respect to each of such claims. If the
Shareholders' Agent and Acquiror should so agree, a memorandum setting forth
such agreement shall be prepared and signed by both parties and shall be
furnished to the Escrow Agent. The Escrow Agent shall be entitled to rely on
any such memorandum and shall distribute the Acquiror Common Stock or other
property from the Escrow Fund in accordance with the terms thereof.
(b) If no such agreement can be reached after good faith
negotiation, either Acquiror or the Shareholders' Agent may, by written notice
to the other, demand arbitration of the matter unless the amount of the damage
or loss is at issue in pending litigation with a third party, in which event
arbitration shall not be commenced until such amount is ascertained or both
parties agree to arbitration; and in either such event the matter shall be
settled by arbitration conducted by three arbitrators. Within fifteen (15) days
after such written notice is sent, Acquiror and the Shareholders' Agent shall
each select one arbitrator, and the two arbitrators so selected shall select a
third arbitrator. The decision of the arbitrators as to the validity and amount
of any claim in such Officer's Certificate shall be binding and conclusive upon
the parties to this Agreement, and notwithstanding anything in Section 6.6
hereof, the Escrow Agent shall be entitled to act in accordance with such
decision and make or withhold payments out of the Escrow Fund in accordance
therewith.
(c) Judgment upon any award rendered by the arbitrators
may be entered in any court having jurisdiction. Any such arbitration shall be
held in Dallas County, Texas under the commercial rules then in effect of the
American Arbitration Association. For purposes of this Section 6.7(c), in any
arbitration hereunder in which any claim or the amount thereof stated in the
Officer's Certificate is at issue, Acquiror shall be deemed to be the Non-
Prevailing Party unless the arbitrators award Acquiror more than one-half (1/2)
of the amount in dispute, plus any amounts not in dispute; otherwise, the Target
shareholders for whom shares of Acquiror Common Stock otherwise issuable to them
that have been deposited in the Escrow Fund shall be deemed to be the
Non-Prevailing Party. The Non-Prevailing Party to an arbitration shall pay its
own expenses, the fees of each arbitrator, the administrative fee of the
American Arbitration Association, and the expenses, including without
limitation, reasonable attorneys' fees and costs, reasonably incurred by the
other party to the arbitration.
6.8 Shareholders' Agent.
(a) Xxxxxxx X. Xxxxxxx has been constituted and appointed
as agent ("Shareholders' Agent") for and on behalf of the Target shareholders to
give and receive notices and communications, to authorize delivery to Acquiror
of the Acquiror Common Stock or other property from the Escrow Fund in
satisfaction of claims by Acquiror, to object to such deliveries, to agree to,
negotiate, enter into settlements and compromises of, and demand arbitration and
comply with orders of courts and awards of arbitrators with respect to such
claims, and to take all actions necessary or appropriate in the judgment of the
Shareholders' Agent for the accomplishment of the foregoing. Such agency may be
changed by the holders of a majority in interest of the Escrow Fund from time to
time upon not less than 10 days' prior written notice to Acquiror. No bond
shall be required of the Shareholders' Agent, and the
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Shareholders' Agent shall receive no compensation for his services. Notices or
communications to or from the Shareholders' Agent shall constitute notice to or
from each of the Target shareholders.
(b) The Shareholders' Agent shall not be liable for any
act done or omitted hereunder as Shareholders' Agent while acting in good faith
and in the exercise of reasonable judgment, and any act done or omitted pursuant
to the advice of counsel shall be conclusive evidence of such good faith. The
Target shareholders shall severally indemnify the Shareholders' Agent and hold
him harmless against any loss, liability or expense incurred without gross
negligence or bad faith on the part of the Shareholders' Agent and arising out
of or in connection with the acceptance or administration of his duties
hereunder.
(c) The Shareholders' Agent shall have reasonable access
to information about Target and the reasonable assistance of Target's officers
and employees for purposes of performing its duties and exercising its rights
hereunder, provided that the Shareholders' Agent shall treat confidentially and
not disclose any nonpublic information from or about Target to anyone (except on
a need to know basis to individuals who agree to treat such information
confidentially).
6.9 Actions of the Shareholders' Agent. A decision, act,
consent or instruction of the Shareholders' Agent shall constitute a decision
of all Target shareholders for whom shares of Acquiror Common Stock otherwise
issuable to them are deposited in the Escrow Fund and shall be final, binding
and conclusive upon each such Target shareholder, and the Escrow Agent and
Acquiror may rely upon any decision, act, consent or instruction of the
Shareholders' Agent as being the decision, act, consent or instruction of each
and every such Target shareholder. The Escrow Agent and Acquiror are hereby
relieved from any liability to any person for any acts done by them in
accordance with such decision, act, consent or instruction of the Shareholders'
Agent.
6.10 Third-Party Claims. In the event Acquiror becomes aware of a
third-party claim which Acquiror believes may result in a demand against the
Escrow Fund, Acquiror shall notify the Shareholders' Agent of such claim, and
the Shareholders' Agent and the Target shareholders for whom shares of Acquiror
Common Stock otherwise issuable to them are deposited in the Escrow Fund shall
be entitled, at their expense, to participate in any defense of such claim.
Acquiror may not effect the settlement of any such claim without the consent of
the Shareholders' Agent, which consent shall not be unreasonably withheld. In
the event that the Shareholders' Agent has consented to any such settlement, the
Shareholders' Agent shall have no power or authority to object under Section 8.6
or any other provision of this Article VI to the amount of any claim by Acquiror
against the Escrow Fund for indemnity with respect to such settlement.
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ARTICLE VII
GENERAL PROVISIONS
7.1 Survival at Effective Time. All the representations
and warranties set forth in this Agreement shall survive the Effective Time
until the expiration of the Escrow Period; provided, however, that there shall
be no limitation period for matters involving fraud or intentional
misrepresentation. The covenants and agreements of the parties shall survive
until the expiration of the time period for their performance as provided
herein.
7.2 Notices. All notices and other communications hereunder
shall be in writing and shall be delivered personally or by commercial delivery
service, or mailed by registered or certified mail (return receipt requested) or
sent via facsimile (with confirmation of receipt) to the parties at the
following address (or at such other address for a party as shall be specified by
like notice):
(a) if to Acquiror or Merger Sub, to:
000 X. Xxx Xxxxxxx Xxxx.
00xx Xxxxx
Xxxxxx, Xxxxx 00000
Attention: Xxxxxx X. Xxxxxxx
Fax: (000) 000-0000
Tel: (000) 000-0000
with a copy (which shall not constitute notice) to:
Xxxxxxx, Phleger & Xxxxxxxx LLP
000 Xxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxx X. Xxxxxx
Fax: (000) 000-0000
Tel: (000) 000-0000
(b) if to Target or the Shareholder's Agent, to
0000 Xxxxxxxxxx Xxxx.
Xxxxx 000
Xxxxxxxxxx, Xxx Xxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
Fax: (000) 000-0000
Tel: (000) 000-0000
with a copy (which shall not constitute notice) to:
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Dechert Price & Xxxxxx
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxx
Fax: (000) 000-0000
Tel: (000) 000-0000
Notice given by personal delivery, commercial delivery service or mail shall be
effective upon actual receipt. Notice given by facsimile shall be confirmed by
appropriate answer back and shall be effective upon actual receipt if received
during the recipient's normal business hours, or at the beginning of the
recipient's next business day after receipt if not received during the
recipient's normal business hours.
7.3 Interpretation. When a reference is made in this
Agreement to Exhibits or Schedules, such reference shall be to an Exhibit or
Schedule to this Agreement unless otherwise indicated. The words "include,"
"includes" and "including" when used herein shall be deemed in each case to be
followed by the words "without limitation." The phrase "made available" in
this Agreement shall mean that the information referred to has been made
available if requested by the party to whom such information is to be made
available. The phrases "the date of this Agreement", "the date hereof", and
terms of similar import, unless the context otherwise requires, shall be deemed
to refer to May 15, 1997. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
7.4 Counterparts. This Agreement may be executed in one
or more counterparts, all of which shall be considered one and the same
agreement and shall become effective when one or more counterparts have been
signed by each of the parties and delivered to the other parties, it being
understood that all parties need not sign the same counterpart.
7.5 Entire Agreement; Nonassignability; Parties in
Interest; Amendment. This Agreement and the documents and instruments and
other agreements specifically referred to herein or delivered pursuant hereto,
including the Exhibits, the Schedules, including the Target Disclosure Schedule
and the Acquiror Disclosure Schedule (a) constitute the entire agreement among
the parties with respect to the subject matter hereof and supersede all prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter hereof, except for the Confidentiality Agreement,
which shall continue in full force and effect, and shall survive any
termination of this Agreement or the Closing, in accordance with its terms; (b)
are not intended to confer upon any other person any rights or remedies
hereunder, except as set forth in Sections 1.6(a)-(d) and (f), 1.7-1.9, 4.6,
4.7, 4.8, 4.12, Article VI and 7.1 (which contain rights intended to inure to
the benefit of the Target shareholders and optionholders); and (c) shall not be
assigned by operation of law or otherwise except as otherwise specifically
provided. This Agreement may be amended after the Effective Time only by the
written agreement of Acquiror, Target and the Shareholder's Agent.
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7.6 Severability. In the event that any provision of
this Agreement, or the application thereof, becomes or is declared by a court
of competent jurisdiction to be illegal, void or unenforceable, the remainder
of this Agreement will continue in full force and effect and the application of
such provision to other persons or circumstances will be interpreted so as
reasonably to effect the intent of the parties hereto. The parties further
agree to replace such void or unenforceable provision of this Agreement with a
valid and enforceable provision that will achieve, to the extent possible, the
economic, business and other purposes of such void or unenforceable provision.
7.7 Remedies Cumulative. Except as otherwise provided
herein, any and all remedies herein expressly conferred upon a party will be
deemed cumulative with and not exclusive of any other remedy conferred hereby,
or by law or equity upon such party, and the exercise by a party of any one
remedy will not preclude the exercise of any other remedy.
7.8 Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of Texas (other than the
conflicts of law principles thereof). Each of the parties hereto irrevocably
consents to the non-exclusive jurisdiction of any court located within the
State of Texas, in connection with any matter based upon or arising out of this
Agreement or the matters contemplated herein, agrees that process may be served
upon them in any manner authorized by the laws of the State of Texas for such
persons and waives and covenants not to assert or plead any objection which
they might otherwise have to such jurisdiction and such process.
7.9 Rules of Construction. The parties hereto agree that
they have been represented by counsel during the negotiation, preparation and
execution of this Agreement and, therefore, waive the application of any law,
regulation, holding or rule of construction providing that ambiguities in an
agreement or other document will be construed against the party drafting such
agreement or document.
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IN WITNESS WHEREOF, Target, Acquiror and Merger Sub have
caused this Agreement to be executed and delivered by their respective officers
thereunto duly authorized, all as of the date first written above.
THINK SYSTEMS CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxx
------------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Chairman of the Board and
Chief Executive Officer
i2 TECHNOLOGIES, INC.
By: /s/ Xxxxxx X. Xxxxx
------------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Chairman of the Board and
Chief Executive Officer
TSC ACQUISITION CORPORATION
By: /s/ Xxxxxx X. Xxxxx
------------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Chairman of the Board and
Chief Executive Officer
[SIGNATURE PAGE TO AGREEMENT AND PLAN OF MERGER]
37.
