Exhibit 99(d)(1)
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AGREEMENT AND PLAN OF MERGER
AMONG
ROCKET SOFTWARE, INC.,
ROCKET ACQUISITION SUB, INC.
AND
TCSI CORPORATION
DATED NOVEMBER 12, 2002
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AGREEMENT AND PLAN OF MERGER
TABLE OF CONTENTS
PAGE
ARTICLE I THE OFFER......................................................................................1
Section 1.1 The Offer..............................................................................1
Section 1.2 Company Action.........................................................................3
Section 1.3 SEC Actions............................................................................4
Section 1.4 Directors..............................................................................6
ARTICLE II THE MERGER....................................................................................7
Section 2.1 The Merger.............................................................................7
Section 2.2 Effective Time; Closing................................................................8
Section 2.3 Effect of the Merger...................................................................8
Section 2.4 Conversion of Company Common Stock.....................................................8
Section 2.5 Dissenting Shares.....................................................................10
Section 2.6 Stock Option Plans....................................................................10
Section 2.7 Company Warrant.......................................................................10
Section 2.8 Surrender of Shares of Company Common Stock; Stock Transfer Books.....................11
Section 2.9 Subsequent Actions....................................................................13
Section 2.10 Stockholders' Meeting.................................................................14
ARTICLE III THE SURVIVING CORPORATION...................................................................16
Section 3.1 Articles of Incorporation.............................................................16
Section 3.2 Bylaws................................................................................16
Section 3.3 Directors and Officers................................................................16
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY................................................16
Section 4.1 Organization and Standing.............................................................17
Section 4.2 Capitalization........................................................................17
Section 4.3 Authority for Agreement...............................................................18
Section 4.4 No Conflict...........................................................................19
Section 4.5 Required Filings and Consents.........................................................20
Section 4.6 Compliance............................................................................20
Section 4.7 SEC Filings, Financial Statements.....................................................21
Section 4.8 Absence of Certain Changes or Events..................................................22
Section 4.9 Taxes.................................................................................22
Section 4.10 Assets................................................................................23
Section 4.11 Change of Control Agreements..........................................................24
Section 4.12 Litigation............................................................................24
Section 4.13 Contracts and Commitments.............................................................25
Section 4.14 Employee Benefit Plans................................................................26
Section 4.15 Labor and Employment Matters..........................................................28
Section 4.16 Environmental Compliance and Disclosure...............................................30
Section 4.17 Intellectual Property Rights..........................................................31
Section 4.18 Third Party Fees......................................................................31
Section 4.19 Rights Agreement......................................................................32
Section 4.20 Customers.............................................................................32
Section 4.21 Related Party Transactions............................................................32
Section 4.22 Insurance.............................................................................33
Section 4.23 Certain State Statutes Inapplicable...................................................33
Section 4.24 Vote Required.........................................................................33
Section 4.25 California Corporations Code..........................................................33
Section 4.26 Disclosure............................................................................33
ARTICLE V REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB..............................................34
Section 5.1 Organization and Standing.............................................................34
Section 5.2 Sub...................................................................................34
Section 5.3 Authority for Agreement...............................................................34
Section 5.4 No Conflict...........................................................................35
Section 5.5 Required Filings and Consents.........................................................35
Section 5.6 Brokers...............................................................................35
Section 5.7 Financing.............................................................................35
ARTICLE VI COVENANTS....................................................................................36
Section 6.1 Conduct of the Business Pending the Merger............................................36
Section 6.2 Access to Information; Confidentiality................................................38
Section 6.3 Notification of Certain Matters.......................................................39
Section 6.4 Reasonable Efforts; Further Assurances; Cooperation...................................39
Section 6.5 Board Recommendations.................................................................40
Section 6.6 Indemnification.......................................................................42
Section 6.7 Public Announcements..................................................................43
Section 6.8 Competing Acquisition Proposals.......................................................43
Section 6.9 Undertakings of Parent................................................................44
Section 6.10 Director Resignations.................................................................44
Section 6.11 Employee Benefits.....................................................................44
Section 6.12 Rights Agreement......................................................................46
Section 6.13 Conveyance Taxes......................................................................46
ARTICLE VII CONDITIONS..................................................................................46
Section 7.1 Conditions to the Obligation of Each Party............................................46
Section 7.2 Conditions to Obligations of Parent and Sub to Effect the Merger......................47
Section 7.3 Conditions to Obligations of the Company to Effect the Merger.........................48
ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER..........................................................49
Section 8.1 Termination...........................................................................49
Section 8.2 Effect of Termination.................................................................51
Section 8.3 Amendments............................................................................51
Section 8.4 Waiver................................................................................52
ARTICLE IX GENERAL PROVISIONS...........................................................................52
Section 9.1 No Third Party Beneficiaries..........................................................52
Section 9.2 Entire Agreement......................................................................52
Section 9.3 Succession and Assignment.............................................................52
Section 9.4 Counterparts..........................................................................53
Section 9.5 Headings..............................................................................53
Section 9.6 Governing Law.........................................................................53
Section 9.7 Severability..........................................................................53
Section 9.8 Specific Performance..................................................................53
Section 9.9 Construction..........................................................................53
Section 9.10 Non-Survival of Representations and Warranties and Agreements.........................54
Section 9.11 Certain Definitions...................................................................54
Section 9.12 Fees and Expenses.....................................................................55
Section 9.13 Notices...............................................................................55
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "AGREEMENT") dated November 12,
2002 by and among Rocket Software, Inc., a Massachusetts corporation ("PARENT"),
Rocket Acquisition Sub, Inc., a Nevada corporation ("Sub") and wholly owned
subsidiary of Parent, and TCSI Corporation, a Nevada corporation (the
"COMPANY").
WITNESSETH:
WHEREAS, the parties to this Agreement desire to effect the acquisition of
the Company by Parent pursuant to a tender offer (the "OFFER") by Sub for any
and all of the issued and outstanding shares (the "Shares") of the Common Stock,
par value $0.10 per share, of the Company ("COMPANY COMMON STOCK") followed by a
merger (the "MERGER") of Sub with and into the Company with the Company as the
surviving corporation in accordance with the Nevada General Corporation Law (the
"NGCL"), upon the terms and subject to the conditions in this Agreement;
WHEREAS, the Board of Directors of Parent and Sub have each unanimously
approved this Agreement and the Merger, upon the terms and subject to the
conditions set forth herein; and
WHEREAS, the Board of Directors of the Company has determined that this
Agreement, the Merger and the transactions contemplated hereby are fair to and
in the best interests of the holders of the Company Common Stock (the "COMPANY
STOCKHOLDERS") and has adopted, and has resolved to recommend that the Company
Stockholders accept the offer and approve, this Agreement, the Merger and the
transactions contemplated hereby to which the Company is a party.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements contained in this
Agreement and intending to be legally bound hereby, the parties hereto agree as
follows:
ARTICLE I
THE OFFER
Section 1.1 The Offer.
(a) OFFER. Provided that this Agreement shall not have been terminated
in accordance with SECTION 8.1 hereof and that none of the events or
circumstances set forth in ANNEX I shall have occurred or exist, Parent
shall cause Sub, as promptly as reasonably practicable after the date
hereof, but in any event no later than five business days following the
date hereof, to commence (within the meaning of Rule 14d-2 under the
Exchange Act) the Offer, at a price of $0.52 per share, net to the seller
in cash, without interest (or at such higher price as Sub
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elects to offer) (the "OFFER PRICE"), but subject to any withholding
required by law. The obligation of Parent and Sub to accept and pay for
Shares tendered shall be subject only to (i) the condition that there shall
be validly tendered prior to the expiration date of the Offer and not
withdrawn a number of Shares which, when added to the shares of Company
Common Stock owned by Parent, represent at least 90% of the Shares issued
and outstanding on a fully diluted basis (the "MINIMUM CONDITION") and (ii)
to the other conditions set forth in ANNEX I (collectively, the "OFFER
CONDITIONS"). Parent and Sub expressly reserve the right to waive any of
the Offer Conditions (except that Parent and Sub may not waive the Minimum
Condition except with the consent of the Company or as and to the extent
provided in this Agreement), to increase the price per share payable in the
Offer and to make any other change or changes in the terms or conditions of
the Offer, including, without limitation, extending the expiration date,
except that, without the consent of the Company, Parent and Sub shall not
(i) reduce the number of Shares subject to the Offer, (ii) reduce the Offer
Price, (iii) impose any other conditions to the Offer other than the Offer
Conditions or modify the Offer Conditions (other than to waive any Offer
Conditions to the extent permitted by this Agreement), (iv) except as
provided in SECTION 1.1(b), extend the Offer, (v) change the form of
consideration payable in the Offer or (vi) amend any other term of the
Offer in a manner adverse to the holders of Company Common Stock.
(b) EXTENSION. Subject to the terms and conditions hereof, the Offer
shall expire at midnight, San Francisco time, on the date twenty business
days (as defined under the Exchange Act) after the date the Offer is
commenced, PROVIDED, that Sub may, without the consent of the Company or
any other person, extend the Offer, if at the scheduled or extended
expiration date of the Offer any of the Offer Conditions shall not be
satisfied or waived, until such time as such conditions are satisfied or
waived, or for any period that may be required by any rule, regulation,
interpretation or position of the Securities and Exchange Commission (the
"SEC") applicable to the Offer, subject in each case to any right the
Company may have to terminate this Agreement pursuant to SECTION 8.1. If,
at any scheduled expiration date of the Offer, the Minimum Condition shall
not have been satisfied or the conditions set forth in paragraph 2(e) or
2(f) of ANNEX I shall occur or exist, but at such scheduled expiration date
the conditions set forth in paragraph 2(a), 2(b), 2(c), 2(d), or 2(g) of
ANNEX I shall not have occurred or existed then at the request of the
Company, Sub shall extend the Offer from time to time, subject to any right
of Parent, Sub or the Company to terminate this Agreement pursuant to the
terms hereof.
(c) WAIVER OF MINIMUM CONDITION. Notwithstanding any other provision
contained herein, including, without limitation, SECTION 1.1(a) and (b),
and subject in each case to any right Sub or Parent may have to terminate
this Agreement pursuant to SECTION 8.1, in the event the Minimum Condition
is not satisfied on any scheduled expiration date of the Offer, Sub shall,
and Parent shall cause Sub to, at the direction of the Company, either (x)
extend the Offer pursuant to SECTION 1.1(b) or (y) amend the Offer to
provide that, in the event (i) the Minimum Condition is not satisfied at
the next scheduled expiration date of the
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Offer (after giving effect to the issuance of any shares of Company Common
Stock theretofore acquired by Parent or Sub) and (ii) the number of shares
of Company Common Stock tendered pursuant to the Offer and not withdrawn as
of such next scheduled expiration date is more than 50% of the then
outstanding shares of Company Common Stock, Sub shall waive the Minimum
Condition and amend the Offer to reduce the number of shares of Company
Common Stock subject to the Offer to 50.1% of the shares of Company Common
Stock then outstanding (the "REVISED MINIMUM NUMBER") and purchase, on a
pro rata basis, the Revised Minimum Number of shares (it being understood
that Sub shall not in any event be required to accept for payment, or pay
for, any shares of Company Common Stock if less than the Revised Minimum
Number of shares are tendered pursuant to the Offer and not withdrawn at
the expiration date).
(d) ACCEPTANCE AND PAYMENT. Sub shall, on the terms and subject to the
prior satisfaction or waiver of the conditions of the Offer, accept for
payment shares of Company Common Stock validly tendered as soon as
practicable (and in any event within five Business Days) after such
satisfaction or waiver of all conditions of the Offer, and pay for accepted
shares of Company Common Stock as promptly thereafter as reasonably
practicable, and in any event in compliance with Rule 14e-1(c) under the
Exchange Act. Parent shall provide, or cause to be provided to Sub on a
timely basis the funds necessary to pay for any shares of Company Common
Stock Sub accepts or becomes obligated to accept for payment.
Section 1.2 COMPANY ACTION.
(a) APPROVAL. The Company hereby approves and consents to the Offer.
(b) STOCKHOLDER LISTS; OTHER ASSISTANCE. The Company will promptly, and
in any event within three (3) Business Days after the execution of this
Agreement, instruct its transfer agent to furnish Sub with a list of its
stockholders, mailing labels and any available listing or computer file
containing the names and addresses of all record holders of outstanding
shares of Company Common Stock and lists of securities positions of
outstanding shares of Company Common Stock held in stock depositories, and
to provide to Sub such additional information (including, without
limitation, updated lists of stockholders, mailing labels and lists of
securities positions) and such other assistance as Parent or Sub or any of
their respective agents may reasonably request in connection with the Offer
and Merger. Subject to the requirements of applicable Law, and except for
such steps as are necessary to disseminate the Offer Documents and any
other documents necessary to consummate the Merger, Parent and Sub shall,
and shall cause their agents to, hold in confidence the information
contained in any such labels, listings and files, use such information only
in connection with the Offer and the Merger and, if this Agreement shall be
terminated, upon request, destroy or deliver to the Company all copies of
such information then in their possession or control.
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Section 1.3 SEC ACTIONS.
(a) SCHEDULE TO. On the date of commencement of the Offer, Parent and
Sub shall file with the SEC a Tender Offer Statement on Schedule TO with
respect to the Offer (including all supplements and amendments thereto, the
"SCHEDULE TO"), which shall contain an offer to purchase, a related letter
of transmittal and summary advertisement (such Schedule TO and all other
documents required to be filed by Parent and Sub with the SEC in connection
with the Offer and the Merger, are collectively referred to as the "OFFER
DOCUMENTS").
(b) SCHEDULE 14D-9. On or as soon as practicable after the date the
Offer Documents are filed with the SEC, the Company shall file with the SEC
a Solicitation/Recommendation Statement on Schedule 14D-9 (including all
supplements and amendments thereto, the "SCHEDULE 14D-9"). The Schedule
14D-9 shall (unless the Board of Directors of the Company, after
consultation with its independent legal counsel, determines in good faith
that such action would be inconsistent with its fiduciary duties to Company
Stockholders under applicable Law) contain the recommendation of the Board
of Directors of the Company that the Company Stockholders accept the Offer
and tender their shares of Company Common Stock (the "COMPANY BOARD
RECOMMENDATION").
(c) ACTION BY PARTIES.
(i) Parent and Sub will take all steps necessary to ensure that
the Offer Documents, and the Company will take all steps
necessary to ensure that the Schedule 14D-9 and all other
documents required to be filed by the Company with the SEC in
connection with the Offer and the Merger (collectively, the
"COMPANY DISCLOSURE DOCUMENTS"), comply or complies in all
material respects with the provisions of applicable federal
securities laws and, on the date filed with the SEC and on
the date first published, sent or given to the Company
Stockholders, shall not 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 were made, not misleading, PROVIDED, that Parent and Sub
make no representation with respect to information furnished
by the Company for inclusion in the Offer Documents and that
the Company makes no representation with respect to
information furnished by Parent or Sub for inclusion in the
Company Disclosure Documents.
(ii) The Company shall ensure that the information with respect to
the Company that the Company furnishes to Parent in
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writing specifically for inclusion in the Offer Documents
will not, at the time of the filing of the Offer Documents,
at the time of any distribution thereof and at the time of
the consummation of the Offer, contain any untrue statement
of a material fact or omit to state any material fact
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
Parent and Sub shall ensure that the information with respect
to Parent and Sub that (X) Parent or Sub furnishes to the
Company in writing specifically for inclusion in the Company
Disclosure Documents, (Y) is incorporated in the Company
Disclosure Documents by reference to any of the Offer
Documents (other than any information set forth in any of the
Offer Documents that is furnished by the Company for
inclusion therein), or (Z) is set forth in the Schedule TO
(other than any information set forth in the Schedule TO that
is furnished by the Company for inclusion therein), will not,
at the time of the filing of the Offer Documents, at the time
of any distribution thereof and at the time of the
consummation of the Offer, contain any untrue statement of a
material fact or omit to state any material fact necessary to
make the statements therein, in light of the circumstances
under which they were made, not misleading. Each of Parent
and Sub, on the one hand, and the Company, on the other hand,
will promptly correct any information provided by it for use
in the Offer Documents and the Company Disclosure Documents,
as the case may be, if and to the extent that it shall have
become false and misleading in any material respect.
(iii) Each of Parent and Sub will take all steps necessary to
cause the Offer Documents, and the Company will take all
steps necessary to cause the Company Disclosure Documents, in
each case including all amendments thereto, to be filed with
the SEC and to be disseminated to holders of the outstanding
shares of the Company Common Stock as and to the extent
required by applicable federal securities laws.
(iv) Each of the Company, on the one hand, and Parent and Sub on
the other hand, will give the other, and their respective
counsel, the opportunity to review and provide comments with
respect to the Company Disclosure Documents and the Offer
Documents, as the case may be, before they are filed with the
SEC, in each case including all amendments thereto. In
addition, such party will provide the other such parties and
their counsel with any comments, whether
5
written or oral, which it may receive from time to time from
the SEC or its staff with respect to the Company Disclosure
Documents or the Offer Documents promptly after the receipt
of such comments.
Section 1.4 DIRECTORS.
(a) ENTITLEMENT. Effective upon the acceptance by Sub of such number of
shares of Company Common Stock as shall constitute satisfaction of the
Minimum Condition or the Revised Minimum Number, as the case may be, and
subject to compliance with Section 14(f) of the Exchange Act, Sub shall be
entitled, at its option, to designate the number of directors, rounded up
to the next whole number, on the Company Board for the period following
such acceptance (the "POST-ACCEPTANCE BOARD") that equals the product of
(i) the total number of available seats on the Post-Acceptance Board
(giving effect to the election of any additional directors, the resignation
of any existing directors and/or the increase in the Company Board pursuant
to this SECTION 1.4) and (ii) the percentage that the number of shares of
Company Common Stock owned by Sub (including shares of Company Common Stock
accepted for payment) and Parent bears to the total number of shares of
Company Common Stock issued and outstanding. The Company shall take all
action necessary to cause Sub's designees to be elected or appointed to the
Post-Acceptance Board, including, without limitation, increasing the number
of directors and seeking and accepting resignations of incumbent directors.
The Company will use its reasonable best efforts to cause individuals
designated by Sub to constitute the same percentage as such individuals
represent on the Post-Acceptance Board of each committee of such
Post-Acceptance Board (other than any committee of such Post-Acceptance
Board established to take action under this Agreement). Notwithstanding the
foregoing, at all times prior to the Effective Time the Post-Acceptance
Board shall include at least two directors in office as of the date hereof
(any such director remaining in office being a "CONTINUING DIRECTOR"),
PROVIDED, that, (i) if the number of Continuing Directors shall be reduced
below two for any reason whatsoever, the remaining Continuing Directors or
Director shall designate a Person or Persons to fill such vacancy or
vacancies, each of whom shall be deemed to be an Continuing Director for
purposes of this Agreement or (ii) if no Continuing Directors then remain,
the other directors shall designate two Persons to fill such vacancies who
shall not be officers or affiliates of the Company, or Officers or
affiliates of Parent or any of its Subsidiaries, and such Persons shall be
deemed to be Continuing Directors for purposes of this Agreement, and in
the case of either clause (i) or (ii) Sub shall cause such Person or
Persons to be elected to fill such vacancy or vacancies. The provisions of
this SECTION 1.4(a) are in addition to and shall not limit any rights which
Parent or Sub or any of their affiliates may have as a holder or beneficial
owner of shares of Company Common Stock as a matter of law with respect to
the election of directors or otherwise.
(b) COMPANY ACTIONS. To the fullest extent permitted by applicable law,
upon any request by Sub following the acceptance by Sub of such number of
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Shares as shall constitute satisfaction of the Minimum Condition or the
Revised Minimum Number, as the case may be, the Company shall promptly take
all actions required in order to fulfill its obligations under this SECTION
1.4(b), including, without limitation, in the case of satisfaction of the
Minimum Condition, all actions required pursuant to Section 14(f) of the
Exchange Act and Rule 14f-1 promulgated thereunder, which shall include
without limitation filing with the SEC and transmitting to the record
stockholders of the Company such information with respect to the Company
and its officers and directors and Sub's designees as is necessary to
enable Sub's designees to be elected to the Post-Acceptance Board. Parent
or Sub will supply to the Company any information with respect to itself
and such nominees, officers, directors and affiliates required by such
Section 14(f) and Rule 14f-1, and Parent and Sub jointly and severally
represent to the Company that such information will not, at the time of the
filing with the SEC of any document required to be filed pursuant to this
SECTION 1.4(b), contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order
that the statements made therein, in light of the circumstances under which
they were made, are not misleading.
(c) CONCURRENCE OF CONTINUING DIRECTORS. Following the election or
appointment of Sub's designees pursuant to SECTION 1.4(b) and prior to the
Effective Time, Parent and Sub shall not cause the Company to take any
action with respect to any amendment, or waiver of any term or condition,
of this Agreement or the Company's Articles of Incorporation or the Company
Bylaws, any termination of this Agreement by the Company, any extension by
the Company of the time for the performance of any of the obligations or
other acts of Sub or Parent or waiver or assertion of any of the Company's
rights hereunder, and any other consent or action by the Board of Directors
of the Company with respect to this Agreement or the Offer, without the
concurrence of a majority of the Continuing Directors.
ARTICLE II
THE MERGER
Section 2.1 THE MERGER.
Upon the terms and subject to the conditions of this Agreement, and in
accordance with the NGCL, at the Effective Time (as defined in SECTION 2.2), Sub
shall be merged with and into the Company. As a result of the Merger, the
separate corporate existence of Sub shall cease and the Company shall continue
as the surviving corporation following the Merger (the "SURVIVING CORPORATION").
The corporate existence of the Company, with all its purposes, rights,
privileges, franchises, powers and objects, shall continue unaffected and
unimpaired by the Merger and, as the Surviving Corporation, it shall be governed
by the Laws (as defined in SECTION 4.4) of the State of Nevada.
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Section 2.2 EFFECTIVE TIME; CLOSING.
As promptly as practicable (and in any event within three (3) business
days) after the conditions set forth in Article VI hereof are satisfied or
waived (other than those conditions that by their nature are to be satisfied at
the Closing), the parties hereto shall cause the Merger to be consummated by
filing the plan of merger pursuant to Section 92A.200 of the NGCL (the "PLAN OF
MERGER"), with the Secretary of State of the State of Nevada and by making all
other filings or recordings required under the NGCL in connection with the
Merger, in such form as is required by, and executed in accordance with the
relevant provisions of, the NGCL. The Merger shall become effective at such time
as the Plan of Merger is duly filed with the Secretary of State of the State of
Nevada, or at such other time as the parties hereto agree shall be specified in
the Plan of Merger (the date and time the Merger becomes effective, the
"EFFECTIVE TIME"). On the date of such filing, a closing (the "Closing") shall
be held at 1:00 p.m., local time, at the offices of Xxxxxxxx & Xxxxxxxx LLP, 000
Xxxxxx Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000, or at such other time and
location as the parties hereto shall otherwise agree.
Section 2.3 EFFECT OF THE MERGER.
At the Effective Time, the effect of the Merger, shall be as provided in
the Plan of Merger, the applicable provisions of the NGCL and this Agreement.
Without limiting the generality of the foregoing, and subject thereto, at the
Effective Time all the property, rights, privileges, powers and franchises of
the Company and Sub shall vest in the Surviving Corporation, and all debts,
liabilities, obligations, restrictions, disabilities and duties of the Company
and Sub shall become the debts, liabilities, obligations, restrictions,
disabilities and duties of the Surviving Corporation.
Section 2.4 CONVERSION OF COMPANY COMMON STOCK.
(a) At the Effective Time, by virtue of the Merger and without any
action on the part of Parent, Sub, the Company or the holders of any of the
following securities:
(i) Each share of Company Common Stock issued and outstanding
immediately prior to the Effective Time (other than shares
canceled pursuant to SECTION 2.4(a)(ii) and Dissenting
Shares, as defined in SECTION 2.5, if any) shall be canceled
and, subject to SECTION 2.5, shall by virtue of the Merger
and without any action on the part of the holder thereof be
converted automatically into the right to receive an amount
in cash equal to the Offer Price or any higher price paid for
each outstanding share of Company Common Stock in the Offer
payable, without interest, to the holder of such share of
Company Common Stock, upon surrender of the certificate that
formerly evidenced such share of Company Common Stock in the
manner provided in
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SECTION 2.8 (together with amounts payable under SECTION 2.6
and SECTION 2.7, the "MERGER CONSIDERATION"); and
(ii) Each share of Company Common Stock issued and outstanding
immediately prior to the Effective Time that is owned by
Parent or Sub or any of their direct or indirect subsidiaries
and each share of Company Common Stock that is owned by the
Company as treasury stock shall be canceled and retired and
cease to exist and no payment or distribution shall be made
with respect thereto.
(b) At the Effective Time, by virtue of the Merger and without any
action on the part of Sub, the Company or the holders of any of the
following securities, each share of common stock, no par value per share,
of Sub issued and outstanding immediately prior to the Effective Time shall
be converted into and become one validly issued, fully paid and
nonassessable share of common stock, no par value per share, of the
Surviving Corporation and all such shares together shall constitute the
only outstanding shares of capital stock of the Surviving Corporation.
(c) At the Effective Time, all shares of the Company Common Stock
converted pursuant to SECTION 2.4(a)(i) shall no longer be outstanding and
shall automatically be canceled and retired and cease to exist, and each
holder of a certificate ("CERTIFICATE") representing any such shares of
Company Common Stock shall cease to have any rights with respect thereto,
except the right to receive the Merger Consideration in accordance with
SECTION 2.4(a)(i).
(d) If, between the date of this Agreement and the Effective Time, the
outstanding shares of Company Common Stock are changed into a different
number or class of shares by reason of any stock split, division or
subdivision of shares, stock dividend, reverse stock split, consolidation
of shares, reclassification, recapitalization or other similar transaction,
then the Merger Consideration shall be appropriately adjusted to reflect
such change or transaction.
(e) If any shares of Company Common Stock outstanding immediately prior
to the Effective Time are unvested or are subject to a repurchase option,
risk of forfeiture or other condition under any applicable restricted stock
purchase agreement or other agreement with the Company or under which the
Company has any rights, then the Merger Consideration payable with respect
thereto will also be unvested and subject to the same repurchase option,
risk of forfeiture or other condition. The Company shall take all action
that may be necessary to ensure that, from and after the Effective Time,
Parent or the Surviving Corporation is entitled to exercise any such
repurchase option or other right set forth in any such restricted stock
purchase agreement or other agreement.
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Section 2.5 DISSENTING SHARES.
(a) Notwithstanding anything in this Agreement to the contrary, shares
of Company Common Stock that are issued and outstanding immediately prior
to the Effective Time and which are held by Company Stockholders who have
demanded and perfected their demands for appraisal of such shares of
Company Stock in the time and manner provided in Section 92A.380 of the
NGCL and, as of the Effective Time, have neither effectively withdrawn nor
lost their rights to such appraisal and payment under the NGCL (the
"DISSENTING SHARES") shall not be converted as described in SECTION
2.4(a)(i), but shall, by virtue of the Merger, be entitled to only such
rights as are granted by Section 92A.380 of the NGCL; PROVIDED, that if
such holder shall have failed to perfect or shall have effectively
withdrawn or lost his, her or its right to appraisal and payment under the
NGCL, such holder's shares of Company Common Stock shall thereupon be
deemed to have been converted, at the Effective Time, as described in
SECTION 2.4(a)(i), into the right to receive the Merger Consideration set
forth in such provisions, without any interest thereon.
(b) The Company shall give Parent prompt notice of any demands for
appraisal pursuant to Section 92A.380 of the NGCL received by the Company,
withdrawals of such demands, and any other instruments served pursuant to
the NGCL and received by the Company and (ii) the opportunity to
participate in all negotiations and proceedings with respect to any such
demand, notice or instrument. The Company shall not make any payment or
settlement offer prior to the Effective Time with respect to any such
demand unless Parent shall have consented in writing to such payment or
settlement offer.
Section 2.6 STOCK OPTION PLANS.
As of the Effective Time, each outstanding option (each, a "COMPANY
OPTION"), whether vested or unvested, under the TCSI Corporation 1991 Stock
Incentive Plan, the TCSI Corporation 1994 Directors Stock Option Plan and the
TCSI Corporation 2001 Stock Incentive Plan, each as amended to date (the
"COMPANY STOCK OPTION Plans"), shall be canceled, and in consideration for such
cancellation the holder thereof shall become entitled to receive an amount in
cash (subject to SECTION 2.8(f)) equal to the product of (i) the number of
shares subject to the Company Options, whether vested or unvested, held by such
holder and (ii) the excess, if any, of the Merger Consideration over the per
share exercise price of each such Company Option.
Section 2.7 COMPANY WARRANT.
The Company and Parent shall use commercially reasonable efforts to provide
that the issued and outstanding warrant to purchase shares of Company Common
Stock (the "COMPANY WARRANT") shall be canceled as of the Effective Time in
consideration for the payment to the holder of the Company Warrant of an amount
in cash equal to the product of (a) the number of shares subject to the Company
Warrant held by the holder
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and (b) the excess (if any) of the Merger Consideration per share of Company
Common Stock over the per share exercise price of each such Company Warrant.
Section 2.8 SURRENDER OF SHARES OF COMPANY COMMON STOCK; STOCK TRANSFER
BOOKS.
(a) Prior to the Effective Time, Parent shall designate a bank or trust
company reasonably acceptable to the Company to act as agent (the "PAYING
AGENT") for the holders of shares of Company Common Stock to receive the
funds necessary to make the payments to such holders provided for in
SECTION 2.4 upon surrender of their Certificates and for the holders of
Company Options and the Company Warrant to receive the payments provided
for in SECTION 2.6 and SECTION 2.7 upon surrender and cancellation of the
Company Options and the Company Warrant. Parent will, on or prior to the
Effective Time, deposit with the Paying Agent the Merger Consideration to
be paid in respect of the shares of Company Common Stock, Company Options
and the Company Warrant (the "FUND"). The Fund shall be invested by the
Paying Agent as directed by Parent; PROVIDED, that such investments shall
be in obligations of, or guaranteed by, the United States of America or any
agency thereof and backed by the full faith and credit of the United States
of America, in commercial paper obligations rated A-1 or P-1 or better by
Xxxxx'x Investor Services, Inc., or Standard and Poor's Corporation,
respectively, or in deposit accounts, certificates of deposit or banker's
acceptances of, or repurchase or reverse repurchase agreements with, or
Eurodollar time deposits purchased from, commercial banks with capital,
surplus and undivided profits aggregating in excess of US$100 million
(based upon the most recent financial statements of such bank which are
then publicly available). Any net profit resulting from, or interest or
income produced by, such investments, shall be placed in the Fund and be
payable to the Surviving Corporation upon demand of non-disbursed funds
pursuant to SECTION 2.8(d) hereof. Parent shall promptly replace any monies
lost through any investment made pursuant to this SECTION 2.8(a), and
Parent shall in any event be liable for the payment of the Merger
Consideration, notwithstanding any losses in the Fund. The Fund shall not
be used for any purpose except as expressly provided in this Agreement. The
Paying Agent shall make the payments provided in SECTION 2.4, SECTION 2.6
and SECTION 2.7.
(b) Promptly after the Effective Time, the Surviving Corporation shall
cause to be mailed to each person who was, at the Effective Time, a holder
of record of shares of Company Common Stock entitled to receive the Merger
Consideration pursuant to SECTION 2.4, a form of letter of transmittal
(which shall specify that delivery shall be effected, and risk of loss and
title to the Certificates shall pass, only upon proper delivery of the
Certificates to the Paying Agent) and instructions for use in effecting the
surrender of the Certificates pursuant to such letter of transmittal. Upon
surrender to the Paying Agent of a Certificate, together with such letter
of transmittal, duly completed and validly executed in accordance with the
instructions thereto, and such other documents as may be reasonably
required pursuant to such instructions, the holder of such Certificate
shall be
11
entitled to receive in exchange therefor the Merger Consideration for each
share of Company Common Stock formerly evidenced by such Certificate, and
such Certificate shall then be canceled. Until so surrendered, each such
Certificate shall, at and after the Effective Time, represent for all
purposes, only the right to receive such Merger Consideration. No interest
shall accrue or be paid to any beneficial owner of shares of Company Common
Stock or any holder of any Certificate with respect to the Merger
Consideration payable upon the surrender of any Certificate. If payment of
the Merger Consideration is to be made to a person other than the person in
whose name the surrendered Certificate is registered on the stock transfer
books of the Company, it shall be a condition of payment that the
Certificate so surrendered shall be endorsed in blank or to the Paying
Agent or otherwise be in proper form for transfer and that the person
requesting such payment shall have paid all transfer and other taxes
required by reason of the payment of the Merger Consideration to a person
other than the registered holder of the Certificate surrendered or shall
have established to the satisfaction of the Surviving Corporation that such
taxes either have been paid or are not applicable. If any Certificate shall
have been lost, stolen or destroyed, upon making of an affidavit of that
fact by the person claiming such Certificate to be lost, stolen or
destroyed and, if required by the Surviving Corporation or Parent, the
posting by such person of a bond, in such reasonable amount as the
Surviving Corporation or Parent may direct, as indemnity against any claim
that may be made against it with respect to such Certificate, the Paying
Agent will issue in exchange for such lost, stolen or destroyed Certificate
the applicable Merger Consideration such holder is entitled to receive
pursuant to SECTION 2.4.
(c) The Parent and the Surviving Corporation shall cause the Paying
Agent to pay the amounts payable to each holder of a Company Option or a
Company Warrant pursuant to SECTION 2.6 or SECTION 2.7 as soon as
reasonably practicable following the Effective Time.
(d) At any time following the sixth month after the Effective Time, the
Surviving Corporation shall be entitled to require the Paying Agent to
deliver to it any portion of the Fund which had been made available to the
Paying Agent and not disbursed to holders of shares of Company Common Stock
(including, without limitation, all interest and other income received by
the Paying Agent in respect of all amounts held in the Fund or other funds
made available to it), and thereafter each such holder shall be entitled to
look only to the Surviving Corporation (subject to abandoned property,
escheat and other similar Laws), and only as general creditors thereof,
with respect to any Merger Consideration that may be payable upon due
surrender of the Certificates held by such holder. If any Certificates
representing shares of Company Common Stock shall not have been surrendered
prior to five years after the Effective Time (or immediately prior to such
date on which the Merger Consideration in respect of such Certificate would
otherwise escheat to or become the property of any Governmental Entity (as
defined in SECTION 4.5)), any such cash, shares, dividends or distributions
payable in respect of such Certificate shall, to the extent permitted by
applicable Law, become the property of the Surviving Corporation, free and
clear of all claims or
12
interest of any person previously entitled thereto. Notwithstanding the
foregoing, none of the Surviving Corporation, Parent or the Paying Agent
shall be liable to any holder of a share of Company Common Stock for any
Merger Consideration delivered in respect of such share of Company Common
Stock to a public official pursuant to any abandoned property, escheat or
other similar Law.
(e) At the Effective Time, the stock transfer books of the Company
shall be closed and thereafter there shall be no further registration of
transfers of shares of Company Common Stock on the records of the Company.
From and after the Effective Time, except for Parent, the holders of shares
of Company Common Stock outstanding immediately prior to the Effective Time
shall cease to have any rights with respect to such shares of Company
Common Stock except as otherwise provided herein or by applicable Law, and
all cash paid pursuant to this ARTICLE II upon the surrender or exchange of
Certificates shall be deemed to have been paid in full satisfaction of all
rights pertaining to the shares of Company Common Stock theretofore
represented by such Certificate.
(f) Parent, Sub, the Surviving Corporation and the Paying Agent, as the
case may be, shall be entitled to deduct and withhold from the Merger
Consideration otherwise payable pursuant to this Agreement to any holder of
shares of Company Common Stock, Company Options or the holder of the
Company Warrant such amounts that Parent, Sub, the Surviving Corporation or
the Paying Agent is required to deduct and withhold with respect to the
making of such payment under the Internal Revenue Code of 1986, as amended
(the "CODE"), the rules and regulations promulgated thereunder or any
provision of state, local or foreign tax Law. To the extent that amounts
are so withheld by Parent, Sub, the Surviving Corporation or the Paying
Agent, such amounts shall be treated for all purposes of this Agreement as
having been paid to the holder of the shares of Company Common Stock,
Company Options and the holder of the Company Warrant in respect of which
such deduction and withholding was made by Parent, Sub, the Surviving
Corporation or the Paying Agent. The Surviving Corporation or Parent shall
promptly pay or cause to be paid any amounts withheld pursuant to this
SECTION 2.8(f) for applicable foreign, federal, state and local taxes to
the appropriate Governmental Entity on behalf of such holders of Company
Common Stock, Company Options or the holder of the Company Warrant.
(g) Except as otherwise provided in this Agreement, the Surviving
Corporation shall pay all charges and expenses including those of the
Paying Agent, in connection with the exchange of cash for shares of Company
Common Stock.
Section 2.9 SUBSEQUENT ACTIONS.
If, at any time after the Effective Time, the Surviving Corporation
shall consider or be advised that any deeds, bills of sale, assignments,
assurances or any other actions or things are necessary or desirable to
vest, perfect or confirm of record or otherwise in the
13
Surviving Corporation its right, title or interest in, to or under any of
the rights, properties or assets of either Sub or the Company acquired or
to be acquired by the Surviving Corporation as a result of, or in
connection with, the Merger or otherwise to carry out this Agreement and
the Merger, the officers and directors of the Surviving Corporation are
hereby authorized to execute and deliver, in the name and on behalf of each
of Sub or the Company or otherwise, all such deeds, bills of sale,
assignments and assurances and to take and do, in the name and on behalf of
each of Sub or the Company or otherwise, all such other actions and things
as may be necessary or desirable to vest, perfect or confirm any and all
right, title and interest in, to and under such rights, properties or
assets in the Surviving Corporation or otherwise to carry out this
Agreement and the Merger.
Section 2.10 STOCKHOLDERS' MEETING.
(a) STOCKHOLDER MEETING AND PROXY STATEMENT. Subject to SECTION
2.10(d), if required by applicable Law in order to consummate the Merger,
the Company, acting through the Post-Acceptance Board, shall, in accordance
with applicable Law:
(i) duly call, give notice of, convene and hold a special meeting
of its stockholders (the "STOCKHOLDER MEETING"), as promptly
as practicable following the acceptance for payment of the
shares of Company Common Stock by Sub pursuant to the Offer,
for the purpose of considering and taking action upon the
approval of the Merger and this Agreement;
(ii) prepare and file with the SEC, as promptly as practicable
following the acceptance for payment of the shares of the
Company Common Stock by Sub, a preliminary proxy statement
relating to the Merger and this Agreement, and use its
reasonable best efforts (x) to obtain and furnish the
information required to be included by applicable Law in the
preliminary proxy Statement and, after consultation with
Parent, to respond promptly to any comments made by the SEC
with respect to the proxy statement, and (y) to cause the
proxy statement and any amendment or supplement thereto, to
be mailed to its stockholders, PROVIDED, that the Company (1)
will promptly notify Parent of its receipt of any comments
from the SEC or its staff and of any request by the SEC or
its staff for amendments or supplements of the proxy
statement or for additional information; (2) will promptly
provide Parent with copies of all correspondence between the
Company or any of its representatives, on the one hand, and
the SEC or its staff, on the other hand, with respect to the
proxy statement or the Merger and (3) will not amend or
supplement the proxy statement without first consulting with
Parent and its
14
counsel and (z) to obtain the necessary approvals of the
Merger and this Agreement by its stockholders to the extent
required by the NGCL;
(iii) use its reasonable best efforts to prepare and revise the
proxy statement so that, at the date mailed to Company
Stockholders and at the time of the Stockholder Meeting, the
proxy statement will (x) not contain any untrue statement of
a material fact or omit to state any material fact required
to be stated therein or necessary in order that the
statements made therein, in light of the circumstances under
which they are made, are not misleading (except that the
Company shall not be responsible under this clause (iii) with
respect to statements made therein based on information
supplied by Parent or Sub expressly for inclusion in the
proxy statement) and (y) comply in all material respects with
the provisions of the Exchange Act and the rules and
regulations thereunder; and
(iv) include in the proxy statement (except to the extent that the
or Board of Directors of the Company, after consultation with
its independent legal counsel, determines in good faith that
such action is inconsistent with its fiduciary duties to the
Company Stockholders under applicable Law) the recommendation
of such Board that the Company Stockholders vote in favor of
the approval of the Merger and the adoption of this
Agreement.
(b) PARENT INFORMATION. Parent shall furnish to the Company such
information concerning itself and Sub, for inclusion in the proxy
statement, as may be requested by the Company and required to be included
in the proxy statement. Such information provided by Parent and Sub in
writing expressly for inclusion in the proxy statement will not, at the
date the proxy statement is filed with the SEC, and mailed to the Company
Stockholders and (including any corrections or modifications made by Parent
or Sub to such information) at the time of the Stockholder Meeting, contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order that the statements
made therein, in light of the circumstances under which they were made, are
not misleading.
(c) PARENT VOTE. Parent shall vote or cause to be voted all shares of
the Company Common Stock purchased pursuant to the Offer and all other
shares beneficially owned by Parent or Sub in favor of adoption of the
Merger and the Merger Agreement.
(d) MERGER WITHOUT MEETING OF STOCKHOLDERS. In the event that Parent or
Sub, collectively, shall acquire at least 90% of the issued and outstanding
15
shares of Company Common Stock, the Company, Parent and Sub agree to take
all appropriate and necessary action to cause the Merger to become
effective as soon as practicable after the expiration or termination of the
Offer, without a meeting of the Company Stockholders, in accordance with
Section 92A.180 of the NGCL.
ARTICLE III
THE SURVIVING CORPORATION
Section 3.1 ARTICLES OF INCORPORATION.
The Articles of Incorporation of Sub as in effect immediately prior to the
Effective Time shall be the Articles of Incorporation of the Surviving
Corporation, until, subject to SECTION 6.6(A), the same shall thereafter be
altered, amended or repealed in accordance with applicable Law or such Articles
of Incorporation.
Section 3.2 BYLAWS.
The Bylaws of Sub as in effect immediately prior to the Effective Time
shall be the Bylaws of the Surviving Corporation, until, subject to SECTION
6.6(a), the same shall thereafter be altered, amended or repealed in accordance
with applicable Law, the Articles of Incorporation of the Surviving Corporation
or such Bylaws.
Section 3.3 DIRECTORS AND OFFICERS.
From and after the Effective Time, until the earlier of their resignation
or removal or until their respective successors are duly elected or appointed
and qualified in accordance with applicable Law, (i) the directors of Sub at the
Effective Time shall be the directors of the Surviving Corporation and (ii) the
officers of Sub at the Effective Time shall be the officers of the Surviving
Corporation.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as specifically set forth in the written disclosure letter prepared
by the Company and delivered to Parent and Sub simultaneously with the execution
of this Agreement (the "COMPANY DISCLOSURE LETTER"), the Company represents and
warrants to Parent and Sub that all of the statements contained in this ARTICLE
IV are true and complete as of the date of this Agreement and will be true and
complete as of the Effective Time (except for those representations and
warranties that address matters only as of a particular date or only with
respect to a specific period of time, which need only be true and correct as of
such date or with respect to such period). The headings in the Company
Disclosure Letter correspond to the section numbers contained in the Agreement
to which the disclosures relate. Information disclosed in any numbered or
lettered part of the Company Disclosure Letter shall be deemed to relate to and
to qualify the particular provision set forth in the corresponding numbered or
lettered section of the Agreement.
16
Section 4.1 ORGANIZATION AND STANDING.
Each of the Company and each Subsidiary (as defined in SECTION 4.2(c)) (a)
is a corporation duly organized, validly existing and in good standing under the
Laws of the jurisdiction of its organization, (b) has the necessary corporate
power and authority to own, lease and operate its properties and assets and to
conduct its business as presently conducted and (c) 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 business makes such qualification or licensing
necessary, except, in the case of this clause (c), where the failure to be so
qualified or licensed or be in such good standing is not reasonably likely to
have a Company Material Adverse Effect (as defined in SECTION 9.11(a)). The
Company has delivered to Parent true and complete copies of the Articles of
Incorporation of the Company (including any certificates of designations
attached thereto, the "COMPANY ARTICLES OF INCORPORATION") and bylaws of the
Company (the "COMPANY BYLAWS") and the articles of incorporation and bylaws (or
equivalent organizational documents) of each Subsidiary, each as amended to
date. Such articles of incorporation, bylaws or equivalent organizational
documents are in full force and effect, and neither the Company nor any
Subsidiary is in violation of any provision of its articles of incorporation,
bylaws or equivalent organizational documents.
Section 4.2 CAPITALIZATION.
(a) The authorized capital stock of the Company consists of 75,000,000
shares of Company Common Stock and 5,000,000 shares of Preferred Stock, par
value $0.01 per share (the "PREFERRED STOCK"). As of November 8, 2002, (i)
20,555,248 shares of Company Common Stock are issued and outstanding, all
of which are validly issued, fully paid and nonassessable and free of
preemptive rights, (ii) no shares of Company Common Stock are held in the
treasury of the Company, (iii) 2,052,830 Company Options (as defined in
SECTION 2.6) are outstanding pursuant to the Company Stock Option Plans,
each such option entitling the holder thereof to purchase one share of
Company Common Stock, and 1,600,000 shares of Company Common Stock is
authorized and reserved for future issuance pursuant to the Company Stock
Option Plans, (iv) no shares of Preferred Stock are issued or outstanding,
and (v) the Company Warrant to purchase 25,000 shares of Company Common
Stock are outstanding and 25,000 shares of Company Common Stock are
reserved for future issuance upon exercise of the Company Warrant. Section
4.2(a) of the Company Disclosure Letter sets forth a true and complete list
of the outstanding Company Options and the Company Warrant together with
the exercise prices thereof and the plan pursuant to which they were
issued, if any. Copies of the outstanding Company Options and the Company
Warrant have been delivered to Parent.
(b) Except as set forth in SECTION 4.2(a) of this Agreement or in
Section 4.2(b) of the Company Disclosure Letter, there are no options,
warrants, convertible securities, subscriptions, stock appreciation rights,
phantom stock plans or stock equivalents or other similar rights,
agreements, arrangements or
17
commitments (contingent or otherwise) of any character issued or authorized
by the Company or any Subsidiary relating to the issued or unissued capital
stock of the Company or any Subsidiary, or pursuant to which the Company or
any Subsidiary is bound, that (i) restricts the transfer of any shares of
capital stock of the Company or any Subsidiary, (ii) relates to the voting
of any shares of capital stock of the Company or any Subsidiary or (iii)
obligates the Company or any Subsidiary to issue or sell any shares of
capital stock of, or options, warrants, convertible securities,
subscriptions or other equity interests in, the Company or any Subsidiary.
All shares of Company Stock subject to issuance as aforesaid, upon issuance
on the terms and conditions specified in the instruments pursuant to which
they are issuable, will be duly authorized, validly issued, fully paid and
nonassessable. There are no outstanding contractual obligations of the
Company or any Subsidiary to repurchase, redeem or otherwise acquire any
shares of Company Stock or any capital stock of any Subsidiary or to pay
any dividend or make any other distribution in respect thereof or to
provide funds to, or make any investment (in the form of a loan, capital
contribution or otherwise) in, any person.
(c) Section 4.2(c) of the Company Disclosure Letter sets forth a
correct and complete list of each corporation, association, subsidiary,
partnership, limited liability company or other entity of which the Company
owns of record or beneficially, directly or indirectly, 30% or more of the
outstanding equity interests (each a "SUBSIDIARY" and collectively, the
"SUBSIDIARIES"). The Company owns beneficially and of record all of the
issued and outstanding capital stock of each Subsidiary and does not own an
equity interest in any other corporation, association, partnership, limited
liability company or other entity, other than in the Subsidiaries. Each
outstanding share of capital stock of each Subsidiary is duly authorized,
validly issued, fully paid and nonassessable and each such share owned by
the Company or another Subsidiary is free and clear of all security
interests, liens, claims, pledges, options, rights of first refusal,
agreements, limitations on the Company's or such other Subsidiary's voting
rights, charges and other encumbrances of any nature whatsoever, except for
liens for Taxes accrued but not yet payable.
Section 4.3 AUTHORITY FOR AGREEMENT.
(a) The Company has all necessary corporate power and authority to
execute and deliver this Agreement, to perform its obligations hereunder
and, subject to obtaining stockholder approval as may be necessary, to
consummate the Merger and the other transactions to which the Company is a
party contemplated by this Agreement. The execution, delivery and
performance by the Company of this Agreement, and the consummation by the
Company of the Merger and the other transactions to which the Company is a
party contemplated by this Agreement, have been duly authorized by all
necessary corporate action (including, without limitation, the approval of
the Board of Directors of the Company) and no other corporate proceedings
on the part of the Company are necessary to authorize this Agreement or to
consummate the Merger or the other
18
transactions to which the Company is a party contemplated by this Agreement
(other than, with respect to the Merger, the approval and adoption of this
Agreement and the Merger by the affirmative vote of a majority of the then
outstanding shares of Company Common Stock and the filing and recordation
of appropriate merger documents as required by the NGCL). This Agreement
has been duly executed and delivered by the Company and, assuming the due
authorization, execution and delivery by Parent and Sub, constitutes a
legal, valid and binding obligation of the Company enforceable against the
Company in accordance with its terms, subject to the qualification,
however, that enforcement of the rights and remedies created hereby is
subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general application related to or affecting
creditors' rights and to general equity principles and subject to a court's
discretionary authority with respect to the granting of a decree ordering
specific performance or other equitable remedies. The affirmative vote of a
majority of the outstanding shares of Company Common Stock entitled to vote
at a duly called and held meeting of stockholders is the only vote of the
Company Stockholders necessary to approve this Agreement, the Merger and
the other transactions to which the Company is a party contemplated by this
Agreement.
(b) The Board of Directors of the Company has (i) determined that this
Agreement and the transactions contemplated hereby to which the Company is
a party, including the Merger, are fair to and in the best interests of the
Company and the Company Stockholders, (ii) approved, authorized and adopted
this Agreement, the Merger and the other transactions to which the Company
is a party contemplated hereby and (iii) resolved, subject to the
provisions of this Agreement, to recommend acceptance of the Offer and
approval and adoption of this Agreement and the Merger by the Company
Stockholders. No Nevada or California, and to the Company's knowledge no
other state, anti-takeover or similar statute is applicable to Parent, Sub,
the Company or the Surviving Corporation in connection with the Merger,
this Agreement or any of the transactions to which the Company is a party
contemplated hereby or thereby.
(c) Duff & Xxxxxx, LLC (the "INDEPENDENT ADVISOR") has delivered to the
Board of Directors of the Company its opinion, as of the date of this
Agreement, that, as of such date and based on the assumptions,
qualifications and limitations contained therein, the consideration to be
received by the Company Stockholders in the Merger is fair to the Company
Stockholders from a financial point of view. The Company will provide to
Parent a copy of the written opinion of the Independent Advisor.
Section 4.4 NO CONFLICT.
The execution and delivery of this Agreement by the Company do not, and the
performance of this Agreement by the Company and the consummation of the Merger
and the other transactions to which the Company is a party contemplated by this
Agreement will not, (a) conflict with or violate the Company Articles of
Incorporation or
19
Company Bylaws or equivalent organizational documents of any of its
Subsidiaries, (b) subject to SECTION 4.5, conflict with or violate any United
States federal, state or local or any foreign statute, law, rule, regulation,
ordinance, code, order, judgment, decree or any other requirement or rule of law
(a "LAW") applicable to the Company or any of its Subsidiaries or by which any
property or asset of the Company or any of its Subsidiaries is bound or
affected, except for such conflicts or violations, which individually or in the
aggregate, are not reasonably likely to have a Company Material Adverse Effect,
or (c) result in a breach of or constitute a default (or an event which with
notice or lapse of time or both would become a default) under, give to others
any right of termination, amendment, acceleration or cancellation of, result in
triggering any payment or other obligations, or result in the creation of a lien
or other encumbrance on, or distribution from escrow of, any property or asset
of the Company or any of its Subsidiaries pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation or Material Contract (as defined in SECTION 4.13) to
which the Company or any of its Subsidiaries is a party or by which the Company
or any of its Subsidiaries or any property or asset of any of them is bound or
affected, except for such breaches, defaults, rights creation, or lien or
encumbrance creation, which individually or in the aggregate, are not reasonably
likely to have a Company Material Adverse Effect.
Section 4.5 REQUIRED FILINGS AND CONSENTS.
The execution and delivery of this Agreement by the Company do not, and the
performance of this Agreement by the Company will not, require any consent,
approval, authorization or permit of, or filing with or notification to, any
United States federal, state or local or any foreign government or any court,
administrative or regulatory agency or commission or other governmental entity
or agency, domestic or foreign (a "GOVERNMENTAL ENTITY"), except (a) for
applicable requirements, if any, of the Securities Exchange Act of 1934, as
amended (the "EXCHANGE ACT"), and state securities or "blue sky" laws ("BLUE SKY
LAWS"), (b) for filings contemplated by SECTION 2.1, SECTION 2.2 and SECTION
4.14 hereof and (c) for such consents, approvals, authorizations, permits,
filings or notifications of which the failure to obtain or make, individually or
in the aggregate, is not reasonably likely to have a Company Material Adverse
Effect.
Section 4.6 COMPLIANCE.
Each of the Company and its Subsidiaries (a) except as to the matters set
forth in SECTION 4.7, SECTION 4.9, SECTION 4.14, SECTION 4.15, SECTION 4.16,
SECTION 4.17, SECTION 4.18 and SECTION 4.20 (which are addressed by the specific
representations regarding the subject matters thereof), has been operated at all
times in compliance in all material respects with all Laws applicable to the
Company or any of its Subsidiaries or by which any property, business or asset
of the Company or any of its Subsidiaries is bound or affected and (b) is not in
default or violation of any notes, bonds, mortgages, indentures, contracts,
agreements, leases, licenses, permits, franchises, or other instruments or
obligations or Material Contract to which the Company or any of its Subsidiaries
is a party or by which the Company or any of its Subsidiaries or any property or
asset of the Company or any of its Subsidiaries is bound or affected, except for
instances of
20
noncompliance, defaults or violations which, individually or in the aggregate,
are not reasonably likely to have a Company Material Adverse Effect.
Section 4.7 SEC FILINGS, FINANCIAL STATEMENTS.
(a) The Company and each Subsidiary, as necessary, has filed all forms,
reports, statements and documents required to be filed with the Securities
and Exchange Commission (the "SEC") since March 31, 1999 (collectively,
including all exhibit thereto, the "SEC REPORTS"), each of which has
complied in all material respects with the applicable requirements of the
Securities Act of 1933, as amended (the "SECURITIES ACT"), and the rules
and regulations promulgated thereunder, and the Exchange Act, and the rules
and regulations promulgated thereunder, each as in effect on the date so
filed. None of the SEC Reports as of their filing dates or, if amended, as
of the date of the last such amendment filed prior to the date hereof,
contained any untrue statement of a material fact or omitted to state a
material fact required to be stated or incorporated by reference therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(b) All of the financial statements included in the SEC Reports, in
each case, including any related notes thereto, as filed with the SEC
(collectively referred to as the "COMPANY FINANCIAL STATEMENTS") have been
prepared in accordance with United States generally accepted accounting
principles ("GAAP") applied on a consistent basis throughout the periods
involved (except as noted therein and, in the case of the unaudited
statements, as may be permitted by the applicable rules and regulations
promulgated under the Exchange Act and the Securities Act and subject, in
the case of unaudited statements, to normal year end adjustments) and
fairly present the consolidated financial position of the Company and its
Subsidiaries at the respective dates thereof and the consolidated results
of its operations and changes in cash flows for the periods indicated.
(c) There are no liabilities of the Company or any of its Subsidiaries
of any kind whatsoever, whether or not accrued and whether or not
contingent or absolute, that would be required to be reflected on, or
reserved against in, a consolidated balance sheet of the Company prepared
in accordance with GAAP, and that are material to the Company and its
Subsidiaries, taken as a whole, other than (i) liabilities disclosed or
provided for in the consolidated balance sheet of the Company and its
Subsidiaries at September 30, 2002, including the notes thereto, (ii)
liabilities disclosed in the SEC Reports and (iii) liabilities incurred in
the ordinary course of business consistent with past practice since
September 30, 2002 which, individually or in the aggregate, will not have a
Company Material Adverse Effect (as defined in SECTION 9.11).
(d) The Company has heretofore furnished or made available to Parent a
complete and correct copy of any amendments or modifications which have not
yet been filed with the SEC to agreements, documents or other instruments
which
21
previously had been filed by the Company with the SEC as exhibits to the
SEC Reports pursuant to the Securities Act and the rules and regulations
promulgated thereunder or the Exchange Act and the rules and regulations
promulgated thereunder.
Section 4.8 ABSENCE OF CERTAIN CHANGES OR EVENTS.
Except as contemplated by this Agreement or as set forth in the SEC Reports
filed prior to the date hereof, since September 30, 2002, the Company and its
Subsidiaries have conducted their respective businesses only in the ordinary
course and consistent with prior practice and there has not been (a) any event
or occurrence of any condition that has had or would reasonably be expected to
have, individually or in the aggregate with other events, occurrences or
conditions, a Company Material Adverse Effect, (b) any declaration, setting
aside or payment of any dividend or any other distribution with respect to any
of the capital stock of the Company or any Subsidiary, (c) any material change
in accounting methods, principles or practices employed by the Company, except
as may have been required by change in GAAP or applicable Law or (d) any action
of the type described in SECTION 6.1(b)(i) or SECTION 6.1(c)(iii), (iv),
(vi),(vii) or (viii) which had such action been taken after the date of this
Agreement would be in violation of any such Section.
Section 4.9 TAXES.
The Company and each of its Subsidiaries have timely filed all Tax Returns
(as defined below) required to be filed by any of them. All such Tax Returns are
true, correct and complete in all material respects. All Taxes (as defined
below) of the Company and its Subsidiaries which are (a) shown as due on such
Tax Returns, (b) otherwise due and payable or (c) claimed or asserted by any
taxing authority to be due, have been paid, except for those Taxes being
contested in good faith and for which adequate reserves have been established in
the financial statements included in the SEC Reports in accordance with GAAP.
There are no liens for any Taxes upon the assets of the Company or any of its
Subsidiaries, other than statutory liens for Taxes not yet due and payable and
liens for real estate Taxes contested in good faith. The Company does not know
of any proposed or threatened Tax claims or assessments that, if upheld,
individually or in the aggregate, are reasonably likely to have a Company
Material Adverse Effect. Neither the Company nor any of its Subsidiaries has
waived any statute of limitations in respect of Taxes or agreed to any extension
of time with respect to a Tax assessment or deficiency, which waiver or
extension remains in effect. Neither the Company nor any of its Subsidiaries has
received from a federal, state, local or foreign tax authority any: (i) notice
indicating an intent to open an audit or other review, (ii) request for
information related to any Tax or (iii) notice of deficiency or proposed
adjustment of any Tax. Neither the Company nor any of its Subsidiaries is
currently undergoing any audit with respect to any Tax. The Company and each
Subsidiary has withheld and paid over to the relevant taxing authority all Taxes
required to have been withheld and paid in connection with payments to
employees, independent contractors, creditors, stockholders or other third
parties. The unpaid Taxes of the Company and its Subsidiaries for the current
taxable period (A) did not, as of the most recent Company
22
Financial Statements, exceed the reserve for Tax liability set forth on the face
of the balance sheet in the most recent Company Financial Statements and (B) do
not exceed that reserve as adjusted for the passage of time through the Closing
in accordance with the past custom and practice of the Company and its
Subsidiaries in filing their Tax Returns. Neither the Company nor any Subsidiary
has ever been a member of any consolidated group (other than with the Company
and its Subsidiaries) for Tax purposes. Federal and state income tax returns of
the Company and its Subsidiaries have been examined by the IRS or applicable
state Authority as shown in Section 4.9 of the Company Disclosure Letter.
Neither the Company nor any of its Subsidiaries (i) is a party to any Tax
allocation or sharing agreement or (ii) has any liability or obligation for the
Taxes of any person (other than Company or any of its Subsidiary) under Treas.
Reg. ss.1.1502-6 (or any similar provision of any other applicable Law), as a
transferee or successor, by contract, or otherwise. The 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. Neither the Company nor any of its Subsidiaries
has filed a consent under Section 341(f) of the Code. For purposes of this
Agreement, (i) "TAX" (and, with correlative meaning, "TAXES") means any federal,
state, local or foreign income, gross receipts, property, sales, use, license,
excise, franchise, employment, payroll, premium, withholding, alternative or
added minimum, ad valorem, transfer or excise tax, or any other tax, custom,
duty, governmental fee or other like assessment or charge of any kind
whatsoever, together with any interest or penalty or addition thereto, whether
disputed or not, imposed by any Governmental Entity and (ii) "TAX RETURN" means
any return, report or similar statement required to be filed with respect to any
Tax (including any attached schedules), including, without limitation, any
information return, claim for refund, amended return or declaration of estimated
Tax.
Section 4.9 of the Company Disclosure Letter sets forth with reasonable
specificity: (X) all jurisdictions in which the Company or any Subsidiary
currently has a presence requiring it to pay Taxes measured by income or gross
receipts (a "TAXABLE PRESENCE") and all jurisdictions in which the Company or
any Subsidiary has had a Taxable Presence since January 1, 1998, (Y) all Tax
Returns for Taxes measured by income or gross receipts filed or due to be filed
applicable to the three-year period ending on the date hereof and (Z) all
material correspondence with any Tax authorities (including, without limitation,
all audits, notices and requests for information from or to taxing authorities)
since January 1, 1998.
Section 4.10 ASSETS.
(a) Section 4.10 of the Company Disclosure Letter sets forth a true,
correct and complete list of all real property (i) owned or leased by the
Company or a Subsidiary, (ii) as to which the Company or a Subsidiary has a
written license, easement or right of way to use, (iii) as to which the
Company or a Subsidiary has the option to purchase, lease, license or
acquire an easement or right of way pursuant to a written agreement or (iv)
in which the Company or a Subsidiary has any other interest, except for
such real property interest which the loss of, individually or in the
aggregate, is not reasonably likely to have a Company Material Adverse
Effect. The real property, improvements, equipment
23
and personal property held under lease by any of the Company or a
Subsidiary are held under valid and enforceable leases, with such
exceptions as are not material and do not materially interfere with the use
made or proposed to be made of such real property, improvements, equipment
or personal property by the Company or such Subsidiary, and the Company or
such Subsidiary enjoys peaceful and undisturbed possession under all leases
pursuant to which it holds any real property, improvements, equipment or
personal property.
(b) The buildings, fixtures and equipment of the Company and its
Subsidiaries are in good operating condition and repair (ordinary wear and
tear excepted) and are adequate for the uses to which they are being put.
(c) Each of the Company and its Subsidiaries has good and valid title
to all the properties and assets reflected as owned on the most recent
consolidated balance sheet of Company and its Subsidiaries, taken as a
whole, included in the SEC Reports or purported to have been acquired by
the Company or any of its Subsidiaries since such date (other than
inventory sold, or property, plant and other equipment used up or retired,
since such date, in each case in the ordinary course of business consistent
with past practice of the Company and its Subsidiaries), in each case free
and clear of all liens and other encumbrances.
Section 4.11 CHANGE OF CONTROL AGREEMENTS.
Except as set forth in Section 4.11 of the Company Disclosure Letter,
neither the execution and delivery of this Agreement nor the consummation of the
Merger or the other transactions contemplated by this Agreement will (either
alone or in conjunction with any other event) result in, cause the accelerated
vesting or delivery of, or increase the amount or value of, any payment or
benefit to any director, officer or employee of the Company or any Subsidiary.
Without limiting the generality of the foregoing, no amount paid or payable by
the Company or any Subsidiary in connection with the Merger or the other
transactions contemplated by this Agreement, including accelerated vesting of
options (either solely as a result thereof or as a result of such transactions
in conjunction with any other event) will be an "excess parachute payment"
within the meaning of Section 280G of the Code.
Section 4.12 LITIGATION.
Except as set forth in Section 4.12 of the Company Disclosure Letter, as of
the date hereof, there are no claims, suits, actions, investigations,
indictments or information, or administrative, arbitration or other proceedings
("LITIGATION") pending or, to the knowledge of the Company, threatened against
the Company or any of its Subsidiaries. As of the date hereof, there are no
judgments, orders, injunctions, decrees, stipulations or awards (whether
rendered by a court, administrative agency, or by arbitration, pursuant to a
grievance or other procedure) to which the Company or any of its Subsidiaries is
a party.
24
Section 4.13 CONTRACTS AND COMMITMENTS.
(a) Section 4.13(a) of the Company Disclosure Letter sets forth a true,
correct and complete list of the following contracts to which the Company
or a Subsidiary is a party and which are binding and in effect as of the
date hereof but which are not listed in SCHEDULE 6.2(a): (i) any written
contracts of employment, (ii) agreements or arrangements for the purchase
or sale of any assets (otherwise than in the ordinary course of business or
involving payments of less than $25,000), (iii) all bonds, debentures,
notes, loans, credit or loan agreements or commitments, mortgages,
indentures or guarantees or other agreements or contracts relating to the
borrowing of money, in each case in a principal amount of more than
$250,000, (iv) agreements with unions, (v) independent contractor
agreements and leased or temporary employee agreements involving in each
case aggregate annual payments of more than $50,000, (vi) leases of any
real or personal property involving, in each case, annual rent of $100,000
or more, (vii) agreements with distributors, manufacturers, suppliers and
trade partners, in each case involving aggregate annual payments of more
than $50,000, (viii) all licensing agreements in each case involving
aggregate annual payments of more than $50,000, (ix) any contract or
agreement for the granting or receiving of a license or sublicense or
arrangement (other than agreements or licenses for standard, packaged
software products) under which any person is obligated to pay or has the
right to receive a royalty, license fee or similar payment in each case
involving aggregate annual payments of more than $50,000, (x) all inbound
license agreements for software code or other technology (not otherwise
readily available from other sources) integrated with or otherwise
comprising a part of any Company product or service that generates a
material amount of revenues for the Company and (xi) all other contracts,
agreements or commitments individually involving, in each case, either (A)
aggregate annual payments made by or to the Company or a Subsidiary of
$50,000 or more of (B) a right which, if expired, terminated or otherwise
became unavailable to the Company would be reasonably likely to have a
Company Material Adverse Effect (together with the contracts listed on
SCHEDULE 6.2(a), each individually, a "MATERIAL CONTRACT" and collectively,
"MATERIAL CONTRACTS"). The Company has delivered or, where disclosure is
prohibited by a contractual nondisclosure agreement will deliver in
accordance with SECTION 6.2(a), to Parent true, correct and complete copies
of all Material Contracts.
(b) As of the date hereof, the Material Contracts are legal, valid,
binding and enforceable in accordance with their respective terms with
respect to the Company and to the knowledge of the Company with respect to
each other party to any of such Material Contracts, except, in each case,
to the extent that enforcement of rights and remedies created by any
Material Contracts are subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar Laws of general
application related to or affecting creditors' rights and to general equity
principles. The Material Contracts constitute all of the Material Contracts
used in the conduct of the conduct of the business of the Company and the
Subsidiaries as currently being conducted. Except as set forth in Section
25
4.13(b)(i) of the Company Disclosure Letter, as of the date hereof, there
are no existing material defaults or breaches of the Company under any
Material Contract (or events or conditions which, with notice or lapse of
time or both would constitute a material default or breach) and, to the
knowledge of the Company, there are no such material defaults (or events or
conditions which, with notice or lapse of time or both, would constitute a
material default or breach) with respect to any third party to any Material
Contract. As of the date hereof, the Company has no knowledge of any
pending or threatened bankruptcy, insolvency or similar proceeding with
respect to any party to any of such agreements. Section 4.13(b)(ii) of the
Company Disclosure Letter identifies each Material Contract set forth
therein that requires the consent of or notice to the other party thereto
to avoid any breach, default or violation of such contract, agreement or
other instrument in connection with the transactions contemplated hereby.
Section 4.14 EMPLOYEE BENEFIT PLANS.
All material employee benefit plans, compensation arrangements and
other benefit arrangements maintained by or contributed to by the Company
covering directors, stockholders and employees of the Company or any of its
Subsidiaries (the "COMPANY BENEFIT PLANS") and all employee agreements
providing for compensation, severance or other benefits to any director,
stockholder, employee or former employee of the Company or any of its
Subsidiaries are listed in Section 4.14 of the Company Disclosure Letter.
True, correct and complete copies of the following documents with respect
to each of the Company Benefit Plans have been provided or made available
by the Company to Parent: (a) any plans and related trust documents,
individual, trust and insurance agreements, and amendments thereto, (b)
summary plan descriptions and material modifications thereto, (c) written
communications made since September 30, 2002, to recipients of benefits
relating to the Company Benefit Plans, (d) written descriptions of all
non-written agreements relating to the Company Benefit Plans, (e) the most
recent Form 5500 series annual reports (including all schedules thereto)
filed with respect to the Company Benefits Plans and (f) the two most
recent financial statements, if any, pertaining to each such plan or
arrangement. To the extent applicable, the Company Benefit Plans comply in
all material respects with the requirements of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), and the Code, and any
Company Benefit Plan intended to be qualified under Section 401(a) of the
Code has received a determination letter or is a model prototype plan and
continues to satisfy the requirements for such qualification. Neither the
Company nor any of its Subsidiaries nor any ERISA Affiliate of the Company
maintains, contributes to or has maintained or contributed in the past six
years to any benefit plan which is covered by Title IV of ERISA or Section
412 of the Code. Neither any Company Benefit Plan, nor the Company nor any
Subsidiary has incurred any material liability or penalty under Section
4975 of the Code or Section 502(i) of ERISA or engaged in any transaction
that is reasonably likely to result in any such material liability or
penalty. Each of the Company and its Subsidiaries and any ERISA Affiliate
which maintains a "group health plan" within the meaning of Section
5000(b)(1) of the Code has complied with the notice and continuation
requirements of Section 4980B of the Code, Part 6 of Subtitle B of Title I
of ERISA and the regulations thereunder (COBRA), and the creditable
coverage certification requirements and
26
limitations on pre-existing condition exclusion requirements of Section
9801 of the Code, Part 7 of Subtitle B of Title I of ERISA and the
regulations thereunder (HIPAA). Each Company Benefit Plan has been
maintained and administered in compliance in all material respects with its
terms and with ERISA and the Code to the extent applicable thereto. There
is no pending or, to the knowledge of the Company, threatened or
anticipated Litigation against or otherwise involving any of the Company
Benefit Plans and no Litigation (excluding claims for benefits incurred in
the ordinary course of Company Benefit Plan activities) has been brought
against or with respect to any such Company Benefit Plan. All contributions
required to be made to the Company Benefit Plans have been made or provided
for. Neither the Company nor any of its Subsidiaries maintains or
contributes to any plan or arrangement which provides or has any liability
to provide life insurance or medical or other employee welfare benefits to
any employee or former employee upon his retirement or termination of
employment, and neither the Company nor any of its Subsidiaries has ever
represented, promised or contracted (whether in oral or written form) to
any employee or former employee that such benefits would be provided.
Other than pursuant to the provisions of COBRA or other applicable Law,
no Company Benefit Plans provide benefits described in Section 3(1) of
ERISA to any former employees or retirees of Company or any of its
Subsidiaries. No condition exists that would prevent Company or any of its
Subsidiaries from amending or terminating any Company Benefit Plans
providing health or medical benefits in respect of any active or retired
employee other than limitations imposed by law. The Company is in
compliance in all material respects with COBRA, including all notification
requirements thereunder. Set forth in Section 4.14 of the Company
Disclosure Letter is a list identifying each former employee of Company or
any of its Subsidiaries or other Person who is entitled to receive health
continuation coverage under COBRA at the date hereof, including a brief
description of the coverage and the date at which such right to coverage
shall terminate.
All Company Benefit Plans that are Pension Plans intended to be
qualified under Section 401 of the Code are so qualified and have been so
qualified during the period since their adoption; each trust created under
any such plan is exempt from tax under Section 501(a) of the Code and has
been so exempt since its creation. A true and correct copy of the most
recent determination letter from the Internal Revenue Service regarding
such qualified status for each such plan has been delivered to Parent. No
Company Benefit Plans have incurred an accumulated funding deficiency (as
defined in Section 412 of the Code), whether or not waived. As of the last
applicable annual valuation date on a termination basis, using the
assumptions established by the Pension Benefit Guaranty Corporation as in
effect on such date, no Company Benefit Plans subject to Title IV of ERISA
have accrued benefit obligations which exceed the current fair market value
of the assets of such plan. None of Company and its Subsidiaries nor any
ERISA Affiliate of any of them has incurred, or reasonably expects to incur
prior to the Closing Date, any material liability under Title IV of ERISA,
other than with respect to the payment of premiums to the Pension Benefit
Guaranty Corporation.
Except as set forth in Section 4.14 of the Company Disclosure Letter,
no Company employee will receive or be entitled to, and none of Company or
any of its
27
Subsidiaries shall be liable for, any additional benefits, bonuses, service
or accelerated rights to payment of benefits under any Company Benefit
Plans, including the right to receive any parachute payment, as defined in
Section 280G of the Code, or become entitled to any severance, termination
allowance or similar payments as a result of the transactions contemplated
by this Agreement.
No Prohibited Transaction has occurred with respect to any Company
Benefit Plans or any other employee benefit plan or arrangement maintained
by Company or any of its Subsidiaries or any ERISA Affiliate of Company or
any of its Subsidiaries which is covered by Title I of ERISA which has
resulted in or could result in material liability of any kind to any of
Company and its Subsidiaries, other than any liability to the extent
reflected in the financial statements of Company contained in the SEC
Reports. No Reportable Event for which reporting was required under Title
IV of ERISA, and no event described in Section 4062 or 4063 of ERISA, has
occurred within the last six (6) years. Neither Company or any of its
Subsidiaries nor any of its current or former ERISA Affiliates (while an
ERISA Affiliate) has within the last six (6) years engaged in, or is a
successor or parent corporation to any entity that has engaged in, a
transaction described in Section 4069 of ERISA.
Any individual who performs services for the Company or any of its
Subsidiaries (other than through a contract with an organization other than
such individual) and who is not treated as an employee for federal income
tax purposes by the Company or its Subsidiaries is not an employee for such
purposes. Except as set forth in Section 4.14 of the Company Disclosure
Schedule, there are no agreements in effect between the Company or any
Subsidiary and any individual retained by the Company or any Subsidiary to
provide services as a consultant or independent contractor.
For purposes of this Agreement "ERISA AFFILIATE" means any business or
entity which is a member of the same "controlled group of corporations," an
"affiliated service group" or is under "common control" with an entity
within the meanings of Sections 414(b), (c) or (m) of the Code, is required
to be aggregated with the entity under Section 414(o) of the Code, or is
under "common control" with the entity, within the meaning of Section
4001(a)(14) of ERISA, or any regulations promulgated or proposed under any
of the foregoing Sections; "Pension Plan" shall mean any employer pension
benefit plan, as defined in Section 3(2) of ERISA.; "Prohibited
Transaction" shall mean a transaction that is prohibited under Section 4975
of the Code or Section 406 of ERISA and not exempt under Section 4975 of
the Code or Section 408 of ERISA, respectively; and "Reportable Event"
shall mean a "reportable event", as defined in Section 4043 of ERISA,
whether or not the reporting of such event to the Pension Benefit Guaranty
Corporation has been waived.
Section 4.15 LABOR AND EMPLOYMENT MATTERS.
(a) Neither the Company nor any of its Subsidiaries is a party to, or
bound by, any collective bargaining agreement or other contracts,
arrangements, agreements or understandings with a labor union or labor
organization that was certified by the National Labor Relations Board
("NLRB"). As of the date hereof,
28
there is no existing, pending or, to the knowledge of the Company,
threatened activity or proceeding by a labor union or representative
thereof to organize any employees of the Company or any of its
Subsidiaries.
(b) Neither the Company nor any of its Subsidiaries has taken any
action that would constitute a "Mass Layoff' or "Plant Closing" within the
meaning of the Worker Adjustment and Retraining Notification ("WARN") Act
or would otherwise trigger notice requirements or liability under any state
or local plant closing notice Law. No agreement, arbitration or court
decision or governmental order to which the Company is a party in any way
limits or restricts any of the Company, any of its Subsidiaries or Parent
from relocating or closing any of the operations of the Company or any of
its Subsidiaries.
(c) Neither the Company nor any of its Subsidiaries has failed in any
material respect to pay when due any wages (including overtime wages),
bonuses, commissions, benefits, taxes, penalties or assessments or other
monies, owed to, or arising out of the employment of or any relationship or
arrangement with, any officer, director, employee, sales representative,
contractor, consultant or other agent. The Company and its Subsidiaries are
in compliance in all material respects with all applicable Laws relating to
employment and the payment of wages and benefits. As of the date hereof,
there are no, and the Company has no reason to believe there would be any,
citations, investigations, administrative proceedings or formal complaints
of violations of any federal or state wage and hour Laws pending or, to the
knowledge of the Company, threatened before the Department of Labor or any
federal, state or administrative agency or court against or involving the
Company or any of its Subsidiaries.
(d) The Company and each of its Subsidiaries are in compliance in all
material respects with all immigration Laws relating to employment and have
properly completed and maintained all applicable forms (including but not
limited to I-9 forms) and, to the knowledge of the Company, as of the date
hereof, there are no citations, investigations, administrative proceedings
or formal complaints of violations of the immigration Laws pending or, to
the knowledge of the Company, threatened before the Immigration and
Naturalization Service or any federal, state or administrative agency or
court against or involving the Company or any of its Subsidiaries.
(e) As of the date hereof, there are no investigations, administrative
proceedings, charges or formal complaints of discrimination (including
discrimination based upon sex, age, marital status, race, national origin,
sexual preference, disability, handicap or veteran status) pending or, to
the knowledge of the Company, threatened against the Company involving any
employee or group of employees of the Company. The Company has not suffered
or sustained any work stoppage and no such work stoppage is threatened.
(f) To the knowledge of the Company, no employee of any of the Company
and its Subsidiaries is in violation of any material term of any
29
employment contract, patent disclosure or invention agreement or
non-competition agreement. There is no pending or, to the knowledge of the
Company, threatened action, suit, proceeding or claim, or to its knowledge
any basis therefor or threat thereof, with respect to any contract,
agreement, covenant or obligation referred to in the preceding sentence.
(g) Section 4.15(g) of the Company Disclosure Letter lists all material
employment, management, consulting, management retention or other personal
service, or compensation agreements or arrangements covering one or more
employees (including severance, termination or change-of-control
arrangements), in each case entered into by the Company or any of its
Subsidiaries, and a true and complete copy of each such agreement has been
delivered to Parent.
(h) Section 4.15(h) of the Company Disclosure Letter sets forth a true
and complete list as of November 8, 2002 of the names and positions of all
employees of Company or any of its Subsidiaries and their respective base
rate of compensation and location.
Section 4.16 ENVIRONMENTAL COMPLIANCE AND DISCLOSURE.
(a) The Company is not in violation of any United States federal, state
or local Environmental Laws applicable to it or its properties, or any
material limitations, restrictions, conditions, standards, obligations or
timetables contained in any Environmental Law. To the knowledge of the
Company, each of the Company and its Subsidiaries currently maintains all
Environmental Permits necessary for their operation, other than
Environmental Permits of which the failure to maintain, individually or in
the aggregate, would not reasonably be likely to have a Material Adverse
Effect. No notice or action alleging such violation is pending or, to the
Company's knowledge, threatened, and no past or present condition or
practice of the Company would prevent continued compliance with any
Environmental Permits or give rise to any common law or statutory liability
or otherwise from the basis of any claim, action or proceeding with respect
to the Company involving any Hazardous Materials.
(b) As used in this SECTION 4.16, the following defined terms have the
meanings set forth below:
"ENVIRONMENTAL LAWS" shall mean any and all United States federal, state,
local and foreign statutes, laws, judicial decisions, regulations, ordinances,
rules, judgments, orders, decrees, codes, plans, injunctions, permits,
concessions, grants, franchises, licenses, agreements and governmental
restrictions, now in effect, relating to human health, the environment or to
emissions, discharges or releases of pollutants, contaminants, Hazardous
Materials or wastes into the environment, including, without limitation, ambient
air, surface water, ground water or land, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants, Hazardous Materials or wastes
or the clean-up or other remediation thereof.
30
"ENVIRONMENTAL PERMITS" shall mean all permits, licenses, authorizations,
certificates and approvals of governmental authorities required by any
Environmental Laws to be obtained by the Company or relating to any
Environmental Law and necessary or proper for the business of the Company as
currently conducted.
"HAZARDOUS MATERIALS" shall mean any toxic, radioactive, corrosive or
otherwise hazardous substance, including petroleum, its derivatives, by-products
and other hydrocarbons, or any substance having any constituent elements
displaying any of the foregoing characteristics, including, without limitation,
any substance regulated under any Environmental Laws.
Section 4.17 INTELLECTUAL PROPERTY RIGHTS.
Section 4.17 of the Company Disclosure Letter sets forth a complete and
accurate list and description of all of the Company's and any Subsidiary's (i)
registrations and pending applications for United States and foreign patents,
trademarks and service marks (the "REGISTERED INTELLECTUAL PROPERTY") and (ii)
unregistered trademarks and service marks (all such rights together with any
copyrights that are owned by the Company or any Subsidiary being hereinafter
referred to as the "INTELLECTUAL PROPERTY RIGHTS"). The Company is the sole
legal owner of, and has good title to, all of the Intellectual Property Rights,
free and clear of any liabilities, liens, encumbrances, restrictions or claims
(except for liens for taxes accrued, but not yet payable or liens arising as a
matter of law in the ordinary course of business, PROVIDED, that the obligations
secured by such liens are not delinquent ("PERMITTED LIENS") and the terms of
any existing license disclosed to Parent or to be disclosed pursuant to SECTION
6.2(A)). The Intellectual Property Rights have not been adjudged invalid or
unenforceable in whole or in part, and any registrations thereof are in full
force and effect. To the Company's knowledge, no facts or circumstances exist
that might result in the invalidity or unenforceability of the Intellectual
Property Rights. The Intellectual Property Rights, and the patent, copyright,
trademark and service xxxx rights obtained by the Company or any of its
Subsidiaries from third parties (collectively, the "THIRD PARTY RIGHTS"), are
all of such rights necessary to the conduct of the business of the Company and
the Subsidiaries as currently being conducted. As of the date hereof, the
validity of the Intellectual Property Rights and title thereto (i) are not being
questioned in any pending litigation and (ii) to the Company's knowledge, are
not the subject(s) of any threatened or proposed litigation. The business of the
Company and the Subsidiaries, as now conducted, does not infringe or
misappropriate and, as of the date hereof, to the Company's knowledge, has not
been alleged to infringe or misappropriate any copyrights, patents, trade
secrets, trademarks, trade names or service marks or other intellectual property
rights of others. The consummation of the transactions contemplated hereby will
not result in the loss or impairment of any of the Intellectual Property Rights.
To the Company's knowledge, no person or entity currently engaging in any
commercial activity is infringing upon the Intellectual Property Rights.
Section 4.18 THIRD PARTY FEES.
(a) Except pursuant to (a) the letter agreement dated November 12, 2001
between the Company and the Xxxxxx Xxxxxx Xxxxxxxx & Co., Inc., as
31
amended October 23, 2002 and (b) the letter agreement dated September 26,
2002 between the Company and Duff & Xxxxxx, LLC (collectively, the
"ENGAGEMENT LETTERS"), no broker, finder or investment banker is entitled
to any brokerage, finder's or other fee or commission in connection with
this Agreement, the Merger or the other transactions contemplated by this
Agreement based upon arrangements made by or on behalf of the Company. The
Company shall provide Parent a complete and correct copy of the Engagement
Letters.
(b) No person is entitled to any break-up or similar fee or the
reimbursement of any expenses, as the result of the execution of this
Agreement, the Merger or the other transactions contemplated by this
Agreement based upon arrangements made by or on behalf of the Company.
Section 4.19 RIGHTS AGREEMENT.
The Board of Directors of Company has approved the amendment of the Second
Amended and Restated Preferred Shares Rights Agreement, dated as of October 17,
2001, by and between the Company and Registrar and Transfer Company (as amended,
the "RIGHTS AGREEMENT"), such that (a) no "Triggering Event" (as defined in the
Rights Agreement) shall occur and neither Parent nor Sub nor any of their
affiliates, individually or taken together, shall become an "Acquiring Person"
(as defined in the Rights Agreement), (b) the Rights Agreement shall not apply
to either Parent, Sub or any of their affiliates, individually or taken
together, in the case of the foregoing clause (a), solely as a result of this
Agreement or the transactions contemplated hereby and (c) all "Rights" (as
defined in the Rights Agreement) issued under the Rights Agreement shall,
immediately prior to the Effective Time, be cancelled, void and of no further
force or effect.
Section 4.20 CUSTOMERS.
Section 4.20 of the Company Disclosure Letter sets forth a list of each
customer which accounted for revenues to the Company and the Subsidiaries in the
aggregate of more than $500,000 during the 12-month period ended September 30,
2002 (each a "MAJOR CUSTOMER" and, collectively, "MAJOR CUSTOMERS") together
with the amount of revenues produced during such period. As of the date hereof,
neither the Company nor any Subsidiary is engaged in any material dispute with
any Major Customer and, to the knowledge of the Company, no Major Customer
intends to terminate, or materially limit or reduce, its business relations with
the Company or any Subsidiary.
Section 4.21 RELATED PARTY TRANSACTIONS.
Section 4.21 of the Company Disclosure Letter sets forth a fair and
accurate list of any contractual obligation entered into, or transaction
occurring, after the date of the most recent financial statements contained in
the SEC Reports, between Company or any of its Subsidiaries and any of the
officers, directors, employees, stockholders of any of Company or its
Subsidiaries or, to Company's knowledge, any affiliate of any of the foregoing
(other than reasonable and customary compensation for services as officers,
32
directors and employees), including any providing for the furnishing of services
to or by, providing for rental of property, real, personal or mixed, to or from,
or providing for the lending or borrowing of money to or from or otherwise
requiring payments to or from, any such officer, director, employee, stockholder
or affiliate.
Section 4.22 INSURANCE.
The Company and its Subsidiaries are insured by recognized institutions
with policies in such amounts and with such deductibles and covering such risks
as are generally deemed adequate and customary for their businesses including,
but not limited to, policies covering real and personal property owned or leased
by the Company and its Subsidiaries against theft, damage, destruction and acts
of vandalism. The nature, amount and carriers of all such insurance are set
forth in Section 4.22 of the Company Disclosure Letter. The Company has no
reason to believe that it or any Subsidiary will not be able (i) to renew its
existing insurance coverage as and when such policies expire or (ii) to obtain
comparable coverage from similar institutions as may be necessary or appropriate
to conduct its business as now conducted and at a cost that would not result in
a Company Material Adverse Effect. Within the last twelve months, neither the
Company nor any Subsidiary has been denied any insurance coverage that it has
sought or for which it has applied.
Section 4.23 CERTAIN STATE STATUTES INAPPLICABLE.
The Board of Directors of the Company has approved, within the meaning of
Section 78.438 of the NGCL, this Agreement, the Merger and the other the
transactions contemplated by this Agreement, and such approval is sufficient to
render inapplicable to this Agreement, the Merger and the other the transactions
contemplated by this Agreement the provisions of Section 78.411, et seq. of the
NGCL.
Section 4.24 VOTE REQUIRED.
The vote of a majority of the outstanding shares of Company Common Stock
(the "Company Stockholder Approval") is the only vote of the holders of any
class or series of Company capital stock that may be necessary or required
(under applicable Law or otherwise) to approve this Agreement, the Merger and
the transactions contemplated hereby. The shares of Company Common Stock held by
Parent or Sub at the date hereof are entitled to be voted by Parent or Sub, as
the case may be, in respect of this Agreement, the Merger and the other
transactions contemplated hereby.
Section 4.25 CALIFORNIA CORPORATIONS CODE.
The Company is not subject to Section 2115 of the California Corporations
Code.
Section 4.26 DISCLOSURE.
No representation or warranty made by the Company in this Agreement
(including the information and material provided in or pursuant to the Company
Disclosure Letter) contains an untrue statement of a material fact or omits a
material fact
33
necessary to make the statements contained herein, in light of the circumstances
under which they were made, not misleading.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Each of Parent and Sub, jointly and severally, represents and warrants to
the Company as follows:
Section 5.1 ORGANIZATION AND STANDING.
Such person is a corporation duly organized, validly existing and in
good standing under the Laws of its jurisdiction of incorporation and has the
corporate power and authority to own, lease and operate its properties and
assets and to conduct its business as presently conducted.
Section 5.2 SUB.
(a) Since the date of its incorporation, Sub has engaged in no business
activities unrelated to this Agreement and the transactions contemplated
hereby. Sub was incorporated for the purpose of engaging in the
transactions contemplated hereby.
(b) The authorized capital stock of Sub consists of 25,000 shares of
common stock, no par value per share, all of which have been validly
issued, fully paid and nonassessable and are owned by Parent free and clear
of any Liens.
Section 5.3 AUTHORITY FOR AGREEMENT.
Such person has all necessary corporate power and authority to execute and
deliver this Agreement, to perform its obligations hereunder and to consummate
the Merger and the other transactions contemplated by this Agreement. The
execution, delivery and performance by such person of this Agreement, and the
consummation by each such person of the Merger and the other transactions
contemplated by this Agreement, have been duly authorized by all necessary
corporate action and no other corporate proceedings on the part of such person
are necessary to authorize this Agreement or to consummate the Merger or the
other transactions contemplated by this Agreement (other than, with respect to
the Merger, the filing and recordation of appropriate merger documents as
required by the NGCL). This Agreement has been duly executed and delivered by
such person and, assuming due authorization, execution and delivery by the
Company, constitutes such person's legal, valid and binding obligation,
enforceable against such person in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar Laws of general application related to or affecting creditors' rights
and to general equity principles and subject to a court's discretionary
authority with respect to the granting of a decree ordering specific performance
or other equitable remedies.
34
Section 5.4 NO CONFLICT.
The execution and delivery of this Agreement by such person do not, and the
performance of this Agreement by such person and the consummation of the Merger
and the other transactions contemplated by this Agreement will not, (a) conflict
with or violate the articles of organization, or articles of incorporation, as
applicable, or the bylaws of such person, (b) conflict with or violate any Law
applicable to such person or by which any property or asset of such person is
bound or affected, or (c) result in any breach of or constitute a default (or an
event which with notice or lapse of time or both would become a default) under,
give to others any right of termination, amendment, acceleration or cancellation
of, or result in the creation of a lien or other encumbrance on any property or
asset of such person pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which such person is a party or by which such person or any property or asset
of either of them is bound or affected, except in the case of clauses (b) and
(c) for any such conflicts, violations, breaches, defaults or other occurrences
which would not, individually or in the aggregate, prevent or materially delay
the performance by such person of its respective obligations under this
Agreement or the consummation of the Merger or the other transactions
contemplated by this Agreement.
Section 5.5 REQUIRED FILINGS AND CONSENTS.
The execution and delivery of this Agreement by such person do not, and the
performance of this Agreement by such person will not, require any consent,
approval, authorization or permit of, or filing with or notification to, any
Governmental Entity, except (a) for applicable requirements, if any, of the
Exchange Act and Blue Sky Laws, (b) for filings and consents contemplated by
SECTION 2.1, SECTION 2.2 and SECTION 4.14 and (c) for such consents, approvals,
authorizations, permits, filings or notifications of which the failure to obtain
or make, individually or in the aggregate, is not reasonably likely to prevent
or materially delay the performance by such person of any of its respective
obligations under this Agreement or the consummation of the Merger or the other
transactions contemplated by this Agreement.
Section 5.6 BROKERS.
No broker, finder or investment banker is entitled to any brokerage,
finder's or other fee or commission payable by such person in connection with
this Agreement, the Merger or the other transactions contemplated by this
Agreement based upon arrangements made by or on behalf of such person.
Section 5.7 FINANCING.
Parent and Sub have the funds available as is necessary to consummate the
transactions contemplated hereby in accordance with the terms hereof.
35
ARTICLE VI
COVENANTS
Section 6.1 CONDUCT OF THE BUSINESS PENDING THE MERGER.
(a) The Company covenants and agrees that between the date of this
Agreement and the earlier of the Effective Time or the termination of this
Agreement in accordance with SECTION 8.1, unless Parent shall otherwise
expressly agree in writing (which request shall not be unreasonably
withheld or delayed): (i) the business of the Company and its Subsidiaries
shall be conducted only in, and the Company and its Subsidiaries shall not
take any action except in, the ordinary course of business and in a manner
consistent with prior practice; (ii) the Company and its Subsidiaries shall
use its reasonable best efforts to preserve intact their business
organizations, keep available the services of their current officers and
employees and preserve the current relationships of the Company and its
Subsidiaries with customers, suppliers, distributors and other persons with
which the Company or its Subsidiaries has material business relations;
(iii) the Company and its Subsidiaries will comply in all material respects
with all Material Contracts and applicable Laws and regulations wherever
its business is conducted, including, without limitation, the timely filing
of all reports, forms or other documents with the SEC required pursuant to
the Securities Act or the Exchange Act; and (iv) the Company and its
Subsidiaries shall cause to be provided all notices, assurances and support
required by any Material Contract relating to any Company Intellectual
Property in order to ensure that no condition under such Material Contract
occurs that could result in, or could increase the likelihood of, (A) any
transfer or disclosure by the Company of any computer source code owned or
licensed by the Company and included among the Company's Intellectual
Property ("COMPANY SOURCE CODE") or (B) a release from any escrow of any
Company Source Code that has been deposited or is required to be deposited
in escrow under the terms of any Material Contract.
(b) The Company covenants and agrees that, between the date of this
Agreement and the earlier of the Effective Time or the termination of this
Agreement in accordance with SECTION 8.1 hereof, unless Parent shall
otherwise expressly agree in writing (which request shall not be
unreasonably withheld or delayed), the Company shall not, nor shall the
Company permit any of its Subsidiaries to, (i) declare or pay any dividends
on or make other distributions (whether in cash, stock or property) in
respect of any of its capital stock, except for dividends payable to the
Company by a wholly owned Subsidiary of the Company, (ii) split, combine or
reclassify any of its capital stock or issue or authorize or propose the
issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock; (iii) repurchase, redeem or
otherwise acquire any shares of its capital stock; (iv) issue, deliver or
sell, or authorize or propose the issuance, delivery or sale of, any shares
of its capital stock or any securities convertible into any such shares of
its capital stock, or any rights, warrants or options to acquire any such
shares or convertible securities or any stock appreciation rights, phantom
stock plans or stock equivalents, other than the
36
issuance of shares of Company Common Stock upon (A) the exercise of Company
Options outstanding as of the date of this Agreement and (B) the exercise
of warrants outstanding as of the date of this Agreement, (v) award or
grant, or authorize or propose the award or grant of any Company Options;
(vi) modify or adjust any outstanding options or other rights to acquire
shares of Company Common Stock (including the acceleration of any vesting
schedule not otherwise provided for in any Company Stock Option Plans) or
(vii) take any action that would, or could reasonably be expected to,
result in any of the conditions set forth in ARTICLE VII not being
satisfied.
(c) The Company covenants and agrees that between the date of this
Agreement and the earlier of the Effective Time or the termination of this
Agreement in accordance with SECTION 8.1 hereof, unless Parent shall
otherwise expressly agree in writing (which agreement shall not be
unreasonably withheld or delayed), the Company shall not, nor shall the
Company permit any of its Subsidiaries to, (i) amend its articles of
incorporation (including any certificate of designations attached thereto)
or bylaws or other equivalent organizational documents; (ii) create, assume
or incur any indebtedness for borrowed money or guaranty any such
indebtedness of another person or mortgage or pledge any of its assets or
properties, other than in connection with (A) existing lines of credit or
(B) leasing contracts entered into in the ordinary course of business;
(iii) make any loans or advances to, or investments in (other than as
described in the SEC Reports and consistent with past practice), to any
other person other than loans or advances between any Subsidiaries of the
Company or between the Company and any of its Subsidiaries and other than
advances of ordinary business expenses or to employees in the ordinary
course of business consistent with past practice in principal amounts of
not more than $10,000; (iv) merge or consolidate with any other entity in
any transaction, or sell any business or assets other than in the ordinary
course of business consistent with past practices; (v) change its
accounting policies except as required by GAAP or applicable Law; (vi) make
any change in employment terms for any of its directors or officers, except
as expressly provided in this Agreement; (vii) alter, amend or create any
obligations with respect to compensation, severance, loans, deferred
compensation, benefits, change-of-control payments or any other payments to
employees, directors or affiliates of the Company or its Subsidiaries or
enter into any new, or amend any existing, employment agreements, except
(A) as required by applicable Law, (B) severance agreements for
non-executive officers containing terms consistent with the Company's
policies and practices as of the date hereof or (C) which will not result
in material costs to the Company; (viii) make any change to the Company
Benefit Plans, except (A) as required by applicable Law, (B) renewals and
adjustments made in the ordinary course of business and consistent with
past practices or (C) which will not result in material costs to the
Company; (ix) amend or cancel or agree to the amendment or cancellation of
any Material Contract; (x) pay, loan or advance any amount, commit to make
or accelerate any profit-sharing or similar payment to, or increase or
commit to increase the amount of the wages, salary, commissions, fringe
benefits, severance, insurance or other compensation or remuneration
payable to, any of its directors, officers, employees
37
or consultants (other than the payment of regular compensation, regular
directors' fees or reimbursement of reasonable expenses in the ordinary
course of business, consistent with past practice) or sell, transfer or
lease any properties or assets (real, personal or mixed, tangible or
intangible) to, or enter into any agreement with, any of its officers or
directors or any "affiliate" or "associate" of any of its officers or
directors; (xi) form or commence the operations of any business or any
corporation, partnership, joint venture, business association or other
business organization or division thereof, (xii) make any tax election or
settle or compromise any tax liability of more than $100,000 except as
required by Law; or (xiii) pay, discharge, settle or satisfy any claims
litigation, liabilities or obligations (whether absolute, accrued, asserted
or unasserted, contingent or otherwise) involving amounts in excess of
$100,000 in the aggregate; (xiv) dispose of or permit to lapse any rights
to the use of any Company Intellectual Property, or dispose of or disclose
to any person other than representatives of Parent any Company Intellectual
Property not theretofore a matter of public knowledge; (xv) permit any
material insurance policy naming it as a beneficiary or a loss payable
payee to be cancelled or terminated without reasonable advance notice to
Parent; (xvi) enter into any agreement, understanding or commitment that
restrains, limits or impedes the ability of the Company to compete with or
conduct any business or line of business; (xviii) except in each case in
the ordinary course of business consistent with past practice or with the
prior written consent of Parent (which shall not be unreasonably withheld
or delayed), discharge or satisfy any lien or encumbrance or pay any
obligation or liability (absolute or contingent) other than current
liabilities or obligations under contracts existing on the date hereof or
thereafter entered into in the ordinary course of business, and commitments
under leases existing on the date hereof or thereafter incurred in the
ordinary course of business; or (xix) permit or cause any Subsidiary of the
Company to do or agree to do any of the foregoing.
In connection with the continued operation of the Company and its
Subsidiaries between the date hereof and the Effective Time, the Company will
confer in good faith on a regular and frequent basis with one or more
representatives of Parent designated to the Company regarding operational
matters and the general status of ongoing operations promptly and will notify
Parent of any event or occurrence that has had or may reasonably be expected to
have a Company Material Adverse Effect.
Section 6.2 ACCESS TO INFORMATION; CONFIDENTIALITY.
(a) From the date hereof to the Effective Time, the Company shall, and
shall cause the officers, directors, employees, auditors, attorneys,
financial advisors, lenders and other agents (collectively, the
"REPRESENTATIVES") of the Company to, afford the Representatives of Parent
reasonable access at all reasonable times and upon reasonable notice to the
officers, employees, agents, properties, offices and other facilities,
books and records, major customers, vendors and business partners of the
Company and its Subsidiaries, and shall furnish Parent with all financial,
operating and other data and information, copies of securities filings,
stockholder and third-party communications and other
38
material documents as Parent or Sub, through its Representatives, may
reasonably request; PROVIDED, that, prior to the receipt by the Company of
certain required third party consents, this SECTION 6.2(a) shall not apply
to those agreements, referred to on SCHEDULE 6.2(a), which may not be
disclosed by the Company without the prior consent of third parties. The
Company shall use commercially reasonable, good faith efforts to obtain
each such consent prior to the Effective Time. Nothing in this SECTION
6.2(a) shall require the Company to provide access to or disclose
information where such access or disclosure would result in the loss of any
attorney-client privilege. The parties hereto shall make appropriate
substitute disclosure arrangements under circumstances in which the
restrictions of the preceding sentence apply. The Company and Parent will
remain subject to the terms of mutual nondisclosure agreement, dated
October 17, 2002 (the "CONFIDENTIALITY AGREEMENT").
(b) No investigation pursuant to this SECTION 6.2 shall limit or modify
in any way or affect any representation or warranty in this Agreement of
any party hereto or any condition to the obligations of the parties hereto.
Section 6.3 NOTIFICATION OF CERTAIN MATTERS.
The Company shall give prompt notice to Parent, and Parent shall give
prompt notice to the Company, of (i) the occurrence, or nonoccurrence, of any
event which would be reasonably likely to result in a condition with respect to
such party's representations and warranties set forth in SECTION 7.2(a) or
SECTION 7.2(b) or SECTION 7.3(a) or SECTION 7.3(b), as the case may be, not
being satisfied and, in such event, whether the particular breach of
representation or warranty is reasonably likely to be cured on or before the
Effective Time and (ii) any failure by such party (or Sub, in the case of
Parent) to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it hereunder which would be reasonably likely to
result in a condition set forth in SECTION 7.3(c) not being satisfied on or
before the Effective Time. If any event or matter arises after the date of this
Agreement which, if existing or occurring at the date of this Agreement, would
have been required to be set forth or described in the Company Disclosure Letter
or which is necessary to make any representation and warranty true and correct
on the Effective Date, then the Company shall, for informational purposes only,
promptly supplement, or amend, and deliver to Parent the Company Disclosure
Letter which it has delivered pursuant to this Agreement. The disclosure of any
matter in accordance with the provisions of this Section 6.3 shall not in any
way modify any representation or warranty set forth herein or limit or otherwise
affect the remedies available hereunder to the party receiving such disclosure
(including for purposes of determining whether the conditions set forth in
SECTION 7.2(a) or SECTION 7.2(b) or SECTION 7.3(a) or SECTION 7.3(b) have been
satisfied).
Section 6.4 REASONABLE EFFORTS; FURTHER ASSURANCES; COOPERATION.
(a) Subject to the other provisions of this Agreement, each of the
parties hereto will each use its commercially reasonable, good faith
efforts to perform its obligations set forth in this Agreement and to take,
or cause to be
39
taken, and do, or cause to be done, all things necessary, proper or
advisable under applicable Law to obtain all consents required as described
in Section 4.13 of the Company Disclosure Letter and all regulatory
approvals (including, but not limited to those identified in Section 4.5
and Section 5.4) and to satisfy all conditions to their respective
obligations under this Agreement and to cause the transactions contemplated
in this Agreement to be effected on or prior to February 14, 2003, in
accordance with the terms of this Agreement and will cooperate fully with
each other and their respective officers, directors, employees, agents,
counsel, accountants and other designees in connection with any steps
required to be taken as a part of their respective obligations under this
Agreement.
(b) Each of the parties hereto promptly will make their respective
filings and submissions and will use its commercially reasonable, good
faith efforts to take all actions necessary, proper or advisable under
applicable Laws and regulations to obtain any required approval of any
Governmental Entity with jurisdiction over the transactions contemplated by
this Agreement. Each of the parties hereto will furnish all information
required for any application or other filing to be made pursuant to the
rules and regulations of any applicable Law in connection with the
transactions contemplated by this Agreement.
(c) The Company will use its commercially reasonable, good faith
efforts to give any notices to third parties and use its commercially
reasonable, good faith efforts (in consultation with Parent) to obtain any
third party consents (i) necessary, proper or advisable to consummate the
transactions contemplated by this Agreement, (ii) disclosed or required to
be disclosed in the Company Disclosure Letter, including, without
limitation, the consents described in Section 4.13 of the Company
Disclosure Letter, (iii) required to avoid a breach of or default under any
Material Contracts in connection with the consummation of the transactions
contemplated by this Agreement or (iv) required to prevent a Company
Material Adverse Effect whether prior to or after the Effective Date.
Section 6.5 BOARD RECOMMENDATIONS.
(a) In connection with the Merger and the Stockholder Meeting to
consider the approval and adoption of this Agreement and the Merger, the
Board of Directors of the Company shall (i) subject to SECTION 6.5(b),
recommend to the Company Stockholders that they accept the Offer and tender
their shares of Company Common Stock pursuant to the Offer, and vote in
favor of this Agreement and the Merger and use its commercially reasonable,
good faith efforts to obtain the necessary approvals by the Company
Stockholders of this Agreement and the Merger and (ii) otherwise comply
with all legal requirements applicable to such meeting.
(b) Neither the Board of Directors of the Company nor any committee
thereof shall, except as expressly permitted by this SECTION 6.5(b), (i)
withdraw, qualify or modify, or propose publicly to withdraw, qualify or
modify, in any manner adverse to Parent or Sub, the approval or
recommendation of such Board
40
of Directors or such committee of the Merger or this Agreement (and the
recommendation that the Company Stockholders tender their shares of Company
Common Stock pursuant to the Offer), (ii) approve or recommend, or propose
publicly to approve or recommend, any transaction involving a Competing
Acquisition Proposal (as defined below) or (iii) cause the Company to enter
into any letter of intent, agreement in principle, acquisition agreement,
memorandum of understanding or other similar agreement or understanding
(each, an "ACQUISITION AGREEMENT") related to or with respect to any
Competing Acquisition Proposal. Notwithstanding the foregoing, if (A) the
Company has complied fully with this SECTION 6.5 and SECTION 6.8 and the
Board of Directors of the Company determines in good faith, after it has
received a Superior Proposal (as hereinafter defined) in compliance with
SECTION 6.8 and based upon advice from independent outside legal counsel
with respect to its fiduciary duties to the Company Stockholders under
applicable Law, that such action is required for the Board of Directors of
the Company to act in a manner consistent with its fiduciary obligations to
the Company Stockholders under applicable Law or (B) if the Company has
complied with this SECTION 6.5 under circumstances not related to a
Competing Acquisition Proposal and the Board of Directors of the Company
determines in good faith based upon advice from independent legal outside
counsel with respect to its fiduciary obligations to the Company
Stockholders under applicable Law, that such action is required for the
Board of Directors to act in a manner consistent with its fiduciary duties
to the Company Stockholders under applicable Law, the Board of Directors of
the Company may (subject to this and the following sentences) take any of
the actions described in clauses (i) through (iii) of this SECTION 6.5(b),
as applicable (a "SUBSEQUENT ADVERSE DETERMINATION"), but only at a time
that is after the second business day following Parent's receipt of written
notice advising Parent that the Board of Directors of the Company intends
to make a Subsequent Adverse Determination. Such written notice shall
specify the material terms and conditions of any Superior Proposal (and
include a copy thereof with all accompanying documentation) or other basis
for the Subsequent Adverse Determination, identify the person making any
Superior Proposal, and state that the Board of Directors of the Company
intends to make a Subsequent Adverse Determination. During such
two-business-day period, the Company shall provide a full opportunity for
Parent to propose such adjustments to the terms and conditions of this
Agreement as would enable the Company to proceed with its recommendation to
the Company Stockholders without a Subsequent Adverse Determination. For
purposes of this Agreement, "COMPETING ACQUISITION PROPOSAL" means any
proposal from a third party with respect to a merger, consolidation, share
exchange, tender offer or similar transaction involving the Company or any
Subsidiary, or any purchase, exchange, securitization, pledge or other
acquisition of all or any substantial portion of the assets of the Company
or any Subsidiary, including, without limitation, any license, lease or
other disposition of all or a substantial portion of the Company's
Intellectual Property Rights (other than in the ordinary course of
business) or any purchase or other acquisition of any equity interest in
the Company or any Subsidiary. For purposes of this Agreement, a "SUPERIOR
PROPOSAL" means any
41
bona fide proposal with respect to a merger, consolidation, share exchange,
tender offer, business combination or similar transaction involving the
Company or any Subsidiary, or any purchase or other acquisition of 70% or
more of the assets of the Company and its Subsidiaries, taken as a whole,
or any purchase or other acquisition of more than 50% of the equity
interests in the Company, in each case, which (x) has no financing
contingency and (y) the independent financial advisor of the Company
advises the Board of Directors of the Company that such proposal is more
favorable to the Company Stockholders than the Merger from a financial
point of view taking into account any proposed changes to this Agreement
that may be proposed by Parent in response to such proposal.
Section 6.6 INDEMNIFICATION.
(a) It is understood and agreed that all rights to indemnification by
the Company now existing in favor of each present and former director and
officer of the Company or its Subsidiaries (the "INDEMNIFIED Parties") as
provided in the Company Articles of Incorporation or the Company Bylaws, in
each case as in effect on the date of this Agreement, or pursuant to any
other agreements in effect on the date hereof, listed in Section 4.13(a) of
the Company Disclosure Letter, copies of which have been provided to
Parent, shall survive the Merger and be observed by the Surviving
Corporation to the fullest extent available under Nevada law for a period
of six years from the Effective Time. Parent and Sub agree that any claims
for indemnification hereunder as to which they have received written notice
prior to the sixth anniversary of the Effective Time shall survive, whether
or not such claims shall have been finally adjudicated or settled.
(b) Parent shall cause the Surviving Corporation to, and the Surviving
Corporation shall, maintain in effect, for the benefit of the Indemnified
Persons with respect to their acts and omissions occurring prior to the
Effective Time, a "tail" policy of directors' and officers' liability
insurance covering the period of time from the Effective Time until up to
the third anniversary of the Effective Time; PROVIDED, that in no event
shall the Surviving Corporation be required to expend pursuant to this
SECTION 6.6(b) more than $320,000 for such insurance. In the event that,
but for the proviso to the immediately preceding sentence, the Surviving
Corporation would be required to expend more than $320,000, the Surviving
Corporation shall obtain the maximum amount of such insurance obtainable by
payment $320,000.
(c) If the Surviving Corporation or any of its successors or assigns
(i) consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity of such consolidation or
merger or (ii) transfers all or substantially all of its properties and
assets to any person, then, and in each such case, proper provision shall
be made so that the successors and assigns of the Surviving Corporation
shall assume the obligations set forth in this SECTION 6.6.
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(d) The provisions of this SECTION 6.6 are intended for the benefit of,
and may be enforced by, each person entitled to indemnification under this
SECTION 6.6.
Section 6.7 PUBLIC ANNOUNCEMENTS.
Parent, Sub and the Company shall consult with each other before issuing
any press release or otherwise making any public statements with respect to this
Agreement or the Merger and shall not issue any such press release or make any
such public statement prior to such consultation, except as may be required by
Law or the requirements of any securities exchange or trading system.
Section 6.8 COMPETING ACQUISITION PROPOSALS.
The Company shall not, nor shall it authorize or permit any of its
Subsidiaries or Representatives to, directly or indirectly, (a) solicit,
initiate or encourage the submission of any Competing Acquisition Proposal or
(b) participate in or encourage any discussion or negotiations regarding, or
furnish to any person any non-public information with respect to, enter into any
Acquisition Agreement 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 Competing Acquisition Proposal; PROVIDED, that the
foregoing shall not prohibit the Board of Directors of the Company from
furnishing information to, or entering into or participating in discussions or
negotiations with, any person or entity that makes an unsolicited Competing
Acquisition Proposal which did not result from a breach of SECTION 6.5 or this
SECTION 6.8 only if, and only to the extent that, (A) the Board of Directors of
the Company, based upon advice from independent outside legal counsel and
financial advisors, determines in good faith that such action could lead to a
Superior Proposal or is otherwise required for the Board of Directors of the
Company to comply with its fiduciary obligations to the Company Stockholders
under applicable Nevada law, (B) prior to taking such action, the Company
receives from such person or entity an executed agreement in reasonably
customary form relating to the confidentiality of information to be provided to
such person or entity and including standstill provisions no less favorable to
the Company than those contained in the Confidentiality Agreement and (C) the
Board of Directors of the Company concludes in good faith that the Competing
Acquisition Proposal could reasonably be expected to lead to a Superior
Proposal. The Company shall provide prompt oral and written notice (in any event
within 24 hours) to Parent of (a) the receipt of any such Competing Acquisition
Proposal or any inquiry which could reasonably be expected to lead to any
Competing Acquisition Proposal, (b) the material terms and conditions of such
Competing Acquisition Proposal or inquiry, (c) the identity of such person or
entity making any such Competing Acquisition Proposal or inquiry and (d) the
Company's intention to furnish information to, or enter into discussions or
negotiations with, such person or entity. The Company shall continue to keep
Parent fully informed of the status and details of any such Competing
Acquisition Proposal or inquiry.
Nothing contained in this Agreement shall prohibit the Board of Directors
of the Company, the Company, any of the Company's Subsidiaries, or any of the
officers,
43
directors, employees, affiliates, agents or Representatives of the Company or
its Subsidiaries (i) referring a third party to this SECTION 6.8 (without
disclosing the balance of this Agreement or other non-public information) or
(ii) complying with Rule 14e-2 promulgated under the Exchange Act, or making
such disclosure to the Company Stockholders as, in the good faith determination
of the Company's Board of Directors, is required by applicable Law; PROVIDED,
that neither the Company nor its Board of Directors nor any committee thereof
shall, except as specifically permitted by SECTION 6.5(b), withdraw, qualify or
modify, or propose to withdraw, qualify or modify, its position with respect to
the Merger or this Agreement, including, without limitation, the Company Board
Recommendation, or approve or recommend, or propose to approve or recommend a
Competing Acquisition Proposal. Nothing in SECTION 6.5(b) or this SECTION 6.8,
and no action taken by the Board of Directors of the Company pursuant to SECTION
6.5(b) or this SECTION 6.8, will (i) permit the Company to enter into any
agreement providing for any transaction contemplated by a Competing Acquisition
Proposal for as long as this Agreement remains in effect or (ii) affect in any
manner any other obligation of the Company under this Agreement.
Section 6.9 UNDERTAKINGS OF PARENT.
Parent shall perform, or cause to be performed, when due all obligations of
Sub and, following the Effective Time, the Surviving Corporation, under this
Agreement.
Section 6.10 DIRECTOR RESIGNATIONS.
The Company shall use its commercially reasonable efforts to cause to be
delivered to Parent resignations of all the directors of the Company's
Subsidiaries to be effective upon the consummation of the Merger.
Section 6.11 EMPLOYEE BENEFITS.
(a) Parent agrees that all employees of the Company who continue
employment with Parent, the Surviving Corporation or any subsidiary thereof
after the Effective Time (the "CONTINUING EMPLOYEES") shall be provided
employment terms and conditions substantially as favorable as provided by
the Company as of the Effective Time with respect to wages and salaries;
PROVIDED, that the Company has not otherwise breached SECTION 6.2 hereof
with respect to increases in wages and salaries, and further subject to
routine employment evaluations consistent with Parent's past practice.
Parent agrees that the Continuing Employees shall be eligible to continue
to participate in the Surviving Corporation's health and welfare benefit
plans; PROVIDED, that (i) the employment of each of the Continuing
Employees shall be "at will" employment, (ii) nothing in this section or
elsewhere in this Agreement shall limit the right of Parent or the
Surviving Corporation to amend or terminate any such health or welfare
benefit plan at any time and (iii) if Parent or the Surviving Corporation
terminates any such health or welfare benefit plan, then (upon expiration
of any appropriate transition period), the Continuing Employees shall be
eligible to participate in Parent's health and welfare benefit plans, or
the Surviving Corporation's
44
successor health and welfare benefit plan, to substantially the same extent
as similarly situated employees of Parent. Nothing in this section or
elsewhere in this Agreement shall be construed to create a right in any of
the Continuing Employees or other person to employment with Parent, the
Surviving Corporation or any other Subsidiary of Parent.
(b) As of the Effective Time and for period of at least one year after
the Closing Date, Parent shall, or shall cause the Surviving Corporation
to, establish and maintain compensation and benefit plans and arrangements
for Continuing Employees that, in the aggregate, are no less favorable than
those currently provided by the Company to the Continuing Employees as of
the Effective Time (excluding any stock options or other stock-based
compensation), except as required by applicable Law (including as required
to preserve any favorable tax treatment afforded such benefits as of the
Effective Time). Parent shall, or shall cause the Surviving Corporation to,
treat Continuing Employees no less favorably than employees of Parent who
are in comparable positions and at comparable locations and shall give each
Continuing Employee past service credit under its compensation and benefit
plans and arrangements and for all employee benefits purposes for service
with the Company prior to the Effective Time as if such service had been
with Parent. Parent shall honor, or cause the Surviving Corporation to
honor, in accordance with their terms and bear any cost associated with (i)
all employee benefit obligations to current and former employees of the
Company accrued as of the Effective Time and (ii) all employee severance
plans in existence as of the date hereof. Parent agrees to, or cause the
Surviving Corporation to, (A) provide coverage for the Continuing Employees
as of the Effective Time either under its medical, dental, and health plans
or under other comparable plans or arrangements; (B) exercise commercially
reasonable, good faith efforts to secure the waiver of any preexisting
condition limitations, waiting periods or actively-at-work requirements
imposed by such plans such that Continuing Employees will be immediately
covered by such plans as of the Effective Time; and (C) exercise
commercially reasonable, good faith efforts to cause such plans to honor
any expenses incurred by the Continuing Employees and their beneficiaries
under similar plans of Parent during the portion of the calendar year in
which the Effective Time occurs for the purposes of satisfying applicable
deductible, co-insurance and maximum out-of-pocket expenses. Parent agrees
that the Surviving Corporation shall be responsible for providing all
legally mandated continuation coverage for Continuing Employees and their
covered dependents who experience a loss of coverage due to a "qualifying
event" (within the meaning of Section 603 of ERISA) which occurs at any
time on or after the Effective Time. Nothing in this section is intended to
create any employment obligation other than as employees at will who may be
terminated with or without cause.
45
Section 6.12 RIGHTS AGREEMENT.
(a) Promptly following the execution of this Agreement (but in no event
greater than five days), the Company shall have entered into the Rights
Agreement with the Registrar and Transfer Company.
(b) The Company shall use its commercially reasonable efforts to
terminate, immediately prior to the Effective Time, the Rights Agreement,
and the Company shall execute and deliver such agreements or certificates
as Parent may reasonably request to further evidence the termination of the
Rights Agreement.
(c) Neither the Company nor any Subsidiary shall adopt any stockholder
rights agreement or any similar plan or agreement which limits or impairs
the ability to purchase, or become the direct or indirect beneficial owner
of, shares of Company Common Stock or any other equity or debt securities
of the Company or any of its Subsidiaries, other than any stockholder
rights plan or stockholder rights agreement that (i) does not impair the
ability of the Parent and Sub to make the Offer and the parties to
consummate the Merger in accordance with the terms of this Agreement and
(ii) does not have an adverse effect on Parent or Sub or on the rights of
Parent or Sub under this Agreement.
Section 6.13 CONVEYANCE TAXES.
Parent and the Company shall cooperate in the preparation, execution and
filing of all returns, questionnaires, applications or other documents regarding
any real property transfer or gains, sales, use, transfer, value added stock
transfer and stamp taxes, any transfer, recording, registration and other fees,
and any similar Taxes which become payable in connection with the transactions
contemplated hereby that are required or permitted to be filed on or before the
Effective Time; PROVIDED, that Parent shall pay any such Taxes or fees required
to be paid from and after the Effective Time.
ARTICLE VII
CONDITIONS
Section 7.1 CONDITIONS TO THE OBLIGATION OF EACH PARTY.
The respective obligations of Parent, Sub and the Company to effect the
Merger are subject to the satisfaction of the following conditions, unless
waived in writing by all parties:
(a) Sub shall have previously accepted for payment and paid for Shares
pursuant to the Offer, except that neither Parent, Sub nor the Company
shall be entitled to invoke this condition if it shall have been the cause
of the failure of Sub to purchase Shares pursuant to the Offer in breach of
its obligations under this Agreement.
46
(b) This Agreement and the Merger shall have been approved and adopted
by the requisite vote of the Company Stockholders as required by the NGCL,
the Company Articles of Incorporation and the Company Bylaws;
(c) No temporary restraining order, preliminary or permanent injunction
or other order issued by any court of competent jurisdiction or other legal
prohibition preventing the consummation of the Merger shall be in effect,
and there shall not be any legal requirement enacted or deemed applicable
to the Merger that makes consummation of the Merger illegal; PROVIDED, that
any party invoking this condition shall have used all commercially
reasonable efforts to have any such order or injunction vacated; and
(d) All actions by or in respect of or filings with any Governmental
Entity required to permit the consummation of the Merger shall have been
obtained or made.
Section 7.2 CONDITIONS TO OBLIGATIONS OF PARENT AND SUB TO EFFECT THE
MERGER.
The obligations of Parent and Sub to effect the Merger are further subject
to satisfaction or waiver by Parent or Sub at or prior to the Effective Time of
the following conditions:
(a) The representations and warranties of the Company in this Agreement
that are qualified by materiality shall be true and correct in all respects
as of the date of this Agreement and as of the Effective Time (except as to
those representations and warranties made as of a specified date, which
shall be so true and correct as of such specified date);
(b) The representations and warranties of the Company in this Agreement
that are not qualified by materiality shall be true and correct in all
material respects as of the date of this Agreement and as of the Effective
Time (except as to those representations and warranties made as of a
specified date, which shall be so true and correct in all material respects
as of such specified date);
(c) the Company shall have performed in all material respects all
covenants, agreements and obligations required to be performed by it under
this Agreement;
(d) there shall not have occurred and be continuing a Company Material
Adverse Effect; and
(e) the Company shall have delivered to Parent and Sub a certificate to
the effect that each of the conditions specified in SECTION 7.2(a), (b),
(c) and (d) above is satisfied in all respects; and
47
(f) the Company shall have furnished Parent and Sub with the following:
(i) a certificate of its Secretary or Assistant Secretary as to
(i) the Company Bylaws, (ii) all resolutions of the Board of
Directors of the Company and the Company Stockholders
relating to this Agreement and (iii) incumbency of any
officers signing this Agreement and any other documents in
connection herewith on its behalf;
(ii) a copy of the Company Articles of Incorporation, certified by
the Secretary of State of the State of Nevada and dated
within a recent date prior to the Effective Date and a copy
of each of the Subsidiaries' respective articles of
incorporation or similar document, as the case may be,
certified by the Secretary of State or other appropriate
official of the jurisdiction of organization or incorporation
of such entity, each dated within a recent date prior to the
Effective Date;
(iii) a certificate of legal existence and good standing for each
of the Company and its Subsidiaries from the Secretary of
State or other appropriate official of the jurisdiction of
organization or incorporation of such entity, each dated
within a recent date prior to the Effective Date; and
(iv) such other certificates, documents and instruments as may be
necessary to effect the intent of this Agreement or
consummate the transactions contemplated hereby.
Section 7.3 CONDITIONS TO OBLIGATIONS OF THE COMPANY TO EFFECT THE MERGER.
The obligations of the Company to effect the Merger are further subject to
satisfaction or waiver by the Company at or prior to the Effective Time of the
following conditions:
(a) The representations and warranties of Parent and Sub in this
Agreement that are qualified by materiality shall be true and correct in
all respects as of the date of this Agreement and as of the Effective Time
(except as to those representations and warranties made as of a specified
date, which shall be so true and correct as of such specified date);
(b) The representations and warranties of Parent and Sub in this
Agreement that are not qualified by materiality shall be true and correct
in all material respects as of the date of this Agreement and as of the
Effective Time (except as to those representations and warranties made as
of a specified date, which shall be so true and correct in all material
respects as of such specified date);
48
(c) Parent and Sub shall have performed in all material respects all
obligations required to be performed by them under this Agreement; and
(d) Parent and Sub shall have delivered to the Company a certificate to
the effect that each of the conditions specified in SECTION 7.3(a), (b) and
(c) is satisfied in all respects.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
Section 8.1 TERMINATION.
This Agreement may be terminated and the Merger may be abandoned at any
time prior to the Effective Time, whether before or after approval of matters
presented in connection with the Merger by the Company Stockholders:
(a) By mutual written consent of duly authorized representatives of
Parent and the Company;
(b) By any of Parent, Sub or the Company if any court of competent
jurisdiction or other Governmental Entity shall have issued an order,
decree, ruling or taken any other action permanently restraining, enjoining
or otherwise prohibiting the acceptance of Shares pursuant to the Offer or
the Merger and such order, decree, ruling or other action shall have become
final and nonappealable, except if the party relying on such order, decree
or ruling or other action has not complied with its obligations under
SECTION 6.4;
(c) By any of Parent, Sub or the Company if (i) as a result of the
failure of any of the Offer Conditions, the Offer shall have terminated or
expired in accordance with its terms without Sub having accepted for
payment any Shares pursuant to the Offer within the time period for
acceptance specified by this Agreement or (ii) Sub shall not have accepted
for payment any Shares pursuant to the Offer by January 10, 2003 (the
"TERMINATION DATE"), PROVIDED, that the right to terminate this Agreement
under this SECTION 8.1(c) shall not be available to any party whose failure
to fulfill any obligation under this Agreement has been the primary cause
of, or resulted in, the failure to consummate the Merger on or before such
date;
(d) By Parent or Sub if the Board of Directors of the Company (i)
causes the Company to enter into any Acquisition Agreement with respect to
a Competing Acquisition Proposal, (ii) shall have made a Subsequent Adverse
Determination, (iii) shall have endorsed, approved or recommended any
Competing Acquisition Proposal or (iv) shall have resolved to do any of the
foregoing;
(e) By any of the Company, Parent or Sub, if this Agreement and the
Merger shall fail to be approved and adopted by the Company Stockholders at
a duly held Stockholders Meeting or at any adjournment or postponement
thereof,
49
PROVIDED, that neither Parent nor Sub may terminate this Agreement under
this SECTION 8.1(e) if the Company Common Stock it is entitled to vote
(whether by ownership, proxy or otherwise) shall not have been voted in
favor of this Agreement and the Merger;
(f) By Parent or Sub, if (i) any of the conditions set forth in SECTION
7.2 shall have become incapable of fulfillment and shall not have been
waived by Parent and Sub or (ii) the Company shall breach in any material
respect any of its representations, warranties, covenants or other
obligations hereunder and, prior to the Termination Date, such breach shall
not have been cured in all material respects or waived by Parent or Sub and
the Company shall not have provided reasonable assurance to Parent and Sub
that such breach will be cured in all material respects on or before the
Effective Time (it being understood that, for purposes of determining the
accuracy of such representations and warranties as of the date of this
Agreement or as of any subsequent date, any update of or modification to
the Company Disclosure Letter made or purported to have been made after the
date of this Agreement shall be disregarded);
(g) By Parent or Sub, prior to the purchase of shares of Company Common
Stock pursuant to the Offer, in the event of a breach by the Company of any
representation, warranty, covenant or other agreement contained in this
Agreement which (i) would give rise to the failure of a condition set forth
in paragraph (e) or (f) of ANNEX I and (ii) cannot be or has not been cured
within 30 days after the giving of written notice to the Company;
(h) By the Company, if the Offer has not been commenced by the Parent
or Sub on or prior to 15 business days following the date of the initial
public announcement of the Offer, PROVIDED, that the Company may not
terminate this Agreement pursuant to this SECTION 8.1(h) if the Company is
in material breach of this Agreement;
(i) By the Company, if (i) any of the conditions set forth in SECTION
7.3 shall have become incapable of fulfillment and shall not have been
waived by the Company or (ii) Parent or Sub shall breach in any material
respect any of their respective representations, warranties or obligations
hereunder and, prior to the Termination Date, such breach shall not have
been cured in all material respects or waived by the Company and Parent or
Sub, as the case may be, shall not have provided reasonable assurance to
the Company that such breach will be cured in all material respects on or
before the Effective Time, except where such failure does not have a
material adverse effect on the ability of Parent of Sub to consummate the
Offer or the Merger; or
(j) By the Company if, prior to the Effective Time, in response to a
bona fide unsolicited proposal with respect to a Competing Acquisition
Proposal (including following actions permitted by SECTION 6.8), if the
Board of Directors of the Company determines in good faith that such
proposal could reasonably be expected to lead to a Superior Proposal;
PROVIDED, that the Company gives Parent
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at least two business days prior written notice of the Company's intention
to terminate this Agreement, during which period, the Company if requested
by Parent engages in good faith negotiations with Parent with respect to
such changes as Parent may propose to the terms of this Agreement.
Section 8.2 EFFECT OF TERMINATION.
(a) In the event of the termination of this Agreement pursuant to
SECTION 8.1 hereof, this Agreement shall forthwith be terminated and have
no further effect except as specifically provided herein and, except as
provided in this SECTION 8.2, the last sentence of SECTION 9.10 and in
SECTION 9.12, there shall be no liability on the part of any party hereto,
provided that nothing herein shall relieve any party from liability for any
willful breach hereof.
(b) The Company shall pay Parent a fee of $500,000 in cash (the "FEE")
if:
(i) the Company terminates this Agreement pursuant to Section
8.1(j) or Parent terminates this Agreement pursuant to
Section 8.1(d)(i); or
(ii) (A) Parent or Sub terminates this Agreement pursuant to
SECTIONS 8.1(d)(ii), 8.1(d)(iii) or 8.1(d)(iv) and (b) a
Competing Acquisition Proposal that was announced publicly
prior to termination of this Agreement is consummated within
one year of the date of termination of this Agreement.
(c) Notwithstanding anything to the contrary set forth in this
Agreement, if the Company fails promptly to pay to Parent any amounts due
under this SECTION 8.2, the Company shall pay the costs and expenses
(including reasonable legal fees and expenses) in connection with any
action, including the filing of any lawsuit or other legal action, taken to
collect payment, together with interest on the amount of any unpaid fee or
obligation at the publicly announced prime rate of Citibank, N.A. in effect
from time to time from the date such fee or obligation was required to be
paid.
The Fee shall be paid within three business days after termination in the case
of termination pursuant to clause (b)(i) above, or one business day after the
consummation of the Competing Acquisition Proposal which gives rise to the
obligation to make such payment in the case of clause (b)(ii) above.
Section 8.3 AMENDMENTS.
This Agreement may not be amended except by an instrument in writing signed
on behalf of each of the parties hereto; PROVIDED, that after approval of the
Merger by the Company Stockholders, no amendment may be made without the further
approval of the Company Stockholders if the effect of such amendment would be to
reduce the Merger
51
Consideration or change the form thereof, and no amendment may be made to
SECTION 6.6 without the consent of the third party beneficiaries of such
Section.
Section 8.4 WAIVER.
At any time prior to the Effective Time, whether before or after the
Stockholders Meeting, any party hereto, by action taken by its Board of
Directors, may (a) extend the time for the performance of any of the covenants,
obligations or other acts of any other party hereto or (b) waive any inaccuracy
of any representations or warranties or compliance with any of the agreements,
covenants or conditions of any other party or with any conditions to its own
obligations. 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 by its duly authorized officer. The failure of any party to
this Agreement to assert any of its rights under this Agreement or otherwise
shall not constitute a waiver of such rights. The waiver of any such right with
respect to particular facts and other circumstances shall not be deemed a waiver
with respect to any other facts and circumstances and each such right shall be
deemed an ongoing right that may be asserted at any time and from time to time.
ARTICLE IX
GENERAL PROVISIONS
Section 9.1 NO THIRD PARTY BENEFICIARIES.
Other than the provisions of SECTION 6.6 hereof, nothing in this Agreement
shall confer any rights or remedies upon any person other than the parties
hereto.
Section 9.2 ENTIRE AGREEMENT.
This Agreement, together with the Confidentiality Agreement, constitutes
the entire agreement among the parties with respect to the subject matter hereof
and supersedes any prior understandings, agreements, or representations by or
among the parties, written or oral, with respect to the subject matter hereof.
No amendment, modification or alteration of the terms or provisions of this
Agreement or the Company Disclosure Letter shall be binding unless the same
shall be in writing and duly executed by the parties hereto.
Section 9.3 SUCCESSION AND ASSIGNMENT.
This Agreement shall be binding upon and inure to the benefit of the
parties named herein and their respective successors and permitted assigns. 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;
PROVIDED, that each of Parent and Sub may freely assign its rights to another
direct or indirect wholly owned subsidiary of Parent or Sub without such prior
written approval but no such assignment shall relieve Parent or Sub of any of
its obligations hereunder. Any purported assignment without such consent shall
be void.
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Section 9.4 COUNTERPARTS.
This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original but all of which together shall constitute one and
the same instrument.
Section 9.5 HEADINGS.
The section headings contained in this Agreement are inserted for
convenience only and shall not affect in any way the meaning or interpretation
of this Agreement.
Section 9.6 GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with the
Laws of the State of California, without regard to principles of conflicts of
Law thereof.
Section 9.7 SEVERABILITY.
Any term or provision of this Agreement that is invalid or unenforceable in
any situation in any jurisdiction shall not affect the validity or
enforceability of the remaining terms and provisions hereof or the validity or
enforceability of the offending term or provision in any other situation or in
any other jurisdiction. If the final judgment of a court of competent
jurisdiction declares that any term or provision hereof is invalid or
unenforceable, the parties agree that the court making the determination of
invalidity or unenforceability shall have the power to reduce the scope,
duration, or area of the term or provision, to delete specific words or phrases,
or to replace any invalid or unenforceable term or provision with a term or
provision that is valid and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable term or provision, and this Agreement
shall be enforceable as so modified after the expiration of the time within
which the judgment may be appealed.
Section 9.8 SPECIFIC PERFORMANCE.
Each of the parties acknowledges and agrees that the other party would be
damaged irreparably in the event any of the provisions of this Agreement are not
performed in accordance with their specific terms or otherwise are breached.
Accordingly, each of the parties agrees that the other party shall be entitled
to seek an injunction or injunctions to prevent breaches of the provisions of
this Agreement and to enforce specifically this Agreement and the terms and
provisions hereof in any action instituted in any court of the United States or
any state thereof having jurisdiction over the parties and the matter, in
addition to any other remedy to which it may be entitled, at law or in equity.
Section 9.9 CONSTRUCTION.
The language used in this Agreement shall be deemed to be the language
chosen by the parties hereto to express their mutual intent, and no rule of
strict construction shall be applied against any party. Whenever the words
"include," "includes" or "including"
53
are used in this Agreement, they shall be deemed to be followed by the words
"without limitation."
Section 9.10 NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES AND AGREEMENTS.
Except as provided in the last sentence of this SECTION 9.10, the
representations, warranties and agreements in this Agreement shall terminate at
the Effective Time or upon the termination of this Agreement pursuant to SECTION
8.1, as the case may be. This SECTION 9.10 will not limit any covenant or
agreement of the parties which by its terms contemplates performance after the
Effective Time or termination of this Agreement.
Section 9.11 CERTAIN DEFINITIONS.
(a) For purposes of this Agreement, the terms "associate" and
"affiliate" shall have the same meaning as set forth in Rule 12b-2
promulgated under the Exchange Act, and the term "person" shall mean any
individual, corporation, partnership (general or limited), limited
liability company, limited liability partnership, trust, joint venture,
joint-stock company, syndicate, association, entity, unincorporated
organization or government or any political subdivision, agency or
instrumentality thereof or any other entity. For purposes of this
Agreement, the phrase "Company Material Adverse Effect" shall mean, with
respect to the Company, any change, event or effect shall have occurred or
been threatened that, when taken together with all other adverse changes,
events or effects that have occurred, is materially adverse to the
business, operations, properties, condition (financial or otherwise),
assets, liabilities (including, without limitation, contingent liabilities)
of the Company and its Subsidiaries taken as a whole; PROVIDED, that a
Company Material Adverse Effect shall not include failure by the Company to
meet analysts' earnings forecasts or estimates, changes in the market price
or trading volume of the Company's securities or any effect resulting from
any change (i) in Law, GAAP or interpretations thereof that apply to the
Company or its Subsidiaries, (ii) any change in general economic or
business conditions, including any change due to any act of war, terrorism
or threat of war or terrorism or (iii) due to the public announcement of
this Agreement or the transactions contemplated by this Agreement, or the
consummation of such transactions.
(b) For purposes of this Agreement, the phrases "to the knowledge of
the Company," "known to the Company," and similar formulations shall mean
(i) the knowledge of any of the executive and managing officers of the
Company and its Subsidiaries and all knowledge which was or could have been
obtained upon reasonable inquiry by such executive and managing officers
whose duties would, in the normal course of the Company's affairs, result
in such persons having knowledge concerning such subject area or state of
affairs and (ii) the actual knowledge of any of the directors or executive
and managing officers of the Company.
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Section 9.12 FEES AND EXPENSES.
Except as provided in SECTION 8.2, all costs and expenses incurred by the
parties hereto in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses.
Section 9.13 NOTICES.
All notices, requests, claims, demands and other communications hereunder
shall be in writing and shall be given (and shall be deemed to have been duly
given upon receipt) by delivery in person, by telecopy, by prepared courier of
recognized standing (with receipt provided by such courier) or by registered or
certified mail (postage prepaid, return receipt requested) to the respective
parties at the following addresses, or at such other address for a party as
shall be specified in a notice given in accordance with this SECTION 9.13:
If to Parent or Sub: Rocket Software, Inc.
0 Xxxxx Xxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx
Telecopier: 000-000-0000
Attention: Xxxxx Xxxxxxxxx
with a copy to: Xxxxxx, Gesmer & Xxxxxxxxx LLP
00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Telecopier: 000-000-0000
Attention: Xxxxxx X. Xxxxxx
If to the Company: TCSI Corporation
0000 Xxxxxx Xxxxxxx Xxxxxxx
Xxxxxxx, Xxxxxxxxxx 00000
Telecopier: 000-000-0000
Attention: Xxxxxxx X. Xxxxx
with a copy to: Xxxxxxxx & Xxxxxxxx LLP
000 Xxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Telecopier: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxx
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IN WITNESS WHEREOF, the Company, Parent and Sub and have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
TCSI CORPORATION
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
ROCKET SOFTWARE, INC.
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
ROCKET ACQUISITION SUB, INC.
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
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ANNEX I
CONDITIONS TO THE OFFER
Capitalized terms used in this Annex I shall have the meanings assigned
to them in this Agreement.
Notwithstanding any other provision of the Offer, and in addition to
(and not in limitation of) Sub's rights to extend and amend the Offer at any
time in its sole discretion (subject to the provisions of this Agreement), Sub
shall not be required to accept for payment or pay for any Shares, and may delay
the acceptance for payment of or, subject to any applicable rules and
regulations of the SEC, including Rule 14e-1(c) under the Exchange Act, the
payment for, any tendered Shares, and may terminate or amend the Offer as to any
Shares not then paid for, if:
(1) at or prior to the expiration date of the Offer, the
number of Shares validly tendered and not withdrawn,
together with any Shares then owned by Parent or Sub,
shall not satisfy the Minimum Condition or, if
applicable pursuant to the provisions of this
Agreement, the Revised Minimum Number; or
(2) at any time prior to acceptance for payment of Shares
pursuant to the Offer, any of the following events or
conditions shall occur or exist:
(a) there shall have been instituted or be pending any action or
proceeding by any Governmental Entity: (i) challenging or seeking to permanently
restrain, enjoin or otherwise prohibit the Offer or the Merger; (ii) seeking to
materially restrain or prohibit Parent's or Sub's full rights of ownership or
operation of any material portion of the business or assets of the Company, or
to compel Parent or Sub to dispose of or hold separate all or any portion of the
business or assets of the Company; (iii) seeking to impose material limitations
on the ability of Parent or Sub effectively to exercise rights of ownership of
the Shares acquired pursuant to the Offer and the Merger, including, without
limitation, the right to vote any Shares acquired or owned by Parent or Sub on
all matters properly presented to the Company Stockholders; (iv) seeking to
require divestiture by Parent or Sub of any Shares or (v) imposing a waiting
period (such as under any applicable antitrust or competition law or
regulation), or requiring any permission, that has not expired or been
terminated or has otherwise not been obtained or satisfied; or
(b) there shall have been enacted, enforced, promulgated or deemed
applicable to the Offer or the Merger by any Governmental Entity any statute,
rule, regulation judgment, order or injunction that has, directly or indirectly,
resulted, or is reasonably likely to, directly or indirectly, result in any of
the consequences referred to in paragraph (a) above;
(c) an event shall have occurred that has had or could reasonably be
expected to have a Material Adverse Effect on the Company;
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(d) the actions described in SECTION 8.1(d) of this Agreement shall
have occurred;
(e) the Company shall have breached or failed to perform in any
material respect any of its covenants or agreements under this Agreement, which
breach or failure to perform, if capable of being cured, continues for more than
30 days after the giving of written notice to the Company;
(f) the representations and warranties of the Company in this Agreement
that are qualified by materiality shall not be true and correct in any respect
as of the date of this Agreement and as of the Effective Time (except as to
those representations and warranties made as of a specified date, which shall be
so true and correct as of such specified date), and the representations and
warranties of the Company in this Agreement that are not qualified by
materiality shall not be true and correct in any material respect as of the date
of this Agreement and as of the Effective Time (except as to those
representations and warranties made as of a specified date, which shall be so
true and correct in all material respects as of such specified date); or
(g) this Agreement shall have been terminated in accordance with its
terms or amended in accordance with its terms to provide for such termination or
amendment of the Offer.
The foregoing conditions are for the sole benefit of Parent and Sub and
may be asserted or waived by Parent or Sub, regardless of the circumstances
giving rise to any such condition, in whole or in part at any time and from time
to time in their sole discretion. The failure by Parent or Sub at any time to
exercise any of the foregoing rights shall not be deemed a waiver of any such
right, and each such right shall be deemed an ongoing right and may be asserted
at any time and from time to time.
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