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Exhibit 1
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
XXXX.XXX, INC.,
MAST ACQUISITION CORP.
AND
NETMOVES CORPORATION
DATED AS OF DECEMBER 11, 1999
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TABLE OF CONTENTS
Page
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ARTICLE I
THE MERGER
1.1 The Merger...............................................................................................1
1.2 Effective Time; Closing..................................................................................2
1.3 Effect of the Merger.....................................................................................2
1.4 Certificate of Incorporation; Bylaws.....................................................................2
1.5 Directors and Officers...................................................................................2
1.6 Effect on Capital Stock..................................................................................2
1.7 Surrender of Certificates................................................................................4
1.8 No Further Ownership Rights in Company Common Stock......................................................6
1.9 Lost, Stolen or Destroyed Certificates...................................................................6
1.10 Tax Consequences.........................................................................................6
1.11 Taking of Necessary Action; Further Action...............................................................6
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF COMPANY
2.1 Organization and Qualification; Subsidiaries.............................................................7
2.2 Certificate of Incorporation and Bylaws..................................................................7
2.3 Capitalization...........................................................................................7
2.4 Authority Relative to this Agreement.....................................................................9
2.5 No Conflict; Required Filings and Consents...............................................................9
2.6 Compliance with Laws....................................................................................10
2.7 SEC Filings; Financial Statements.......................................................................10
2.8 No Undisclosed Liabilities..............................................................................11
2.9 Absence of Certain Changes or Events....................................................................11
2.10 Litigation..............................................................................................11
2.11 Employee Benefit Plans..................................................................................12
2.12 Labor Matters...........................................................................................13
2.13 Registration Statement; Proxy Statement.................................................................14
2.14 Restrictions on Business Activities.....................................................................14
2.15 Title to Property.......................................................................................14
2.16 Taxes...................................................................................................14
2.17 Environmental Matters...................................................................................16
2.18 Brokers.................................................................................................17
2.19 Intellectual Property...................................................................................17
2.20 Agreements, Contracts and Commitments...................................................................20
2.21 Insurance...............................................................................................20
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2.22 Opinion of Financial Advisor............................................................................20
2.23 Board Approval..........................................................................................20
2.24 Vote Required...........................................................................................20
2.25 Section 203 of the DGCL Not Applicable..................................................................20
2.26 Change of Control Payments..............................................................................20
2.27 Affiliates..............................................................................................21
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
3.1 Organization and Qualification; Subsidiaries............................................................21
3.2 Certificate of Incorporation and Bylaws.................................................................21
3.3 Capitalization..........................................................................................21
3.4 Authority Relative to this Agreement....................................................................22
3.5 No Conflict; Required Filings and Consents..............................................................22
3.6 SEC Filings; Financial Statements.......................................................................23
3.7 Registration Statement; Proxy Statement.................................................................24
3.8 No Undisclosed Liabilities..............................................................................24
3.9 Absence of Certain Changes or Events....................................................................24
3.10 Taxes...................................................................................................24
3.11 Brokers.................................................................................................25
3.12 Merger Sub..............................................................................................25
3.13 Intellectual Property...................................................................................25
3.14 Litigation..............................................................................................25
3.15 Title...................................................................................................25
ARTICLE IV
CONDUCT PRIOR TO THE EFFECTIVE TIME
4.1 Conduct of Business by Company..........................................................................26
4.2 Conduct of Business by Parent...........................................................................29
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 Proxy Statement/Prospectus; Registration Statement; Other Filings; Board Recommendations................29
5.2 Meeting of Company Stockholders.........................................................................30
5.3 Confidentiality; Access to Information..................................................................31
5.4 No Solicitation.........................................................................................32
5.5 Public Disclosure.......................................................................................34
5.6 Reasonable Efforts; Notification........................................................................34
5.7 Stock Options and Warrants..............................................................................35
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5.8 Form S-8................................................................................................36
5.9 Indemnification.........................................................................................36
5.10 Nasdaq Listing..........................................................................................36
5.11 Regulatory Filings; Reasonable Efforts..................................................................36
5.12 Benefit Plans...........................................................................................37
5.13 Treatment as a Reorganization...........................................................................37
5.14 Board of Directors of Parent............................................................................37
ARTICLE VI
CONDITIONS TO THE MERGER
6.1 Conditions to Obligations of Each Party to Effect the Merger............................................37
6.2 Additional Conditions to Obligations of Company.........................................................38
6.3 Additional Conditions to the Obligations of Parent and Merger Sub.......................................39
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
7.1 Termination.............................................................................................40
7.2 Notice of Termination; Effect of Termination............................................................41
7.3 Fees and Expenses.......................................................................................42
7.4 Amendment...............................................................................................43
7.5 Extension; Waiver.......................................................................................43
ARTICLE VIII
GENERAL PROVISIONS
8.1 Non-Survival of Representations and Warranties..........................................................43
8.2 Notices.................................................................................................43
8.3 Interpretation..........................................................................................45
8.4 Counterparts............................................................................................46
8.5 Entire Agreement; Third Party Beneficiaries.............................................................46
8.6 Severability............................................................................................46
8.7 Other Remedies; Specific Performance....................................................................46
8.8 Governing Law...........................................................................................47
8.9 Rules of Construction...................................................................................47
8.10 Assignment..............................................................................................47
8.11 WAIVER OF JURY TRIAL....................................................................................47
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INDEX OF EXHIBITS
Exhibit A.........Form of Company Voting Agreement
Exhibit B.........Company Schedule
Exhibit C.........Parent Schedule
Exhibit D.........Form of Company Affiliate Letter
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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and
entered into as of December 11, 1999, among Xxxx.xxx, Inc., a Delaware
corporation ("Parent"), Mast Acquisition Corp., a Delaware corporation and a
wholly-owned subsidiary of Parent ("Merger Sub"), and NetMoves Corporation, a
Delaware corporation ("Company").
RECITALS
A. Upon the terms and subject to the conditions of this Agreement
(as defined in Section 1.2 below) and in accordance with the General Corporation
Law of the State of Delaware (the "DGCL"), Parent and Company intend to enter
into a business combination transaction.
B. The (i) Boards of Directors of Company and Parent (a) have
determined that the Merger (as defined in Section 1.1) is fair to, and in the
best interests of, their respective companies and their respective stockholders
and (b) have declared the advisability of the Merger and approved, subject to
stockholder approval in the case of the Company, this Agreement and the
transactions contemplated hereby and (ii) Board of Directors of Company has
determined to recommend that the stockholders of Company approve and adopt this
Agreement and approve the Merger.
C. Concurrently with the execution of this Agreement, and as a
condition to and an inducement to Parent's willingness to enter into this
Agreement, certain directors and officers of Company are entering into Voting
Agreements in substantially the form attached hereto as Exhibit A (the "Company
Voting Agreements").
D. The parties intend, by executing this Agreement, to adopt a
plan of reorganization within the meaning of Section 368 of the Internal Revenue
Code of 1986, as amended (the "Code").
NOW, THEREFORE, in consideration of the covenants, promises and
representations set forth herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties agree
as follows:
ARTICLE I
THE MERGER
1.1 THE MERGER. At the Effective Time (as defined in Section 1.2) and
subject to and upon the terms and conditions of this Agreement and the
applicable provisions of the DGCL, Merger Sub shall be merged with and into
Company (the "Merger"), the separate corporate existence of Merger Sub shall
cease and Company shall continue as the surviving corporation. Company as the
surviving corporation after the Merger is hereinafter sometimes referred to as
the "Surviving Corporation."
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1.2 EFFECTIVE TIME; CLOSING. Subject to the conditions of this
Agreement, the parties hereto shall cause the Merger to be consummated by filing
with the Secretary of State of the State of Delaware in accordance with the
relevant provisions of the DGCL a Certificate of Merger (the "Certificate of
Merger") (the time of such filing with the Secretary of State of the State of
Delaware, or such later time as may be agreed in writing by Company and Parent
and specified in the Certificate of Merger, being the "Effective Time") as soon
as practicable on or after the Closing Date (as herein defined). The term
"Agreement" as used herein refers to this Agreement and Plan of Merger, as the
same may be amended from time to time, and all schedules hereto (including
Company Schedule and Parent Schedule). Unless this Agreement shall have been
terminated and the Merger herein contemplated shall have been abandoned pursuant
to Section 7.1, the closing of the Merger (the "Closing") shall take place at
the offices of Winthrop, Stimson, Xxxxxx & Xxxxxxx, Xxx Xxxxxxx Xxxx Xxxxx, Xxx
Xxxx, Xxx Xxxx 00000 at a time and date to be specified by the parties, which
shall be no later than the second business day after the satisfaction or waiver
of the conditions set forth in Article VI, or at such other time, date and
location as the parties hereto agree in writing (the "Closing Date").
1.3 EFFECT OF THE MERGER. At the Effective Time, the effect of the
Merger shall be as provided in this Agreement and the applicable provisions of
the DGCL. Without limiting the generality of the foregoing, and subject thereto,
at the Effective Time all the property, rights, privileges, powers and
franchises of Company and Merger Sub shall vest in the Surviving Corporation,
and all debts, liabilities and duties of Company and Merger Sub shall become the
debts, liabilities and duties of the Surviving Corporation.
1.4 CERTIFICATE OF INCORPORATION; BYLAWS.
(a) At the Effective Time, the Certificate of Incorporation of
Company shall be amended in the Merger to be the same as the Certificate of
Incorporation of Merger Sub, except that the name of the Surviving Corporation
shall be NetMoves Corporation, and as so amended shall be the Certificate of
Incorporation of the Surviving Corporation until thereafter amended as provided
by law and such Certificate of Incorporation of the Surviving Corporation.
(b) The Bylaws of Merger Sub, as in effect immediately prior
to the Effective Time, shall be, at the Effective Time, the Bylaws of the
Surviving Corporation until thereafter amended.
1.5 DIRECTORS AND OFFICERS. The initial directors of the Surviving
Corporation shall be the directors of Merger Sub immediately prior to the
Effective Time, until their respective successors are duly elected or appointed
and qualified. The initial officers of the Surviving Corporation shall be the
officers of Merger Sub immediately prior to the Effective Time.
1.6 EFFECT ON CAPITAL STOCK. Subject to the terms and conditions of
this Agreement, at the Effective Time, by virtue of the Merger and this
Agreement and without any action on the part of Merger Sub, Company or the
holders of any of the following securities, the following shall occur:
(a) CONVERSION OF COMPANY COMMON STOCK. Each share of Common
Stock, par value $0.01 per share, of Company (the "Company Common Stock") issued
and outstanding
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immediately prior to the Effective Time, other than any shares of Company Common
Stock to be canceled pursuant to Section 1.6(b), will be automatically converted
(subject to Sections 1.6(e) and (f)) into the right to receive 0.385336 shares
of Class A Common Stock, par value $0.01 per share, of Parent (the "Parent
Common Stock") (the "Exchange Ratio") upon surrender of the certificate
representing such share of Company Common Stock in the manner provided in
Section 1.7 (or in the case of a lost, stolen or destroyed certificate, upon
delivery of an affidavit (and bond, if required) in the manner provided in
Section 1.9). If any shares of Company Common Stock outstanding immediately
prior to the Effective Time are unvested or are subject to a repurchase option,
risk of forfeiture or other condition under any applicable restricted stock
purchase agreement or other agreement with Company, then the shares of Parent
Common Stock issued in exchange for such shares of Company Common Stock will
also be unvested or subject to the same repurchase option, risk of forfeiture or
other condition, and the certificates representing such shares of Parent Common
Stock may accordingly be marked with appropriate legends. The Company shall take
all action that may be necessary to ensure that, from and after the Effective
Time, Parent is entitled to exercise any such repurchase option or other right
set forth in any such restricted stock purchase agreement or other agreement.
(b) CANCELLATION OF PARENT-OWNED STOCK. Each share of Company
Common Stock held by Company or owned by Merger Sub, Parent or any direct or
indirect wholly-owned subsidiary of Company or of Parent immediately prior to
the Effective Time shall be canceled and extinguished without any conversion or
payment in respect thereof.
(c) STOCK OPTIONS AND WARRANTS. At the Effective Time, all
options to purchase Company Common Stock then outstanding under Company's 1996
Stock Option/Stock Issuance Plan, including options originally granted under
Company's 1990 Stock Option Plan (the "Company Option Plan"), shall be assumed
by Parent in accordance with Section 5.7(a) hereof and all warrants to purchase
Company Common Stock then outstanding (other than those that Parent elects not
to assume and to deem converted pursuant to the terms thereof) shall be assumed
by Parent or converted in accordance with Section 5.7(b) hereof.
(d) CAPITAL STOCK OF MERGER SUB. Each share of Common Stock,
par value $.01 per share, of Merger Sub (the "Merger Sub Common Stock") issued
and outstanding immediately prior to the Effective Time shall be converted into
one validly issued, fully paid and nonassessable share of Common Stock, par
value $.01 per share, of the Surviving Corporation. Each certificate evidencing
ownership of shares of Merger Sub Common Stock shall evidence ownership of such
shares of capital stock of the Surviving Corporation.
(e) ADJUSTMENTS TO EXCHANGE RATIO. The Exchange Ratio shall be
adjusted to reflect appropriately the effect of any stock split, reverse stock
split, stock dividend (including any dividend or distribution of securities
convertible into Parent Common Stock or Company Common Stock), extraordinary
cash dividends, reorganization, recapitalization, reclassification, combination,
exchange of shares or other like change with respect to Parent Common Stock or
Company Common Stock occurring on or after the date hereof and prior to the
Effective Time and of any increase (not to exceed 50,000) in the number of
shares of Company Common Stock outstanding as a result of any failure of Section
2.3 to be correct at the date hereof.
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(f) FRACTIONAL SHARES. No fraction of a share of Parent Common
Stock will be issued by virtue of the Merger, but in lieu thereof each holder of
shares of Company Common Stock who would otherwise be entitled to a fraction of
a share of Parent Common Stock (after aggregating all fractional shares of
Parent Common Stock that otherwise would be received by such holder) shall, upon
surrender of such holder's Certificates(s) (as defined in Section 1.7(c))
receive from Parent an amount of cash (rounded to the nearest whole cent),
without interest, equal to the product of (i) such fraction, multiplied by (ii)
the average closing price of one share of Parent Common Stock for the ten (10)
most recent days that Parent Common Stock has traded ending on the trading day
immediately prior to the Effective Time, as reported on the Nasdaq National
Market System ("Nasdaq").
1.7 SURRENDER OF CERTIFICATES.
(a) EXCHANGE AGENT. Parent shall select a bank or trust
company reasonably acceptable to Company to act as the exchange agent (the
"Exchange Agent") in the Merger.
(b) PARENT TO PROVIDE COMMON STOCK. Promptly after the
Effective Time, and in no event more than three (3) business days thereafter,
Parent shall make available to the Exchange Agent, for exchange in accordance
with this Article I, the shares of Parent Common Stock issuable pursuant to
Section 1.6 in exchange for outstanding shares of Company Common Stock, and cash
in an amount sufficient for payment in lieu of fractional shares pursuant to
Section 1.6(f) and any dividends or distributions to which holders of shares of
Company Common Stock may be entitled pursuant to Section 1.7(d).
(c) EXCHANGE PROCEDURES. Promptly after the Effective Time,
and in no event more than three (3) business days thereafter, Parent shall cause
the Exchange Agent to mail to each holder of record (as of the Effective Time)
of a certificate or certificates (the "Certificates"), which immediately prior
to the Effective Time represented outstanding shares of Company Common Stock
whose shares were converted into the right to receive shares of Parent Common
Stock pursuant to Section 1.6 and cash in lieu of any fractional shares pursuant
to Section 1.6(f), (i) a letter of transmittal in customary form (which shall
specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the Exchange
Agent and shall contain such other customary provisions as Parent may reasonably
specify) and (ii) instructions for use in effecting the surrender of the
Certificates in exchange for certificates representing shares of Parent Common
Stock, cash in lieu of any fractional shares pursuant to Section 1.6(f) and any
dividends or other distributions pursuant to Section 1.7(d). Upon surrender of
Certificates for cancellation to the Exchange Agent or to such other agent or
agents as may be appointed by Parent, together with such letter of transmittal,
duly completed and validly executed in accordance with the instructions thereto,
the holders of such Certificates shall be entitled to receive in exchange
therefor certificates representing the number of whole shares of Parent Common
Stock into which their shares of Company Common Stock were converted into the
right to receive at the Effective Time, payment in lieu of fractional shares
which such holders have the right to receive pursuant to Section 1.6(f) and any
dividends or distributions payable pursuant to Section 1.7(d), and the
Certificates so surrendered shall forthwith be canceled. Until so surrendered,
outstanding Certificates will be deemed from and after the Effective Time, to
evidence only the right to receive the applicable number of full
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shares of Parent Common Stock issuable pursuant to Section 1.6(a) and the right
to receive an amount in cash in lieu of the issuance of any fractional shares in
accordance with Section 1.6(f).
(d) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES. No
dividends or other distributions declared or made after the date of this
Agreement with respect to Parent Common Stock with a record date after the
Effective Time will be paid to the holders of any unsurrendered Certificates
with respect to the shares of Parent Common Stock to be issued upon surrender
thereof until the holders of record of such Certificates shall surrender such
Certificates. Subject to applicable law, following surrender of any such
Certificates with a properly completed letter of transmittal, the Exchange Agent
shall promptly deliver to the record holders thereof, without interest,
certificates representing whole shares of Parent Common Stock issued in exchange
therefor along with payment in lieu of fractional shares pursuant to Section
1.6(f) hereof and the amount of any such dividends or other distributions with a
record date after the Effective Time theretofore paid with respect to such whole
shares of Parent Common Stock.
(e) TRANSFERS OF OWNERSHIP. If certificates representing
shares of Parent Common Stock are to be issued in a name other than that in
which the Certificates surrendered in exchange therefor are registered, it will
be a condition of the issuance thereof that the Certificates so surrendered will
be properly endorsed and otherwise in proper form for transfer and that the
persons requesting such exchange will have paid to Parent or any agent
designated by it any transfer or other taxes required by reason of the issuance
of certificates representing shares of Parent Common Stock in any name other
than that of the registered holder of the Certificates surrendered, or
established to the satisfaction of Parent or any agent designated by it that
such tax has been paid or is not payable.
(f) REQUIRED WITHHOLDING. Each of the Exchange Agent, Parent
and the Surviving Corporation shall be entitled to deduct and withhold from any
consideration payable or otherwise deliverable pursuant to this Agreement to any
holder or former holder of Company Common Stock such amounts as are required to
be deducted or withheld therefrom under the Code or under any provision of
state, local or foreign tax law or under any other applicable legal requirement.
To the extent such amounts are so deducted or withheld, such amounts shall be
treated for all purposes under this Agreement as having been paid to the person
to whom such amounts would otherwise have been paid.
(g) TERMINATION OF COMMON STOCK EXCHANGE AGENT FUNDING. Any
portion of funds (including any interest earned thereon) or Parent Common Stock
held by the Exchange Agent which have not been delivered to holders of
Certificates within six months after the Effective Time shall promptly be paid
or delivered, as appropriate, to Parent, and thereafter holders of Certificates
who have not theretofore complied with the exchange procedures outlined in and
contemplated by this Section 1.7 shall thereafter look only to Parent (subject
to abandoned property, escheat and similar laws) only as general creditors
thereof for their claim for shares of Parent Common Stock, any cash in lieu of
fractional shares of Parent Common Stock pursuant to Section 1.6(f) and any
dividends or distributions pursuant to Section 1.7(d) with respect to Parent
Common Stock to which they are entitled.
(h) NO LIABILITY. Notwithstanding anything to the contrary in
this Section 1.7, neither the Exchange Agent, Parent, the Surviving Corporation,
the Company nor any party
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hereto shall be liable to a holder of shares of Parent Common Stock or Company
Common Stock for any amount properly paid to a public official pursuant to any
applicable abandoned property, escheat or similar law.
1.8 NO FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON STOCK. All shares of
Parent Common Stock issued in accordance with the terms hereof (including any
cash paid in respect thereof pursuant to Section 1.6(f)) shall be deemed to have
been issued in full satisfaction of all rights pertaining to such shares of
Company Common Stock, and there shall be no further registration of transfers on
the records of the Surviving Corporation of shares of Company Common Stock which
were outstanding immediately prior to the Effective Time. If, after the
Effective Time, Certificates are presented to the Surviving Corporation for any
reason, they shall be canceled and exchanged as provided in this Article I.
1.9 LOST, STOLEN OR DESTROYED CERTIFICATES. In the event that any
Certificates shall have been lost, stolen or destroyed, the Exchange Agent shall
issue in exchange for such lost, stolen or destroyed Certificates, upon the
making of an affidavit of that fact by the holder thereof, certificates
representing the shares of Parent Common Stock which the shares of Company
Common Stock formerly represented by such Certificates were converted into the
right to receive pursuant to Section 1.6, cash for fractional shares, if any, as
may be required pursuant to Section 1.6(f) and any dividends or distributions
payable pursuant to Section 1.7(d); provided, however, that Parent may, in its
discretion and as a condition precedent to the issuance of such certificates
representing shares of Parent Common Stock, cash and other distributions,
require the owner of such lost, stolen or destroyed Certificates to deliver a
bond in such sum as it may reasonably direct as indemnity against any claim that
may be made against Parent, the Surviving Corporation or the Exchange Agent with
respect to the Certificates alleged to have been lost, stolen or destroyed.
1.10 TAX CONSEQUENCES. It is intended by the parties hereto that the
Merger shall constitute a reorganization within the meaning of Section 368 of
the Code. The parties hereto adopt this Agreement as a "plan of reorganization"
within the meaning of Sections 1.368-2(g) and 1.368-3(a) of the United States
Income Tax Regulations.
1.11 TAKING OF NECESSARY ACTION; FURTHER ACTION. If, at any time after
the Effective Time, any further action is necessary or desirable to carry out
the purposes of this Agreement and to vest the Surviving Corporation with full
right, title and possession to all assets, property, rights, privileges, powers
and franchises of Company and Merger Sub, the officers and directors of Company
and Merger Sub will take all such lawful and necessary action.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF COMPANY
Company represents and warrants to Parent and Merger Sub, subject to
such exceptions as are specifically disclosed in writing in the disclosure
letter supplied by Company to Parent dated as of the date hereof and attached
hereto as Exhibit B, which disclosure shall provide an exception to or otherwise
qualify the representations or warranties of Company specifically
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referred to, cross-referenced or clearly applicable in such disclosure (the
"Company Schedule"), as follows:
2.1 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES.
(a) Company is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Delaware and has
the requisite corporate power and authority to own, lease and operate its assets
and properties and to carry on its business as it is now being or currently
planned by Company to be conducted. Company is in possession of all franchises,
grants, authorizations, licenses, permits, easements, consents, certificates,
approvals and orders ("Approvals") necessary to own, lease and operate the
properties it purports to own, operate or lease and to carry on its business as
it is now being or currently planned by Company to be conducted, except where
the failure to have such Approvals could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect (as defined in Section
8.3(b)) on Company.
(b) Company has no Subsidiaries (as defined in Section
8.3(c)); and does not directly or indirectly own any capital stock of, or any
equity interest of any nature in, any other entity, except for passive
investments in equity interests of public companies as part of the cash
management program of the Company. Company has not agreed and is not obligated
to make nor is bound by any written, oral or other agreement, contract,
subcontract, lease, binding understanding, instrument, note, option, warranty,
purchase order, license, sublicense, insurance policy, benefit plan, commitment
or undertaking of any nature, as of the date hereof or as may hereafter be in
effect (a "Contract") under which Contract it may become obligated to make, any
future investment in or capital contribution to any other entity.
(c) Company is duly qualified or licensed to do business as a
foreign corporation and is in good standing, in each jurisdiction where the
character of the properties owned, leased or operated by it or the nature of its
activities makes such modification or licensing necessary, except for such
failures to be so duly qualified or licensed and in good standing that could
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on Company.
2.2 CERTIFICATE OF INCORPORATION AND BYLAWS. Company has previously
furnished to Parent a complete and correct copy of its Sixth Amended and
Restated Certificate of Incorporation and its Bylaws as amended to date
(together, the "Company Charter Documents"). Such Company Charter Documents are
in full force and effect. Company is not in violation of any of the provisions
of Company Charter Documents.
2.3 CAPITALIZATION.
(a) The authorized capital stock of Company consists of
40,000,000 shares of Company Common Stock and 1,000,000 shares of Preferred
Stock ("Company Preferred Stock"), par value $0.01 per share. At the close of
business on the business day prior to the date hereof, (i) 16,463,305 shares of
Company Common Stock were issued and outstanding, all of which are validly
issued, fully paid and nonassessable; (ii) 2,602,697 shares of Company Common
Stock were reserved for issuance upon the exercise of outstanding options to
purchase
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Company Common Stock under the Company Option Plan and (iii) 148,815 shares of
Company Common Stock were reserved for issuance upon the exercise of outstanding
warrants to purchase Company Common Stock. As of the date hereof, no shares of
Company Preferred Stock were issued or outstanding. Section 2.3(a) of the
Company Schedule sets forth the following information with respect to each
Company Stock Option (as defined in Section 5.7) outstanding as of the date of
this Agreement: (i) the name and address of the optionee; (ii) the particular
plan pursuant to which such Company Stock Option was granted; (iii) the number
of shares of Company Common Stock subject to such Company Stock Option; (iv) the
exercise price of such Company Stock Option; (v) the date on which such Company
Stock Option was granted; (vi) the applicable vesting schedule; (vii) the date
on which such Company Stock Option expires; and (viii) whether the
exercisability of such option will be accelerated in any way by the transactions
contemplated by this Agreement, and indicates the extent of acceleration.
Company has made available to Parent accurate and complete copies of all stock
option plans pursuant to which Company has granted such Company Stock Options
that are currently outstanding and the form of all stock option agreements
evidencing such Company Stock Options. All shares of Company Common Stock
subject to issuance as aforesaid, upon issuance on the terms and conditions
specified in the instrument pursuant to which they are issuable, will be duly
authorized, validly issued, fully paid and nonassessable. Except as set forth in
Section 2.3(a) of the Company Schedule, there are no commitments or agreements
of any character to which Company is bound obligating Company to accelerate the
vesting of any Company Stock Option as a result of the Merger. All outstanding
shares of Company Common Stock and all outstanding Company Stock Options have
been issued and granted in compliance with (i) all applicable securities laws
and (in all material respects) other applicable Legal Requirements (as defined
below) and (ii) all requirements set forth in applicable Contracts. For the
purposes of this Agreement, "Legal Requirements" means any federal, state,
local, municipal, foreign or other law, statute, constitution, principle of
common law, resolution, ordinance, code, edict, decree, rule, regulation, ruling
or requirement issued, enacted, adopted, promulgated, implemented or otherwise
put into effect by or under the authority of any Governmental Entity (as defined
below) and (ii) all requirements set forth in applicable contracts, agreements,
and instruments.
(b) Except as set forth in Section 2.3(b) of the Company
Schedule, there are no equity securities, partnership interests or similar
ownership interests of any class of any equity security of Company, or any
securities exchangeable or convertible into or exercisable for such equity
securities, partnership interests or similar ownership interests, issued,
reserved for issuance or outstanding. Except as set forth in Section 2.3(b) of
the Company Schedule or as set forth in Section 2.3(a) hereof there are no
subscriptions, options, warrants, equity securities, partnership interests or
similar ownership interests, calls, rights (including preemptive rights),
commitments or agreements of any character to which Company is a party or by
which it is bound obligating Company to issue, deliver or sell, or cause to be
issued, delivered or sold, or repurchase, redeem or otherwise acquire, or cause
the repurchase, redemption or acquisition of, any shares of capital stock,
partnership interests or similar ownership interests of Company or obligating
Company to grant, extend, accelerate the vesting of or enter into any such
subscription, option, warrant, equity security, call, right, commitment or
agreement. Except as contemplated by this Agreement and except as set forth in
Section 2.3(b) of the Company Schedule, there are no registration rights and
there is, except for Company Voting Agreements, no voting trust, proxy, rights
plan, antitakeover plan or other agreement or understanding to which Company is
a party or by which it is bound with respect to any equity security of any class
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of Company. Assuming that Parent Common Stock is listed on Nasdaq at the
Effective Time, stockholders of the Company will not be entitled to dissenters'
or appraisal rights under applicable state law in connection with the Merger.
2.4 AUTHORITY RELATIVE TO THIS AGREEMENT. Company has all necessary
corporate power and authority to execute and deliver this Agreement and to
perform its obligations hereunder and, subject to adoption of this Agreement and
the Merger by the stockholders of Company, to consummate the transactions
contemplated hereby (including the Merger).
The execution and delivery of this Agreement and the consummation by
Company of the transactions contemplated hereby (including the Merger) have been
duly and validly authorized by all necessary corporate action on the part of
Company and no other corporate proceedings on the part of Company are necessary
to authorize this Agreement or to consummate the transactions so contemplated
(other than the approval and adoption of this Agreement and the approval of the
Merger by the holders of a majority of the outstanding shares of Company Common
Stock entitled to vote with respect thereto and the filing of the Certificate of
Merger pursuant to the DGCL). This Agreement has been duly and validly executed
and delivered by Company and, assuming the due authorization, execution and
delivery thereof by Parent and Merger Sub, constitutes the legal and binding
obligation of Company, enforceable against Company in accordance with its terms,
except as may be limited by bankruptcy, insolvency, reorganization or other
similar laws affecting the enforcement of creditors' rights generally and by
general principles of equity and public policy.
2.5 NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) The execution and delivery of this Agreement by the
Company and the execution and delivery of the Company Voting Agreements by the
signing stockholders do not, and the performance of this Agreement by the
Company and the performance of the Company Voting Agreements by the signing
stockholders shall not, (i) conflict with or violate the Company Charter
Documents, (ii) subject to obtaining the adoption of this Agreement and the
Merger by the stockholders of Company and compliance with the requirements set
forth in Section 2.5(b) below, conflict with or violate any law, rule,
regulation, order, judgment or decree applicable to Company or by which its
properties are bound or affected, or (iii) result in any breach of or constitute
a default (or an event that with notice or lapse of time or both would become a
default) under, or materially impair Company's rights or alter the rights or
obligations of any third party under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in the
creation of a lien or encumbrance on any of the properties or assets of Company
pursuant to, any material note, bond, mortgage, indenture, contract, agreement,
lease, license, permit, franchise or other instrument or obligation to which
Company is a party or by which Company or its properties are bound or affected,
except, with respect to clauses (ii) or (iii), for any such conflicts,
violations, breaches, defaults or other occurrences that would not, individually
and in the aggregate, have a Material Adverse Effect on Company.
(b) The execution and delivery of this Agreement by Company do
not, and the performance of its obligations hereunder will not, require any
consent, approval, authorization or permit of, or filing with or notification
to, any court, administrative agency, commission, governmental or regulatory
authority, domestic or foreign (a "Governmental Entity"), except (i)
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for applicable requirements, if any, of the Securities Act of 1933, as amended
(the "Securities Act"), the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), state securities laws ("Blue Sky Laws"), the pre-merger
notification requirements of the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended (the "HSR Act"), the Communications Act of 1934, as amended,
state public utility laws and of foreign Governmental Entities and the rules and
regulations thereunder, the rules and regulations of Nasdaq, and the filing of
the Certificate of Merger with the Secretary of State of the State of Delaware
and appropriate documents with the relevant authorities of other states in which
Company is qualified to do business, and (ii) where the failure to obtain such
consents, approvals, authorizations or permits, or to make such filings or
notifications, would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on Company or, after the Effective
Time, Parent, or prevent consummation of the Merger or otherwise prevent the
parties hereto from performing their obligations under this Agreement.
2.6 COMPLIANCE WITH LAWS. Company has complied with, is not in
violation of, and has not received any notices of violation with respect to, any
federal, state or local statute, law or regulation with respect to the conduct
of its business, or the ownership or operation of its business, except for
failures to comply or violations which, individually or in the aggregate, have
not had and are not reasonably likely to have a Material Adverse Effect on the
Company.
2.7 SEC FILINGS; FINANCIAL STATEMENTS.
(a) Company has made available to Parent a correct and
complete copy of each report, registration statement and definitive proxy
statement filed by Company with the Securities and Exchange Commission ("SEC")
for the 24 months prior to the date of this Agreement (the "Company SEC
Reports"), which are all the forms, reports and documents required to be filed
by Company with the SEC for the 24 months prior to the date of this Agreement.
As of their respective dates, the Company SEC Reports (A) were prepared in
accordance and complied in all material respects with the requirements of the
Securities Act or the Exchange Act, as the case may be, and the rules and
regulations of the SEC thereunder applicable to such Company SEC Reports, and
(B) did not at the time they were filed (and if amended or superseded by a
filing prior to the date of this Agreement then on the date of such filing and
as so amended or superceded) contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading.
(b) Each set of financial statements (including, in each case,
any related notes thereto) contained in Company SEC Reports, including each
Company SEC Report filed after the date hereof until the Closing, complied as to
form in all material respects with the published rules and regulations of the
SEC with respect thereto, was prepared in accordance with United States
generally accepted accounting principles ("GAAP") applied on a consistent basis
throughout the periods involved (except as may be indicated in the notes thereto
or, in the case of unaudited statements, do not contain footnotes as permitted
by Form 10-Q of the Exchange Act) and each fairly presents in all material
respects the financial position of Company at the respective dates thereof and
the results of its operations and cash flows for the periods indicated, except
that the unaudited interim financial statements were or are subject to normal
adjustments which were not or are not expected to have a Material Adverse Effect
on Company.
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(c) Company has previously furnished to Parent a complete and
correct copy of any amendments or modifications, which have not yet been filed
with the SEC but which are required to be filed, to agreements, documents or
other instruments which previously had been filed by Company with the SEC
pursuant to the Securities Act or the Exchange Act.
2.8 NO UNDISCLOSED LIABILITIES. Except as set forth in Section 2.8 of
the Company Schedule, Company has no liabilities (absolute, accrued, contingent
or otherwise) of a nature required to be disclosed on a balance sheet or in the
related notes to the financial statements prepared in accordance with GAAP which
are, individually or in the aggregate, material to the business, results of
operations or financial condition of Company, except (i) liabilities provided
for in or otherwise disclosed in Company SEC Reports filed prior to the date
hereof or (ii) liabilities incurred since September 30, 1999 in the ordinary
course of business, none of which would have a Material Adverse Effect on
Company.
2.9 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth in
Section 2.9 of the Company Schedule, since September 30, 1999, there has not
been: (i) any Material Adverse Effect on Company, (ii) any declaration, setting
aside or payment of any dividend on, or other distribution (whether in cash,
stock or property) in respect of, any of Company's capital stock, or any
purchase, redemption or other acquisition by Company of any of Company's capital
stock or any other securities of Company or any options, warrants, calls or
rights to acquire any such shares or other securities, (iii) any split,
combination or reclassification of any of Company's capital stock, (iv) any
granting by Company of any increase in compensation or fringe benefits, except
for normal increases of cash compensation in the ordinary course of business
consistent with past practice, or any payment by Company of any bonus, except
for bonuses made in the ordinary course of business consistent with past
practice, or any granting by Company of any increase in severance or termination
pay or any entry by Company into any currently effective employment, severance,
termination or indemnification agreement or any agreement the benefits of which
are contingent or the terms of which are materially altered upon the occurrence
of a transaction involving Company of the nature contemplated hereby, (v) entry
by Company into any licensing or other agreement with regard to the acquisition
or disposition of any Intellectual Property (as defined in Section 2.19) other
than licenses in the ordinary course of business consistent with past practice
or any amendment or consent with respect to any licensing agreement filed or
required to be filed by Company with the SEC, (vi) any material change by
Company in its accounting methods, principles or practices, except as required
by concurrent changes in GAAP, or (vii) any revaluation by Company of any of its
assets, including, without limitation, writing down the value of capitalized
inventory or writing off notes or accounts receivable or any sale of assets of
Company other than in the ordinary course of business.
2.10 LITIGATION. There are no claims, suits, actions or, to the best
knowledge of the Company, proceedings pending or threatened against Company,
before any court, governmental department, commission, agency, instrumentality
or authority, or any arbitrator that seeks to restrain or enjoin the
consummation of the transactions contemplated by this Agreement or which could
reasonably be expected, either singularly or in the aggregate with all such
claims, actions or proceedings, to have a Material Adverse Effect on Company or
have a Material Adverse Effect on the ability of the parties hereto to
consummate the Merger.
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2.11 EMPLOYEE BENEFIT PLANS.
(a) All employee compensation, incentive, fringe or benefit
plans, programs, policies, commitments or other arrangements (whether or not set
forth in a written document and including, without limitation, all "employee
benefit plans" within the meaning of Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")) covering any active or former
employee, director or consultant of Company, or any trade or business (whether
or not incorporated) which is a member of a controlled group or which is under
common control with Company within the meaning of Section 414 of the Code (an
"Affiliate"), with respect to which Company has liability, are listed in Section
2.11(a) of the Company Schedule (collectively, the "Plans"). Company has
provided, or will provide within five (5) business days of the date hereof, to
Parent: (i) correct and complete copies of all documents embodying each Plan
including (without limitation) all amendments thereto, all related trust
documents, and all material written agreements and contracts relating to each
such Plan; (ii) the three (3) most recent annual reports (Form Series 5500 and
all schedules and financial statements attached thereto), if any, required under
ERISA or the Code in connection with each Plan; (iii) the most recent summary
plan description together with the summary(ies) of material modifications
thereto, if any, required under ERISA with respect to each Plan; (iv) all
Internal Revenue Service (the "IRS") or Department of Labor (the "DOL")
determination, opinion, notification and advisory letters; (v) all material
correspondence to or from any governmental agency relating to any Plan; (vi) all
material communications to employees or former employees, relating to any
amendments, terminations, establishments, increases or decreases in benefits,
acceleration of payments or vesting schedules or other events which would result
in any material liability under any Plan or proposed Plan; and (vii) all
registration statements, annual reports (Form 11-K and all attachments thereto)
and prospectuses prepared in connection with any Plan. None of the Plans is
self-insured.
(b) Each Plan has been maintained and administered in all
material respects in compliance with its terms and with the requirements
prescribed by any and all statutes, orders, rules and regulations, including but
not limited to ERISA and the Code, which are applicable to such Plans. No suit,
action or other litigation (excluding claims for benefits incurred in the
ordinary course of Plan activities) has been brought, or to the knowledge of
Company is threatened, against or with respect to any such Plan. There are no
audits, inquiries or proceedings pending or, to the knowledge of Company,
threatened by the IRS or DOL with respect to any Plans. All contributions,
reserves or premium payments required to be made or accrued as of the date
hereof to the Plans have been timely made or accrued. Any Plan intended to be
qualified under Section 401(a) of the Code and each trust intended to qualify
under Section 501(a) of the Code (i) has either obtained a favorable
determination, notification, advisory and/or opinion letter, as applicable, as
to its qualified status from the IRS or still has a remaining period of time
under applicable Treasury Regulations or IRS pronouncements in which to apply
for such letter and to make any amendments necessary to obtain a favorable
determination, and (ii) incorporates or has been amended to incorporate all
provisions required to comply with the Tax Reform Act of 1986 and subsequent
legislation to the extent such amendment or incorporation is required as of the
Closing Date. Company does not have any plan or commitment to establish any new
Plan, to modify any Plan (except to the extent required by law or to conform any
such Plan to the requirements of any applicable law, in each case as previously
disclosed to Parent in writing, or as required by this Agreement), or to enter
into any new Plan. Each Plan can be
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amended, terminated or otherwise discontinued after the Effective Time in
accordance with its terms, without liability to Parent, Company or any of its
Affiliates (other than ordinary administration expenses and expenses for
benefits accrued but not yet paid).
(c) Neither Company nor any of its Affiliates has at any time
ever maintained, established, sponsored, participated in, or contributed to any
plan subject to Title IV of ERISA or Section 412 of the Code and at no time has
Company contributed to or been requested to contribute to any "multiemployer
plan," as such term is defined in ERISA or to any plan described in Section
413(c) of the Code. Neither Company, nor any officer or director of Company is
subject to any liability or penalty under Section 4975 through 4980B of the Code
or Title I of ERISA. No "prohibited transaction," within the meaning of Section
4975 of the Code or Sections 406 and 407 of ERISA, and not otherwise exempt
under Section 408 of ERISA, has occurred with respect to any Plan which could
subject Company to material liabilities.
(d) Neither Company, nor any of its Affiliates has, prior to
the Effective Time and in any material respect, violated any of the health
continuation coverage requirements of the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended ("COBRA") or the requirements of the
Family Medical Leave Act of 1993, as amended. None of the Plans promises or
provides retiree medical or other retiree welfare benefits to any person except
as required by applicable law, and Company has not represented, promised or
contracted (whether in oral or written form) to provide such retiree benefits to
any employee, former employee, director, consultant or other person, except to
the extent required by statute.
(e) Except as disclosed on Section 2.11(e) of the Company
Schedule, neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (i) result in any
payment (including severance, unemployment compensation, golden parachute, bonus
or otherwise) becoming due to any stockholder, director or employee of Company
under any Plan or otherwise, (ii) materially increase any benefits otherwise
payable under any Plan, or (iii) result in the acceleration of the time of
payment or vesting of any such benefits.
(f) There is no International Employee Plan in existence. For
purposes of this Section "International Employee Plan" shall mean any Plan
adopted or maintained by Company, whether informally or formally, for the
benefit of current or former employees of Company outside the United States.
2.12 LABOR MATTERS. (i) There are no material controversies pending or,
to the knowledge of Company, threatened, between Company and any of its
employees which controversies have or could reasonably be expected to have a
Material Adverse Effect on Company; (ii) Company is not a party to any
collective bargaining agreement or other labor union contract applicable to
persons employed by Company nor does Company know of any activities or
proceedings of any labor union to organize any such employees; and (iii) Company
has no knowledge of any strikes, slowdowns, work stoppages or lockouts, or
threats thereof, by or with respect to any employees of Company, nor has Company
experienced any labor interruptions over the past three (3) years.
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2.13 REGISTRATION STATEMENT; PROXY STATEMENT. None of the information
supplied or to be supplied by Company for inclusion or incorporation by
reference in (i) the registration statement on Form S-4 to be filed with the SEC
by Parent in connection with the issuance of the Parent Common Stock in
connection with the Merger (the "S-4") will, at the time the S-4 becomes
effective under the Securities Act, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make such statements therein, in light of the
circumstances under which they are made, not misleading; and (ii) the proxy
statement/prospectus to be filed with the SEC by Company pursuant to Section
5.1(a) hereof (the "Proxy Statement/Prospectus") will, at the date mailed to the
stockholders of Company and at the time of the special stockholders meeting of
Company (the "Company Stockholders' Meeting") in connection with the
transactions contemplated hereby and as of the Effective Time, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not misleading. The Proxy
Statement/Prospectus will comply as to form in all material respects with the
provisions of the Exchange Act and the rules and regulations promulgated by the
SEC thereunder. Notwithstanding the foregoing, Company makes no representation
or warranty with respect to any information supplied by Parent or Merger Sub
which is contained in any of the foregoing documents.
2.14 RESTRICTIONS ON BUSINESS ACTIVITIES. There is no agreement,
commitment, judgment, injunction, order or decree binding upon Company or to
which Company is a party which has or could reasonably be expected to have the
effect of prohibiting or materially impairing any business practice of Company,
any acquisition of property by Company or the conduct of business by Company as
currently conducted other than such effects, individually or in the aggregate,
which have not had and could not reasonably be expected to have, a Material
Adverse Effect on Company.
2.15 TITLE TO PROPERTY. Company has good and valid title to all of its
material properties and assets, free and clear of all liens, pledges, claims,
charges, security interests or other encumbrances except liens for taxes not yet
due and payable and such liens or other imperfections of title, if any, as do
not materially detract from the value of or materially interfere with the
present use of the property affected thereby; and all leases pursuant to which
Company leases from others material real or personal property are valid and
effective in accordance with their respective terms, and there is not, under any
of such leases, any existing material default or event of default of Company or,
to Company's knowledge, any other party (or any event which with notice or lapse
of time, or both, would constitute a material default), except where the lack of
such validity and effectiveness or the existence of such default or event of
default could not reasonably be expected to have a Material Advance Effect on
Company. All the plants, structures and equipment owned by Company, and to the
knowledge of Company, all the plants, structures and equipment leased by
Company, except such as may be under construction, are in good operating
condition and repair (subject to normal wear and tear), in all material
respects.
2.16 TAXES.
(a) DEFINITION OF TAXES. For the purposes of this Agreement,
"Tax" or "Taxes" refers to any and all federal, state, local and foreign taxes,
including, without limitation, gross receipts, income, profits, sales, use,
occupation, value added, ad valorem, transfer, franchise,
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withholding, payroll, recapture, employment, excise and property taxes,
assessments, governmental charges and duties together with all interest,
penalties and additions imposed with respect to any such amounts and any
obligations under any agreements or arrangements with any other person with
respect to any such amounts and including any liability of a predecessor entity
for any such amounts.
(b) TAX RETURNS AND AUDITS. Except as set forth in Section
2.16(b) of the Company Schedule:
(i) Company has timely filed all federal, state, local
and foreign returns, estimates, information statements and reports relating to
Taxes ("Returns ") required to be filed by Company with any Tax authority prior
to the date hereof, except such Returns which are not material to Company. All
such Returns are true, correct and complete in all material respects. Company
has paid all Taxes shown to be due on such Returns.
(ii) All Taxes that Company is required by law to
withhold or collect have been duly withheld or collected, and have been timely
paid over to the proper governmental authorities to the extent due and payable.
(iii) Company has not been delinquent in the payment of
any material Tax nor is there any material Tax deficiency outstanding, proposed
or assessed against Company, nor has Company executed any unexpired waiver of
any statute of limitations on or extending the period for the assessment or
collection of any Tax.
(iv) No audit or other examination of any Return of
Company by any Tax authority is presently in progress, nor has Company been
notified in writing of any request for such an audit or other examination.
(v) No adjustment relating to any Returns filed by
Company has been proposed in writing, formally or informally, by any Tax
authority to the Company or any representative thereof.
(vi) Company has no liability for any material unpaid
Taxes which have not been accrued for or reserved on Company's balance sheet
included in Company's report on Form 10-Q for the quarter ended September 30,
1999, whether asserted or unasserted, contingent or otherwise, which is material
to Company, other than any liability for unpaid Taxes that may have accrued
since September 30, 1999 in connection with the operation of the business of
Company in the ordinary course of business, none of which is material to the
business, results of operations or financial condition of Company.
(vii) There is no contract, agreement, plan or arrangement
to which Company is a party as of the date of this Agreement, including but not
limited to the provisions of this Agreement, covering any employee or former
employee of Company that, individually or collectively, could reasonably be
expected to give rise to the payment of any amount that would not be deductible
pursuant to Sections 280G, 404 or 162(m) of the Code (or any similar provision
of state or local law). There is no contract, agreement, plan or arrangement to
which Company is a party or by which it is bound that could require the
compensation of any individual
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for excise taxes payable pursuant to Section 4999 of the Code (or any similar
provision of state or local law).
(viii) Company has not filed any consent agreement under
Section 341(f) of the Code (or any similar provision of state or local law) or
agreed to have Section 341(f)(2) of the Code (or any similar provision of state
or local law) apply to any disposition of a subsection (f) asset (as defined in
Section 341(f)(4) of the Code (or any similar provision of state or local law))
owned by Company.
(ix) Company is not party to, and has no obligation
under, any tax sharing, tax indemnity, tax allocation or similar agreement or
arrangement.
(x) None of Company's assets is tax exempt use property
within the meaning of Section 168(h) of the Code (or any similar provision of
state or local law).
(xi) Company has not distributed the stock of any
corporation in a transaction satisfying the requirements of Section 355 of the
Code. The stock of Company has not been distributed in a transaction satisfying
the requirements of Section 355 of the Code.
(xii) Company is not, and has not been a "United States
real property holding corporation" within the meaning of Section 897(c)(2) of
the Code.
(xiii) No power of attorney has been granted by Company and
is currently in effect.
(xiv) Company has not taken any action and does not know
of any fact, agreement, plan or other circumstance that is reasonably likely to
prevent the Merger from qualifying as a reorganization within the meaning of
Section 368(a) of the Code.
2.17 ENVIRONMENTAL MATTERS.
(a) Except as disclosed in the Company SEC Reports filed prior
to the date hereof and except for such matters that, individually or in the
aggregate, are not reasonably likely to have a Material Adverse Effect: (i)
Company has complied with all applicable Environmental Laws; (ii) the properties
currently owned or operated by Company (including soils, groundwater, surface
water, buildings or other structures) are not contaminated with any Hazardous
Substances; (iii) the properties formerly owned or operated by Company were not
contaminated with Hazardous Substances during the period of ownership or
operation by Company; (iv) Company is not subject to liability for any Hazardous
Substance disposal or contamination on any third party property; (v) Company has
not been associated with any release or threat of release of any Hazardous
Substance; (vi) Company has not received any notice, demand, letter, claim or
request for information alleging that Company may be in violation of or liable
under any Environmental Law; (vii) Company is not subject to any orders,
decrees, injunctions or other arrangements with any Governmental Entity or
subject to any indemnity or other agreement with any third party relating to
liability under any Environmental Law or relating to Hazardous Substances; and
(viii) there are no circumstances or conditions involving Company that could
reasonably be expected to result in any claims, liability, investigations, costs
or restrictions on the ownership, use or transfer of any property of Company
pursuant to any Environmental Law.
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(b) As used herein, the term "ENVIRONMENTAL LAW" means any
federal, state, local or foreign law, regulation, order, decree, permit,
authorization, opinion, common law or agency requirement relating to: (A) the
protection, investigation or restoration of the environment, health and safety,
or natural resources; (B) the handling, use, presence, disposal, release or
threatened release of any Hazardous Substance or (C) noise, odor, wetlands,
pollution, contamination or any injury or threat of injury to persons or
property.
(c) As used herein, the term "HAZARDOUS SUBSTANCE" means any
substance that is: (A) listed, classified or regulated pursuant to any
Environmental Law; (B) any petroleum product or by-product, asbestos-containing
material, lead-containing paint or plumbing, polychlorinated biphenyls,
radioactive materials or radon; or (C) any other substance which is the subject
of regulatory action by any Governmental Entity pursuant to any Environmental
Law.
2.18 BROKERS. Except with respect to Xxxxxx Brothers Inc., Company has
not incurred, nor will it incur, directly or indirectly, any liability for
brokerage or finders fees or agent's commissions or any similar charges in
connection with this Agreement or any transaction contemplated hereby. Prior to
the date hereof, a copy of the letter by which Company engaged Xxxxxx Brothers,
Inc., complete with all schedules and fee information, has been delivered to
Parent.
2.19 INTELLECTUAL PROPERTY. For the purposes of this Agreement,
the following terms have the following definitions:
"Intellectual Property" shall mean any or all of the following and all
worldwide common law and statutory rights in, arising out of, or
associated therewith: (i) patents and applications therefor and all
reissues, divisions, renewals, extensions, provisionals, continuations
and continuations-in-part thereof ("Patents"); (ii) inventions (whether
patentable or not), invention disclosures, improvements, trade secrets,
proprietary information, know how, technology, technical data and
customer lists, and all documentation relating to any of the foregoing;
(iii) copyrights, copyrights registrations and applications therefor,
and all other rights corresponding thereto throughout the world; (iv)
domain names, uniform resource locators ("URLs") and other names and
locators associated with the Internet ("Domain Names"); (v) industrial
designs and any registrations and applications therefor; (vi) trade
names, logos, common law trademarks and service marks, trademark and
service xxxx registrations and applications therefor (collectively,
"Trademarks"); (vii) all databases and data collections and all rights
therein; (viii) all moral and economic rights of authors and inventors,
however denominated, and (ix) any similar or equivalent rights to any
of the foregoing (as applicable).
"Company Intellectual Property" shall mean any Intellectual Property
that is owned by, or exclusively licensed to, Company.
"Registered Intellectual Property" means all Intellectual Property that
is the subject of an application, certificate, filing, registration or
other document issued, filed with, or recorded by any private, state,
government or other legal authority.
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"Company Registered Intellectual Property" means all of the Registered
Intellectual Property owned by, or filed in the name of, Company.
"Company Products" means all current versions of products or service
offerings of Company.
(a) No Company Intellectual Property or Company Product is
subject to any material proceeding or outstanding decree, order, judgment,
contract, license, agreement or stipulation restricting in any manner the use,
transfer or licensing thereof by Company, or which may affect the validity, use
or enforceability of such Company Intellectual Property or Company Product,
which in any such case could reasonably be expected to have a Material Adverse
Effect on Company.
(b) Each material item of Company Registered Intellectual
Property is valid and subsisting, all necessary registration, maintenance and
renewal fees currently due in connection with such Company Registered
Intellectual Property have been made and all necessary documents, recordations
and certificates in connection with such Company Registered Intellectual
Property have been filed with the relevant patent, copyright, trademark or other
authorities in the United States or foreign jurisdictions, as the case may be,
for the purposes of maintaining such Company Registered Intellectual Property,
except where the failure to do so could not be reasonably likely to have a
Material Adverse Effect on Company.
(c) To the knowledge of Company, except as disclosed on
Section 2.19(c) of the Company Schedule, Company owns and has good and exclusive
title to, each material item of Company Intellectual Property owned by it free
and clear of any lien or encumbrance (excluding non-exclusive licenses and
related restrictions granted in the ordinary course); and Company is the
exclusive owner of all material Trademarks used in connection with the operation
or conduct of the business of Company including the sale of any products or the
provision of any services by Company. Without limiting the foregoing, (i)
Company owns exclusively, and has good title to, all copyrighted works that are
Company Products or which Company otherwise purports to own and (ii) except as
could not reasonably be expected to have a Material Adverse Effect, to the
extent that any Patents would be infringed by any Company Products, Company is
the exclusive owner of such Patents.
(d) To the knowledge of Company, except as disclosed on
Section 2.19(d) of the Company Schedule, to the extent that any material
technology, material software or material Intellectual Property has been
developed or created independently or jointly by a third party for Company or is
incorporated into any of Company Products, Company has a written agreement with
such third party with respect thereto and Company thereby either (i) has
obtained ownership of, and is the exclusive owner of, or (ii) has obtained a
perpetual, non-terminable license (sufficient for the conduct of its business as
currently conducted and as proposed to be conducted) to all such third party's
Intellectual Property in such work, material or invention by operation of law or
by valid assignment, to the fullest extent it is legally possible to do so.
(e) Company has not transferred ownership of, or granted any
exclusive license with respect to, any Intellectual Property that is material
Company Intellectual Property, to any
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third party, or knowingly permitted Company's rights in such material Company
Intellectual Property to lapse or enter the public domain.
(f) Section 2.19(f) of the Company Schedule lists all
contracts, licenses and agreements to which Company is a party and that remain
in effect: (i) with respect to Company Intellectual Property licensed or
transferred to any third party resulting in, or which may result in, annual
payments of $50,000 or more to Company; or (ii) pursuant to which a third party
has licensed or transferred any material Intellectual Property to Company
resulting in, or which may result in, annual payments of $50,000 or more by
Company.
(g) The operation of the business of Company as such business
currently is conducted, including (i) Company's design, development,
manufacture, distribution, reproduction, marketing or sale of the products or
services of Company (including Company Products) and (ii) Company's use of any
product, device or process, to its knowledge and except as could not reasonably
be expected to have a Material Adverse Effect, has not and does not and will not
infringe or misappropriate the Intellectual Property of any third party or
constitute unfair competition or trade practices under the laws of any
jurisdiction.
(h) Company has not received written notice from any third
party that the operation of the business of Company or any act, product or
service of Company, infringes or misappropriates the Intellectual Property of
any third party or constitutes unfair competition or trade practices under the
laws of any jurisdiction, except as could not reasonably be expected to have a
Material Adverse Effect on Company.
(i) To the knowledge of Company, no person has infringed or is
infringing or misappropriating any material Company Intellectual Property,
except as could not reasonably be expected to have a Material Adverse Effect on
Company.
(j) Company has and enforces a policy requiring each employee
and contractor to execute a proprietary information/confidentiality agreement
substantially in the form provided to Parent prior to the date hereof and all
current and former employees and contractors of Company have executed such an
agreement, except where the failure to do so could not reasonably be expected to
have a Material Adverse Effect on Company.
(k) To Company's knowledge, the Company Products will be fully
compatible in normal operation with changes to outputs, data or other
information in relation to dates arising in the Year 2000 and beyond, without a
material loss of performance or a material loss of use, affected by hardware or
third party software (including but not limited to operating systems) or
unauthorized modifications made to Company Products. To Company's knowledge, all
of Company's Information Technology (as defined below) is Year 2000 compliant,
and will not cause an interruption in the ongoing operations of Company's
business on or after January 1, 2000 except such interruptions as could not
reasonably be expected to have a Material Adverse Effect on Company. For
purposes of the foregoing, the term "Information Technology" shall mean and
include all material software, hardware, firmware, telecommunications systems,
network systems, embedded systems and other systems, components and/or services
(other than general utility services including gas, electric, telephone and
postal) that are owned or used by Company in the conduct of their business, or
purchased by Company from third-party suppliers.
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2.20 AGREEMENTS, CONTRACTS AND COMMITMENTS. Company has not breached,
or received in writing any claim or notice that it has breached, any of the
terms or conditions of any agreement, contract or commitment to which it is a
party or by which it is bound in such a manner as, individually or in the
aggregate, are reasonably likely to have a Material Adverse Effect on Company.
Each agreement, contract or commitment to which the Company is a party or by
which it is bound that has not expired by its terms is in full force and effect,
except where such failure to be in full force and effect is not reasonably
likely to have a Material Adverse Effect on Company.
2.21 INSURANCE. Company maintains insurance policies and fidelity bonds
covering the assets, business, equipment, properties, operations, employees,
officers and directors of Company (collectively, the "Insurance Policies") which
Company reasonably believes are adequate in amount and scope. There is no
material claim by Company pending under any of the material Insurance Policies
as to which coverage has been questioned, denied or disputed by the underwriters
of such policies or bonds.
2.22 OPINION OF FINANCIAL ADVISOR. Company has been advised in writing
by its financial advisor, Xxxxxx Brothers Inc., that in its written opinion, as
of the date of this Agreement, the Exchange Ratio is fair to the stockholders of
Company from a financial point of view.
2.23 BOARD APPROVAL. The Board of Directors of Company (including any
required committee or subgroup of the Board of Directors of the Company) has, as
of the date of this Agreement, unanimously (i) declared the advisability of the
Merger and approved, subject to stockholder approval, this Agreement and the
transactions contemplated hereby, (ii) determined that the Merger is in the best
interests of the stockholders of Company and is on terms that are fair to such
stockholders and (iii) recommended that the stockholders of Company approve and
adopt this Agreement and approve the Merger.
2.24 VOTE REQUIRED. The affirmative vote of a majority of the votes
that holders of the outstanding shares of Company Common Stock are entitled to
vote with respect to this Agreement is the only vote of the holders of any class
or series of Company's capital stock necessary to approve and adopt this
Agreement and the transactions contemplated hereby pursuant to the DGCL and the
Company Charter Documents.
2.25 SECTION 203 OF THE DGCL NOT APPLICABLE. The Board of Directors of
Company has taken all actions so that the restrictions contained in Section 203
of the DGCL applicable to a "business combination" (as defined in such Section
203), or any other state takeover statute or similar law that otherwise would be
applicable, will not apply to the execution, delivery or performance of this
Agreement or the Company Voting Agreements or to the consummation of the Merger
or the other transactions contemplated by this Agreement or the Company Voting
Agreements.
2.26 CHANGE OF CONTROL PAYMENTS. Section 2.26 of the Company Schedule
sets forth each plan or agreement pursuant to which any amounts may become
payable (whether currently or in the future) to current or former employees and
directors of the Company as a result of or in connection with the Merger.
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2.27 AFFILIATES. Set forth in Section 2.27 of the Company Schedule is a
list of those persons who may be deemed to be, in Company's reasonable judgment,
affiliates of Company within the meaning of Rule 145 under the Securities Act.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub jointly and severally represent and warrant to
Company, subject to such exceptions as are specifically disclosed in writing in
the disclosure letter supplied by Parent to Company dated as of the date hereof
and attached hereto as Exhibit C, which disclosure shall provide an exception to
or otherwise qualify the representations or warranties thereof specifically
referred to, cross-referenced or clearly applicable in such disclosure (the
"Parent Schedule"), as follows:
3.1 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES. Each of Parent and
its Subsidiaries is a corporation duly incorporated, validly existing and in
good standing, to the extent applicable, under the laws of the jurisdiction of
its incorporation and has the requisite corporate power and authority to own,
lease and operate its assets and properties and to carry on its business as it
is now being or currently planned by Parent to be conducted. Each of Parent and
its Subsidiaries is in possession of all Approvals necessary to own, lease and
operate the properties it purports to own, operate or lease and to carry on its
business as it is now being or currently planned by Parent to be conducted,
except where the failure to have such Approvals would not, individually or in
the aggregate, have a Material Adverse Effect on Parent. Except as set forth in
Section 3.1 of the Parent Schedule, each of Parent and its Subsidiaries is duly
qualified or licensed as a foreign corporation to do business, and is in good
standing, in each jurisdiction where the character of the properties owned,
leased or operated by it or the nature of its activities makes such
qualification or licensing necessary, except for such failures to be so duly
qualified or licensed and in good standing that would not, either individually
or in the aggregate, have a Material Adverse Effect on Parent.
3.2 CERTIFICATE OF INCORPORATION AND BYLAWS. Parent has previously
furnished to Company complete and correct copies of its Amended and Restated
Certificate of Incorporation and Bylaws as amended to date (together, the
"Parent Charter Documents"). Such Parent Charter Documents and equivalent
organizational documents of each of its Subsidiaries are in full force and
effect. Parent is not in violation of any of the provisions of the Parent
Charter Documents, and no subsidiary of Parent is in violation of any of its
equivalent organizational documents.
3.3 CAPITALIZATION. As of the date hereof, the authorized capital stock
of Parent consists of (i) 120,000,000 shares of Parent Common Stock, (ii)
10,000,000 shares of Class B Common Stock, par value $0.01 per share (the "Class
B Common Stock"), and (iii) 60,000,000 shares of Preferred Stock, par value
$0.01 per share. (i) As of October 29, 1999, 34,856,571 shares of Parent Common
Stock were issued and outstanding, (ii) as of the date hereof, 10,000,000 shares
of Class B Common Stock were issued and outstanding, (iii) as of the date
hereof, no shares of Preferred Stock were issued and outstanding and (iv) except
as disclosed in the Parent SEC Filings (as defined in Section 3.6), as of
October 29, 1999
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Parent had no present commitment to issue any shares of Parent Common Stock,
Class B Common Stock or Preferred Stock. As of the date hereof, the authorized
capital stock of Merger Sub consists of 100 shares of common stock, par value
$.01 per share, all of which, as of the date hereof, are issued and outstanding.
All of the outstanding shares of Parent's and Merger Sub's respective capital
stock have been duly authorized and validly issued and are fully paid and
nonassessable. All shares of Parent Common Stock subject to issuance as
disclosed in the Parent SEC Filings, upon issuance on the terms and conditions
specified in the instruments pursuant to which they are issuable, shall, and the
shares of Parent Common Stock to be issued pursuant to the Merger will be, duly
authorized, validly issued, fully paid and nonassessable. All of the outstanding
shares of capital stock (other than directors' qualifying shares) of each of
Parent's Subsidiaries is duly authorized, validly issued, fully paid and
nonassessable and all such shares (other than directors' qualifying shares) are
owned by Parent or another Subsidiary of Parent free and clear of all security
interests, liens, claims, pledges, agreements, limitations in Parent's voting
rights, charges or other encumbrances of any nature whatsoever.
3.4 AUTHORITY RELATIVE TO THIS AGREEMENT. Each of Parent and Merger Sub
has all necessary corporate power and authority to execute and deliver this
Agreement and to perform its obligations hereunder and to consummate the
transactions contemplated hereby (including the Merger), and Parent has all
necessary corporate power and authority to execute and deliver the Company
Voting Agreements and to perform its obligations thereunder and to consummate
the transactions contemplated thereby. The execution and delivery of this
Agreement by Parent and Merger Sub and the consummation by Parent and Merger Sub
of the transactions contemplated hereby (including the Merger) have been duly
and validly authorized by all necessary corporate action on the part of Parent
and Merger Sub, and no other corporate proceedings on the part of Parent or
Merger Sub are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby (including the Merger), except that the
approval of the stockholders of Parent may be required by Nasdaq. The execution
and delivery of the Company Voting Agreements by Parent and the consummation by
Parent of the transactions contemplated thereby have been duly and validly
authorized by all necessary corporate action on the part of Parent, and no other
corporate proceedings on the part of Parent are necessary to authorize the
Company Voting Agreements, or to consummate the transactions contemplated
thereby. This Agreement has been duly and validly executed and delivered by
Parent and Merger Sub and, assuming the due authorization, execution and
delivery thereof by Company, constitutes the legal and binding obligations of
Parent and Merger Sub, enforceable against Parent and Merger Sub in accordance
with its terms, except as may be limited by bankruptcy, insolvency,
reorganization or other similar laws affecting the enforcement of creditors'
rights generally and by general equitable principles. The Company Voting
Agreements have been duly and validly executed and delivered by Parent and,
assuming the due authorization, execution and delivery thereof by Company,
constitute the legal and binding obligations of Parent, enforceable against
Parent in accordance with their terms, except as may be limited by bankruptcy,
insolvency, reorganization or other similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles.
3.5 NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) The execution and delivery of this Agreement by Parent and
Merger Sub and the Company Voting Agreements by Parent do not, and the
performance of this Agreement by
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Parent and Merger Sub and the Company Voting Agreements by Parent shall not, (i)
conflict with or violate the Parent Charter Documents or the equivalent
organizational documents of any of Parent's Subsidiaries, (ii) subject to
compliance with the requirements set forth in Section 3.5(b) below, conflict
with or violate any law, rule, regulation, order, judgment or decree applicable
to Parent or any of its Subsidiaries or by which it or their respective
properties are bound or affected, or (iii) result in any breach of or constitute
a default (or an event that with notice or lapse of time or both would become a
default) under, or materially impair Parent's or any such Subsidiary's rights or
alter the rights or obligations of any third party under, or give to others any
rights of termination, amendment, acceleration or cancellation of, or result in
the creation of a lien or encumbrance on any of the properties or assets of
Parent or any of its Subsidiaries pursuant to, any material note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which Parent or any of its Subsidiaries is a
party or by which Parent or any of its Subsidiaries or its or any of their
respective properties are bound or affected, except, with respect to clauses
(ii) or (iii), for any such conflicts, violations, breaches, defaults or other
occurrences that would not in the case of clauses (ii) or (iii), individually or
in the aggregate, have a Material Adverse Effect on Parent.
(b) The execution and delivery of this Agreement by Parent and
Merger Sub and the Company Voting Agreements by Parent do not, and the
performance of this Agreement by Parent and Merger Sub and of the Company Voting
Agreements by Parent shall not, require any consent, approval, authorization or
permit of, or filing with or notification to, any Governmental Entity except (i)
for applicable requirements, if any, of the Securities Act, the Exchange Act,
Blue Sky Laws, the pre-merger notification requirements of the HSR Act, the
Communications Act of 1934, as amended, state public utility laws and of foreign
governmental entities and the rules and regulations thereunder, the rules and
regulations of Nasdaq, and the filing of the Certificate of Merger with the
Secretary of State of the State of Delaware and appropriate documents with the
relevant authorities of other states in which Parent is qualified to do business
and (ii) where the failure to obtain such consents, approvals, authorizations or
permits, or to make such filings or notifications, (x) would not prevent
consummation of the Merger or otherwise prevent Parent or Merger Sub from
performing their respective obligations under this Agreement or (y) could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on Parent.
3.6 SEC FILINGS; FINANCIAL STATEMENTS.
(a) Parent has made available to Company a correct and
complete copy of each report, schedule, registration statement and definitive
proxy statement filed by Parent with the SEC on or after June 17, 1999 (the
"Parent SEC Reports"), which are all the forms, reports and documents required
to be filed by Parent with the SEC since that date. As of their respective
dates, the Parent SEC Reports (A) were prepared in accordance and complied in
all material respects with the requirements of the Securities Act or the
Exchange Act, as the case may be, and the rules and regulations of the SEC
thereunder applicable to such Parent SEC Reports, and (B) did not at the time
they were filed (or if amended or superseded by a filing prior to the date of
this Agreement, then on the date of such filing and as so amended or superceded)
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they
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were made, not misleading. None of Parent's Subsidiaries is required to file any
reports or other documents with the SEC.
(b) Each set of consolidated financial statements (including,
in each case, any related notes thereto) contained in the Parent SEC Reports,
including each Parent SEC Report filed after the date hereof until the Closing,
complied as to form in all material respects with the published rules and
regulations of the SEC with respect thereto, was prepared in accordance with
GAAP applied on a consistent basis throughout the periods involved (except as
may be indicated in the notes thereto or, in the case of unaudited statements,
do not contain footnotes as permitted by Form 10-Q of the Exchange Act) and each
fairly presents in all material respects the consolidated financial position of
Parent and its Subsidiaries at the respective dates thereof and the consolidated
results of its operations and cash flows for the periods indicated, except that
the unaudited interim financial statements were or are subject to normal
adjustments which were not or are not expected to have a Material Adverse Effect
on Parent.
3.7 REGISTRATION STATEMENT; PROXY STATEMENT. None of the information
supplied or to be supplied by Parent for inclusion or incorporation by reference
in (i) the S-4 will, at the time the S-4 becomes effective under the Securities
Act, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made, not
misleading; and (ii) the Proxy Statement/ Prospectus will, at the date mailed to
the stockholders of Company and at the time of Company Stockholders' Meeting and
as of the Effective Time, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading. The S-4 will comply as to form in all material
respects with the provisions of the Securities Act and the rules and regulations
promulgated by the SEC thereunder. Notwithstanding the foregoing, Parent makes
no representation or warranty with respect to any information supplied by
Company which is contained in any of the foregoing documents.
3.8 NO UNDISCLOSED LIABILITIES. Except as set forth in Section 3.8 of
the Parent Schedules, neither Parent nor any of its Subsidiaries has any
liabilities (absolute, accrued, contingent or otherwise) of a nature required to
be disclosed on a balance sheet or in the related notes to the consolidated
financial statements prepared in accordance with GAAP which are, individually or
in the aggregate, material to the business, results of operations or financial
condition of Parent, except (i) liabilities provided for or otherwise disclosed
in Parent SEC Reports filed prior to the date hereof or (ii) liabilities
incurred since September 30, 1999 in the ordinary course of business, none of
which would have a Material Adverse Effect on Parent.
3.9 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth in
Section 3.9 of the Parent Schedules since September 30, 1999, there has not been
any Material Adverse Effect on Parent.
3.10 TAXES. Neither Parent nor any of its Subsidiaries has taken any
action or knows of any fact, agreement, plan or other circumstance that is
reasonably likely to prevent the Merger from qualifying as a reorganization
within the meaning of Section 368(a) of the Code.
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3.11 BROKERS. Except with respect to Xxxxxxxxx, Xxxxxx & Xxxxxxxx
Securities Corporation, Parent and Merger Sub have not incurred, nor will they
incur, directly or indirectly, any liability for brokerage or finders' fees or
agents' commissions or any similar charges in connection with this Agreement or
any transaction contemplated hereby.
3.12 MERGER SUB. Merger Sub was formed solely for the purpose of
engaging in the transactions contemplated hereby, has engaged in no other
business activities and has conducted its operations only as contemplated
hereby.
3.13 INTELLECTUAL PROPERTY. "Parent Intellectual Property" shall
mean any Intellectual Property that is owned by, or exclusively licensed to,
Parent. Except as set forth in Section 3.13 of the Parent Schedules:
(a) (i) With respect to any Parent Intellectual Property that,
were Parent for any reason unable to use such Parent Intellectual Property it
would be reasonably likely to have a Material Adverse Effect on Parent, Parent
owns or possesses, or owns or possesses licenses or other valid rights to use,
such Parent Intellectual Property; and (ii) to the knowledge of Parent, the
conduct of the business of Parent as presently conducted does not infringe or
conflict with, nor has it been alleged to infringe or conflict with, any
patents, trademarks, trade names or copyrights or other intellectual property
rights of others, except as could not reasonably be expected to have a Material
Adverse Effect on Parent.
(b) To the knowledge of Parent, there is no claim or liability
for trademark, trade name, patent or copyright infringement relating to the
conduct by Parent of its business that, if determined adversely to Parent, would
be reasonably likely to have a Material Adverse Effect on Parent.
(c) To the knowledge of Parent, on the date hereof (i) there
are no pending re-examination, opposition, interference, cancellation or other
administrative proceedings with respect to any of the Parent Intellectual
Property that, if determined adversely to Parent, would be reasonably likely to
have a Material Adverse Effect on Parent, and (ii) no order, holding, decision
or judgment has been rendered by any court of law or authority, and no
agreement, consent or pending litigation in a court of law exists to which
Parent is a party, which would prevent Parent from using any of the Parent
Intellectual Property, except as could not reasonably be expected to have a
Material Adverse Effect on Parent.
3.14 LITIGATION. Except as set forth in Section 3.14 of the Parent
Schedules, there are no claims, suits or actions or, to the knowledge of Parent,
proceedings pending or threatened against Parent, before any court, governmental
department, commission, agency, instrumentality or authority, or any arbitrator
that seek to restrain or enjoin the consummation of the transactions
contemplated by this Agreement or which could reasonably be expected, either
singularly or in the aggregate with all such claims, actions or proceedings, to
have a Material Adverse Effect on Parent or have a material adverse effect on
the ability of the parties hereto to consummate the Merger.
3.15 TITLE. Parent has good and valid title to all of its material
properties and assets, free and clear of all liens, pledges, claims, charges,
security interests or other encumbrances
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except as disclosed in Parent SEC Reports, liens for taxes not yet due and
payable and such liens or other imperfections of title, if any, as could not
reasonably be expected to have a Material Adverse Effect on Parent; and all
leases pursuant to which Parent leases from others material real or personal
property are valid and effective in accordance with their respective terms, and
there is not, under any of such leases, any existing material default or event
of default of Parent or, to Parent's knowledge, any other party (or any event
which with notice or lapse of time, or both, would constitute a material
default), except where the lack of such validity and effectiveness or the
existence of such default or event of default could not reasonably be expected
to have a Material Adverse Effect on Parent.
ARTICLE IV
CONDUCT PRIOR TO THE EFFECTIVE TIME
4.1 CONDUCT OF BUSINESS BY COMPANY. During the period from the date of
this Agreement and continuing until the earlier of the termination of this
Agreement pursuant to its terms or the Effective Time, Company shall, except to
the extent that Parent shall otherwise consent in writing, carry on its
business, in the usual, regular and ordinary course consistent with past
practices, in substantially the same manner as heretofore conducted and in
compliance with all applicable laws and regulations (except where noncompliance
would not have a Material Adverse Effect), pay its debts and taxes when due
subject to good faith disputes over such debts or taxes, pay or perform other
material obligations when due, and use its commercially reasonable efforts
consistent with past practices and policies to (i) preserve substantially intact
its present business organization, (ii) keep available the services of its
present officers and employees and (iii) preserve its relationships with
customers, suppliers, distributors, licensors, licensees, and others with which
it has significant business dealings. In addition, except as permitted by the
terms of this Agreement, without the prior written consent of Parent, during the
period from the date of this Agreement and continuing until the earlier of the
termination of this Agreement pursuant to its terms or the Effective Time,
Company shall not do any of the following:
(a) Waive any stock repurchase rights, accelerate, amend or
(except as specifically provided for herein) change the period of exercisability
of options or restricted stock, or reprice options granted under any employee,
consultant, director or other stock plans or authorize cash payments in exchange
for any options granted under any of such plans;
(b) Grant any severance or termination pay to any officer or
employee except pursuant to applicable law, written agreements outstanding, or
policies existing, on the date hereof and as previously or concurrently
disclosed in writing or made available to Parent, or adopt any new severance
plan, or amend or modify or alter in any manner any severance plan, agreement or
arrangement existing on the date hereof;
(c) Transfer or license to any person or otherwise extend,
amend or modify any material rights to Company Intellectual Property, or enter
into grants to transfer or license to any person future patent rights, other
than in the ordinary course of business consistent with past practices, provided
that in no event shall Company license on an exclusive basis or sell any Company
Intellectual Property;
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(d) Declare, set aside or pay any dividends on or make any
other distributions (whether in cash, stock, equity securities or property) in
respect of any capital stock or split, combine or reclassify any capital stock
or issue or authorize the issuance of any other securities in respect of, in
lieu of or in substitution for any capital stock;
(e) Except as set forth in Section 4.1(e) of the Company
Schedule, purchase, redeem or otherwise acquire, directly or indirectly, any
shares of capital stock of Company, except repurchases of unvested shares at
cost in connection with the termination of the employment relationship with any
employee pursuant to stock option or purchase agreements in effect on the date
hereof;
(f) Issue, deliver, sell, authorize, pledge or otherwise
encumber, or agree to any of the foregoing with respect to, any shares of
capital stock or any securities convertible into or exchangeable for shares of
capital stock, or subscriptions, rights, warrants or options to acquire any
shares of capital stock or any securities convertible into or exchangeable for
shares of capital stock, or enter into other agreements or commitments of any
character obligating it to issue any such shares or convertible or exchangeable
securities, other than (i) the issuance delivery and/or sale of shares of
Company Common Stock pursuant to the exercise of stock options therefor
outstanding as of the date of this Agreement and (ii) the granting of stock
options (and the issuance of Company Common Stock upon exercise thereof), in the
ordinary course of business and consistent with past practices, in an amount not
to exceed options to purchase (and the issuance of Company Common Stock upon
exercise thereof) 300,000 shares in the aggregate (provided that the vesting of
these options shall not accelerate upon the Closing);
(g) Amend Company Charter Documents;
(h) Except as disclosed in Section 4.1(h) of the Company
Schedule, acquire or agree to acquire by merging or consolidating with, or by
purchasing any equity interest in or a portion of the assets of, or by any other
manner, any business or any corporation, partnership, association or other
business organization or division thereof, or otherwise acquire or agree to
acquire any assets which are material, individually or in the aggregate, to the
business of the Company or enter into any joint ventures, strategic partnerships
or alliances or other arrangements that provide for exclusivity of territory or
otherwise restrict Company's ability to compete or to offer or sell any products
or services;
(i) Sell, lease, license, encumber or otherwise dispose of any
properties or assets, except sales of inventory in the ordinary course of
business consistent with past practice and, except for the sale, lease or
disposition (other than through licensing) of property or assets which are not
material, individually or in the aggregate, to the business of Company;
(j) Except as disclosed in Section 4.1(j) of the Company
Schedule, incur any indebtedness for borrowed money in excess of $50,000 in the
aggregate or guarantee any such indebtedness of another person, issue or sell
any debt securities or options, warrants, calls or other rights to acquire any
debt securities of Company, enter into any "keep well" or other agreement to
maintain any financial statement condition or enter into any arrangement having
the economic effect of any of the foregoing;
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(k) Except as disclosed in Section 4.1(k) of the Company
Schedule, adopt or amend any employee benefit plan, policy or arrangement, any
employee stock purchase or employee stock option plan, or enter into any
employment contract or collective bargaining agreement (other than offer letters
and letter agreements entered into in the ordinary course of business consistent
with past practice with employees who are terminable "at will"), pay any special
bonus or special remuneration to any director or employee, or increase the
salaries or wage rates or fringe benefits (including rights to severance or
indemnification) of its directors, officers, employees or consultants, except in
the ordinary course of business consistent with past practices;
(l) Except as disclosed in Schedule 4.1(1) of the Company
Schedule, (i) pay, discharge, settle or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), or litigation (whether or not commenced prior to the date of this
Agreement) other than the payment, discharge, settlement or satisfaction, in the
ordinary course of business consistent with past practices or in accordance with
their terms, or liabilities recognized or disclosed in the most recent
consolidated financial statements (or the notes thereto) of Company included in
Company SEC Reports or incurred since the date of such financial statements, or
(ii) waive the benefits of, agree to modify in any manner, terminate, release
any person from or knowingly fail to enforce any confidentiality or similar
agreement to which Company is a party or of which Company is a beneficiary;
(m) Except in the ordinary course of business consistent with
past practices, modify, amend or terminate any Company Contract or other
material contract or material agreement to which Company is a party or waive,
delay the exercise of, release or assign any material rights or claims
thereunder;
(n) Except as required by GAAP, revalue any of its assets or
make any change in accounting methods, principles or practices;
(o) Except as set forth in Section 4.1(o) of the Company
Schedule, incur or enter into any agreement, contract or commitment requiring
Company to pay in excess of $100,000 in any 12 month period;
(p) Engage in any action that could reasonably be expected to
cause the Merger to fail to qualify as a "reorganization" under Section 368(a)
of the Code;
(q) Except as set forth in Section 4.1(q) of the Company
Schedule, settle any litigation;
(r) Make or rescind any Tax elections that, individually or in
the aggregate, could be reasonably likely to adversely affect in any material
respect the Tax liability or Tax attributes of Company, settle or compromise any
material income tax liability or, except as required by applicable law,
materially change any method of accounting for Tax purposes or prepare or file
any Return in a manner inconsistent with past practice;
(s) Form, establish or acquire any Subsidiary;
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(t) Permit the Plan Administrator to exercise any of its
discretionary rights under the Company Option Plan or the Company's 1990 Stock
Option Plan to provide for the automatic acceleration of any outstanding
options, the termination of any outstanding repurchase rights or the termination
of any cancellation rights issued pursuant to such plans; or
(u) Agree in writing or otherwise agree, commit or resolve to
take any of the actions described in Section 4.1 (a) through (s) above.
4.2 CONDUCT OF BUSINESS BY PARENT. During the period from the date of
this Agreement and continuing until the earlier of the termination of this
Agreement pursuant to its terms and the Effective Time, except as permitted by
the terms of this Agreement, without the prior written consent of Company,
Parent shall not declare, set aside or pay dividends on or make any other
distributions (whether in cash, stock, equity securities or property) on its
common stock without reserving a pro rata amount for distribution to the Company
Stockholders based on the Exchange Ratio.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 PROXY STATEMENT/PROSPECTUS; REGISTRATION STATEMENT; OTHER
FILINGS; BOARD RECOMMENDATIONS.
(a) As promptly as practicable after the execution of this
Agreement, Company and Parent will prepare, and file with the SEC, the Proxy
Statement/Prospectus, and Parent will prepare and file with the SEC the S-4 in
which the Proxy Statement/Prospectus will be included as a prospectus. Each of
Parent and Company shall provide promptly to the other such information
concerning its business and financial statements and affairs as, in the
reasonable judgment of the providing party or its counsel, may be required or
appropriate for inclusion in the Proxy Statement/Prospectus and the S-4, or in
any amendments or supplements thereto, and to cause its counsel and auditors to
cooperate with the other's counsel and auditors in the preparation of the Proxy
Statement/Prospectus and the S-4. Each of Company and Parent will respond to any
comments of the SEC, and will use its respective commercially reasonable efforts
to have the S-4 declared effective under the Securities Act as promptly as
practicable after such filing, and Company will cause the Proxy
Statement/Prospectus to be mailed to its stockholders at the earliest
practicable time after the S-4 is declared effective by the SEC (the "SEC
Effective Date"). As promptly as practicable after the date of this Agreement,
each of Company and Parent will prepare and file any other filings required to
be filed by it under the Exchange Act, the Securities Act or any other Federal,
foreign or Blue Sky or related securities laws in order to consummate the Merger
and the transactions contemplated by this Agreement (the "Other Filings"). Each
of Company and Parent will notify the other promptly upon the receipt of any
comments from the SEC or its staff and of any request by the SEC or its staff
for amendments or supplements to the S-4 or the Proxy Statement/Prospectus and
will supply the other with copies of all correspondence between such party or
any of its representatives, on the one hand, and the SEC or its staff, on the
other hand, with respect to the S-4, the Proxy Statement/Prospectus or the
Merger. Each of Company and Parent will cause all documents that it is
responsible for filing with the SEC under this Section 5.1(a) to comply in all
material respects with all applicable
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requirements of law and the rules and regulations promulgated thereunder.
Whenever any event occurs which is required to be set forth in an amendment or
supplement to the Proxy Statement/Prospectus or the S-4, Company or Parent, as
the case may be, will promptly inform the other of such occurrence and cooperate
in filing with the SEC or its staff, and/or mailing to stockholders of Company,
such amendment or supplement.
(b) Subject to Section 5.2(c) below, the Proxy
Statement/Prospectus will include the recommendation of the Board of Directors
of Company in favor of approval and adoption of this Agreement and approval of
the Merger.
5.2 MEETING OF COMPANY STOCKHOLDERS.
(a) Promptly after the date hereof, Company will take all
action reasonably necessary in accordance with the DGCL and Company Charter
Documents to convene Company Stockholders' Meeting to be held as promptly as
practicable for the purpose of voting upon this Agreement and the Merger.
Company will use its commercially reasonable efforts to solicit from its
stockholders proxies in favor of the approval and adoption of this Agreement and
approval of the Merger and will take all other action necessary or advisable to
secure the vote or consent of its stockholders required by the rules of Nasdaq
or the DGCL to obtain such approvals, subject to Section 5.2(c). Notwithstanding
anything to the contrary contained in this Agreement, Company may adjourn or
postpone Company Stockholders' Meeting to the extent necessary to ensure that
any necessary supplement or amendment to the Prospectus/Proxy Statement is
provided to Company's stockholders in advance of a vote on the Merger and this
Agreement or, if as of the time for which Company Stockholders' Meeting is
originally scheduled (as set forth in the Prospectus/Proxy Statement) there are
insufficient shares of Company Common Stock represented (either in person or by
proxy) to constitute a quorum necessary to conduct the business of Company
Stockholders' Meeting. Company shall ensure that Company Stockholders' Meeting
is called, noticed, convened, held and conducted, and that all proxies solicited
by Company in connection with Company Stockholders' Meeting are solicited, in
compliance with the DGCL, Company Charter Documents, the rules of Nasdaq and all
other applicable legal requirements. Company's obligation to call, give notice
of, convene and hold Company Stockholders' Meeting in accordance with this
Section 5.2(a) shall not be limited to or otherwise affected by the
commencement, disclosure, announcement or submission to Company of any
Acquisition Proposal.
(b) Subject to Section 5.2(c), (i) the Board of Directors of
Company shall recommend that Company's stockholders vote in favor of the
approval and adoption of this Agreement and approval of the Merger at Company
Stockholders' Meeting; (ii) the Prospectus/Proxy Statement shall include a
statement to the effect that the Board of Directors of Company has recommended
that Company's stockholders vote in favor of the approval and adoption of this
Agreement and approval of the Merger at Company Stockholders' Meeting; and (iii)
neither the Board of Directors of Company nor any committee thereof shall
withdraw, amend or modify, or propose or resolve to withdraw, amend or modify in
a manner adverse to Parent, the recommendation of the Board of Directors of
Company that Company's stockholders vote in favor of the approval and adoption
of this Agreement and approval of the Merger.
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(c) Nothing in this Agreement shall prevent the Board of
Directors of Company from withholding, withdrawing, amending or modifying its
recommendation in favor of approval and adoption of this Agreement and approval
of the Merger if (i) a Superior Offer (as defined below) is made to Company and
is not withdrawn, (ii) neither Company nor any of its representatives shall have
violated any of the restrictions set forth in Section 5.4, (iii) the Board of
Directors of Company concludes in good faith, after consultation with its
outside counsel, that, in light of such Superior Offer, the failure to withhold,
withdraw, amend or modify such recommendation would cause the Board of Directors
of Company to breach its fiduciary obligations to Company and Company's
stockholders under applicable law, (iv) five business days elapse following
delivery by Company to Parent of written notice advising Parent that the Board
of Directors of Company intends to resolve to withhold, withdraw, amend or
modify its recommendation absent modification of the terms and conditions of
this Agreement and (v) assuming this Agreement was amended to reflect all
adjustments to the terms and conditions hereof proposed by Parent during such
five business day period, such Acquisition would nevertheless constitute a
Superior Offer. Nothing contained in this Section 5.2 shall limit Company's
obligation to hold and convene the Company Stockholders' Meeting (regardless of
whether the recommendation of the Board of Directors of the Company shall have
been withdrawn, amended or modified). For purposes of this Agreement, "Superior
Offer" shall mean an unsolicited, bona fide written offer (the "Proposed
Superior Offer") made by a third party to consummate any of the following
transactions: (i) a merger, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transaction involving
Company pursuant to which the stockholders of Company immediately preceding such
transaction hold less than 15% of the equity interest in the surviving or
resulting entity of such transaction; (ii) a sale or other disposition by
Company of assets (excluding inventory and used equipment sold in the ordinary
course of business) representing all or substantially all of Company's assets,
or (iii) the acquisition by any person or group (including by way of a tender
offer or an exchange offer or issuance by Company), directly or indirectly, of
beneficial ownership or a right to acquire beneficial ownership of shares
representing in excess of 85% of the voting power of the then outstanding shares
of capital stock of Company, in each case on terms that the Board of Directors
of Company determines, in its reasonable judgment (after consultation with an
investment bank of nationally recognized reputation) to be more favorable to
Company stockholders from a financial point of view than the terms of the Merger
and the consideration of which reasonably likely exceeds the value of the
consideration in the Merger (after taking into account all relevant factors,
including any conditions to the Proposed Superior Offer, the timing of the
consummation of the transaction pursuant to the Proposed Superior Offer, the
risk of nonconsummation thereof and the need for any required governmental or
other consents, filings and approvals); provided, however, that a Proposed
Superior Offer shall only be a "Superior Offer" if any financing required to
consummate the transaction contemplated by such offer is committed or is
otherwise reasonably likely in the judgment of Company's Board of Directors to
be obtained by such third party on a timely basis.
5.3 CONFIDENTIALITY; ACCESS TO INFORMATION.
(a) The parties acknowledge that Company and Parent have
previously executed a Confidentiality Agreement, dated as of November 24, 1999
(the "Confidentiality Agreement"), which Confidentiality Agreement (except for
paragraph 10 thereof, which shall be superseded in
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its entirety by the provisions of this Agreement) will continue in full force
and effect in accordance with its terms.
(b) Access to Information.
(i) Company will afford Parent and its underwriters,
accountants, counsel and other representatives reasonable access during normal
business hours, upon reasonable notice, to the properties, books, records and
personnel of Company during the period prior to the Effective Time to obtain all
information concerning the business, including the status of product development
efforts, properties, results of operations and personnel of Company, as Parent
may reasonably request. No information or knowledge obtained by Parent in any
investigation pursuant to this Section 5.3 will affect or be deemed to modify
any representation or warranty contained herein or the conditions to the
obligations of the parties to consummate the Merger.
(ii) Parent will afford Company and its underwriters,
accountants, counsel and other representatives reasonable access during normal
business hours, upon reasonable notice, to the properties, books, records and
personnel of Parent during the period prior to the Effective Time to obtain all
information concerning the business, including the status of product development
efforts, properties, results of operations and personnel of Parent, as Company
may reasonably request. No information or knowledge obtained by Company in any
investigation pursuant to this Section 5.3 will affect or be deemed to modify
any representation or warranty contained herein or the conditions to the
obligations of the parties to consummate the Merger.
5.4 NO SOLICITATION.
(a) Until the earlier of the Effective Time or termination of
this Agreement pursuant to Article VII, Company will not, and will not authorize
or permit any of its officers, directors, affiliates or employees or any
investment banker, attorney or other advisor or representative retained by it
to, directly or indirectly (i) solicit, initiate, encourage or induce the
making, submission or announcement of any Acquisition Proposal (as defined
below), (ii) participate in any discussions or negotiations regarding, or
furnish to any person any information with respect to, or take any other action
to facilitate any inquiries or the making of any proposal that constitutes or
may reasonably be expected to lead to, any Acquisition Proposal, (iii) engage in
discussions with any person with respect to any Acquisition Proposal, (iv)
authorize, approve or recommend any Acquisition Proposal or (v) enter into any
letter of intent or similar document or any contract, agreement or commitment
providing for any Acquisition Transaction (as defined below) or accepting any
Acquisition Proposal; provided, however, that this Section 5.4(a) shall not
prohibit Company, on or before the adoption of this Agreement by the
stockholders of the Company, from furnishing information regarding Company or
entering into negotiations or discussions with, any person or group in response
to a Superior Offer submitted by such person or group (and not withdrawn) if (1)
neither Company nor any of its officers, directors, affiliates or employees or
any investment banker, attorney or other advisor or representative retained by
it shall have violated any of the restrictions set forth in this Section 5.4,
(2) the Board of Directors of Company concludes in good faith, after
consultation with its outside legal counsel, that failure to take such action
would cause the Board of Directors of Company to breach its fiduciary
obligations to Company and Company's stockholders under applicable law, (3) (x)
at least twenty-four (24) hours prior to furnishing any such information to, or
entering into discussions
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or negotiations with, such person or group, Company gives Parent written notice
of the identity of such person or group (with whom Parent shall thereafter have
no contact either directly or indirectly through a representative with respect
to any matters relating to Company (without the consent of Company) prior to the
earlier of the termination of this Agreement or the Effective Time), of the
terms and conditions of the offer and of Company's intention to furnish
information to, or enter into discussions or negotiations with, such person or
group and (y) Company receives from such person or group an executed
confidentiality agreement containing customary limitations on the use and
disclosure of all nonpublic written and oral information furnished to such
person or group by or on behalf of Company containing terms no less favorable to
Company than those set forth in the confidentiality agreement (provided that
such confidentiality agreement shall not in any way restrict Company from
complying with its disclosure obligations under this Agreement, including with
respect to such Acquisition Proposal), and (4) contemporaneously with furnishing
any such information to such person or group, Company furnishes such information
to Parent (to the extent that such information has not been previously furnished
by Company to Parent). Company and its officers, directors, affiliates,
employees and any investment banker, attorney or other advisor or representative
retained by it will immediately cease any and all existing activities,
discussions or negotiations with any parties conducted heretofore with respect
to any Acquisition Proposal. Without limiting the foregoing, it is understood
that any violation of the restrictions set forth in the preceding two sentences
by any officer, director, employee or affiliate of Company or any investment
banker, attorney or other advisor or representative of Company shall be deemed
to be a breach of this Section 5.4 by Company.
For purposes of this Agreement, "Acquisition Proposal" shall mean any
offer or proposal (other than an offer or proposal by Parent, Merger Sub or any
affiliate thereof) relating to any Acquisition Transaction. For the purposes of
this Agreement, "Acquisition Transaction" shall mean any transaction or series
of related transactions other than the transactions contemplated by this
Agreement involving: (A) any acquisition or purchase from Company by any person
or "group" (as defined under Section 13(d) of the Exchange Act and the rules and
regulations thereunder) of more than a 20% interest in the total outstanding
voting securities of Company or any tender offer or exchange offer that if
consummated would result in any person or "group" (as defined under Section
13(d) of the Exchange Act and the rules and regulations thereunder) beneficially
owning 20% or more of the total outstanding voting securities of Company; (B)
any merger, consolidation, business combination or similar transaction involving
Company; (C) any sale, lease, exchange, transfer, license or other disposition
of more than 20% of the assets of Company; or (D) any liquidation or dissolution
of Company.
(b) In addition to the obligations of Company set forth in
paragraph (a) of this Section 5.4, Company as promptly as practicable shall
advise Parent orally and in writing of any request received by Company for
information which Company reasonably believes could lead to an Acquisition
Proposal or of any Acquisition Proposal, or any inquiry received by Company with
respect to or which Company reasonably believes could lead to any Acquisition
Proposal, the terms and conditions of such request, Acquisition Proposal or
inquiry, and the identity of the person or group making any such request,
Acquisition Proposal or inquiry. Company will keep Parent reasonably informed in
all material respects of the status and details (including amendments or
proposed amendments) of any such request, Acquisition Proposal or inquiry.
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(c) Nothing contained in this Section 5.4 shall prevent the
Board of Directors of the Company from complying with Rule 14e-2 promulgated
under the Exchange Act with regard to an Acquisition Proposal by a third party
or from making such disclosure as may be required by applicable law; provided,
however, that the Board of Directors may not withhold, withdraw, amend or modify
in a manner adverse to Parent its recommendation with respect to this Agreement,
the Merger or the other transactions contemplated hereby except in accordance
with Section 5.2.
5.5 PUBLIC DISCLOSURE. Parent and Company will consult with each other
and agree before issuing any press release or otherwise making any public
statement with respect to the Merger, this Agreement or an Acquisition Proposal
and will not issue any such press release or make any such public statement
prior to such consultation, except as may be required by law (including
fiduciary duty) or NASD requirements for companies whose securities are traded
on Nasdaq.
5.6 REASONABLE EFFORTS; NOTIFICATION.
(a) Upon the terms and subject to the conditions set forth in
this Agreement, including Sections 5.2(c) and 5.4, each of the parties agrees to
use its commercially reasonable efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, and to assist and cooperate with the
other parties in doing, all things necessary, proper or advisable to consummate
and make effective, in the most expeditious manner practicable, the Merger and
the other transactions contemplated by this Agreement, including using
commercially reasonable efforts to accomplish the following: (i) the taking of
all reasonable acts necessary to cause the conditions precedent set forth in
Article VI to be satisfied, (ii) the obtaining of all necessary actions or
nonactions, waivers, consents, approvals, orders and authorizations from
Governmental Entities and the making of all necessary registrations,
declarations and filings (including registrations, declarations and filings with
Governmental Entities, if any) and the taking of all reasonable steps as may be
necessary to avoid any suit, claim, action, investigation or proceeding by any
Governmental Entity, (iii) the obtaining of all consents, approvals or waivers
from third parties required as a result of the transactions contemplated in this
Agreement, (iv) the defending of any suits, claims, actions, investigations or
proceedings, whether judicial or administrative, challenging this Agreement or
the consummation of the transactions contemplated hereby, including seeking to
have any stay or temporary restraining order entered by any court or other
Governmental Entity vacated or reversed and (v) the execution or delivery of any
additional instruments reasonably necessary to consummate the transactions
contemplated by, and to fully carry out the purposes of, this Agreement. In
connection with and without limiting the foregoing, Company and its Board of
Directors shall, if any state takeover statute or similar statute or regulation
is or becomes applicable to the Merger, this Agreement or any of the
transactions contemplated by this Agreement, use its commercially reasonable
efforts to enable the Merger and the other transactions contemplated by this
Agreement to be consummated as promptly as practicable on the terms contemplated
by this Agreement. Notwithstanding anything herein to the contrary, nothing in
this Agreement shall be deemed to require Parent or Company or any Subsidiary or
affiliate thereof to agree to any divestiture by itself or any of its affiliates
of shares of capital stock or of any business, assets or property, or the
imposition of any material limitation on the ability of any of them to conduct
their business or to own or exercise control of such assets, properties and
stock.
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(b) Company shall give prompt notice to Parent upon becoming
aware that any representation or warranty made by it contained in this Agreement
has become untrue or inaccurate, or of any failure of Company to comply with or
satisfy in any material respect any covenant, condition or agreement to be
complied with or satisfied by it under this Agreement, in each case, such that
the conditions set forth in Section 6.3(a) or 6.3(b) would not be satisfied;
provided, however, that no such notification shall affect the representations,
warranties, covenants or agreements of the parties or the conditions to the
obligations of the parties under this Agreement.
(c) Parent shall give prompt notice to Company upon becoming
aware that any representation or warranty made by it or Merger Sub contained in
this Agreement has become untrue or inaccurate, or of any failure of Parent or
Merger Sub to comply with or satisfy in any material respect any covenant,
condition or agreement to be complied with or satisfied by it under this
Agreement, in each case, such that the conditions set forth in Section 6.2(a) or
6.2(b) would not be satisfied; provided, however, that no such notification
shall affect the representations, warranties, covenants or agreements of the
parties or the conditions to the obligations of the parties under this
Agreement.
5.7 STOCK OPTIONS AND WARRANTS
(a) STOCK OPTIONS. At the Effective Time, each outstanding
option to purchase shares of Company Common Stock (each, a "Company Stock
Option") under the Company Option Plan or Company's 1990 Stock Option Plan,
whether or not vested, shall be assumed by Parent. Each Company Stock Option so
assumed by Parent under this Agreement will continue to have, and be subject to,
the same terms and conditions of such options immediately prior to the Effective
Time (including, without limitation, any repurchase rights or vesting provisions
and provisions regarding the acceleration of vesting on certain transactions,
other than the transactions contemplated by this Agreement), except that (i)
each Company Stock Option will be exercisable (or will become exercisable in
accordance with its terms) for that number of whole shares of Parent Common
Stock equal to the product of the number of shares of Company Common Stock that
were issuable upon exercise of such Company Stock Option immediately prior to
the Effective Time multiplied by the Exchange Ratio, rounded down to the nearest
whole number of shares of Parent Common Stock and (ii) the per share exercise
price for the shares of Parent Common Stock issuable upon exercise of such
assumed Company Stock Option will be equal to the quotient determined by
dividing the exercise price per share of Company Common Stock at which such
Company Stock Option was exercisable immediately prior to the Effective Time by
the Exchange Ratio, rounded up to the nearest whole cent.
(b) WARRANTS. At the Effective Time, each outstanding warrant
to purchase shares of Company Common Stock (each, a "Warrant") shall be assumed
by Parent and will continue to have, and be subject to, the same forms and
conditions of such Warrants immediately prior to the Effective Time, except that
(i) such Warrant will be exercisable (or will become exercisable in accordance
with its terms) for that number of shares of Parent Common Stock equal to the
product of the number of shares of Company Common Stock that were issuable upon
exercise of such Warrant immediately prior to the Effective Time multiplied by
the Exchange Ratio, rounded down to the nearest whole number of shares of Parent
Common Stock, (ii) the per share exercise price for the shares of Parent Common
Stock issuable upon exercise of
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such assumed Warrant will be equal to the quotient determined by dividing the
exercise price per share of Company Common Stock at which such Warrant was
exercisable immediately prior to the Exercise Time by the Exchange Ratio,
rounded up to the nearest whole cent and (iii) if Parent elects not to assume
the obligations under any of the warrants identified on Schedule 5.7(b) of the
Parent Schedule, then such warrant shall be deemed to be converted pursuant the
terms of such warrant.
(c) Prior to the Closing Date, Company agrees to take all
necessary steps to effectuate the foregoing provisions of this Section,
including obtaining all necessary consents and releases, if any, from the
holders of Company Stock Options and Warrants.
5.8 FORM S-8. Parent agrees to file a registration statement on Form
S-8 (or any successor form) for the shares of Parent Common Stock issuable with
respect to assumed Company Stock Options that are eligible to be registered on
Form S-8 or such successor form as soon as is reasonably practicable after the
Effective Time.
5.9 INDEMNIFICATION. From and after the Effective Time, Parent will
cause the Surviving Corporation to fulfill and honor in all respects the
obligations of Company pursuant to any indemnification agreements between
Company and its directors and officers in effect immediately prior to the
Effective Time (the "Indemnified Parties") and any indemnification provisions
under Company Charter Documents as in effect on the date hereof. The Certificate
of Incorporation and Bylaws of the Surviving Corporation will contain provisions
with respect to exculpation and indemnification that are at least as favorable
to the Indemnified Parties as those contained in Company Charter Documents as in
effect on the date hereof, which provisions will not be amended, repealed or
otherwise modified for a period of six (6) years from the Effective Time in any
manner that would adversely affect the rights thereunder of individuals who,
immediately prior to the Effective Time, were directors, officers, employees or
agents of Company, unless such modification is required by law. Parent will
cause the Surviving Corporation to maintain Director and Officer liability
insurance on the same terms as the current policies with respect to the
Indemnified Parties for the three (3) years following the Effective Time;
provided that the annual premium therefor does not exceed 150% of the current
annual premium therefor.
5.10 NASDAQ LISTING. Parent agrees to use its best efforts to authorize
for listing on Nasdaq the shares of Parent Common Stock issuable, and those
required to be reserved for issuance, in connection with the Merger, subject to
official notice of issuance.
5.11 REGULATORY FILINGS; REASONABLE EFFORTS. As soon as may be
reasonably practicable, Company and Parent each shall file with the United
States Federal Trade Commission (the "FTC") and the Antitrust Division of the
United States Department of Justice ("DOJ") Notification and Report Forms
relating to the transactions contemplated herein as required by the HSR Act, as
well as comparable pre-merger notification forms required by the merger
notification or control laws and regulations of any applicable jurisdiction, as
agreed to by the parties. Company and Parent each shall promptly (a) supply the
other with any information which may be required in order to effectuate such
filings and (b) supply any additional information which reasonably may be
required by the FTC, the DOJ or the competition or merger control authorities of
any other jurisdiction and which the parties may reasonably deem
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appropriate; provided, however, that Parent shall not be required to agree to
any divestiture by Parent or Company or any of Parent's Subsidiaries or
affiliates of shares of capital stock or of any business, assets or property of
Parent or its Subsidiaries or affiliates or of Company, its affiliates, or the
imposition of any material limitation on the ability of any of them to conduct
their businesses or to own or exercise control of such assets, properties and
stock. As soon as may be reasonably practicable, Company and Parent will file
any applications required for the consummation of the transactions contemplated
hereby with (i) the Federal Communications Commission and (ii) any state public
utility commissions or similar state regulatory bodies regulating Company's
business.
5.12 BENEFIT PLANS. Company shall cause its 401(k) plan to terminate
effective as of the day immediately preceding the Closing Date. During the
period commencing at the Closing Date and ending on the first anniversary
thereof, Parent shall provide employees of the Surviving Corporation with
benefits under employee benefit plans (other than stock option or other plans
involving the potential issuance of securities) that are substantially similar
to the plans in which employees of Parent participate. Parent shall recognize
service with Company for the purpose of eligibility to participate under such
plans.
5.13 TREATMENT AS A REORGANIZATION. Neither Parent nor Merger Sub shall
take any action prior to or following the Merger that could reasonably be
expected to cause the Merger to fail to qualify as a "reorganization" within the
meaning of Section 368(a) of the Code.
5.14 BOARD OF DIRECTORS OF PARENT. The Board of Directors of Parent
will take all actions necessary such that one member of Company's Board of
Directors designated by Company and reasonably acceptable to Parent shall be
appointed to Parent's Board of Directors with a term expiring at the next annual
meeting of Parent's stockholders and shall include such person in the slate of
nominees recommended by Parent's Board of Directors to the stockholders of
Parent at such annual meeting.
ARTICLE VI
CONDITIONS TO THE MERGER
6.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY TO EFFECT THE MERGER. The
respective obligations of each party to this Agreement to effect the Merger
shall be subject to the satisfaction at or prior to the Closing Date of the
following conditions:
(a) STOCKHOLDER APPROVAL. This Agreement and the Merger shall
have been duly approved and adopted, by the requisite vote under the DGCL and
the Company Charter Documents, by the stockholders of Company and, if required
by Nasdaq, shall have been duly approved by the requisite vote under Nasdaq
regulations by the stockholders of Parent.
(b) REGISTRATION STATEMENT EFFECTIVE; PROXY STATEMENT. The SEC
shall have declared the S-4 effective. No stop order suspending the
effectiveness of the S-4 or any part thereof shall have been issued and no
proceeding for that purpose, and no similar proceeding in respect of the Proxy
Statement/Prospectus, shall have been initiated or threatened in writing by the
SEC.
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(c) NO ORDER; HSR ACT. No Governmental Entity shall have
enacted, issued, promulgated, enforced or entered any statute, rule, regulation,
executive order, decree, injunction or other order (whether temporary,
preliminary or permanent) which is in effect and which has the effect of making
the Merger illegal or otherwise prohibiting consummation of the Merger,
substantially on the terms contemplated by this Agreement. All waiting periods,
if any, under the HSR Act and any foreign law in any jurisdiction in which the
Company has material operations relating to the transactions contemplated hereby
will have expired or terminated early and all material foreign antitrust
approvals required to be obtained prior to the Merger in connection with the
transactions contemplated hereby shall have been obtained.
(d) TAX OPINIONS. Prior to the mailing of the Proxy
Statement/Prospectus (and to be reconfirmed at the Closing Date), Parent and
Company shall each have received written opinions from their respective tax
counsel (Winthrop, Stimson, Xxxxxx & Xxxxxxx and Xxxxxxx Xxxxxxx & Xxxxxxxx LLP,
respectively), in form and substance reasonably satisfactory to them, to the
effect that the Merger will constitute a reorganization within the meaning of
Section 368(a) of the Code and such opinions shall not have been withdrawn;
provided, however, that if the counsel to either Parent or Company does not
render such opinion, this condition shall nonetheless be deemed to be satisfied
with respect to such party if counsel to the other party renders such opinion to
such party. The parties to this Agreement agree to make such reasonable
representations as requested by such counsel for the purpose of rendering such
opinions.
(e) NASDAQ LISTING. The shares of Parent Common Stock issuable
to the stockholders of Company pursuant to this Agreement and such other shares
required to be reserved for issuance in connection with the Merger shall have
been authorized for listing on Nasdaq upon official notice of issuance.
6.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF COMPANY. The obligation of
Company to consummate and effect the Merger shall be subject to the satisfaction
at or prior to the Closing Date of each of the following conditions, any of
which may be waived, in writing, exclusively by Company:
(a) REPRESENTATIONS AND WARRANTIES. Each representation and
warranty of Parent and Merger Sub contained in this Agreement (i) shall have
been true and correct as of the date of this Agreement and (ii) shall be true
and correct on and as of the Closing Date with the same force and effect as if
made on the Closing Date (it being understood that, other than with respect to
the representation set forth in Section 3.9, for purposes of determining the
accuracy of such representations and warranties for purposes of this clause
(ii), all "Material Adverse Effect" qualifications and other qualifications
based on the word "material" or similar phrases contained in such
representations and warranties shall be disregarded) except, other than with
respect to the representation set forth in Section 3.9, (A) in each case, or in
the aggregate, as does not constitute a Material Adverse Effect on Parent and
Merger Sub, (B) for changes contemplated by this Agreement and (C) for those
representations and warranties which address matters only as of a particular
date (which representations shall have been true and correct (subject to the
qualifications as set forth in the preceding clause (A)) as of such particular
date). Any update of or modification to the Parent Schedule made or purported to
have been made after the date of this Agreement shall be disregarded. Company
shall have received a certificate with respect to the foregoing signed on behalf
of Parent by an authorized officer of Parent.
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(b) AGREEMENTS AND COVENANTS. Parent and Merger Sub shall have
performed or complied in all material respects with all agreements and covenants
required by this Agreement to be performed or complied with by them on or prior
to the Closing Date, except to the extent that any failure to perform or comply
(other than a willful failure to perform or comply or failure to perform or
comply with an agreement or covenant reasonably within the control of Parent and
Merger Sub) does not, or will not, constitute a Material Adverse Effect with
respect to Parent, and Company shall have received a certificate to such effect
signed on behalf of Parent by an authorized officer of Parent.
6.3 ADDITIONAL CONDITIONS TO THE OBLIGATIONS OF PARENT AND MERGER SUB.
The obligations of Parent and Merger Sub to consummate and effect the Merger
shall be subject to the satisfaction at or prior to the Closing Date of each of
the following conditions, any of which may be waived, in writing, exclusively by
Parent:
(a) REPRESENTATIONS AND WARRANTIES. Each representation and
warranty of Company contained in this Agreement (i) shall have been true and
correct as of the date of this Agreement and (ii) shall be true and correct on
and as of the Closing Date with the same force and effect as if made on and as
of the Closing Date (it being understood that, other than with respect to the
representation set forth in Section 2.9(i), for purposes of determining the
accuracy of such representations and warranties for purposes of this clause
(ii), all "Material Adverse Effect" qualifications and other qualifications
based on the word "material" or similar phrases contained in such
representations and warranties shall be disregarded) except, other than with
respect to the representation set forth in Section 2.9(i), (A) in each case, or
in the aggregate, as does not constitute a Material Adverse Effect on Company
provided, however, such Material Adverse Effect qualifier shall be inapplicable
with respect to representations and warranties contained in the first two
sentences of Section 2.3, (B) for changes contemplated by this Agreement, (C)
for those representations and warranties which address matters only as of a
particular date (which representations shall have been true and correct (subject
to the qualifications as set forth in the preceding clause (A)) as of such
particular date) and (D) in the case of Section 2.3, where the increase in the
number of shares of Company Common Stock outstanding as a result of the failure
of such representation and warranty to be correct on the date hereof does not
exceed 50,000). Any update of or modification to the Company Schedule made or
purported to have been made after the date of this Agreement shall be
disregarded. Parent shall have received a certificate with respect to the
foregoing signed on behalf of Company by an authorized officer of Company.
(b) AGREEMENTS AND COVENANTS. Company shall have performed or
complied in all material respects with all agreements and covenants required by
this Agreement to be performed or complied with by it at or prior to the Closing
Date except to the extent that any failure to perform or comply (other than a
willful failure to perform or comply or failure to perform or comply with an
agreement or covenant reasonably within the control of Company) does not, or
will not, constitute a Material Adverse Effect on Company, and Parent shall have
received a certificate to such effect signed on behalf of Company by the Chief
Executive Officer and the Chief Financial Officer of Company.
(c) CONSENTS. Company shall have obtained all consents,
waivers and approvals required in connection with the consummation of the
transactions contemplated hereby, other
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than consents, waivers and approvals the absence of which, either alone or in
the aggregate, could not reasonably be expected to have a Material Adverse
Effect on Company.
(d) DIRECTOR RESIGNATIONS. Company shall have delivered to
Parent evidence satisfactory to Parent of the resignation of all directors of
Company, effective as of the Effective Time.
(e) AFFILIATE LETTERS. Each of the persons named in Section
2.27 of the Company Schedule shall have delivered to Parent a written agreement
substantially in the form attached as Exhibit D hereto.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
7.1 TERMINATION. This Agreement may be terminated at any time prior to
the Effective Time, whether before or after the requisite approval of the
stockholders of Company or Merger Sub:
(a) by mutual written consent duly authorized by the Boards
of Directors of Parent and Company;
(b) by either Company or Parent if the Merger shall not have
been consummated by June 15, 2000 for any reason; provided, however, that the
right to terminate this Agreement under this Section 7.1(b) shall not be
available to any party whose action or failure to act has been a principal cause
of or resulted in the failure of the Merger to occur on or before such date and
such action or failure to act constitutes a breach of this Agreement;
(c) by either Company or Parent if a Governmental Entity shall
have issued an order, decree or ruling or taken any other action, in any case
having the effect of permanently restraining, enjoining or otherwise prohibiting
the Merger, which order, decree, ruling or other action is final and
nonappealable;
(d) by either Company or Parent if the required approval of
the stockholders of Company contemplated by this Agreement shall not have been
obtained by reason of the failure to obtain the required vote at a meeting of
Company stockholders duly convened therefor or at any adjournment thereof;
(e) by Company, upon a material breach of any representation,
warranty, covenant or agreement on the part of Parent set forth in this
Agreement, or if any representation or warranty of Parent shall have become
materially untrue, in either case such that the conditions set forth in Section
6.2(a) or Section 6.2(b) would not be satisfied as of the time of such breach or
as of the time such representation or warranty shall have become untrue,
provided, that if such inaccuracy in Parent's representations and warranties or
breach by Parent is curable by Parent prior to the Closing Date, then Company
may not terminate this Agreement under this Section 7.1(e) for thirty (30) days
after delivery of written notice from Company to Parent of such breach, provided
Parent continues to exercise commercially reasonable efforts to cure such
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breach (it being understood that Company may not terminate this Agreement
pursuant to this Section 7.1(e) if it shall have materially breached this
Agreement or if such breach by Parent is cured during such thirty (30)-day
period);
(f) by Parent, upon a material breach of any representation,
warranty, covenant or agreement on the part of Company set forth in this
Agreement, or if any representation or warranty of Company shall have become
materially untrue, in either case such that the conditions set forth in Section
6.3(a) or Section 6.3(b) would not be satisfied as of the time of such breach or
as of the time such representation or warranty shall have become untrue,
provided, that if such inaccuracy in Company's representations and warranties or
breach by Company is curable by Company prior to the Closing Date, then Parent
may not terminate this Agreement under this Section 7.1(f) for thirty (30) days
after delivery of written notice from Parent to Company of such breach, provided
Company continues to exercise commercially reasonable efforts to cure such
breach (it being understood that (i) Parent may not terminate this Agreement
pursuant to this Section 7.1(f) if it shall have materially breached this
Agreement or if such breach by Company is cured during such thirty (30)-day
period and (ii) any breach of Sections 5.2 or 5.4 hereof is not curable);
(g) by Parent, upon a material and willful breach of the
provisions of Section 5.2 or Section 5.4 of this Agreement; or
(h) by Parent if a Triggering Event (as defined below) shall
have occurred.
For the purposes of this Agreement, a "Triggering Event" shall be
deemed to have occurred if: (i) the Board of Directors of Company or any
committee thereof shall for any reason have withdrawn or shall have amended or
modified in a manner adverse to Parent its recommendation in favor of, the
approval and adoption of this Agreement and approval of the Merger; (ii) Company
shall have failed to include in the Proxy Statement/Prospectus the
recommendation of the Board of Directors of Company in favor of the approval and
adoption of this Agreement and the Merger; (iii) Board of Directors of Company
fails to reaffirm its recommendation in favor of the approval and adoption of
this Agreement and the Merger within ten (10) business days after Parent
requests in writing that such recommendation be reaffirmed at any time following
the making, announcement or submission of an Acquisition Proposal; or (iv) a
tender or exchange offer relating to securities of Company shall have been
commenced by a person unaffiliated with Parent and Company shall not have sent
to its securityholders pursuant to Rule 14e-2 promulgated under the Securities
Act, within ten (10) business days after such tender or exchange offer is first
published sent or given, a statement disclosing that Company recommends
rejection of such tender or exchange offer.
7.2 NOTICE OF TERMINATION; EFFECT OF TERMINATION. Any termination of
this Agreement under Section 7.1 above will be effective immediately upon (or,
if the termination is pursuant to Section 7.1(e) or Section 7.1(f) and the
proviso therein is applicable, thirty (30) days after) the delivery of written
notice of the terminating party to the other parties hereto. In the event of the
termination of this Agreement as provided in Section 7.1, this Agreement shall
be of no further force or effect and the Merger shall be abandoned, except (i)
as set forth in this Section 7.2, Section 7.3 and Article 8 (General
Provisions), each of which shall survive the termination of this Agreement, and
(ii) nothing herein shall relieve any party from liability for any intentional
or
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willful breach of this Agreement. No termination of this Agreement shall affect
the obligations of the parties contained in the Confidentiality Agreement, all
of which obligations shall survive termination of this Agreement and the
abandonment of the Merger in accordance with their terms.
7.3 FEES AND EXPENSES.
(a) GENERAL. Except as set forth in this Section 7.3, all fees
and expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses whether
or not the Merger is consummated; provided, however, that Parent and Company
shall share equally all fees and expenses, other than attorneys' and accountants
fees and expenses, incurred in relation to the printing and filing (with the
SEC) of the Proxy Statement/Prospectus (including any preliminary materials
related thereto) and the S-4 (including financial statements and exhibits) and
any amendments or supplements thereto.
(b) COMPANY PAYMENTS.
(i) Company shall pay to Parent $7,000,000 (the
"Termination Fee") in immediately available funds (A) within one (1) business
day after demand by Parent following termination of this Agreement if this
Agreement is terminated by Parent pursuant to Section 7.1(g) or (B) if this
Agreement is terminated by Parent pursuant to Section 7.1(h), upon the earlier
of (x) 10 days after demand by Parent following termination of this Agreement
and (y) the consummation of an Acquisition Transaction with another party or the
entering into of an agreement providing for the consummation of an Acquisition
Proposal with another party.
(ii) Company shall pay to Parent in immediately available
funds, within one (1) business day after termination of this Agreement, an
amount equal to all out-of-pocket expenses and fees incurred by Parent arising
out of, or in connection with or related to, the transactions contemplated by
this Agreement, including, without limitation, all fees and expenses of agents,
counsel, commercial banks, investment banking firms, accountants, experts and
consultants to Parent and its affiliates if this Agreement is terminated by
Parent pursuant to Section 7.1(f).
(iii) Company shall pay Parent in immediately available
funds, within one (1) business day after demand by Parent following the
consummation of an Acquisition Transaction with another party or the entering
into of an agreement providing for the consummation of an Acquisition Proposal
with another party, an amount equal to the Termination Fee, if (A) this
Agreement is terminated by Parent or Company, as applicable, pursuant to Section
7.1(b) or (d) and (B)(1) within 18 months of termination of this Agreement,
Company shall enter into an agreement for an Acquisition Transaction or shall
consummate an Acquisition Transaction; (2) prior to termination of this
Agreement pursuant to Section 7.1(b), an Acquisition Proposal shall have been
made known to Company or to Company stockholders generally or any person shall
have publicly announced an intention (whether or not conditional and whether or
not such Acquisition Proposal shall have been rejected or shall have been
withdrawn or terminated prior to the Company Stockholders' Meeting or any
termination of this Agreement) to make an Acquisition Proposal or (3) in the
case of termination pursuant to Section
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7.1(d), prior to or during the Company Stockholders' Meeting (or any subsequent
meeting of the Company stockholders at which it is proposed that the Merger be
approved), an Acquisition Proposal shall have been made directly to the Company
stockholders generally or any person shall have publicly announced an intention
(whether or not conditional and whether or not such Acquisition Proposal shall
have been rejected or shall have been withdrawn or terminated prior to the
Company Stockholders' Meeting or any termination of this Agreement) to make an
Acquisition Proposal.
(iv) Company acknowledges that the agreements contained
in this Section 7.3(b) are an integral part of the transactions contemplated by
this Agreement and that, without these agreements, Parent would not enter into
this Agreement; accordingly, if Company fails to pay in a timely manner the
amounts due pursuant to this Section 7.3(b) and, in order to obtain such
payment, Parent makes a claim that results in a judgment against Company for the
amounts set forth in this Section 7.3(b), Company shall pay to Parent its
reasonable costs and expenses (including reasonable attorneys' fees and
expenses) in connection with such suit, together with interest on the amounts
set forth in this Section 7.3(b) at the prime rate of The Chase Manhattan Bank
in effect on the date such payment was required to be made. Subject to Section
8.7, payment of the fees described in this Section 7.3(b) shall be in lieu of
damages incurred in the event of breach of this Agreement other than a material
and willful breach.
7.4 AMENDMENT. This Agreement may be amended by the parties hereto at
any time (whether before or after adoption of this Agreement by the stockholders
of Company or Merger Sub) by execution of an instrument in writing signed on
behalf of each of Parent and Company; provided, however, this Agreement may not
be amended after any such approval in a manner which by law requires further
approval of such stockholders without such further approval.
7.5 EXTENSION; WAIVER. At any time prior to the Effective Time, any
party hereto may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties made to such
party contained herein or in any document delivered pursuant hereto and (iii)
waive compliance with any of the agreements or conditions for the benefit of
such party contained herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party. Delay in exercising any right under this
Agreement shall not constitute a waiver of such right.
ARTICLE VIII
GENERAL PROVISIONS
8.1 NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations
and warranties of Company, Parent and Merger Sub contained in this Agreement
shall terminate at the Effective Time, and only the covenants that by their
terms survive the Effective Time shall survive the Effective Time.
8.2 NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally or by commercial
delivery service, or sent via
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telecopy (receipt confirmed) to the parties at the following addresses or
telecopy numbers (or at such other address or telecopy numbers for a party as
shall be specified by like notice):
(a) if to Parent or Merger Sub, to:
Xxxx.xxx, Inc.
00 Xxxxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxxx
Telephone No.: (000) 000-0000 (x205)
Telecopy No.: (000) 000-0000
with a copy at the same address to:
Xxxxx X. Xxxxxxxx, Esq.
Telephone No.: (000) 000-0000 (x382)
Telecopy No.: (000) 000-0000
and with a copy to:
Winthrop, Stimson, Xxxxxx & Xxxxxxx
Xxx Xxxxxxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attn: Xxxxxx X. Xxxxxxx, Xx., Esq.
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
(b) if to Company, to:
NetMoves Corporation
000 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxx
Telephone No.: (000) 000-0000 (x2223)
Telecopy No.: (000) 000-0000
with a copy to:
Xxxxxxx, Phleger & Xxxxxxxx, LLP
000 Xxxxxxxxxxx Xxxx.
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Xxxxx 000
Xxxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxxx, Esq.
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
and
Xxxxxxx, Xxxxxxx & Xxxxxxxx, LLP
Two Embarcadero Place, 0000 Xxxx Xxxx
Xxxx Xxxx, XX 00000
Attention: Xxx X. Xxxxxx, Esq.
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
8.3 INTERPRETATION.
(a) When a reference is made in this Agreement to Exhibits,
such reference shall be to an Exhibit to this Agreement unless otherwise
indicated. When a reference is made in this Agreement to Sections, such
reference shall be to a Section of this Agreement. Unless otherwise indicated
the words "include," "includes" and "including" when used herein shall be deemed
in each case to be followed by the words "without limitation." The table of
contents and headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. When reference is made herein to "the business of" an entity, such
reference shall be deemed to include the business of all direct and indirect
Subsidiaries of such entity. Reference to the Subsidiaries of an entity shall be
deemed to include all direct and indirect Subsidiaries of such entity.
(b) For purposes of this Agreement, the term "Material Adverse
Effect" when used in connection with an entity means any change, event,
violation, inaccuracy, circumstance or effect, individually or when aggregated
with other changes, events, violations, inaccuracies, circumstances or effects,
that is materially adverse to the business, assets (including intangible
assets), revenues, financial condition or results of operations of such entity
and its Subsidiaries, if any, taken as a whole (it being understood that neither
of the following alone or in combination shall be deemed, in and of itself, to
constitute a Material Adverse Effect: (a) a change in the market price or
trading volume of Parent Common Stock or Company Common Stock, (b) changes
attributable to the public announcement or pendency of the transactions
contemplated hereby, (c) changes in general national or regional economic
conditions or (d) changes affecting the industry generally in which Company or
Parent operates).
(c) For purposes of this Agreement, the term "Person" shall
mean any individual, corporation (including any non-profit corporation), general
partnership, limited partnership, limited liability partnership, joint venture,
estate, trust, company (including any
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limited liability company or joint stock company), firm or other enterprise,
association, organization, entity or Governmental Entity.
(d) For purposes of this Agreement, the term "Subsidiary"
means with respect to Company, the Surviving Corporation, Parent or any other
person, any corporation, partnership, joint venture, limited liability company
or other legal entity of which (i) Company, the Surviving Corporation, Parent or
such other person, as the case may be, (either alone or through or together with
any other subsidiary) owns, directly or indirectly, more than 25% of the stock
or other equity interests the holders of which are generally entitled to vote
for the election of the board of directors or other governing body of such
corporation or other legal entity or (ii) which constitutes a "Significant
Subsidiary" of such entity within the meaning of Rule 12b-2 of the Exchange Act.
8.4 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party, it being understood that all
parties need not sign the same counterpart.
8.5 ENTIRE AGREEMENT; THIRD PARTY BENEFICIARIES. This Agreement and the
documents and instruments and other agreements among the parties hereto as
contemplated by or referred to herein, including the Company Disclosure Schedule
and the Parent Disclosure Schedule (a) constitute the entire agreement among the
parties with respect to the subject matter hereof and supersede all prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter hereof, it being understood that the
Confidentiality Agreement shall continue in full force and effect until the
Closing and shall survive any termination of this Agreement; and (b) are not
intended to confer upon any other person any rights or remedies hereunder,
except as specifically provided in Section 5.9.
8.6 SEVERABILITY. In the event that any provision of this Agreement, or
the application thereof, becomes or is declared by a court of competent
jurisdiction to be illegal, void or unenforceable, the remainder of this
Agreement will continue in full force and effect and the application of such
provision to other persons or circumstances will be interpreted so as reasonably
to effect the intent of the parties hereto. The parties further agree to replace
such void or unenforceable provision of this Agreement with a valid and
enforceable provision that will achieve, to the extent possible, the economic,
business and other purposes of such void or unenforceable provision.
8.7 OTHER REMEDIES; SPECIFIC PERFORMANCE. Except as otherwise provided
herein, any and all remedies herein expressly conferred upon a party will be
deemed cumulative with and not exclusive of any other remedy conferred hereby,
or by law or equity upon such party, and the exercise by a party of any one
remedy will not preclude the exercise of any other remedy. The parties hereto
agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to seek an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
hereof in any court of the United States or any state having jurisdiction, this
being in addition to any other remedy to which they are entitled at law or in
equity.
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8.8 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, REGARDLESS OF THE LAWS THAT
MIGHT OTHERWISE GOVERN UNDER APPLICABLE PRINCIPLES OF CONFLICTS OF LAW THEREOF.
8.9 RULES OF CONSTRUCTION. The parties hereto agree that they have been
represented by counsel during the negotiation and execution of this Agreement
and, therefore, waive the application of any law, regulation, holding or rule of
construction providing that ambiguities in an agreement or other document will
be construed against the party drafting such agreement or document.
8.10 ASSIGNMENT. No party may assign either this Agreement or any of
its rights, interests, or obligations hereunder without the prior written
approval of the other parties, except that Merger Sub may assign, in its sole
discretion, any or all of its rights, interests and obligations hereunder to
Parent or to any direct or indirect wholly-owned subsidiary of Parent. Subject
to the first sentence of this Section 8.10, this Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
8.11 WAIVER OF JURY TRIAL. EACH OF PARENT, COMPANY AND MERGER SUB
HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING
OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE ACTIONS OF PARENT, COMPANY OR MERGER SUB IN
THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT HEREOF.
*****
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized respective officers as of the date first
written above.
XXXX.XXX, INC.
By: /s/ XXXXXX XXXXXX
---------------------------------------------
Name: Xxxxxx Xxxxxx
Title: Chairman and Chief Executive Officer
MAST ACQUISITION CORP.
By: /s/ XXXXXX XXXXXX
---------------------------------------------
Name: Xxxxxx Xxxxxx
Title: Chairman and Chief Executive Officer
NETMOVES CORPORATION
By: /s/ XXXXXX X. XXXXXXXX
---------------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Chairman, President & CEO
48
