EXHIBIT 1
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
among
ARIBA, INC.,
SILVER MERGER CORPORATION
and
AGILE SOFTWARE CORPORATION
Dated as of January 29, 2001
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
TABLE OF CONTENTS
Page
----
ARTICLE I THE MERGER.................................................. A-2
1.01. The Merger.................................................. A-2
1.02. Effective Time; Closing..................................... A-2
1.03. Effect of the Merger........................................ A-2
1.04. Certificate of Incorporation; Bylaws........................ A-2
1.05. Directors and Officers...................................... A-2
ARTICLE II CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES.......... A-3
2.01. Conversion of Securities.................................... A-3
2.02. Exchange of Certificates.................................... A-3
2.03. Stock Transfer Books........................................ A-5
2.04. Company Stock Options....................................... A-6
2.05. Warrants.................................................... A-6
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY............... A-7
3.01. Organization and Qualification; Subsidiaries................ A-7
3.02. Charters and Bylaws......................................... A-8
3.03. Capitalization.............................................. A-8
3.04. Authority Relative to This Agreement........................ A-9
3.05. No Conflict; Required Filings and Consents.................. A-10
3.06. Permits; Compliance......................................... A-10
3.07. SEC Filings; Financial Statements........................... A-11
3.08. Undisclosed Liabilities..................................... A-11
3.09. Absence of Certain Changes or Events........................ A-12
3.10. Absence of Litigation....................................... A-13
3.11. Employee Benefit Plans; Labor Matters....................... A-14
3.12. Contracts................................................... A-17
3.13. Environmental Matters....................................... A-18
3.14. Title to Properties; Absence of Liens and Encumbrances...... A-19
3.15. Intellectual Property....................................... A-19
3.16. Taxes....................................................... A-21
3.17. Status as a Reorganization.................................. A-23
3.18. Affiliate Transactions...................................... A-23
3.19. Insurance................................................... A-23
3.20. Board Approval; Vote Required............................... A-23
3.21. State Takeover Statutes..................................... A-23
3.22. Opinion of Financial Advisor................................ A-23
3.23. Brokers..................................................... A-23
3.24. Customers; Suppliers........................................ A-24
3.25. Restrictions on Business Activities......................... A-24
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB..... A-24
4.01. Organization and Qualification; Subsidiaries................ A-24
4.02. Certificate of Incorporation and Bylaws..................... A-25
4.03. Capitalization.............................................. A-25
4.04. Authority Relative to This Agreement........................ A-26
4.05. No Conflict; Required Filings and Consents.................. A-26
4.06. SEC Filings; Financial Statements........................... A-27
4.07. Tax Matters................................................. A-27
4.08. Operations of Merger Sub.................................... A-27
Page
----
4.09. Brokers................................................... A-27
4.10. Board Approval; Vote Required............................. A-27
4.11. Undisclosed Liabilities................................... A-28
4.12. Absence of Certain Changes or Events...................... A-28
4.13. Absence of Litigation..................................... A-28
4.14. Intellectual Property..................................... A-28
4.15. Opinion of Financial Advisor.............................. A-29
4.16. Taxes..................................................... A-29
ARTICLE V CONDUCT OF BUSINESS PENDING THE MERGER.................... A-29
5.01. Conduct of Business by the Company Pending the Merger..... A-29
5.02. Conduct of Business by Parent............................. A-30
5.03. Notification of Certain Matters........................... A-30
ARTICLE VI ADDITIONAL AGREEMENTS..................................... A-31
6.01. Registration Statement; Joint Proxy Statement............. A-31
6.02. Company Stockholders' Meeting............................. A-33
6.03. Parent Stockholders' Meeting.............................. A-33
6.04. Access to Information; Confidentiality.................... A-33
6.05. No Solicitation of Transactions........................... A-33
6.06. Directors' and Officers' Indemnification and Insurance.... A-34
6.07. Obligations of Merger Sub................................. A-35
6.08. Affiliates................................................ A-35
6.09. Further Action; Consents; Filings......................... A-36
6.10. Plan of Reorganization.................................... A-36
6.11. Public Announcements...................................... A-37
6.12. Listing................................................... A-37
6.13. Commercially Reasonable Efforts and Further Assurances.... A-37
6.14. Employee Benefits......................................... A-37
ARTICLE VII CONDITIONS TO THE MERGER.................................. A-37
7.01. Conditions to the Obligations of Each Party............... A-37
7.02. Conditions to the Obligations of Parent and Merger Sub.... A-38
7.03. Conditions to the Obligations of the Company.............. A-39
ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER......................... A-40
8.01. Termination............................................... A-40
8.02. Effect of Termination..................................... A-41
8.03. Amendment................................................. A-41
8.04. Waiver.................................................... A-41
8.05. Expenses.................................................. A-41
ARTICLE IX GENERAL PROVISIONS........................................ A-42
Non-Survival of Representations, Warranties and
9.01. Agreements................................................ A-42
9.02. Notices................................................... A-42
9.03. Certain Definitions....................................... A-43
9.04. Severability.............................................. A-44
9.05. Assignment; Binding Effect; Benefit....................... A-44
9.06. Specific Performance...................................... A-44
9.07. Governing Law; Forum...................................... A-44
9.08. Waiver of Jury Trial...................................... A-44
9.09. Headings.................................................. A-44
9.10. Counterparts.............................................. A-44
Page
----
9.11. Mutual Drafting................................................. A-45
9.12. Entire Agreement................................................ A-45
Exhibit A Form of Company Voting Agreement
Exhibit B Form of Parent Voting Agreement
Exhibit C Form of Company Stock Option Agreement
Exhibit D Form of Affiliate
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION dated as of January 29, 2001
(this "Agreement") among ARIBA, INC., a Delaware corporation ("Parent"), SILVER
MERGER CORPORATION, a Delaware corporation and a wholly owned subsidiary of
Parent ("Merger Sub"), and AGILE SOFTWARE CORPORATION, a Delaware corporation
(the "Company").
WITNESSETH
WHEREAS, upon the terms and subject to the conditions of this Agreement and
in accordance with the Delaware General Corporation Law (the "DGCL"), Parent
will combine with the Company through the merger of Merger Sub with and into
the Company with the Company being the surviving corporation (the "Merger");
WHEREAS, the Board of Directors of the Company (i) has approved, and deems
it advisable and in the best interests of the Company and its stockholders to
consummate, the Merger, upon the terms and subject to the conditions set forth
in this Agreement and (ii) has recommended the approval of the Merger and the
adoption of this Agreement by the stockholders of the Company;
WHEREAS, the Boards of Directors of each of Parent and Merger Sub have (i)
determined that the Merger is consistent with and in furtherance of the long-
term business strategy of Parent, (ii) approved this Agreement, the Merger and
the other transactions contemplated by this Agreement and (iii) recommended the
approval of the issuance of Parent Common Shares (as defined in Section 2.01(a)
below) pursuant to the Merger by the Stockholders of Parent;
WHEREAS, concurrently with the execution of this Agreement, and as a
condition and inducement to Parent's willingness to enter into this Agreement,
certain stockholders of the Company are entering into voting agreements (the
"Company Voting Agreements") with Parent in substantially the form attached as
Exhibit A hereto;
WHEREAS, concurrently with the execution of this Agreement, and as a
condition and inducement to the Company's willingness to enter into this
Agreement, certain stockholders of Parent are entering into voting agreements
(the "Parent Voting Agreements") with the Company in substantially the form
attached as Exhibit B hereto;
WHEREAS, concurrently with the execution of this Agreement, and as a
condition and inducement to Parent's willingness to enter into this Agreement,
the Company shall execute and deliver a stock option agreement (the "Company
Stock Option Agreement") in substantially the form attached as Exhibit C hereto
in favor of Parent, and the Board of Directors of the Company will have
approved such Company Stock Option Agreement;
WHEREAS, as a condition and inducement to Parent's willingness to enter into
this Agreement, certain employees of the Company are entering into employment
and non-competition agreements with Parent;
WHEREAS, for United States federal income tax purposes, the Merger is
intended to qualify as a reorganization under the provisions of section 368(a)
of the United States Internal Revenue Code of 1986, as amended (the "Code");
WHEREAS, the parties intend that the Merger shall be accounted for as a
"purchase" for financial reporting purposes; and
WHEREAS, pursuant to the Merger, (i) each outstanding share of Common Stock
of the Company and all outstanding options or other rights to acquire or
receive shares of Common Stock of the Company and (ii) each outstanding warrant
that does not by its terms terminate at or prior to the Effective Time (as
defined in Section 1.02 below) shall be converted into the right to receive
shares of Parent's authorized Common Stock at the rate determined in this
Agreement;
A-1
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements herein contained, and intending to be legally bound hereby,
Parent, Merger Sub and the Company hereby agree as follows:
ARTICLE I
The Merger
SECTION 1.01 The Merger. Upon the terms of this Agreement and subject to the
conditions set forth in Article VII, and in accordance with the DGCL, at the
Effective Time (as defined below), Merger Sub shall be merged with and into the
Company. As a result of the Merger, the separate corporate existence of Merger
Sub shall cease and the Company shall continue as the surviving corporation of
the Merger (the "Surviving Corporation").
SECTION 1.02 Effective Time; Closing. As promptly as practicable and in no
event later than the second business day following the satisfaction or, if
permissible, waiver of the conditions set forth in Article VII (or such other
date as may be agreed in writing by each of the parties hereto), the parties
hereto shall cause the Merger to be consummated by filing a certificate of
merger (the "Certificate of Merger") with the Secretary of State of the State
of Delaware in such form as is required by, and executed in accordance with,
the relevant provisions of the DGCL. The term "Effective Time" means the date
and time of the filing with, and the acceptance by, the Secretary of State of
the State of Delaware of the Certificate of Merger (or such later time, not to
exceed 30 days after such acceptance for record, as may be agreed in writing by
each of the parties hereto and specified in the Certificate of Merger).
Immediately prior to the filing of the Certificate of Merger, a closing (the
"Closing") will be held at the offices of Xxxxxxxxx Xxxxxxx Xxxxxx Xxxxxxxxxx
Xxxxxxxx & Xxxxxxxxx, LLP ("Xxxxxxxxx Xxxxxxx"), 000 Xxxxxxxxxxxx Xxxxx, Xxxxx
Xxxx, Xxxxxxxxxx 00000 (or such other place as the parties hereto may agree).
The date on which the Closing shall occur is referred to herein as the "Closing
Date."
SECTION 1.03 Effect of the Merger. At the Effective Time, the effect of the
Merger shall be as provided in the applicable provisions of the DGCL. Without
limiting the generality of the foregoing, and subject thereto, at the Effective
Time, all the property, rights, privileges, powers and franchises of the
Company and Merger Sub shall vest in the Surviving Corporation, and all debts,
liabilities, obligations, restrictions, disabilities and duties of each of the
Company and Merger Sub shall become the debts, liabilities, obligations,
restrictions, disabilities and duties of the Surviving Corporation.
SECTION 1.04 Certificate of Incorporation; Bylaws.
(a) At the Effective Time the Certificate of Incorporation of the Company as
the Surviving Corporation shall be amended and restated to read the same as the
Certificate of Incorporation of Merger Sub, as in effect immediately prior to
the Effective Time, except that Article I of the amended and restated
Certificate of Incorporation of the Company, instead of reading the same as the
Certificate of Incorporation of Merger Sub shall read as follows: The name of
the corporation is Agile Software Corporation.
(b) At the Effective Time, the Bylaws of Merger Sub, as in effect
immediately prior to the Effective Time, shall, subject to Section 6.06(a) of
this Agreement, be the Bylaws of the Surviving Corporation until thereafter
amended as provided by law, the Certificate of Incorporation of the Surviving
Corporation and such Bylaws.
SECTION 1.05 Directors and Officers. The directors of Merger Sub immediately
prior to the Effective Time shall be the directors of the Surviving
Corporation, each to hold office in accordance with the Certificate of
Incorporation and Bylaws of the Surviving Corporation, and the officers of
Merger Sub immediately prior to the Effective Time shall be the officers of the
Surviving Corporation, in each case until their respective successors are duly
elected or appointed and qualified.
A-2
ARTICLE II
Conversion of Securities; Exchange of Certificates
SECTION 2.01 Conversion of Securities.
(a) At the Effective Time, by virtue of the Merger and without any action on
the part of Parent, Merger Sub, the Company or the holders of any of the
following securities:
(i) Each share of Common Stock of the Company, par value $0.001 per
share (the "Company Common Stock") (all issued and outstanding shares of
Company Common Stock being hereinafter collectively referred to as the
"Shares"), issued and outstanding immediately prior to the Effective Time
(other than any Shares to be canceled pursuant to Section 2.01(a)(ii))
shall be converted, subject to Section 2.02(e), into the right to receive
that number of shares of Common Stock of Parent, par value $0.002 per share
("Parent Common Shares") equal to 1.35 (the "Exchange Ratio"). At the
Effective Time, each such Share shall be canceled, cease to be outstanding
and cease to exist and each holder of Shares shall thereafter cease to have
any rights with respect to such Shares, except the right to receive,
without interest, Parent Common Shares in accordance with this Section
2.01(a)(i) and cash for fractional Parent Common Shares in accordance with
Section 2.02(e).
(ii) Each Share held in the treasury of the Company and each Share owned
by Parent or any direct or indirect wholly owned subsidiary of Parent or of
the Company immediately prior to the Effective Time shall be canceled and
extinguished without any conversion thereof and no payment or distribution
shall be made with respect thereto.
(iii) Each share of Common Stock, par value $0.001 per share, of Merger
Sub issued and outstanding immediately prior to the Effective Time shall be
converted into and exchanged for one duly authorized, validly issued, fully
paid and nonassessable share of common stock, par value $0.001 per share,
of the Surviving Corporation.
(b) If between the date of this Agreement and the Effective Time, the
outstanding Parent Common Shares or outstanding shares of Company Common Stock
shall have been changed into a different number of shares or a different class,
by reason of any stock dividend, subdivision, reclassification,
recapitalization, split, combination or exchange of shares or any similar
event, the Exchange Ratio shall be correspondingly adjusted to the extent
appropriate to reflect such stock dividend, subdivision, reclassification,
recapitalization, split, combination or exchange of shares or similar event.
(c) If any shares of Company Common Stock outstanding immediately prior to
the Effective Time are unvested or are subject to a repurchase option, risk of
forfeiture or other condition under any applicable restricted stock purchase
agreement or other agreement with the Company, then (i) the Parent Common
Shares issued in exchange for such shares of Company Common Stock will also be
unvested and/or subject to the same repurchase option, risk of forfeiture or
other condition, (ii) the certificates representing such Parent Common Shares
may accordingly be marked with appropriate legends and (iii) the Company shall
take all action that may be necessary to ensure that, from and after the
Effective Time, Parent is entitled to exercise any such repurchase option or
other right set forth in any such restricted stock purchase agreement or other
agreement.
SECTION 2.02 Exchange of Certificates.
(a) Exchange Agent. Parent shall deposit, or shall cause to be deposited,
with Bank Boston, N.A., or such other bank or trust company that may be
designated by Parent and is reasonably satisfactory to the Company (the
"Exchange Agent"), for the benefit of the holders of Shares, for exchange in
accordance with this Article II through the Exchange Agent, certificates
representing Parent Common Shares issuable pursuant to Section 2.01 as of the
Effective Time and cash, from time to time as required to make payments in lieu
of
A-3
any fractional shares pursuant to Section 2.02(e) (such cash and certificates
for Parent Common Shares, together with any dividends or distributions with
respect thereto, being hereinafter referred to as the "Exchange Fund"). The
Exchange Agent shall, pursuant to irrevocable instructions, deliver the Parent
Common Shares contemplated to be issued pursuant to Section 2.01 out of the
Exchange Fund. Except as contemplated by Section 2.02(f) hereof, the Exchange
Fund shall not be used for any other purpose.
(b) Exchange Procedures. As promptly as practicable after the Effective
Time, Parent shall cause 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 (the "Certificates") (i) a letter of transmittal
(which shall be in customary form and 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 (ii)
instructions for use in effecting the surrender of the Certificates in exchange
for certificates representing Parent Common Shares and cash in lieu of any
fractional shares. Upon surrender to the Exchange Agent of a Certificate for
cancellation, together with such letter of transmittal, duly executed and
completed in accordance with the instructions thereto, and such other documents
as may be reasonably required pursuant to such instructions, the holder of such
Certificate shall be entitled to receive in exchange therefor a certificate
representing that number of whole Parent Common Shares that such holder has the
right to receive in respect of the Shares formerly represented by such
Certificate (after taking into account all Shares then held by such holder),
cash in lieu of any fractional Parent Common Shares to which such holder is
entitled pursuant to Section 2.02(e) and any dividends or other distributions
to which such holder is entitled pursuant to Section 2.02(c), and the
Certificate so surrendered shall forthwith be canceled. In the event of a
transfer of ownership of Shares that is not registered in the transfer records
of the Company, a certificate representing the proper number of Parent Common
Shares, cash in lieu of any fractional Parent Common Shares to which such
holder is entitled pursuant to Section 2.02(e) and any dividends or other
distributions to which such holder is entitled pursuant to Section 2.02(c) may
be issued to a transferee if the Certificate representing such Shares is
presented to the Exchange Agent, accompanied by all documents required to
evidence and effect such transfer and by evidence satisfactory to the Surviving
Corporation that any applicable share transfer taxes have been paid. Until
surrendered as contemplated by this Section 2.02, each Certificate shall be
deemed at all times after the Effective Time to represent only the right to
receive upon such surrender the certificate representing Parent Common Shares,
cash in lieu of any fractional Parent Common Shares to which such holder is
entitled pursuant to Section 2.02(e) and any dividends or other distributions
to which such holder is entitled pursuant to Section 2.02(c).
(c) Distributions with Respect to Unexchanged Parent Common Shares. No
dividends or other distributions declared or made after the Effective Time with
respect to the Parent Common Shares with a record date after the Effective Time
shall be paid to the holder of any unsurrendered Certificate with respect to
the Parent Common Shares represented thereby, and no cash payment in lieu of
any fractional shares shall be paid to any such holder pursuant to Section
2.02(e), until the holder of such Certificate shall surrender such Certificate
as provided in Section 2.02(b). Subject to the effect of escheat, tax or other
applicable Laws (as defined in Section 3.05(a)), following surrender of any
such Certificate, there shall be paid to the holder of the certificates
representing whole Parent Common Shares issued in exchange therefor, without
interest, (i) the amount of any cash payable with respect to a fractional
Parent Common Share to which such holder is entitled pursuant to Section
2.02(e) and the amount of dividends or other distributions with a record date
after the Effective Time and theretofore payable with respect to such whole
Parent Common Shares and (ii) at the appropriate payment date, the amount of
dividends or other distributions, with a record date after the Effective Time
but prior to surrender and a payment date occurring after surrender, payable
with respect to such whole Parent Common Shares.
(d) No Further Rights in Company Common Stock. All Parent Common Shares
issued upon conversion of the Shares in accordance with the terms hereof and
any cash paid pursuant to Sections 2.02(c) or (e) shall be deemed to have been
issued or paid in full satisfaction of all rights pertaining to such Shares.
(e) No Fractional Shares. No certificates or scrip representing fractional
Parent Common Shares shall be issued upon the surrender for exchange of
Certificates, and such fractional share interests will not entitle the
A-4
owner thereof to vote or to any other rights of a stockholder of Parent. Each
holder of a fractional share interest shall be paid an amount in cash (without
interest) equal to the product obtained by multiplying (i) such fractional
share interest to which such holder (after taking into account all fractional
share interests then held by such holder) would otherwise be entitled by (ii)
the average closing price per share of Parent Common Shares for the ten most
recent days that Parent Common Shares have traded ending on (and including) the
trading day immediately prior to the Effective Time, as reported on The Nasdaq
National Market. As promptly as practicable after the determination of the
amount of cash, if any, to be paid to holders of fractional share interests,
the Exchange Agent shall so notify Parent, and Parent shall deposit such amount
with the Exchange Agent and shall cause the Exchange Agent to forward payments
to such holders of fractional share interests subject to and in accordance with
the terms of Sections 2.02(b) and (c).
(f) Termination of Exchange Fund. Any portion of the Exchange Fund that
remains undistributed to the holders of Shares for twelve months after the
Effective Time shall be delivered to Parent, upon demand, and any holders of
Shares who have not theretofore complied with this Article II shall thereafter
look only to Parent for the Parent Common Shares, any cash in lieu of
fractional Parent Common Shares to which they are entitled pursuant to Section
2.02(e) and any dividends or other distributions with respect to the Parent
Common Shares to which they are entitled pursuant to Section 2.02(c). Any
portion of the Exchange Fund remaining unclaimed by holders of Shares as of a
date that is immediately prior to such time as such amounts would otherwise
escheat to or become property of any government entity shall, to the extent
permitted by applicable Law, become the property of Parent free and clear of
any claims or interest of any person previously entitled thereto.
(g) No Liability. Neither Parent nor the Surviving Corporation shall be
liable to any holder of Shares for any Parent Common Shares (or dividends or
distributions with respect thereto) or cash delivered to a public official
pursuant to any abandoned property, escheat or similar Law.
(h) Withholding Rights. Each of the Surviving Corporation, Parent and the
Exchange Agent shall be entitled to deduct and withhold from the consideration
otherwise payable pursuant to this Agreement to any holder of Shares such
amounts as it 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 the Surviving Corporation,
Parent or the Exchange Agent, as the case may be, such withheld amounts shall
be treated for all purposes of this Agreement as having been paid to the holder
of the Shares in respect of which such deduction and withholding was made by
the Surviving Corporation, Parent or the Exchange Agent, as the case may be.
(i) Lost, Stolen or Destroyed Certificates. If any Certificate shall have
been lost, stolen or destroyed, upon the making of an affidavit of that fact by
the person claiming such Certificate to be lost, stolen or destroyed, and, if
required by the Surviving Corporation or the Exchange Agent, the posting by
such person of a bond, in such reasonable amount as the Surviving Corporation
or Exchange Agent may direct, as indemnity against any claim that may be made
against it with respect to such Certificate and the payment of any fee charged
by the Exchange Agent for such service, the Exchange Agent will issue in
exchange for such lost, stolen or destroyed Certificate the Parent Common
Shares, any cash in lieu of fractional Parent Common Shares to which the holder
thereof is entitled pursuant to Section 2.02(e) and any dividends or other
distributions to which the holder thereof is entitled pursuant to Section
2.02(c).
SECTION 2.03 Stock Transfer Books.
(a) At the Effective Time, the stock transfer books of the Company shall be
closed and there shall be no further registration of transfers of Shares
thereafter on the records of the Company. From and after the Effective Time,
the holders of Certificates representing Shares outstanding immediately prior
to the Effective Time shall cease to have any rights with respect to such
Shares, except as otherwise provided in this Agreement or by Law. On or after
the Effective Time, any Certificates presented to the Exchange Agent or Parent
for any reason shall be converted into Parent Common Shares, any cash in lieu
of fractional Parent Common Shares to which the holders thereof are entitled
pursuant to Section 2.02(e) and any dividends or other distributions to which
the holders thereof are entitled pursuant to Section 2.02(c).
A-5
(b) Notwithstanding anything herein to the contrary, Certificates
surrendered for exchange by any person constituting an Affiliate (as defined in
Section 6.08 below) shall not be exchanged until Parent shall have received
from such person an affiliate letter as provided in Section 6.08.
SECTION 2.04 Company Stock Options.
(a) At the Effective Time, Parent shall assume (i) all options to acquire
Company Common Stock (the "Company Stock Options") outstanding immediately
prior to the Effective Time, whether or not exercisable and whether or not
vested, under the Company's 1995 Stock Option Plan (the "Company 1995 Plan"),
the 1995 Stock Plan of Digital Market, Inc. (the "DMI 1995 Plan"), the
Company's 2000 Nonstatutory Stock Option Plan (the "2000 Plan" and together
with the Company 1995 Plan and the DMI 1995 Plan, the "Company Stock Option
Plans"), and (ii) each Company Stock Option Plan, and the Company's repurchase
right with respect to any unvested shares acquired by the exercise of Company
Stock Options shall be assigned to Parent by virtue of the Merger and without
any further action on the part of the Company or the holders of such unvested
shares. Each Company Stock Option so assumed by Parent under this Agreement
will continue to have, and be subject to, the same terms and conditions of such
option immediately prior to the Effective Time (including, without limitation,
any repurchase rights or vesting provisions), except that (i) each Company
Stock Option will be exercisable (or will become exercisable in accordance with
its terms) for that number of whole Parent Common Shares (rounded down to the
nearest whole share) equal to the number of shares of Company Common Stock
subject to such Company Stock Option multiplied by the Exchange Ratio and (ii)
the per share exercise price for the Parent Common Shares issuable upon
exercise of such assumed Company Stock Option will be equal to the exercise
price per share of such Company Stock Option in effect immediately prior to the
Effective Time divided by the Exchange Ratio (the exercise price per share, as
so determined, being rounded upward to the nearest full cent). It is the
intention of the parties that each Company Stock Option assumed by Parent shall
qualify following the Effective Time as an incentive stock option as defined in
section 422 of the Code to the extent permitted under section 422 of the Code
and to the extent such option qualified as an incentive stock option prior to
the Effective Time. Outstanding purchase rights under the Company's 1999
Employee Stock Purchase Plan (the "Company Purchase Plan") shall be exercised
upon the earlier of (i) the next scheduled purchase date under the Company
Purchase Plan or (ii) immediately prior to the Effective Time, and each
participant in the Company Purchase Plan shall accordingly be issued shares of
Company Common Stock at that time pursuant to the terms of the Company Purchase
Plan and each share of Company Common Stock so issued shall by virtue of the
Merger, and without any action on the part of the holder thereof, be converted
into the right to receive Parent Common Shares in accordance with Section
2.01(a)(i) and cash for fractional Parent Common Shares in accordance with
Section 2.02(e). The Company Purchase Plan shall be terminated as of the
Effective Time.
(b) As soon as practicable after the Effective Time, Parent shall deliver to
each person who, immediately prior to the Effective Time, was a holder of an
outstanding Company Stock Option an appropriate notice setting forth such
holder's rights pursuant thereto. As soon as practicable after the Effective
Time (but in any event not later than 20 business days following the Effective
Time), Parent shall file a registration statement on Form S-8 (or any successor
or other appropriate forms) that will register the Parent Common Shares subject
to Company Stock Options to the extent permitted by federal securities laws and
shall use its reasonable efforts to maintain the effectiveness of such
registration statement or registration statements for so long as such options
remain outstanding. In addition, Parent shall use all reasonable efforts to
cause the Parent Common Shares subject to Company Stock Options to be listed on
The Nasdaq National Market and such exchanges as Parent shall determine.
SECTION 2.05 Warrants. At the Effective Time, each warrant to acquire
Company Common Stock (the "Warrants") granted and outstanding immediately prior
to the Effective Time, whether contingent or earned, that does not terminate by
its terms at or prior to the Effective Time shall be converted into a warrant
to acquire Parent Common Shares, and each Warrant so converted will continue to
have, and be subject to, the same terms and conditions of such Warrant
immediately prior to the Effective Time, except that (i) each Warrant will be
exercisable (or will become exercisable in accordance with its terms) for that
number of whole
A-6
Parent Common Shares (rounded down to the nearest whole share) equal to the
number of shares of Company Common Stock issuable upon exercise of such Warrant
prior to the Effective Time multiplied by the Exchange Ratio and (ii) the per
share exercise price for the Parent Common Shares issuable upon exercise of
such assumed Warrant will be equal to the exercise price per share of Company
Common Stock at which such Warrant was exercisable immediately prior to the
Effective Time divided by the Exchange Ratio (the exercise price per share, as
so determined, being rounded upward to the nearest whole cent).
ARTICLE III
Representations and Warranties of the Company
The Company hereby represents and warrants to Parent and Merger Sub that the
statements contained in this Article III are true and correct except as set
forth in the disclosure schedule delivered by the Company to Parent and Merger
Sub concurrently with the execution of this Agreement (the "Company Disclosure
Schedule"). The Company Disclosure Schedule shall be arranged according to
specific sections in this Article III and shall provide exceptions to, or
otherwise qualify in reasonable detail, only the corresponding section in this
Article III and any other section in this Article III where it is reasonably
clear, upon a reading of such disclosure without any independent knowledge on
the part of the reader regarding the matter disclosed, that the disclosure is
intended to apply to such other section.
SECTION 3.01 Organization and Qualification; Subsidiaries.
(a) Section 3.01(a) of the Company Disclosure Schedule sets forth the
jurisdiction of incorporation or organization of each of the Company and each
subsidiary of the Company (collectively, the "Company Subsidiaries"). Each of
the Company and the Company Subsidiaries is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of
such incorporation and has all requisite corporate power and authority and all
necessary governmental approvals to own, lease and operate its properties and
to carry on its business as it is now being conducted, except where the failure
to have such governmental approvals have not had, and could not reasonably be
expected to have, individually or in the aggregate, a Company Material Adverse
Effect (as defined below). Each of the Company and the Company Subsidiaries is
duly qualified or licensed as a foreign corporation or organization 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 business
makes such qualification or licensing necessary, except for such failures to be
so qualified or licensed and in good standing that have not had, and could not
reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect. Section 3.01(a) of the Company Disclosure Schedule
sets forth each jurisdiction in which the Company or a Company Subsidiary is
qualified or licensed to do business as a foreign corporation or organization.
The term "Company Material Adverse Effect" means any changes in or effects on
the business of the Company or any Company Subsidiary that, individually or in
the aggregate, are or are substantially likely to be materially adverse to the
business, financial condition, assets (tangible or intangible), liabilities
(including contingent liabilities) or results of operations of the Company and
the Company Subsidiaries taken as a whole, except for any such changes or
effects principally resulting from or principally arising in connection with
(i) any changes affecting the respective industries in which the Company and
the Company Subsidiaries operate that do not have a disproportionate impact on
the Company and the Company Subsidiaries, taken as a whole, (ii) any changes in
general economic conditions that do not disproportionately impact the Company
and the Company Subsidiaries, taken as a whole, (iii) in and of itself, any
change in the trading price of Company Common Stock, (iv) in and of itself, a
failure by Company to meet the revenue or earnings predictions of equity
analysts for any period ending (or for which earnings are released) on or after
the date of this Agreement and prior to the Closing Date, (v) the taking of any
action expressly required by the terms of this Agreement or (vi) any adverse
change, effect, event, occurrence, state of facts or development to the extent
primarily attributable to the announcement or pendency of the Merger; provided,
however, that the Company shall bear the burden of showing that such change,
effect, event, occurrence, state of fact or development which the Company
claims does not constitute a Company Material Adverse Effect is primarily
attributable to the announcement or pendency of the Merger.
A-7
(b) Neither the Company nor any Company Subsidiary directly or indirectly
owns any equity or similar interest in, or any interest convertible into or
exchangeable or exercisable for, any corporation, partnership, joint venture or
other business association or entity that is or could reasonably be expected to
be material to the Company and the Company Subsidiaries, taken as a whole.
SECTION 3.02 Certificate of Incorporation and Bylaws. The Company has
heretofore made available to Parent a complete and correct copy of the
Certificates of Incorporation, Bylaws (or equivalent organizational documents)
and minute books of the Company and each of the Company Subsidiaries, each as
amended to the date of this Agreement. Such Certificates of Incorporation and
Bylaws (or equivalent organizational documents) are in full force and effect.
Neither the Company nor any Company Subsidiary is in violation of any of the
provisions of its Certificate of Incorporation or Bylaws (or equivalent
organizational documents). The minute books of the Company and the Company
Subsidiaries are complete and accurate and have been duly maintained in
accordance with all applicable legal requirements, and all signatures appearing
on all documents contained therein are the true signatures of the persons
purported to have signed the same.
SECTION 3.03 Capitalization.
(a) The authorized capital stock of the Company consists of 100,000,000
shares of Company Common Stock and 10,000,000 shares of preferred stock, par
value $0.001 per share (the "Company Preferred Stock"). As of the date hereof,
(i) 47,220,810 shares of Company Common Stock are issued and outstanding, all
of which are duly authorized, validly issued, fully paid and nonassessable,
(ii) no shares of Company Common Stock or Company Preferred Stock are held in
the treasury of the Company, (iii) no shares of Company Common Stock or Company
Preferred Stock are held by Company Subsidiaries and (iv) no shares of Company
Preferred Stock are issued and outstanding. Each outstanding share of stock or
other equity interest of each Company Subsidiary is duly authorized, validly
issued, fully paid and nonassessable and each such share or other equity
interest owned by the Company or another Company Subsidiary is free and clear
of all liens, security interests, claims, pledges, options, rights of first
refusal, agreements, limitations on voting rights, charges and other
encumbrances of any nature whatsoever. The Company directly owns 100% of the
issued and outstanding capital stock, and all options or other rights to
acquire such capital stock, of each Company Subsidiary.
(b) The Company has duly reserved 11,750,000 shares of Company Common Stock
for future issuance pursuant to the Company 1995 Plan, of which options to
purchase 4,605,895 shares of Company Common Stock are outstanding as of the
date of this Agreement, 111,986 shares of Company Common Stock for future
issuance pursuant to the DMI 1995 Plan, of which options to purchase 43,069
shares of Company Common Stock are outstanding as of the date of this
Agreement, 9,500,000 shares of Company Common Stock for future issuance
pursuant to the 2000 Plan, of which options to purchase 8,151,816 shares of
Company Common Stock are outstanding as of the date of this Agreement, and
2,000,000 shares of Company Common Stock for issuance to employees pursuant to
the Company Purchase Plan, of which 1,809,875 shares are available for
issuance. Section 3.03(b) of the Company Disclosure Schedule accurately sets
forth with respect to each Company Stock Option that is outstanding as of the
date of this Agreement: (i) the name of the holder of such Company Stock
Option; (ii) the total number of shares of Company Common Stock that was
originally subject to such Company Stock Option, (iii) the number of shares of
Company Common Stock that remain subject to such Company Stock Option; (iv) the
date on which such Company Stock Option was granted, (v) the term of such
Company Stock Option; (vi) the vesting schedule for such Company Stock Option;
(vii) the vesting commencement date for such Company Stock Option; (viii) the
exercise price per share of Company Common Stock purchasable under such Company
Stock Option; (ix) whether such Company Stock Option has been designated an
"incentive stock option" as defined in section 422 of the Code; and (x) the
current employee or independent contractor status of the holder of such Company
Stock Option. No Company Stock Option will by its terms require an adjustment
in connection with the Merger, except as contemplated by this Agreement.
Neither the consummation of the transactions contemplated by this Agreement,
nor any action taken or to be taken by Company in connection with such
transactions, will result in (i) any acceleration of exercisability or vesting
(including, without limiting the foregoing, any right to acceleration of
vesting that is contingent upon
A-8
the occurrence of a subsequent event) in favor of any optionee under any
Company Stock Option; (ii) any additional benefits for any optionee under any
Company Stock Option; or (iii) the inability of Parent after the Effective Time
to exercise any right or benefit held by the Company prior to the Effective
Time with respect to any Company Stock Option assumed by Parent or any shares
of Company Common Stock previously issued upon exercise of a Company Stock
Option, including, without limitation, the right to repurchase an optionee's
unvested shares on termination of such optionee's employment. The assumption by
Parent of the Company Stock Option Plans and the Company Stock Options in
accordance with Section 2.04 hereunder will not give rise to any event
described in clauses (i) through (iii) of the immediately preceding sentence.
(c) The Company has duly reserved 50,000 shares of Company Common Stock for
future issuance pursuant to the exercise of Warrants. Section 3.03(c) of the
Company Disclosure Schedule sets forth, with respect to each Warrant issued to
any person: (i) the name of the holder of such Warrant; (ii) the total number
of shares of Company Common Stock that are subject to such Warrant; (iii) the
total number of shares of Company Common Stock with respect to which such
Warrant is immediately exercisable; (iv) the exercise price per share of
Company Common Stock issuable under such Warrant; (v) whether such Warrant is
subject to vesting and, if so, the conditions of such vesting; and (vi) the
term of such Warrant.
(d) Except (i) as set forth in Sections 3.03(b) and 3.03(c) of the Company
Disclosure Schedule, (ii) for shares of Company Common Stock reserved for
issuance under the Company Purchase Plan and (iii) as provided in the Company
Stock Option Agreement, there are no options, warrants or other rights,
agreements, arrangements or commitments of any character relating to the issued
or unissued capital stock of the Company or any Company Subsidiary or
obligating the Company or any Company Subsidiary to issue or sell any shares of
its capital stock or other equity interests. All shares of Company Common Stock
so subject to issuance, upon issuance in accordance with the terms and
conditions specified in the instruments pursuant to which they are issuable,
will be duly authorized, validly issued, fully paid and nonassessable. There
are no outstanding contractual obligations of the Company to repurchase, redeem
or otherwise acquire any shares of capital stock or other equity interests of
the Company or any Company Subsidiary. Each holder of a Company Stock Option or
Warrant has been or will be given, or shall have properly waived, any required
notice of the Merger prior thereto, and all such rights of notice will
terminate at or prior to the Effective Time.
(e) All of the securities sold or issued by the Company and each Company
Subsidiary have been sold or issued in compliance with the requirements of the
federal securities laws and any other applicable securities laws.
(f) The Company has never repurchased, redeemed or otherwise reacquired any
shares of capital stock or other securities of the Company or any Subsidiary,
other than unvested securities upon termination of employment or consultancy.
(g) There are no stockholder agreements, voting trusts or other agreements
or understandings to which the Company or any Company Subsidiary is a party, or
of which the Company or any Company Subsidiary is aware, (i) relating to
voting, registration or disposition of any shares of capital stock of the
Company or any Company Subsidiary; (ii) granting to any person or group of
persons the right to elect, or to designate or nominate for election, a
director to the board of directors of the Company or any Company Subsidiary; or
(iii) granting to any person or group of persons information rights.
(h) The Company has duly reserved 9,396,941 shares of Company Common Stock
for issuance pursuant to the Company Stock Option Agreement.
SECTION 3.04 Authority Relative to This Agreement. The Company has all
necessary corporate power and authority to execute and deliver this Agreement
and the Company Stock Option Agreement, and, subject to obtaining the necessary
approvals of the Company's stockholders, to perform its obligations hereunder
and thereunder and to consummate the Merger and the other transactions
contemplated hereby and thereby. The execution and delivery of this Agreement
and the Company Stock Option Agreement by the Company and the
A-9
consummation by the Company of the Merger and the other transactions
contemplated hereby and thereby have been duly and validly authorized by all
necessary corporate action and no other corporate proceedings on the part of
the Company are necessary to authorize this Agreement and the Company Stock
Option Agreement or to consummate the Merger and the other transactions so
contemplated (other than with respect to approval of the Merger and adoption of
this Agreement by the Company's stockholders by the affirmative vote of a
majority of all the votes entitled to vote on the matter (the "Company
Stockholders' Vote"), and the filing and acceptance of the Certificate of
Merger as required by the DGCL). This Agreement and the Company Stock Option
Agreement have been duly and validly executed and delivered by the Company and,
assuming the due authorization, execution and delivery by Parent and Merger
Sub, constitute legal, valid and binding obligations of the Company,
enforceable against the Company in accordance with their respective terms,
except as the enforcement thereof may be limited by bankruptcy, insolvency
(including, without limitation, all laws relating to fraudulent transfers),
reorganization, moratorium or similar laws affecting enforcement of creditors'
rights generally and except as enforcement thereof is subject to general
principles of equity (regardless of whether enforcement is considered in a
proceeding in equity or at law).
SECTION 3.05 No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement and the Company Stock
Option Agreement by the Company do not, and the performance of this Agreement
and the Company Stock Option Agreement by the Company will not, (i) conflict
with or violate the Certificate of Incorporation or Bylaws of the Company or
any equivalent organizational documents of any Company Subsidiary, (ii)
assuming that all consents, approvals, authorizations and other actions
described in Section 3.05(b) have been obtained and all filings and obligations
described in Section 3.05(b) have been made or complied with, conflict with or
violate any foreign or domestic (federal, state or local) law, statute,
ordinance, writ, rule, regulation, order, injunction, judgment or decree
("Law") applicable to the Company or any Company Subsidiary or by which any
material property or asset of the Company or any Company Subsidiary is bound or
affected, or (iii) conflict with, result in any breach of or constitute a
default (or an event which with notice or lapse of time or both would become a
default) under, or give to others any right of termination, amendment,
acceleration or cancellation of, or require any payment under, or result in the
creation of a lien, claim, security interest or other charge or encumbrance on
any material property or asset of the Company or any Company Subsidiary
pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or obligation to which the
Company or any Company Subsidiary is a party or by which any material asset of
the Company or any Company Subsidiary is bound or affected.
(b) The execution and delivery of this Agreement and the Company Stock
Option Agreement by the Company do not, and the performance of this Agreement
and the Company Stock Option Agreement by the Company will not, require any
consent, approval, order, authorization, registration or permit of, or filing
with or notification to, any domestic, foreign or supranational governmental,
regulatory or administrative authority, agency or commission, any court,
tribunal, or arbitral body, or any quasi-governmental or private body
exercising regulatory, taxing, importing or other governmental authority (a
"Governmental Entity"), except (i) for applicable requirements, if any, of the
Securities Exchange Act of 1934, as amended (together with the rules and
regulations promulgated thereunder, the "Exchange Act"), state securities or
"blue sky" laws ("Blue Sky Laws"), The Nasdaq National Market, Delaware state
takeover laws, the pre-merger notification requirements of the Xxxx-Xxxxx-
Xxxxxx Antitrust Improvements Act of 1976, as amended, and the rules and
regulations thereunder (the "HSR Act") and the filing and recordation of
appropriate merger documents as required by the DGCL, and (ii) for such other
consents, approvals, orders, authorizations, registrations, permits, filings or
notifications, which if not obtained or made could not be material to the
Company or Parent or prevent or materially delay the consummation of the
transactions contemplated by this Agreement.
SECTION 3.06 Permits; Compliance.
(a) Each of the Company and the Company Subsidiaries is in possession of all
franchises, grants, authorizations, licenses, permits, easements, variances,
exceptions, consents, certificates, approvals and orders of any Governmental
Entity necessary for the Company or any Company Subsidiary to own, lease and
operate
A-10
its material properties or to carry on its business as it is now being
conducted (the "Company Permits"). All Company Permits are in full force and
effect in all material respects and will remain so after the Closing and no
suspension or cancellation of any of the Company Permits is pending or, to the
knowledge of the Company, threatened.
(b) Neither the Company nor any Company Subsidiary is in conflict in any
material respect with, or in default or violation in any material respect of,
(i) any Law applicable to the Company or any Company Subsidiary or by which any
material property or asset of the Company or any Company Subsidiary is bound or
affected, (ii) any material note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which the Company or any Company Subsidiary is a party or by which the
Company or any Company Subsidiary or any material property or asset of the
Company or any Company Subsidiary is bound or affected or (iii) any Company
Permits.
SECTION 3.07 SEC Filings; Financial Statements.
(a) The Company has filed all forms, reports and documents required to be
filed by it with the Securities and Exchange Commission (the "SEC") since June
23, 1999 (collectively, the "Company SEC Reports"), and the Company has made
available to Parent correct and complete copies of each Company SEC Report,
including all exhibits thereto. As of the respective dates they were filed (and
if amended or superseded by a filing prior to the date of this Agreement then
on the date of such filing), (i) each Company SEC Report complied in all
material respects with the requirements of the Securities Act of 1933, as
amended (together with the rules and regulations promulgated thereunder, the
"Securities Act") or the Exchange Act, as the case may be, and (ii) none of the
Company SEC Reports contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading. No Company Subsidiary is required
to file any form, report or other document with the SEC or any similar foreign
agency or governmental entity.
(b) Each of the consolidated financial statements (including, in each case,
any notes thereto) contained in the Company SEC Reports (the "Company Financial
Statements") was prepared in accordance with generally accepted accounting
principles ("GAAP") applied on a consistent basis throughout the periods
indicated (except as may be indicated in the notes thereto or, in the case of
unaudited statements, as permitted by Form 10-Q or 8-K promulgated by the SEC)
and each presents fairly, in all material respects, the consolidated financial
position, results of operations and cash flows of the Company and the
consolidated Company Subsidiaries as at the respective dates thereof and for
the respective periods indicated therein, except as otherwise noted therein
(subject, in the case of unaudited statements, to normal and recurring year-end
adjustments that could not be reasonably expected to, individually or in the
aggregate, have a Company Material Adverse Effect). The most recent balance
sheet of the Company contained in the Company SEC Reports as of October 31,
2000 is hereinafter referred to as the "Company Balance Sheet".
(c) The Company has heretofore furnished to Parent a complete and correct
copy of any amendments or modifications, which have not yet been filed with the
SEC but which are required to be filed, to agreements, documents or other
instruments that previously had been filed by the Company with the SEC pursuant
to the Securities Act or the Exchange Act.
SECTION 3.08 Undisclosed Liabilities. Except for (a) liabilities that are
fully reflected or reserved against on the Company Balance Sheet, or in the
notes thereto, (b) liabilities incurred in the ordinary course of business
consistent with past practice, since the date of the Company Balance Sheet and
(c) liabilities for fees and expenses of professional advisors arising out of
the transactions contemplated hereby, neither the Company nor any Company
Subsidiary has incurred any liability of any nature whatsoever (whether
absolute, accrued, contingent or otherwise and whether due or to become due)
that would be material to the business, results of operations or financial
condition of the Company and the Company Subsidiaries taken as a whole.
A-11
SECTION 3.09 Absence of Certain Changes or Events. Since April 30, 2000,
each of the Company and the Company Subsidiaries has conducted its business
only in the ordinary course and in a manner consistent with past practice and,
since such date, there has not been any:
(a) Company Material Adverse Effect;
(b) amendment or any other change to the Certificate of Incorporation or
Bylaws or equivalent organizational documents of the Company or any Company
Subsidiary;
(c) issuance, sale, pledge, lease, license, disposition, grant,
encumbrance, or authorization for any issuance, sale, pledge, lease,
license, disposition, grant or encumbrance, of (i) any shares of capital
stock of any class of the Company or any Company Subsidiary, or any
options, warrants, convertible securities or other rights of any kind to
acquire any shares of such stock, or any other ownership interest
(including, without limitation, any phantom interest) of the Company or any
Company Subsidiary (except for (x) the issuance of shares of Company Common
Stock pursuant to the exercise of Company Stock Options and in accordance
with the terms of the Company Stock Option Plan, (y) the grant in the
ordinary course of business and consistent with past practice of Company
Stock Options pursuant to a Company Stock Option Plan and (z) the issuance
of shares of Company Common Stock pursuant to the Company Purchase Plan) or
(ii) any material assets of the Company or any Company Subsidiary, except
in the ordinary course of business and in a manner consistent with past
practice, including, without limitation, any Intellectual Property (as
defined below) of the Company or any Company Subsidiary;
(d) authorization, declaration, set aside, dividend payment or other
distribution, payable in cash, stock, property or otherwise, with respect
to any of the capital stock of the Company or any Company Subsidiary;
(e) reclassification, combination, split, subdivision or redemption,
purchase or other acquisition, directly or indirectly, of any of the
capital stock of the Company or any Company Subsidiary;
(f) acquisition (including, without limitation, by merger,
consolidation, or acquisition of stock or assets) of any interest in any
corporation, partnership, other business organization or any division
thereof or any assets, other than acquisitions of assets for consideration
which is not, in the aggregate, in excess of $5,000,000;
(g) incurrence of any indebtedness for borrowed money or issuance of any
debt securities or assumption, guarantee or endorsement of the obligations
of any person, or any loans or advances made, except for indebtedness
incurred in the ordinary course of business and consistent with past
practice and for other indebtedness with a maturity of not more than one
year in a principal amount not, in the aggregate, in excess of $250,000;
(h) contracts or agreements entered into requiring the payment, or
receipt of payment, of consideration in excess of $100,000, or the
modification, amendment or termination of any such existing contract or
agreement, except, in each case, for contracts or agreements relating to
the sale of products entered into in the ordinary course of business;
(i) making or authorization of any capital expenditures individually in
excess of $100,000 and in the aggregate in excess of $500,000, other than
capital expenditures reflected in the capital expenditure budget for the
fiscal year ending April 30, 2001 (which is set forth in Section 3.09(i) of
the Company Disclosure Schedule);
(j) waiver of any stock repurchase rights, acceleration, amendment or
change in the period of exercisability of options or restricted stock, or
the repricing of options granted under the Company Stock Option Plans or
authorization of cash payments in exchange for any options granted under
any such plans;
(k) increase in, or agreement to increase, the compensation payable or
to become payable to its officers or employees, except for increases in
accordance with past practices in salaries or wages of
A-12
employees of the Company or any Company Subsidiary who are not officers of
the Company, or the grant of any rights to severance or termination pay to,
or the entering into of any employment, consulting, termination,
indemnification or severance agreement with, any director, officer or other
employee of the Company or any Company Subsidiary, or the establishment,
adoption, entering into or amendment of any collective bargaining, bonus,
profit sharing, thrift, compensation, stock option, restricted stock,
pension, retirement, deferred compensation, employment, termination,
severance or other plan, agreement, trust, fund, policy or arrangement for
the benefit of any director, officer or employee; provided, however, that
the foregoing provisions of this subsection shall not apply to any
amendments to employee benefits plans described in section 3(3) of the
Employee Retirement Security Act of 1974, as amended ("ERISA") that may be
required by law;
(l) action to make or change any material Tax (as defined in Section
3.16 below) or accounting election, change any annual accounting period,
adopt or change any accounting method, file any amended Tax Return (as
defined in Section 3.16 below), enter into any closing agreement, settle
any Tax claim or assessment relating to the Company or any Company
Subsidiary, surrender any right to claim a refund of Taxes, consent to any
extension or waiver of the limitation period applicable to any Tax claim or
assessment relating to the Company or any Company Subsidiary, or take any
other action or omit to take any action that would have the effect of
increasing the Tax liability of the Company or any Company Subsidiary or
Parent;
(m) action taken, other than as required by GAAP or by the SEC, with
respect to accounting principles or procedures, including, without
limitation, any revaluation of assets;
(n) initiation or settlement of any Legal Proceeding (as defined in
Section 3.10 below);
(o) acceleration (or grant of any right to acceleration, whether or not
contingent), amendment or change in the period of exercisability or the
vesting schedule of restricted stock or options granted under any option
plan, employee stock plan or agreements or authorization of cash payments
in exchange for any Company Stock Options granted under any of such plans,
except as specifically required by the terms of such plans or any such
agreements or any related agreements in effect as of the date of this
Agreement and disclosed in the Company Disclosure Schedule;
(p) action to cause, or failure to take any action to prevent, the
accelerated vesting and exercisability of any Company Stock Options or
Warrants;
(q) (i) sale, assignment, lease, termination, abandonment, transfer,
authorization to encumber or to otherwise dispose of or grant of any
security interest in and to any item of the Company Intellectual Property,
in whole or in part, (ii) grant of any license with respect to any Company
Intellectual Property, other than license of Company software to customers
of the Company or any Company Subsidiary to whom the Company or any Company
Subsidiary licenses such Company software in the ordinary course of
business, (iii) development, creation or invention of any Intellectual
Property jointly with any third party, or (iv) disclosure, or authorization
for disclosure, of any confidential Company Intellectual Property, unless
such Company Intellectual Property is subject to a confidentiality or non-
disclosure covenant protecting against disclosure thereof; or
(r) any authorization, agreement or commitment by the Company or any
Company Subsidiary to do any of the things described in this Section 3.09.
SECTION 3.10 Absence of Litigation. There is no litigation, suit, claim,
action, proceeding or investigation pending or, to the knowledge of the
Company, threatened against the Company or any Company Subsidiary, or any
property or asset of the Company or any Company Subsidiary, before any court,
arbitrator or Governmental Entity, domestic or foreign ("Legal Proceeding"),
that (i) could reasonably be expected to, individually or in the aggregate,
materially affect the operations of the Company as currently conducted or
result in damages or an award in excess of $500,000 or (ii) seeks to delay or
prevent the consummation of the
A-13
Merger or any other material transaction contemplated by this Agreement. None
of the Company, the Company Subsidiaries, or the directors and officers of the
Company and the Company Subsidiaries in their capacity as such, nor any
material property or asset of the Company or any Company Subsidiary is subject
to any continuing order of, consent decree, settlement agreement or other
similar written agreement with, or, to the knowledge of the Company, continuing
investigation by, any Governmental Entity, or any order, writ, judgment,
injunction, decree, determination or award of any Governmental Entity or
arbitrator. The Company does not have any plans to initiate any litigation,
arbitration or other proceeding against any third party.
SECTION 3.11 Employee Benefit Plans; Labor Matters.
(a) Schedule 3.11(a) of the Company Disclosure Schedule lists (i) all
employee benefit plans (as defined in section 3(3) of ERISA) and all bonus,
stock option, stock purchase, stock appreciation right, restricted stock,
phantom stock, incentive, deferred compensation, executive compensation,
cafeteria benefit, dependent care, director or employee loan, fringe benefit,
sabbatical, retiree medical or life insurance, disability, supplemental
retirement, employment, severance, termination pay or other benefit plans,
programs or arrangements, including (without limitation) any arrangements that
contain change of control or vesting acceleration provisions, whether legally
enforceable or not, to which the Company or any Company Subsidiary is a party,
with respect to which the Company or any Company Subsidiary has any obligation
or which are maintained, contributed to or sponsored by the Company or any
Company Subsidiary for the benefit of any current or former employee, officer
or director of the Company or any Company Subsidiary, (ii) each employee
benefit plan for which the Company or any Company Subsidiary could incur
liability under section 4069 of ERISA in the event such plan has been or were
to be terminated, (iii) any plan in respect of which the Company or any Company
Subsidiary could incur liability under section 4212(c) of ERISA, and (iv) any
contracts or arrangements between the Company or any Company Subsidiary and any
employee or former employee of the Company or any Company Subsidiary including,
without limitation, any contracts, arrangements or understandings relating to a
sale of the Company (collectively, the "Company Benefit Plans").
(b) Each Company Benefit Plan is in writing and the Company has made
available to Parent a true and complete copy of each Company Benefit Plan and a
true and complete copy of each material document, if any, prepared in
connection with each such Company Benefit Plan, including, without limitation,
(i) a copy of each trust or other funding arrangement, (ii) each summary plan
description and summary of material modifications, (iii) the three (3) most
recent annual reports (Form 5500 series and all schedules and financial
statements attached thereto), if any, required under ERISA or the Code in
connection with each Company Benefit Plan, (iv) the most recently received IRS
determination letter for each such Company Benefit Plan, if such plan is
intended to qualify under Section 401 of the Code, (v) any actuarial report and
financial statement in connection with each such Company Benefit Plan for the
three most recent plan years, (vi) any correspondence with the IRS or the
Department of Labor with respect to each such Company Benefit Plan and (vii)
each form of notice of grant or stock option agreement used to document Company
Stock Options. Except as disclosed on Schedule 3.11(a) of the Company
Disclosure Schedule, there are no other employee benefit plans, programs,
arrangements or agreements, whether formal or informal, whether in writing or
not, to which the Company or any Company Subsidiary is a party, with respect to
which the Company or any Company Subsidiary has any obligation or which are
maintained, contributed to or sponsored by the Company or any Company
Subsidiary for the benefit of any current or former employee, officer or
director of the Company or any Company Subsidiary. Neither the Company nor any
Company Subsidiary has express or implied commitment, whether legally
enforceable or not, (x) to create, incur liability with respect to, or cause to
exist, any other employee benefit plan, program or arrangement, (y) to enter
into any contract or agreement to provide compensation or benefits to any
individual, or (z) to modify, change or terminate any Company Benefit Plan,
other than with respect to a modification, change or termination required by
ERISA or the Code.
(c) None of the Company Benefit Plans is a multiemployer plan (within the
meaning of section 3(37) or 4001(a)(3) of ERISA) (a "Multiemployer Plan") or a
single employer pension plan (within the meaning of section 4001(a)(15) of
ERISA) for which the Company or any Company Subsidiary could incur liability
under section 4063 or 4064 of ERISA (a "Multiple Employer Plan"). None of the
Company Benefit Plans provides
A-14
for or promises retiree medical, disability or life insurance benefits to any
current or former employee, officer or director of the Company or any Company
Subsidiary other than procedures intended to comply with the Consolidated
Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA"). Each of the
Company Benefit Plans is subject only to the Laws of the United States or a
political subdivision thereof.
(d) None of the Company Benefit Plans provides for the payment of
separation, severance, termination or similar-type benefits to any person or
obligates the Company or any Company Subsidiary to pay separation, severance,
termination or similar benefits solely or partially as a result of any
transaction contemplated by this Agreement or as a result of a "change in
ownership or control," within the meaning of such term under section 280G of
the Code. No amounts payable under the Company Benefit Plans solely as a result
of the consummation of the transactions contemplated by this Agreement will
fail to be deductible for federal income tax purposes by virtue of section 280G
of the Code. Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby, either alone or together
with another event, will (i) result in any payment (including, without
limitation, severance, unemployment compensation, golden parachute, forgiveness
of indebtedness or otherwise) becoming due under any Company Benefit Plan,
(ii) increase any benefits otherwise payable under any Company Benefit Plan or
other arrangement, (iii) result in the acceleration of the time of payment,
vesting or funding of any benefits including, but not limited to, the
acceleration of the vesting and exercisability of any Company Stock Options, or
(iv) affect in any material respects any Company Benefit Plan's current
treatment under any Laws including any tax or social contribution law. No
Company Benefit Plan provides or reflects or represents any liability to
provide retiree health to any person for any reason, except as may be required
by COBRA or other applicable statute, and neither the Company nor any Company
Subsidiary has represented, promised or contracted (whether in oral or written
form) to any employee (either individually or to employees as a group) or any
other person that such employee(s) or other person would be provided with
retiree health, except to the extent required by statute.
(e) Each Company Benefit Plan is now and always has been operated in
accordance in all material respects with its terms and the requirements of all
applicable Laws, regulations and rules promulgated thereunder including,
without limitation, ERISA, COBRA, the Family Medical Leave Act of 1993, as
amended ("FMLA"), and the Code. The Company and each Company Subsidiary has
performed in all material respects all obligations required to be performed by
it under, is not in any material respect in default under or in violation of,
and has no knowledge of any default or violation by any party to, any Company
Benefit Plan. No action, claim or proceeding is pending or, to the knowledge of
the Company, threatened with respect to any Company Benefit Plan (other than
claims for benefits in the ordinary course) and no fact or event exists that
could give rise to any such action, claim or proceeding. Neither the Company
nor any person that is a member of the same controlled group as the Company or
under common control with the Company within the meaning of section 414 of the
Code (each, an "ERISA Affiliate") is subject to any penalty or tax with respect
to any Company Benefit Plan under section 402(i) of ERISA or sections 4975
through 4980 of the Code. Each Company Benefit Plan can be amended, terminated
or otherwise discontinued as of or after the Effective Time, without material
liability to the Parent, Company or any of its ERISA Affiliates (other than
ordinary administration expenses). Neither the Company nor any Company
Subsidiary nor any affiliate has, prior to the Effective Time and in any
material respect, violated any of the health care continuation requirements of
COBRA, the requirements of FMLA, the requirements of the Health Insurance
Portability and Accountability Act of 1996, the requirements of the Women's
Health and Cancer Rights Act of 1998, the requirements of the Newborns' and
Mothers' Health Protection Act of 1996, or any amendment to each such act, or
any similar provisions of state Law applicable to its employees.
(f) Each Company Benefit Plan intended to qualify under section 401(a) or
section 401(k) of the Code and each trust intended to qualify under section
501(a) of the Code has either received a favorable determination, opinion,
notification or advisory letter from the IRS with respect to each such Company
Benefit Plan as to its qualified status under the Code, including all
amendments to the Code effected by the Tax Reform Act of 1986 and subsequent
legislation, and no fact or event has occurred since the date of such
determination letter or letters from the IRS to adversely affect the qualified
status of any such Company Benefit Plan or the exempt
A-15
status of any such trust, or has remaining a period of time under applicable
Treasury regulations or IRS pronouncements in which to apply for such a letter
and make any amendments necessary to obtain a favorable determination as to the
qualified status of each such Company Benefit Plan.
(g) Neither the Company nor any Company Subsidiary or ERISA Affiliate has
any accumulated funding deficiency under section 412 of the Code or has
incurred any liability under, arising out of or by operation of Title IV of
ERISA (other than liability for premiums to the Pension Benefit Guaranty
Corporation arising in the ordinary course), including, without limitation, any
liability in connection with (i) the termination or reorganization of any
employee benefit plan subject to Title IV of ERISA or (ii) the withdrawal from
any Multiemployer Plan or Multiple Employer Plan, and no fact or event exists
which could give rise to any such liability.
(h) Neither the Company nor any Subsidiary has, since January 1, 1995,
terminated, suspended, discontinued contributions to or withdrawn from any
employee pension benefit plan, as defined in section 3(2) of ERISA, including,
without limitation, any multiemployer plan, as defined in section 3(37) of
ERISA. All contributions, premiums or payments required to be made or accrued
with respect to any Company Benefit Plan have been made on or before their due
dates. All such contributions have been fully deducted for income tax purposes
and no such deduction has been challenged or disallowed by any Governmental
Entity and, to the knowledge of the Company, no fact or event exists which
could give rise to any such challenge or disallowance.
(i) Except as set forth in Section 3.11(i) of the Company Disclosure
Schedule, (i) neither the Company nor any Company Subsidiary is a party to any
collective bargaining agreement or other labor union contract applicable to
persons employed by the Company or any Company Subsidiary or in the Company's
or any Company Subsidiary's business, and currently there are no organizational
campaigns, petitions or other unionization activities seeking recognition of a
collective bargaining unit which could affect the Company or any Company
Subsidiary; (ii) there are no controversies, strikes, slowdowns or work
stoppages pending or, to the best knowledge of the Company after reasonable due
inquiry, threatened between the Company or any Company Subsidiary and any of
its employees, and neither the Company nor any Company Subsidiary has
experienced any such controversy, strike, slowdown or work stoppage within the
past three years; (iii) neither the Company nor any Company Subsidiary has
breached or otherwise failed to comply with the provisions of any collective
bargaining or union contract and there are no grievances outstanding against
the Company or any Company Subsidiary under any such agreement or; (iv) there
are no unfair labor practice complaints pending against the Company or any
Company Subsidiary before the National Labor Relations Board or any other
Governmental Entity or any current union representation questions involving
employees of the Company or any Company Subsidiary; (v) the Company and each
Company Subsidiary is currently in compliance in all material respects with all
applicable Laws relating to the employment of labor, including, without
limitation, those related to wages, hours, worker classification, collective
bargaining and the payment and withholding of Taxes and other sums as required
by the appropriate Governmental Entity and has withheld and paid to the
appropriate Governmental Entity or is holding for payment not yet due to such
Governmental Entity all amounts required to be withheld from employees of the
Company or any Company Subsidiary and is not liable for any arrears of wages,
Taxes, penalties or other sums for failure to comply with any of the foregoing;
(vi) the Company and each Company Subsidiary has paid in full to all employees
or adequately accrued for in accordance with GAAP consistently applied all
wages, salaries, commissions, bonuses, benefits and other compensation due to
or on behalf of such employees; (vii) there is no claim with respect to payment
of wages, salary or overtime pay that has been asserted or is now pending or
threatened before any Governmental Entity with respect to any persons currently
or formerly employed by the Company or any Company Subsidiary; (viii) neither
the Company nor any Company Subsidiary is a party to, or otherwise bound by,
any consent decree with, or citation by, any Governmental Entity relating to
employees or employment practices; (ix) there is no charge or proceeding with
respect to a violation of any occupational safety or health standards that has
been asserted or is now pending or threatened with respect to the Company or
any Company Subsidiary; and (x) there is no charge of discrimination in
employment or employment practices, for any reason, including,
A-16
without limitation, age, gender, race, religion or other legally protected
category, which has been asserted or is now pending or threatened before the
United States Equal Employment Opportunity Commission, or any other
Governmental Entity with respect to the Company or any Company Subsidiary.
(j) Section 3.11(j) of the Company Disclosure Schedule accurately sets
forth the name and title of each employee of the Company with the title of
vice president or higher.
SECTION 3.12 Contracts. Neither the Company nor any Company Subsidiary is a
party to, or is bound by, any:
(a) employment, consulting, termination or severance agreement, contract
or commitment with any officer, director or higher level employee, or
member of the Company's Board of Directors;
(b) agreement, contract or commitment containing any covenant limiting
the right of the Company or any Company Subsidiary to engage in any line of
business, acquire any property, distribute any product or provide any
service (including geographic restrictions) or to compete with any person
or granting any exclusive distribution rights;
(c) agreement, contract or commitment (i) relating to the disposition or
acquisition by the Company or any Company Subsidiary of assets not in the
ordinary course of business, (ii) relating to the acquisition by the
Company or any Company Subsidiary of any other entity, whether by means of
merger, consolidation, purchase of assets or otherwise, or (iii) pursuant
to which the Company or any Company Subsidiary has any ownership interest
in any corporation, partnership, joint venture or other business enterprise
(other than the Company Subsidiaries) that is material to the Company's
business as currently conducted;
(d) joint venture, stockholder, partnership or other agreement relating
to any equity ownership or profit interest;
(e) distributor, reseller or dealer agreement;
(f) contract relating to any outstanding commitment for capital
expenditures in excess of $500,000;
(g) indenture, mortgage, promissory note, loan agreement, credit
agreement, security agreement, guarantee of borrowed money or other
agreement or instrument relating to the borrowing of money or extension of
credit in excess of $250,000;
(h) contract providing for an "earn-out" or other contingent payment by
the Company or any Company Subsidiary involving more than $500,000 over the
term of the contract;
(i) contract or agreement which is terminable upon or prohibits a change
of ownership or control of the Company or any Company Subsidiary;
(j) contract providing for the indemnification of any officer, director,
employee or agent;
(k) contract providing for any obligation of the Company or any Company
Subsidiary to provide funds to, or make any investment (in the form of a
loan, capital contribution or otherwise) in, any Company Subsidiary or any
other person; or
(l) any other agreement, contract, license or commitment that is
material to the business of the Company and the Company Subsidiaries, taken
as a whole, as currently conducted or proposed to be conducted.
Neither the Company nor any Company Subsidiary, nor to the Company's
knowledge any other party to a Company Contract (as defined below), is in
breach or violation of or default under in any material respect (nor does
there exist any condition which with the passage of time or giving of notice
or both would result in such a breach, violation or default), and neither the
Company nor any Company Subsidiary has received written notice that it has
breached, violated or defaulted under in any material respect, any of the
material terms or conditions
A-17
of any of the agreements, contracts or commitments to which the Company or any
Company Subsidiary is a party or by which it is bound that (A) are required to
be disclosed in the Company Disclosure Schedule pursuant to clauses (a) through
(l) above, (B) are set forth in Section 3.14(a) of the Company Disclosure
Schedule or (C) are required to be filed with any Company SEC Report (any such
agreement, contract or commitment, a "Company Contract"), in each case, in such
a manner as would permit any other party to cancel or terminate any such
Company Contract, or would permit any other party to seek damages or other
remedies (for any or all of such breaches, violations or defaults, in the
aggregate). Each Company Contract (i) is valid and binding in all material
respects on the Company or Company Subsidiary and, to the knowledge of the
Company, on the other parties thereto and is in full force and effect and (ii)
upon consummation of the transactions contemplated by this Agreement, shall
continue in full force and effect without penalty or other consequence. The
Company has delivered or made available to Parent accurate and complete copies
of all Company Contracts, including all amendments thereto.
SECTION 3.13 Environmental Matters.
(a) The Company and the Company Subsidiaries (i) are in compliance in all
material respects with all applicable Environmental Laws (as defined below),
(ii) hold all material Environmental Permits (as defined below) and (iii) are
in compliance in all material respects with their respective Environmental
Permits.
(b) Neither the Company nor any of the Company Subsidiaries has released,
and to their knowledge no other person has released, in any material amount
Hazardous Materials (as defined below) on any real property owned or leased by
the Company or the Company Subsidiaries or, during their ownership or occupancy
of such property, on any property formerly owned or leased by the Company or
any Company Subsidiary.
(c) Neither the Company nor any Company Subsidiary has received any written
request for information, or been notified that it is a potentially responsible
party, under CERCLA (as defined below), or any similar Law of any state,
locality or any other jurisdiction.
(d) Neither the Company nor any Company Subsidiary has entered into or
agreed to any consent decree or order or is subject to any judgment, decree or
judicial order relating to compliance with Environmental Laws, Environmental
Permits or the investigation, sampling, monitoring, treatment, remediation,
removal or cleanup of Hazardous Materials and, to the knowledge of Company, no
investigation, litigation or other proceeding is pending or threatened in
writing with respect thereto.
(e) None of the real property currently or formerly owned or leased by the
Company or any Company Subsidiary is listed or, to the knowledge of the
Company, proposed for listing on the "National Priorities List" under CERCLA,
as updated through the date of this Agreement, or any similar list of sites in
the United States or any other jurisdiction requiring investigation or cleanup.
For purposes of this Agreement:
"CERCLA" means the U.S. Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended as of the date hereof.
"Environmental Laws" means any federal, state or local statute, law,
ordinance, regulation, rule, code or order of the United States, or any
other foreign or domestic or supranational jurisdiction and any enforceable
judicial or administrative interpretation thereof, including any judicial
or administrative order, consent decree or judgment, relating to pollution
or protection of the environment or natural resources, including, without
limitation, those relating to the use, handling, transportation, treatment,
storage, disposal, release or discharge of Hazardous Materials, as in
effect as of the date of this Agreement.
"Environmental Permits" means any permit, approval, identification
number, license and other authorization required under any applicable
Environmental Law.
A-18
"Hazardous Materials" means (i) any petroleum, petroleum products, by-
products or breakdown products, radioactive materials, asbestos-containing
materials or polychlorinated biphenyls or (ii) any chemical, material or
substance defined or regulated as toxic or hazardous or as a pollutant or
contaminant under any applicable Environmental Law.
SECTION 3.14 Title to Properties; Absence of Liens and Encumbrances.
(a) Neither the Company nor any of the Company Subsidiaries owns any real
property. Section 3.14(a) of the Company Disclosure Schedule lists all real
property leases to which the Company or any Company Subsidiary is a party and
each amendment thereto. All such current leases are in full force and effect,
are valid and effective in accordance with their respective terms, and, to the
Company's knowledge, there is not, under any of such leases, any existing
default or event of default (or event which with notice or lapse of time, or
both, would constitute a default) that would give rise to a material claim.
Other than leaseholds created under the real property leases identified in
Section 3.14(a) of the Company Disclosure Schedule, the Company and the Company
Subsidiaries have no leasehold interest in any real property.
(b) Each of the Company and the Company Subsidiaries has good and valid
title to personal property, used or held for use in its business, free and
clear of any liens, pledges, charges, claims, security interests or other
encumbrances of any sort ("Liens") except for Liens (i) imposed by Law in
respect of obligations not yet due that are owed in respect of taxes or which
otherwise are owed to carriers, warehouse persons or laborers, (ii) reflected
in the financial statements contained in the Company SEC Reports and (iii)
which are not material in character, amount or extent, and which do not
materially detract from the value, or materially interfere with the present or
currently contemplated use, of the property subject thereto or affected
thereby.
SECTION 3.15 Intellectual Property.
(a) The Company and the Company Subsidiaries each own or are licensed for,
and in any event possess sufficient and legally enforceable rights with respect
to, all Company Intellectual Property (as defined below) relevant to their
respective businesses, as conducted or as currently proposed to be conducted,
without any conflict with or infringement or misappropriation of any rights or
property of any person ("Infringement"). Such ownership, licenses and rights
are exclusive except with respect to standard, generally commercially
available, "off-the-shelf" third party products that are not part of any
product, service or Intellectual Property offering of the Company or any
Company Subsidiary that is currently available or currently in actual
development. "Intellectual Property" means (i) inventions (whether or not
patentable); trade names, trade and service marks, logos, domains, URLs,
website addresses and other similar designations ("Marks"); works of
authorship; mask works; data; technology, know-how, trade secrets, ideas and
information; designs; formulas; algorithms; processes; schematics; computer
software (in source code and/or object code form); and all other intellectual
property of any sort ("Inventions") and (ii) patent rights; Xxxx rights;
copyrights; mask work rights; sui generis database rights; trade secret rights;
moral rights; and all other intellectual and industrial property rights of any
sort throughout the world, and all applications, registrations, issuances and
the like with respect thereto ("IP Rights"). "Company Intellectual Property"
means all Intellectual Property that is used, exercised, or exploited ("Used")
or proposed to be Used in any business of the Company or any Company
Subsidiary, or that may be necessary to conduct any such businesses as
conducted or proposed to be conducted. All copyrightable matter within Company
Intellectual Property that is relevant to the Company or any Company Subsidiary
has been created by persons who were employees of the Company or that Company
Subsidiary at the time of creation and no third party has or will have "moral
rights" or rights to terminate any assignment or license with respect thereto.
(b) To the extent included in Company Intellectual Property (but excluding
Intellectual Property licensed to the Company and the Company Subsidiaries only
on a nonexclusive basis), Section 3.15(b) of the Company Disclosure Schedule
lists (by name, number, jurisdiction and owner) all patents and patent
applications; all registered and unregistered Marks; and all registered and
material unregistered copyrights and mask works; and all other issuances,
registrations, applications and the like with respect to those or any other IP
Rights. All the foregoing (i) are valid, enforceable and subsisting, and (ii)
along with all related filings, registrations and
A-19
correspondence, have been provided to Parent. No cancellation, termination,
expiration or abandonment of any of the foregoing (except natural expiration or
termination at the end of the full possible term, including extensions and
renewals) is anticipated by the Company or any Company Subsidiary. Neither the
Company nor any Company Subsidiary is aware of any questions or challenges (or
any potential basis therefor) with respect to the patentability or validity of
any claims of any of the foregoing patents or patent applications or the
validity (or any other aspect or status) of any such IP Rights.
(c) Section 3.15(c) of the Company Disclosure Schedule lists: (i) all
licenses, sublicenses and other agreements to which the Company or a Company
Subsidiary is a party (or by which it or any Company Intellectual Property is
bound or subject) and pursuant to which any person has been or may be assigned,
authorized to Use, granted a Lien on, or given access to, any Company
Intellectual Property (ii) all licenses, sublicenses and other agreements
pursuant to which the Company or a Company Subsidiary has been or may be
assigned or authorized to Use, or has or may incurred any obligation in
connection with, (A) any third party Intellectual Property that may be
influential in the development of, require payment with respect to, be
incorporated or embodied in, or form all or any part of any product, service or
Intellectual Property offering of the Company or any Company Subsidiary that is
currently available or currently in actual development or (B) any Company
Intellectual Property and (iii) each agreement pursuant to which the Company or
a Company Subsidiary has deposited or is required to deposit with an
escrowholder or any other person, all or part of the source code (or any
algorithm or documentation contained in or relating to any source code) of any
Company Intellectual Property ("Source Materials"). Neither the Company nor any
of the Company Subsidiaries has entered into any agreement to indemnify, hold
harmless or defend any other person with respect to any assertion of
Infringement or warranting the lack thereof.
(d) No event or circumstance has occurred, exists or is currently
contemplated (including, without limitation, authorization, execution or
delivery of this Agreement or the consummation of any of the transactions
contemplated hereby) that (with or without notice or the lapse of time) could
reasonably be expected to, result in (i) the breach or violation of any
license, sublicense or other agreement required to be listed in Section 3.15(d)
of the Company Disclosure Schedule or (ii) the loss or expiration of any right
or option by the Company or any of its Subsidiaries (or the gain thereof by any
third party) under any such license, sublicense or other agreement or (iii) the
release, disclosure or delivery to any third party of any part of the Source
Materials. Further, the Company and each of the Company Subsidiaries make all
the same representations and warranties with respect to each license,
sublicense and agreement listed on Section 3.15 of the Company Disclosure
Schedule as are made with respect to Company Contracts elsewhere in this
Agreement.
(e) There is, to the knowledge of the Company and the Company Subsidiaries,
no unauthorized Use, disclosure, or Infringement of any Company Intellectual
Property by any third party, including, without limitation, any employee or
former employee of the Company or any of the Company Subsidiaries. Neither the
Company nor any Company Subsidiary has brought or threatened any action, suit
or proceeding against any third party for any Infringement of any Company
Intellectual Property or any breach of any license, sublicense or agreement
involving Company Intellectual Property.
(f) The Company and the Company Subsidiaries have taken all commercially
reasonable and appropriate steps to protect and preserve the confidentiality of
all Company Intellectual Property not otherwise disclosed in published patents
or patent applications or registered copyrights ("Company Confidential
Information"). All use by and disclosure to employees or others of Company
Confidential Information has been pursuant to the terms of valid and binding
written confidentiality and nonuse/restricted-use agreements or agreements that
contain similar obligations. Except as set forth in Section 3.15(f) of the
Company Disclosure Schedule, none of the Company or any of the Company
Subsidiaries has disclosed or delivered to any third party, or permitted the
disclosure or delivery to any escrow agent or other person any part of the
Source Materials.
(g) Each current and former employee and contractor of the Company or any
Company Subsidiary has executed and delivered (and to the Company's and the
Company Subsidiaries' knowledge, is in compliance
A-20
with) an agreement in substantially the form of the Company's standard
Proprietary Information and Inventions Agreement (in the case of an employee)
or Consulting Agreement (in the case of a contractor) (which agreement provides
valid written assignments to the Company or such Company Subsidiary of all
title and rights to any Company Intellectual Property conceived or developed
thereunder but not already owned by the Company or a Company Subsidiary by
operation of Law).
(h) None of the Company or any of the Company Subsidiaries has received any
communication alleging or suggesting that or questioning whether the Company or
any Company Subsidiary has been or may be engaged in, liable for or
contributing to any Infringement, nor does the Company or any Company
Subsidiary have any reason to expect that any such communication will be
forthcoming.
(i) None of the Company or the Company Subsidiaries is aware that any of its
employees or contractors is obligated under any agreement, commitments,
judgment, decree, order or otherwise (an "Employee Obligation") that could
reasonably be expected to interfere with the use of his or her best efforts to
promote the interests of the Company and the Company Subsidiaries or that could
reasonably be expected to conflict with any of their businesses as conduct or
currently proposed to be conducted. Neither the execution nor delivery of this
Agreement nor the conduct of the Company's business as conducted or currently
proposed to be conducted, will, to the Company's or any Company Subsidiary's
knowledge, conflict with or result in a breach of the terms, conditions or
provisions of, or constitute a default under, any Employee Obligation. To each
of the Company's and the Company Subsidiaries' knowledge, none of the Company
or any of the Company Subsidiaries is Using (i) any Inventions of any of their
past or present employees or contractors (or people currently intended to be
hired) made prior to or outside the scope of their employment by the Company or
such Company Subsidiary or (ii) any confidential information or trade secrets
of any former employer of any such person.
(j) All Software is free of viruses, worms, trojan horses and other
infections or harmful routines and does not contain any bugs, errors, or
problems that, to the Company's or any Company Subsidiary's knowledge, could
reasonably be expected to disrupt its operation or have an adverse impact on
the operation of other software programs or operating systems. "Software" means
software, programs, databases and related documentation, in any form (including
Internet sites, Internet content and links) that is (i) material to the
operation of the business of the Company or any Company Subsidiary, including,
but not limited to, that operated by the Company or any Company Subsidiary on
its web sites or used by the Company or any Company Subsidiary in connection
with processing customer orders, storing customer information, or storing or
archiving data, or (ii) manufactured, distributed, sold, licensed or marketed
by the Company or any Company Subsidiary.
(k) The Company and the Company Subsidiaries have obtained all approvals and
agreements necessary or appropriate (including, without limitation, assurances
from customers regarding further export) for exporting any Company Intellectual
Property outside the United States and importing any Company Intellectual
Property into any country in which they are or have been disclosed, sold or
licensed for Use, and all such export and import approvals in the United States
and throughout the world are valid, current, outstanding and in full force and
effect.
SECTION 3.16 Taxes.
(a) All Tax (as defined below) returns, statements, reports, declarations
and other forms and documents (including, without limitation, estimated Tax
returns and reports and material information returns and reports) required to
be filed with any Tax Authority (as defined below) with respect to any Taxable
(as defined below) period ending on or before the Closing, by or on behalf of
the Company (collectively, "Company Tax Returns" and individually a "Company
Tax Return"), have been or will be completed and filed when due (including any
extensions of such due date) and all amounts shown due on such Company Tax
Returns on or before the Effective Time have been or will be paid on or before
such date. The Company Financial Statements (i) fully accrue all actual and
contingent liabilities for Taxes (as defined below) with respect to all periods
through the
A-21
date of the Company Balance Sheet, and the Company has not and will not incur
any Tax liability in excess of the amount reflected (excluding any amount
thereof that reflects timing differences between the recognition of income for
purposes of GAAP and for Tax purposes) on the Company Balance Sheet with
respect to such periods, and (ii) properly accrues in accordance with GAAP all
material liabilities for Taxes payable after the date of the Company Balance
Sheet, with respect to all transactions and events occurring on or prior to
such date. All information set forth in the notes to the Company Financial
Statements relating to Tax matters is true, complete and accurate in all
material respects. No material Tax liability since the date of the Company
Balance Sheet has been incurred by the Company other than in the ordinary
course of business and adequate provision has been made by the Company for all
Taxes since that date in accordance with GAAP on at least a quarterly basis.
(b) The Company has withheld and paid to the applicable financial
institution or Tax Authority all amounts required to be withheld. The Company
(or any member of any affiliated or combined group of which the Company has
been a member) has not granted any extension or waiver of the limitation period
applicable to any Company Tax Returns that is still in effect and there is no
material claim, audit, action, suit, proceeding, or (to the knowledge of the
Company) investigation now pending or threatened against or with respect to the
Company in respect of any Tax or assessment. There are no liens for Taxes
(other than for current Taxes not yet due and payable) upon the assets of the
Company. The Company has never been a member of an affiliated group of
corporations, within the meaning of section 1504 of the Code other than the
affiliated group of corporations of which the Company is the common parent
corporation. Neither the Company nor any person on behalf of the Company has
entered into or will enter into any agreement or consent pursuant to the
collapsible corporation provisions of section 341(f) of the Code (or any
corresponding provision of state, local or foreign income tax Law) or agreed to
have section 341(f)(2) of the Code (or any corresponding provision of state,
local or foreign income tax Law) apply to any disposition of any asset owned by
the Company. There is no agreement, contract or arrangement to which the
Company is a party that could, individually or collectively, result in the
payment of any amount that would not be deductible by reason of sections 280G
(as determined without regard to section 280G(b)(4)), 162 (other than 162(a))
or 404 of the Code. The Company is not a party to or bound by any Tax
indemnity, Tax sharing or Tax allocation agreement (whether written or
unwritten or arising under operation of federal Law as a result of being a
member of a group filing consolidated Company Tax Returns, under operation of
certain state Laws as a result of being a member of a unitary group, or under
comparable Laws of other states or foreign jurisdictions) which includes a
party other than the Company nor does the Company owe any amount under any such
agreement. The Company is not, and has not 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. Other than
by reason of the Merger, the Company has not been and will not be required to
include any material adjustment in Taxable income for any Tax period (or
portion thereof) pursuant to section 481 or 263A of the Code or any comparable
provision under state or foreign Tax Laws as a result of transactions, events
or accounting methods employed prior to the Merger.
(c) For purposes of this Agreement, the following terms have the following
meanings: "Tax" (and, with correlative meaning, "Taxes" and "Taxable") means
any and all taxes including, without limitation, (i) any net income,
alternative or add-on minimum tax, gross income, gross receipts, sales, use, ad
valorem, transfer, franchise, profits, value added, net worth, license,
withholding, payroll, employment, excise, severance, stamp, occupation,
premium, property, environmental or windfall profit tax, custom, duty or other
tax, governmental fee or other like assessment or charge of any kind
whatsoever, together with any interest or any penalty, addition to tax or
additional amount imposed by any Governmental Entity responsible for the
imposition of any such tax (domestic or foreign) (a "Tax Authority"), (ii) any
liability for the payment of any amounts of the type described in (i) as a
result of being a member of an affiliated, consolidated, combined or unitary
group for any Taxable period or as the result of being a transferee or
successor thereof and (iii) any liability for the payment of any amounts of the
type described in (i) or (ii) as a result of any express or implied obligation
to indemnify any other person. As used in this Section 3.16, the term "the
Company" means the Company and any entity included in, or required under GAAP
to be included in, any of the Company Financial Statements.
A-22
SECTION 3.17 Status as a Reorganization. Neither the Company nor any of its
affiliates has taken or agreed to take any action that would prevent the Merger
from constituting a reorganization within the meaning of section 368(a) of the
Code. The Company is not aware of any agreement, plan or other circumstance
that would prevent the Merger from qualifying as a reorganization within the
meaning of section 368(a) of the Code.
SECTION 3.18 Affiliate Transactions. Except as disclosed in the Company SEC
Reports, no event has occurred that would be required to be reported currently
by the Company as a Certain Relationship or Related Transaction pursuant to
Item 404 of Regulation S-K promulgated under the Securities Act.
SECTION 3.19 Insurance. The Company has provided or made available to Parent
true, correct and complete copies of all policies of insurance to which each of
the Company and the Company Subsidiaries are a party or are a beneficiary or
named insured. There is no material claim pending under any of such policies as
to which coverage has been questioned, denied or disputed by the underwriters
of such policies. All premiums due and payable under all such policies have
been paid and the Company is otherwise in compliance in all material respects
with the terms of such policies. The Company has no knowledge of any threatened
termination of, or material premium increase with respect to, any of such
policies.
SECTION 3.20 Board Approval; Vote Required.
(a) The Board of Directors of the Company, by resolutions duly adopted by
unanimous vote of those voting (who constituted all of the directors then in
office) at a meeting duly called and held and not subsequently rescinded or
modified in any way (the "Company Board Approval"), has duly (i) determined
that this Agreement, the Company Stock Option Agreement and the Merger are
advisable, fair to and in the best interests of the Company and its
stockholders, (ii) approved this Agreement and the Merger, (iii) recommended
that the stockholders of the Company adopt and approve this Agreement and
approve the Merger and (iv) confirmed that the Company Stock Options will not
accelerate as a result of the Merger. The Company has no stockholders' rights
plan or similar plan in effect.
(b) The only vote of the holders of any class or series of stock of the
Company necessary to approve the Merger, and adopt this Agreement and the other
transactions contemplated by this Agreement is the Company Stockholders' Vote.
SECTION 3.21 State Takeover Statutes. The Board of Directors of the Company
has taken all actions so that the restrictions contained in Section 203 of the
DGCL applicable to a "business combination" (as defined in Section 203) will
not apply to the execution, delivery or performance of this Agreement, the
Company Stock Option Agreement and the Company Voting Agreements or the
consummation of the Merger or the other transactions contemplated by this
Agreement. No other state takeover statute is applicable to this Agreement, the
Company Stock Option Agreement, the Company Voting Agreements, the Merger or
the other transactions contemplated by this Agreement.
SECTION 3.22 Opinion of Financial Advisor. The Company has been advised in
writing by its financial advisor, Xxxxxx Xxxxxxx & Co. Incorporated (the
"Company Financial Advisor"), that in its opinion, as of the date of this
Agreement, the Exchange Ratio is fair to the holders of shares of Company
Common Stock from a financial point of view, and the Company shall provide to
Parent a copy of such opinion promptly after the date of this Agreement.
SECTION 3.23 Brokers. No broker, finder or investment banker (other than the
Company Financial Advisor) is entitled to any brokerage, finder's or other fee
or commission in connection with the Merger or the other transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
the Company. The Company has delivered to Parent true and complete copies of
all agreements under which any such fees or expenses payable and all
indemnification and other agreements related to the engagement of the persons
to whom such fees are payable.
A-23
SECTION 3.24 Customers; Suppliers.
(a) No customer that individually accounted for more than five percent (5%)
of the Company's consolidated gross revenues during the 12 month period
preceding the date of this Agreement has, within the last 12 months, canceled
or otherwise terminated, or made any written threat to the Company or any
Company Subsidiary to cancel or otherwise terminate, its relationship with the
Company or such Company Subsidiary, or decreased materially its usage of the
services or products of the Company or such Company Subsidiary.
(b) No supplier of the Company or any of the Company Subsidiaries that
individually accounted for more than five percent (5%) of the Company's
consolidated expenditures during the 12 month period preceding the date of this
Agreement has, within the last 12 months, canceled or otherwise terminated, or
made any written threat to the Company or such Company Subsidiary to cancel or
otherwise terminate, its relationship with the Company or such Company
Subsidiary, or has decreased materially its services or supplies to the Company
or such Company Subsidiary.
SECTION 3.25 Restrictions on Business Activities. There is no agreement,
commitment, judgment, injunction, order or decree binding upon the Company or
any Company Subsidiary or to which the Company or any Company Subsidiary is a
party which has or could reasonably be expected to have the effect of
prohibiting or materially impairing any business practice material to the
Company or any Company Subsidiary, any acquisition of property by the Company
or any Company Subsidiary or the conduct of business by the Company or any
Company Subsidiary as currently conducted.
ARTICLE IV
Representations and Warranties of Parent and Merger Sub
Parent and Merger Sub hereby represent and warrant to the Company that the
statements contained in this Article IV are true and correct except as set
forth in the disclosure schedule delivered by Parent to the Company
concurrently with the execution of this Agreement (the "Parent Disclosure
Schedule"). The Parent Disclosure Schedule shall be arranged according to
specific sections in this Article IV and shall provide exceptions to, or
otherwise qualify in reasonable detail, only the corresponding section in this
Article IV and any other section in this Article IV where it is reasonably
clear, upon a reading of such disclosure without any independent knowledge on
the part of the reader regarding the matter disclosed, that the disclosure is
intended to apply to such other section.
SECTION 4.01 Organization and Qualification; Subsidiaries. Section 4.01 of
the Parent Disclosure Schedule sets forth the jurisdiction of incorporation of
Parent and each subsidiary of Parent required to be disclosed in the Parent SEC
Reports (as defined in Section 4.06(a) below) (the "Parent Subsidiaries"). Each
of Parent and the Parent Subsidiaries is a corporation duly organized, validly
existing and in good standing under the laws of such jurisdiction and has all
requisite corporate power and authority and all necessary governmental
approvals to own, lease and operate its properties and to carry on its business
as it is now being conducted, except where the failure to obtain such
governmental approvals has not had, and could not reasonably be expected to
have, individually or in the aggregate, a Parent Material Adverse Effect (as
defined below). Each of Parent and the Parent Subsidiaries is duly qualified or
licensed as a foreign corporation or organization 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 business makes such
qualification or licensing necessary, except for such failures to be so
qualified or licensed and in good standing that have not had, and could not
reasonably be expected to have, individually or in the aggregate, a Parent
Material Adverse Effect. The term "Parent Material Adverse Effect" means any
changes in or effects on the business of Parent or any Parent Subsidiary that,
individually or in the aggregate, are or are substantially likely to be
materially adverse to the business, financial condition, assets (tangible or
intangible), liabilities (including contingent liabilities), or results of
operations of Parent and the Parent Subsidiaries, taken as a whole, except for
any such changes or effects principally resulting from or principally arising
in connection with (i) any changes affecting the respective
A-24
industries in which Parent and the Parent Subsidiaries operate that do not have
a disproportionate impact on Parent and the Parent Subsidiaries, taken as a
whole, (ii) any changes in general economic conditions that do not
disproportionately impact Parent and the Parent Subsidiaries, taken as a whole,
(iii) in and of itself, any change in the trading price of the Parent Common
Shares, (iv) in and of itself, a failure by Parent to meet the revenue or
earnings predictions of equity analysts for any period ending (or for which
earnings are released) on or after the date of this Agreement and prior to the
Closing Date, (v) the taking of any action expressly required by the terms of
this Agreement or (vi) any adverse change, effect, event, occurrence, state of
facts or development to the extent primarily attributable to the announcement
or pendency of the Merger; provided, however, that Parent shall bear the burden
of showing that such change, effect, event, occurrence, state of fact or
development which Parent claims does not constitute a Parent Material Adverse
Effect is primarily attributable to the announcement or pendency of the Merger.
SECTION 4.02 Certificate of Incorporation and Bylaws. Parent has heretofore
made available to the Company a complete and correct copy of the Certificate of
Incorporation and Bylaws, each as amended to date, of Parent and Merger Sub.
Such Certificates of Incorporation and Bylaws are in full force and effect.
Neither Parent nor Merger Sub is in violation of any of the provisions of its
Certificate of Incorporation or Bylaws.
SECTION 4.03 Capitalization.
(a) The authorized capital stock of Parent consists of (i) 600,000,000
Parent Common Shares, and (ii) 20,000,000 shares of Preferred Stock, par value
$0.002 per share (the "Parent Preferred Shares").
(b) As of January 25, 2001, (i) 251,449,558 Parent Common Shares were issued
and outstanding, all of which are duly authorized, validly issued, fully paid
and non-assessable, (ii) no Parent Common Shares are held in the treasury of
Parent or by Parent Subsidiaries, (iii) an aggregate of 52,397,269 Parent
Common Shares are reserved for issuance pursuant to Parent's 1999 Equity
Incentive Plan, 1999 Directors' Stock Option Plan, Trading Dynamics 1998 Stock
Plan, Trading Dynamics 1999 Stock Plan, Tradex Technologies, Inc. 1997 Employee
Stock Option Plan, Tradex Technologies, Inc. 1999 Employee Stock Option/Stock
Issuance Plan and SupplierMarket 1999 Stock Option Plan (collectively, the
"Parent Stock Option Plans"), of which an aggregate of 45,609,005 shares are
subject to outstanding, unexercised options, and (iv) 17,484,977 Parent Common
Shares are reserved for issuance pursuant to Parent's 1999 Employee Stock
Purchase Plan (the "Parent Purchase Plan"), of which 17,484,977 shares are
available for issuance, (v) 13,068,572 shares were reserved for issuance and
subject to outstanding, unexercised warrants and (vi) no Parent Preferred
Shares were issued or outstanding.
(c) Except for (i) options granted pursuant to the Parent Stock Option
Plans, (ii) options assumed by Parent in previous acquisitions, (iii) warrants
disclosed in the Parent SEC Reports that have not been subsequently cancelled
and (iv) Parent Common Shares reserved for issuance under the Parent Purchase
Plan, there are no options, warrants or other rights, agreements, arrangements
or commitments of any character relating to the issued or unissued capital
stock of Parent or any Parent Subsidiary, or conditionally or absolutely
obligating Parent or any Parent Subsidiary to issue or sell any shares of
capital stock of, or other equity interests in, Parent or any Parent
Subsidiary. All Parent Common Shares subject to issuance as aforesaid, upon
issuance on the terms and conditions (whether conditional or absolute)
specified in the instruments pursuant to which they are issuable, will be duly
authorized, validly issued, fully paid and nonassessable. There are no
outstanding obligations of Parent or any Parent Subsidiary to repurchase,
redeem or otherwise acquire any Parent Common Shares or any capital stock or
other equity interest of any Parent Subsidiary. Each outstanding share of
capital stock or other equity interest of each Parent Subsidiary is duly
authorized, validly issued, fully paid and non-assessable, and each such share
or other equity interest owned by Parent or another Parent Subsidiary is free
and clear of all security interests, liens, claims, pledges, options, rights of
first refusal, agreements, limitations on Parent's or such other Parent
Subsidiary's voting rights, charges and other encumbrances of any nature
whatsoever, except where failure to own such shares free and clear would not,
individually or in the aggregate, have a Parent Material Adverse Effect.
A-25
(d) The authorized stock of Merger Sub consists of 1,000 shares of common
stock, par value $0.001 per share, all of which are duly authorized, validly
issued, fully paid and nonassessable and free of any preemptive rights in
respect thereof, and all of which are owned by Parent. The Parent Common Shares
to be issued pursuant to the Merger in accordance with Section 2.01(a)(i) will
be duly authorized, validly issued, fully paid and non-assessable and not
subject to preemptive rights created by statute, Parent's Certificate of
Incorporation or Bylaws or any agreement to which Parent is a party or is bound
and (ii) will, when issued, be registered under the Securities Act and the
Exchange Act and registered or exempt from registration under applicable Blue
Sky Laws.
SECTION 4.04 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 the Company Stock Option Agreement, and, subject to the Parent
Stockholder Approval (as defined in Section 4.10 below), to perform its
obligations hereunder and thereunder and to consummate the Merger and the other
transactions contemplated hereby and thereby. The execution and delivery of
this Agreement and the Company Stock Option Agreement by each of Parent and
Merger Sub and the consummation by each of Parent and Merger Sub of the Merger
and the other transactions contemplated hereby and thereby have been duly and
validly authorized by all necessary corporate action, and no other corporate
proceedings on the part of Parent or Merger Sub are necessary to authorize this
Agreement and the Company Stock Option Agreement or to consummate the Merger
and the other transactions so contemplated (other than, with respect to the
Merger and this Agreement, the Parent Stockholder Approval, the Merger Sub
Stockholder Approval (as each is defined in Section 4.10 below) and the filing
and recordation of appropriate merger documents as required by the DGCL). This
Agreement and the Company Stock Option Agreement have been duly and validly
executed and delivered by each of Parent and Merger Sub and, assuming the due
authorization, execution and delivery by the Company, constitute legal, valid
and binding obligations of each of Parent and Merger Sub, enforceable against
each of Parent and Merger Sub in accordance with their respective terms, except
as the enforcement thereof may be limited by bankruptcy, insolvency (including,
without limitation, all laws relating to fraudulent transfers), reorganization,
moratorium or similar laws affecting enforcement of creditors' rights generally
and except as enforcement thereof is subject to general principles of equity
(regardless of whether enforcement is considered in a proceeding in equity or
at law).
SECTION 4.05 No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement and the Company Stock
Option Agreement by each of Parent and Merger Sub do not, and the performance
of this Agreement and the Company Stock Option Agreement by each of Parent and
Merger Sub will not, (i) conflict with or violate the Certificate of
Incorporation or Bylaws of Parent or any equivalent organizational documents of
any Parent Subsidiary, (ii) assuming that all consents, approvals,
authorizations and other actions described in Section 4.05(b) have been
obtained and all filings and obligations described in Section 4.05(b) have been
made or complied with, conflict with or violate any Law applicable to Parent or
any Parent Subsidiary or by which any property or asset of Parent or any Parent
Subsidiary is bound or affected, or (iii) conflict with, result in any breach
of or constitute a default (or an event which with notice or lapse of time or
both would become a default) under, or give to others any right of termination,
amendment, acceleration or cancellation of, or require any payment under, or
result in the creation of a lien, claim, security interest or other charge or
encumbrance on any property or asset of Parent or any Parent Subsidiary
pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or obligation to which Parent or
any Parent Subsidiary is a party or by which any asset of Parent or any Parent
Subsidiary is bound or affected except, with respect to clauses (ii) and (iii),
for any such conflicts, violations, breaches, defaults or other occurrences
that could not reasonably be expected to have, individually or in the
aggregate, a Parent Material Adverse Effect.
(b) The execution and delivery of this Agreement by each of Parent and
Merger Sub do not, and the performance of this Agreement by each of Parent and
Merger Sub will not, require any consent, approval, order, authorization,
registration or permit of, or filing with or notification to, any Governmental
Entity, except
A-26
(i) for applicable requirements, if any, of the Exchange Act, Blue Sky Laws,
the Securities Act, The Nasdaq National Market, state takeover laws, the pre-
merger notification requirements of the HSR Act, the filing and recordation of
appropriate merger documents as required by the DGCL, and as set forth in
Section 4.05(b) of the Parent Disclosure Schedule and (ii) for such other
consents, approvals, orders, authorizations, registrations, permits, filings or
notifications which if not obtained or made could not be material to the
Company or Parent or prevent or materially delay the consummation of the
transactions contemplated by this Agreement.
SECTION 4.06 SEC Filings; Financial Statements.
(a) Parent has filed all forms, reports and documents required to be filed
by it with the SEC since April 23, 1999 (collectively, the "Parent SEC
Reports"). As of the respective dates they were filed (and if amended or
superseded by a filing prior to the date of this Agreement then on the date of
such filing), (i) the Parent SEC Reports complied in all material respects with
the requirements of the Securities Act or the Exchange Act, as the case may be,
and (ii) none of the Parent SEC Reports contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading. No Parent Subsidiary
is required to file any form, report or other document with the SEC.
(b) Each of the consolidated financial statements (including, in each case,
any notes thereto) contained in the Parent SEC Reports was prepared in
accordance with GAAP applied on a consistent basis throughout the periods
indicated (except as may be indicated in the notes thereto or, in the case of
unaudited statements, as permitted by Form 10-Q or 8-K promulgated by the SEC)
and each presents fairly, in all material respects, the consolidated financial
position, results of operations and cash flows of Parent and the consolidated
Parent Subsidiaries as at the respective dates thereof and for the respective
periods indicated therein, except as otherwise noted therein (subject, in the
case of unaudited statements, to normal and recurring year-end adjustments
which could not reasonably be expected to, individually or in the aggregate,
have a Parent Material Adverse Effect). The balance sheet of Parent contained
in the Parent SEC Reports as of September 30, 2000 is hereinafter referred to
as the "Parent Balance Sheet."
(c) Parent has heretofore furnished to the Company a complete and correct
copy of any amendments or modifications, which have not yet been filed with the
SEC but which are required to be filed, to agreements, documents or other
instruments which previously had been filed by Parent with the SEC pursuant to
the Securities Act or the Exchange Act.
SECTION 4.07 Tax Matters. To the knowledge of Parent, neither Parent nor any
of its affiliates has taken or agreed to take any action that would prevent the
Merger from qualifying as a reorganization within the meaning of section 368(a)
of the Code. Parent is not aware of any agreement, plan or other circumstance
that would prevent the Merger from qualifying as a reorganization within the
meaning of section 368(a) of the Code.
SECTION 4.08 Operations of Merger Sub. Merger Sub is a direct, wholly owned
subsidiary of Parent, was formed solely for the purpose of engaging in the
transactions contemplated by this Agreement, has engaged in no other business
activities and has conducted its operations only as contemplated by this
Agreement.
SECTION 4.09 Brokers. No broker, finder or investment banker (other than
Xxxxxx Xxxxxx Partners) is entitled to any brokerage, finder's or other fee or
commission in connection with the Merger or the other transactions contemplated
by this Agreement based upon arrangements made by or on behalf of Parent.
SECTION 4.10 Board Approval; Vote Required.
(a) The Board of Directors of Parent, by resolutions duly adopted at a
meeting duly called and held and not subsequently rescinded or modified in any
way (the "Parent Board Approval"), has duly (i) approved this Agreement and the
Merger and (ii) recommended that the stockholders of Parent approve the
issuance of Parent Common Shares in connection with the Merger.
A-27
(b) The affirmative vote at the Parent Stockholders' Meeting (as defined in
Section 6.01(a) below) of a majority of the total votes cast in person or by
proxy on the proposal to approve the issuance of Parent Common Shares pursuant
to the Merger (the "Parent Stockholder Approval") is the only vote of the
holders of any class or series of Parent's capital stock necessary to approve
the transactions contemplated by this Agreement.
(c) The Board of Directors of Merger Sub, pursuant to resolutions duly
adopted by written consent of the sole director and not subsequently rescinded
or modified in any way, has duly approved this Agreement and the Merger.
(d) Parent, as sole stockholder of Merger Sub, pursuant to resolutions duly
adopted by written consent and not subsequently rescinded or modified in any
way, has duly approved this Agreement and the Merger (the "Merger Sub
Stockholder Approval").
SECTION 4.11 Undisclosed Liabilities. Except for (a) liabilities that are
fully reflected or reserved against on the Parent Balance Sheet, or in the
notes thereto, and (b) liabilities incurred in the ordinary course of business
consistent with past practice that could not, individually or in the aggregate,
reasonably be expected to have a Parent Material Adverse Effect, since the date
of the Parent Balance Sheet, Parent has not incurred any liability of any
nature whatsoever (whether absolute, accrued, contingent or otherwise and
whether due or to become due).
SECTION 4.12 Absence of Certain Changes or Events. Since September 30, 2000,
there has not been any Parent Material Adverse Effect.
SECTION 4.13 Absence of Litigation. There is no litigation, suit, claim,
action, proceeding or investigation pending or, to the knowledge of Parent or
Merger Sub, threatened against Parent or Merger Sub, or any property or asset
of Parent or Merger Sub, before any court, arbitrator or Governmental Entity,
domestic or foreign, that (i) could reasonably be expected to, individually or
in the aggregate, have a Parent Material Adverse Effect or (ii) seeks to delay
or prevent the consummation of the Merger or any other material transaction
contemplated by this Agreement. Neither Parent nor Merger Sub nor any material
property or asset of Parent or Merger Sub is subject to any continuing order
of, consent decree, settlement agreement or other similar written agreement
with, or, to the knowledge of Parent, continuing investigation by, any
Governmental Entity, or any order, writ, judgment, injunction, decree,
determination or award of any Governmental Entity or arbitrator that in any
case could reasonably be expected to have a Parent Material Adverse Effect.
SECTION 4.14 Intellectual Property.
(a) Parent and the Parent Subsidiaries each own or are licensed for, and in
any event possess sufficient and legally enforceable rights with respect to,
all Parent Intellectual Property (as defined below) relevant to their
respective businesses as currently conducted without any Infringement, except
to the extent that the failure to have such rights has not had and could not
reasonably be expected to have a Parent Material Adverse Effect and except for
such items as have yet to be conceived or developed or that may reasonably be
expected to be available for licensing on reasonable terms from third parties.
With respect to patent rights, moral rights and Xxxx rights, the
representations and warranties of this Section 4.14(a) are made only to
Parent's and the Parent Subsidiaries' knowledge.
(b) Since the date of the Parent Balance Sheet, and prior the date of this
Agreement, there has been no sale, assignment, lease, termination, abandonment,
transfer, authorization to encumber or to otherwise dispose of or grant of any
security interest in and to any item of Parent Intellectual Property (as
defined below), in whole or in part, except for such sales, assignments,
leases, terminations, abandonment, transfers, authorizations to encumber or
dispose of or grants of security interests that could not reasonably be
expected to have a Parent Material Adverse Effect.
(c) For purposes of this Agreement, "Parent Intellectual Property" means all
Intellectual Property that is Used in any business of Parent or any Parent
Subsidiary, or that may be necessary to conduct any such businesses.
A-28
SECTION 4.15 Opinion of Financial Advisor. Parent's Board of Directors has
received an opinion from Xxxxxx Xxxxxx Partners, dated as of the date hereof,
to the effect that as of the date hereof, the Exchange Ratio is fair to Parent
from a financial point of view.
SECTION 4.16 Taxes. All Tax (as defined in Section 3.16) returns,
statements, reports, declarations and other forms and documents (including,
without limitation, estimated Tax returns and reports and material information
returns and reports) required to be filed with any Tax Authority (as defined in
Section 3.16) with respect to any Taxable (as defined in Section 3.16) period
ending on or before the Closing, by or on behalf of the Parent (collectively,
"Parent Tax Returns" and individually a "Parent Tax Return"), have been or will
be completed and filed when due (including any extensions of such due date) and
all amounts shown due on such Parent Tax Returns on or before the Effective
Time have been or will be paid on or before such date, except where the failure
to complete and file such Parent Tax Returns or to pay such amounts shown would
not have a Parent Material Adverse Effect. Except as would not have a Parent
Material Adverse Effect, the consolidated financial statements of Parent
contained in the Parent SEC Reports (i) fully accrue all actual and contingent
liabilities for Taxes (as defined in Section 3.16) with respect to all periods
through the date of the Parent Balance Sheet. All information set forth in the
notes to the consolidated financial statements of Parent contained in the
Parent SEC Reports relating to Tax matters is correct and complete in all
material respects. Parent has withheld and paid to the applicable financial
institution or Tax Authority all amounts required to be withheld. As used in
this Section 4.16, the term "Parent" means Parent and any entity included in,
or required under GAAP to be included in, any of the consolidated financial
statements of Parent contained in the Parent SEC Reports.
ARTICLE V
Conduct of Business Pending the Merger
SECTION 5.01 Conduct of Business by the Company Pending the Merger. Conduct
of Business by the Company Pending the Merger. The Company agrees that, between
the date of this Agreement and the Effective Time, except as set forth in
Section 5.01 of the Company Disclosure Schedule or as specifically contemplated
by any other provision of this Agreement, unless Parent shall otherwise consent
in writing:
(a) the businesses of the Company and the Company Subsidiaries shall be
conducted only in, and the Company and the Company Subsidiaries shall not take
any action except in, the ordinary course of business and in a manner
consistent with past practice; and
(b) the Company shall use its commercially reasonable efforts to preserve
substantially intact the business organization of the Company and the Company
Subsidiaries, to keep available the services of the current officers, employees
and consultants of the Company and the Company Subsidiaries and to preserve the
current relationships of the Company and the Company Subsidiaries with
customers, suppliers, licensors, licensees, alliance partners and other persons
with which the Company or any Company Subsidiary has business relations.
By way of amplification and not limitation, except as contemplated by this
Agreement or as set forth in Section 5.01 of the Company Disclosure Schedule,
the Company shall not, and shall not permit any Company Subsidiary to, between
the date of this Agreement and the Effective Time, directly or indirectly do,
any of the following without the prior written consent of Parent:
(1) issue, deliver or sell, or authorize or propose the issuance,
delivery or sale of, any shares of capital stock of any class or any
securities convertible into, or any right, warrants, calls, subscriptions
or options to acquire, any such shares or convertible securities, or any
other ownership interest other than (i) the issuance of shares of Company
Common Stock upon the exercise of Company Stock Options outstanding on the
date of this Agreement under the Company Stock Option Plan or pursuant to
the Company Purchase Plan, (ii) the issuance of shares of Company Common
Stock upon the exercise of Warrants outstanding on the date of this
Agreement or (iii) the grant of options to purchase up to
A-29
1,200,000 shares of Company Common Stock in the aggregate, but not to
exceed 100,000 shares of Company Common Stock to any individual optionee,
to newly hired officers, employees and consultants in the ordinary course
of business consistent with past practice, in each case at an exercise
price no less than fair market value; provided, however, that such
1,200,000 share limitation shall not apply to shares of Company Common
Stock returned to any Company Stock Option Plan as a result of option
terminations or repurchases of unvested shares;
(2) take any of the actions described in clauses (b) through (q) of
Section 3.09 hereof;
(3) intentionally take any action (or intentionally fail to take any
action) to cause the Company's representations and warranties set forth in
Article III to be untrue in any respect; or
(4) agree in writing or otherwise to take any of the actions described
in Section 5.01(b)(1) through (3) above.
SECTION 5.02 Conduct of Business by Parent. Parent agrees that, between the
date of this Agreement and the Effective Time, except as set forth in Section
5.02 of the Parent Disclosure Schedule or as specifically contemplated by any
other provision of this Agreement, unless the Company shall otherwise consent
in writing, Parent shall not:
(a) intentionally take any action that could reasonably be expected to
cause the Merger to fail to qualify as a "reorganization" under Section
368(a) of the Code, whether or not otherwise permitted by the provisions of
this Article V or fail to take any action reasonably necessary to cause the
Merger to so qualify;
(b) declare, set aside or pay any dividends on or make any other
distributions in cash in respect of any capital stock;
(c) cause, permit or propose any amendments to its Certificate of
Incorporation or Bylaws (or similar governing instruments of any of its
subsidiaries), except as contemplated by this Agreement, that would have an
adverse effect on the rights of the holders of Parent Shares (including
Parent Shares to be issued in the Merger);
(d) intentionally take any action (or intentionally fail to take any
action) to cause Parent's representations and warranties in Article IV to
be untrue in any material respect; or
(e) agree in writing or otherwise to take any of the actions described
in Section 5.02(a) through (d) above.
SECTION 5.03 Notification of Certain Matters. Parent shall give prompt
notice to the Company, and the Company shall give prompt notice to Parent, of
(a) the occurrence or nonoccurrence of any event the occurrence or
nonoccurrence of which would be likely to cause (i) any representation or
warranty contained in this Agreement to be untrue or inaccurate in any material
respect or (ii) any covenant, condition or agreement contained in this
Agreement not to be complied with or satisfied in any material respect and (b)
any failure or inability of Parent or the Company, as the case may be, to
comply with or satisfy any covenant, condition or agreement to be complied with
or satisfied by it hereunder; provided, however, that the delivery of any
notice pursuant to this Section 5.03 shall not limit or otherwise affect the
representations, warranties, covenants or agreements of the Parent or the
Company, as the case may be, the conditions to the obligations of the parties
hereto to consummate the Merger or the remedies available hereunder to Parent
or the Company, as the case may be.
A-30
ARTICLE VI
Additional Agreements
SECTION 6.01 Registration Statement; Joint Proxy Statement.
(a) As promptly as practicable after the execution of this Agreement, (i)
Parent and the Company shall prepare and file with the SEC a joint proxy
statement (together with any amendments thereof or supplements thereto, the
"Joint Proxy Statement") relating to the respective meetings of the Company's
stockholders (the "Company Stockholders' Meeting") to be held to consider
approval of the Merger and adoption of this Agreement and of the Parent
stockholders (the "Parent Stockholders' Meeting") to be held to obtain the
Parent Stockholder Approval and (ii) Parent shall prepare and file with the SEC
a registration statement on Form S-4 (together with all amendments thereto, the
"Registration Statement") in which the Joint Proxy Statement shall be included
as a prospectus, in connection with the registration under the Securities Act
of the Parent Common Shares to be issued to the stockholders of the Company
pursuant to the Merger. Each of Parent and the Company shall use its
commercially reasonable efforts to cause the Registration Statement to become
effective as promptly as practicable, and prior to the effective date of the
Registration Statement, Parent shall use its commercially reasonable efforts to
take all or any action required under any applicable federal or state
securities laws in connection with the issuance of Parent Common Shares
pursuant to the Merger. Each of Parent and the Company shall furnish all
information concerning itself as the other may reasonably request in connection
with such actions and the preparation of the Registration Statement and Joint
Proxy Statement. As promptly as practicable after the Registration Statement
shall have become effective, each of Parent and the Company shall mail the
Joint Proxy Statement to their respective stockholders.
(b) Subject to paragraph (c) of this Section 6.01, the Joint Proxy Statement
shall include the unanimous recommendation of the Board of Directors of the
Company to the stockholders of the Company to vote in favor of approving the
Merger and adoption of this Agreement and neither the Board of Directors of the
Company nor any committee thereof shall withhold, withdraw, amend, modify or
change, or propose or resolve to withhold, withdraw, amend, modify or change,
in each case in a manner adverse to Parent, the unanimous recommendation of the
Board of Directors of the Company that the Company's stockholders vote in favor
of and adopt and approve this Agreement and approve the Merger. For purposes of
this Agreement, such recommendation of the Board of Directors shall be deemed
to have been modified in a manner adverse to Parent if such recommendation
shall no longer be unanimous.
(c) Prior to the adoption and approval of this Agreement and the approval of
the Merger by the requisite vote of the stockholders of the Company, nothing in
this Agreement shall prevent the Company's Board of Directors from withholding,
withdrawing, amending, modifying or changing its unanimous recommendation in
favor of the Merger if (i) a Superior Proposal (as defined in Section 6.05
below) is made to the Company and is not withdrawn, (ii) the Company shall have
as promptly as practicable provided written notice to Parent advising Parent
that the Company has received a Superior Proposal, specifying the material
terms and conditions of such Superior Proposal in reasonable detail and
identifying the person or entity making such Superior Proposal (a "Notice of
Superior Proposal"), (iii) Parent shall not have, within three business days of
Parent's receipt of the Notice of Superior Proposal, made an offer that the
Company's Board of Directors by a majority vote determines in its good faith
judgment (after consultation with its financial advisor) to be at least as
favorable to the Company and its stockholders as such Superior Proposal (it
being agreed that the Company's Board of Directors shall convene a meeting to
consider any such offer by Parent as promptly as practicable following the
receipt thereof), (iv) the Board of Directors of the Company concludes in good
faith, after consultation with its outside legal counsel, that, in light of
such Superior Proposal, the withholding, withdrawal, amendment, modification or
change of such recommendation is required in order for the Board of Directors
of the Company to comply with its fiduciary obligations to the Company and its
stockholders under applicable Law and (v) the Company shall not have violated
any of the restrictions set forth in Section 6.05 or this Section 6.01(c). The
Company shall provide Parent with at least two business days' notice of any
meeting of the Company's Board of Directors at which the Company's Board of
Directors is reasonably expected to
A-31
consider any Competing Transaction (as defined in Section 6.05 below). Subject
to applicable laws, nothing contained in this Section 6.01(c) shall limit the
Company's obligation to convene and hold the Company Stockholders' Meeting
(regardless of whether the unanimous recommendation of the Board of Directors
of the Company shall have been withheld, withdrawn, amended, modified or
changed).
(d) The Joint Proxy Statement shall include the unanimous recommendation of
the Board of Directors of Parent to the stockholders of Parent to vote in favor
of approving the issuance of the Parent Common Shares pursuant to the Merger
and neither the Board of Directors Parent nor any committee thereof shall
withhold, withdraw, amend, modify or change, or propose or resolve to withhold,
withdraw, amend, modify or change, in each case in a manner adverse to the
Company, the unanimous recommendation of the Board of Directors of Parent that
the Company's stockholders vote in favor of and approve the issuance of the
Parent Common Shares pursuant to the Merger. For purposes of this Agreement,
such recommendation of the Board of Directors shall be deemed to have been
modified in a manner adverse to the Company if such recommendation shall no
longer be unanimous.
(e) Subject to Section 6.01(c), no amendment or supplement to the Joint
Proxy Statement or the Registration Statement will be made by Parent or the
Company without the approval of the other party (such approval not to be
unreasonably withheld or delayed). Each of Parent and the Company will advise
the other, promptly after it receives notice thereof, of the time at which the
Registration Statement has become effective or any supplement or amendment has
been filed, of the issuance of any stop order, of the suspension of the
qualification of the Parent Common Shares issuable in connection with the
Merger for offering or sale in any jurisdiction, or of any request by the SEC
for amendment of the Joint Proxy Statement or the Registration Statement or
comments thereon and responses thereto or requests by the SEC for additional
information.
(f) The information supplied by Parent for inclusion in the Registration
Statement and the Joint Proxy Statement shall not, at (i) the time the
Registration Statement is declared effective, (ii) the time the Joint Proxy
Statement (or any amendment thereof or supplement thereto) is first mailed to
the stockholders of the Company, (iii) the time the Joint Proxy Statement (or
any amendment thereof or supplement thereto) is first mailed to the
stockholders of Parent, (iv) the time of the Company Stockholders' Meeting, (v)
the time of the Parent Stockholders' Meeting and (vi) the Effective Time,
contain any untrue statement of a material fact or fail to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. If, at any time prior to the Effective Time, any event or
circumstance relating to Parent or any Parent Subsidiary, or their respective
officers or directors, that should be set forth in an amendment or a supplement
to the Registration Statement or Joint Proxy Statement should be discovered by
Parent, Parent shall promptly inform the Company. All documents that Parent is
responsible for filing with the SEC in connection with the Merger or the other
transactions contemplated by this Agreement will comply as to form and
substance in all material respects with the applicable requirements of the
Securities Act and the Exchange Act.
(g) The information supplied by the Company for inclusion in the
Registration Statement and the Joint Proxy Statement shall not, at (i) the time
the Registration Statement is declared effective, (ii) the time the Joint Proxy
Statement (or any amendment thereof or supplement thereto) is first mailed to
the stockholders of the Company, (iii) the time the Joint Proxy Statement (or
any amendment thereof or supplement thereto) is first mailed to the
stockholders of Parent, (iv) the time of the Company Stockholders' Meeting, (v)
the time of the Parent Stockholders' Meeting and (vi) the Effective Time,
contain any untrue statement of a material fact or fail to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. If, at any time prior to the Effective Time, any event or
circumstance relating to the Company or any Company Subsidiary, or their
respective officers or directors, that should be set forth in an amendment or a
supplement to the Registration Statement or Joint Proxy Statement should be
discovered by the Company, the Company shall promptly inform Parent. All
documents that the Company is responsible for filing with the SEC in connection
with the Merger or the other transactions contemplated by this Agreement will
comply as to form and substance in all material respects with the applicable
requirements of the Securities Act and the Exchange Act.
A-32
SECTION 6.02 Company Stockholders' Meeting. The Company shall (i) call and
hold the Company Stockholders' Meeting as promptly as practicable for the
purpose of voting upon the approval of the Merger and adoption of this
Agreement, (ii) use its commercially reasonable efforts to hold the Company
Stockholders' Meeting as soon as practicable after the date on which the
Registration Statement becomes effective and (iii) shall in any event hold such
Company Stockholders' Meeting within 45 days after the date on which the
Registration Statement becomes effective. The Company shall use its
commercially reasonable efforts to solicit from its stockholders proxies in
favor of the approval of the Merger and adoption of this Agreement, and shall
take all other commercially reasonable action necessary or advisable to secure
the vote or consent of stockholders required by the rules of The Nasdaq
National Market and the DGCL, to obtain such approvals.
SECTION 6.03 Parent Stockholders' Meeting. Parent shall (i) call and hold
the Parent Stockholders' Meeting as promptly as practicable for the purpose of
voting upon the issuance of Parent Common Shares pursuant to the Merger, (ii)
use its commercially reasonable efforts to hold the Parent Stockholders'
Meeting as soon as practicable after the date on which the Registration
Statement becomes effective and (iii) shall in any event hold such Parent
Stockholders' Meeting within 45 days after the date on which the Registration
Statement becomes effective. Parent shall use its commercially reasonable
efforts to solicit from its stockholders proxies in favor of the issuance of
Parent Common Shares pursuant to the Merger, and shall take all other
commercially reasonable action necessary or advisable to secure the vote or
consent of stockholders required by the rules of The Nasdaq National Market and
the DGCL, to obtain such approvals.
SECTION 6.04 Access to Information; Confidentiality.
(a) Except as required pursuant to any confidentiality agreement or similar
agreement or arrangement to which Parent or the Company or any of their
subsidiaries is a party or pursuant to applicable Law, from the date of this
Agreement to the Effective Time, Parent and the Company shall (and shall cause
their respective subsidiaries to): (i) provide to the other (and its officers,
directors, employees, subsidiaries, accountants, consultants, legal counsel,
investment bankers, advisors, agents and other representatives, collectively,
"Representatives") access at reasonable times upon prior notice to the
officers, employees, agents, properties, offices and other facilities of it and
its subsidiaries and to the books and records thereof and (ii) furnish promptly
such information concerning the business, properties, contracts, assets,
liabilities, personnel and other aspects of it and its subsidiaries as the
other party or its Representatives may reasonably request.
(b) The parties shall comply with, and shall cause their respective
Representatives to comply with, all of their obligations under the Non-
Disclosure Agreement dated January 22, 2001 (the "Non-Disclosure Agreement"),
between the Company and Parent. All information obtained by the parties
pursuant to (a) above shall be subject to the Non-Disclosure Agreement.
(c) No investigation pursuant to this Section 6.04 shall affect any
representation or warranty in this Agreement or any condition to the
obligations of the parties hereto to consummate the Merger.
SECTION 6.05 No Solicitation of Transactions.
(a) The Company will not, directly or indirectly, and will instruct its
Representatives not to, directly or indirectly, solicit, initiate or encourage
(including by means of furnishing nonpublic information), or take any other
action to facilitate, any inquiries or the making of any proposal or offer
(including, without limitation, any proposal or offer to its stockholders) that
constitutes, or may reasonably be expected to lead to, any Competing
Transaction (as defined below), or enter into or maintain or continue
discussions or negotiate with any person or entity in furtherance of such
inquiries or to obtain a Competing Transaction, or agree to or endorse any
Competing Transaction, or authorize or permit any of its Representatives to
take any such action. The Company shall immediately notify Parent if any
proposal or offer, or any inquiry or contact with any person with respect
thereto, regarding a Competing Transaction is made, and the Company shall
immediately inform Parent as to the material details of any such proposal,
offer, inquiry or contact, including, without limitation, the identity of the
party making any such proposal, offer, inquiry or contact, and, if in writing,
promptly deliver or cause to be delivered to Parent a copy of such proposal,
offer, inquiry or contact and any
A-33
other written material relating thereto that contains the principal terms of
such proposal or offer. The Company immediately shall cease and cause to be
terminated all existing discussions or negotiations with any parties conducted
heretofore with respect to a Competing Transaction. The Company shall not
release any third party from, or waive any provision of, any confidentiality or
standstill agreement to which it is a party. Notwithstanding anything to the
contrary in this Section 6.05, the Company's Board of Directors may furnish
information to, and enter into discussions and negotiate with, a person who has
made an unsolicited, written, bona fide proposal or offer regarding a Competing
Transaction if the Company's Board of Directors has (i) reasonably concluded
after consultation with its financial advisor that such proposal or offer
constitutes a Superior Proposal (as defined below), (ii) reasonably concluded,
after consultation with its outside legal counsel, that, in light of such
Superior Proposal, the furnishing of such information or entering into
discussions is required to comply with its fiduciary obligations to the Company
and its stockholders under applicable Law, (iii) provided written notice to
Parent of its intent to furnish information or enter into discussions with such
person at least three business days prior to taking any such action and (iv)
obtained from such person an executed confidentiality agreement on terms no
less favorable to the Company than those contained in the Non-Disclosure
Agreement; provided, however, that no information may be furnished and no
discussions or negotiations may be entered into in the event that the Company
has taken any actions inconsistent with this Section 6.05(a); provided further,
however, that the Company's Board of Directors shall furnish to Parent all
information provided to the person who has made the Superior Proposal to the
extent that such information has not been previously provided to Parent and
shall keep Parent promptly and reasonably informed as to the status of any
discussions regarding such Superior Proposal.
(b) A "Competing Transaction" means any of the following involving the
Company (other than the Merger and the other transactions contemplated by this
Agreement): (i) a merger, consolidation, share exchange, business combination
or other similar transaction; (ii) any sale, lease, exchange, mortgage, pledge,
transfer or other disposition of 15% or more of the assets of the Company and
the Company Subsidiaries, taken as a whole; (iii) a tender offer or exchange
offer for, or an offer to purchase directly from the Company, 15% or more of
the outstanding voting securities of the Company; or (iv) any solicitation in
opposition to adoption by the Company's stockholders of this Agreement.
(c) A "Superior Proposal" means an unsolicited written bona fide offer or
proposal made by a third party to consummate an "Acquisition Transaction" (as
defined below) (i) that is not attributable to a material breach by the Company
of Section 6.05(a) hereof and (ii) on terms (including conditions to
consummation of the contemplated transaction) that the Board of Directors of
the Company determines, in its good faith reasonable judgment (after
consultation with the Company's financial advisor), to be more favorable to the
Company stockholders from a financial point of view than the terms of the
Merger and with any financing required to consummate the transaction
contemplated by such offer committed or likely, in the reasonable good faith
judgment of the Company's Board of Directors (after consultation with the
Company's financial advisor), to be obtained by such third party on a timely
basis. For purposes of this Agreement, an "Acquisition Transaction" shall mean
a merger, consolidation, business combination, recapitalization, liquidation,
dissolution, sale or disposition or similar transaction involving the Company
pursuant to which a person (or its stockholders) would own, if consummated, all
or substantially all of the outstanding capital stock of the Company (or of the
surviving entity in a merger or the direct or indirect parent of the surviving
entity in a merger) or all or substantially all the assets of the Company and
the Company Subsidiaries taken as a whole.
(d) Nothing contained in this Agreement shall prohibit the Company or its
Board of Directors from taking and disclosing to its stockholders a position
contemplated by Rules 14d-9 and 14e-2(a) promulgated under the Exchange Act.
SECTION 6.06 Directors' and Officers' Indemnification and Insurance.
(a) The Certificate of Incorporation and Bylaws of the Surviving Corporation
shall contain the same provisions with respect to indemnification, advancement
and director exculpation as are set forth in the Certificate of Incorporation
and Bylaws of the Company on the date of this Agreement, which provisions shall
A-34
not be amended, repealed or otherwise modified for a period of six years from
the Effective Time in any manner that would affect adversely the rights
thereunder of persons who at any time prior to the Effective Time were entitled
to indemnification, advancement or exculpation under the Certificate of
Incorporation or Bylaws of the Company in respect of actions or omissions
occurring at or prior to the Effective Time (including, without limitation, the
transactions contemplated by this Agreement), unless such modification is
required by Law.
(b) The Company shall, to the fullest extent permitted under applicable Law
and regardless of whether the Merger becomes effective, indemnify and hold
harmless, and, after the Effective Time, Parent and the Surviving Corporation
shall, to the fullest extent permitted under applicable Law, indemnify and hold
harmless, each present and former director or officer of the Company and each
Company Subsidiary and each such person that served at the request of the
Company or any Company Subsidiary as a director, officer, trustee, partner,
fiduciary, employee or agent of another corporation, partnership, joint
venture, trust, pension or other employee benefit plan or enterprise
(collectively, the "Indemnified Parties") against all costs and expenses
(including reasonable attorneys' fees), judgments, fines, losses, claims,
damages, liabilities and settlement amounts paid in connection with any claim,
action, suit, proceeding or investigation (whether arising before or after the
Effective Time), whether civil, administrative or investigative, arising out of
or pertaining to any action or omission in their capacities as officers or
directors, in each case occurring before the Effective Time (including the
transactions contemplated by this Agreement). Without limiting the foregoing,
in the event of any such claim, action, suit, proceeding or investigation, (i)
the Company or Parent and the Surviving Corporation, as the case may be, shall
pay the reasonable fees and expenses of counsel selected by any Indemnified
Party, which counsel shall be reasonably satisfactory to the Company or to
Parent and the Surviving Corporation, as the case may be, promptly after
statements therefor are received (unless the Surviving Corporation shall elect
to defend such action) and (ii) the Company and Parent and the Surviving
Corporation shall cooperate in the defense of any such matter; provided,
however, that neither the Company, Parent nor the Surviving Corporation shall
be liable for any settlement effected without its written consent (which
consent shall not be unreasonably withheld or delayed).
(c) For a period of six years after the Effective Time, Parent shall cause
to be maintained in effect the current directors' and officers' liability
insurance policies maintained by the Company (provided that Parent may
substitute therefor policies of at least the same coverage containing terms and
conditions, taken as a whole, that are no less advantageous) with respect to
claims arising from facts or events that occurred prior to the Effective Time;
provided, however, that in no event shall Parent be required to expend pursuant
to this Section 6.06(c) more than an amount per year equal to 150% of current
annual premiums paid by the Company for such insurance (which premiums the
Company represents and warrants to be approximately $750,000 per year in the
aggregate).
(d) This Section 6.06 is intended to be for the benefit of, and shall be
enforceable by, the Indemnified Parties and their heirs and personal
representatives and shall be binding on the Surviving Corporation and its
successors and assigns. In the event the Company or the Surviving Corporation
or any of their respective successors or assigns (i) consolidates with or
merges into any other person and shall not be the continuing or surviving
corporation or entity in such consolidation or merger or (ii) transfers all or
substantially all of its properties and assets to any person, then, and in each
case, proper provision shall be made so that the successors and assigns of the
Company or the Surviving Corporation, as the case may be, honor the
indemnification obligations set forth in this Section 6.06.
SECTION 6.07 Obligations of Merger Sub. Obligations of Merger Sub. Parent
shall take all action necessary to cause Merger Sub to perform its obligations
under this Agreement and to consummate the Merger on the terms and subject to
the conditions set forth in this Agreement.
SECTION 6.08 Affiliates Agreements. As soon as practicable after the date of
this Agreement, the Company shall deliver to Parent a list of names and
addresses of those persons who were, in the Company's reasonable judgment, on
such date, affiliates (within the meaning of Rule 145 of the rules and
regulations
A-35
promulgated under the Securities Act (each such person being an "Affiliate"))
of the Company. The Company shall provide Parent with such information and
documents as Parent shall reasonably request for purposes of reviewing such
list. The Company shall use its commercially reasonable efforts to deliver or
cause to be delivered to Parent, no later than at least 30 days prior to the
Effective Time, an affiliate agreement in the form attached hereto as Exhibit D
(an "Affiliate Agreement"), executed by each of the Affiliates of the Company
identified in the foregoing list and any person who shall, to the knowledge of
the Company, have become an Affiliate of the Company subsequent to the delivery
of such list.
SECTION 6.09 Further Action; Consents; Filings.
(a) Upon the terms and subject to the conditions hereof, each of the parties
hereto shall use its commercially reasonable efforts to (i) take, or cause to
be taken, all appropriate action and do, or cause to be done, all things
necessary, proper or advisable under applicable Law or otherwise to consummate
and make effective the Merger and the other transactions contemplated by this
Agreement, (ii) obtain from Governmental Entities any consents, licenses,
permits, waivers, approvals, authorizations or orders required to be obtained
or made by Parent or the Company or any of their subsidiaries in connection
with the authorization, execution and delivery of this Agreement and the
consummation of the Merger and the other transactions contemplated by this
Agreement and (iii) make all necessary filings, and thereafter make any other
reasonably required submissions, with respect to this Agreement, the Merger and
the other transactions contemplated by this Agreement that are required under
(A) the Exchange Act and the Securities Act and any other applicable federal or
state securities laws, (B) the HSR Act and foreign antitrust regulations, if
any, applicable to the Merger and the other transactions contemplated hereunder
and (C) any other applicable Law. The parties hereto shall cooperate with each
other in connection with the making of all such filings.
(b) Parent and the Company shall file as soon as practicable after the date
of this Agreement notifications under the HSR Act and shall respond as promptly
as practicable to all reasonable inquiries or reasonable requests received from
the Federal Trade Commission or the Antitrust Division of the Department of
Justice for additional information or documentation and shall respond as
promptly as practicable to all reasonable inquiries and reasonable requests
received from any State Attorney General or other Governmental Entity in
connection with antitrust matters. The parties shall cooperate with each other
in connection with the making of all such filings or responses. Notwithstanding
anything to the contrary in this Section 6.09, Parent shall not be required to
agree to (i) the divestiture (including, without limitation, through a
licensing arrangement) by Parent, any Parent Subsidiary, the Company or any
Company Subsidiary of any of their respective businesses, product lines or
assets, or (ii) the imposition of any material limitation on the ability of any
of them to conduct their business or to own or exercise control of such assets,
properties and stock.
SECTION 6.10 Plan of Reorganization.
(a) This Agreement is intended to constitute a "plan of reorganization"
within the meaning of section 1.368-2(g) of the income tax regulations
promulgated under the Code. From and after the date of this Agreement and until
the Effective Time, each party hereto shall use its commercially reasonable
efforts to cause the Merger to qualify, and will not knowingly take any action,
cause any action to be taken, fail to take any action or cause any action to
fail to be taken which action or failure to act could prevent the Merger from
qualifying as a reorganization under the provisions of section 368(a) of the
Code. Following the Effective Time, neither the Surviving Corporation, Parent
nor any of their affiliates shall knowingly take any action, cause any action
to be taken, fail to take any action or cause any action to fail to be taken,
which action or failure to act could cause the Merger to fail to qualify as a
reorganization under section 368(a) of the Code.
(b) As of the date of this Agreement, the Company does not know of any
reason why it would not be able to deliver to Xxxxxxxxx Xxxxxxx or Xxxx Xxxx
Xxxx & Freidenrich LLP ("Xxxx Xxxx"), at the date of the legal opinions
referred to below, certificates substantially in compliance with IRS published
advance ruling guidelines, with customary exceptions and modifications thereto,
to enable such firms to deliver the legal opinions contemplated by Sections
7.02(d) and 7.03(c), and the Company hereby agrees to deliver such certificates
effective as of the date of such opinions.
A-36
(c) As of the date of this Agreement, Parent and Merger Sub do not know of
any reason why they would not be able to deliver to Xxxxxxxxx Xxxxxxx or Xxxx
Xxxx, at the date of the legal opinions referred to below, certificates
substantially in compliance with IRS published advance ruling guidelines, with
customary exceptions and modifications thereto, to enable such firms to deliver
the legal opinions contemplated by Sections 7.02(d) and 7.03(c), and Parent
hereby agrees to deliver such certificates effective as of the date of such
opinions.
SECTION 6.11 Public Announcements. The initial press release relating to
this Agreement shall be a joint press release the text of which has been agreed
to by each of Parent and the Company. Thereafter, unless otherwise required by
applicable Law or the requirements of The Nasdaq National Market, each of
Parent and the Company shall use commercially reasonable efforts to consult
with the other before issuing any press release or otherwise making any public
statements with respect to this Agreement, the Merger or any of the other
transactions contemplated by this Agreement.
SECTION 6.12 Listing. Prior to the Effective Time, to the extent required
under the applicable listing agreement, Parent shall file with The Nasdaq
National Market a Notification Form for Listing of Additional Shares with
respect to the Parent Common Shares referred to in Section 2.01.
SECTION 6.13 Commercially Reasonable Efforts and Further Assurances. Subject
to the terms and conditions hereof, each of the parties to this Agreement shall
use commercially reasonable efforts to effect the transactions contemplated
hereby and to fulfill and cause to be fulfilled the conditions to the Merger
under this Agreement. Subject to the terms and conditions hereof, each party
hereto, at the reasonable request of another party hereto, shall execute and
deliver such other instruments and do and perform such other acts and things as
may be necessary or desirable for effecting completely the consummation of this
Agreement and the transactions contemplated hereby.
SECTION 6.14 Employee Benefits. Following the Effective Time, all Company
and Company Subsidiary employees shall continue in their existing benefit plans
until such time as, in Parent's sole discretion, an orderly transition can be
accomplished and such employees may be transferred to employee benefit plans
and programs maintained by Parent for its and its affiliates' employees in the
United States. Parent shall take such reasonable actions, to the extent
permitted by Parent's benefit programs, as are necessary to allow eligible
employees of the Company and the Company Subsidiaries to participate in the
health, welfare and other employee benefits programs of Parent or alternative
benefits programs in the aggregate substantially equivalent to those applicable
to employees of Parent in similar functions and positions on similar terms (it
being understood that equity incentive plans, including, without limitation,
the Company Stock Option Plans and the Company Purchase Plan, are not
considered employee benefits). Pending such action, Parent shall maintain the
effectiveness of the Company's and the Company Subsidiaries' benefit plans.
Each continuing employee shall be given credit, for purposes of any service
requirements for participation or vesting, for his or her period of service
with the Company credited under a similar benefit plan or program prior to the
Closing Date. If requested by Parent no later than three business days prior to
the Closing Date, at its sole discretion, the Company shall take all corporate
action required to terminate its 401(k) plan effective as of the day
immediately preceding the Closing Date.
ARTICLE VII
Conditions To The Merger
SECTION 7.01 Conditions to the Obligations of Each Party. Conditions to the
Obligations of Each Party. The obligations of the Company, Parent and Merger
Sub to consummate the Merger are subject to the satisfaction or waiver (where
permissible) of the following conditions:
(a) Registration Statement Effective. The Registration Statement shall
have been declared effective by the SEC under the Securities Act and no
stop order suspending the effectiveness of the Registration Statement shall
have been issued by the SEC and no proceeding for that purpose shall have
been initiated by the SEC.
A-37
(b) Company Stockholder Approval. The Merger, this Agreement and the
transactions contemplated hereby shall have been approved and adopted by
the requisite affirmative vote of the stockholders of the Company in
accordance with the DGCL and the Company's Certificate of Incorporation and
Bylaws.
(c) Parent Stockholder Approval. The Parent Stockholder Approval shall
have been obtained.
(d) No Order. No Governmental Entity or court of competent jurisdiction
shall have enacted, threatened, issued, promulgated, enforced or entered
any law, rule, regulation, judgment, decree, injunction, executive order or
award, whether temporary, preliminary or permanent (an "Order"), that is
then in effect, pending or threatened and has, or would have, the effect of
making the Merger illegal or otherwise prohibiting consummation of the
Merger.
(e) Antitrust Waiting Periods. Any waiting period (and any extension
thereof) applicable to the consummation of the Merger under the HSR Act
shall have expired or been terminated and any waiting period (and any
extension thereof) applicable to the consummation of the Merger under any
foreign antitrust Law (or any approval thereunder) shall have expired or
been terminated or obtained.
(f) Listing of Additional Shares. The filing with The Nasdaq National
Market of a Notification Form for Listing of Additional Shares with respect
to the Parent Common Shares issuable (i) upon conversion of the Company
Common Stock in the Merger, and (ii) upon exercise of the options under the
Company Stock Option Plans assumed by Parent and (iii) upon exercise of the
Warrants assumed by Parent shall have been made.
SECTION 7.02 Conditions to the Obligations of Parent and Merger Sub. The
obligations of Parent and Merger Sub to consummate the Merger are subject to
the satisfaction or waiver (where permissible) of the following additional
conditions:
(a) Representations and Warranties. Each of the representations and
warranties of the Company contained in this Agreement shall be true and
correct in all respects (i) as of the date of this Agreement and (ii) as of
the Effective Time, as though made at and as of the Effective Time, except,
in the case of clauses (i) and (ii), (A) for such failures to be true and
correct that do not individually or in the aggregate constitute a Company
Material Adverse Effect; provided, however, that with respect to
representations and warranties contained in Sections 3.03, 3.20, 3.21, 3.22
and 3.23, such representations and warranties shall be true and correct in
all material respects, and (B) for those representations and warranties
that address matters only as of a particular date shall remain true and
correct in all respects as of such date (subject to the qualifications set
forth in clause (A)) (it being understood that, for purposes of determining
the accuracy of such representations and warranties, (i) all "Material
Adverse Effect" qualifications and other qualifications based on the word
"material" or similar phrases contained in such representations and
warranties shall be disregarded and (ii) any update of or modification to
the Company Disclosure Schedule made or purported to have been made after
the date of this Agreement shall be disregarded). Parent shall have
received a certificate of the Chief Executive Officer or Chief Financial
Officer of the Company with respect to the foregoing.
(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 on or
prior to the Effective Time, and Parent shall have received a certificate
of the Chief Executive Officer or Chief Financial Officer of the Company to
that effect.
(c) Consents. All consents, approvals and authorizations legally
required to be obtained to consummate the Merger shall have been obtained
from and made with all Governmental Entities, and all consents from third
parties under any agreement, contract, license, lease or other instrument
set forth on Section 7.02(c) of the Company Disclosure Schedule shall have
been obtained.
(d) Tax Opinion. Parent shall have received the opinion of Xxxxxxxxx
Xxxxxxx, counsel to Parent, based upon representations of Parent, Merger
Sub and the Company and normal assumptions, to the effect that the Merger
will be treated for federal income tax purposes as a reorganization
qualifying under the
A-38
provisions of section 368(a) of the Code and that each of Parent, Merger
Sub and the Company will be a party to the reorganization within the
meaning of section 368(b) of the Code, which opinion shall not have been
withdrawn or modified in any material respect. The issuance of such opinion
shall be conditioned on receipt by Xxxxxxxxx Xxxxxxx of representation
letters from each of Parent and Company as contemplated in Section 6.10 of
this Agreement. 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 as of the Effective Time. Notwithstanding the
foregoing, if Parent's counsel does not render such opinion, this condition
shall nevertheless be deemed satisfied if Xxxx Xxxx, counsel to the
Company, renders such opinion in form reasonably satisfactory to Parent.
(e) Employment Agreements. Each of the Employment Agreements among
Parent, the Company and the individuals listed in Section 7.02(e)(i) of the
Company Disclosure Schedule shall be in full force and effect and shall not
have been anticipatorially breached or repudiated by the Company or any of
such individuals.
(f) Company Stock Option Agreement. The Company Stock Option Agreement
shall be in full force and effect and shall not have been anticipatorially
breached or repudiated by the Company.
(g) Material Adverse Effect. No Company Material Adverse Effect shall
have occurred since the date of this Agreement, including, without
limitation, any Company Material Adverse Effect resulting from the failure
by the Company to obtain any required consents or approvals from any third
party under any agreement, contract, license, lease or other instrument.
SECTION 7.03 Conditions to the Obligations of the Company. The obligations
of the Company to consummate the Merger are subject to the satisfaction or
waiver (where permissible) of the following additional 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 in all respects (i) as of the date of this Agreement and
(ii) as of the Effective Time, as though made at and as of the Effective
Time, except, in the case of clauses (i) and (ii), (A) for such failures to
be true and correct that do not individually or in the aggregate constitute
a Parent Material Adverse Effect; provided, however, that with respect to
representations and warranties contained in Sections 4.03, 4.09, 4.10 and
4.15, such representations and warranties shall be true and correct in all
material respects, and (B) for those representations and warranties that
address matters only as of a particular date shall remain true and correct
in all respects as of such date (subject to the qualifications set forth in
clause (A)) (it being understood that, for purposes of determining the
accuracy of such representations and warranties, (i) all "Material Adverse
Effect" qualifications and other qualifications based on the word
"material" or similar phrases contained in such representations and
warranties shall be disregarded and (ii) any update of or modification to
the Parent Disclosure Schedule made or purported to have been made after
the date of this Agreement shall be disregarded. The Company shall have
received a certificate of the Chief Executive Officer or Chief Financial
Officer of Parent with respect to the foregoing.
(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 it on or
prior to the Effective Time, and the Company shall have received a
certificate of the Chief Executive Officer or Chief Financial Officer of
Parent to that effect.
(c) Tax Opinion. The Company shall have received the opinion of Xxxx
Xxxx, counsel to the Company, based upon representations of Parent, Merger
Sub and the Company, and normal assumptions, to the effect that the Merger
will be treated for federal income tax purposes as a reorganization
qualifying under the provisions of section 368(a) of the Code and that each
of Parent, Merger Sub and the Company will be a party to the reorganization
within the meaning of section 368(b) of the Code, which opinion shall not
have been withdrawn or modified in any material respect. The issuance of
such opinion shall be conditioned on receipt by Xxxx Xxxx of representation
letters from each of Parent and Company as
A-39
contemplated in Section 6.10 of this Agreement. 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 as of the Effective
Time. Notwithstanding the foregoing, if counsel to the Company does not
render such opinion, this condition shall nevertheless be deemed satisfied
if Xxxxxxxxx Xxxxxxx, counsel to Parent, renders such opinion in form
reasonably satisfactory to the Company.
(d) Material Adverse Effect. No Parent Material Adverse Effect shall
have occurred since the date of this Agreement.
ARTICLE VIII
Termination, Amendment And Waiver
SECTION 8.01 Termination. This Agreement may be terminated and the Merger
and the other transactions contemplated by this Agreement may be abandoned at
any time prior to the Effective Time, notwithstanding any requisite approval
and adoption of this Agreement and the transactions contemplated by this
Agreement, as follows:
(a) by mutual written consent duly authorized by the Boards of Directors
of each of Parent and the Company;
(b) by either Parent or the Company if the Effective Time shall not have
occurred on or before July 31, 2001; provided however, however that the
right to terminate this Agreement under this Section 8.01(b) shall not be
available to any party whose action or failure to act has caused the
failure of the Merger to occur on or before such date;
(c) there shall be any Order which is final and nonappealable preventing
the consummation of the Merger;
(d) by Parent if (i) the Board of Directors of the Company withholds,
withdraws, amends, modifies or changes its unanimous recommendation of the
adoption of this Agreement or the approval of the Merger or the other
transactions contemplated hereby in a manner adverse to Parent or shall
have resolved to do so, (ii) the Board of Directors of the Company shall
have recommended to the stockholders of the Company a Competing Transaction
or shall have resolved to do so or shall have entered into any letter of
intent or similar document or any agreement, contract or commitment
accepting any Competing Transaction, (iii) the Board of Directors of the
Company fails to reject a Competing Transaction within ten business days
following receipt by the Company of the written proposal for such Competing
Transaction, (iv) the Company shall have failed to include in the Joint
Proxy Statement the unanimous recommendation of the Company's Board of
Directors in favor of the approval of the Merger or this Agreement, (v) the
Company's Board of Directors fails to reaffirm its unanimous recommendation
in favor of the approval of the Merger and this Agreement within five
business days after Parent requests in writing that such recommendation be
reaffirmed, (vi) the Company shall have materially breached its obligations
under Section 6.05 or (vii) a tender offer or exchange offer for 5% or more
of the outstanding shares of stock of the Company is commenced, and the
Board of Directors of the Company fails to recommend against acceptance of
such tender offer or exchange offer by its stockholders (including by
taking no position with respect to the acceptance of such tender offer or
exchange offer by its stockholders);
(e) by either Parent or the Company if this Agreement shall fail to
receive the requisite vote for approval and adoption at the Company
Stockholders' Meeting, or any adjournment or postponement thereof;
(f) by Parent upon a breach of any representation, warranty, covenant or
agreement on the part of the Company set forth in this Agreement, or if any
representation or warranty of the Company shall have become untrue, in
either case such (and only such) that the conditions set forth either in
Section 7.02(a) or (b) would not be satisfied ("Terminating Company
Breach"); provided, however, that if such Terminating
A-40
Company Breach is curable by the Company within 30 days of the occurrence
of such Terminating Company Breach through the exercise of its best efforts
and for as long as the Company continues to exercise such best efforts,
Parent may not terminate this Agreement under this Section 8.01(f) until
the expiration of such 30-day period;
(g) by the Company upon a breach of any representation, warranty,
covenant or agreement on the part of Parent and Merger Sub set forth in
this Agreement, or if any representation or warranty of Parent and Merger
Sub shall have become untrue, in either case such (and only such) that the
conditions set forth either in Section 7.03(a) or (b) would not be
satisfied ("Terminating Parent Breach"); provided, however, that if such
Terminating Parent Breach is curable by Parent and Merger Sub within 30
days of the occurrence of such Terminating Parent Breach through the
exercise of their respective best efforts and for as long as Parent and
Merger Sub continue to exercise such best efforts, the Company may not
terminate this Agreement under this Section 8.01(g) until the expiration of
such 30-day period; or
(h) by either Parent or the Company if the Parent Stockholder Approval
shall not have been obtained at the Parent Stockholders' Meeting, or any
adjournment or postponement thereof.
SECTION 8.02 Effect of Termination. Except as provided in Sections 8.05 and
9.01, in the event of termination of this Agreement pursuant to Section 8.01,
this Agreement shall forthwith become void, there shall be no liability under
this Agreement on the part of Parent, Merger Sub or the Company or any of their
respective officers or directors, and all rights and obligations of each party
hereto shall cease; provided, however, that nothing herein shall relieve any
party from liability for the willful breach of any of its representations and
warranties, or breach of its covenants or agreements set forth in this
Agreement.
SECTION 8.03 Amendment. This Agreement may be amended by the parties hereto
by action taken by or on behalf of their respective Boards of Directors at any
time prior to the Effective Time; provided, however, that, after the approval
of the Merger and adoption of this Agreement by the stockholders of the
Company, no amendment may be made that would reduce the amount or change the
type of consideration into which each Share shall be converted upon
consummation of the Merger. This Agreement may not be amended, except by an
instrument in writing signed by each of the parties hereto.
SECTION 8.04 Waiver. At any time prior to the Effective Time, any party
hereto may (a) extend the time for the performance of any obligation or other
act of any other party hereto, (b) waive any inaccuracy in the representations
and warranties contained herein or in any document delivered pursuant hereto
and (c) waive compliance with any agreement or condition contained herein. Any
such extension or waiver shall be valid if set forth in an instrument in
writing signed by the party or parties to be bound thereby.
SECTION 8.05 Expenses.
(a) Except as set forth in this Section 8.05, all Expenses (as defined
below) incurred in connection with this Agreement, the Merger and the other
transactions contemplated by this Agreement shall be paid by the party
incurring such expenses, whether or not the Merger or any other transaction is
consummated, except that the Company and Parent each shall pay one-half of all
Expenses relating to printing, filing and mailing the Registration Statement
and the Joint Proxy Statement and all SEC and other regulatory filing fees
incurred in connection with the Registration Statement and the Joint Proxy
Statement. "Expenses" as used in this Agreement shall include all reasonable
out-of-pocket expenses (including, without limitation, all fees and expenses of
counsel, accountants, investment bankers, experts and consultants to a party
hereto and its affiliates) incurred by a party or on its behalf in connection
with or related to the authorization, preparation, negotiation, execution and
performance of this Agreement, the preparation, printing, filing and mailing of
the Registration Statement and the Joint Proxy Statement, the solicitation of
stockholder approval, the filing of any required notices under the HSR Act or
other similar regulations and all other matters related to the closing of the
Merger and the other transactions contemplated by this Agreement.
A-41
(b) The Company agrees that the Company shall pay to Parent an amount equal
to the sum of $100 million (the "Termination Fee") and all of Parent's Expenses
up to $10,000,000:
(i) if Parent shall terminate this Agreement pursuant to Section
8.01(d); or
(ii) if the Company or Parent shall terminate this Agreement pursuant to
Section 8.01(e) hereof, and at or prior to such termination there shall
exist or have been publicly proposed or widely known a Competing
Transaction, and within 12 months of the date of the termination of this
Agreement pursuant to Section 8.01(e), a Competing Transaction shall have
been consummated or the Company shall have entered into an agreement,
letter of intent or similar arrangement relating to a Competing
Transaction.
(c) Any payment required to be made pursuant to Section 8.05(b) shall be
made to Parent not later than five business days after delivery to the Company
of notice of demand for payment and an itemization setting forth in reasonable
detail all Expenses of Parent (which itemization may be supplemented and
updated from time to time by Parent until the 60th day after Parent delivers
such notice of demand for payment), and shall be made by wire transfer of
immediately available funds to an account designated by Parent. Payment of the
Termination Fee and Expenses described in Section 8.05(b) shall be the sole and
exclusive remedy of Parent upon termination of this Agreement pursuant to
Section 8.01(d) hereof; provided, however, that payment of such fee and
expenses shall not be in lieu of damages incurred in the event of willful
breach of the representations and warranties set forth in this Agreement or the
breach of any of the covenants or agreements set forth in this Agreement.
(d) In the event that the Company shall fail to pay the Termination Fee or
the Expenses when due, the term "Expenses" shall be deemed to include the costs
and expenses actually incurred or accrued by Parent (including, without
limitation, fees and expenses of counsel) in connection with the collection
under and enforcement of this Section 8.05, together with interest on such
Termination Fee and unpaid Expenses, commencing on the date that such
Termination Fee and Expenses became due, at a rate equal to the rate of
interest publicly announced by Citibank, N.A., from time to time, in The City
of New York, as such bank's Prime Rate plus 1.00%.
ARTICLE IX
General Provisions
SECTION 9.01 Non-Survival of Representations, Warranties and Agreements. The
representations, warranties and agreements in this Agreement and in any
certificate delivered pursuant hereto shall terminate at the Effective Time or
upon the termination of this Agreement pursuant to Section 8.01, as the case
may be, except that the agreements set forth in Articles I and II and Sections
6.04(b), 6.06, 6.07, 6.10, 6.13 and this Article IX shall survive the Effective
Time and those set forth in Sections 6.04(b), 8.02 and 8.05 and this Article IX
shall survive termination of this Agreement.
SECTION 9.02 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly given upon receipt) by delivery in person, by cable,
telecopy, facsimile, telegram or telex or by registered or certified mail
(postage prepaid, return receipt requested) to the respective parties at the
following addresses (or at such other address for a party as shall be specified
in a notice given in accordance with this Section 9.02):
if to Parent or Merger Sub:
ARIBA, INC.
0000 Xxxxxxxxxx Xx.
Xxxxxxxx Xxxx, XX 00000
Facsimile No.: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxxx
A-42
with a copy to:
Xxxxxxxxx Xxxxxxx Xxxxxx Xxxxxxxxxx Xxxxxxxx & Xxxxxxxxx, LLP
000 Xxxxxxxxxxxx Xxxxx
Xxxxx Xxxx, XX 00000
Facsimile No.: (000) 000-0000
Attention: Xxxxxxxxxxx X. Xxxxxx
Xxxxxx Xxxxxx
if to the Company:
AGILE SOFTWARE CORPORATION
Xxx Xxxxxxx Xxxx.
Xxx Xxxx, XX 00000
Facsimile No.: (000) 000-0000
Attention: Xxxxx X. Xxxxxx
with a copy to:
Xxxx Xxxx Xxxx & Freidenrich LLP
000 Xxxxxxxx Xxxxxx
Xxxx Xxxx, XX 00000
Facsimile No.: (000) 000-0000
Attention: Xxxxx X. Xxxxxxxxx
SECTION 9.03 Certain Definitions. For purposes of this Agreement, the term:
(a) "affiliate" of a specified person means a person who directly or
indirectly through one or more intermediaries controls, is controlled by,
or is under common control with such specified person;
(b) "beneficial owner" with respect to any shares means a person who
shall be deemed to be the beneficial owner of such shares (i) that such
person or any of its affiliates or associates (as such term is defined in
Rule 12b-2 promulgated under the Exchange Act) beneficially owns, directly
or indirectly, (ii) that such person or any of its affiliates or associates
has, directly or indirectly, (A) the right to acquire (whether such right
is exercisable immediately or subject only to the passage of time),
pursuant to any agreement, arrangement or understanding or upon the
exercise of consideration rights, exchange rights, warrants or options, or
otherwise, or (B) the right to vote pursuant to any agreement, arrangement
or understanding, or (iii) that are beneficially owned, directly or
indirectly, by any other persons with whom such person or any of its
affiliates or associates or person with whom such person or any of its
affiliates or associates has any agreement, arrangement or understanding
for the purpose of acquiring, holding, voting or disposing of any Shares;
(c) "business day" means any day on which the principal offices of the
SEC in Washington, D.C. are open to accept filings, or, in the case of
determining a date when any payment is due, any day on which banks are not
required or authorized to close in The City of San Francisco;
(d) "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 and policies of a person, whether through the ownership of
voting securities, as trustee or executor, by contract or credit
arrangement or otherwise;
(e) "knowledge" or "known" means, with respect to any matter in
question, if any of the executive officers of the Company or Parent, as the
case may be, has knowledge of such matter or would have knowledge after
reasonable due inquiry;
(f) "person" means an individual, corporation, partnership, limited
partnership, syndicate, person (including, without limitation, a "person"
as defined in section 13(d)(3) of the Exchange Act), trust, association or
entity or government, political subdivision, agency or instrumentality of a
government; and
A-43
(g) "subsidiary" or "subsidiaries" of any person means any corporation,
partnership, joint venture or other legal entity of which such person
(either alone or through or together with any other subsidiary) owns,
directly or indirectly, more than 50% of the stock or other equity
interests, the holders of which are generally entitled to vote for the
election of the board of directors or other governing body of such
corporation or other legal entity.
SECTION 9.04 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 as long as the economic or legal
substance of the transactions contemplated by this Agreement is not affected in
any manner materially 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 a mutually
acceptable manner in order that the transactions contemplated by this Agreement
be consummated as originally contemplated to the fullest extent possible.
SECTION 9.05 Assignment; Binding Effect; Benefit. Neither this Agreement nor
any of the rights, interests or obligations hereunder shall be assigned by any
of the parties hereto (whether by operation of law or otherwise) without the
prior written consent of the other parties. Subject to the preceding sentence,
this Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and assigns. Nothing in this
Agreement, expressed or implied, is intended to confer on any person other than
the parties hereto or their respective successors and assigns any rights,
remedies, obligations or liabilities under or by reason of this Agreement,
other than as provided in Section 6.06.
SECTION 9.06 Specific Performance. The parties hereto agree that irreparable
damage would occur in the event any provision of this Agreement was not
performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or in equity.
SECTION 9.07 Governing Law; Forum.
(a) This Agreement shall be governed by, and construed in accordance with,
the laws of the State of Delaware, without giving effect to the principles of
conflicts of law thereof.
(b) Each party hereby irrevocably submits to the exclusive jurisdiction of
the Court of Chancery in the State of Delaware in any action, suit or
proceeding arising in connection with this Agreement, and agrees that any such
action, suit or proceeding shall be brought only in such court (and waives any
objection based on forum non conveniens or any other objection to venue
therein); provided, however, that such consent to jurisdiction is solely for
the purpose referred to in this Section 9.07(b) and shall not be deemed to be a
general submission to the jurisdiction of such court or in the State of
Delaware other than for such purposes.
SECTION 9.08 Waiver of Jury Trial. EACH OF PARENT, THE COMPANY AND MERGER
SUB 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 ACTIONS OF PARENT, THE
COMPANY OR MERGER SUB IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND
ENFORCEMENT THEREOF.
SECTION 9.09 Headings. The descriptive headings contained in this Agreement
are included for convenience of reference only and shall not affect in any way
the meaning or interpretation of this Agreement.
SECTION 9.10 Counterparts. This Agreement may be executed and delivered
(including by facsimile transmission) in one or more counterparts, and by the
different parties hereto in separate counterparts, each of which when executed
and delivered shall be deemed to be an original but all of which taken together
shall constitute one and the same agreement.
A-44
SECTION 9.11 Mutual Drafting. Each party hereto has participated in the
drafting of this Agreement, which each party acknowledges is the result of
extensive negotiations between the parties.
SECTION 9.12 Entire Agreement. This Agreement (including the Exhibits, the
Company Disclosure Schedule and the Parent Disclosure Schedule), the Company
Stock Option Agreement, the Company Voting Agreements, the Parent Voting
Agreements, the Employment Agreements, the Affiliate Agreements and the Non-
Disclosure Agreement constitute the entire agreement among the parties with
respect to the subject matter hereof and supersede all prior agreements and
understandings among the parties with respect thereto. No addition to or
modification of any provision of this Agreement shall be binding upon any party
hereto unless made in writing and signed by all parties hereto. Except as
explicitly stated in the Agreement, this Agreement is not intended to confer
upon any Person, other than the parties hereto, any rights or remedies
hereunder.
A-45
SIGNATURE PAGE TO AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
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.
ARIBA, INC.
By: _________________________________
Name:
Title:
SILVER MERGER CORPORATION
By: _________________________________
Name:
Title:
AGILE SOFTWARE CORPORATION
By: _________________________________
Name:
Title:
A-46
EXHIBIT A
FORM OF COMPANY VOTING AGREEMENT
A-47
EXHIBIT B
FORM OF PARENT VOTING AGREEMENT
A-48
EXHIBIT C
FORM OF COMPANY STOCK OPTION AGREEMENT
A-49
EXHIBIT D
FORM OF AFFILIATE AGREEMENT
A-50
