AGREEMENT OF MERGER
BY AND AMONG
DSET CORPORATION,
NE TECHNOLOGIES, INC.
AND
NE TECHNOLOGIES ACQUISTION CORPORATION.
Dated as of November 8, 2002
TABLE OF CONTENTS
ARTICLE I THE MERGER...........................................................1
SECTION 1.1 MERGER PROCESS.....................................................1
SECTION 1.2 COMPANY ACTION.....................................................1
SECTION 1.3 THE MERGER.........................................................2
SECTION 1.4 RESERVED...........................................................2
SECTION 1.5 EFFECT ON COMPANY COMMON STOCK.....................................2
SECTION 1.6 EXCHANGE OF CERTIFICATES...........................................3
SECTION 1.7 LOST CERTIFICATES..................................................4
SECTION 1.8 MERGER CLOSING.....................................................4
SECTION 1.9 ANTIDILUTION.......................................................4
ARTICLE II THE SURVIVING CORPORATION...........................................5
SECTION 2.1 CERTIFICATE OF INCORPORATION.......................................5
SECTION 2.2 BYLAWS.............................................................5
SECTION 2.3 OFFICERS AND DIRECTORS.............................................5
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY......................5
SECTION 3.1 CORPORATE EXISTENCE AND POWER......................................5
SECTION 3.2 CORPORATE AUTHORIZATION............................................5
SECTION 3.3 CONSENTS AND APPROVALS; NO VIOLATIONS..............................6
SECTION 3.4 CAPITALIZATION.....................................................6
SECTION 3.5 SUBSIDIARIES.......................................................7
SECTION 3.6 SEC DOCUMENTS......................................................7
SECTION 3.7 FINANCIAL STATEMENTS...............................................7
SECTION 3.8 DISCLOSURE DOCUMENTS...............................................7
SECTION 3.9 ABSENCE OF UNDISCLOSED LIABILITIES.................................8
SECTION 3.10 ABSENCE OF MATERIAL ADVERSE CHANGES, ETC..........................8
SECTION 3.11 TAXES.............................................................9
SECTION 3.12 EMPLOYEE BENEFIT PLANS............................................9
SECTION 3.13 LITIGATION; COMPLIANCE WITH LAWS.................................11
SECTION 3.14 CERTAIN CONTRACTS AND ARRANGEMENTS...............................11
SECTION 3.15 INTELLECTUAL PROPERTY............................................12
SECTION 3.16 ENVIRONMENTAL MATTERS............................................13
SECTION 3.17 INSURANCE........................................................14
SECTION 3.18 CERTAIN TRANSACTIONS.............................................14
SECTION 3.19 OPINION OF FINANCIAL ADVISOR.....................................14
SECTION 3.20 PROFESSIONAL FEES................................................14
SECTION 3.21 REQUIREMENTS OF THE NEW JERSEY GENERAL CORPORATION LAW...........15
SECTION 3.22 BANKRUPTCY.......................................................15
SECTION 3.23 CERTAIN BUSINESS PRACTICES.......................................15
SECTION 3.24 TITLE TO PROPERTY/REAL PROPERTY LEASES...........................15
SECTION 3.25 CONSUMERS AND SUPPLIERS..........................................15
SECTION 3.26 EMPLOYEE RELATIONS...............................................15
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB............16
SECTION 4.1 CORPORATE EXISTENCE AND POWER.....................................16
SECTION 4.2 AUTHORIZATION.....................................................16
SECTION 4.3 CONSENTS AND APPROVALS; NO VIOLATIONS.............................16
SECTION 4.4 DISCLOSURE DOCUMENTS..............................................17
SECTION 4.5 FINDERS' FEES.....................................................17
SECTION 4.6 INTERIM OPERATIONS OF MERGER SUB..................................17
SECTION 4.7 FINANCING.........................................................17
SECTION 4.8 OWNERSHIP.........................................................17
ARTICLE V COVENANTS OF THE PARTIES............................................17
SECTION 5.1 CONDUCT OF THE BUSINESS OF THE COMPANY............................17
SECTION 5.2 STOCKHOLDER APPROVAL; PREPARATION OF PROXY STATEMENT..............20
SECTION 5.3 ACCESS TO INFORMATION; CONFIDENTIALITY AGREEMENT..................20
SECTION 5.4 NO SOLICITATION...................................................21
SECTION 5.5 INDEMNIFICATION...................................................22
SECTION 5.6 OBTAINING FINANCING...............................................22
SECTION 5.7 REASONABLE BEST EFFORTS...........................................22
SECTION 5.8 PUBLIC ACCOUNCEMENTS..............................................23
SECTION 5.9 STATE TAKEOVER LAWS...............................................23
SECTION 5.10 CERTAIN NOTIFICATIONS............................................23
SECTION 5.11 VOTING OF SHARES.................................................23
SECTION 5.12 ADDITIONAL REPORTS...............................................23
SECTION 5.13 LOAN EXTENSION...................................................23
ARTICLE VI CONDITIONS TO THE MERGER...........................................23
SECTION 6.1 CONDITIONS TO EACH PARTY'S OBLIGATIONS............................23
SECTION 6.2 CONDITIONS TO THE OBLIGATION OF THE PARENT AND THE MERGER.........23
SECTION 6.3 CONDITIONS TO THE OBLIGATION OF THE COMPANY.......................25
ARTICLE VII TERMINATION.......................................................25
SECTION 7.1 TERMINATION.......................................................25
SECTION 7.2 EFFECT OF TERMINATION.............................................26
SECTION 7.3 REMEDIES, FEES AND EXPENSES.......................................27
ARTICLE VIII MISCELLANEOUS....................................................27
SECTION 8.1 NOTICES...........................................................27
SECTION 8.2 SURVIVAL OF REPRESENTATIONS AND WARRANTIES........................28
SECTION 8.3 INTERPRETATION....................................................28
SECTION 8.4 AMENDMENTS, MODIFICATION AND WAIVER...............................28
SECTION 8.5 SUCCESSORS AND ASSIGNS............................................28
SECTION 8.6 SPECIFIC PERFORMANCE..............................................28
SECTION 8.7 GOVERNING LAW.....................................................29
SECTION 8.8 SEVERABILITY......................................................29
SECTION 8.9 THIRD PARTY BENEFICIARIES.........................................29
SECTION 8.10 ENTIRE AGREEMENT.................................................29
SECTION 8.11 COUNTERPARTS; EFFECTIVENESS......................................29
SECTION 8.12 RULES OF CONSTRUCTION............................................29
SECTION 8.13 SUBMISSION TO JURISDICTION.......................................29
SECTION 8.14 MERGER SUB COMPLIANCE............................................29
EXHIBIT A FORM OF STOCKHOLDER AGREEMENT
THIS AGREEMENT OF MERGER, dated as of November 8, 2002 (this
"AGREEMENT"), by and among DSET, Corporation, a New Jersey corporation (the
"COMPANY"), NE Technologies, Inc., a Georgia corporation ("PARENT"), and NE
TECHNOLOGIES ACQUISITION CORPORATION, a Georgia corporation and a wholly owned
subsidiary of Parent ("MERGER SUB").
W I T N E S S E T H
WHEREAS, the respective Boards of Directors of Parent, Merger Sub and
the Company have approved this Agreement, and have approved the merger of the
Company with and into Merger Sub (the "MERGER"), upon the terms and subject to
the conditions of this Agreement and in accordance with the Business Corporation
Code of the State of Georgia (the "GA Code"), and the New Jersey Business
Corporation Act ("NJ Code"); and
WHEREAS, concurrently with the execution of this Agreement, and as a
condition and inducement to Parent's willingness to enter into this Agreement,
certain stockholders of the Company are entering into Stockholder Agreements in
substantially the form attached hereto as Exhibit A (the "STOCKHOLDER
AGREEMENTS");
NOW, THEREFORE, in consideration of the representations, warranties,
covenants, agreements and conditions set forth herein, and intending to be
legally bound hereby, the parties hereto agree as follows:
ARTICLE I
THE MERGER
SECTION 1.1 THE MERGER PROCESS. Subject to the terms and conditions of
this Agreement and in accordance with the GA Code and the NJ Code, on the
Effective Date, the Company will be merged with and into Merger Sub, a
wholly-owned subsidiary of Parent, pursuant to which each outstanding share of
common stock, no par value per share, of the Company (the "COMPANY COMMON STOCK"
or the "SHARES") shall be exchanged for the right to receive from Merger Sub
Thirty Cents ($.30) per share in cash (the "EXCHANGE PRICE").
SECTION 1.2 COMPANY ACTION.
(a) The Company hereby represents that its Board of Directors, at
a meeting duly called and held on or prior to the date hereof, has (i)
determined that this Agreement and the transactions contemplated hereby,
including the Merger, are advisable and are fair from a financial point of view
to the holders of the Company's Common Stock, (ii) approved this Agreement and
the transactions contemplated hereby, including the Merger and the Stockholder
Agreements and the transactions contemplated thereby, and (iii) resolved to
recommend approval of the Merger and adoption of this Agreement by the Company's
stockholders (the recommendations referred to in this clause (iii) are
collectively referred to in this Agreement as the "RECOMMENDATIONS").
(b) As soon as practicable after the date hereof, the Company
shall file with the Securities and Exchange Commission ("SEC") a Proxy Statement
with respect to the Merger which will contain or incorporate by reference all or
part of the Plan of Merger and form of the related letter of transmittal and
notice of shareholders meeting (together with any supplements or amendments
thereto, collectively the "MERGER DOCUMENTS"). Parent, Merger Sub and the
Company each agree promptly to correct any information provided by it for use in
the Merger Documents and add any information that had been omitted therefrom if
and to the extent that such information shall have become false or misleading in
any material respect. The Company, Parent and Merger Sub agree to take all steps
necessary to cause the Merger Documents as so corrected to be filed with the
SEC. The Parent and Merger Sub and their counsel shall be given a reasonable
opportunity to review and comment on the Merger Documents prior to their being
filed with the SEC. The Company agrees to provide the Parent and Merger Sub and
its counsel with any comments Company or its counsel may receive in writing from
the SEC or its staff with respect to the Merger Documents as soon as practicable
after receipt of such written comments.
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(c) Upon approval of the Merger Documents by the SEC the Company
shall promptly cause the Merger Documents, which shall include the
Recommendations, to be disseminated to holders of Shares, and shall schedule a
shareholder's meeting twenty-one business days from the date the Notice and
Proxy are mailed to the holders of Shares; PROVIDED, HOWEVER, that prior to the
Effective Time (as defined in Section 1.3(b) hereof), the Board of Directors of
the Company may withhold, withdraw, modify or change in a manner adverse to
Parent and Merger Sub, or fail to make, its Recommendations in accordance with
the terms of Section 5.4 hereof; PROVIDED FURTHER, HOWEVER, that the obligations
of the members of the Company's Board of Directors with respect to voting their
Shares in favor of the Merger under any Stockholder Agreement entered into by
such directors shall continue until termination of such Stockholder Agreement in
accordance with their terms.
(d) The Company has been advised that each of its directors and
executive officers and stockholders identified on Schedule 1.2(d) have executed
a Stockholder Agreement, and shall vote in favor of the Merger.
(e) Each party hereto shall file all written communications, that
are made public or otherwise supplied to third parties, with the SEC on or prior
to the date the communication is first used as and to the extent required by the
federal securities laws. All such communications shall comply as to form and
content, including bearing the appropriate legends, in all material respects
with the applicable provisions of the federal securities laws. Each party agrees
that, prior to any such filing or use of written communications, to the extent
practicable as a result of the federal securities laws, such party will provide
the other party and its counsel the opportunity to review and comment (promptly
and in good faith) on such communications and filings.
SECTION 1.3 THE MERGER.
(a) Upon the terms and subject to the conditions of this
Agreement, and in accordance with the applicable provisions of the GA Code and
the NJ Code, at the Effective Time (as defined in Section 1.3(b) hereof), the
Company shall be merged with and into the Merger Sub, whereupon the separate
existence of the Company shall cease, and the Merger Sub shall continue as the
surviving corporation (sometimes referred to herein as the "SURVIVING
CORPORATION"). The name of the Surviving Corporation shall be designated by
Parent and may be changed with the Merger.
(b) Concurrently with the Closing (as defined in Section 1.8
hereof), the Company shall cause a certificate of merger (the "NJ CERTIFICATE OF
MERGER") with respect to the Merger to be executed and filed with the Secretary
of State of the State of New Jersey as provided in the NJ Code, and the Parent
shall cause a Certificate of Merger (the "GA CERTIFICATE OF MERGER") with
respect to the Merger to be executed and filed with the Secretary of State of
Georgia as provided in the GA Code. The Merger shall become effective on the
date and time at which the NJ Certificate of Merger and the GA Certificate of
Merger have been duly filed with the appropriate Secretary of State or at such
other date and time as is agreed between the parties and specified in the
Certificates of Merger, and such date and time is hereafter referred to as the
"EFFECTIVE TIME."
(c) The Merger shall have the effects set forth in the NJ Code
and the GA Code. Without limiting the generality of the foregoing and subject
thereto, from and after the Effective Time, the Surviving Corporation shall
possess all rights, privileges, immunities, powers and franchises and be subject
to all of the obligations, restrictions, disabilities, liabilities, debts and
duties of the Company and Merger Sub as and to the extent required under the NJ
Code and GA Code.
SECTION 1.4 RESERVED
SECTION 1.5 EFFECT ON COMPANY COMMON STOCK. At the Effective Time:
(a) CANCELLATION OF SHARES OF COMPANY COMMON STOCK. Each share of
Company Common Stock held by Parent or the Merger Sub or by the Company as
treasury stock immediately prior to the Effective Time shall automatically be
cancelled and retired and cease to exist, and no consideration or payment shall
be delivered therefor or in respect thereto. Each share of Company Common Stock
to be converted into the Exchange Price pursuant to Section 1.5(b) shall, by
virtue of the Merger and without any action on the part of the holders thereof,
cease to be outstanding, be cancelled and retired and cease to exist; and each
holder of a certificate (representing prior to the Effective Time any such
shares of Company Common Stock) shall thereafter cease to have any rights with
respect to such shares
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of Company Common Stock, except the right to receive the aggregate Exchange
Price into which such shares of Company Common Stock have been converted.
(b) CONVERSION OF SHARES OF COMPANY COMMON STOCK. Each share of
Company Common Stock issued and outstanding immediately prior to the Effective
Time (other than shares of Company Common Stock referred to in the first
sentence of Section 1.5(a) hereof) shall, by virtue of the Merger and without
any action on the part of the holder thereof, be converted into the Exchange
Price.
(c) CAPITAL STOCK OF MERGER SUB. Each share of Common Stock, no
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
(1) validly issued, fully paid and nonassessable share of Common Stock, no par
value per share, of the Surviving Corporation. Each certificate evidencing
ownership of such shares of Merger Sub Common Stock shall evidence ownership of
shares of capital stock of the Surviving Corporation.
(d) TREATMENT OF COMPANY OPTIONS. As of the Effective Time, each
issued and outstanding option, warrant or similar right to purchase or otherwise
acquire Company Common Stock or any other equity security (whether or not
vested) (collectively, the "Options") issued to any Person (as defined in
Section 1.6(a)) shall be exercised or terminated in accordance with the terms
thereof. The Company shall take all necessary actions (including providing all
required notices) to ensure that all Option holders are aware of conditions that
may cause termination of their Option. In the case of any holder of such
Options, the Company shall take steps to enable the holder thereof to exercise
the Option on a basis that enables the holder effectively to exchange the Shares
in the Merger.
SECTION 1.6 EXCHANGE OF CERTIFICATES.
(a) Prior to the Closing, Parent shall designate a bank, trust
company, Person or Persons reasonably acceptable to the Company to act as the
depositary and exchange agent for the delivery of the Exchange Price upon
delivery of certificates formerly representing shares of Company Common Stock
(the "EXCHANGE AGENT") in connection with the Merger. At or promptly following
the Effective Time, Parent shall deposit, or cause to be deposited, with the
Exchange Agent the aggregate Exchange Price for the benefit of the holders of
shares of Company Common Stock which are converted into the Exchange Price
pursuant to Section 1.5(b) hereof (being hereafter referred to as the "EXCHANGE
FUND"). The deposited sum shall be invested in the Exchange Agent's discretion
and all interest thereon shall be paid to Parent for its sole benefit and shall
be taxable to the Parent. For purposes of this Agreement, "PERSON" means any
natural person, firm, individual, corporation, limited liability company,
partnership, association, joint venture, company, business trust, trust or any
other entity or organization, whether incorporated or unincorporated, including
a government or political subdivision or any agency or instrumentality thereof.
(b) As of or promptly following the Effective Time but in no
event later than five (5) business days thereafter, the Surviving Corporation
shall cause the Exchange Agent to mail (and to make available for collection by
hand) to each holder of record of a certificate or certificates, which
immediately prior to the Effective Time represented outstanding shares of
Company Common Stock (the "CERTIFICATES"), (i) a letter of transmittal (which
shall specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon proper delivery of the Certificates to the
Exchange Agent and which shall be in the form and have such other provisions as
Parent and the Company may reasonably specify) and (ii) instructions for use in
effecting the surrender of the Certificates in exchange for the aggregate
Exchange Price into which the number of shares of Common Stock previously
represented by such Certificates shall have been converted pursuant to this
Agreement (which instructions shall provide that at the election of the
surrendering holder, Certificates may be surrendered, and the aggregate Exchange
Price in exchange therefor collected, by hand delivery). Upon surrender of a
Certificate for cancellation to the Exchange Agent, together with a letter of
transmittal duly completed and validly executed in accordance with the
instructions thereto, and such other documents as may be required pursuant to
such instructions, the holder of such Certificate shall be entitled to receive
in exchange therefor the Exchange Price for each share of Common Stock formerly
represented by such Certificate, to be mailed (or made available for collection
by hand if so elected by the surrendering holder) within three (3) business days
of receipt thereof (but in no case prior to the Effective Time), and the
Certificate so surrendered shall be forthwith cancelled. The Exchange Agent
shall accept such
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Certificates upon compliance with such reasonable terms and conditions as the
Exchange Agent may impose to effect an orderly exchange thereof in accordance
with normal exchange practices. No interest shall be paid or accrued for the
benefit of holders of the Certificates on the Exchange Price.
(c) Any portion of the Exchange Fund which remains undistributed
to the holders of the Certificates for six (6) months after the Effective Time
shall be delivered to Parent, upon demand, and any holders of shares of Company
Common Stock prior to the Merger who have not theretofore complied with this
Article I shall thereafter look for payment of their claim, as general creditors
thereof, only to Parent for their claim for the aggregate Exchange Price
(without interest) to which such holders may be entitled.
(d) None of Parent, the Company or the Exchange Agent shall be
liable to any Person in respect of any cash held in the Exchange Fund delivered
to a public official pursuant to any applicable abandoned property, escheat or
similar law. If any Certificates shall not have been surrendered prior to such
date on which any cash payable in respect of such Certificate would otherwise
escheat to or become the property of any Governmental Entity (as defined in
Section 3.3(b) hereof)), any such cash payable in respect of such Certificate
shall, to the extent permitted by applicable law, become the property of Parent,
free and clear of any claims or interest of any Person previously entitled
thereto.
(e) The aggregate Exchange Price paid upon the surrender for
exchange of Certificates in accordance with the terms hereof shall be deemed to
have been paid in full satisfaction of all rights pertaining to the Shares
theretofore represented by such Certificates. After the Effective Time, there
shall be no further registration of transfers on the stock transfer books of the
Surviving Corporation of the Shares which were outstanding immediately prior to
the Effective Time. If, after the Effective Time, Certificates are presented to
the Surviving Corporation or the Exchange Agent for any reason, they shall be
canceled and exchanged as provided in this Section 1.6(e), except as otherwise
provided by law.
(f) Parent or the Surviving Corporation shall be entitled but not
required to deduct and withhold, or cause the Exchange Agent to deduct and
withhold, from consideration otherwise payable pursuant to this Agreement to any
holder of any Shares such amounts as are required to be deducted and withheld
with respect to the making of such payment under the Internal Revenue Code of
1986, as amended, or any provision of state, local or foreign tax law. The
parties shall take all reasonably required steps to reduce such withholding to
the maximum extent allowable under applicable law. To the extent that amounts
are so withheld, (A) such withheld amounts shall be treated for all purposes of
this Agreement as having been paid to the holder of the Certificates in respect
of which such deduction and withholding was made, and (B) Parent shall provide,
or cause the Exchange Agent to provide, to the holders of such Shares written
notice of the amounts so deducted or withheld.
SECTION 1.7 LOST CERTIFICATES. If any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the Person
claiming such Certificate to be lost, stolen or destroyed and, if required by
the Surviving Corporation, the payment of any reasonable fees, and the posting
by such Person of a bond, in such reasonable amount as the Surviving Corporation
may direct (but consistent with past practice of the Company), as indemnity
against any claim that may be made against it with respect to such Certificate,
the Exchange Agent will issue in exchange for such lost, stolen or destroyed
Certificate the aggregate Exchange Price to which the holder thereof is entitled
pursuant to this Article I.
SECTION 1.8 MERGER CLOSING. Subject to the satisfaction or waiver of
the conditions set forth in Article VI hereof, the closing of the Merger (the
"CLOSING") will take place at such time and on such date to be specified by the
parties hereto, and no later than the second business day after the satisfaction
or waiver of the conditions set forth in Article VI hereof that are to be
satisfied other than on the day of the Closing, at the offices of ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, unless another time, date
or place is agreed to in writing by the parties hereto (such date, the "CLOSING
DATE").
SECTION 1.9 ANTIDILUTION. In the event the Company changes the number
of shares of Company Common Stock issued and outstanding prior to the Effective
Time as a result of a stock split, stock dividend, or similar recapitalization
with respect to such Shares and the record date therefor (in the case of a stock
dividend) or the effective date thereof (in the case of a stock split or similar
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recapitalization for which a record date is not established) shall be prior to
the Effective Time, the Exchange Price shall be proportionately adjusted.
ARTICLE II
THE SURVIVING CORPORATION
SECTION 2.1 CERTIFICATE OF INCORPORATION. At the Effective Time, the
Certificate of Incorporation of the Surviving Corporation shall be the
Certificate of Incorporation of Merger Sub, until thereafter amended in
accordance with the GA Code and such Certificate of Incorporation.
SECTION 2.2 BYLAWS. At the Effective Time, the Bylaws of the Surviving
Corporation shall be the Bylaws of Merger Sub, as in effect immediately prior to
the Effective Time, until thereafter amended in accordance with the GA Code, the
Certificate of Incorporation of the Surviving Corporation and such Bylaws,
PROVIDED, HOWEVER, that all references in such Bylaws to Merger Sub shall be
amended to refer to the name of the Surviving Corporation or such other names as
Parent may specify.
SECTION 2.3 OFFICERS AND DIRECTORS.
(a) From and after the Effective Time, the officers of Merger Sub
at the Effective Time shall be the officers of the Surviving Corporation, until
their respective successors are duly elected or appointed and qualified in
accordance with applicable law.
(b) The Board of Directors of the Surviving Corporation effective
as of, and immediately following, the Effective Time shall consist of the
directors of Merger Sub immediately prior to the Effective Time.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Merger Sub as of the
date hereof, subject to such exceptions as are disclosed in writing in the
disclosure schedule supplied by the Company to Parent (the "COMPANY DISCLOSURE
SCHEDULE"), which disclosure shall provide an exception to or otherwise qualify
the representations or warranties of the Company specifically referred to in
such disclosure schedule and such other representations and warranties to the
extent such disclosure shall reasonably appear to be applicable to such other
representations or warranties, as follows:
SECTION 3.1 CORPORATE EXISTENCE AND POWER. The Company is a corporation
duly incorporated, validly existing and in good standing under the laws of the
State of New Jersey, and has all corporate powers and all governmental licenses,
authorizations, permits, consents and approvals (collectively, "LICENSES")
required to carry on its business as now conducted except for failures to have
any such License which would not, in the aggregate, have a Company Material
Adverse Effect (as defined hereafter). The Company is duly qualified to do
business as a foreign corporation and is in good standing in each jurisdiction
where the character of the property owned, leased or operated by it or the
nature of its activities makes such qualification necessary and as listed on
Section 3.1 of the Company Disclosure Schedule, except in such jurisdictions
where failures to be so qualified would not reasonably be expected to, in the
aggregate, have a Company Material Adverse Effect. As used herein, the term
"COMPANY MATERIAL ADVERSE EFFECT" means a material adverse effect on the
financial condition, business, assets or results of operations of the Company
and its Subsidiaries, taken as a whole, PROVIDED, HOWEVER, that in no event
shall any effect that results from (i) any change in general economic
conditions, (ii) any failure by the Company to meet revenue earnings and
estimates in and of itself, (iii) the delisting of the Company Common Stock from
the Nasdaq SmallCap Market, or (iv) the announcement or pendency of this
Agreement (including any delays or cancellations in customer orders, a reduction
in sales, a disruption in supplier, distribution or similar relationships or a
loss of employees), constitute, or be considered in determining the existence
of, a Company Material Adverse Effect. The Company has heretofore made available
to Parent true and complete copies of the Certificate of Incorporation and the
Bylaws of the Company as currently in effect.
SECTION 3.2 CORPORATE AUTHORIZATION.
(a) The Company has the requisite corporate power and authority
to execute and deliver this Agreement and, subject to approval of the Company's
stockholders, as set forth in Section 3.2(b) hereof and as contemplated by
Section 5.2 hereof, to perform its obligations hereunder. The execution and
delivery of this Agreement and the performance of the Company's obligations
hereunder have been duly and validly authorized, and this Agreement has been
approved, by the Board of Directors of the
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Company and no other corporate proceedings, on the part of the Company, other
than the approval of the Company's stockholders, are necessary to authorize the
execution, delivery and performance of this Agreement. This Agreement has been
duly executed and delivered by the Company and constitutes, assuming due
authorization, execution and delivery of this Agreement by Parent and the Merger
Sub, a valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms (except in all cases as such enforceability
may be limited by applicable bankruptcy, insolvency, reorganization,
receivership, conservatorship, moratorium, or similar laws affecting the
enforcement of creditors' rights generally and except that the availability of
the equitable remedy of specific performance or injunctive relief is subject to
the discretion of the court before which any proceeding may be brought).
(b) Under applicable law, the Certificate of Incorporation and
the rules of any applicable securities exchange or market, the affirmative vote
of the majority of the votes cast by the holders of shares of Company Common
Stock outstanding on the record date, established by the Board of Directors of
the Company in accordance with the Bylaws of the Company, applicable law and
this Agreement, is the vote required to approve the Merger and adopt this
Agreement.
SECTION 3.3 CONSENTS AND APPROVALS; NO VIOLATIONS.
(a) Neither the execution and delivery of this Agreement, the
performance by the Company of its obligations hereunder, nor the consummation by
the Company of the transactions contemplated hereby, will (i) conflict with or
result in any breach of any provision of the Certificate of Incorporation or the
Bylaws of the Company; (ii) except as set forth in Section 3.3(a) of the Company
Disclosure Schedule, result in a violation or breach of, or constitute (with or
without due notice or lapse of time or both) a default (or give rise to any
right of termination, cancellation or acceleration or obligation to repurchase,
repay, redeem or acquire or any similar right or obligation) under any of the
terms, conditions or provisions of any note, mortgage, letter of credit, other
evidence of indebtedness, guarantee, license, lease or agreement or similar
instrument or obligation to which the Company is a party or by which it or its
assets may be bound or (iii) assuming that the filings, registrations,
notifications, authorizations, consents and approvals referred to in subsection
(b) below have been obtained or made, as the case may be, violate any order,
injunction, decree, statute, rule or regulation of any Governmental Entity to
which the Company is subject, excluding from the foregoing clauses (ii) and
(iii) such requirements, defaults, breaches, rights or violations (A) that would
not, in the aggregate, reasonably be expected to have a Company Material Adverse
Effect and would not have a material adverse effect on the ability of the
Company to perform its obligations hereunder or (B) that become applicable as a
result of the business or activities in which Parent or any of its affiliates is
or proposes to be engaged or any acts or omissions by, or facts specifically
pertaining to, Parent.
(b) No filing or registration with, notification to, or
authorization, consent or approval of, any government or any agency, court,
tribunal, commission, board, bureau, department, political subdivision or other
instrumentality of any government (including any regulatory or administrative
agency), whether federal, state, provincial, municipal, domestic or foreign
(each, a "GOVERNMENTAL ENTITY") is required in connection with the execution and
delivery of this Agreement by the Company or the performance by the Company of
its obligations hereunder, except (i) the filing of the Certificates of Merger
in accordance with the NJ Code and the GA Code; (ii) compliance with any
applicable requirements of the Securities Exchange Act of 1934, as amended (the
"EXCHANGE ACT"); and (iii) such other consents, approvals, orders,
authorizations, notifications, registrations, declarations and filings (A) the
failure of which to be obtained or made would not, in the aggregate, reasonably
be expected to have a Company Material Adverse Effect and would not have a
material adverse effect on the ability of the Company to perform its obligations
hereunder or (B) that become applicable as a result of the business or
activities in which Parent or any of its affiliates is or proposes to be engaged
or any acts or omissions by, or facts specifically pertaining to, Parent.
SECTION 3.4 CAPITALIZATION.
(a) The authorized capital stock of the Company consists of
10,000,000 shares of Common Stock and 5,000,000 shares of preferred stock, no
par value per share, of the Company (the "PREFERRED STOCK"). 40,000 shares of
the Preferred stock have been designated as Series A Junior Participating
Preferred Stock and 4,960,000 shares of the Preferred Stock are undesignated. As
of September 30, 2002, there were (i) 5,147,182 shares of Common Stock issued
and outstanding and (ii)
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no shares of Preferred Stock issued and outstanding. All shares of capital stock
of the Company have been duly authorized and validly issued and are fully paid
and nonassessable and were not issued in violation of any preemptive rights. As
of September 30, 2002, there were no outstanding Company Options to purchase
shares of Company Common Stock that had an exercise price at or less
than the Exchange Price, and Options to purchase 545,506 shares of Company
Common stock having an exercise price in excess of the Exchange Price, and no
outstanding warrants exercisable for shares of Company Common Stock,
all of which are more fully described on Section 3.4 of the Company Disclosure
Schedule. Except as set forth in this Section 3.4, as of the date of this
Agreement, there are outstanding (i) no shares of capital stock or other voting
securities of the Company, (ii) no securities of the Company convertible into or
exchangeable for shares of capital stock or voting securities of the Company and
(iii) no options or other rights to acquire from the Company, and no obligation
of the Company to issue, any capital stock, voting securities or securities
convertible into or exchangeable for capital stock or voting securities of the
Company (the items in clauses (i), (ii) and (iii) being referred to collectively
as the "COMPANY SECURITIES"). There are no outstanding obligations of the
Company to repurchase, redeem or otherwise acquire any Company Securities. The
capitalization of the Company as of the date of this Agreement is the same as
the capitalization of the Company as of September 30, 2002 and as set forth
above in this Section 3.4(a). The Company does not believe that there will be
any option exercises in connection with the consummation of the transactions
contemplated by this Agreement based upon the current exercise prices of
currently outstanding options as of the date of this Agreement and there are no
other outstanding convertible securities of the Company as of the date of this
Agreement.
(b) The Company is not party to, nor (except as contemplated
hereby) as of the date hereof is aware of, any voting agreement, voting trust or
similar agreement or arrangement relating to any class or series of its capital
stock, or any agreement or arrangement providing for registration rights with
respect to any capital stock or other securities thereof.
SECTION 3.5 SUBSIDIARIES. Except as set forth in Section 3.5 of the
Company Disclosure Schedule, as of the date of this Agreement, the Company has
no Subsidiaries. Section 3.5 of the Company Disclosure Schedule also contains a
list of all prior subsidiaries of the Company ("Prior Subsidiaries").
SECTION 3.6 SEC DOCUMENTS. The Company has timely filed all required
reports, proxy statements, registration statements, forms and other documents,
together with any required amendments, with the SEC since it became a SEC
reporting company (the "COMPANY SEC DOCUMENTS"). As of their respective dates,
and giving effect to any amendments thereto, (a) the Company SEC Documents
complied in all material respects with the requirements of the Securities Act of
1933, as amended (the "SECURITIES ACT") or the Exchange Act, as the case may be,
and the applicable rules and regulations of the SEC promulgated thereunder and
(b) none of the Company SEC Documents contained any untrue statement of a
material fact or omitted to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
SECTION 3.7 FINANCIAL STATEMENTS. The financial statements of the
Company (including, in each case, any notes and schedules thereto) included or
incorporated by reference in the Company SEC Documents (a) comply as to form in
all material respects with all applicable accounting requirements and the rules
and regulations of the SEC with respect thereto, (b) are in conformity with
United States generally accepted accounting principles ("GAAP"), applied on a
consistent basis (except in the case of unaudited statements, as permitted by
the rules and regulations of the SEC) during the periods involved, and (c)
fairly present the consolidated financial position of the Company and its
consolidated Subsidiaries as of the dates thereof and the consolidated results
of their operations and cash flows for the periods then ended (subject, in the
case of unaudited statements, to normal year-end audit adjustments which were
not and are not expected to be, individually or in the aggregate, material in
amount).
SECTION 3.8 DISCLOSURE DOCUMENTS. No information supplied or to be
supplied by the Company or its Subsidiaries or Representatives for inclusion or
incorporation by reference in the Merger Documents will, at the respective times
any such documents or any amendments or supplements thereto are filed with the
SEC, are first published, sent or given to stockholders, contain any untrue
statement of
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a material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading. The Proxy Statement
will comply as to form in all material respects with the requirements of all
applicable laws, including the Exchange Act and the rules and regulations
thereunder. No representation or warranty is made by the Company with respect to
statements made or incorporated by reference in any such documents based on
information supplied by Parent or Merger Sub for inclusion or incorporation by
reference therein.
SECTION 3.9 ABSENCE OF UNDISCLOSED LIABILITIES. Except for liabilities
and obligations incurred in the ordinary course of business and consistent with
past practice, or as otherwise disclosed in the Company Disclosure Schedule,
since June 30, 2002 (the date of the most recent balance sheet included in the
Company SEC Documents), the Company has not incurred any liabilities or
obligations of any nature (whether accrued, absolute, contingent or otherwise)
in excess of $50,000 in the aggregate. Section 3.9 of the Company Disclosure
Schedule sets forth (a) detail of all currently accrued and outstanding
professional fees (legal, accounting and investment banking) and (b) a good
faith estimate of the total of all professional fees to be paid by the Company,
which fees were or are expected to be incurred in connection with the
transactions contemplated by this Agreement or in connection with any
alternative change of control transaction being considered by the Company
simultaneously with the Merger and which fees have not yet been paid.
SECTION 3.10 ABSENCE OF MATERIAL ADVERSE CHANGES, ETC. Except as set
forth on Schedule 3.10 of the Company Disclosure Schedule, or as otherwise
disclosed in the Company Disclosure Schedule, since June 30, 2002, there has not
been a Company Material Adverse Effect. Without limiting the foregoing, except
as contemplated by this Agreement, since June 30, 2002, there has not been:
(a) any declaration, setting aside or payment of any dividend or
other distribution with respect to any shares of capital stock of the Company,
or any repurchase, redemption or other acquisition by the Company of any
outstanding shares of capital stock or other equity securities of, or other
ownership interests in, the Company or any Company Securities or any stock
split, reclassification, subdivision or exchange of any Company Securities;
(b) any amendment of any provision of the Certificate of
Incorporation or Bylaws of the Company, or of any material term of any
outstanding security issued by the Company;
(c) any incurrence, assumption or guarantee by the Company of any
indebtedness for borrowed money other than borrowings under existing short-term
credit facilities not in excess of $50,000 in the aggregate;
(d) any change in any method of accounting or accounting practice
by the Company;
(e) except as disclosed in Section 3.10(e) of the Company
Disclosure Schedule, any (i) grant of any severance or termination pay to any
director, officer or employee of the Company, (ii) employment, deferred
compensation or other similar agreement (or any amendment to any such existing
agreement) with any director, officer or employee of the Company entered into,
(iii) increase in benefits payable under any existing severance or termination
pay policies or employment agreements or (iv) increase in compensation, bonus or
other benefits payable to directors, officers or employees of the Company, in
each case other than those required by written contractual agreements;
(f) except as disclosed in Section 3.10(f) of the Company
Disclosure Schedule, acquisition or disposition of assets material to the
Company except for sales of inventory in the ordinary course of business
consistent with past practice, or prepaid expenses in the ordinary course of
business, or any acquisition or disposition of capital stock of any third party
(other than acquisitions or dispositions of non-controlling equity interests of
third parties in the ordinary course of business consistent with past practice)
where the aggregate cost of all such acquisitions and dispositions does not
exceed $50,000, or any merger or consolidation with any third party, by the
Company;
(g) entry by the Company into any joint venture, partnership or
similar agreement with any Person;
(h) any damage, destruction or loss (whether or not covered by
insurance) materially adversely affecting the Company's properties or business;
(i) any granting by the Company of a security interest in or lien
on any material property or assets of the Company, other than liens for taxes
not yet due and payable;
-8-
(j) except as set forth in Section 3.10(j) of the Company
Disclosure Schedule, entry by the Company into any new material agreement; or
(k) any authorization of, or commitment or agreement to take any
of the foregoing actions except as otherwise permitted by this Agreement.
SECTION 3.11 TAXES.
(a) (1) All federal, state, local and foreign Tax Returns (as
defined in Section 3.11(b) hereof) required to be filed by or on behalf of the
Company have been timely filed, and all returns filed are complete and accurate
in all material respects; (2) all Taxes (as defined hereafter) due and owing by
the Company have been paid, or adequately reserved for in accordance with GAAP;
(3) except as set forth in Section 3.11(a) of the Company Disclosure Schedule,
to the knowledge of the Company, there is no presently pending and, contemplated
or scheduled audit examination, deficiency, refund litigation, proposed
adjustment or matter in controversy with respect to any Taxes due and owing or
alleged to be due and owing by the Company, nor has the Company filed any waiver
of the statute of limitations applicable to the assessment or collection of any
Tax; (4) all assessments for Taxes due and owing by the Company, with respect to
completed and settled examinations or concluded litigation have been fully paid;
and (5) the Company has complied in all material respects with all rules and
regulations relating to the withholding of Taxes.
(b) For purposes of this Agreement, (i) "TAXES" means all taxes,
levies or other like assessments, charges or fees (including estimated taxes),
including, without limitation, income, corporation, advance corporation, gross
receipts, transfer, excise, property, sales, use, value-added, license, payroll,
withholding, social security and franchise or other governmental taxes or like
charges, imposed by any Governmental Entity, any interest, penalties or
additions to tax attributable to such taxes and shall include any liability for
such amounts as a result either of being a member of a combined, consolidated,
unitary or affiliated group or of a contractual obligation to indemnify any
Person or other entity, and (ii) "TAX RETURN" means any report, return,
statement or other written information required to be supplied to a taxing
authority in connection with Taxes.
(c) For avoidance of doubt, the Company makes no representations
or warranties regarding any Company Tax liabilities arising solely in connection
with the transactions described herein.
SECTION 3.12 EMPLOYEE BENEFIT PLANS. (a) Schedule 3.12(a) of the
Company Disclosure Schedule contains a true and complete list or summary of each
deferred compensation, incentive compensation, and equity compensation plan;
"welfare" plan, fund or program (within the meaning of Section 3(1) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"));
"pension" plan, fund or program (within the meaning of Section 3(2) of ERISA);
each employment, termination or severance agreement; and each other employee
benefit plan, fund, program, agreement or arrangement, in each case, (i)
sponsored, maintained or contributed to or required to be contributed to by the
Company or by any trade or business, whether or not incorporated (each, an
"ERISA AFFILIATE"), that together with the Company would be deemed a "single
employer" within the meaning of Section 4001(b) of ERISA or Sections 414(c),
(m), (o) or (t) of the Code or would be deemed to be within the same "controlled
group" within the meaning of Section 4001(a)(14) of ERISA or Section 414(b) of
the Code or (ii) under which the Company or any ERISA Affiliate are or may be
liable. The plans, funds, programs, agreements and arrangements listed on
Schedule 3.12(a) of the Company Disclosure Schedule are referred to herein
collectively as the "PLANS".
(b) Except as disclosed in Section 3.12(b) of the Company
Disclosure Schedule, with respect to each Plan, the Company has heretofore
delivered or made available to Parent true and complete copies of the Plan and
any amendments thereto (or if the Plan is not a written Plan, a description
thereof), any related trust or other funding vehicle, the reports or summaries
required under ERISA or the Code for the last three years and the most recent
determination letter, if any, received from the Internal Revenue Service with
respect to each Plan intended to qualify under Section 401 of the Code and all
material written communications with any governmental agency or entity
(including, without limitation, the DOL and the IRS).
(c) Each Plan conforms to the knowledge of the Company in all
material respects to and has been operated and administered in all material
respects in accordance with its terms and applicable law, including, but not
limited to, ERISA and the Code.
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(d) Each Plan intended to be "qualified" within the meaning of
Section 401(a) of the Code has received a favorable determination, opinion,
notification and/or letter from the Internal Revenue Service. No event or
condition exists or has occurred since the date of such determination, opinion
notification or letter that would cause or allow the IRS to disqualify any Plan
that is intended to be so qualified under Section 401(a) of the Code.
(e) Except as disclosed in Section 3.12(e) of the Company
Disclosure Schedule, or as otherwise may be required pursuant to the terms of
the severance agreements listed in Section 3.12 of the Company Disclosure
Schedule, Company is not obligated to make any payments with respect to, and no
Plan provides for, medical, surgical, hospitalization, death or similar benefits
(whether or not insured) for employees or former employees of the Company for
periods extending beyond their retirement or other termination of service, other
than (i) coverage mandated by Section 4980B of the Code or Part 6 of Subtitle B
of Title I of ERISA or similar state law, (ii) death benefits under any "pension
plan," or (iii) benefits the full cost of which is borne by the current or
former employee (or his or her beneficiary), dependant or other covered Person.
Each Plan that provides medical, surgical, hospitalization, death or similar
benefits (whether or not insured) extending beyond retirement or other
termination of service other than as described in (i) of the preceding sentence
may be amended or terminated at any time by unilateral action of the Company.
(f) There are no pending, or to the knowledge of the Company,
threatened or anticipated, claims with respect to any Plan, by any employee or
beneficiary covered under any such Plan, or otherwise involving any such Plan
(other than routine claims for benefits).
(g) Except as expressly provided in Section 3.12 of the
Company Disclosure Schedule, or pursuant to the terms of the agreements set
forth in Section 3.12 of the Company Disclosure Schedule, the consummation of
the transactions contemplated by this Agreement will not, either alone or in
combination with another event, (i) entitle any current or former employee or
officer of the Company or any ERISA Affiliate to severance pay, unemployment
compensation or any other payment, or (ii) accelerate the time of payment or
vesting, or increase the amount of compensation due any such employee or
officer.
(h) There are no employee benefit plans that are subject solely
to the laws of any jurisdiction outside the United States.
(i) Other than any failures that are not material, all
contributions and other payments required to have been made by the Company or
any ERISA Affiliate with respect to any Plan (or to any person pursuant to the
terms thereof) have been or will be timely made and all such amounts have been
properly accrued on the financial statements of the Company.
(j) No Plan is subject to any ongoing audit, investigation or
other administrative proceeding of the IRS, the DOL or any other federal, state
or local governmental entity or, to the knowledge of the Company, is scheduled
to be subject to such an audit, investigation or proceeding.
(k) With respect to each Plan, no event has occurred, and there
exists no condition or set of circumstances, that would subject the Company or
any ERISA Affiliate, directly or indirectly, to any liability arising under the
Code, ERISA or any other applicable law (including, without limitation, any
liability to or under any such Plan or any indemnity agreement to which the
Company or any ERISA Affiliate is a party), which liability, excluding liability
for benefit claims and funding obligations, each payable in the ordinary course,
could reasonably be expected to have a Company Material Adverse Effect.
(l) Neither the Company nor any ERISA Affiliate has ever
maintained, had an obligation to contribute to, contributed to, or had any
liability with respect to any "pension plan" that is or was subject to Title IV
or Section 302 of ERISA or Section 412 of the Code.
(m) No non-exempt prohibited transaction within the meaning of
Section 406 of ERISA or Section 4975 of the Code, or, to the knowledge of the
Company, breach of any fiduciary duty under Title I of ERISA, has occurred with
respect to any Plan or with respect to the Company or any ERISA Affiliate.
(n) The Company and each ERISA Affiliate has made all payments
and contributions due from it to date with respect to each Plan. With respect to
each Plan, there are no funded benefit obligations for which the contributions
have not been made or properly accrued and there are no unfunded benefit
obligations that have not been accounted for by reserves, or otherwise properly
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footnoted in accordance with generally accepted accounting principles, on the
financial statements of the Company or the ERISA Affiliate.
(o) Neither the Company nor any ERISA Affiliate has ever
maintained, had an obligation to contribute to, contributed to, or had any
liability with respect to any employee benefit plan that constituted a
multiemployer plan as defined in Section 414(f) of the Code or Sections 3(37) or
4001(a)(31) of ERISA. No Plan is a multiple employer plan within the meaning of
Section 413(c) of the Code or Sections 4063, 4064 or 4066 of ERISA. No Plan is a
multiple employer welfare arrangement as defined in Section 3(40) of ERISA.
SECTION 3.13 LITIGATION; COMPLIANCE WITH LAWS.
(a) Except as disclosed in Section 3.13(a) of the Company
Disclosure Schedule, there is no action, suit or proceeding pending against or,
to the knowledge of the Company, threatened against or affecting, the Company or
any of its respective properties before any court or arbitrator or any
Governmental Entity.
(b) (i) No Governmental Authority has notified the Company of an
intention to conduct any investigation or review, nor, (ii) to the knowledge of
the Company, is there any investigation or review by any Governmental Entity
with respect to the Company pending.
(c) The Company is in material compliance with all applicable
material laws, ordinances, rules and regulations of any Governmental Entity
applicable to their respective businesses and operations. All material Licenses
required to conduct the business of the Company have been obtained, are in full
force and effect and are being complied with.
SECTION 3.14 CERTAIN CONTRACTS AND ARRANGEMENTS.
(a) Section 3.14 of the Company Disclosure Schedule contains a
list of the following types of contracts, agreements and commitments to which
the Company is a party as of the date hereof (such contracts, agreements and
commitments as are required to be set forth in Section 3.14 of the Company
Disclosure Schedule are referred to herein as "MATERIAL CONTRACTS"):
(i) any agreement (A) relating to the employment of, or the
performance of services by, any employee, consultant or other Person (other than
ordinary course, at-will offer letters), (B) pursuant to which the Company is or
may become obligated to make any severance, termination or similar payment to
any current or former employee or director, or (C) pursuant to which the Company
is or may become obligated to make any bonus or similar payment (sales
commissions and similar payments made in the ordinary course of business
consistent with past practice shall not be deemed to constitute a bonus or
similar payment) to any current or former employee or director;
(ii) any agreement relating to the acquisition, transfer,
development, sharing or license of any Intellectual Property (as defined in
Section 3.15(e)) material to the Company's business (except for any contract
pursuant to which non-customized software is licensed to Company under any third
party software license generally available to the public, if such software is
not incorporated into any product of the Company or otherwise redistributed or
sublicensed by the Company);
(iii) any agreement that provides for indemnification of any
officer, director, employee or agent;
(iv) any agreement imposing any material restriction on the
right or ability of the Company, or which, after consummation of the Merger,
would impose a restriction on the right or ability of Parent (other than the
Company), to compete in any line of business or in any geographic region with
any other Person or to transact business or deal in any other manner with any
other Person;
(v) any agreement (other than agreements evidencing Company
Options) (A) relating to the acquisition, issuance, voting, registration, sale
or transfer of any securities, (B) providing any Person with any preemptive
right, right of participation, right of maintenance, right of first refusal or
similar right with respect to any securities, or (C) providing Company or any of
its Subsidiaries with any right of first refusal or similar right with respect
to, or right to repurchase or redeem, any securities;
(vi) any agreement (A) to which any Governmental Entity is a
party or under which any Governmental Entity has any rights or obligations, or
(B) directly benefiting any Governmental Entity (including any subcontract or
other agreement between Company and any contractor or subcontractor to any
Governmental Entity);
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(vii) any agreement that contemplates or involves the payment
or delivery of cash or other consideration in an amount or having a value in
excess of $10,000 in the aggregate, or contemplates or involves the performance
of services having a value in excess of $10,000 in the aggregate;
(viii) any agreement pursuant to which Company distributes or
sells any of its products, including distributor agreements and sales
representative agreements and similar agreements but excluding those entered
into in the ordinary course of business consistent with past practice and
cancelable without penalty on notice of 30 days or fewer;
(ix) any agreement pursuant to which another Person
manufactures or supplies any products, or components thereof, of the Company or
any of its Subsidiaries, but excluding those entered into in the ordinary course
of business consistent with past practice and cancelable without penalty on
notice of 30 days or fewer;
(x) any agreement pursuant to which any Intellectual Property
of Company has been or is required to be placed into escrow for the benefit of
any other Person;
(xi) any and all alliance and partnership contracts material
to the Company's business; and
(xii) any other contract, agreement or commitment that is
material to the business of the Company, taken as a whole.
(b) Except as set forth in Section 3.13(a) of the Company
Disclosure Schedule, Each Material Contract is in full force and effect and is a
valid and binding obligation of the Company and, to the knowledge of the
Company, the other parties thereto, and neither the Company nor any of its
Subsidiaries, nor, to the knowledge of the Company, any other party thereto, is
in breach of, or default under, any such Material Contract, and no event has
occurred that with notice or passage of time or both would constitute such a
breach or default thereunder by the Company or any of its Subsidiaries, or, to
the knowledge of the Company, any other party thereto, except for such failures
to be in full force and effect and such breaches and defaults which, in the
aggregate, would not reasonably be expected to have a Company Material Adverse
Effect. Except with respect to the real property leases listed in Section 3.3(a)
and 3.24 of the Company Disclosure Schedule, consummation of the transactions
contemplated by this Agreement will not, by the terms of any Material Contract,
result in termination of any such Material Contract, give rise to a termination
right under any such Material Contract, require any third-party consent or
result in a payment in excess of $50,000.
SECTION 3.15 INTELLECTUAL PROPERTY.
(a) Section 3.15(a) of the Company Disclosure Schedule contains
an accurate and complete list of all Registered Intellectual Property Rights (as
such term is defined in Section 3.15(e) hereof), specifying as to each the
nature of such right and jurisdiction that has issued such registration with
respect thereto or, with respect to any application, where such application is
pending. To the knowledge of the Company, except as reflected on the Company
Disclosure Schedule, the Company owns free and clear of all liens, claims or
other encumbrances except liens for taxes not yet due and payable all Company
Intellectual Property.
(b) (i) All of the registrations relating to material Registered
Intellectual Property Rights are subsisting and unexpired, free of all liens or
encumbrances except liens for taxes not yet due and payable that would
reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect; (ii) except as set forth on Section 3.15(b) of the
Company Disclosure Schedule, the Company has not received notice from any third
party alleging that Company infringes the Intellectual Property (as defined in
Section 3.15(e) hereof) of any third party in any respect that would reasonably
be expected to have, individually or in the aggregate, a Company Material
Adverse Effect; (iii) no judgment, decree, injunction, rule or order has been
rendered by a Governmental Entity which would limit, cancel or question the
validity of, or the Company's rights in and to, any Company Intellectual
Property (as defined in Section 3.15(e)) in any respect that would reasonably be
expected to have, individually or in the aggregate, a Company Material Adverse
Effect; and (iv) the Company has not received notice of any pending or
threatened suit, action or adversarial proceeding that seeks to limit, cancel or
question the validity of, or the Company's rights in and to, any of its
Intellectual Property, which would reasonably be expected to have, individually
or in the aggregate, a Company Material Adverse Effect;
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(c) The Company has taken commercially reasonable steps to
protect the Company Intellectual Property. The source code and system
documentation relating to the Company Intellectual Property (i) have at all
times been maintained in confidence and (ii) have been disclosed by the Company
only to employees and consultants having "a need to know" the contents thereof
in connection with the performance of their duties to the Company.
(d) Except as disclosed on Section 3.15(d) of the Company
Disclosure Schedule, all employees of the Company have executed written
agreements with the Company that assign to the Company all rights to the
material inventions improvements, discoveries or information created as a result
of their employment at the Company. Similarly, to the knowledge of the Company,
all material independent contractors of and consultants to the Company have
executed written agreements with the Company that assign to the Company all
rights to the material inventions, improvements, discoveries or information
created as a result of the services that they rendered to the Company.
(e) Definitions.
(i) "INTELLECTUAL PROPERTY" shall mean (A) all (1) proprietary
inventions, discoveries, processes, formulae, designs, methods, techniques,
procedures, concepts, developments, technology, new and useful improvements
thereof and proprietary know-how relating thereto, whether or not patented or
eligible for patent protection; (2) copyrights and copyrightable works,
including, but not limited to, computer applications, programs, software,
databases and related items; (3) trademarks, service marks, trade names, and
trade dress, the goodwill of any business symbolized thereby, and all common-law
rights relating thereto; and (4) trade secrets and other confidential
information and (B) all rights, privileges and priorities provided under U.S.,
state and foreign law relating to the above
(ii) "COMPANY INTELLECTUAL PROPERTY' means any Intellectual
Property relating to, owned by, filed in the name of, or licensed to, the
Company.
(iii) "REGISTERED INTELLECTUAL PROPERTY RIGHTS" means all
United States, international and foreign: (A) patents; (B) registered
trademarks; (C) registered copyrights; (D) domain names; together with (E) any
applications for any of the foregoing related to Company Intellectual Property
owned by, or filed in the name of, the Company (or any of its predecessors or
affiliates).
(f) The technical documentation includes the source code, system
documentation, statements of principles of operation, and schematics for all
Company Intellectual Property that is computer software or computer software
related, as well as any pertinent commentary or explanation that may be
necessary to render such materials understandable and usable by a trained
computer programmer. The technical documentation also includes any program
(including compilers), "workbenches", tools, and higher level (or "proprietary")
language used for the development, maintenance, and implementation of the
applicable software programs.
(g) The Company has validly obtained the right and license to
use, copy, modify, and distribute the third-party programming and materials
contained in the Company Intellectual Property that is computer software or
computer software related pursuant to the contracts identified as "Licenses from
third parties (development and/or marketing)" or "Licenses from third parties
(internal use only)" in Section 3.15(g) of the Company Disclosure Schedule. To
the knowledge of the Company, such software programs contain no other
programming or materials in which any third party may claim superior, joint, or
common ownership, including any right or license
SECTION 3.16 ENVIRONMENTAL MATTERS.
(a) Except as would not result in material liability to the
Company, no underground storage tanks and no amount of any substance that has
been designated by any Governmental Entity or by applicable federal, state or
local law to be radioactive, toxic, hazardous or otherwise a danger to health or
the environment, including, without limitation, PCBs, asbestos, petroleum,
urea-formaldehyde and all substances listed as hazardous substances pursuant to
the Comprehensive Environmental Response, Compensation, and Liability Act of
1980, as amended, or defined as a hazardous waste
-13-
pursuant to the United States Resource Conservation and Recovery Act of 1976, as
amended, and the regulations promulgated pursuant to said laws, but excluding
office and janitorial supplies, (a "HAZARDOUS MATERIAL") are present, as a
result of the actions of the Company, or, to the Company's knowledge, as a
result of any actions of any third party or otherwise, in, on or under any
property, including the land and the improvements, ground water and surface
water thereof, that the Company has at any time owned, operated, occupied or
leased.
(b) Except as would not result in a material liability to the
Company (in any individual case or in the aggregate) (i) the Company has not
transported, stored, used, manufactured, disposed of, released or exposed its
employees or others to Hazardous Materials in violation of any law in effect on
or before the Closing, and (ii) the Company has not disposed of, transported,
sold, used, released, exposed its employees or others to or manufactured any
product containing a Hazardous Material (collectively "HAZARDOUS MATERIALS
ACTIVITIES") in violation of any rule, regulation, treaty or statute promulgated
by any Governmental Entity in effect prior to or as of the date hereof to
prohibit, regulate or control Hazardous Materials or any Hazardous Material
Activity.
(c) The Company currently hold all environmental approvals,
permits, licenses, clearances and consents (the "COMPANY ENVIRONMENTAL PERMITS")
necessary for the conduct of the Company's Hazardous Material Activities and
other businesses of the Company as such activities and businesses are currently
being conducted, except where the absence of such Company Environmental Permits
would not result in a Material Adverse Effect.
(d) No action, proceeding, revocation proceeding, amendment
procedure, writ or injunction is pending, and to the Company's knowledge, no
action, proceeding, revocation proceeding, amendment procedure, writ or
injunction has been threatened by any Governmental Entity against the Company or
in a writing delivered to the Company or any of its Subsidiaries concerning any
Company Environmental Permit, Hazardous Material or any Hazardous Materials
Activity of the Company. The Company is not aware of any fact or circumstance
which could involve the Company or any of its Subsidiaries in any material
environmental litigation or impose upon the Company any material environmental
liability.
SECTION 3.17 INSURANCE. The Company has summarized in a chart in
Section 3.17 of the Company Disclosure Schedule the type of policy, name of
issuer, policy limits, annual premium, premium due date, date of last payment of
premium, and scheduled expiration date, and has attached thereto, a copy of all
such insurance policies and all self-insurance programs and arrangements
relating to the business, assets and operations of the Company. There is no
material claim pending under any of such policies or bonds as to which coverage
has been denied, questioned or disputed by the underwriters of such policies or
bonds. All premiums due and payable under all such policies have been paid and
the Company is otherwise in compliance with the terms of such policies and
bonds. To the knowledge of the Company, there has been no threatened termination
of, or material premium increase with respect to, any such material policies.
SECTION 3.18 CERTAIN TRANSACTIONS. Except as set forth in the Company
SEC Documents or on Section 3.18 of the Company Disclosure Schedule, since
Company's proxy statement dated January 3, 2002 with respect to the acquisition
of ISPSoft Inc., no event has occurred that would be required to be reported as
a Certain Relationship or Related Transaction pursuant to Item 404 of Regulation
S-K promulgated by the SEC.
SECTION 3.19 OPINION OF FINANCIAL ADVISOR. The Company has received the
opinion of ▇▇▇▇▇▇▇▇ Bros., L.P. to the effect that, as of the date of such
opinion, and based upon and subject to the matters stated therein, the Exchange
Price is fair from a financial point of view to the holders of Company Common
Stock.
SECTION 3.20 PROFESSIONAL FEES. Except for ▇▇▇▇▇▇▇ Bros., whose fees
will be paid by the Company, there is no investment banker, broker, finder or
other intermediary which has been retained by, or is authorized to act on behalf
of, the Company that would be entitled to any fee or commission from the
Company, Parent or any of Parent's affiliates upon consummation of the
transactions contemplated by this Agreement. A true and correct copy of the
Company's engagement letter with ▇▇▇▇▇▇▇ Bros. has been delivered to Parent.
Except for ▇▇▇▇ and ▇▇▇▇ LLP, the Company employs no other legal counsel in
connection with the transaction contemplated hereby or in connection with any
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alternative change of control transaction. Provided that Parent and the Merger
Sub are in full compliance with the terms of this Agreement, the Company
covenants that it will not incur any investment banker, broker, finder or legal
fees with any firm other than ▇▇▇▇▇▇▇ Bros. and ▇▇▇▇ and ▇▇▇▇ LLP nor with
respect to the transactions contemplated hereby or in connection with any
alternative change of control transaction such that its aggregate legal or
investment banking fees, as applicable, increase (any breach of the covenant
contained in this sentence shall be deemed material).
SECTION 3.21 REQUIREMENTS OF THE NEW JERSEY GENERAL CORPORATION LAW.
The Board of Directors of the Company has taken all actions so that the
restrictions contained in the NJ Code applicable to a "business combination" and
the applicable anti-takeover laws of any other state, federal or foreign
jurisdiction will not apply to the execution, delivery or performance of this
Agreement or the Stockholder Agreements or to the consummation of the Merger or
the other transactions contemplated by this Agreement or the Stockholder
Agreements.
SECTION 3.22 BANKRUPTCY. The Company does not have any plans or
intentions to declare bankruptcy or insolvency, liquidate, enter into
receivership or otherwise cease operations as presently conducted. To the
knowledge of the Company as of the date hereof, no creditor or any other Person
has made any attempt to, or has any plans or intentions to, force or cause the
Company to declare bankruptcy or insolvency, liquidate, enter into receivership
or otherwise cease operations as presently conducted.
SECTION 3.23 CERTAIN BUSINESS PRACTICES. Neither the Company nor, to
the Company's knowledge, any of their respective directors, officers or
employees, has: (i) used any funds for unlawful contributions, gifts,
entertainment or other unlawful payments relating to political activity or (ii)
made any unlawful payment to any foreign or domestic government official or
employee or to any foreign or domestic political party or campaign or violated
any provision of the Foreign Corrupt Practices Act of 1977, as amended.
SECTION 3.24 TITLE TO PROPERTY/REAL PROPERTY LEASES. The Company owns
or has a valid right to use, or an agreement with a third party with respect to,
all assets, including without limitation, Intellectual Property, material to the
current business of the Company. The Company does not own any real property.
Section 3.24 of the Company Disclosure Schedule lists all of leases, subleases
or settlements with respect thereto, pursuant to which the Company leases or has
leased (i) real property (the "REAL PROPERTY LEASES") in existence as of June
30, 2002 or (ii) personal property which require annual payments in excess of
$10,000 with respect to each personal property lease or sublease ((i) and (ii)
collectively, the "COMPANY LEASES"). With respect to each Real Property Lease or
sublease that has been terminated since June 1, 2002, the Company has provided a
copy of such lease termination and settlement, if any. With respect to the Real
Property Lease for real property located in Plano, Texas, the Company has agreed
to use its commercially reasonable efforts to terminate the lease prior to the
Closing at a termination or settlement cost of no more than $100,000. In any
event, the Company agrees to disclose the material terms of any termination or
settlement offer for the Plano Real Property Lease, and to discuss an
appropriate termination or settlement with Parent and Merger Sub prior to
executing any such termination or settlement. The Real Property Lease for real
property located in Shrewsbury, New Jersey remains in full force and effect in
accordance with its terms. There is not, under any Real Property Lease, any
existing default or event of default of the Company or, to the Company's
knowledge, any other party.
SECTION 3.25 CUSTOMERS AND SUPPLIERS. Except as set forth on Section
3.25 of the Company Disclosure Schedule, to the knowledge of the Company, none
of the material customers or suppliers of the Company are in the process of or
intend to terminate or otherwise materially alter their business relationship or
pricing scheme with the Company.
SECTION 3.26 EMPLOYEE RELATIONS. Within the last two (2) years, the
Company and its Subsidiaries have not experienced any strike, picketing,
boycott, work stoppage or slowdown or other labor dispute, nor to the knowledge
of the Company, is any such event or any organizing effort threatened against
it. To the knowledge of the Company, there is no pending charge or complaint of
unfair labor practice, employment discrimination or similar matters against the
Company relating to the employment of labor, nor have any such charges or
complaints been filed with any Governmental Entity within two years prior to the
date of this Agreement.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub jointly and severally represent and warrant to the
Company, subject to such exceptions as are disclosed in writing in the
disclosure schedule supplied by Parent and Merger Sub to the Company (the
"PARENT DISCLOSURE SCHEDULE"), which disclosure shall provide an
exception to or otherwise qualify the representations or warranties of Parent
specifically referred to in such disclosure schedule and such other
representations and warranties to the extent such disclosure shall reasonably
appear to be applicable to such other representations or warranties, as follows:
SECTION 4.1 CORPORATE EXISTENCE AND POWER. Each of Parent and Merger Sub is
a corporation duly incorporated (or other entity duly organized), validly
existing and in good standing under the laws of the state of Georgia, has all
corporate or other power, as the case may be, and all Licenses required to carry
on its business as now conducted except for failures to have any such License
which would not, in the aggregate, have a Parent Material Adverse Effect (as
defined hereafter). Parent and Merger Sub are duly qualified to do business and
is in good standing in each jurisdiction where the character of the property
owned, leased or operated by it or the nature of its activities makes such
qualification necessary, except for those jurisdictions where failures to be so
qualified would not reasonably be expected to, in the aggregate, have a Parent
Material Adverse Effect. As used herein, the term "PARENT MATERIAL ADVERSE
EFFECT" means a material adverse effect on the financial condition,
business, assets or results of operations of Parent, taken as a whole, or on the
ability of Parent and/or Merger Sub to complete the transactions contemplated
hereby, PROVIDED, HOWEVER, that in no event shall any effect that results from
(i) any change in general economic conditions, (ii) any failure by Parent to
meet revenue earnings and estimates in and of itself, or (iii) the announcement
or pendency of this Agreement (including any delays or cancellations in customer
orders, a reduction in sales, a disruption in supplier, distribution or similar
relationships or a loss of employees), constitute, or be considered in
determining the existence of, a Parent Material Adverse Effect. Parent has
heretofore delivered or made available to the Company true and complete copies
of the governing documents or other organizational documents of like import, as
currently in effect, of Parent.
SECTION 4.2 AUTHORIZATION. Each of Parent and Merger Sub has the requisite
power and authority to execute and deliver this Agreement and to perform its
obligations hereunder. The execution and delivery of this Agreement and the
performance of its obligations hereunder have been duly and validly authorized
by both the Board of Directors of Parent and the Board of Directors of Merger
Sub, and no other proceedings on the part of Parent, including stockholder
approval, or on the part of Merger Sub are necessary to authorize the execution,
delivery and performance of this Agreement. This Agreement has been duly
executed and delivered by Parent and Merger Sub and constitutes, assuming due
authorization, execution and delivery of this Agreement by the Company, a valid
and binding obligation of Parent and Merger Sub, respectively enforceable
against each entity in accordance with its terms (except in all cases as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, receivership, conservatorship, moratorium, or similar laws
affecting the enforcement of creditors' rights generally and except that the
availability of the equitable remedy of specific performance or injunctive
relief is subject to the discretion of the court before which any proceeding may
be brought).
SECTION 4.3 CONSENTS AND APPROVALS; NO VIOLATIONS.
(a) Neither the execution and delivery of this Agreement nor the
performance by Parent or Merger Sub of its respective obligations hereunder will
(i) conflict with or result in any breach of any provision of the Certificate of
Incorporation or Bylaws (or other governing or organizational documents) of
Parent or of Merger Sub, as applicable, or (ii) result in a violation or breach
of, or constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, cancellation or acceleration
or obligation to repurchase, repay, redeem or acquire or any similar right or
obligation) under any of the terms, conditions or provisions of any note,
mortgage, letter of credit, other evidence of indebtedness, guarantee, license,
lease or agreement or similar instrument or obligation to which Parent or Merger
Sub is a party or by which any of them or any of the respective assets used or
held for use by any of them may be bound or (iii) assuming that the filings,
registrations, notifications, authorizations, consents and approvals referred to
in subsection (b) below have been obtained or made,
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as the case may be, violate any order, injunction, decree, statute, rule or
regulation of any Governmental Entity to which Parent or Merger Sub is subject,
excluding from the foregoing clauses (ii) and (iii) such requirements, defaults,
breaches, rights or violations (A) that would not, in the aggregate, reasonably
be expected to have a Parent Material Adverse Effect and would not reasonably be
expected to have a material adverse effect on the ability of Parent to perform
its obligations hereunder or (B) that become applicable as a result of any acts
or omissions by, or facts specifically pertaining to, the Company.
(b) No filing or registration with, notification to, or
authorization, consent or approval of, any Governmental Entity is required in
connection with the execution and delivery of this Agreement by Parent or by
Merger Sub or the performance by either entity of its obligations hereunder,
except (i) the filing of the Certificate of Merger in accordance with the GA
Code and the NJ Code; (ii) compliance with any applicable requirements of the
Exchange Act, and (iii) such other consents, approvals, orders, authorizations,
notifications, registrations, declarations and filings (A) the failure of which
to be obtained or made would not, in the aggregate, reasonably be expected to
have a Parent Material Adverse Effect and would not have a material adverse
effect on the ability of Parent or of Merger Sub to perform its obligations
hereunder or (B) that become applicable as a result of any acts or omissions by,
or facts specifically pertaining to, the Company.
SECTION 4.4 DISCLOSURE DOCUMENTS. Neither the Merger Documents, nor any of
the information supplied or to be supplied by Parent or its Subsidiaries or
Representatives (as defined in Section 5.3) for inclusion or incorporation by
reference in the Proxy Statement will, at the respective times any such
documents or any amendments or supplements thereto are filed with the SEC, are
first published, sent or given to stockholders or, in the case of the Proxy
Statement, at the time of the Company Special Meeting, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading. The
Merger Documents will comply as to form in all material respects with the
requirements of all applicable laws, including the Exchange Act and the rules
and regulations thereunder. No representation or warranty is made by Parent or
Merger Sub with respect to statements made or incorporated by reference in any
such documents based on information supplied by the Company for inclusion or
incorporation by reference therein.
SECTION 4.5 FINDERS' FEES. Except with respect to investment banker fees
payable in connection with the financing of this transaction, there is no
broker, finder or other intermediary that might be entitled to any fee or
commission in connection with or upon consummation of the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
Parent.
SECTION 4.6 INTERIM OPERATIONS OF MERGER SUB. Merger Sub was formed solely
for the purpose of engaging in the transactions contemplated by this Agreement
and has not engaged in any business activities or conducted any operations other
than in connection with the transactions contemplated by this Agreement.
SECTION 4.7 FINANCING. Parent has obtained a written commitment from
funding sources to provide funding for this transaction, and has provided a copy
of such funding commitment letters attached to Section 4.7 of Parent Disclosure
Schedule, such commitment letters provide that at the Effective Time, Parent and
the Merger Sub will have available all the funds necessary to purchase all the
Shares pursuant to the Merger.
SECTION 4.8 OWNERSHIP. Except as may be deemed as a result of the
Stockholder Agreements, Parent does not beneficially own any shares of Company
Common Stock.
ARTICLE V
COVENANTS OF THE PARTIES
SECTION 5.1 CONDUCT OF THE BUSINESS OF THE COMPANY. Except as (i)
contemplated by this Agreement and (ii) as set forth on the Company Disclosure
Schedule, after the date hereof and prior to the Closing, the Company agrees
that (except to the extent that Parent shall otherwise consent, which consent
shall not be unreasonably withheld, delayed or conditioned) the Company shall
conduct its operations in the ordinary course, taking into account the advice
and recommendations of the Advisory Committee,and will use commercially
reasonable efforts to preserve intact its present business focus while making
commercially reasonable decisions regarding reductions in the Company's monthly
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expenditures vis-a-vis its monthly income, negotiating terminations of its
Bridgewater and Plano office leases, and maintaining satisfactory relationships
with licensors, licensees, suppliers, contractors, distributors, customers and
others having business relationships with it. Without limiting the generality of
the foregoing, during the period from the date of this Agreement to the Closing,
the Company shall not, without the prior written consent of Parent, which
consent shall not be unreasonably withheld, delayed or conditioned:
(a) declare, set aside or pay any dividend or other distribution
with respect to any shares of capital stock of the Company, or repurchase,
redeem or acquire any outstanding shares of capital stock or other equity
securities of, or other ownership interests in, the Company or effect any stock
split (forward or reverse) or otherwise change its capitalization or capital
structure in any manner from the way it existed on the date hereof;
(b) amend any provision of the Certificate of Incorporation or
Bylaws of, or any material term of any outstanding security issued by, the
Company;
(c) incur, assume or guarantee any indebtedness for borrowed money
other than borrowings under existing short term credit facilities not in excess
of $10,000 in the aggregate;
(d) change any method of accounting or accounting practice by the
Company, except for any such change required by reason of a change in GAAP or
the Internal Revenue Code of 1986, as amended;
(e) (i) except as set forth in the Company Disclosure Schedule,
grant any severance or termination pay to any director, officer or employee of
the Company, (ii) enter into any employment, deferred compensation or other
similar agreement (or any amendment to any such existing agreement) with any
director, officer or employee of the Company, (iii) increase benefits payable
under any existing severance or termination pay policies or employment
agreements or (iv) increase compensation, bonus or other benefits payable to
directors, officers or employees of the Company, in each case other than in the
ordinary course of business consistent with past practice;
(f) issue any Company Securities other than pursuant to Company
Options, warrants or other Common Stock equivalents outstanding as of the date
of this Agreement;
(g) acquire, dispose of or license assets material to the Company,
except for sales of inventory in the ordinary course of business consistent with
past practice, or acquire or dispose of capital stock of any third party, merge
or consolidate with any third party;
(h) enter into any joint venture, partnership or similar agreement
with any Person;
(i) modify, amend or terminate any of the Company's Material
Contracts, or waive, release or assign any material rights or claims under any
of the Company's Material Contracts, except in the ordinary course of business;
(j) make any Tax election inconsistent with past practice that,
individually or in the aggregate, would adversely affect in any material respect
the Tax liability or Tax attributes of the Company, taken as a whole, or settle
or compromise any material Tax liability;
(k) settle, compromise or otherwise terminate any material
litigation, claim or other settlement negotiation;
(l) fail to maintain insurance covering the Company's material
properties and assets under substantially similar terms and conditions as the
Company's current policies;
(m) enter into any Material Contract; or
(n) authorize, commit or agree to take any of the foregoing
actions except as otherwise permitted by this Agreement.
Upon the execution and delivery of this Agreement, the Company and
Parent shall establish a committee (the "Advisory Committee") for the purpose
of, to the extent permitted by applicable laws, monitoring and advising the
Company regarding its business, operations, reductions in force, monthly
expenditures, capital spending, asset acquisition or disposition, budgets, and
financial results (collectively, the "Advisory Issues"), between such date and
the Closing (the "Interim Period") and otherwise facilitating the efficient
transition and combination of the respective businesses of Parent and the
Company as promptly as practicable following the Closing. The Advisory Committee
members shall be provided with such current financial and operational
information as they may request, and shall, during
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normal business hours and on reasonable notice, have access to the executive
officers and managers of the Company. All Advisory Issues shall be presented to
the Advisory Committee, together with sufficient background information, prior
to final determination of such issues by the Board of Directors or management of
the Company. The Company shall consider the recommendations of the Advisory
Committee prior to making a final decision on any Advisory Issues. The Company
and Parent agree that (i) any information provided by the Company to Parent or
Parent's Advisory Committee representative pursuant to this paragraph, (ii) the
content of Advisory Committee materials, communications or meetings and (iii)
oral communications by executive officers and managers of the Company to
Parent's Advisory Committee representative shall be considered Evaluation
Material (as such term is defined in that certain confidentiality agreement
dated July 1, 2002 between the Company and Parent (the "Confidentiality
Agreement")) and shall be subject to the terms and conditions of the
Confidentiality Agreement, except that the three year limitation contained in
the third paragraph of the Confidentiality Agreement shall be increased to five
(5) years for such Evaluation Material. The Company and the Parent also agree
that any Advisory Committee representative of the Parent shall be considered a
Representative under the Confidentiality Agreement.
The Advisory Committee at all times shall consist of one
individual to be designated from time to time by the Chairman of the Board of
Directors of Parent and two individuals to be designated from time to time by
the Board of Directors of the Company and will be chaired by one of the
individuals designated by Parent. All decisions of the Advisory Committee, which
shall be dissolved as of the Closing, shall be agreed upon by the majority vote
of the Advisory Committee members. Any actions of the Company which are in
accordance with the decisions of the Advisory Committee shall be deemed to be in
compliance with the Company's obligations and covenants set forth above in this
Section 5.1.
Nothing herein shall obligate the Board of Directors or management
of the Company to (i) adopt the recommendations or proposals of the Advisory
Committee or (ii) provide information to the Advisory Committee if the Board of
Directors of the Company believes in good faith, after consultation with the
Company's counsel that such action would be inconsistent with the fiduciary
duties of the Board of Directors of the Company under applicable law. Any action
of the Company taken in accordance with this paragraph shall be deemed to be in
compliance with the Company's obligations and covenants set forth above in this
Section 5.1.
Without limiting the generality of the foregoing, the Company
shall promptly notify Parent and the Advisory Committee of (i) any discussions
or actions (of any type, preliminary or otherwise) relating to bankruptcy of the
Company, (ii) any complaints, investigations or hearings (or communications
indicating that the same may be contemplated) of any Governmental Entity, (iii)
any material loss of or damage to any property, (iv) any material change in
material existing relationships with outside third parties, (v) the institution
or threat of any material litigation that could affect the Company, (vi) the
failure of the Company to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it pursuant to this Agreement or
(vii) any other matter that could result in a Material Adverse Effect.
Notwithstanding the foregoing or anything contained herein to the contrary,
nothing in this Agreement shall be construed to restrict the Company's
operations in a manner which would violate applicable law.
The Company shall indemnify and hold harmless Parent and those
employees of Parent who render services to the Advisory Committee during the
Interim Period under this Agreement from and against any claims or liabilities
asserted against them relating to their services to the Advisory Committee
hereunder (and Company hereby forever releases Parent and such persons from any
claims by or liabilities to Company arising from or relating to such services to
the Advisory Committee), provided that (i) such claims or liabilities did not
result from acts or omissions (x) not in good faith or (y) which involve
intentional misconduct or a knowing violation of law and (ii) such services were
rendered in a manner reasonably and in good faith believed to be in or not
opposed to the best interests of the Company.
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During the Interim Period, Parent shall cause all of its employees
to use their best efforts to (i) avoid doing anything to the competitive
disadvantage of the Company vis-a-vis Parent, (ii) not use to the advantage of
Parent any confidential information of the Company obtained while performing
services for or on behalf of the Company, (iii) not solicit any employees of the
Company to terminate their relationship with the Company, and (iv) if requested
by the Company to do so, cause each such employee of Parent to execute
confidentiality and non-solicitation agreements in customary form in accordance
with the foregoing.
SECTION 5.2 STOCKHOLDER APPROVAL; PREPARATION OF PROXY STATEMENT.
(a) In connection with the approval of the Company's stockholders
as required by applicable law in order to consummate the Merger, Company shall,
as soon as practicable following the execution of this Agreement, prepare and
the Company shall file with the SEC the Proxy Statement. The Company will cause
the Proxy Statement to be mailed to the Company's stockholders as promptly as
practicable after receiving SEC approval, or deemed approval (if no response is
received within ten days after filing with the SEC). No filing of, or amendment
or supplement to, or correspondence to the SEC or its staff with respect to the
Proxy Statement will be made by the Company, without providing Parent and Merger
Sub a reasonable opportunity to review and comment thereon. The Company will
advise Parent and Merger Sub promptly after it receives notice thereof, of any
request by the SEC for the amendment of the Proxy Statement or comments thereon
and responses thereto or requests by the SEC for additional information. If at
any time prior to the Closing any information relating to the Company or Parent,
or any of their respective affiliates, officers or directors, should be
discovered by the Company, Parent or Merger Sub which should be set forth in an
amendment or supplement to the Proxy Statement, so that any of such documents
would not include any misstatement of a material fact or omit to state any
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, the party which
discovers such information shall promptly notify the other parties hereto and an
appropriate amendment or supplement describing such information shall be
promptly filed with the SEC and, to the extent required by law, disseminated to
the stockholders of the Company.
(b) The Company shall establish, as soon as practicable following
the date hereof, a record date in order to duly call, give notice of, convene
and hold a meeting of its stockholders (the "COMPANY SPECIAL MEETING")
for the purpose of considering the approval of the Merger and (with the consent
of Parent) such other matters as may in the reasonable judgment of the Company
be appropriate for consideration at the Company Special Meeting. Once the
Company Special Meeting has been called and noticed, the Company shall not
postpone or adjourn the Company Special Meeting (other than for the absence of a
quorum, or in connection with the exercise of fiduciary duties by the Board of
Directors of the Company pursuant to Section 5.4) without the consent of Parent.
Subject to the Company's right pursuant to Section 5.4 hereof to withhold,
withdraw, modify, change or fail to make the Recommendations, the Board of
Directors of the Company shall include in the Proxy Statement the
Recommendations. Unless the Board of Directors of the Company shall have
withheld, withdrawn, modified, changed or failed to make its Recommendations in
compliance with Section 5.4, the Company shall use commercially reasonable
efforts to secure the vote or consent of stockholders required by the NJ Code to
effect the Merger.
(c) The Company and Parent shall cooperate with one another (i) in
connection with the preparation of the Proxy Statement, (ii) in determining
whether any action by or in respect of, or filing with, any Governmental Entity
is required, or any actions, consents, approvals or waivers are required to be
obtained from parties to any material contracts, in connection with the
consummation of the transactions contemplated by this Agreement and (iii) in
seeking any such actions, consents, approvals or waivers or making any such
filings, furnishing information required in connection therewith or with the
Proxy Statement and seeking timely to obtain any such actions, consents,
approvals or waivers.
SECTION 5.3 ACCESS TO INFORMATION; CONFIDENTIALITY AGREEMENT. Between the
date hereof and the Closing Date, the Company shall (i) give Parent, its
respective counsel, financial advisors, auditors and other authorized
representatives (collectively, "REPRESENTATIVES") access to the
offices, properties, books and records of the Company, (ii) furnish to Parent
and Parent's Representatives such financial and operating data and other
information relating to the Company, and its respective operations
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as such Persons may reasonably request and (iii) instruct the Company's
employees, counsel and financial advisors to cooperate with Parent in its
investigation of the business of the Company; PROVIDED that any information and
documents received by Parent or its Representatives (whether furnished before or
after the date of this Agreement) shall be held in accordance with that certain
letter dated as of July 1, 2002 between Parent and the Company regarding
confidentiality and non-disclosure of Company information (the "CONFIDENTIALITY
AGREEMENT"), which shall remain in full force and effect pursuant to the terms
thereof until the Effective Time, notwithstanding the execution and delivery of
this Agreement or the termination hereof.
SECTION 5.4 NO SOLICITATION. From the date hereof until the Effective Time
or, if earlier, the termination of this Agreement, the Company shall not,
whether directly or indirectly through its respective Representatives, (a)
solicit, initiate or encourage any Acquisition Proposal (as defined hereafter),
(b) engage in discussions or negotiations with, or disclose any non-public
information relating to the Company or afford access to the properties, books or
records of the Company to, any Person (other than Parent or its Representatives)
concerning an Acquisition Proposal, (c) release any third party from, or waive
any provisions of, any confidentiality or standstill agreement to which the
Company is a party, or (d) following receipt of an Acquisition Proposal,
withhold, withdraw, modify or change in a manner adverse to Parent, or fail to
make, its Recommendations or approve, endorse or recommend such Acquisition
Proposal; PROVIDED THAT, in each case, if and to the extent that (i) the
Company's Board of Directors believes in good faith, after consultation with the
Company's financial advisor and legal counsel, that such Acquisition Proposal
is, or could reasonably be expected to lead to, a Superior Proposal (as defined
hereafter) and (ii) the Company's Board of Directors believes in good faith,
after consultation with the Company's counsel, that the failure to engage in
such negotiations or discussions, provide such information, release a third
party from or waive any provision under any such confidentiality or standstill
agreement, so withhold, withdraw, modify, change or fail to make its
Recommendations and/or so approve, endorse or recommend such Acquisition
Proposal would be inconsistent with the fiduciary duties of the Board of
Directors of the Company under applicable law, then the Company may furnish
information with respect to the Company, participate in negotiations regarding
such Acquisition Proposal, release a third party from or waive any provisions
under any such confidentiality or standstill agreement, withhold, withdraw,
modify or change in a manner adverse to Parent its Recommendations, and/or fail
to make, approve, endorse or recommend such Acquisition Proposal, as applicable.
Upon its receipt thereof, the Company shall promptly (and in any event within
one (1) business day) provide Parent with a written statement with respect to
any non-written Acquisition Proposal received, which statement shall include the
identity of the parties making the Acquisition Proposal and the material terms
thereof and shall promptly (and in any event within one (1) business day) advise
Parent of any material modification or proposed modification thereto. For
purposes of this Agreement, "ACQUISITION PROPOSAL" means any offer or
proposal for a merger, consolidation, recapitalization, liquidation or other
business combination involving the Company or the acquisition or purchase of
over 15% or more of any class of equity securities of the Company, or any tender
offer (including self-tenders) or exchange offer that if consummated would
result in any Person beneficially owning 15% or more of any class of equity
securities of the Company, or a substantial portion of the assets of, the
Company. As used herein, a "SUPERIOR PROPOSAL" shall mean a bona fide
written Acquisition Proposal which the Company's Board of Directors believes in
good faith, after consultation with the Company's financial advisor, (i) would
be reasonably likely to be more favorable to the Company and its stockholders
than those provided pursuant to this Agreement from a financial point of view
and otherwise (taking into account, among other things, all legal, financial,
regulatory and other aspects of the proposal and identity of the offeror) as
compared to the transaction contemplated hereby (including any alternative
proposal offered by Parent in response thereto) and (ii) if applicable, is
reasonably capable of being financed by the Person making such Acquisition
Proposal. Nothing contained in this Agreement shall prohibit the Company or the
Company's Board of Directors from taking and disclosing to the Company's
stockholders a position with respect to a tender or exchange offer by a third
party pursuant to Rules 14d-9 and 14e-2(a) promulgated under the Exchange Act or
from making any disclosure required by applicable law.
The Company shall immediately cease and cause to be terminated any existing
discussions or negotiations with any third party (other than Parent) conducted
heretofore with respect to any
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Acquisition Proposal, except that the Company shall use its commercially
reasonable efforts to cause any such parties in possession of confidential
information about the Company that was furnished by or on behalf of the Company
in connection with any Acquisition Proposal to return or destroy all such
information in the possession of any such Person or in the possession of any
Representative of any such Person. The Company shall use its commercially
reasonable efforts to inform its Representatives of the restrictions described
in this Section 5.4.
SECTION 5.5 INDEMNIFICATION
(a) From and after the Effective Time, Parent shall cause the
Surviving Corporation to fulfill and honor in all respects the obligations of
the Company to indemnify and hold harmless the Company's and its Subsidiaries'
present and former directors, officers, employees, and agents and their heirs,
executors and assigns (collectively, the "Covered Parties") against all claims,
losses, liabilities, damages, judgments, fines and reasonable fees, costs and
expenses, including attorneys' fees and disbursements, incurred in connection
with any claim, action, suit, proceeding or investigation, whether civil,
criminal, administrative or investigative, arising out of or pertaining to (i)
the fact that the Covered Party is or was an officer, director, employee or
agent of the Company or any of its subsidiaries or (ii) matters existing or
occurring at or prior to the Effective Time (including this Agreement and the
transactions and actions contemplated hereby), whether asserted or claimed prior
to, at or after the Effective Time, to the fullest extent permitted under
applicable law. Prior to or concurrent with the Closing, the Company shall
purchase and have effective a six (6) year extension of the discovery period
under the Company's current directors' and officers' liability insurance policy.
(b) The certificate of incorporation and by-laws of the Surviving
Corporation shall contain, at all times prior to the sixth anniversary of the
Effective Time, provisions no less favorable with respect to indemnification,
advancement of expenses and exculpation of present and former directors,
officers, employees and agents of the Company and its subsidiaries than are
presently set forth in the certificate of incorporation and by-laws of the
Company.
(c) Notwithstanding anything herein to the contrary, if any
claim, action, suit, proceeding or investigation (whether arising before, at or
after the Effective Time) is made against any Covered Party, on or prior to the
sixth anniversary of the Effective Time, the provisions of this Section 5.5
shall continue in effect until the final disposition of such claim, action,
suit, proceeding or investigation.
(d) The covenants contained in this Section are intended to be
for the benefit of, and shall be enforceable by, each of the Covered Parties and
their respective heirs and legal representatives and shall not be deemed
exclusive of any other rights to which a Covered Party is entitled, whether
pursuant to law, contract or otherwise. In the event that the Surviving
Corporation or any of its successors or assigns (i) consolidates with or merges
into any other person and shall not be the continuing or surviving corporation
or entity of such consolidation or merger or (ii) transfers or conveys all or
substantially all of its properties and assets to any person, then, and in each
such case, proper provision shall be made so that the successors or assigns of
the Surviving Corporation, as the case may be, shall succeed to the obligations
set forth in this Section 5.5.
SECTION 5.6 OBTAINING FINANCING. Parent shall use its reasonable best
efforts to obtain, prior to the Closing, the financing contemplated by Section
4.7, or such other financing necessary to fund the aggregate Exchange Price.
SECTION 5.7 REASONABLE BEST EFFORTS. Upon the terms and subject to the
conditions of this Agreement, each party hereto shall use its reasonable best
efforts to take, or cause to be taken, all actions and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations to consummate the transactions contemplated by this Agreement and to
cooperate with each of the other parties hereto in connection with the
foregoing, including using its reasonable best efforts: (A) to obtain all
necessary waivers, consents and approvals from third parties; (B) to obtain all
necessary consents, approvals and authorizations as are required to be obtained
under any federal, state or foreign laws or regulations; (C) to lift or rescind
any injunction or restraining order or other order adversely affecting the
ability of the parties to consummate the transactions contemplated hereby; (D)
to
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effect all necessary registrations and filings and submissions of information
requested by governmental authorities; and (E) to fulfill all conditions to this
Agreement; and shall not take, or agree in writing or otherwise to take, any
action which would cause or would be reasonably likely to cause, any of the
conditions to the Merger not to be satisfied. From the date of this Agreement
through the Closing, Parent agrees that it will not acquire beneficial ownership
of shares of Company Common Stock, without the Company's consent.
SECTION 5.8 PUBLIC ANNOUNCEMENTS. Neither the Company, Parent, nor any of
their respective affiliates shall issue or cause the publication of any press
release or other public announcement with respect to the Merger, this Agreement
or the other transactions contemplated hereby without the prior written consent
of the other party, except as may be required by law or by any listing agreement
with, or the policies of, a national securities exchange in which circumstance
reasonable efforts to consult with the other party will still be required to the
extent practicable.
SECTION 5.9 STATE TAKEOVER LAWS. If any "fair price," "business
combination" or "control share acquisition" statute or other similar statute or
regulation is or may become applicable to the Merger or the Stockholder
Agreements, the Company shall take such actions as are necessary so that the
transactions contemplated by this Agreement may be consummated as promptly as
practicable on the terms contemplated hereby and otherwise act to eliminate or
minimize the effects of any such statute or regulation on the Merger and the
Stockholder Agreements.
SECTION 5.10 CERTAIN NOTIFICATIONS. Between the date hereof and the
Effective Time, each party shall promptly notify the other party hereto in
writing after becoming aware of the occurrence of any event which will, or is
reasonably likely to, result in the failure to satisfy any of the conditions
specified in Article VI.
SECTION 5.11 VOTING OF SHARES. Parent and Merger Sub agree to vote all
Shares beneficially owned by them as of the applicable record date in favor of
adoption of this Agreement at the Company Stockholder Meeting or pursuant to
applicable provisions of the GA Code on the terms and subject to the conditions
set forth in this Agreement.
SECTION 5.12 ADDITIONAL REPORTS. The Company shall furnish to Parent copies
of any reports which it files with the SEC on or after the date hereof but prior
to the Closing.
SECTION 5.13 LOAN EXTENSION. The Company shall use its commercially
reasonable efforts to negotiate an extension of the Company's obligations due
under (i) that certain Promissory Note by the Company in favor of Signal Lake
Venture Fund, L.P., dated January 31, 2002 in the original principal amount of
$400,000 and (ii) that certain Promissory Note by the Company in favor of Lucent
Technologies, dated January 31, 2002 in the original principal amount of
$400,000.
ARTICLE VI
CONDITIONS TO THE MERGER
SECTION 6.1 CONDITIONS TO EACH PARTY'S OBLIGATIONS. The respective
obligations of the Company, Parent and Merger Sub to consummate the Merger are
subject to the satisfaction or, to the extent permitted by applicable law, the
waiver on or prior to the Effective Time of each of the following conditions:
(a) If required by the NJ Code, this Agreement shall have been
adopted and the Merger approved by the stockholders of the Company; and
(b) No provision of any applicable law or regulation and no
judgment, injunction, order or decree shall prohibit the consummation of the
Merger or the other transactions contemplated by this Agreement.
SECTION 6.2 CONDITIONS TO THE OBLIGATION OF THE PARENT AND THE MERGER SUB.
The obligation of the Parent and the Merger Sub to consummate the Merger is
subject to the satisfaction (or waiver by the Parent) of the following
additional conditions:
(a) The Company shall have obtained at its own expense (and shall
have provided copies thereof to the Parent) all of the waivers, permits,
consents, approvals or other authorizations, and effected all of the
registrations, filings and notices, referred to in Section 3.3 which are
required on the part of the Company, except for any failure of which to obtain
or effect would not, individually or in the
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aggregate, have a Company Material Adverse Effect or a material adverse effect
on the ability of the Parties to consummate the transactions contemplated by
this Agreement;
(b) The representations and warranties of the Company contained
in this Agreement shall be true and correct on and as of the Closing with the
same force and effect as if made as of such date, except to the extent that (A)
the inaccuracy of any such representation or warranty is the result of events or
circumstances occurring subsequent to the date of this Agreement and any such
inaccuracies, individually or in the aggregate, would not have a Company
Material Adverse Effect (it being understood that, for purposes of determining
the accuracy of such representations and warranties, all Company Material
Adverse Effect and materiality qualifications and other qualifications based on
the word "material" contained in such representations and warranties shall be
disregarded), (B) the changes are contemplated by this Agreement, (C) the
representations and warranties address matters only as of a particular date,
which representations shall have been true and correct as of such particular
date such that, in each case or in the aggregate, such failure to be true and
correct constitutes a Company Material Adverse Effect (it being understood that,
for purposes of determining the accuracy of such representations and warranties,
all Company Material Adverse Effect and materiality qualifications and other
qualifications based on the word "material" contained in such representations
and warranties shall be disregarded), and (D) the representations and warranties
are contained in Section 3.4, which shall be true and correct in all material
respects as of the date of the Agreement;
(c) There shall not have been any action taken, or any statute,
law, ordinance, rule, regulation, injunction, judgment, order or decree
proposed, entered, enacted, enforced, promulgated, issued or deemed applicable
to the Merger by any Governmental Entity, or there shall not be pending any
action, suit or proceeding by any Governmental Entity against Parent, the
Company, or Merger Sub, that is likely to (i) prohibit, limit or make illegal,
or otherwise restrict the consummation of the Merger (ii) render Merger Sub
unable to accept for payment or pay for some or all of the Shares, (iii) impose
material limitations on the ability of Parent effectively to exercise full
rights of ownership of the Shares, including, without limitation, the right to
vote the Shares purchased by it on all matters properly presented to the
Company's stockholders, (iv) prohibit or impose any limitations on Parent's
direct or indirect ownership or operation (or that of any of its affiliates) of
all or a material portion of their or the Company's businesses or assets, (v)
compel Parent or its affiliates to dispose of or hold separate any material
portion of the business or assets of the Company or Parent and their respective
Subsidiaries, (vi) oblige the Company, Parent or any of their respective
subsidiaries to pay material damages in connection with the transactions
contemplated by the Agreement or (vii) otherwise constitute a Company Material
Adverse Effect or, as a result of the transactions contemplated by the
Agreement, a Parent Material Adverse Effect;
(d) There shall not have occurred and be continuing (i) any
general suspension of trading in securities on the Nasdaq SmallCap Market or
over the counter bulletin board, (ii) the declaration of a banking moratorium or
any suspension of payments in respect of banks in the United States, (iii) any
direct or indirect limitation (whether or not mandatory) by a United States
Governmental Entity on the extension of credit by banks or other financial
institutions, (iv) a change in banking, general financial or capital market
conditions which materially and adversely affects the ability of financial
institutions in the United States to extend credit or syndicate loans, or (v) in
the case of any of the foregoing existing on the date of the Agreement, a
material change, acceleration or worsening thereof;
(e) The Company shall have performed or complied with in all
material respects its agreements and covenants required to be performed or
complied with under this Agreement as of or prior to the Closing;
(f) No Legal Proceeding shall be pending or threatened wherein an
unfavorable judgment, order, decree, stipulation or injunction would (i) prevent
consummation of the transactions contemplated by this Agreement, (ii) cause the
transactions contemplated by this Agreement to be rescinded following
consummation or (iii) have, individually or in the aggregate, a Company Material
Adverse Effect, and no such judgment, order, decree, stipulation or injunction
shall be in effect;
(g) The Parent shall have received copies of the resignations,
effective as of the Closing, of each director and officer of the Company (other
than any such resignations which the Parent designates, by written notice to the
Company, as unnecessary); and
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(h) The Parent shall have received such other certificates and
instruments (including bring down certificates, certificates of good standing of
the Company in its jurisdiction of organization and the various foreign
jurisdictions in which it is qualified, certified charter documents,
certificates as to the incumbency of officers and the adoption of authorizing
resolutions) as it shall reasonably request in connection with the Closing.
SECTION 6.3 CONDITIONS TO THE OBLIGATION OF THE COMPANY. The obligation of
the Company to consummate the Merger is subject to the satisfaction (or waiver
by the Company) of the following additional conditions:
(a) The representations and warranties of the Parent and the
Merger Sub set forth in the first sentence of Section 3.1 and in Section 3.2 and
any representations and warranties of the Parent and the Merger Sub set forth in
this Agreement that are qualified as to materiality shall be true and correct in
all respects, and all other representations and warranties of the Parent and the
Merger Sub set forth in this Agreement shall be true and correct in all material
respects, in each case as of the date of this Agreement and as of the Closing as
though made as of the Closing, except to the extent such representations and
warranties are specifically made as of a particular date (in which case such
representations and warranties shall be true and correct as of such date);
(b) Each of the Parent and the Merger Sub shall have performed or
complied with in all material respects its agreements and covenants required to
be performed or complied with under this Agreement as of or prior to the
Closing;
(c) No legal proceeding shall be pending or threatened wherein an
unfavorable judgment, order, decree, stipulation or injunction would (i) prevent
consummation of the transactions contemplated by this Agreement or (ii) cause
the transactions contemplated by this Agreement to be rescinded following
consummation, and no such judgment, order, decree, stipulation or injunction
shall be in effect;
(d) The Company shall have received such other certificates and
instruments (including bring down certificates, certificates of good standing of
the Parent and the Merger Sub in their jurisdiction of organization, certified
charter documents, certificates as to the incumbency of officers and the
adoption of authorizing resolutions) as it shall reasonably request in
connection with the Closing.
ARTICLE VII
TERMINATION
SECTION 7.1 TERMINATION. Notwithstanding anything herein to the contrary,
this Agreement may be terminated and the transactions contemplated by this
Agreement may be abandoned:
(a) by the mutual written consent of the Company and Parent;
(b) at any time prior to the Closing, by either the Company or
Parent, if there shall be any applicable law or regulation that makes
consummation of the Merger illegal or otherwise prohibited or any judgment,
injunction, order or decree of any Governmental Entity having competent
jurisdiction enjoining the Company or Parent from consummating the Merger is
entered and such judgment, injunction, order or decree shall have become final
and nonappealable;
(c) by Parent if, prior to the Closing, (i) the Board of Directors
of the Company shall have, in any manner, withdrawn or materially modified or
amended in any respect adverse to Parent its Recommendations or shall have
resolved or announced an intention to do so, (ii) the Board of Directors of the
Company shall have approved or recommended to the stockholders of the Company
any Acquisition Proposal or shall have resolved or announced an intention to do
so, or (iii) a tender offer or exchange offer for 50% or more of the outstanding
shares of Company Common Stock is announced or commenced and, either (A) the
Board of Directors of the Company recommends acceptance of such tender offer or
exchange offer by its stockholders or (B) within ten (10) business days of such
commencement, the Board of Directors of the Company shall have failed to
recommend against acceptance of such tender offer or exchange offer by its
stockholders (each of (i), (ii) and (iii) a "TRIGGERING EVENT");
(d) by the Company, if prior to the Closing (but not less than
three (3) business days after Parent's receipt of the written notice referred to
in clause (ii) of this Section 7.1(d)), the Company enters into, or its Board of
Directors determines to enter into, a definitive acquisition agreement providing
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for the consummation of a Superior Proposal; PROVIDED that: (i) the Company is
not in breach of its obligations under Section 5.4 hereof in connection with
such Superior Proposal, (ii) the Company shall have notified Parent in writing
that the Company has received a Superior Proposal and intends to enter into a
definitive acquisition agreement providing for the consummation of such Superior
Proposal, and (iii) Parent shall not have made, within three (3) business days
after receipt of the Company's written notice of its intention to enter into a
definitive acquisition agreement providing for the consummation of a Superior
Proposal, an offer that the Board of Directors of the Company determines in good
faith, after consultation with its financial advisor and its counsel, is more
favorable to the Company and the Company's stockholders than such Superior
Proposal;
(e) by the Company, at any time prior to the Closing, upon a
material breach of any covenant or agreement on the part of Parent set forth in
this Agreement, or if any representation or warranty of Parent shall have been
untrue or inaccurate when made or shall have become untrue or inaccurate such
that, in the aggregate, in the case of such representations and warranties, such
untruths or inaccuracies would reasonably be expected to have a material adverse
effect on Parent's ability to consummate the transactions contemplated hereby;
PROVIDED, HOWEVER, that (except with respect to the untruth of Section 4.7, for
which no cure period shall be available) if such untruth or inaccuracy in
Parent's representations and warranties or breach by Parent is curable by Parent
through exercise of commercially reasonable efforts, then the Company may not
terminate this Agreement pursuant to this Section 7.1(e) until the earlier of
(i) the expiration of a thirty (30)-day period after delivery of written notice
from the Company to Parent of such untruth or inaccuracy or breach, or (ii) the
date on which Parent ceases to exercise commercially reasonable efforts to cure
such untruth or inaccuracy or breach (it being understood that the Company may
not terminate this Agreement pursuant to this Section 7.1(e) if such untruth or
inaccuracy or breach by Parent is cured during such thirty-day period);
(f) by Parent, at any time prior to the Closing, upon a material
breach of any covenant or agreement on the part of the Company set forth in this
Agreement, or if any representation or warranty of the Company shall have been
untrue or inaccurate when made or shall have become untrue or inaccurate such
that in the aggregate, in the case of such representations and warranties, such
untruths or inaccuracies would reasonably be expected to have a material adverse
effect on Company's ability to consummate the transactions contemplated hereby;
PROVIDED, HOWEVER, that if such untruth or inaccuracy in the Company's
representations and warranties or breach by the Company is curable by the
Company through exercise of commercially reasonable efforts, then Parent may not
terminate this Agreement pursuant to this Section 7.1(f) until the earlier of
(i) the expiration of a thirty (30)-day period after delivery of written notice
from Parent to the Company of such untruth or inaccuracy or breach, or (ii) the
date on which the Company ceases to exercise commercially reasonable efforts to
cure such untruth or inaccuracy or breach (it being understood that Parent may
not terminate this Agreement pursuant to this Section 7.1(f) if such untruth or
inaccuracy or breach by the Company is cured during such thirty-day period).
(g) by either the Company or Parent if the shareholders of the
Company do not approve the Merger.
(h) by the Company if the Parent fails to obtain the financing
contemplated by Sections 4.7 and 5.6.
The party desiring to terminate this Agreement shall give written notice of
such termination to the other party in accordance with Section 8.1.
SECTION 7.2 EFFECT OF TERMINATION. Except for any material breach of this
Agreement by any party hereto (which material breach and liability therefor
shall not be affected by the termination of this Agreement or the payment of any
Termination Fee (as defined in Section 7.3(a) hereof)), if this Agreement is
terminated pursuant to Section 7.1 hereof, then this Agreement shall become void
and of no effect with no liability on the part of any party hereto; PROVIDED,
HOWEVER, that notwithstanding such termination the agreements contained in
Sections 7.2, 7.3 and 8.7 hereof, the last sentence of Section 1.2 and the
proviso to Section 5.3 hereof shall survive the termination hereof.
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SECTION 7.3 REMEDIES, FEES & EXPENSES
(a) The Company agrees to pay Parent in immediately available
funds by wire transfer an amount equal to the costs and expenses incurred by
Parent in furtherance of this transaction, not to exceed $200,000 (the
"COMPANY TERMINATION FEE"), if:
(i) this Agreement is terminated by Parent pursuant to
Section 7.1(c) hereof; or
(ii) this Agreement is terminated by the Company
pursuant to Section 7.1(d) hereof.
"COMPANY ACQUISITION" means any bona fide offer or proposal for a
merger, consolidation, recapitalization, liquidation or other business
combination involving a change of control of the Company or the acquisition or
purchase of over 50% or more of the Company Common Stock, or tender offer or
exchange offer that if consummated would result in any Person beneficially
owning 50% or more of any class of the Company Common Stock, or all or
substantially all of the assets of, the Company.
(b) The Company shall pay the Company Termination Fee pursuant to
this Section 7.3 (if all conditions thereto have been satisfied) (i) at or prior
to the termination of this Agreement by the Company in the circumstances
described in Section 7.3(a)(ii) hereof, (ii) not later than one (1) business day
after the termination of this Agreement by Parent in the circumstances described
in Section 7.3(a)(i) hereof.
(c) The Parent agrees to pay the Company in immediately available
funds by wire transfer an amount equal to the costs and expenses incurred by the
Company in furtherance of this transaction, not to exceed $150,000 (the
"PARENT TERMINATION FEE"), if this Agreement is terminated by the
Company pursuant to Section 7.1(h) hereof.
(d) The Parent shall pay the Parent Termination Fee pursuant to
this Section 7.3 (if all conditions thereto have been satisfied) not later than
one (1) business day after the termination of this Agreement by the Company in
the circumstances described in Section 7.3(c) hereof.
(e) Except with respect to circumstances causing the payment of a
Company Termination Fee or a Parent Termination Fee, all costs and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such expenses; provided, however,
that Merger Sub shall pay any transfer or similar taxes arising in connection
with the Merger or any other transactions contemplated hereunder.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1 NOTICES. All notices, requests, demands, waivers and other
communications required or permitted to be given under this Agreement to any
party hereunder shall be in writing and deemed given upon (a) personal delivery,
(b) transmitter's confirmation of a receipt of a facsimile transmission, (c)
confirmed delivery by a standard overnight carrier or when delivered by hand or
(d) when mailed in the United States by certified or registered mail, postage
prepaid, addressed at the following addresses (or at such other address for a
party as shall be specified by notice given hereunder):
If to the Company, to:
DSET Corporation
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇ ▇▇▇▇▇, CEO and President
with copies to:
▇▇▇▇ and ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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If to Parent and Merger Sub, to:
NE Technologies, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇, President and ▇▇▇▇ ▇▇▇▇▇,
Vice President
with a copy to:
▇▇▇▇▇ ▇▇▇▇▇▇, LLC
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
SECTION 8.2 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations
and warranties contained herein and in any certificate or other writing
delivered pursuant hereto shall not survive the Effective Time. All other
covenants and agreements contained herein which by their terms are to be
performed in whole or in part, or which prohibit actions, subsequent to the
Effective Time, shall survive the Effective Time in accordance with their terms.
SECTION 8.3 INTERPRETATION. References herein to the "knowledge" of a party
shall mean the actual knowledge of the executive officers of such party.
Whenever the words "include," "includes" or "including" are used in this
Agreement they shall be deemed to be followed by the words "without limitation."
As used in this Agreement, the term "affiliate" shall have the meaning set forth
in Rule 12b-2 promulgated under the Exchange Act.
The article and section headings contained in this Agreement are solely for
the purpose of reference, are not part of the agreement of the parties hereto
and shall not in any way affect the meaning or interpretation of this Agreement.
Any matter disclosed pursuant to any Schedule of the Company Disclosure Schedule
or the Parent Disclosure Schedule shall not be deemed to be an admission or
representation as to the materiality of the item so disclosed.
SECTION 8.4 AMENDMENTS, MODIFICATION AND WAIVER.
(a) Except as may otherwise be provided herein, any provision of
this Agreement may be amended, modified or waived by the parties hereto, by
action taken by or authorized by their respective Board of Directors, prior to
the Closing Date if, and only if, such amendment or waiver is in writing and
signed, in the case of an amendment, by the Company and Parent or, in the case
of a waiver, by the party against whom the waiver is to be effective; PROVIDED,
HOWEVER, that after the adoption of this Agreement by the stockholders of the
Company, no such amendment shall be made except as allowed under applicable law.
(b) No failure or delay by any party in exercising any right,
power or privilege hereunder shall operate as a waiver thereof nor shall any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies herein provided shall be cumulative and not exclusive of any rights or
remedies provided by law.
SECTION 8.5 SUCCESSORS AND ASSIGNS. The provisions of this Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns; PROVIDED THAT neither the Company nor Parent
or the Merger Sub may assign, delegate or otherwise transfer any of its rights
or obligations under this Agreement without the consent of the other party
hereto.
SECTION 8.6 SPECIFIC PERFORMANCE. The parties acknowledge and agree that
any breach of the terms of this Agreement would give rise to irreparable harm
for which money damages would not be an adequate remedy and accordingly the
parties agree that, in addition to any other remedies, each shall be entitled to
enforce the terms of this Agreement by a decree of specific performance without
the necessity of proving the inadequacy of money damages as a remedy.
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SECTION 8.7 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Georgia (regardless of the
laws that might otherwise govern under applicable principles of conflicts of
laws thereof) as to all matters, including, but not limited to, matters of
validity, construction, effect, performance and remedies.
SECTION 8.8 SEVERABILITY. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule of law, or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated herein are not affected in any manner materially
adverse to any party hereto. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in a mutually acceptable
manner.
SECTION 8.9 THIRD PARTY BENEFICIARIES. This Agreement is solely for the
benefit of the Company and its successors and permitted assigns, with respect to
the obligations of Parent under this Agreement, and for the benefit of Parent
and its successors and permitted assigns, with respect to the obligations of the
Company under this Agreement, and this Agreement shall not, except to the extent
necessary to enforce the provisions of Section 5.5 hereof, be deemed to confer
upon or give to any other third party any remedy, claim, liability,
reimbursement, cause of action or other right.
SECTION 8.10 ENTIRE AGREEMENT. This Agreement, the exhibits and the
schedules hereto constitutes the entire agreement among the parties hereto with
respect to the subject matter hereof and supersedes all other prior agreements
or understandings, both written and oral, between the parties or any of them
with respect to the subject matter hereof.
SECTION 8.11 COUNTERPARTS; EFFECTIVENESS. This Agreement may be signed in
any number of counterparts, each of which shall be deemed an original, with the
same effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement shall become effective when each party hereto shall
have received counterparts hereof signed by all of the other parties hereto.
SECTION 8.12 RULES OF CONSTRUCTION. The parties hereto agree that they have
been represented by counsel during the negotiation and execution of this
Agreement and, therefor, 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.
SECTION 8.13 SUBMISSION TO JURISDICTION. All actions and proceedings
arising out of or relating to this Agreement shall be heard and determined
exclusively in any Georgia state or federal court sitting in ▇▇▇▇▇▇ County. The
parties hereto hereby (a) submit to the exclusive jurisdiction of any state or
federal court sitting in ▇▇▇▇▇▇ County for the purpose of any action arising out
of or relating to this Agreement brought by any party hereto, and (b)
irrevocably waive, and agree not to assert by way of motion, defense or
otherwise, in any such action, any claim that it is not subject personally to
the jurisdiction of the above-named courts, that its property is exempt or
immune from attachment or execution, that the action is brought in an
inconvenient forum, that the venue of the action is improper or that this
Agreement or the transactions contemplated hereby may not be enforced in or by
any of the above-named courts.
SECTION 8.14 MERGER SUB COMPLIANCE. Whenever this Agreement requires Merger
Sub to take action, such requirement shall be deemed to include an undertaking
on the part of Parent to cause Merger Sub to take such action.
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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.
NE TECHNOLOGIES, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇
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▇▇▇▇▇ ▇▇▇▇, President
DSET CORPORATION
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
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▇▇▇▇▇ ▇▇▇▇▇, President and CEO
NE TECHNOLOGIES ACQUISITION CORPORATION
By: /s/ ▇▇▇▇ ▇▇▇▇▇
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▇▇▇▇ ▇▇▇▇▇, President
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