EXHIBIT 2.1
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
EXE TECHNOLOGIES, INC.,
ALMOND ACQUISITION CORP.
AND
ALLPOINTS SYSTEMS, INC.
JANUARY 18, 2001
TABLE OF CONTENTS
PAGE
ARTICLE I THE MERGER.............................................................................................1
1.1 The Merger.............................................................................................1
1.2 The Closing............................................................................................1
1.3 Actions at the Closing.................................................................................1
1.4 Additional Action......................................................................................2
1.5 Conversion of Shares...................................................................................2
1.6 Dissenting Shares......................................................................................3
1.7 Fractional Shares......................................................................................3
1.8 Options................................................................................................4
1.9 Escrow.................................................................................................5
1.10 Certificate of Incorporation and By-Laws...............................................................5
1.11 No Further Rights......................................................................................5
1.12 Closing of Transfer Books..............................................................................5
1.13 Tax and Accounting Consequences........................................................................5
1.14 Closing Date Stock Schedule............................................................................5
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE COMPANY.........................................................6
2.1 Organization, Qualification and Corporate Power........................................................6
2.2 Capitalization.........................................................................................6
2.3 Authorization of Transaction...........................................................................7
2.4 Noncontravention.......................................................................................8
2.5 Subsidiaries...........................................................................................8
2.6 Financial Statements...................................................................................8
2.7 Absence of Certain Changes.............................................................................9
2.8 Undisclosed Liabilities................................................................................9
2.9 Tax Matters............................................................................................9
2.10 Assets................................................................................................11
2.11 Real Property.........................................................................................11
2.12 Real Property Leases..................................................................................11
2.13 Intellectual Property.................................................................................12
2.14 Inventory.............................................................................................13
2.15 Contracts.............................................................................................13
2.16 Accounts Receivable...................................................................................15
2.17 Powers of Attorney....................................................................................15
2.18 Insurance.............................................................................................15
2.19 Litigation............................................................................................15
2.20 Warranties............................................................................................15
2.21 Employees.............................................................................................16
2.22 Employee Benefits.....................................................................................16
2.23 Environmental Matters.................................................................................18
2.24 Legal Compliance......................................................................................18
2.25 Customers and Suppliers...............................................................................18
2.26 Permits...............................................................................................19
2.27 Certain Business Relationships With Affiliates........................................................19
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2.28 Brokers' Fees.........................................................................................19
2.29 Books and Records.....................................................................................19
2.30 Disclosure............................................................................................19
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE BUYER AND THE TRANSITORY SUBSIDIARY...........................20
3.1 Organization, Qualification and Corporate Power.......................................................20
3.2 Capitalization........................................................................................20
3.3 Authorization of Transaction..........................................................................20
3.4 Noncontravention......................................................................................20
3.5 Reports and Financial Statements......................................................................21
3.6 Absence of Material Adverse Change....................................................................21
3.7 Litigation............................................................................................21
3.8 Interim Operations of the Transitory Subsidiary.......................................................22
3.9 Brokers' Fees.........................................................................................22
3.10 Reorganization........................................................................................22
3.11 Representations Relating to Qualification of the Merger as a Tax-Free Reorganization..................22
3.12 Disclosure............................................................................................23
ARTICLE IV COVENANTS............................................................................................23
4.1 Closing Efforts.......................................................................................23
4.2 Governmental and Third-Party Notices and Consents.....................................................23
4.3 Stockholder Approval..................................................................................23
4.4 Operation of Business.................................................................................24
4.5 Access to Information.................................................................................26
4.6 Exclusivity...........................................................................................26
4.7 Expenses..............................................................................................27
4.8 Listing of Merger Shares..............................................................................27
4.9 Registration Rights...................................................................................27
4.10 Continued Charter / By-Law Indemnification............................................................27
4.11 Benefit Arrangements..................................................................................28
4.12 Buyer Options.........................................................................................28
4.13 Severance.............................................................................................28
4.14 U.S. Real Property Interest...........................................................................28
4.15 Payment of Outstanding Company Payables...............................................................28
4.16 Termination of 401(k) Plan............................................................................29
ARTICLE V CONDITIONS TO CONSUMMATION OF MERGER..................................................................29
5.1 Condition to Each Party's Obligations.................................................................29
5.2 Conditions to Obligations of the Buyer and the Transitory Subsidiary..................................29
5.3 Conditions to Obligations of the Company..............................................................31
ARTICLE VI INDEMNIFICATION......................................................................................32
6.1 Indemnification by the Company Stockholders...........................................................32
6.2 Indemnification Claims................................................................................32
6.3 Survival..............................................................................................36
6.4 Limitations...........................................................................................36
ARTICLE VII TERMINATION.........................................................................................37
7.1 Termination of Agreement..............................................................................37
7.2 Automatic Termination.................................................................................38
7.3 Effect of Termination.................................................................................38
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ARTICLE VIII DEFINITIONS........................................................................................38
ARTICLE IX MISCELLANEOUS........................................................................................41
9.1 Press Releases and Announcements......................................................................41
9.2 No Third Party Beneficiaries..........................................................................41
9.3 Entire Agreement......................................................................................41
9.4 Succession and Assignment.............................................................................41
9.5 Counterparts and Facsimile Signature..................................................................41
9.6 Headings..............................................................................................41
9.7 Notices...............................................................................................41
9.8 Fees and Expenses.....................................................................................42
9.9 Indemnification Representatives.......................................................................42
9.10 Governing Law.........................................................................................43
9.11 Amendments and Waivers................................................................................43
9.12 Severability..........................................................................................43
9.13 Submission to Jurisdiction............................................................................43
9.14 Construction..........................................................................................44
Exhibit A Form of Escrow Agreement
Exhibit B Form of Registration Rights Agreement
Exhibit C Form of Investment Representation Letter
Exhibit D Form of Opinion of Counsel to the Company
Exhibit E Supplemental Employment Terms
Exhibit F Form of Employee Confidentiality Agreement
Exhibit G Form of Lock-Up Agreement
Exhibit H Form of Opinion of Counsel to the Buyer and the Transitory Subsidiary
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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER is entered into as of January 18,
2001 (this "Agreement"), by and among EXE Technologies, Inc., a Delaware
corporation (the "Buyer"), Almond Acquisition Corp., a Delaware corporation and
a wholly-owned subsidiary of the Buyer (the "Transitory Subsidiary"), and
AllPoints Systems, Inc., a Delaware corporation (the "Company"). The Buyer, the
Transitory Subsidiary and the Company are referred to collectively herein as the
"Parties."
This Agreement contemplates a merger of the Transitory Subsidiary into
the Company. In such merger, the stockholders of the Company will receive common
stock of the Buyer in exchange for their capital stock of the Company. The
parties intend that the merger shall constitute a reorganization for purposes of
Section 368(a) of the Internal Revenue Code of 1986, as amended (the "Code")
(and this Agreement is intended to constitute a plan of reorganization for
purposes of Section 368(a) of the Code).
Now, therefore, in consideration of the representations, warranties and
covenants herein contained, the Parties agree as follows.
ARTICLE I
THE MERGER
1.1 THE MERGER. Upon and subject to the terms and conditions of this
Agreement, the Transitory Subsidiary shall merge with and into the Company (with
such merger referred to herein as the "Merger") at the Effective Time (as
defined below). From and after the Effective Time, the separate corporate
existence of the Transitory Subsidiary shall cease and the Company shall
continue as the surviving corporation in the Merger (the "Surviving
Corporation"). The "Effective Time" shall be the time at which the Surviving
Corporation files a certificate of merger or other appropriate documents
prepared and executed in accordance with Section 251(c) of the Delaware General
Corporation Law (the "Certificate of Merger") with the Secretary of State of the
State of Delaware. The Merger shall have the effects set forth in Section 259 of
the Delaware General Corporation Law.
1.2 THE CLOSING. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Xxxx and Xxxx LLP
in Boston, Massachusetts, commencing at 9:00 a.m. local time on January 23,
2001, or, if all of the conditions to the obligations of the Parties to
consummate the transactions contemplated hereby have not been satisfied or
waived by such date, on such mutually agreeable later date as soon as
practicable (and in any event not later than three business days) after the
satisfaction or waiver of all conditions (excluding the delivery of any
documents to be delivered at the Closing by any of the Parties) set forth in
Article V hereof (the "Closing Date").
1.3 ACTIONS AT THE CLOSING. At the Closing:
(a) the Company shall deliver to the Buyer and the Transitory
Subsidiary the various certificates, instruments and documents referred to in
Section 5.2;
(b) the Buyer and the Transitory Subsidiary shall deliver to the
Company the various certificates, instruments and documents referred to in
Section 5.3;
(c) the Surviving Corporation shall file with the Secretary of State of
the State of Delaware the Certificate of Merger;
(d) each of the stockholders of record of the Company immediately prior
to the Effective Time (the "Company Stockholders") shall deliver to the Buyer
the certificate(s) (the "Certificates") representing his, her or its Company
Shares (as defined below);
(e) the Buyer shall deliver certificates for the Initial Shares (as
defined below) to each Company Stockholder in accordance with Section 1.5(b);
and
(f) the Buyer, Xxxxx X. Xxxxx and Xxxxx X. House, Sr. (each a
"Indemnification Representative" and collectively, the "Indemnification
Representatives") and State Street Bank and Trust Company (the "Escrow Agent")
shall execute and deliver the Escrow Agreement attached hereto as EXHIBIT A (the
"Escrow Agreement") and the Buyer shall deliver to the Escrow Agent a
certificate for the Escrow Shares (as defined below) being placed in escrow on
the Closing Date pursuant to Section 1.9.
1.4 ADDITIONAL ACTION. The Surviving Corporation may, at any time after
the Effective Time, take any action, including executing and delivering any
document, in the name and on behalf of either the Company or the Transitory
Subsidiary, in order to consummate the Merger.
1.5 CONVERSION OF SHARES. At the Effective Time, by virtue of the
Merger and without any action on the part of any Party or the holder of any of
the following securities:
(a) Each share of common stock, $0.01 par value per share, of the
Company ("Company Shares") issued and outstanding immediately prior to the
Effective Time (other than Company Shares owned beneficially by the Buyer or the
Transitory Subsidiary, Dissenting Shares (as defined below) and Company Shares
held in the Company's treasury) shall be converted into and represent the right
to receive (subject to the provisions of Section 1.9) such number of shares of
common stock, $0.01 par value per share, of the Buyer ("Buyer Common Stock") as
is equal to the Conversion Ratio (as defined below).
(b) The "Conversion Ratio" shall be the result obtained by dividing (i)
the Total Buyer Shares (as defined below) by (ii) the sum of (A) the number of
outstanding Company Shares immediately prior to the Effective Time and (B) the
number of Company Shares issuable upon exercise of all outstanding Options
immediately prior to the Effective Time. The "Total Buyer Shares" shall be the
lesser of (i) 2,000,000 and (ii) the result obtained by dividing (A) $45,000,000
by (B) the average of the last reported sale prices per share of the Buyer
Common Stock on the Nasdaq National Market over the five consecutive trading
days ending on the trading day that is two trading days prior to the Closing
Date. The Conversion Ratio shall be subject to equitable adjustment in the event
of any stock split, stock dividend, reverse stock split or similar event
affecting the Buyer Common Stock between the date hereof and the Effective Time.
Each Company Stockholder shall be entitled to receive immediately 90% of the
shares of Buyer Common Stock into which its Company Shares were converted
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pursuant to this Section 1.5 ("Initial Shares"); the remaining shares of Buyer
Common Stock into which such Company Stockholder's Company Shares were converted
pursuant to this Section 1.5, rounded to the nearest whole number (the "Escrow
Shares"), shall be deposited in escrow pursuant to Section 1.9 and shall be held
and disposed of in accordance with the terms of the Escrow Agreement. The
Initial Shares and the Escrow Shares shall together be referred to herein as the
"Merger Shares."
(c) Each Company Share held in the Company's treasury immediately prior
to the Effective Time and each Company Share owned beneficially by the Buyer or
the Transitory Subsidiary shall be cancelled and retired without payment of any
consideration therefor.
(d) Each share of common stock, $.01 par value per share, of the
Transitory Subsidiary issued and outstanding immediately prior to the Effective
Time shall be converted into and thereafter evidence one share of common stock,
$.01 par value per share, of the Surviving Corporation.
1.6 DISSENTING SHARES.
(a) For purposes of this Agreement, "Dissenting Shares" means Company
Shares held as of the Effective Time by a Company Stockholder who has not voted
such Company Shares in favor of the adoption of this Agreement and the Merger
and with respect to which appraisal shall have been duly demanded and perfected
in accordance with Section 262 of the Delaware General Corporation Law and not
effectively withdrawn or forfeited prior to the Effective Time. Dissenting
Shares shall not be converted into or represent the right to receive Merger
Shares, unless such Company Stockholder shall have forfeited his, her or its
right to appraisal under the Delaware General Corporation Law or properly
withdrawn, his, her or its demand for appraisal. If such Company Stockholder has
so forfeited or withdrawn his, her or its right to appraisal of Dissenting
Shares, then (i) as of the occurrence of such event, such holder's Dissenting
Shares shall cease to be Dissenting Shares and shall be converted into and
represent the right to receive the Merger Shares issuable in respect of such
Company Shares pursuant to Section 1.5, and (ii) as soon as practicable
following the occurrence of such event, the Buyer shall deliver to such Company
Stockholder a certificate representing the Initial Shares to which such holder
is entitled pursuant to Section 1.5 (which shares shall be considered Initial
Shares for all purposes of this Agreement) and shall deliver to the Escrow Agent
a certificate representing the remaining Merger Shares to which such holder is
entitled pursuant to Section 1.5 (which shares shall be considered Escrow Shares
for all purposes of this Agreement).
(b) The Company shall give the Buyer (i) prompt notice of any written
demands for appraisal of any Company Shares, withdrawals of such demands, and
any other instruments that relate to such demands received by the Company and
(ii) the opportunity to participate in all negotiations and proceedings with
respect to demands for appraisal under the Delaware General Corporation Law. The
Company shall not, except with the prior written consent of the Buyer, make any
payment with respect to any demands for appraisal of Company Shares or offer to
settle or settle any such demands.
1.7 FRACTIONAL SHARES. No certificates or scrip representing fractional
Initial Shares shall be issued to former Company Stockholders upon the surrender
for exchange of the
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Certificates, and such former Company Stockholders shall not be entitled to any
voting rights, rights to receive any dividends or distributions or other rights
as a stockholder of the Buyer with respect to any fractional Initial Shares that
would have otherwise been issued to such former Company Stockholders. In lieu of
any fractional Initial Shares that would have otherwise been issued, each former
Company Stockholder that would have been entitled to receive a fractional
Initial Share shall, upon proper surrender of such person's Certificates,
receive such whole number of Initial Shares as is equal to the precise number of
Initial Shares to which such person would be entitled, rounded up to the nearest
whole number.
1.8 OPTIONS.
(a) As of the Effective Time, the Company's 1996 Stock Option Plan, as
adopted on June 12, 1996 (the "Option Plan"), and all options to purchase
Company Shares issued by the Company pursuant to its Option Plan or otherwise
("Options"), whether vested or unvested, shall be assumed by the Buyer.
Immediately after the Effective Time, each Option outstanding immediately prior
to the Effective Time shall be deemed to constitute an option to acquire, on the
same terms and conditions as were applicable under such Option at the Effective
Time, such number of shares of Buyer Common Stock as is equal to the number of
Company Shares subject to the unexercised portion of such Option multiplied by
the Conversion Ratio (with any fraction resulting from such multiplication to be
rounded down to the nearest whole number). The exercise price per share of each
such assumed Option shall be equal to the exercise price of such Option
immediately prior to the Effective Time, divided by the Conversion Ratio
(rounded up to the nearest whole cent). The term, exercisability, vesting
schedule, status as an "incentive stock option" under Section 422 of the Code,
if applicable, and all of the other terms of the Options shall otherwise remain
unchanged.
(b) As soon as practicable after the Effective Time, the Buyer or the
Surviving Corporation shall deliver to the holders of Options a notice setting
forth a brief statement of such holders' rights pursuant to such Options, as
amended by this Section 1.8, and the agreements evidencing such Options shall
continue in effect on the same terms and conditions (subject to the amendments
provided for in this Section 1.8 and such notice).
(c) The Buyer shall take all corporate action necessary to reserve for
issuance a sufficient number of shares of Buyer Common Stock for delivery upon
exercise of the Options assumed in accordance with this Section 1.8. As soon as
practicable after the Buyer files a Registration Statement on Form S-8 (or any
successor form) under the Securities Act of 1933 (as amended, the "Securities
Act") with respect to its 1997 Incentive and Non-Qualified Stock Option Plan,
the Buyer shall file a Registration Statement on Form S-8 (or any successor
form) under the Securities Act with respect to all shares of Buyer Common Stock
subject to such Options that may be registered on a Form S-8, and shall use its
Reasonable Best Efforts (as defined below) to maintain the effectiveness of such
Registration Statement for so long as such Options remain outstanding. The Buyer
shall use all reasonable efforts to cause the shares of Buyer Common Stock
subject to Options to be listed on the Nasdaq National Market.
(d) The Company shall obtain, prior to the Closing, the written consent
from each holder of an Option to the amendment of such Option pursuant to this
Section 1.8 (unless such consent is not required under the terms of the
applicable agreement, instrument or plan).
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1.9 ESCROW.
(a) On the Closing Date, the Buyer shall deliver to the Escrow Agent a
certificate (issued in the name of the Escrow Agent or its nominee) representing
the Escrow Shares, as described in Section 1.5, for the purpose of securing the
indemnification obligations of the Indemnifying Stockholders (as defined in
Section 6.1) set forth in this Agreement. The Escrow Shares shall be held by the
Escrow Agent under the Escrow Agreement pursuant to the terms thereof. The
Escrow Shares shall be held as a trust fund and shall not be subject to any
lien, attachment, trustee process or any other judicial process of any creditor
of any party, and shall be held and disbursed solely for the purposes and in
accordance with the terms of the Escrow Agreement.
(b) The adoption of this Agreement and the approval of the Merger by
the Company Stockholders shall constitute approval of the Escrow Agreement and
of all of the arrangements relating thereto, including without limitation the
placement of the Escrow Shares in escrow and the appointment of the
Indemnification Representatives.
1.10 CERTIFICATE OF INCORPORATION AND BY-LAWS.
(a) The Certificate of Incorporation of the Surviving Corporation
immediately following the Effective Time shall be the same as the Certificate of
Incorporation of the Transitory Subsidiary immediately prior to the Effective
Time, except that (1) the name of the corporation set forth therein shall be
changed to the name of the Company and (2) the identity of the incorporator
shall be deleted.
(b) The By-Laws of the Surviving Corporation immediately following the
Effective Time shall be the same as the By-Laws of the Transitory Subsidiary
immediately prior to the Effective Time, except that the name of the corporation
set forth therein shall be changed to the name of the Company.
1.11 NO FURTHER RIGHTS. From and after the Effective Time, no Company
Shares shall be deemed to be outstanding, and holders of Certificates shall
cease to have any rights with respect thereto, except as provided herein or by
law.
1.12 CLOSING OF TRANSFER BOOKS. At the Effective Time, the stock
transfer books of the Company shall be closed and no transfer of Company Shares
shall thereafter be made. If, after the Effective Time, Certificates are
presented to the Buyer or the Surviving Corporation they shall be cancelled and
exchanged for Initial Shares in accordance with Section 1.5, subject to Section
1.9 and to applicable law in the case of Dissenting Shares.
1.13 TAX AND ACCOUNTING CONSEQUENCES. It is intended by the parties
hereto that the Merger shall constitute a reorganization within the meaning of
Section 368(a) of the Code (and this Agreement is intended to constitute a plan
of reorganization for purposes of Section 368(a) of the Code).
1.14 CLOSING DATE STOCK SCHEDULE. On the Closing Date, the Buyer and
the Company shall each have reviewed and approved a schedule (the "Closing Date
Stock Schedule") reflecting, as of the Effective Time (i) for each holder of
Company Shares, the number of
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Company Shares held by such holder, the aggregate number of shares of Buyer
Common Stock to which such holder is entitled to receive in the Merger, the
number of Initial Shares to be delivered to such holder in accordance with
Section 1.5(b) and the number of Escrow Shares to be delivered to the Escrow
Agent in accordance with Section 1.5(b), and (ii) for each holder of an Option,
the number of Company Shares issuable upon such holder's exercise of any such
Option immediately prior to the Effective Time (together with the per share
exercise price thereof) and the number of shares of Buyer Common Stock issuable
upon such holder's exercise of any such Option immediately following the
Effective Time (together with the per share exercise price thereof).
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Buyer that the statements
contained in this Article II are true and correct, except as set forth in the
disclosure schedule provided by the Company to the Buyer on the date hereof and
accepted in writing by the Buyer (the "Company Disclosure Schedule"); provided
that disclosures contained in the Company Disclosure Schedule shall not qualify,
in any respect, Section 2.2(b) below. The Company Disclosure Schedule shall be
arranged in paragraphs corresponding to the numbered and lettered paragraphs
contained in this Article II (other than Section 2.2(b) below), and the
disclosures in any paragraph of the Company Disclosure Schedule shall qualify
other paragraphs in this Article II only to the extent it is clear from a
reading of the disclosure that such disclosure is applicable to such other
paragraphs. For purposes of this Article II, the phrase "to the knowledge of the
Company" or any phrase of similar import shall be deemed to refer to the actual
personal knowledge of Xxxxx X. Xxxxx, Xxxxx X. House, Sr., Xxxxx X. Xxxxx,
Xxxxxxx X. Xxxxxx, Xxxx X. Xxxxxxxxxx, Xxxxxxx X. xxx Xxxxxxxxxx, Xxxxxxx
Xxxxxxxx and Xxxxxxx Xxxxxxx.
2.1 ORGANIZATION, QUALIFICATION AND CORPORATE POWER. The Company is a
corporation duly organized, validly existing and in corporate and tax good
standing under the laws of the State of Delaware. The Company is duly qualified
to conduct business and is in corporate and tax good standing under the laws of
each jurisdiction in which the nature of its businesses or the ownership or
leasing of its properties requires such qualification, except where the failure
to be so qualified or in good standing, individually or in the aggregate, has
not had and would not reasonably be expected to have a Company Material Adverse
Effect (as defined below). The Company has all requisite corporate power and
authority to carry on the businesses in which it is engaged and to own and use
the properties owned and used by it. The Company has furnished to the Buyer
complete and accurate copies of its Certificate of Incorporation and By-Laws.
The Company is not in default under or in violation of any provision of its
Certificate of Incorporation or By-Laws. For purposes of this Agreement,
"Company Material Adverse Effect" means a material adverse effect on the assets,
business, financial condition or results of operations of the Company.
2.2 CAPITALIZATION.
(a) The authorized capital stock of the Company consists of (i)
8,000,000 Company Shares, of which, as of the date of this Agreement, 4,124,170
shares are issued and outstanding, (ii) 2,000,000 shares of undesignated
preferred stock, of which, as of the date of this
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Agreement, no shares are issued and outstanding. There are no shares of the
Company's capital stock held in the treasury of the Company. The Company has
reserved an aggregate of 1,749,883 Company Shares for issuance pursuant to the
Option Plan, of which 305,800 shares have been issued and are outstanding,
695,710 shares are subject to outstanding Options and 748,373 shares are
reserved for future option grants or issuance. Section 2.2 of the Company
Disclosure Schedule sets forth a complete and accurate list of (i) all
stockholders of the Company, indicating the number of Company Shares held by
each stockholder, (ii) all outstanding Options, indicating (A) the holder
thereof, (B) the number and class or series of Company Shares subject to each
Option, (C) the exercise price, date of grant, vesting schedule and expiration
date for each Option, and (D) any terms regarding the acceleration of vesting,
and (iii) all stock option plans and other stock or equity-related plans of the
Company. All of the issued and outstanding Company Shares are, and all Company
Shares that may be issued upon exercise of Options will be (upon issuance in
accordance with their terms), duly authorized, validly issued, fully paid,
nonassessable and free of all preemptive rights. Other than the Options listed
in Section 2.2 of the Company Disclosure Schedule, there are no outstanding or
authorized options, warrants, rights, agreements or commitments to which the
Company is a party or which are binding upon the Company providing for the
issuance or redemption of any of its capital stock. There are no outstanding or
authorized stock appreciation, phantom stock or similar rights with respect to
the Company. There are no agreements to which the Company is a party or by which
it is bound with respect to the voting (including without limitation voting
trusts or proxies), registration under the Securities Act, or sale or transfer
(including without limitation agreements relating to pre-emptive rights, rights
of first refusal, co-sale rights or "drag-along" rights) of any securities of
the Company. To the knowledge of the Company, there are no agreements among
other parties, to which the Company is not a party and by which it is not bound,
with respect to the voting (including without limitation voting trusts or
proxies) or sale or transfer (including without limitation agreements relating
to rights of first refusal, co-sale rights or "drag-along" rights) of any
securities of the Company. All of the issued and outstanding Company Shares were
issued in compliance with applicable federal and state securities laws.
(b) Notwithstanding any disclosure in the Company Disclosure Schedule
(which disclosure shall not qualify this Section 2.2(b) in any respect) the
Company (i) has no obligation, agreement, arrangement, understanding, contract,
covenant or promise to issue any shares of its capital stock, options or
warrants to Key Handling Systems, Inc. or XxxXxxXxxxxx.xxx (collectively,
"Key"); (ii) has no obligation or liability to make any payments to Key,
including without limitation, as a result of, or in connection with, the
consummation of the Merger and the transactions contemplated hereby; and (iii)
has no obligation or liability to refund to NFI Industries, Inc. ("NFI") any
license fees or other monies paid by NFI to the Company in connection with that
certain Addendum A to Software Services Agreement annexed to that certain
Software Services Agreement, dated January 29, 2000, by and between the Company
and NFI (the "NFI Services Agreement").
2.3 AUTHORIZATION OF TRANSACTION. The Company has all requisite power
and authority to execute and deliver this Agreement and to perform its
obligations hereunder. The execution and delivery by the Company of this
Agreement and, subject to the adoption of this Agreement and the approval of the
Merger by the holders of at least a majority of the Company Shares entitled to
vote on this Agreement and the Merger (the "Requisite Stockholder Approval"),
the consummation by the Company of the transactions contemplated hereby have
been duly and
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validly authorized by all necessary corporate action on the part of the Company.
Without limiting the generality of the foregoing, the Board of Directors of the
Company, at a meeting duly called and held, by the unanimous vote of all
directors (i) determined that the Merger is fair and in the best interests of
the Company and its stockholders, (ii) adopted this Agreement in accordance with
the provisions of the Delaware General Corporation Law, and (iii) directed that
this Agreement and the Merger be submitted to the stockholders of the Company
for their adoption and approval and resolved to recommend that the stockholders
of Company vote in favor of the adoption of this Agreement and the approval of
the Merger. This Agreement has been duly and validly executed and delivered by
the Company and constitutes a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency or similar laws
affecting the enforcement of creditors' rights generally and the availability of
equitable remedies may be limited by equitable principles of general
applicability.
2.4 NONCONTRAVENTION. Subject to the filing of the Certificate of
Merger as required by the Delaware General Corporation Law, neither the
execution and delivery by the Company of this Agreement, nor the consummation by
the Company of the transactions contemplated hereby, will (a) conflict with or
violate any provision of the Certificate of Incorporation or By-Laws of the
Company, (b) require on the part of the Company any filing with, or any permit,
authorization, consent or approval of, any court, arbitration tribunal,
administrative agency or commission or other governmental or regulatory
authority or agency (a "Governmental Entity"), (c) conflict with, result in a
breach of, constitute (with or without due notice or lapse of time or both) a
default under, result in the acceleration of obligations under, create in any
party the right to terminate, modify or cancel, or require any notice, consent
or waiver under, any contract or instrument to which the Company is a party or
by which the Company is bound or to which any of their assets is subject, (d)
result in the imposition of any Security Interest (as defined below) upon any
assets of the Company or (e) violate any order, writ, injunction, decree,
statute, rule or regulation applicable to the Company or any of the Company's
properties or assets. For purposes of this Agreement: "Security Interest" means
any mortgage, pledge, security interest, encumbrance, charge or other lien
(whether arising by contract or by operation of law), other than (i) mechanic's,
materialmen's, and similar liens, (ii) liens arising under worker's
compensation, unemployment insurance, social security, retirement, and similar
legislation, and (iii) liens on goods in transit incurred pursuant to
documentary letters of credit, in each case arising in the Ordinary Course of
Business (as defined below) of the Company and not material to the Company; and
"Ordinary Course of Business" means the ordinary course of the Company's
business, consistent with past custom and practice (including with respect to
frequency and amount).
2.5 SUBSIDIARIES. The Company does not own, directly or indirectly, an
equity interest in any corporation, partnership, joint venture or any other
entity representing 50% or more of the capital stock thereof or other equity
interests therein.
2.6 FINANCIAL STATEMENTS. The Company has provided to the Buyer (a) the
audited consolidated balance sheets and statements of income, changes in
stockholders' equity and cash flows of the Company as of and for each of the
fiscal years ended December 31, 1998 and 1999; and (b) the unaudited
consolidated balance sheet and statements of income as of and for the eleven
months ended as of November 30, 2000 (the "Most Recent Balance Sheet Date").
Such
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financial statements (collectively, the "Financial Statements") have been
prepared in accordance with United States generally accepted accounting
principles ("GAAP") applied on a consistent basis throughout the periods covered
thereby, fairly present in all material respects the financial condition,
results of operations and cash flows of the Company as of the respective dates
thereof and for the periods referred to therein and are consistent with the
books and records of the Company; PROVIDED, HOWEVER, that the Financial
Statements referred to in clause (b) above are subject to normal recurring
year-end adjustments (which will not be material) and do not include footnotes.
2.7 ABSENCE OF CERTAIN CHANGES. Since the Most Recent Balance Sheet
Date, (a) there has occurred no event or development which has had, or could
reasonably be expected to have in the future, a Company Material Adverse Effect,
and (b) the Company has not taken any of the actions set forth in paragraphs (a)
through (o) of Section 4.4.
2.8 UNDISCLOSED LIABILITIES. The Company has no liabilities (whether
known or unknown, whether absolute or contingent, whether liquidated or
unliquidated and whether due or to become due), except for (a) liabilities shown
on the balance sheet referred to in clause (b) of Section 2.6 (the "Most Recent
Balance Sheet"), (b) contractual liabilities (other than claims for breach of
contract, breach of warranty or tort) which have arisen since the Most Recent
Balance Sheet Date in the Ordinary Course of Business and (c) contractual
liabilities (other than claims for breach of contract, breach of warranty or
tort) incurred in the Ordinary Course of Business which are not required by GAAP
to be reflected on a balance sheet.
2.9 TAX MATTERS.
(a) For purposes of this Agreement, the following terms shall have the
following meanings:
(i) "Taxes" means all taxes, charges, fees, levies or other similar
assessments or liabilities, including without limitation income, gross receipts,
ad valorem, premium, value-added, excise, real property, personal property,
sales, use, transfer, withholding, employment, unemployment insurance, social
security, business license, business organization, environmental, workers
compensation, payroll, profits, license, lease, service, service use, severance,
stamp, occupation, windfall profits, customs, duties, franchise and other taxes
imposed by the United States of America or any state, local or foreign
government, or any agency thereof, or other political subdivision of the United
States or any such government, and any interest, fines, penalties, assessments
or additions to tax resulting from, attributable to or incurred in connection
with any tax or any contest or dispute thereof.
(ii) "Tax Returns" means all reports, returns, declarations,
statements or other information required to be supplied to a taxing authority in
connection with Taxes.
(b) The Company has filed on a timely basis all Tax Returns that it was
required to file, and all such Tax Returns were complete and accurate in all
material respects. The Company is not and has never been a member of a group of
corporations with which it has filed (or been required to file) consolidated,
combined or unitary Tax Returns. The Company has paid on a timely basis all
Taxes that were due and payable as reflected on its Tax Returns,
-9-
other than those contested in good faith. The unpaid Taxes of the Company for
tax periods through the Most Recent Balance Sheet Date do not exceed the
accruals and reserves for Taxes (excluding accruals and reserves for deferred
Taxes established to reflect timing differences between book and Tax income) set
forth on the Most Recent Balance Sheet. The Company has no actual or potential
liability for any Tax obligation of any taxpayer (including without limitation
any affiliated group of corporations or other entities that included the Company
during a prior period) other than the Company. All Taxes that the Company is or
was required by law to withhold or collect have been duly withheld or collected
and, to the extent required, have been paid to the proper Governmental Entity.
(c) The Company has delivered to the Buyer complete and accurate copies
of all federal income Tax Returns, examination reports and statements of
deficiencies assessed against or agreed to by the Company since January 1, 1997.
The federal income Tax Returns of the Company have been audited by the Internal
Revenue Service or are closed by the applicable statute of limitations for all
taxable years through the taxable year specified in Section 2.9(c) of the
Company Disclosure Schedule. No examination or audit of any Tax Return of the
Company by any Governmental Entity is currently in progress or, to the knowledge
of the Company, threatened or contemplated. The Company has never been informed
by any jurisdiction that the jurisdiction believes that the Company was required
to file any Tax Return that was not filed. The Company has never waived any
statute of limitations with respect to Taxes or agreed to an extension of time
with respect to a Tax assessment or deficiency.
(d) The Company: (i) is not and has never been a "consenting
corporation" within the meaning of Section 341(f) of the Code, and none of the
assets of the Company is subject to an election under Section 341(f) of the
Code; (ii) has never been a United States real property holding corporation
within the meaning of Section 897(c)(2) of the Code during the applicable period
specified in Section 897(c)(l)(A)(ii) of the Code; (iii) has never made any
payments, is obligated to make any payments, or is a party to any agreement that
could obligate it to make any payments that may be treated as an "excess
parachute payment" under Section 280G of the Code; (iv) has no any actual or
potential liability for any Taxes of any person (other than the Company) under
Treasury Regulation Section 1.1502-6 (or any similar provision of federal,
state, local, or foreign law), or as a transferee or successor, by contract, or
otherwise; or (v) is or has been required to make a basis reduction pursuant to
Treasury Regulation Section 1.1502-20(b) or Treasury Regulation Section
1.337(d)-2(b).
(e) The Company has never undergone a change in its method of
accounting resulting in an adjustment to its taxable income pursuant to Section
481 of the Code.
(f) No state or federal "net operating loss" of the Company determined
as of the Closing Date is subject to limitation on its use pursuant to Section
382 of the Code or comparable provisions of state law as a result of any
"ownership change" within the meaning of Section 382(g) of the Code or
comparable provisions of any state law occurring prior to the Closing Date.
(g) At all times since the Company's inception, for federal income tax
purposes, the Company has validly been treated as an "S corporation" within the
meaning of Section 1361(a) of the Code and has validly been treated in a similar
manner for purposes of the
-10-
income tax laws of all states in which it has been subject to taxation. The
Company has never had any "net unrealized built-in gain" within the meaning of
Section 1374(d) of the Code that would give rise to taxation pursuant to Section
1374 of the Code (or comparable provisions of state law) if all of the assets of
the Company were disposed of as of the end of the day immediately preceding the
Closing Date at their respective fair market values.
2.10 ASSETS. The Company owns or leases all tangible assets necessary
for the conduct of its businesses as presently conducted and as presently
proposed to be conducted. Each such tangible asset is free from material
defects, has been maintained in accordance with normal industry practice, is in
good operating condition and repair (subject to normal wear and tear) and is
suitable for the purposes for which it presently is used. No asset of the
Company (tangible or intangible) is subject to any Security Interest. All of the
tangible assets of the Company are located at the offices of the Company at 000
Xxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxxxxxx.
2.11 REAL PROPERTY. The Company does not own any interest in any real
property (other than leasehold interests disclosed under Section 2.12 herein).
2.12 REAL PROPERTY LEASES. Section 2.12 of the Company Disclosure
Schedule lists all real property leased or subleased to or by the Company and
lists the term of such lease, any extension and expansion options, and the rent
payable thereunder. The Company has delivered to the Buyer complete and accurate
copies of the leases and subleases (as amended to date) listed in Section 2.12
of the Company Disclosure Schedule. With respect to each lease and sublease
listed in Section 2.12 of the Company Disclosure Schedule:
(a) the lease or sublease is legal, valid, binding, enforceable and in
full force and effect;
(b) the lease or sublease will continue to be legal, valid, binding,
enforceable and in full force and effect immediately following the Closing in
accordance with the terms thereof as in effect immediately prior to the Closing;
(c) neither the Company nor, to the knowledge of the Company, any other
party, is in breach or violation of, or default under, any such lease or
sublease, and no event has occurred, is pending or, to the knowledge of the
Company, is threatened, which, after the giving of notice, with lapse of time,
or otherwise, would constitute a breach or default by the Company or, to the
knowledge of the Company, any other party under such lease or sublease;
(d) the Company has never assigned, transferred, conveyed, mortgaged,
deeded in trust or encumbered any interest in the leasehold or subleasehold; and
(e) the Company is not aware of any Security Interest, easement,
covenant or other restriction applicable to the real property subject to such
lease, except for recorded easements, covenants and other restrictions which do
not materially impair the current uses or the occupancy by the Company of the
property subject thereto.
-11-
2.13 INTELLECTUAL PROPERTY.
(a) The Company owns all right, title and interest (free and clear of
all Security Interests) or possesses adequate third-party licenses or other
valid rights to use all Intellectual Property (as defined below) necessary (i)
to use, manufacture, market and distribute the products currently manufactured,
marketed, sold or licensed or currently planned by the Company to be
manufactured, marketed, sold or licensed, and to provide the services provided
or currently planned by the Company to be provided, by the Company to other
parties (together, the "Customer Deliverables") or (ii) to operate the Company's
internal systems that are material to the business or operations of the Company
as the business of the Company is currently conducted or planned to be
conducted, including, without limitation, computer hardware systems, software
applications and embedded systems (the "Internal Systems"; the Intellectual
Property owned by or licensed to the Company and incorporated in or underlying
the Customer Deliverables or the Internal Systems is referred to herein as the
"Company Intellectual Property"). Each item of Company Intellectual Property
will be owned or available for use by the Surviving Corporation immediately
following the Closing on substantially identical terms and conditions as it was
immediately prior to the Closing. The Company has taken reasonable steps in
accordance with normal industry practice to protect the proprietary nature of
each item of Company Intellectual Property and to maintain in confidence all
trade secrets and confidential information that it owns or uses. To the
knowledge of the Company, (a) no other person or entity has any rights to any of
the Company Intellectual Property owned by the Company (except pursuant to
agreements granted in the Ordinary Course of Business), and (b) no other person
or entity is infringing, violating or misappropriating any of the Company
Intellectual Property. For purposes of this Agreement, "Intellectual Property"
means all (i) patents and patent applications, (ii) copyrights and registrations
thereof, (iii) computer software, data and documentation, (iv) trade secrets and
confidential business information, whether patentable or unpatentable and
whether or not reduced to practice, know-how, manufacturing and production
processes and techniques, research and development information, copyrightable
works, financial, marketing and business data, pricing and cost information,
business and marketing plans and customer and supplier lists and information,
(v) trademarks, service marks, trade names, domain names and applications and
registrations therefor and (vi) other proprietary rights relating to any of the
foregoing. Section 2.13(a) of the Company Disclosure Schedule lists each patent,
patent application, copyright registration or application therefor, and
trademark, service xxxx and domain name registration or application therefor of
the Company.
(b) None of the products manufactured, marketed, sold or licensed, or
the services provided, by the Company to other parties, or the marketing,
distribution, provision or use thereof, infringes or violates, or constitutes a
misappropriation of, any Intellectual Property rights of any person or entity.
To the knowledge of the Company, none of the Internal Systems, or the use
thereof, infringes or violates, or constitutes a misappropriation of, any
Intellectual Property rights of any person or entity. Section 2.13(b) of the
Company Disclosure Schedule lists any complaint, claim or notice, or written
threat thereof, received by the Company alleging any such infringement,
violation or misappropriation; and the Company has provided to the Buyer
complete and accurate copies of all written documentation in the possession of
the Company relating to any such complaint, claim, notice or threat. The Company
has provided to the Buyer complete and accurate copies of all written
documentation in the Company's possession relating to claims or disputes known
to the Company concerning any Company Intellectual Property.
-12-
(c) Section 2.13(c) of the Company Disclosure Schedule identifies each
license or other agreement (or type of license or other agreement) pursuant to
which the Company has licensed, distributed or otherwise granted any rights to
any third party with respect to, any Company Intellectual Property, other than
non-exclusive licenses granted to customers of the Company in connection with
sales of products in the Ordinary Course of Business prior to January 1, 1998.
(d) Section 2.13(d) of the Company Disclosure Schedule identifies each
item of Company Intellectual Property that is owned by a party other than the
Company, and the license or agreement pursuant to which the Company uses it
(excluding off-the-shelf software programs licensed by the Company pursuant to
"shrink wrap" licenses).
(e) The Company has never disclosed the source code for any of the
software owned by the Company (the "Software") or other confidential information
constituting, embodied in or pertaining to the Software to any person or entity,
other than (i) pursuant to the agreements listed in Section 2.13(e) of the
Company Disclosure Schedule or (ii) prior to January 1, 1998 pursuant to an
agreement with a third party obligated (A) to use such source code or
information solely in connection with the installation and/or support of the
Company's products and (B) to maintain the confidentiality of such source code
or information, and the Company has taken reasonable measure to prevent
disclosure of such source code.
(f) All of the copyrightable materials (including Software)
incorporated in or bundled with the Customer Deliverables have been created by
employees of the Company within the scope of their employment by the Company or
by independent contractors of the Company who have executed agreements assigning
all right, title and interest in such copyrightable materials to the Company. To
the extent that any Intellectual Property has been developed or created by a
third party for the Company, the Company has a written agreement with such third
party with respect thereto, and the Company thereby either (i) has obtained
ownership of, and is the exclusive owner of, or (ii) has obtained a license
(sufficient for the conduct of its business as currently conducted or currently
planned by the Company to be conducted) to all such third party's Intellectual
Property in such work, material or invention by operation of law or by valid
assignment.
(g) To the knowledge of the Company, the Customer Deliverables and the
Internal Systems are free from significant defects or programming errors and
conform in all material respects to the written documentation and specifications
therefor.
2.14 INVENTORY. All inventory of the Company, if any, whether or not
reflected on the Most Recent Balance Sheet, consists of a quality and quantity
usable and saleable in the Ordinary Course of Business, except for obsolete
items and items of below-standard quality, all of which have been written-off or
written-down to net realizable value on the Most Recent Balance Sheet.
2.15 CONTRACTS.
(a) Section 2.15 of the Company Disclosure Schedule lists the following
agreements (written or oral) to which the Company is a party as of the date of
this Agreement:
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(i) any agreement (or group of related agreements) for the lease of
personal property from or to third parties providing for lease payments in
excess of $20,000 per annum or having a remaining term longer than 12 months;
(ii) any agreement (or group of related agreements) for the
purchase or sale or license of products or for the furnishing or receipt of
services (A) which calls for performance over a period of more than one year,
(B) which involves more than the sum of $20,000, or (C) in which the Company has
granted manufacturing rights, "most favored nation" pricing provisions or
marketing or distribution rights relating to any products or territory or has
agreed to purchase a minimum quantity of goods or services or has agreed to
purchase goods or services exclusively from a certain party;
(iii) any agreement establishing a partnership or joint venture;
(iv) any agreement (or group of related agreements) under which it
has created, incurred, assumed or guaranteed (or may create, incur, assume or
guarantee) indebtedness (including capitalized lease obligations) involving more
than $20,000 or under which it has imposed (or may impose) a Security Interest
on any of its assets, tangible or intangible;
(v) any agreement concerning confidentiality or noncompetition;
(vi) any employment or consulting agreement;
(vii) any agreement involving any officer, director or stockholder
of the Company or any affiliate (an "Affiliate"), as defined in Rule 12b-2 under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), thereof;
(viii) any agreement under which the consequences of a default or
termination would reasonably be expected to have a Company Material Adverse
Effect;
(ix) any agreement which contains any provisions requiring the
Company to indemnify any other party thereto (excluding indemnities contained in
agreements for the purchase, sale or license of products entered into in the
Ordinary Course of Business);
(x) any other oral agreement, arrangement, understanding, contract,
covenant or promise with a customer of the Company relating to the sale or
license of products or performance of services or support, by which the Company
is bound; and
(xi) any other agreement (or group of related agreements), either
involving more than $20,000 or not entered into in the Ordinary Course of
Business.
(b) The Company has delivered to the Buyer a complete and accurate copy
of each agreement listed in Section 2.13 or Section 2.15 of the Company
Disclosure Schedule. With respect to each agreement so listed: (i) the agreement
is legal, valid, binding and enforceable and in full force and effect, except as
enforceability may be limited by bankruptcy, insolvency or similar laws
affecting the enforcement of creditors' rights generally and the availability of
equitable remedies may be limited by equitable principles of general
applicability;
-14-
(ii) the agreement will continue to be legal, valid, binding and enforceable and
in full force and effect immediately following the Closing in accordance with
the terms thereof as in effect immediately prior to the Closing, except as
enforceability may be limited by bankruptcy, insolvency or similar laws
affecting the enforcement of creditors' rights generally and the availability of
equitable remedies may be limited by equitable principles of general
applicability; and (iii) neither the Company nor, to the knowledge of the
Company, any other party, is in breach or violation of, or default under, any
such agreement, and no event has occurred, is pending or, to the knowledge of
the Company, is threatened, which, after the giving of notice, with lapse of
time, or otherwise, would constitute a breach or default by the Company or, to
the knowledge of the Company, any other party under such contract.
2.16 ACCOUNTS RECEIVABLE. All accounts receivable of the Company
reflected on the Most Recent Balance Sheet are valid receivables subject to no
setoffs or counterclaims and are current and collectible (within 180 days after
the date on which it first became due and payable), net of the applicable
reserve for bad debts on the Most Recent Balance Sheet. All accounts receivable
reflected in the financial or accounting records of the Company that have arisen
since the Most Recent Balance Sheet Date are valid receivables subject to no
setoffs or counterclaims and are collectible (within 180 days after the date on
which it first became due and payable), net of a reserve for bad debts in an
amount proportionate to the reserve shown on the Most Recent Balance Sheet.
2.17 POWERS OF ATTORNEY. There are no outstanding powers of attorney
executed on behalf of the Company.
2.18 INSURANCE. Section 2.18 of the Company Disclosure Schedule lists
each insurance policy (including fire, theft, casualty, general liability,
workers compensation, business interruption, environmental, product liability
and automobile insurance policies and bond and surety arrangements) to which the
Company is a party. There is no material claim pending under any such policy as
to which coverage has been questioned, denied or disputed by the underwriter of
such policy. All premiums due and payable under all such policies have been
paid, the Company is not liable for retroactive premiums or similar payments,
and the Company is otherwise in compliance in all material respects with the
terms of such policies. The Company has no knowledge of any threatened
termination of, or material premium increase with respect to, any such policy.
Each such policy will continue to be enforceable and in full force and effect
immediately following the Closing in accordance with the terms thereof as in
effect immediately prior to the Closing.
2.19 LITIGATION. There is no action, suit, proceeding, claim,
arbitration or investigation before any Governmental Entity or before any
arbitrator (a "Legal Proceeding") which is pending or has been threatened in
writing against the Company.
2.20 WARRANTIES. No product or service manufactured, sold, leased,
licensed or delivered by the Company on or after January 1, 1998, or to the
knowledge of the Company prior to January 1, 1998, is subject to any guaranty,
warranty, right of return, right of credit or other indemnity other than (i) the
applicable standard terms and conditions of sale or lease of the Company, which
are set forth in Section 2.20 of
-15-
the Company Disclosure Schedule and (ii) manufacturers' warranties for which
neither the Company has any liability. Section 2.20 of the Company Disclosure
Schedule sets forth the aggregate expenses incurred by the Company in fulfilling
its obligations under its guaranty, warranty, right of return and indemnity
provisions during each of the fiscal years and the interim period covered by the
Financial Statements.
2.21 EMPLOYEES.
(a) Section 2.21(a) of the Company Disclosure Schedule contains a
list of all employees of the Company, along with the position and the annual
rate of compensation of each such person. Each such employee has entered into a
Noncompetition, Nondisclosure and Inventions Agreement with the Company, a copy
of which has previously been delivered to the Buyer. Section 2.21 of the Company
Disclosure Schedule contains a list of all employees of the Company who are a
party to a non-competition agreement with the Company; copies of such agreements
have previously been delivered to the Buyer. To the knowledge of the Company, no
employee or group of employees has any plans to terminate employment with the
Company.
(b) Section 2.21(b) of the Company Disclosure Schedule sets forth a
list of all employees of the Company who hold a temporary work authorization,
including without limitation H-1B, F-1 or J-1 visas or work authorizations (the
"Work Permits"), setting forth the name of the employees, the type of Work
Permit and the length of time remaining on such Work Permit. With respect to
each Work Permit, all of the information that the Company provided to the
Department of Labor and the Immigration and Naturalization Service (the "INS")
in the application for such Work Permit was, to the Company's knowledge, true
and complete at the time of filing and is, to the Company's knowledge, true and
complete as of the date hereof. The Company received the appropriate notice of
approval from the INS with respect to each such Work Permit. The Company has not
received any notice from the INS or any other governmental authority that any
Work Permit has been revoked. There is no action pending or threatened in
writing to revoke or adversely modify the terms of any of the Work Permits.
(c) The Company is not a party to or bound by any collective
bargaining agreement, nor has it experienced any strikes, grievances, claims of
unfair labor practices or other collective bargaining disputes. The Company has
no knowledge of any organizational effort made or threatened, either currently
or within the past two years, by or on behalf of any labor union with respect to
employees of the Company.
2.22 EMPLOYEE BENEFITS.
(a) Section 2.22(a) of the Company Disclosure Schedule contains a
complete and accurate list of all Employee Benefit Plans (as defined below)
maintained, or contributed to, by the Company. Complete and accurate copies of
all Employee Benefit Plans have been delivered to the Buyer. The Company has
complied in all material respects, in the administration and operation of each
Employee Benefit Plan, with the terms of any such plans and the requirements of
applicable law (including without limitation the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), and the Code and the regulations
thereunder). The Company has no monetary liability under any Employee Benefit
Plan, except for those set forth on the Most Recent Balance Sheet or those that
have arisen since the date of the Most Recent Balance Sheet in the Ordinary
Course of Business. "Employee Benefit Plan" means any "employee pension benefit
plan" (as defined in Section 3(2) of ERISA), any "employee welfare
-16-
benefit plan" (as defined in Section 3(1) of ERISA), and any other written or
oral plan, agreement or arrangement involving direct or indirect compensation,
including without limitation insurance coverage, severance benefits, disability
benefits, deferred compensation, bonuses, stock options, stock purchase, phantom
stock, stock appreciation or other forms of incentive compensation or
post-retirement compensation.
(b) All the Employee Benefit Plans that are intended to be
qualified under Section 401(a) of the Code have received determination letters
from the Internal Revenue Service to the effect that such Employee Benefit Plans
are qualified and the plans and the trusts related thereto are exempt from
federal income taxes under Sections 401(a) and 501(a), respectively, of the
Code, no such determination letter has been revoked and revocation has not been
threatened, and no such Employee Benefit Plan has been amended or operated since
the date of its most recent determination letter or application therefor in any
respect, and no act or omission has occurred, that would adversely affect its
qualification or materially increase its cost. Each Employee Benefit Plan which
is required to satisfy Section 401(k)(3) or Section 401(m)(2) of the Code has
been tested for compliance with, and satisfies the requirements of, Section
401(k)(3) and Section 401(m)(2) of the Code for each plan year ending prior to
the Closing Date.
(c) There are no unfunded obligations under any Employee Benefit
Plan providing benefits after termination of employment to any employee of the
Company (or to any beneficiary of any such employee), including but not limited
to retiree health coverage and deferred compensation, but excluding continuation
of health coverage required to be continued under Section 4980B of the Code or
other applicable law and insurance conversion privileges under state law. The
assets of each Employee Benefit Plan which is funded are reported at their fair
market value on the books and records of such Employee Benefit Plan.
(d) Each Employee Benefit Plan is amendable and terminable
unilaterally by the Company at any time without liability to the Company as a
result thereof and no Employee Benefit Plan, plan documentation or agreement,
summary plan description or other written communication distributed generally to
employees by its terms prohibits the Company from amending or terminating any
such Employee Benefit Plan.
(e) Section 2.22(e) of the Company Disclosure Schedule discloses
each: (i) agreement with any stockholder, consultant, director, officer or other
employee of the Company (A) the benefits of which are contingent, or the terms
of which are materially altered, upon the occurrence of a transaction involving
the Company of the nature of any of the transactions contemplated by this
Agreement, (B) providing any term of employment or compensation guarantee or (C)
providing severance benefits or other benefits after the termination of
employment of such consultant, director, officer or employee; (ii) agreement,
plan or arrangement under which any person may receive payments from the Company
that may be subject to the tax imposed by Section 4999 of the Code or included
in the determination of such person's "parachute payment" under Section 280G of
the Code; and (iii) agreement or plan binding the Company, including without
limitation any stock option plan, stock appreciation right plan, restricted
stock plan, stock purchase plan, severance benefit plan or Employee Benefit
Plan, any of the benefits of which will be increased, or the vesting of the
benefits of which will be accelerated, by the occurrence of any of the
transactions contemplated by this Agreement or
-17-
the value of any of the benefits of which will be calculated on the basis of any
of the transactions contemplated by this Agreement.
(f) Section 2.22(f) of the Company Disclosure Schedule sets forth
the policy of the Company with respect to accrued vacation, accrued sick time
and earned time-off and the amount of such liabilities as of January 1, 2001.
2.23 ENVIRONMENTAL MATTERS. The Company has complied with all
applicable Environmental Laws (as defined below). There is no pending or, to the
knowledge of the Company, threatened civil or criminal litigation, written
notice of violation, formal administrative proceeding, or investigation, inquiry
or information request by any Governmental Entity, relating to any Environmental
Law involving the Company. For purposes of this Agreement, "Environmental Law"
means any federal, state or local law, statute, rule or regulation or the common
law relating to the environment or occupational health and safety, including
without limitation any statute, regulation, administrative decision or order
pertaining to (i) treatment, storage, disposal, generation and transportation of
industrial, toxic or hazardous materials or substances or solid or hazardous
waste; (ii) air, water and noise pollution; (iii) groundwater and soil
contamination; (iv) the release or threatened release into the environment of
industrial, toxic or hazardous materials or substances, or solid or hazardous
waste, including without limitation emissions, discharges, injections, spills,
escapes or dumping of pollutants, contaminants or chemicals; (v) the protection
of wild life, marine life and wetlands, including without limitation all
endangered and threatened species; (vi) storage tanks, vessels, containers,
abandoned or discarded barrels, and other closed receptacles; (vii) health and
safety of employees and other persons; and (viii) manufacturing, processing,
using, distributing, treating, storing, disposing, transporting or handling of
materials regulated under any law as pollutants, contaminants, toxic or
hazardous materials or substances or oil or petroleum products or solid or
hazardous waste. As used above, the terms "release" and "environment" shall have
the meaning set forth in the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended ("CERCLA"). The Company has no liability
or remediation obligation under any federal, state or local law, rule or
regulation or the common law relating to the production or clean-up of the
environment.
2.24 LEGAL COMPLIANCE. The Company, and the conduct and operations of
its business, is in compliance with each applicable law (including rules and
regulations thereunder) of any federal, state, local or foreign government, or
any Governmental Entity, except for any violations or defaults that,
individually or in the aggregate, have not had and would not reasonably be
expected to have a Company Material Adverse Effect.
2.25 CUSTOMERS AND SUPPLIERS. Section 2.25 of the Company Disclosure
Schedule sets forth a list of (a) each customer of the Company during the last
full fiscal year or the interim period through the Most Recent Balance Sheet
Date and the amount of revenues accounted for by such customer during each such
period and (b) each supplier that is the sole supplier of any significant
product to the Company. No such customer or supplier has advised the Company in
writing within the past year that it will stop, or decrease the rate of, buying
products or supplying products, as applicable, to the Company. To the knowledge
of the Company, no unfilled customer order or commitment obligating the Company
to process, manufacture or deliver
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products or perform services is reasonably expected to result in a loss to the
Company upon completion of performance.
2.26 PERMITS. Section 2.26 of the Company Disclosure Schedule sets
forth a list of all permits, licenses, registrations, certificates, orders or
approvals from any Governmental Entity (including without limitation those
issued or required under Environmental Laws and those relating to the occupancy
or use of owned or leased real property) ("Permits") issued to or held by the
Company. Such listed Permits are the only Permits that are required for the
Company to conduct its business as presently conducted or as proposed to be
conducted, except for those the absence of which, individually or in the
aggregate, have not had and would not reasonably be expected to have a Company
Material Adverse Effect. Each such Permit is in full force and effect and, to
the knowledge of the Company, no suspension or cancellation of such Permit is
threatened and there is no basis for believing that such Permit will not be
renewable upon expiration. Each such Permit will continue in full force and
effect immediately following the Closing.
2.27 CERTAIN BUSINESS RELATIONSHIPS WITH AFFILIATES. No Affiliate of
the Company (a) owns any property or right, tangible or intangible, which is
used in the business of the Company, (b) has any claim or cause of action
against the Company, or (c) owes any money to, or is owed any money by, the
Company. Section 2.27 of the Company Disclosure Schedule describes any material
transactions or contractual relationships between the Company and any Affiliate
thereof which have occurred or existed since January 1, 1998.
2.28 BROKERS' FEES. Except with respect to the fees and expenses
payable to Xxxxxxxxx Associates pursuant to its letter of agreement with the
Company, dated as of September 14, 2000, the Company has no liability or
obligation to pay any fees or commissions to any broker, finder or agent with
respect to the transactions contemplated by this Agreement.
2.29 BOOKS AND RECORDS. The minute books and other similar records of
the Company contain complete and accurate records of all actions taken at any
meetings of the Company's stockholders, Board of Directors or any committee
thereof and of all written consents executed in lieu of the holding of any such
meeting. The books and records of the Company accurately reflect in all material
respects the assets, liabilities, business, financial condition and results of
operations of the Company and have been maintained in accordance with good
business and bookkeeping practices.
2.30 DISCLOSURE. No representation or warranty by the Company contained
in this Agreement, and no statement contained in the Company Disclosure Schedule
or any other document, certificate or other instrument delivered or to be
delivered by or on behalf of the Company pursuant to this Agreement, contains or
will contain any untrue statement of a material fact or omits or will omit to
state any material fact necessary, when read together in light of the
circumstances under which it was or will be made, in order to make the
statements herein or therein not misleading.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE BUYER
AND THE TRANSITORY SUBSIDIARY
Each of the Buyer and the Transitory Subsidiary represents and warrants
to the Company as follows:
3.1 ORGANIZATION, QUALIFICATION AND CORPORATE POWER. Each of the Buyer
and the Transitory Subsidiary is a corporation duly organized, validly existing
and in good standing under the laws of the state of its incorporation. The Buyer
is duly qualified to conduct business and is in corporate and tax good standing
under the laws of each jurisdiction in which the nature of its businesses or the
ownership or leasing of its properties requires such qualification, except where
the failure to be so qualified or in good standing would not have a Buyer
Material Adverse Effect (as defined below). The Buyer has all requisite
corporate power and authority to carry on the businesses in which it is engaged
and to own and use the properties owned and used by it. The Buyer has furnished
to the Company complete and accurate copies of its Certificate of Incorporation
and By-Laws. For purposes of this Agreement, "Buyer Material Adverse Effect"
means a material adverse effect on the assets, business, condition (financial or
otherwise), results of operations of the Buyer and its subsidiaries, taken as a
whole, PROVIDED, HOWEVER, that a decline in the trading price of the Buyer
Common Stock on the Nasdaq National Market shall not, in and of itself,
constitute a Buyer Material Adverse Effect.
3.2 CAPITALIZATION. The authorized capital stock of the Buyer consists
of (a) 150,000,000 shares of Buyer Common Stock, of which 43,007,762 shares were
issued and outstanding as of October 15, 2000, and (b) 20,000,000 shares of
Preferred Stock, $.01 par value per share, of which no shares are issued or
outstanding. All of the issued and outstanding shares of Buyer Common Stock are
duly authorized, validly issued, fully paid, nonassessable and free of all
preemptive rights. All of the Merger Shares will be, when issued in accordance
with this Agreement, duly authorized, validly issued, fully paid, nonassessable
and free of all preemptive rights.
3.3 AUTHORIZATION OF TRANSACTION. Each of the Buyer and the Transitory
Subsidiary has all requisite power and authority to execute and deliver this
Agreement and (in the case of the Buyer) the Escrow Agreement and to perform its
obligations hereunder and thereunder. The execution and delivery by the Buyer
and the Transitory Subsidiary of this Agreement and (in the case of the Buyer)
the Escrow Agreement and the consummation by the Buyer and the Transitory
Subsidiary of the transactions contemplated hereby and thereby have been duly
and validly authorized by all necessary corporate action on the part of the
Buyer and Transitory Subsidiary, respectively. This Agreement has been duly and
validly executed and delivered by the Buyer and the Transitory Subsidiary and
constitutes a valid and binding obligation of the Buyer and the Transitory
Subsidiary, enforceable against them in accordance with its terms.
3.4 NONCONTRAVENTION. Subject to compliance with the applicable
requirements of the Securities Act and any applicable state securities laws, the
Exchange Act and the filing of the Certificate of Merger as required by the
Delaware General Corporation Law, neither the execution and delivery by the
Buyer or the Transitory Subsidiary of this Agreement or (in the case of the
Buyer) the Escrow Agreement, nor the consummation by the Buyer or the Transitory
Subsidiary of the transactions contemplated hereby or thereby, will (a) conflict
with or violate any provision of the charter or By-Laws of the Buyer or the
Transitory Subsidiary, (b) require on the part of the Buyer or the Transitory
Subsidiary any filing with, or permit, authorization, consent or approval of,
any Governmental Entity, (c) conflict with, result in breach of, constitute
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(with or without due notice or lapse of time or both) a default under, result in
the acceleration of obligations under, create in any party any right to
terminate, modify or cancel, or require any notice, consent or waiver under, any
contract or instrument to which the Buyer or the Transitory Subsidiary is a
party or by which either is bound or to which any of their assets are subject,
except any such conflict, breach, default, acceleration, right, notice, waiver
or consent which would not, individually or in the aggregate, constitute a Buyer
Material Adverse Effect, or (d) violate any order, writ, injunction, decree,
statute, rule or regulation applicable to the Buyer or the Transitory Subsidiary
or any of their properties or assets.
3.5 REPORTS AND FINANCIAL STATEMENTS.
(a) Buyer has filed all forms, reports and documents required to be
filed by Buyer under Section 13 or subsections (a) or (c) of Section 14 of the
Exchange Act after August 4, 2000 with the Securities and Exchange Commission
(the "SEC"), and has made available to the Company such forms, reports and
documents in the form filed with the SEC. All such required forms, reports and
documents (including those that Buyer may file subsequent to the date hereof
until the Closing) are referred to herein as the "Buyer Reports". As of their
respective filing dates, the Buyer Reports (i) complied in all material respects
with the requirements of the Exchange Act and the rules and regulations of the
SEC thereunder applicable to such Buyer Reports and (ii) did not at the time
they were filed (or if amended or superseded by a filing prior to the date of
this Agreement, then on the date of such filing) contain any untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(b) Each of the consolidated financial statements of Buyer
(including, in such case, the notes thereto) included in the Prospectus of the
Buyer filed with the SEC on August 4, 2000 pursuant to Rule 424 under the
Securities Act (the "Prospectus") or in the Buyer Reports, including each such
Buyer Report filed after the date hereof until the Closing, (i) complied as to
the form in all material respects with applicable accounting requirements and
the published rules and regulations of the SEC with respect thereto, (ii) was
prepared in accordance with GAAP applied on a consistent basis throughout the
periods indicated (except as may be indicated therein or in the notes thereto
or, in the case of unaudited statements, as may be permitted by the SEC), (iii)
fairly presented in all material respects the consolidated financial position of
Buyer as at the respective dates thereof and the consolidated results of
operations and cash flows of the Buyer as of the respective dates thereof and
for the periods referred to therein (subject, in the case of unaudited financial
statements, to normal audit adjustments), and (iv) are consistent with the books
and records of the Buyer. There has been no material change in Buyer's
accounting policies except as described in the notes to the consolidated
financial statements of the Buyer.
3.6 ABSENCE OF MATERIAL ADVERSE CHANGE. Since September 30, 2000, there
has occurred no event or development which has had, or could reasonably be
expected to have in the future, a Buyer Material Adverse Effect.
3.7 LITIGATION. Except as disclosed in the Prospectus or the Buyer
Reports, as of the date of this Agreement, there is no Legal Proceeding which is
pending or, to the Buyer's knowledge, threatened against the Buyer or any
subsidiary of the Buyer which, if determined
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adversely to the Buyer or such subsidiary, could have, individually or in the
aggregate, a Buyer Material Adverse Effect or which in any manner challenges or
seeks to prevent, enjoin, alter or delay the transactions contemplated by this
Agreement.
3.8 INTERIM OPERATIONS OF THE TRANSITORY SUBSIDIARY. The Transitory
Subsidiary was formed solely for the purpose of engaging in the transactions
contemplated by this Agreement and has engaged in no business activities other
than as contemplated by this Agreement.
3.9 BROKERS' FEES. Except as provided in Section 4.7 with respect to a
financial advisor to the Company, neither the Buyer nor the Transitory
Subsidiary has any liability or obligation to pay any fees or commissions to any
broker, finder or agent with respect to the transactions contemplated by this
Agreement.
3.10 REORGANIZATION. Neither Buyer nor Transitory Subsidiary nor any
Affiliate of Buyer or Transitory Subsidiary has taken or agreed to take any
action which would reasonably be expected to cause the Merger to fail to qualify
as a tax free reorganization within the meaning of Section 368(a) of the Code.
3.11 REPRESENTATIONS RELATING TO QUALIFICATION OF THE MERGER AS A
TAX-FREE REORGANIZATION.
(a) The Buyer (i) is not an "investment company" as defined in
Section 368(a)(2)(F)(iii) and (iv) of the Code; (ii) has no present plan or
intention to liquidate the Surviving Corporation or to merge the Surviving
Corporation with or into any other corporation or entity, or to sell or
otherwise dispose of the stock of the Surviving Corporation which Buyer will
acquire in the Merger, or to cause the Surviving Corporation to sell or
otherwise dispose of its assets, all except in the ordinary course of business
or if such liquidation, merger, disposition is described in Section 368(a)(2)(C)
or Section 1.368-2(k); provided that Buyer may merge the Surviving Corporation
with and into Parent; (iii) has no present plan or intention, following the
Merger, to issue any additional shares of stock of the Surviving Corporation or
to create any new class of stock of the Surviving Corporation.
(b) The Transitory Subsidiary is a wholly-owned subsidiary of the
Buyer, formed solely for the purpose of engaging in the Merger, and will carry
on no business prior to the Merger.
(c) Immediately prior to the Merger, the Buyer will be in control
of Transitory Subsidiary within the meaning of Section 368(c) of the Code.
(d) Immediately following the Merger, the Surviving Corporation
will hold at least 90% of the fair market value of the net assets and at least
70% of the fair market value of the gross assets held by the Transitory
Subsidiary immediately prior to the Merger (for purposes of this representation,
amounts used by the Transitory Subsidiary to pay reorganization expenses, if
any, will be included as assets of the Transitory Subsidiary held immediately
prior to the Merger).
(e) The Buyer has no present plan or intention to reacquire any of
the Merger Shares.
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(f) The Transitory Subsidiary will have no liabilities assumed by
the Surviving Corporation and will not transfer to the Surviving Corporation any
assets subject to liabilities in the Merger.
(g) Following the Merger, the Surviving Corporation will continue
the Company's historic business or use a significant portion of the Company's
historic business assets in a business as required by Section 368 of the Code
and the Treasury Regulation Section 1.368-1(d).
3.12 DISCLOSURE. No representation or warranty by the Buyer contained
in this Agreement, and no statement contained in the any document, certificate
or other instrument delivered or to be delivered by or on behalf of the Buyer
pursuant to this Agreement, contains or will contain any untrue statement of a
material fact or omit or will omit to state any material fact necessary, when
read together in light of the circumstances under which it was or will be made,
in order to make the statements herein or therein not misleading.
ARTICLE IV
COVENANTS
4.1 CLOSING EFFORTS. Each of the Parties shall use its best efforts, to
the extent commercially reasonable ("Reasonable Best Efforts"), to take all
actions and to do all things necessary, proper or advisable to consummate the
transactions contemplated by this Agreement, including without limitation using
its Reasonable Best Efforts to ensure that (i) its representations and
warranties remain true and correct in all material respects through the Closing
Date and (ii) the conditions to the obligations of the other Parties to
consummate the Merger are satisfied.
4.2 GOVERNMENTAL AND THIRD-PARTY NOTICES AND CONSENTS.
(a) Each Party shall use its Reasonable Best Efforts to obtain, at
its expense, all waivers, permits, consents, approvals or other authorizations
from Governmental Entities, and to effect all registrations, filings and notices
with or to Governmental Entities, as may be required for such Party to
consummate the transactions contemplated by this Agreement and to otherwise
comply with all applicable laws and regulations in connection with the
consummation of the transactions contemplated by this Agreement.
(b) The Company shall use its Reasonable Best Efforts to obtain, at
its expense, all such waivers, consents or approvals from third parties, and to
give all such notices to third parties, as are required to be listed in Section
2.4 of the Company Disclosure Schedule.
4.3 STOCKHOLDER APPROVAL.
(a) The Company shall use its Reasonable Best Efforts to obtain, as
promptly as practicable, the Requisite Stockholder Approval, pursuant to a
written stockholder consent, all in accordance with the applicable requirements
of the Delaware General Corporation Law. In connection with such written
stockholder consent, the Company shall provide to its stockholders a written
consent solicitation or information statement (the "Disclosure Statement") which
includes (A) a summary of the Merger and this Agreement (which summary shall
include a
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summary of the terms relating to the indemnification obligations of the Company
Stockholders, the escrow arrangements and the authority of the Indemnification
Representatives, and a statement that the adoption of this Agreement by the
stockholders of the Company shall constitute approval of such terms), (B) all of
the information required by Rule 502(b)(2) of Regulation D under the Securities
Act and (C) a statement that appraisal rights are available for the Company
Shares pursuant to Section 262 of the Delaware General Corporation Law and a
copy of such Section 262. The Buyer agrees to cooperate with the Company in the
preparation of the Disclosure Statement. The Company agrees not to distribute
the Disclosure Statement until the Buyer has had a reasonable opportunity to
review and comment on the Disclosure Statement and the Disclosure Statement has
been approved by the Buyer (which approval may not be unreasonably withheld or
delayed). Following receipt of the Requisite Stockholder Approval, the Company
shall send, pursuant to Sections 228 and 262(d) of the Delaware General
Corporation Law, a written notice to all stockholders of the Company that did
not execute such written consent informing them that this Agreement and the
Merger were adopted and approved by the stockholders of the Company and that
appraisal rights are available for their Company Shares pursuant to Section 262
of the Delaware General Corporation Law (which notice shall include a copy of
such Section 262), and shall promptly inform the Buyer of the date on which such
notice was sent.
(b) The Company, acting through its Board of Directors, shall
include in the Disclosure Statement the unanimous recommendation of its Board of
Directors that the stockholders of the Company vote in favor of the adoption of
this Agreement and the approval of the Merger.
(c) The Company shall ensure that the Disclosure Statement does not
contain any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements made, in light of the circumstances
under which they were made, not misleading (provided that the Company shall not
be responsible for the accuracy or completeness of any information furnished by
the Buyer in writing for inclusion in the Disclosure Statement).
(d) The Buyer shall ensure that any information furnished by the
Buyer to the Company in writing for inclusion in the Disclosure Statement does
not contain any untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements made, in light of the
circumstances under which they were made, not misleading.
(e) Each of the Company Stockholders listed on the signature page
to this Agreement hereby agrees (i) to vote all Company Shares that are
beneficially owned by him in favor of the adoption of this Agreement and the
approval of the Merger, (ii) not to vote any Company Shares in favor of any
other acquisition (whether by way of merger, consolidation, share exchange,
stock purchase or asset purchase) of all or a majority of the outstanding
capital stock or assets of the Company and (iii) otherwise to use his Reasonable
Best Efforts (but without any obligation to incur any personal expense) to
obtain the Requisite Stockholder Approval.
4.4 OPERATION OF BUSINESS. Except as contemplated by this Agreement,
during the period from the date of this Agreement to the Effective Time, the
Company shall conduct its operations in the Ordinary Course of Business and in
compliance with all applicable laws and
-24-
regulations and, to the extent consistent therewith, use its Reasonable Best
Efforts to preserve intact its current business organization, keep its physical
assets in good working condition, keep available the services of its current
officers and employees and preserve its relationships with customers, suppliers
and others having business dealings with it to the end that its goodwill and
ongoing business shall not be impaired in any material respect. Without limiting
the generality of the foregoing, prior to the Effective Time, the Company shall
not, without the written consent of the Buyer:
(a) issue or sell, or redeem or repurchase, any stock or other
securities of the Company or any rights, warrants or options to acquire any such
stock or other securities (except pursuant to the exercise of Options
outstanding on the date hereof), or amend any of the terms of (including without
limitation the vesting of) any such Options; provided, however, the Company
shall grant prior to the Effective Time and pursuant to the Company's Option
Plan, options to purchase up to 366,620 Company Shares to such persons, in such
amounts and upon such terms as are set forth on Schedule 4.4 hereto (it being
understood that each such person (other than those referred to in Section
5.2(m)) shall, as a condition to the grant, execute the Confidentiality
Agreement in the form attached hereto as Exhibit E);
(b) split, combine or reclassify any shares of its capital stock;
declare, set aside or pay any dividend or other distribution (whether in cash,
stock or property or any combination thereof) in respect of its capital stock;
(c) create, incur or assume any indebtedness (including obligations
in respect of capital leases); assume, guarantee, endorse or otherwise become
liable or responsible (whether directly, contingently or otherwise) for the
obligations of any other person or entity; or make any loans, advances or
capital contributions to, or investments in, any other person or entity;
(d) enter into, adopt or amend any Employee Benefit Plan or any
employment or severance agreement or arrangement of the type described in
Section 2.22(e) or increase in any manner the compensation or fringe benefits
of, or modify the employment terms of, its directors, officers or employees,
generally or individually, or pay any bonus or other benefit to its directors,
officers or employees (except for existing payment obligations listed in Section
2.20 of the Company Disclosure Schedule);
(e) acquire, sell, lease, license or dispose of any assets or
property (including without limitation any shares or other equity interests in
or securities of any corporation, partnership, association or other business
organization or division thereof), other than purchases and sales of assets in
the Ordinary Course of Business;
(f) mortgage or pledge any of its property or assets or subject any
such property or assets to any Security Interest;
(g) discharge or satisfy any Security Interest or pay any
obligation or liability other than in the Ordinary Course of Business;
(h) amend its charter, By-Laws or other organizational documents;
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(i) change in any material respect its accounting methods,
principles or practices, except insofar as may be required by a generally
applicable change in GAAP;
(j) enter into, amend, terminate, take or omit to take any action
that would constitute a violation of or default under, or waive any rights
under, any material contract or agreement;
(k) make or commit to make any capital expenditure;
(l) institute or settle any Legal Proceeding;
(m) take any action or fail to take any action permitted by this
Agreement with the knowledge that such action or failure to take action would
result in (i) any of the representations and warranties of the Company set forth
in this Agreement becoming untrue or (ii) any of the conditions to the Merger
set forth in Article V not being satisfied;
(n) make or revoke any material Tax election or settle or
compromise any material claim in respect of any Taxes;
(o) agree in writing or otherwise to take any of the foregoing
actions.
4.5 ACCESS TO INFORMATION.
(a) The Company shall permit representatives of the Buyer to have
full access (subject to reasonable advance notice and at reasonable times, and
in a manner so as not to interfere with the normal business operations of the
Company) to all premises, properties, financial and accounting records,
contracts, other records and documents, and personnel, of or pertaining to the
Company.
(b) Within 15 days after the end of each month ending prior to the
Closing, beginning with December 31, 2000, the Company shall furnish to the
Buyer an unaudited income statement for such month and a balance sheet as of the
end of such month, prepared on a basis consistent with unaudited Financial
Statements. Such financial statements shall present fairly in all material
respects the financial condition and results of operations of the Company on a
consolidated basis as of the dates thereof and for the periods covered thereby,
and shall be consistent with the books and records of the Company.
(c) Buyer shall use its Reasonable Best Efforts to cause its
employees, agents and representatives to hold, in strict confidence all such
information disclosed pursuant to this Section 4.5 in accordance with the terms
of the Mutual Confidential Disclosure Agreement, dated October 30, 2000, between
the Buyer and the Company, which shall remain in full force and effect in
accordance with the terms thereof, including, in the event of termination of
this Merger Agreement
4.6 EXCLUSIVITY.
(a) The Company shall not, and the Company shall require each of
its officers, directors, employees, representatives and agents not to, directly
or indirectly, (i) initiate,
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solicit, encourage or otherwise facilitate any inquiry, proposal, offer or
discussion with any party (other than the Buyer) concerning any merger,
reorganization, consolidation, recapitalization, business combination,
liquidation, dissolution, share exchange, sale of stock, sale of material assets
or similar business transaction involving the Company or any division of the
Company, (ii) furnish any non-public information concerning the business,
properties or assets of the Company or any division of the Company to any party
(other than the Buyer) or (iii) engage in discussions or negotiations with any
party (other than the Buyer) concerning any such transaction.
(b) The Company shall immediately notify any party with which
discussions or negotiations of the nature described in paragraph (a) above were
pending that the Company is terminating such discussions or negotiations. If the
Company receives any inquiry, proposal or offer of the nature described in
paragraph (a) above, the Company shall, within one business day after such
receipt, notify the Buyer of such inquiry, proposal or offer, including the
identity of the other party and the terms of such inquiry, proposal or offer.
4.7 EXPENSES. Except as set forth in Article VI and the Escrow
Agreement, each of the Parties shall bear its own costs and expenses (including
legal fees and expenses) incurred in connection with this Agreement and the
transactions contemplated hereby; PROVIDED, HOWEVER, that if the Merger is
consummated, the Buyer and the Surviving Corporation shall not be obligated to
pay any such costs or expenses incurred by the Company in connection with this
Agreement and the Merger (the "Third Party Expenses"), other than $1,100,000,
with respect to financial advisor fees and expenses, and $250,000 in legal fees
and expenses, and any such Third Party Expenses incurred in excess of such
amounts shall be subject to the indemnification provisions of Article VI hereof
without giving effect to the provisions of Section 6.4(a)(ii). Such financial
advisor fees and legal fees and expenses shall be paid at the Closing.
4.8 LISTING OF MERGER SHARES. The Buyer shall use its Reasonable Best
Efforts to list the Merger Shares on the Nasdaq National Market.
4.9 REGISTRATION RIGHTS. Buyer agrees that the stockholders of the
Company receiving Buyer Common Stock in the Merger pursuant to Section 1.5
hereto shall be entitled to the registration rights set forth in the
Registration Rights Agreement attached as EXHIBIT B hereto.
4.10 CONTINUED CHARTER / BY-LAW INDEMNIFICATION.
(a) From and after the Effective Time, the Surviving Corporation
will fulfill and honor in all respects the obligations of the Company pursuant
to any indemnification provisions under the Company's Certificate of
Incorporation or By-Laws as each is in effect on the date hereof (the persons to
be indemnified pursuant to the provisions referred to in this Section 4.10 shall
be referred to herein as, collectively, the "Section 4.10 Indemnified Parties"),
PROVIDED, HOWEVER, that in no event shall the Buyer or the Surviving Corporation
be required to indemnify any of the Section 4.10 Indemnified Parties for any
amount paid by the Indemnifying Stockholders under the Escrow Agreement or
otherwise to the Buyer under this Agreement. The Certificate of Incorporation
and By-Laws of the Surviving Corporation shall contain provisions with respect
to indemnification and exculpation from liability set forth in the Company's
Certificate of Incorporation and By-Law as in effect on the date of this
Agreement, which
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provisions shall not be amended, repealed or otherwise modified for a period of
six (6) years after the Effective Time in any manner that would adversely affect
the rights thereunder of any Section 4.10 Indemnified Party; provided, however,
nothing herein shall prevent the merger of the Surviving Corporation with and
into the Buyer and nothing herein shall, in connection therewith, require the
Buyer to amend its certificate of incorporation and/or by-laws.
(b) This Section 4.10 shall survive consummation of the Merger at
the Effective Time, is intended to be for the benefit of, and enforceable by,
the Company, the Surviving Corporation and each Section 4.10 Indemnified Party
and such Section 4.10 Indemnified Party's heirs and representatives, and shall
be binding on all successors and assigns of the Surviving Corporation.
4.11 BENEFIT ARRANGEMENTS. Buyer covenants and agrees that to the
extent permitted by applicable law and to the extent the existing benefit plans
and arrangements provided by the Company to its employees are terminated on or
after the Effective Time, such employees shall be entitled to benefits which are
available or subsequently become available to Buyer's employees and on a basis
which is on parity with Buyer's employees. For purposes of satisfying the terms
and conditions of such plans, Buyer shall give full credit for eligibility,
vesting or benefit accrual for each participant's period of service at the
Company prior to the Effective Time; provided, however, this Section 4.11 shall
not apply to any options granted to employees of the Company under Section 4.12.
4.12 BUYER OPTIONS. On the Closing Date, Buyer will grant options to
purchase an aggregate of 1,218,000 shares of its Common Stock to the employees
of the Company identified on SCHEDULE 4.12, in such amounts as set forth
opposite their name, at a per share exercise price equal to the last reported
sale price per share of the Buyer Common Stock on the Nasdaq National Market on
the Closing Date. Such options will vest over a four year period as follows: 25%
on the first anniversary of the grant date and the remaining 75% shall vest at a
rate of 2.083% per month thereafter, subject in each case to continued
employment with or service to Buyer following the Closing.
4.13 SEVERANCE. All employees of the Company who are not retained by
Buyer after the Closing Date shall receive a severance payment of one weeks
salary for each year of service with the Company (to be prorated accordingly for
incomplete years), with a minimum of two weeks salary to be granted to each
employee.
4.14 U.S. REAL PROPERTY INTEREST. If requested by the Buyer (i) the
Company will deliver to the Buyer and to the Internal Revenue Service notices
that the Company Shares are not a "U.S. real property interest" in accordance
with the Treasury Regulations under Sections 897 and 1445 of the Code, or (ii)
the Stockholders will deliver to the Buyer certifications that they are not
foreign persons in accordance with the Treasury Regulations under Section 1445
of the Code. Such notices or certificates shall be delivered by the Company or
the Stockholders on or before the Closing.
4.15 PAYMENT OF OUTSTANDING COMPANY PAYABLES. The Buyer agrees that the
outstanding payables of the Company set forth on SCHEDULE 4.15 hereto shall be
paid in full by the Buyer at and subject to the Closing.
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4.16 TERMINATION OF 401(k) PLAN. The Company agrees to terminate its
401(k) plan effective as of the day immediately prior to the Effective Time and
deliver to the Buyer evidence that the Company 401(k) plan has been terminated
pursuant to resolutions of its Board of Directors (the form and substance of
which resolutions shall be subject to review and approval of the Buyer),
effective as of the day immediately preceding the Effective Time.
ARTICLE V
CONDITIONS TO CONSUMMATION OF MERGER
5.1 CONDITION TO EACH PARTY'S OBLIGATIONS. The respective obligations
of each Party to consummate the Merger are subject to this Agreement and the
Merger having received the Requisite Stockholder Approval.
5.2 CONDITIONS TO OBLIGATIONS OF THE BUYER AND THE TRANSITORY
SUBSIDIARY. The obligation of each of the Buyer and the Transitory Subsidiary to
consummate the Merger is subject to the satisfaction (or waiver by the Buyer) of
the following additional conditions:
(a) the holders of at least 93% of the outstanding Company Shares
entitled to vote on this Agreement and the Merger shall have adopted this
Agreement and approved the Merger;
(b) the number of Dissenting Shares shall not exceed 7% of the
number of outstanding Company Shares as of the Effective Time;
(c) the Company shall have obtained (and shall have provided copies
thereof to the Buyer) all of the waivers, permits, consents, approvals or other
authorizations, and effected all of the registrations, filings and notices,
referred to in Section 4.2 which are required on the part of the Company;
(d) the representations and warranties of the Company set forth in
the first sentence of Section 2.1 and in Sections 2.2 and 2.3 shall be true and
correct in all respects, in each case as of the date of this Agreement and as of
the Effective Time, as though made as of the Effective Time;
(e) the representations and warranties (other than the
representations and warranties set forth in the first sentence of Section 2.1
and in Sections 2.2 and 2.3) of the Company set forth in this Agreement shall be
true and correct in all respects, in each case as of the date of this Agreement
and as of the Effective Time as though made as of the Effective Time, except to
the extent such representations and warranties are specifically made as of a
particular date or as of the date of this Agreement (in which case such
representations and warranties shall be true and correct as of such date) and
except for inaccuracies in a representation or warranty that would not,
individually or in the aggregate, constitute a Company Material Adverse Effect;
(f) the Company shall have performed or complied with in all
material respects its agreements and covenants required to be performed or
complied with under this Agreement as of or prior to the Effective Time;
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(g) no Legal Proceeding shall be pending or threatened wherein an
unfavorable judgment, order, decree, stipulation or injunction would (i) prevent
consummation of any of the transactions contemplated by this Agreement, (ii)
cause any of the transactions contemplated by this Agreement to be rescinded
following consummation or (iii) have a Company Material Adverse Effect, and no
such judgment, order, decree, stipulation or injunction shall be in effect;
(h) the Company shall have delivered to the Buyer and the
Transitory Subsidiary a certificate (the "Company Certificate") to the effect
that the condition specified in Section 5.1 and clauses (a) through (g) (insofar
as clause (g) relates to Legal Proceedings involving the Company) of this
Section 5.2 is satisfied in all respects;
(i) each of the Company Stockholders shall have executed and
delivered to the Buyer an Investment Representation Letter in the form attached
hereto as EXHIBIT C and the Buyer shall have no reason to believe that the
statements set forth therein are not true and shall be reasonably satisfied that
the issuance and sale of the Merger Shares is exempt from the registration
requirements of the Securities Act;
(j) the Buyer shall have received from counsel to the Company an
opinion with respect to the matters set forth in EXHIBIT D attached hereto,
addressed to the Buyer and dated as of the Closing Date;
(k) the Buyer shall have received copies of the resignations,
effective as of the Effective Time, of each director and officer of the Company
(other than any such resignations which the Buyer designates, by written notice
to the Company, as unnecessary);
(l) the Buyer shall have received such other certificates and
instruments (including without limitation certificates of good standing of the
Company in its jurisdiction of organization and the various foreign
jurisdictions in which it is qualified, certified charter documents,
certificates as to the incumbency of officers and the adoption of authorizing
resolutions) as it shall reasonably request in connection with the Closing;
(m) the Buyer shall have received original executed employment
agreement term sheets by and between the Buyer and each of Xxxxx X. Xxxxx, Xxxxx
X. House, Sr., Xxxxx X. Xxxxx, Xxxxxxx X. Xxxxxx and Xxxx X. Xxxxxxxxxx (each,
an "Employment Agreement Term Sheet");
(n) the Buyer shall have received original executed supplemental
employment agreement term sheets by and between the Buyer and each of Xxxxx X.
Xxxxx, Xxxxx X. House, Sr., Xxxxx X. Xxxxx, Xxxxxxx X. Xxxxxx and Xxxx X.
Xxxxxxxxxx (each, a "Supplemental Employment Agreement Term Sheet" and which may
be in the form of an amendment to the Employment Agreement Term Sheet) having
the terms set forth in EXHIBIT E;
(o) the Buyer shall have received an original executed employee
confidentiality agreement, by and between the Buyer and each Company employee
(other than those signing Employment Agreement Term Sheets, in the form attached
hereto as EXHIBIT F; and
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(p) the Buyer shall have received original executed lock-up
agreements in the form attached hereto as EXHIBIT G from each Company
Stockholder and each holder of Options to purchase an aggregate of at least
5,000 Company Shares.
5.3 CONDITIONS TO OBLIGATIONS OF THE COMPANY. The obligation of the
Company to consummate the Merger is subject to the satisfaction of the following
additional conditions:
(a) the Merger Shares shall have been authorized for listing on the
Nasdaq National Market upon official notice of issuance;
(b) the Buyer shall have effected all of the registrations, filings
and notices referred to in Section 4.2 which are required on the part of the
Buyer;
(c) the representations and warranties of the Buyer and the
Transitory Subsidiary set forth in the first sentence of Section 3.1 and in
Sections 3.2 and 3.3 shall be true and correct in all respects, in each case as
of the date of this Agreement and as of the Effective Time, as though made as of
the Effective Time;
(d) the representations and warranties (other than the
representations and warranties set forth in the first sentence of Section 3.1
and in Sections 3.2 and 3.3) of the Buyer and the Transitory Subsidiary set
forth in this Agreement shall be true and correct in all respects, in each case
as of the date of this Agreement and as of the Effective Time as though made as
of the Effective Time, except to the extent such representations and warranties
are specifically made as of a particular date or as of the date of this
Agreement (in which case such representations and warranties shall be true and
correct as of such date) and except for inaccuracies in a representation or
warranty that would not, individually or in the aggregate, constitute a Buyer
Material Adverse Effect;
(e) each of the Buyer and the Transitory Subsidiary shall have
performed or complied with in all material respects its agreements and covenants
required to be performed or complied with under this Agreement as of or prior to
the Effective Time;
(f) no Legal Proceeding shall be pending or threatened wherein an
unfavorable judgment, order, decree, stipulation or injunction would (i) prevent
consummation of any of the transactions contemplated by this Agreement or (ii)
cause any of the transactions contemplated by this Agreement to be rescinded
following consummation, and no such judgment, order, decree, stipulation or
injunction shall be in effect;
(g) the Buyer shall have delivered to the Company a certificate
(the "Buyer Certificate") to the effect that each of the conditions specified in
clauses (a) through (f) (insofar as clause (f) relates to Legal Proceedings
involving the Buyer) of this Section 5.3 is satisfied in all respects;
(h) the Company shall have received from counsel to the Buyer and
the Transitory Subsidiary an opinion with respect to the matters set forth in
EXHIBIT H attached hereto, addressed to the Company and dated as of the Closing
Date;
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(i) the Company shall have received such other certificates and
instruments (including without limitation certificates of good standing of the
Buyer and the Transitory Subsidiary in their jurisdiction of organization,
certified charter documents, certificates as to the incumbency of officers and
the adoption of authorizing resolutions) as it shall reasonably request in
connection with the Closing;
(j) the Buyer shall have executed each of the Employment Agreement
Term Sheets;
(k) the Buyer shall have executed each of the Supplemental
Employment Agreement Term Sheets (which may be in the form of an amendment to
the Employment Agreement Term Sheets); and
(l) the Buyer shall have executed the Registration Rights
Agreement.
ARTICLE VI
INDEMNIFICATION
6.1 INDEMNIFICATION BY THE COMPANY STOCKHOLDERS. The Company
Stockholders receiving the Merger Shares pursuant to Section 1.5 (the
"Indemnifying Stockholders") shall, subject to the provisions and limitations of
this Article VI, severally and not jointly, in proportion to their interests in
the Merger Shares held under the Escrow Agreement, indemnify the Buyer in
respect of, and hold it harmless against, any and all debts, obligations and
other liabilities (whether absolute, accrued, contingent, fixed or otherwise, or
whether known or unknown, or due or to become due or otherwise), monetary
damages, fines, fees, penalties, interest obligations, deficiencies, losses and
expenses (including without limitation amounts paid in settlement, interest,
court costs, costs of investigators, fees and expenses of attorneys,
accountants, financial advisors and other experts, and other expenses of
litigation) ("Damages") incurred or suffered by the Surviving Corporation or the
Buyer or any Affiliate thereof resulting from, relating to or constituting:
(a) any misrepresentation, breach of warranty or failure to perform
any covenant or agreement of the Company contained in this Agreement or the
Company Certificate;
(b) any Third Party Expenses incurred by the Company in excess of
the amounts set forth in the proviso to Section 4.7;
(c) any claim by Key in connection with, related to, or arising out
of, (A) ownership or rights to ownership of any shares of capital stock,
warrants or other securities of the Company, or (B) any claim by Key for a
payment of money; any claim by NFI in connection with, related to, or arising
out of, the NFI Services Agreement; and any claim by Deloitte & Touche LLP in
connection with, related to, or arising out of, the recapture of any discounts,
write-offs or xxxx-xxxxx on professional service fees and expenses previously
granted to the Company.
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6.2 INDEMNIFICATION CLAIMS.
(a) A party entitled, or seeking to assert rights, to
indemnification under this Article VI (an "Indemnified Party") shall give
written notification to the party from whom indemnification is sought (an
"Indemnifying Party") of the commencement of any suit or proceeding relating to
a third party claim for which indemnification pursuant to this Article VI may be
sought. Such notification shall be given within 20 business days after receipt
by the Indemnified Party of notice of such suit or proceeding, and shall
describe in reasonable detail (to the extent known by the Indemnified Party) the
facts constituting the basis for such suit or proceeding and the amount of the
claimed damages; PROVIDED, HOWEVER, that no delay on the part of the Indemnified
Party in notifying the Indemnifying Party shall relieve the Indemnifying Party
of any liability or obligation hereunder except to the extent of any damage or
liability caused by or arising out of such failure. Within 20 days after
delivery of such notification, the Indemnifying Party may, upon written notice
thereof to the Indemnified Party, assume control of the defense of such suit or
proceeding with counsel reasonably satisfactory to the Indemnified Party;
provided that (i) the Indemnifying Party may only assume control of such defense
if (A) it acknowledges in writing to the Indemnified Party that any damages,
fines, costs or other liabilities that may be assessed against the Indemnified
Party in connection with such suit or proceeding constitute Damages for which
the Indemnified Party shall be indemnified pursuant to this Article VI and (B)
the AD DAMNUM is less than or equal to the amount of Damages for which the
Indemnifying Party is liable under this Article VI and (ii) the Indemnifying
Party may not assume control of the defense of a suit or proceeding involving
criminal liability or in which equitable relief is sought against the
Indemnified Party. If the Indemnifying Party does not so assume control of such
defense, the Indemnified Party shall control such defense. The party not
controlling such defense (the "Non-controlling Party") may participate therein
at its own expense; provided that if the Indemnifying Party assumes control of
such defense and the Indemnified Party reasonably concludes that the
Indemnifying Party and the Indemnified Party have conflicting interests or
different defenses available with respect to such suit or proceeding, the
reasonable fees and expenses of counsel to the Indemnified Party shall be
considered "Damages" for purposes of this Agreement. The party controlling such
defense (the "Controlling Party") shall keep the Non-controlling Party advised
of the status of such suit or proceeding and the defense thereof and shall
consider in good faith recommendations made by the Non-controlling Party with
respect thereto. The Non-controlling Party shall furnish the Controlling Party
with such information as it may have with respect to such suit or proceeding
(including copies of any summons, complaint or other pleading which may have
been served on such party and any written claim, demand, invoice, billing or
other document evidencing or asserting the same) and shall otherwise cooperate
with and assist the Controlling Party in the defense of such suit or proceeding.
The Indemnifying Party shall not agree to any settlement of, or the entry of any
judgment arising from, any such suit or proceeding without the prior written
consent of the Indemnified Party, which shall not be unreasonably withheld or
delayed; provided that the consent of the Indemnified Party shall not be
required if the Indemnifying Party agrees in writing to pay any amounts payable
pursuant to such settlement or judgment and such settlement or judgment includes
a complete release of the Indemnified Party from further liability and has no
other adverse effect on the Indemnified Party. The Indemnified Party shall not
agree to any settlement of, or the entry of any judgment arising from, any such
suit or proceeding without the prior written consent of the Indemnifying Party,
which shall not be unreasonably withheld or delayed.
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(b) In order to seek indemnification under this Article VI, an
Indemnified Party shall give written notification (a "Claim Notice") to the
Indemnifying Party which contains (i) a description and the amount (the "Claimed
Amount") of any Damages incurred or reasonably expected to be incurred by the
Indemnified Party, (ii) a statement that the Indemnified Party is entitled to
indemnification under this Article VI for such Damages and a reasonable
explanation of the basis therefor, and (iii) a demand for payment (in the manner
provided in paragraph (c) below) in the amount of such Damages. The Indemnifying
Party shall also deliver a copy of the Claim Notice to the Escrow Agent.
(c) Within 20 days after delivery of a Claim Notice, the
Indemnifying Party shall deliver to the Indemnified Party a written response
(the "Response") in which the Indemnifying Party shall elect one of the
following: (i) agree that the Indemnified Party is entitled to receive all of
the Claimed Amount (in which case the Response shall be accompanied by a payment
by the Indemnifying Party to the Indemnified Party of the Claimed Amount, by
check or by wire transfer; provided that if the Indemnified Party is seeking to
enforce any such claim hereunder pursuant to the Escrow Agreement, the
Indemnifying Party and the Indemnified Party shall deliver to the Escrow Agent,
within three days following the delivery of the Response, a written notice
executed by both parties instructing the Escrow Agent to distribute to the Buyer
such number of Escrow Shares as have an aggregate Value (as defined below) equal
to the Claimed Amount), or (ii) agree that the Indemnified Party is entitled to
receive part, but not all, of the Claimed Amount (the "Agreed Amount") (in which
case the Response shall be accompanied by a payment by the Indemnifying Party to
the Indemnified Party of the Agreed Amount, by check or by wire transfer;
provided that if the Indemnified Party is seeking to enforce any such claim
pursuant to the Escrow Agreement, the Indemnifying Party and the Indemnified
Party shall deliver to the Escrow Agent, within three days following the
delivery of the Response, a written notice executed by both parties instructing
the Escrow Agent to distribute to the Buyer such number of Escrow Shares as have
an aggregate Value equal to the Agreed Amount) or (iii) dispute that the
Indemnified Party is entitled to receive any of the Claimed Amount. If the
Indemnifying Party in the Response disputes its liability for all or part of the
Claimed Amount, the Indemnifying Party and the Indemnified Party shall follow
the procedures set forth in Section 6.3(d) for the resolution of such dispute (a
"Dispute"). For purposes of this Article VI, the "Value" of any Escrow Shares
delivered in satisfaction of an indemnity claim shall be $15.62 (subject to
equitable adjustment in the event of any stock split, stock dividend, reverse
stock split or similar event affecting the Buyer Common Stock after the date
hereof), multiplied by the number of such Escrow Shares.
(d) During the 60-day period following the delivery of a Response
that reflects a Dispute, the Indemnifying Party and the Indemnified Party shall
use good faith efforts to resolve the Dispute. If the Dispute is not resolved
within such 60-day period, the Indemnifying Party and the Indemnified Party
shall discuss in good faith the submission of the Dispute to a mutually
acceptable alternative dispute resolution procedure (which may be non-binding or
binding upon the parties, as they agree in advance) (the "ADR Procedure"). In
the event the Indemnifying Party and the Indemnified Party agree upon an ADR
Procedure, such parties shall, in consultation with the chosen dispute
resolution service (the "ADR Service"), promptly agree upon a format and
timetable for the ADR Procedure, agree upon the rules applicable to the ADR
Procedure, and promptly undertake the ADR Procedure. The provisions of this
Section 6.3(d) shall not obligate the Indemnifying Party and the Indemnified
Party to
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pursue an ADR Procedure or prevent either such party from pursuing the Dispute
in a court of competent jurisdiction; provided that, if the Indemnifying Party
and the Indemnified Party agree to pursue an ADR Procedure, neither the
Indemnifying Party nor the Indemnified Party may commence litigation or seek
other remedies with respect to the Dispute prior to the completion of such ADR
Procedure. Any ADR Procedure undertaken by the Indemnifying Party and the
Indemnified Party shall be considered a compromise negotiation for purposes of
federal and state rules of evidence, and all statements, offers, opinions and
disclosures (whether written or oral) made in the course of the ADR Procedure by
or on behalf of the Indemnifying Party, the Indemnified Party or the ADR Service
shall be treated as confidential and, where appropriate, as privileged work
product. Such statements, offers, opinions and disclosures shall not be
discoverable or admissible for any purposes in any litigation or other
proceeding relating to the Dispute (provided that this sentence shall not be
construed to exclude from discovery or admission any matter that is otherwise
discoverable or admissible). The fees and expenses (including any advances
thereof) of any ADR Service used by the Indemnifying Party and the Indemnified
Party shall be shared equally by the Indemnifying Party and the Indemnified
Party. If the Indemnified Party is seeking to enforce the claim that is the
subject of the Dispute pursuant to the Escrow Agreement, the Indemnifying Party
and the Indemnified Party shall deliver to the Escrow Agent, promptly following
the resolution of the Dispute (whether by mutual agreement, pursuant to an ADR
Procedure, as a result of a judicial decision or otherwise), a written notice
executed by both parties instructing the Escrow Agent as to what (if any)
portion of the Escrow Shares shall be distributed to the Buyer and/or the
Indemnifying Stockholders (which notice shall be consistent with the terms of
the resolution of the Dispute).
(e) Notwithstanding the other provisions of this Section 6.3, if a
third party asserts (other than by means of a lawsuit) that an Indemnified Party
is liable to such third party for a monetary or other obligation which may
constitute or result in Damages for which such Indemnified Party may be entitled
to indemnification pursuant to this Article VI, and such Indemnified Party
reasonably determines that it has a valid business reason to fulfill such
obligation, then (i) such Indemnified Party shall be entitled to satisfy such
obligation, without prior notice to or consent from the Indemnifying Party, (ii)
such Indemnified Party may subsequently make a claim for indemnification in
accordance with the provisions of this Article VI, and (iii) such Indemnified
Party shall be reimbursed, in accordance with the provisions of this Article VI,
for any such Damages for which it is entitled to indemnification pursuant to
this Article VI (subject to the right of the Indemnifying Party to dispute the
Indemnified Party's entitlement to indemnification, or the amount for which it
is entitled to indemnification, under the terms of this Article VI).
(f) For purposes of this Section 6.2 and the last two sentences of
Section 6.3, references to the Indemnifying Party (except provisions relating to
an obligation to make or a right to receive any payments provided for in Section
6.2 or Section 6.3) shall be deemed to refer to the Indemnification
Representatives. The Indemnification Representatives shall have full power and
authority on behalf of each Indemnifying Stockholder to take any and all actions
on behalf of, execute any and all instruments on behalf of, and execute or waive
any and all rights of, the Indemnifying Stockholders under this Article VI. The
Indemnification Representatives shall have no liability to any Indemnifying
Stockholder for any action taken or omitted on behalf of the Indemnifying
Stockholders pursuant to this Article VI.
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6.3 SURVIVAL. All representations, warranties and covenants contained
in this Agreement, the Company Certificate or the Buyer Certificate shall (a)
survive the Closing and any investigation at any time made by or on behalf of an
Indemnified Party or the Company and (b) shall expire on the date one year
following the Closing Date. If an Indemnified Party delivers to an Indemnifying
Party, before expiration of a representation or warranty, either a Claim Notice
based upon a breach of such representation or warranty, or a notice that, as a
result a legal proceeding instituted by or written claim made by a third party,
the Indemnified Party reasonably expects to incur Damages as a result of a
breach of such representation or warranty (an "Expected Claim Notice"), then
such representation or warranty shall continue to survive, but only for purposes
of the matter(s) specified in such notice, beyond the date which is one year
following the Closing Date until the resolution of the matter(s) covered by such
notice. If the legal proceeding or written claim with respect to which an
Expected Claim Notice has been given is definitively withdrawn or resolved in
favor of the Indemnified Party, the Indemnified Party shall promptly so notify
the Indemnifying Party; and if the Indemnified Party has delivered a copy of the
Expected Claim Notice to the Escrow Agent and Escrow Shares have been retained
in escrow after the Termination Date (as defined in the Escrow Agreement) with
respect to such Expected Claim Notice, the Indemnifying Party and the
Indemnified Party shall promptly deliver to the Escrow Agent a written notice
executed by both parties instructing the Escrow Agent to distribute such
retained Escrow Shares to the Indemnifying Stockholders in accordance with the
terms of the Escrow Agreement.
6.4 LIMITATIONS.
(a) Except as provided in Section 6.4(e) below, (i) the liability
of the Buyer and the Surviving Corporation for Damages under this Agreement
shall be limited to an amount equal to the Value of the Escrow Shares, as
determined pursuant to Section 6.2(c), (ii) the liability of the Indemnifying
Stockholders for Damages under this Article VI shall be limited to the Escrow
Shares held by the Escrow Agent pursuant to the Escrow Agreement, (iii) the
Buyer and the Surviving Corporation shall be liable under this Agreement for
only that portion of the aggregate Damages for which they would otherwise be
liable which exceeds $500,000, and (iv) the Indemnifying Stockholders shall be
liable under this Article VI for only that portion of the aggregate Damages for
which they would otherwise be liable which exceeds $500,000; PROVIDED that the
limitation set forth in clause (iii) above shall not apply to a claim relating
to a breach of the representations and warranties set forth in Sections 3.1,
3.2, or 3.3 (or the portion of the Buyer Certificate relating thereto);
PROVIDED, FURTHER, that the limitation set forth in clause (iv) above shall not
apply to a claim pursuant to Section 6.1 relating to a breach of the
representations and warranties set forth in Sections 2.1, 2.2, or 2.3 (or the
portion of the Company Certificate relating thereto) to a claim pursuant to
Section 6.1 for Third Party Expenses in excess of the amounts set forth in
Section 4.7 or to a claim pursuant to Section 6.1(c). For purposes solely of
this Article VI, all representations and warranties of the Company in Article II
(other than Sections 2.7 and 2.30) and all representations and warranties of the
Buyer and the Transitory Subsidiary in Article III (other than Sections 3.6 and
3.12) shall be construed as if the term "material" and any reference to "Company
Material Adverse Effect" and "Buyer Material Adverse Effect" (and variations
thereof) were omitted from such representations and warranties.
(b) The Escrow Agreement is intended to secure the indemnification
obligations of the Indemnifying Stockholders under this Agreement and, except as
provided in
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Section 6.4(e) below, shall be the exclusive means for the Buyer to collect any
Damages for which it is entitled to indemnification under this Article VI.
(c) After the Closing, except as provided in Section 6.4(e) below,
the rights of the Indemnified Parties under this Article VI and the Escrow
Agreement shall be the exclusive remedy of the Indemnified Parties with respect
to claims resulting from or relating to any misrepresentation, breach of
warranty or failure to perform any covenant or agreement contained in this
Agreement.
(d) No Indemnifying Stockholder shall have any right of
contribution against the Company or the Surviving Corporation with respect to
any breach by the Company of any of its representations, warranties, covenants
or agreements.
(e) Notwithstanding anything in this Section 6.4 to the contrary,
this Section 6.4 shall not apply to any claims by any Party based on fraud or
intentional misrepresentation and neither the Buyer's nor the Indemnifying
Stockholders' liability for any such claims shall be limited to the Escrow
Shares nor shall the Escrow Agreement be the exclusive means for the Buyer to
enforce such rights; provided, however, that the Buyer may only assert claims
under this Section 6.4(e) against the Indemnifying Stockholder who engaged in
the fraud or intentional misrepresentation giving rise to any such claim.
(f) In determining the foregoing thresholds and in otherwise
determining the amount of any Damages for which the Buyer or Surviving
Corporation is entitled to assert a claim for indemnification, the amount of any
such Damages shall be determined after deducting therefrom the amount of any
insurance proceeds received by the Buyer or Surviving Corporation in respect of
such Damages (which recoveries the Buyer or Surviving Corporation agree to use
its Reasonable Best Efforts to obtain). If an indemnification payment is
received by the Buyer or Surviving Corporation and the Buyer or Surviving
Corporation later receives insurance proceeds in respect of the related Damages,
the Buyer or Surviving Corporation shall immediately pay to the Indemnifying
Stockholders a sum equal to the lesser of (i) the actual amount of insurance
proceeds received, or (ii) the actual amount of the indemnification repayment
previously paid by the Indemnifying Stockholders with respect to such Damages.
(g) Buyer and the Indemnifying Stockholders shall treat any payment
under this Article VI for all Tax purposes as an adjustment of the Merger
consideration.
ARTICLE VII
TERMINATION
7.1 TERMINATION OF AGREEMENT. The Parties may terminate this Agreement
prior to the Effective Time (whether before or after Requisite Stockholder
Approval), as provided below:
(a) the Parties may terminate this Agreement by mutual written
consent;
(b) the Buyer may terminate this Agreement by giving written notice
to the Company in the event the Company is in breach of any representation,
warranty or covenant contained in this Agreement, and such breach, individually
or in combination with any other such breach, (i) would cause the conditions set
forth in clauses (c) or (d) of Section 5.2 not to be
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satisfied and (ii) is not cured within 10 days following delivery by the Buyer
to the Company of written notice of such breach;
(c) the Company may terminate this Agreement by giving written
notice to the Buyer in the event the Buyer or the Transitory Subsidiary is in
breach of any representation, warranty or covenant contained in this Agreement,
and such breach, individually or in combination with any other such breach, (i)
would cause the conditions set forth in clauses (c) or (d) of Section 5.3 not to
be satisfied and (ii) is not cured within 10 days following delivery by the
Company to the Buyer of written notice of such breach;
(d) any Party may terminate this Agreement by giving written notice
to the other Parties at any time after the Company Stockholders have voted on
whether to approve this Agreement and the Merger in the event this Agreement and
the Merger failed to receive the Requisite Stockholder Approval;
(e) the Buyer may terminate this Agreement by giving written notice
to the Company if the Closing shall not have occurred on or before January 29
2001 by reason of the failure of any condition precedent under Section 5.1 or
5.2 hereof (unless the failure results primarily from a breach by the Buyer or
the Transitory Subsidiary of any representation, warranty or covenant contained
in this Agreement);
(f) the Company may terminate this Agreement by giving written
notice to the Buyer and the Transitory Subsidiary if the Closing shall not have
occurred on or before January 29, 2001 by reason of the failure of any condition
precedent under Section 5.1 or 5.3 hereof (unless the failure results primarily
from a breach by the Company of any representation, warranty or covenant
contained in this Agreement); or
(g) the Company may terminate this Agreement by giving written
notice to the Buyer and the Transitory Subsidiary if the average of the last
reported sale prices per share of the Buyer Common Stock on the Nasdaq National
Market over any five consecutive trading days after the date hereof is less than
$7.50.
7.2 AUTOMATIC TERMINATION. Notwithstanding anything herein to the
contrary, this agreement shall terminate automatically if the Closing shall not
have occurred prior to January 31, 2001 for any reason whatsoever.
7.3 EFFECT OF TERMINATION. If any Party terminates this Agreement
pursuant to Section 7.1, or if this Agreement terminates by its terms pursuant
to Section 7.2, all obligations of the Parties hereunder shall terminate without
any liability of any Party to any other Party, provided nothing herein shall
relieve any party from liability for any willful breach of any of their
respective representations, warranties, covenants or agreements set forth in
this Agreement.
ARTICLE VIII
DEFINITIONS
For purposes of this Agreement, each of the following defined terms is
defined in the Section of this Agreement indicated below.
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DEFINED TERM SECTION
Agreement Introduction
ADR Procedure 6.2(d)
ADR Service 6.2(d)
Affiliate 2.15(a)(vii)
Agreed Amount 6.2(c)
Buyer Introduction
Buyer Certificate 5.3(g)
Buyer Common Stock 1.5(a)
Buyer Material Adverse Effect 3.1
Buyer Reports 3.5(a)
CERCLA 2.23
Certificates 1.3(d)
Certificate of Merger 1.1
Claim Notice 6.2(b)
Claimed Amount 6.2(b)
Closing 1.2
Closing Date 1.2
Closing Date Stock Schedule 1.14
Code Introduction
Company Introduction
Company Certificate 5.2(h)
Company Disclosure Schedule Article II
Company Intellectual Property 2.13(a)
Company Material Adverse Effect 2.1
Company Shares 1.5(a)
Company Stockholder 1.3(d)
Controlling Party 6.2(a)
Conversion Ratio 1.5(b)
Customer Deliverables 2.13(a)
Damages 6.1
Disclosure Statement 4.3(a)
Dispute 6.2(c)
Dissenting Shares 1.6(a)
Effective Time 1.1
Employee Benefit Plan 2.22(a)
Employment Agreement Term Sheet 5.2(m)
Environmental Law 2.23
ERISA 2.22(a)
Escrow Agreement 1.3(f)
Escrow Agent 1.3(f)
Escrow Shares 1.5(b)
Expected Claim Notice 6.3
Exchange Act 2.15(a)(vii)
Financial Statements 2.6
GAAP 2.6
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Governmental Entity 2.4
Indemnification Representatives 1.3(f)
Indemnified Party 6.2(a)
Indemnifying Party 6.2(a)
Indemnifying Stockholders 6.1
Initial Shares 1.5(b)
INS 2.21(b)
Intellectual Property 2.13(a)
Internal Systems 2.13(a)
Key 2.2
Legal Proceeding 2.19
Merger 1.1
Merger Shares 1.5(b)
Most Recent Balance Sheet 2.8
Most Recent Balance Sheet Date 2.6
NFI 2.2
NFI Services Agreement 2.2
Non-controlling Party 6.2(a)
Options 1.8(a)
Option Plan 1.8(a)
Ordinary Course of Business 2.4
Parties Introduction
Permits 2.26
Prospectus 3.5(b)
Reasonable Best Efforts 4.1
Response 6.2(c)
Requisite Stockholder Approval 2.3
Section 4.10 Indemnified Parties 4.10(a)
Section 9.9 Indemnified Party 9.9
SEC 3.5(a)
Securities Act 1.8(c)
Security Interest 2.4
Software 2.13(e)
Surviving Corporation 1.1
Supplemental Employment Agreement Term Sheet 5.2(n)
Taxes 2.9(a)(i)
Tax Returns 2.9(a)(ii)
Third Party Expenses 4.7
Total Buyer Shares 1.5(b)
Transitory Subsidiary Introduction
Value 4.7
Work Permits 2.21(b)
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ARTICLE IX
MISCELLANEOUS
9.1 PRESS RELEASES AND ANNOUNCEMENTS. No Party shall issue any press
release or public announcement relating to the subject matter of this Agreement
without the prior written approval of the other Parties; provided, HOWEVER, that
any Party may make any public disclosure it believes in good faith is required
by applicable law, regulation or stock market rule (in which case the disclosing
Party shall use reasonable efforts to advise the other Parties and provide them
with a copy of the proposed disclosure prior to making the disclosure).
9.2 NO THIRD PARTY BENEFICIARIES. This Agreement shall not confer any
rights or remedies upon any person other than the Parties and their respective
successors and permitted assigns; PROVIDED, HOWEVER, that (a) the provisions in
Article I concerning issuance of the Merger Shares are intended for the benefit
of the Company Stockholders, (b) the provisions of Section 4.10 concerning the
continuation of indemnification provisions are intended for the benefit of the
Section 4.10 Indemnified Parties set forth therein, and (c) the provisions of
Section 4.11 concerning the continuation of employee benefits are for the
benefit of the employees entitled to received such benefits.
9.3 ENTIRE AGREEMENT. This Agreement (including the documents referred
to herein) constitutes the entire agreement among the Parties and supersedes any
prior understandings, agreements or representations by or among the Parties,
written or oral, with respect to the subject matter hereof; provided that the
Mutual Confidential Disclosure Agreement dated October 30, 2000 between the
Buyer and the Company shall remain in effect in accordance with its terms.
9.4 SUCCESSION AND ASSIGNMENT. This Agreement shall be binding upon and
inure to the benefit of the Parties named herein and their respective successors
and permitted assigns. No Party may assign either this Agreement or any of its
rights, interests or obligations hereunder without the prior written approval of
the other Parties; provided that the Transitory Subsidiary may assign its
rights, interests and obligations hereunder to an Affiliate of the Buyer.
9.5 COUNTERPARTS AND FACSIMILE SIGNATURE. This Agreement may be
executed in two or more counterparts, each of which shall be deemed an original
but all of which together shall constitute one and the same instrument. This
Agreement may be executed by facsimile signature.
9.6 HEADINGS. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
9.7 NOTICES. All notices, requests, demands, claims, and other
communications hereunder shall be in writing. Any notice, request, demand, claim
or other communication hereunder shall be deemed duly delivered four business
days after it is sent by registered or certified mail, return receipt requested,
postage prepaid, or one business day after it is sent for next business day
delivery via a reputable nationwide overnight courier service, in each case to
the intended recipient as set forth below:
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IF TO THE COMPANY: COPY TO:
AllPoints Systems, Inc. Xxxxxx Xxxx & Xxxxxxx
000 Xxxxxx Xxxxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxxxxxxx 00000 Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: President Attn: Xxxxx X. Xxxxxx, III, P.C.
Telecopy: (000) 000-0000 Telecopy: 000-000-0000
IF TO THE BUYER OR COPY TO:
THE TRANSITORY SUBSIDIARY:
EXE Technologies, Inc. Xxxx and Xxxx LLP
0000 Xxxxxxxx Xxxxxxx 00 Xxxxx Xxxxxx
Xxxxxx, Xxxxx 00000 Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Chief Financial Officer Attn: Xxxx X. Xxxxxx, Esq.
Telecopy: (000) 000-0000 Telecopy: 617-526-5000
and
EXE Technologies, Inc.
000 Xxxxxxx Xxxxx Xxxxxxxxx
Xxxxxxxxx, Xxxxxxxxxxxx 00000
Attn: General Counsel
Telecopy: (000) 000-0000
Any Party may give any notice, request, demand, claim or other
communication hereunder using any other means (including personal delivery,
expedited courier, messenger service, telecopy, telex, ordinary mail or
electronic mail), but no such notice, request, demand, claim or other
communication shall be deemed to have been duly given unless and until it
actually is received by the party for whom it is intended. Any Party may change
the address to which notices, requests, demands, claims, and other
communications hereunder are to be delivered by giving the other Parties notice
in the manner herein set forth.
9.8 FEES AND EXPENSES. If the Merger is not consummated and the Closing
does not occur, all Third Party Expenses incurred by the Buyer or Transitory
Subsidiary shall be the obligation of the Buyer, and all Third Party Expenses
incurred by the Company or its shareholders shall be the obligation of the
Company.
9.9 INDEMNIFICATION REPRESENTATIVES. Each Company Stockholder (a)
authorizes each of the Indemnification Representatives, acting jointly and not
separately, to take any and all actions permitted to be taken or contemplated to
be taken by the Indemnification Representatives under this Agreement, including,
but not limited to, the receipt, holdback or payment of any funds in connection
with any adjustment to the Merger Shares, pursuant to Section 1.6 hereof, or in
connection with the payment, discharge or settlement of any Damages and to take
any actions which in the good faith judgment of the Indemnification
Representatives are considered to be necessary, desirable or convenient in
connection with the foregoing and (b) agreed that the Company Stockholders shall
indemnify and hold free and harmless the Indemnification Representatives and
each of their respective partners, stockholders, Affiliates, directors,
officers, fiduciaries, employees and agents and each of the partners,
stockholders, Affiliates, directors, officers, fiduciaries, employees and agents
of each of the foregoing (each a "Section 9.9 Indemnified Party") from and
against Damages, incurred or suffered by any of them as a result
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of, or arising out of, or relating to any and all actions taken or omitted to be
taken by the Indemnification Representatives under this Agreement or in
connection with the incurrence, payment, discharge or settlement of any Damages,
except for any such Damages that arise on account of such Section 9.9
Indemnified Party's gross negligence or willful misconduct as determined by a
court of competent jurisdiction in a final adjudication. The Indemnification
Representatives shall not be liable to any Company Stockholder in respect of
such arrangements or actions or omissions in connection therewith, except to the
extent that such acts or omissions constitute gross negligence or willful
misconduct. Notwithstanding anything to the contrary in this Agreement, all
actions required or permitted to be taken by the Indemnification Representatives
in connection with the matters described in clause (a) of this Section 9.9 or
otherwise, in order for such actions to be effective shall be taken jointly and
shall require the prior written consent of each of the Indemnification
Representatives.
9.10 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of Delaware without giving
effect to any choice or conflict of law provision or rule (whether of the State
of Delaware or any other jurisdiction) that would cause the application of laws
of any jurisdictions other than those of the State of Delaware.
9.11 AMENDMENTS AND WAIVERS. The Parties may mutually amend any
provision of this Agreement at any time prior to the Effective Time; PROVIDED,
HOWEVER, that any amendment effected subsequent to the Requisite Stockholder
Approval shall be subject to any restrictions contained in the Delaware General
Corporation Law. No amendment of any provision of this Agreement shall be valid
unless the same shall be in writing and signed by all of the Parties. No waiver
of any right or remedy hereunder shall be valid unless the same shall be in
writing and signed by the Party giving such waiver. No waiver by any Party with
respect to any default, misrepresentation or breach of warranty or covenant
hereunder shall be deemed to extend to any prior or subsequent default,
misrepresentation or breach of warranty or covenant hereunder or affect in any
way any rights arising by virtue of any prior or subsequent such occurrence.
9.12 SEVERABILITY. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction. If the final judgment of a court of
competent jurisdiction declares that any term or provision hereof is invalid or
unenforceable, the Parties agree that the court making the determination of
invalidity or unenforceability shall have the power to limit the term or
provision, to delete specific words or phrases, or to replace any invalid or
unenforceable term or provision with a term or provision that is valid and
enforceable and that comes closest to expressing the intention of the invalid or
unenforceable term or provision, and this Agreement shall be enforceable as so
modified.
9.13 SUBMISSION TO JURISDICTION. Each of the Parties (a) submits to the
jurisdiction of any state or federal court sitting in the State of Delaware in
any action or proceeding arising out of or relating to this Agreement, (b)
agrees that all claims in respect of such action or proceeding may be heard and
determined in any such court, and (c) agrees not to bring any action or
proceeding arising out of or relating to this Agreement in any other court. Each
of the Parties waives any defense of inconvenient forum to the maintenance of
any action or proceeding so
-43-
brought and waives any bond, surety or other security that might be required of
any other Party with respect thereto. Any Party may make service on another
Party by sending or delivering a copy of the process to the Party to be served
at the address and in the manner provided for the giving of notices in Section
9.7. Nothing in this Section 9.13, however, shall affect the right of any Party
to serve legal process in any other manner permitted by law.
9.14 CONSTRUCTION.
(a) The language used in this Agreement shall be deemed to be the
language chosen by the Parties to express their mutual intent, and no rule of
strict construction shall be applied against any Party.
(b) Any reference to any federal, state, local or foreign statute
or law shall be deemed also to refer to all rules and regulations promulgated
thereunder, unless the context requires otherwise.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the Parties have executed this Agreement and Plan
of Merger as of the date first above written.
BUYER:
EXE TECHNOLOGIES, INC.
By: /s/ Xxxxxxx X. Xxxx
--------------------------------------
Name: Xxxxxxx X. Xxxx
Title: President and Chief Executive
Officer
TRANSITORY SUBSIDIARY:
ALMOND ACQUISITION CORP.
By: /s/ Xxxxxxx X. Xxxx
--------------------------------------
Name: Xxxxxxx X. Xxxx
Title: President and Chief Executive
Officer
COMPANY:
ALLPOINTS SYSTEMS, INC.
By: /s/ Xxxxx X. House, Sr.
--------------------------------------
Name: Xxxxx X. House, Sr.
Title: President and Chief Executive
Officer
The following stockholders of the Company hereby execute this Agreement
for the limited purpose of agreeing to and becoming bound by the provisions of
Section 4.3(e).
COMPANY STOCKHOLDERS:
/s/ Xxxxx X. Xxxxx
------------------------------------------
Xxxxx X. Xxxxx
/s/ Xxxxx X. House, Sr.
------------------------------------------
Xxxxx X. House, Sr.
/s/ Xxxxxxx Xxxxxxx
------------------------------------------
Xxxxxxx Xxxxxxx
/s/ Xxxxxxx X. Xxxxxx
------------------------------------------
Xxxxxxx X. Xxxxxx
/s/ Xxxxx Xxxxx
------------------------------------------
Xxxxx Xxxxx
/s/ Xxxx Xxxxxxxxxx
------------------------------------------
Xxxx Xxxxxxxxxx
/s/ Xxxxxxx Xxxxxxxx
-------------------------------------------
Xxxxxxx Xxxxxxxx
The undersigned, being the duly elected Secretary or Assistant
Secretary of the Transitory Subsidiary, hereby certifies that this Agreement has
been adopted by a majority of the votes represented by the outstanding shares of
capital stock of the Transitory Subsidiary entitled to vote on this Agreement.
By: /s/ Xxxxxxxxxxx X. Xxxxxx
---------------------------------------
SECRETARY
The undersigned, being the duly elected Secretary of the Company,
hereby certifies that this Agreement has been adopted by a majority of the votes
represented by the outstanding Company Shares entitled to vote on this
Agreement.
By: /s/ Xxxxx X. Xxxxxx
--------------------------------------
SECRETARY
[The following schedules and exhibits to this Agreement and Plan of Merger have
been omitted and will be provided to the Commission upon request to the Company:
Company Disclosure Schedule
Exhibit A Form of Escrow Agreement
Exhibit B Form of Registration Rights Agreement
Exhibit C Form of Investment Representation Letter
Exhibit D Form of Opinion of Counsel to the Company
Exhibit E Supplemental Employment Terms
Exhibit F Form of Employee Confidentiality Agreement
Exhibit G Form of Lock-Up Agreement
Exhibit H Form of Opinion of Counsel to the Buyer and the
Transitory Subsidiary]