AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (the "Agreement") dated as of September 30,
1999, by and between NETRIX CORPORATION, a Delaware corporation ("Acquiror"),
and OPENROUTE NETWORKS, INC., a Massachusetts corporation (the "Company").
Acquiror and the Company are referred to collectively herein as the "Parties."
WITNESSETH:
WHEREAS, this Agreement contemplates a transaction in which Acquiror will
acquire all of the outstanding capital stock of the Company through a merger
of the Company with and into Acquiror (the "Merger");
WHEREAS, the Board of Directors of each of Acquiror and the Company has
approved the acquisition of the Company by Acquiror, including the Merger,
upon the terms and subject to the conditions set forth herein;
WHEREAS, the Board of Directors of the Company has determined that the
Merger is advisable and is fair to and in the best interests of the holders of
the Company's common stock, par value $.01 per share (the "Company Shares"),
and has resolved to recommend the approval of the Merger and the adoption of
this Agreement by the Company Stockholders (as defined in Section 1 below);
WHEREAS, the Board of Directors of Acquiror has determined that the
Merger is advisable and is fair to and in the best interests of the holders of
Acquiror's common stock, par value $0.01 per share (the "Acquiror Shares"),
and has resolved to recommend the approval of the Merger and the adoption of
this Agreement by the Acquiror Stockholders (as defined in Section 1 below);
WHEREAS, the Acquiror Shares are listed for trading on the Nasdaq
National Market ("Nasdaq") and the Board of Directors of Acquiror has resolved
to recommend the approval by the Acquiror Stockholders of (i) the issuance of
Acquiror Shares in connection with the Merger as provided in this Agreement as
required by the Rules of Nasdaq and (ii) an amendment to the certificate of
incorporation of Acquiror to increase the authorized number of Acquiror
Shares; and
WHEREAS, this Agreement contemplates that for U.S. Federal income tax
purposes the Merger will qualify as a reorganization within the meaning of
Code Section 368(a).
NOW, THEREFORE, in consideration of the premises and the mutual
promises set forth herein, and in consideration of the representations,
warranties and covenants set forth herein, the Parties agree as follows:
1. Definitions.
"Acquiror" has the meaning set forth in the preambles.
"Acquiror 10-K" has the meaning set forth in Section 4(h) below.
"Acquiror 10-Q" has the meaning set forth in Section 4(h) below.
"Acquiror Acquisition Proposal" means any proposal or offer
(including, without limitation, any proposal or offer to Acquiror
Stockholders) with respect to a merger, acquisition, consolidation,
recapitalization, reorganization, liquidation, tender offer or exchange offer
or similar transaction involving, or any purchase of 25% or more of the
consolidated assets of, or any equity interest representing 25% or more of the
outstanding shares of capital stock in, Acquiror.
"Acquiror Benefit Plan" and "Acquiror Benefit Plans" have the
respective meanings set forth in Section 4(o)(i) below.
"Acquiror Board" means the board of directors of Acquiror.
"Acquiror Contracts" has the meaning set forth in Section 4(t)
below.
"Acquiror Disclosure Letter" has the meaning set forth in Section
4(a) below.
"Acquiror Employees" has the meaning set forth in Section 4(o)(i)
below.
"Acquiror ERISA Affiliate" has the meaning set forth in Section
4(o)(iii) below.
"Acquiror Fairness Opinion" means an opinion of Xxxxxxx Brothers,
L.P., addressed to the Acquiror Board, as to the fairness of the Merger to
Acquiror from a financial point of view.
"Acquiror Intellectual Property" has the meaning set forth in
Section 4(r) below.
"Acquiror Material Adverse Effect" has the meaning set forth in
Section 4(a) below.
"Acquiror Pension Plan" has the meaning set forth in Section
4(o)(ii) below.
"Acquiror Reports" has the meaning set forth in Section 4(g)
below.
"Acquiror Shares" has the meaning set forth in the preambles.
"Acquiror Special Meeting" has the meaning set forth in Section
5(c)(ii) below.
"Acquiror Stockholder" means any Person who or which holds any
Acquiror Shares.
"Acquiror Superior Proposal" has the meaning set forth in
Section 5(i)(ii) below.
"Acquiror Third Party" means any Person (or group of Persons)
other than the Company or its respective Affiliates.
"Acquisition Proposal" means any proposal or offer (including,
without limitation, any proposal or offer to the Company Stockholders) with
respect to a merger, acquisition, consolidation, recapitalization,
reorganization, liquidation, tender offer or exchange offer or similar
transaction involving, or any purchase of 25% or more of the consolidated
assets of, or any equity interest representing 25% or more of the outstanding
shares of capital stock in, the Company.
"Affiliate" has the meaning set forth in Rule 12b-2 of the
regulations promulgated under the Securities Exchange Act.
"Agreement" has the meaning set forth in the preambles.
"Blue Sky Filings" has the meaning set forth in Section
5(c)(i) below.
"Certificate of Merger" has the meaning set forth in Section
2(c) below.
"Closing" has the meaning set forth in Section 2(b) below.
"Closing Date" has the meaning set forth in Section 2(b)
below.
"Closing Sales Price" means with respect to an Acquiror Share
or Company Share, as the case may be, on any day, the average of the last
reported sale price of one such share on the Nasdaq Stock Market for each of
the ten trading days immediately preceding such day.
"Code" has the meaning set forth in Section 3(o)(ii) below.
"Company" has the meaning set forth in the preambles.
"Company 10-K" has the meaning set forth in Section 3(h) below.
"Company 10-Q" has the meaning set forth in Section 3(h) below.
"Company Benefit Plan" and "Company Benefit Plans" have the
meanings set forth in Section 3(o)(i) below.
"Company Board" means the board of directors of the Company.
"Company Contracts" has the meaning set forth in Section 3(u)
below.
"Company Disclosure Letter" has the meaning set forth in
Section 3(a) below.
"Company Employees" has the meaning set forth in Section
3(o)(i) below.
"Company ERISA Affiliate" has the meaning set forth in
Section 3(o)(iii) below.
"Company Fairness Opinion" means an opinion of Xxxxxx Xxxxxxx
Xxxxxx Gull, addressed to the Company Board, as to the fairness of the Per
Share Merger Consideration to the Company Stockholders (other than Acquiror)
from a financial point of view.
"Company Intellectual Property" has the meaning set forth in
Section 3(s) below.
"Company Material Adverse Effect" has the meaning set forth
in Section 3(a) below.
"Company Pension Plan" has the meaning set forth in Section
3(o)(ii) below.
"Company Reports" has the meaning set forth in Section 3(g)
below.
"Company Shares" has the meaning set forth in the
preambles.
"Company Special Meeting" has the meaning set forth in
Section 5(c)(ii) below.
"Company Stockholder" means any Person who or which holds
any Company Shares.
"Confidentiality Agreement" means the Mutual Non-
Disclosure Agreement dated August 11, 1999 between Acquiror and the Company,
providing that, among other things, each Party would maintain confidential
certain information of the other Party.
"Confidential Information" means Information, as defined in
the Confidentiality Agreement.
"Delaware General Corporation Law" means Title 8, Chapter 1
of the Delaware Code, as amended.
"Dissenting Holder" has the meaning set forth in Section
2(d)(viii) below.
"Effective Time" has the meaning set forth in Section
2(d)(i) below.
"Environmental Law" has the meaning set forth in Section
3(r) below.
"ERISA" has the meaning set forth in Section 3(o)(i) below.
"Exchange Agent" has the meaning set forth in Section
2(e)(i) below.
"Exchange Fund" has the meaning set forth in Section
2(e)(i) below.
"Foreign Competition Laws" means foreign statutes, rules,
regulations, orders, decrees and administrative and judicial directives that
are designed or intended to prohibit, restrict or regulate actions having the
purpose or effect of monopolization, lessening of competition or restraint of
trade.
"GAAP" means United States generally accepted accounting
principles as in effect from time to time.
"Government Entity" has the meaning set forth in Section
3(f) below.
"Xxxx-Xxxxx-Xxxxxx Act" means the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended.
"Hazardous Substance" has the meaning set forth in Section
3(r) below.
"Indemnified Party" has the meaning set forth in Section
5(j)(ii) below.
"Joint Proxy Statement/Prospectus" has the meaning set
forth in Section 5(c)(i) below.
"Massachusetts Business Corporation Law" means Chapter 156B
of the General Laws of the Commonwealth of Massachusetts.
"Merger" has the meaning set forth in the preambles.
"Merger Consideration" has the meaning set forth in Section
5(d)(v) below.
"Nasdaq" has the meaning set forth in the preambles.
"Order" has the meaning set forth in Section 6(a)(v) below.
"Outside Date" has the meaning set forth in Section
7(a)(ii) below.
"Party" has the meaning set forth in the preambles.
"Person" means an individual, a partnership, a corporation,
a limited liability company, an association, a joint stock company, a trust, a
joint venture, an unincorporated organization or a governmental entity (or any
department, agency or political subdivision thereof).
"Per Share Merger Consideration" has the meaning set forth
in Section 2(d)(v) below.
"Prior Consultation" means oral or written notice to the
chief executive officer of the Company at least two (2) business days prior to
the earlier of (x) taking the action or (y) committing to take the action with
respect to which Prior Consultation is necessary pursuant to Section 5(e)
below and subsequent to such notice making the chief executive officer of
Acquiror reasonably available to the chief executive officer of the Company to
discuss such action prior to taking such action.
"Prohibited Acquiror Acquisition Proposal" has the meaning
set forth in Section 5(i)(i) below.
"Representatives" has the meaning set forth in Section
5(h)(i) below.
"Registration Statement" has the meaning set forth in
Section 5(c)(i) below.
"Required Acquiror Consent" has the meaning set forth in
Section 4(f) below.
"Required Company Consent" has the meaning set forth in
Section 3(f) below.
"Requisite Stockholder Approval" means, with respect to
the Company, the affirmative vote of a majority of the holders of the
outstanding Company Shares in favor of the adoption of this Agreement in
accordance with the Massachusetts Business Corporation Law or, with respect to
Acquiror, the affirmative vote of a majority of the holders of the outstanding
Acquiror Shares in favor of (a) approval of the issuance of Acquiror Shares in
connection with the Merger as provided in this Agreement in accordance with
the rules of Nasdaq and (b) an amendment to Acquiror's certificate of
incorporation to increase the authorized capital stock of Acquiror in
accordance with the Delaware General Corporation Law.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder.
"Securities Exchange Act" means the Securities Exchange
Act of 1934, as amended, and the rules and regulations promulgated thereunder.
"Security Interest" means any mortgage, pledge, lien, encumbrance, charge or
other security interest, other than (a) mechanic's, materialman's and similar
liens; (b) liens for taxes not yet due and payable or for taxes that the
taxpayer is contesting in good faith through appropriate proceedings; (c)
purchase money liens and liens securing rental payments under capital lease
arrangements; and (d) other liens arising in the ordinary course of business
and not incurred in connection with the borrowing of money.
"Stock Rights" means each option, warrant, purchase right,
subscription right, conversion right, exchange right or other contract,
commitment or security providing for the issuance or sale of any capital
stock, or otherwise causing to become outstanding any capital stock.
"Stockholder" has the meaning set forth in the preambles.
"Subsidiary" of a specified Person means any corporation,
limited liability company, partnership, joint venture or other legal entity of
which the specified Person (either alone or together with any other Subsidiary
of the specified Person) owns, directly or indirectly, more than 50% of the
stock or other equity, partnership, limited liability company or equivalent
interests, the holders of which are generally entitled to vote for the
election of the board of directors or other governing body of such corporation
or other legal entity, or otherwise has the power to vote or direct the voting
of sufficient securities to elect a majority of such board of directors or
other governing body.
"Superior Proposal" has the meaning set forth in Section
5(h)(ii) below.
"Surviving Corporation" has the meaning set forth in Section
2(a) below.
"Tax Return" means any report, return, declaration or other
information required to be supplied to a taxing authority in connection with
Taxes.
"Taxes" means all taxes or other like assessments including,
without limitation, income, withholding, gross receipts, excise, ad valorem,
real or personal property, asset, sales, use, license, payroll, transaction,
capital, net worth and franchise taxes imposed by or payable to any federal,
state, county, local or foreign government, taxing authority, subdivision or
agency thereof, including interest, penalties, additions to tax or additional
amounts thereto.
"Third Party" means any Person (or group of Persons) other
than Acquiror or its respective Affiliates.
"Year 2000 Compliant" has the meaning set forth in Section
3(q) below.
2. The Transaction.
(a) The Merger. On and subject to the terms and conditions of
this Agreement, the Company will merge with and into Acquiror at the Effective
Time. Acquiror shall be the corporation surviving the Merger (the "Surviving
Corporation").
(b) The Closing. The closing of the transactions contemplated by
this Agreement (the "Closing") shall take place at the offices of Xxxxxx Xxxx
& Xxxxxx LLP, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, commencing at 9:00 a.m.
local time on the third business day following the satisfaction or waiver of
all conditions to the obligations of the Parties to consummate the
transactions contemplated hereby (other than conditions with respect to
actions the respective Parties will take at the Closing itself) or such other
date as the Parties may mutually determine (the "Closing Date").
(c) Actions at the Closing. At the Closing, (i) the Company will
deliver to Acquiror the various certificates, instruments and documents
referred to in Section 6(a) below; (ii) Acquiror will deliver to the Company
the various certificates, instruments and documents referred to in Section
6(b) below; (iii) the Company and Acquiror will file with the Secretary of
State of the State of Delaware a Certificate of Merger in such form as
required by and executed in accordance with the relevant provisions of the
Delaware General Corporation Law (the "Certificate of Merger"); (iv) the
Company and Acquiror will file with the Secretary of State of the Commonwealth
of Massachusetts Articles of Merger in such form as required by and executed
in accordance with the relevant provisions of the Massachusetts Business
Corporation (the "Articles of Merger") and (v) Acquiror will deliver or cause
to be delivered the Exchange Fund to the Exchange Agent in the manner provided
below in this Section 2.
(d) Effect of Merger.
(i) General. The Merger shall become effective at the time (the
"Effective Time") the Company and Acquiror file the Certificate
of Merger with the Secretary of State of the State of Delaware
or at such later time as the Parties may agree and specify in
the Certificate of Merger. The Merger shall have the effects
set forth in the Delaware General Corporation Law and the
Massachusetts Business Corporation Law. The Surviving
Corporation may, at any time after the Effective Time, take any
action (including executing and delivering any document) in the
name and on behalf of either the Company or Acquiror in order
to carry out and effectuate the transactions contemplated by
this Agreement.
(ii) Certificate of Incorporation. The certificate of
incorporation of Acquiror shall continue as the certificate of
incorporation of the Surviving Corporation until thereafter
amended in accordance with its terms and as provided by law,
except that Article Fourth thereof shall be amended to read in
its entirety as follows:
FOURTH: I. The total number of shares of all classes of stock
which the Corporation shall have authority to issue is
56,000,000 shares, consisting of (i) 55,000,000 shares of
Common Stock, $.05 par value (the "Common Stock") and (ii)
1,000,000 shares of Preferred Stock, $.05 par value ("Preferred
Stock").
II. The designations, powers, preferences and
relative, participating, optional or other special rights of,
and the qualifications, limitations or restrictions upon, each
class or series of the Corporation's capital stock shall be as
follows:
A. Common Stock:
1. General. The voting, dividend and liquidation
rights of the holders of the Common Stock are subject to and
qualified by the rights of the holders of the Preferred Stock
of any series as may be designated by the Board of Directors
upon any issuance of the Preferred Stock of any series.
2. Voting. The holders of the Common Stock are
entitled to one vote for each share held at all meetings of
stockholders (and written actions in lieu of meetings). There
shall be no cumulative voting.
The number of authorized shares of Common Stock may be
increased or decreased (but not below the number of shares
thereof then outstanding) by the affirmative vote of the
holders of a majority of the stock of the Corporation entitled
to vote, irrespective of the provisions of Section 242(b)(2) of
the General Corporation Law of the State of Delaware.
3. Dividends. Dividends may be declared and paid on
the Common Stock from funds lawfully available therefor as and
when determined by the Board of Directors and subject to any
preferential dividend rights of any then outstanding Preferred
Stock.
4. Liquidation. Upon the dissolution or liquidation
of the Corporation, whether voluntary or involuntary, holders
of Common Stock will be entitled to receive all assets of the
Corporation available for distribution to its stockholders,
subject to any preferential rights of any then outstanding
Preferred Stock.
B. Preferred Stock.
Preferred Stock may be issued from time to time in one
or more series, each of such series to have such terms as
stated or expressed herein and in the resolution or resolutions
providing for the issue of such series adopted by the Board of
Directors of the Corporation as hereinafter provided. Any
shares of Preferred Stock which may be redeemed, purchased or
acquired by the Corporation may be reissued except as otherwise
provided by law. Different series of Preferred Stock shall not
be construed to constitute different classes of shares for
the purposes of voting by classes unless expressly provided.
Authority is hereby expressly granted to the Board of
Directors from time to time to issue the Preferred Stock in one
or more series, and in connection with the creation of any such
series, by resolution or resolutions providing for the issue of
the shares thereof, to determine and fix such voting powers,
full or limited, or no voting powers, and such designations,
preferences and relative participating, optional or other
special rights, and qualifications, limitations or restrictions
thereof, including without limitation thereof, dividend rights,
conversion rights, redemption privileges and liquidation
preferences, as shall be stated and expressed in such
resolutions, all to the full extent now or hereafter permitted
by the General Corporation Law of the State of Delaware.
Without limiting the generality of the foregoing, the
resolutions providing for issuance of any series of Preferred
Stock may provide that such series shall be superior or rank
equally or be junior to the Preferred Stock of any other series
to the extent permitted by law. Except as otherwise provided
in this Restated Certificate of Incorporation, no vote of the
holders of the Preferred Stock or Common Stock shall be a
prerequisite to the designation or issuance of any shares of
any series of the Preferred Stock authorized by and complying
with the conditions of this Restated Certificate of
Incorporation, the right to have such vote being expressly
waived by all present and future holders of the capital stock
of the Corporation.
(iii) By-laws. The by-laws of Acquiror in effect
immediately prior to the Effective Time shall be the By-laws of
the Surviving Corporation until thereafter amended in
accordance with their terms and as provided by law.
(iv) Directors and Officers. Except as provided in
Section 6(m) with respect to the directors of the Surviving
Corporation, the directors and officers of Acquiror immediately
prior to the Effective Time shall be the directors and officers
of the Surviving Corporation at and as of the Effective Time
(retaining their respective positions and terms of office),
until the earlier of their respective resignation, removal or
otherwise ceasing to be a director or officer, respectively,
or until their respective successors are duly elected and
qualified, as the case may be.
(v) Conversion of Company Shares. At and as of the
Effective Time, (A) each issued and outstanding Company Share
(other than any Company Shares owned by Acquiror, the Company
or any Dissenting Holder) shall be converted into the right to
receive one Acquiror Share (the "Per Share Merger
Consideration"), and all such Company Shares shall no longer be
outstanding, shall be canceled and shall cease to exist, and
each holder of a certificate representing any such Company
Shares shall thereafter cease to have any rights with respect
to such Company Shares, except the right to receive the Per
Share Merger Consideration for each such Company Share and any
unpaid dividends and distributions, if any, to which the holder
of such Company Shares is entitled pursuant to Section 2(e)
upon the surrender of such certificate in accordance with
Section 2(e) below (collectively, the "Merger Consideration"),
provided, however, that the Per Share Merger Consideration
shall be subject to proportionate adjustment in the
event of any stock split, stock dividend or reverse stock
split, and (B) each Company Share owned by Acquiror or the
Company shall be canceled without payment therefor. No Company
Share shall be deemed to be outstanding or to have any rights
other than those set forth above in this Section 2(d)(v) after
the Effective Time. Notwithstanding anything to the contrary
in this Section 2(d)(v), no fractional Acquiror Shares shall be
issued to then former holders of Company Shares. In
lieu thereof, each then former holder of a Company Share who
would otherwise have been entitled to receive a fraction of a
Acquiror Share (after taking into account all certificates
delivered by such then former holder at any one time) shall
receive an amount in cash equal to such fraction of a Acquiror
Share multiplied by the Closing Sales Price per Acquiror Share
on the date of the Effective Time.
(vi) Conversion of Stock Rights. Each of the Parties
shall take all such action as may be necessary to cause, at the
Effective Time, each Stock Right granted by the Company to
purchase Company Shares which is outstanding and unexercised
immediately prior thereto (whether or not vested or
exercisable), to be converted automatically into an equivalent
Stock Right to purchase Acquiror Shares in an amount and at an
exercise price determined as follows:
(x) The number of Acquiror Shares to be
subject to the new Stock Right shall be equal to the number of
Company Shares subject to the original Stock Right; and
(y) The exercise price per Acquiror Share
under the new Stock Right shall be equal to the exercise price
per Company Share under the original Stock Right.
The adjustments provided herein with respect to any original
Stock Rights which are "incentive stock options" (as defined in
Section 422 of the Code) shall be and are intended to be
effected in a manner which is consistent with Section 424(a) of
the Code. The option plan of the Company under which the
original Stock Rights were issued shall be assumed by Acquiror,
and the duration and other terms of the new Stock Rights shall
be the same as the original Stock Rights, except that all
references to the Company shall be deemed to be references to
Acquiror. At the Effective Time, Acquiror shall deliver to
then former holders of original Stock Rights appropriate
agreements representing the right to acquire Acquiror Shares
on the terms and conditions set forth in this Section
2(d)(vi).
Acquiror shall take all corporate action necessary to reserve
for issuance a sufficient number of Acquiror Shares for
delivery upon exercise of the new Stock Rights in accordance
with this Section 2(d)(vi). Acquiror shall file a
registration statement on Form S-8 (or any successor form) or
another appropriate form, and use its reasonable best efforts
to cause such Form S-8 to become effective at or as
soon as practicable after the Effective Time, with respect to
Acquiror Shares subject to new employee stock options included
in the Stock Rights and shall use reasonable efforts to
maintain the effectiveness of such registration statement or
registration statements (and maintain the current status of the
prospectus or prospectuses contained therein) for so long as
such options remain outstanding. Acquiror shall promptly take
any action required to be taken under state securities
or Blue Sky laws in connection with the issuance of Acquiror
Shares in connection with new employee options included in the
Stock Rights. With respect to those individuals who subsequent
to the Merger will be subject to the reporting requirements
under Section 16(a) of the Securities Exchange Act,
Acquiror shall administer the option plans assumed pursuant to
this Section 2(d)(vi) in a manner that complies with Rule 16b-
promulgated under the Securities Exchange Act to the extent the
Company option plan complied with such rule prior to the
Merger.
(vii) No Effect on Capital Stock of Acquiror. Each
share of the outstanding capital stock of Acquiror issued and
outstanding immediately prior to the Effective Time shall
remain outstanding and shall be unchanged after the Merger.
(viii) Dissenter's' Rights.
(A) No conversion under Section 2(d)(v) hereof
shall be made with respect to the Company Shares held by
a Dissenting Holder; provided, however, that each Company Share
outstanding immediately prior to the Effective Time and held by
a Dissenting Holder who shall, after the Effective Time,
withdraw his demand for appraisal or lose his right of
appraisal, in either case pursuant to the applicable provisions
of the Massachusetts Business Corporation Law, shall be deemed
to be converted, as of the Effective Time, into the Merger
Consideration as set forth in Section 2(d)(v) hereof. The term
"Dissenting Holder" shall mean a holder of Company Shares who
has demanded appraisal rights in compliance with the applicable
provisions of the Massachusetts Business Corporation Law
concerning the right of such holder to dissent from the Merger
and demand appraisal of such holder's Company Shares.
(B) Any Dissenting Holder (x) who files with the
Company a written objection to the Merger before the taking of
the votes to approve this Agreement by the Company Stockholders
and who states in such objection that he intends to demand
payment for his Company Shares if the Merger is concluded and
(y) whose Company Shares are not voted in favor of the Merger
shall be entitled to demand payment from the Company for his
Company Shares and an appraisal of the value thereof, in
accordance with the provisions of Sections 86 through 98 of
the Massachusetts Business Corporation Law.
(e) Procedure for Exchange.
(i) At or prior to the Effective Time, (A) Acquiror will furnish
to Equiserve, its transfer agent, or such other bank or trust
company reasonably acceptable to the Company, to act as exchange
agent (the "Exchange Agent") a corpus (the "Exchange Fund")
consisting of Acquiror Shares and cash sufficient to permit the
Exchange Agent to make full payment of the Merger Consideration
to the holders of all of the issued and outstanding Company Shares
(other than any Company Shares owned by Acquiror or the Company),
and (B) Acquiror will cause the Exchange Agent to mail a letter of
transmittal (with instructions for its use) in a form to be mutually
agreed upon by the Company and Acquiror prior to Closing to each
holder of issued and outstanding Company Shares (other than any
Company Shares owned by Acquiror or the Company) for the holder to
use in surrendering the certificates which, immediately prior to the
Effective Time, represented his or its Company Shares against
payment of the Merger Consideration to which such holder is entitled
pursuant to Section 2(d)(v). Upon surrender to the Exchange Agent
of such certificates, together with such letter of transmittal, duly
executed and completed in accordance with the instructions
thereto, Acquiror shall promptly cause to be issued a certificate
representing that number of whole Acquiror Shares and a check
representing the amount of cash in lieu of any fractional shares and
unpaid dividends and distributions, if any, to which such Persons
are entitled, after giving effect to any required tax withholdings.
No interest will be paid or accrued on the cash in lieu of
fractional shares and unpaid dividends and distributions, if any,
payable to recipients of Acquiror Shares. If payment is to be made
to a Person other than the registered holder of the certificate
surrendered, it shall be a condition of such payment that
the certificate so surrendered shall be properly endorsed or
otherwise in proper form for transfer and that the Person requesting
such payment shall pay any transfer or other taxes required by
reason of the payment to a Person other than the registered holder
of the certificate surrendered or establish to the reasonable
satisfaction of the Surviving Corporation or the Exchange Agent that
such tax has been paid or is not applicable. In the event any
certificate representing Company Shares 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,
the Exchange Agent will issue in exchange for such lost, stolen or
destroyed certificate the Merger Consideration deliverable in
respect thereof; provided, however, the Person to whom such Merger
Consideration is paid shall, as a condition precedent to the payment
thereof, give the Surviving Corporation a bond in such sum as it may
direct or otherwise indemnify the Surviving Corporation in a manner
reasonably satisfactory to it against any claim that may be made
against the Surviving Corporation with respect to the certificate
alleged to have been lost, stolen or destroyed. No dividends or
other distributions declared after the Effective Time with respect
to Acquiror Shares and payable to the holders of record thereof
shall be paid to the holder of any unsurrendered certificate until
the holder thereof shall surrender such certificate in accordance
with this Section 2(e). After the surrender of a certificate in
accordance with this Section 2(e), the record holder thereof shall
be entitled to receive any such dividends or other distributions,
without any interest thereon, which theretofore had become payable
with respect to the Acquiror Shares represented by such certificate.
No holder of an unsurrendered certificate shall be entitled, until
the surrender of such certificate, to vote the Acquiror Shares into
which his or its Company Shares shall have been converted into the
right to receive.
(ii) The Company will cause its transfer agent to furnish
promptly to Acquiror a list, as of a recent date, of the record
holders of Company Shares and their addresses, as well as mailing
labels containing the names and addresses of all record holders of
Company Shares and lists of security positions of Company
Shares held in stock depositories. The Company will furnish
Acquiror with such additional information (including, but not
limited to, updated lists of holders of Company Shares and their
addresses, mailing labels and lists of security positions) and such
other assistance as Acquiror or its agents may reasonably request.
(iii) Acquiror may cause the Exchange Agent to invest the cash
included in the Exchange Fund in one or more investments selected by
Acquiror; provided, however, that the terms and conditions of the
investments shall be such as to permit the Exchange Agent to make
prompt payment of the Merger Consideration as necessary. Acquiror
may cause the Exchange Agent to pay over to the Surviving
Corporation any net earnings with respect to the investments, and
Acquiror will replace promptly any portion of the Exchange Fund
which the Exchange Agent loses through investments.
(iv) Acquiror may cause the Exchange Agent to pay over to the
Surviving Corporation any portion of the Exchange Fund (including
any earnings thereon) remaining 180 days after the Effective Time,
and thereafter all former stockholders of the Company shall be
entitled to look to the Surviving Corporation (subject to abandoned
property, escheat and other similar laws) as general creditors
thereof with respect to the Merger Consideration and any cash
payable upon surrender of their certificates.
(v) Acquiror shall pay, or shall cause the Surviving Corporation
to pay, all charges and expenses of the Exchange Agent.
(f) Closing of Transfer Records. After the Effective Time, no
transfer of Company Shares outstanding prior to the Effective Time shall be
made on the stock transfer books of the Surviving Corporation. If, after the
Effective Time, certificates representing such shares are presented for
transfer to the Exchange Agent, they shall be canceled and exchanged for
certificates representing Acquiror Shares, cash in lieu of fractional shares,
if any, and unpaid dividends and distributions, if any, as provided in Section
2(e).
3. Representations and Warranties of the Company. The Company
represents and warrants to Acquiror:
(a) Organization, Qualification and Corporate Power. The Company
is a corporation duly organized, validly existing and in good standing under
the laws of Massachusetts. If applicable to such country, each of the
Company's Subsidiaries operating in such country has been duly incorporated or
otherwise organized and is validly existing. Each of the Company and its
Subsidiaries is duly authorized to conduct business and, if applicable to
such country, is in good standing under the laws of each jurisdiction where
such qualification is required, except where the lack of such qualification or
failure to be in good standing would not reasonably be expected to have a
material adverse effect on the business, financial condition or results of
operations of the Company and its Subsidiaries taken as a whole or on the
ability of the Company to consummate the transactions contemplated by this
Agreement (a "Company Material Adverse Effect"). Each of the Company and its
Subsidiaries has full corporate power and corporate authority, and all
foreign, federal, state and local governmental permits, licenses and consents,
required to carry on the businesses in which it is engaged and to own and use
the properties owned and used by it, except for such permits, licenses and
consents the failure of which to have would not reasonably be expected to have
a Company Material Adverse Effect. The Company does not own any equity
interest in any corporation, partnership, limited liability company, joint
venture or other legal entity other than the Subsidiaries listed in Section
3(a) of the Company Disclosure Letter accompanying this Agreement (the
"Company Disclosure Letter"). The Company has delivered to the Acquiror a
true, complete and correct copy of the articles of incorporation (or
comparable charter document) and by-laws, each as amended to date, of Company
and all of its Subsidiaries. Neither Company nor any of its Subsidiaries is
in violation of any provision of its articles of incorporation (or comparable
charter document) or by-laws.
(b) Capitalization. The entire authorized capital stock of the
Company consists of 7,500,000 shares of preferred stock, $.01 par value per
share, none of which are issued and outstanding as of September 25, 1999,
30,000,000 Shares, of which 15,916,570 Shares were issued and outstanding as
of September 25, 1999 and 390,769 Shares were held in treasury as of September
25, 1999. All of the issued and outstanding Company Shares have been duly
authorized and are validly issued, fully paid and nonassessable, and none have
been issued in violation of any preemptive or similar right. As of September
25, 1999, no warrants of the Company were outstanding. As of September 25,
1999, 2,185,776 Shares were subject to issuance pursuant to employee stock
options issued under Company Benefit Plans. Except as set forth above or in
Section 3(b) of the Company Disclosure Letter, neither the Company nor any of
its Subsidiaries has any outstanding or authorized Stock Rights. Except for
stock appreciation rights authorized under Company Benefit Plans, of which
none are outstanding, there are no outstanding or authorized stock
appreciation, phantom stock, profit participation or similar rights
with respect to the Company or any of its Subsidiaries. Except as set forth
in Section 3(b) of the Company Disclosure Letter, there are no rights,
contracts, commitments or arrangements obligating the Company to redeem,
purchase or acquire, or offer to purchase, redeem or acquire, any outstanding
shares of, or any outstanding options, warrants or rights of any kind to
acquire any shares of, or any outstanding securities that are convertible into
or exchangeable for any shares of, capital stock of the Company.
(c) Subsidiaries. Except as set forth in Section 3(c) of the
Company Disclosure Letter, the Company owns, directly or indirectly, 100% of
the outstanding shares of capital stock of each of its Subsidiaries free and
clear of any Security Interest and each such share of capital stock has been
duly authorized and is validly issued, fully paid and nonassessable, and none
of such shares of capital stock has been issued in violation of any preemptive
or similar right. No shares of capital stock of, or other equity interests
in, any Subsidiary of the Company are reserved for issuance, and there are no
contracts, agreements, commitments or arrangements obligating the Company or
any of its Subsidiaries (i) to offer, sell, issue, grant, pledge, dispose of
or encumber any shares of capital stock of, or other equity interests in, or
any options, warrants or rights of any kind to acquire any shares of capital
stock of, or other equity interests in, any of the Subsidiaries of the Company
or (ii) to redeem, purchase or acquire, or offer to purchase or acquire, any
outstanding shares of capital stock of, or other equity interests in, or any
outstanding options, warrants or rights of any kind to acquire any shares of
capital stock of, or other equity interest in, or any outstanding securities
that are convertible into or exchangeable for, any shares of capital stock of,
or other equity interests in, any of the Subsidiaries of the Company.
(d) Voting Arrangements. Except as set forth in Section 3(d) of the
Company Disclosure Letter or in Company Reports filed prior to the date
hereof, there are no voting trusts, proxies or other similar agreements or
understandings to which the Company or any of its Subsidiaries is a party or
by which the Company or any of its Subsidiaries is bound with respect to the
voting of any shares of capital stock of the Company or any of its
Subsidiaries or with respect to the registration of the offering, sale or
delivery of any shares of capital stock of the Company or any of its
Subsidiaries under the Securities Act. There are no issued or outstanding
bonds, debentures, notes or other indebtedness of the Company having the right
to vote on any matters on which stockholders of the Company may vote.
(e) Authorization of Transaction. The Company has full power and
authority (including full corporate power and corporate authority), and has
taken all required action, necessary to properly execute and deliver this
Agreement and to perform its obligations hereunder, and this Agreement
constitutes the valid and legally binding obligation of the Company,
enforceable in accordance with its terms and conditions, except as limited by
(i) applicable bankruptcy, insolvency, reorganization, moratorium and other
laws of general application affecting enforcement of creditors' rights
generally and (ii) general principles of equity, regardless of whether
asserted in a proceeding in equity or at law; provided, however, that
the Company cannot consummate the Merger unless and until it receives the
Requisite Stockholder Approval of the Company Stockholders.
(f) Noncontravention. Neither the execution and the delivery of
this Agreement, nor the consummation of the transactions contemplated hereby,
will (i) violate any constitution, statute, regulation, rule, injunction,
judgment, order, decree or other restriction of any government, governmental
agency or court of competent jurisdiction (a "Government Entity") to which the
Company or any of its Subsidiaries is subject or any provision of the charter
or by-laws of the Company or any of its Subsidiaries or (ii) conflict with,
result in a breach of, constitute a default under, result in the acceleration
of, create in any party the right to accelerate, terminate, modify or cancel
or require any notice under any agreement, contract, lease, license,
instrument or other arrangement to which the Company or any of its
Subsidiaries is a party or by which it is bound or to which any of its assets
is subject, except where the violation, conflict, breach, default,
acceleration, termination, modification, cancellation, or failure to give
notice would not reasonably be expected to have a Company Material Adverse
Effect or except as set forth in Section 3(f) of the Company Disclosure
Letter. Other than as required under the provisions of the Xxxx-Xxxxx-Xxxxxx
Act, Foreign Competition Laws, the Massachusetts Business Corporation Law, the
Delaware General Corporation Law, Nasdaq, the Securities Exchange Act, the
Securities Act and state securities laws, neither the Company nor any of its
Subsidiaries needs to give any notice to, make any filing with or obtain any
authorization, consent or approval of any Government Entity in order for the
Parties to consummate the transactions contemplated by this Agreement, except
where the failure to give notice, to file or to obtain any authorization,
consent or approval would not reasonably be expected to have a Company
Material Adverse Effect or except as set forth in Section 3(f) of the
Company Disclosure Letter. "Required Company Consents" means any
authorization, consent or approval of a Government Entity or other Third Party
required to be obtained pursuant to any Foreign Competition Laws or state
securities laws or so that a matter set forth in Section 3(f) of the
Company Disclosure Letter would not be reasonably expected to have a Company
Material Adverse Effect for purposes of this Section 3(f).
(g) Filings with the SEC. The Company has made all filings with the
SEC that it has been required to make under the Securities Act and the
Securities Exchange Act (collectively, the "Company Reports"). Each of the
Company Reports has complied with the Securities Act and the Securities
Exchange Act in all material respects. None of the Company Reports, as of
their respective dates, contained any untrue statement of a material fact or
omitted to state a material fact necessary in order to make the statements
made therein, in light of the circumstances under which they were made, not
misleading.
(h) Financial Statements.
(i) The Company has filed an Annual Report on Form 10-K (the
"Company 10-K") for the fiscal year ended December 31, 1998 and a
Quarterly Report on Form 10-Q (the "Company 10-Q") for the fiscal
quarter ended June 26, 1999. The financial statements included in
the Company 10-K and the Company 10-Q (including the related notes
and schedules) have been prepared from the books and records of the
Company and its Subsidiaries in accordance with GAAP applied on a
consistent basis throughout the periods covered thereby, and
present fairly in all material respects the financial condition of
the Company and its Subsidiaries as of the indicated dates and the
results of operations and cash flows of the Company and its
Subsidiaries for the periods set forth therein (subject in
the case of quarterly financial statements to the absence of
complete footnotes and subject to normal year-end audit
adjustments).
(ii) From January 1, 1999 until the date of this Agreement, the
Company and its Subsidiaries have not incurred any liabilities that
are of a nature that would be required to be disclosed on a balance
sheet of the Company and its Subsidiaries or the footnotes thereto
prepared in conformity with GAAP, other than (A) liabilities
incurred in the ordinary course of business that would not,
individually or in the aggregate, reasonably be expected to have a
Company Material Adverse Effect or (B) liabilities disclosed in
Section 3(h) of the Company Disclosure Letter or in Company Reports
filed prior to the date hereof.
(i) Events Subsequent to January 1, 1999. From January 1, 1999 to
the date of this Agreement, except as disclosed in the Company Reports filed
prior to the date hereof or except as set forth in Section 3(i) of the Company
Disclosure Letter, (i) the Company and its Subsidiaries have conducted their
respective businesses only in, and have not engaged in any transaction other
than according to, the ordinary and usual course of such businesses, and (ii)
there has not been (A) any change in the financial condition, business or
results of operations of the Company or any of its Subsidiaries, or any
development or combination of developments relating to the Company or any of
its Subsidiaries of which management of the Company has knowledge, and which
would reasonably be expected to have a Company Material Adverse Effect; (B)
any declaration, setting aside or payment of any dividend or other
distribution with respect to the capital stock of the Company, or any
redemption, repurchase or other reacquisition of any of the capital stock of
the Company; (C) any change by the Company in accounting principles, practices
or methods materially affecting the reported consolidated assets, liabilities
or results of operations of the Company; (D) any increase in the compensation
of any officer of the Company or any of its Subsidiaries or grant of any
general salary or benefits increase to the employees of the Company or any of
its Subsidiaries other than in the ordinary course of business consistent with
past practices; (E) any issuance or sale of any capital stock or other
securities (including any Stock Rights) by the Company or any of its
Subsidiaries of any kind, other than upon exercise of Stock Rights issued by
or binding upon the Company; (F) any modification, amendment or change to the
terms or conditions of any Stock Right; or (G) any split, combination,
reclassification, redemption, repurchase or other reacquisition of any capital
stock or other securities of the Company or any of its Subsidiaries.
(j) Compliance. Except as set forth in Section 3(j) of the Company Disclosure
Letter or in Company Reports filed prior to the date hereof, the Company and
its Subsidiaries are in compliance with all applicable foreign, federal, state
and local laws, rules and regulations and all court orders, judgments and
decrees to which any of them is a party, except where the failure to be in
compliance would not reasonably be expected to have a Company Material Adverse
Effect.
(k) Brokers' and Other Fees. Except as set forth in Section 3(k) of
the Company Disclosure Letter, none of the Company and its Subsidiaries has
any liability or obligation to pay any fees or commissions to any broker,
finder or agent with respect to the transactions contemplated by this
Agreement.
(l) Litigation and Liabilities. Except as disclosed in Section 3(l)
of the Company Disclosure Letter or in Company Reports filed prior to the date
hereof, there are (i) no actions, suits or proceedings pending or, to the
knowledge of the Company, threatened against the Company or any of its
Subsidiaries, or any facts or circumstances known to the Company which
may give rise to an action, suit or proceeding against the Company or any of
its Subsidiaries, which would reasonably be expected to have a Company
Material Adverse Effect, and (ii) no obligations or liabilities of the Company
or any of its Subsidiaries, whether accrued, contingent or otherwise, known to
the Company which would reasonably be expected to have a Company Material
Adverse Effect.
(m) Taxes. Except as set forth in Section 3(m) of the Company
Disclosure Letter or in Company Reports filed prior to the date hereof, the
Company and each of its Subsidiaries have duly filed or caused to be duly
filed on their behalf all federal, state, local and foreign Tax Returns
required to be filed by them, and have duly paid, caused to be paid or made
adequate provision for the payment of all Taxes required to be paid in respect
of the periods covered by such Tax Returns, except where the failure to file
such Tax Returns or to pay such Taxes would not reasonably be expected to have
a Company Material Adverse Effect. Except as set forth in Section 3(m) of the
Company Disclosure Letter, no claims for Taxes have been asserted against the
Company or any of its Subsidiaries and no material deficiency for any Taxes
has been proposed, asserted or assessed which has not been resolved or paid in
full. To the knowledge of the Company, no Tax Return or taxable period of the
Company or any of its Subsidiaries is under examination by any taxing
authority, and neither the Company nor any of its Subsidiaries has received
written notice of any pending audit by any taxing authority. There are no
outstanding agreements or waivers extending the statutory period of limitation
applicable to any Tax Return for any period of the Company or any or its
Subsidiaries. Except as set forth in Section 3(m) of the Company Disclosure
Letter, there are no tax liens other than liens for Taxes not yet due and
payable relating to the Company or any of its Subsidiaries. The Company has
no reason to believe that any conditions exist that could reasonably be
expected to prevent the Merger from qualifying as a reorganization within the
meaning of Section 368(a) of the Code. Except as provided in Section 3(m) of
the Company Disclosure Letter, neither the Company nor any of its Subsidiaries
is a party to any agreement or contract which would result in payment of any
"excess parachute payment" within the meaning of Section 280G of the Code as
of the date of this Agreement. Neither the Company nor any of its
Subsidiaries has filed any consent pursuant to Section 341(f) of the Code or
agreed to have Section 341(f)(2) of the Code apply to any disposition of a
subsection (f) asset owned by the Company or any of its Subsidiaries. The
Company has not been and is not a United Stated real property holding company
(as defined in Section 897(c)(2) of the Code) during the applicable period
specified in Section 897(c)(1)(A)(ii) of the Code. None of the Company or its
Subsidiaries (x) has been a member of an "affiliated group," within the
meaning of Section 1504(a) of the Code, other than a group the common
acquiror of which was the Company or (y) has any liability for the Taxes of
any person, other than any of the Company or its Subsidiaries under Treasury
Regulation Section 1.1502-6 (or any similar provision of state, local or
foreign law) as a transferee, successor, by contract or otherwise.
(n) Fairness Opinion. Xxxxxx Xxxxxxx Xxxxxx Gull has delivered the
Company Fairness Opinion to the Company Board, and a true and complete copy
thereof has been furnished to Acquiror.
(o) Employee Benefits.
(i) All material pension, profit-sharing, deferred compensation,
savings, stock bonus and stock option plans, and all employee
benefit plans, whether or not covered by the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), which are
sponsored by the Company, any Subsidiary of the Company or any
Company ERISA Affiliate (as defined below) of the Company or to
which the Company, any Subsidiary of the Company or any
Company ERISA Affiliate of the Company makes contributions, and
which cover employees of the Company or any Subsidiary (the
"Company Employees") or former employees of the Company or any
Subsidiary, all employment or severance contracts with employees of
the Company or its Subsidiaries, and any applicable "change of
control" or similar provisions in any plan, contract or
arrangement that cover Company Employees (collectively, "Company
Benefit Plans" and individually a "Company Benefit Plan") are
accurately and completely listed in Section 3(o) of the Company
Disclosure Letter. No Company Benefit Plan is a multi-employer
plan, money purchase plan, defined benefit plan, multiple
employer plan or multiple employer welfare arrangement and no
Company Benefit Plan is covered by Title IV of ERISA. True and
complete copies of all Company Benefit Plans have been provided to
Acquiror.
(ii) All Company Benefit Plans to the extent subject to ERISA,
are in compliance in all material respects with ERISA and the rules
and regulations promulgated thereunder. Each Company Benefit Plan
which is an "employee pension benefit plan" within the meaning of
Section 3(2) of ERISA ("Company Pension Plan") and which is
intended to be qualified under Section 401(a) of the Internal
Revenue Code of 1986, as amended (the "Code"), has received a
favorable determination letter from the Internal Revenue Service,
which determination letter is currently in effect, and there are no
proceedings pending or, to the knowledge of the Company,
threatened, or any facts or circumstances known to the Company,
which are reasonably likely to result in revocation of any
such favorable determination letter. There is no pending or, to
the knowledge of the Company, threatened litigation relating to the
Company Benefit Plans. Neither the Company nor any of its
Subsidiaries has engaged in a transaction with respect to any
Company Benefit Plan that, assuming the taxable period of such
transaction expired as of the date hereof, is reasonably likely to
subject the Company or any of its Subsidiaries to a tax or penalty
imposed by either Section 4975 of the Code or Section 502(i) of
ERISA.
(iii) No liability under Title IV of ERISA has been or is
reasonably likely to be incurred by the Company or any of its
Subsidiaries with respect to any ongoing, frozen or terminated
Company Benefit Plan that is a "single-employer plan", within the
meaning of Section 4001(a)(15) of ERISA, currently or formerly
maintained by any of them, or the single-employer plan of any
entity which is considered a predecessor of the Company or one
employer with the Company under Section 4001 of ERISA (a "Company
ERISA Affiliate"). All contributions required to be made under the
terms of any Company Benefit Plan have been timely made or reserves
therefor on the balance sheet of the Company have been established,
which reserves are adequate. Except as required by Part 6 of Title
I of ERISA, the Company does not have any unfunded obligations for
retiree health and life benefits under any Company Benefit Plan.
(p) Massachusetts Business Corporation Law. The execution and
delivery of this Agreement and consummation of transactions contemplated
hereby will not be subject to Sections 110C-110F of the Massachusetts General
Laws in the consummation of the Merger or this Agreement or the transactions
contemplated by either thereof.
(q) Year 2000. Except as disclosed in the previously filed Company
Reports, the Company's products and information systems are Year 2000
Compliant except to the extent that their failure to be Year 2000 Compliant
would not, individually or in the aggregate, reasonably be expected to have a
Company Material Adverse Effect. For purposes of this Agreement, "Year 2000
Compliant" shall mean that a Person's products and information systems
accurately process date/time data (including, but not limited to, calculating,
comparing and sequencing) from, into and between the twentieth and twenty-
first centuries, and the years 1999 and 2000 and leap year calculations.
(r) Environmental Matters. Except for such matters that,
individually or in the aggregate, would not reasonably be expected to have a
Company Material Adverse Effect or would not otherwise require disclosure
pursuant to the Securities Exchange Act, or are listed in Section 3(r) of the
Company Disclosure Letter or described in Company Reports filed prior to the
date hereof, (i) each of the Company and its Subsidiaries has complied and is
in compliance with all applicable Environmental Laws (as defined below); (ii)
the properties currently owned or operated by the Company or any of its
Subsidiaries (including soils, groundwater, surface water, buildings or other
structures) are not contaminated with Hazardous Substances (as defined below);
(iii) neither the Company nor any of its Subsidiaries is subject to liability
for any Hazardous Substance disposal or contamination on any third party
property; (iv) neither the Company nor any or its Subsidiaries has had any
release or threat of release of any Hazardous Substance; (v) neither the
Company nor any of its Subsidiaries has received any notice, demand, threat,
letter, claim or request for information alleging that it or any of its
Subsidiaries may be in violation of or liable under any Environmental Law
(including any claims relating to electromagnetic fields or microwave
transmissions); (vi) neither the Company nor any of its Subsidiaries is
subject to any orders, decrees, injunctions or other arrangements with any
governmental or regulatory authority of competent jurisdiction or is subject
to any indemnity or other agreement with any third party relating to liability
under any Environmental Law or relating to Hazardous Substances; and (vii)
there are no circumstances or conditions involving the Company or any of its
Subsidiaries that would reasonably be expected to result in any claims,
liabilities, investigations, costs or restrictions on the ownership, use or
transfer of any of its properties pursuant to any Environmental Law.
As used herein, the term "Environmental Law" means any federal,
state, local, foreign or other law (including common law), statutes,
ordinances or codes relating to: (i) the protection, investigation or
restoration of the environment, health, safety or natural resources, (ii)
the handling, use, presence, disposal, release or threatened release of any
Hazardous Substance, or (iii) noise, odor, wetlands, pollution, contamination
or any injury or threat of injury to person or property in connection with any
Hazardous Substance.
As used herein, the term "Hazardous Substances" means any substance
that is listed, classified or regulated pursuant to any Environmental Law,
including any petroleum product or by-product, asbestos-containing material,
lead-containing paint or plumbing, polychlorinated biphenyls, radioactive
materials or radon.
(s) Intellectual Property. Except as disclosed in Section 3(s) of
the Company Disclosure Letter or in the Company Reports filed prior to the
date hereof, the Company and its Subsidiaries have all right, title and
interest in, or a valid and binding license to use, all Company Intellectual
Property (as defined below). Except as disclosed in Section 3(s) of the
Company Disclosure Letter or in the Company Reports filed prior to the date
hereof, the Company and its Subsidiaries (i) have not defaulted in any
material respect under any license to use any Company Intellectual Property,
(ii) are not the subject of any proceeding or litigation for infringement of
any third party intellectual property, (iii) have no knowledge of
circumstances that would be reasonably expected to give rise to any such
proceeding or litigation and (iv) have no knowledge of circumstances that are
causing or would be reasonably expected to cause the loss or impairment of any
Company Intellectual Property, other than a default, proceeding, litigation,
loss or impairment that is not having or would not be reasonably expected to
have, individually or in the aggregate, a Company Material Adverse Effect.
For purposes of this Agreement, "Company Intellectual Property"
means patents and patent rights, trademarks and trademark rights, trade names
and trade name rights, service marks and service xxxx rights, copyrights and
copyright rights, trade secret and trade secret rights, and other intellectual
property rights, and all pending applications for and registrations of
any of the foregoing that are individually or in the aggregate material to the
conduct of the business of the Company and its Subsidiaries taken as a whole.
(t) Insurance. Except as set forth in Section 3(t) of the Company
Disclosure Letter, each of the Company and its Subsidiaries is insured with
financially responsible insurers in such amounts and against such risks and
losses as are customary for companies conducting the business as conducted by
the Company and its Subsidiaries.
(u) Certain Contracts. Except as set forth in Section 3(u) of the
Company Disclosure Letter, all material contracts to which the Company or any
of its Subsidiaries is a party or may be bound that are required by Item
610(b)(10) of Regulation S-K to be filed as exhibits to, or incorporated by
reference in, the Company 10-K or the Company 10-Q have been so filed or
incorporated by reference. All material contracts to which the Company or any
of its Subsidiaries is a party or may be bound that have been entered into as
of the date hereof and will be required by Item 610(b)(10) of Regulation S-K
to be filed or incorporated by reference into the Company's Quarterly Report
on Form 10-Q for the period ending September 30, 1999, but which have not
previously been filed or incorporated by reference into any Company Report,
are set forth in Section 3(u) of the Company Disclosure Letter. All
contracts, licenses, consents, royalty or other agreements which are material
to the Company and its Subsidiaries, taken as a whole, to which the Company or
any of its Subsidiaries is a party (the "Company Contracts") are valid and
in full force and effect on the date hereof except to the extent they have
previously expired in accordance with their terms or, to the extent such
invalidity would not reasonably be expected to have a Company Material Adverse
Effect and, to the Company's knowledge, neither the Company nor any of its
Subsidiaries has violated any provision of, or committed or failed to perform
any act which with or without notice, lapse of time or both would constitute a
default under the provisions of, any Company Contract, except for defaults
which individually and in the aggregate would not reasonably be expected to
result in a Company Material Adverse Effect.
(v) Accounting and Tax Matters. To the Company's knowledge, neither
the Company nor any of its Affiliates has taken or agreed to take any action,
or knows of any circumstances, that (without regard to any action taken or
agreed to be taken or agreed to be taken by Acquiror or any of its Affiliates)
would prevent the Merger from qualifying as a reorganization within the
meaning of Section 368(a) of the Code.
4. Representations and Warranties of Acquiror. Acquiror represents and
warrants to the Company:
(a) Organization, Qualification and Corporate Power. Acquiror has
been duly organized, validly existing and in good standing under the laws of
the State of Delaware. If applicable to such country, each of Acquiror's
Subsidiaries operating in such country has been duly incorporated or otherwise
organized and is validly existing. Each of Acquiror and its Subsidiaries is
duly authorized to conduct business and, if applicable to such country, is in
good standing under the laws of each jurisdiction where such qualification is
required, except where the lack of such qualification or failure to be in good
standing would not reasonably be expected to have a material adverse effect on
the business, financial condition or results of operations of Acquiror and its
Subsidiaries taken as a whole or on the ability of Acquiror to consummate the
transactions contemplated by this Agreement (an "Acquiror Material Adverse
Effect"). Each of Acquiror and its Subsidiaries has full corporate power and
corporate authority, and all foreign, federal, state and local governmental
permits, licenses and consents, required to carry on the businesses in which
it is engaged and to own and use the properties owned and used by it, except
for such permits, licenses and consents the failure of which to have would not
reasonably be expected to have a Acquiror Material Adverse Effect. Acquiror
does not own any equity interest in any corporation, partnership, limited
liability company, joint venture or other entity other than the Subsidiaries
listed in Section 4(a) of Acquiror's disclosure letter accompanying this
Agreement (the "Acquiror Disclosure Letter"). Acquiror has delivered to the
Company a true, complete and correct copy of its certificate of incorporation
and by-laws, each as amended to date. Neither Acquiror nor any of its
Subsidiaries is in violation of any provision of its certificate of
incorporation (or comparable charter document) or by-laws.
(b) Capitalization. The entire authorized capital stock of Acquiror
consists of 15,249,599 shares of preferred stock, $.01 par value per share, of
which 298,187 shares are issued and outstanding as of September 1, 1999 and no
shares of Acquiror preferred stock were held in Treasury as of September 1,
1999, and 29,000,000 Acquiror Shares, of which 11,562,906 Acquiror Shares were
issued and outstanding as of September 1, 1999 and no Acquiror Shares were
held in treasury on September 1, 1999. All of the issued and outstanding
Acquiror Shares have been duly authorized and are validly issued, fully paid
and nonassessable, and none have been issued in violation of any preemptive or
similar right. Except as set forth in Section 4(b) of the Acquiror Disclosure
Letter, neither Acquiror nor any of its Subsidiaries has any outstanding or
authorized Stock Rights. There are no outstanding or authorized stock
appreciation, phantom stock, profit participation or similar rights with
respect to Acquiror or any of its Subsidiaries. There are no rights,
contracts, commitments or arrangements obligating Acquiror or any of its
Subsidiaries to redeem, purchase or acquire, or offer to purchase, redeem or
acquire, any outstanding shares of, or any outstanding options, warrants or
rights of any kind to acquire any shares of, or any outstanding securities
that are convertible into or exchangeable for any shares of, capital stock of
Acquiror. The Acquiror Shares to be issued in connection with the Merger
(including the Acquiror Shares to be issued to the holders of Company Shares
and the Acquiror Shares to be issued to holders of Stock Rights to purchase or
otherwise acquire Company Shares upon the exercise and according to the terms
of such Stock Rights) have been duly authorized by all necessary corporate
action, and when issued in accordance with the terms of this Agreement,
will be validly issued, fully paid and nonassessable and not subject to any
preemptive rights, and will be issued in compliance with the requirements of
the Securities Act and applicable state securities or Blue Sky laws.
(c) Subsidiaries. Except as set forth in Section 4(a) of the Acquiror
Disclosure Letter, Acquiror, directly or indirectly, owns 100% of the
outstanding shares of capital stock of each of its Subsidiaries free and clear
of any Security Interest and each such share of capital stock has been duly
authorized and is validly issued, fully paid and nonassessable, and none of
such shares of capital stock has been issued in violation of any preemptive or
similar right. No shares of capital stock of, or other equity interests in,
any Subsidiary of Acquiror are reserved for issuance, and there are no
contracts, agreements, commitments or arrangements obligating Acquiror or any
of its Subsidiaries (i) to offer, sell, issue, grant, pledge, dispose of or
encumber any shares of capital stock of, or other equity interests in, or any
options, warrants or rights of any kind to acquire any shares of capital stock
of, or other equity interests in, any of the Subsidiaries of Acquiror or (ii)
to redeem, purchase or acquire, or offer to purchase or acquire, any
outstanding shares of capital stock of, or other equity interests in, or any
outstanding options, warrants or rights of any kind to acquire any shares of
capital stock of, or other equity interest in, or any outstanding securities
that are convertible into or exchangeable for, any shares of capital
stock of, or other equity interests in, any of the Subsidiaries of Acquiror.
(d) Voting Arrangements. There are no voting trusts, proxies or other similar
agreements or understandings to which Acquiror or any of its Subsidiaries is a
party or by which Acquiror or any of its Subsidiaries is bound with respect to
the voting of any shares of capital stock of Acquiror or any of its
Subsidiaries. There are no issued or outstanding bonds, debentures, notes or
other indebtedness of Acquiror having the right to vote on any matters on
which stockholders of Acquiror may vote.
(e) Authorization of Transaction. Acquiror has full power and
authority (including full corporate power and corporate authority), and has
taken all required action, necessary to properly execute and deliver this
Agreement and to perform its obligations hereunder, and this Agreement
constitutes the valid and legally binding obligation of Acquiror, enforceable
in accordance with its terms and conditions, except as limited by (i)
applicable bankruptcy, insolvency, reorganization, moratorium and other laws
of general application affecting enforcement of creditors' rights generally
and (ii) general principles of equity, regardless of whether asserted in a
proceeding in equity or at law; provided, however, that Acquiror cannot
consummate the Merger unless and until it receives the Requisite Stockholder
Approval of the Acquiror Stockholders.
(f) Noncontravention. Except as disclosed in Section 4(h) of the
Acquiror Disclosure Letter, neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
(i) violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree or other restriction of any Government Entity to which Acquiror
or any of its Subsidiaries is subject or any provision of the charter or by-
laws of Acquiror or any of its Subsidiaries or (ii) conflict with, result in a
breach of, constitute a default under, result in the acceleration of, create
in any party the right to accelerate, terminate, modify or cancel or require
any notice under any agreement, contract, lease, license, instrument or other
arrangement to which either Acquiror or any of its Subsidiaries is a party or
by which it is bound or to which any of its assets is subject, except in the
case of clause (ii) where the violation, conflict, breach, default,
acceleration, termination, modification, cancellation or failure to give
notice would not reasonably be expected to have a Acquiror Material Adverse
Effect. Other than as required under the provisions of the Xxxx-Xxxxx-Xxxxxx
Act, Foreign Competition Laws, Nasdaq, the Securities Exchange Act, the
Securities Act and state securities laws neither Acquiror nor any of its
Subsidiaries needs to give any notice to, make any filing with or obtain
any authorization, consent or approval of any Government Entity in order for
the Parties to consummate the transactions contemplated by this Agreement,
except where the failure to give notice, to file or to obtain any
authorization, consent or approval would not reasonably be expected to have a
Acquiror Material Adverse Effect or except as set forth in Section 4(f) of the
Acquiror Disclosure Letter. "Required Acquiror Consents" means any
authorization, consent or approval of a Government Entity or other Third Party
required to be obtained pursuant to any Foreign Competition Laws or state
securities laws or so that a matter set forth in Section 4(f) of the
Acquiror Disclosure Letter would not be reasonably expected to have a Acquiror
Material Adverse Effect for purposes of this Section 4(f).
(g) Filings with the SEC. Acquiror has made all filings with the
SEC that it has been required to make under the Securities Act and the
Securities Exchange Act (collectively, the "Acquiror Reports"). Each of the
Acquiror Reports has complied with the Securities Act and the Securities
Exchange Act in all material respects. None of the Acquiror Reports, as of
their respective dates, contained any untrue statement of a material fact or
omitted to state a material fact necessary in order to make the statements
made therein, in light of the circumstances under which they were made, not
misleading.
(h) Financial Statements.
(i) Acquiror has filed an Annual Report on Form 10-K (the
"Acquiror 10-K") for the fiscal year ended December 31, 1998 and a
Quarterly Report on Form 10-Q (the "Acquiror 10-Q") for the fiscal
quarter ended June 30, 1999. The financial statements included in
the Acquiror 10-K and the Acquiror 10-Q (including the related
notes and schedules) have been prepared from the books and records
of Acquiror and its Subsidiaries in accordance with GAAP applied on
a consistent basis throughout the periods covered thereby, and
present fairly in all material respects the financial condition of
Acquiror and its Subsidiaries as of the indicated dates and the
results of operations and cash flows of Acquiror and its
Subsidiaries for the periods set forth therein (subject in the case
of quarterly financial statements to the absence of complete
footnotes and subject to normal year-end audit adjustments).
(ii) From January 1, 1999 until the date of this Agreement,
Acquiror and its Subsidiaries have not incurred any liabilities
that are of a nature that would be required to be disclosed on a
balance sheet of Acquiror and its Subsidiaries or the footnotes
thereto prepared in conformity with GAAP, other than (A)
liabilities incurred in the ordinary course of business that would
not, individually or in the aggregate, reasonably be expected to
have a Acquiror Material Adverse Effect or (B) liabilities
disclosed in Section 4(h) of the Acquiror Disclosure Letter or in
Acquiror Reports filed prior to the date hereof.
(i) Events Subsequent to January 1, 1999. From January 1, 1999 to
the date of this Agreement, except as disclosed in the Acquiror Reports filed
prior to the date hereof or except as set forth in Section 4(i) of the
Acquiror Disclosure Letter, (i) Acquiror and its Subsidiaries have conducted
their respective businesses only in, and have not engaged in any transaction
other than according to, the ordinary and usual course of such businesses, and
(ii) there has not been (A) any change in the financial condition, business or
results of operations of Acquiror or any of its Subsidiaries, or any
development or combination of developments relating to Acquiror
or any of its Subsidiaries of which management of Acquiror has knowledge, and
which would reasonably be expected to have an Acquiror Material Adverse
Effect; (B) any declaration, setting aside or payment of any dividend or other
distribution with respect to the capital stock of Acquiror, or any redemption,
repurchase or other reacquisition of any of the capital stock of Acquiror; (C)
any change by Acquiror in accounting principles, practices or methods; (D) any
increase in the compensation of any officer of Acquiror or any of its
Subsidiaries or grant of any general salary or benefits increase to the
employees of Acquiror or any of its Subsidiaries other than in the ordinary
course of business consistent with past practices; (E) any issuance or sale of
any capital stock or other securities (including any Stock Rights) by Acquiror
or any of its Subsidiaries of any kind, other than upon exercise of Stock
Rights issued by or binding upon Acquiror; (F) any modification, amendment or
change to the terms or conditions of any Stock Right; or (G) any split,
combination, reclassification, redemption, repurchase or other
reacquisition of any capital stock or other securities of Acquiror or any of
its Subsidiaries.
(j) Compliance. Except as set forth in Section 4(j) of the Acquiror
Disclosure Letter or in Acquiror Reports filed prior to the date hereof,
Acquiror and its Subsidiaries are in compliance with all applicable foreign,
federal, state and local laws, rules and regulations and all court orders,
judgments and decrees to which any of them is a party except where the failure
to be in compliance would not reasonably be expected to have a Acquiror
Material Adverse Effect.
(k) Brokers' and Other Fees. Except as set forth in Section 4(k) of
the Acquiror Disclosure Letter, none of Acquiror and its Subsidiaries has any
liability or obligation to pay any fees or commissions to any broker, finder
or agent with respect to the transactions contemplated by this Agreement.
(l) Litigation and Liabilities. Except as disclosed in Section 4(l) of the
Acquiror Disclosure Letter or in Acquiror Reports filed prior to the date
hereof, there are (i) no actions, suits or proceedings pending or, to the
knowledge of Acquiror, threatened against Acquiror or any of its Subsidiaries,
or any facts or circumstances known to Acquiror which may give rise to
an action, suit or proceeding against Acquiror or any of its Subsidiaries,
which would reasonably be expected to have a Acquiror Material Adverse Effect
and (ii) no obligations or liabilities of Acquiror or any of its Subsidiaries,
whether accrued, contingent or otherwise, to Acquiror which would reasonably
be expected to have an Acquiror Material Adverse Effect.
(m) Taxes. Except as set forth in Section 4(m) of the Acquiror
Disclosure Letter or in Acquiror Reports filed prior to the date hereof,
Acquiror and each of its Subsidiaries have duly filed or caused to be duly
filed on their behalf all federal, state, local and foreign Tax Returns
required to be filed by them, and have duly paid, caused to be paid or made
adequate provision for the payment of all Taxes required to be paid in respect
of the periods covered by such Tax Returns, except where the failure to file
such Tax Returns or pay such Taxes would not reasonably be expected to have an
Acquiror Material Adverse Effect. Except as set forth in Section 4(m) of the
Acquiror Disclosure Letter, no claims for Taxes have been asserted against
Acquiror or any of its Subsidiaries and no material deficiency for any Taxes
has been proposed, asserted or assessed which has not been resolved or paid in
full. To the knowledge of Acquiror, no Tax Return or taxable period of
Acquiror or any of its Subsidiaries is under examination by any taxing
authority, and neither Acquiror nor any of its Subsidiaries has received
written notice of any pending audit by any taxing authority. There are no
outstanding agreements or waivers extending the statutory period of limitation
applicable to any Tax Return for any period of Acquiror or any or its
Subsidiaries. Except as set forth in Section 4(m) of the Acquiror Disclosure
Letter, there are no tax liens other than liens for Taxes not yet due and
payable relating to Acquiror or any of its Subsidiaries. Acquiror has no
reason to believe that any conditions exist that could reasonably be expected
to prevent the Merger from qualifying as a reorganization within the meaning
of Section 368(a) of the Code. Neither Acquiror nor any of its Subsidiaries
is a party to any agreement or contract which would result in payment of any
"excess parachute payment" within the meaning of Section 280G of the Code as a
result of the transactions contemplated hereby. Neither Acquiror nor any of
its Subsidiaries has filed any consent pursuant to Section 341(f) of the Code
or agreed to have Section 341(f)(2) of the Code apply to any disposition of a
subsection (f) asset owned by Acquiror or any of its Subsidiaries. Acquiror
has not been and is not a United States real property holding company (as
defined in Section 897(c)(2) of the Code) during the applicable period
specified in Section 897(c)(1)(A)(ii) of the Code. None of Acquiror or its
Subsidiaries (x) has been a member of an "affiliated group," within the
meaning of Section 1504(a) of the Code, other than a group the common acquiror
of which was the Acquiror or (y) has any liability for the Taxes of any
person, other than any of Acquiror or its Subsidiaries under Treasury
Regulation Section 1.1502-6 (or any similar provision of state, local or
foreign law) as a transferee, successor, by contract or otherwise.
(n) Fairness Opinion. Xxxxxxx Brothers, L.P. has delivered the Acquiror
Fairness Opinion to the Acquiror Board, and a true and complete copy thereof
has been furnished to the Company.
(o) Employee Benefits.
(i) All pension, profit-sharing, deferred compensation, savings,
stock bonus and stock option plans, and all employee benefit plans,
whether or not covered by ERISA which are sponsored by Acquiror,
any Subsidiary of Acquiror or any Acquiror ERISA Affiliate (as
defined below) of Acquiror or to which Acquiror, any Subsidiary of
Acquiror or any Acquiror ERISA Affiliate of Acquiror makes
contributions, and which cover employees of Acquiror or any
Subsidiary of Acquiror (the "Acquiror Employees") or former
employees of Acquiror or any Subsidiary of Acquiror, all employment
or severance contracts with employees of Acquiror or any Subsidiary
of Acquiror, and any applicable "change of control" or similar
provisions in any plan, contract or arrangement that cover Acquiror
Employees (collectively, "Acquiror Benefit Plans" and
individually a "Acquiror Benefit Plan") are accurately and
completely listed in Section 4(o) of the Acquiror Disclosure
Letter. No Acquiror Benefit Plan is a multi-employer plan, money
purchase plan, defined benefit plan, multiple employer plan or
multiple employer welfare arrangement and no Acquiror Benefit Plan
is covered by Title IV of ERISA. True and complete copies of all
Acquiror Benefit Plans (other than medical and other similar
welfare plans made generally available to all Acquiror Employees)
have been made available to the Company.
(ii) All Acquiror Benefit Plans to the extent subject to ERISA,
are in compliance in all material respects with ERISA and the rules
and regulations promulgated thereunder. Each Acquiror Benefit Plan
which is an "employee pension benefit plan" within the meaning of
Section 3(2) of ERISA ("Acquiror Pension Plan") and which is
intended to be qualified under Section 401(a) of the Code, has
received a favorable determination letter from the Internal Revenue
Service, which determination letter is currently in effect, and
there are no proceedings pending or, to the knowledge of Acquiror,
threatened, or any facts or circumstances known to Acquiror, which
are reasonably likely to result in revocation of any such favorable
determination letter. There is no pending or, to the knowledge of
Acquiror, threatened litigation relating to the Acquiror Benefit
Plans. Neither Acquiror nor any of its Subsidiaries has engaged in
a transaction with respect to any Acquiror Benefit Plan that,
assuming the taxable period of such transaction expired as of the
date hereof, is reasonably likely to subject Acquiror or any of its
Subsidiaries to a tax or penalty imposed by either Section
4975 of the Code or Section 502(i) of ERISA.
(iii) No liability under Title IV of ERISA has been or is
reasonably likely to be incurred by Acquiror or any of its
Subsidiaries with respect to any ongoing, frozen or terminated
Acquiror Benefit Plan that is a "single-employer plan", within the
meaning of Section 4001(a)(15) of ERISA, currently or formerly
maintained by any of them, or the single-employer plan of any
entity which is considered a predecessor of Acquiror or one
employer with Acquiror under Section 4001 of ERISA (a "Acquiror
ERISA Affiliate"). All contributions required to be made under the
terms of any Acquiror Benefit Plan have been timely made or
reserves therefor on the balance sheet of Acquiror have been
established, which reserves are adequate. Except as required by
Part 6 of Title I of ERISA, Acquiror does not have any unfunded
obligations for retiree health and life benefits under any Acquiror
Benefit Plan.
(iv) Acquiror and its Subsidiaries have not incurred any
liability under, and have complied in all material respects with,
the WARN Act, and no fact or event exists that could give rise to
liability under such act.
(p) Year 2000. Except as disclosed in the previously filed Acquiror
Reports, Acquiror's products and information systems are Year 2000 Compliant
except to the extent that their failure to be Year 2000 Compliant would not,
individually or in the aggregate, reasonably be expected to have an Acquiror
Material Adverse Effect.
(q) Environmental Matters. Except for such matters that,
individually or in the aggregate, would not reasonably be expected to have an
Acquiror Material Adverse Effect or would not otherwise require disclosure
pursuant to the Securities Exchange Act, or are listed in Section 4(q) of the
Acquiror Disclosure Letter or described in Acquiror Reports filed prior to the
date hereof, (i) each of Acquiror and its Subsidiaries has complied and is in
compliance with all applicable Environmental Laws; (ii) the properties
currently owned or operated by Acquiror or any of its Subsidiaries (including
soils, groundwater, surface water, buildings or other structures) are not
contaminated with Hazardous Substances (as defined below); (iii) neither
Acquiror nor any of its Subsidiaries is subject to liability for any Hazardous
Substance disposal or contamination on any third party property; (iv) neither
Acquiror nor any or its Subsidiaries has had any release or threat of release
of any Hazardous Substance; (v) neither Acquiror nor any of its Subsidiaries
has received any notice, demand, threat, letter, claim or request for
information alleging that it or any of its Subsidiaries may be in violation of
or liable under any Environmental Law (including any claims relating to
electromagnetic fields or microwave transmissions); (vi) neither Acquiror nor
any of its Subsidiaries is subject to any orders, decrees, injunctions or
other arrangements with any governmental or regulatory authority of competent
jurisdiction or is subject to any indemnity or other agreement with any third
party relating to liability under any Environmental Law or relating to
Hazardous Substances; and (vii) there are no circumstances or conditions
involving Acquiror or any of its Subsidiaries that would reasonably be
expected to result in any claims, liabilities, investigations, costs or
restrictions on the ownership, use or transfer of any of its properties
pursuant to any Environmental Law.
(r) Intellectual Property. Except as disclosed in Section 4(r) of
the Acquiror Disclosure Letter or in the Acquiror Reports filed prior to the
date hereof, Acquiror and its Subsidiaries have all right, title and interest
in, or a valid and binding license to use, all Acquiror Intellectual Property
(as defined below). Except as disclosed in Section 4(r) of the Acquiror
Disclosure Letter or in the Acquiror Reports filed prior to the date hereof,
Acquiror and its Subsidiaries (i) have not defaulted in any material respect
under any license to use any Acquiror Intellectual Property, (ii) are not the
subject of any proceeding or litigation for infringement of any third
party intellectual property, (iii) have no knowledge of circumstances that
would be reasonably expected to give rise to any such proceeding or litigation
and (iv) have no knowledge of circumstances that are causing or would be
reasonably expected to cause the loss or impairment of any Acquiror
Intellectual Property, other than a default, proceeding, litigation, loss or
impairment that is not having or would not be reasonably expected to have,
individually or in the aggregate, an Acquiror Material Adverse Effect.
For purposes of this Agreement, "Acquiror Intellectual Property"
means patents and patent rights, trademarks and trademark rights, trade names
and trade name rights, service marks and service xxxx rights, copyrights and
copyright rights, trade secret and trade secret rights, and other intellectual
property rights, and all pending applications for and registrations of
any of the foregoing that are individually or in the aggregate material to the
conduct of the business of Acquiror and its Subsidiaries taken as a whole.
(s) Insurance. Except as set forth in Section 4(s) of the Acquiror
Disclosure Letter, each of Acquiror and its Subsidiaries is insured with
financially responsible insurers in such amounts and against such risks and
losses as are customary for companies conducting the business as conducted by
Acquiror and its Subsidiaries.
(t) Certain Contracts. Except as set forth in Section 4(t) of the
Acquiror Disclosure Letter, all material to which Acquiror or any of its
Subsidiaries is a party or may be bound that are required by Item 610(b)(10)
of Regulation S-K to be filed as exhibits to, or incorporated by
reference in, the Acquiror 10-K or the Acquiror 10-Q have been so filed or
incorporated by reference. All material contracts to which Acquiror or any of
its Subsidiaries is a party or may be bound that have been entered into as of
the date hereof and will be required by Item 610(b)(10) of Regulation S-K to
be filed or incorporated by reference into Acquiror's Quarterly Report on Form
10-Q for the period ending September 30, 1999, but which have not previously
been filed or incorporated by reference into any Acquiror Reports, are set
forth in Section 4(t) of the Acquiror Disclosure Letter. All contracts,
licenses, consents, royalty or other agreements which are material to Acquiror
and its Subsidiaries, taken as a whole, to which Acquiror or any of its
Subsidiaries is a party (the "Acquiror Contracts") are valid and in full force
and effect on the date hereof except to the extent they have previously
expired in accordance with their terms or, to the extent such invalidity would
not reasonably be expected to have an Acquiror Material Adverse Effect and, to
Acquiror's knowledge, neither Acquiror nor any of its Subsidiaries has
violated any provision of, or committed or failed to perform any act which
with or without notice, lapse of time or both would constitute a default under
the provisions of, any Acquiror Contract, except for defaults which
individually and in the aggregate would not reasonably be expected to result
in an Acquiror Material Adverse Effect.
(u) Accounting and Tax Matters. To Acquiror's knowledge, neither
Acquiror nor any of its Affiliates has taken or agreed to take any action, or
knows of any circumstances, that (without regard to any action taken or agreed
to be taken or agreed to be taken by the Company or any of its Affiliates)
would prevent the Merger from qualifying as a reorganization within the
meaning of Section 368(a) of the Code.
5. Covenants. The Parties agree as follows with respect to the period
from and after the execution of this Agreement through and including the
Effective Time (except for Section 5(j), Section 5(l) and Section 5(q), which
will apply from and after the Effective Time in accordance with their
respective terms and Section 5(p) which will apply from the date hereof and
shall survive after the Closing).
(a) General. Each of the Parties will use all reasonable efforts to
take all actions and to do all things necessary in order to consummate and
make effective the transactions contemplated by this Agreement (including
satisfaction, but not waiver, of the closing conditions set forth in Section 6
below).
(b) Notices and Consents. The Company and Acquiror will give any
notices (and will cause each of their respective Subsidiaries to give any
notices) to third parties, and will use all reasonable efforts to obtain (and
will cause each of their respective Subsidiaries to use all reasonable efforts
to obtain) any third-party consents, that may be required in connection with
the matters referred to in Section 3(f) and Section 4(f) above (regardless of
whether the failure to give such notice or obtain such consent would result in
a Company Material Adverse Effect or a Acquiror Material Adverse Effect).
(c) Regulatory Matters and Approvals. Each of the Parties, promptly after the
date hereof, will (and the Company, promptly after the date hereof, will cause
each of its Subsidiaries to) give any notices to, make any filings with and
use all reasonable efforts to obtain any authorizations, consents and
approvals of Government Entities in connection with the matters referred to in
Section 3(f) and Section 4(f) above. Without limiting the generality of the
foregoing:
(i) Federal Securities Laws. As promptly as practicable
following the date hereof, Acquiror shall, in cooperation with the
Company, prepare and file with the SEC preliminary proxy materials
which shall constitute the Joint Proxy Statement/Prospectus (such
proxy statement/prospectus, and any amendments or supplements
thereto, the "Joint Proxy Statement/Prospectus") and a registration
statement on Form S-4 with respect to the issuance of Acquiror
Shares in connection with the Merger (such registration statement,
and any amendments or supplements thereto, the "Registration
Statement"), and file with state securities administrators such
registration statements or other documents as may be required
under applicable blue sky laws to qualify or register such Acquiror
Shares in such states as are designated by the Company (the "Blue
Sky Filings"). The Joint Proxy Statement/Prospectus will be
included in the Registration Statement as Acquiror's prospectus.
The Registration Statement and the Joint Proxy Statement/Prospectus
shall comply as to form in all material respects with the applicable
provisions of the Securities Act and the Exchange Act and the rules
and regulations thereunder. Acquiror shall use all reasonable
efforts to have the Registration Statement declared effective by the
SEC as promptly as practicable after filing with the SEC and to keep
the Registration Statement effective as long as is necessary to
consummate the Merger. Acquiror agrees that none of the information
supplied or to be supplied by Acquiror for inclusion or
incorporation by reference in the Registration Statement and/or the
Joint Proxy Statement/Prospectus and each amendment or supplement
thereto, at the time of mailing thereof and at the time of the
Company Special Meeting or the Acquiror Special Meeting, will
contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they
were made, not misleading. The Company agrees that none of the
information supplied or to be supplied by the Company for inclusion
or incorporation by reference in the Joint Proxy
Statement/Prospectus and each amendment or supplement thereto, at
the time of mailing thereof and at the time of the Company Special
Meeting or the Acquiror Special Meeting, will contain an untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made,
not misleading. For purposes of the foregoing, it is understood and
agreed that information concerning or related to Acquiror and the
Acquiror Special Meeting will be deemed to have been supplied by
Acquiror, and information concerning or related to the Company and
the Company Special Meeting shall be deemed to have been supplied by
the Company. Acquiror will provide the Company with a
reasonable opportunity to review and comment on the Joint Proxy
Statement/Prospectus and any amendment or supplement thereto prior
to filing such with the SEC, will provide the Company with a copy of
all such filings concurrent with their filing with the SEC and will
notify the Company as promptly as practicable after the receipt of
any comments from the SEC or its staff or from any state securities
administrators and of any request by the SEC or its staff or by any
state securities administrators for amendments or supplements
to the Registration Statement or any Blue Sky Filings or for
additional information, and will supply the Company and its legal
counsel with copies of all correspondence between Acquiror or any of
its representatives, on the one hand, and the SEC, its staff or any
state securities administrators, on the other hand, with respect to
the Registration Statement. No change, amendment or supplement
to the information supplied by the Company for inclusion in the
Joint Proxy Statement/Prospectus shall be made without the approval
of the Company, which approval shall not be unreasonably withheld or
delayed. If, at any time prior to the Effective Time, any event
relating to the Company or Acquiror or any of their respective
Affiliates, officers or directors is discovered by the Company or
Acquiror, as the case may be, that is required by the Securities Act
or the Securities Exchange Act to be set forth in an amendment to
the Registration Statement or a supplement to the Joint Proxy
Statement/Prospectus, the Company or Acquiror, as the case may be,
will as promptly as practicable inform the other, and such amendment
or supplement will be promptly filed with the SEC and disseminated
to the stockholders of the Company and Acquiror, to the extent
required by applicable securities laws. All documents which the
Company or Acquiror files or is responsible for filing with the SEC
and any other regulatory agency in connection with the Merger
(including, without limitation, the Registration Statement and the
Joint Proxy Statement/Prospectus) will comply as to form and content
in all material respects with the provisions of applicable law.
Notwithstanding the foregoing, the Company, on the one hand, and
Acquiror, on the other hand, make no representations or warranties
with respect to any information that has been supplied in writing by
the other, or the other's auditors, attorneys or financial advisors,
specifically for use in the Registration Statement or the Joint
Proxy Statement/Prospectus, or in any other documents to be filed
with the SEC or any other regulatory agency expressly for use in
connection with the transactions contemplated hereby.
(ii) State Corporation Law. The Company will take all action,
to the extent necessary in accordance with applicable law, its
certificate of incorporation and by-laws to convene a special
meeting of its stockholders (the "Company Special Meeting"), as soon
as reasonably practicable in order that its stockholders
may consider and vote upon the adoption of this Agreement and the
approval of the Merger in accordance with the Massachusetts Business
Corporation Law. Acquiror will take all action, to the extent
necessary in accordance with applicable law, its certificate of
incorporation and by-laws to convene a special meeting of its
stockholders (the "Acquiror Special Meeting"), as soon as
reasonably practicable in order that its stockholders may consider
and vote upon the adoption of this Agreement and the approval of the
Merger in accordance with the Delaware Business Corporation Law, the
issuance of Acquiror Shares in connection with the Merger as
provided in this Agreement as required by the rules
of Nasdaq and an amendment to the certificate of incorporation of
Acquiror to increase the number of authorized Acquiror Shares. The
Company and Acquiror shall mail the Joint Proxy Statement/Prospectus
to their respective stockholders simultaneously and as soon as
reasonably practicable. Subject to Section 5(h)(iv) and
Section 5(i)(iv) below, the Joint Proxy Statement/Prospectus shall
contain the affirmative unanimous recommendations of the Company
Board in favor of the adoption of this Agreement and the approval of
the Merger and of the Acquiror Board in favor of issuance of
Acquiror Shares in connection with the Merger as provided in the
Agreement as required by the rules of Nasdaq and the increase in the
number of authorized Acquiror Shares in accordance with the Delaware
General Corporation Law.
(iii) Periodic Reports. Each of the Parties and its counsel
shall be given an opportunity to review each Form 10-K and Form 10-Q
(and any amendments thereto) to be filed by the other Party under
the Securities Exchange Act prior to their being filed with the SEC
and Nasdaq, and shall be provided with final copies thereof
concurrently with their filing with the SEC.
(d) Operation of the Company's Business. Except as set forth in
Section 5(d) of the Company Disclosure Letter or as otherwise expressly
contemplated by this Agreement, the Company will not (and will not cause or
permit any of its Subsidiaries to), without the written consent of Acquiror,
take any action or enter into any transaction other than in the ordinary
course of business consistent with past practice. Without limiting the
generality of the foregoing, except as expressly provided in this Agreement or
Section 5(d) of the Company Disclosure Letter, without the written consent of
Acquiror:
(i) none of the Company and its Subsidiaries will authorize or
effect any change in its charter or by-laws or comparable
organizational document;
(ii) none of the Company and its Subsidiaries will grant any
Stock Rights or issue, sell, authorize or otherwise dispose of any
of its capital stock, (x) except upon the conversion or exercise of
Stock Rights outstanding as of the date of this Agreement and (y)
except for stock options issued to employees of the Company and its
Subsidiaries in a manner consistent with past practice which (I)
do not provide for the issuance of more than 200,000 Company Shares
in any calendar quarter, (II) are issued only to new employees and
employees promoted after the date hereof, (III) are issued at not
less than the market price of the Company Stock on the date of
grant, (IV) are not issued to any executive officer or director of
the Company and (V) do not provide for accelerated vesting as a
result of the Merger;
(iii) none of the Company and its Subsidiaries will sell, lease,
encumber or otherwise dispose of, or otherwise agree to sell,
lease, encumber or otherwise dispose of, any of its assets which
are material, individually or in the aggregate, to the Company and
its Subsidiaries taken as a whole, other than equipment sales from
inventory arising in the ordinary course of business consistent
with past practice;
(iv) none of the Company and its Subsidiaries (other than
wholly-owned Subsidiaries) will declare, set aside or pay any
dividend or distribution with respect to its capital stock (whether
in cash or in kind);
(v) none of the Company and its Subsidiaries will split,
combine or reclassify any of its capital stock or redeem,
repurchase or otherwise acquire any of its capital stock;
(vi) none of the Company and its Subsidiaries will acquire or
agree to acquire by merger or consolidation with, or by purchasing
a substantial equity interest in or a substantial portion of the
assets of, or by any other manner, any business of any Person or
division thereof or otherwise acquire or agree to acquire
any assets (other than assets used in the operation of the business
of the Company and its Subsidiaries in the ordinary course
consistent with past practice);
(vii) none of Company or its Subsidiaries will incur or commit
to any capital expenditures other than capital expenditures
incurred or committed to in the ordinary course of business
consistent with past practice and which, together with all such
expenditures incurred or committed since January 1, 1999, are not
in excess of the respective amounts by category or in the aggregate
set forth in the Company's capital expenditure budget, as
previously disclosed to Acquiror or, if the Closing Date has not
occurred prior to December 31, 1999, such additional amounts for
any subsequent period as may be consented to by Acquiror, such
consent not to be unreasonably withheld, or, if Acquiror shall not
have so consented, an amount not greater than an amount equal to a
pro rata portion of the Company's 1999 capital expenditure budget;
(viii) none of the Company or its Subsidiaries will (x) other
than in connection with actions permitted by Section 5(d)(vi), make
any loans, advances or capital contributions to, or investments in,
any other Person, other than by the Company or a Subsidiary of the
Company to or in the Company or any Subsidiary of the Company, (y)
pay, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or
otherwise), other than payments, discharges or satisfactions
incurred or committed to in the ordinary course of business
consistent with past practice or (z) other than in connection
with actions permitted by Section 5(d)(vi), create, incur, assume
or suffer to exist any indebtedness, issuances of debt securities,
guarantees, Security Interests, loans or advances not in existence
as of the date of this Agreement except pursuant to the
credit facilities, indentures and other arrangements in existence
on the date of this Agreement and incurred in the ordinary course
of business consistent with past practice, and any other
indebtedness existing on the date of this Agreement, in
each case as such credit facilities, indentures, other arrangements
and other existing indebtedness may be amended, extended, modified,
refunded, renewed or refinanced after the date of this Agreement,
but only if the aggregate principal amount thereof is not increased
thereby, the term thereof is not extended thereby and the other
terms and conditions thereof, taken as a whole, are not less
advantageous to the Company and its Subsidiaries than those in
existence as of the date of this Agreement;
(ix) none of the Company and its Subsidiaries will make any
change in employment terms for any of its directors, officers and
employees other than (A) customary increases to employees whose
total annual cash compensation is less than $120,000 awarded in the
ordinary course of business consistent with past practices, and (B)
customary employee bonuses (including to employees who are
officers) approved by the Company Board and paid in the ordinary
course of business consistent with past practices and (C)
immaterial changes to Company Benefit Plans;
(x) except as disclosed in the Company Reports filed prior to
the date of this Agreement, the Company will not change its methods
of accounting in effect at December 31, 1998 in a manner materially
affecting the consolidated assets, liabilities or results of
operations of the Company, except as required by changes in GAAP as
concurred in by the Company's independent auditors, and
the Company will not (i) change its fiscal year or (ii) make any
material tax election, other than in the ordinary course of
business consistent with past practice; and
(xi) none of the Company and its Subsidiaries will resolve or
commit to any of the foregoing.
In the event the Company shall request Acquiror to consent in
writing to an action otherwise prohibited by this Section 5(d), Acquiror shall
use reasonable efforts to respond in a prompt and timely fashion (but in no
event later than ten (10) business days following such request), but
may otherwise respond affirmatively or negatively in its sole discretion.
(e) Operation of Acquiror's Business. Except as set forth in
Section 5(e) of the Acquiror Disclosure Letter or as otherwise contemplated by
this Agreement:
(i) none of Acquiror and its Subsidiaries will authorize or
effect any change in its charter or by-laws or comparable
organizational document except for such amendments to its charter,
by-laws or other comparable charter or organizational documents that
do not have an adverse affect on the Merger and the other
transactions contemplated hereby;
(ii) none of Acquiror and its Subsidiaries will grant any Stock
Rights or issue, sell, authorize or otherwise dispose of any of its
capital stock, except (x) upon the conversion or exercise of Stock
Rights outstanding as of the date of this Agreement or issued
pursuant to the following clauses (y) and (z); (y) stock
options issued to employees of the Acquiror and its Subsidiaries in
a manner consistent with past practice which (I) do not provide for
the issuance of more than 200,000 Acquiror Shares in any calendar
quarter, (II) are issued only to new employees and employees
promoted after the date hereof, (III) are issued at not less than
the market price of the Acquiror Stock on the date of grant, (IV)
are not issued to any executive officer or director of the Acquiror
and (V) do not provide for accelerated vesting as a result of the
Merger; and (z) Stock Rights and capital stock issued as
consideration for acquisitions as permitted by Section 5(e)(vi);
(iii) none of Acquiror and its Subsidiaries will sell, lease,
encumber or otherwise dispose of, or otherwise agree to sell or
otherwise dispose of, any of its assets which are material,
individually or in the aggregate, to Acquiror and its
Subsidiaries taken as a whole, other than equipment sales from
inventory arising in the ordinary course of business consistent with
past practice;
(iv) none of Acquiror and its Subsidiaries (other than wholly
owned Subsidiaries) will declare, set aside or pay any dividend or
distribution with respect to its capital stock (whether in cash or
in kind);
(v) none of Acquiror and its Subsidiaries will split, combine
or reclassify any of its capital stock or redeem, repurchase or
otherwise acquire any of its capital stock;
(vi) without Prior Consultation, none of Acquiror and its
Subsidiaries will acquire or agree to acquire by merger or
consolidation with, or by purchasing a substantial equity interest
in or a substantial portion of the assets of, or by any
other manner, any business of any Person or division thereof or
otherwise acquire or agree to acquire any substantial assets in a
single transaction or series of related transactions;
(vii) without Prior Consultation, none of Acquiror or its
Subsidiaries will incur or commit to any capital expenditures other
than capital expenditures incurred or committed to in the ordinary
course of business consistent with past practice;
(viii) without Prior Consultation, none of Acquiror or its
Subsidiaries will (A) other than in connection with actions
permitted by Section 5(e)(vii), make any loans, advances or capital
contributions to, or investments in, any other Person, other than by
Acquiror or a Subsidiary of Acquiror to or in Acquiror or any
Subsidiary of Acquiror, (B) pay, discharge or satisfy any claims,
liabilities or obligations (absolute, accrued, asserted or
unasserted, contingent or otherwise), other than loans, advances,
capital contributions, investments, payments, discharges or
satisfactions incurred or committed to in the ordinary course of
business consistent with past practice or (C) other than in
connection with actions permitted by Section 5(e)(vii), create,
incur, assume or suffer to exist any indebtedness, issuances of debt
securities, guarantees, Security Interests, loans or advances not
in existence as of the date of this Agreement except pursuant to the
credit facilities, indentures and other arrangements in existence on
the date of this Agreement and incurred in the ordinary course of
business consistent with past practice, and any other indebtedness
existing on the date of this Agreement, in each case as such credit
facilities, indentures, other arrangements and other
existing indebtedness may be amended, extended, exchanged, modified,
refunded, renewed or refinanced after the date of this Agreement,
but only if the aggregate principal amount thereof is not increased
thereby, the term thereof is not extended thereby and the other
terms and conditions thereof, taken as a whole, are not less
advantageous to Acquiror and its Subsidiaries than those in
existence as of the date of this Agreement;
(ix) none of the Acquiror and its Subsidiaries will make any
change in employment terms for any of its directors, officers and
employees other than (A) customary increases to employees whose
total annual cash compensation is less than $120,000 awarded in the
ordinary course of business consistent with past practices, and (B)
customary employee bonuses (including to employees who are
officers) approved by the Acquiror Board and paid in the ordinary
course of business consistent with past practices and (C) immaterial
changes to Acquiror Benefit Plans;
(x) Acquiror will not change its methods of accounting in
effect at December 31, 1998 in a manner materially affecting the
consolidated assets, liabilities or operating results of Acquiror,
except as required by changes in GAAP as concurred in by Acquiror's
independent auditors, and Acquiror will not (i) change its fiscal
year or (ii) make any material tax election, other than in the
ordinary course of business consistent with past practice; and
(xi) none of Acquiror and its Subsidiaries will resolve or commit to
any of the foregoing (A) which requires the Company's consent unless
it has obtained such consent or (B) which requires Prior
Consultation unless it has afforded Prior Consultation.
In the event Acquiror shall request the Company to consent in
writing to an action otherwise prohibited by this Section 5(e), the Company
shall use reasonable efforts to respond in a prompt and timely fashion (but in
no event later than ten (10) business days following such request), but may
otherwise respond affirmatively or negatively in its sole discretion.
(f) Access. Each Party will (and will cause each of its Subsidiaries to)
permit representatives of the other Party to have access at all reasonable
times and in a manner so as not to materially interfere with the normal
business operations of the Company and its Subsidiaries, or Acquiror and its
Subsidiaries, as applicable, to all premises, properties, personnel, books,
records (including without limitation tax and financial records), contracts
and documents of or pertaining to such Party. Each Party and all of its
respective representatives will treat and hold as such any Confidential
Information it receives from the other Party or any of its representatives
in accordance with the Confidentiality Agreement.
(g) Notice of Developments. Each Party will give prompt written
notice to the others of any material adverse development causing a breach of
any of its own representations and warranties in Section 3 and Section 4
above. No disclosure by any Party pursuant to this Section 5(g), however,
shall be deemed to amend or supplement the Company Disclosure Letter or
Acquiror Disclosure Letter or to prevent or cure any misrepresentation, breach
of warranty or breach of covenant.
(h) Company Exclusivity.
(i) The Company shall, and shall cause its Subsidiaries and
Representatives to, immediately cease and terminate any existing
solicitation, initiation, encouragement, activity, discussion or
negotiation with any Persons conducted heretofore by the Company,
its Subsidiaries or any of their respective Affiliates, officers,
directors, employees, financial advisors, agents or representatives
(each a "Representative") with respect to any proposed, potential
or contemplated Acquisition Proposal.
(ii) From and after the date hereof, without the prior written
consent of Acquiror, the Company will not authorize or permit any of
its Subsidiaries to, and shall cause any and all of its
Representatives not to, directly or indirectly, (A) solicit,
initiate, or encourage any inquiries or proposals that constitute,
or could reasonably be expected to lead to, an Acquisition Proposal,
or (B) engage in negotiations or discussions with any Third Party
concerning, or provide any non-public information to any person or
entity relating to, an Acquisition Proposal, or (C) enter into any
letter of intent, agreement in principle or any acquisition
agreement or other similar agreement with respect to any Acquisition
Proposal; provided, however, that nothing contained in this Section
5(h)(ii) shall prevent the Company or the Company Board prior to
receipt of the Requisite Stockholder Approval of the Company
Stockholders, from furnishing non-public information to, or entering
into discussions or negotiations with, any Third Party in connection
with an unsolicited, bona fide written proposal for an Acquisition
Proposal by such Third Party, if and only to the extent that (1)
such Third Party has made a written proposal to the Company Board to
consummate an Acquisition Proposal, (2) the Company Board determines
in good faith, based upon the advice of a financial advisor of
nationally recognized reputation, that such Acquisition Proposal is
reasonably capable of being completed on substantially the terms
proposed, and would, if consummated, result in a transaction that
would provide greater value to the holders of the Company Shares
than the transaction contemplated by this Agreement (a "Superior
Proposal"), (3) the failure to take such action would, in the
reasonable good faith judgment of the Company Board, based upon a
written opinion of Company outside legal counsel, be a violation of
its fiduciary duties to the Company's stockholders under applicable
law, and (4) prior to furnishing such non-public information to, or
entering into discussions or negotiations with, such Person, the
Company Board receives from such Person an executed confidentiality
agreement with material terms no less favorable to the Company than
those contained in the Confidentiality Agreement and provides
prior notice of its decision to take such action to Acquiror. The
Company agrees not to release any Third Party from, or waive any
provision of, any standstill agreement to which it is a party or any
confidentiality agreement between it and another Person who has
made, or who may reasonably be considered likely to make, an
Acquisition Proposal, unless the failure to take such action would,
in the reasonable good faith judgment of the Company Board, based
upon written opinion of Company outside legal counsel, be a
violation of its fiduciary duties to the Company Stockholders under
applicable law and such action is taken prior to
receipt of the Requisite Stockholder Approval of the Company
Stockholders. Without limiting the foregoing, it is understood that
any violation of the restrictions set forth in the preceding
sentence by any Representative of the Company or any of its
Subsidiaries shall be deemed to be a breach of this Section 5(h) by
the Company.
(iii) The Company shall notify Acquiror promptly after
receipt by the Company or the Company's knowledge of the receipt by
any of its Representatives of any Acquisition Proposal or any
request for non-public information in connection with an Acquisition
Proposal or for access to the properties, books or records of the
Company by any Person that informs such party that it is considering
making or has made an Acquisition Proposal. Such notice shall be
made orally and in writing and shall indicate the identity of the
offeror and the terms and conditions of such proposal, inquiry or
contact. The Company shall keep Acquiror informed of the status
(including any change to the material terms) of any such Acquisition
Proposal or request for non-public information.
(iv) The Company Board may not withdraw or modify, or propose
to withdraw or modify, in a manner adverse to Acquiror, the approval
or recommendation by the Company Board of this Agreement or the
Merger unless, following the receipt of a Superior Proposal but
prior to receipt of the Requisite Stockholder Approval of the
Company Stockholders, in the reasonable good faith judgment of the
Company Board, based upon the written opinion of Company's
outside legal counsel, the failure to do so would be a violation of
the Company Board's fiduciary duties to the Company's stockholders
under applicable law; provided, however, that, the Company Board
shall submit this Agreement and the Merger to the Company's
stockholders for adoption and approval, whether or not the Company
Board at any time subsequent to the date hereof determines that this
Agreement is no longer advisable or recommends that the stockholders
of the Company reject it or otherwise modifies or withdraws its
recommendation. Unless the Company Board has withdrawn its
recommendation of this Agreement in compliance herewith, the Company
shall use its best efforts to solicit from the Company's
stockholders proxies in favor of the adoption and approval of this
Agreement and the Merger and to secure the vote or consent of the
Company's stockholders required by the Massachusetts Business
Corporation Law and its articles of incorporation and by-laws to
adopt and approve this Agreement and the Merger.
(i) Acquiror Exclusivity.
(i) Acquiror shall, and shall cause its Subsidiaries and
Representatives to, immediately cease and terminate any existing
solicitation, initiation, encouragement, activity, discussion or
negotiation with any Persons conducted heretofore by Acquiror, its
Subsidiaries or any of its Representatives with respect
to any proposed, potential or contemplated Acquiror Acquisition
Proposal the consummation of which would be reasonably expected to
(x) result in a material delay in the Effective Time or (y)
materially and adversely impact the likelihood of obtaining any
Required Company Consent or Required Acquiror Consent other
than those the failures to obtain would not result in either a
Company Material Adverse Effect or a Acquiror Material Adverse
Effect (a "Prohibited Acquiror Acquisition Proposal").
(ii) From and after the date hereof, Acquiror will notify the
Company of any Acquiror Acquisition Proposal of which notice is
given to the Acquiror Board. Such notice to the Company will be
made promptly after such notice to the Acquiror Board, but will be
conditional upon an appropriate confidentiality Agreement. Without
the prior written consent of the Company, Acquiror will not
authorize or permit any of its Subsidiaries to, and shall cause any
and all of its Representatives not to, directly or indirectly, (A)
solicit, initiate, or encourage any inquiries or proposals that
constitute, or could reasonably be expected to lead to, a Prohibited
Acquiror Acquisition Proposal, or (B) engage in negotiations or
discussions with any Acquiror Third Party concerning, or provide any
nonpublic information to any person or entity relating to, a
Prohibited Acquiror Acquisition Proposal, or (C) enter into any
letter of intent, agreement in principle or any acquisition
agreement or other similar agreement with respect to any Prohibited
Acquiror Acquisition Proposal; provided, however, that nothing
contained in this Section 5(i)(ii) shall prevent Acquiror or the
Acquiror Board from, prior to receipt of the Requisite Stockholder
Approval of the Acquiror Stockholders, furnishing nonpublic
information to, or entering into discussions or negotiations with,
any Acquiror Third Party in connection with an unsolicited, bona
fide written proposal for a Prohibited Acquiror Acquisition Proposal
by such Acquiror Third Party, if and only to the extent that (1)
such Acquiror Third Party has made a written proposal to the
Acquiror Board to consummate a Prohibited Acquiror Acquisition
Proposal, (2) the Acquiror Board determines in good faith, based
upon the advice of a financial advisor of nationally recognized
reputation, that such Prohibited Acquiror Acquisition Proposal is
reasonably capable of being completed on substantially the terms
proposed, and would, if consummated, result in a transaction that
would provide greater value to the holders of the Acquiror Shares
than the transaction contemplated by this Agreement (an "Acquiror
Superior Proposal"), (3) the failure to take such action would, in
the reasonable good faith judgment of the Acquiror Board, based upon
a written opinion of Acquiror's outside legal counsel, be a
violation of its fiduciary duties to the Acquiror's stockholders
under applicable law, and (4) prior to furnishing such nonpublic
information to, or entering into discussions or negotiations with,
such Person, the Acquiror Board receives from such Person an
executed confidentiality agreement with material terms no less
favorable to Acquiror than those contained in the Confidentiality
Agreement. Acquiror agrees not to release any Acquiror Third
Party from, or waive any provision of, any standstill agreement to
which it is a party or any confidentiality agreement between it and
another Person who has made, or who may reasonably be considered
likely to make, a Prohibited Acquiror Acquisition Proposal, unless
the failure to take such action would, in the reasonable good faith
judgment of the Acquiror Board, based upon the written
opinion of Acquiror's outside legal counsel, be a violation of its
fiduciary duties to the Acquiror's stockholders under applicable law
and such action is taken prior to receipt of the Requisite
Stockholder Approval of the Acquiror Stockholders. Without limiting
the foregoing, it is understood that any violation of the
restrictions set forth in the preceding sentence by any director or
officer of Acquiror or any of its Subsidiaries or any investment
bank, financial advisor, attorney, accountant or other
representative of Acquiror or any of its Subsidiaries
shall be deemed to be a breach of this Section 5(i)(ii) by Acquiror.
A Acquiror Acquisition Proposal shall be deemed a Prohibited
Acquiror Acquisition Proposal at the time (and not before) the
Acquiror Board is first notified of such Acquiror Acquisition
Proposal, and at any time that the Acquiror Board is notified of a
significant development with respect to such Acquiror Acquisition
Proposal, unless the Acquiror Board in good faith determines that
such Acquiror Acquisition Proposal is not, and is not reasonably
likely to become, a Prohibited Parent Acquisition Proposal.
(iii) Acquiror shall notify the Company promptly after receipt
by Acquiror or Acquiror's knowledge of the receipt by any of its
Representatives of any Prohibited Acquiror Acquisition Proposal or
any request for non-public information in connection with a
Prohibited Acquiror Acquisition Proposal or for access to the
properties, books or records of Acquiror by any Person that informs
such party that it is considering making or has made a Prohibited
Acquiror Acquisition Proposal. Such notice shall be made orally and
in writing and shall indicate the identity of the offeror and the
terms and conditions of such proposal, inquiry or contact. Acquiror
shall keep the Company informed of the status (including any change
to the material terms) of any such Prohibited Acquiror
Acquisition Proposal or request for nonpublic information.
(iv) The Acquiror Board may not withdraw or modify, or propose
to withdraw or modify, in a manner adverse to the Company, the
approval or recommendation by the Acquiror Board of this Agreement
or the Merger unless, following the receipt of a Acquiror Superior
Proposal but prior to receipt of the Requisite Stockholder Approval
of the Acquiror stockholders, in the reasonable good faith judgment
of the Acquiror Board, based upon the written opinion of
Acquiror's outside legal counsel, the failure to do so would be a
violation of the Acquiror Board's fiduciary duties to the Acquiror's
stockholders under applicable law; provided, however, that the
Acquiror Board shall submit the Merger to the Acquiror stockholders
for adoption and approval, whether or not the Acquiror
Board at any time subsequent to the date hereof determines that this
Agreement is no longer advisable or recommends that the stockholders
of the Acquiror reject the Merger or otherwise modifies or withdraws
its recommendation. Unless the Acquiror Board has withdrawn its
recommendation of the Merger in compliance herewith, Acquiror shall
use its best efforts to solicit from the Acquiror stockholders
proxies in favor of the adoption and approval of the Merger and to
secure the vote or consent of the Acquiror's stockholders required
by Nasdaq and the Delaware General Corporation Law.
(v) Prior to taking any action with respect to a Acquiror
Acquisition Proposal which is not a Prohibited Acquiror Acquisition
Proposal equivalent to those permitted by clauses (A), (B) or (C) of
Section 5(i)(ii), Acquiror shall notify each Acquiror Third Party
which is the object of or a party to such action of the limitation
on Prohibited Acquiror Acquisition Proposals set forth in this
Section 5(i), and Acquiror shall not enter into any letter of
intent, agreement in principle or any acquisition agreement or other
similar agreement with respect to any Acquiror Acquisition Proposal
unless such letter or agreement includes a covenant of the
applicable Acquiror Third Party not to take any action which would
cause such Acquiror Acquisition Proposal to become a Prohibited
Acquiror Acquisition Proposal.
(j) Insurance and Indemnification.
(i) Surviving Corporation will provide each individual who served
as a director or officer of the Company at any time prior to the
Effective Time with liability insurance for a period of six years
after the Effective Time no less favorable in coverage and amount
than any applicable insurance of the Company in effect immediately
prior to the Effective Time; provided, however, that if the
existing liability insurance expires, or is terminated or canceled by
the insurance carrier during such six-year period, the Surviving
Corporation will use its reasonable best efforts to obtain comparable
insurance for the remainder of such period on a commercially
reasonable basis; provided further, however, that in the
event any claim or claims are asserted within such period, all rights
to indemnification in respect of such claim or claims shall continue
until the final disposition thereof;
(ii) After the Effective Time, Surviving Corporation (A) will not
take or permit to be taken any action to alter or impair any
exculpatory or indemnification provisions now existing in the
certificate of incorporation, by-laws or indemnification and
employment agreements of the Company or any of its
Subsidiaries for the benefit of any individual who served as a
director or officer of the Company or any of its Subsidiaries (an
"Indemnified Party") at any time prior to the Effective Time (except
as may be required by applicable law), and (B) shall cause the
Surviving Corporation to honor and fulfill such provisions until the
date which is six years from the Effective Time (except as may be
required by applicable law); provided, however, that in the event any
claim or claims are asserted within such period, all rights to
indemnification in respect of such claim or claims shall continue
until the final disposition thereof.
(iii) To the extent clauses (i) and (ii) above shall not serve to
indemnify and hold harmless an Indemnified Party, Surviving
Corporation, subject to the terms and conditions of this clause
(iii), will indemnify, for a period of six years from the Effective
Time, to the fullest extent permitted under applicable law, each
Indemnified Party from and against any and all actions, suits,
proceedings, hearings, investigations, charges, complaints, claims,
demands, injunctions, judgments, orders, decrees, rulings, damages,
dues, penalties, fines, costs, amounts paid in settlement,
liabilities, obligations, taxes, liens, losses, expenses
and fees, including all court costs and reasonable attorneys' fees
and expenses, resulting from, arising out of, relating to or caused
by this Agreement or any of the transactions contemplated herein;
provided, however, that in the event any claim or claims are
asserted or threatened within such six-year period, all rights to
indemnification in respect of any such claim or claims shall
continue until final disposition of any and all such claims. Any
Indemnified Party wishing to claim indemnification under this clause
(iii), notwithstanding anything to the contrary in the provisions
set forth in the Company's or the Surviving Corporation's
certificate of incorporation, by-laws or other agreements respecting
indemnification of directors or officers, upon learning of any such
claim, action, suit, proceeding or investigation, shall promptly
notify Surviving Corporation thereof, but the failure to so notify
shall not relieve Surviving Corporation of any liability it may have
to such Indemnified Party if such failure does not materially
prejudice Surviving Corporation. In the event of any such claim,
action, suit, proceeding or investigation (whether arising before or
after the Effective Time), (A) Acquiror or the Surviving Corporation
shall have the right following the Effective Time to assume the
defense thereof and Surviving Corporation shall not be liable to such
Indemnified Parties for any legal expenses of other counsel or
any other expenses subsequently incurred by such Indemnified Parties
in connection with the defense thereof, except that if Acquiror or
the Surviving Corporation fails to assume such defense or counsel for
the Indemnified Party advises that there are issues which raise
conflicts of interest between Acquiror or the Surviving Corporation,
on the one hand, and the Indemnified Parties, on the other hand, the
Indemnified Parties may retain counsel satisfactory to them, and
the Company, Surviving Corporation shall pay all reasonable fees and
expenses of such counsel for the Indemnified Parties promptly as
statements therefor are received; provided, however, that Surviving
Corporation shall be obligated to pay for only one firm of counsel
for all Indemnified Parties in any jurisdiction unless
the use of one counsel for such Indemnified Parties would present
such counsel with a conflict of interest, in which case Surviving
Corporation need only pay for separate counsel to the extent
necessary to resolve such conflict; (B) the Indemnified Parties will
reasonably cooperate in the defense of any such matter; and (C)
Surviving Corporation shall not be liable for any settlement
effectuated without its prior written consent, which consent shall
not be unreasonably withheld or delayed. Surviving Corporation shall
not settle any action or claim identified in this Section 5(j)(iii)
in any manner that would impose any liability or penalty on an
Indemnified Party not paid by Acquiror or the Surviving Corporation
without such Indemnified Party's prior written consent, which
consent shall not be unreasonably withheld or delayed.
(iv) Notwithstanding anything contained in clause (iii) above,
Surviving Corporation shall not have any obligation hereunder to any
Indemnified Party (A) if the indemnification of such Indemnified
Party by Surviving Corporation in the manner contemplated hereby is
prohibited by applicable law, (B) the conduct of the Indemnified
Party relating to the matter for which indemnification is sought
involved bad faith or willful misconduct of such Indemnified Party,
or (C) with respect to actions taken by any such Indemnified
Party in his or its individual capacity, including, without
limitations, with respect to any matters relating, directly or
indirectly, to the purchase, sale or trading of securities issued by
the Company other than a tender or sale pursuant to a stock tender
agreement or (D) if such Indemnified Party shall have breached its
obligation to cooperate with Surviving Corporation in the defense of
any claim in respect of which indemnification is sought and such
breach (x) materially and adversely affects Surviving Corporation's
defense of such claim or (y) will materially and adversely affect
Surviving Corporation's defense of such claim if such breach is not
cured within ten days after notice of such breach is delivered to
the Indemnified Party and such breach is not cured during such
period.
(k) Financial Statements.
(i) As soon as they are made available to and reviewed by senior
management of the Company, the Company shall make available to
Acquiror the internally generated monthly, quarterly (including
quarterly statements for the three-month period ended September 25,
1999) and annual financial statements of the Company, consisting of
consolidated balance sheets, and consolidated statements of income and
of cash flows.
(ii) As soon as they are made available to and reviewed by senior
management of Acquiror, Acquiror shall make available to the Company
the internally generated monthly, quarterly (including, quarterly
statements for the three-month period ended September 30, 1999) and
annual financial statements, consisting of consolidated balance
sheets, and consolidated statements of income and of cash flows.
(l) Continuity of Business Enterprise. Acquiror, Surviving
Corporation or any other member of the qualified group (as defined in
Treasury Regulation Section 1.368-1(d)) shall, for the foreseeable
future, continue at least one significant historic business line of
the Company or use at least a significant portion of the Company's
historic business assets in a business, in each case within the
meaning of Treasury Regulation Section 1.368-1(d).
(m) Acquiror Board of Directors. At or before the Effective Time, the
Board of Directors of Acquiror will take all action necessary to cause the
number of directors constituting the Acquiror Board of Directors to be fixed
at nine directors and to elect the Chief Executive Officer of the Company and
three independent directors (as defined in National Association of Securities
Dealers Rule 4200(a)(13)) designated by the Company Board to the Acquiror
Board. In addition, at the next annual meeting of Acquiror's stockholders
held after the Effective Time, Acquiror shall cause to be nominated, and
Acquiror shall undertake its commercially reasonable efforts to cause to be
elected:
(i) the Chief Executive Officer of the Company as a Class II
director, to serve until the annual meeting of the Acquiror
Stockholders in 2003;
(ii) two of such independent directors designated by the Company
Board, as Class I directors, to serve until the annual meeting of the
Acquiror's Stockholders in 2002; and
(iii) the other such independent director designated by the Company
Board as a Class III director, to serve until the annual meeting of
the Acquiror Stockholders in 2001.
(n) Rule 145 Affiliates. Prior to the Closing Date, the Company shall
deliver to Acquiror a letter identifying all persons who were, at the date of
the Company Special Meeting, "affiliates" of the Company for purposes of Rule
145 under the Securities Act. The Company shall use its reasonable efforts to
cause each such person to deliver to Acquiror on or prior to the Closing Date
a written agreement substantially in the form attached as Exhibit A.
(o) Nasdaq Listing. Acquiror shall use all reasonable efforts to cause
the Acquiror Shares to be issued in connection with the Merger and under the
Company Benefit Plans to be approved for listing on Nasdaq, subject to
official notice of issuance, prior to the Closing Date.
(p) Tax Free Treatment. The Parties intend the Merger to qualify as a
reorganization under Section 368(a) of the Code. Each Party shall use
reasonable efforts, and shall undertake reasonable efforts to cause its
Affiliates to use reasonable efforts, to cause the Merger to so qualify and to
obtain the opinions referred to in Section 6(a)(ix) and Section 6(b)(vii).
For purposes of the tax opinions described in Section 6(a)(ix) and Section
6(b)(vii), counsel may receive and rely upon representations, including those
contained in this Agreement or in separate certificates, of the parties hereto
and others. Acquiror and the Company and each of their respective Affiliates
shall not take any action and shall not fail to take any action or suffer to
exist any condition which action or failure to act or condition would prevent,
or would be reasonably likely to prevent, the Merger from qualifying as a
reorganization within the meaning of Section 368(a) of the Code.
(q) Company Employee Plans. After the Effective Time, Surviving
Corporation shall arrange for each employee participating in any of the
Company Benefits Plans to participate in any counterpart benefit plans of
Acquiror or its Subsidiaries (as appropriate) in accordance with the
eligibility criteria thereof, provided that (i) such participants shall
receive full credit for years of service with the Company or any of its
Subsidiaries prior to the Effective Time for all purposes for which such
service was recognized under the Company Benefit Plans and (ii) such
participants shall participate in the Acquiror Benefit Plans on terms no less
favorable than those offered by Acquiror to similarly situated employees of
Acquiror or its Subsidiaries. Surviving Corporation shall give credit under
its applicable employee welfare benefit plans for all copayments, deductibles
and out-of-pocket maximums satisfied by employees (and their eligible
dependents) of the Company (and its Subsidiaries), in respect of the calendar
year in which the Closing Date occurs. Surviving Corporation shall waive all
pre-existing conditions (to the extent waived under the applicable employee
welfare benefit plans of the Company and its Subsidiaries) otherwise
applicable to employees of the Company and its Subsidiaries under Acquiror's
employee welfare benefit plans in which employees of the Company (and its
Subsidiaries) become eligible to participate on or following the Closing.
Notwithstanding the foregoing, Surviving Corporation may continue (or cause
the Surviving Corporation to continue) one or more of the Company Benefit
Plans, in which case Surviving Corporation shall have satisfied its
obligations hereunder with respect to the benefits so provided if the terms of
the Company Benefit Plans which are continued are no less favorable, as a
whole, than the terms of the counterpart plans of Acquiror and its
Subsidiaries (as applicable).
(r) Letter of the Company's Accountants. The Company shall use all
reasonable efforts to cause to be delivered to Acquiror a letter of BDO
Xxxxxxx LLP, the Company's independent auditors, dated a date within two
business days before the date on which the Registration Statement shall become
effective and addressed to Acquiror, in form reasonably satisfactory to
Acquiror and customary in scope and substance for letters delivered by
independent public accountants in connection with registration statements
similar to the Registration Statement.
(s) Letter of Acquiror's Accountants. Acquiror shall use all reasonable
efforts to cause to be delivered to the Company a letter of Xxxxxx Xxxxxxxx
XXX, Xxxxxxxx'x independent auditors, dated a date within two business days
before the date on which the Registration Statement shall become effective and
addressed to the Company, in form reasonably satisfactory to the Company and
customary in scope and substance for letters delivered by independent public
accountants in connection with registration statements similar to the
Registration Statement.
6. Conditions to Obligation to Close.
(a) Conditions to Obligation of Acquiror. The obligation of Acquiror
to consummate the Merger is subject to satisfaction or waiver by Acquiror of
the following conditions at or prior to the Closing Date:
(i) this Agreement and the Merger shall have received the
Requisite Stockholder Approvals;
(ii) the Company and its Subsidiaries shall have obtained the
Required Company Consents, other than those Required Company
Consents the failure of which to obtain would not reasonably be
expected to have a Company Material Adverse Effect and Acquiror
shall have obtained the Required Acquiror Consents, other than those
Required Acquiror Consents the failure of which to obtain would
not reasonably be expected to have an Acquiror Material Adverse
Effect;
(iii) the representations and warranties set forth in Section 3
above shall be true and correct in all material respects at and as
of the Closing Date, except for those representations and warranties
which address matters only as of a particular date (which shall have
been true and correct as of such date);
(iv) the Company shall have performed and complied with all of
its covenants hereunder in all material respects through the
Closing;
(v) neither any statute, rule, regulation, order, stipulation or
injunction (each an "Order") shall be enacted, promulgated, entered,
enforced or deemed applicable to the Merger nor any other action
shall have been taken by any Government Entity (A) which prohibits
the consummation of the transactions contemplated by the Merger; (B)
which prohibits Acquiror's ownership or operation of all or any
material portion of their or the Company's business or assets, or
which compels Acquiror to dispose of or hold separate all or any
material portion of Acquiror's or the Company's business or assets
as a result of the transactions contemplated by the Merger; (C)
which makes the Merger illegal; (D) which imposes material
limitations on the ability of Acquiror to consummate
the Merger; or (E) which imposes any limitations on the ability of
Acquiror or any of its Subsidiaries effectively to control in any
material respect the business or operations of the Company or any of
its Subsidiaries;
(vi) the Company shall have delivered to Acquiror a certificate
to the effect that each of the conditions specified above in Section
6(a)(i)-Section 6(a)(iv) is satisfied in all respects; provided,
however, with respect to Section 6(a)(i), the Company shall
only be required to certify that this Agreement and the Merger
received the Requisite Stockholder Approval of the Company
Stockholders;
(vii) the Acquiror Shares to be issued in connection with the
Merger shall have been approved upon official notice of issuance for
quotation on Nasdaq, subject to official notice of issuance;
(viii) the Registration Statement shall have been declared
effective by the SEC under the Securities Act, and no stop order
suspending the effectiveness of the Registration Statement shall have
been issued by the SEC and no proceedings for that purpose shall have
been initiated or threatened by the SEC;
(ix) Acquiror shall have received a written opinion, dated as
of the Closing Date, from Xxxxxx, Xxxx & Xxxxxx LLP, counsel to
Acquiror, to the effect that the Merger will be treated for U.S.
federal income tax purposes as a reorganization within the meaning of
Section 368(a) of the Code, and that Acquiror and the Company will
each be a party to that reorganization within the meaning of Section
368(b) of the Code; such counsel shall be entitled to rely upon
customary representations provided by the Parties; and
(x) holders of not more than $2,500,000 in value of Company
Shares (calculated based upon the Closing Price per Company Share as
of the date preceding the scheduled Closing Date) shall have exercised
and not withdrawn dissenters' rights with respect to their shares.
Subject to the provisions of applicable law, Acquiror may waive, in
whole or in part, any condition specified in this Section 6(a) if they execute
a writing so stating at or prior to the Closing.
(b) Conditions to Obligation of the Company. The obligation of the
Company to consummate the Merger is subject to satisfaction or waiver by the
Company of the following conditions at or prior to the Closing Date:
(i) this Agreement and the Merger shall have received the
Requisite Stockholder Approvals;
(ii) Acquiror and its Subsidiaries shall have obtained the
Required Acquiror Consents, other than those Required Acquiror
Consents the failure of which to obtain would not reasonably be
expected to have a Acquiror Material Adverse Effect, and the Company
and its Subsidiaries shall have obtained the Required Company
Consents other than those Required Company Consents the
failure of which to obtain would not reasonably be expected to have
a material adverse effect on the business, financial condition or
results of operations of Acquiror, the Surviving Corporation and
their Affiliates taken as a whole;
(iii) the representations and warranties set forth in Section 4
above shall be true and correct in all material respects at and as of
the Closing Date, except for those representations and warranties
which address matters only as of a particular date (which shall have
been true and correct as of such date);
(iv) Acquiror shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing;
(v) neither any Order shall be enacted, promulgated, entered,
enforced or deemed applicable to the Merger nor any other action
shall have been taken by any Government Entity (A) which prohibits
the consummation of the transactions contemplated by the Merger; (B)
which prohibits Acquiror's ownership or operation of all or any
material portion of their or the Company's business or assets, or
which compels Acquiror to dispose of or hold separate all or any
material portion of Acquiror's or the Company's business or assets as
a result of the transactions contemplated by the Merger; or (C) which
makes the Merger illegal;
(vi) Acquiror shall have delivered to the Company a certificate
to the effect that each of the conditions specified above in Section
6(b)(i)-(iv) is satisfied in all respects; provided, however, with
respect to Section 6(b)(i), Acquiror shall only be required to
certify that this Agreement and the Merger received the Requisite
Stockholder Approval of the Acquiror Stockholders;
(vii) the Company shall have received a written opinion, dated
as of the Closing Date, from Xxxxxxx Berlin Shereff Xxxxxxxx LLP,
counsel to the Company, to the effect that the Merger will be treated
for U.S. Federal income tax purposes as a reorganization within the
meaning of Section 368(a) of the Code and as to such other matters as
are customary for transactions such as the Merger, and that Acquiror
and the Company will each be a party to that reorganization within
the meaning of Section 368(b) of the Code; it being understood that
in rendering such opinion, such tax counsel shall be entitled to rely
upon customary representations provided by the Parties;
(viii) the Acquiror Shares to be issued in connection with the
Merger shall have been approved upon official notice of issuance for
quotation on Nasdaq, subject to official notice of issuance;
(ix) the Registration Statement shall have been declared
effective by the SEC under the Securities Act, no stop order
suspending the effectiveness of the Registration Statement shall have
been issued by the SEC and no proceedings for that purpose shall have
been initiated or threatened by the SEC; and
(x) holders of not more than $2,500,000 in value of Company
Shares (calculated based upon the Closing Price per Company Share as
of the date preceding the scheduled Closing Date) shall have
exercised and not withdrawn dissenters' rights with respect to their
shares.
Subject to the provisions of applicable law, the Company may waive,
in whole or in part, any condition specified in this Section 6(b) if it
executes a writing so stating at or prior to the Closing.
7. Termination.
(a) Termination of Agreement. The Parties may terminate this
Agreement with the prior authorization of their respective board of directors
as provided below:
(i) The Parties may terminate this Agreement, and the Merger may
be abandoned, by mutual written consent at any time prior to the
Effective Time before or after the approval by the Company
Stockholders or the Acquiror Stockholders;
(ii) This Agreement may be terminated and the Merger may be
abandoned by action of the Board of Directors of either Acquiror or
the Company, before or after the approval by the Company Stockholders
or the Acquiror Stockholders, (A) if the Effective Time shall not
have occurred by February 29, 2000 (the "Outside Date") (unless the
failure to consummate the Merger by such date is due to the action or
failure to act of the Party seeking to terminate) or (B) if any
condition to the obligation of the terminating Party to consummate
the Merger shall have become incapable of being satisfied prior to
the Outside Date as of a result of an Order that is final and non-
appealable;
(iii) This Agreement may be terminated and the Merger may be
abandoned at any time prior to the Effective Time, before or after
the approval by the Company Stockholders or the Acquiror
Stockholders, by action of the Company Board, in the event that
Acquiror shall have breached any of its representations, warranties
or covenants under this Agreement which breach (A) would give rise to
the failure of a condition set forth in Section 6(b) above, and (B)
cannot be or has not been cured within 30 days after the giving of
written notice by the Company to Acquiror of such breach (provided
that the Company is not then in material breach of any
representation, warranty or covenant contained in this Agreement);
(iv) This Agreement may be terminated and the Merger may be
abandoned at any time prior to the Effective Time, before or after
the approval by the Company Stockholders or the Acquiror
Stockholders, by action of the Acquiror Board, in the event that the
Company shall have breached any of its representations, warranties or
covenants under this Agreement which breach (A) would give rise to
the failure of a condition set forth in Section 6(a) above, and
(B) cannot be or has not been cured within 30 days after the giving
of written notice by Acquiror to the Company of such breach (provided
that Acquiror is not then in material breach of any representation,
warranty or covenant contained in this Agreement);
(v) This Agreement may be terminated by Acquiror, and the Merger
may be abandoned, (A) if the Company Board (i) enters into or
publicly announces its intention to enter into an agreement or
agreement in principle with respect to an Acquisition Proposal, (ii)
withdraws its recommendation to the Company Stockholders of this
Agreement or the Merger or (iii) after the receipt of an Acquisition
Proposal, fails to confirm publicly, within ten days after the
request of Acquiror, its recommendation to the Company Stockholders
that the Company Stockholders adopt and approve this Agreement and
the Merger or (B) if the Company or any of its Representatives takes
any of the actions that would be proscribed by Section 5(h) above,
but for the exceptions therein allowing certain actions to be taken
pursuant to the proviso in the first sentence of Section 5(h)(ii)
above;
(vi) This Agreement may be terminated by the Company, and the
Merger may be abandoned, (A) if the Acquiror Board (i) enters into or
publicly announces its intention to enter into an agreement or
agreement in principle with respect to a Prohibited Acquiror
Acquisition Proposal, (ii) withdraws its recommendation to the
Acquiror Stockholders that the Acquiror Stockholders approve the
issuance of Acquiror Shares in connection with the Merger as
provided by the Agreement or, if necessary, that the Acquiror
Stockholders approve an amendment to the certificate of incorporation
of Acquiror to increase the authorized number of Acquiror Shares or
(iii) after receipt of a Acquiror Acquisition Proposal, fails to
publicly confirm, within ten days after the request of the Company,
its recommendation to the Acquiror Stockholders described in the
foregoing clause (ii) or (B) if Acquiror or any of its
Representatives takes any of the actions that would be proscribed by
Section 5(i) but for the exceptions therein allowing certain actions
to be taken pursuant to the proviso in the first sentence of
Section 5(i)(ii);
(vii) Either Party may terminate this Agreement, and the Merger
may be abandoned, by giving written notice to the other Party at any
time after the Company Special Meeting in the event that (1) this
Agreement and the Merger fail to receive the Requisite Stockholder
Approval by the Company Stockholders or (2) or dissenters rights are
exercised by the holders of Company Shares having an aggregate value
(based upon the Closing Sales Price per Company Share on
the date immediately prior to the scheduled Closing Date) in excess
of $2,500,000; and
(viii) Either Party may terminate this Agreement, and the Merger
may be abandoned, by giving written notice to the other Party at any
time after the Acquiror Special Meeting in the event that this
Agreement and the Merger fail to receive the Requisite Stockholder
Approval by the Acquiror Stockholders.
(b) Effect of Termination.
(i) Except as provided in clauses (ii) or (iii) of this Section
7(b), if any Party terminates this Agreement pursuant to Section
7(a) above, all rights and obligations of the Parties hereunder
shall terminate without any liability of either Party to the other
Party (except for any liability of any Party then in breach);
provided, however, that the provisions of the Confidentiality
Agreement, this Section 7(b) and Section 8 below, shall survive any
such termination.
(ii) If this Agreement is terminated (A) by the Company
pursuant to Section 7(a)(vii)(1) or (B) by Acquiror pursuant to
Section 7(a)(v) or Section 7(a)(vii)(1), or (C) any
Person makes an Acquisition Proposal that remains in effect on the
date 60 days prior to the Outside Date and the Requisite
Stockholder Approval of the Company Stockholders is not obtained
prior to termination of this Agreement pursuant to Section
7(a)(ii), then, within 60 days after such termination, the Company
shall pay Acquiror the sum of $1,000,000 in immediately available
funds.
(iii) If this Agreement is terminated (A) by Acquiror pursuant
to Section 7(a)(viii) or (B) by the Company pursuant to Section
7(a)(vi) or Section 7(a)(viii) or (C) any person makes a Prohibited
Acquiror Acquisition Proposal that remains in effect on the date 60
days prior to the Outside Date and the Requisite Stockholder
Approval of the Acquiror Stockholders is not obtained prior to
termination of this Agreement pursuant to Section 7(a)(ii), then,
within 60 days after such termination, Acquiror shall pay the
Company the sum of $1,000,000 in immediately available funds.
8. Miscellaneous.
(a) Survival. None of the representations, warranties and covenants of
the Parties (other than the provisions in Section 2 concerning payment of the
Merger Consideration, the provisions in Section 5(j), Section 5(l), Section
5(m), Section 5(p) and Section 5(q) shall survive the Effective Time.
(b) Press Releases and Public Announcements. No Party shall issue any
press release or make any public announcement relating to the subject matter
of this Agreement without the prior written approval of the other Parties;
provided, however, that any Party may make any public disclosure it believes
in good faith is required by applicable law or any listing or trading
agreement concerning its publicly-traded securities (in which case the
disclosing Party will use all reasonable efforts to advise the other Parties
prior to making the disclosure).
(c) No Third-Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any Person other than the Parties and their respective
successors and permitted assigns; provided, however, that (i) the provisions
in Section 2 above (A) concerning payment of the Merger Consideration are
intended for the benefit of the Company Stockholders and (B) concerning the
conversion of the stock options are intended for the benefit of the holders of
such stock options, (ii) the provisions in Section 5(j) above concerning
insurance and indemnification are intended for the benefit of the individuals
specified therein and their respective legal representatives and (iii) the
provisions of Section 5(l), Section 5(m) and Section 5(p) are intended for the
benefit of the Company Stockholders.
(d) Entire Agreement. This Agreement (including the Confidentiality
Agreement and the other documents referred to herein) constitutes the entire
agreement among the Parties and supersedes any prior understandings,
agreements or representations by or among the Parties, written or oral, to the
extent they related in any way to the subject matter hereof.
(e) Binding Effect; Assignment. This Agreement shall be binding upon
and inure to the benefit of the Parties and their respective successors and
permitted assigns. No Party may assign or delegate either this Agreement or
any of its rights, interests or obligations hereunder, by operation of law or
otherwise, without the prior written approval of the other Parties. Any
purported assignment or delegation without such approval shall be void and of
no effect.
(f) Counterparts. This Agreement may be executed (including by
facsimile) in one or more counterparts, each of which shall be deemed an
original but all of which together will constitute one and the same
instrument.
(g) Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(h) Notices. All notices, requests, demands, claims and other
communications hereunder shall be in writing. Any notice, request, demand,
claim or other communication hereunder shall be deemed duly given if (and then
two business days after) it is sent by registered or certified mail, return
receipt requested, postage prepaid and addressed to the intended recipient as
set forth below:
If to the Company:
OpenROUTE Networks, Inc.
Nine Technology Drive
Xxxxxxxxxxx, Xxxxxxxxxxxxx 00000
Attention: President
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to:
Xxxxxxx Berlin Shereff Xxxxxxxx, LLP
0000 X. Xxxxxx, X.X., Xxxxx 000
Xxxxxxxxxx, X.X. 00000
Attention: Xxxx X. XxXxxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to Acquiror:
Netrix Corporation
00000 Xxxxxx Xxxxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Chairman
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to:
Xxxxxx Xxxx & Xxxxxx LLP
Two Stamford Plaza
000 Xxxxxxx Xxxxxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxx X. Xxxxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Either Party may send any notice, request, demand, claim or other
communication hereunder to the intended recipient at the address set forth
above using personal delivery, expedited courier, messenger service, telecopy
or ordinary mail, but no such notice, request, demand, claim or other
communication shall be deemed to have been duly given unless and until it
actually is received by the intended recipient. Either Party may change the
address to which notices, requests, demands, claims and other communications
hereunder are to be delivered by giving the other Party notice in the manner
set forth in this Section 8(h), provided that no such change of address shall
be effective until it actually is received by the intended recipient.
(i) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE DOMESTIC LAWS OF THE STATE OF NEW YORK
WITHOUT GIVING EFFECT TO ANY CHOICE OR CONFLICT OF LAW PROVISION OR RULE
(WHETHER OF THE STATE OF NEW YORK OR ANY OTHER JURISDICTION) THAT WOULD CAUSE
THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF NEW
YORK.
(j) Amendments and Waivers. The Parties may mutually amend any
provision of this Agreement at any time prior to the Effective Time with the
prior authorization of their respective boards of directors; provided,
however, that any amendment effected subsequent to Requisite Stockholder
Approval will be subject to the restrictions contained in the Massachusetts
Business Corporation Law and the Delaware General Corporation Law, to the
extent applicable. No amendment of any provision of this Agreement shall be
valid unless the same shall be in writing and signed by all of the Parties.
No waiver by any Party of any default, misrepresentation or breach of warranty
or covenant hereunder, whether intentional or not, shall be deemed to extend
to any prior or subsequent default, misrepresentation or breach of warranty
or covenant hereunder or affect in any way any rights arising by virtue of any
prior or subsequent such occurrence.
(k) Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
(l) Expenses. Except as expressly set forth elsewhere in this
Agreement, each of the Parties will bear its own costs and expenses (including
legal fees and expenses) incurred in connection with this Agreement and the
transactions contemplated hereby.
(m) Construction. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof
shall arise favoring or disfavoring any Party by virtue of the authorship of
any of the provisions of this Agreement. Any reference to any federal, state,
local or foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context otherwise requires.
The word "including" shall mean including without limitation. The phrase
"business day" shall mean any day other than a day on which banks in the State
of New York are required or authorized to be closed. Disclosure of any matter
in the Company Disclosure Letter or the Acquiror Disclosure Letter shall not
be deemed an admission that such matter is material.
(n) Incorporation of Exhibits. The Exhibits identified in this
Agreement are incorporated herein by reference and made a part hereof.
(o) Definition of Knowledge. As used herein, the words "knowledge"
or "known" shall, (i) with respect to the Company, mean the actual knowledge
of the corporate executive officers of the Company, in each case after such
individuals have made due and diligent inquiry as to the matters which are the
subject of the statements which are "known" by the Company or made to the
"knowledge" of the Company, and (ii) with respect to Acquiror, mean the actual
knowledge of the corporate executive officers of Acquiror, in each case after
such individuals have made due and diligent inquiry as to the matters which
are the subject of the statements which are "known" by Acquiror or made to the
"knowledge" of Acquiror.
(p) WAIVER OF JURY TRIAL. EACH OF ACQUIROR AND THE COMPANY, AND
EACH INDEMNIFIED PARTY, HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM (WHETHER BASED UPON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of
the date first above written.
OPENROUTE NETWORKS, INC.
By: /s/ Xxxxx X. Xxxxxx
-----------------------------
Name: Xxxxx X. Xxxxxx
Title: Chief Executive Officer and President
By: /s/ Xxxxx Xxxxxx
------------------------------
Name: Xxxxx Xxxxxx
Title: Vice President-Finance and
Administration, Chief Financial
Officer, Treasurer and Clerk
NETRIX CORPORATION
By: /s/ Xxxxxx X. Francesco
-------------------------------
Name: Xxxxxx X. Francesco
-------------------------------
Title: Chairman and Chief Executive Officer
-------------------------------
AGREEMENT AND PLAN OF MERGER
BETWEEN
OPENROUTE NETWORKS, INC.,
AND
NETRIX CORPORATION
1. DEFINITIONS................................................. 2
2. THE TRANSACTION............................................. 7
(a) The Merger.......................................... 7
(b) The Closing......................................... 7
(c) Actions at the Closing.............................. 7
(d) Effect of Merger.................................... 7
(e) Procedure for Exchange............................. 12
(f) Closing of Transfer Records........................ 13
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.............. 14
(a) Organization, Qualification and Corporate Power.... 14
(b) Capitalization..................................... 14
(c) Subsidiaries....................................... 15
(d) Voting Arrangements................................ 15
(e) Authorization of Transaction....................... 15
(f) Noncontravention................................... 15
(g) Filings with the SEC............................... 16
(h) Financial Statements............................... 16
(i) Events Subsequent to January 1, 1999............... 17
(j) Compliance......................................... 17
(k) Brokers' and Other Fees............................ 17
(l) Litigation and Liabilities......................... 17
(m) Taxes.............................................. 18
(n) Fairness Opinion................................... 18
(o) Employee Benefits.................................. 18
(p) Massachusetts Business Corporation Law............. 19
(q) Year 2000.......................................... 20
(r) Environmental Matters.............................. 20
(s) Intellectual Property.............................. 21
(t) Insurance.......................................... 21
(u) Certain Contracts.................................. 21
(v) Accounting and Tax Matters......................... 22
4. REPRESENTATIONS AND WARRANTIES OF ACQUIROR................. 22
(a) Organization, Qualification and Corporate Power.... 22
(b) Capitalization..................................... 22
(c) Subsidiaries....................................... 23
(d) Voting Arrangements................................ 23
(e) Authorization of Transaction....................... 23
(f) Noncontravention................................... 23
(g) Filings with the SEC............................... 24
(h) Financial Statements............................... 24
(i) Events Subsequent to January 1, 1999............... 25
(j) Compliance......................................... 25
(k) Brokers' and Other Fees............................ 25
(l) Litigation and Liabilities......................... 25
(m) Taxes.............................................. 26
(n) Fairness Opinion................................... 26
(o) Employee Benefits.................................. 26
(p) Year 2000.......................................... 27
(q) Environmental Matters.............................. 28
(r) Intellectual Property.............................. 28
(s) Insurance.......................................... 29
(t) Certain Contracts.................................. 29
(u) Accounting and Tax Matters......................... 29
5. COVENANTS.................................................. 29
(a) General............................................ 29
(b) Notices and Consents............................... 29
(c) Regulatory Matters and Approvals................... 30
(d) Operation of the Company's Business................ 32
(e) Operation of Acquiror's Business................... 34
(f) Access............................................. 36
(g) Notice of Developments............................. 36
(h) Company Exclusivity................................ 37
(i) Acquiror Exclusivity............................... 38
(j) Insurance and Indemnification...................... 41
(k) Financial Statements............................... 43
(l) Continuity of Business Enterprise.................. 43
(m) Acquiror Board of Directors........................ 43
(n) Rule 145 Affiliates................................ 44
(o) Nasdaq Listing..................................... 44
(p) Tax Free Treatment................................. 44
(q) Company Employee Plans............................. 44
(r) Letter of the Company's Accountants................ 45
(s) Letter of Acquiror's Accountants................... 45
6. CONDITIONS TO OBLIGATION TO CLOSE.......................... 45
(a) Conditions to Obligation of Acquiror............... 45
(b) Conditions to Obligation of the Company............ 47
7. TERMINATION................................................ 48
(a) Termination of Agreement........................... 48
(b) Effect of Termination.............................. 50
8. MISCELLANEOUS.............................................. 51
(a) Survival........................................... 51
(b) Press Releases and Public Announcements............ 51
(c) No Third-Party Beneficiaries....................... 51
(d) Entire Agreement................................... 51
(e) Binding Effect; Assignment......................... 51
(f) Counterparts....................................... 51
(g) Headings........................................... 51
(h) Notices............................................ 51
(i) Governing Law...................................... 52
(j) Amendments and Waivers............................. 52
(k) Severability....................................... 53
(l) Expenses........................................... 53
(m) Construction....................................... 53
(n) Incorporation of Exhibits.......................... 53
(o) Definition of Knowledge............................ 53
(p) Waiver of Jury Trial............................... 53
Exhibit A Form of Affiliate Letter
