Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
DIGITAL INSIGHT CORPORATION,
ATA ACQUISITION CORP.
AND
ANYTIME ACCESS, INC.
Dated as of March 30, 2000
ARTICLE I
THE MERGER
1.1 The Merger 2
1.2 Effective Time; Closing 2
1.3 Effect of the Merger 2
1.4 Articles of Incorporation; Bylaws 2
1.5 Directors and Officers 2
1.6 Effect on Capital Stock 2
1.7 Surrender of Certificates 5
1.8 No Further Ownership Rights in Company Stock 6
1.9 Lost, Stolen or Destroyed Certificates 7
1.10 Tax Consequences 7
1.11 Taking of Necessary Action; Further Action 7
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF COMPANY
2.1 Organization and Qualification 8
2.2 Articles of Incorporation and Bylaws 9
2.3 Capitalization 9
2.4 Authority Relative to this Agreement 10
2.5 No Conflict; Required Filings and Consents 11
2.6 Compliance; Permits 11
2.7 Financial Statements 12
2.8 No Undisclosed Liabilities 12
2.9 Absence of Certain Changes or Events 12
2.10 Absence of Litigation 13
2.11 Employee Benefit Plans 13
2.12 Restrictions on Business Activities 15
2.13 Title to Property 15
2.14 Taxes 15
2.15 Environmental Matters 17
2.16 Absence of Certain Business Practices 17
2.17 Accounts Receivable 18
2.18 Transactions with Affiliates 18
2.19 Brokers 18
2.20 Intellectual Property 18
2.21 Agreements, Contracts and Commitments 21
2.22 Opinion of Financial Advisor 22
2.23 Board Approval 22
2.24 Vote Required 22
2.25 Tax Matters 23
2.26 California Hearing 23
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
3.1 Organization and Qualification; Subsidiaries 23
3.2 Certificate of Incorporation and Bylaws 23
3.3 Capitalization 24
3.4 Authority Relative to this Agreement 24
3.5 No Conflict; Required Filings and Consents 25
3.6 SEC Filings; Financial Statements 25
3.7 No Undisclosed Liabilities 26
3.8 Absence of Certain Changes or Events 26
3.9 Absence of Litigation 26
3.10 Taxes 26
3.11 Environmental Matters 27
3.12 Brokers 28
3.13 Intellectual Property 28
3.14 Opinion of Financial Advisor 29
3.15 Board Approval 30
3.16 Tax Matters 30
3.17 Merger Sub Operations 30
3.18 California Hearing 30
ARTICLE IV
CONDUCT PRIOR TO THE EFFECTIVE TIME
4.1 Conduct of Business by Company 30
4.2 Conduct of Business by Parent 32
4.3 Voting Agreements 32
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 California Hearing 32
5.2 Shareholder Consent 34
5.3 Confidentiality; Access to Information 34
5.4 No Solicitation 34
5.5 Public Disclosure 35
5.6 Commercially Reasonable Efforts; Notification 35
5.7 Third Party Consents 37
5.8 Stock Options and Employee Benefits 37
5.9 Form S-8 38
5.10 Warrants 38
5.11 Employees 39
5.12 Affiliates 39
ARTICLE VI
CONDITIONS TO THE MERGER
6.1 Conditions to Obligations of Each Party to Effect
the Merger 39
6.2 Additional Conditions to Obligations of Company 40
6.3 Additional Conditions to Obligations of Parent and
Merger Sub 41
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
7.1 Termination 42
7.2 Notice of Termination; Effect of Termination 43
7.3 Fees and Expenses 43
7.4 Amendment 43
7.5 Extension; Waiver 43
ARTICLE VIII
GENERAL PROVISIONS
8.1 Notices 44
8.2 Interpretation; Definitions 45
8.3 Counterparts 45
8.4 Entire Agreement; Third Party Beneficiaries 45
8.5 Severability 45
8.6 Other Remedies; Specific Performance 46
8.7 Governing Law 46
8.8 Rules of Construction 46
8.9 Assignment 46
INDEX OF EXHIBITS
Exhibit A-1 List of Shareholders to Sign Shareholder
Agreement A-1
Exhibit A-2 Form of Shareholder Agreement X-0
Xxxxxxx X-0 List of Shareholders to Sign Voting
Agreement B-1
Exhibit B-2 Form of Voting Agreement B-2
Exhibit C Form of Escrow Agreement C-1
Exhibit D Form of Company Affiliate Agreement D-1
Exhibit E-1 List of Individuals to Sign Non-Compete
Agreement E-1
Exhibit E-2 Form of Non-Compete Agreement E-2
Exhibit F Amended and Restated Articles of Incorporation
of Surviving Corporation F-1
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this "Agreement") is
made and entered into as of March 30, 2000, among Digital
Insight Corporation, a Delaware corporation ("Parent"),
ATA Acquisition Corp., a California corporation and a
wholly-owned subsidiary of Parent ("Merger Sub"), and
AnyTime Access, Inc., a California corporation ("Company").
RECITALS
A. Upon the terms and subject to the conditions of
this Agreement and in accordance with the California General
Corporation Law (the "CGCL"), Parent and Company intend
to enter into a business combination transaction.
B. The Board of Directors of Company has
(i) determined that the Merger (as defined in Section 1.1)
is consistent with, and in furtherance of, the long-term
business strategy of Company and fair to, and in the best
interests of, Company and its shareholders, (ii) approved
this Agreement, the Merger and the other transactions
contemplated by this Agreement and (iii) recommended that
the shareholders of Company adopt and
approve this Agreement and approve the Merger.
C. The Board of Directors of Parent has
(i) determined that the Merger is consistent with, and in
furtherance of, the long-term business strategy of Parent
and is fair to, and in the best interests of, Parent and
its stockholders, and (ii) approved this Agreement, the
Merger and the other transactions contemplated by this
Agreement.
D. Concurrently with the execution of this Agreement,
and as a condition and inducement to Parent's willingness to
enter into this Agreement, the shareholders of Company
listed on Exhibit A-1 are entering into shareholder
agreements in the form attached hereto as Exhibit A-2
(the "Shareholder Agreements").
E. The shareholders of Company own a total of (i)
6,275,711 shares of the Common Stock, $0.025 stated value
per share, of Company (the "Company Common Stock"), (ii)
7,093,256 shares of the Series A Preferred Stock, no par
value per share, of Company (the "Series A Preferred
Stock"), (iii) 6,233,818 shares of the Series B Preferred
Stock, no par value per share, of Company (the "Series B
Preferred Stock"), and (iv) 7,500,000 shares of the
Series C Preferred Stock, no par value per share,
of Company (the "Series C Preferred Stock" and, together
with the Company Common Stock, the Series A Preferred Stock
and the Series B Preferred Stock, the "Company Stock"),
which shares are all of the issued and outstanding shares of
capital stock of Company.
F. The parties intend, by executing this Agreement,
to adopt a plan of reorganization within the meaning of
Section 368 of the Internal Revenue Code of 1986, as
amended (the "Code").
NOW, THEREFORE, in consideration of the covenants,
promises and representations set forth herein, and for
other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties
hereto agree as follows:
ARTICLE I
THE MERGER
1.1 The Merger. At the Effective Time (as defined in
Section 1.2) and subject to and upon the terms and
conditions of this Agreement and the applicable provisions
of the CGCL, Merger Sub shall be merged with and into
Company (the "Merger"), the separate corporate existence
of Merger Sub shall cease, and Company shall continue
as the surviving corporation. Company as the surviving
corporation after the Merger is hereinafter sometimes
referred to as the "Surviving Corporation."
1.2 Effective Time; Closing. Subject to the provisions
of this Agreement, the parties hereto shall cause the
Merger to be consummated by filing this Agreement and
appropriate officers' certificates of each of Company
and Merger Sub with the Secretary of State of the State
of California in accordance with the relevant provisions
of the CGCL (the "Merger Documents") (the time of
such filing being the "Effective Time") as soon as
practicable on or after the Closing Date (as defined
below). The closing of the Merger (the "Closing")
shall take place at the offices of O'Melveny & Xxxxx LLP,
000 Xxxxx Xxxx Xxxxxx, Xxx Xxxxxxx, Xxxxxxxxxx, at a
time and date to be specified by the parties, which
shall be no later than the second business day after the
satisfaction or waiver of the conditions set forth in
Article VI, or at such other time, date and location as
the parties hereto agree in writing (the "Closing Date").
1.3 Effect of the Merger. At the Effective Time, the
effect of the Merger shall be as provided in this
Agreement and the applicable provisions of the CGCL.
1.4 Articles of Incorporation; Bylaws.
(a) At the Effective Time, the Articles of Incorporation
of the Surviving Corporation shall be amended and restated
in the form attached hereto as Exhibit F.
(b) The Bylaws of Company, as in effect immediately prior
to the Effective Time, shall be, at the Effective Time,
the Bylaws of the Surviving Corporation until thereafter
amended.
1.5 Directors and Officers. The initial directors
of the Surviving Corporation shall be the
directors of Merger Sub immediately prior to the
Effective Time, until their respective successors
are duly elected or appointed and qualified. The
initial officers of the Surviving Corporation shall be
the officers of Merger Sub immediately prior to the
Effective Time, until their respective successors are
duly appointed.
1.6 Effect on Capital Stock. Subject to the terms and
conditions of this Agreement, at the Effective Time, by
virtue of the Merger and without any action on the part
of Merger Sub, Company or the holders of any of the
following securities, the following shall occur:
(a) Conversion of Company Stock. Each share of
Company Stock issued and outstanding immediately prior
to the Effective Time, other than any shares of
Company Stock to be canceled pursuant to Section
1.6(e) and Dissenting Shares (as defined in Section
1.6(h)), will be canceled and extinguished and
automatically converted (subject to Sections 1.6(h) and
1.6(i)) upon surrender of the certificate representing
such share of Company Stock in the manner provided in
Section 1.7 (or in the case of a lost, stolen or
destroyed certificate, upon delivery of
an affidavit (and indemnity, if required, pursuant to
Section 1.9), into the right to receive:
(i) With respect to the Company Common Stock, the
Common Stock Applicable Fraction (as defined below)
of a share of Common Stock, $0.001 par value per
share, of Parent ("Parent Common Stock");
(ii) With respect to the Series A Preferred Stock, the
Series A Preferred Stock Applicable Fraction (as
defined below) of a share of Parent Common Stock;
(iii) With respect to the Series B Preferred Stock, the
Series B Preferred Stock Applicable Fraction (as defined
below) of a share of Parent Common Stock; and
(iv) With respect to the Series C Preferred Stock, the
Series C Preferred Stock Applicable Fraction (as defined
below) of a share of Parent Common Stock.
(b) Terms, Etc. For purposes of this Agreement,
(i) the "Applicable Fraction" shall mean the Common
Stock Applicable Fraction, Series A Preferred Stock
Applicable Fraction, Series B Preferred Stock Applicable
Fraction or Series C Preferred Stock Applicable Fraction,
as applicable;
(ii) the "Common Stock Applicable Fraction" shall be
equal to 0.048907;
(iii) the "Series A Preferred Stock Applicable Fraction"
shall be equal to 0.052297;
(iv) the "Series B Preferred Stock Applicable Fraction"
shall be equal to 0.082432;
(v) the "Series C Preferred Stock Applicable Fraction"
shall be equal to 0.078665;
(vi) the "Merger Shares" shall mean the shares of
Parent Common Stock to be issued upon the exchange and
conversion of Company Stock in accordance with this Section
1.6(a); and
(vii) the "Aggregate Merger Consideration" shall mean
the aggregate of 1,900,749 shares of Parent Common Stock
to be issued in exchange for the Company Stock pursuant
to Section 1.6(a) and upon exercise of Company Stock
Options, Employee Options and Warrants pursuant to
Sections 5.8 and 5.10.
(viii) All calculations of Applicable Fractions under
this Section 1.6 shall be rounded to the nearest sixth
decimal place (0.000001). The Applicable Fraction shall
be adjusted to reflect fully the effect of any stock split,
stock dividend (including any dividend or distribution of
stock convertible into Parent Common Stock or Company
Stock), reorganization, recapitalization or other similar
change with respect to Parent Common Stock or
Company Stock after the date hereof and prior to the Effective Time.
(c) Restrictions on Company Stock. If any shares of
Company 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 Company, then the shares of
Parent Common Stock issued in exchange for such
shares of Company Stock will also be unvested and subject
to the same repurchase option, risk of forfeiture or other
condition, and the certificates representing such shares of
Parent Common Stock may accordingly be marked with
appropriate legends. Company shall take all action that
may be reasonably necessary to ensure that, from and after
the Effective Time, the Surviving Corporation is entitled
to exercise any such repurchase option or other right set
forth in any such restricted stock purchase agreement or
other agreement.
(d) Escrow Agreement. Parent shall establish and maintain
an escrow (the "Escrow Account") comprised of shares of
Parent Common Stock in a number equal to 210,939 of the
Merger Shares (the "Holdback Shares"), and shall designate
and appoint U.S. Trust Company of California or such other
third party escrow agent that is mutually and reasonably
acceptable to Parent and the Shareholders' Agent (as
defined in the Shareholders Agreement) in connection
therewith (the "Escrow Agent") to serve in accordance with
the Escrow Agreement attached as Exhibit C hereto (the
"Escrow Agreement") to be entered into among Parent,
the Escrow Agent and the Shareholders' Agent at Closing.
In the absence of any change in tax treatment under the
Code or other applicable tax law, any disbursements of
Holdback Shares to Parent or any other indemnified party
in satisfaction of the indemnification obligations of the
former shareholders of Company pursuant to Section 2(a)(i)
of the Shareholder Agreement shall be treated as a
reduction of the aggregate purchase price under this
Agreement.
(e) Cancellation of Parent-Owned Stock. Each share of
Company Stock held by Company or owned by Merger Sub,
Parent or any direct or indirect wholly-owned subsidiary
of Company or Parent immediately prior to the Effective
Time shall be canceled and extinguished without any
Conversion thereof.
(f) Stock Options. At the Effective Time, all options to
purchase Company Stock then outstanding under Company's
1996 and 1997 Stock Option Plans (the "Company Option
Plans") shall be assumed by Parent in accordance with
Section 5.8 hereof.
(g) Capital Stock of Merger Sub. Each share of Common
Stock, $0.01 par value per share, of Merger Sub (the
"Merger Sub Common Stock") issued and outstanding
immediately prior to the Effective Time shall be
converted into one validly issued, fully paid and
nonassessable share of Common Stock, $0.01 par value
per share, of the Surviving Corporation. Each certificate
evidencing ownership of shares of Merger Sub Common Stock
shall evidence ownership of such shares of capital stock of
the Surviving Corporation.
(h) Dissenters' Rights. Notwithstanding anything in this
Agreement to the contrary, shares of Company Stock
outstanding immediately prior to the Effective Time and
constituting "dissenting shares" (as defined in Section 1300
of the CGCL) ("Dissenting Shares"), shall not be converted
into the right to receive Parent Common Stock, as provided
in Section 1.6(a) hereof, unless and until the holder of
such Dissenting Shares fails to perfect or effectively
withdraws or otherwise loses his or her right to appraisal
and payment under the CGCL. If, after the Effective Time,
any such holder fails to perfect or effectively withdraws or
loses his or her right to appraisal, such Dissenting Shares
thereupon shall be treated as if they had been converted as
of the Effective Time into the right to receive
Parent Common Stock to which such holder is entitled,
without interest thereon. Company shall give Parent (i)
prompt written notice of any demands received by Company
for appraisal of any shares of Company Stock, attempted
withdrawals of such demands and any other instruments
received by Company relating to dissenters' rights and
(ii) the opportunity to direct all negotiations with
respect to dissenters under the CGCL. Company shall
not, without the prior written consent of Parent (unless
such payment is pursuant to a court order, in which event
Company shall give Parent notice of any such court
order or request therefor as soon as practicable),
which consent shall not be unreasonably withheld or
delayed, voluntarily make any payment with respect
to Dissenting Shares, offer to settle or settle any
such demands or approve any withdrawal of such demands.
(i) Fractional Shares. No fraction of a share of
Parent Common Stock will be issued by virtue of the
Merger, but in lieu thereof each holder of shares of
Company Stock who would otherwise be entitled to a
fraction of a share of Parent Common Stock (after
aggregating all fractional shares of Parent Common Stock
that otherwise would be received by such holder) shall,
upon surrender of such holder's Certificate(s) (as
defined in Section 1.7(b)) receive from Parent an
amount of cash (rounded to the nearest
whole cent), without interest, equal to the product of (i)
such fraction, multiplied by (ii) the average closing
price of Parent Common Stock for the ten trading days
immediately preceding the last full trading day prior to
the Effective Time, as reported on the Nasdaq National
Market System ("Nasdaq").
1.7 Surrender of Certificates.
(a) Exchange Agent. Boston Equiserv shall act as
the exchange agent in the Merger (the "Exchange Agent").
(b) Exchange Procedures. On or prior to the Effective
Time, Parent shall cause the Exchange Agent to mail to
each holder of record (as of the Effective Time) of a
certificate or certificates (the "Certificates"), which
immediately prior to the Effective Time represented
outstanding shares of Company Stock whose shares were
converted into the right to receive shares of
Parent Common Stock pursuant to Section 1.6, cash in
lieu of any fractional shares pursuant to Section 1.6(i)
and any dividends or other distributions pursuant to
Section 1.7(c), (i) a letter of transmittal in customary
form (which shall specify that delivery shall be effected,
and risk of loss and title to the Certificates
shall pass, only upon delivery of the Certificates to the
Exchange Agent and shall contain such other provisions as
the Exchange Agent may reasonably specify) and (ii)
instructions for use in effecting the surrender of the
Certificates in exchange for certificates representing
shares of Parent Common Stock, cash in lieu of any
fractional shares pursuant to Section 1.6(i) and
any dividends or other distributions pursuant to Section
1.7(c).Parent will use commercially reasonable efforts to cause Exchange
Agent to agree that within five days after surrender of a
Certificate for cancellation to the Exchange Agent or to
such other agent or agents as may be appointed by Parent,
together with such letter of transmittal, duly completed
and validly executed in accordance with the instructions
thereto, Parent shall cause the Exchange Agent to deliver
to the holder of such Certificate a certificate
representing the number of whole shares of Parent Common
Stock into which such holder's shares of Company
Stock were converted at the Effective Time, payment in
lieu of fractional shares which such holder has the
right to receive pursuant to Section 1.6(i) and any
dividends or distributions payable pursuant to Section
1.7(c), and the Certificate so surrendered shall forthwith
be canceled. Until so surrendered, outstanding
Certificates will be deemed from and after the
Effective Time, for all corporate purposes, subject to
Section 1.7(c) as to the payment of dividends, to evidence
only the ownership of the number of full shares of Parent
Common Stock into which such shares of Company Stock shall
have been so converted and the right to receive an amount
in cash in lieu of the issuance of any fractional shares
in accordance with Section 1.6(i) and any dividends or
distributions payable pursuant to Section 1.7(c).
(c) Distributions with Respect to Unexchanged Shares. No
dividends or other distributions declared or made after the
date of this Agreement with respect to Parent Common Stock
with a record date after the Effective Time will be paid to
the holders of any unsurrendered Certificates with respect
to the shares of Parent Common Stock represented thereby
until the holders of record of such Certificates shall
surrender such Certificates. Subject to applicable law,
following surrender of any such Certificates, the Exchange
Agent shall deliver to the record holders thereof, without
interest, certificates representing whole shares of Parent
Common Stock issued in exchange therefor along with
payment in lieu of fractional shares pursuant to
Section 1.6(i) hereof and the amount of any such dividends
or other distributions with a record date after the
Effective Time payable with respect to such whole shares
of Parent Common Stock.
(d) Transfers of Ownership. If certificates representing
shares of Parent Common Stock are to be issued in a name
other than that in which the Certificates surrendered in
exchange therefor are registered (other than as a result
of a change in the corporate name of the holder of such
Certificate), it will be a condition of the issuance
thereof that the Certificates so surrendered will
be properly endorsed and otherwise in proper form for
transfer and that the persons requesting such
exchange will have paid to the Exchange Agent or any
agent designated by it any transfer or other taxes
required by reason of the issuance of certificates
representing shares of Parent Common Stock in any name
other than that of the registered holder of the
Certificates surrendered, or established to the
satisfaction of the Exchange Agent or any agent designated
by it that such tax has been paid or is not payable.
(e) No Liability. Notwithstanding anything to the
contrary in this Section 1.7, neither the Exchange Agent,
Parent, the Surviving Corporation nor any party hereto
shall be liable to a holder of shares of Parent Common
Stock or Company Stock for any amount properly paid to a
public official pursuant to any applicable abandoned
property, escheat or similar law.
1.8 No Further Ownership Rights in Company Stock. All
shares of Parent Common Stock issued in accordance with the
terms hereof (together with any cash paid in respect
thereof pursuant to Sections 1.6(i) and 1.7(c)) shall be
deemed to have been issued in full satisfaction of
all rights pertaining to such shares of Company Stock, and
there shall be no further registration of
transfers on the records of the Surviving Corporation of
shares of Company Stock which were outstanding immediately
prior to the Effective Time. If, after the Effective Time,
Certificates are presented to the Surviving Corporation for
any reason, they shall be canceled and exchanged as provided
in this Article I.
1.9 Lost, Stolen or Destroyed Certificates. In the event
that any Certificates shall have been lost, stolen or
destroyed, Parent shall cause the transfer agent for Parent
Common Stock to issue in exchange for such lost, stolen or
destroyed Certificates, upon the making of an affidavit of
that fact by the holder thereof, certificates representing
the shares of Parent Common Stock into which the shares of
Company Stock represented by such Certificates were
converted pursuant to Section 1.6, cash for fractional
shares, if any, as may be required pursuant to
Section 1.6(i) and any dividends or distributions payable
pursuant to Section 1.7(c); provided, however, that Parent
may, in its discretion and as a condition precedent to the
issuance of such certificates representing shares of Parent
Common Stock, cash and other distributions, require the
owner of such lost, stolen or destroyed Certificates to
deliver an indemnity agreement reasonably satisfactory in
form and amount to Parent as indemnity against any claim
that may be made against Parent or the Surviving
Corporation with respect to the Certificates
alleged to have been lost, stolen or destroyed.
1.10 Tax Consequences. It is intended by the parties
hereto that the Merger shall constitute a reorganization
within the meaning of Section 368 of the Code. The parties
hereto adopt this Agreement as a "plan of reorganization"
within the meaning of Sections 1.368-2(g) and 1.368-3(a) of
the United States Income Tax Regulations. No party shall
take a position on any tax return or reports inconsistent
with this Section 1.10, and each party shall use its
commercially reasonable efforts to maintain
such reporting in the context of an audit. Each party
shall give the other parties prompt notice of any
challenges or investigations undertaken by any taxing
agency in connection with such reporting and shall keep
such other parties fully informed of all aspects of such
ongoing challenge or investigation.
1.11 Taking of Necessary Action; Further Action. If, at
any time after the Effective Time, any further action is
necessary or desirable to carry out the purposes of this
Agreement and to vest the Surviving Corporation with full
right, title and possession to all assets, property,
rights, privileges, powers and franchises of Company and
Merger Sub, the current officers and directors of Company
and Merger Sub will take all such lawful and necessary
action.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF COMPANY
As of the date hereof and as of the Closing Date,
Company represents and warrants to Parent and Merger Sub,
subject to such exceptions as are specifically disclosed in
writing in the disclosure letter and referencing a specific
representation supplied by Company to Parent dated as of
the date hereof and certified by a duly authorized officer
of Company (the "Company Schedule"), as follows:
2.1 Organization and Qualification.
(a) Company is a corporation duly organized,
validly existing and in good standing under the laws of
the State of California and has the requisite corporate
power and authority to own, lease and operate its assets
and properties and to carry on its business as it is now
being conducted. Anytime Access Acceptance, Inc. and
Anytime Access Services, Inc. are the only subsidiaries
of Company (the "Subsidiaries"). Each Subsidiary is
a corporation duly organized, validly existing and in good
standing under the laws of the State of California and
has the requisite corporate power and authority to own,
lease and operate its assets and properties and to
carry on its business as it is now being conducted.
Each of Company and each Subsidiary is in possession of
all franchises, grants, authorizations, licenses,
permits, easements, consents, certificates, approvals and
orders ("Approvals") necessary to own, lease and operate
the properties it purports to own, operate or lease and
to carry on its business as it is now being conducted,
except where the failure to have such Approvals would not,
individually or in the aggregate, have a Material Adverse
Effect on Company (as defined below). Each of
Company and each Subsidiary is duly qualified or licensed
as a foreign corporation to do business, and is in good
standing, in each jurisdiction where the character of the
properties owned, leased or operated by it or the nature
of its activities makes such qualification or licensing
necessary, except for such failures to be so duly
qualified or licensed and in good standing that would not,
either individually or in the aggregate, have a
Material Adverse Effect on Company. As used in this
Agreement, the phrase "Material Adverse Effect on Company"
means (i) as to matters which can reasonably be quantified
in economic terms, any effect which has resulted in or
would reasonably be expected to result in, with respect
to Company or any Subsidiary, a diminution or decrease in
the value of properties or assets, an increase in
liabilities or obligations (whether accrued,
contingent or otherwise), an adverse change in the business
or financial condition, or any combination thereof
involving, individually or in the aggregate, more than
$100,000, (ii) as to matters which cannot reasonably be
quantified in economic terms, a material adverse effect
on the condition (financial or otherwise), business,
assets, liabilities or results of operations of Company
and Subsidiaries considered as a whole, or
(iii) a material adverse effect on the ability of Company to
consummate the transactions contemplated by this Agreement;
provided, however, that in no event shall any of the
following be deemed, in and of itself, to constitute a
Material Adverse Effect on Company: (i) a change that
results from conditions generally affecting the U.S.
economy, (ii) a change that results from
conditions generally affecting Company's industry, (iii) a
change that results from the announcement or pendency of
the transactions contemplated hereby or (iv) a change that
results from the taking of any action required by this
Agreement.
(b) All of the outstanding shares of the capital stock
of, or other ownership interests in, the Subsidiaries have
been duly authorized and validly issued, are fully paid and
nonassessable, and are owned beneficially and of record by
Company, free and clear of all liens, claims, charges or
encumbrances. Neither Company nor either Subsidiary has
agreed nor is obligated to make nor is bound by any written,
oral or other agreement, contract, subcontract, lease,
binding understanding, instrument, note,
option, warranty, purchase order, license, sublicense,
insurance policy, benefit plan, commitment or undertaking
of any nature, as of the date hereof or as may hereafter
be in effect (a "Contract"), under which it may become
obligated to make, any future investment in or capital
contribution to any other entity. Neither Company nor
either Subsidiary directly or indirectly owns
any equity or similar interest in or any interest
convertible, exchangeable or exercisable for, any equity
or similar interest in, any corporation, partnership,
joint venture or other business, association or entity
other than Company's ownership of equity interests in Subsidiaries).
2.2 Articles of Incorporation and Bylaws. Company has
previously furnished to Parent a complete and correct copy
of its Articles of Incorporation and Bylaws as amended to
date and the Articles of Incorporation and Bylaws as
amended to date of each Subsidiary (together, the
"Company Charter Documents"). Such Company Charter
Documents are in full force and effect. Neither
Company nor either Subsidiary is in violation of any of the
provisions of the Company Charter Documents.
2.3 Capitalization.
(a) As of the date of this Agreement, the authorized
capital stock of Company consists of (i) 50,000,000 shares
of Company Common Stock, of which (A) 6,275,711 shares are
issued and outstanding, (B) 150,000 shares have been
reserved for issuance upon exercise of outstanding
warrants, (C) 21,478,183 shares have been reserved for
issuance upon conversion of outstanding shares
of Company Preferred Stock, and (D) 3,500,000 shares have
been reserved for issuance under the Company Option Plans,
and (ii) 25,000,000 shares of Preferred Stock ("Company
Preferred Stock"), of which (A) 7,743,256 shares have
been designated Series A Preferred Stock, of which
7,093,256 shares are issued and outstanding and 580,000
shares have been reserved for issuance upon exercise of
outstanding warrants, (B) 6,304,927 shares have
been designated Series B Preferred Stock, of which 6,233,818
shares are issued and outstanding and 71,109 shares have
been reserved for issuance upon exercise of outstanding
warrants, and (C) 10,016,500 shares have been designated
Series C Preferred Stock, of which 7,500,000 shares are
issued and outstanding. All of the outstanding shares of
Company Stock have been duly authorized and validly issued
and are fully paid and nonassessable. Section 2.3(a) of
the Company Schedule sets forth the following information
with respect to each Company Stock Option (as defined in
Section 5.8) outstanding as of the date of this Agreement:
(i) the name of the optionee; (ii) the particular plan
pursuant to which such Company Stock Option was
granted; (iii) the number of shares of Company Stock
subject to such Company Stock Option; (iv) the exercise
price of such Company Stock Option; (v) the date on
which such Company Stock Option was granted; (vi) the
applicable vesting schedule; and (vii) the date on
which such Company Stock Option expires. Section 2.3(a)
of the Company Schedule also sets forth the following
information with respect to each Warrant (as defined in
Section 5.10) outstanding as of the date of this Agreement:
(1) the name and address of the holder of the Warrant;
(2) the number and type of shares subject to the Warrant;
(3) the exercise price of the Warrant; (4) the date of
grant and expiration date of the Warrant; and (5) the
date the Warrant became or will become exercisable.
Company has made available to Parent accurate and complete
copies of all Warrant agreements and all stock option
plans pursuant to which Company has granted such
Company Stock Options that are currently outstanding and
the form of all stock option agreements evidencing such
Company Stock Options. All shares of Company Stock subject
to issuance as aforesaid, upon issuance on the terms and
conditions specified in the instrument pursuant to which
they are issuable, would be duly authorized, validly
issued, fully paid and nonassessable. Except
as set forth in Section 2.3(a) of the Company Schedule,
there are no commitments or agreements of any character to
which Company is bound obligating Company to accelerate
the vesting of any Company Stock Option as a result
of the Merger. All
outstanding shares of Company Stock and all outstanding
Warrants and Company Stock Options have been issued and
granted in compliance with all applicable securities laws
and other applicable Legal Requirements (as defined below).
For the purposes of this Agreement, "Legal Requirements"
means any federal, state, local, municipal, foreign
or other law, statute, constitution, principle
of common law, resolution, ordinance, code, edict, decree,
rule, regulation, ruling or requirement issues, enacted,
adopted, promulgated, implemented or otherwise put into
effect by or under the authority of any Governmental
Entity (as defined in Section 2.5(b) below) and all
requirements set forth in applicable contracts,
agreements, and instruments.
(b) Except as set forth in Section 2.3(a) and in
Section 2.3(a) of the Company Schedule, there are no
subscriptions, options, warrants, equity securities,
partnership interests or similar ownership interests,
calls, rights (including preemptive rights),
commitments or agreements of any character to which
Company or either Subsidiary is a party or by which
any of them is bound obligating Company or either
Subsidiary to issue, deliver or sell, or cause to
be issued, delivered or sold, or repurchase,
redeem or otherwise acquire, or cause the repurchase,
redemption or acquisition of, any shares of capital
stock, partnership interests or similar ownership
interests of Company or either Subsidiary or obligating
Company or either Subsidiary to grant, extend,
accelerate the vesting of or enter into any such
subscription, option, warrant, equity security, call,
right, commitment or agreement. As of the date of
this Agreement, except as contemplated by this Agreement
or as set forth in Section 2.3(b) of the Company
Schedule, there are no registration rights and there is,
except for the Voting Agreements (as defined
in Section 4.3) or as set forth in Section 2.3(b) of the
Company Schedule, no voting trust, proxy, rights plan,
antitakeover plan or other similar agreement to which
Company is a party or by which Company is bound with
respect to any equity security of any class of Company.
2.4 Authority Relative to this Agreement. Company has
all necessary corporate power and authority to execute
and deliver this Agreement and to perform its obligations
hereunder and, subject to obtaining the approval of the
shareholders of Company of the Merger, to consummate the
transactions contemplated hereby. The execution and
delivery of this Agreement by Company and the consummation
by Company of the transactions contemplated
hereby have been duly and validly authorized by all
necessary corporate action on the part of Company, and
no other corporate proceedings on the part of Company
are necessary to authorize this Agreement or to consummate
the transactions so contemplated (other than, with respect
to the Merger, the approval and adoption of this Agreement
by the Required Shareholder Vote (as defined in Section
2.24) in accordance with the CGCL and the Company Charter
Documents). This Agreement has been duly and validly
executed and delivered by Company and, assuming the due
authorization, execution and delivery by Parent and Merger
Sub, constitutes a legal and binding obligation of Company,
enforceable against Company in accordance with the terms
hereof, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium and
other laws affecting creditors' rights generally, or by
general equitable principles (regardless of whether
enforcement is sought in a proceeding at
law or in equity), and to the extent any indemnification or
contribution provisions thereof may be limited by applicable
federal or state securities laws.
2.5 No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by
Company do not, and the performance of this Agreement by Company
shall not, (i) conflict with or violate the Company Charter
Documents, (ii) subject to obtaining the approval of Company's
shareholders of the Merger and compliance with the requirements
set forth in Section 2.5(b) below, conflict with or violate any
law, rule, regulation, order, judgment or decree applicable to
Company or either Subsidiary or by which any of their respective
properties is bound or affected, or (iii) result in any breach of
or constitute a default (or an event that with notice or lapse of
time or both would become a default) under, or impair Company's
or either Subsidiary's rights or alter the rights or obligations
of any third party under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or
result in the creation of a lien or encumbrance on any of the
properties or assets of Company or either Subsidiary pursuant to,
any material note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument
or obligation to which Company or either Subsidiary is a party or
by which Company or either Subsidiary or any of their respective
properties are bound or affected, except to the extent such
conflict, violation, breach, default, impairment or other effect
could not, in the case of clauses (ii) or (iii), individually or
in the aggregate, reasonably be expected to have a Material
Adverse Effect on Company.
(b) The execution and delivery of this Agreement by
Company do not, and the performance of this Agreement by Company
shall not, require any consent, approval, authorization or permit
of, or filing with or notification to, any court, administrative
agency, commission, governmental or regulatory authority, domestic
or foreign (a "Governmental Entity"), except (i) for applicable
requirements, if any, of the Securities Act of 1933, as amended
(the "Securities Act"), state securities laws ("Blue Sky Laws"),
the pre-merger notification requirements of the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended (the "HSR Act"),
and the filing of the Merger Documents as required by the CGCL
and (ii) where the failure to obtain such consents, approvals,
authorizations or permits, or to make such filings or
notifications, could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on
Company and would not prevent consummation of the Merger or
otherwise prevent Company from performing its obligations under
this Agreement.
2.6 Compliance; Permits.
(a) Except as set forth in Section 2.6(a) of the Company
Schedule, neither Company nor either Subsidiary is in conflict
with, or in default or violation of, (i) any law, rule,
regulation, order, judgment or decree applicable to Company or
either Subsidiary or by which any of their properties is bound
or affected, or (ii) any Company Contract (as defined in
Section 2.21), except for any conflicts, defaults or violations
that (individually or in the aggregate) would not cause Company
or either Subsidiary to lose any material benefit or incur any
material liability. No investigation or review by any
Governmental Entity is pending or, to the knowledge of Company,
threatened against Company or either Subsidiary, nor has any
Governmental Entity indicated an intention to conduct the same,
other than, in each such case, those the outcome of which could
not, individually or in the aggregate, reasonably be expected to
have the effect of prohibiting or materially impairing any
business practice of Company or either
Subsidiary, any acquisition of material property by Company
or either Subsidiary or the conduct of business by Company
or either Subsidiary.
(b) Except as set forth in Section 2.6(b) of the
Company Schedule, Company and Subsidiaries hold all permits,
licenses, variances, exemptions, orders and approvals from
Governmental Entities which are material to operation of the
business of Company or either Subsidiary (collectively, the "Company
Permits"). Each of Company and each Subsidiary is in compliance
in all material respects with the terms of the Company Permits.
2.7 Financial Statements. Company has provided drafts and, as
soon as practicable (but in any event prior to the Closing),
shall provide audited final copies (which do not differ in any
material respect from the drafts), of balance sheets of Company
at December 31, 1999 and 1998 and statements of operations,
shareholders' net capital deficiency and cash flows for the two
years ended December 31, 1999 (including the related notes
thereto) of Company, prepared in accordance with generally
accepted accounting principles ("GAAP") applied on a consistent
basis throughout the periods involved (except as may be indicated
in the notes thereto). Such balance sheets and statements of
operations, shareholders' net capital deficiency and cash flows
fairly present the financial position of Company at the
respective dates thereof and the results of its operations,
shareholders' net capital deficiency and cash flows for the
periods indicated.
2.8 No Undisclosed Liabilities. Neither Company nor either
Subsidiary has any liabilities (absolute, accrued, contingent or
otherwise) which are, individually or in the aggregate, material
to the business, results of operations or financial condition of
Company and Subsidiaries taken as a whole, except (i) liabilities
provided for in Company's balance sheet as of December 31, 1999,
(ii) liabilities incurred since December 31, 1999 in the ordinary
course of business, (iii) liabilities that individually or in the
aggregate do not exceed $100,000, (iv) liabilities under
Company's Contracts; and (v) liabilities identified in
Section 2.8 of the Company Schedule.
2.9 Absence of Certain Changes or Events. Except as set forth
in Section 2.9 of the Company Schedule, since December 31, 1999,
there has not been: (i) any Material Adverse Effect on Company,
(ii) any declaration setting aside or payment of any dividend on,
or other distribution (whether in cash, stock or property) in
respect of, any of Company's capital stock or either Subsidiary's
capital stock, or any purchase, redemption or other acquisition
by Company of any of Company's capital stock or either
Subsidiary's capital stock or any other securities of Company or
either Subsidiary or any options, warrants, calls or rights to
acquire any such shares or other securities, except for
repurchases from employees following their termination pursuant
to the terms of their pre-existing stock option or purchase
agreements, (iii) any split, combination or reclassification of
any of Company's capital stock, (iv) any granting by Company or
either Subsidiary of any increase in compensation or fringe
benefits, except for normal increases of cash compensation to non-
officer employees in the ordinary course of business consistent
with past practice, or any payment by Company or either
Subsidiary of any bonus, except for bonuses paid to non-officer
employees in the ordinary course of business consistent with past
practice, or any granting by Company or either Subsidiary of any
increase in severance or termination pay or any entry by Company
or either Subsidiary into any currently effective employment,
severance, termination or indemnification agreement or any
agreement the benefits of which are contingent or the terms of
which are materially altered upon the occurrence of a transaction
involving Company or either Subsidiary of the nature contemplated
hereby, (v) entry by Company or either
Subsidiary into any licensing or other agreement with
regard to the acquisition or disposition of any Company
Intellectual Property (as defined in Section 2.20), (vi)
any material change by Company or either Subsidiary in its
accounting methods, principles or practices, except as
required by concurrent changes in GAAP, or (vii) any
revaluation by Company or either Subsidiary of any of their
assets, including, without limitation, writing down the value of
capitalized inventory or writing off notes or accounts receivable
or any sale of assets of Company or either Subsidiary other than
in the ordinary course of business.
2.10 Absence of Litigation. There are no claims, actions,
suits or proceedings pending or, to the knowledge of Company,
threatened (or, to the knowledge of Company, any governmental or
regulatory investigation pending or threatened) against Company
or either Subsidiary or any properties or rights of Company or
either Subsidiary, before any court, arbitrator or Governmental
Entity.
2.11 Employee Benefit Plans.
(a) All employee compensation, incentive, fringe or
benefit plans, programs, policies, commitments or other
arrangements (whether or not set forth in a written document
and including, without limitation, all "employee benefit plans"
within the meaning of Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")) (i) covering
any active or former employee, director or consultant of Company
or either Subsidiary, or any trade or business (whether or not
incorporated) which is a member of a controlled group with or
which is under common control with Company within the meaning of
Section 414 of the Code (an "Affiliate"), or (ii) with respect to
which Company or either Subsidiary has any liability, are listed
in Section 2.11(a) of the Company Schedule (such plans, programs,
policies, commitments or other arrangements herein referred to as
the "Plans"). Company has provided to Parent: (i) correct and
complete copies of all documents embodying each Plan including
(without limitation) all amendments thereto, all related trust
documents, and all material written agreements and contracts
relating to each such Plan; (ii) the three (3) most recent annual
reports (Form Series 5500 and all schedules and financial
statements attached thereto), if any, required under ERISA and/or
the Code in connection with each Plan; (iii) the most recent
summary plan description together with the summary(ies) of
material modifications thereto, if any, required under ERISA with
respect to each Plan; (iv) all IRS (as defined in
Section 2.11(b)) or DOL (as defined in Section 2.11(b))
determination, opinion, notification and advisory letters
relating to each Plan; (v) all material correspondence to or from
any governmental agency relating to any Plan; (vi) the most
recent annual actuarial valuations, if any, prepared for each
Plan; (vii) if the Plan is funded, the most recent annual and
periodic accounting of Plan assets; (viii) all material written
agreements and contracts relating to each Plan, including, but
not limited to, administrative service agreements, group annuity
contracts and group insurance contracts; (ix) all material
communications to employees or former employees relating to any
amendments, terminations, establishments, increases or decreases
in benefits, acceleration of payments or vesting schedules or
other events which would result in any material liability under
any Plan or proposed Plan; and (x) all policies pertaining to
fiduciary liability insurance covering the fiduciaries for each
Plan.
(b) Each Plan has been maintained and administered in all
material respects in compliance with its terms and with the
requirements prescribed by any and all statutes, orders,
rules and regulations (foreign or domestic), including, but not
limited to, ERISA and the Code, which are applicable to such
Plans. No suit, action or other litigation (excluding claims
for benefits incurred in the ordinary course of Plan activities)
has been brought, or to the knowledge of Company is threatened,
against or with respect to any such Plan. There are no audits,
inquiries or proceedings pending or, to the knowledge of Company,
threatened by the Internal Revenue Service (the "IRS") or Department
of Labor (the "DOL") with respect to any Plans. All contributions,
reserves or premium payments required to be made or accrued as of
the date hereof to the Plans have been timely made or accrued.
Any Plan intended to be qualified under Section 401(a) of the
Code and each trust intended to qualify under Section 501(a) of
the Code still has a remaining period of time under applicable
Treasury Regulations or IRS pronouncements in which to apply for
a favorable determination, notification, advisory and/or opinion
letter, as applicable, as to its qualified status from the IRS
and to make any amendments necessary to obtain such a favorable
determination. Company does not have any commitment to establish
any new Plan or to modify any Plan (except to the extent required
by law or to conform any such Plan to the requirements of any
applicable law. Each Plan can be amended, terminated or
otherwise discontinued after the Effective Time in accordance
with its terms.
(c) Neither Company nor any of its Subsidiaries has
at any time ever maintained, established, sponsored, participated
in, or contributed to any plan subject to Title IV of ERISA or
Section 412 of the Code and at no time has Company or either
Subsidiary contributed to or been requested to contribute to any
"multiemployer plan," as such term is defined in ERISA or to any
plan described in Section 413(c) of the Code. Neither Company
nor any officer or director of Company or either Subsidiary is
subject to any material liability or penalty under Sections 4975
through 4980B of the Code or Title I of ERISA. No "prohibited
transaction," within the meaning of Section 4975 of the Code or
Sections 406 and 407 of ERISA, not otherwise exempt under
Section 408 of ERISA, has occurred with respect to any Plan.
(d) None of the Plans promises or provides medical or
other welfare benefits to any former employee of Company or either
Subsidiary except as required by the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended, or other applicable law
or by the terms of a written agreement with such former employee,
and neither Company nor either Subsidiary has represented,
promised or contracted (whether in oral or written form) to
provide such retiree benefits to any employee, former employee,
director, consultant or other person, except to the extent
required by statute.
(e) Neither Company nor either Subsidiary is bound by
or subject to (and none of its respective assets or properties is
bound by or subject to) any arrangement with any labor union. No
employee of Company or either Subsidiary is represented by any
labor union or covered by any collective bargaining agreement and,
to the knowledge of Company, no campaign to establish such
representation is in progress. There is no pending or, to the
knowledge of Company, threatened labor dispute involving Company
or either Subsidiary and any group of its employees nor has
Company or either Subsidiary experienced any labor interruptions
over the past three (3) years. Company and each Subsidiary is in
compliance in all material respects with all applicable material
foreign, federal, state and local laws, rules and regulations
respecting employment, employment practices, terms and conditions
of employment and wages and hours.
(f) Neither the execution and delivery of this Agreement
nor the consummation of the transactions contemplated hereby will
(i) result in any payment (including severance, unemployment
compensation, golden parachute, bonus or otherwise) becoming due
to any shareholder, director or employee of Company or either
Subsidiary under any Plan or otherwise, (ii) materially increase
any benefits otherwise payable under any Plan, or (iii) result in
the acceleration of the time of payment or vesting of any such
benefits.
2.12 Restrictions on Business Activities. There is no agreement,
commitment, judgment, injunction, order or decree binding upon
Company or either Subsidiary or to which Company or either
Subsidiary is a party which has or could reasonably be expected
to have the effect of prohibiting or materially impairing any
business practice of Company or either Subsidiary, any
acquisition of property by Company or either Subsidiary or the
conduct of business by Company or either Subsidiary as currently
conducted.
2.13 Title to Property. Neither Company nor either Subsidiary
owns any real property. Each of Company and each Subsidiary has
good and defensible title to, or any required right to use, all
of its material properties and assets, free and clear of all
liens, charges and encumbrances except liens for taxes not yet
due and payable and such liens or other imperfections of title,
if any, as do not materially detract from the value of or
interfere with the present use of the property affected thereby.
All leases pursuant to which Company or either Subsidiary lease
from others material real or personal property are in good
standing, valid and effective in accordance with their respective
terms, and there is not, under any of such leases, any existing
material default or event of default (or any event which with
notice or lapse of time, or both, would constitute a material
default).
2.14 Taxes.
(a) For the purposes of this Agreement, "Tax" or "Taxes" refers
to any and all federal, state, local and foreign taxes,
assessments and other governmental charges, duties, impositions
and liabilities relating to taxes, including taxes based upon or
measured by gross receipts, income, profits, sales, use and
occupation, and value added, ad valorem, transfer, franchise,
withholding, payroll, recapture, employment, excise and property
taxes, together with all interest, penalties and additions
imposed with respect to such amounts and any obligations under
any agreements or arrangements with any other person with respect
to such amounts and including any liability for taxes of a
predecessor entity.
(b) (i) Company and each Subsidiary have timely filed
all federal, state, local and foreign returns, estimates, information
statements and reports ("Returns") relating to Taxes required to
be filed by Company or either Subsidiary with any Tax authority,
except such Returns which are not material to Company and
Subsidiaries considered as a whole (or, if due between the date
hereof and the Closing Date, the Company and each Subsidiary will
timely file all such Returns or file for an appropriate extension
of such filing), and each such Return correctly and completely
reflects the income or other Tax liability and all other
information required to be reported thereon. Company and each
Subsidiary have paid all Taxes shown to be due on such Returns
(or, if due between the date hereof and the Closing Date, all
Taxes will be timely paid).
(ii) Company and each Subsidiary as of the
Effective Time will have withheld with respect to its employees
all federal and state income Taxes, Taxes pursuant to the Federal
Insurance Contribution Act, Taxes pursuant to the Federal
Unemployment Tax Act and other Taxes required to be withheld,
except such Taxes which are not material to Company and
Subsidiaries considered as a whole.
(iii) Neither Company nor either Subsidiary is
a party to any agreement extending the time within which to file
any Return due on or before the Closing Date that has not been
filed. No claim has ever been made by any Tax authority in a
jurisdiction in which Company or either Subsidiary does not file
Returns that is or may be subject to taxation in that
jurisdiction.
(iv) Except as set forth in Section 2.14(b) of the
Company Schedule, neither Company nor either Subsidiary has been
delinquent in the payment of any material Tax nor is there any
material Tax deficiency outstanding, proposed or assessed against
Company or either Subsidiary, nor has Company or either
Subsidiary executed any unexpired waiver of any statute of
limitations on or extension of the period for the assessment or
collection of any Tax.
(v) No audit or other examination of any Return
of Company or either Subsidiary by any Tax authority is presently
in progress, nor has Company or either Subsidiary been notified
of any request for such an audit or other examination.
(vi) No adjustment relating to any Returns filed
by Company or either Subsidiary has been proposed in writing
formally or informally by any Tax authority to Company or either
Subsidiary or any representative thereof.
(vii) Except as set forth in Section 2.14(b)
of the Company Schedule, neither Company nor either Subsidiary
has any liability for any material unpaid Taxes which has not
been accrued for or reserved on Company's balance sheet dated
December 31, 1999 in accordance with GAAP, whether asserted or
unasserted, contingent or otherwise, which is material to Company
and Subsidiaries considered as a whole, other than any liability
for unpaid Taxes that may have accrued since December 31, 1999 in
connection with the operation of the business of Company or
either Subsidiary in the ordinary course.
(viii) There are no Tax liens upon any of the
assets and properties of Company or either Subsidiary other than
statutory liens for Taxes not yet due and payable.
(ix) There is no contract, agreement, plan or
arrangement to which Company or either Subsidiary is a party as
of the date of this Agreement, including but not limited to the
provisions of this Agreement, covering any employee or former
employee of Company or either Subsidiary or covering any other
third party that, individually or collectively, would reasonably
be expected to give rise to the payment of any amount that would
not be deductible pursuant to Sections 280G, 404 or 162(m) of the
Code. There is no contract, agreement, plan or arrangement to
which Company or either Subsidiary is a party or by which either
is bound to compensate any individual for excise taxes paid
pursuant to Section 4999 of the Code.
(x) Neither Company nor either Subsidiary has
filed any consent agreement under Section 341(f) of the Code or
agreed to have Section 341(f)(2) of the Code apply to any
disposition of a subsection (f) asset (as defined in
Section 341(f)(4) of the Code) owned by Company or either
Subsidiary.
(xi) Neither Company nor either Subsidiary is a
party to or has any obligation under any tax-sharing, tax
indemnity or tax allocation agreement or arrangement.
(xii) None of Company's or either Subsidiary's
assets are tax exempt use property within the meaning of
Section 168(h) of the Code.
(xiii) Neither Company nor either Subsidiary
has distributed the stock of any corporation in a transaction
satisfying the requirements of Section 355 of the Code. No
Company Stock has been distributed in a transaction satisfying
the requirements of Section 355 of the Code.
2.15 Environmental Matters. Each of Company and each
Subsidiary (i) has obtained all applicable permits, licenses
and other authorizations that are required under Environmental
Laws (as defined below) the absence of which is reasonably likely
to have a Material Adverse Effect on Company; and (ii) is in
compliancein all material respects with all material terms and
conditions of such required permits, licenses and authorizations,
and also is in compliance in all material respects with all Environmental
Laws. "Environmental Laws" means all federal, state, local and
foreign laws and regulations relating to pollution of the
environment (including ambient air, surface water, ground water,
land surface or subsurface strata) or the protection of human
health and worker safety, including, without limitation, laws and
regulations relating to emissions, discharges, releases or
threatened releases of Hazardous Materials (as defined below), or
otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of
Hazardous Materials. "Hazardous Materials" means chemicals,
pollutants, contaminants, wastes, toxic substances, radioactive
and biological materials, asbestos-containing materials,
hazardous substances, petroleum and petroleum products or any
fraction thereof, excluding, however, Hazardous Materials
contained in products typically used for office and janitorial
purposes properly and safely maintained in accordance with
Environmental Laws.
2.16 Absence of Certain Business Practices. None of Company or
either Subsidiary or, to Company's knowledge, any officer,
employee or agent of Company or either Subsidiary or any other
person acting on its behalf, has, directly or indirectly, given
or agreed to give any gift or similar benefit (other than with
respect to bona fide payments for which adequate consideration
has been given) to any customer, vendor, governmental employee or
other person who is or may be in a position to help or hinder the
business of Company or either Subsidiary (or assist Company or
either Subsidiary in connection with any actual or proposed
transaction) (a) which might subject Company or either Subsidiary
to any damage or penalty in any civil, criminal or governmental
litigation or proceeding, (b) which, if not continued in the
future, would have or would reasonably be expected to have a
Material Adverse Effect on Company or which would or would
reasonably be expected to subject Company or either Subsidiary to
suit or penalty in any private or governmental litigation or
proceeding, (c) for any of the purposes
described in Section 162(c) of the Code, or (d) for
establishment or maintenance of any concealed fund or
concealed bank account.
2.17 Accounts Receivable. All accounts receivable of
Company and each Subsidiary (i) are valid, existing and collectible
in a manner consistent with Company's past practice without resort to
legal proceedings or collection agencies (except for an allowance
for doubtful accounts not to exceed $100,000 in the aggregate),
(ii) represent monies due in the ordinary course of business and
(iii) are not subject to any refunds or adjustments or any
defenses, contractual rights of set-off, assignment, contractual
restrictions, security interests or other encumbrances.
2.18 Transactions with Affiliates. Except as set forth in
Section 2.18 of the Company Schedule, no director, officer or
other Affiliate or "associate" (as such term is defined in Rule
12b-2 under the Securities Exchange Act of 1934 (the "Exchange
Act")) of Company or, to Company's knowledge, any person with
whom any such director, officer or other Affiliate or associate
has any direct or indirect relation by blood, marriage or
adoption, or, to Company's knowledge, any entity in which any
such director, officer or other Affiliate or associate, owns any
beneficial interest (other than a publicly held corporation whose
stock is traded on a national securities exchange or in the over-
the-counter market and less than 1% of the stock of which is
beneficially owned by all such persons) has any interest in
(i) any contract, arrangement or understanding with Company or
either Subsidiary, or relating to the business or operations of
Company or either Subsidiary (other than such contracts as relate
solely to any such person's ownership of capital stock or other
securities of Company), (ii) any loan, arrangement,
understanding, agreement or contract for or relating to
indebtedness of Company or either Subsidiary, or (iii) any
property (real, personal or mixed), tangible or intangible, used
or currently intended to be used in, the business or operations
of Company or either Subsidiary.
2.19 Brokers. Except for fees payable to FleetBoston Xxxxxxxxx
Xxxxxxxx, Inc. pursuant to an engagement letter dated January 16,
2000, a copy of which has been provided to Parent, Company has
not incurred, nor will it incur, directly or indirectly, any
liability for brokerage or finders' fees or agents' commissions
or any similar charges in connection with this Agreement or any
transaction contemplated hereby.
2.20 Intellectual Property. For the purposes of this Agreement,
the following terms have the following definitions:
"Intellectual Property" shall mean any or all of the
following and all rights therein, arising therefrom, or
associated therewith: (i) all United States and foreign
patents and applications therefor and all reissues,
divisions, renewals, extensions, provisionals, continuations
and continuations-in-part thereof ("Patents"); (ii) all
inventions (whether patentable or not), invention
disclosures, improvements, trade secrets, proprietary
information, know how, technology, technical data and
customer lists, and all documentation relating to any of the
foregoing; (iii) all copyrights, copyright registrations and
applications therefor and all other rights corresponding
thereto throughout the world; (iv) all industrial designs
and any registrations and applications therefor throughout
the world; (v) all trade names, logos, common law trademarks
and service marks, trademark and service xxxx registrations
and applications therefor and all
goodwill associated therewith throughout the world; (vi) all
databases and data collections and all rights therein
throughout the world; (vii) all computer software including
all source code, object code, firmware, development tools,
files, records and data, all media on which any of the
foregoing is recorded, all Web addresses, sites and domain
names; (viii) any similar, corresponding or equivalent rights
to any of the foregoing; and (ix) all documentation related
to any of the foregoing.
"Company Intellectual Property" shall mean any
Intellectual Property that is owned by, or exclusively
licensed to, Company or either Subsidiary. Without in any
way limiting the generality of the foregoing, Company
Intellectual Property includes all Intellectual Property
owned or licensed by Company or either Subsidiary related to
Company's or either Subsidiary's products.
"Registered Intellectual Property" shall mean all
United States, international and foreign: (i) patents and
patent applications (including provisional applications);
(ii) registered trademarks, applications to register
trademarks, intent-to-use applications, or other
registrations or applications related to trademarks; (iii)
registered copyrights and applications for copyright
registration; and (iv) any other Intellectual Property that
is the subject of an application, certificate, filing,
registration or other document issued by, filed with, or
recorded by, any state, government or other public legal
authority.
"Company Registered Intellectual Property" means all of
the Registered Intellectual Property owned by, or filed in
the name of, Company or either Subsidiary.
(a) Except as set forth in Section 2.20(a) of the Company
Schedule, no material Company Intellectual Property or software
product or service offering of Company or either Subsidiary
(each, a "Company Product") is subject to any proceeding or
outstanding decree, order, judgment, contract, license,
agreement, or stipulation restricting in any manner the use,
transfer, or licensing thereof by Company or either Subsidiary,
or which may affect the validity, use or enforceability of such
Company Intellectual Property or Company Product.
(b) Each material item of Company Registered Intellectual
Property is valid and subsisting, all necessary registration,
maintenance and renewal fees currently due in connection with
such Company Registered Intellectual Property have been made, and
all necessary documents, recordations and certificates in
connection with such Company Registered Intellectual Property
have been filed with the relevant patent, copyright, trademark or
other authorities in the United States or foreign jurisdictions,
as the case may be, for the purposes of maintaining such Company
Registered Intellectual Property.
(c) Each of Company and each Subsidiary owns and has good and
exclusive title to, or any required right to use, each material
item of Company Intellectual Property free and clear of any lien
or encumbrance (excluding non-exclusive licenses and related
restrictions granted in the ordinary course); and each of Company
and each Subsidiary is the exclusive owner of all material
trademarks used in connection with the operation or conduct of
the business of Company or either Subsidiary, including the sale,
distribution or provision of any Company Products by Company or
either Subsidiary.
(d) To the extent that any material Intellectual Property has
been developed or created by a third party for Company or either
Subsidiary, Company or either Subsidiary, as the case may be, has
a written agreement with such third party with respect thereto
and Company or either Subsidiary, as the case may be, thereby
either (i) has obtained ownership of, and is the exclusive owner
of, or (ii) has obtained a license (sufficient for the conduct of
its business as currently conducted) to all such third party's
Intellectual Property rights in such work, material or invention
by operation of law or by valid assignment, to the fullest extent
it is legally possible to do so.
(e) Neither Company nor either Subsidiary has transferred
ownership of, or granted any exclusive license with respect to,
any Intellectual Property that is or was material Company
Intellectual Property, to any third party.
(f) Section 2.20(f) of the Company Schedule lists all
material contracts, licenses and agreements to which Company or
either Subsidiary is a party: (i) with respect to Company Intellectual
Property licensed or transferred to any third party (other than
end-user licenses in the ordinary course); or (ii) pursuant to
which a third party has licensed or transferred any material
Intellectual Property (other than off-the-shelf software) to
Company or either Subsidiary.
(g) To Company's knowledge, all material contracts, licenses and
agreements relating to Company Intellectual Property are in full
force and effect. The consummation of the transactions
contemplated by this Agreement will neither violate nor result in
the breach, modification, cancellation, termination or suspension
of such contracts, licenses and agreements. Except as set forth
in Section 2.20(g) of the Company Schedule, Company and each
Subsidiary is in material compliance with, and has not materially
breached any term of, any such contracts, licenses and agreements
and, to the knowledge of Company, all other parties to such
contracts, licenses and agreements are in material compliance
with, and have not materially breached any term of, such
contracts, licenses and agreements. Following the Closing Date,
the Surviving Corporation will be permitted to exercise all of
Company's and each Subsidiary's rights under such contracts,
licenses and agreements to the same extent Company or either
Subsidiary would have been able to had the transactions
contemplated by this Agreement not occurred and without the
payment of any additional amounts or consideration other than
ongoing fees, royalties or payments which Company or either
Subsidiary would otherwise be required to pay.
(h) To Company's knowledge, the operation of the business of
Company and each Subsidiary as such business currently is
conducted, including (i) Company's and each Subsidiary's design,
development, manufacture, distribution, reproduction, marketing
or sale of the products or services of Company or each Subsidiary
(including Company Products) and (ii) Company's and each
Subsidiary's use of any product, device or process, has not
infringed or misappropriated, and does not and will not infringe
or misappropriate, the Intellectual Property of any third party
or constitute unfair competition or trade practices under the
laws of any jurisdiction.
(i) Neither Company nor either Subsidiary has received notice
from any third party that the operation of the business of
Company or either Subsidiary or any act, product or
service of Company or Subsidiary, infringes or misappropriates
the Intellectual Property of any third party or constitutes unfair
competition or trade practices under the laws of any
jurisdiction.
(j) To the knowledge of Company, no person has
infringed or misappropriated, or is infringing or misappropriating,
any Company Intellectual Property.
(k) Each of Company and each Subsidiary has taken
commercially reasonable steps to protect Company's and each
Subsidiary's rights in Company's and each Subsidiary's confidential
information and trade secrets that it wishes to protect or any
trade secrets or confidential information of third parties
provided to Company or either Subsidiary, and, without limiting
the foregoing, Company and each Subsidiary have and enforce a
policy requiring each employee and contractor to execute a
proprietary information/confidentiality agreement substantially
in the form provided to Parent, and all current and former
employees and contractors of Company and each Subsidiary have
executed such an agreement, except where the failure to do so is
not reasonably likely to have a Material Adverse Effect on
Company.
(l) All of the Company Products (i) record, store,
process, calculate and present calendar dates falling on and after
January 1, 2000, and calculate any information dependent on or
relating to such dates in the same manner, and with the same
functionality, data integrity and performance, as such Company
Products record, store, process, calculate and present calendar
dates on or before December 31, 1999, or calculate any
information dependent on or relating to such dates (collectively,
"Year 2000 Compliant"), and (ii) have lost no functionality with
respect to the introduction of records containing dates falling
on or after January 1, 2000.
2.21 Agreements, Contracts and Commitments. Except as set forth
in Section 2.21 of the Company Schedule, neither Company nor
either Subsidiary is a party to or bound by:
(a) any employment or consulting agreement, contract or
commitment with any officer, director or employee, other than
those that are terminable by Company or Subsidiary on no more
than thirty (30) days' notice without liability or financial
obligation to Company or Subsidiary;
(b) any agreement or plan, including, without
limitation, any stock option plan, stock appreciation right plan
or stock purchase plan, any of the benefits of which will be
increased, or the vesting of benefits of which will be accelerated,
by the occurrence of any of the transactions contemplated by this
Agreement or the value of any of the benefits of which will be
calculated on the basis of any of the transactions contemplated
by this Agreement;
(c) any agreement of indemnification or any guaranty
other than any agreement of indemnification entered into in
connection with services provided or license of software products
in the ordinary course of business;
(d) any agreement, contract or commitment currently in
force relating to the disposition or acquisition by Company or either
Subsidiary after the date of this Agreement of a material amount
of assets not in the ordinary course of business or pursuant to
which Company or either Subsidiary has any material ownership
interest in any corporation, partnership, joint venture or other
business enterprise;
(e) any mortgages, indentures, guarantees, loans or
credit agreements, security agreements or other agreements or
instruments relating to the borrowing of money or extension of
credit;
(f) any settlement agreement entered into within five
(5) years prior to the date of this Agreement, except settlement
agreements with employees of Company that impose no ongoing
obligations on Company or either Subsidiary;
(g) any contracts or agreements that limit or restrict
Company or either Subsidiary, or to Company's knowledge, any of their
officers or key employees, from engaging in any business or any
contracts or agreements that limit or restrict anyone other than
Company's or either Subsidiary's employees or consultants from
competing with Company or either Subsidiary;
(h) any contract, agreement or commitment requiring
Company or either Subsidiary to register the resale of its capital
stock or securities under federal or state securities laws;
(i) any powers of attorney or comparable delegations of
authority granted by Company or either Subsidiary; or
(j) any other agreement, contract or commitment that has a value
of $100,000 or more individually.
Neither Company, either Subsidiary, nor to Company's
knowledge any other party to a Company Contract (as defined
below), is in breach, violation or default under, and each of
Company and each Subsidiary has not received written notice that
it has breached, violated or defaulted under, any of the material
terms or conditions of any of the agreements, contracts or
commitments to which Company or either Subsidiary is a party or
by which it is bound that are required to be disclosed in the
Company Schedule (any such agreement, contract or commitment, a
"Company Contract") 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 material damages or other remedies
(for any or all of such breaches, violations or defaults, in the
aggregate).
2.22 Opinion of Financial Advisor. Company has received an
opinion from its financial advisor, FleetBoston Xxxxxxxxx
Xxxxxxxx, Inc., dated as of the date hereof, that the Aggregate
Merger Consideration to be received by the shareholders of
Company in connection with the Merger is fair to the shareholders
of Company from a financial point of view.
2.23 Board Approval. The Board of Directors of Company has, as
of the date of this Agreement, unanimously (i) approved this
Agreement, the Merger and the other transactions contemplated
hereby, (ii) determined that the Merger is consistent with and in
furtherance of the long-term business strategy of Company and
fair to, and in the best interests of, Company and its
shareholders and (iii) determined to recommend that the
shareholders of Company adopt and approve this Agreement and
approve the Merger.
2.24 Vote Required. The affirmative vote of a majority of the
votes that holders of the outstanding shares of Company Common
Stock are entitled to vote with respect to the Merger
and the affirmative vote of at least 66 2/3% of the votes that
holders of the outstanding shares of Series A Preferred Stock,
Series B Preferred Stock and Series C Preferred Stock, voting as
one class, are entitled to vote with respect to the Merger (together,
the "Required Shareholder Vote") are the only votes of the
holders of any class or series of Company's capital stock
necessary to approve this Agreement and the transactions
contemplated hereby.
2.25 Tax Matters. Company is not aware of any agreement,
plan or circumstance that would prevent the Merger from constituting
a reorganization under Section 368 of the Code.
2.26 California Hearing. All of the information supplied
or to be supplied by Company in connection with the Permit,
California Hearing or the Registration Statement (each as defined
in Section 5.1), will be true, correct and complete.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub jointly and severally represent
and warrant to Company, subject to such exceptions as are
specifically disclosed in writing in the disclosure letter and
referencing a specific representation supplied by Parent or
Merger Sub to Company dated as of the date hereof and certified
by a duly authorized officer of Parent (the "Parent Schedule"),
as follows:
3.1 Organization and Qualification; Subsidiaries. Each of
Parent and Merger Sub is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction
of its incorporation and has the requisite corporate power and
authority to own, lease and operate its assets and properties and
to carry on its business as it is now being conducted. Each of
Parent and Merger Sub is in possession of all Approvals necessary
to own, lease and operate the properties it purports to own,
operate or lease and to carry on its business as it is now being
conducted, except where the failure to have such Approvals would
not, individually or in the aggregate, have a Material Adverse
Effect on Parent (as defined below). Each of Parent and Merger
Sub is duly qualified or licensed as a foreign corporation to do
business, and is in good standing, in each jurisdiction where the
character of the properties owned, leased or operated by it or
the nature of its activities makes such qualification or
licensing necessary, except for such failures to be so duly
qualified or licensed and in good standing that would not, either
individually or in the aggregate, have a Material Adverse Effect
on Parent. As used in this Agreement, the phrase "Material
Adverse Effect on Parent" means a material adverse effect on the
condition (financial or otherwise), business, assets, liabilities
or results of operations of Parent and its subsidiaries
considered as a whole, or a material adverse effect on the
ability of Parent to consummate the transactions contemplated by
this Agreement; provided, however, that in no event shall any of
the following be deemed, in and of itself, to constitute a
Material Adverse Effect on Parent: (i) a change that results
from conditions generally affecting the U.S. economy, (ii) a
change that results from conditions generally affecting Parent's
industry, (iii) a change that results from the announcement or
pendency of the transactions contemplated hereby, (iv) a change
that results from the taking of any action required by this
Agreement, or (v) a reduction in the stock price of Parent Common
Stock.
3.2 Certificate of Incorporation and Bylaws. Parent has
previously furnished to Company complete and correct copies of
its Certificate of Incorporation and Bylaws as amended
to date (together, the "Parent Charter Documents"). Such Parent
Charter Documents and equivalent organizational documents of
each of its subsidiaries are in full force and effect. Parent
is not in violation of any of the provisions of the Parent Charter
Documents, and Merger Sub is not in violation of any of its
equivalent organizational documents.
3.3 Capitalization. The authorized capital stock of Parent
consists of (i) 100,000,000 shares of Parent Common Stock, and
(ii) 5,000,000 shares of Preferred Stock, $0.001 par value per
share ("Parent Preferred Stock"). At the close of business on
March 15, 2000, (i) 23,029,251 shares of Parent Common Stock were
issued and outstanding, (ii) no shares of Parent Common Stock
were held in treasury by Parent or by subsidiaries of Parent,
(iii) 300,000 shares of Parent Common Stock were reserved for
future issuance pursuant to Parent's employee stock purchase
plan, (iv) 3,167,793 shares of Parent Common Stock were reserved
for issuance upon the exercise of outstanding options ("Parent
Options") to purchase Parent Common Stock and (v) 51,041 shares
of Parent Common Stock were reserved for future issue upon the
exercise of outstanding warrants to purchase Parent Common Stock.
As of the date hereof, no shares of Parent Preferred Stock were
issued or outstanding. The authorized capital stock of Merger
Sub consists of 1,000 shares of common stock, par value $0.01 per
share, all of which, as of the date hereof, are issued and
outstanding and held of record by Parent. All of the outstanding
shares of Parent's and Merger Sub's respective capital stock have
been duly authorized and validly issued and are fully paid and
nonassessable. All shares of Parent Common Stock subject to
issuance as aforesaid, upon issuance on the terms and conditions
specified in the instruments pursuant to which they are issuable,
shall, and the shares of Parent Common Stock to be issued
pursuant to the Merger will be, duly authorized, validly issued,
fully paid and nonassessable. All outstanding shares of Parent
Common Stock, all outstanding Parent Stock Options, and all
outstanding shares of capital stock of Merger Sub have been
issued and granted in compliance with all applicable securities
laws and other applicable Legal Requirements.
3.4 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 to perform its
obligations hereunder and to consummate the transactions
contemplated hereby. The execution and delivery of this
Agreement by Parent and Merger Sub and the consummation by Parent
and Merger Sub of the transactions contemplated hereby have been
duly and validly authorized by all necessary corporate action on
the part of Parent and Merger Sub, and no other corporate
proceedings on the part of Parent or Merger Sub are necessary to
authorize this Agreement, or to consummate the transactions so
contemplated, subject only to the filing of the Merger Documents
pursuant to CGCL and approval of the issuance of the Merger
Shares at the California Hearing (or alternatively the
registration of the Merger Shares under the Securities Act).
This Agreement has been duly and validly executed and delivered
by Parent and Merger Sub and, assuming the due authorization,
execution and delivery by Company, constitutes a legal and
binding obligation of Parent and Merger Sub, enforceable against
Parent and Merger Sub in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and other laws affecting creditors'
rights generally, or by general equitable principles (regardless
of whether enforcement is sought in a proceeding at law or in
equity), and to the extent any indemnification or contribution
provisions thereof may be limited by applicable federal or state
securities laws.
3.5 No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by
Parent and Merger Sub do not, and the performance of this Agreement
by Parent and Merger Sub shall not, (i) conflict with or violate
the Parent Charter Documents, Bylaws or equivalent organizational
documents of Merger Sub, (ii) subject to compliance with the
requirements set forth in Section 3.5(b) below, conflict with or
violate any law, rule, regulation, order, judgment or decree
applicable to Parent or any of its subsidiaries or by which it or
their respective properties are bound or affected, or (iii)
result in any breach of or constitute a default (or an event that
with notice or lapse of time or both would become a default)
under, or impair Parent's or any such subsidiary's rights or
alter the rights or obligations of any third party under, or give
to others any rights of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien or
encumbrance on any of the properties or assets of Parent or any
of its subsidiaries pursuant to, any material note, bond,
mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which Parent or
any of its subsidiaries is a party or by which Parent or any of
its subsidiaries or its or any of their respective properties are
bound or affected, except to the extent such conflict, violation,
breach, default, impairment or other effect could not in the case
of clauses (ii) or (iii) individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on
Parent.
(b) The execution and delivery of this Agreement by
Parent and Merger Sub do not, and the performance of this Agreement
by Parent and Merger Sub shall not, require any consent, approval,
authorization or permit of, or filing with or notification to,
any Governmental Entity except (i) for applicable requirements,
if any, of the Securities Act, the Exchange Act, Blue Sky Laws,
the pre-merger notification requirements of the HSR Act, the
rules and regulations of Nasdaq, and the filing of the Merger
Documents as required by the CGCL and (ii) where the failure to
obtain such consents, approvals, authorizations or permits, or to
make such filings or notifications, (x) would not prevent
consummation of the Merger or otherwise prevent Parent or Merger
Sub from performing their respective obligations under this
Agreement or (y) could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on
Parent.
3.6 SEC Filings; Financial Statements.
(a) Parent has made available to Company a correct and complete
copy of each report, schedule, registration statement and
definitive proxy statement filed by Parent with the Securities
and Exchange Commission (the "SEC") on or after October 1, 1999
(the "Parent SEC Reports"), which are all the forms, reports and
documents required to be filed by Parent with the SEC since
October 1, 1999. The Parent SEC Reports (i) were prepared in
accordance with the requirements of the Securities Act or the
Exchange Act, as the case may be, and (ii) did not at the time
they were filed (or if amended or superseded by a filing prior to
the date of this Agreement, then on the date of such filing)
contain any untrue statement of a material fact or omit to state
a 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. None
of Parent's subsidiaries is required to file any reports or other
documents with the SEC.
(b) Each set of financial statements (including, in
each case, any related notes thereto) contained in the Parent
SEC Reports was prepared in accordance with GAAP applied on a
consistent basis throughout the periods involved (except as may
be indicated in the notes thereto or, in the case of unaudited
statements, do not contain footnotes as permitted by Form 10-Q
of the Exchange Act) and each fairly presents the consolidated
financial position of Parent and its subsidiaries at the
respective dates thereof and the consolidated results of its
operations and cash flows for the periods indicated, except that
the unaudited interim financial statements were or are subject to
normal year-end adjustments which were not or are not expected to
be material in amount.
(c) Parent has previously furnished to 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.
3.7 No Undisclosed Liabilities. Neither Parent nor Merger Sub
has any liabilities (absolute, accrued, contingent or otherwise)
which are, individually or in the aggregate, material to the
business, results of operations or financial condition of Parent
and Merger Sub taken as a whole, except (i) liabilities provided
for in Parent's balance sheet as of December 31, 1999, (ii)
liabilities incurred since December 31, 1999 in the ordinary
course of business, (iii) liabilities that individually or in the
aggregate do not exceed $100,000, (iv) liabilities under Parent's
Contracts; and (v) liabilities identified in Section 3.7 of the
Parent Schedule.
3.8 Absence of Certain Changes or Events. Except as set forth
in Section 3.8 of the Parent Schedule, since December 31, 1999,
there has not been: (i) any Material Adverse Effect on Parent,
(ii) any declaration, setting aside or payment of any dividend
on, or other distribution (whether in cash, stock or property) in
respect of, any of Parent's capital stock, or any purchase,
redemption or other acquisition by Parent of any of Parent's
capital stock or any other securities of Parent, (iii) any split,
combination or reclassification of any of Parent's capital stock,
(iv) any material change by Parent in its accounting methods,
principles or practices, except as required by concurrent changes
in GAAP, or (v) any revaluation by Parent of any of its assets,
including, without limitation, writing down the value of
capitalized inventory or writing off notes or accounts receivable
or any sale of assets of Parent other than in the ordinary course
of business.
3.9 Absence of Litigation. There are no claims, actions, suits
or proceedings pending or, to the knowledge of Parent, threatened
(or, to the knowledge of Parent, any governmental or regulatory
investigation pending or threatened) against Parent or Merger Sub
or any properties or rights of Parent or Merger Sub, before any
court, arbitrator or Governmental Entity.
3.10 Taxes.
(a) Parent and each of its subsidiaries have timely
filed all Returns relating to Taxes required to be filed by Parent
and each of its subsidiaries with any Tax authority, except such
Returns which are not material to Parent. Parent and each of its
subsidiaries have paid all Taxes shown to be due on such Returns.
(b) Parent and each of its subsidiaries as of the
Effective Time will have withheld with respect to their respective
employees all federal and state income Taxes, Taxes pursuant to the
Federal Insurance Contribution Act, Taxes pursuant to the Federal
Unemployment Tax Act and other Taxes required to be withheld,
except such Taxes which are not material to Parent.
(c) Neither Parent nor any of its subsidiaries has been
delinquent in the payment of any material Tax nor is there any
material Tax deficiency outstanding, proposed or assessed against
Parent or any of its subsidiaries, nor has Parent or any of its
subsidiaries executed any unexpired waiver of any statute of
limitations on or extension of the period for the assessment or
collection of any Tax.
(d) No audit or other examination of any Return of
Parent or any of its subsidiaries by any Tax authority is
presently in progress, nor has Parent or any of its subsidiaries
been notified of any request for such an audit or other examination.
(e) No adjustment relating to any Returns filed by
Parent or any of its subsidiaries has been proposed in writing
formally or informally by any Tax authority to Parent or any of
its subsidiaries or any representative thereof.
(f) Neither Parent nor any of its subsidiaries has
any liability for any material unpaid Taxes which has not been
accrued for or reserved on Parent's balance sheet dated December
31, 1999 in accordance with GAAP, whether asserted or unasserted,
contingent or otherwise, which is material to Parent, other than any
liability for unpaid Taxes that may have accrued since December
31, 1999 in connection with the operation of the business of
Parent and its subsidiaries in the ordinary course.
(g) Neither Parent nor any of its subsidiaries has
filed any consent agreement under Section 341(f) of the Code or
agreed to have Section 341(f)(2) of the Code apply to any
disposition of a subsection (f) asset (as defined in Section
341(f)(4) of the Code) owned by Parent or any of its subsidiaries.
(h) Neither Parent nor any of its subsidiaries is party
to or has any obligation under any tax-sharing, tax indemnity or tax
allocation agreement or arrangement.
(i) None of Parent's or its subsidiaries' assets are
tax exempt use property within the meaning of Section 168(h) of the
Code.
(j) Parent has not distributed the stock of any
corporation in a transaction satisfying the requirements of Section
355 of the Code. No Parent Stock has been distributed in a transaction
satisfying the requirements of Section 355 of the Code.
3.11 Environmental Matters. To Parent's knowledge, Parent
(i) has obtained all applicable permits, licenses and other
authorizations that are required under Environmental Laws, the
absence of which is reasonably likely to have a Material Adverse
Effect on Parent; and (ii) is in compliance in all material
respects with all material terms and conditions of such required
permits, licenses and authorizations, and also is in compliance
in all material respects with all Environmental Laws.
3.12 Brokers. Except for fees payable to Deutsche Banc Alex.
Xxxxx pursuant to an engagement letter dated March 20, 2000, a
copy of which has been provided to Company, Parent has not
incurred, nor will it incur, directly or indirectly, any
liability for brokerage or finders' fees or agents' commissions
or any similar charges in connection with this Agreement or any
transaction contemplated hereby.
3.13 Intellectual Property. For the purposes of this Agreement,
the following terms have the following definitions:
"Parent Intellectual Property" shall mean any
Intellectual Property that is owned by, or exclusively
licensed to, Parent or any of its subsidiaries. Without in
any way limiting the generality of the foregoing, Parent
Intellectual Property includes all Intellectual Property
owned or licensed by Parent related to Parent's products.
"Parent Registered Intellectual Property" means all of
the Registered Intellectual Property owned by, or filed in
the name of, Parent or any of its subsidiaries.
(a) Except as set forth in Section 3.13(a) of the Parent
Schedule, no material Parent Intellectual Property or software
product or service offering of Parent or any of it subsidiaries
(each, a "Parent Product") is subject to any proceeding or
outstanding decree, order, judgment, contract, license,
agreement, or stipulation restricting in any manner the use,
transfer, or licensing thereof by Parent or any of its
subsidiaries, or which may affect the validity, use or
enforceability of such Parent Intellectual Property or Parent
Product.
(b) Each material item of Parent Registered
Intellectual Property is valid and subsisting, all necessary
registration, maintenance and renewal fees currently due in
connection with such Parent Registered Intellectual Property have
been made, and all necessary documents, recordations and certificates
in connection with such Parent Registered Intellectual Property
have been filed with the relevant patent, copyright, trademark or
other authorities in the United States or foreign jurisdictions,
as the case may be, for the purposes of maintaining such Parent
Registered Intellectual Property.
(c) Parent owns and has good and exclusive title to, or
any required right to use, each material item of Parent Intellectual
Property free and clear of any lien or encumbrance (excluding non-
exclusive licenses and related restrictions granted in the
ordinary course); and Parent is the exclusive owner of all
material trademarks used in connection with the operation or
conduct of the business of Parent and its subsidiaries, including
the sale, distribution or provision of any Parent Products by
Parent or its subsidiaries.
(d) To the extent that any material Intellectual Property
has been developed or created by a third party for Parent or any of
its subsidiaries, Parent has a written agreement with such third
party with respect thereto and Parent thereby either (i) has
obtained ownership of, and is the exclusive owner of, or (ii) has
obtained a license (sufficient for the conduct of its business as
currently conducted) to all such third party's Intellectual
Property in such work, material or invention by operation of law
or by valid assignment, to the fullest extent it is legally
possible to do so.
(e) Neither Parent nor any of its subsidiaries has
transferred ownership of, or granted any exclusive license with
respect to, any Intellectual Property that is or was material Parent
Intellectual Property, to any third party.
(f) To Parent's knowledge, all material contracts, licenses
and agreements relating to Parent Intellectual Property are in full
force and effect. The consummation of the transactions
contemplated by this Agreement will neither violate nor result in
the breach, modification, cancellation, termination or suspension
of such contracts, licenses and agreements. Each of Parent and
its subsidiaries is in material compliance with, and has not
materially breached any term of, any such contracts, licenses and
agreements and, to the knowledge of Parent, all other parties to
such contracts, licenses and agreements are in material
compliance with, and have not materially breached any term of,
such contracts, licenses and agreements.
(g) To Parent's knowledge, the operation of the business
of Parent and its subsidiaries as such business currently is
conducted, including (i) Parent's and its subsidiaries' design,
development, manufacture, distribution, reproduction, marketing
or sale of the products or services of Parent and its
subsidiaries (including Parent Products) and (ii) Parent's use of
any product, device or process, has not infringed or
misappropriated, and does not and will not infringe or
misappropriate, the Intellectual Property of any third party or
constitute unfair competition or trade practices under the laws
of any jurisdiction.
(h) Neither Parent nor any of its subsidiaries has
received notice from any third party that the operation of the
business of Parent or any of its subsidiaries or any act, product
or service of Parent or any of its subsidiaries, infringes or
misappropriates the Intellectual Property of any third party or
constitutes unfair competition or trade practices under the laws
of any jurisdiction.
(i) To the knowledge of Parent, no person has infringed
or misappropriated, or is infringing or misappropriating, any Parent
Intellectual Property.
(j) Parent and each of its subsidiaries has taken
commercially reasonable steps to protect Parent's and its
subsidiaries' rights in Parent's confidential information
and trade secrets that it wishes to protect or any trade secrets
or confidential information of third parties provided to Parent or
any of its subsidiaries, and, without limiting the foregoing, each of
Parent and its subsidiaries has and enforces a policy requiring each
employee and contractor to execute a proprietary
information/confidentiality agreement substantially in the form
provided to Company, and all current and former employees and
contractors of Parent and any of its subsidiaries have executed
such an agreement, except where the failure to do so is not
reasonably likely to have a Material Adverse Effect on Parent.
(k) All of the Parent Products (i) are Year 2000 Compliant, and
(ii) have lost no functionality with respect to the introduction
of records containing dates falling on or after January 1, 2000.
3.14 Opinion of Financial Advisor. Parent has received an
opinion from its financial advisor, Deutsche Banc Alex. Xxxxx,
dated as of the date hereof, that the Aggregate Merger
Consideration to be paid by Parent in connection with the Merger
is fair to Parent from a financial point of view.
3.15 Board Approval. The Board of Directors of each of Parent
and Merger Sub has, as of the date of this Agreement, unanimously
(i) determined that the Merger is consistent with and in
furtherance of the long-term business strategy of Parent and is
fair to, and in the best interests of, Parent and its
stockholders, and (ii) approved this Agreement, the Merger and
the other transactions contemplated by this Agreement.
3.16 Tax Matters. Parent is not aware of any agreement, plan or
other circumstance that would prevent the Merger from
constituting a reorganization under Section 368 of the Code.
3.17 Merger Sub Operations. Merger Sub was formed solely for the
purpose of engaging in the transactions contemplated hereby and
has not (a) engaged in any business activities, (b) conducted any
operations other than in connection with the transactions
contemplated hereby or (c) incurred any liabilities other than in
connection with the transactions contemplated hereby.
3.18 California Hearing. All of the information supplied or to
be supplied by Parent in connection with the Permit, California
Hearing or the Registration Statement (each as defined in
Section 5.1), will be true, correct and complete.
ARTICLE IV
CONDUCT PRIOR TO THE EFFECTIVE TIME
4.1 Conduct of Business by Company. During the period
from the date of this Agreement and continuing until the earlier
of the termination of this Agreement pursuant to its terms or the
Effective Time, Company shall, and shall cause each Subsidiary
to, except to the extent that Parent shall otherwise consent in
writing, carry on its business, in the ordinary course, and in
compliance with all applicable laws and regulations, pay its
debts and Taxes when due subject to good faith disputes over such
debts or Taxes, pay or perform other material obligations when
due, and use its commercially reasonable efforts consistent with
past practices and policies to (i) preserve intact its present
business organization, (ii) keep available the services of its
present officers and employees and (iii) preserve its
relationships with customers, suppliers, distributors, licensors,
licensees, and others with which it has business dealings.
In addition, except as expressly permitted by the terms
of this Agreement, without the prior written consent of Parent,
during the period from the date of this Agreement and continuing
until the earlier of the termination of this Agreement pursuant
to its terms or the Effective Time, Company shall not do any of
the following and shall not permit either Subsidiary to do any of
the following:
(a) Waive any stock repurchase rights, accelerate,
amend or change the period of exercisability of options or reprice
options granted under any employee, consultant, director or other
stock plans or authorize cash payments in exchange for any options
granted under any of such plans;
(b) Grant any severance or termination pay to any officer
or employee except pursuant to written agreements outstanding on the
date hereof and as previously disclosed in writing to Parent, or
adopt any new severance plan;
(c) Transfer or license to any person or entity or
otherwise extend, amend or modify any rights to the Company
Intellectual Property other than in the ordinary course of business
consistent with past practice, or enter into grants to transfer or
license to any person future patent rights other than in the ordinary
course of business consistent with past practices, provided that
in no event shall Company or either Subsidiary license on an
exclusive basis or sell any Company Intellectual Property;
(d) Declare, set aside or pay any dividends on or make any other
distributions (whether in cash, stock, equity securities or
property) in respect of any capital stock or split, combine or
reclassify any capital stock or issue or authorize the issuance
of any other securities in respect of, in lieu of or in
substitution for any capital stock;
(e) Purchase, redeem or otherwise acquire, directly or
indirectly, any shares of capital stock of Company or either
Subsidiary;
(f) Issue, deliver, sell, authorize, pledge or
otherwise encumber, or propose any of the foregoing with respect
to, any shares of capital stock or any securities convertible
into shares of capital stock, or subscriptions, rights, warrants
or options to acquire any shares of capital stock or any securities
convertible into shares of capital stock, or enter into other
agreements or commitments of any character obligating it to issue
any such shares or convertible securities, other than the
issuance delivery and/or sale of (i) shares of Company Common
Stock pursuant to the exercise of stock options outstanding as of
the date of this Agreement and (ii) shares of Company Common
Stock issuable upon conversion of the Company Preferred Stock
outstanding on the date of this Agreement or upon exercise of the
Warrants outstanding on the date of this Agreement consistent
with the terms thereof;
(g) Cause, permit or propose any amendments to the
Company Charter Documents;
(h) Acquire or agree to acquire, by merging or
consolidating with, by purchasing any equity interest in or a
portion of the assets of, or by any other manner, any business
or any corporation, partnership, association or other business
organization or division thereof, or otherwise acquire or agree
to acquire any assets or enter outside the ordinary course of
Company's or either Subsidiary's business consistent with past
practice into any joint ventures, strategic partnerships or
alliances;
(i) Sell, lease, license, encumber or otherwise dispose
of any of Company's or either Subsidiary's properties or assets other
than in the ordinary course of business consistent with past
practice;
(j) Incur any indebtedness for borrowed money or
guarantee any such indebtedness of another person, issue or
sell any debt securities or options, warrants, calls or other
rights to acquire any debt securities of Company or either
Subsidiary, enter into any "keep
well" or other agreement to maintain any financial statement
condition or enter into any arrangement having the economic
effect of any of the foregoing;
(k) Adopt or amend any employee benefit plan, policy
or arrangement, any employee stock purchase or employee stock
option plan, or enter into any employment contract or collective
bargaining agreement, pay any special bonus or special
remuneration to any director or employee, or increase the
salaries or wage rates or fringe benefits (including rights to
severance or indemnification) of its directors, officers,
employees or consultants;
(l) Make any individual or series of related payments
outside of the ordinary course of business in excess of $100,000;
(m) Revalue any of its assets or, except as required
by GAAP, make any change in accounting methods, principles or
practices;
(n) Incur or enter into any agreement, contract or
commitment outside of the ordinary course of business in excess
of $100,000 individually;
(o) Make any tax election that, individually or in
the aggregate, is reasonably likely to adversely affect in any
material respect the tax liability or tax attributes of Company
or either Subsidiary or settle or compromise any material income
tax liability;
(p) Engage in any action that would cause the Merger
to fail to qualify as a "reorganization" under Section 368(a) of
the Code, whether or not otherwise permitted by this Article IV; or
(q) Agree in writing or otherwise to take any of the actions
described in Section 4.1 (a) through (p) above.
4.2 Conduct of Business by Parent. During the period from the
date of this Agreement and continuing until the earlier of the
termination of this Agreement pursuant to its terms or the
Effective Time, Parent and Merger Sub shall carry on their
business in the ordinary course and in compliance with all
applicable laws and regulations and shall not engage in any
action that would 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 IV.
4.3 Voting Agreements. As soon as practicable after receipt of
the Permit (as defined in Section 5.1(a)) or a Commissioner
Refusal (as defined in Section 5.1(b)), Company shall cause the
shareholders of Company listed on Exhibit B-1 to execute and
deliver to Parent voting agreements in the form attached hereto
as Exhibit B-2 (the "Voting Agreements").
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 California Hearing.
(a) Parent, Company and Merger Sub will promptly take all
necessary steps, including cooperating fully with each other in
terms of providing information and reviewing
documents, to (i) apply for and obtain a permit (the "Permit")
issued by the California Commissioner of Corporations (the
"Commissioner") pursuant to Section 25142 of the CGCL approving
the terms and conditions, and the fairness of the terms and
conditions, of the issuance of the Merger Shares pursuant to
this Agreement, (ii) respond promptly to any comments from the
Commissioner, (iii) participate in the hearing to be held by the
Commissioner in connection with the application for the Permit (the
"California Hearing"), and (iv) otherwise use their commercially
reasonable efforts to obtain the Permit as soon as possible.
Each party hereto will provide each other party all information
reasonably required in connection with the Permit. Each party
hereto will use all commercially reasonable efforts to cause the
issuance of the Permit as soon as practicable. Each party hereto
will notify the others promptly if it receives any comments from
the Commissioner or its staff, or it receives any request by the
Commissioner or its staff or any other government officials for
amendments or supplements to the Permit or any other filing or
for additional information. Each party hereto will supply the
others with copies of all correspondence between it or any of its
representatives, on the one hand, and the Commissioner, or its
staff or any other government officials, on the other hand, with
respect to the Permit or other filing. Whenever any event occurs
that is required to be included in an amendment or supplement to
the Permit or any other filing, each party hereto will promptly
inform the other parties of that occurrence and cooperate in
filing with the Commissioner or its staff or any other government
officials, and/or mailing to the shareholders of Company, the
amendment or supplement.
(b) If the Commissioner refuses to hold the California
Hearing or issue the Permit (a "Commissioner Refusal"), as
promptly as practicable after the Commissioner Refusal, Parent
shall prepare and file with the SEC a registration statement of
Parent on Form S-4 (as it may be amended, the "Registration
Statement") under the Securities Act to register the issuance of
the Merger Shares in connection with the Merger. Each of the
parties hereto shall use all reasonable efforts to cause the
Registration Statement to become effective as promptly as
practicable after the date hereof, and, prior to the effective
date of the Registration Statement, the parties hereto shall take
all action required under any applicable laws in connection with
the issuance of shares of Parent Common Stock pursuant to the
Merger. Each of Parent and Company shall provide promptly to the
other said information concerning its business and financial
statements and affairs, as, in the reasonable judgment of the
providing party or its counsel, may be required or appropriate
for inclusion in the Registration Statement, or in any amendments
or supplements thereto, and to cause its counsel and auditors to
cooperate with the other's counsel and auditors in the
preparation of the Registration Statement. Each of Company and
Parent will respond to any comments of the SEC, and will use its
respective reasonable efforts to have the Registration Statement
declared effective under the Securities Act as promptly as
practicable after such filing. As promptly as practicable after
the date of the Agreement, each of Company and Parent will
prepare and file any filings required to be filed by it under the
Exchange Act, the Securities Act, or other federal, foreign or
Blue Sky or related laws relating to the Merger and the
transactions contemplated by this Agreement (the "Other
Filings"). Each of Company and Parent will notify the other
promptly upon the receipt of any comments of the SEC or its staff
or any other government officials for amendments or supplements
to the Registration Statement or any Other Filing, or any
additional information, and will supply the other with copies of
all correspondence between such party or any of its
representatives, on the one hand, and the SEC or its staff or any
other government officials, on the other hand, with respect to
the Registration Statement, the Merger or any Other Filing. Each
of Company and Parent will cause
all documents that it is responsible for filing with the SEC
or other regulatory authorities under this Section 5.1(b) to
comply in all material respects with all applicable requirements
of law and the rules and regulations promulgated thereunder.
Whenever any event occurs which is required to be set forth in
the Registration Statement or any Other Filing, Company or Parent
as the case may be, will promptly inform the other of such occurrence
and cooperate in filing with the SEC or its staff or any other
government officials such amendment or supplement. No amendment
or supplement to the Registration Statement shall be made without
the approval of Parent and Company, which approval shall not be
unreasonably withheld or delayed. Each of the parties hereto
shall advise the other parties hereto, promptly after it receives
notice thereof, of the time when 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 Stock issuable in connection
with the Merger for offering or sale in any jurisdiction, or of
any request by the SEC for amendment of the Registration
Statement or comments thereon and responses thereto or requests
by the SEC for additional information.
5.2 Shareholder Consent. Company shall take all action
necessary in accordance with applicable law and the Company
Charter Documents to obtain from the holders of a majority of the
outstanding shares of the Company Stock and the holders of at
least 66 2/3% of the outstanding shares of the Series A Preferred
Stock, Series B Preferred Stock and Series C Preferred Stock,
voting as one class, their adoption and approval of this
Agreement and their approval of the Merger and shall take all
other action necessary or advisable to secure the consent of
shareholders as required by the CGCL.
5.3 Confidentiality; Access to Information.
(a) The parties acknowledge that Company and Parent have
previously executed a mutual nondisclosure agreement, dated as of
January 13, 2000 (as amended, the "Confidentiality Agreement"),
which Confidentiality Agreement will continue in full force and
effect in accordance with its terms.
(b) Each of Company and Parent will afford the other
and the other's accountants, counsel and other representatives
reasonable access, during normal business hours and upon reasonable
notice, to its properties, books, records and personnel during the
period prior to the Effective Time to obtain all information concerning
its business as such other party may reasonably request. No
information or knowledge obtained in any investigation pursuant
to this Section 5.3 will affect or be deemed to modify any
representation or warranty contained herein or the conditions to
the obligations of the parties to consummate the Merger.
5.4 No Solicitation. From and after the date of this Agreement
until the Effective Time or termination of this Agreement
pursuant to Article VII, Company will not, nor will it authorize
or permit any of its officers, directors, affiliates or employees
or any investment banker, attorney or other advisor or
representative retained by any of them to, directly or
indirectly, (i) solicit, initiate, encourage or induce the
making, submission or announcement of any Acquisition Proposal
(as defined below), (ii) participate in any discussions or
negotiations regarding, or furnish to any person any information
with respect to, or take any other action to facilitate any
inquiries or the making of any proposal that constitutes or may
reasonably be expected to lead to, any Acquisition Proposal,
(iii) engage in discussions with any person with
respect to any Acquisition Proposal, (iv) approve, endorse
or recommend any Acquisition Proposal or (v) enter into any
letter of intent or similar document or any contract, agreement
or commitment contemplating or otherwise relating to any
Acquisition Transaction (as defined below). Without limiting
the foregoing, it is understood that any violation of the
restrictions set forth in this Section 5.4 by any officer or
director of Company or any investment banker or attorney of
Company shall be deemed to be a breach of this Section 5.4
by Company.
For purposes of this Agreement, "Acquisition Proposal"
shall mean any offer or proposal (other than an offer or proposal
by Parent) relating to any Acquisition Transaction. For the
purposes of this Agreement, "Acquisition Transaction" shall mean
any transaction or series of related transactions other than the
transactions contemplated by this Agreement involving: (A) any
acquisition or purchase from Company by any person of voting
securities of Company or any tender offer or exchange offer that
if consummated would result in any person or "group" (as defined
under Section 13(d) of the Exchange Act and the rules and
regulations thereunder) beneficially owning 5% or more of the
total outstanding voting securities of Company, or any merger,
consolidation, business combination or similar transaction
involving Company; (B) any sale, lease (other than in the
ordinary course of business), exchange, transfer, license (other
than in the ordinary course of business), acquisition or
disposition of more than 5% of the assets of Company; or (C) any
liquidation, dissolution, recapitalization or other significant
corporate reorganization of Company.
In addition to the other obligations of Company set
forth in this Section 5.4, Company, as promptly as practicable
and in any event within 24 hours, shall advise Parent orally and
in writing of any request for information which Company
reasonably believes would lead to an Acquisition Proposal or of
any Acquisition Proposal, or any inquiry with respect to or which
Company reasonably should believe would lead to any Acquisition
Proposal, the material terms and conditions of such request,
Acquisition Proposal or inquiry, and the identity of the person
or group making any such request, Acquisition Proposal or
inquiry. Company will keep Parent informed in all material
respects of the status and details (including material amendments
or proposed amendments) of any such request, Acquisition Proposal
or inquiry.
5.5 Public Disclosure. Parent and Company will consult with
each other and agree before issuing any press release or
otherwise making any public statement with respect to the Merger
or this Agreement and will not issue any such press release or
make any such public statement prior to such agreement, except as
may be required by law or any listing agreement with a national
securities exchange, in which case reasonable efforts to consult
with the other party will be made prior to any such release or
public statement.
5.6 Commercially Reasonable Efforts; Notification.
(a) Upon the terms and subject to the conditions, including,
without limitation, Section 5.4, set forth in this Agreement,
each of the parties agrees to use all commercially reasonable
efforts to take, or cause to be taken, all actions, and to do, or
cause to be done, and to assist and cooperate with the other
parties in doing, all things necessary, proper or advisable to
consummate and make effective, in the most expeditious manner
practicable, the Merger and the other transactions contemplated
by this Agreement, including using reasonable efforts to
accomplish the following: (i) the taking of all reasonable acts
necessary to cause the
conditions precedent set forth in Article VI to be satisfied,
(ii) the obtaining of all necessary actions or nonactions,
waivers, consents, approvals, orders and authorizations from
Governmental Entities and the making of all necessary
registrations, declarations and filings (including
registrations, declarations and filings with Governmental
Entities, if any) and the taking of all reasonable steps as may
be necessary to avoid any suit, claim, action, investigation or
proceeding by any Governmental Entity, (iii) the obtaining of all
necessary consents, approvals or waivers from third parties
required as a result of the transactions contemplated by this
Agreement, (iv) the defending of any suits, claims, actions,
investigations or proceedings, whether judicial or
administrative, challenging this Agreement or the consummation of
the transactions contemplated hereby, including seeking to have
any stay or temporary restraining order entered by any court or
other Governmental Entity vacated or reversed and (v) the
execution or delivery of any additional instruments necessary to
consummate the transactions contemplated by, and to fully carry
out the purposes of, this Agreement. In connection with and
without limiting the foregoing, each of Parent and Company and
their respective Boards of Directors shall, if any state takeover
statute or similar statute or regulation is or becomes applicable
to the Merger, this Agreement or any of the transactions
contemplated by this Agreement, use all commercially reasonable
efforts to ensure that the Merger and the other transactions
contemplated by this Agreement may be consummated as promptly as
practicable on the terms contemplated by this Agreement and
otherwise to minimize the effect of such statute or regulation on
the Merger, this Agreement and the transactions contemplated
hereby. Notwithstanding anything herein to the contrary, nothing
in this Agreement shall be deemed to require Parent, Company or
any subsidiary or Affiliate of Parent or Company to agree to any
divestiture by itself or any of its Affiliates of shares of
capital stock or 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.
(b) Company shall give prompt notice to Parent upon
becoming aware that any representation or warranty made by it
contained in this Agreement has become untrue or inaccurate in
any material respect, or of any failure of Company to comply
with or satisfy in any material respect any covenant, condition
or agreement to be complied with or satisfied by it under this
Agreement. If any event, condition, fact or circumstance that
is required to be disclosed pursuant to this Section 5.6(b)
requires any change in the Company Schedule, or if any such
event, condition, fact or circumstance would require such a
change assuming the Company Schedule were dated as of the
date of the occurrence, existence or discovery of such event,
condition, fact or circumstance, then Company shall promptly
deliver to Parent an update to the Company Schedule specifying
such change. No such update shall be deemed to supplement or
amend the Company Schedule for the purpose of determining (i) the
accuracy of any of the representations and warranties made by
Company in this Agreement and (ii) whether any of the conditions
set forth in Section 6 have been satisfied.
(c) Parent shall give prompt notice to Company upon
becoming aware that any representation or warranty made by it or
Merger Sub contained in this Agreement has become untrue or
inaccurate in any material respect, or of any failure of Parent
or Merger Sub to comply with or satisfy in any material respect any
covenant, condition or agreement to be complied with or satisfied
by it under this Agreement. If any event, condition, fact or
circumstance that is required to be disclosed pursuant to this
Section 5.6(c) requires any change in the Parent Schedule, or if
any such event, condition, fact or circumstance would require
such a
change assuming the Parent Schedule were dated as of the
date of the occurrence, existence or discovery of such event,
condition, fact or circumstance, then Parent shall promptly
deliver to Company an update to the Parent Schedule specifying
such change. No such update shall be deemed to supplement or
amend the Parent Schedule for the purpose of determining (i) the
accuracy of any of the representations and warranties made by
Parent and Merger Sub in this Agreement and (ii) whether any of
the conditions set forth in Section 6 have been satisfied.
5.7 Third Party Consents. As soon as practicable following
the date hereof, Parent and Company will each use its commercially
reasonable efforts to obtain any consents, waivers and approvals
under any of its or its subsidiaries' respective agreements,
contracts, licenses or leases required to be obtained in
connection with the consummation of the transactions contemplated
hereby.
5.8 Stock Options and Employee Benefits.
(a) At the Effective Time, each outstanding option to
purchase shares of Company Common Stock (each, a "Company Stock
Option") under the Company Option Plans and each Employee Option
(as defined in Section 5.8(c)), whether vested or unvested, shall
by virtue of the Merger be assumed by Parent. Each Company Stock
Option and Employee Option so assumed by Parent under this
Agreement will continue to have, and be subject to, the same
terms and conditions of such Company Stock Option or Employee
Option immediately prior to the Effective Time (including,
without limitation, any repurchase rights or vesting provisions
and provisions regarding acceleration of vesting upon certain
transactions other than those contemplated by this Agreement),
except that (i) each Company Stock Option and Employee Option
will be or will become exercisable in accordance with its terms
for that number of whole shares of Parent Common Stock equal to
the product (rounded to the nearest whole number of shares of
Parent Common Stock unless required to be rounded down pursuant
to subsection (b) below) of the number of shares of Company
Common Stock that were issuable upon exercise of such Company
Stock Option or Employee Option immediately prior to the
Effective Time multiplied by the Common Stock Applicable Fraction
and (ii) the per share exercise price for the shares of Parent
Common Stock issuable upon exercise of such assumed Company Stock
Option or Employee Option will be equal to the quotient (rounded
to the nearest whole cent unless required to be rounded up to the
nearest whole cent pursuant to subsection (b) below) determined
by dividing the exercise price per share of Company Common Stock
at which such Company Stock Option or Employee Option was
exercisable immediately prior to the Effective Time by the Common
Stock Applicable Fraction. Following the Closing, Parent will
send to each holder of an assumed Company Stock Option or
Employee Option a written notice setting forth (i) the number of
shares of Parent Common Stock subject to such assumed Company
Stock Option or Employee Option, and (ii) the exercise price per
share of Parent Common Stock issuable upon exercise of such
assumed Company Stock Option or Employee Option.
(b) It is the intention of the parties (1) that subject to
applicable law, the Company Stock Options assumed by Parent
qualify, following the Effective Time, as incentive stock
options, as defined in Section 422 of the Code, to the extent
that the Company Stock Options qualified as incentive stock
options prior to the Effective Time, (2) that each holder of a
Company Stock Option shall, after the Effective Time, have an
option which preserves (but does not increase) the excess of the
fair market value of the shares subject to the option immediately
before the Effective Time over the aggregate option price of such
shares immediately before the Effective Time, (3) that the terms,
conditions, restrictions and provisions of the resulting option
be identical to the terms, conditions, restrictions and
provisions of the Company Stock Option which was assumed as if
Parent had originally issued such Company Stock Option for Parent
Common Stock, and (4) any terms, conditions, restrictions or
provisions of an option applicable to a number of shares rather
than a percentage or fraction of shares should be appropriately
adjusted.
(c) Notwithstanding anything else in this Agreement,
prior to the Closing, Company may issue options to the senior
employees of Company listed on Section 5.8 of the Company Schedule
with respect to 1,848,495 shares of Company Common Stock (the
"Employee Options"). The Employee Options will have an exercise
price of $0.05 per share of Company Common Stock and will be
subject to the terms set forth in Section 5.8 of the Company
Schedule. Any shares of Parent Common Stock subject to an
Employee Option but not issued because the Employee Option is not
exercised or is not exercisable as a result of the terms thereof
shall be deposited by Parent as soon as practicable in the Escrow
Account and shall be deemed to be Holdback Shares. Company may,
at its option, issue restricted stock in place of the Employee
Options with terms substantially the same as the Employee
Options.
(d) Prior to the Closing, the parties will negotiate
in good faith to agree on a plan to provide to the senior employees
of Company listed on Section 5.8 of the Company Schedule a pool of
15,067 shares of Parent Common Stock, or its equivalent in value,
to be distributed to such employees subject to the terms and
conditions set forth in Section 5.8 of the Company Schedule;
provided, however, that Parent shall not be obligated to agree to
any such plan that has an adverse financial or accounting impact
on Parent. If the parties are unable to agree on such a plan,
the 15,067 shares of Parent Common Stock will be paid to the
shareholders of Company at the Closing, and the Applicable
Fractions will be revised accordingly.
5.9 Form S-8. Parent agrees to file a registration
statement on Form S-8 for the shares of Parent Common Stock
issuable with respect to assumed Company Stock Options as soon
as is reasonably practicable, and in any event within ten business
days, after the Effective Time and shall use its best efforts to
maintain the effectiveness of such registration statement thereafter
for so long as any such options or other rights remain outstanding.
5.10 Warrants. At the Effective Time, each outstanding warrant
to purchase shares of Company Stock (each, a "Warrant") shall by
virtue of the Merger be assumed by Parent. Each Warrant so
assumed by Parent under this Agreement will continue to have, and
be subject to, the same terms and conditions of such Warrants
immediately prior to the Effective Time, except that (i) each
Warrant will be or will become exercisable in accordance with its
terms for that number of whole shares of Parent Common Stock
equal to the product (rounded to the nearest whole number of
shares of Parent Common Stock) of the number of shares of Company
Stock that were issuable upon exercise of such Warrant
immediately prior to the Effective Time multiplied by the
appropriate Applicable Fraction, rounded to the nearest whole
number of shares of Parent Common Stock and (ii) the per share
exercise price for the shares of Parent Common Stock issuable
upon exercise of such assumed Warrant will be equal to the
quotient (rounded to the nearest whole cent) determined by
dividing the exercise price per share of Company Stock at
which such Warrant was exercisable immediately prior to the
Effective Time by the appropriate Applicable Fraction.
5.11 Employees. Employees of Company employed by the Surviving
Corporation at the Effective Time will be provided with welfare
benefits by the Surviving Corporation, Parent or one of its
subsidiaries which welfare benefits shall be substantially
similar to such welfare benefits provided to similarly situated
employees of Parent. If any employee of Company becomes a
participant in any employee benefit plan, program, policy or
arrangement of Parent or one of its subsidiaries, such employee
shall, to the extent permitted by such plan, program, policy or
arrangement, be given credit for all service with Company prior
to the Effective Time for purposes of vesting eligibility and for
benefit accrual purposes. Nothing in this Section 5.11 or
Section 5.8 shall be deemed to constitute an employment contract
between the Surviving Corporation and any individual, or a waiver
of the Surviving Corporation's right to discharge any employee at
any time, with or without cause, subject to the terms of any
employment agreement with such employee.
5.12 Affiliates. Section 5.13 of the Company Schedule sets forth
a list of those persons who may be deemed to be, in Company's
reasonable judgment, affiliates of Company within the meaning of
Rule 145 promulgated under the Securities Act or Opinion 16 of
the Accounting Principles Board and applicable SEC rules and
regulations (each, a "Company Affiliate"). Company will provide
Parent with such information and documents as Parent reasonably
requests for purposes of reviewing such list. Company will
deliver or cause to be delivered to Parent, as promptly as
practicable on or following the date hereof, from each Company
Affiliate an executed affiliate agreement in substantially the
form attached hereto as Exhibit D (the "Company Affiliate
Agreement"), each of which will be in full force and effect
as of the Effective Time.
ARTICLE VI
CONDITIONS TO THE MERGER
6.1 Conditions to Obligations of Each Party to Effect the
Merger. The respective obligations of each party to this
Agreement to effect the Merger shall be subject to the
satisfaction at or prior to the Closing Date of the following
conditions:
(a) Shareholder Approval. This Agreement shall have
been approved and adopted, and the Merger shall have been duly
approved, by the requisite vote under applicable law, by the
shareholders of Company.
(b) Permit. The Commissioner shall have held the
California Hearing and issued the Permit, and the Permit shall
be in full force and effect, or, if a Commissioner Refusal
has occurred, the Registration Statement shall have been filed
with and declared effective by the SEC.
(c) No Order; HSR Act. No Governmental Entity
shall have enacted, issued, promulgated, enforced or entered
any statute, rule, regulation, executive order, decree,
injunction or other order (whether temporary, preliminary or
permanent) which is in effect and which has the effect of
making the Merger illegal or otherwise prohibiting
consummation of the Merger.
All waiting periods, if any, under the HSR Act relating to the
transactions contemplated hereby will have expired or terminated
early and all material foreign antitrust approvals required to be
obtained prior to the Merger in connection with the transactions
contemplated hereby shall have been obtained.
(d) Tax Opinion. Company shall have received a written
opinion from Xxxxxx, Xxxxxxxxxx & Xxxxxxxxx LLP, in form
and substance reasonably satisfactory to them, to the effect that
the Merger will constitute a reorganization within the meaning of
Section 368(a) of the Code, and such opinion shall not have been
withdrawn; provided, however, that if such counsel does not
render such opinion, this condition shall nonetheless be deemed
to be satisfied if counsel to Parent renders such opinion. The
parties to this Agreement agree to make such reasonable
representations as requested by such counsel for the purpose of
rendering such opinion.
6.2 Additional Conditions to Obligations of Company. The
obligation of Company to consummate and effect the Merger shall
be subject to the satisfaction at or prior to the Closing Date of
each of the following conditions, any of which may be waived, in
writing, exclusively by Company:
(a) Representations and Warranties. Each representation
and warranty of Parent and Merger Sub contained in this Agreement
(i) shall have been true and correct as of the date of this
Agreement and (ii) shall be true and correct on and as of the
Closing Date with the same force and effect as if made on and as
of the Closing Date except for (A) such failures to be true and
correct that do not in the aggregate constitute a Material
Adverse Effect on Parent and (B) those representations and
warranties which address matters only as of a particular date
(which representations shall have been true and correct as of
such particular date) (it being understood that, for purposes of
determining the accuracy of such representations and warranties,
(i) all "Material Adverse Effect on Parent" 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, Parent
Schedule made or purported to have been made after the date of
this Agreement shall be disregarded). Company shall have
received a certificate with respect to the foregoing signed on
behalf of Parent by its President and Chief Financial Officer.
(b) Agreements and Covenants. Parent and Merger Sub
shall have performed or complied in all material respects with all
agreements and covenants required by this Agreement to be
performed or complied with by them on or prior to the Closing
Date, and Company shall have received a certificate to such
effect signed on behalf of Parent by its President and Chief
Financial Officer.
(c) Consents. Parent and Merger Sub shall have obtained
all consents, waivers and approvals required in connection with the
consummation of the transactions contemplated hereby.
(d) Material Adverse Effect. There shall not have been
any Material Adverse Effect on Parent since December 31, 1999.
Company shall have received a certificate with respect to the
foregoing signed on behalf of Parent by its President and Chief
Financial Officer.
6.3 Additional Conditions to Obligations of Parent and Merger
Sub. The obligation of Parent and Merger Sub to consummate and
effect the Merger shall be subject to the satisfaction at or
prior to the Closing Date of each of the following conditions,
any of which may be waived, in writing, exclusively by Parent:
(a) Representations and Warranties. Each representation and
warranty of Company contained in this Agreement (i) shall have
been true and correct as of the date of this Agreement and (ii)
shall be true and correct on and as of the Closing Date with the
same force and effect as if made on and as of the Closing Date,
except for (A) such failures to be true and correct that do not
in the aggregate constitute a Material Adverse Effect on Company
(provided, however, such Material Adverse Effect on Company
qualifier shall be inapplicable with respect to representations
and warranties contained in Sections 2.3, 2.22, 2.23, 2.24
and 2.25) and (B) for those representations and warranties which
address matters only as of a particular date (which
representations shall have been true and correct as of such
particular date) (it being understood that, for purposes of
determining the accuracy of such representations and warranties,
(i) all "Material Adverse Effect on Company" 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
Schedule made or purported to have been made after the date of
this Agreement shall be disregarded). Parent shall have received
a certificate with respect to the foregoing signed on behalf of
Company by its President and Chief Financial Officer.
(b) Agreements and Covenants. Company shall have
performed or complied in all material respects with all agreements
and covenants required by this Agreement to be performed or
complied with by it at or prior to the Closing Date, and Parent
shall have received a certificate to such effect signed on
behalf of Company by its President and Chief Financial Officer.
(c) Affiliate Agreements. Each of the Company
Affiliates shall have entered into the Company Affiliate Agreement,
and each of such agreements shall be in full force and effect as
of the Effective Time.
(d) Consents. Company shall have obtained all consents,
waivers and approvals required in connection with the consummation
of the transactions contemplated hereby.
(e) Material Adverse Effect. There shall not have been
any Material Adverse Effect on Company since December 31, 1999.
Parent shall have received a certificate with respect to the
foregoing signed on behalf of Company by its President and Chief
Financial Officer.
(f) Dissenters' Rights. Effective demands for payment of
dissenters' rights by shareholders of Company shall not equal or
exceed five percent of the outstanding shares of the Company
Stock.
(g) Non-Compete Agreements. The individuals listed on
Exhibit X- 0 shall have executed and delivered to Parent Non-Compete
Agreements substantially in the form
attached hereto as Exhibit E-2, and such Non-Compete Agreements
shall be in full force and effect as of the Effective Time.
(h) Shareholder Agreements. The Shareholder Agreements
shall have been executed and delivered by each of the shareholders of
Company listed on Exhibit A-1 and shall be in full force and
effect as of the Effective Time.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
7.1 Termination. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after the
requisite approval of the shareholders of Company:
(a) by mutual written consent duly authorized by the Boards of
Directors of Parent and Company;
(b) by either Company or Parent if the Merger shall not have
been consummated by May 31, 2000 (or, if a Commissioner Refusal
has occurred, then 60 days after the date of such Commissioner
Refusal) for any reason; provided, however, that the right to
terminate this Agreement under this Section 7.1(b) shall not be
available to any party whose action or failure to act has been a
principal cause of or resulted in the failure of the Merger to
occur on or before such date and such action or failure to act
constitutes a breach of this Agreement;
(c) by either Company or Parent if a Governmental Entity
shall have issued an order, decree or ruling or taken any other
action, in any case having the effect of permanently restraining,
enjoining or otherwise prohibiting the Merger, which order,
decree, ruling or other action is final and nonappealable;
(d) by Company, upon a breach of any representation,
warranty, covenant or agreement on the part of Parent or Merger Sub
set forth in this Agreement, or if any representation or warranty of
Parent shall have become untrue, in either case such that the
conditions set forth in Section 6.2(a) or Section 6.2(b) would
not be satisfied as of the time of such breach or as of the time
such representation or warranty shall have become untrue;
provided that if such inaccuracy in Parent's representations and
warranties or breach by Parent is curable by Parent, then Company
may not terminate this Agreement under this Section 7.1(d) for
thirty (30) days after delivery of written notice from Company to
Parent of such breach, provided Parent continues to exercise best
efforts to cure such breach (it being understood that Company may
not terminate this Agreement pursuant to this paragraph (d) if
such breach by Parent is cured during such thirty (30)-day
period); or
(e) by Parent, upon a breach of any representation, warranty,
covenant or agreement on the part of Company set forth in this
Agreement, or if any representation or warranty of Company shall
have become untrue, in either case such that the conditions set
forth in Section 6.3(a) or Section 6.3(b) would not be satisfied
as of the time of such breach or as of the time such
representation or warranty shall have become untrue; provided
that if such inaccuracy in Company's representations and
warranties or breach by Company is curable by Company, then
Parent may not terminate this Agreement under this Section 7.1(e)
for thirty (30) days
after delivery of written notice from Parent to Company of
such breach, provided Company continues to exercise
best efforts to cure such breach (it being understood that Parent
may not terminate this Agreement pursuant to this paragraph (e)
such breach by Company is cured during such thirty (30)-day
period).
7.2 Notice of Termination; Effect of Termination. Any
termination of this Agreement under Section 7.1 above will be
effective immediately upon the delivery of written notice of the
terminating party to the other parties hereto (or such later time
as may be required by Section 7.1). In the event of the
termination of this Agreement as provided in Section 7.1, this
Agreement shall be of no further force or effect, except (i) as
set forth in this Section 7.2, Section 5.3(a), Section 7.3 and
Article VIII, each of which shall survive the termination of this
Agreement, and (ii) nothing herein shall relieve any party from
liability for fraud in connection with, or any willful breach of,
this Agreement.
7.3 Fees and Expenses.
(a) General. Except as set forth in this Section 7.3, all
fees and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party
incurring such expenses, whether or not the Merger is
consummated; provided, however, that Parent and Company shall
share equally all fees and expenses, other than attorneys' and
accountants fees and expenses, incurred (i) in relation to the
Permit and the California Hearing and (ii) for the premerger
notification and report forms under the HSR Act.
(b) Termination Fee.
(i) In the event that the condition set forth in
Section 6.1(a) is not satisfied, Company shall pay to Parent an amount
in cash equal to $5 million. In addition, if the Closing does not occur
as a result of the breach of this Agreement by either Company or
Parent or Merger Sub, the breaching party shall pay the other
party an amount in cash equal to $5 million within 10 days
following termination of this Agreement.
(ii) Each party hereto acknowledges that the agreement
contained in this Section 7.3(b) is an integral part of the transactions
contemplated by this Agreement, and that, without the agreement
contained in this Section 7.3(b), the other parties hereto would
not enter into this Agreement. The parties acknowledge that
damages resulting from the failure to consummate the Merger as a
result of a breach by a party hereto would be difficult to
determine and the termination fees payable pursuant to clause (i)
above are the parties' best estimate of such damages.
7.4 Amendment. Subject to applicable law, this Agreement may be
amended by the parties hereto at any time by execution of an
instrument in writing signed on behalf of each of Parent, Merger
Sub and Company.
7.5 Extension; Waiver. At any time prior to the Effective Time,
any party hereto may, to the extent legally allowed, (i) extend
the time for the performance of any of the obligations or other
acts of the other parties hereto, (ii) waive any inaccuracies in
the representations and warranties made to such party contained
herein or in any document delivered pursuant hereto and (iii)
waive compliance with any of the agreements or conditions for the
benefit of such party contained herein. Any agreement on the
part of a party hereto to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on
behalf of such party. Delay in exercising any right under this
Agreement shall not constitute a waiver of such right.
ARTICLE VIII
GENERAL PROVISIONS
8.1 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered
personally or by commercial delivery service, or sent via
telecopy (receipt confirmed) to the parties at the following
addresses or telecopy numbers (or at such other address or
telecopy numbers for a party as shall be specified by like
notice):
(a) if to Parent or Merger Sub, to:
Digital Insight Corporation
00000 Xxxxxx Xxxx
Xxxxxxxxx, XX 00000
Attention: President
Facsimile: (000) 000-0000
with a copy (not constituting notice) to:
O'Melveny & Xxxxx LLP
000 Xxxxx Xxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx Xxxxxxx, Esq.
Facsimile: (000) 000-0000
(b) if to Company, to:
AnyTime Access, Inc.
0000 Xxxxxxxxx Xxxx Xxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
Attention: President
Facsimile: (000) 000-0000
with a copy (not constituting notice) to:
Xxxxxx, Xxxxxxxxxx & Xxxxxxxxx LLP
000 Xxxxxxx Xxxx, Xxxxx 0000
Xxxxxxxxxx, XX 00000
Attention: Xxxx Xxxx, Esq.
Facsimile: (000) 000-0000
8.2 Interpretation; Definitions.
(a) When a reference is made in this Agreement to Exhibits,
such reference shall be to an Exhibit to this Agreement unless
otherwise indicated. When a reference is made in this Agreement
to Sections, such reference shall be to a Section of this
Agreement. Unless otherwise indicated the words "include,"
"includes" and "including" when used herein shall be deemed in
each case to be followed by the words "without limitation." The
table of contents and headings contained in this Agreement are
for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. When reference is
made herein to "the business of" an entity, such reference shall
be deemed to include the business of all direct and indirect
subsidiaries of such entity. Reference to the subsidiaries of an
entity shall be deemed to include all direct and indirect
subsidiaries of such entity.
(b) For purposes of this Agreement:
(i) the term "knowledge" of a party hereto, with
respect to any matter in question, means the actual knowledge
of the executive officers of such party; and
(ii) the term "person" shall mean any individual,
corporation (including any non-profit corporation), general partnership,
limited partnership, limited liability partnership, joint
venture, estate, trust, company (including any limited liability
company or joint stock company), firm or other enterprise,
association, organization, entity or Governmental Entity.
8.3 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same
agreement and shall become effective when one or more
counterparts have been signed by each of the parties and
delivered to the other party, it being understood that all
parties need not sign the same counterpart.
8.4 Entire Agreement; Third Party Beneficiaries. This Agreement
and the documents and instruments and other agreements among the
parties hereto as contemplated by or referred to herein,
including the Company Schedule and Parent Schedule (a) constitute
the entire agreement among the parties with respect to the
subject matter hereof and supersede all prior agreements and
understandings, both written and oral, among the parties with
respect to the subject matter hereof, it being understood that
the Confidentiality Agreement shall continue in full force and
effect until the Closing and shall survive any termination of
this Agreement; and (b) are not intended to confer upon any other
person any rights or remedies hereunder.
8.5 Severability. In the event that any provision of this
Agreement, or the application thereof, becomes or is declared by
a court of competent jurisdiction to be illegal, void or
unenforceable, the remainder of this Agreement will continue in
full force and effect and the application of such provision to
other persons or circumstances will be interpreted so as
reasonably to effect the intent of the parties hereto. The
parties further agree to replace such void or unenforceable
provision of this Agreement with a valid and enforceable
provision that will achieve, to the extent possible, the
economic, business and other purposes of such void or
unenforceable provision.
8.6 Other Remedies; Specific Performance. Except as otherwise
provided herein, any and all remedies herein expressly conferred
upon a party will be deemed cumulative with and not exclusive of
any other remedy conferred hereby, or by law or equity upon such
party, and the exercise by a party of any one remedy will not
preclude the exercise of any other remedy. The parties hereto
agree that irreparable damage would occur in the event that any
of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached.
It is accordingly agreed that the parties shall be entitled to
seek an injunction or injunctions to prevent breaches of this
Agreement and to enforce specifically the terms and provisions
hereof in any court of the United States or any state having
jurisdiction, this being in addition to any other remedy to which
they are entitled at law or in equity.
8.7 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of California,
regardless of the laws that might otherwise govern under
applicable principles of conflicts of law thereof.
8.8 Rules of Construction. The parties hereto agree that they
have been represented by counsel during the negotiation and
execution of this Agreement and, therefore, waive the application
of any law, regulation, holding or rule of construction providing
that ambiguities in an agreement or other document will be
construed against the party drafting such agreement or document.
8.9 Assignment. No party may assign either this Agreement or
any of its rights, interests, or obligations hereunder without
the prior written approval 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 permitted assigns.
[REMAINDER OF PAGE LEFT BLANK INTENTIONALLY]
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their duly authorized respective
officers as of the date first written above.
DIGITAL INSIGHT CORPORATION
By: /s/ Xxxx Xxxxxx
----------------------
Xxxx Xxxxxx
President
By: /s/ Xxxxx XxXxxxxxx
----------------------
Xxxxx XxXxxxxxx
Chief Financial Officer
ATA ACQUISITION CORP.
By: /s/ Xxxx Xxxxxx
-----------------------
Xxxx Xxxxxx
President
By: /s/ Xxxxx XxXxxxxxx
-----------------------
Xxxxx XxXxxxxxx
Chief Financial Officer
ANYTIME ACCESS, INC.
By: /s/ Xxxxxx X. Xxxxxx
----------------------
Xxxxxx X. Xxxxxx
President
By: /s/ Xxxxxx X. Xxxxx
----------------------
Xxxxxx X. Xxxxx
Chief Financial Officer
Exhibit A-1
LIST OF SHAREHOLDERS TO SIGN
SHAREHOLDER AGREEMENT
Xxx Xxxxxxxxxx and Xxxxxxxxx Xxxxxxxxxx, husband and wife
Xxxxxx Xxxxxx and Xxxxxxxx Xxxxxx, husband and wife
Xxxxxx Xxxxxxx and Xxxxxxxx Xxxxxxx
Crosspoint Venture Partners 1993
Crosspoint 1993 Entrepreneurs Fund
Xxxxxxx Xxxxx
Xxxxxxx Xxxxxxx
Xxxxxx X. Xxxx and Xxxxxxxx X. Xxxx, as trustees
Xxxxxx Xxxxxxxx
Xxxxxx X. Xxxxx
Xxxxxx Van Velzer
Xxxxxxxx Van Velzer
Xxxxxxxx Xxxx
Xxxxx Donde
Xxxx Xxxx
Xxx Xxxx
Xxxxxx Xxxxxx
Chancellor Private Capital Partners III, L.P.
Citiventure 96 Partnership, X.X.
Xxxxxxxxxx Private Capital Offshore Partners II, X.X.
Xxxxxxxxxx Private Capital Offshore Partners I, C.V.
Procific
Damac Investors, Inc.
Al Jazeira Services Co. SAOG
CUNA Mutual Group
Mid-Atlantic Venture Funds
CUNA Mutual Insurance Society
Exhibit A-2
FORM OF SHAREHOLDER AGREEMENT
THIS SHAREHOLDER AGREEMENT (this "Agreement") is made
and entered into as of March 30, 2000, between Digital Insight
Corporation, a Delaware corporation ("Parent"), and the
undersigned, a shareholder (the "Shareholder") of Anytime Access,
Inc., a California corporation ("Company").
RECITALS
A. Concurrent herewith, Parent, ATA Acquisition Corp.
and Company are entering into an Agreement and Plan of Merger
(the "Merger Agreement") which provides for the merger (the
"Merger") of ATA Acquisition Corp. with and into Company.
B. Shareholder is a shareholder of Company and, upon
consummation of the Merger as contemplated by the Merger
Agreement, the shares of Company Stock held by Shareholder or
issuable upon exercise of warrants to purchase Company Stock (the
"Warrants") will be converted into shares of the Common Stock of
Parent or the right to receive shares of Common Stock of Parent
upon exercise of the Warrants.
C. The other shareholders of Company are entering
into agreements similar to this Agreement.
D. As an inducement to Parent to enter into the
Merger Agreement and in consideration of the execution of the
Merger Agreement by Parent, Shareholder agrees as set forth
below.
NOW THEREFORE, intending to be legally bound, the
parties hereto agree as follows:
1. Representations of Shareholder. Shareholder
hereby represents and warrants to Parent that Shareholder has
full power and authority to make, enter into and carry out the
terms of this Agreement and this Agreement has been duly executed
and delivered by the Shareholder and constitutes the valid and
binding obligation of Shareholder, enforceable in accordance with
its terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium and other laws affecting
creditors' rights generally, or by general equitable principles
(regardless of whether enforcement is sought in a proceeding at
law or in equity), and to the extent any indemnification or
contribution provisions thereof may be limited by applicable
federal or state securities laws. Shareholder also represents
and warrants that Shareholder has carefully reviewed the Merger
Agreement, especially the representations and warranties of
Company contained in Article II of the Merger Agreement.
2. Indemnification. (a) Provided that the Closing
has occurred, Shareholder will, severally but not jointly,
indemnify and hold harmless Parent and its affiliates, including
the Surviving Corporation, each of their respective officers,
directors, employees and agents and each of their heirs,
executors, successors and assigns of any of the foregoing
(collectively, the "Indemnified Parties") from and against all
claims, losses, liabilities, damages and expenses (net of any tax
benefit that such Indemnified Party (or any affiliate thereof)
has actually received as a
result thereof), including, without limitation, attorneys'
fees and costs of investigation and litigation (collectively,
"Damages") arising out of or relating to any breach of (i)
the representations and warranties made by Company in Article
II of the Merger Agreement or in the certificates delivered
by Company pursuant to Sections 6.3(a)
and 6.3(e) of the Merger Agreement or (ii) the representations
and warranties of Shareholder contained in Section 1 of this
Agreement.
(b) Notwithstanding the foregoing, no shareholder of
Company shall be required to pay any amount for Damages with
respect to clause (i) of subsection (a) above of this Agreement
or similar shareholder agreements executed by other shareholders
of Company, unless the aggregate amount otherwise payable by such
shareholders with respect to all claims for indemnification
pursuant to clause (i) of subsection (a) above would exceed
$750,000 (the "Deductible"), whereupon only the amount of Damages
otherwise payable above the Deductible shall be payable by such
shareholders. The Deductible does not apply to Damages payable
with respect to clause (ii) of subsection (a) above.
(c) With the exception of claims based upon fraud,
from and after the Closing Date, recourse of the Indemnified
Parties to Shareholder's Holdback Shares pursuant to this
Agreement and the Escrow Agreement shall be the sole and
exclusive remedy of the Indemnified Parties against Shareholder
for Damages with respect to clause (i) of subsection (a) above.
Any claim for indemnification for Damages hereunder shall be
offset or reduced by the amount of any insurance proceeds
received by the Indemnified Parties for such Damages unless the
payment of such insurance proceeds results or is reasonably
likely to result in a material modification of the premium or
other material terms of the applicable insurance policy.
(d) Indemnification with respect to Damages with
respect to clause (i) of subsection (a) above shall expire on the
first anniversary of the Closing Date; provided, however, that if
prior to that date notice of any claim for Damages has been given
by an Indemnified Party as provided herein, then the right to
indemnification with respect thereto shall remain in effect until
such matter shall have been finally determined and disposed of,
and any indemnification due in respect thereof shall have been
paid. Upon expiration of this indemnification and provided that
no such notice of any claim for Damages has been given, the
Shares held in escrow shall be delivered to the shareholders of
Company as provided in the Escrow Agreement.
(e) Shareholder shall not have any liability for
Damages which arise solely as a result of (i) actions taken by or
on behalf of, or omissions of, Parent or the Surviving
Corporation after the Closing; (ii) changes in accounting methods
or policies of the Surviving Corporation after the Closing; or
(iii) the passing of, or any change in, after the Closing, any
law or administrative practice of any Governmental Entity in any
such case not actually in force as of the date of this Agreement
(even if retroactive in effect), including any increase in the
tax rates in effect on the date of this Agreement or the
imposition of any tax not in effect on the date of this
Agreement.
(f) Promptly after receipt by an Indemnified Party of
notice of any claim, liability or expense to which the
indemnification obligations hereunder would apply, the
Indemnified Party shall give notice thereof in writing to the
Shareholder, but the omission to so notify the Shareholder
promptly will not relieve the Shareholder from any liability
except to the
extent that the Shareholder shall have been
prejudiced as a result of the failure or delay in giving such
notice. Such notice shall state the information then available
regarding the amount and nature of such claim, liability or
expense.
(g) With respect to third party claims, if within 20
days after receiving the notice described in clause (f) above,
the Shareholders' Agent (as defined in Section 4 below) gives
written notice to the Indemnified Parties stating that the former
shareholders of Company (the "Shareholders") intend to defend
against such claim, liability or expense at their own cost and
expense, then counsel for the defense shall be selected by the
Shareholders' Agent (subject to the consent of the Indemnified
Parties, which consent shall not be unreasonably withheld) and
the Indemnified Parties shall not be required to make any payment
with respect to such claim, liability or expense as long as the
Shareholders' Agent is conducting a good faith and diligent
defense at the expense of the Shareholders; provided, however,
that the assumption of defense of any such matters by the
Shareholders' Agent shall relate solely to the claim, liability
or expense that is subject or potentially subject to
indemnification. The Shareholders' Agent shall have the right,
with the consent of the Indemnified Parties, which consent shall
not be unreasonably withheld, to settle all indemnifiable matters
related to claims by third parties which are susceptible to being
settled, provided the Shareholders' and other indemnifying
parties' obligations to indemnify the Indemnified Parties
therefore will be fully satisfied. The Shareholders' Agent shall
furnish the Indemnified Parties with all documents and
information that the Indemnified Parties shall reasonably request
and shall consult with the Indemnified Parties prior to acting on
major matters, including settlement discussions. Notwithstanding
anything herein stated, each Indemnified Party shall at all times
have the right to fully participate in such defense at its own
expense directly or through counsel; provided, however, if the
named parties to the action or proceeding include both the
indemnifying parties and the Indemnified Parties and
representation of both parties by the same counsel would be
inappropriate under applicable standards of professional conduct,
the expense of one separate counsel for the Indemnified Parties
shall be paid by the Shareholder and other indemnifying parties.
If no such notice of intent to defend is given, or if such
diligent good faith defense is not being or ceases to be
conducted, the Indemnified Parties shall undertake the defense of
(with counsel selected by the Indemnified Parties), and shall
have the right to compromise or settle (exercising reasonable
business judgment), such claim, liability or expense; provided,
however, that if Shareholders, through the Shareholders' Agent,
agree in writing that such claim, liability or expense is a
claim, liability or expense to which the indemnification
obligations hereunder apply, the Indemnified Parties shall have
the right to compromise or settle such claim, liability or
expense with the consent of the Shareholders' Agent, which
consent will not be unreasonably withheld. If the Indemnified
Parties are undertaking the defense of any third party claim
pursuant to the preceding sentence, the Indemnified Parties shall
furnish the Shareholders' Agent with all major pleadings with
respect to the claim and periodic updates as to the status of the
claim as Shareholders' Agent may reasonably request.
3. Lock-Up Agreement. Shareholder agrees that
Shareholder will not, without the prior written consent of
Parent, offer, sell, contract to sell, pledge or otherwise
dispose of, or enter into any transaction which is designed to,
or might reasonably be expected to, result in the disposition
(whether by actual disposition or effective economic disposition
due to cash settlement or otherwise), directly or indirectly, or
establish or increase a put equivalent position or liquidate or
decrease a call equivalent position within the meaning of
Section 16 of the
Securities Exchange Act of 1934, as amended,
with respect to, any shares of Parent Common Stock to be received
by Shareholder under the Merger Agreement for a period of 180
days after the Closing. After said 180-day period, 25% of Parent
Common Stock to be received by Shareholder under the Merger
Agreement will be freed from the restrictions of this Section 3
and an additional 25% will be freed from the restrictions of this
Section 3 nine months after the Closing. One year after the
Closing, all such shares of Parent Common Stock will be freed
from the restrictions of this Section 3.
4. Shareholders' Agent. Shareholder hereby
irrevocably appoints Xxxxxx X. Xxxxxx as his, her or its agent
and as the agent for purposes of all matters relating to this
Agreement and the Escrow Agreement (the "Shareholders' Agent"),
and Xxxxxx X. Xxxxxx hereby accepts his appointment as the
Shareholders' Agent. Parent shall be entitled to deal
exclusively with the Shareholders' Agent on all matters relating
to this Agreement and the Escrow Agreement, and shall be entitled
to rely conclusively (without further evidence of any kind
whatsoever) on any document executed or purported to be executed
on behalf of Shareholder by the Shareholders' Agent, and on any
other action taken or purported to be taken on behalf of
Shareholder by the Shareholders' Agent, as fully binding upon
Shareholder. If the Shareholders' Agent shall die, become
disabled or otherwise be unable to fulfill his responsibilities
as agent of the Shareholders, then the former shareholders of
Company holding a majority of the Merger Shares shall, within ten
days after such death or disability, appoint a successor agent
and, promptly thereafter, shall notify Parent of the identity of
such successor. Any such successor shall become the
"Shareholders' Agent" in accordance with this Section 4. The
Shareholders' Agent shall be reimbursed by the Shareholders for
his reasonable out-of-pocket expenses incurred in connection with
serving as the Shareholders' Agent under this Agreement and the
Escrow Agreement. Shareholders' Agent shall not be liable for
any act done or omitted hereunder as Shareholders' Agent while
acting in good faith and in the exercise of reasonable judgment.
The Shareholders on whose behalf Holdback Shares were contributed
to the Escrow Account shall severally indemnify Shareholders'
Agent and hold Shareholders' Agent harmless against any loss,
liability or expense incurred without gross negligence, bad faith
or willful misconduct on the part of Shareholders' Agent and
arising out of or in connection with the acceptance or
administration of Shareholders' Agent's duties hereunder and
under the Escrow Agreement, including the reasonable fees and
expenses of any legal counsel retained by Shareholders' Agent.
5. Termination of Agreements. Effective as of the
Closing Date, Shareholder agrees that the following agreements
shall be terminated and of no further force and effect: (i) that
certain Amended and Restated Shareholder Rights Agreement, dated
August 10, 1999, among Company and the investors listed on
Exhibit A thereto; (ii) Management Rights Letter, dated
August 10, 1999, to Chancellor Private Capital Partners III, L.P.
from Company; and (iii) Side Letter, dated August 11, 1999, to
the investors listed on Exhibit A thereto, from Company.
6. Miscellaneous.
(a) Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent
jurisdiction to be invalid, void or unenforceable, then
the remainder of the terms, provisions, covenants and restrictions
of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.
(b) Binding Effect and Assignment. This Agreement and
all of the provisions hereof shall be binding upon and inure to
the benefit of the parties hereto and their respective successors
and permitted assigns, but, except as otherwise specifically
provided herein, neither this Agreement nor any of the rights,
interests or obligations of the parties hereto may be assigned by
either of the parties without prior written consent of the other.
(c) Amendments and Modification. This Agreement may
not be modified, amended, altered or supplemented except upon the
execution and delivery of a written agreement executed by the
parties hereto.
(d) Notices. All notices and other communications
pursuant to this Agreement shall be in writing and deemed to be
sufficient if contained in a written instrument and shall be
deemed given if delivered personally, telecopied, sent by
nationally-recognized overnight courier or mailed by registered
or certified mail (return receipt requested), postage prepaid, to
the parties at the following address (or at such other address
for a party as shall be specified by like notice):
If to Parent: Digital Insight Corporation
00000 Xxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: President
Facsimile: (000) 000-0000
With a copy (not constituting notice) to:
O'Melveny & Xxxxx LLP
000 X. Xxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx Xxxxxxx, Esq.
Facsimile: (000) 000-0000
If to Shareholder: To the address for notice set forth on the
signature page hereof.
(e) Governing Law. This Agreement shall be governed
by the laws of the State of California, without reference to
rules of conflicts of law.
(f) Entire Agreement. This Agreement contains the
entire understanding of the parties in respect of the subject
matter hereof, and supersedes all prior negotiations and
understandings between the parties with respect to such subject
matter.
(g) Effect of Headings. The section headings are for
convenience only and shall not affect the construction or
interpretation of this Agreement.
(h) Terms. Capitalized terms not otherwise defined
herein shall have the meaning given such terms in the Merger
Agreement.
(i) Counterparts. This Agreement may be executed in
several counterparts, each of which shall be an original, but all
of which together shall constitute one and the same agreement.
[REMAINDER OF PAGE LEFT BLANK INTENTIONALLY]
IN WITNESS WHEREOF, the parties have caused this
Agreement to be duly executed on the day and year first above
written.
DIGITAL INSIGHT CORPORATION SHAREHOLDER
By: __________________________ By: ________________________
Signature Signature
Name:__________________________ Name: _______________________
Title:_________________________ Title:________________________
Print Address:
_____________________________
_____________________________
_____________________________
Telephone:___________________
Fax no.:______________________
[Signature page to Shareholder Agreement]
Exhibit B-1
LIST OF SHAREHOLDERS TO SIGN
VOTING AGREEMENT
NEPA Venture Fund II, L.P.
Crosspoint Venture Partners 1993
Crosspoint 1993 Entrepreneurs Fund
CUNA Mutual Group
Exhibit B-2
FORM OF VOTING AGREEMENT
THIS VOTING AGREEMENT (this "Agreement") is made and
entered into as of _______________, 2000, among Digital Insight
Corporation, a Delaware corporation ("Parent"), and the
undersigned shareholder ("Shareholder") of Anytime Access, Inc.,
a California corporation ("Company").
RECITALS
A. Company, Merger Sub (as defined below) and Parent
have entered into an Agreement and Plan of Merger (the "Merger
Agreement"), which provides for the merger (the "Merger") of a
wholly owned subsidiary of Parent ("Merger Sub") with and into
Company. Pursuant to the Merger, all outstanding capital stock
of Company shall be converted into the right to receive common
stock of Parent, as set forth in the Merger Agreement;
B. Shareholder is the beneficial owner (as defined in
Rule 13d-3 under the Securities Exchange Act of 1934, as amended
(the "Exchange Act")) of such number of shares of the outstanding
capital stock of Company and shares subject to outstanding
options and warrants as is indicated on the signature page of
this Agreement; and
C. In consideration of the execution of the Merger
Agreement by Parent, Shareholder agrees to vote or execute a
consent with respect to the Shares (as defined in Section 1(c)
below) and other such shares of capital stock of Company over
which Shareholder has voting power so as to facilitate
consummation of the Merger.
NOW, THEREFORE, intending to be legally bound, the
parties hereto agree as follows:
1. Certain Definitions. Capitalized terms not
defined herein shall have the meanings ascribed to them in the
Merger Agreement. For purposes of this Agreement:
(a) "Expiration Date" shall mean the earlier to occur
of (i) such date and time as the Merger Agreement shall have been
terminated pursuant to Article VII thereof, or (ii) such date and
time as the Merger shall become effective in accordance with the
terms and provisions of the Merger Agreement.
(b) "Person" shall mean any (i) individual,
(ii) corporation, limited liability company, partnership or other
entity, or (iii) governmental authority.
(c) "Shares" shall mean: (i) all securities of
Company (including all shares of Company Stock and all options,
warrants and other rights to acquire shares of Company Stock)
owned by Shareholder as of the date of this Agreement; and
(ii) all additional securities of Company (including all
additional shares of Company Stock and all additional options,
warrants and other rights to acquire shares of Company Stock) of
which Shareholder acquires ownership during the period from the
date of this Agreement through the Expiration Date.
(d) A Person shall be deemed to have effected a
"Transfer" of a security if such person directly or indirectly
(i) sells, pledges, encumbers, grants an option with respect to,
transfers or disposes of such security or any interest in such
security; or (ii) enters into an agreement or commitment
providing for the sale of, pledge of, encumbrance of, grant of an
option with respect to, transfer of or disposition of such
security or any interest therein.
2. Transfer of Shares.
(a) Transferee of Shares to be Bound by this
Agreement. Shareholder agrees that, during the period from the
date of this Agreement through the Expiration Date, Shareholder
shall not cause or permit any Transfer of any of the Shares to be
effected unless prior to any such Transfer the Person to which
any of such Shares, or any interest in any of such Shares, is or
may be transferred shall have: (a) executed a counterpart of
this Agreement and a proxy in the form attached hereto as Exhibit
A (with such modifications as Parent may reasonably request); and
(b) agreed in writing to hold such Shares (or interest in such
Shares) subject to all of the terms and provisions of this
Agreement.
(b) Transfer of Voting Rights. Shareholder agrees
that, during the period from the date of this Agreement through
the Expiration Date, Shareholder shall not deposit (or permit the
deposit of) any of the Shares in a voting trust or grant any
proxy or enter into any voting agreement or similar agreement in
contravention of the obligations of Shareholder under this
Agreement with respect to any of the Shares.
3. Agreement to Vote Shares. At every meeting of the
shareholders of Company called, and at every adjournment thereof,
and on every action or approval by written consent of the
shareholders of Company, Shareholder shall cause the Shares to be
voted in favor of approval of the Merger Agreement and the
Merger.
4. Irrevocable Proxy. Concurrently with the
execution of this Agreement, Shareholder agrees to deliver to
Parent a proxy in the form attached hereto as Exhibit A (the
"Proxy"), which shall be irrevocable to the fullest extent
permissible by law, with respect to the Shares.
5. Representations and Warranties of the Shareholder.
Shareholder (i) is the beneficial owner of the shares of Company
Stock and/or the options and warrants to purchase shares of
Company Stock indicated on the final page of this Agreement, free
and clear of any liens, claims, options, rights of first refusal,
co-sale rights, charges or other encumbrances other than any of
such liens, claims, options, rights of first refusal, co-sale
rights, charges or other encumbrances granted by Shareholder in
favor of Company and/or other shareholders of Company; (ii) does
not beneficially own any securities of Company other than the
shares of Company Stock and/or options and warrants to purchase
shares of Company Stock indicated on the final page of this
Agreement; and (iii) has full power and authority to make, enter
into and carry out the terms of this Agreement and the Proxy.
6. Additional Documents. Shareholder hereby
covenants and agrees to execute and deliver any additional
documents reasonably necessary or desirable, in the reasonable
opinion of Parent, to carry out the intent of this Agreement.
7. Consent and Waiver. Shareholder (not in his
capacity as a director or officer of Company) hereby gives any
consents or waivers that are reasonably required for the
consummation of the Merger under the terms of any agreements to
which Shareholder is a party or pursuant to any rights
Shareholder may have.
8. Legending of Shares. If so requested by Parent,
Shareholder agrees that the Shares shall bear a legend stating
that they are subject to this Agreement and to an irrevocable
proxy. Subject to the terms of Section 2 hereof, Shareholder
agrees that Shareholder shall not Transfer the Shares without
first having the aforementioned legend affixed to the
certificates representing the Shares.
9. Termination. This Agreement shall terminate and
shall have no further force or effect as of the Expiration Date.
10. Miscellaneous.
(a) Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent
jurisdiction to be invalid, void or unenforceable, then the
remainder of the terms, provisions, covenants and restrictions of
this Agreement shall remain in full force and effect and shall in
no way be affected, impaired or invalidated.
(b) Binding Effect and Assignment. This Agreement and
all of the provisions hereof shall be binding upon and inure to
the benefit of the parties hereto and their respective successors
and permitted assigns, but, except as otherwise specifically
provided herein, neither this Agreement nor any of the rights,
interests or obligations of the parties hereto may be assigned by
either of the parties without prior written consent of the other.
(c) Amendments and Modification. This Agreement may
not be modified, amended, altered or supplemented except upon the
execution and delivery of a written agreement executed by the
parties hereto.
(d) Specific Performance; Injunctive Relief. The
parties hereto acknowledge that Parent shall be irreparably
harmed and that there shall be no adequate remedy at law for a
violation of any of the covenants or agreements of Shareholder
set forth herein. Therefore, it is agreed that, in addition to
any other remedies that may be available to Parent upon any such
violation, Parent shall have the right to enforce such covenants
and agreements by specific performance, injunctive relief or by
any other means available to Parent at law or in equity.
(e) Notices. All notices and other communications
pursuant to this Agreement shall be in writing and deemed to be
sufficient if contained in a written instrument and shall be
deemed given if delivered personally, telecopied, sent by
nationally-recognized overnight courier or mailed by registered
or certified mail (return receipt requested), postage prepaid, to
the parties at the following address (or at such other address
for a party as shall be specified by like notice):
If to Parent: Digital Insight Corporation
00000 Xxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: President
Facsimile: (000) 000-0000
With a copy (not constituting notice) to:
O'Melveny & Xxxxx LLP
000 X. Xxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx Xxxxxxx, Esq.
Facsimile: (000) 000-0000
If to Shareholder: To the address for notice set forth on the
signature page hereof.
(f) Governing Law. This Agreement shall be governed
by the laws of the State of California, without reference to
rules of conflicts of law.
(g) Entire Agreement. This Agreement and the Proxy
contain the entire understanding of the parties in respect of the
subject matter hereof, and supersede all prior negotiations and
understandings between the parties with respect to such subject
matter.
(h) Effect of Headings. The section headings are for
convenience only and shall not affect the construction or
interpretation of this Agreement.
(i) Counterparts. This Agreement may be executed in
several counterparts, each of which shall be an original, but all
of which together shall constitute one and the same agreement.
[REMAINDER OF PAGE LEFT BLANK INTENTIONALLY]
IN WITNESS WHEREOF, the parties have caused this
Agreement to be duly executed on the day and year first above
written.
DIGITAL INSIGHT CORPORATION SHAREHOLDER
By: __________________________ By: _______________________
Signature Signature
Name: __________________________ Name: _________________________
Title:__________________________ Title: ________________________
Print Address:
_____________________________
_____________________________
_____________________________
Telephone:____________________
Fax no.:_____________________
Shares beneficially owned:
________________ shares of Company Common Stock
________________ shares of Preferred Stock
________________ shares of Company Common Stock issuable
upon exercise of outstanding options or warrants
________________ shares of the Preferred Stock issuable
upon exercise of outstanding options or warrants
[Signature page to Voting Agreement]
Exhibit A
IRREVOCABLE PROXY
The undersigned shareholder of Anytime Access, Inc., a
California corporation ("Company"), hereby irrevocably (to the
fullest extent permitted by law) appoints the President of
Digital Insight Corporation, a Delaware corporation ("Parent"),
as the sole and exclusive attorney and proxy of the undersigned,
with full power of substitution and resubstitution, to vote and
exercise all voting and related rights (to the full extent that
the undersigned is entitled to do so) with respect to all of the
shares of capital stock of Company that now are or hereafter may
be beneficially owned by the undersigned, and any and all other
shares or securities of Company issued or issuable in respect
thereof on or after the date hereof (collectively, the "Shares")
in accordance with the terms of this Proxy. The Shares
beneficially owned by the undersigned shareholder of Company as
of the date of this Proxy are listed on the final page of this
Proxy. Upon the undersigned's execution of this Proxy, any and
all prior proxies given by the undersigned with respect to any
Shares are hereby revoked and the undersigned agrees not to grant
any subsequent proxies with respect to the Shares until after the
Expiration Date (as defined below).
This Proxy is irrevocable (to the fullest extent
permitted by law), is coupled with an interest and is granted
pursuant to that certain Voting Agreement of even date herewith
by and among Parent and the undersigned shareholder (the "Voting
Agreement"), and is granted in consideration of Parent entering
into that certain Agreement and Plan of Merger (the "Merger
Agreement"), among Parent, ATA Acquisition Corp., a California
corporation and a wholly-owned subsidiary of Parent ("Merger
Sub"), and Company. The Merger Agreement provides for the merger
of Merger Sub with and into Company in accordance with its terms
(the "Merger"). As used herein, the term "Expiration Date" shall
mean the earlier to occur of (i) such date and time as the Merger
Agreement shall have been validly terminated pursuant to Article
VII thereof or (ii) such date and time as the Merger shall become
effective in accordance with the terms and provisions of the
Merger Agreement.
The attorney and proxy named above, and each of them,
are hereby authorized and empowered by the undersigned, at any
time prior to the Expiration Date, to act as the undersigned's
attorney and proxy to vote the Shares, and to exercise all
voting, consent and similar rights of the undersigned with
respect to the Shares (including, without limitation, the power
to execute and deliver written consents) at every annual, special
or adjourned meeting of shareholders of Company and in every
written consent in lieu of such meeting in favor of approval of
the Merger Agreement and the Merger.
The attorneys and proxies named above may not exercise
this Proxy on any other matter except as provided above. The
undersigned shareholder may vote the Shares on all other matters.
Any obligation of the undersigned hereunder shall be
binding upon the successors and assigns of the undersigned.
This Proxy is irrevocable (to the fullest extent
permitted by law). This Proxy shall terminate, and be of no
further force and effect, automatically upon the Expiration Date.
Dated: ________________, 2000
Signature of Shareholder: ____________________________
Print Name of Shareholder: ___________________________
Shares beneficially owned:
________________ shares of Company Common Stock
________________ shares of Preferred Stock
________________ shares of Company Common Stock issuable
upon exercise of outstanding options or warrants
________________ shares of the Preferred Stock issuable
upon exercise of outstanding options or warrants
[Signature Page to Irrevocable Proxy]
Exhibit C
FORM OF ESCROW AGREEMENT
THIS ESCROW AGREEMENT (this "Agreement") is entered
into as of ____________, 2000, by and between Digital Insight
Corporation, a Delaware corporation ("Digital Insight"), Xxxxxx
X. Xxxxxx (the "Shareholders' Agent"), as agent for the former
shareholders of Anytime Access, Inc., a California corporation
("Company"), and ___________________, a
_________________________, as Escrow Agent (the "Escrow Agent").
W I T N E S S E T H
WHEREAS, Digital Insight, ATA Acquisition Corp. and
Company, have entered into an Agreement and Plan of Merger, dated
as of March 30, 2000 (the "Merger Agreement"), pursuant to which
ATA Acquisition Corp. will be merged with and into Company and
all the capital stock of Company will be converted into Common
Stock, $0.001 par value per share, of Digital Insight (the
"Digital Insight Common Stock"); and
WHEREAS, the Merger Agreement requires that 210,939
shares of Digital Insight Common Stock be deposited in escrow at
the Closing (as defined in the Merger Agreement) and that, from
time to time, other shares of Digital Insight Common Stock may be
deposited in escrow pursuant to Section 5.8(c) of the Merger
Agreement (the shares of Digital Insight Common Stock deposited
at Closing and pursuant to Section 5.8(c) of the Merger Agreement
are collectively referred to as the "Shares"); and
WHEREAS, Digital Insight desires that the Escrow Agent
hold in escrow the Shares in accordance with the terms and
conditions hereinafter set forth, and the Escrow Agent has agreed
to act as Escrow Agent hereunder, in accordance with the terms
and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing and
of the mutual covenants and agreements hereinafter set forth, the
parties hereto, intending to be bound legally, agree as follows:
Section 1. Appointment of Escrow Agent. Digital Insight
hereby appoints and designates the Escrow Agent, and the Escrow
Agent hereby agrees, to receive the Shares and to hold and
deliver the Shares as set forth herein.
Section 2. Escrow Deposit.
2.1 Deposit. There is hereby established a separate escrow
account with the Escrow Agent in which Digital Insight,
simultaneously with the execution of this Escrow Agreement, is
depositing with the Escrow Agent the Shares, to be held and
disbursed by the Escrow Agent as hereinafter set forth.
2.2 Receipt. The Escrow Agent hereby acknowledges receipt
of and accepts the Shares in escrow and agrees to hold and keep
same in accordance with the terms and conditions hereof and for
the uses and purposes stated herein.
2.3 Escrow Period. The Escrow shall be in existence
immediately following the Effective Time, as defined in the
Merger Agreement, and shall terminate at 5:00 p.m. (Pacific Time)
on the date which is twelve months after the Effective Time (the
"Escrow Period"); provided, however, that the Escrow Period shall
not terminate with respect to any portion of the Shares specified
in any Officer's Certificate delivered to the Escrow Agent prior
to the termination of the Escrow Period with respect to facts and
circumstances existing prior to the termination of such Escrow
Period. As soon as all such claims have been resolved and the
Escrow Agent has received notice thereof from Digital Insight,
the Escrow Agent shall deliver to the persons listed on Annex I
to this Agreement (the "Company Shareholders") that number of
Shares determined by multiplying the total number of Shares then
held by Escrow Agent by the percentage set forth next to the name
of each Company Shareholder on Annex I.
Section 3. Procedures for Disbursement. The Escrow
Agent shall hold the Shares for the exclusive benefit of Digital
Insight and the Company Shareholders, as provided in this Escrow
Agreement, and shall disburse the Shares only in accordance with
the following terms and conditions:
3(a) Upon receipt by the Escrow Agent at any time on or
before the last day of the Escrow Period of an Officer's
Certificate from Digital Insight, the Escrow Agent shall, subject
to the provision of Section 3(b) hereof, deliver to Digital
Insight the number of Shares specified in the Officer's
Certificate. "Officer's Certificate" shall mean a certificate
signed by any officer of Digital Insight: (A) stating that
Digital Insight has incurred "Damages," as defined in the form of
Shareholder Agreement attached to the Merger Agreement, for which
it is entitled to indemnity (hereinafter individually, a "Loss"
and collectively, "Losses"), (B) specifying in reasonable detail
the individual items of Losses included in the amount so stated,
and (C) the number of Shares to be delivered to Digital Insight,
which shall be equal to the amount of Loss divided by the average
closing price on the Nasdaq National Market of a share of Digital
Insight Common Stock on the ten trading days prior to the date of
the Officer's Certificate (which price will be set forth in the
Officer's Certificate).
3(b) At the time of delivery of any Officer's
Certificate to the Escrow Agent, a duplicate copy of such
certificate shall be delivered to the Shareholder's Agent and for
a period of thirty (30) days after such delivery, the Escrow
Agent shall make no delivery to Digital Insight of any portion of
the Shares. After the expiration of such thirty (30) day period,
the Escrow Agent shall make delivery of the number of Shares
requested by Digital Insight in its Officer's Certificate;
provided, however, that no such delivery may be made if the
Shareholder's Agent shall object in a written statement to the
claim made in the Officer's Certificate, and such statement shall
contain specific bases upon which such objection is being made
and shall have been delivered to the Escrow Agent and Digital
Insight prior to the expiration of such thirty (30) day period.
If the Shareholder's Agent only objects in part to the claim made
in the Officer's Certificate, any amounts not objected to will be
paid by the Escrow Agent to Digital Insight.
3(c) If by the termination of the Escrow Period, the
Escrow Agent has not received any written instructions or other
documents specified in Section 3 directing the release of the
Shares, the Escrow Agent shall deliver the Shares to the Company
Shareholders, whereupon the Escrow Agent shall be relieved of any
further obligation pursuant hereto.
3(d) Upon disbursement of the Shares in accordance with
this Section 3, regardless of whether prior to the expiration of
the Escrow Period, the Escrow Agent shall be discharged from all
obligations under this Escrow Agreement and shall have no further
duties or responsibilities in connection herewith.
Section 4. Escrow Agent.
4.1 Duties. The Escrow Agent undertakes only to accept,
hold and disburse the Shares in accordance with the provisions of
this Escrow Agreement. The Escrow Agent shall not be under any
duty to give the Shares any greater degree of care than it gives
its own similar property. With respect to any matter on which
the holders of Digital Insight Common Stock are entitled to vote,
the Shareholders' Agent shall vote the Shares that the Escrow
Agent is entitled to vote as directed in writing by Digital
Insight.
4.2 Fees and Expenses. Digital Insight shall pay all of
the Escrow Agent's standard charges for professional services and
its other charges in connection with the Escrow Agent's service
under this Agreement.
4.3 Indemnification. Except with respect to claims based
upon gross negligence or willful misconduct that are successfully
asserted against the Escrow Agent, Digital Insight shall
indemnify and hold harmless the Escrow Agent (and any successor
to the Escrow Agent) from and against any and all costs, losses,
claims, damages, liabilities and expenses (including reasonable
costs of investigation, court costs and attorney's fees and
related other charges) which may be imposed upon or incurred by
the Escrow Agent in connection with its service as Escrow Agent
hereunder, including any litigation arising from this Escrow
Agreement or involving the subject matter hereof.
4.4 Ambiguity or Dispute. If the Escrow Agent is uncertain
as to its duties and rights hereunder, or if any objections are
received with respect to actions proposed to be taken by the
Escrow Agent under Section 3, or in the event of any other
dispute between or conflicting claims by or among Digital Insight
or any Company Shareholders with respect to the Shares, the
Escrow Agent shall be entitled, at its sole option, to refuse to
comply with any demands, claims or instructions and to refrain
from taking any action other than to keep all property held by it
in escrow until the Escrow Agent is directed otherwise in joint
written instructions signed by Digital Insight and the
Shareholders' Agent or by a judgment by a court of competent
jurisdiction, and the Escrow Agent is authorized to deposit the
Shares with, or commence an interpleader action in, any court of
competent jurisdiction, whereupon the Escrow Agent shall be
relieved of any further obligation pursuant hereto. The Escrow
Agent shall not be or become liable in any way for actions taken
in accordance with this Section 4.4.
4.5 Resignation. The Escrow Agent reserves the right to
resign as Escrow Agent at any time, provided ten day's prior
written notice is given to the other parties hereto. Subject to
the prior written consent of the Shareholders' Agent, which
consent shall not be unreasonably withheld, Digital Insight
reserves the right to remove the Escrow Agent by written notice
at any time, provided that such notice is given to the Escrow
Agent at least ten days prior to the effectiveness of such
removal.
Section 5. Liabilities of Escrow Agent.
5.1 Limitations on Escrow Agent's Responsibility and
Liability.
5.1(a) The Escrow Agent does not have any interest
in the Shares but is serving as escrow holder only, having only
possession thereof. The Escrow Agent makes no representation as
to the validity, value, genuineness or sufficiency of the Shares.
5.1(b) The Escrow Agent shall be under no duty to
accept instructions from any person other than Digital Insight or
the Shareholder's Agent, and shall only accept such instructions
to the extent and in the manner provided in this Escrow
Agreement.
5.1(c) The Escrow Agent shall be permitted to
consult with counsel of its choice and shall not be liable for
any action taken, suffered, or omitted by it in good faith in
accordance with the advice of such counsel.
5.1(d) The Escrow Agent shall not be liable, except
for its own gross negligence or willful misconduct, and, except
with respect to claims based upon such gross negligence or
willful misconduct that are successfully asserted against the
Escrow Agent, Digital Insight shall indemnify and hold harmless
the Escrow Agent (and any successor to the Escrow Agent) as
provided in Section 4.3.
5.1(e) The Escrow Agent shall not be liable for loss
or damage resulting from any good faith act or forbearance of the
Escrow Agent, any default, error, action or omission of any party
other than the Escrow Agent, any delay that is not caused by the
Escrow Agent, the Escrow Agent's assertion or failure to assert
any cause of action or defense in any judicial or administrative
proceeding, or any loss or damage that arises after the Shares
has been disbursed in accordance with the terms of this Escrow
Agreement.
5.2 Reliance. The Escrow Agent shall be entitled to rely
upon any order, judgment, certification, instruction, notice or
other writing delivered to it in compliance with the provisions
of this Agreement without being required to determine the
authenticity or the correctness of any fact stated therein or the
propriety or validity thereof. The Escrow Agent may act in
reliance upon any instrument comporting with the provisions of
this Agreement or signature believed by it to be genuine, and may
assume that any person purporting to give notice or receipt or
advice or to make any statement or to execute any document in
connection with the provisions hereof has been duly authorized to
do so.
5.3 No Implied Duties; Collateral Agreements. The Escrow
Agent shall not be obligated to perform any duties that are not
expressly set forth in this Escrow Agreement, and no implied
covenants or obligations shall be inferred from this Agreement
against the Escrow Agent.
Section 6. Termination. This Escrow Agreement shall be
terminated on the earlier of (i) the disbursement by the Escrow
Agent of the Shares, or (ii) the termination of the Escrow
Period, except as provided in Section 2.3 above. This Escrow
Agreement shall not be otherwise terminated. The rights of the
Escrow Agent and the obligations of Digital Insight under
Sections 4.2 and 4.3 shall survive notwithstanding termination of
this Agreement or the resignation of the Escrow Agent.
Section 7. Other Provisions.
7.1 Notices. All notices, demands, requests, or other
communications which may be or are required to be given, served,
or sent by any party to any other party pursuant to this
Agreement shall be in writing and shall be mailed by first-class,
registered or certified mail, return receipt requested, postage
prepaid, or transmitted by hand delivery (including delivery by
courier), telegram, telex, or facsimile transmission, addressed
as follows:
To Digital Insight: Digital Insight Corporation
00000 Xxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: President
Facsimile: (000) 000-0000
With a copy (which shall not constitute
notice) to:
O'Melveny & Xxxxx LLP
000 X. Xxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx Xxxxxxx, Esq.
Facsimile: (000) 000-0000
To the Escrow Agent: _________________________
_________________________
_________________________
_________________________
Attention: ________________
Facsimile: _____________
To the Shareholders' Agent: _____________________
_________________________
_________________________
_________________________
Attention: _____________
Facsimile: _____________
With a copy (which shall not constitute
notice) to:
Xxxxxx, Xxxxxxxxxx & Xxxxxxxxx LLP
000 Xxxxxxx Xxxx, Xxxxx 0000
Xxxxxxxxxx, XX 00000
Attention: Xxxx Xxxx, Esq.
Facsimile: (000) 000-0000
Each party may designate by notice in writing a new
address to which any notice, demand, request or communication may
thereafter be so given, served or sent. Each notice, demand,
request, or communication which shall be mailed, delivered or
transmitted in the manner described above shall be deemed
sufficiently given, served, sent and received for all purposes at
such time as it is delivered to the addressee (with the return
receipt, the delivery receipt, the affidavit of messenger or
(with respect to a telex) the answerback being deemed conclusive
(but not exclusive) evidence of such delivery) or at such time as
delivery is refused by the addressee upon presentation.
7.2 Benefit and Assignment. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto
and their respective successors and assigns as permitted
hereunder. No person or entity other than the parties hereto is
or shall be entitled to bring any action to enforce any provision
of this Agreement against any of the parties hereto, and the
covenants and agreements set forth in this Agreement shall be
solely for the benefit of, and shall be enforceable only by, the
parties hereto and the Company Shareholders or their respective
successors and assigns as permitted hereunder. No party to this
Agreement may assign this Agreement or any rights hereunder
without the prior written consent of the other parties hereto.
7.3 Entire Agreement; Amendment. This Agreement contains
all the terms agreed upon by the parties with respect to the
escrow arrangement that is the subject matter hereof and
supersedes all prior oral or written agreements, commitments or
understandings with respect to such matters. This Agreement may
be amended only by a written instrument signed by the party
against whom enforcement of any waiver, change, modification,
extension or discharge is sought.
7.4 Additional Actions and Documents. Each of the parties
hereto hereby agrees to take or cause to be taken such further
actions, to execute, deliver and file or cause to be executed,
delivered and filed such further documents and instruments, and
to use best efforts to obtain such consents, as may be necessary
or as may be reasonably requested in order to fully effectuate
the purposes, terms and conditions of this Agreement.
7.5 Headings. The headings of the sections and subsections
of this Agreement are for purposes of reference only and do not
evidence the intentions of the parties.
7.6 Severability. In the event that a court of competent
jurisdiction holds that a particular provision or requirement of
this Agreement is in violation of any applicable law, each such
provision or requirement shall be enforced only to the extent it
is not in violation of such law or is not otherwise
unenforceable, and all other provisions and requirements of this
Agreement shall remain in full force and effect.
7.7 Governing Law. This Agreement shall be governed by,
and construed according to, the laws of California (without
regard to the choice of law provisions thereof).
7.8 Counterparts. To facilitate execution, this Agreement
may be executed in as many counterparts as may be required; and
it shall not be necessary that the signatures of, or on behalf
of, each party, or that the signatures of all persons required to
bind any party, appear on each counterpart; but it shall be
sufficient that the signature of, or on behalf of, each party, or
that the signatures of the persons required to bind any party,
appear on one or more of the counterparts. All counterparts
shall collectively constitute a single agreement. It shall not
be necessary in making proof of this Agreement to produce or
account for more than a number of counterparts containing the
respective signatures of, or on behalf of, all of the parties
hereto.
[REMAINDER OF PAGE LEFT BLANK INTENTIONALLY]
IN WITNESS WHEREOF, the parties hereto have executed this
Escrow Agreement as of the date set forth above.
DIGITAL INSIGHT CORPORATION
By: _______________________
Name:
Title:
[__________________________________
AS ESCROW AGENT
By: ______________________________
Name:
Authorized Officer
XXXXXX X. XXXXXX,
AS SHAREHOLDERS' AGENT
___________________________________
Annex I
COMPANY SHAREHOLDERS
Name Address
Exhibit D
FORM OF COMPANY AFFILIATE AGREEMENT
THIS COMPANY AFFILIATE AGREEMENT (this "Agreement") is
made and entered into as of _____________, 2000, by and between
Digital Insight Corporation, a Delaware corporation ("Parent"),
and the undersigned shareholder who may be deemed an affiliate
("Affiliate") of AnyTime Access, Inc., a California corporation
("Company"). Capitalized terms used but not otherwise defined
herein shall have the meanings ascribed to them in the Merger
Agreement (as defined below).
RECITALS
A. Company, Merger Sub (as defined below) and Parent
have entered into an Agreement and Plan of Merger (the "Merger
Agreement") which provides for the merger (the "Merger") of a
wholly owned subsidiary of Parent ("Merger Sub") with and into
Company. Pursuant to the Merger, all outstanding capital stock
of Company (the "Company Stock") shall be converted into the
right to receive common stock of Parent;
B. Affiliate has been advised that Affiliate may be
deemed to be an "affiliate" of Company, as that term is used for
purposes of Rule 145 of the rules and regulations of the
Securities and Exchange Commission (the "SEC") and of Opinion 16
of the Accounting Principles Board and applicable SEC rules and
regulations.
C. The execution and delivery of this Agreement by
Affiliate is a material inducement to Parent to enter into the
Merger Agreement.
NOW, THEREFORE, intending to be legally bound, the
parties hereto agree as follows:
1. Acknowledgments by Affiliate. Affiliate
acknowledges and understands that the representations, warranties
and covenants by Affiliate set forth herein shall be relied upon
by Parent, Company and their respective affiliates, counsel and
accounting firms, and that substantial losses and damages may be
incurred by these persons if Affiliate's representations,
warranties or covenants are breached. Affiliate has carefully
read this Agreement and the Merger Agreement.
2. Beneficial Ownership of Company Stock. The
Affiliate is the sole record and beneficial owner of the number
of shares of Company Stock set forth next to its name on the
signature page hereto (the "Shares"). The Shares are not subject
to any claim, lien, pledge, charge, security interest or other
encumbrance or to any rights of first refusal of any kind. There
are no options, warrants, calls, rights, commitments or
agreements of any character, written or oral, to which the
Affiliate is party or by which it is bound obligating the
Affiliate to issue, deliver, sell, repurchase or redeem, or cause
to be issued, delivered, sold, repurchased or redeemed, any
Shares or obligating the Affiliate to grant or enter into any
such option, warrant, call, right, commitment or agreement. The
Affiliate has the sole right to transfer such Shares. The Shares
constitute all shares of Company Stock owned, beneficially or of
record, by the Affiliate. The Shares are not subject to
preemptive rights created by any agreement to which the Affiliate
is party. The Affiliate has not engaged in any sale or other
transfer of the Shares in
contemplation of the Merger. All shares of Company Stock and
common stock of Parent ("Parent Common Stock") acquired by
Affiliate subsequent to the date hereof (including shares
of Parent Common Stock acquired in the Merger) shall be subject
to the provisions of this Agreement as if held by Affiliate as
of the date hereof.
3. Compliance with Rule 145 and the Securities Act.
(a) Affiliate has been advised that (i) the resale of
shares of Parent Common Stock acquired by Affiliate in connection
with the Merger will be subject to restrictions set forth in Rule
145 under the Securities Act of 1933, as amended (the "Securities
Act"), and (ii) Affiliate may be deemed to be an affiliate of
Company. Affiliate accordingly agrees not to sell, transfer or
otherwise dispose of any Parent Common Stock issued to Affiliate
in the Merger unless (i) such sale, transfer or other disposition
is made in conformity with the requirements of Rule 145(d)
promulgated under the Securities Act, or (ii) such sale, transfer
or other disposition is made pursuant to an effective
registration statement under the Securities Act or an appropriate
exemption from registration, or (iii) Affiliate delivers to
Parent a written opinion of counsel, reasonably acceptable to
Parent in form and substance, that such sale, transfer or other
disposition is otherwise exempt from registration under the
Securities Act.
(b) Parent shall give stop transfer instructions to
its transfer agent with respect to any Parent Common Stock
received by Affiliate pursuant to the Merger and there shall be
placed on the certificates representing such Parent Common Stock,
or any substitutions therefor, a legend stating in substance:
"THE SHARES REPRESENTED BY THIS CERTIFICATE MAY ONLY BE
TRANSFERRED IN CONFORMITY WITH RULE 145(d) OR PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR IN ACCORDANCE WITH A WRITTEN OPINION OF
COUNSEL, REASONABLY ACCEPTABLE TO THE ISSUER IN FORM AND
SUBSTANCE, THAT SUCH TRANSFER IS EXEMPT FROM REGISTRATION
UNDER THE SECURITIES ACT OF 1933, AS AMENDED."
The legend set forth above shall be removed (by delivery of a
substitute certificate without such legend) and Parent shall so
instruct its transfer agent, if Affiliate delivers to Parent
(i) satisfactory written evidence that the shares have been sold
in compliance with Rule 145 (in which case, the substitute
certificate shall be issued in the name of the transferee), or
(ii) an opinion of counsel, in form and substance reasonably
satisfactory to Parent, to the effect that public sale of the
shares by the holder thereof is no longer subject to Rule 145.
4. Termination. This Agreement shall be terminated
and shall be of no further force and effect in the event of the
termination of the Merger Agreement pursuant to Article VII of
the Merger Agreement.
5. Miscellaneous.
(a) Waiver; Severability. No waiver by any party
hereto of any condition or of any breach of any provision of this
Agreement shall be effective unless in writing and signed by each
party hereto. In the event that any provision of this Agreement,
or the application of any
such provision to any person, entity or set of circumstances,
shall be determined to be invalid, unlawful, void or unenforceable
to any extent, the remainder of this Agreement, and the application
of such provision to persons, entities or circumstances other than
those as to which it is determined to be invalid, unlawful, void or
unenforceable, shall not be impaired or otherwise affected and
shall continue to be valid and enforceable to the fullest extent
permitted by law.
(b) Binding Effect and Assignment. This Agreement and
all of the provisions hereof shall be binding upon and inure to
the benefit of the parties hereto and their respective successors
and permitted assigns, but, except as otherwise specifically
provided herein, neither this Agreement nor any of the rights,
interests or obligations of the parties hereto may be assigned by
either of the parties without prior written consent of the other
party hereto.
(c) Amendments and Modification. This Agreement may
not be modified, amended, altered or supplemented except upon the
execution and delivery of a written agreement executed by the
parties hereto.
(d) Injunctive Relief. Each of the parties
acknowledge that (i) the covenants and the restrictions contained
in this Agreement are necessary, fundamental, and required for
the protection of Parent and Company and to preserve for Parent
the benefits of the Merger; (ii) such covenants relate to matters
which are of a special, unique, and extraordinary character that
gives each of such covenants a special, unique, and extraordinary
value; and (iii) a breach of any such covenants or any other
provision of this Agreement shall result in irreparable harm and
damages to Parent and Company which cannot be adequately
compensated by a monetary award. Accordingly, it is expressly
agreed that in addition to all other remedies available at law or
in equity, Parent and Company shall be entitled to the immediate
remedy of a temporary restraining order, preliminary injunction,
or such other form of injunctive or equitable relief as may be
used by any court of competent jurisdiction to restrain or enjoin
any of the parties hereto from breaching any such covenant or
provision or to specifically enforce the provisions hereof.
(e) Governing Law. This Agreement shall be governed
by and construed, interpreted and enforced in accordance with the
internal laws of the State of California without giving effect to
any choice or conflict of law provision.
(f) Entire Agreement. This Agreement, the Merger
Agreement and any other agreements referred to in the Merger
Agreement set forth the entire understanding of Affiliate and
Parent relating to the subject matter hereof and thereof and
supersede all prior agreements and understandings between
Affiliate and Parent relating to the subject matter hereof and
thereof.
(g) Attorneys' Fees. In the event of any legal
actions or proceeding to enforce or interpret the provisions
hereof, the prevailing party shall be entitled to reasonable
attorneys' fees, whether or not the proceeding results in a final
judgment.
(h) Further Assurances. Affiliate shall execute
and/or cause to be delivered to Parent such instruments and other
documents and shall take such other actions as Parent may
reasonably request to effectuate the intent and purposes of this
Agreement.
(i) Third Party Reliance. Counsel to and independent
auditors for Parent and Company shall be entitled to rely upon
this Affiliate Agreement.
(j) Survival. The representations, warranties,
covenants and other provisions contained in this Agreement shall
survive the Merger.
(k) Notices. All notices and other communications
pursuant to this Agreement shall be in writing and deemed to be
sufficient if contained in a written instrument and shall be
deemed given if delivered personally, telecopied, sent by
nationally-recognized overnight courier or mailed by registered
or certified mail (return receipt requested), postage prepaid, to
the parties at the following address (or at such other address
for a party as shall be specified by like notice):
If to Parent: Digital Insight Corporation
00000 Xxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: President
Facsimile: (000) 000-0000
With a copy (not constituting notice) to:
O'Melveny & Xxxxx LLP
000 X. Xxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx Xxxxxxx, Esq.
Facsimile: (000) 000-0000
If to Affiliate: To the address for notice set forth on the
signature page hereof.
(l) Counterparts. This Agreement shall be executed in
one or more counterparts, each of which shall be deemed an
original, and all of which together shall constitute one and the
same instrument.
[REMAINDER OF PAGE LEFT BLANK INTENTIONALLY]
IN WITNESS WHEREOF, the parties have caused this
Affiliate Agreement to be duly executed on the day and year first
above written.
DIGITAL INSIGHT CORPORATION SHAREHOLDER
By: __________________________ By: __________________________
Signature Signature
Name:__________________________ Name:________________________
Title:________________________ Title:_______________________
Affiliate's Address for
Notice:
_____________________________
_____________________________
_____________________________
Fax no.:_____________________
Shares beneficially owned:
________________ shares of Company Common Stock
________________ shares of Preferred Stock
________________ shares of Company Common Stock issuable
upon exercise of outstanding options or warrants
________________ shares of Preferred Stock issuable
upon exercise of outstanding options or warrants
________________ shares of Parent Common Stock
[Signature Page to Affiliate Agreement]
Exhibit E-1
LIST OF INDIVIDUALS TO SIGN
NON-COMPETE AGREEMENT
Xxxxxx X. Xxxxxx
Xxxxxx Xxxxxxxx
Xxxxxx Van Velzer
Xxxxxx Xxxxxx
Exhibit E-2
FORM OF NON-COMPETE AGREEMENT
THIS NON-COMPETE AGREEMENT (this "Agreement") is made
and entered into as of _______________, 2000, among AnyTime
Access, Inc., a California corporation ("Company"), Digital
Insight Corporation ("Parent"), a Delaware corporation and holder
of all of the issued and outstanding shares of Company, and the
undersigned ("Employee"). Reference is made to that certain
Agreement and Plan of Merger, dated as of March 30, 2000 (the
"Merger Agreement"), by and among Parent, Company and ATA
Acquisition Corp., a California corporation and wholly-owned
subsidiary of Parent ("Merger Sub"), which provides for
(a) Merger Sub to be merged with and into Company, with Company
continuing as the surviving corporation (the "Surviving
Corporation"); (b) all of the outstanding capital stock of
Company to be converted into shares of Parent's capital stock;
and (c) all of the outstanding capital stock of Merger Sub to be
converted into shares of the Surviving Corporation's capital
stock. Capitalized terms used in this Agreement and not defined
herein shall have the meanings ascribed to them in the Merger
Agreement.
W I T N E S S E T H
WHEREAS, on the date hereof, as a result of the
consummation of the transactions described in the Merger
Agreement, Parent owns all of the issued and outstanding shares
of capital stock of Company;
WHEREAS, Parent and Company are engaged in the business
of providing outsourced consumer loan services (including,
without limitation, processing of loan applications, credit
decisioning, development of credit evaluation systems, loan
brokering, marketing, underwriting, and fulfillment services) to
financial institutions (the "Business");
WHEREAS, Employee has considerable experience and
knowledge with respect to the operation of the Business and knows
or has access to confidential information and/or trade secrets
associated with the operation of the Business that are
competitively valuable;
WHEREAS, if Parent and Company are to receive the full
value of the transactions consummated pursuant to the Merger
Agreement, Parent and Company must have full and enforceable
assurances from Employee that Employee will preserve and protect,
and will not use, the aforementioned confidential information and
trade secrets. Without such assurances, Parent and Company would
not have agreed to the transactions described in the Merger
Agreement; and
WHEREAS, if Parent and Company are to receive the full
value of the transactions consummated pursuant to the Merger
Agreement, they must have the agreement of Employee that,
following the Closing, Employee will not compete with the
Business of Parent and Company. Without such an agreement,
Parent and Company would not have agreed to the transactions
described in the Merger Agreement.
NOW, THEREFORE, in consideration of the mutual promises
and covenants set forth herein, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as
follows:
Section 1. Non-Competition. In view of the fact that any
activity of Employee in violation of the terms hereof would
deprive Parent, Company and their affiliates (as defined below)
of the benefit of the bargain under the Merger Agreement, as a
material inducement to and a condition precedent of Parent's
obligations thereunder, and to preserve the goodwill associated
with Company's business, Employee hereby agrees to the following
restrictions on his activities:
Employee hereby agrees that during the period
commencing on the date hereof and ending ________ months [18
months for Xxx Xxxxxx, 12 months for other Employees] after the
date hereof, he will not, without the express written consent of
Parent, directly or indirectly, anywhere in the United States,
engage in any activity which is, or participate or invest in,
provide or facilitate the provision of financing to, or assist
(whether as owner, part-owner, shareholder, partner, director,
officer, trustee, employee, agent or consultant, or in any other
capacity), any business, organization or person (as defined
below) other than Parent or Company (or any affiliate of Parent
or Company), whose business, activities, products or services are
competitive with the Business conducted by Parent or Company (or
any affiliate of Parent or Company) as of the date hereof.
Without implied limitation, the foregoing covenant shall include
soliciting, for or on behalf of Employee or any such competitor,
any client of Company, and diverting to any person any client or
business opportunity of Company. The parties intend that the
covenant contained in the preceding portion of this paragraph
shall be construed as a series of separate covenants, one for
each of the separate geographical areas to which this Agreement
applies. Except for the geographic coverage, the terms of each
such covenant shall be deemed identical to the terms of the
covenant described above.
Employee hereby agrees that during the period
commencing on the date hereof and ending ________ months [18
months for Xxx Xxxxxx, 12 months for other Employees] after the
date hereof, he will not, without the express written consent of
Parent, directly or indirectly, anywhere in the United States,
solicit for employment, for or on behalf of himself or any such
competitor, any officer or employee of Company, or encourage, for
or on behalf of himself or any such competitor, any such officer
or employee to terminate his or her relationship or employment
with Company.
Notwithstanding anything herein to the contrary,
Employee may make passive investments in any enterprise, the
shares of which are publicly traded, if such investment
constitutes less than five (5) percent of the equity of such
enterprise, and Employee may purchase shares of Parent's common
stock without limitation hereunder.
As of the date of this Agreement, Employee has no
business interests in or relating to the Business whatsoever
other than his interest in Company, and other than interests in
public companies of less than five (5) percent.
For purposes of this Agreement, the term "person" shall
mean an individual, a corporation, an association, a partnership,
a limited liability company, an estate, a trust, and any
other entity or organization, and any reference to an
"affiliate" of aperson shall be deemed to include any person
controlling, controlled by or under common control with
such person.
Section 2. Scope of Agreement. The parties acknowledge that
the time, scope, geographic area and other provisions of this
Agreement have been specifically negotiated by sophisticated
commercial parties and agree that (a) all such provisions are
reasonable under the circumstances of the transactions
contemplated by the Merger Agreement, (b) all such provisions are
given as an integral and essential part of the transactions
contemplated by the Merger Agreement, and (c) but for the
covenants of Employee contained in this Agreement, the other
parties hereto would not have entered into or consummated the
transactions contemplated by the Merger Agreement. Employee has
independently consulted with his counsel and has been advised in
all respects concerning the reasonableness and propriety of the
covenants contained herein, with specific regard to the Business
to be conducted by Parent, Company and their affiliates.
Section 3. Certain Remedies; Severability. It is
specifically understood and agreed that any breach of the
provisions of this Agreement by Employee will result in
irreparable injury to the other parties hereto, that the remedy
at law alone will be an inadequate remedy for such breach and
that, in addition to any other remedy they may have, Parent and
Company shall be entitled to enforce the specific performance of
this Agreement by Employee through both temporary and permanent
injunctive relief without the necessity of proving actual
damages, but without limitation of their right to damages and any
and all other remedies available to them, it being understood
that injunctive relief is in addition to, and not in lieu of,
such other remedies. In the event that any covenant contained in
this Agreement shall be determined by any court of competent
jurisdiction to be unenforceable by reason of its extending for
too great a period of time or over too great a geographical area
or by reason of its being too extensive in any other respect, it
shall be interpreted to extend only over the maximum period of
time for which it may be enforceable and/or over the maximum
geographical area as to which it may be enforceable and/or to the
maximum extent in all other respects as to which it may be
enforceable, all as determined by such court in such action. The
existence of any claim or cause of action which Employee may have
against Parent, Company or any of their affiliates shall not
constitute a defense or bar to the enforcement of any of the
provisions of this Agreement.
Section 4. Jurisdiction. The parties hereby irrevocably
submit to the non-exclusive jurisdiction of the courts of the
State of California to construe and enforce the covenants
contained in this Agreement. In the event that the courts of any
state shall hold such covenants unenforceable (in whole or in
part) by reason of the breadth of such scope or otherwise, it is
the intention of the parties hereto that such determination shall
not bar or in any way affect the right of Parent, Company or any
of their affiliates to the relief provided for herein in the
courts of any other state within the geographic scope of such
covenants, as to breaches of such covenants in such other
respective states, the above covenants as they relate to each
state being, for this purpose, severable into diverse and
independent covenants.
Section 5. Notices. All notices, requests, demands and other
communications hereunder shall be deemed to have been duly given
if delivered, telecopied or mailed by certified or registered
mail:
To Parent Digital Insight Corporation
or Company: 00000 Xxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: President
Facsimile: (000) 000-0000
with a copy (not constituting notice) to:
O'Melveny & Xxxxx LLP
000 Xxxxx Xxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx Xxxxxxx, Esq.
Facsimile: (000) 000-0000
To Employee: ______________________________
______________________________
______________________________
______________________________
or to such other address of which any party may notify the other
parties as provided above. Notices shall be effective as of the
date of such delivery or mailing.
Section 6. Miscellaneous. This Agreement shall be governed
by and construed under the laws of the State of California, and
shall not be modified or discharged in whole or in part except by
an agreement in writing signed by Employee and the other parties
hereto. The prevailing party in any controversy hereunder shall
be entitled to reasonable attorneys' fees and expenses. The
failure of any of the parties to require the performance of a
term or obligation or to exercise any right under this Agreement
or the waiver of any breach hereunder shall not prevent
subsequent enforcement of such term or obligation or exercise of
such right or the enforcement at any time of any other right
hereunder or be deemed a waiver of any subsequent breach of the
provision so breached, or of any other breach hereunder. This
Agreement shall inure to the benefit of, and be binding upon,
successors of Parent and Company by way of merger, consolidation
or transfer of substantially all the assets of Parent or Company
as applicable, and may not be assigned by Employee. This
Agreement supersedes all prior understandings and agreements
between the parties relating to the subject matter hereof.
[REMAINDER OF PAGE LEFT BLANK INTENTIONALLY]
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first written above.
ANYTIME ACCESS, INC.
By: ______________________________
Name:
Title:
DIGITAL INSIGHT CORPORATION
By: ______________________________
Name:
Title:
EMPLOYEE
________________________________
Name:
Exhibit F
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF SURVIVING CORPORATION
Name
One: The name of the corporation is AnyTime Access,
Inc.
Purpose
Two: The purpose of the corporation is to engage in any
lawful act or activity for which a corporation may be organized
under the General Corporation Law of California other than the
banking business, the trust company business or the practice of a
profession permitted to be incorporated by the California
Corporations Code.
Agent for Service
Three: The name and address of the corporation's
initial agent for service of process is Xxx Xxxx, 00000 Xxxxxx
Xxxx, Xxxxxxxxx, XX 00000.
Authorized Shares
Four: The total number of shares which the
corporation is authorized to issue is one thousand (1,000), par
value $0.01 per share.
Director Liability
Five: The liability of the directors of the
corporation for monetary damages shall be eliminated to the
fullest extent permissible under California law.
Indemnification of Agents
Six: The corporation is authorized to provide
indemnification of agents (as defined in Section 317 of the
California Corporations Code) through bylaw provisions,
agreements with agents, vote of shareholders or disinterested
directors or otherwise, in excess of the indemnification
otherwise permitted by Section 317 of the California Corporations
Code, subject only to the applicable limits set forth in
Section 204 of the California Corporations Code with respect to
actions for breach of duty to the corporation and its
shareholders.
