Exhibit 2.1
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
XXX XXXXXXXXXXX,
ELITE MERGER CORPORATION
and
DOCUMENTUM, INC.
Dated as of October 13, 2003
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of October 13, 2003 (this
"Agreement"), by and among XXX Xxxxxxxxxxx, a Massachusetts corporation
("Parent"), Elite Merger Corporation, a Delaware corporation and a wholly owned
subsidiary of Parent ("Merger Sub"), and Documentum, Inc., a Delaware
corporation (the "Company").
WHEREAS, the respective Boards of Directors of Parent, Merger Sub and
the Company have each determined that it is advisable and in the best interests
of their respective stockholders that Parent acquire the Company pursuant to the
terms and conditions of this Agreement, and, in furtherance of such acquisition,
such Boards of Directors have approved the merger of Merger Sub with and into
the Company (the "Merger") in accordance with the terms of this Agreement and
the applicable provisions of the General Corporation Law of the State of
Delaware ("GCL");
WHEREAS, for United States federal income tax purposes, it is intended
that the Merger shall qualify as a reorganization within the meaning of Section
368(a) of the Internal Revenue Code of 1986, as amended (the "Code"), and that
this Agreement shall be, and is hereby, adopted as a plan of reorganization for
purposes of Section 368(a) of the Code.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth below, the
parties hereto agree as follows:
ARTICLE I
THE MERGER
Section 1.1 The Merger. Subject to the terms and conditions of this
Agreement, at the Effective Time (as defined in Section 1.2), Merger Sub shall
merge with and into the Company in accordance with the GCL, the separate
corporate existence of Merger Sub shall cease, and the Company shall continue as
the surviving corporation in the Merger. The Company, in its capacity as the
corporation surviving the Merger, is hereinafter sometimes referred to as the
"Surviving Corporation."
Section 1.2 Effective Time. On the Closing Date (as defined below),
Parent and the Company shall cause the Merger to be consummated by filing a duly
executed and delivered certificate of merger as required by the GCL (the
"Certificate of Merger") with the Secretary of State of the State of Delaware,
in such form as required by, and executed in accordance with the relevant
provisions of, the GCL (the time of such filing, or such other time as Parent
and the Company shall specify in the Certificate of Merger, being the "Effective
Time").
Section 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
Section 259 of the GCL.
Section 1.4 Certificate of Incorporation of the Surviving Corporation.
At and after the Effective Time, the Certificate of Incorporation of Merger Sub
(the "Merger Sub Charter"), as in effect immediately prior to the Effective
Time, shall be the Certificate of Incorporation of the Surviving Corporation,
until amended in accordance with the GCL, except that the name of the Surviving
Corporation shall be "Documentum, Inc."
Section 1.5 By-Laws of the Surviving Corporation. At and after the
Effective Time, the By-Laws of Merger Sub (the "Merger Sub By-Laws"), as in
effect immediately prior to the Effective Time, shall be the By-Laws of the
Surviving Corporation, until amended in accordance with the Certificate of
Incorporation of the Surviving Corporation and the GCL, except that the name of
the Surviving Corporation shall be "Documentum, Inc."
Section 1.6 Directors and Officers of the Surviving Corporation.
(a) The directors of Merger Sub immediately prior to the
Effective Time shall be the initial directors of the Surviving Corporation and
shall hold office from the Effective Time until their respective successors are
duly elected or appointed and qualified in the manner provided in the
Certificate of Incorporation or By-Laws of the Surviving Corporation or as
otherwise provided by law.
(b) The officers of Merger Sub immediately prior to the
Effective Time shall be the initial officers of the Surviving Corporation and
shall hold office from the Effective Time until their respective successors are
duly elected or appointed and qualified in the manner provided in the
Certificate of Incorporation or By-Laws of the Surviving Corporation or as
otherwise provided by law.
Section 1.7 Closing. Subject to the provisions of this Agreement, the
closing of the Merger (the "Closing") shall take place at 10:00 a.m. Eastern
Time, at the offices of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, One Beacon
Street, Boston, Massachusetts on a date to be specified by Parent and the
Company which shall be no later than the second business day after satisfaction
or waiver of each of the conditions set forth in Article VII (other than the
delivery of items to be delivered at Closing and other than those conditions
that by their nature are to be satisfied at the Closing, it being understood
that the occurrence of the Closing shall remain subject to the delivery of such
items and the satisfaction or waiver of such conditions at the Closing) or on
such other date and such other time and place as Parent and the Company shall
agree. The date on which the Closing shall occur is hereinafter referred to as
the "Closing Date."
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ARTICLE II
CONVERSION AND EXCHANGE OF SECURITIES
Section 2.1 Conversion of Capital Stock. At the Effective Time, by
virtue of the Merger and without any action on the part of any holder of any
shares of common stock, par value $0.001 per share, of the Company ("Company
Common Stock") or any capital stock of Merger Sub:
(a) Company Common Stock. Subject to this Article II, each
share of Company Common Stock issued and outstanding immediately prior to the
Effective Time (other than shares to be cancelled in accordance with Section
2.1(b)), together with each associated "Right" (as defined in the Rights
Agreement, dated as of February 3, 1999, between the Company and BankBoston,
N.A., as rights agent (the "Company Rights Agreement")), shall be converted into
the right to receive 2.175 (the "Exchange Ratio") shares of common stock, par
value $0.01 per share, of Parent ("Parent Common Stock"), payable upon the
surrender of the Certificates (as defined in Section 2.2(b)). All such shares of
Company Common Stock, when so converted, shall no longer be outstanding and
shall automatically be cancelled and retired and shall cease to exist, and each
holder of a Certificate representing any such shares shall cease to have any
rights with respect thereto, except the right to receive the shares of Parent
Common Stock pursuant to this Section 2.1(a), any dividends or other
distributions payable pursuant to Section 2.2(c) and any cash in lieu of
fractional shares payable pursuant to Section 2.2(d), all to be issued or paid
in consideration therefor upon the surrender of such Certificates in accordance
with Section 2.2, without interest (collectively, the "Merger Consideration").
Notwithstanding the foregoing, the Exchange Ratio shall be appropriately
adjusted to reflect fully the effect of any stock split, reverse split,
reclassification, stock dividend (including any dividend or distribution of
securities convertible into Parent Common Stock or Company Common Stock),
reorganization, recapitalization or other like change with respect to Parent
Common Stock or Company Common Stock occurring (or having a record date) after
the date of this Agreement and prior to the Effective Time.
(b) Cancellation of Treasury Stock and Parent-Owned Stock. All
shares of Company Common Stock, together with each associated "Right," that are
(i) held by the Company as treasury shares or (ii) owned by Parent or any wholly
owned Subsidiary (as defined below) of Parent shall be cancelled and retired and
cease to exist, and no securities of Parent or other consideration shall be
delivered in exchange therefor. As used in this Agreement, the word "Subsidiary"
means, with respect to any party, any corporation or other organization, whether
incorporated or unincorporated, of which (A) such party or any other Subsidiary
of such party is a general partner (excluding partnerships, the general
partnership interests of which held by such party or any Subsidiary of such
party do not have a majority of the voting interest in such partnership), (B)
such party or any Subsidiary of such party owns in excess of a majority of the
outstanding equity or voting securities or interests or (C) such party or any
Subsidiary of such party has the right to elect at least a
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majority of the board of directors or others performing similar functions with
respect to such corporation or other organization.
(c) Capital Stock of Merger Sub. Each share of common stock,
par value $0.01 per share, of Merger Sub ("Merger Sub Common Stock") issued and
outstanding immediately prior to the Effective Time shall be converted into and
become one fully paid and nonassessable share of common stock, par value $0.01
per share, of the Surviving Corporation.
(d) Stock Options. Outstanding options to purchase shares of
Company Common Stock shall be treated in the manner set forth in Sections 5.4
and 6.10 hereof.
(e) Company Convertible Debt. The outstanding debt of the
Company convertible into shares of the Company's Common Stock (the "Company
Convertible Debt") pursuant to the terms of the Indenture dated as of April 5,
2002 between the Company and Wilmington Trust Company (the "Indenture") shall
become convertible into that number of shares of Parent Common Stock that would
have been issued if the Company Convertible Debt had been converted into Company
Common Stock immediately prior to the Effective Time. Parent and the Company
shall use all reasonable efforts to take all such actions required under the
Indenture, in each case as may be necessary to comply with all of the terms and
conditions of the Indenture.
Section 2.2 Exchange of Certificates.
(a) Exchange Agent. Prior to the Closing Date, Parent shall
designate a bank or trust company to act as Exchange Agent hereunder (the
"Exchange Agent"). As soon as practicable after the Effective Time, Parent shall
deposit with or for the account of the Exchange Agent, for the benefit of the
holders of Company Common Stock, stock certificates representing the number of
shares of Parent Common Stock issuable pursuant to Section 2.1(a) in exchange
for outstanding shares of Company Common Stock, which shares of Parent Common
Stock shall be deemed to have been issued at the Effective Time. From time to
time, Parent shall make available to the Exchange Agent sufficient cash to make
all cash payments in lieu of fractional shares pursuant to Section 2.2(d).
(b) Exchange Procedures. As soon as practicable after the
Effective Time, Parent will instruct the Exchange Agent to mail to each holder
of record of a certificate or certificates which immediately prior to the
Effective Time represented outstanding shares of Company Common Stock (the
"Certificates") that were converted pursuant to Section 2.1(a) into the right to
receive the Merger Consideration (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 proper delivery of the Certificates to the
Exchange Agent and shall be in such form and have such other provisions as
Parent may reasonably specify that are not inconsistent with the terms of this
Agreement), and (ii) instructions for use in effecting the surrender of the
Certificates in exchange for the Merger Consideration. Upon surrender of a
Certificate for cancellation to the Exchange Agent together with such letter of
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transmittal, duly executed, and such other customary documents as may be
required pursuant to such instructions, the holder of such Certificate shall be
entitled to receive in exchange therefor (A) certificates evidencing that number
of whole shares of Parent Common Stock which such holder has the right to
receive in accordance with Section 2.1(a) in respect of the shares of Company
Common Stock formerly evidenced by such Certificate, (B) any dividends or other
distributions to which such holder is entitled pursuant to Section 2.2(c), and
(C) any cash in lieu of any fractional shares of Parent Common Stock to which
such holder is entitled pursuant to Section 2.2(d), after giving effect to any
tax withholdings required by applicable law, and the Certificate so surrendered
shall forthwith be cancelled. In the event of a transfer of ownership of shares
of Company Common Stock which is not registered in the transfer records of the
Company as of the Effective Time, a certificate representing the proper number
of shares of Parent Common Stock may be issued to a transferee if the
Certificate evidencing such Company Common Stock is presented to the Exchange
Agent, accompanied by all documents required to evidence and effect such
transfer pursuant to this Section 2.2(b) and by evidence that any applicable
stock transfer taxes have been paid. Until so surrendered, each outstanding
Certificate that, prior to the Effective Time, represented shares of Company
Common Stock will be deemed, from and after the Effective Time, for all
corporate purposes, to represent only the right to receive upon surrender a
certificate representing shares of Parent Common Stock, any dividends or other
distributions payable pursuant to Section 2.2(c) and any cash in lieu of any
fractional shares of Parent Common Stock payable pursuant to Section 2.2(d), in
accordance with the terms of this Agreement.
(c) Distributions With Respect to Unexchanged Parent Shares.
No dividends or other distributions with respect to shares of Parent Common
Stock for which the record date is after the Effective Time shall be paid to the
holder of any unsurrendered Certificate with respect to the shares of Parent
Common Stock such holder is entitled to receive until such holder surrenders
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 Parent Common Stock issued in exchange therefor,
without interest, at the time of such surrender, the amount of dividends or
other distributions with a record date after the Effective Time theretofore paid
with respect to such shares of Parent Common Stock.
(d) No Fractional Shares. No certificate or scrip representing
fractional shares of Parent Common Stock shall be issued upon the surrender for
exchange of Certificates, and such fractional share interests shall not entitle
the owner thereof to vote or to any other rights of a stockholder of Parent.
Notwithstanding any other provision of this Agreement, each holder of shares of
Company Common Stock converted pursuant to the Merger who would otherwise have
been entitled to receive a fraction of a share of Parent Common Stock (after
taking into account all Certificates delivered by such holder and the aggregate
number of shares of Company Common Stock represented thereby) shall receive, in
lieu thereof, cash (without interest) in an amount equal to such fractional part
of a share of Parent Common Stock multiplied by the average of the last reported
sales prices of Parent Common Stock at the 4:00 p.m., New York City time, end of
regular trading hours on the New York Stock Exchange ("NYSE") during the five
consecutive trading days ending on the
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last trading day prior to the Effective Time.
(e) Transfers of Ownership. If any certificate for shares of
Parent 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 to 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 Parent or any agent designated by it
any transfer or other taxes required by reason of the issuance of a certificate
for shares of Parent Common Stock in any name other than that of the registered
holder of the Certificate surrendered, or have established to the satisfaction
of Parent or any agent designated by it that such tax has been paid or is not
payable.
(f) Termination of Exchange Fund; No Liability. At any time
following the first anniversary of the Effective Time, Parent shall be entitled
to require the Exchange Agent to deliver to it any shares of Parent Common Stock
which had been made available to the Exchange Agent and which have not been
disbursed to holders of Certificates, and thereafter such holders shall be
entitled to look only to Parent (subject to abandoned property, escheat or other
similar law) with respect to the shares of Parent Common Stock upon due
surrender of their Certificates, without any interest thereon. Neither Parent,
Merger Sub nor the Company shall be liable to any holder of Company Common Stock
or Parent Common Stock, as the case may be, for such shares (or dividends or
distributions with respect thereto) delivered to a public official pursuant to
any applicable abandoned property, escheat or other similar law following the
passage of time specified therein.
(g) Withholding Rights. Parent or the Exchange Agent shall be
entitled to deduct and withhold from the Merger Consideration otherwise payable
pursuant to this Agreement to any person who was a holder of Company Common
Stock immediately prior to the Effective Time such amounts as Parent or the
Exchange Agent is required to deduct and withhold with respect to the making of
such payment under the Code, or any provision of state, local or foreign tax
law. To the extent that amounts are so withheld by Parent or the Exchange Agent,
such withheld amounts shall be treated for all purposes of this Agreement as
having been paid to the holder of the shares of Parent Common Stock in respect
of which such deduction and withholding was made by Parent or the Exchange
Agent.
(h) No Further Ownership Rights in Company Stock. At the
Effective Time, the stock transfer books of the Company shall be closed and
thereafter there shall be no further registration of transfers on the stock
transfer books of the Company or the Surviving Corporation of the shares of
Company Common Stock which were outstanding immediately prior to such time. If,
after such time, Certificates are presented to the Surviving Corporation for any
reason, they shall be cancelled and exchanged as provided in this Article II.
(i) Lost, Stolen or Destroyed Certificates. In the event any
Certificates shall have been lost, stolen or destroyed, the Exchange Agent shall
issue in
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exchange for such lost, stolen or destroyed Certificates, upon the making of an
affidavit of that fact by the holder thereof, such shares of Parent Common Stock
as may be required pursuant to Section 2.1(a) as well as the other Merger
Consideration as provided in this Article II; provided, however, that Parent
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 an
agreement of indemnification in form satisfactory to Parent, or a bond in such
sum as Parent may reasonably direct as indemnity against any claim that may be
made against Parent or the Exchange Agent with respect to the Certificates
alleged to have been lost, stolen or destroyed.
Section 2.3 Taking of Necessary Action; Further Action. Each of Parent,
Merger Sub and the Company will take all such reasonable and lawful action as
may be necessary or appropriate in order to effectuate the Merger in accordance
with this Agreement as promptly as possible. If, at any time after the Effective
Time, any such further action is necessary or desirable to carry out the
purposes of this Agreement and to vest the Surviving Corporation with full
right, title and possession to all assets, property, rights, privileges, powers
and franchises of the Company or Merger Sub, the officers and directors of the
Company and Merger Sub immediately prior to the Effective Time are fully
authorized in the name of their respective corporations or otherwise to take,
and will take, all such lawful and necessary action.
Section 2.4 Material Adverse Effect.
(a) The term "Company Material Adverse Effect" means any
change, effect or circumstance that, individually or when taken together with
all other such similar or related changes, effects or circumstances that have
occurred prior to the date of determination of the occurrence of the Company
Material Adverse Effect, (i) is materially adverse to the business, assets
(including intangible assets), liabilities, capitalization, financial condition
or results of operations of the Company and its Subsidiaries, taken as a whole,
or (ii) materially adversely affects the ability of the Company to consummate
the transactions contemplated hereby; provided, however, that no change, effect
or circumstance to the extent resulting from any of the following shall be
deemed to constitute, in and of itself, a Company Material Adverse Effect, nor
shall it be taken into consideration when determining whether there has occurred
a Company Material Adverse Effect: (A) general market, economic or political
conditions affecting the industries in which the Company participates, provided
that such change, effect or circumstance does not have a substantially
disproportionate adverse impact on the Company and its Subsidiaries, taken as a
whole; (B) compliance with the terms and conditions of this Agreement, the
transactions contemplated by this Agreement or the pendency or announcement of
this Agreement or the transactions contemplated by this Agreement; (C) any
litigation brought or threatened by stockholders of the Company (whether on
behalf of the Company or otherwise) arising out of or in connection with the
announcement of this Agreement or the consummation of the Merger; (D) any
decrease in the market price or trading volume of the Company's publicly traded
common stock; (E) the Company's failure to meet published industry analyst
expectations; or (F) any change in applicable accounting requirements or
principles, or applicable laws, rules or regulations which occurs or becomes
effective after the date of this Agreement.
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(b) The term "Parent Material Adverse Effect" means any
change, effect or circumstance that, individually or when taken together with
all other such similar or related changes, effects or circumstances that have
occurred prior to the date of determination of the occurrence of the Parent
Material Adverse Effect, (i) is materially adverse to the business, assets
(including intangible assets), liabilities, capitalization, financial condition
or results of operations of Parent and its Subsidiaries, taken as a whole, or
(ii) materially adversely affects the ability of Parent to consummate the
transactions contemplated hereby; provided, however, that no change, effect or
circumstance resulting solely from any of the following shall be deemed to
constitute, in and of itself, a Parent Material Adverse Effect, nor shall it be
taken into consideration when determining whether there has occurred a Parent
Material Adverse Effect: (A) general market, economic or political conditions
affecting the industries in which Parent participates, provided that such
change, effect or circumstance does not have a substantially disproportionate
impact on Parent and its Subsidiaries, taken as a whole; (B) compliance with the
terms and conditions of this Agreement, the transactions contemplated by this
Agreement or the pendency or announcement of this Agreement or the transactions
contemplated by this Agreement; (C) any litigation brought or threatened by
stockholders of Parent (whether on behalf of Parent or otherwise) arising out of
or in connection with the announcement of this Agreement or the consummation of
the Merger; (D) any decrease in the market price or trading volume of Parent's
publicly traded common stock; (E) Parent's failure to meet published industry
analyst expectations; or (F) any change in applicable accounting requirements or
principles, or applicable laws, rules or regulations which occurs or becomes
effective after the date of this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
The Company represents and warrants to Parent and Merger Sub that, except
as set forth in the written disclosure schedule prepared by the Company which is
dated as of the date of this Agreement and arranged in sections corresponding to
the numbered and lettered sections contained in this Article III and was
previously delivered to Parent in connection herewith (the "Disclosure
Schedule") (disclosure in any section of the Disclosure Schedule qualifying the
corresponding section in this Article III and other sections of this Article III
to the extent such disclosure reasonably appears to be applicable to such
sections):
Section 3.1 Organization and Qualification; Subsidiaries. Each
of the Company and each of its Subsidiaries is an entity duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and has the requisite corporate power and authority necessary to
own, lease and operate the properties it purports to own, lease or operate and
to carry on its business as it is now being conducted or presently proposed to
be conducted. Each of the Company and each of its Subsidiaries is duly qualified
or licensed as a foreign corporation to do business, and is in good standing, in
each jurisdiction where the character of the properties owned, leased or
operated by it or the
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nature of its activities makes such qualification or licensing necessary, except
for such failures to be so duly qualified or licensed and in good standing that
could not reasonably be expected to have a Company Material Adverse Effect. A
true, complete and correct list of all of the Company's Subsidiaries, together
with the jurisdiction of incorporation of each Subsidiary, the authorized
capitalization of each Subsidiary, and the percentage of each Subsidiary's
outstanding capital stock owned by the Company or another Subsidiary or
affiliate of the Company (excluding nominal qualifying directors' share
ownership information relating to the Company's Subsidiaries), is set forth in
Section 3.1 of the Disclosure Schedule. The Company does not directly or
indirectly own any equity or similar interest in, or any interest convertible
into or exchangeable or exercisable for any equity or similar interest in, any
corporation, partnership, limited liability company, joint venture or other
business association or entity, excluding securities in any publicly traded
company held for investment by the Company and comprising less than one percent
of the outstanding stock of such company.
Section 3.2 Certificate of Incorporation and By-Laws. The Company has
heretofore made available to Parent a true, complete and correct copy of its
Amended and Restated Certificate of Incorporation, as amended to date (the
"Company Charter"), and Amended and Restated By-Laws, as amended to date (the
"Company By-Laws"), and has furnished to Parent true, complete and correct
copies of the charter and By-Laws (or equivalent organizational documents), each
as amended to date, of each of its Subsidiaries (the "Subsidiary Documents").
The Company Charter, Company By-Laws and the Subsidiary Documents are in full
force and effect. The Company is not in violation of any of the provisions of
the Company Charter or Company By-Laws and the Company's Subsidiaries are not in
violation of any of the provisions of their respective Subsidiary Documents.
Section 3.3 Capitalization.
(a) The authorized capital stock of the Company consists of
100,000,000 shares of Company Common Stock, and 5,000,000 shares of preferred
stock, par value, $.001 per share (the "Preferred Stock"). As of September 30,
2003, (i) 50,140,921 shares of Company Common Stock are issued and outstanding;
(ii) 4,505,866 shares of Company Common Stock are reserved for issuance upon
exercise of options granted pursuant to the Company's 1993 Equity Incentive Plan
(the "1993 Plan"); (iii) 473,330 shares of Company Common Stock are reserved for
issuance upon exercise of options granted pursuant to the Company's 1995
Non-Employee Director's Stock Option Plan (the "Directors Plan"); (iv)
14,767,653 shares of the Company Common Stock are reserved for issuance upon
exercise of options granted pursuant to the Company's 1996 Non-Officer Equity
Incentive Plan (the "1996 Plan"); (v) 31,136 shares of the Company Common Stock
are reserved for issuance upon exercise of options granted pursuant to the
Company's 1996 Relevance Technologies Inc. Stock Plan (the "Relevance Plan");
(vi) 799,526 shares of Company Common Stock are reserved for issuance upon
exercise of options granted pursuant to the Company's 1996 eRoom Technology,
Inc. Stock Plan (the "eRoom Plan"); (vii) 2,419,148 shares of Company Common
Stock are reserved for issuance upon exercise of options granted pursuant to the
Company's Employee Stock Purchase Plan (the "ESPP"
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and, together with the 1993 Plan, the 1995 Plan, the 1996 Plan, the Relevance
Plan and the eRoom Plan, the "Company Stock Plans"); (viii) no shares of Company
Common Stock are issued and held in the treasury of the Company; and (ix) no
shares of Preferred Stock are issued and outstanding. Between June 30, 2003 and
the date of this Agreement, the Company has not issued any securities (including
derivative securities) except for shares of Company Common Stock issued upon
exercise of stock options outstanding or purchase rights under the ESPP prior to
June 30, 2003.
(b) Section 3.3(b) of the Disclosure Schedule sets forth a
true, complete and correct list of all persons who, as of October 9, 2003 held
outstanding options to purchase shares of Company Common Stock (the "Company
Stock Options") under the Company Stock Plans other than the ESPP, indicating,
with respect to each Company Stock Option then outstanding, the number of shares
of Company Common Stock subject to such Company Stock Option, the relationship
of the holder of such Company Stock Option to the Company, and the exercise
price, date of grant, vesting schedule and expiration date thereof, including
the extent to which any vesting had occurred as of the date of this Agreement
and whether (and to what extent) the vesting of such Company Stock Option will
be accelerated in any way by the consummation of the transactions contemplated
by this Agreement or by the termination of employment or engagement or change in
position of any holder thereof following or in connection with the consummation
of the Merger. The Company has made available to Parent true, complete and
correct copies of all Company Stock Plans and the forms of all stock option
agreements evidencing outstanding Company Stock Options. No consent of any
holder of Company Stock Options is required in connection with the assumption
thereof by Parent in accordance with the provisions of Section 6.10.
(c) Except as described in Section 3.3(a) of this Agreement or
as set forth in Section 3.3(b) of the Disclosure Schedule, no capital stock of
the Company or any of its Subsidiaries or any security convertible or
exchangeable into or exercisable for such capital stock, is issued, reserved for
issuance or outstanding as of the date of this Agreement. Except as described in
Section 3.3(a) of this Agreement or as set forth in Section 3.3(b) of the
Disclosure Schedule, there are no options, preemptive rights, warrants, calls,
rights, commitments, agreements, arrangements or understandings of any kind to
which the Company or any of its Subsidiaries is a party, or by which the Company
or any of its Subsidiaries is bound, obligating the Company or any of its
Subsidiaries to issue, deliver or sell, or cause to be issued, delivered or
sold, additional shares of capital stock of the Company or any of its
Subsidiaries or obligating the Company or any of its Subsidiaries to grant,
extend or accelerate the vesting of or enter into any such option, warrant,
call, right, commitment, agreement, arrangement or understanding. There are no
stockholder agreements, voting trusts, proxies or other similar agreements,
arrangements or understandings to which the Company or any of its Subsidiaries
is a party, or by which it or they are bound, obligating the Company or any of
its Subsidiaries with respect to any shares of capital stock of the Company or
any of its Subsidiaries. There are no rights or obligations, contingent or
otherwise (including rights of first refusal in favor of the Company), of the
Company or any of its Subsidiaries, to repurchase, redeem or otherwise acquire
any shares of capital stock of the Company or any of its Subsidiaries or to
provide funds to or make any investment (in the form of a loan, capital
contribution or otherwise) in
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any such Subsidiary or any other entity. There are no registration rights or
other agreements, arrangements or understandings to which the Company or any of
its Subsidiaries is a party, or by which it or they are bound, obligating the
Company or any of its Subsidiaries with respect to any shares of Company Common
Stock or shares of capital stock of any such Subsidiary.
(d) All outstanding shares of the Company's capital stock are,
and all shares of Company Common Stock reserved for issuance as specified above
shall be, upon issuance on the terms and conditions specified in the instruments
pursuant to which they are issuable, duly authorized, validly issued, fully paid
and nonassessable and not subject to or issued in violation of any purchase
option, call option, right of first refusal, pre-emptive right, subscription
right or any similar right under any provision of the GCL, the Company Charter
or the Company By-Laws or any agreement to which the Company is a party or
otherwise bound. None of the outstanding shares of the Company's capital stock
have been issued in violation of any federal or state securities laws. No
material change in the Company's capitalization has occurred since December 31,
2002. All of the outstanding shares of capital stock of each of the Company's
Subsidiaries are duly authorized, validly issued, fully paid and nonassessable,
and all such shares (other than directors' qualifying shares in the case of
foreign Subsidiaries) are owned by the Company or a Subsidiary of the Company
free and clear of all security interests, liens, claims, pledges, agreements,
limitations in voting rights, charges or other encumbrances of any nature
whatsoever (collectively, "Liens"). There are no accrued and unpaid dividends
with respect to any outstanding shares of capital stock of the Company or any of
its Subsidiaries.
(e) The Company Common Stock constitutes the only class of
securities of the Company or its Subsidiaries registered or required to be
registered under the Securities Exchange Act of 1934, as amended (the "Exchange
Act").
Section 3.4 Authority Relative to this Agreement. Subject only to the
approval of the Company's stockholders as described below, the Company has all
necessary corporate power and authority to execute and deliver this Agreement
and each instrument required hereby to be executed and delivered by it at the
Closing and to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution and delivery by the Company of
this Agreement and each instrument required hereby to be executed and delivered
at the Closing by the Company and the consummation by the Company of the
transactions contemplated hereby have been duly and validly authorized by all
necessary corporate action on the part of the Company, subject only to the
approval of this Agreement and the Merger by the Company's stockholders by the
affirmative vote of the holders of a majority of outstanding shares of Company
Common Stock as required by the GCL and the Company Charter. This Agreement has
been duly and validly executed and delivered by the Company and, assuming the
due authorization, execution and delivery of this Agreement by Parent and Merger
Sub, constitutes the legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally and by general equitable principles
11
(regardless of whether enforceability is considered in a proceeding in equity or
at law). As of the date of this Agreement, the Board of Directors of the Company
has unanimously determined that it is fair to, advisable and in the best
interests of the Company's stockholders for the Company to enter into a business
combination with Parent upon the terms and subject to the conditions of this
Agreement, and has unanimously recommended as of the date of this Agreement that
the Company's stockholders approve and adopt this Agreement and the Merger, and
none of the aforesaid actions by the Company's Board of Directors has been
amended, rescinded or modified as of the date hereof. The action taken by the
Company's Board of Directors constitutes approval of the Merger and the other
transactions contemplated hereby by the Company's Board of Directors under the
provisions of Section 203 of the GCL such that Section 203 of the GCL does not
apply to this Agreement or the transactions contemplated hereby. The affirmative
vote of the holders of a majority of the outstanding shares of Company Common
Stock is the only vote of the holders of any class or series of the Company's
capital stock necessary to approve and adopt this Agreement and no other vote of
any holders of shares of the Company's capital stock is necessary to approve any
of the transactions contemplated hereby.
Section 3.5 Anti-Takeover Statute Not Applicable. No "business
combination," "fair price," "moratorium," "control share acquisition" or other
similar anti-takeover statute or regulation under the laws of the State of
Delaware or the State of California (each a "Takeover Statute") is applicable to
the Company, the shares of Company Common Stock, the Merger or any of the other
transactions contemplated by this Agreement.
Section 3.6 Agreements, Contracts and Commitments.
(a) Neither the Company nor any of its Subsidiaries has any
agreements, contracts or commitments which (i) require payment by the Company or
any of its Subsidiaries in excess of $250,000 or (ii) require the making of any
charitable contribution in excess of $50,000;
(b) No purchase contracts or purchase commitments of the
Company or any of its Subsidiaries have a duration in excess of the normal,
ordinary and usual requirements of the business of the Company or its
Subsidiary, as applicable;
(c) There are no outstanding sales contracts or sales
commitments of the Company or any of its Subsidiaries which have a duration in
excess of the normal, ordinary and usual practices of the business of the
Company, and there are no outstanding contracts, bids or sales or service
proposals quoting prices or terms which would not reasonably be expected to
result in a normal profit;
(d) Except for (i) nondisclosure agreements entered into in
the ordinary course; (ii) agreements for the trial, evaluation, purchase, sale,
license, distribution, maintenance or support of Company products entered into
in the ordinary course; (iii) agreements which require payment by or to the
Company or any of its Subsidiaries not in excess of $250,000; (iv) agreements
which do not provide for any term extension or
12
expansion of the rights granted with respect to the Intellectual Property owned
by the Company as a result of the Merger; or (v) real property leases, licenses
or other occupancy agreements (collectively, "Real Property Leases") for
individual properties listed in Section 3.15 of the Disclosure Schedule
comprising less than 5,000 square feet, there are no contracts or agreements of
the Company or any of its Subsidiaries which do not expire or which the Company
may not terminate within one year after the date of this Agreement or which may
be renewed at the option of any person other than the Company so as to expire
more than one year after the date of this Agreement;
(e) Except for (i) nondisclosure agreements entered into in
the ordinary course or (ii) agreements for the trial, evaluation, purchase,
sale, license, distribution, maintenance or support of Company products entered
into in the ordinary course, neither the Company nor any of its Subsidiaries has
(A) any contracts or agreements with officers, employees, agents, consultants,
advisors, salesmen, sales representatives, distributors or dealers which require
payment by or to the Company or any of its Subsidiaries in excess of $250,000
and which are not cancelable by it on notice of not longer than thirty days and
without liability, penalty or premium or (B) any contracts, agreements or
arrangements providing for the payment of any bonus or commission based on sales
or earnings, in each case where the cost to the Company will exceed $100,000;
(f) Neither the Company nor any of its Subsidiaries is in
default, nor is there any known basis for any valid claim of default, under any
contract made or obligation owed by it, except for such defaults that would not
reasonably be likely to have, in the aggregate, a Company Material Adverse
Effect;
(g) Neither the Company nor any of its Subsidiaries has any
employee to whom it is paying compensation at the annual rate of more than
$200,000;
(h) Neither the Company nor any of its Subsidiaries is
restricted by agreement from carrying on its business in any material respect
anywhere in the world by any agreement under which the Company (i) is restricted
from selling, licensing or otherwise distributing any of its technology or
products or providing services to customers or potential customers or any class
of customers, including resellers or other distributors, in any geographic area,
during any period of time, or in segment of any market or line of business; (ii)
is required to give favored pricing to any customers or potential customers or
any class of customers (that is, required to give pricing to such customers or
potential customers or classes of customers that is at least as good or better
to that offered to others) or to provide exclusive or favored access to any
product features, excluding exclusive customizations, to any customers or
potential customers or any class of customers (it being understood that
agreements to provide updates, enhancements or new versions as they become
available shall not be considered "favorable access," nor shall agreements to
provide alpha, beta or other similar restricted release versions of products);
(iii) has agreed to purchase a material minimum amount of goods or services; or
(iv) has agreed to purchase goods or services exclusively from a certain party;
13
(i) Neither the Company nor any of its Subsidiaries is under
any liability or obligation with respect to the return of inventory or
merchandise in the possession of wholesalers, distributors, resellers, retailers
or other customers, except for such obligations or liabilities that would not
reasonably be likely to have, in the aggregate, a Company Material Adverse
Effect;
(j) Neither the Company nor any of its Subsidiaries has any
debt obligation for borrowed money (other than capital leases), including
guarantees of or agreements to acquire any such debt obligation of others (other
than guarantees by the Company of obligations of its Subsidiaries);
(k) The Company and its Subsidiaries do not have contracts for
capital expenditures exceeding $1,000,000 in the aggregate;
(l) Neither the Company nor any of its Subsidiaries has any
contract, agreement or commitment currently in force relating to the disposition
or acquisition of assets not in the ordinary course of business;
(m) Neither the Company nor any of its Subsidiaries has any
contract, agreement or commitment for the purchase of any ownership interest in
any corporation, partnership, joint venture or other business enterprise;
(n) Neither the Company nor any of its Subsidiaries has any
outstanding loan (other than any loan for employee relocation or any loan not in
excess of $50,000) to any person other than to the Company or a wholly owned
Subsidiary of the Company in an amount that exceeds $50,000;
(o) Neither the Company nor any of its Subsidiaries has any
power of attorney outstanding or any material obligations or liabilities
(whether absolute, accrued, contingent or otherwise), as guarantor (other than
guarantees by the Company of obligations of its Subsidiaries), surety,
co-signer, endorser or co-maker in respect of any obligation of any person,
corporation, partnership, joint venture, association, organization or other
entity, or any capital maintenance, keep-well or similar agreements or
arrangements;
(p) Neither the Company nor any of its Subsidiaries has any
agreements, contracts or arrangements containing any provision requiring the
Company to indemnify another party (excluding indemnities contained in
agreements for the trial, evaluation, purchase, sale, distribution, maintenance,
support or license of products entered into in the ordinary course of business
consistent with past practice and in any Real Property Leases) or, other than in
the case of settlement agreements entered into prior to the date of this
Agreement with current or former officers or employees of the Company in their
individual capacity, containing any covenant not to bring legal action against
any third party;
(q) The Company has made available to Parent true, complete
and correct copies of each contract listed in Section 3.6 of the Disclosure
Schedule (collectively, the "Material Contracts"); and
14
(r) (i) Neither the Company nor any of its Subsidiaries has
breached, is in default under, or has received written notice of any breach of
or default under, any Material Contract, which breach or default remains
uncured, (ii) to the Company's knowledge, no other party to any Material
Contract has breached or is in default of any of its obligations thereunder,
which breach or default remains uncured, (iii) each Material Contract is in full
force and effect and (iv) each Material Contract is a legal, valid and binding
obligation of the Company or its Subsidiary and each of the other parties
thereto, enforceable in accordance with its terms, except that the enforcement
thereof may be limited by bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally and by general equitable principles
(regardless of whether enforceability is considered in a proceeding in equity or
at law).
Section 3.7 No Conflict; Required Filings and Consents.
(a) The execution and delivery by the Company of this
Agreement do not, the execution and delivery by the Company of any instrument
required hereby to be executed and delivered by the Company at the Closing will
not, and the performance of its agreements and obligations under this Agreement
by the Company will not, (i) conflict with or violate the Company Charter or
Company By-Laws or any Subsidiary Documents, (ii) conflict with or violate any
law, rule, regulation, order, judgment or decree applicable to the Company or
any of its Subsidiaries or by which its or any of their respective properties is
bound or affected, (iii) result in any breach of or constitute a default (or an
event that with notice or lapse of time or both would become a default), or
impair the Company's or any of its Subsidiaries' rights or alter the rights or
obligations of any third party under, or give to others any rights of
termination, amendment, payment, acceleration or cancellation of, or result in
the creation of a Lien on any of the properties or assets (including intangible
assets) of the Company or any of its Subsidiaries pursuant to, any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which the Company or any of its Subsidiaries
is a party or by which the Company or any of its Subsidiaries or its or any of
their respective properties is bound or affected, or (iv) give rise to or result
in any person having, or having the right to exercise, any pre-emptive rights,
rights of first refusal, rights to acquire or similar rights with respect to any
capital stock of the Company or any of its Subsidiaries or any of their
respective assets or properties, other than, in the case of (iii) above, such
breaches, defaults, impairments, rights of termination, amendment, acceleration
or cancellation, or Liens that would not be reasonably expected to have, in the
aggregate, a Company Material Adverse Effect.
(b) The execution and delivery by the Company of this
Agreement do not, the execution and delivery by the Company of any instrument
required hereby to be executed and delivered by the Company at the Closing will
not, and the performance of its agreements and obligations under this Agreement
by the Company will not, require any consent, approval, order, license,
authorization, registration, declaration or permit of, or filing with or
notification to, any court, arbitrational tribunal, administrative or regulatory
agency or commission or other governmental authority or instrumentality (whether
domestic or foreign, a "Governmental Entity"), except (i) as may be required by
the Xxxx-Xxxxx-Xxxxxx
15
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), (ii) as may be
required under any foreign antitrust or competition law or regulation, including
Council Regulation No. 4064/89 of the European Community, as amended (the "EC
Merger Regulation"), (iii) the filing of a Registration Statement on Form S-4
(the "Registration Statement") with the U.S. Securities and Exchange Commission
("SEC") in accordance with the Securities Act of 1933, as amended (the
"Securities Act"), and the filing of the Proxy Statement/Prospectus (as defined
in Section 3.22) with the SEC under the Exchange Act, (iv) such consents,
approvals, orders, licenses, authorizations, registrations, declarations,
permits, filings, and notifications as may be required under applicable U.S.
federal and state or foreign securities laws, (v) the filing of the Certificate
of Merger or other documents as required by the GCL and (vi) such other
consents, approvals, orders, registrations, declarations, permits, filings and
notifications which, if not obtained or made, could not reasonably be expected
to have a material adverse effect.
Section 3.8 Compliance; Permits.
(a) The Company and its Subsidiaries are and have been in
material compliance with and are not in material default or violation of (and
have not received any notice of material non-compliance, default or violation
with respect to) any law, rule, regulation, order, judgment or decree applicable
to the Company or any of its Subsidiaries or by which any of their respective
properties is bound or affected, and the Company is not aware of any such
material non-compliance, default or violation thereunder.
(b) The Company and its Subsidiaries hold all permits,
licenses, easements, variances, exemptions, consents, certificates,
authorizations, registrations, orders and other approvals from Governmental
Entities that are material to the operation of the business of the Company and
its Subsidiaries taken as a whole as currently conducted (collectively, the
"Company Permits"). The Company Permits are in full force and effect, have not
been violated in any material respect and, to the best knowledge of the Company,
no suspension, revocation or cancellation thereof has been threatened, and there
is no action, proceeding or investigation pending or, to the Company's
knowledge, threatened, seeking the suspension, revocation or cancellation of any
Company Permits. No Company Permit shall cease to be effective as a result of
the consummation of the transactions contemplated by this Agreement.
Section 3.9 SEC Filings; Financial Statements.
(a) The Company has timely filed and made available to Parent
all forms, reports, schedules, statements and other documents, including any
exhibits thereto, required to be filed by the Company with the SEC
(collectively, the "Company SEC Reports"). The Company SEC Reports, including
all forms, reports and documents filed by the Company with the SEC after the
date hereof and prior to the Effective Time, (i) were and, in the case of
Company SEC Reports filed after the date hereof, will be prepared in all
material respects in accordance with the applicable requirements of the
Securities Act and the Exchange Act, as the case may be, and the rules and
regulations thereunder, and (ii) did not at the time they were filed (or if
amended or superseded by a filing prior to the date of
16
this Agreement, then on the date of such filing), and in the case of such forms,
reports and documents filed by the Company with the SEC after the date of this
Agreement, will not as of the time they are filed, contain any untrue statement
of a material fact or omit to state a material fact required to be stated in
such Company SEC Reports or necessary in order to make the statements in such
Company SEC Reports, in light of the circumstances under which they were and
will be made, not misleading. None of the Company's Subsidiaries is required to
file any forms, reports, schedules, statements or other documents with the SEC.
(b) Each of the consolidated financial statements (including,
in each case, any related notes and schedules), contained in the Company SEC
Reports, including any Company SEC Reports filed after the date of this
Agreement, complied or will comply, as of its respective date, in all material
respects with all applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto, was or will be prepared in
accordance with U.S. generally accepted accounting principles ("GAAP") (except
as may be indicated in the notes thereto) applied on a consistent basis
throughout the periods involved and fairly presented in all material respects or
will fairly present in all material respects the consolidated financial position
of the Company and its Subsidiaries as of the respective dates thereof and the
consolidated results of its operations and cash flows for the periods indicated,
except that any unaudited interim financial statements are subject to normal and
recurring year-end adjustments which have not been and are not expected to be
material in amount, individually or in the aggregate. The unaudited balance
sheet of the Company contained in the Company SEC Report on Form 10-Q for the
fiscal quarter ended June 30, 2003 is referred to herein as the "Company Balance
Sheet."
(c) The chief executive officer and chief financial officer of
the Company have made all certifications required by, and would be able to make
such certifications as of the date hereof and as of the Closing Date as if
required to be made as of such dates pursuant to, the Xxxxxxxx-Xxxxx Act of 2002
(the "Xxxxxxxx-Xxxxx Act") and any related rules and regulations promulgated by
the SEC, and the statements contained in any such certifications are complete
and correct; and the Company is otherwise in compliance with all applicable
effective provisions of the Xxxxxxxx-Xxxxx Act and the applicable listing and
corporate governance rules of The Nasdaq National Market.
Section 3.10 Absence of Certain Changes or Events. Since the date of
the Company Balance Sheet, the Company has conducted its business in the
ordinary course consistent with past practice and, since such date, there has
not occurred: (i) any change, development, event or other circumstance,
situation or state of affairs that has had or would reasonably be expected to
have a Company Material Adverse Effect; (ii) any amendments to or changes in the
Company Charter or Company By-Laws; (iii) any damage to, destruction or loss of
any asset of the Company or any of its Subsidiaries (whether or not covered by
insurance) that could reasonably be expected to have a Company Material Adverse
Effect; (iv) any change by the Company in its accounting methods, principles or
practices; (v) any revaluation by the Company of any of its assets, including
writing down the value of inventory or writing off notes or accounts receivable
other than in the ordinary course of business consistent with past practice, in
terms of both frequency and amount, and in any event in excess of $100,000; (vi)
any sale of a material amount of assets (tangible or
17
intangible) of the Company; or (vii) any other action or event that would have
required the consent of Parent pursuant to Section 5.1 had such action or event
occurred after the date of this Agreement.
Section 3.11 No Undisclosed Liabilities.
(a) Except as reflected in the Company Balance Sheet, neither
the Company nor any of its Subsidiaries has any liabilities (absolute, accrued,
contingent or otherwise) which are required by GAAP to be set forth on a
consolidated balance sheet of the Company and its consolidated subsidiaries or
in the notes thereto, other than (i) any liabilities and obligations incurred
since June 30, 2003 in the ordinary course of business consistent with past
practice, (ii) any liabilities or obligations incurred in connection with the
transactions contemplated by this Agreement and (iii) liabilities that,
individually and in the aggregate, have not had, and would not reasonably be
expected to have, a Company Material Adverse Effect.
(b) Neither the Company nor any of its Subsidiaries is a party
to, or has any commitment to become a party to, any joint venture, partnership
agreement or any similar contract (including any contract relating to any
transaction, arrangement or relationship between or among the Company or any of
its Subsidiaries, on the one hand, and any unconsolidated affiliate, including
any structured finance, special purpose or limited purpose entity or person, on
the other hand) where the purpose or intended effect of such arrangement is to
avoid disclosure of any material transaction involving the Company or any of its
Subsidiaries in the Company's consolidated financial statements.
(c) Neither the Company nor any of its Subsidiaries is a party
to, or has any commitment to become a party to, any tax shelter arrangement as
described in Internal Revenue Service final regulations (T.D. 9046).
Section 3.12 Absence of Litigation; Investigations. Except as
disclosed in the Company SEC Reports filed and publicly available on the SEC's
XXXXX database prior to the date of this Agreement (the "Filed Company SEC
Documents"), there are no claims, actions, suits, proceedings or, to the
knowledge of the Company, governmental investigations, inquiries or subpoenas
(other than any actions, suits, proceedings, investigations, inquiries or
subpoenas challenging or otherwise arising from or relating to the Merger or any
of the other transactions contemplated by this Agreement) (a) pending against
the Company or any of its Subsidiaries or any properties or assets of the
Company or of any of its Subsidiaries or (b) to the knowledge of the Company,
threatened against the Company or any of its Subsidiaries, or any properties or
assets of the Company or of any of its Subsidiaries, or (c) whether filed or
threatened, that have been settled or compromised by the Company or any
Subsidiary within the three years prior to the date of this Agreement and at the
time of such settlement or compromise were material, other than in the case of
(a) through (c) above, such claims, actions, suits, proceedings, investigations,
inquiries or subpoenas that would not be reasonably likely to have, in the
aggregate, a Company Material Adverse Effect. Neither the Company nor any
Subsidiary of the Company is subject to any outstanding order, writ, injunction
or decree that would reasonably be expected to be
18
material or would reasonably be expected to prevent or delay the consummation of
the transactions contemplated by this Agreement. There has not been since
January 1, 2000 nor are there currently any internal investigations or inquiries
being conducted by the Company, its Board of Directors (or any committee
thereof) or any third party at the request of any of the foregoing concerning
any financial, accounting, tax, conflict of interest, self-dealing, fraudulent
or deceptive conduct or other misfeasance or malfeasance issues.
Section 3.13 Employee Benefit Plans, Options and Employment
Agreements.
(a) Section 3.13(a) of the Disclosure Schedule sets forth a
complete and accurate list of all Employee Benefit Plans maintained, or
contributed to, by the Company, any of the Company's Subsidiaries or any of
their ERISA Affiliates or to which the Company, any of the Company's
Subsidiaries or any of their respective ERISA Affiliates is obligated to
contribute, or under which any of them has or may have any liability for
premiums or benefits (collectively, the "Company Employee Plans"). For purposes
of this Agreement, the following terms shall have the following meanings: (i)
"Employee Benefit Plan" means any "employee pension benefit plan" (as defined in
Section 3(2) of ERISA), any "employee welfare benefit plan" (as defined in
Section 3(1) of ERISA), and any other written or oral plan, agreement or
arrangement involving material compensation, including insurance coverage,
severance benefits, disability benefits, deferred compensation, bonuses, stock
options, stock purchase, phantom stock, stock appreciation or other forms of
fringe benefits, perquisites, incentive compensation or post-retirement
compensation and all employment, change in control, severance or similar
agreements, written or otherwise, for the benefit of, or relating to, any
current or former employee, officer or director of the Company or any of its
Subsidiaries or any ERISA Affiliate; (ii) "ERISA" means the Employee Retirement
Income Security Act of 1974, as amended; and (iii) "ERISA Affiliate" means any
entity which is, or at any applicable time was, a member of (A) a controlled
group of corporations (as defined in Section 414(b) of the Code), (B) a group of
trades or businesses under common control (as defined in Section 414(c) of the
Code) or (C) an affiliated service group (as defined under Section 414(m) of the
Code or the regulations under Section 414(o) of the Code), any of which includes
or included the Company or a Subsidiary.
(b) With respect to each Company Employee Plan, the Company
has made available to Parent complete and accurate copies of (i) such Company
Employee Plan (or a written summary of any unwritten plan) together with all
amendments, (ii) in the case of any plan for which Forms 5500 are required to be
filed, the most recent annual report (Form 5500) with schedules attached, (iii)
in the case of any plan that is intended to be qualified under Section 401(a) of
the Code, the most recent determination letter from the IRS, (iv) each trust
agreement, group annuity contract, administration and similar material
agreements, investment management or investment advisory agreements, (v) the
most recent summary plan descriptions and employee handbook, or other similar
material employee communications, (vi) all personnel, payroll and employment
manuals and policies, and (vii) the most recent financial statements for each
Company Employee Plan that is funded.
19
(c) Each Company Employee Plan has been administered in all
material respects in accordance with ERISA, the Code and all other applicable
laws and the regulations thereunder and materially in accordance with its terms
and each of the Company, the Company's Subsidiaries and their ERISA Affiliates
have in all material respects met their obligations with respect to each Company
Employee Plan and have timely made (or timely will make) all required
contributions thereto. All material filings and reports as to each Company
Employee Plan required to have been submitted to the Internal Revenue Service or
to the United States Department of Labor have been timely submitted. With
respect to the Company Employee Plans, no event has occurred, and, to the
knowledge of the Company, there exists no condition or set of circumstances in
connection with which Parent, the Company or any of its Subsidiaries or any plan
participant could be subject to any material liability (including penalties or
taxes) under ERISA, the Code or any other applicable law, nor will the
negotiation or consummation of the transactions contemplated by this Agreement
give rise to any such material liability.
(d) With respect to the Company Employee Plans, there are no
material benefit obligations for which contributions have not been made or
properly accrued and there are no benefit obligations which have not been
accounted for by reserves, or otherwise properly footnoted in accordance with
the requirements of GAAP, on the financial statements of the Company. The assets
of each Company Employee Plan which is funded are reported at their fair market
value on the books and records of such Employee Benefit Plan.
(e) No Company Employee Plan has assets that include
securities issued by the Company, any of the Company's Subsidiaries or any of
their ERISA Affiliates.
(f) All the Company Employee Plans that are intended to be
qualified under Section 401(a) of the Code (each, a "Qualified Plan") have
received determination, opinion or advisory letters from the Internal Revenue
Service to the effect that such Company Employee Plans are qualified and the
plans and trusts related thereto are exempt from federal income taxes under
Sections 401(a) and 501(a), respectively, of the Code, or the Company has
remaining a period of time under applicable U.S. Department of the Treasury
regulations or IRS pronouncements in which to apply for such a letter and to
make any amendments necessary to obtain a favorable determination as to the
qualified status of each such Qualified Plan. To the Company's knowledge, no
such determination, opinion or advisory letter has been revoked and revocation
has not been threatened, and no such Employee Benefit Plan has been amended or
operated since the date of its most recent determination letter or application
therefor in any respect, and no act or omission has occurred, that would
adversely affect its qualification or materially increase its cost. There has
been no termination, partial termination or discontinuance of contributions to
any Qualified Plan that will result in material liability to the Company. Each
Company Employee Plan which is required to satisfy Section 401(k)(3) or Section
401(m)(2) of the Code has been tested for compliance with, and satisfies in all
material respects the requirements of Section 401(k)(3) and Section 401(m)(2) of
the Code, as the case may be, for each plan year ending prior to the Closing
Date for which testing is required to be completed.
20
(g) Neither the Company, any of the Company's Subsidiaries nor
any of their ERISA Affiliates has (i) ever maintained a Company Employee Plan
which was ever subject to Section 412 of the Code or Title IV of ERISA or (ii)
ever been obligated to contribute to a "multiemployer plan" (as defined in
Section 4001(a)(3) of ERISA). No Company Employee Plan is funded by, associated
with or related to a "voluntary employees' beneficiary association" within the
meaning of Section 501(c)(9) of the Code.
(h) To the extent permitted by applicable law, each Company
Employee Plan (other than the Company Stock Plans or an employment, severance,
change in control or similar agreement with an individual) is amendable and
terminable unilaterally by the Company and any of the Company's Subsidiaries
party thereto or covered thereby at any time without material liability to the
Company or any of its Subsidiaries as a result thereof, other than for benefits
accrued as of the date of such amendment or termination and routine
administrative costs.
(i) Other than as required under Section 601 et seq. of ERISA,
none of the Company Employee Plans promises or provides health or other welfare
benefits (excluding normal claims for benefits under the Company's group life
insurance, accidental death and dismemberment insurance and disability plans and
policies) or coverage to any person following retirement or other termination of
employment. Section 3.13(i) of the Disclosure Schedule lists each Company
Employee Plan which provides benefits after termination of employment (other
than medical benefits required to be continued under Section 4980B of the Code
and part 6 of Subtitle B of Title I of ERISA) and the amount, if any, by which
the present value of benefits accrued under each such Company Employee Plan
exceeds the fair market value of the assets of each such Company Employee Plan.
(j) There is no action, suit, proceeding, claim, arbitration,
audit or investigation pending or, to the knowledge of the Company, threatened,
with respect to any Company Employee Plan, other than claims for benefits in the
ordinary course. No Company Employee Plan is or within the last three calendar
years has been the subject of, or has received notice that it is the subject of,
examination by a government agency or a participant in a government sponsored
amnesty, voluntary compliance or similar program.
(k) To the knowledge of the Company, each individual who has
received compensation for the performance of services on behalf of the Company,
any of the Company's Subsidiaries or its ERISA Affiliates has been properly
classified as an employee or independent contractor in accordance with
applicable law.
(l) Each Company Employee Plan maintained or covering
employees outside the United States, and the books and records thereof, is in
material compliance with all applicable laws, rules and regulations of each
applicable jurisdiction. Section 3.13(l) of the Disclosure Schedule lists each
country in which the Company or any of its affiliates has operations and the
number of employees in each such country.
(m) Section 3.13(m) of the Disclosure Schedule sets forth a
true, complete and correct list of (i) all employment agreements with employees
of the Company
21
or any of its Subsidiaries obligating (or potentially obligating) the Company or
any of its Subsidiaries to make annual cash payments in an amount equal to or
exceeding $50,000; (ii) all employees of the Company or any of its Subsidiaries
who have executed a non-competition agreement with the Company or any of its
Subsidiaries; (iii) all severance agreements, programs and policies of the
Company or any of its Subsidiaries with or relating to its employees, in each
case with potential obligations equal to or exceeding $50,000, excluding
programs and policies required to be maintained by law; and (iv) all plans,
programs, agreements and other arrangements of the Company or any of its
Subsidiaries pursuant to which payments (or acceleration of benefits or vesting
of options or lapse of repurchase rights) may be required upon, or may become
payable directly or indirectly as a result of or in connection with, the
negotiation or consummation of the transactions contemplated by, or the
execution of, this Agreement. True, complete and correct copies of each of the
foregoing agreements to which any employee of the Company is a party have been
made available to Parent.
(n) All contributions required to be made with respect to any
Company Employee Plan on or prior to the Effective Time have been or will be
timely made or are reflected on the Company's balance sheet. There are no
pending, threatened or reasonably anticipated claims by or on behalf of any
Plan, by any employee or beneficiary covered under any such Company Employee
Plan, or otherwise involving any such Plan (other than routine claims for
benefits).
(o) The negotiation or consummation of the transactions
contemplated by this Agreement will not, either alone or in combination with
another event, (i) entitle any current or former employee or officer of the
Company or any Subsidiary of the Company to severance pay, or any other payment
from the Company or any of its Subsidiaries or (ii) accelerate the time of
payment or vesting, a lapse of repurchase rights or increase the amount of
compensation due any such employee or officer. There is no Company Employee Plan
or other contract, agreement, plan or arrangement that, individually or
collectively, could give rise to the payment of any amount that would not be
deductible pursuant to Sections 280G (determined without regard to Section
280G(b)(4) of the Code) or 162(m) of the Code.
Section 3.14 Labor Matters. (a) The Company and each of its
Subsidiaries are in compliance in all material respects with all applicable laws
respecting employment, employment practices and occupational safety and health,
terms and conditions of employment and wages and hours, and are not engaged in
any unfair labor practices; (b) there are no actions, suits, claims or
grievances pending or, to the knowledge of the Company or any of its
Subsidiaries, threatened, between the Company or any of its Subsidiaries and any
of their respective employees, consultants or independent contractors, which
actions, suits, claims or grievances have or would reasonably be expected to
have a Company Material Adverse Effect; (c) neither the Company nor any of its
Subsidiaries is a party to any collective bargaining agreement or other labor
union contract applicable to persons employed by the Company or its
Subsidiaries, nor does the Company or any of its Subsidiaries know of any
activities or proceedings of any labor union to organize any such employees; and
(d) to the knowledge of the Company, there are no labor disputes, strikes,
22
slowdowns, work stoppages, lockouts, or threats thereof, by or with respect to
any employees of, or consultants or independent contractors to, the Company or
any of its Subsidiaries. No employee of the Company or any of its Subsidiaries
(i) to the Company's knowledge is in violation of any term of any patent
disclosure agreement, non-competition agreement, or any restrictive covenant to
a former employer relating to the right of any such employee to be employed by
the Company or any of its Subsidiaries because of the nature of the business
conducted or presently proposed to be conducted by the Company or any of its
Subsidiaries or to the use of trade secrets or proprietary information of
others, or (ii) in the case of any key employee or group of key employees, has
given notice as of the date of this Agreement to the Company or any of its
Subsidiaries that such employee or any employee in a group of key employees
intends to terminate his or her employment with the Company. Neither the Company
nor any of its Subsidiaries has any material liability for (i) a plant closing,
as defined in the Worker Adjustment and Retaining Notification Act of 1988, as
amended ( the "WARN Act"), or (ii) a mass layoff, as defined in the WARN Act.
Neither the Company nor any of its Subsidiaries is currently engaged in any
layoffs or employment terminations sufficient in number to trigger application
of any similar state, local or foreign law.
Section 3.15 Properties; Encumbrances. Each of the Company and each
of its Subsidiaries has good and valid title to, or a valid leasehold interest
in, all the properties and assets which it purports to own or lease (real,
tangible, personal and mixed), including all the properties and assets reflected
in the Company Balance Sheet (except for personal property sold since the date
of the Company Balance Sheet in the ordinary course of business consistent with
past practice). All properties and assets reflected in the Company Balance Sheet
are free and clear of all Liens, except for Liens reflected on the Company
Balance Sheet and Liens for current taxes not yet due and other Liens that do
not materially detract from the value or impair the use of the property or
assets subject thereto. Section 3.15 of the Disclosure Schedule sets forth a
true, complete and correct list of all real property owned, leased, subleased or
licensed by the Company and the location of such premises. Each of the Company
and each of its Subsidiaries is and has been in material compliance with the
provisions of each lease or sublease for the real property which is set forth in
Section 3.15 of the Disclosure Schedule.
Section 3.16 Taxes.
(a) For purposes of this Agreement, "Tax" or "Taxes" shall
mean taxes, fees, assessments, liabilities, levies, duties, tariffs, imposts and
governmental impositions or charges of any kind in the nature of (or similar to)
taxes, payable to any federal, state, local or foreign taxing authority, or any
agency or subdivision thereof, including (i) income, franchise, profits, gross
receipts, ad valorem, net worth, value added, sales, use, service, real or
personal property, special assessments, capital stock, license, payroll,
withholding, employment, social security, workers' compensation, unemployment
compensation, utility, severance, production, excise, stamp, occupation,
premiums, windfall profits, transfer and gains taxes, and (ii) interest,
penalties, fines, additional taxes and additions to tax imposed with respect
thereto; and "Tax Returns" shall mean returns, reports and information
statements with respect to Taxes required to be filed with a taxing authority,
23
domestic or foreign, including, consolidated, combined or unitary tax returns
and any amendments to any of the foregoing.
(b) The Company and each of its Subsidiaries have filed with
the appropriate taxing authorities all Tax Returns required to be filed by them,
except to the extent that the failure to file would not reasonably be likely to
have, in the aggregate, a Company Material Adverse Effect, and all such Tax
Returns were true, complete and correct. All Taxes shown to be due on such Tax
Returns have been timely paid. There are no Tax Liens on any assets of the
Company or any Subsidiary thereof other than liens relating to Taxes not yet due
and payable. Neither the Company nor any of its Subsidiaries has granted any
outstanding waiver of any statute of limitations with respect to, or any
outstanding extension of a period for the assessment of, any Tax. The accruals
and reserves for Taxes (exclusive of any accruals for "deferred taxes" or
similar items that reflect timing differences between tax and financial
accounting principles) reflected in the Company Balance Sheet are adequate to
cover all Taxes accruable through the date thereof (including interest and
penalties, if any, thereon and Taxes being contested) in accordance with GAAP
applied on a consistent basis with the Company Balance Sheet. All liabilities
for Taxes attributable to the period commencing on the date following the date
of the Company Balance Sheet were incurred in the ordinary course of business
and are consistent in type and amount with Taxes attributable to similar prior
periods.
(c) The Company and each of its Subsidiaries have timely
withheld with respect to its employees all federal and state Taxes required to
be withheld, except to the extent that the failure to withhold would not
reasonably be likely to have, in the aggregate, a Company Material Adverse
Effect. Neither the Company nor any of its Subsidiaries has received any written
notice of any Tax deficiency outstanding, proposed or assessed against the
Company or any of its Subsidiaries. Neither the Company nor any of its
Subsidiaries has received any written notice of any audit examination,
deficiency, refund litigation, proposed adjustment or matter in controversy with
respect to any Tax Return of the Company or any of its Subsidiaries. Neither the
Company nor any of its Subsidiaries has filed any consent under Section 341(f)
of the Code or agreed to have Section 341(f)(2) of the Code apply to any
disposition of a subsection (f) asset (as defined in Section 341(f)(4) of the
Code) owned by the Company. Neither the Company nor any of its Subsidiaries is a
party to or bound by any tax indemnity, tax sharing or tax allocation agreements
with any entity not included in the Company's consolidated financial statements
most recently filed by the Company with the SEC. Except for the group of which
the Company and its Subsidiaries are now currently members, neither the Company
nor any of its Subsidiaries has ever been a member of an affiliated group of
corporations within the meaning of Section 1504 of the Code. Neither the Company
nor any of its Subsidiaries is liable for the Taxes of any person under Treasury
Regulation 1.1502-6 (or any similar provision of state, local or foreign law) as
a transferee or successor, by contract or otherwise.
(d) The Company made available to Parent (i) complete and
correct copies of all income Tax Returns, examination reports and statements of
deficiencies assessed against or agreed to by the Company or any of its
Subsidiaries with respect to all taxable years for which the statutes of
limitation have not expired.
24
(e) None of the assets of the Company or any of its
Subsidiaries: (i) is property that is required to be treated as being owned by
any other person pursuant to the provisions of former Section 168(f)(8) of the
Code; (ii) is "tax-exempt use of property" within the meaning of Section 168(h)
of the Code; or (iii) directly or indirectly secures any debt the interest on
which is tax exempt under Section 103(a) of the Code.
(f) Neither the Company nor any of its Subsidiaries has agreed
nor is it required to make any material adjustment under Section 481 of the Code
by reason of a change in accounting method or otherwise prior to the Effective
Time.
(g) Neither the Company nor any of its Subsidiaries is, or has
been, a United States real property holding corporation (as defined in Section
897(c)(2) of the Code) during the applicable period specified in Section
897(c)(1)(A)(ii) of the Code.
(h) Neither the Company nor any of its Subsidiaries has
constituted either a "distributing corporation" or a "controlled corporation"
(within the meaning of Section 355(a)(1)(A) of the Code) in a distribution of
stock qualifying for tax-free treatment under Section 355 of the Code (A) in the
two years prior to the date of this Agreement or (B) in a distribution which
could otherwise constitute part of a "plan" or "series of related transactions"
(within the meaning of Section 355(e) of the Code) in connection with the
Merger.
(i) Neither the Company nor any of its Subsidiaries has taken
any action or knows of any fact, agreement, plan or other circumstance that is
reasonably likely to prevent the Merger as qualifying as a "reorganization"
within the meaning of Section 368(a) of the Code.
Section 3.17 Environmental Matters.
(a) Except as set forth in Section 3.17 of the Disclosure
Schedule (i) the Company and its Subsidiaries are and have been in material
compliance with all Environmental Laws (as defined below); (ii) there has been
no release or threatened release of any pollutant, contaminant or toxic or
hazardous material, substance or waste, or petroleum or any fraction thereof
(each a "Hazardous Substance") on, upon, into or from any site currently or
heretofore owned, leased or otherwise used by the Company or its Subsidiaries,
except for such releases that would not reasonably be likely to have, in the
aggregate, a Company Material Adverse Effect; (iii) there have been no Hazardous
Substances generated by the Company or its Subsidiaries that have been disposed
of or come to rest at any site that has been included in any published U.S.
federal, state or local "superfund" site list or any other similar list of
hazardous or toxic waste sites published by any Governmental Entity within or
outside the United States, except as would not reasonably be likely to have, in
the aggregate, a Company Material Adverse Effect; and (iv) there are no
underground storage tanks located on, no polychlorinated biphenyls ("PCBs") or
PCB-containing equipment used or stored on, and no hazardous waste as defined by
the Resource Conservation and Recovery Act, as amended, stored on, any site
owned or operated by the Company or its Subsidiaries, except for the storage of
hazardous waste in compliance with
25
Environmental Law and except for such storage that would not reasonably be
likely to have, in the aggregate, a Company Material Adverse Effect. The Company
and its Subsidiaries have made available to Parent true and correct copies of
all material environmental records, reports, notifications, certificates of
need, permits, pending permit applications, correspondence, engineering studies,
and environmental studies or assessments relating to the business of the Company
and its Subsidiaries or any of their respective properties and assets.
(b) For purposes of this Section 3.17, "Environmental Laws"
means any law, regulation, or other applicable requirement (whether domestic or
foreign) relating to (i) releases or threatened release of any Hazardous
Substance; (ii) pollution or protection of employee health or safety, public
health or the environment; or (iii) the manufacture, handling, transport, use,
treatment, storage, or disposal of any Hazardous Substance.
Section 3.18 Intellectual Property.
(a) Section 3.18(a)(i) of the Disclosure Schedule sets forth
as of the date hereof a true, complete and correct list of all U.S. and foreign
(i) patents and pending patent applications owned by the Company or any of its
Subsidiaries as of the date of this Agreement; (ii) trademark registrations
(including internet domain registrations) and pending trademark applications
owned by the Company or any of its Subsidiaries as of the date of this
Agreement; and (iii) copyright registrations and pending copyright applications
owned by the Company or any of its Subsidiaries as of the date of this Agreement
(collectively the "Registered Intellectual Property"). All of the Registered
Intellectual Property is owned solely by the Company or one of its Subsidiaries.
(b) The Company or one or more of its Subsidiaries owns, or
has a valid right to use all of the Intellectual Property (as defined below)
that is used in the business of the Company and its Subsidiaries as currently
conducted.
(c) The Registered Intellectual Property that is used in the
business of the Company or any of its Subsidiaries as currently conducted, is,
to the Company's knowledge, subsisting (except with respect to applications),
and has not expired or been cancelled, or abandoned.
(d) There is no pending or, to the Company's knowledge,
threatened (and at no time within the two years prior to the date of this
Agreement has there been pending any) material suit, arbitration or other
adversarial proceeding before any court, government agency or arbitral tribunal
or in any jurisdiction alleging that any activities or conduct of the Company's
or any of its Subsidiaries' business infringes or will infringe upon, violate or
constitute the unauthorized use of the intellectual property rights of any third
party or challenging the ownership, validity, enforceability or registerability
of any Intellectual Property owned by the Company or any of its Subsidiaries.
The Company is not party to any settlements, covenants not to xxx, consents,
decrees, stipulations, judgments, or orders resulting from suits, actions or
similar legal proceedings which (i) materially restrict the Company's or any of
its Subsidiaries' rights to use any Intellectual Property owned by and
26
material to the business of the Company or any of its Subsidiaries as currently
conducted, (ii) materially restrict the conduct of the business of the Company
or any of its Subsidiaries as currently conducted in order to accommodate any
third party's intellectual property rights, or (iii) permit third parties to use
any Intellectual Property owned by and material to the business of the Company
or any of its Subsidiaries as currently conducted.
(e) The conduct of the business of the Company and its
Subsidiaries as currently conducted does not infringe upon any intellectual
property rights owned by any third party. The Company and its Subsidiaries have
taken reasonable measures to protect the proprietary nature of the Intellectual
Property owned by the Company or such Subsidiary that is material to the
business of the Company and its Subsidiaries as currently conducted (other than
trade secrets with respect to which the Company knowingly made a reasonable
judgment to not keep such trade secrets confidential and other than intellectual
property rights that the Company knowingly made a reasonable judgment not to
seek to secure registration of the applicable rights). To the Company's
knowledge, no third party is misappropriating, infringing, diluting or violating
any intellectual property owned by the Company or any of its Subsidiaries that
is material to the business of the Company and its Subsidiaries as currently
conducted, and no intellectual property misappropriation, infringement dilution
or violation suits, arbitrations or other adversarial proceedings have been
brought before any court, government agency or arbitral tribunal against any
third party by the Company or any of its Subsidiaries which remain unresolved.
(f) The Company and each of its operating Subsidiaries has,
and uses reasonable efforts to enforce, a policy of requiring each relevant
employee who participates in the development of Intellectual Property to execute
a confidentiality and assignment of proprietary rights agreement substantially
in the Company's standard form as set forth in Section 3.18(f) of the Disclosure
Schedule, and, except (i) as may be made under nondisclosure agreements or other
agreements containing nondisclosure obligations, and (ii) for confidential
information or trade secrets that the Company knowingly made a reasonable
judgment not to keep such confidential information and trade secrets
confidential, there has been no disclosure to any third party by the Company or
any of its Subsidiaries of material confidential information or material trade
secrets of the Company or any of its Subsidiaries related to any material
proprietary product currently being marketed, sold, licensed or developed by the
Company or any of its Subsidiaries (each such product owned by the Company or
its Subsidiaries, a "Proprietary Product"). All employees of the Company and its
Subsidiaries who have made material contributions to the development of any
Proprietary Product (including all employees who have designed, written, tested
or worked on any software code contained in any Proprietary Product) have signed
confidentiality and assignment of proprietary rights agreements substantially in
one of the forms attached to Section 3.18(b) of the Disclosure Schedule. All
consultants and independent contractors who have made material contributions to
the development of any Proprietary Product (including all consultants and
independent contractors who have designed, written, tested or worked on any
software code contained in any Proprietary Product) have assigned to the Company
or one or more of its Subsidiaries (or a third party that has assigned its
rights in such Proprietary Product to the Company or one or more of its
Subsidiaries) all of their right, title and interest (other than moral rights,
if any) in and to the portions of such Proprietary
27
Product developed by them in the course of their work for the Company or one or
more of its Subsidiaries (or applicable third party). Assignments of the patents
and patent applications listed in Section 3.18(a) of the Disclosure Schedule to
the Company or one or more of its Subsidiaries have been duly executed and filed
with the United States Patent and Trademark Office.
(g) Neither the Company nor any of its Subsidiaries has (i)
granted or is obligated to grant access to any of its source code contained in
any Proprietary Product, (ii) made its source code contained in any Proprietary
Product subject to any open source license, or (iii) licensed or has the right
to obtain any source code, object code or any open license of any third party
contained in any Proprietary Product (including in any such case any conditional
right to access or under which the Company has established any escrow
arrangement for the storage and conditional release of any source code, object
code or open license).
(h) None of the Proprietary Products contains any third party
software code that is, in whole or in part, subject to the provisions of any
open source or quasi-open source license agreement under which the Company or
any of its Subsidiaries is obligated to make the source code for such
Proprietary Product generally available to the public.
(i) The Company does not have any obligation to pay any third
party any royalties or other fees in excess of $250,000 in the aggregate in
calendar year 2002 or in the period from January 1, 2003 through September 30,
2003 for the use of Intellectual Property and no obligation to pay such
royalties or other fees will result from the consummation of the transactions
contemplated by this Agreement.
(j) Neither the Company nor any of its Subsidiaries is in
violation of any material license, sublicense, agreement or instrument to which
the Company or any of its Subsidiaries is party or otherwise bound under which
the Company or its Subsidiaries derive rights to Intellectual Property that is
material to the Company's or its Subsidiaries' business as currently conducted,
nor will the consummation by the Company of the transactions contemplated hereby
result in any loss or impairment of ownership by the Company or any of its
Subsidiaries of, or the right of any of them to use, any Intellectual Property
that is material to the business of the Company and its Subsidiaries as
currently conducted, nor, to the Company's knowledge, require the consent of any
Governmental Entity or third party with respect to any such Intellectual
Property. Neither the Company nor any of its Subsidiaries is a party to any
agreement under which a third party would be entitled to receive or expand a
license or any other right to any intellectual property of Parent or any of
Parent's affiliates as a result of the consummation of the transactions
contemplated by this Agreement.
(k) For purposes of this Agreement, "Intellectual Property"
shall mean trademarks, service marks, trade names, and internet domain names,
together with all goodwill, registrations and applications related to the
foregoing; patents and industrial design registrations or applications
(including any continuations, divisionals, continuations-
28
in-part, renewals, reissues, re-examinations and applications for any of the
foregoing); works of authorship protected by copyright for E.U. design
registrations; copyrights (including any registrations and applications for any
of the foregoing); mask works rights and trade secrets and other confidential
information, know-how, proprietary processes, formulae, algorithms, models, and
methodologies; in each case used in or necessary for the conduct of the business
of the Company and each of its Subsidiaries, as currently conducted.
Section 3.19 Insurance. All fire and casualty, general liability,
business interruption, product liability, sprinkler and water damage insurance
policies and other forms of insurance maintained by the Company or any of its
Subsidiaries have been made available to Parent. Each such policy is in full
force and effect and all premiums due thereon have been paid in full. None of
such policies shall terminate or lapse (or be affected in any other materially
adverse manner) by reason of the consummation of the transactions contemplated
by this Agreement.
Section 3.20 Rights Agreement. The Company has taken all action
necessary to ensure that so long as this Agreement shall not have been
terminated pursuant to Article VIII, (i) neither Parent nor Merger Sub shall, by
virtue of the execution and delivery of this Agreement or the consummation of
the transactions contemplated hereby, be deemed an "Acquiring Person" (as that
term is defined in the Company Rights Agreement), (ii) no "Rights" (as that term
is defined in the Company Rights Agreement) are issued or required to be issued
to the stockholders of the Company by virtue of the execution and delivery of
this Agreement or the consummation of the transactions contemplated hereby and
(iii) neither the execution and delivery of this Agreement nor the consummation
of the Merger and the other transactions contemplated in this Agreement will
trigger any other provisions of the Company Rights Agreement, including giving
rise to a Distribution Date or a Shares Acquisition Date (each as defined in the
Company Rights Agreement). Except as permitted by Section 6.6 hereof, the
Company has not amended the Company Rights Agreement, redeemed the Rights
thereunder or taken any other action to make the Company Rights Agreement or the
Rights thereunder inapplicable, in each case, with respect to (a) any person or
entity other than Parent or Merger Sub or (b) any Acquisition Proposal (as
defined in Section 6.2(a)).
Section 3.21 Restrictions on Business. Except for this Agreement,
there is no agreement (other than agreements disclosed in response to Section
3.6(h)), judgment, injunction, order or decree binding upon the Company or any
of its Subsidiaries which has or could reasonably be expected to have the effect
of prohibiting or impairing in any material respect any business practice of the
Company or any of its Subsidiaries, acquisition of property by the Company or
any of its Subsidiaries or the conduct of business by the Company or any of its
Subsidiaries as currently conducted.
Section 3.22 Registration Statement; Proxy Statement/Prospectus. The
information supplied or to be supplied by the Company for inclusion in the
Registration Statement shall not at the time the Registration Statement is
declared effective by the SEC contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the
29
circumstances under which they were made, not misleading. The information
supplied or to be supplied by the Company for inclusion or incorporation by
reference in the proxy statement/prospectus (as amended or supplemented, the
"Proxy Statement/Prospectus") to be sent to the stockholders of the Company in
connection with the meeting of the stockholders of the Company to consider the
Merger (the "Company Stockholders Meeting"), or to be included or supplied by or
on behalf of the Company for inclusion in any filing pursuant to Rule 165 and
Rule 425 under the Securities Act or Rule 14a-12 under the Exchange Act (each, a
"Regulation M-A Filing") shall not, on the date the Proxy Statement/Prospectus
(or any amendment thereof or supplement thereto) is first mailed to stockholders
or at the time of the Company Stockholders Meeting or at the time any Regulation
M-A Filing is filed with the SEC or as of the Effective Time, contain any
statement which, at such time and in light of the circumstances under which it
shall be made, is false or misleading with respect to any material fact, or omit
to state any material fact necessary in order to make the statements made
therein not false or misleading; or omit to state any material fact necessary to
correct any statement in any earlier communication with respect to the
solicitation of proxies for the Company Stockholders Meeting which has become
false or misleading. If at any time prior to the Company Stockholders Meeting
any event relating to the Company or any of its respective affiliates, officers
or directors should be discovered by the Company which should be set forth in an
amendment to the Registration Statement or a supplement to the Proxy
Statement/Prospectus, the Company shall promptly inform Parent. The Proxy
Statement/Prospectus shall comply in all material respects as to form and
substance with the requirements of the Securities Act, the Exchange Act and the
rules and regulations thereunder. Notwithstanding the foregoing, the Company
makes no representation or warranty with respect to any information supplied by
Parent or Merger Sub which is contained in any of the foregoing documents.
Section 3.23 Interested Party Transactions. Except as set forth in
Section 3.23 of the Disclosure Schedule, since December 31, 2002, no event has
occurred that would be required to be reported as a Certain Relationship or
Related Transaction pursuant to Statement of Financial Accounting Standards No.
57.
Section 3.24 No Existing Discussions. As of the date of this
Agreement, the Company is not engaged, directly or indirectly, in any
discussions or negotiations with any other party with respect to an Acquisition
Proposal (as defined below) or any other substantially similar proposal.
Section 3.25 Opinion of Financial Advisor. The financial advisor of
the Company, Xxxxxx Xxxxxxx & Co., has delivered to the Company an opinion dated
on or about the date of this Agreement to the effect that as of such date, the
Exchange Ratio is fair, from a financial point of view, to the stockholders of
the Company. The Company has provided, or will promptly provide upon issuance, a
true, complete and correct copy of such opinion to Parent after receipt of
written confirmation thereof. As of the date hereof, such opinion has not been
withdrawn, revoked or modified.
30
Section 3.26 Brokers; Schedule of Fees.
(a) No broker, finder or investment banker (other than Xxxxxx
Xxxxxxx & Co., whose brokerage, finder's or other fees will be paid by the
Company) is entitled to any brokerage, finder's or other fee or commission in
connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Company or any of its Subsidiaries.
(b) Section 3.26(b) of the Disclosure Schedule sets forth a
good faith estimate as of the date of this Agreement, of the fees and expenses
incurred and to be incurred by the Company and any of its Subsidiaries in
connection with this Agreement and the transactions contemplated hereby
(including the fees of Xxxxxx Xxxxxxx & Co., which will, in any event, not
exceed, in the aggregate, $13 million plus expenses, and of the Company's legal
counsel and accountants).
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF PARENT AND MERGER SUB
Parent and Merger Sub represent and warrant to the Company that:
Section 4.1 Organization and Qualification. Parent and each of its
Subsidiaries is an entity duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation and has the requisite
corporate power and authority necessary to own, lease and operate the properties
it purports to own, lease or operate and to carry on its business as it is now
being conducted or presently proposed to be conducted. Each of Parent and Merger
Sub is duly qualified or licensed as a foreign corporation to do business, and
is in good standing, in each jurisdiction where the character of the properties
owned, leased or operated by it or the nature of its activities makes such
qualification or licensing necessary, except for such failures to be so duly
qualified or licensed and in good standing that could not reasonably be expected
to have a Parent Material Adverse Effect.
Section 4.2 Capitalization.
(a) The authorized capital stock of Parent consists of
6,000,000,000 shares of Parent Common Stock and 25,000,000 shares of preferred
stock, par value $0.01 per share ("Parent Preferred Stock"). As of October 9,
2003, 2,184,705,255 shares of Parent Common Stock are issued and outstanding.
(b) All of the outstanding shares of Parent Common Stock as
well as all shares of Parent Common Stock to be issued in the Merger have been
or will be duly authorized and, with respect to shares of Parent Common Stock to
be issued in the Merger, will be, when issued in accordance with this Agreement,
validly issued, fully paid and nonassessable and not subject to or issued in
violation of any purchase option, call option,
31
right of first refusal, preemptive right, subscription right or any similar
right under any provision of the GCL, the Parent Charter (as defined in Section
4.4(a)), the Parent By-Laws (as defined in Section 4.4(a)) or any agreement,
arrangement or understanding to which Parent is a party or otherwise bound. As
of the Closing, Parent will have reserved the shares of Parent Common Stock to
be issued upon exercise of Company Stock Options assumed by Parent hereto. The
Parent Common Stock, when issued, will be registered under the Securities Act
and the Exchange Act and registered or exempt from registration under any
applicable state securities or "blue sky" laws.
(c) The authorized capital stock of Merger Sub consists of 100
shares of Merger Sub Common Stock, all of which are issued and outstanding and
fully paid and nonassessable. All of the issued and outstanding capital stock of
Merger Sub is, and at the Effective Time will be, owned by Parent, and there are
(i) no other shares of capital stock or voting securities of Merger Sub, (ii) no
securities of Merger Sub convertible into or exchangeable for shares of capital
stock or voting securities of Merger Sub and (iii) no options or other rights to
acquire from Merger Sub, and no obligations of Merger Sub to issue, any capital
stock, voting securities or securities convertible into or exchangeable for
capital stock or voting securities of Merger Sub. Merger Sub has not conducted
any business prior to the date here of and has no, and prior to the Effective
Time will have no, assets, liabilities or obligations of any nature other than
those incident to its formation and pursuant to this Agreement and the Merger
and the other transactions contemplated by this Agreement.
Section 4.3 Authority Relative to this Agreement. Each of Parent and
Merger Sub has all necessary corporate power and authority to execute and
deliver this Agreement and each instrument required hereby to be executed and
delivered by it at Closing and to perform its obligations hereunder and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement and each instrument required hereby to be executed and delivered
at Closing by Parent and Merger Sub and the consummation by Parent and Merger
Sub of the transactions contemplated hereby have been duly and validly
authorized by all necessary corporate action on the part of Parent and Merger
Sub. This Agreement has been duly and validly executed and delivered by Parent
and Merger Sub and, assuming the due authorization, execution and delivery
hereof by the Company, constitutes the legal, valid and binding obligation of
Parent and Merger Sub, enforceable against Parent and Merger Sub in accordance
with its terms, except as such enforceability may be limited by bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium or other similar
laws now or hereafter in effect relating to creditors' rights generally and by
general equitable principles (regardless of whether enforceability is considered
in a proceeding in equity or at law).
Section 4.4 No Conflict, Required Filings and Consents.
(a) The execution and delivery by Parent and Merger Sub of
this Agreement do not, the execution and delivery by Parent and Merger Sub of
each instrument required hereby to be executed and delivered at the Closing will
not, and the performance of their respective agreements and obligations under
this Agreement by Parent and Merger Sub
32
will not, (i) conflict with or violate the Restated Articles of Organization, as
amended, of Parent (the "Parent Charter"), the Amended and Restated By-Laws, as
amended, of Parent (the "Parent By-Laws"), the Merger Sub Charter or the Merger
Sub By-Laws, (ii) conflict with or violate any law, rule, regulation, order,
judgment or decree applicable to Parent or Merger Sub by which its or their
respective properties are bound or affected, (iii) result in any breach of or
constitute a default (or an event that with notice or lapse of time or both
would become a default) or impair Parent's or any of its Subsidiaries' rights or
alter the rights or obligations of any third party under, or give to others any
rights of termination, amendment, acceleration or cancellation of, or result in
the creation of a Lien on any of the properties or assets (including intangible
assets) of Parent or any of its Subsidiaries pursuant to any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which Parent or any of its Subsidiaries is a
party or by which Parent or any of its Subsidiaries or its or any of their
respective properties is bound or affected, or (iv) give rise to or result in
any person having, or having the right to exercise, any pre-emptive rights,
rights of first refusal, rights to acquire or similar rights with respect to any
capital stock of Parent or any of its Subsidiaries or any of their respective
assets or properties other than such conflict, violation, breach, default,
impairment, rights of termination, amendment, acceleration or cancellation, or
Liens that would not be reasonably expected to have, in the aggregate, a Parent
Material Adverse Effect.
(b) The execution and delivery by Parent and Merger Sub of
this Agreement do not, the execution and delivery by Parent and Merger Sub of
any instrument required hereby to be executed and delivered at the Closing will
not, and the performance of their respective agreements and obligations under
this Agreement by Parent and Merger Sub will not, require any consent, approval,
order, license, authorization, registration, declaration or permit of, or filing
with or notification to, any Governmental Entity, except (i) as may be required
by the HSR Act, (ii) as may be required under any foreign antitrust or
competition law or regulation, including the EC Merger Regulation, (iii) the
filing of the Registration Statement with the SEC in accordance with the
Securities Act, and the filing of the Proxy Statement/Prospectus with the SEC
under the Exchange Act, (iv) such consents, approvals, orders, licenses,
authorizations, registrations, declarations, permits, filings and notifications
as may be required under applicable U.S. federal and state or foreign securities
laws, (v) the filing of the Certificate of Merger or other documents as required
by the GCL and (vi) such other consents, approvals, orders, registrations,
declarations, permits, filings or notifications which, if not obtained or made,
could not reasonably be expected to have a material adverse effect.
Section 4.5 SEC Filings; Financial Statements.
(a) Parent has timely filed and made available to the Company
all forms, reports, schedules, statements and other documents, including any
exhibits thereto, required to be filed by Parent with the SEC (collectively, the
"Parent SEC Reports"). The Parent SEC Reports, including all forms, reports and
documents filed by Parent with the SEC after the date hereof and prior to the
Effective Time, (i) were and, in the case of Parent SEC Reports filed after the
date hereof, will be prepared in all material respects in accordance with the
applicable requirements of the Securities Act and the Exchange Act, as
33
the case may be, and the rules and regulations thereunder and (ii) did not at
the time they were filed (or if amended or superseded by a filing prior to the
date of this Agreement, then on the date of such filing) and, in the case of
such forms, reports and documents filed by Parent with the SEC after the date of
this Agreement, will not as of the time they are filed, contain any untrue
statement of a material fact or omit to state a material fact required to be
stated in such Parent SEC Reports or necessary in order to make the statements
in such Parent SEC Reports, in light of the circumstances under which they were
made, not misleading. None of Parent's Subsidiaries are required to file any
forms, reports, schedules, statements or other documents with the SEC.
(b) Each of the consolidated financial statements (including,
in each case, any related notes and schedules) contained in the Parent SEC
Reports, including any Parent SEC Reports filed between the date of this
Agreement and the Closing, complied or will comply, as of its respective date,
in all material respects with all applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto, was or will be
prepared in accordance with GAAP (except as may be indicated in the notes
thereto) applied on a consistent basis throughout the periods involved and
fairly presented or will fairly present the consolidated financial position of
Parent and its consolidated Subsidiaries as of the respective dates thereof and
the consolidated results of its operations and cash flows of Parent and its
consolidated Subsidiaries for the periods indicated, except that any unaudited
interim financial statements are subject to normal and recurring year-end
adjustments which have not been made and are not expected to be material in
amount, individually or in the aggregate. The unaudited balance sheet of Parent
contained in Parent's Quarterly Report on Form 10-Q for the fiscal quarter ended
June 30, 2003 is referred to herein as the "Parent Balance Sheet."
(c) The chief executive officer and chief financial officer of
Parent have made all certifications required by, and would be able to make such
certifications as of the date hereof and as of the Closing Date as if required
to be made as of such dates pursuant to, the Xxxxxxxx-Xxxxx Act and any related
rules and regulations promulgated by the SEC , and the statements contained in
any such certifications are complete and correct; Parent maintains "disclosure
controls and procedures" (as defined in Rule 13a-14(c) under the Exchange Act);
Parent is otherwise in compliance with all applicable effective provisions of
the Xxxxxxxx-Xxxxx Act and the applicable listing standards of the NYSE.
Section 4.6 Absence of Certain Changes or Events. Since the date of
the Parent Balance Sheet and except as disclosed in the Parent SEC Reports,
Parent has conducted its business in the ordinary course consistent with past
practice and, since such date, there has not occurred: (a) any change,
development, event or other circumstance, situation or state of affairs that has
had or could reasonably be expected to have a Parent Material Adverse Effect;
(b) any amendments to or changes in the Parent Charter or Parent By-Laws; (c)
any damage to, destruction or loss of any asset of Parent or any of its
Subsidiaries (whether or not covered by insurance) that could reasonably be
expected to have a Parent Material Adverse Effect; (d) any change by Parent in
its accounting methods, principles or practices; (e) any revaluation by Parent
of any of its assets, including writing down the value of inventory or writing
off notes or accounts receivable other than in the
34
ordinary course of business consistent with past practice; and (f) any sale of a
material amount of assets (tangible or intangible) of Parent.
Section 4.7 Absence of Litigation. Except as disclosed in the Parent
SEC Reports, there are no claims, actions, suits, proceedings or governmental
investigations (other than any actions, suits, proceedings or governmental
investigations challenging or otherwise arising from or relating to the Merger
or any of the other transactions contemplated by this Agreement) (a) pending
against Parent or any of its Subsidiaries or any properties or assets of Parent
or of any of its Subsidiaries or (b) to the knowledge of Parent, threatened
against Parent or any of its Subsidiaries, or any properties or assets of Parent
or of any of its Subsidiaries, in each case, which claims, actions, suits,
proceedings or investigations could reasonably be expected to have a Parent
Material Adverse Effect. Neither Parent nor any Subsidiary of Parent is subject
to any outstanding order, writ, injunction or decree that would reasonably be
expected to be material or would reasonably be expected to prevent or delay the
consummation of the transactions contemplated by this Agreement.
Section 4.8 Registration Statement; Proxy Statement/Prospectus. The
information supplied by Parent for inclusion in the Registration Statement shall
not at the time the Registration Statement is declared effective by the SEC
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. The information supplied by Parent for inclusion or incorporation by
reference in the Proxy Statement/Prospectus to be sent to the stockholders of
the Company in connection with the Company Stockholders Meeting, or to be
included or supplied by or on behalf of the Parent for inclusion in any
Regulation M-A Filing, shall not, on the date the Proxy Statement/Prospectus (or
any amendment thereof or supplement thereto) is first mailed to stockholders or
at the time of the Company Stockholders Meeting or at any time any Regulation
M-A Filing is filed with the SEC or at the Effective Time, contain any statement
which, at such time and in light of the circumstances under which it shall be
made, is false or misleading with respect to any material fact, or omit to state
any material fact necessary in order to make the statements made therein not
false or misleading; or omit to state any material fact necessary to correct any
statement in any earlier communication with respect to the solicitation of
proxies for the Company Stockholders Meeting which has become false or
misleading. If at any time prior to the Company Stockholders Meeting any event
relating to Parent or any of its respective affiliates, officers or directors
should be discovered by Parent which should be set forth in an amendment to the
Registration Statement or a supplement to the Proxy Statement/Prospectus, Parent
shall promptly inform the Company. The Registration Statement shall comply in
all material respects as to form and substance with the requirements of the
Securities Act, the Exchange Act and the rules and regulations thereunder.
Notwithstanding the foregoing, Parent makes no representation or warranty with
respect to any information supplied by the Company which is contained in any of
the foregoing documents.
Section 4.9 Brokers. No broker, finder or investment banker (other
than Xxxxxx Brothers Inc. whose brokerage, finder's or other fee will be paid by
Parent) is
35
entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of Parent.
Section 4.10 Ownership of Merger Sub; No Prior Activities. Parent
owns all of the outstanding shares of capital stock of Merger Sub. As of the
date of this Agreement and as of the Effective Time, except for obligations or
liabilities incurred in connection with its incorporation or organization and
the transactions contemplated by this Agreement and except for this Agreement
and any other agreements or arrangements contemplated by this Agreement, Merger
Sub has not and will not have incurred, directly or indirectly, any obligations
or liabilities or engaged in any business activities of any type or kind
whatsoever or entered into any agreements or arrangements with any person.
Section 4.11 Tax Status. Parent has not taken any action nor knows
of any fact, agreement, plan or other circumstance that is reasonably likely to
prevent the Merger as qualifying as a "reorganization" within the meaning of
Section 368(a) of the Code.
Section 4.12 No Undisclosed Liabilities.
(a) Except as reflected in the Parent Balance Sheet, neither
Parent nor any of its Subsidiaries has any liabilities (absolute, accrued,
contingent or otherwise) which are required by GAAP to be set forth on a
consolidated balance sheet of Parent and its consolidated Subsidiaries or in the
notes thereto, other than (i) any liabilities and obligations incurred since
June 30, 2003 in the ordinary course of business consistent with past practice,
(ii) any liabilities or obligations incurred in connection with the transactions
contemplated by this Agreement and (iii) liabilities that, individually or in
the aggregate, have not had, and would not reasonably be expected to have, a
Parent Material Adverse Effect.
(b) Neither Parent nor any of its Subsidiaries is a party to,
or has any commitment to become a party to, any tax shelter arrangement as
described in Internal Revenue Service final regulations (T.D. 9046).
ARTICLE V
CONDUCT OF BUSINESS
Section 5.1 Conduct of Business by the Company Pending the Merger.
Except (i) as expressly contemplated by this Agreement, (ii) as described in
Section 5.1 of the Disclosure Schedule or (iii) to the extent Parent shall
otherwise consent in writing, the Company covenants and agrees that, during the
period from the date of this Agreement and continuing until the earlier of the
termination of this Agreement or the Effective Time, the Company shall conduct
its business and that of its Subsidiaries, taken as a whole, only in, and the
Company shall not take any action except in, and shall cause its Subsidiaries
not to take any action except in, the ordinary course of business and in a
manner consistent with past practice and in compliance in all material respects
with all applicable laws and regulations; and the Company shall use all
reasonable efforts to preserve substantially intact
36
the business organization of the Company and its Subsidiaries, taken as a whole,
to keep available the services of the current officers, employees and
consultants of the Company and its Subsidiaries, and to preserve the present
relationships of the Company and its Subsidiaries with customers, suppliers,
distributors and other persons with which the Company or any of its Subsidiaries
has significant business relations. Parent and the Company agree that the
individuals identified in Section 5.1(a) of the Disclosure Schedule shall be
authorized to provide the agreement of Parent to the various acts of the Company
contemplated by this Section 5.1 during the period from the date of this
Agreement until the earlier of the termination of this Agreement or the
Effective Time. In addition, except (i) as expressly contemplated by this
Agreement, (ii) as described in Section 5.1 of the Disclosure Schedule or (iii)
to the extent Parent shall otherwise consent in writing, the Company shall not
and shall not permit its Subsidiaries to, during the period from the date of
this Agreement and continuing until the earlier of the termination of this
Agreement or the Effective Time do any of the following without the prior
written consent of Parent:
(a) amend or otherwise change the Company Charter or Company
By-Laws or the Subsidiary Documents;
(b) issue, sell, pledge, redeem, accelerate rights under,
dispose of or encumber, or authorize the issuance, sale, pledge, redemption,
acceleration of rights under, disposition or encumbrance of, any shares of
capital stock of any class, or any options, warrants, convertible securities or
other rights of any kind to acquire any shares of capital stock, or any other
ownership interest (including any phantom interest) in the Company, any of its
Subsidiaries or affiliates, except for (A) the issuance of shares of Company
Common Stock pursuant to the exercise of currently outstanding Company Stock
Options or outstanding purchase rights under the ESPP; (B) the grant of options
under the Company Stock Plans (other than purchase rights under the ESPP) to
purchase shares of Company Common Stock in the amounts described on Schedule
5.1(b) of the Disclosure Schedule; provided that such options (1) are issued in
the ordinary course of business consistent with past practice, (2) are issued in
connection with the hiring of new employees, (3) are issued at exercise prices
at least equal to the fair market value per share of the Company Common Stock on
the date of grant, (4) do not include any vesting acceleration provisions other
than those set forth in any applicable Company Stock Plan, and (5) vest in
accordance with the Company's standard vesting schedule under the applicable
Company Stock Plan; (C) the issuance of shares of Company Common Stock pursuant
to the exercise of options granted in accordance with the preceding clause (B);
and (D) the issuance of any shares of Company Common Stock pursuant to currently
outstanding securities convertible into shares of Company Common Stock pursuant
to the terms of such securities;
(c) sell, pledge, dispose of or encumber any assets of the
Company or any of its Subsidiaries or suffer to exist any Lien thereupon (other
than (i) sales of assets not to exceed $150,000 in the aggregate or
non-exclusive licenses in the ordinary course of business and in a manner
consistent with past practice, (ii) dispositions of obsolete or worthless assets
or (iii) sales of immaterial assets not in excess of $75,000 in the aggregate);
37
(d) (i) declare, set aside, make or pay any dividend or other
distribution (whether in cash, stock or property or any combination thereof) in
respect of any of its capital stock, except that a direct or indirect wholly
owned Subsidiary of the Company may declare and pay a dividend to its parent,
(ii) split, combine or reclassify any of its capital stock or issue or authorize
or propose the issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock, or (iii) amend the terms or change
the period of exercisability of, purchase, repurchase, redeem or otherwise
acquire, or permit any Subsidiary to purchase, repurchase, redeem or otherwise
acquire, any of its securities or any securities of its Subsidiaries, or any
option, warrant or right, directly or indirectly, to acquire any such
securities, or propose to do any of the foregoing, other than pursuant to (i)
the exercise of currently outstanding Company Stock Options or (ii) the exercise
of the Company's repurchase rights with respect to unvested shares held by
individuals terminating employment or service with the Company or any
Subsidiary;
(e) (i) acquire (by merger, consolidation or acquisition of stock or
assets or otherwise) any corporation, partnership or other business organization
or division thereof; (ii) incur any indebtedness for borrowed money or issue any
debt securities or assume, guarantee or endorse or otherwise as an accommodation
become responsible for, the obligations of any person, or make any loans or
advances or capital contributions to or investments in any other person, except
in the ordinary course of business and consistent with past practice; (iii)
enter into, amend or waive any right under any material contract, agreement or
joint venture other than in the ordinary course of business consistent with past
practice, or any contract or agreement not entered into in the ordinary course
of business consistent with past practices, or enter into, renew, fail to renew,
amend or terminate any lease relating to real property, or open or close any
facility comprising more than 5,000 square feet; (iv) adopt or implement any new
stockholder rights plan; (v) authorize any capital expenditures or purchase of
fixed assets which are in excess of $100,000 for any individual expenditure or
purchase or in excess of $1,000,000 in the aggregate for all such expenditures
and purchases, for the Company and its Subsidiaries taken as a whole; (vi)
modify its standard warranty terms for its products or amend or modify any
product warranties in effect as of the date of this Agreement in any manner that
is adverse to the Company or any Subsidiary, other than extensions of warranties
in the ordinary course of business; (vii) mortgage or pledge any of its assets,
tangible or intangible, or create or suffer to exist any Lien thereupon, except
in the ordinary course of business consistent with past practice; or (viii)
enter into or amend any contract, agreement, commitment or arrangement to effect
any of the matters prohibited by this Section 5.1(e);
(f) increase the compensation payable or to become payable to its
directors, officers or employees (other than increases payable to non-officer
employees made in the ordinary course of business consistent with past
practice), make any loan, advance or capital contribution (other than loans or
advances of reasonable relocation expenses), or grant any severance or
termination pay to, or enter into or amend any Company Employee Plan or other
plan, contract, agreement or arrangement that would be a Company Employee Plan,
establish, adopt, enter into or amend any collective bargaining agreement or
other plan, agreement, trust, fund, policy or arrangement for the benefit of any
current or former directors, officers or employees of the Company or any of its
Subsidiaries, pay any
38
discretionary bonuses to any officer of the Company, materially change any
actuarial assumption or other assumption used to calculate funding obligations
with respect to any pension or retirement plan, or change the manner in which
contributions to any such plan are made or the basis on which such contributions
are determined, except, in each case, as may be required by law or contractual
commitments which are existing as of the date of this Agreement and listed in
Section 3.13 of the Disclosure Schedule;
(g) take any action to change accounting policies or procedures
(including procedures with respect to revenue recognition, payments of accounts
payable and collection of accounts receivable), change any assumption
underlying, or method of calculating, any bad debt contingency or other reserve,
except in each case as required under GAAP;
(h) make any material Tax election inconsistent with past practice or
settle or compromise any material federal, state, local or foreign Tax liability
or agree to an extension of a statute of limitations, fail to file any Tax
Return when due (or, alternatively, fail to file for available extensions) or
fail to cause such Tax Returns when filed to be complete and accurate; or fail
to pay any material Taxes when due;
(i) pay, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other than
the payment, discharge or satisfaction in the ordinary course of business and
consistent with past practice of liabilities reflected or reserved against in
the financial statements contained in the Filed Company SEC Documents or
incurred in the ordinary course of business and consistent with past practice;
(j) fail to pay accounts payable and other obligations in the ordinary
course of business;
(k) accelerate the collection of receivables or modify the payment
terms of any receivables other than in the ordinary course of business
consistent with past practices;
(l) sell, securitize, factor or otherwise transfer any accounts
receivable;
(m) adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other reorganization
of the Company or any Subsidiary (other than the Merger or as expressly provided
in this Agreement);
(n) revalue in any material respect any of its assets, including
writing down the value of inventory or writing off notes or accounts receivable,
except as required under GAAP;
(o) enter into any agreement, contract or commitment of any type
referred to in Section 3.6, or take, or agree in writing or otherwise to take,
any of the actions described in Sections 5.1(a) through (n) above, or any action
which would make any of the
39
representations or warranties of the Company contained in this Agreement untrue
or incorrect or prevent the Company from performing or cause the Company not to
perform its covenants hereunder, in each case, such that the conditions set
forth in Sections 7.2(a) or 7.2(b), as the case may be, would not be satisfied.
Section 5.2 Conduct of Business by Parent Pending the Merger. Parent
covenants and agrees that, during the period from the date of this Agreement and
continuing until the earlier of the termination of this Agreement or the
Effective Time, unless the Company shall otherwise agree in writing, Parent
shall conduct its business and that of its Subsidiaries, taken as a whole, in
compliance in all material respects with all applicable laws and regulations;
and Parent shall use all reasonable efforts to preserve substantially intact the
business organization of Parent and its Subsidiaries, taken as a whole. Parent
shall not and shall not permit its Subsidiaries to, during the period from the
date of this Agreement and continuing until the earlier of the termination of
this Agreement or the Effective Time, directly or indirectly do, or propose to
do, any of the following without the prior written consent of the Company:
(a) except as expressly contemplated by this Agreement, take any
action that would, or that would reasonably be expected to result in any
condition to the Merger set forth in Article VII not being satisfied; or
(b) effect, or agree to effect, any merger, consolidation, or
business combination in which Parent is not the surviving corporation, or effect
or agree to effect any liquidation, dissolution or similar transaction involving
Parent, other than the transactions contemplated by this Agreement.
Section 5.3 Cooperation. Subject to compliance with applicable law,
from the date of this Agreement until the earlier of the termination of this
Agreement in accordance with its terms or the Effective Time, (a) the Company
and Parent shall confer with one another on a regular and frequent basis with
one or more representatives to report operational matters that are material and
the general status of ongoing operations and (b) each of Parent and the Company
shall promptly provide the other party or its counsel with copies of all filings
made by such party with any Governmental Entity in connection with this
Agreement, the Merger and the transactions contemplated hereby, including any
correspondence to and from the SEC (excluding any requests for confidential
treatment of any documents included in any filing with the SEC) in connection
with the Proxy Statement/Prospectus.
Section 5.4 ESPP. Prior to the Effective Time, the Company shall take
all necessary and appropriate actions so that all outstanding purchase rights
under the ESPP shall automatically be exercised, in accordance with the terms of
the ESPP, immediately prior to the Effective Time, and the shares of Company
Common Stock purchased under those exercised rights shall at the Effective Time
be cancelled and converted into the right to receive shares of Parent Common
Stock pursuant to Section 2.1(a) of this Agreement. Prior to the Effective Time,
the Company shall take all necessary and appropriate actions so that the ESPP
shall terminate with such purchase, and no further purchase rights shall be
granted
40
under the ESPP. Employees of the Company and its Subsidiaries who continue in
the employ of the Surviving Corporation or Parent or any Subsidiary of Parent
after the Effective Time shall be eligible for participation in Parents'
Employee Stock Purchase Plan in accordance with the terms, provisions and
policies thereof; provided, that such employees shall be eligible to participate
in such plan as of the first entry date following the Effective Time on which
they qualify as eligible employees under such plan, with service rendered to the
Company or any Subsidiary prior to the Effective Time to be taken into account
for purposes of satisfying any service requirement for such eligibility to the
same extent as if such service had been rendered to Parent.
ARTICLE VI
ADDITIONAL AGREEMENTS
Section 6.1 Access to Information; Confidentiality. The Company shall
(and shall cause its Subsidiaries and its and their respective officers,
directors, employees, auditors and agents to) afford to Parent and to Parent's
officers, employees, financial advisors, legal counsel, accountants, consultants
and other representatives reasonable access during normal business hours
throughout the period prior to the Effective Time to all of its books and
records (other than privileged documents) and its properties, plants and
personnel. During such period, each of Parent and the Company shall furnish
promptly to each other a copy of each report, schedule and other document filed
or received by it pursuant to the requirements of federal securities laws. No
investigation or receipt of information pursuant to this Section 6.1 shall
affect any representations, warranties covenants or agreements of the parties
(or remedies with respect thereto) or any matter set forth in the Disclosure
Schedule or the conditions to the obligations of the parties under this
Agreement. Each party agrees that it (and its Subsidiaries and its and their
respective representatives) shall hold in confidence all non-public information
acquired from the other party or the other party's representatives in accordance
with the terms of the Non-Disclosure Agreement effective September 26, 2003
between Parent and the Company (the "Confidentiality Agreement").
Section 6.2 No Solicitation.
(a) The Company and each of its Subsidiaries and affiliates shall
not, directly or indirectly, through any officer, director, employee,
representative or agent of the Company or any of its Subsidiaries (and it shall
instruct such officer, director, employee, representative and agent not to,
directly or indirectly), (i) solicit, initiate, resume, facilitate or encourage
any inquiries or proposals that constitute, or could reasonably be expected to
lead to, an Acquisition Proposal (as defined below) or (ii) engage in
negotiations or discussions concerning, or provide any non-public information to
any person or entity relating to, any Acquisition Proposal; provided, however,
that if, at any time prior to the date of the requisite approval of this
Agreement and the Merger by the Company's Stockholders (the "Applicable
Period"), the Board of Directors of the Company determines in good faith, after
receiving the advice of outside counsel, that it is necessary to do so in order
to comply with its fiduciary duties to the Company's stockholders under
applicable law, the Company may, in response
41
to a Superior Proposal (as defined in Section 6.2(b)) which was not solicited by
it and which did not otherwise result from a breach of this Section 6.2(a), and
subject to providing prior written notice of its decision to take such action to
Parent (a "Section 6.2 Notice") and compliance with Section 6.2(c), (x) furnish
information with respect to the Company and its Subsidiaries to any person
making a Superior Proposal pursuant to a confidentiality agreement containing
terms no less favorable to the Company (including with respect to standstill or
other provisions) than the Confidentiality Agreement and permitting the
disclosure contemplated by this Section 6.2 and (y) participate in discussions
or negotiations regarding such Superior Proposal. For purposes of this
Agreement, "Acquisition Proposal" means any inquiry, proposal or offer from any
person relating to any direct or indirect acquisition or purchase of a business
that constitutes 25% or more of the net revenues, net income or assets of the
Company and its Subsidiaries, in each case taken as a whole, or 25% or more of
any class of equity securities of the Company, any tender offer or exchange
offer that if consummated would result in any person beneficially owning 25% or
more of any class of equity securities of the Company or any of its
Subsidiaries, or any merger, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transaction involving the
acquisition of 25% or more of any class of equity securities or assets of the
Company or any of its Subsidiaries, other than the transactions contemplated by
this Agreement.
(b) Neither the Board of Directors of the Company nor any committee
thereof shall:
(i) except as set forth in this Section 6.2, withdraw,
amend or modify, or propose publicly to withdraw or modify, in a
manner adverse to Parent or Merger Sub, the approval or
recommendation by the Company's Board of Directors or any such
committee of this Agreement or the Merger (any such withdrawal,
amendment, modification or proposal, a "Change of Recommendation");
(ii) cause or permit the Company to enter into any
letter of intent, memorandum of understanding, agreement in
principle, acquisition agreement, merger agreement or similar
agreement constituting or relating to any Acquisition Proposal
(other than a confidentiality agreement referred to in Section
6.2(a) entered into in the circumstances referred to in and
consistent with the provisions of Section 6.2(a)); or
(iii) except as set forth in this Section 6.2 adopt,
approve or recommend to its stockholders that they accept, or
propose publicly to adopt, approve or recommend, any Acquisition
Proposal other than the Merger.
Notwithstanding the foregoing, the Board of Directors of the Company
may, in response to a Superior Proposal that did not result from a
breach by the Company of this Section 6.2, effect a Change of
Recommendation or in the case of a tender or exchange offer made
directly to its stockholders, recommend that its stockholders
42
accept the tender or exchange offer, if (A) the Superior Proposal
has been made and has not been withdrawn and continues to be a
Superior Proposal; (B) the Company's Board of Directors determines
in good faith, after receiving the advice of outside counsel, that
it is necessary to do so in order to comply with its fiduciary
obligations to the Company's stockholders under applicable law, but
only at a time that is prior to the adoption of this Agreement at
the Company Stockholders Meeting and is after the third business day
following Parent's receipt of written notice advising Parent that
the Company's Board of Directors desires to withdraw or modify the
recommendation due to the existence of a Superior Proposal,
specifying the material terms and conditions of such Superior
Proposal and identifying the person making such Superior Proposal;
or (C) the Company shall have complied with this Section 6.2 and
shall not have breached in any material respect of the provisions
set forth in Sections 6.3, 6.4 or 6.5. Nothing in this Section 6.2
shall be deemed to (A) permit the Company to take any action
described in clauses (ii) or (iii) (provided, that in the case of a
tender or exchange offer made directly to its stockholders the
Company may recommend that its stockholders accept the tender or
exchange offer) of the first sentence of this Section 6.2(b), or (B)
affect any obligation of the Company under this Agreement or (C)
limit the Company's obligation to call, give notice of, convene and
hold the Company Stockholders Meeting, regardless of whether the
Company's Board of Directors has effected a Change of
Recommendation.
If Parent makes a counterproposal to a Superior
Proposal, the Company shall consider and cause its financial and
legal advisors to negotiate on its behalf in good faith with respect
to the terms of such counterproposal. For purposes of this
Agreement, a "Superior Proposal" means any bona fide, written
proposal made by a third party to acquire, directly or indirectly,
including pursuant to a tender offer, exchange offer, merger,
consolidation, business combination, recapitalization, liquidation,
dissolution or similar transaction, for consideration consisting of
cash and/or securities, more than 50% of the combined voting power
of the shares of Company Common Stock then outstanding or all or
substantially all the assets of the Company and otherwise on terms
which the Board of Directors of the Company determines in its good
faith judgment (after receiving the advice of an independent
financial advisor of nationally recognized reputation), taking into
account all of the terms and conditions of such proposal and this
Agreement (including any proposal by Parent to amend the terms of
this Agreement) to be more favorable to the Company's stockholders
than the Merger, to have a reasonable likelihood of closing, and for
which financing, to the extent required, is then committed or which,
in the good faith judgment of the Board of Directors of the Company,
is reasonably capable of being, and likely to be, obtained on the
proposed terms by such third party.
(c) The Company agrees that as of the date of this Agreement, it
shall cause and it shall cause its Subsidiaries and affiliates (and shall direct
its and their respective officers, directors, employees, representatives and
agents) to immediately cease and cause to be terminated any existing activities,
discussions or negotiations with any person (other than Parent or its
representatives) conducted heretofore with respect to any
43
Acquisition Proposal. The Company shall notify Parent promptly after receipt by
the Company (or its advisors) of any Acquisition Proposal or any request for
nonpublic information in connection with an Acquisition Proposal or for access
to the properties, books or records of the Company or any of its Subsidiaries by
any person or entity that informs the Company that it is considering making, or
has made, an Acquisition Proposal. Such notice to Parent shall be made orally
and in writing and shall indicate in reasonable detail the identity of the
offeror and the terms and conditions of such proposal, inquiry or contact. The
Company shall inform Parent promptly (and in any event within 24 hours) of all
material developments and the status of any Acquisition Proposal, any
negotiations or discussions with respect to any Acquisition Proposal or any
request for nonpublic information in connection with any Acquisition Proposal or
for access to the properties, books or records of the Company or any of its
Subsidiaries by any person or entity that, to the Company's knowledge, is
considering making, or has made, an Acquisition Proposal. The Company shall
provide Parent with copies of all documents received from (to the extent such
documentation sets forth the terms or conditions of such Acquisition Proposal)
or delivered or sent to any person or entity that is considering making or has
made an Acquisition Proposal. The Company will promptly provide to Parent any
non-public information concerning the Company provided to any other party in
connection with an Acquisition Proposal which was not previously provided to
Parent.
(d) Nothing contained in this Section 6.2 shall prohibit the Company
from taking any action or disclosing to its stockholders a position contemplated
by Rule 14e-2(a) promulgated under the Exchange Act or from making any
disclosure to the Company's stockholders if the Board of Directors of the
Company determines in good faith, after receiving the advice of outside counsel,
that it is necessary to do so under applicable law; provided, however, that
except as specifically permitted in this Section 6.2, neither the Company nor
its Board of Directors nor any committee thereof shall withdraw or modify, or
propose publicly to withdraw or modify, its position with respect to this
Agreement or the Merger or approve or recommend, or publicly propose to approve
or recommend, an Acquisition Proposal.
Section 6.3 Proxy Statement/Prospectus; Registration Statement.
(a) As promptly as practicable after execution of this Agreement,
Parent and the Company shall in consultation with each other prepare the Proxy
Statement/Prospectus and the Registration Statement, and the Company shall file
with the SEC the Proxy Statement/Prospectus. Parent shall file with the SEC the
Registration Statement. The Company and Parent shall use all reasonable efforts
to cause the Registration Statement to become effective as soon thereafter as
practicable.
(b) The Company shall use all reasonable efforts to mail the Proxy
Statement/Prospectus to the stockholders of the Company as soon as practicable
after the Registration Statement is declared effective by the SEC. Subject to
the right of the Company's Board of Directors to withdraw or modify its
recommendation pursuant to Section 6.2(b), the Proxy Statement/Prospectus shall
include the recommendation of the Board of Directors of the Company in favor of
the Merger.
44
(c) The Company shall furnish Parent with all information concerning
the Company and the holders of its capital stock and shall take such other
action as Parent may reasonably request in connection with the Registration
Statement and the issuance of the shares of Parent Common Stock. If at any time
prior to the Effective Time any event or circumstance relating to the Company,
Parent or any of their respective Subsidiaries, affiliates, officers or
directors should be discovered by such party which should be set forth in an
amendment or a supplement to the Registration Statement or Proxy
Statement/Prospectus, such party shall promptly inform the other thereof and
take appropriate action in respect thereof.
(d) The Company and Parent shall make any necessary filing with
respect to the Merger under the Securities Act and the Exchange Act and the
rules and regulations thereunder.
Section 6.4 Company Stockholders Meeting.
(a) The Company, acting through its Board of Directors, shall take
all actions in accordance with applicable law, the Company Charter, the Company
By-Laws and the rules of The Nasdaq National Market to promptly and duly call,
give notice of, convene and hold as promptly as practicable, and in any event
within sixty (60) days after the declaration of effectiveness of the
Registration Statement, the Company Stockholders Meeting for the purpose of
considering and voting upon the approval of this Agreement and the Merger.
Subject to Section 6.2(b), to the fullest extent permitted by applicable law,
(i) the Company's Board of Directors shall recommend adoption and approval of
this Agreement and the Merger by the stockholders of the Company and include
such recommendation in the Proxy Statement/Prospectus, and (ii) neither the
Company's Board of Directors nor any committee thereof shall effect a Change of
Recommendation. Unless the Company's Board of Directors or any committee thereof
shall effect a Change of Recommendation of accordance with Section 6.2(b), the
Company shall use its reasonable best efforts to solicit from its stockholders
proxies in favor of the proposal to adopt and approve this Agreement and the
Merger and to secure the vote or consent of the stockholders of the Company that
are required by the rules of The Nasdaq National Market or the GCL.
Notwithstanding anything to the contrary contained in this Agreement, the
Company, after consultation with Parent, may adjourn or postpone the Company
Stockholders Meeting to the extent necessary to ensure that any required
supplement or amendment to the Proxy Statement/Prospectus is provided to the
Company's stockholders or, if as of the time for which the Company Stockholders
Meeting is originally scheduled (as set forth in the Proxy
Statement/Prospectus), there are insufficient shares of Company Common Stock
represented (either in person or by proxy) to constitute a quorum necessary to
conduct the business of the Company Stockholders Meeting.
(b) The Company shall call, give notice of, convene and hold the
Company Stockholders Meeting in accordance with this Section 6.4 and shall
submit the proposal to adopt and approve this Agreement and the Merger to its
stockholders for the purpose of acting upon such proposal whether or not (i) the
Company's Board of Directors at any time subsequent to the date of this
Agreement determines, in the manner permitted by
45
Section 6.2(b), that the proposal is no longer advisable or recommends that the
stockholders of the Company reject such proposal, or (ii) any actual, potential
or purported Acquisition Proposal or Superior Proposal has been commenced,
disclosed, announced or submitted to the Company. The Company shall use
reasonable efforts to ensure that all proxies solicited by the Company in
connection with the Company Stockholders Meeting are solicited, in compliance
with the GCL, the Company Charter, the Company By-Laws, the rules of The Nasdaq
National Market and all other applicable legal requirements.
(c) Following the Company Stockholders Meeting and at or prior to
the Closing, the Company shall deliver to Parent a certificate of its Corporate
Secretary setting forth the voting results from the Company Stockholders
Meeting.
Section 6.5 Legal Conditions to Merger. Each of Parent and, subject to
Section 6.2, the Company will use its reasonable best efforts to comply promptly
with all legal requirements which may be imposed with respect to the Merger
(which efforts shall include furnishing all information required under the HSR
Act and in connection with approvals of or filings with any other Governmental
Entity) and will promptly cooperate with and furnish information to each other
in connection with any such requirements imposed upon any of them or any of
their Subsidiaries in connection with the Merger. Each of Parent and the Company
will, and will cause its Subsidiaries to, take all reasonable actions necessary
to obtain (and will cooperate with each other in obtaining) any consent,
authorization, order or approval of, or any exemption by, any Governmental
Entity required to be obtained or made by Parent, the Company or any of their
Subsidiaries in connection with the Merger or the taking of any action
contemplated thereby or by this Agreement. Notwithstanding the foregoing,
neither Parent nor any of its affiliates shall be required to (i) sell or
dispose of or hold separately (through a trust or otherwise) any assets or
businesses or interests in any assets or businesses of Parent, the Company or
their respective affiliates or make any other change in any portion of the
Company's or its business or incur any other limitation on the conduct of the
Company's or its business to obtain such consents, authorizations, orders,
approvals and exemptions or agree to do, or submit to orders providing for, any
of the foregoing, in each case whether before or after the Effective Time,
except in each case for any such action that would not reasonably be expected to
result in a Company Material Adverse Effect or a Parent Material Adverse Effect
or (ii) if any governmental body that has the authority to enforce any Antitrust
Law seeks, or authorizes its staff to seek, a preliminary injunction or
restraining order to enjoin consummation of the Merger, take any action which
Parent reasonably believes would be prohibited or restricted under such
preliminary injunction or restraining order.
Section 6.6 Company Rights Agreement. Prior to the Effective Time and
for so long as this Agreement shall not have been terminated pursuant to Article
VIII, the Company shall not, directly or indirectly, in connection with the
execution, delivery or performance of this Agreement and the transactions
contemplated hereby (i) take any action to deem Parent or Merger Sub to be an
"Acquiring Person," (ii) issue or cause to be issued any "Rights" to
stockholders of the Company or (iii) trigger any other provisions of the Company
Rights Agreement, including giving rise to a "Distribution Date" or a "Shares
Acquisition Date." Prior to the Effective Time and for so long as this Agreement
shall not
46
have been terminated pursuant to Article VIII, the Company shall not amend,
modify (other than to delay any "Distribution Date" therein or to render the
"Rights" inapplicable to the Merger or any action permitted under this
Agreement) or terminate the Company Rights Agreement unless (i) required to do
so by order of a court of competent jurisdiction or (ii) the Company's Board of
Directors has concluded in good faith, after receiving the advice of outside
counsel, that, in light of a Superior Proposal with respect to it, such
amendment, modification or termination is necessary in order to comply with the
Board of Directors' fiduciary obligations to its stockholders under applicable
law.
Section 6.7 Public Announcements.
(a) Parent and the Company shall consult with each other before
issuing any press release or making any public statement with respect to the
Merger or this Agreement and shall not issue any such press release or make any
such public statement without the prior written consent of the other party,
which shall not be unreasonably withheld or delayed; provided, however, that a
party may, without the prior consent of the other party, issue such press
release or make such public statement as may upon the written advice of counsel
be required by law or the rules and regulations of the NYSE or The Nasdaq
National Market if it has used all reasonable efforts to consult with the other
party prior thereto and provided, further, that, following a Change of
Recommendation, no such consultation or agreement shall be required.
(b) Notwithstanding anything to the contrary contained in this
Agreement or the Confidentiality Agreement, the parties (and each employee,
representative or other agent of the parties) may disclose to any and all
persons, without limitation of any kind, the tax treatment and any facts that
may be relevant to the tax structure of the transactions contemplated hereby
beginning on the earliest of (i) the date of the public announcement by the
parties of discussions relating to the transactions contemplated hereby, (ii)
the date of public announcement by the parties of the transactions contemplated
hereby or (iii) the date of the execution of this Agreement; provided, however,
that nothing in this Section 6.7(b) shall permit either party (or any employee,
representative or agent thereof) to disclose (A) any information that is not
necessary to understand the tax treatment and tax structure of such transactions
(including the identity of the parties and any information that could lead
another to determine the identity of the parties), or (B) any other information
to the extent that such disclosure could result in a violation of any applicable
law.
Section 6.8 Listing of Parent Shares. Parent shall use all reasonable
efforts to have authorized for listing on the NYSE, upon official notice of
issuance, the shares of Parent Common Stock to be issued in the Merger.
Section 6.9 Employee Benefits; 401(k) Plan.
(a) From and after the Effective Time, Parent will, or will cause
the Surviving Corporation to, recognize the prior service with the Company or
its Subsidiaries of each employee of the Company or its Subsidiaries as of the
Effective Time (the "Company Employees") in connection with all employee benefit
plans, programs or policies
47
(including vacation) of Parent or its affiliates in which Company Employees are
eligible to participate following the Effective Time, for purposes of
eligibility, vesting and levels of benefits (but not for purposes of benefit
accruals or benefit amounts under any defined benefit pension plan or to the
extent that such recognition would result in duplication of benefits). From and
after the Effective Time, Parent or the Surviving Corporation shall provide
Company Employees for so long as such Company Employees remain so employed,
health and welfare benefits (i) pursuant to the Company's or its Subsidiaries'
employee benefit plans, programs, policies and arrangements as provided to such
employees immediately prior to the Effective Time or (ii) pursuant to employee
benefit plans, programs, policies or arrangements maintained by Parent or any
Subsidiary of Parent providing coverage and benefits which (in the case of this
clause (ii)) are no less favorable than those provided to employees of Parent in
positions comparable to positions held by Company Employees with Parent or its
Subsidiaries from time to time after the Effective Time. From and after the
Effective Time, Parent will, or will cause the Surviving Corporation to (i)
cause any pre-existing conditions or limitations and eligibility waiting periods
(to the extent that such waiting periods would be inapplicable, taking into
account service with the Company) under any group health plans of Parent or its
affiliates to be waived with respect to Company Employees and their eligible
dependents and (ii) give each Company Employee credit for the plan year in which
the Effective Time occurs towards applicable deductibles and annual
out-of-pocket limits for expenses incurred prior to the Effective Time for which
evidence of payment is provided to Parent. From and after the Effective Time,
Parent will, or will cause the Surviving Corporation to, provide the benefits
described in Section 6.9 of the Disclosure Schedule to the Company Employees, in
each instance in accordance with Section 6.9 of the Disclosure Schedule.
(b) Prior to the Effective Time, the Company shall take such actions
as Parent may reasonably request so as to enable the Surviving Corporation to
effect such actions relating to the Documentum, Inc. 401(k) Plan (the "401(k)
Plan") as Parent may deem necessary or appropriate (after reasonable
consultation with the Company), including terminating the 401(k) Plan prior to
the Effective Time, subject to the terms of the 401(k) Plan and applicable law
and provided that such action does not preclude the immediate participation of
the Company Employees in any successor plan.
(c) As promptly as reasonably practicable after the Effective Time
and in any event within five days thereof (to the extent Parent has received
copies of the relevant Company Stock Plans within a reasonable time period prior
thereto), Parent shall prepare and file with the SEC a registration statement on
Form S-8 covering the shares of Parent Common Stock issuable pursuant to the
outstanding Company Stock Options assumed under Section 6.10(a). Parent shall
maintain such Form S-8 registration statement (and maintain the current status
of the prospectuses contained therein) in effect for as long as all the Company
Stock Options remain outstanding.
(d) As of the Effective Time, Parent shall assume and continue in
full force and effect the Company's Change of Control Retention Plan.
48
Section 6.10 Stock Plans.
(a) At the Effective Time, each Company Stock Option which is
outstanding immediately prior to the Effective Time, whether or not then vested
or exercisable, shall be assumed by Parent and converted in accordance with its
terms into an option to acquire, on the same terms and conditions (including as
to vesting and exercisability) as were applicable under the Company Stock Option
immediately prior to the Effective Time, the number of shares of Parent Common
Stock determined by multiplying (i) the number of shares of Company Common Stock
subject to such Company Stock Option immediately prior to the Effective Time by
(ii) the Exchange Ratio (rounded down to the nearest whole number), at a price
per share equal to the exercise price per share of Company Common Stock subject
to the Company Stock Option divided by (ii) the Exchange Ratio (with the result
rounded up to the nearest whole cent). It is the intention of the parties that
the Company Stock Options which qualify as incentive stock options (as defined
in Section 422 of the Code) continue to so qualify, to the maximum extent
permissible, following the Effective Time. As soon as practicable after the
Effective Time (but in no event later than ten business days thereafter), Parent
will deliver to the holders of Company Stock Options appropriate notices
regarding options held under Company Option Plans and the effect of this Section
6.10.
(b) If and to the extent necessary or required by the terms of any
Company Stock Plan or any Company Stock Option, the Company shall, prior to the
Effective Time, (i) obtain any consents from holders of Company Stock Options
and (ii) amend the terms of its equity incentive plans or arrangements, to give
effect to the provisions of Section 6.10(a).
(c) If the Closing Date occurs on or after January 1, 2004 but prior
to March 1, 2004, Parent will use all reasonable efforts to create a special
offering period under the Parent's Employee Stock Purchase Plan so that the
Company Employees who become employees of Parent or any of its Subsidiaries can
participate in such plan within ten business days from the Closing Date.
Section 6.11 Consents. The Company shall use its reasonable best
efforts to obtain all necessary consents, waivers and approvals under any of the
Company's material agreements, contracts, licenses or leases in connection with
the Merger required to prevent the occurrence of an event that could reasonably
be expected to have a Company Material Adverse Effect or a Parent Material
Adverse Effect prior to the Effective Time or after the Effective Time.
Section 6.12 Indemnification and Insurance.
(a) For six years after the Effective Time, the Parent shall, to the
fullest extent permitted under applicable law, indemnify and hold harmless each
person who is now or has been prior to the date hereof or who becomes prior to
the Effective Time an officer or director of the Company or any of its
Subsidiaries against all losses, claims, damages, costs, expenses (including
reasonable counsel fees and expenses), amounts paid in
49
settlement (provided that any such settlement is effected with the written
consent of Parent) or liabilities arising out of acts or omissions occurring at
or prior to the Effective Time, whether or not asserted or claimed prior to or
at or after the Effective Time, that are based in whole or in part on or arising
in whole or in part out of the fact that such person is or was an officer or
director of the Company or any Subsidiary. This Section 6.12(a) shall not limit
or otherwise adversely affect any rights any Indemnified Person may have under
any agreement with the Company or under the Company's Charters or By-Laws as
presently in effect.
(b) From and after the Effective Time, Parent shall, to the fullest
extent permitted under applicable law, cause the Surviving Corporation to assume
the obligations of the Company pursuant to any indemnification agreements
between the Company and its directors and officers in effect prior to the date
of this Agreement (or indemnification agreements in the Company's customary form
as of the date hereof for directors joining the Company's Board of Directors
prior to the Effective Time) and any indemnification provisions under the
Company's Charter or By-Laws as in effect immediately prior to the Effective
Time.
(c) For a period of six years after the Effective Time, Parent shall
cause to be maintained in effect, subject to the terms described on Schedule
6.12(c) of the Disclosure Schedule, the current policies of directors' and
officers' and fiduciary liability insurance maintained by the Company (provided
that Parent may substitute therefor policies of at least the same coverage and
amounts containing terms and conditions which are no less advantageous to former
officers and directors of the Company) only with respect to claims arising from
facts or events which occurred at or before the Effective Time.
Section 6.13 Reasonable Best Efforts. Subject to the other terms and
conditions of this Agreement, each of the parties agrees to use its reasonable
best efforts to take, or cause to be taken, all actions and to do, or cause to
be done, all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions contemplated by
this Agreement.
Section 6.14 Notification of Certain Matters. Parent shall give prompt
notice to the Company, and the Company shall give prompt notice to Parent, upon
any director or officer of Parent or the Company (as applicable) becoming aware
of the occurrence, or failure to occur, of any event, which occurrence or
failure to occur would be reasonably likely to cause any of the conditions set
forth in Article VII not to be satisfied. Notwithstanding the provisions of this
Section 6.14, the delivery of any notice pursuant to this Section 6.14 will not
limit or otherwise affect the remedies available hereunder to the party
receiving such notice or the conditions to such party's obligation to consummate
the Merger.
Section 6.15 Takeover Statutes. Notwithstanding any other provision in
this Agreement, in no event shall the approval of the Merger and this Agreement
by the Board of Directors of the Company under Section 203 of the GCL be
withdrawn, revoked or modified by the Board of Directors of the Company. If any
Takeover Statute is or may become applicable to the Merger or any of the other
transactions contemplated by this
50
Agreement, the Company and the Company's Board of Directors shall promptly grant
such approvals and take such lawful actions as are necessary so that such
transactions may be consummated as promptly as practicable on the terms
contemplated by this Agreement or the Merger, as the case may be, and otherwise
take such lawful actions to eliminate or minimize the effects of such statute,
and any regulations promulgated thereunder, on such transactions.
Section 6.16 Section 16 Matters.
(a) The Board of Directors of Parent, or a committee thereof
consisting of non-employee directors (as such term is defined for purposes of
Rule 16b-3(d) under the Exchange Act), shall adopt a resolution in advance of
the Effective Time providing that the receipt by the Company Insiders of Parent
Common Stock in exchange for shares of Company Common Stock, and of options to
purchase Parent Common Stock upon assumption and conversion of Company Stock
Options, in each case pursuant to the transactions contemplated hereby and to
the extent such securities are listed in the Section 16 Information (as defined
below), is intended to be exempt pursuant to Rule 16b-3 under the Exchange Act.
In addition, the Board of Directors of the Company, or a committee thereof
consisting of non-employee directors (as such term is defined for purposes of
Rule 16b-3(d) under the Exchange Act), shall adopt a resolution in advance of
the Effective Time providing that the disposition by the Company Insiders of the
Company Common Stock in exchange for shares of Parent Common Stock, and the
disposition of their Company Stock Options which will be deemed to occur upon
the assumption of those options and their resulting conversion into options to
purchase Parent Common Stock, in each case pursuant to the transactions
contemplated hereby and to the extent such securities are listed in the Section
16 Information, are also intended to be exempt pursuant to Rule 16b-3 under the
Exchange Act.
(b) For purposes of this Agreement, "Section 16 Information" means
information regarding the Company Insiders and (i) the number of shares of
Company Common Stock or other Company equity securities deemed to be
beneficially owned by each such Company Insider and expected to be exchanged for
Parent Common Stock and (ii) the number of shares of Company Common Stock,
together with the applicable exercise price per share, subject to each Company
Stock Option held by the Company Insider which is to be assumed and converted
into options to purchase Parent Common Stock, in each case, in connection with
the Merger, which shall be provided by the Company to the Parent within 10
business days after the date of this Agreement.
(c) For purposes of this Agreement, "Company Insiders" means those
officers and directors of the Company who are subject to the reporting
requirements of Section 16(a) of the Exchange Act as listed in the Section 16
Information.
Section 6.17 Tax-Free Reorganization Treatment. Parent and the Company
intend that the Merger will qualify as a reorganization within the meaning of
Section 368(a) of the Code, and each shall, and shall cause their respective
subsidiaries to, use its reasonable best efforts to cause the Merger to so
qualify. Neither Parent nor the Company shall knowingly take any action, or
knowingly fail to take any action, that would
51
be reasonably likely to jeopardize the qualification of the Merger as a
reorganization within the meaning of Section 368(a) of the Code.
ARTICLE VII
CONDITIONS TO THE MERGER
Section 7.1 Conditions to Obligation of Each Party to Effect the
Merger. The respective obligations of each party to effect the Merger shall be
subject to the satisfaction at or prior to the Effective Time of the following
conditions:
(a) Effectiveness of the Registration Statement. The Registration
Statement shall have been declared effective by the SEC under the Securities
Act. No stop order suspending the effectiveness of the Registration Statement
shall have been issued by the SEC and no proceedings for that purpose and no
similar proceeding in respect of the Proxy Statement/Prospectus shall have been
initiated or threatened in writing by the SEC.
(b) Stockholder Approval. This Agreement and the Merger shall have
been approved and adopted by the requisite vote of the stockholders of the
Company.
(c) Antitrust Approvals. All necessary waiting periods (and all
extensions thereof) applicable to the Merger under the Antitrust Laws shall have
terminated or expired, all consents, approvals, authorizations and orders
applicable to the Merger required under the Antitrust Laws shall have been
received and become final and non-appealable, and any governmental body that has
the authority to enforce any Antitrust Laws in those jurisdictions where such
consents, approvals, authorizations and orders are so required shall have
approved, cleared or decided neither to initiate proceedings or otherwise
intervene in respect of the Merger.
(d) No Injunctions or Restraints; Illegality. No temporary
restraining order, preliminary or permanent injunction or other order issued by
any court of competent jurisdiction or other legal restraint or prohibition
preventing the consummation of the Merger shall be in effect, nor shall any
proceeding brought by any administrative agency or commission or other
Governmental Entity seeking any of the foregoing be pending; and there shall not
be any action taken, or any statute, rule, regulation or order enacted, entered,
enforced or deemed applicable to the Merger which makes the consummation of the
Merger illegal.
(e) Governmental Actions. There shall not be pending or threatened
any action or proceeding (or any investigation or other inquiry that would
reasonably be expected to result in such an action or proceeding) by any
Governmental Entity or administrative agency before any Governmental Entity,
administrative agency or court of competent jurisdiction, nor shall there be in
effect any judgment, decree or order of any Governmental Entity, administrative
agency or court of competent jurisdiction, in each case, seeking to prohibit or
limit Parent from exercising all material rights and privileges
52
pertaining to its ownership of the Surviving Corporation or the ownership or
operation by Parent of all or a material portion of the business or assets of
Parent, or seeking to compel Parent to dispose of or hold separate all or any
material portion of the business or assets of Parent or the Surviving
Corporation (or any of their Subsidiaries), as a result of the Merger or the
transactions contemplated by this Agreement, except in each case for any such
action, proceeding, investigation, inquiry, judgment, decree or order as would
not reasonably be expected to result in a Company Material Adverse Effect or a
Parent Material Adverse Effect.
(f) NYSE Listing. The shares of Parent Common Stock issuable in the
Merger shall have been authorized for listing on the NYSE upon official notice
of issuance.
(g) Tax Opinions. Parent and the Company shall have received an
opinion of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP and Xxxxxx Xxxxxxx Xxxxxxxx
& Xxxxxx, Professional Corporation, respectively, dated as of the Effective
Time, to the effect that the Merger will qualify as a reorganization within the
meaning of Section 368(a) of the Code. The issuance of such opinions shall be
conditioned upon the receipt by such counsel of customary representation letters
from each of Parent, Merger Sub and the Company, in each case, in form and
substance reasonably satisfactory to such counsel. Each such representation
letter shall be dated on or before the date of such opinion and shall not have
been withdrawn or modified in any material respect. The opinion condition
referred to in this Section 7.1(g) shall not be waivable after receipt of the
stockholder approval referred to in Section 7.1(b), unless further stockholder
approval is obtained with appropriate disclosure.
Section 7.2 Additional Conditions to Obligations of Parent and Merger
Sub. The obligations of Parent and Merger Sub to effect the Merger are also
subject to the following conditions:
(a) Representations and Warranties. Each of the representations and
warranties of the Company contained in this Agreement shall be true and correct
(without giving effect to any qualification as to materiality or Company
Material Adverse Effect contained in any specific representation or warranty),
as of the date of this Agreement and as of the Closing Date, except (i) for
changes contemplated or permitted by this Agreement, (ii) that the accuracy of
representations and warranties that by their terms speak as of the date of this
Agreement or other date will be determined as of such date and (iii) where any
such failures of the representations and warranties to be true and correct in
the aggregate will not have a Company Material Adverse Effect; and Parent shall
have received a certificate signed on behalf of the Company by the chief
executive officer and chief financial officer of the Company to such effect.
(b) Agreements and Covenants. The Company shall have performed or
complied in all material respects with all agreements and covenants required by
this Agreement to be performed or complied with by it at or prior to the Closing
Date; and Parent and Merger Sub shall have received a certificate signed by the
chief executive
53
officer and the chief financial officer of the Company to such effect.
Section 7.3 Additional Conditions to Obligation of the Company. The
obligation of the Company to effect the Merger is also subject to the following
conditions:
(a) Representations and Warranties. Each of the representations and
warranties of Parent and Merger Sub contained in this Agreement shall be true
and correct (without giving effect to any qualification as to materiality or
Parent Material Adverse Effect contained in any specific representation or
warranty), as of the date of this Agreement and as of the Closing Date, except
(i) for changes contemplated or permitted by this Agreement, (ii) that the
accuracy of representations and warranties that by their terms speak as of the
date of this Agreement or other date will be determined as of such date and
(iii) where any such failure of the representations and warranties to be true
and correct in the aggregate will not have a Parent Material Adverse Effect; and
the Company shall have received a certificate signed on behalf of Parent by the
chief executive officer and chief financial officer of Parent to such effect.
(b) Agreements and Covenants. Parent and Merger Sub shall have
performed or complied in all material respects with all agreements and covenants
required by this Agreement to be performed or complied with by them at or prior
to the Closing Date; and the Company shall have received a certificate signed by
the chief executive officer and the chief financial officer of Parent to such
effect.
ARTICLE VIII
TERMINATION
Section 8.1 Termination. This Agreement may be terminated at any time
prior to the Effective Time, notwithstanding approval thereof by the
stockholders of the Company:
(a) by mutual written consent duly authorized by the Boards of
Directors of Parent and the Company;
(b) by either Parent or the Company if the Merger shall not have
been consummated by April 15, 2004 (as such date may be extended in accordance
with the terms of this Section 8.1(b), the "Outside Date"), provided, that if
(x) the Effective Time has not occurred by such date by reason of the
non-satisfaction of any of the conditions set forth in Section 7.1(c) and (y)
all other conditions set forth in Article VIII have heretofore been satisfied or
waived or are then capable of being satisfied, then such date shall
automatically be extended to June 15, 2004 (provided, further, that the right to
terminate this Agreement under this Section 8.1(b) shall not be available to any
party whose failure to fulfill any obligation under this Agreement has been the
principal cause of the failure of the Merger to occur on or before the Outside
Date);
54
(c) by either Parent or the Company if a court of competent
jurisdiction or governmental, regulatory or administrative agency or commission
shall have issued a nonappealable final order, decree or ruling or taken any
other action having the effect of permanently restraining, enjoining or
otherwise prohibiting the Merger (provided that the party seeking to terminate
pursuant to this Section 8.1(c) shall have complied with its obligations under
Section 6.5 and used its reasonable best efforts to have any such order, decree,
ruling or other action vacated or lifted);
(d) by either Parent or, if the Company has not materially breached
the provisions of Section 6.2 or Section 6.4, the Company, if at the Company
Stockholders Meeting (giving effect to any adjournment or postponement thereof),
the requisite vote of the stockholders of the Company in favor of this Agreement
and the Merger shall not have been obtained;
(e) by Parent, if the Company shall have breached or failed to
perform any of its representations, warranties, covenants or other agreements
contained in this Agreement, which breach or failure to perform would cause the
conditions set forth in Section 7.2(a) or Section 7.2(b) to not be satisfied and
which breach or failure, if capable of being cured, shall not have been cured
within 20 business days following receipt by the Company of written notice of
such breach or failure from Parent;
(f) by the Company, if Parent shall have breached or failed to
perform any of its representations, warranties, covenants or other agreements
contained in this Agreement, which breach or failure to perform would cause the
conditions set forth in Sections 7.3(a) or 7.3(b), to not be satisfied and which
breach or failure, if capable of being cured, shall not have been cured within
20 business days following receipt by Parent of written notice of such breach
from the Company;
(g) by Parent, if
(i) the Company's Board of Directors (or any committee
thereof) shall have failed to recommend the adoption and approval of
this Agreement and the Merger in the Proxy Statement/Prospectus or
shall have effected a Change of Recommendation;
(ii) the Company's Board of Directors (or any committee
thereof) shall have failed after the public announcement of an
Acquisition Proposal to reconfirm its recommendation to adopt and
approve this Agreement and the Merger within ten business days after
receipt of the written request of Parent that the Company's Board of
Directors (or any committee thereof) do so;
(iii) the Company's Board of Directors (or any committee
thereof) shall have approved or recommended to the stockholders of
the Company an Acquisition Proposal (other than the Merger);
55
(iv) a tender offer or exchange offer for outstanding
shares of Company Common Stock shall have been commenced (other than
by Parent or an affiliate of Parent) and the Company's Board of
Directors (or any committee thereof) recommends that the
stockholders of the Company tender their shares in such tender or
exchange offer or, within ten business days after the commencement
of such tender or exchange offer, fails to recommend against
acceptance of such offer; or
(v) the Company shall have breached in any material
respect its obligations under Section 6.2 or 6.4.
Section 8.2 Effect of Termination. In the event of the termination of
this Agreement pursuant to Section 8.1, this Agreement shall forthwith become
void and there shall be no liability on the part of any party hereto or any of
its affiliates, directors, officers or stockholders except (i) that the
provisions of Sections 3.26, 4.9, 8.3, this Section 8.2 and Article IX hereof
shall survive termination and (ii) nothing herein shall relieve any party from
liability for any willful breach of this Agreement. The Confidentiality
Agreement shall survive termination of this Agreement as provided therein.
Section 8.3 Fees and Expenses.
(a) Except as set forth in this Section 8.3, all fees and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such expenses, whether or not the
Merger is consummated; provided, however, that Parent and the Company shall
share equally all fees and expenses (but not including attorneys' fees and
expenses) incurred in connection with the printing and filing of the Proxy
Statement/Prospectus (including any preliminary materials related thereto), the
Registration Statement (including financial statements and exhibits) and any
amendments or supplements thereto and filings by Parent and the Company under
the HSR Act, the EC Merger Regulation or any similar filing requirement of any
Governmental Entity applicable to the Merger or this Agreement.
(b) (i) The Company shall reimburse Parent for up to a maximum of
$2.5 million of its reasonable costs and expenses actually incurred relating to
the transactions contemplated by this Agreement (including reasonable fees and
expenses of Parent's counsel, accountants and financial advisors), upon the
termination of this Agreement (x) by Parent pursuant to Section 8.1(e) or 8.1(g)
or (y) by Parent or the Company pursuant to Section 8.1(b) if the failure to
satisfy the conditions set forth in Section 7.2(a) or 7.2(b) by the Outside Date
shall have resulted in the Closing not occurring; and (ii) Parent shall
reimburse the Company for up to a maximum of $2.5 million of its reasonable
costs and expenses of the Company actually incurred relating to the transactions
contemplated by this Agreement (including reasonable fees and expenses of the
Company's counsel, accountants and financial advisors), upon the termination of
this Agreement (x) by the Company pursuant to Section 8.1(f) or (y) by Parent or
the Company pursuant to Section 8.1(b) if the failure to satisfy the conditions
set forth in Section 7.3(a) or 7.3(b) by the Outside Date shall have resulted in
the Closing not occurring.
56
(c) The Company shall pay Parent a termination fee of $55 million
upon the earliest to occur of the following events (each, a "Termination
Event"):
(i) the entry by the Company into an agreement with
respect to, or the consummation of, any Acquisition Proposal (for
purposes of this Section 8.3(c), substituting 40% for 25% everywhere
it otherwise appears in the definition of Acquisition Proposal) in
any such case within 270 days of the termination of this Agreement
pursuant to Sections 8.1(b), 8.1(d) or 8.1(e) if prior to such
termination an Acquisition Proposal shall have been publicly
announced or otherwise become publicly known or any person shall
have publicly announced an intention (whether or not conditional) to
make an Acquisition Proposal; or
(ii) the termination of this Agreement by Parent
pursuant to Section 8.1(g).
(d) In the case of fees payable pursuant to Section 8.3(c)(i), 25%
of such fees shall be paid promptly upon termination of this Agreement, but in
no event later than two business days after the date of the first to occur of
the events described in Section 8.3(c)(i), and the remaining 75% of such fees
shall be paid prior to the consummation of the Acquisition Proposal or other
acquisition referred to therein. The fees payable pursuant to Section 8.3(c)(ii)
shall be paid promptly upon termination of this Agreement, but in no event later
than two business days after the date of the first to occur of the events
described in Section 8.3(c)(ii). Notwithstanding the foregoing, in no event
shall the Company be required to pay the fees and expenses of Parent if,
immediately prior to the termination of this Agreement, Parent was in material
breach of its obligations under this Agreement. The Company acknowledges that
the agreements contained in Section 8.3(c) are an integral part of the
transactions contemplated by this Agreement, and that, without these agreements,
Parent would not enter into this Agreement; accordingly, if the Company fails
promptly to pay the amount due pursuant to Section 8.3(c), and, in order to
obtain such payment, Parent commences a suit which results in a judgment against
the Company for the fee set forth in Section 8.3(c), the Company shall pay to
Parent its costs and expenses (including attorneys' fees and expenses) actually
incurred in connection with such suit, together with interest on the amount of
the fee at the prime rate of Citibank, N.A. in effect on the date such payment
was required to be made.
57
ARTICLE IX
GENERAL PROVISIONS
Section 9.1 Nonsurvival of Representations; Warranties and Agreements.
None of the representations, warranties or agreements in this Agreement or in
any instrument delivered pursuant to this Agreement shall survive the Effective
Time, except for the agreements contained in: Articles I and II; Sections 6.7
(Public Announcements), 6.8 (Listing of Parent Shares), 6.9 (Employee Benefits;
401(k) Plan), 6.10 (Stock Plans), 6.12 (Indemnification and Insurance), 6.13
(Reasonable Best Efforts), 8.2 (Effect of Termination) and 8.3 (Fees and
Expenses); this Article IX; and Sections 6.9, 6.10 and 6.12 of the Disclosure
Schedule. The Confidentiality Agreement shall survive the execution and delivery
of this Agreement or the termination of this Agreement in accordance with the
provisions of this Agreement, as the case may be, pursuant to its terms and
conditions.
Section 9.2 Notices. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly given
or made if and when delivered personally or by overnight courier to the parties
at the following addresses or sent by electronic transmission, with confirmation
received, to the telecopy numbers specified below (or at such other address or
telecopy number for a party as shall be specified by like notice):If to Parent
or Merger Sub:
XXX Xxxxxxxxxxx
000 Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Vice President, Corporate Development
Telecopier No.: 000-000-0000
Telephone No.: 000-000-0000
With a copy to:
XXX Xxxxxxxxxxx
000 Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Office of the General Counsel
Telecopier No.: 000-000-0000
Telephone No.: 000-000-0000
58
and
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxx Xxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, XX 00000
Attention: Xxxxxxxx X. Xxxxx, Esq.
Telecopier No.: 000-000-0000
Telephone No.: 000-000-0000
(a) If to the Company:
Documentum, Inc.
0000 Xxxx Xxxxxx Xxxxxxx
Xxxxxxxxxx, XX 00000-0000
Attention: Xxxxx XxXxxx
Telecopier No.: 000-000-0000
Telephone No.: 000-000-0000
With a copy to:
Wilson, Sonsini, Xxxxxxxx & Xxxxxx
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxxx X. Xxxxxxx, Esq.
Xxxxx X. Xxxxx, Esq.
Telecopier No.: 000-000-0000
Telephone No.: 000-000-0000
Any such notice or communication shall be deemed to have been delivered
and received (i) in the case of personal delivery, on the date of such delivery,
(ii) in the case of facsimile, on the date sent if confirmation of receipt is
received and such notice is also promptly mailed by registered or certified mail
(return receipt requested), (iii) in the case of a nationally-recognized
overnight courier in circumstances under which such courier guarantees next
business day delivery, on the next business day after the date when sent and
(iv) in the case of mailing, on the third business day following that on which
the piece of mail containing such communication is posted.
Section 9.3 Certain Definitions. For purposes of this Agreement, the
term:
59
(a) "affiliate" means a person that directly or indirectly, through
one or more intermediaries, controls, is controlled by, or is under common
control with, the first mentioned person;
(b) "Antitrust Law" means the Xxxxxxx Act, as amended, the Xxxxxxx
Act, as amended, the HSR Act, the Federal Trade Commission Act, as amended, the
EC Merger Regulations and all other federal, state and foreign statutes, rules,
regulations, orders, decrees, administrative and judicial doctrines, and other
Laws that are designed or intended to prohibit, restrict or regulate actions
having the purpose or effect of monopolization or restraint of trade;
(c) "beneficial owner" with respect to any shares of Company Common
Stock means a person who shall be deemed to be the beneficial owner of such
shares pursuant to Rule 13d-3 under the Exchange Act;
(d) "business day" means any day other than a Saturday or Sunday or
any day on which banks in The Commonwealth of Massachusetts are required or
authorized to be closed;
(e) "control" including the terms "controlled by" and "under common
control with") means the possession, directly or indirectly or as trustee or
executor, of the power to direct or cause the direction of the management or
policies of a person, whether through the ownership of stock, as trustee or
executor, by contract or credit arrangement or otherwise;
(f) "include" or "including" means "include, without limitation" or
"including, without limitation," as the case may be, and the language following
"include" or "including" shall not be deemed to set forth an exhaustive list;
(g) "knowledge" with respect to the Company means the actual
knowledge, after reasonable investigation, of any of the individuals identified
in Section 9.3(g)(i) of the Disclosure Schedule; provided, that with respect to
Section 3.18(c), "knowledge" with respect to the Company means the actual
knowledge after reasonable investigation, of any of the individuals identified
in Sections 9.3(g)(i) and 9.3(g)(ii); and
(h) "person" means an individual, corporation, partnership,
association, trust, unincorporated organization, other entity or group (as
defined in Section 13(d)(3) of the Exchange Act).
Section 9.4 Amendment. This Agreement may be amended by the parties
hereto by action taken by or on behalf of their respective Boards of Directors
at any time prior to the Effective Time; provided, however, that, after approval
of the Merger by the stockholders of the Company, no amendment may be made which
by law requires further approval by such stockholders without such further
approval. This Agreement may not be amended except by an instrument in writing
signed by the parties hereto.
60
Section 9.5 Extension; Waiver. At any time prior to the Effective Time,
the parties hereto, by action taken or authorized by their respective Boards of
Directors, may to the extent legally allowed, (a) extend the time for the
performance of any of the obligations or other acts of any other party hereto,
(b) waive any inaccuracies in the representations and warranties of any other
party hereto contained herein or in any document delivered pursuant hereto or
(c) waive compliance with any of the agreements or conditions of any other party
hereto contained herein. Any agreement on the part of a party hereto to any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed on behalf of such party.
Section 9.6 Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
Section 9.7 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the end
that the transactions contemplated hereby are fulfilled to the fullest extent
possible.
Section 9.8 Entire Agreement; No Third Party Beneficiaries. This
Agreement (including the documents and instruments referred to herein, including
the Confidentiality Agreement) (a) constitutes the entire agreement and
supersedes all prior agreements and understandings, both written and oral, among
the parties, or any of them, with respect to the subject matter hereof, and (b)
is not intended to confer upon any person other than the parties hereto any
rights or remedies hereunder, other than the persons intended to benefit from
the provisions of Section 6.12 (Indemnification and Insurance), who shall have
the right to enforce such provisions directly.
Section 9.9 Assignment. This Agreement shall not be assigned by
operation of law or otherwise, except that Parent and Merger Sub may assign all
or any of their rights hereunder to any wholly owned subsidiary thereof;
provided, however, that no such assignment pursuant to this Section 9.9 shall
relieve Parent of its obligations hereunder.
Section 9.10 Interpretation. When a reference is made in this Agreement
to Sections, such reference shall be to a Section of this Agreement unless
otherwise indicated. 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. Whenever the words "include",
"includes" or "including" are used in this Agreement they shall be deemed to be
followed by the words "without limitation."
61
Section 9.11 Failure or Indulgence Not Waiver; Remedies Cumulative. No
failure or delay on the part of any party hereto in the exercise of any right
hereunder shall impair such right or be construed to be a waiver of, or
acquiescence in, any breach of any representation, warranty or agreement herein,
nor shall any single or partial exercise of any such right preclude any other or
further exercise thereof or of any other right. All rights and remedies existing
under this Agreement are cumulative to, and not exclusive of, any rights or
remedies otherwise available.
Section 9.12 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the internal laws of the State of Delaware,
without regard to the conflict of law provisions thereof.
Section 9.13 Counterparts. This Agreement may be executed in two or
more counterparts, and by the different parties hereto in separate counterparts,
each of which when executed shall be deemed to be an original but all of which
taken together shall constitute one and the same agreement.
Section 9.14 WAIVER OF JURY TRIAL. EACH OF PARENT, MERGER SUB AND THE
COMPANY HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE)
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HERBY OR THE ACTIONS OF PARENT, MERGER SUB OR THE COMPANY IN THE NEGOTIATION,
ADMINISTRATION, PERFORMANCE AND ENFORCEMENT OF THIS AGREEMENT.
Section 9.15 Specific Performance. The parties agree that irreparable
damage would occur and that the parties would not have any adequate remedy at
law in the event that any of the provisions of this Agreement were not performed
in accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement, this being in addition to any other
remedy to which they are entitled at law or in equity.
[Signature Page Follows]
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IN WITNESS WHEREOF, Parent, Merger Sub and the Company have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
XXX XXXXXXXXXXX
By: /s/ Xxxxxx X.Xxxxx
--------------------------------
Name:Xxxxxx X.Xxxxx
Title:President and Chief Executive Officer
ELITE MERGER CORPORATION
By: /s/ Xxxx X. Xxxxxx
--------------------------------
Name:Xxxx X. Xxxxxx
Title:President
DOCUMENTUM, INC.
By: /s/ Xxxxx X. Xxxxxx
--------------------------------
Name:Xxxxx X. Xxxxxx
Title:President and Chief Executive Officer
