EXHIBIT 2.1
AGREEMENT AND
PLAN OF MERGER
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
MOTOROLA, INC.
EARTH ACQUISITION CORPORATION
AND
BLUE WAVE SYSTEMS INC.
DATED AS OF FEBRUARY 20, 2001
ARTICLE I
THE MERGER; EFFECTIVE TIME; CLOSING............................................................. 2
1.1 The Merger.............................................................................. 2
1.2 Closing................................................................................. 2
1.3 Effective Time.......................................................................... 2
1.4 Effect of the Merger.................................................................... 2
ARTICLE II
CERTIFICATE OF INCORPORATION AND BY-LAWS OF THE SURVIVING CORPORATION........................... 2
2.1 Certificate of Incorporation............................................................ 2
2.2 Bylaws.................................................................................. 3
ARTICLE III
DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION AND PARENT.................................. 3
3.1 Directors of the Surviving Corporation.................................................. 3
3.2 Officers of the Surviving Corporation................................................... 3
ARTICLE IV
MERGER CONSIDERATION; CONVERSION OR CANCELLATION OF SHARES IN THE MERGER........................ 3
4.1 Share Consideration for the Merger; Conversion or Cancellation of Shares in the Merger.. 3
4.2 Payment for Shares in the Merger........................................................ 6
4.3 Cash For Fractional Parent Shares....................................................... 9
4.4 Transfer of Shares after the Effective Time............................................. 9
4.5 Investment of the Stock Merger Exchange Fund and Fractional Securities Fund............. 9
4.6 Lost Certificates....................................................................... 9
4.7 Further Assurances...................................................................... 9
4.8 Affiliates.............................................................................. 10
ARTICLE V
REPRESENTATIONS AND WARRANTIES.................................................................. 10
5.1 Representations and Warranties of the Company........................................... 10
5.2 Representations and Warranties of Parent and Merger Sub................................. 42
ARTICLE VI
ADDITIONAL COVENANTS AND AGREEMENTS............................................................. 47
6.1 Conduct of Business of the Company...................................................... 47
6.2 No Solicitation......................................................................... 50
6.3 Company Stockholders Meeting............................................................ 52
6.4 Registration Statement; Proxy Statment.................................................. 53
6.5 Listing Application..................................................................... 53
6.6 Access to Information................................................................... 53
6.7 Publicity............................................................................... 54
6.8 Indemnification of Directors and Officers............................................... 54
6.9 Affiliates.............................................................................. 55
6.10 Representations and Warranties......................................................... 55
6.11 Filings; Reasonable Best Efforts to Consummate Transactions............................ 55
6.12 Tax-Free Reorganization Treatment...................................................... 55
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6.13 Termination of 401(k) Plan............................................................. 55
6.14 Employee Benefits...................................................................... 55
6.15 Accountant's Comfort Letters........................................................... 56
6.16 U.K. Matters........................................................................... 56
6.17 Bonuses................................................................................ 57
ARTICLE VII
CONDITIONS...................................................................................... 57
7.1 Conditions to Each Party's Obligations.................................................. 57
7.2 Additional Conditions to the Obligations of the Company................................. 58
7.3 Additional Conditions to the Obligations of Parent...................................... 59
ARTICLE VIII
TERMINATION..................................................................................... 61
8.1 Termination by Mutual Consent........................................................... 61
8.2 Termination by either the Company or Parent............................................. 61
8.3 Termination by the Company.............................................................. 61
8.4 Termination by Parent................................................................... 62
8.5 Effect of Termination; Termination Fee.................................................. 63
ARTICLE IX
MISCELLANEOUS AND GENERAL....................................................................... 64
9.1 Payment of Expenses..................................................................... 64
9.2 Non-Survival of Representations and Warranties.......................................... 64
9.3 Modification or Amendment............................................................... 64
9.4 Waiver of Conditions.................................................................... 65
9.5 Counterparts............................................................................ 65
9.6 Governing Law........................................................................... 65
9.7 Notices................................................................................. 65
9.8 Entire Agreement; Assignment............................................................ 66
9.9 Parties in Interest..................................................................... 66
9.10 Certain Definitions.................................................................... 66
9.11 Obligations of Subsidiary.............................................................. 71
9.12 Severability........................................................................... 71
9.13 Specific Performance................................................................... 71
9.14 Trial by Jury.......................................................................... 71
9.15 Captions............................................................................... 72
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GLOSSARY OF DEFINED TERMS
Acquisition Proposal........................................ Section 6.2(f)(i)
Affiliate................................................... Section 9.10(a)
Agreement................................................... Introduction
Applicable Trading Days..................................... Section 4.1(a)
Authorized Representatives.................................. Section 6.6
Basis....................................................... Section 9.10(b)
Business Day................................................ Section 9.10(c)
Cancelled Shares............................................ Section 4.1(b)
CERCLA...................................................... Section 5.1(u)(v)
Certificate................................................. Section 4.1(a)(ii)
Certificate of Merger....................................... Section 1.3
Closing..................................................... Section 1.2
Closing Date................................................ Section 1.2
Code........................................................ Recitals
Company..................................................... Introduction
Company Acquisition Transaction............................. Section 6.2(f)(ii)
Company Affiliates.......................................... Section 6.9
Company Affiliate Agreement................................. Section 6.9
Company Assets.............................................. Section 5.1(d)(i)
Company Disclosure Schedule................................. Section 5.1
Company Financial Advisor................................... Section 9.10(d)
Company Financial Advisor Opinion........................... Section 5.1(x)
Company Intellectual Property............................... Section 9.10(e)
Company Licenses............................................ Section 5.1(m)(xi)
Company Records............................................. Section 6.16(a)
Company SEC Reports......................................... Section 5.1(f)(i)
Company Shares.............................................. Section 4.1(a)
Company Software............................................ Section 9.10(f)
Company Stockholder Approval................................ Section 6.3
Company Stockholder Meeting................................. Section 6.3
Company Voting Debt......................................... Section 5.1(b)(ii)
Consents.................................................... Section 7.2(e)
Control..................................................... Section 9.10(g)
Controlled Group............................................ Section 9.10(h)
Converted Blue Wave Option.................................. Section 4.1(e)(i)
Determination Date.......................................... Section 4.1(a)
DGCL........................................................ Section 1.1
Direct Contracts............................................ Section 5.1(bb)(i)
Dormant Subsidiaries........................................ Section 6.16(b)
Eagle Trust Options......................................... Section 4.1(e)(iii)
Blue Wave Employee Option................................... Section 4.1(e)(i)
Effective Time.............................................. Section 1.3
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Employee Benefit Plan....................................... Section 9.10(i)
Employee Pension Benefit Plan............................... Section 9.10(j)
Employee Welfare Benefit Plan............................... Section 9.10(k)
Environmental Costs and Liabilities......................... Section 5.1(u)
Environmental Health and Safety Requirements................ Section 9.10(l)
ERISA....................................................... Section 9.10(m)
Exchange Act................................................ Section 9.10(n)
Exchange Agent.............................................. Section 4.2(a)
Exchange Ratio.............................................. Section 4.1(a)
Excluded Licenses........................................... Section 9.10(o)
Filings..................................................... Section 7.2(e)
Fractional Securities Fund.................................. Section 4.3
GAAP........................................................ Section 9.10(p)
Governmental Entity......................................... Section 5.1(c)(iv)
Hazardous Material.......................................... Section 5.1(u)
HSR Act..................................................... Section 9.10(q)
Indemnified Party........................................... Section 6.8
Intellectual Property....................................... Section 9.10(r)
IRS......................................................... Section 9.10(s)
Knowledge................................................... Section 9.10(t)
KPMG........................................................ Section 6.15(b)
Law......................................................... Section 9.10(u)
Liability................................................... Section 9.10(v)
Lien........................................................ Section 9.10(w)
LSI Options................................................. Section 4.1(e)(iii)
Material Adverse Effect..................................... Section 9.10(x)
Material Contracts.......................................... Section 5.1(n)
Material Subsidiaries....................................... Section 5.1(e)(iii)
Maximum Premium............................................. Section 6.8
Merger...................................................... Recitals
Merger Consideration........................................ Section 4.1(a)
Merger Sub.................................................. Introduction
Most Recent Fiscal Period End............................... Section 5.1(h)
Nasdaq...................................................... Section 5.1(c)(iv)
Non-Disclosure Agreement.................................... Section 6.6
NYSE........................................................ Section 4.1(a)
Ordinary Course of Business................................. Section 9.10(y)
Outside Date................................................ Section 8.2(a)
Parent...................................................... Introduction
Parent Common Stock......................................... Section 5.2(b)
Parent Disclosure Schedule.................................. Section 5.2
Parent Expenses............................................. Section 8.5(b)
Parent Market Price......................................... Section 4.1(a)
Parent Rights............................................... Section 5.2(b)
Parent Rights Agreement..................................... Section 5.2(b)
Parent SEC Reports.......................................... Section 5.2(d)(i)
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Parent Shares............................................ Section 4.1(a)
Parties.................................................. Introduction
Person................................................... Section 9.10(z)
Prohibited Transaction................................... Section 9.10(aa)
Proprietary Rights Agreement............................. Section 5.1(s)(ii)
Prospects................................................ Section 9.10(bb)
Proxy Statement.......................................... Section 6.4
RCRA..................................................... Section 5.1(u)(v)
Registered Intellectual Property......................... Section 9.10(cc)
Representative........................................... Section 6.2(b)
Required Company Votes................................... Section 5.1(i)
Restraints............................................... Section 7.1(c)
S-4 Registration Statement............................... Section 6.4
SEC...................................................... Section 9.10(dd)
Securities Act........................................... Section 9.10(ee)
Security Interest........................................ Section 9.10(ff)
Software................................................. Section 9.10(gg)
Stock Merger Exchange Fund............................... Section 4.2(a)
Stock Option Agreement................................... Recitals
Subcontracts............................................. Section 5.1(bb)(i)
Subsidiary............................................... Section 9.10(hh)
Superior Proposal........................................ Section 6.2(f)(iii)
Surviving Corporation.................................... Section 1.1
SWDA..................................................... Section 5.1(u)(v)
Takeover Statute......................................... Section 5.1(c)(iii)
Tax...................................................... Section 5.1(k)
Tax Return............................................... Section 9.10(ii)
Termination Fee.......................................... Section 8.5(b)
Termination Notice....................................... Section 8.3(b)
Third Party.............................................. Section 6.2(b)
U.K. Pension Scheme...................................... Section 9.10(jj)
U.K. Subsidiary.......................................... Section 5.1(t)(ii)(6)
Unregistered Intellectual Property....................... Section 9.10(kk)
Voting Agreement......................................... Recitals
Voting Stockholder....................................... Recitals
EXHIBITS
Stock Option Agreement..................................................... Exhibit A
Voting Agreement........................................................... Exhibit B
Company Affiliate Letter................................................... Exhibit C
Blue Wave Systems Inc. Standard Form Contract of Employment................ Exhibit D-1
Blue Wave Systems Limited Standard Form Contract of Employment............. Exhibit D-2
Loughborough Sound Images Limited Form Contract of Employment.............. Exhibit D-3
Loughborough Sound Images Ltd. Form Statement of Employment................ Exhibit D-4
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of February
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20, 2001, by and among MOTOROLA, INC., a Delaware corporation ("Parent"), EARTH
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ACQUISITION CORPORATION, a Delaware corporation and a direct wholly-owned
subsidiary of Parent ("Merger Sub"), and BLUE WAVE SYSTEMS INC., a Delaware
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corporation (the "Company"). Parent, Merger Sub and the Company are referred to
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collectively herein as the "Parties".
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RECITALS
WHEREAS, the Board of Directors of each of Parent and the Company have
determined that it is in the best interests of each corporation and their
respective stockholders that the Parties consummate the business combination
transaction provided for herein in which Merger Sub will merge with and into the
Company (the "Merger") and, in furtherance thereof, have approved this
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Agreement, the Merger and the transactions contemplated by this Agreement and
declared the Merger advisable;
WHEREAS, Parent, as the sole shareholder of Merger Sub, has approved
this Agreement, the Merger and the transactions contemplated by this Agreement
pursuant to action taken in accordance with the requirements of the Delaware
General Corporation Law and the bylaws of Merger Sub;
WHEREAS, pursuant to the Merger, the outstanding shares of common
stock of the Company shall be converted into shares of common stock of Parent at
the rate determined herein;
WHEREAS, for federal income tax purposes, it is intended that the
Merger shall qualify as a reorganization within the meaning of Section 368(a) of
the Internal Revenue Code of 1986, as amended (the "Code"), and the regulations
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promulgated thereunder;
WHEREAS, in connection with and immediately prior to the execution and
delivery of this Agreement, and as a condition to Parent's willingness to enter
into this Agreement, (i) the Company and Parent are entering into a Stock Option
Agreement, attached as Exhibit A hereto (the "Stock Option Agreement"); and (ii)
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certain holders (each a "Voting Stockholder") of Company Shares are entering
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into a stockholder voting agreement, attached as Exhibit B hereto (the "Voting
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Agreement").
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NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants and agreements set forth herein, the Parties hereby agree
as follows:
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ARTICLE I
THE MERGER; EFFECTIVE TIME; CLOSING
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1.1 The Merger. Upon the terms and subject to the conditions set forth in
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this Agreement, and in accordance with the Delaware General Corporation Law, as
amended (the "DGCL"), at the Effective Time, Merger Sub shall be merged with and
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into the Company, the separate corporate existence of Merger Sub shall thereupon
cease and the Company shall continue as the surviving corporation and shall
succeed to and assume all the rights and obligations of Merger Sub in accordance
with the DGCL. The Company, as the surviving corporation after the consummation
of the Merger, is sometimes hereinafter referred to as the "Surviving
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Corporation."
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1.2 Closing. Unless this Agreement shall have been terminated and the
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transactions contemplated herein shall have been abandoned pursuant to Article
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VIII, the closing of the Merger (the "Closing") shall take place at 10:00 a.m.,
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local time, at the offices of counsel for Parent, on the first business day
after all of the conditions (excluding conditions that, by their nature, cannot
be satisfied until the Closing Date) to the obligations of the Parties to
consummate the Merger as set forth in Article VII have been satisfied or waived
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(subject to applicable law), or such other date, time or place as is agreed to
in writing by the Parties (the actual time and date of the Closing being
referred to herein as the "Closing Date").
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1.3 Effective Time. Subject to the provisions of this Agreement, the
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Parties shall cause the Merger to be consummated by filing the certificate of
merger of Merger Sub and the Company (the "Certificate of Merger") with the
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Secretary of State of the State of Delaware in such form as required by, and
executed in accordance with, the relevant provisions of the DGCL as soon as
practicable on or before the Closing Date. The Merger shall become effective at
such time as the Certificate of Merger is duly filed with the Secretary of State
of Delaware or at such subsequent date or time as the Parties shall agree and
specify in the Certificate of Merger (the date and time the Merger becomes
effective being hereinafter referred to as the "Effective Time").
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1.4 Effect of the Merger. At and after the Effective Time, the effect of
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the Merger shall be as provided in this Agreement and the applicable provisions
of the DGCL. Without limiting the generality of the foregoing, and subject
thereto, at the Effective Time, all the property, rights, privileges, powers and
franchises of the Company and Merger Sub shall vest in the Surviving
Corporation, and all debts, liabilities and duties of the Company and Merger Sub
shall become the debts, liabilities and duties of the Surviving Corporation.
ARTICLE II
CERTIFICATE OF INCORPORATION AND
--------------------------------
BY-LAWS OF THE SURVIVING CORPORATION
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2.1 Certificate of Incorporation. At and after the Effective Time, and
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without any further action on the part of the Company and Merger Sub, the
certificate of incorporation of the Company shall be amended to read in its
entirety as the certificate of
2
incorporation of Merger Sub reads as in effect immediately prior to the
Effective Time until thereafter changed or amended as provided therein or by
applicable law, provided that such certificate of incorporation shall be amended
to reflect Blue Wave Systems Inc. as the name of the Surviving Corporation.
2.2 Bylaws. At the Effective Time, the bylaws of Merger Sub as in effect
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immediately prior to the Effective Time shall be the bylaws of the Surviving
Corporation, until thereafter changed or amended as provided therein or by
applicable law.
ARTICLE III
DIRECTORS AND OFFICERS OF
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THE SURVIVING CORPORATION AND PARENT
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3.1 Directors of the Surviving Corporation. The directors of the
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Surviving Corporation, as of the Effective Time, will be the directors of Merger
Sub immediately prior to the Effective Time.
3.2 Officers of the Surviving Corporation. The officers of the Surviving
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Corporation, as of the Effective Time, will be the officers of Merger Sub
immediately prior to the Effective Time.
ARTICLE IV
MERGER CONSIDERATION; CONVERSION OR
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CANCELLATION OF SHARES IN THE MERGER
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4.1 Share Consideration for the Merger; Conversion or Cancellation of
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Shares in the Merger. At the Effective Time, the manner of converting or
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canceling shares of the Company and Parent shall be as follows:
(a) Effect on Capital Stock. (i) At the Effective Time, each share
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of common stock, $0.01 par value ("Company Shares"), of the Company issued
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and outstanding immediately prior to the Effective Time (other than the
Cancelled Shares, as defined in Section 4.1(b), shall be converted into the
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right to receive that number of duly authorized, validly issued, fully paid
and nonassessable shares of common stock, $3.00 par value, of Parent
(collectively, "Parent Shares") (together with the associated Parent Rights
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and with any cash in lieu of fractional shares to be paid pursuant to
Section 4.3, the "Merger Consideration") equal to the Exchange Ratio. The
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"Exchange Ratio" shall be determined as follows and shall be subject to
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adjustment pursuant to Section 8.3:
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(1) If the Parent Market Price is less than or equal to
$25.38 the Exchange Ratio shall equal .3947; and
(2) If the Parent Market Price is greater than $25.38, the
Exchange Ratio shall equal a quotient (rounded to the nearest one-
ten-thousandth), the numerator of which is $10.02, and the
denominator of which is the Parent Market Price.
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For purposes of this Agreement, "Parent Market Price" shall mean the
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average daily closing price per share of Parent Common Stock as reported on
the New York Stock Exchange, Inc. (the "NYSE") Composite Tape for the
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Applicable Trading Days, "Applicable Trading Days" shall mean the twenty
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(20) trading days ending on and including the Determination Date, and
"Determination Date" shall mean the third NYSE trading day preceding the
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Closing Date.
(ii) As a result of the Merger and without any action on the part
of the holders thereof, at the Effective Time, all Company Shares
shall cease to be outstanding and shall automatically be canceled and
retired and shall cease to exist, and each holder of a certificate
which immediately prior to the Effective Time represented any Company
Shares (a "Certificate") shall thereafter cease to have any rights
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with respect to such shares of Company Common Stock, except as
provided herein or by law.
(b) Cancellation of Parent Owned and Treasury Stock. All of the
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Company Shares that are owned by Parent, any direct or indirect wholly-
owned subsidiary of Parent or by the Company as treasury stock
(collectively, the "Cancelled Shares") shall, by virtue of the Merger,
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cease to be outstanding and shall be canceled and retired and no Parent
Shares, Parent Rights or other consideration shall be delivered in exchange
therefor.
(c) Stock of Merger Sub. Each share of common stock, $0.01 par value,
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of Merger Sub issued and outstanding immediately prior to the Effective
Time, shall, by virtue of the Merger and without any action on the part of
the holder thereof, be converted automatically into and exchanged for one
(1) validly issued, fully paid and nonassessable share of common stock,
$0.01 par value, of the Surviving Corporation. Each stock certificate
representing any shares of Merger Sub shall continue to represent ownership
of such shares of capital stock of the Surviving Corporation.
(d) Associated Rights. References in Article IV of this Agreement to
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Parent Shares shall include, unless the context requires otherwise, the
associated Parent Rights.
(e) Options; Stock Plans.
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(i) Prior to the Effective Time, the Company Board of Directors
will adopt appropriate resolutions and take all other actions
necessary to amend the Blue Wave Systems Inc. Stock Option Plan to
provide that, as of the Effective Time, each option that is
outstanding under the Blue Wave Systems Inc. Stock Option Plan (each,
a "Blue Wave Employee Option") will be converted into an option to
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purchase Parent Shares (a "Converted Blue Wave Option"), if with
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respect to each outstanding option the holder of the option has, by
the Effective Time, signed an agreement consenting to the terms of the
conversion described in the following three sentences, and if Parent
has received that signed
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agreement by the Effective Time. The number of Parent Shares subject
to each Converted Blue Wave Option will be the number of Company
Shares that were subject to the option before conversion, multiplied
by the Exchange Ratio, and rounded down to the next whole number. The
per-share exercise price of each Converted Blue Wave Option will be
the exercise price of the option before conversion, divided by the
Exchange Ratio, and the expiration date of each Converted Blue Wave
Option will be identical to the expiration date contained in the Blue
Wave Employee Option prior to conversion. Each Converted Blue Wave
Option will be fully vested from and after the Effective Time, and
will be exercisable approximately ten (10) business days after the
Effective Time, but will be subject to the terms regarding ability,
time and conditions of exercise after termination due to death,
disability, retirement, cause or other reasons; manner of exercise;
the effect of a change in control; transferability; and other terms
and conditions of the option as are generally applicable to options
granted under the Motorola Omnibus Incentive Plan of 2000. The Company
affirms that, because the plan amendment will not apply to an option
that is not subject to an agreement consenting to the terms of
conversion described above, any Blue Wave Employee Option regarding
which the holder does not sign such an agreement will, in accordance
with the terms of the Blue Wave Systems Inc. Stock Option Plan,
terminate at the Effective Time and be of no further force and effect.
The Company will prepare the necessary agreements consenting to the
terms of the conversion described in this Section 4.1(e)(i); provided,
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however, such agreements shall be subject to Parent's approval. The
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Company will be responsible for seeing that the agreements consenting
to the terms of the conversion are distributed and signed by Blue Wave
Employee Option holders, and that copies of the signed agreements are
received by Parent prior to the Effective Time.
(ii) Prior to the Effective Time, the Company Board of Directors
will adopt appropriate resolutions and take all other actions
necessary (including obtaining the written consent of any option
holder as contemplated by Section 7.3(i) hereof) to terminate the Blue
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Wave Systems Inc. Directors' Stock Option Plan effective at the
Effective Time, so that all options under the Blue Wave Systems Inc.
Directors' Stock Option Plan that are not exercised prior to the
Effective Time will terminate effective at the Effective Time.
(iii) Each option assumed by Mizar, Inc. from Loughborough Sound
Images Limited in connection with the transactions contemplated by
that certain share purchase agreement dated November 17, 1997 between
Mizar, Inc. and Loughborough Sound Images Limited, as amended by that
certain letter agreement dated March 24, 1998 (the "LSI Options"), and
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each option issued pursuant to the Trust Deed of the LSI Employee
Share Trust (the "Eagle Trust Options") will be converted into an
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option to purchase Parent Shares, according to the terms described in
5
the remainder of this Section 4.1(e)(iii). From and after the
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Effective Time, each LSI Option or Eagle Trust Option will entitle its
holder to purchase a number of Parent Shares equal to the number of
Company Shares that were subject to the option before conversion,
multiplied by the Exchange Ratio and rounded down to the next whole
number. The per-share exercise price of the LSI Option or Eagle Trust
Option after conversion will equal the option's per-share exercise
price before conversion, divided by the Exchange Ratio.
(iv) Any other plan, program, agreement or arrangement providing
for the issuance or grant of any other interest in respect of the
capital stock of the Company or any Affiliate will terminate as of the
Effective Time, and no individual will have any rights under any such
plan, program, agreement or arrangement.
(f) Reservation of Parent Shares. Parent shall take all corporate
----------------------------
action necessary to reserve for issuance a sufficient number of Parent
Shares for delivery upon exercise of any Converted Blue Wave Options or LSI
Options in accordance with Section 4.1(e). As soon as practicable after
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the Closing Date, to the extent required to effect registration of the
Parent Shares subject to each Converted Blue Wave Option or LSI Option,
Parent shall file a registration statement, or an amendment to an existing
registration statement, under the Securities Act on Form S-8 (or other
successor form) with respect to the Parent Shares subject to such Converted
Blue Wave Options or LSI Options and shall use its best efforts to maintain
the effectiveness of such registration statement for so long as such
Converted Blue Wave Options or LSI Options remain outstanding. In
addition, Parent will cause such shares to be listed on the NYSE.
(g) Certain Adjustments. If, between the date of this Agreement and
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the Effective Time, the outstanding Company Shares or Parent Shares shall
have been changed into a different number of shares or different class by
reason of any reclassification, recapitalization, stock split, split-up,
combination or exchange of shares or a stock dividend or dividend payable
in any other securities shall be declared with a record date within such
period, or any similar event shall have occurred, (i) the Exchange Ratio
shall be appropriately adjusted to provide to the holders of Company Shares
the same economic effect as contemplated by this Agreement prior to such
event, and (ii) any references to the Parent Market Price relating to a
party's termination rights hereunder shall also be approximately adjusted.
4.2 Payment for Shares in the Merger. The manner of making payment for
--------------------------------
Shares in the Merger shall be as follows:
(a) Exchange Agent. On or prior to the Closing Date, Parent shall
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appoint a commercial bank or trust company having net capital of not less
than $300,000,000 or a wholly-owned subsidiary thereof to act as exchange
agent hereunder for the purposes of exchanging Certificates for Company
Shares (the
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"Exchange Agent"). At or prior to the Effective Date, Parent shall deposit
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with the Exchange Agent in trust for the benefit of the holders of Company
Shares, a sufficient number of certificates representing the Parent Shares
required to effect the delivery of the aggregate consideration in Parent
Shares and cash for the fractional Parent Shares required to be delivered
pursuant to Sections 4.1 and 4.3 (the certificates representing the Parent
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Shares comprising the Merger Consideration being referred to hereinafter as
the "Stock Merger Exchange Fund"). The Exchange Agent shall, pursuant to
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irrevocable instructions, deliver the Merger Consideration out of the Stock
Merger Exchange Fund and the Fractional Securities Fund. The Stock Merger
Exchange Fund and the Fractional Securities Fund shall not be used for any
other purpose than as set forth herein.
(b) Exchange Procedures. Promptly after the Effective Time, Parent
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shall cause the Exchange Agent to mail to each holder of record of
outstanding Company Shares (i) a form of letter of transmittal, in a form
reasonably satisfactory to the Parties and (ii) instructions for use in
effecting the surrender of Certificates for payment therefor. Upon
surrender of Certificates for cancellation to the Exchange Agent, together
with such letter of transmittal duly executed and completed in accordance
with the instructions thereto, and any other documents as may be required
by the Exchange Act, the holder of such Certificate shall be entitled to
receive in exchange for each of the Company Shares represented by the
Certificates held of record by such holder one (1) or more Parent Shares
(which shall be in uncertificated book-entry form unless a physical
certificate is requested) representing, in the aggregate, the whole number
of Parent Shares that such holder has the right to receive pursuant to
Section 4.1(a) and (2) a check in the amount equal to the cash that such
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holder has the right to receive in lieu of any fractional Parent Shares
pursuant to Sections 4.1 and 4.3. No interest will be paid or will accrue
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on any cash payable pursuant to Sections 4.1 and 4.3. The Certificates so
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surrendered pursuant to this Section 4.2(b) shall forthwith be canceled.
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Until so surrendered, such Certificates shall represent solely the right to
receive the Merger Consideration allocable to such Certificates.
(c) Distributions with Respect to Unexchanged Shares. No dividends or
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other distributions that are declared or made with respect to Parent Shares
with a record date after the Effective Time shall be paid to the holder of
any unsurrendered Certificate with respect to the Parent Shares that such
holder would be entitled to receive by reason of the Merger upon surrender
of such Certificate and no cash payment in lieu of fractional Parent Shares
shall be paid to any such holder pursuant to Sections 4.1 and 4.3 until
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such holder shall surrender such Certificate. Subject to the effect of
applicable law, following surrender of any such Certificate, there shall be
paid to such holder of Parent Shares issuable in exchange therefor, without
interest, (i) promptly after the time of such surrender, the amount of any
cash payable in lieu of fractional Parent Shares to which such holder is
entitled pursuant to Sections 4.1 and 4.3 and the amount of dividends or
------------ ---
other distributions with a record date after the Effective Time theretofore
paid prior to the time of such surrender with respect to such whole Parent
Shares, and (ii) at the appropriate payment date, the amount of dividends
or other distributions
7
with a record date after the Effective Time but prior to such surrender and
a payment date subsequent to such surrender payable with respect to such
Parent Shares. Any dividends or other distributions that are payable with
respect to Parent Shares deliverable upon surrender of unexchanged
Certificates shall be deposited by Parent in the Stock Merger Exchange
Fund.
(d) Transfers of Ownership. If any certificate representing Parent
----------------------
Shares is to be issued in a name other than that in which the Certificate
surrendered in exchange therefor is registered, it shall be a condition of
such exchange that the Certificate so surrendered shall be properly
endorsed and otherwise in proper form for transfer and that the Person
requesting such exchange shall pay to the Exchange Agent any transfer or
other taxes required by reason of the issuance of certificates for such
Parent Shares in a name other than that of the registered holder of the
Certificate surrendered, or shall establish to the satisfaction of the
Exchange Agent that such tax has been paid or is not applicable.
(e) No Liability. Neither the Exchange Agent nor any of the Parties
------------
shall be liable to a holder of Company Shares for any Parent Shares or
dividends thereon, or, in accordance with Sections 4.1 and 4.3, cash in
------------ ---
lieu of fractional Parent Shares, delivered to a public official pursuant
to applicable abandoned property, escheat or similar law. The Exchange
Agent shall not be entitled to vote or exercise any rights of ownership
with respect to the Parent Shares held by it from time to time hereunder,
except that it shall receive and hold all dividends or other distributions
paid or distributed with respect to such Parent Shares for the account of
the Persons entitled thereto.
(f) Termination of Funds. Subject to applicable law, any portion of
--------------------
the Stock Merger Exchange Fund and the Fractional Securities Fund which
remains unclaimed by the former stockholders of the Company for six months
after the Effective Time shall be delivered to Parent or as otherwise
directed by Parent, and any former stockholder of the Company shall
thereafter look only to Parent for payment of their applicable claim for
the Merger Consideration for their Company Shares. Any such portion of the
Stock Merger Exchange Fund and the Fractional Securities Fund remaining
unclaimed by holders of Company Shares five years after the Effective Time
(or such earlier date immediately prior to such time as such amounts would
otherwise escheat to or become property of any Governmental Entity having
jurisdiction thereover) shall, to the extent permitted by law, become the
property of the Surviving Corporation free and clear of any claims or
interest of any Person previously entitled thereto.
(g) No Further Ownership Rights in Company Shares. All Parent Shares
---------------------------------------------
issued and cash paid upon conversion of Company Shares in accordance with
the terms of this Article IV (including any cash paid pursuant to Sections
---------- --------
4.1 and 4.3) shall be deemed to have been issued or paid in full
--- ---
satisfaction of all rights pertaining to the Company Shares.
8
4.3 Cash For Fractional Parent Shares. No certificates or scrip or shares
---------------------------------
of Parent Shares representing fractional Parent Shares or book-entry credit of
the same shall be issued upon the surrender for exchange of Certificates and
such fractional share interests will not entitle the owner thereof to vote or to
have any rights of a stockholder of Parent or a holder of Parent Shares.
Notwithstanding any other provision of this Agreement, each holder of Company
Shares exchanged pursuant to the Merger who would otherwise have been entitled
to receive a fractional Parent Share (after taking into account all Certificates
delivered by such holder) shall receive, in lieu thereof, a cash payment
(without interest) in an amount equal to the product of (i) the fractional
interest of a Parent Share to which such holder otherwise would have been
entitled multiplied by (ii) the closing price of a Parent Share on the NYSE
Composite Transactions Tape on the trading day immediately prior to the
Effective Time (the cash comprising such aggregate payments in lieu of
fractional Parent Shares being hereinafter referred to as the "Fractional
----------
Securities Fund").
---------------
4.4 Transfer of Shares after the Effective Time. No transfers of Company
-------------------------------------------
Shares shall be made on the stock transfer books of the Company after the close
of business on the day prior to the date of the Effective Time.
4.5 Investment of the Stock Merger Exchange Fund and Fractional Securities
----------------------------------------------------------------------
Fund. The Exchange Agent shall invest any cash included in the Stock Merger
----
Exchange Fund and the Fractional Securities Fund in obligations of, or
guaranteed by, the United States of America, in commercial paper obligations
rated A-1 or P-1 or better by Xxxxx'x Investor Services or Standard & Poor's
Corporation, respectively, in each case with maturities not exceeding seven
days; provided, that no such investment or loss thereon shall affect the amounts
payable to Company stockholders pursuant to Article IV and the other provisions
----------
of this Agreement. Any interest and other income resulting from such
investments shall promptly be paid to Parent.
4.6 Lost Certificates. If any Certificate shall have been lost, stolen or
-----------------
destroyed, upon the making of an affidavit of that fact by the Person claiming
such Certificate to be lost, stolen or destroyed and, if required by the
Surviving Corporation (or Parent, as applicable), the posting by such Person of
a bond in such reasonable amount as the Surviving Corporation (or Parent, as
applicable) may direct as indemnity against any claim that may be made against
it with respect to such Certificate, the Exchange Agent will deliver in exchange
for such lost, stolen or destroyed Certificate the applicable Merger
Consideration with respect to the Company Shares formerly represented thereby
and unpaid dividends and distributions on Parent Shares deliverable in respect
thereof, pursuant to and in accordance with the terms of this Agreement.
4.7 Further Assurances. At and after the Effective Time, the officers and
------------------
directors of the Surviving Corporation will be authorized to execute and
deliver, in the name and on behalf of the Company or Merger Sub, as applicable,
any deeds, bills of sale, assignments or assurances and to take and do, in the
name and on behalf of the Company or Merger Sub, any other actions and things to
vest, perfect or confirm of record or otherwise in the Surviving Corporation any
and all right, title and interest in, to
9
and under any of the rights, properties or assets acquired or to be acquired by
the Surviving Corporation as a result of, or in connection with, the Merger.
4.8 Affiliates. Notwithstanding anything to the contrary herein, to the
----------
fullest extent permitted by law, no certificates representing Parent Shares or
cash shall be delivered to a Person who may be deemed a Company Affiliate in
accordance with Section 6.9 hereof until such Person has executed and delivered
-----------
a Company Affiliate Agreement to Parent.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
------------------------------
5.1 Representations and Warranties of the Company. The Company hereby
---------------------------------------------
represents and warrants to Parent and Merger Sub that the statements contained
in this Section 5.1 are true and correct, except to the extent specifically set
-----------
forth on the disclosure schedule previously delivered by the Company to Parent
and Merger Sub (the "Company Disclosure Schedule"). The Company Disclosure
---------------------------
Schedule shall be arranged in sections and paragraphs corresponding to the
letter and numbered paragraphs contained in this Section 5.1, and the disclosure
-----------
in any paragraph shall qualify only the corresponding paragraph in this Section
-------
5.1 or other paragraphs or sections to which it is clearly apparent (from a
---
plain reading of the disclosure) that such disclosure relates.
(a) Organization, Qualification, and Corporate Power. The Company is
------------------------------------------------
a corporation duly organized, validly existing, and in good standing under
the laws of the State of Delaware. The Company is duly authorized to
conduct business and is in good standing under the laws of each
jurisdiction where such qualification is required, except where the failure
to be so qualified would not have a Material Adverse Effect on the Company.
The Company and each of its Subsidiaries has full corporate power and
authority and all licenses, permits, and authorizations necessary to carry
on the businesses in which it is engaged and in which it presently proposes
to engage and to own and use the properties owned and used by it. Schedule
--------
5.1(a) lists: (i) all sales offices and any other offices or facilities of
------
the Company and each of its Subsidiaries; (ii) all states and other
jurisdictions where the Company and each of its Subsidiaries is qualified
to transact business as a foreign corporation; and (iii) the directors and
officers of the Company and each of its Subsidiaries. True and complete
copies of the charter and bylaws of the Company and each of its
Subsidiaries (as amended to date) have been provided to Parent. Except as
set forth on Schedule 5.1(a), the minute books (containing the records of
---------------
meetings of the stockholders, the board of directors, and any committees of
the board of directors), the stock certificate books, and the stock record
books of the Company and each of its Subsidiaries are correct and complete
and accurate copies thereof have been provided to Parent. Neither the
Company nor any of its Subsidiaries is in default under or in violation of
any provision of its charter or bylaws.
(b) Capitalization; Title to Shares.
-------------------------------
10
(i) As of the date hereof, the entire authorized capital stock
of the Company consists of 50,000,000 shares of common stock, par
value $.01 per share, of which 15,795,852 shares are issued and
outstanding, and 1,000,000 shares of preferred stock, par value $.01
per share, of which no shares are issued and outstanding or reserved
for issuance. As of the date hereof, the number of Company Shares
outstanding on a fully-diluted basis, assuming the exercise of all
outstanding and vested and unvested options, warrants and other rights
to purchase securities, other than the Eagle Trust Options, is
16,787,301 shares. As of the date hereof, options (including Eagle
Trust Options) to purchase an aggregate of 1,126,524 Company Shares
were outstanding and the exercise price and vesting schedule for each
such options is as set forth in Schedule 5.1(b)(i).
------------------
(ii) As of the date hereof, no bonds, debentures, notes or other
indebtedness of the Company having the right to vote on any matters on
which stockholders may vote ("Company Voting Debt") are issued or
-------------------
outstanding.
(iii) All issued and outstanding Company Shares: (A) have been
duly authorized and validly issued; (B) are fully paid and
nonassessable; and (C) were issued in compliance with all applicable
state and federal laws concerning the issuance of securities. Other
than as set forth on Schedule 5.1(b)(iii) there are no options,
--------------------
warrants, purchase rights, subscription rights, conversion or exchange
rights or other contracts or commitments that could require the
Company to issue, sell or otherwise cause to become outstanding any of
its capital stock. There are no outstanding or authorized stock
appreciation, phantom stock, profit participation, or similar rights
with respect to the Company. Except as set forth in, or contemplated
by, this Agreement, there are no voting trusts, proxies, or other
agreements or understandings with respect to the voting of the capital
stock of the Company.
(iv) Except as disclosed on Schedule 5.1(b)(iv), there are no
-------------------
outstanding contractual obligations of the Company (A) restricting the
transfer of, (B) affecting the voting rights of, (C) requiring the
repurchase, redemption or disposition of, or containing any right of
first refusal with respect to, (D) requiring the registration for sale
of, or (E) granting any preemptive or antidilutive rights with respect
to, any of the Company Shares or any capital stock of, or other equity
interests in, the Company. There are no outstanding contractual
obligations of the Company to provide funds to, or make any investment
(in the form of a loan, capital contribution or otherwise) in, any
Person.
(v) The Company Shares constitute all of the issued and
outstanding shares of capital stock of the Company.
(c) Authority; No Conflicts.
-----------------------
11
(i) The Company has all requisite corporate power and corporate
authority to enter into this Agreement and, subject to the adoption of
this Agreement and approval of the Merger by the requisite vote of the
holders of Company Shares, to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly
and validly authorized by all necessary corporate action on the part
of the Company, subject in the case of the consummation of the Merger
to the adoption of this Agreement by the requisite vote of the
stockholders of the Company, and no other corporate proceedings are
necessary to authorize this Agreement or to consummate the
transactions contemplated hereby. This Agreement has been duly
executed and delivered by the Company and constitutes a valid and
binding agreement of the Company, enforceable against it in accordance
with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium and similar laws
relating to or affecting creditors generally and by general equity
principles (regardless of whether such enforceability is considered in
a proceeding in equity or at law). The Company Board of Directors
has, at a meeting duly called and held, (A) unanimously approved this
Agreement and the Merger, (B) determined that the Merger Consideration
is fair to and in the best interests of the Company's stockholders,
and (C) recommended that the stockholders of the Company adopt this
Agreement.
(ii) The execution, delivery and performance of this Agreement
does not or will not, as the case may be, and the consummation of the
transactions contemplated hereby will not, conflict with, or result in
a change in control event or any violation of, or constitute a default
(with or without notice or lapse of time, or both) under, or give rise
to a right of consent, termination, amendment, cancellation or
acceleration of any obligation or the loss of a material benefit
under, or the creation of a Lien on any assets, or result in any
adverse change in the rights or obligations of the Company, pursuant
to: (A) any provision of the charter or bylaws of the Company or (B)
except as could not reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect on the Company and, subject
to obtaining or making the consents, approvals, orders,
authorizations, registrations, declarations and filings referred to in
paragraph (c)(iv) below, the terms, provisions or conditions of any
loan or credit agreement, note, mortgage, bond, indenture, lease,
compensation or benefit plan (or any grant or award made pursuant
thereto) or other agreement, obligation, instrument, contract, permit,
concession, franchise, license, judgment, order, writ, injunction,
award, decree, statute, law, ordinance, rule or regulation applicable
to the Company, the Company's Subsidiaries or any of their respective
properties or assets.
(iii) The Company has taken all appropriate actions so that the
restrictions on business combinations contained in Section 203 of the
12
DGCL will not apply with respect to or as a result of this Agreement,
the Stockholders Agreement, or the transactions contemplated hereby
and thereby, including the Merger, without any further action on the
part of the stockholders or the Board of Directors of the Company.
True and complete copies of all resolutions of the Board of Directors
of the Company reflecting such actions have been previously provided
to Parent. No other "fair price", "moratorium", "control share
acquisition", "interested shareholder", "business combination" or
other similar anti-takeover statute or regulation of any jurisdiction
(each, including the business combination provisions of Section 203 of
the DGCL, a "Takeover Statute") is applicable to the Merger.
----------------
(iv) No consent, registration, permit, approval, order or
authorization of, or registration, declaration, notice, report, or
other filing with, any foreign, supranational, national, state,
municipal or local government, any instrumentality, subdivision,
court, administrative agency or commission or other authority thereof,
or any quasi-governmental or private body exercising any regulatory,
taxing, importing or other governmental or quasi-governmental
authority (a "Governmental Entity"), is required by or with respect to
-------------------
the Company in connection with the execution and delivery of this
Agreement by the Company or the consummation by the Company of the
transactions contemplated hereby, except for (x) those required under
or in relation to (A) the Exchange Act, (B) the DGCL with respect to
the filing and recordation of appropriate merger or other documents,
(C) rules and regulations of the Nasdaq National Market System
("Nasdaq"), and (D) antitrust or other competition laws of any
--------
applicable jurisdictions, including without limitation, requirements,
if any, arising out of the HSR Act and (y) such consents, approvals,
orders, authorizations, registrations, declarations and filings the
failure of which to make or obtain could not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect on
the Company or impair or delay the ability of the Company to
consummate the transactions contemplated hereby. Notwithstanding the
foregoing, the Company will use its reasonable best efforts to obtain
all the consents required to consummate the transactions contemplated
hereby.
(d) Title to Assets; Asset Sufficiency.
----------------------------------
(i) The Company and each of its Subsidiaries has good and
marketable title to, or a valid leasehold interest in, the properties
and assets used by them, located on their premises, or shown on
Schedule 5.1(d), free and clear of all Security Interests (the
---------------
"Company Assets").
---------------
(ii) The Company Assets comprise all of the rights, services,
properties and assets (real, personal and mixed, tangible and
intangible)
13
that are used in or necessary for the continued conduct of the
Company's business as now being conducted.
(e) Subsidiaries.
------------
(i) Each of the Company's Subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has all requisite corporate
power and authority to own, lease and operate its properties and to
carry on its business as now being conducted except where the failure
to be so organized, existing and in good standing or to have such
power and authority would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on such
Subsidiary.
(ii) Each of the Company and its Subsidiaries is duly qualified
or licensed and in good standing to do business in each jurisdiction
(including any foreign country) in which the property owned, leased or
operated by it or the nature of the business conducted by it makes
such qualification or licensing necessary, except where the failure to
be so duly qualified or licensed and in good standing would not,
individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect on such Subsidiary.
(iii) The Company has heretofore furnished or made available to
Parent complete and correct copies of the certificate of incorporation
and bylaws or the equivalent organizational documents of each of its
Subsidiaries listed on Schedule 5.1(e) (the "Material Subsidiaries"),
--------------- ---------------------
each as amended to the date hereof, as requested by Parent. Such
certificate of incorporation, bylaws or equivalent organizational
documents are in full force and effect and no other material
organizational documents are applicable to or binding upon the Company
or its Material Subsidiaries. No Material Subsidiary is in violation
of any of the provisions of its certificate of incorporation, bylaws
or equivalent organizational documents.
(iv) The Company has heretofore furnished or made available to
Parent a complete and correct list of the Subsidiaries of the Company,
which list sets forth the percentage of total capital stock of or
other equity interests in such Subsidiaries owned by the Company,
directly or indirectly. No Subsidiary of the Company that is not a
Material Subsidiary is, individually or when taken together with all
other Subsidiaries of the Company that are not Material Subsidiaries,
material to the business of the Company and its Subsidiaries taken as
a whole. Except as set forth on Schedule 5.1(e), no entity in which
---------------
the Company owns, directly or indirectly, less than a 50% equity
interest is, individually or when taken together with all other such
entities, material to the business of
14
the Company and its Subsidiaries, taken as a whole. No Subsidiary of
the Company that is not a Material Subsidiary has any material
liabilities.
(f) SEC Reports and Financial Statements.
------------------------------------
(i) Since January 1, 1998, the Company has timely filed all
required reports, schedules, forms, statements and other documents
required to be filed by it with the SEC (collectively, including all
exhibits thereto, the "Company SEC Reports"). The Company SEC
-------------------
Reports, as of their respective dates (and, if amended or superseded
by a filing prior to the date of this Agreement or of the Closing
Date, then on the date of such filing), did not, and any Company SEC
Reports filed with the SEC subsequent to the date hereof will not,
contain any untrue statement of a material fact or omit to state a
material fact required to be stated (or incorporated by reference)
therein or necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading. Each of
the financial statements (including the related notes) included or to
be included in, or incorporated by reference into, the Company SEC
Reports present or will present fairly, in all material respects, the
financial position and results of operations and cash flows of the
Company as of the respective dates or for the respective periods set
forth therein, all in conformity with GAAP consistently applied during
the periods involved except as otherwise noted therein, and subject,
in the case of the unaudited interim financial statements, to normal
and recurring year-end adjustments that have not been and will not be
material in amount. All of such Company SEC Reports, as of their
respective dates (and as of the date of any amendment to the
respective Company SEC Report filed prior to the date hereof),
complied in all respects with the applicable requirements of the
Securities Act and the Exchange Act and the rules and regulations
promulgated thereunder (as in effect on the dates on which such
Company SEC Reports were filed).
(ii) Except as set forth in the Company SEC Reports filed and
publicly available prior to the date of this Agreement, and except for
liabilities and obligations incurred in the Ordinary Course of
Business since September 30, 2000 (none of which has had or could be
reasonably expected to have, individually or in the aggregate, a
Material Adverse Effect on the Company), the Company does not have any
undisclosed liabilities or obligations of any nature required by GAAP
to be set forth on a consolidated balance sheet of the Company or
which have had or are reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on the Company.
(iii) The Company has delivered to Parent a complete and correct
copy of any amendments or modifications, which have not yet been filed
with the SEC, to all agreements, documents or other
15
instruments which previously had been filed by the Company with the
SEC pursuant to the Exchange Act.
(g) S-4 Registration Statement and Proxy Statement/Prospectus. None
---------------------------------------------------------
of the information supplied or to be supplied by the Company for inclusion
or incorporation by reference in the S-4 Registration Statement or the
Proxy Statement will (i) in the case of the S-4 Registration Statement, at
the time it becomes effective or at the Effective Time, contain any untrue
statement of a material fact or omit to state any material fact required to
be stated therein or necessary in order to make the statements therein not
misleading, or (ii) in the case of the Proxy Statement, and at the time of
the mailing of the Proxy Statement, at the time of the Company Stockholder
Meeting, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they
are made, not misleading. If at any time prior to the Effective Time any
event with respect to the Company, its officers and directors or any of its
Subsidiaries should occur which is required to be described in an amendment
of, or a supplement to, the Proxy Statement or the S-4 Registration
Statement, the Company shall promptly inform Parent, such event shall be so
described, and such amendment or supplement shall be promptly filed with
the SEC and, as required by law, disseminated to the stockholders of the
Company. The S-4 Registration Statement will (with respect to the Company)
comply as to form in all material respects with the requirements of the
Securities Act and the rules and regulations promulgated thereunder. The
Proxy Statement will (with respect to the Company) comply as to form in all
material respects with the requirements of the Exchange Act and the rules
and regulations promulgated thereunder. Notwithstanding the foregoing
provisions of this Section 5.1(g), no representation or warranty is made by
--------------
the Company with respect to statements made or incorporated by reference in
the S-4 Registration Statement or the Proxy Statement based on information
supplied by Parent or Merger Sub for inclusion or incorporation by
reference therein.
(h) Events Subsequent to Most Recent Fiscal Period End. Since June
--------------------------------------------------
30, 2000 (the "Most Recent Fiscal Period End") to the date hereof, there
-----------------------------
has not been any Material Adverse Effect with respect to the Company.
Without limiting the generality of the foregoing, except as set forth in
Schedule 5.1(h) and except as otherwise contemplated under this Agreement,
---------------
since the Most Recent Fiscal Period End:
(i) neither the Company nor any of its Subsidiaries has sold,
leased, transferred, assigned or otherwise disposed of any of its
assets, tangible or intangible, other than for a fair consideration in
the Ordinary Course of Business;
(ii) neither the Company nor any of its Subsidiaries has entered
into any agreement, contract, lease, or license (or series of related
16
agreements, contracts, leases, or licenses) either involving more than
$250,000 or outside the Ordinary Course of Business;
(iii) no Person (including the Company and each of its
Subsidiaries) has accelerated, terminated, modified, or canceled any
agreement, contract, lease, or license (or series of related
agreements, contracts, leases, and licenses) involving more than
$250,000 to which the Company or any of its Subsidiaries is a party or
by which it is bound;
(iv) neither the Company nor any of its Subsidiaries has
imposed any Security Interest upon any of its assets, tangible or
intangible;
(v) neither the Company nor any of its Subsidiaries has made
any capital expenditure (or series of related capital expenditures)
either involving more than $100,000 or outside the Ordinary Course of
Business;
(vi) neither the Company nor any of its Subsidiaries has made
any capital investment in, any loan to, or any acquisition of the
securities or assets of, any other Person (or series of related
capital investments, loans, and acquisitions) either involving more
than $100,000 or outside the Ordinary Course of Business;
(vii) neither the Company nor any of its Subsidiaries has issued
any note, bond, or other debt security or created, incurred, assumed,
or guaranteed any indebtedness for borrowed money or capitalized lease
obligation either involving more than $50,000 individually or $250,000
in the aggregate;
(viii) neither the Company nor any of its Subsidiaries has
delayed or postponed the payment of accounts payable or other
Liabilities outside the Ordinary Course of Business;
(ix) neither the Company nor any of its Subsidiaries has
canceled, compromised, waived, or released any right or claim (or
series of related rights and claims) either involving more than
$100,000 or outside the Ordinary Course of Business;
(x) neither the Company nor any of its Subsidiaries has
granted any license or sublicense of any rights under or with respect
to any Intellectual Property other than in the Ordinary Course of
Business;
(xi) there has been no change made or authorized in the charter
or bylaws or other organizational documents of the Company or any of
its Subsidiaries;
(xii) neither the Company nor any of its Subsidiaries has
issued, sold, or otherwise disposed of any of its capital stock, or
granted any
17
options, warrants, or other rights to purchase or obtain (including
upon conversion, exchange, or exercise) any of its capital stock;
(xiii) neither the Company nor any of its Subsidiaries has
declared, set aside, or paid any dividend or made any distribution
with respect to its capital stock (whether in cash or in kind) or
redeemed, purchased, or otherwise acquired any of its capital stock;
(xiv) neither the Company nor any of its Subsidiaries has
experienced any damage, destruction, or loss (whether or not covered
by insurance) to its property in excess of $250,000;
(xv) neither the Company nor any of its Subsidiaries has made
any loan to, or entered into any other transaction with, any of its
Affiliates, directors, officers, employees, or any Affiliate thereof
outside the Ordinary Course of Business;
(xvi) neither the Company nor any of its Subsidiaries has
entered into any employment contract or collective bargaining
agreement, written or oral, or modified the terms of any existing such
contract or agreement;
(xvii) neither the Company nor any of its Subsidiaries has
granted or agreed to make any increase in the base compensation or
remuneration payable or to become payable by the Company or any of its
Subsidiaries to any of its or their directors, officers, and employees
outside the Ordinary Course of Business;
(xviii) neither the Company nor any of its Subsidiaries has
adopted, amended, modified, or terminated any bonus, profit sharing,
incentive, severance (including early retirement and redundancy), or
other plan, contract, or commitment for the benefit of any of its or
their directors, officers, and employees (or taken any such action
with respect to any other Employee Benefit Plan or any other
arrangement for providing benefits to any employee or employees of a
Subsidiary);
(xix) neither the Company nor any of its Subsidiaries has made
any other change in employment terms for any of its or their
directors, officers, and employees outside the Ordinary Course of
Business;
(xx) neither the Company nor any of its Subsidiaries has made
or pledged to make any charitable or other capital contribution
outside the Ordinary Course of Business;
(xxi) there has not been any other occurrence, event, incident,
action, failure to act, or transaction outside the Ordinary Course of
Business involving the Company or any of its Subsidiaries;
18
(xxii) the Company has not made any change in the accounting
methods or practices it follows, whether for general financial or tax
purposes, or any change in depreciation or amortization policies or
rates adopted therein other than changes required by changes in GAAP;
(xxiii) the Company has not (nor has any Subsidiary) suffered
any dispute involving any employee or former employee that may
reasonably be expected to result in a Material Adverse Effect to the
Company;
(xxiv) the Company has not (nor has any Subsidiary) received
any notice of violation of any law, rule or regulation, of any
Governmental Entity, nor received any claim for damages arising out of
actual or alleged negligence or other tort, or breach of contract
(whether or not fully covered by insurance); and
(xxv) neither the Company nor any of its Subsidiaries has
committed or agreed, in writing or otherwise, to any of the forgoing.
(i) Vote Required. The affirmative vote of the holders of a majority
-------------
of the outstanding Company Shares (the "Required Company Votes") is the
----------------------
only vote of the holders of any class or series of the Company capital
stock necessary to approve this Agreement and the transactions contemplated
hereby.
(j) Legal Compliance. Each of the Company, its Subsidiaries, and
----------------
their respective predecessors and Affiliates has complied in all respects
with all applicable laws (including rules, regulations, codes, plans,
injunctions, judgments, orders, decrees, rulings, and charges thereunder)
of federal, state, local, provincial and foreign governments (and all
agencies thereof including, without limitation, any related to exporting or
importing goods), and no action, suit, proceeding, hearing, investigation,
charge, complaint, claim, demand, or notice has been filed or commenced
against any of them alleging any failure so to comply. None of the
Company, its Subsidiaries, or to the Company's Knowledge, any other Person,
has made any payment to, or conferred any benefit, directly or indirectly,
on suppliers, customers, employees, or agents of suppliers or customers, or
officials or employees of any government or agency or instrumentality of
any government (domestic or foreign) or any political parties or candidates
for office, which is or was unlawful under any applicable law, including
without limitation the United States Foreign Corrupt Practices Act, as
amended.
(k) Tax Matters.
-----------
(i) The term "Tax" means any net income, capital gains, gross
---
income, gross receipts, sales, use, transfer, ad valorem, franchise,
profits, license, capital, withholding, payroll, employment, Social
Security or National Insurance Contribution, excise, goods and
services, severance, stamp, occupation, premium, property, windfall
profits or other tax or customs duties, or any interest, any
penalties, additions to tax or additional
19
amounts incurred or accrued under applicable tax law or properly
assessed or charged by any Taxing authority (domestic or foreign). For
purposes of the definition of Tax, any interest, penalties, additions
to tax or additional amounts that relate to taxes for any period, or a
portion of any period, ended on or before the Closing Date shall
include any interest, penalties, additions to tax, or additional
amounts relating to taxes for such periods, regardless of whether such
items are incurred, accrued, assessed or similarly charged on, before
or after the Closing Date.
(ii) For purposes of this Section 5.1(k), the "Company" shall
--------------
be deemed to include any Subsidiary of the Company, any predecessor of
the Company, or any person or entity from which the Company incurs a
liability for Taxes as a result of transferee liability, joint and
several liability, contract, or otherwise.
(iii) Except as set forth on Schedule 5.1(k)(iii), the Company
--------------------
has timely filed true, correct and complete Tax Returns, reports or
estimates, all prepared in accordance with applicable laws, for all
years and periods (and portions thereof) and for all jurisdictions
(whether federal, state, local or foreign) in which any such Tax
Returns, reports or estimates were due. Except for matters which, in
the aggregate, would not cause a Material Adverse Effect to the
Company, the Company has timely filed true, correct and complete Tax
Returns, reports or estimates, all prepared in accordance with
applicable laws, for all years and periods (and portions thereof) and
for all jurisdictions (whether federal, state, local or foreign) in
which any such returns, reports or estimates were due. All Taxes, as
due and payable in respect of such returns, reports and estimates have
been paid, and there is no current Liability for any Taxes due in
connection with any such returns. All Taxes not yet due and payable
have been fully accrued on the books of the Company and adequate
reserves have been established therefor. There are no unpaid
assessments for additional Taxes for any period and there is no Basis
therefor. All charges, accruals, and reserves for Taxes provided for
on the financial statements in the Company SEC Reports are adequate.
All federal, state and foreign Tax Returns filed by the Company for
the past five years have been provided to Parent.
(iv) The Company is not a party of any joint venture,
partnership or other arrangement that could be treated as a
partnership for federal income Tax purposes.
(v) The Company has (A) withheld all required amounts from its
employees, agents, contractors and nonresidents and remitted such
amounts to the proper agencies; (B) paid all employer contributions
and premiums; and (C) filed all federal, state, local and foreign
returns and reports with respect to employee income Tax withholding,
social security unemployment Taxes and premiums, all in compliance
with the
20
withholding Tax provisions of the Code as in effect for the applicable
year and other applicable federal, state, local or foreign laws.
(vi) The federal income Tax Returns of the Company have been
examined by the IRS, or have been closed by the applicable statute of
limitations, for all periods through June 30, 1996; the state Tax
Returns of the Company have been examined by the relevant agencies or
such returns have been closed by the applicable statute of limitations
for all periods through June 30, 1996; the foreign Tax Returns of the
Company have been examined by the relevant agencies or such returns
have been closed by the applicable statute of limitations for all
periods through (A) June 30, 1997 for the United Kingdom, (B) June 30,
1998 for its operations in Germany and (C) June 30, 2000 for its
operations in France. No deficiencies or reassessments for any Taxes
have been proposed, asserted or assessed against the Company by
federal, state, local or foreign Taxing authority.
(vii) The Company has not executed or filed with any Taxing
authority (whether federal, state, local or foreign) any agreement or
other document extending or having the effect of extending the period
for assessment, reassessment or collection of any Taxes, and no power
of attorney granted by the Company with respect to any Taxes is
currently in force.
(viii) Except as set forth on Schedule 5.1(k)(viii), no federal,
---------------------
state, local or foreign Tax audits or other administrative
proceedings, discussions or court proceedings are presently pending
with regard to any Taxes or Tax Returns of the Company and no
additional issues are being asserted against the Company in connection
with any existing audits of the Company.
(ix) The Company has not entered into any agreement relating to
Taxes which affects any taxable year ending after the Closing Date.
(x) The Company has not agreed to and it is not required to
make any adjustment by reason of a change in accounting methods that
affects any taxable year ending after the Closing Date. Neither the
IRS nor any other agency has proposed any such adjustment or change in
accounting methods that affects any taxable year ending after the
Closing Date. The Company has no application pending with any Taxing
authority requesting permission for any changes in accounting methods
that relate to its business or operations and that affects any taxable
year ending after the Closing Date.
(xi) Except as set forth on Schedule 5.1(k)(xi), the Company is
-------------------
not and never has been a party to any tax sharing agreement or similar
arrangement for the sharing of Tax liabilities or benefits.
21
(xii) The Company has not consented to the application of Code
section 341(f).
(xiii) There is no contract, agreement, plan or arrangement
covering any employee or former employee of the Company that,
individually or collectively, could give rise to the payment by the
Company of any amount that would not be deductible by reason of Code
section 280G.
(xiv) No asset of the Company is tax-exempt use property under
Code section 168(h).
(xv) No portion of the cost of any asset of the Company has
been financed directly or indirectly from the proceeds of any tax-
exempt state or local government obligation described in Code section
103(a).
(xvi) None of the assets of the Company is property that the
Company is required to treat as being owned by any other person
pursuant to the safe harbor lease provision of former Code section
168(f)(8).
(xvii) Except as disclosed on Schedule 5.1(k)(xvii), in the past
---------------------
five years, the Company has not been a party to a transaction that is
reported to qualify as a reorganization within the meaning of Code
section 368, distributed a corporation in a transaction that is
reported to qualify under Code section 355, or been distributed in a
transaction that is reported to qualify under Code section 355.
(l) Real Property.
-------------
(i) Except as disclosed on Schedule 5.1(l)(i), the Company does
------------------
not own, and has never owned, any real property, and it has no
outstanding options or rights of first refusal to purchase any real
property, or any portion thereof or interest therein.
(ii) Schedule 5.1(l)(ii) lists and describes briefly all real
-------------------
property leased or subleased to the Company. The Company has
delivered to Parent correct and complete copies of the leases and
subleases listed on Schedule 5.1(l)(ii) (as amended to date). With
-------------------
respect to each lease and sublease listed on Schedule 5.1(l)(ii):
-------------------
(1) the lease or sublease, as modified or amended, is
legal, valid, binding, enforceable, and in full force and effect
and will continue to be legal, valid, binding, enforceable and in
full force and effect on identical terms immediately following
the consummation of the Merger; subject to laws of general
application relating to public policy, bankruptcy, insolvency and
the relief of debtors and rules of law governing specific
performance, injunctive relief and other equitable remedies and
22
subject further to receipt of the consent of the landlords of
such premises as listed on Schedule 5.1(l)(ii); the landlord of
-------------------
any premises leased or subleased to the Company will not be
entitled to recapture such leased or subleased space upon the
Merger;
(2) to the Knowledge of the Company, no party to the lease
or sublease is in breach or default, and no event has occurred
which, with notice or lapse of time, would constitute a breach or
default or permit termination, modification, or acceleration
thereunder;
(3) to the Knowledge of the Company, no party to the lease
or sublease has repudiated any provision thereof;
(4) there are no material disputes, oral agreements, or
forbearance programs in effect as to the lease or sublease;
(5) with respect to each sublease, the representations and
warranties set forth in subsections (1) through (4) above are
true and correct with respect to the underlying lease;
(6) the Company has not subleased, licensed, assigned,
transferred, conveyed, mortgaged, deeded in trust, or encumbered
any interest in the leasehold or subleasehold;
(7) with respect to the Company's leased facilities located
at 0000 Xxxx Xxxx, Xxxxx 000, Xxxxxxxxxx, Xxxxx and the U.K.
Subsidiary's leased facilities located at Loughborough Park,
Xxxxx Road, Loughborough, Leicestershire, England, the monthly
rent and all other charges due under such leases are current and
will have been paid in full through Closing;
(8) to the Knowledge of the Company, all facilities leased
or subleased thereunder have received all approvals of
Governmental Entities (including licenses and permits) required
in connection with the operation thereof and have been operated
and maintained in accordance with applicable laws, rules, and
regulations;
(9) all facilities leased or subleased thereunder are
supplied with utilities and other services necessary for the
operation of said facilities;
(10) there are no parties (other than the Company) in
possession of such leased property, other than tenants under any
leases disclosed on Schedule 5.1(l)(ii) who are in possession of
-------------------
space to which they are entitled; and
23
(11) the Company has received no notice of any pending
condemnation proceedings, lawsuits, or administrative actions
relating to the property or other matters affecting materially
and adversely the current use, occupancy, or value thereof, and
to the Knowledge of the Company, none are threatened.
(m) Intellectual Property.
---------------------
(i) Schedule 5.1(m)(i) contains a complete list and
------------------
description (showing in each case the registered or other owner,
registration, application or issue date and number, if any) of all
Registered Intellectual Property.
(ii) Schedule 5.1(m)(ii) contains a list of all Company
-------------------
Intellectual Property.
(iii) Except as set forth on Schedule 5.1(m)(iii), the Company
--------------------
or any of its Subsidiaries (A) owns all rights, title, and interest in
all Company Intellectual Property free and clear of any encumbrance,
including ownership of pending and accrued causes of action for
patent, trademark, or copyright infringement, misappropriation, and
unfair business practice and has the sole and exclusive right to bring
actions for infringement and misappropriation of such Company
Intellectual Property, and (B) owns free and clear of any encumbrances
or otherwise has the right to all Intellectual Property necessary to
conduct the business of the Company or any of its Subsidiaries as it
is currently conducted, including its design, development,
manufacture, and sale of its products, services and Company Software
(including those products, services and Company Software currently
under development).
(iv) Each item of Registered Intellectual Property is valid and
subsisting; all necessary registration, maintenance or annuity, and
renewal fees in connection with such item of Registered Intellectual
Property have been made; all necessary documents and certificates in
connection with such Registered Intellectual Property have been filed
with the relevant patent, copyright, trademark or other authorities in
the United States or foreign jurisdictions, as the case may be, for
the purposes of maintaining such Registered Intellectual Property; and
all patent, trademark, service xxxx and copyright applications set
forth on Schedule 5.1(m)(i) have been duly filed.
------------------
(v) All employees, agents, consultants, contractors, or other
Persons who have contributed to or participated in the creation or
development of any Company Intellectual Property, including Company
Software: (A) made such contribution pursuant to and within the scope
of employment with the Company or any of its Subsidiaries as an
employee or otherwise as a party to a "work-for-hire" agreement under
which the
24
Company or any of its Subsidiaries is deemed to be the owner and/or
author, as applicable, of all right, title, and interest therein; or
(B) have executed a written assignment or other agreement to assign in
favor of the Company or any of its Subsidiaries legally transferring
to the Company or any of its Subsidiaries all right, title and
interest in such Company Intellectual Property and ownership of all
pending and accrued causes of action relating thereto.
(vi) Except as set forth on Schedule 5.1(m)(vi), all employees
-------------------
and non-employees (including interns, trainees, independent
contractors to the Company or any of its Subsidiaries, vendors,
customers, joint-venturers, and other potential claimants) who have
had access to any Company Intellectual Property, including Company
Software, have executed a development and confidentiality agreement
substantially in the form attached hereto as Exhibit X-0, X-0, X-0 or
D-4, prior to receipt of the Company confidential/proprietary
information.
(vii) Schedule 5.1(m)(vii) contains a list of the Company
--------------------
Software. Except as set forth on Schedule 5.1(m)(vii): (A) the
--------------------
Company and its Subsidiaries have developed the Company Software
through its own efforts and for its own account without the aid or use
of any consultants, agents, independent contractors or Persons (other
than Persons that are employees of the Company); (B) the Company and
its Subsidiaries have complete and exclusive right, title and interest
in and to the Company Software; (C) no third party has any interest
in, or right to compensation from the Company or any of its
Subsidiaries by reason of, the use, exploitation, or sale of the
Company Software; (D) none of the Company Software contains any source
code or portions of source code (including any "canned program" or
"free-xxxx") created by any party other than the authors of the
Company Software on behalf of the Company or any of its Subsidiaries;
(E) the Company Software is not subject by agreement to any transfer,
assignment, site, equipment, or other operational limitation, and no
situation, matter, or agreement exists that would prevent the Company
or any of its Subsidiaries or the Surviving Corporation from making
any change to the Company Software or combining it with other software
in a lawful manner; (F) the Company and its Subsidiaries have
maintained and protected the Company Software with appropriate
proprietary notices (including, without limitation, the notice of
copyright in accordance with the requirements of 17 U.S.C. (S) 401),
confidentiality and non-disclosure agreements and such other measures
as are reasonably necessary to protect the proprietary, trade secret
or confidential information contained therein; (G) the Company
Software has been registered or is eligible for protection and
registration under applicable U.S. copyright law and has not been
forfeited to the public domain; (H) the Company and its Subsidiaries
have copies of all releases or separate versions of the Company
Software so that the same may be subject to registration in the United
States Copyright Office; (I) to
25
the Knowledge of the Company and its Subsidiaries without further
inquiry, the Company Software does not infringe any copyright or other
Intellectual Property rights of any other Person; (J) any Company
Software includes the source code, system documentation, statements of
principles of operation and schematics, as well as any pertinent
commentary, explanation, program (including compilers), workbenches,
tools, and higher level (or "proprietary") language used for the
development, maintenance, implementation and use thereof, so that a
trained computer programmer could develop, maintain, support, compile
and use all releases or separate versions of the same that are
currently subject to maintenance obligations by the Company or any of
its Subsidiaries; (K) there are no agreements or arrangements in
effect with respect to the marketing, distribution, licensing or
promotion of the Company Software by any other Person; (L) neither the
Company nor any of its Subsidiaries has any source code for the
Company Software or other Company Intellectual Property in escrow; and
(M) neither the Company nor any of its Subsidiaries has received
notice of, and neither the Company nor any of its Subsidiaries has
Knowledge of, any complaint, assertion, threat, or allegation
inconsistent with the preceding statements in this paragraph.
(viii) No claims of any kind have been made by the Company or
any of its Subsidiaries against any third party that, and neither the
Company nor any of its Subsidiaries has Knowledge that, any third
party infringes, or has previously infringed, misappropriates, or has
previously misappropriated any Company Intellectual Property.
(ix) Except as set forth on Schedule 5.1(m)(ix), no claims of
-------------------
any kind have been made or asserted by any party against the Company
or any of its Subsidiaries, or against, or to, the employees, agents
or contractors, customers, vendors, suppliers, or distributors
claiming or alleging that the Company or any of its products
(including products currently under development), services, or methods
of operation infringe, have infringed, contribute to the infringement
or induce the infringement of, misappropriate the Intellectual
Property of any third party, violate the right of any Person
(including rights of privacy or publicity), or constitute unfair
competition, nor is the Company or any of its Subsidiaries aware of or
on notice of any such infringement, misappropriation or violation. To
the Company's Knowledge, (A) neither the Company nor any of its
Subsidiaries has infringed any Intellectual Property right of any
third party or breached any obligation of confidentiality owed to a
third party, and (B) the continued operation of the Company's business
consistent with past practices will not infringe any Intellectual
Property rights of a third party.
(x) No Company Intellectual Property or product or service of
the Company or any of its Subsidiaries is subject to any outstanding
26
decree, order, judgment, or stipulation restricting in any manner the
use or licensing thereof by the Company or any of its Subsidiaries.
(xi) Schedule 5.1(m)(xi) contains a list (showing in each case
-------------------
the parties thereto and the material terms thereof) of all contracts,
licenses, assignments, software escrows, and other agreements to which
the Company or any of its Subsidiaries is a party relating to any
Intellectual Property licensed or assigned to the Company or any of
its Subsidiaries (collectively the "Company Licenses") other than
----------------
Excluded Licenses. The Company Licenses listed on Schedule 5.1(m)(xi)
-------------------
represent all contracts, licenses, software escrows, and other
agreements to which the Company is a party relating to any
Intellectual Property licensed or assigned to the Company, except for
the Excluded Licenses. Except as set forth on Schedule 5.1(m)(xi):
-------------------
(A) the Company Licenses listed on Schedule 5.1(m)(xi) are in full
-------------------
force and effect; (B) the consummation of the transactions
contemplated by this Agreement will neither violate nor result in the
breach, modification, cancellation, termination, or suspension of the
Company Licenses listed on Schedule 5.1(m)(xi); (C) the Company and
-------------------
its Subsidiaries are in compliance with and have not breached any term
of, the Company Licenses listed on Schedule 5.1(m)(xi); and (D) all
-------------------
other parties to the Company Licenses listed on Schedule 5.1(m)(xi)
-------------------
are in compliance with, and have not breached any term of such Company
Licenses. Except as disclosed on Schedule 5.1(m)(xi), following the
-------------------
Closing Date, the Surviving Corporation will be permitted to exercise
all of its rights under the Company Licenses listed on Schedule
--------
5.1(m)(xi) without the payment of any additional amounts or
----------
consideration other than ongoing fees, royalties or payments that the
Company would otherwise be required to pay.
(xii) Except as set forth on Schedule 5.1(m)(xii) and other than
--------------------
end-user licenses, neither the Company nor any of its Subsidiaries
has: (A) licensed, or otherwise authorized any third party reseller,
or original equipment manufacturer (OEM) to make, have made, use or
sell, copy, distribute, modify, reverse engineer, decompile, prepare
derivatives of, or disclose, any Company Intellectual Property
including the Company Software; (B) conveyed, disclosed, or licensed
to any third party any proprietary or trade secret information as
"trade secret" is defined in the Uniform Trade Secrets Act, under
circumstances that could reasonably be expected to cause a Material
Adverse Effect on the Company; and (C) by any of its acts or omissions
(or by acts or omissions of its directors, officers, employees, or
agents) caused any proprietary rights in the Company Intellectual
Property, including the Company Software, to be diminished, or
adversely affected to any material extent.
(xiii) Schedule 5.1(m)(xiii) lists all contracts, licenses,
---------------------
software escrows, and other agreements between the Company or any of
its Subsidiaries and any other Person wherein or whereby the Company
or
27
any of its Subsidiaries has agreed to assume, or assumed, any
obligation or duty to indemnify, hold harmless or otherwise assume or
incur any obligation or Liability with respect to the infringement by
the Company or any of its Subsidiaries or such other Person of the
Intellectual Property rights of any other Person; provided, however,
-------- -------
that the foregoing only applies to agreements for which the Company's
or any of its Subsidiaries' obligations are continuing as of the date
of this Agreement and where compliance with such obligations could
reasonably be expected cause a Material Adverse Effect on the Company.
(xiv) Except as set forth in Schedule 5.1(m)(xiv), there are no
--------------------
contracts, licenses, software escrows, and other agreements between
the Company or any of its Subsidiaries and any other Person with
respect to the Company Intellectual Property with respect to which the
Company has received notice of any dispute that could reasonably be
considered to be a material dispute regarding the scope of such
agreement, or performance under such agreement including with respect
to any payments to be made or received by the Company or any of its
Subsidiaries thereunder.
(xv) No government funding or university or college facilities
were used in the development of any Company Intellectual Property in a
manner that would give such government or university or college any
interest in the Company Intellectual Property.
(xvi) To the Knowledge of the Company, (A) no product, service,
or publication of the Company or any of its Subsidiaries, (B) no
material published or distributed by the Company or any of its
Subsidiaries, and (C) no conduct or statement of the Company or any of
its Subsidiaries, constitutes obscene material, a defamatory statement
or material, or violates any rights, including rights of publicity or
privacy, of any Person.
(n) Contracts. Schedule 5.1(n) lists the following currently
--------- ---------------
effective contracts and other agreements to which the Company or any of its
Subsidiaries is a party (collectively, the "Material Contracts"):
------------------
(i) any agreement relating to indebtedness, liability for
borrowed money or the deferred purchase price of property (excluding
trade payables in the Ordinary Course of Business), and the respective
principal amounts outstanding thereunder as of the date of this
Agreement, or any guarantee or other contingent liability in respect
of any indebtedness or obligation of any Person (other than the
endorsement of negotiable instruments for collection in the Ordinary
Course of Business);
(ii) any agreement that contains restrictions with respect to
payment of dividends or any other distribution in respect of the
equity of the Company or any of its Subsidiaries;
28
(iii) any letters of credit or similar arrangements relating to
the Company or any of its Subsidiaries;
(iv) any agreement concerning a partnership or joint venture;
(v) any employment agreements with any employee of the Company
or any of its Subsidiaries or other Person on a consulting basis;
(vi) any management, consulting or advisory agreements, or
severance (including early retirement and redundancy) plans or
arrangements for any present or former employee of the Company or any
of its Subsidiaries;
(vii) any non-disclosure agreements and non-compete agreements
or other agreements containing confidentiality provisions or
restrictive covenants binding a present or former employee of the
Company or any of its Subsidiaries;
(viii) any agreement under which the Company or any of its
Subsidiaries is lessee of or holds or operates (A) any real property,
or (B) any personal property providing for payments in excess of
$20,000 annually;
(ix) any agreement under which the Company or any of its
Subsidiaries is lessor of or permits any third party to hold or
operate any property, real or personal;
(x) any agreement relating to the acquisition or divestiture
of the capital stock or other equity securities, assets or business of
any Person involving the Company or any of its Subsidiaries or
pursuant to which the Company or any of its Subsidiaries has any
Liability, contingent or otherwise;
(xi) any powers of attorney granted by or on behalf of the
Company or any of its Subsidiaries;
(xii) any agreement, other than agreements entered into in the
Ordinary Course of Business, which prevents the Company or any of its
Subsidiaries from disclosing confidential information or which
prohibits the Company or any of its Subsidiaries from freely engaging
in business anywhere in the world;
(xiii) any sales or distribution agreements, franchise
agreements and advertising agreements relating to the Company or any
of its Subsidiaries;
29
(xiv) any warranty, guaranty or other similar undertaking with
respect to a contractual performance extended by the Company or any of
its Subsidiaries;
(xv) any agreement with any of the stockholders of the Company
or Affiliates;
(xvi) any agreement under which the Company or any of its
Subsidiaries has advanced or loaned any amount to any of its
directors, officers and employees outside the Ordinary Course of
Business;
(xvii) any agreement pursuant to which the Company or any of its
Subsidiaries has agreed to defend, indemnify or hold harmless any
other Person;
(xviii) any agreement pursuant to which the Company or any of
its Subsidiaries has agreed to settle any Liability for Taxes;
(xix) any agreement pursuant to which the Company or any of
its Subsidiaries has agreed to shift or allocate the Liability of the
Company or any of its Subsidiaries or any other Person for Taxes;
(xx) any agreement where the Company or any of its
Subsidiaries has entered into an escrow agreement for Company
Software, specifically designated as such on Schedule 5.1(n);
---------------
(xxi) any other agreement involving in excess of $500,000 or
which is otherwise required to be filed as an exhibit to the Company
SEC Reports; and
(xxii) any agreement with any federal government office or
agency, any general service administration (GSA) agreement, or any
agreement with any state or local government agency funded in any part
by federal funds, in each case specifically designated as such on
Schedule 5.1(n).
---------------
The Company has delivered to Parent a correct and complete copy of
each written agreement listed in Schedule 5.1(n) (as amended to date) and a
---------------
written summary setting forth the terms and conditions of each oral agreement
referred to in Schedule 5.1(n). With respect to each such agreement: (i) the
---------------
agreement is legal, valid, binding, enforceable, and in full force and effect
and will continue to be legal, valid, binding, enforceable, and in full force
and effect on identical terms immediately following the consummation of the
Merger, subject to laws of general application relating to public policy,
bankruptcy, insolvency and the relief of debtors and rules of law governing
specific performance, injunctive relief and other equitable remedies; (ii)
neither the Company nor any of its Subsidiaries is and no other party is in
breach or default, and no event has occurred which with notice or lapse of time
would constitute a breach or default, or permit termination, modification, or
acceleration, under the agreement; (iii)
30
neither the Company nor any of its Subsidiaries has and no other party has
repudiated any provision of the agreement; and (iv) neither the Company nor any
of its Subsidiaries has or currently is making any payments, including payment
of liquidated damages, under any such agreements for failure to perform
thereunder.
(o) Insurance. Schedule 5.1(o) sets forth the following information
--------- ---------------
with respect to each insurance policy and/or self-insurance plan,
including, without limitation, property, casualty, employers liability
insurance, workers compensation insurance programs and surety, to which the
Company and each of its Subsidiaries has been a party, a named insured,
established claim reserves, qualified as a "self-insurer," joined a state
fund or risk sharing pool or is otherwise the beneficiary of coverage at
any time:
(i) the name, address, and telephone number of each broker,
agent or other representative providing policies and/or services;
(ii) the name of the insurer, the name of the policyholder, and
the name of each covered insured;
(iii) the policy number, the period of coverage and type, i.e.
occurrence, claims made or other basis; and
(iv) the amount/policy limits for each policy or program.
(v) With respect to each such insurance policy and self-
insurance plan described in Schedule 5.1(o): (A) the policy is legal,
---------------
valid, binding, enforceable, and in full force and effect; (B) the
policy will continue to be legal, valid, binding, enforceable, and in
full force and effect on identical terms following the consummation of
the Merger; (C) neither the Company nor any of its Subsidiaries nor
any other party to the policy is in breach or default (including with
respect to the payment of premiums or the giving of notices), and no
event has occurred which, with notice or the lapse of time, would
constitute such a breach or default, or permit termination,
modification, or acceleration, under the policy; and (D) none of the
Company, any of its Subsidiaries, or any other party to the policy has
repudiated any provision thereof. The Company and each of its
Subsidiaries are and at all times prior hereto have been covered by
insurance in scope and amount customary and reasonable for the
businesses in which they are or have been engaged. To the Knowledge of
the Company, no litigation is being handled by an insurer of the
Company which has a significant settlement or judgment value that may
not be covered by insurance.
(p) Litigation. There is no litigation, arbitration, claim, suit,
----------
action, investigation or proceeding pending or, to the Knowledge of the
Company, threatened against or affecting the Company, any of its
Subsidiaries or any of their respective properties or assets, which has had
or could reasonably be
31
expected to have, individually or in the aggregate, a Material Adverse
Effect on the Company nor is there any judgment, award, decree, injunction,
rule or order of any Governmental Entity or arbitrator outstanding against
the Company or any of its Subsidiaries which would reasonably be expected
to have, individually or in the aggregate, a Material Adverse Effect on the
Company.
(q) Software Products.
-----------------
(i) The Company and its Subsidiaries are in conformity with all
applicable contractual commitments and all express and implied
warranties with regard to all the Company Software and any other
software products that the Company or any of its Subsidiaries has sold
or licensed and all warranty/maintenance service that the Company or
any of its Subsidiaries has agreed to provide.
(ii) No claim has been made or asserted by any third party
against the Company or any of its Subsidiaries or against any customer
of the Company or any of its Subsidiaries related to any breach of any
such commitment or warranty or other than claims that would be the
subject of routine warranty/maintenance items with respect to the
Company Software or any other software products that the Company or
any of its Subsidiaries has sold or licensed.
(iii) Except as set forth on Schedule 5.1(q)(iii), there are no
--------------------
material defects in the Company Software or any other software
products that the Company or any of its Subsidiaries has sold or
licensed, and there are no errors in any accompanying design
documentation provided to a licensee or customer, which defects or
errors would in any material respect affect such licensee's or
customer's use of such software or the functioning of such software in
accordance with the published specifications for such software, other
than defects or errors that would be the subject of routine
warranty/maintenance items.
(iv) The Company Software and any other software products that
the Company or any of its Subsidiaries has sold or licensed have all
the material features described in the user manuals made available to
the Company's or any of its Subsidiaries' customers, other than
routine warranty/maintenance items.
(v) The Company Software and any other software products that the
Company or any of its Subsidiaries have sold or licensed do not
intentionally contain any back door, time bomb, Trojan horse, worm,
drop-dead device, virus (as these terms are commonly used in the
computer software industry), or other software routines or hardware
components designed to permit unauthorized access, to disable or erase
software, hardware, or data, or to perform any other similar type of
functions.
32
(r) Product Liability. Neither the Company nor any of its
-----------------
Subsidiaries has any Liability (and there is no Basis for any present or
future action, suit, proceeding, hearing, investigation, charge, complaint,
claim, or demand against any of them giving rise to any Liability) arising
out of any injury to individuals or property as a result of the license,
possession, or use of any product of the Company or any of its
Subsidiaries.
(s) Employees; Independent Contractors.
----------------------------------
(i) To the Knowledge of the Company, no employee identified on
Schedule 5.1(s)(i), or group of employees, has any plans to terminate
------------------
employment with the Company or any of its Subsidiaries. Except as set
forth on Schedule 5.1(s)(i), neither the Company nor any of its
------------------
Subsidiaries is a party to or bound by any collective bargaining
agreement, nor has any of them experienced any strikes or other
industrial actions, grievances, claims of unfair labor practices, or
other collective bargaining disputes or trade disputes. Neither the
Company nor any of its Subsidiaries has committed any unfair labor
practice or violated any applicable laws, including foreign laws,
relating to employment or employment practices or termination of
employment, including those relating to prices, wages and hours,
discrimination in employment, collective bargaining and the payment of
social security and taxes and is not liable for any arrears of wages
or any tax or any penalty for failure to comply with any of the
foregoing. Except as set forth on Schedule 5.1(s)(i), there is not
------------------
currently and there has not been within the previous three (3) years,
any claim against the Company or any of its Subsidiaries based on
actual or alleged wrongful termination or any claim of unlawful
dismissal or unfair dismissal or any claim on the basis of race, age,
sex, disability or other harassment or discrimination, nor any
reasonable Basis for any such claim. No organizational effort has
been or is presently being made or threatened by or on behalf of any
labor union (which includes any application or request for
recognition) with respect to any employees of the Company or any of
its Subsidiaries.
(ii) Schedule 5.1(s)(ii) contains a complete and accurate list of
-------------------
the following information for each employee and independent contractor
of the Company and each of its Subsidiaries, including each employee
on leave of absence or layoff status: name; job title; current
compensation or remuneration paid or payable and any change in
compensation or remuneration since December 1, 2000; employer (if
other than the Company); vacation accrued; and initial service dates,
being in the case of employees in the United Kingdom the date of
commencement of continuous employment. To the Company's Knowledge, no
current or former employee or current or former officer or director of
the Company or any of its Subsidiaries is a party to, or is otherwise
bound by, any agreement or arrangement, including any confidentiality,
non-competition or proprietary rights agreement (which includes any
agreement containing
33
any confidentiality provisions or restrictive covenants), between such
employee or officer or director and any other Person ("Proprietary
-----------
Rights Agreement") that in any way adversely affected, affects, or
----------------
will affect (A) the performance of his or her duties as an employee or
officer or director of the Company or its Subsidiaries, (B) the
ability of the Company or its Subsidiaries to conduct its business, or
(C) the ability of the Company or its Subsidiaries to enforce or enjoy
the benefits of any Proprietary Rights Agreement between the Company
or its Subsidiaries and any employee or director.
(iii) The Company and each of its Subsidiaries has timely filed
for all years prior to the year in which the Closing occurs, all Forms
1099 (including corrected or amended forms) and any comparable form
required to be filed under the applicable law of any state or foreign
jurisdiction, for all workers which the Company or any of its
Subsidiaries have classified and treated as independent contractors.
(iv) Except as set forth on Schedule 5.1(s)(iv), neither the
-------------------
Company nor any of its Subsidiaries has made any promises for the
payment of any bonuses, backpay or other remuneration to any
employees, contractors, interns or other Persons for their work on
behalf of such entity.
(v) Schedule 5.1(s)(v) contains a list of all employment,
------------------
consulting and severance (including early retirement and redundancy)
agreements or arrangements to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its
Subsidiaries is bound. The Company has delivered to Parent a correct
and complete copy of each written agreement listed in Schedule
--------
5.1(s)(v) (as amended to date).
---------
(t) Employee Benefits.
-----------------
(i) Schedule 5.1(t)(i) and Schedule 5.1(t)(ii) list each Employee
------------------ -------------------
Benefit Plan.
(1) Each Employee Benefit Plan (and each related trust,
insurance contract, or fund) complies in form and in operation
with the applicable requirements of ERISA, the Code, and other
applicable laws, rules and regulations, and no event has occurred
which will or could cause any Employee Benefit Plan to fail to
comply with such requirements.
(2) All required reports and descriptions (including Form
5500 Annual Reports, Summary Annual Reports, PBGC 1s, and Summary
Plan Descriptions) have been filed or distributed appropriately
with respect to each Employee Benefit Plan. The
34
requirements of Part 6 of Subtitle B of Title I of ERISA and of
Code (S) 4980B have been met with respect to each Employee
Benefit Plan that is subject to them.
(3) All contributions (including all employer contributions
and employee salary reduction contributions or other
contributions) which are due have been paid to each Employee
Benefit Plan, and all contributions for any period ending on or
before the Effective Time which are not yet due have been paid to
each Employee Pension Benefit Plan or accrued in accordance with
the past custom and practice of the Controlled Group. All
required premiums or other payments for all periods ending on or
before the Effective Time have been paid with respect to each
Employee Benefit Plan.
(4) Each Employee Benefit Plan that is an Employee Pension
Benefit Plan and is intended to be "qualified" under Code (S)
401(a) has received a current favorable determination letter from
the Internal Revenue Service, and the Company has no Knowledge of
any fact, situation, circumstance, condition or occurrence that
would or could adversely affect the qualified status of any such
Employee Benefit Plan.
(5) Each Employee Benefit Plan that is an Employee Pension
Benefit Plan is a defined contribution plan.
(6) The Company has delivered to Parent correct and complete
copies of the plan documents and summary plan descriptions,
summaries of material modification that have not yet been
incorporated into the summary plan descriptions, award
agreements, summaries of outstanding awards, the most recent
determination letter received from the Internal Revenue Service,
the three most recent Form 5500 Annual Reports, the most recent
plan financial statements, a report of current premium costs,
with the employer- and employee-paid portions identified, and all
related trust agreements, insurance contracts, and other funding
agreements which implement each such Employee Benefit Plan,
together with any correspondence from any government authority
regarding the Employee Benefit Plan.
(ii) With respect to each Employee Benefit Plan:
(1) The Employee Benefit Plan is not a defined benefit plan,
subject to Title IV of ERISA or a Multiemployer Plan.
(2) There have been no Prohibited Transactions with respect
to the Employee Benefit Plan. No fiduciary has any
35
Liability for breach of fiduciary duty or any other failure to
act or comply in connection with the administration or investment
of the assets of the Employee Benefit Plan. No claim, action,
suit, proceeding, hearing, investigation, charge, complaint,
claim, or demand with respect to the administration or the
investment of the assets of the Employee Benefit Plan is pending
or threatened. The Company has no Knowledge of any Basis for any
such claim, action, suit, proceeding, hearing, investigation,
charge, complaint, claim, or demand. No excise tax is owed on the
$26,990 and $134,067 in 401(k) contributions that were reported
to the IRS as transmitted to the Company 401(k) Plan in 1997 and
1998, respectively, more than thirty-one days after withholding
from the paychecks to which they related.
(3) There is no pending or threatened claim against or under
any Employee Benefit Plan, other than claims for benefits in the
Ordinary Course of Business.
(4) Neither the Company nor any member of the Controlled
Group maintains or ever has maintained or contributes, ever has
contributed, or ever has been required to contribute to any
Employee Welfare Benefit Plan providing medical, health, or life
insurance or other welfare type benefits for current or future
retired or terminated employees, their spouses, or their
dependents (other than in accordance with Code (S) 4980B or
health care continuation provisions of applicable state law).
(5) The transactions contemplated by this Agreement will not
entitle any employee of the Controlled Group to any type of
payment under any such Employee Benefit Plan, or to any payment
that would be an "excess parachute payment" under Code (S) 280G.
(6) Schedule 5.1(t)(ii) sets out all benefits provided to
-------------------
all directors and employees of Blue Wave Systems Limited (the
"U.K. Subsidiary").
----------------
(7) Other than bonuses issued pursuant to the bonus plans
set forth on Schedule 5.1(t)(ii), there are no schemes (whether
-------------------
contractual or discretionary) in operation by or in relation to
the U.K. Subsidiary under which any director or employee of the
U.K. Subsidiary or former director or employee of the U.K.
Subsidiary is entitled to any profit related pay, bonus, profit
share, commission or other incentive scheme.
(8) Except as set forth on Schedule 5.1(t)(ii), the U.K.
-------------------
Subsidiary is not bound nor accustomed to pay any monies (other
36
than in respect of contractual remuneration or emoluments of
employment) to or for the benefit of any director or employee of
the U.K. Subsidiary.
(9) All payments which the U.K. Subsidiary is obliged to
make whether to any employees or to a third party in respect of
the provision of any employee benefit to any such employee have
been paid.
(10) Except as set forth on Schedule 5.1(t)(ii), the Company
-------------------
has delivered to Parent complete copies of all documentation
relating to any plan or arrangements under which benefits are
provided to employees of the U.K. Subsidiary including all
insurance arrangements, trust agreements and details of premium
costs.
(11) There is no pending or threatened claim against the
U.K. Subsidiary in respect of the provision of or failing to
provide any employee or director or former employee or director
of the U.K. Subsidiary with any employee benefit. The U.K.
Subsidiary does not provide or contribute to the provision of any
benefit (including private health and life assurance cover) to
any former employee or director of the U.K. Subsidiary.
(12) Except pursuant to the U.K. Pension Scheme, the Company
and the U.K. Subsidiary have not prior to the date of this
Agreement paid, provided or contributed towards, and neither the
Company nor the U.K. Subsidiary have proposed nor are under any
obligation, liability or commitment, whether established by
trust, contract, board resolution, service agreement, ex-gratia
arrangement or otherwise, and whether or not legally enforceable
to pay, provide or contribute towards, any retirement, death or
disability benefit or otherwise to provide 'relevant benefits'
within the meaning of Section 612 Income and Corporation Taxes
Xxx 0000 for or in respect of any present or past employee or
officer (or any spouse, child or dependent of either of them) of
the U.K. Subsidiary, of any predecessor in business of the U.K.
Subsidiary or of any Affiliate or either, and no such pension or
payment is now being made voluntarily, and no ex-gratia payments
in respect of any pension have been or are proposed to be made by
the U.K. Subsidiary or the Company or any Affiliate to any such
Persons.
(13) The Company has disclosed to Parent full details of the
individuals of the U.K. Subsidiary who are members of the U.K.
Pension Scheme and the current rates of contribution required to
be paid by the U.K. Subsidiary to the U.K. Pension Scheme and
such details are true, accurate and complete.
37
(14) All contributions and expenses which have become due,
including professional fees, in respect of the U.K. Pension
Scheme have been paid.
(15) No claim has been made or threatened against the U.K.
Subsidiary or any Affiliate in respect of any act, event,
omission or other matter arising out of or in connection with the
U.K. Pension Scheme, and after making due and careful inquiries
the Company is not aware of any circumstances which might give
rise to any such claim. No indemnities have been given to any
person in connection with the U.K. Pension Scheme under which the
U.K. Subsidiary or any Affiliate might be liable.
(16) The U.K. Pension Scheme provides only money purchase
benefits (as defined in the Occupational Pension Schemes
(Disclosure of Information) Regulations 1996) for its
beneficiaries, and neither the Company, the U.K. Subsidiary nor
any Affiliate has given any promise or assurance (oral or
written) to any beneficiary that his or her benefits under the
U.K. Pension Scheme will be calculated wholly or partly by
reference to any Person's remuneration or will constitute
(approximately or exactly) any particular amount.
(u) Environmental, Health, and Safety Matters.
-----------------------------------------
(i) Solely with respect to the business conducted by the
Company and its Subsidiaries, each of the Company, its Subsidiaries
and their respective predecessors and Affiliates has complied and is
in compliance with all Environmental, Health, and Safety Requirements.
(ii) Without limiting the generality of the foregoing, each of
the Company, its Subsidiaries and their respective Affiliates has
obtained and complied with, and is in compliance with, all permits,
licenses and other authorizations that are required pursuant to
Environmental, Health, and Safety Requirements for the occupation of
its facilities and leased locations and the operation of its business;
a list of all such permits, licenses and other authorizations is set
forth on the attached Schedule 5.1(u).
---------------
(iii) Neither the Company nor its Subsidiaries has received any
written notice, report or other information regarding any actual or
alleged violation of Environmental, Health, and Safety Requirements,
or any Liabilities or potential Liabilities (whether accrued,
absolute, contingent, unliquidated or otherwise), including any
investigatory, remedial or corrective obligations, relating to any of
them or its facilities or any third party facilities arising under
Environmental, Health, and Safety Requirements.
38
(iv) Neither the Company nor its Subsidiaries has caused the
following to exist or be operated at any property or facility leased
or subleased by the Company, its Subsidiaries or their respective
predecessors and none of the following exists at any property or
facility leased or subleased by the Company, its Subsidiaries or their
respective predecessors: (A) underground storage tanks, (B) asbestos-
containing material in any form or condition, (C) materials or
equipment containing polychlorinated biphenyls, or (D) landfills,
surface impoundments, or disposal areas.
(v) Neither the Company nor any of its Subsidiaries, or their
respective predecessors or Affiliates has treated, stored, disposed
of, arranged for or permitted the disposal of, transported, handled,
or released any substance, including without limitation any hazardous
substance, or owned or operated any property or facility (and no such
property or facility is contaminated by any such substance) in a
manner that has given or would give rise to liabilities, including any
liability for response costs, corrective action costs, personal
injury, property damage, natural resources damages or attorney fees,
pursuant to the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended ("CERCLA"), Resource Conservation
------
and Recovery Act, as amended ("RCRA"), the Solid Waste Disposal Act,
----
as amended ("SWDA") or any other Environmental, Health, and Safety
----
Requirements.
(vi) Neither this Agreement nor the consummation of the
transaction that is the subject of this Agreement will result in any
obligations for site investigation or cleanup, or notification to or
consent of government agencies or third parties, pursuant to any of
the so-called "transaction-triggered" or "responsible property
transfer" Environmental, Health, and Safety Requirements.
(vii) Neither the Company nor any of its Subsidiaries has,
either expressly or by operation of law, assumed or undertaken any
Liability, including without limitation any obligation for corrective
or remedial action, of any other Person relating to Environmental,
Health, and Safety Requirements.
(viii) No facts, events or conditions relating to the past or
present facilities, properties or operations of the Company or its
Subsidiaries will prevent, hinder or limit in any way continued
compliance with Environmental, Health, and Safety Requirements, give
rise to any investigatory, remedial or corrective obligations pursuant
to Environmental, Health, and Safety Requirements, or give rise to any
other Liabilities (whether accrued, absolute, contingent, unliquidated
or otherwise) pursuant to Environmental, Health, and Safety
Requirements, including without limitation any relating to onsite or
offsite releases or
39
threatened releases of hazardous materials, substances or wastes,
personal injury, property damage or natural resources damage.
(v) Information Systems Integrity.
-----------------------------
(i) None of the firmware or Company Software that the Company
or any of its Subsidiaries provides to its customers has limitations
concerning calculation and manipulation of dates, including century,
millennium and leap year calculations, which make the firmware or
Company Software unfit for its intended purposes.
(ii) None of the firmware or Company Software that the Company
or any of its Subsidiaries uses in the conduct of its business has
limitations concerning calculation and manipulation of dates,
including century, millennium and leap year calculations, which make
the firmware or Company Software unfit for its intended purposes.
(iii) None of the firmware or Company Software produced by a
third-party and licensed by the Company to its customers has
limitations concerning calculation and manipulation of dates,
including century, millennium and leap year calculations, which make
the firmware or Company Software unfit for its intended purposes.
(iv) The Company has adopted information protection and security
policies, standards and guidelines of the type customarily maintained
by similar companies in similar businesses in order to maintain the
integrity, availability and confidentiality of information systems and
networks (e.g. protection from viruses and other malicious software,
data backup and recovery) for the management and operation of its
computers and information systems networks.
(w) Brokers, Finders and Agents. Other than to Bear, Xxxxxxx & Co.
---------------------------
Inc., neither the Company nor any of its Subsidiaries has any Liability to
pay any fees or commissions to any broker, finder or agent with respect to
the transactions contemplated by this Agreement.
(x) Opinion of Financial Advisor. The Company has received the
----------------------------
opinion of the Company Financial Advisor, dated the date of this Agreement
(the "Company Financial Advisor Opinion"), to the effect that, as of the
---------------------------------
date of this Agreement, the Merger Consideration to be received in the
Merger, by the holders of Company Shares are fair to such holders from a
financial point of view. A complete and correct signed copy of such
opinion has been delivered to Parent, and such opinion has not been
withdrawn or modified.
(y) Relationships. Except as set forth on Schedule 5.1(y), the
------------- ---------------
Company has not received written notice that any customer, supplier,
distributor or sales representative intends to cancel, terminate or
otherwise modify its
40
relationship with the Company or any of its Subsidiaries, which action
would reasonably be expected to have a Material Adverse Effect on the
Company.
(z) No Alternative Transactions. The Company is not a party to or
---------------------------
otherwise bound by any agreement with respect to an Acquisition Proposal.
(aa) Change of Control. Except as set forth on Schedule 5.1(aa), the
----------------- ----------------
transactions contemplated by this Agreement will not constitute a "change
of control" under, require the consent from or the giving of notice to a
third party pursuant to, permit a third party to terminate or accelerate
vesting or repurchase rights or create any other detriment under the terms,
conditions or provisions of any Material Contract to which the Company or
any of its Subsidiaries is a party or by which any of them or any of their
properties or assets may be bound.
(bb) Government Contracts.
--------------------
(i) Schedule 5.1(bb)(i) sets forth all of the following types
-------------------
of contracts and other agreements (whether written or oral, express or
implied) to which the Company (or any of its Subsidiaries) is now a
party, or in which the Company (or any of its Subsidiaries), or
predecessor in interest, was a party within the past six years:
(1) contracts with an agency of the United States
Government or a foreign government (the "Direct Contracts") with
----------------
a value in excess of $50,000;
(2) contracts with a nongovernmental entity in support of a
contract with an agency of the United States Government or a
foreign government (the "Subcontracts") with a value in excess of
------------
$50,000;
(3) Direct Contracts or Subcontracts in which the Company
was subject to the requirements of the Truth in Negotiations Act
("XXXX"), 10 U.S.C. (S) 2306(f), or claimed an exemption from
XXXX based upon any reason other than adequate price competition;
(4) Direct Contracts or Subcontracts in which the Company
applied for payments based upon representations of cost incurred;
and
(5) Direct Contacts or Subcontracts in which the Company
agreed to provide "most favored" or other preferential treatment
with regard to prices.
(ii) Schedule 5.1(bb)(ii) identifies by date and, where
--------------------
applicable, audit or investigation number, all audits, investigations,
and reviews conducted by any governmental entity of the Company's
41
operations, including compliance with or performance of Direct
Contracts and Subcontracts.
(iii) With respect to Direct Contracts and Subcontracts, the
Company warrants that, except as noted in Schedule 5.1(bb)(iii):
---------------------
(1) the Company and its Subsidiaries have complied with
all material terms and requirements of its and their Direct
Contracts and Subcontracts including, but not limited to,
provisions regarding compliance with product specifications,
product testing requirements, performance requirements, foreign
content restrictions, certifications and representations, and
pricing; and
(2) all cost or pricing data or information submitted in
support of the negotiation of Direct Contracts and Subcontracts,
or in support of the negotiation of modifications of Direct
Contracts or Subcontracts, or in support of request for payments
thereunder, was, at the time of the submission, current, accurate
and complete.
5.2 Representations and Warranties of Parent and Merger Sub. Parent and
-------------------------------------------------------
Merger Sub hereby represent and warrant to the Company that the statements
contained in this Section 5.2 are true and correct, except to the extent
-----------
specifically set forth on the disclosure schedule previously delivered by Parent
to the Company (the "Parent Disclosure Schedule"). The Parent Disclosure
--------------------------
Schedule shall be arranged in sections and paragraphs corresponding to the
letter and numbered paragraphs contained in this Section 5.2, and the disclosure
-----------
in any paragraph shall qualify only the corresponding paragraph in this Section
-------
5.2 or other paragraphs or sections to which it is clearly apparent (from a
---
plain reading of the disclosure) that such disclosure relates.
(a) Organization, Qualification and Corporate Power. Parent is a
-----------------------------------------------
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware. Merger Sub is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware. Each of Parent and Merger Sub has the requisite corporate power
and authority to own, operate or lease its properties and to carry on its
business as it is now being conducted, and is duly qualified or licensed to
do business, and is in good standing, in each jurisdiction in which the
nature of its business or the properties owned, operated or leased by it
makes such qualification, licensing or good standing necessary, except
where the failure to have such power or authority, or the failure to be so
qualified, licensed or in good standing, would not have a Material Adverse
Effect on Parent.
(b) Capitalization. As of January 31, 2001, the authorized capital
--------------
stock of Parent consists of (i) 4,200,000,000 shares of common stock, $3.00
par value per share (the "Parent Common Stock"), of which 2,192,725,028
-------------------
shares were issued and outstanding and (ii) 500,000 shares of preferred
stock, $100 par
42
value per share, issuable in series, none of which are issued or
outstanding and 250,000 of which have been designated as Junior
Participating Preferred Stock, Series B, and reserved for issuance upon the
exercise of the rights (the "Parent Rights") granted to holders of Parent
-------------
Common Stock pursuant to the Rights Agreement, dated as of November 5,
1998, between Parent and Xxxxxx Trust and Savings Bank, as Rights Agent
(the "Parent Rights Agreement"). All of the outstanding shares of capital
-----------------------
stock of Parent are, and when Parent Shares are issued in the Merger or
upon exercise of stock options converted in the Merger pursuant to Section
-------
4.1 such shares will be, duly authorized, validly issued, fully paid and
---
nonassessable and free of any preemptive rights.
(c) Authority; No Conflicts.
------------------------
(i) Each of Parent and Merger Sub has all requisite corporate
power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this
Agreement by Parent and Merger Sub and the consummation by Parent and
Merger Sub of the transactions contemplated hereby have been duly and
validly authorized and approved by the respective Boards of Directors
of Parent and Merger Sub and by Parent as sole Stockholder of Merger
Sub and no other corporate proceedings on the part of Parent or Merger
Sub are necessary to authorize or approve this Agreement or to
consummate the transactions contemplated hereby. This Agreement has
been duly executed and delivered by each of Parent and Merger Sub and,
assuming the due and valid authorization, execution and delivery by
the Company, constitutes a valid and binding obligation of each of
Parent and Merger Sub enforceable against each of them in accordance
with its terms.
(ii) The execution, delivery and performance of this Agreement
does not or will not, as the case may be, and the consummation of the
transactions contemplated hereby will not, conflict with, or result in
any violation of, or constitute a default (with or without notice or
lapse of time, or both) under, or give rise to a right of consent,
termination, amendment, cancellation or acceleration of any obligation
or the loss of a material benefit under, or the creation of a Lien on
any assets, or result in any adverse change in the rights or
obligations of Parent or Merger Sub, pursuant to: (A) any provision of
the charter or bylaws of Parent or Merger Sub or (B) except as could
not reasonably be expected to have, individually or in the aggregate,
a Material Adverse Effect on Parent and, subject to obtaining or
making the consents, approvals, orders, authorizations, registrations,
declarations and filings referred to in paragraph (c)(iii) below, the
terms, provisions or conditions of any loan or credit agreement, note,
mortgage, bond, indenture, lease, compensation or benefit plan (or any
grant or award made pursuant thereto) or other agreement, obligation,
instrument, contract, permit, concession, franchise, license,
judgment, order, writ, injunction, award, decree, statute, law,
43
ordinance, rule or regulation applicable to Parent or Merger Sub or
any of their respective properties or assets.
(iii) No consent, registration, permit, approval, order or
authorization of, or registration, declaration, notice, report, or
other filing with, any Governmental Entity is required by or with
respect to Parent or Merger Sub in connection with the execution and
delivery of this Agreement by Parent or Merger Sub or the consummation
by the Parent or the Merger Sub of the transactions contemplated
hereby, except for (x) those required under or in relation to (A) the
Exchange Act, (B) the DGCL with respect to the filing and recordation
of appropriate merger or other documents, (C) rules and regulations of
the NYSE, and (D) antitrust or other competition laws of any
applicable jurisdictions, including without limitation, requirements,
if any, arising out of the HSR Act and (y) such consents, approvals,
orders, authorizations, registrations, declarations and filings the
failure of which to make or obtain could not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect on
Parent or Merger Sub or impair or delay the ability of Parent or
Merger Sub to consummate the transactions contemplated hereby.
Notwithstanding the foregoing, Parent or Merger Sub will use its
reasonable best efforts to obtain all the consents required to
consummate the transactions contemplated hereby.
(d) SEC Reports and Financial Statements.
------------------------------------
(i) Since January 1, 1998, Parent has timely filed all required
reports, schedules, forms, statements and other documents required to
be filed by it with the SEC (collectively, including all exhibits
thereto, the "Parent SEC Reports"). The Parent SEC Reports, as of
------------------
their respective dates (and, if amended or superseded by a filing
prior to the date of this Agreement or of the Closing Date, then on
the date of such filing), did not, and any Parent SEC Reports filed
with the SEC subsequent to the date hereof will not, contain any
untrue statement of a material fact or omit to state a material fact
required to be stated (or incorporated by reference) therein or
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading. Each of the
financial statements (including the related notes) included or to be
included in, or incorporated by reference into, the Parent SEC Reports
present or will present fairly, in all material respects, the
financial position and results of operations and cash flows of Parent
as of the respective dates or for the respective periods set forth
therein, all in conformity with GAAP consistently applied during the
periods involved except as otherwise noted therein, and subject, in
the case of the unaudited interim financial statements, to normal and
recurring year-end adjustments that have not been and will not be
material in amount. All of such Parent SEC Reports, as of their
respective dates (and as of the date of any amendment to the
respective Parent SEC Report filed prior to the date hereof),
44
complied in all respects with the applicable requirements of the
Securities Act and the Exchange Act and the rules and regulations
promulgated thereunder (as in effect on the dates on which such Parent
SEC Reports were filed).
(ii) Except as set forth in the Parent SEC Reports filed and
publicly available prior to the date of this Agreement, and except for
liabilities and obligations incurred in the Ordinary Course of
Business since September 30, 2000 (none of which has had or could be
reasonably expected to have, individually or in the aggregate, a
Material Adverse Effect on Parent), Parent does not have any
undisclosed liabilities or obligations of any nature required by GAAP
to be set forth on a consolidated balance sheet of Parent or which
have had or are reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Parent.
(iii) Parent has delivered to the Company a complete and correct
copy of any amendments or modifications, which have not yet been filed
with the SEC, to all agreements, documents or other instruments which
previously had been filed by Parent with the SEC pursuant to the
Exchange Act.
(e) S-4 Registration Statement and Proxy Statement/Prospectus. None
---------------------------------------------------------
of the information supplied or to be supplied by Parent or Merger Sub for
inclusion or incorporation by reference in the S-4 Registration Statement
or the Proxy Statement will (i) in the case of the S-4 Registration
Statement, at the time it becomes effective or at the Effective Time,
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make
the statements therein not misleading, or (ii) in the case of the Proxy
Statement, at the time of the mailing of the Proxy Statement and at the
time of the Company Stockholder Meeting, contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading. If at any time
prior to the Effective Time any event with respect to Parent, Merger Sub or
any of their respective Affiliates, officers and directors or any of its
Subsidiaries should occur which is required to be described in an amendment
of, or a supplement to, the Proxy Statement or the S-4 Registration
Statement, Parent shall promptly inform the Company, such event shall be so
described, and such amendment or supplement shall be promptly filed with
the SEC. The S-4 Registration Statement will (with respect to Parent and
Merger Sub) comply as to form in all material respects with the
requirements of the Securities Act and the rules and regulations
promulgated thereunder. The Proxy Statement will (with respect to Parent
and Merger Sub) comply as to form in all material respects with the
requirements of the Exchange Act and the rules and regulations promulgated
thereunder. Notwithstanding the foregoing provisions of this Section 5.2(e),
-------------
no representation or warranty is made by Parent or Merger Sub with respect
to statements made or incorporated by
45
reference in the S-4 Registration Statement or the Proxy Statement based on
information supplied by the Company or its Subsidiaries for inclusion or
incorporation by reference therein.
(f) Events Subsequent. Since September 30, 2000 to the date hereof,
-----------------
there has not been any Material Adverse Effect with respect to Parent.
(g) Litigation. There is no litigation, arbitration, claim, suit,
----------
action, investigation or proceeding pending or, to the Knowledge of Parent,
threatened against or affecting Parent, Merger Sub or any of their
respective properties or assets, which has had or could reasonably be
expected to have, individually or in the aggregate, a Material Adverse
Effect on Parent, nor is there any judgment, award, decree, injunction,
rule or order of any Governmental Entity or arbitrator outstanding against
Parent or Merger Sub which would reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on Parent.
(h) Brokers. Other than to Xxxxxxx, Xxxxx & Co., neither Parent nor
-------
Merger Sub has any Liability to pay any fees or commissions to any broker,
finder, or agent with respect to the transactions contemplated by this
Agreement.
(i) Ownership of Merger Sub; No Prior Activities.
--------------------------------------------
(i) Merger Sub was formed solely for the purpose of engaging
in the transactions contemplated by this Agreement.
(ii) As of the Effective Time, all of the outstanding capital
stock of Merger Sub will be owned directly by Parent. As of the
Effective Time, there will be no options, warrants or other rights
(including registration rights), agreements, arrangements or
commitments to which Merger Sub is a party of any character relating
to the issued or unissued capital stock of, or other equity interests
in, Merger Sub or obligating Merger Sub to grant, issue or sell any
shares of the capital stock of, or other equity interests in, Merger
Sub, by sale, lease, license or otherwise. There are no obligations,
contingent or otherwise, of Merger Sub to repurchase, redeem or
otherwise acquire any shares of the capital stock of Merger Sub.
(iii) As of the date hereof and the Effective Time, except for
obligations or Liabilities incurred in connection with its
incorporation or organization and the transactions contemplated by
this Agreement, Merger Sub has not and will not have incurred,
directly or indirectly, through any Subsidiary or Affiliates, any
obligations or Liabilities or engaged in any business activities of
any type whatsoever or entered into any agreements or arrangements
with any Person.
46
ARTICLE VI
ADDITIONAL COVENANTS AND AGREEMENTS
-----------------------------------
6.1 Conduct of Business of the Company.
----------------------------------
(a) The Company covenants and agrees that, during the period from the
date of this Agreement to the Effective Time (unless the Parties shall
otherwise agree in writing and except as otherwise contemplated by this
Agreement) it will, and will cause each of its Subsidiaries to, conduct its
operations according to its ordinary and usual course of business
consistent with past practice and, to the extent consistent therewith, with
no less diligence and effort than would be applied in the absence of this
Agreement, seek to preserve intact its current business organizations, use
its reasonable best efforts to keep available the service of its current
officers and employees and preserve its relationships with customers, key
technology suppliers and others having business dealings with it to the end
that goodwill and ongoing businesses shall be unimpaired at the Effective
Time.
(b) Without limiting the generality of the foregoing, and except as
otherwise permitted in this Agreement, prior to the Effective Time, the
Company shall not, and shall cause each of its Subsidiaries not to, and to
the extent permissible under applicable antitrust law, without the prior
written consent of Parent:
(i) accelerate, amend or change the period of exercisability or
vesting of any outstanding options or other rights granted under any
stock option plan, reprice options granted under any stock option plan
or authorize cash payments in exchange for any options or other rights
granted under any of such plans, as the case may be, except to the
extent required under any stock option plan or any individual
agreement as in effect on the date hereof;
(ii) except for shares to be issued upon exercise of outstanding
options issue, deliver, sell, dispose of, pledge or otherwise
encumber, or authorize or propose the issuance, sale, disposition or
pledge or other encumbrance of (A) any additional shares of capital
stock of any class, or any securities or rights convertible into,
exchangeable for, or evidencing the right to subscribe for any shares
of capital stock, or any rights, warrants, options, calls, commitments
or any other agreements of any character to purchase or acquire any
shares of capital stock or any securities or rights convertible into,
exchangeable for, or evidencing the right to subscribe for, any shares
of capital stock, or (B) any other securities in respect of, in lieu
of, or in substitution for, shares outstanding on the date hereof;
47
(iii) redeem, purchase or otherwise acquire, or offer to redeem,
purchase or otherwise acquire, any of its outstanding securities
(including the Company Shares);
(iv) split, combine, subdivide or reclassify any shares of its
capital stock or declare, set aside for payment or pay any dividend,
or make any other actual, constructive or deemed distribution in
respect of any shares of its capital stock or otherwise make any
payments to stockholders in their capacity as such;
(v) adopt a plan of complete or partial liquidation,
dissolution, merger, consolidation, restructuring, recapitalization or
other reorganization (other than the Merger as provided for herein);
(vi) adopt any amendments to its certificate of incorporation
or bylaws or alter through merger, liquidation, reorganization,
restructuring or in any other fashion the corporate structure or
ownership of any of its Subsidiaries;
(vii) make any acquisition, by means of merger, consolidation or
otherwise, or dispositions, of assets or securities (except for
acquisitions or dispositions in the Ordinary Course of Business, none
of which are acquisitions or dispositions of businesses);
(viii) other than in the Ordinary Course of Business, incur any
indebtedness for borrowed money or guarantee any such indebtedness or
make any loans, advances or capital contributions to, or investments
in, any other Person;
(ix) make or revoke any material Tax election, settle or
compromise any material federal, state, local or foreign Tax liability
or change (or make a request to any taxing authority to change) any
material aspect of its method of accounting for Tax purposes (except
for Tax elections which are consistent with prior such elections (in
past years));
(x) incur any material liability for Taxes other than in the
Ordinary Course of Business;
(xi) incur or commit to incur any capital expenditures in
excess of $50,000 for any individual expenditure and $150,000 in the
aggregate per calendar month;
(xii) enter into any contract not consistent with past practices
of the Company and its Subsidiaries; provided that any contracts
entered into with any Governmental Entity shall, to the extent
permissible under antitrust law, require the prior written consent of
Parent to ensure compliance with all applicable laws and regulations,
including but not limited to the Federal Acquisition Regulations;
48
(xiii) enter into any strategic alliance or joint marketing
arrangement or agreement other than routine alliances, arrangements or
agreements;
(xiv) pay, discharge, settle or satisfy any material claims,
liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise) or litigation (whether or not commenced prior
to the date of this Agreement), other than the payment, discharge,
settlement or satisfaction in the Ordinary Course of Business;
(xv) except as required by this Agreement or as required to be
held in accordance with a valid stockholder request, call or hold any
meeting of stockholders of the Company;
(xvi) transfer or license to any Person or entity or otherwise
extend, amend or modify any Company Intellectual Property other than
in the Ordinary Course of Business;
(xvii) make any change to accounting policies or procedures,
except as may be required by GAAP or applicable law;
(xviii) take any action (other than pursuant to this Agreement)
to cause the Company Shares not to be listed on the Nasdaq;
(xix) take any action to render inapplicable, or to exempt any
third party from, any statute referred to in Section 5.1(c)(iii); or
-------------------
(xx) authorize, recommend, propose or announce an intention to
do any of the foregoing, or enter into any contract, agreement,
commitment or arrangement to do any of the foregoing.
(c) Between the date hereof and the Effective Time, the Company shall
not and shall procure that its Subsidiaries shall not (without the prior
written consent of Parent) (A) except for normal increases in the Ordinary
Course of Business that, in the aggregate, are not inconsistent with
customary historical anniversary increases, but in no event shall be
greater than 5% per individual, or as required by the terms of any contract
disclosed pursuant to this Agreement, increase the compensation or
remuneration, bonus or other benefits payable or provided or to become
payable or to be provided to any director, officer, other employee or
independent contractor; (B) except as required to comply with applicable
law, pay or agree to pay any pension, retirement allowance or other payment
or employee benefit not provided for by (or in a manner or at a time not
provided in) any of the existing benefit, severance (including early
retirement and redundancy), pension or employment plans, agreements or
arrangements as in effect on the date hereof to any such director, officer
or employee, whether past or present; (C) enter into any new or amend any
existing employment or severance (including early retirement and
redundancy) agreement with or for the benefit of any such director,
officer, employee or independent contractor; (D) except as may
49
be required to comply with applicable law, become obligated under any new
pension plan, welfare plan, multi-employer plan, employee benefit plan,
severance (including early retirement and redundancy) plan, benefit
arrangement, or similar plan or arrangement, which was not in existence on
the date hereof, or amend, terminate or change the terms of such plans or
agreements or any funding policies or assumptions for any such plan or
arrangement in existence on the date hereof if such amendment, termination
or change would have the effect of enhancing any benefits thereunder or
increasing the cost thereof to the Company or any Subsidiary, as the case
may be, or (E) increase the total head count of the Company and its
Subsidiaries in an amount greater than an increase in the Ordinary Course
of Business.
(d) Between the date hereof and the Effective Time, the Company will
use commercially reasonable best efforts to maintain in full force and
effect all of its and its Subsidiaries presently existing policies of
insurance or insurance comparable to the coverage afforded by such
policies.
6.2 No Solicitation.
---------------
(a) The Company shall immediately cease and terminate any existing
solicitation, initiation, encouragement, activity, discussion or
negotiation with any Persons conducted heretofore by the Company, its
Subsidiaries or any of their respective Representatives with respect to any
proposed, potential or contemplated Acquisition Proposal.
(b) From and after the date hereof, without the prior written consent
of Parent, the Company will not, will not authorize or permit any of its
Subsidiaries to, and shall use its reasonable best efforts to cause all of
its and their respective officers, directors, employees, financial
advisors, agents or representatives (each a "Representative") not to,
--------------
directly or indirectly, solicit, initiate or encourage (including by way of
furnishing information) or take any other action to facilitate any
inquiries or the making of any proposal which constitutes or may reasonably
be expected to lead to an Acquisition Proposal from any Person (a "Third
-----
Party"), or engage in any discussion or negotiations relating thereto or
-----
accept any Acquisition Proposal.
(c) Notwithstanding the provisions of paragraph (b) above, (i) the
Company may, in response to an unsolicited written offer or proposal with
respect to a potential or proposed Acquisition Proposal engage in
negotiations or discussions with, or provide information or data to, any
Third Party relating to any Acquisition Proposal if (i) the Acquisition
Proposal is a Superior Proposal and (ii) the Company's Board of Directors
determines in good faith, after consultation with outside legal counsel to
the Company, that such action is required to comply with its fiduciary
duties under applicable law. Any information furnished to any Third Party
in connection with any Company Acquisition Proposal shall be provided
pursuant to a confidentiality and standstill agreement on customary terms
(including prohibitions on unsolicited tender
50
offers, acquisitions of equity interests in the Company, proposals to
acquire stock or assets, formation of Section 13(d) groups, public requests
for release from the standstill, actions that would require the Company to
make a public announcement and engaging in proxy contests). Subject to all
of the foregoing requirements, the Company will (x) immediately notify
Parent orally and in writing if any discussions or negotiations are sought
to be initiated, any inquiry or proposal is made, or any information is
requested by any Third Party with respect to any Acquisition Proposal or
which could lead to an Acquisition Proposal, (y) immediately notify Parent
of all material terms of any Acquisition Proposal, including the identity
of the Third Party making the Acquisition Proposal or the request for
information, if known, and including with such notice any documentation
relating to such Acquisition Proposal, and (z) thereafter shall inform
Parent on a timely, ongoing basis of the status and content of any
discussions or negotiations with a Third Party, including immediately
reporting any changes to the terms and conditions of the Acquisition
Proposal, including with such notice any documentation relating to such
Acquisition Proposal.
(d) In the event the Board of Directors of the Company has determined
that any Acquisition Proposal constitutes a Superior Proposal, (i) the
Company shall promptly notify Parent thereof and (ii) for a period of five
business days after delivery of such notice, the Company and its
Representatives, if requested by Parent, shall negotiate in good faith with
Parent to make such adjustments to the terms and conditions of this
Agreement as would enable the Company to proceed with the Merger on such
adjusted terms. After such five business day period, the Board of
Directors of the Company may then (and only then) withdraw or modify its
approval or recommendation of the Merger and this Agreement and recommend
such Superior Proposal.
(e) The Company agrees not to release any Third Party from, or waive
any provision of, any standstill agreement to which it is a party or any
confidentiality agreement between it and another Person who has made, or
who may reasonably be considered likely to make, an Acquisition Proposal or
who the Company or any of its Representatives have had discussions with
regarding a proposed, potential or contemplated Company Acquisition
Transaction unless the Company's Board of Directors shall conclude, in good
faith, that such action will lead to a Superior Proposal and that, after
receiving advice from outside legal counsel to the Company, such action is
required for the Board of Directors to comply with its fiduciary duties
under applicable law.
(f) For purposes of this Agreement:
(i) "Acquisition Proposal" shall mean, with respect to the
--------------------
Company, any bona fide inquiry, proposal or offer from any Third Party
relating to any (A) direct or indirect acquisition or purchase of a
business of the Company or any of its Subsidiaries, that constitutes
15% or more of the consolidated net revenues, net income or assets of
the Company and its Subsidiaries, (B) direct or indirect acquisition
or purchase of 15% or more
51
of any class of equity securities of the Company or any of its
Subsidiaries whose business constitutes 15% or more of the
consolidated net revenues, net income or assets of the Company and its
Subsidiaries, (C) tender offer or exchange offer that if consummated
would result in any Person beneficially owning 15% or more of the
capital stock of the Company, or (D) merger, consolidation, business
combination, recapitalization, liquidation, dissolution or similar
transaction involving the Company or any of its Subsidiaries whose
business constitutes 15% or more of the consolidated net revenues, net
income or assets of the Company and its Subsidiaries.
(ii) Each of the transactions referred to in clauses (A) through
(D) of the definition of Acquisition Proposal, other than any such
transaction to which Parent or any of its Subsidiaries is a party, is
referred to herein as a "Company Acquisition Transaction."
-------------------------------
(iii) "Superior Proposal" means any bona fide written offer made
-----------------
by a Third Party to acquire, directly or indirectly, for consideration
consisting of cash and/or securities, all of the Common Shares then
outstanding or all or substantially all the assets of the Company (i)
on terms that the Board of Directors of the Company determines in its
good faith judgment (after consultation with a financial advisor of
nationally recognized reputation and taking into account all the terms
and conditions of the offer deemed relevant by such Board of
Directors, including any break-up fees, expense reimbursement
provisions, conditions to consummation, and the ability of the party
making such proposal to obtain financing for such offer) are
materially more favorable from a financial point of view to its
stockholders than the Merger; and (ii) that constitutes a transaction
that, in such Board of Directors' judgment, is reasonably likely to be
consummated on the terms set forth, taking into account all legal,
financial, regulatory and other aspects of such proposal.
(g) Except as expressly permitted by Section 6.2(d), neither the Board
--------------
of Directors of the Company nor any committee thereof shall (i) withdraw or
modify, or propose publicly to withdraw or modify, in a manner adverse to
Parent, the approval or recommendation by such Board of Directors of this
Agreement or the Merger or (ii) approve or recommend, or propose publicly
to approve or recommend, any Acquisition Proposal or Company Acquisition
Transaction. Nothing contained in this Section 6.2 shall prohibit the
-----------
Company from taking and disclosing to its shareholders a position
contemplated by Rule 14e-2(a) promulgated under the Exchange Act.
6.3 Company Stockholders Meeting. The Company shall take all action
----------------------------
necessary in accordance with applicable law and its certificate of incorporation
and bylaws to convene, and will convene, a meeting of its stockholders (the
"Company Stockholder Meeting") as promptly as practicable to consider and vote
----------------------------
upon the approval of the Merger. Subject only to Section 6.2(d), the Board of
--------------
Directors of the Company
52
shall recommend and shall declare advisable such approval (the "Company
-------
Stockholder Approval"). Unless the Board of Directors of the Company has
--------------------
withdrawn its recommendation of this Agreement in compliance herewith, the
Company shall use its reasonable best efforts to solicit from its stockholders
proxies in favor of the approval and adoption of this Agreement and the Merger
and to secure the vote or consent of stockholders required by the DGCL and its
certificate of incorporation and bylaws to approve and adopt this Agreement and
the Merger.
6.4 Registration Statement; Proxy Statement. Parent will, as promptly as
--------------------------------------
practicable, prepare and file with the SEC a registration statement on Form S-4
(the "S-4 Registration Statement"), containing a proxy statement/prospectus, in
--------------------------
connection with the registration under the Securities Act of the issuance of the
Parent Shares upon conversion of the Company Shares and the other transactions
contemplated hereby. The Company and Parent will, as promptly as practicable,
prepare and file with the SEC a proxy statement that will be the same proxy
statement/prospectus contained in the S-4 Registration Statement and a form of
proxy, in connection with the vote of the Company's stockholders with respect to
the Merger (such proxy statement/prospectus, together with any amendments
thereof or supplements thereto, in each case in the form or forms mailed to the
Company's stockholders, is herein called the "Proxy Statement"). The Company
---------------
and Parent will, and will cause their accountants and lawyers to, use their
reasonable best efforts to have or cause the S-4 Registration Statement declared
effective as promptly as practicable, including, without limitation, causing
their accountants to deliver necessary or required instruments such as opinions,
consents and certificates, and will take any other action required or necessary
to be taken under federal or state securities laws or otherwise in connection
with the registration process. The Company will use its reasonable best efforts
to cause the Proxy Statement to be mailed to its stockholders at the earliest
practicable date and will coordinate and cooperate with Parent with respect to
the timing of the Company Stockholder Meeting and will use its reasonable best
efforts to hold the Company Stockholder Meeting as soon as practicable after the
date hereof. Parent shall also take any action required to be taken under state
blue sky or other securities laws in connection with the issuance of Parent
Shares in the Merger.
6.5 Listing Application. Parent shall as soon as practicable prepare and
-------------------
submit to the NYSE a listing application with respect to the Parent Shares
issuable in the Merger, and shall use its reasonable best efforts to obtain,
prior to the Effective Time, approval for the listing of such Parent Shares on
such exchange, subject to official notice of issuance.
6.6 Access to Information. Upon reasonable notice, the Company shall (and
---------------------
shall cause each of its Subsidiaries to) afford to officers, employees, counsel,
accountants and other authorized representatives of Parent (the "Authorized
----------
Representatives") reasonable access, during normal business hours throughout the
---------------
period prior to the Effective Time, to its properties, assets, books and records
and, during such period, shall (and shall cause each of its Subsidiaries to)
furnish promptly to such Authorized Representatives all information concerning
their business, properties, assets and personnel as may reasonably be requested
for purposes of appropriate and necessary due
53
diligence, provided that no investigation pursuant to this Section 6.6 shall
-----------
affect or be deemed to modify any of the representations or warranties made by
the Company. The Company acknowledges that Parent may request full and complete
access and cooperation of the Company and its personnel for additional due
diligence with regards to Direct Contracts and Subcontracts of the Company, and
agrees to provide any support and to take any actions reasonably requested by
Parent in this regard. Parent agrees to treat (and cause its Authorized
Representatives to treat) any and all information provided pursuant to this
Section 6.6 in strict compliance with the terms of that certain Non-Disclosure
-----------
Agreement, entered by and between the Company and Parent, dated September 22,
1999 (the "Non-Disclosure Agreement").
------------------------
6.7 Publicity. The Parties agree that they will consult with each other
---------
concerning any proposed press release or public announcement pertaining to this
Agreement or the Merger in order to agree upon the text of any such press
release or the making of such public announcement, which agreement shall not be
unreasonably withheld, except as may be required by applicable law or by
obligations pursuant to any listing agreement with a national securities
exchange or national automated quotation system, in which case the Party
proposing to issue such press release or make such public announcement shall use
its reasonable best efforts to consult in good faith with Parent or the Company,
as applicable, before issuing any such press release or making any such public
announcement. Notwithstanding the foregoing, in the event the Board of
Directors of the Company withdraws its recommendation of this Agreement in
compliance herewith, neither Party will be required to consult with or obtain
the agreement of the other in connection with any press release or public
announcement.
6.8 Indemnification of Directors and Officers. Parent shall cause to be
-----------------------------------------
maintained in effect for a period of six years after the Effective Time, the
current provisions regarding indemnification of current or former officers and
directors (each an "Indemnified Party") contained in the certificate of
-----------------
incorporation and bylaws of the Company and in any agreements between an
Indemnified Party and the Company, provided that in the event any claim or
claims are asserted or made within such six year period, all rights to
indemnification in respect of any claim or claims shall continue until final
disposition of any and all such claims; and for a period of three years, the
current policies of directors' and officers' liability insurance and fiduciary
liability insurance maintained by the Company (provided that Parent or the
Surviving Corporation may substitute therefor policies of at least substantially
the same coverage and amounts containing terms and conditions which are, in the
aggregate, no less advantageous to the insured and provided that such
substitution shall not result in any gaps or lapses in coverage with respect to
matters occurring prior to the Effective Time) with respect to claims arising
from facts or events that occurred on or before the Effective Time. Parent
shall not be obligated to pay annual premiums to the extent such premiums exceed
150% of the annual premiums paid as of the date hereof by the Company for such
insurance (such 150% amount, the "Maximum Premium"). If such insurance coverage
---------------
cannot be obtained at all, or can only be obtained at an annual premium in
excess of the Maximum Premium, Parent shall maintain the most advantageous
policies of directors' and officers' insurance obtainable for an annual premium
equal to the Maximum Premium. The Company represents that the Maximum Premium
is $35,000. This covenant is intended
54
to be for the benefit of, and shall be enforceable by, each of the Indemnified
Parties and their respective heirs and legal representatives.
6.9 Affiliates. Not less than 45 days prior to the Effective Time, the
----------
Company shall deliver to Parent a letter identifying all persons who may be
deemed at the time this Agreement is submitted for adoption by the stockholders
of the Company, "affiliates" of the Company for purposes of Rule 145 under the
Securities Act ("Company Affiliates"), and such list shall be updated as
------------------
necessary to reflect changes from the date thereof. The Company shall use
reasonable best efforts to cause each Person identified on such list to deliver
to Parent not less than 30 days prior to the Effective Time, a written agreement
substantially in the form attached as Exhibit C hereto (a "Company Affiliate
-----------------
Agreement").
---------
6.10 Representations and Warranties. Each of the Company and Parent shall
------------------------------
give prompt notice to the other of any circumstances that would cause any of
their respective representations and warranties set forth in Section 5.1 or 5.2,
----------- ---
as the case may be, not to be true and correct in all material respects at and
as of the Effective Time; provided, that delivery of such notice shall not cure
or be deemed to cure any breach of a representation or warranty.
6.11 Filings; Reasonable Best Efforts to Consummate Transactions. Subject
-----------------------------------------------------------
to the terms and conditions herein provided, the Parties shall: (a) promptly
make their respective filings and thereafter make any other required submissions
under the HSR Act or any other antitrust or competition laws of any applicable
jurisdiction, the Securities Act, the Exchange Act, and any other applicable law
with respect to this Agreement and the transactions contemplated hereby; (b)
cooperate in the preparation of such filings or submissions; and (c) use their
reasonable best efforts promptly to take, or cause to be taken, all other
actions and do, or cause to be done, all other things necessary, proper or
appropriate to consummate and make effective the transactions contemplated by
this Agreement as soon as practicable.
6.12 Tax-Free Reorganization Treatment. Prior to the Effective Time, the
---------------------------------
Parties shall use their reasonable best efforts to cause the Merger to be
treated as a reorganization within the meaning of Section 368 of the Code and to
obtain the opinions of their respective counsels or special tax advisors, as the
case may be, dated as of the Closing Date contemplated by Sections 7.2(f) and
---------------
7.3(f) and shall not knowingly take or fail to take any action which action or
------
failure to act would jeopardize the qualification of the Merger as a
reorganization within Section 368 of the Code.
6.13 Termination of 401(k) Plan. The Company shall, prior to the Closing,
--------------------------
adopt a resolution of its Board of Directors terminating the Company 401(k) Plan
(the form and substance of such resolution shall be subject to review and
approval by Parent).
6.14 Employee Benefits. Except as provided in Section 4.1(e), Parent shall
----------------- --------------
cause the Surviving Corporation to assume and honor, in accordance with their
terms, all written employment, retention and termination agreements applicable
to employees of the Company and provided to Parent prior to the date of this
Agreement or described on the
55
Company SEC Reports, subject to any amendments and modifications contemplated by
this Agreement. Prior to the Closing, the Company will provide Parent with a
written confirmation from the trustee under the Trust Deed of the LSI Employee
Share Trust that, from and after the Effective Time, the trustee will permit the
Parent Shares then held by it to be used to satisfy the exercise of the Eagle
Trust Options that will have been converted into options to purchase Parent
Shares pursuant to Section 4.1(e)(iii). Notwithstanding the foregoing, except as
-------------------
provided in this Agreement, nothing shall in any way limit or restrict the
ability of Parent or the Surviving Corporation following the Effective Time to
modify, amend or terminate any Employee Benefit Plan or non-U.S. benefit plans,
in accordance with its terms. Nothing contained herein shall limit or restrict
the ability of Parent to terminate the employment of any employee.
6.15 Accountant's Comfort Letters.
----------------------------
(a) The Company shall use reasonable best efforts to cause Xxxxxx
Xxxxxxxx & Co., the Company's independent public accountants, to deliver to
Parent two letters, one dated approximately the date on which the Form S-4
shall become effective and one dated the Closing Date, in form reasonably
satisfactory to Parent and customary in scope for comfort letters delivered
by independent public accountants in connection with registration
statements on Form S-4.
(b) Parent shall use reasonable best efforts to cause KPMG LLP
("KPMG"), the Parent's independent public accountants, to deliver to the
----
Company two letters, one dated approximately the date on which the Form S-4
shall become effective and one dated the Closing Date, in form reasonably
satisfactory to the Company and customary in scope for comfort letters
delivered by independent public accountants in connection with registration
statements on Form S-4.
6.16 U.K. Matters.
------------
(a) The Company shall cause each Subsidiary to ensure that, prior to
Closing, (i) all statutory books, books of account and other records of
whatsoever kind (the "Company Records") of each Subsidiary are up-to-date
---------------
and maintained in accordance with all applicable legal requirements and
contain complete and accurate records of all matters required to be dealt
with in the Company Records, (ii) all Company Records and all other
documents of title and copies of all subsisting agreements to which any
Subsidiary is a party which are the property of such Subsidiary or ought to
be in its possession, are in its possession (or under its control), and
(iii) all accounts, documents and returns required by law to be delivered
or made to the Registrar of Companies in England (or equivalent in any
other jurisdiction in which a Subsidiary is incorporated) or any other
authority have been duly and correctly delivered or made, in each case so
that by Closing no notice or allegation that any Company Record is
incorrect or should be rectified is capable of being served by any Person
on any Subsidiary.
56
(b) Prior to Closing, the Company shall take all necessary action to
commence the dissolution of each Subsidiary incorporated in the U.K. apart
from the U.K. Subsidiary (the "Dormant Subsidiaries") in accordance with
--------------------
section 652 of the Companies Xxx 0000, and the Company shall ensure that
all necessary steps, filings or actions of whatsoever nature required to be
taken under the applicable legislation are promptly taken by each Dormant
Subsidiary and its directors and officers; provided that in the event that
it is not possible to dissolve all or any of the Dormant Subsidiaries
pursuant to section 652 of the Companies Xxx 0000, the Company shall ensure
that it and each such Dormant Subsidiary takes all necessary action to
commence the winding up or dissolution of such Dormant Subsidiary as
otherwise permitted under the applicable laws of England and Wales.
6.17 Bonuses. The Company shall pay, or shall cause its Subsidiaries to
-------
pay, prior to Closing, all accrued bonuses earned for all fiscal years ended
prior to fiscal year 2001.
ARTICLE VII
CONDITIONS
----------
7.1 Conditions to Each Party's Obligations. The respective obligations of
--------------------------------------
each Party to consummate the Merger are subject to the satisfaction or waiver by
each of the Parties of the following conditions:
(a) this Agreement and the Merger shall have received the Company
Stockholder Approval;
(b) the S-4 Registration Statement shall have become effective in
accordance with the provisions of the Securities Act, and no stop order
suspending the effectiveness of the S-4 Registration Statement shall have
been issued by the SEC and remain in effect;
(c) no judgment, order, decree, statute, law, ordinance, rule or
regulation, entered, enacted, promulgated, enforced or issued by any court
or other Governmental Entity of competent jurisdiction or other legal
restraint or prohibition shall be in effect which (i) has the effect of
making the consummation of the Merger or the other transaction contemplated
hereby illegal, (ii) materially restricts, prevents or prohibits
consummation of the Merger or any of the transactions contemplated hereby
or (iii) would impair the ability of Parent to own the outstanding shares
of the Surviving Corporation, or operate its or any of its Subsidiaries'
businesses (including the businesses of the Surviving Corporation or any of
its Subsidiaries), following the Effective Time (collectively,
"Restraints"); and there shall not be pending any suit, action or
----------
proceeding by any Governmental Entity or third party which would have any
of the foregoing effects; provided, however, that each of the Parties shall
have used their reasonable best efforts to prevent the entry of such
Restraints and to appeal as promptly as possible any such Restraints that
may be entered;
57
(d) the waiting period(s) under the HSR Act or antitrust or
competition laws of any applicable jurisdiction, if applicable, shall have
expired; and
(e) the Parent Shares to be issued pursuant to the Merger shall have
been duly approved for listing on the NYSE, subject to official notice of
issuance.
7.2 Additional Conditions to the Obligations of the Company. The
-------------------------------------------------------
obligations of the Company to consummate the Merger also are subject to the
fulfillment at or prior to the Effective Time of the following conditions, any
or all of which may be waived in whole or in part by the Company to the extent
permitted by applicable law:
(a) the representations and warranties of Parent set forth in Section
-------
5.2 that are qualified as to materiality or Material Adverse Effect shall
---
be true and correct, and such representations and warranties that are not
so qualified shall be true and correct, except where any such failure to be
true and correct would not individually or in the aggregate result in a
Material Adverse Effect to Parent, in each case as of the date of this
Agreement, and as of the Effective Time with the same force and effect as
if made on and as of the Effective Time (except to the extent expressly
made as of an earlier date, in which case as of such date), in each case
(i) except as permitted or contemplated by this Agreement and (ii) except
for changes or developments in the general economic conditions or other
factors that are not unique to Parent, its Subsidiaries or other Persons
engaged in substantially the same business as Parent and its Subsidiaries;
(b) Parent and its Subsidiaries shall have performed or complied in
all material respects with its agreements and covenants required to be
performed or complied with under this Agreement as of or prior to the
Effective Time;
(c) Parent shall have delivered to the Company a certificate of any
senior executive officer of Parent to the effect that each of the
conditions specified in clauses (a), (b) and (d) of this Section 7.2 is
-----------
satisfied;
(d) from the date of this Agreement to the Effective Time, there
shall not have been any event or development which results in a Material
Adverse Effect on Parent;
(e) Parent shall have obtained all consents, approvals, releases or
authorizations ("Consents") from, and Parent shall have made all filings
--------
and registrations ("Filings") to or with, any Person, including without
-------
limitation any Governmental Entity, necessary to be obtained or made in
order for the Company to consummate the Merger, unless the failure to
obtain such Consents or make such Filings would not, individually or in the
aggregate, have a Material Adverse Effect on the Company;
(f) the Company shall have received an opinion of Xxxxxxx & Xxxxxx,
P.C., counsel to the Company, in form and substance reasonably acceptable
to the Company, based upon facts, representations and assumptions set forth
in such opinion which are consistent with the state of facts at the
Effective Time, to the
58
effect that for federal income tax purposes (1) the Merger will be treated
as a reorganization qualifying under the provisions of Section 368(a) of
the Code, and Parent, Merger Sub and the Company will each be a party to
the reorganization within the meaning of Section 368(b) of the Code, (2) no
gain or loss will be recognized by Parent, Merger Sub or the Company as a
result of the Merger, and (3) no gain or loss will be recognized by the
holders of Company Shares who exchange their Company Shares for Parent
Shares pursuant to the Merger (except with respect to cash received in lieu
of a fractional share interest), dated the date of the Effective Time. In
rendering such opinion, counsel may require and rely upon factual
representations contained in certificates of officers of Parent, the
Company, Merger Sub and certain stockholders of Parent and the Company; and
(g) Parent shall have received the accountant's letter contemplated
by Section 6.15 to be received by it.
------------
7.3 Additional Conditions to the Obligations of Parent. The obligations
--------------------------------------------------
of Parent to consummate the Merger also are subject to the fulfillment at or
prior to the Effective Time of the following conditions, any or all of which may
be waived in whole or in part by Parent to the extent permitted by applicable
law:
(a) the representations and warranties of the Company set forth in
Section 5.1 that are qualified as to materiality or Material Adverse Effect
-----------
shall be true and correct, and such representations and warranties that are
not so qualified shall be true and correct, except where any such failure
to be true and correct would not individually or in the aggregate result in
a Material Adverse Effect to the Company, in each case as of the date of
this Agreement, and as of the Effective Time with the same force and effect
as if made on and as of the Effective Time (except to the extent expressly
made as of an earlier date, in which case as of such date), in each case
(i) except as permitted or contemplated by this Agreement, (ii) except for
changes or developments in the general economic conditions or other factors
that are not unique to the Company, its Subsidiaries or other Persons
engaged in substantially the same business as the Company and its
Subsidiaries, and (iii) except for the loss by the Company or any of its
Subsidiaries of any of its or their customers as a result of the
announcement or other proper disclosure of this Agreement or the
transactions contemplated hereby;
(b) the Company and its Subsidiaries shall have performed or complied
in all material respects with its agreements and covenants required to be
performed or complied with under this Agreement as of or prior to the
Effective Time;
(c) the Company shall have delivered to Parent a certificate of its
Chief Executive Officer and Chief Financial Officer to the effect that each
of the conditions specified in clauses (a), (b) and (d) of this Section 7.3
-----------
is satisfied;
59
(d) from the date of this Agreement to the Effective Time, there
shall not have been any event or development which results in a Material
Adverse Effect on the Company;
(e) the Company shall have obtained all Consents from, and the
Company shall have made all Filings to or with, any Person, including
without limitation any Governmental Entity, necessary to be obtained or
made in order for Parent to consummate the Merger or issue Parent Shares
thereto, as applicable, unless the failure to obtain such Consents or make
such Filings would not, individually or in the aggregate, have a Material
Adverse Effect on Parent;
(f) Parent shall have received an opinion of KPMG, special tax
advisors to Parent, in form and substance reasonably acceptable to Parent,
based upon facts, representations and assumptions set forth in such opinion
which are consistent with the state of facts at the Effective Time, to the
effect that for federal income tax purposes (1) the Merger will be treated
as a reorganization qualifying under the provisions of Section 368(a) of
the Code, and Parent, Merger Sub and the Company will each be a party to
the reorganization within the meaning of Section 368(b) of the Code, (2) no
gain or loss will be recognized by Parent, Merger Sub or the Company as a
result of the Merger, and (3) no gain or loss will be recognized by the
holders of Company Shares who exchange their Company Shares for Parent
Shares pursuant to the Merger (except with respect to cash received in lieu
of a fractional share interest), dated the date of the Effective Time. In
rendering such opinion, special tax advisor may require and rely upon
factual representations contained in certificates of officers of Parent,
the Company, Merger Sub and certain stockholders of Parent and the Company;
(g) Parent shall have received the accountant's letter contemplated
by Section 6.16 to be received by it;
------------
(h) each of the parties to the Voting Agreement other than Parent
shall have complied in all material respects with all agreements and
covenants under the Voting Agreement required to be performed by it on or
before the Effective Time, unless the failure to so comply would not,
individually or in the aggregate, have a Material Adverse Effect on the
Company; and
(i) The Company shall have obtained and provided to Parent the signed
consent of each holder of an option under the Directors' Stock Option Plan
to the exercise, pay-out and cancellation of all of his or her options
under the Directors' Stock Option Plan, as described in Section 4.1(e)(ii),
------------------
and the Board of Directors of the Company shall have taken the actions
required by it pursuant to Section 4.1(e)(i) and (ii).
----------------- ----
60
ARTICLE VIII
TERMINATION
-----------
8.1 Termination by Mutual Consent. This Agreement may be terminated and
-----------------------------
the Merger may be abandoned at any time prior to the Effective Time, before or
after gaining Company Stockholder Approval, by the mutual written consent of the
Company and Parent.
8.2 Termination by either the Company or Parent. This Agreement may be
-------------------------------------------
terminated and the Merger may be abandoned at any time prior to the Effective
Time, before or after gaining Company Stockholder Approval, by action of the
Board of Directors of the Company or any senior executive officer of Parent if:
(a) the Merger shall not have been consummated by December 31, 2001
(the "Outside Date"); provided, however, that the right to terminate this
------------
Agreement under this Section 8.2(a) shall not be available to any Party
--------------
whose failure to fulfill any obligation under this Agreement has been the
cause of or resulted in the failure of the Merger to occur on or before
such date;
(b) if any Restraint shall be in effect and shall have become final
and nonappealable; provided, however, that the right to terminate this
Agreement under this Section 8.2(b) shall not be available to any Party who
--------------
fails to use reasonable best efforts to remove such Restraint before it
becomes final and nonappealable; or
(c) at the Company's Stockholders Meeting (including any adjournments
thereof), the Company Stockholder Approval shall not have been obtained;
provided, however, that the right to terminate this Agreement under this
Section 8.2(c) shall not be available to the Company if it has not complied
--------------
with its obligations under Sections 6.2 or 6.3.
------------ ---
8.3 Termination by the Company. This Agreement may be terminated upon
--------------------------
written notice to Parent, and the Merger may be abandoned, at any time prior to
the Effective Time, before or after the approval by holders of the Company
Shares, by action of the Board of Directors of the Company, if:
(a) Parent shall have breached or failed to perform any of the
representations, warranties, covenants or other agreements contained in
this Agreement, or if any representation or warranty of Parent shall have
become untrue, in either case such that (i) the condition set forth in
Section 7.2(a) or (b) would not be satisfied as of the time of such breach
-------------- ---
or as of such time as such representation or warranty shall have become
untrue and (ii) such breach or failure to be true has not been or is
incapable of being cured within thirty (30) business days following receipt
by Parent of notice of such breach or failure to comply; or
(b) Subject to the other provisions of this Section 8.3(b), (A) the
--------------
Company's Board of Directors so determines in its sole discretion by a
majority
61
vote, at any time during the 24-hour period commencing at the close of
trading on the NYSE on the Determination Date, if the Parent Market Price
is less than $20.77 and (B) the Company gives Parent written notice of its
intention to terminate this Agreement (the "Termination Notice") within the
------------------
aforementioned 24-hour period, provided that the Company may withdraw the
Termination Notice at any time within the aforementioned 24-hour period.
Notwithstanding the foregoing, no right of termination shall arise under
this Section 8.3(b) if Parent shall have given written notice to the
--------------
Company at any time within 24 hours of its receipt of the Termination
Notice that Parent elects to adjust the Exchange Ratio to a number equal to
a quotient (rounded to the nearest one-ten-thousandth), the numerator of
which is $8.20, and the denominator of which is the Parent Market Price. If
Parent makes an election contemplated by the preceding sentence, subject to
the limitations therein, and so notifies the Company within such 24-hour
period, the Company shall not have the right to terminate this Agreement
pursuant to this Section 8.3(b) and this Agreement shall remain in effect
--------------
in accordance with its terms (except as the Exchange Ratio shall have been
so modified), and any references in this Agreement to Exchange Ratio shall
thereafter be deemed to refer to the Exchange Ratio as adjusted pursuant to
this Section 8.3(b).
--------------
8.4 Termination by Parent. This Agreement may be terminated upon written
---------------------
notice to the Company, and the Merger may be abandoned, at any time prior to the
Effective Time, by action of any senior executive officer of Parent, if:
(a) the Company shall have breached or failed to perform any of the
representations, warranties, covenants or other agreements contained in
this Agreement, or if any representation or warranty of the Company shall
have become untrue, in either case such that (i) the condition set forth in
Section 7.3(a) or (b) would not be satisfied as of the time of such breach
-------------- ---
or as of such time as such representation or warranty shall have become
untrue and (ii) such breach or failure to be true has not been or is
incapable of being cured within thirty (30) business days following receipt
by the breaching Party of notice of such breach or failure to comply; or
(b) (i) the Board of Directors of the Company or any committee
thereof shall have withdrawn or modified in a manner adverse to Parent its
approval or recommendation of the Merger or this Agreement, (ii) the
Company shall have failed to include in the Proxy Statement the
recommendation of the Board of Directors of the Company in favor of
approval to the Merger and this Agreement, (iii) the Board of Directors of
the Company or any committee thereof shall have recommended any Acquisition
Proposal to the Company's stockholders, (iv) the Company or any of its
officers or directors shall have entered into discussions or negotiations
in violation of Section 6.2, unless such violation is (x) inadvertent or
-----------
unintentional and (y) does not adversely affect the consummation of the
transaction contemplated by this Agreement, (v) the Company shall enter
into an agreement to consummate a Company Acquisition Transaction, (vi) the
Board of Directors of the Company or any committee thereof
62
shall have resolved to do any of the foregoing or (vii) any Company
Acquisition Transaction is consummated.
8.5 Effect of Termination; Termination Fee.
--------------------------------------
(a) In the event of termination of this Agreement by either Parent or
the Company as provided in this Article VIII, this Agreement shall
------------
forthwith become void and there shall be no liability or obligation on the
part of the Parties or their respective Affiliates, officers, directors or
stockholders except (w) as set forth in this Section 8.5 (x) with respect
-----------
to the treatment of confidential information pursuant to Section 6.6 and
-----------
the payment of expenses pursuant to Section 9.1, (y) to the extent that
-----------
such termination results from the willful breach of a Party of any of its
representations or warranties, or any of its covenants or agreements or (z)
with respect to intentional or knowing misrepresentation in connection with
this Agreement or the transactions contemplated hereby.
(b) In the event that either
(i) this Agreement is terminated by Parent pursuant to Section
-------
8.4(b), or
------
(ii) any Person shall have made or announced an intention to make
an Acquisition Proposal, and thereafter (A) this Agreement is
terminated by either the Company or Parent pursuant to Section 8.2(a)
--------------
or pursuant to Section 8.2(c); and (B) the Company enters into an
--------------
agreement to consummate, or consummates, a Company Acquisition
Transaction during the twelve (12) month period subsequent to any such
termination,
then the Company shall pay Parent a fee (the "Termination Fee") equal to
---------------
the lesser of (A) $6,435,000 or (B) 3.9% of the amount calculated by
multiplying 6,500,000 by the average daily closing price per share of
Parent Common Stock as reported on the NYSE Composite Tape for the twenty
(20) trading days ending on and including the date on which this Agreement
was terminated in the manner described in clauses (i) or (ii) of this
paragraph (b), as applicable. The Termination Fee shall be payable by wire
transfer of immediately available funds (x) in the case of clause (i) of
this paragraph (b), upon such termination, or (y) in the case of clause
(ii) of this paragraph (b), upon the earlier of the execution of an
agreement to consummate a Company Acquisition Transaction or the
consummation of a Company Acquisition Transaction. If the Company is
required to pay the Termination Fee, the Company shall also reimburse
Parent, promptly after being requested to do so by Parent, for all out-of-
pocket costs and expenses incurred by Parent in connection with this
Agreement and the transactions contemplated hereby, including, without
limitation, fees and expenses of accountants, attorneys, financial
advisors, commercial banks, experts and consultants and fees and expenses
otherwise allocated to the Parent pursuant to Section 9.1 (collectively the
-----------
"Parent Expenses"). The Company acknowledges that the agreements contained
---------------
in this Section 8.5(b) are an integral part of the
--------------
63
transactions contemplated by this Agreement, and that, without these
agreements, Parent would not enter into this Agreement, and accordingly, if
the Company fails to pay the Termination Fee or the Parent Expenses when
due pursuant to this Section 8.5(b), such amount shall be payable with
--------------
interest at the prime rate plus 2% announced by Citibank, N.A. in effect
from the date such payment was required to be made to the date of payment,
and if in order to obtain such payment, Parent commences a suit which
results in a judgment against the Company for the Termination Fee or the
Parent Expenses, the Company shall pay to Parent its costs and expenses
(including reasonable attorneys' fees and expenses) in connection with such
suit.
(c) If this Agreement is terminated under circumstances in which
Parent is entitled to receive the Termination Fee and the Parent Expenses,
the payment of such Termination Fee and Parent Expenses shall be the sole
and exclusive remedy available to Parent, except in the event of (x) a
willful breach by the Company of any provision of this Agreement, or (y)
the intentional or knowing misrepresentation in connection with this
Agreement or the transactions contemplated hereby, in which event Parent
shall have all rights, powers and remedies against the Company which may be
available at law or in equity. All rights, powers and remedies provided
under this Agreement or otherwise available in respect hereof at law or in
equity shall be cumulative and not alternative, and the exercise of any
such right, power or remedy by any Party shall not preclude the
simultaneous or later exercise of any other such right, power or remedy by
such Party.
ARTICLE IX
MISCELLANEOUS AND GENERAL
-------------------------
9.1 Payment of Expenses. Whether or not the Merger shall be consummated,
-------------------
each Party shall pay its own expenses incident to preparing for, entering into
and carrying out this Agreement and the consummation of the transactions
contemplated hereby, provided that the Surviving Corporation shall pay any and
all property or transfer taxes imposed on the Surviving Corporation. The filing
fee and the cost of printing the S-4 Registration Statement and the Proxy
Statement and the filing fee for the required filing under the HSR Act shall be
borne solely by Parent.
9.2 Non-Survival of Representations and Warranties. The representations
----------------------------------------------
and warranties made herein shall not survive beyond the Effective Time or a
termination of this Agreement, except to the extent a willful breach of such
representation or intentional or knowing misrepresentation formed the basis for
such termination. This Section 9.2 shall not limit any covenant or agreement of
-----------
the Parties which by its terms contemplates performance after the Effective
Time.
9.3 Modification or Amendment. Subject to the applicable provisions of
-------------------------
the DGCL, at any time prior to the Effective Time, the Parties hereto, by
resolution of their respective Board of Directors, may modify or amend this
Agreement, by written agreement executed and delivered by duly authorized
officers of the respective Parties;
64
provided, however, that after the Company Stockholder Approval is obtained, no
amendment which requires further stockholder approval shall be made without such
approval of such stockholders.
9.4 Waiver of Conditions. The conditions to each of the Parties'
--------------------
obligations to consummate the Merger are for the sole benefit of such Party and
may be waived by such Party in whole or in part to the extent permitted by
applicable law.
9.5 Counterparts. For the convenience of the parties hereto, this
------------
Agreement may be executed in any number of counterparts, each such counterpart
being deemed to be an original instrument, and all such counterparts shall
together constitute the same agreement.
9.6 Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the State of Delaware, without giving effect to the
principles of conflicts of law thereof.
9.7 Notices. Any notice, request, instruction or other document to be
-------
given hereunder by any Party to the other Parties shall be deemed delivered upon
actual receipt and shall be in writing and delivered personally or sent by
registered or certified mail, postage prepaid, reputable overnight courier, or
by facsimile transmission (with a confirming copy sent by reputable overnight
courier), as follows:
(a) if to Parent or Merger Sub, to:
Motorola, Inc.
0000 X. Xxxxxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: General Counsel
Facsimile: (000) 000-0000
with a copy to:
Winston & Xxxxxx
00 Xxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxx, Esq.
Xxxx X. XxxXxxxxx, Esq.
Facsimile: (000) 000-0000
(b) if to the Company, to:
Blue Wave Systems Limited
Xxxxxxxxxxxx Xxxx
Xxxxx Xxxx, Xxxxxxxxxxxx
Xxxxxxxxxxxxxx, XX00 0XX
Xxxxxxx
65
Attention: Xxx X. Xxxxxxxx, Chief Executive Officer
Facsimile: x00 (0) 0000 000000
and:
Blue Wave Systems Inc.
0000 Xxxx Xxxx
Xxxxxxxxxx, Xxxxx 00000
Attention: Xxx Xxxxxxx, Chief Financial Officer
Facsimile: (000) 000-0000
with a copy to:
Xxxxxxx & Xxxxxx, P.C.
000 X. Xxxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxxxx, Esq.
Xxxxx X. Xxxxxxxxxx, Esq.
Facsimile: (000) 000-0000
or to such other Persons or addresses as may be designated in writing by the
Party to receive such notice.
9.8 Entire Agreement; Assignment. This Agreement, including the
----------------------------
Disclosure Schedules and the Exhibits attached hereto and the Non-Disclosure
Agreement, (i) constitutes the entire agreement among the Parties with respect
to the subject matter hereof and supersedes all other prior agreements and
understandings, both written and oral, among the Parties or any of them with
respect to the subject matter hereof, and (ii) shall not be assigned by
operation of law or otherwise.
9.9 Parties in Interest. This Agreement shall be binding upon and inure
-------------------
solely to the benefit of each Party hereto and their respective successors and
assigns. Nothing in this Agreement, express or implied, other than the right to
receive the consideration payable in the Merger pursuant to Article IV hereof,
----------
is intended to or shall confer upon any other Person any rights, benefits or
remedies of any nature whatsoever under or by reason of this Agreement;
provided, however, that the provisions of Section 6.8 shall inure to the benefit
-----------
of and be enforceable by the Indemnified Parties.
9.10 Certain Definitions. As used herein the following terms shall have
-------------------
the following meanings and, unless the context otherwise requires, use of the
singular form shall include the plural and any gender shall be deemed to include
both genders:
(a) "Affiliate" has the meaning set forth in Rule 12b-2 under the
---------
Exchange Act.
(b) "Basis" means any past or present fact, situation, circumstance,
-----
status, condition, activity, practice, plan, occurrence, event, incident,
action,
66
failure to act, or transaction that forms or could form the basis for any
specified consequence.
(c) "Business Day" means any day on which banks are not required or
------------
authorized to close in the City of New York.
(d) "Company Financial Advisor" means Bear, Xxxxxxx & Co. Inc.
-------------------------
(e) "Company Intellectual Property" means (i) the Registered
-----------------------------
Intellectual Property; (ii) any and all other Intellectual Property that is
owned by the Company or its Subsidiaries, including the Company Software
and the Unregistered Intellectual Property; and (iii) any and all
Intellectual Property of third parties that is exclusively licensed to the
Company or any Subsidiary.
(f) "Company Software" means all computer software, including all
----------------
enhancements, versions, releases and updates of such computer software,
developed by or for the Company or any of its Subsidiaries as of the
Closing Date, and any other computer software regardless of the computer
software's stage of development. Company Software includes all source
code, object code, firmware, development tools, files, records and data,
and all media on which any of the foregoing is recorded. For purposes of
clarification, Company Software does not include computer software that is
licensed under the Excluded Licenses.
(g) "Control" with respect to any Person, means the possession, direct
-------
or indirect, of the power to direct or cause the direction of the
management and policies of such Person, whether through the ownership of
voting securities, by contract, or otherwise.
(h) "Controlled Group" means the group of corporations, partnerships,
----------------
trades and businesses described in Sections 414(b), (c) and (m) of the
Code, of which the Company is a member before the Closing Date.
(i) "Employee Benefit Plan" means any of the following arrangements
---------------------
that is or was maintained or contributed to by the Company or any other
member of the Controlled Group, to which the Company or another member of
the Controlled Group has an obligation to contribute or under which the
Company or any other member of the Controlled Group could reasonably be
expected to have any Liability: (a) nonqualified deferred compensation or
retirement plan or arrangement which is an Employee Pension Benefit Plan;
(b) qualified defined contribution retirement plan or arrangement which is
an Employee Pension Benefit Plan (including any Multiemployer Plan); (c)
qualified defined benefit retirement plan or arrangement which is an
Employee Pension Benefit Plan (including any Multiemployer Plan); (d)
Employee Welfare Benefit Plan or material fringe benefit plan or program;
(e) any other policy, plan, program, arrangement or contract providing
bonuses, stock, stock-based compensation, shares, share-based compensation,
incentive or deferred compensation, or
67
severance or supplemental retirement benefits; or (f) any employment or
compensation agreements.
(j) "Employee Pension Benefit Plan" has the meaning set forth in ERISA
-----------------------------
(S) 3(2).
(k) "Employee Welfare Benefit Plan" has the meaning set forth in ERISA
-----------------------------
(S) 3(1).
(l) "Environmental, Health, and Safety Requirements" shall mean all
----------------------------------------------
federal, state, local and foreign statutes, regulations, ordinances and
other provisions having the force or effect of law, all judicial and
administrative orders and determinations, all contractual obligations and
all common law concerning public health and safety, worker health and
safety, and pollution or protection of the environment, including without
limitation all those relating to the presence, use, production, generation,
handling, transportation, treatment, storage, disposal, distribution,
labeling, testing, processing, discharge, release, threatened release,
control, or cleanup of any hazardous materials, substances or wastes,
chemical substances or mixtures, pesticides, pollutants, contaminants,
toxic chemicals, petroleum products or byproducts, asbestos,
polychlorinated biphenyls, noise or radiation, each as amended and as now
or hereafter in effect.
(m) "ERISA" means the Employee Retirement Income Security Act of 1974,
-----
as amended, and all regulations promulgated thereunder, as in effect from
time to time.
(n) "Exchange Act" means the Securities Exchange Act of 1934, as
------------
amended, and the rules and regulations promulgated thereunder.
(o) "Excluded Licenses" means contracts, licenses, or other agreements
-----------------
currently in effect relating to any Intellectual Property that constitutes:
(i) "shrink wrap" software; or (ii) third party software generally
available to the public at a cost of less than Ten Thousand Dollars
($10,000).
(p) "GAAP" means United States Generally Accepted Accounting
----
Principles.
(q) "HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
-------
of 1976, as amended.
(r) "Intellectual Property" means any or all of the following and all
---------------------
rights in, arising out of, or associated therewith, whether registered or
unregistered, as applicable: (i) United States and foreign patents and
applications therefor and all reissues, divisions, renewals, extensions,
provisionals, continuations and continuations-in-part thereof; (ii)
inventions and discoveries (whether or not patentable and whether disclosed
or undisclosed), disclosures on inventions, trade secrets, proprietary
information, know-how, technical data and customer lists, and all
documentation relating to any of the foregoing; (iii)
68
copyrights, copyright registrations and applications therefor and all other
corresponding rights thereto throughout the world; (iv) industrial designs
and any registrations and applications therefor throughout the world; (v)
trade names, logos, common law trademarks and service marks, and trademark
and service xxxx registrations and applications therefor and all goodwill
associated with the foregoing throughout the world; (vi) data bases and
data collections and all rights therein throughout the world; (vii) all Web
addresses, sites and domain names; (viii) computer software; (ix) any
similar corresponding or equivalent rights to any one of the foregoing; and
(x) all documentation directly related to any of the foregoing.
(s) "IRS" means the Internal Revenue Service.
---
(t) "Knowledge" as it is applied to the Company and its Subsidiaries
---------
or Parent and its Subsidiaries means actual knowledge of the executive
officers of the Company and the U.K. Subsidiary or Parent, respectively, as
listed in the most recent Annual Report on Form 10-K of the Company or
Parent, respectively.
(u) "Law" means any federal, state, local or foreign law, statute,
---
code, ordinance, rule or regulation promulgated, or order, judgment, writ,
stipulation, award, injunction or decree entered, by a Governmental Entity.
(v) "Liability" means any liability (whether known or unknown, whether
---------
asserted or unasserted, whether absolute or contingent, whether accrued or
unaccrued, whether liquidated or unliquidated, and whether due or to become
due), including any liability for Taxes.
(w) "Lien" means any lien (statutory or other), mortgage, pledge,
----
hypothecation, assignment, deposit arrangement, encumbrance or preference,
priority or security agreement or preferential arrangement of any kind or
nature whatsoever (including, without limitation, the interest of a vendor
or lessor under any conditional sale, capitalized lease or other title
retention agreement).
(x) "Material Adverse Effect" shall mean, with respect to any Person,
-----------------------
any change, circumstance, event or effect that individually or in the
aggregate with all other changes, circumstances, events or effects (i) is
or is reasonably likely to be materially adverse to the business,
properties, liabilities, operations, condition (financial or otherwise) or
Prospects of such Person and its Subsidiaries taken as a whole or (ii)
will, or would be reasonably likely to, prevent or materially impair such
Person's ability to consummate the Merger or the other transactions
contemplated by this Agreement.
(y) "Ordinary Course of Business" means the ordinary course of
---------------------------
business consistent with past custom and practice (including with respect
to quantity and frequency).
69
(z) "Person" means any individual or corporation, company,
------
partnership, trust, incorporated or unincorporated association, joint
venture or other entity of any kind.
(aa) "Prohibited Transaction" has the meaning set forth in ERISA (S)
----------------------
406 and Code (S) 4975.
(bb) "Prospects" means, with respect to any Person, the business or
---------
financial prospects of such Person and its Subsidiaries, taken as a whole,
or any such Person, but excluding (i) general economic conditions or other
factors that are not unique to such Person, its Subsidiaries or other
Persons engaged in substantially the same business as such Person and its
Subsidiaries or (ii) the loss by the Company or any of its Subsidiaries of
any of its or their customers as a result of the announcement or other
proper disclosure of this Agreement or the transactions contemplated
hereby.
(cc) "Registered Intellectual Property" means all of the following
--------------------------------
items of Intellectual Property owned by the Company or any of its
Subsidiaries: (i) United States and foreign patents, patent applications
(including provisional applications); (ii) registered trademarks,
applications to register trademarks, intent to use applications or other
registrations related to trade identity and trademarks; (iii) registered
copyrights and applications for copyright registration; (iv) mask work
registrations and applications to register mask works; (v) all Web
addresses, sites and domain names; and (vi) any other Intellectual Property
that is the subject of an application, certificate or registration filed
with, issued by, or recorded by, any state, government, or other public
legal authority.
(dd) "SEC" means the Securities and Exchange Commission.
---
(ee) "Securities Act" means the Securities Act of 1933, as amended,
--------------
and the rules and regulations promulgated thereunder.
(ff) "Security Interest" means any mortgage, pledge, lien,
-----------------
encumbrance, charge, or other security interest, other than (a) mechanic's,
materialmen's, and similar liens, (b) liens for Taxes not yet due and
payable, (c) purchase money liens and liens securing rental payments under
capital lease arrangements, and (d) other liens arising in the Ordinary
Course of Business and not incurred in connection with the borrowing of
money.
(gg) "Software" means all computer software and subsequent versions
--------
thereof, including but not limited to, source code, object code, objects,
comments, screens, user interfaces, report formats, templates, menus,
buttons and icons, and all files, data, materials manuals, design notes and
other items and documentation related thereto or associated therewith.
(hh) "Subsidiary" means, with respect to any Person, any other Person
----------
of which such first Person (either alone or through or together with any
other Subsidiary) owns, directly or indirectly, a majority of the stock or
other equity
70
interests the holders of which are generally entitled to vote for the
election of the Board of Directors or other governing body of such Person.
(ii) "Tax Return" means a report, return or other information
----------
(including any attached schedules or any amendments to such report, return
or other information) required to be supplied to or filed with a
Governmental Entity with respect to any Tax, including an information
return, claim for refund, amended return or declaration or estimated Tax.
(jj) "U.K. Pension Scheme" means the group personal pension plan
-------------------
arranged with Equitable Life.
(kk) "Unregistered Intellectual Property" means all Company
----------------------------------
Intellectual Property, other than the Registered Intellectual Property and
Company Software, that is relevant to conducting the business as now being
conducted including: (i) disclosures on inventions; (ii) trade secrets,
documented know-how, proprietary processes, and other documented
proprietary information relevant to conducting the business of the Company;
(iii) unregistered trademarks; and (iv) all unregistered Web addresses,
sites and domain names.
9.11 Obligations of Subsidiary. Whenever this Agreement requires any
-------------------------
Subsidiary of a Party to take any action, such requirement shall be deemed to
include an undertaking on the part of such Party to cause such Subsidiary to
take such action.
9.12 Severability. If any term or other provision of this Agreement is
------------
invalid, illegal or unenforceable, all other provisions of this Agreement shall
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner materially
adverse to any Party. Upon a determination that any term or other provision is
invalid, illegal or incapable of being enforced, the Parties shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
Parties as closely as possible in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the maximum extent possible.
9.13 Specific Performance. The Parties hereto acknowledge that irreparable
--------------------
damage would result if this Agreement were not specifically enforced, and they
therefore consent that the rights and obligations of the Parties under this
Agreement may be enforced by a decree of specific performance issued by a court
of competent jurisdiction. Such remedy shall, however, not be exclusive and
shall be in addition to any other remedies which any Party may have under this
Agreement or otherwise.
9.14 Trial by Jury. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND
-------------
UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO TRIAL BY JURY IN CONNECTION WITH
ANY LITIGATION ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE STOCK OPTION
AGREEMENT, THE VOTING AGREEMENT, THE NON-DISCLOSURE AGREEMENT OR MERGER OR ANY
OF THE OTHER TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
71
9.15 Captions. The Article, Section and paragraph captions herein are for
--------
convenience of reference only, do not constitute part of this Agreement and
shall not be deemed to limit or otherwise affect any of the provisions hereof.
[Signature Page Follows]
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IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the duly authorized officers of the Parties hereto and shall be
effective as of the date first herein above written.
MOTOROLA, INC.
By: /s/ Xxxx Xxxxxxxxx
---------------------------
Name: Xxxx Xxxxxxxxx
Title: Vice President
EARTH ACQUISITION CORPORATION
By: /s/ Xxxx Xxxxxxxxx
----------------------------
Name: Xxxx Xxxxxxxxx
Title: Vice President
BLUE WAVE SYSTEMS INC.
By: /s/ Xxx X. Xxxxxxxx
----------------------------
Name: Xxx X. Xxxxxxxx
Title: Chief Executive Officer
73
