EXHIBIT 2.1
EXECUTION COPY
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AGREEMENT AND PLAN OF MERGER
by and among
VALUECLICK, INC.,
BRAVO ACQUISITION I CORP.
and
BE FREE, INC.
Dated as of
March 10, 2002
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TABLE OF CONTENTS
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ARTICLE 1 DEFINITIONS AND INTERPRETATION..................................................... 1
Section 1.1 Definitions............................................................. 1
Section 1.2 Interpretation..........................................................10
ARTICLE 2 THE MERGER.........................................................................11
Section 2.1 The Merger..............................................................11
Section 2.2 Effective Time..........................................................11
Section 2.3 Effects of the Merger...................................................11
Section 2.4 Certificate of Incorporation and Bylaws of the Surviving Corporation....11
Section 2.5 Directors and Officers of the Surviving Corporation.....................11
Section 2.6 Closing.................................................................12
ARTICLE 3 EFFECTS OF THE MERGER ON CAPITAL STOCK; EXCHANGE OF
CERTIFICATES.................................................................................12
Section 3.1 Effect on Company Capital Stock.........................................12
Section 3.2 Conversion of Merger Sub Capital Stock..................................12
Section 3.3 Cancellation of Treasury Stock and Parent-Owned Stock...................13
Section 3.4 Exchange of Company Certificates........................................13
Section 3.5 No Fractional Shares....................................................14
Section 3.6 Termination of Exchange Fund............................................14
Section 3.7 Certain Adjustments.....................................................15
Section 3.8 Company Options and Restricted Stock....................................15
Section 3.9 Lost, Stolen or Destroyed Company Certificates..........................17
Section 3.10 Withholding Rights......................................................17
Section 3.11 Taking of Necessary Action; Further Action..............................17
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE COMPANY......................................18
Section 4.1 Organization; Qualification.............................................18
Section 4.2 Subsidiaries and Affiliates.............................................18
Section 4.3 Capitalization..........................................................19
Section 4.4 Authorization, Validity of Agreement, Company Action....................20
Section 4.5 Board Approvals Regarding Transactions..................................21
Section 4.6 Vote Required...........................................................21
Section 4.7 No Violations...........................................................21
Section 4.8 Consents and Approvals..................................................21
Section 4.9 Reports and Company Financial Statements................................22
Section 4.10 Books and Records.......................................................22
Section 4.11 No Undisclosed Liabilities..............................................23
Section 4.12 Absence of Certain Changes..............................................23
Section 4.13 Litigation..............................................................23
Section 4.14 Employee Benefit Plans..................................................23
Section 4.15 Tax Matters.............................................................26
Section 4.16 Intellectual Property...................................................27
Section 4.17 Employment Matters......................................................29
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Section 4.18 Compliance with Laws....................................................30
Section 4.19 Contracts and Commitments...............................................30
Section 4.20 Customers and Suppliers.................................................31
Section 4.21 Information Supplied....................................................31
Section 4.22 Opinion of Financial Advisor............................................32
Section 4.23 Rights Agreement........................................................32
Section 4.24 Absence of Questionable Payments........................................32
Section 4.25 Insider Interests.......................................................32
Section 4.26 Brokers or Finders......................................................33
Section 4.27 Insurance...............................................................33
Section 4.28 Properties..............................................................33
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF Parent AND Merger Sub............................34
Section 5.1 Organization; Qualification.............................................34
Section 5.2 Subsidiaries and Affiliates.............................................34
Section 5.3 Capitalization..........................................................35
Section 5.4 Authorization, Validity of Agreement, Parent Action.....................36
Section 5.5 Board Approvals Regarding Transactions..................................36
Section 5.6 Vote Required...........................................................37
Section 5.7 No Violations...........................................................37
Section 5.8 Consents and Approvals..................................................37
Section 5.9 Reports and Parent Financial Statements.................................38
Section 5.10 Books and Records.......................................................38
Section 5.11 No Undisclosed Liabilities..............................................39
Section 5.12 Absence of Certain Changes..............................................39
Section 5.13 Litigation..............................................................39
Section 5.14 Employee Benefit Plans..................................................39
Section 5.15 Tax Matters.............................................................41
Section 5.16 Intellectual Property...................................................43
Section 5.17 Employment Matters......................................................44
Section 5.18 Compliance with Laws....................................................45
Section 5.19 Contracts and Commitments...............................................46
Section 5.20 Customers and Suppliers.................................................46
Section 5.21 Information Supplied....................................................47
Section 5.22 Opinion of Financial Advisor............................................47
Section 5.23 Absence of Questionable Payments........................................47
Section 5.24 Insider Interests.......................................................47
Section 5.25 Brokers or Finders......................................................48
Section 5.26 Insurance...............................................................48
Section 5.27 Properties..............................................................48
ARTICLE 6 COVENANTS..........................................................................49
Section 6.1 Interim Operations of the Company.......................................49
Section 6.2 Interim Operations of Parent and Merger Sub.............................52
Section 6.3 Access; Confidentiality.................................................55
Section 6.4 Reasonable Efforts......................................................55
Section 6.5 No Solicitation of Company Competing Transaction........................57
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Section 6.6 No Solicitation of Parent Competing Transaction.........................59
Section 6.7 Publicity...............................................................61
Section 6.8 Notification of Certain Matters.........................................61
Section 6.9 Parent Board of Directors...............................................61
Section 6.10 Exemption from Liability Under Section 16(b)............................61
Section 6.11 Directors' and Officers' Insurance and Indemnification..................62
Section 6.12 State Takeover Laws.....................................................63
Section 6.13 Preparation of the Registration Statement and the Proxy
Statement/Prospectus; Stockholders' Meetings............................63
Section 6.14 Nasdaq National Market Quotations.......................................66
Section 6.15 Tax Treatment...........................................................66
Section 6.16 Affiliate Legends.......................................................67
Section 6.17 Conveyance Taxes........................................................67
Section 6.18 Nasdaq National Market Additional Listing...............................67
ARTICLE 7 CONDITIONS.........................................................................67
Section 7.1 Conditions to Each Party's Obligation to Effect the Merger..............67
Section 7.2 Conditions to Paren's and Merger Sub's Obligations to
Effect the Merger.......................................................68
Section 7.3 Conditions to the Company's Obligations to Effect the Merger............69
ARTICLE 8 TERMINATION........................................................................70
Section 8.1 Termination.............................................................70
Section 8.2 Effect of Termination...................................................71
Section 8.3 Method of Termination...................................................71
ARTICLE 9 MISCELLANEOUS......................................................................72
Section 9.1 Fees and Expenses.......................................................72
Section 9.2 Amendment and Modification..............................................73
Section 9.3 Non-survival of Representations and Warranties..........................73
Section 9.4 Notices.................................................................73
Section 9.5 Counterparts............................................................74
Section 9.6 Entire Agreement; No Third-Party Beneficiaries..........................74
Section 9.7 Severability............................................................74
Section 9.8 Governing Law...........................................................75
Section 9.9 Enforcement.............................................................75
Section 9.10 Extension, Waiver.......................................................75
Section 9.11 Assignment..............................................................76
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of March 10, 2002 (this
"Agreement"), by and among ValueClick, Inc., a Delaware corporation ("Parent"),
Bravo Acquisition I Corp., a Delaware corporation and a direct wholly-owned
subsidiary of Parent ("Merger Sub"), and Be Free, Inc., a Delaware corporation
(the "Company"). Capitalized terms used and not otherwise defined herein have
the meanings set forth in Article 1.
WHEREAS, the boards of directors of each of Parent, Merger Sub and the
Company have determined that it is advisable and in the best interests of their
respective corporations and stockholders to enter into a business combination
by means of the merger of Merger Sub with and into the Company and have
approved and adopted the Merger, this Agreement and the transactions
contemplated hereby;
WHEREAS, as a condition and inducement to each party's entering into this
Agreement, each of the Company Major Stockholders and Parent Major
Stockholders, concurrently with the execution and delivery of this Agreement,
is entering into a Voting Agreement; and
WHEREAS, for United States federal income tax purposes, it is intended
that the Merger shall qualify as a tax-free reorganization within the meaning
of Section 368(a) of the Code and that this Agreement shall be, and hereby is,
adopted as a plan of reorganization within the meaning of Section 368(a) of the
Code.
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties and covenants in this Agreement, the parties
hereto, intending to be legally bound, agree as follows:
ARTICLE 1
DEFINITIONS AND INTERPRETATION
Section 1.1 Definitions. For all purposes of this Agreement, except
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as otherwise expressly provided or unless the context clearly requires
otherwise:
"Affiliate" has the meaning set forth in Rule l2b-2 of the Exchange Act.
"Balance Sheet" means the most recent consolidated balance sheet of the
Company or the Parent, as the case may be, and its respective Subsidiaries
included in the Financial Statements.
"Balance Sheet Date" means the date of the Balance Sheet.
"Benefit Plan" means any employee benefit fund, plan, program, arrangement
or contract (including any "pension" plan, fund or program, as defined in
Section 3(2) of ERISA, and any "employee benefit plan," as defined in Section
3(3) of ERISA and any plan, program, arrangement or contract providing for
severance; medical, dental or vision benefits; life insurance or death
benefits; disability benefits, sick pay or other wage replacement; vacation,
holiday or sabbatical; pension or profit-sharing benefits; stock options or
other equity compensation; bonus or incentive pay or other material fringe
benefits), whether written or not.
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"Business Day" means any day other than a Saturday, a Sunday or a day on
which commercial banks in The City of New York are authorized or obligated by
law, rule or regulation to be closed.
"Certificate of Merger" means a certificate of merger to be reasonably
agreed upon by Parent, Merger Sub, and the Company and filed with the Secretary
of State of the State of Delaware as provided in the DGCL, pursuant to Section
2.2.
"Change in Company Recommendation" means any of the actions referred to in
Section 6.5(b).
"Change in Parent Recommendation" means any of the actions referred to in
Section 6.6(b).
"Closing" means the closing referred to in Section 2.6.
"Closing Date" means the date and time at which the Closing occurs.
"Code" means the Internal Revenue Code of 1986, as amended, and the rules
and regulations promulgated thereunder.
"Company Agreement" means any material note, bond, mortgage, indenture,
lease, license, contract, agreement or other instrument or obligation to which
the Company or any Company Subsidiary is a party or by which any of them or any
of their properties or assets may be bound.
"Company Benefit Plan" means any Benefit Plan maintained, sponsored or
contributed to or required to be contributed to by the Company or any Company
ERISA Affiliate.
"Company Certificate" means a certificate representing, immediately prior
to the Effective Time, one or more shares of Company Common Stock.
"Company Common Stock" means the common stock, par value $0.01 per share,
of the Company.
"Company Competing Transaction" means any of the following (other than the
Merger): (a) any merger, consolidation, share exchange, business combination or
other similar transaction involving the Company or any Company Subsidiary after
which the stockholders of the Company will control less than eighty-five
percent of the voting power of the surviving entity; (b) any sale, lease,
exchange, license, transfer or other disposition of fifteen percent or more of
the assets (other than sales of inventory and non-exclusive licenses to
customers in the ordinary course of business consistent with past practices) of
the Company or any Company Subsidiary, in a single transaction or a series of
transactions; (c) any tender offer or exchange offer for fifteen percent or
more of the outstanding voting securities of the Company or any Company
Subsidiary or the filing of a registration statement under the Securities Act
in connection therewith; (d) any Person having acquired beneficial ownership or
the right to acquire beneficial ownership of, or any "group" (as such term is
defined under Section 13(d) of the Exchange Act) having been formed which
beneficially owns or has the right to acquire beneficial ownership of,
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fifteen percent or more of the outstanding voting securities of the Company or
any Company Subsidiary; (e) any solicitation in opposition to the adoption of
this Agreement by the stockholders of the Company; or (f) any public
announcement of a proposal, plan or intention to do any of the foregoing or any
agreement to engage in any of the foregoing.
"Company Disclosure Letter" means the disclosure letter, dated as of the
date of this Agreement, delivered by the Company to Parent concurrently with
the execution of this Agreement and forming a part hereof.
"Company ERISA Affiliate" means the Company, any Company Subsidiary and
any other trade or business (whether or not incorporated) that is or was under
"common control" with the Company or any Company Subsidiary (within the meaning
of ERISA Section 4001) or with respect to which the Company or any Company
Subsidiary could otherwise incur liability under Title IV of ERISA.
"Company ESPP" shall mean the Company's 1999 Employee Stock Purchase Plan.
"Company Expenses" means an amount equal to the actual and reasonably
documented out-of-pocket fees and expenses incurred by the Company in
connection with the Merger, this Agreement and the consummation of the
Transactions (provided that such reimbursable out-of-pocket fees and expenses
shall not exceed one-fourth of the Termination Fee).
"Company Financial Advisor" has the meaning ascribed to it in Section 4.22.
"Company Financial Statements" means each of (a) the audited consolidated
financial statements and unaudited condensed consolidated interim financial
statements of the Company (including any related notes and schedules) included
(or incorporated by reference) in the Company SEC Documents and (b) the interim
consolidated financial statements of the Company as of and through the period
ended November 30, 2001.
"Company Insiders" shall mean those officers and directors of the Company
who are subject to short-swing profits liability provisions of Section 16(b) of
the Exchange Act as listed in the Section 16 Information.
"Company Intellectual Property" means all Intellectual Property that (a)
is owned by the Company; (b) is licensed to the Company; (c) was developed or
created by or for the Company; or (d) is currently used, or currently proposed
or planned to be used, in the Company's business or the business of any Company
Subsidiary.
"Company Major Stockholders" means the Persons listed on Schedule 1.1 to
this Agreement.
"Company Option" means an option or warrant to purchase shares of Company
Common Stock (other than pursuant to the Company ESPP) which has been granted
by the Company.
"Company Preferred Stock" means the preferred stock, par value $0.01, of
the Company.
"Company Rights" has the meaning ascribed to it in Section 4.3.
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"Company Rights Plan" has the meaning ascribed to it in Section 4.3.
"Company Rights Plan Amendment" has the meaning ascribed to it in Section
4.23.
"Company SEC Documents" means each form, report, schedule, statement and
other document required to be filed by the Company since November 3, 1999
(including those that the Company may file after the date hereof until the
Closing) under the Exchange Act or the Securities Act or by the rules and
regulations of the NNM, including any financial statements or schedules
included therein or incorporated by reference, and any amendment to such
document, whether or not such amendment is required to be so filed.
"Company Stock Plans" means the 1998 Stock Incentive Plan and the TriVida
Corporation 1998 Equity Incentive Plan.
"Company Stockholder Approval" has the meaning ascribed to it in Section
4.6.
"Company Subsidiary" means each Person which is a Subsidiary of the
Company.
"Company Superior Proposal" means an unsolicited proposal in connection
with a Company Competing Transaction (but changing the fifteen percent amount
in clauses (b) and (c) of the definition of Company Competing Transaction to
fifty percent) not resulting from, arising out of or otherwise by virtue of any
breach of Section 6.5(a), which satisfies both Section 6.5(a)(ii)(A) and
Section 6.5(a)(ii)(B).
"Company's knowledge" means the knowledge that the directors and officers
of the Company and any Company Subsidiaries and the employees of the Company
and any Company Subsidiary having responsibility for the particular subject
matter at issue have or would possess after reasonable investigation and
inquiry.
"Confidentiality Agreement" means the confidentiality agreement, dated
December 6, 2001, between the Company and Parent.
"DGCL" means the General Corporation Law of the State of Delaware.
"Effective Time" means the date and time at which the Certificate of
Merger is duly filed with the Secretary of State of the State of Delaware or
such other date and time as is agreed upon by the parties and specified in the
Certificate of Merger.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations promulgated thereunder.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Agent" means the bank or trust company designated by Parent to
act as exchange agent for the holders of the shares of Company Common Stock
pursuant to Section 3.4(a).
"Exchange Fund" shall have the meaning set forth in Section 3.4.
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"Exchange Ratio" has the meaning ascribed to it in Section 3.1.
"GAAP" means generally accepted accounting principles in the United States
as in effect from time to time.
"Governmental Entity" means a court, arbitral tribunal, administrative
agency or commission or other governmental or regulatory authority or agency or
any Person exercising the authority of any of the foregoing.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976.
"Indemnified Party" means each present and former officer and director of
the Company or any Company Subsidiary, and each Person who becomes any of the
foregoing prior to the Effective Time.
"Intellectual Property" means all trademarks and trademark rights, trade
names and trade name rights, service marks and service xxxx rights, service
names and service name rights, patents and patent rights, utility models and
utility model rights, copyrights, mask work rights, brand names, trade dress,
product designs, product packaging, business and product names, logos, slogans,
rights of publicity, trade secrets, inventions (whether patentable or not),
invention disclosures, improvements, processes, formulae, industrial models,
processes, designs, specifications, technology, methodologies, computer
software (including all source code and object code), firmware, development
tools, flow charts, annotations, all Web addresses, sites and domain names, all
data bases and data collections and all rights therein, any other confidential
and proprietary right or information, whether or not subject to statutory
registration, and all related technical information, manufacturing, engineering
and technical drawings, know-how and all pending applications for and
registrations of patents, utility models, trademarks, service marks and
copyrights, and the right to xxx for patent infringement, if any, in connection
with any of the foregoing, and all documents, disks, records, files and other
media on which any of the foregoing is stored.
"IRS" means the United States Internal Revenue Service or any successor
agency performing similar functions under the Code.
"Law" means any law, statute, order, decree, consent decree, judgment,
rule, regulation, ordinance or other pronouncement having the effect of law
whether in the United States, any foreign country, or any domestic or foreign
state, county, city or other political subdivision or of any Governmental
Entity.
"Licenses" means all licenses and agreements pursuant to which the Company
or any Company Subsidiary, or Parent or Parent Subsidiary, as the case may be,
has acquired rights in or to any Intellectual Property, or licenses and
agreements pursuant to which the Company or any Company Subsidiary has licensed
or transferred the right to use any of the foregoing (including, any covenants
not to xxx with respect to any Intellectual Property).
"Lien" means any mortgage, pledge, assessment, security interest, lease,
lien, easement, license, covenant, condition, restriction, adverse claim, levy,
charge, option, equity, adverse claim or restriction or other encumbrance of
any kind, or any conditional sale contract, title
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retention contract or other contract to give any of the foregoing, except for
any restrictions on transfer generally arising under any applicable federal or
state securities Law.
"Material Adverse Effect" means a material adverse effect on or
development with respect to (a) the business, prospects, condition (financial
or otherwise), assets or results of operations of a Person and its
Subsidiaries, taken as a whole, or (b) the ability of such Person to timely
consummate any of the Transactions, but shall not in any event include a
material adverse effect or development arising out of, related to or otherwise
by virtue of (i) changes in the economy generally, (ii) changes in the market
price of such Person's securities in the capital markets, (iii) changes in the
online advertising business generally, (iv) changes, effects, or circumstances
arising out of, or resulting from, the actions contemplated by the parties in
connection with this Agreement or the pendancy or announcement of the
Transaction, or (v) continued incurrence of losses in the ordinary course of
business of such Person.
"Merger" means the merger of Merger Sub into the Company referred to in
Section 2.1.
"Merger Sub Common Stock" means common stock, par value $0.001 per share,
of Merger Sub.
"NNM" means the distinct tier of the Nasdaq Stock Market referred to as
the Nasdaq National Market.
"Parent Agreement" means any material note, bond, mortgage, indenture,
lease, license, contract, agreement or other instrument or obligation to which
the Parent or any Parent Subsidiary is a party or by which any of them or any
of their properties or assets may be bound.
"Parent Benefit Plan" means any Benefit Plan maintained, sponsored or
contributed to or required to be contributed to by Parent or any Parent ERISA
Affiliate.
"Parent Common Stock" means shares of common stock, par value $0.001 per
share, of Parent.
"Parent Competing Transaction" means any of the following (other than the
Merger): (a) any merger, consolidation, share exchange, business combination or
other similar transaction involving Parent or any Parent Subsidiary after which
the stockholders of Parent will control less than fifty-five percent of the
voting power of the surviving entity; (b) any sale, lease, exchange, license,
transfer or other disposition of forty-five percent or more of the assets
(other than sales of inventory and non-exclusive licenses to customers in the
ordinary course of business consistent with past practices) of Parent or any
Parent Subsidiary, in a single transaction or a series of transactions; (c) any
tender offer or exchange offer for forty-five percent or more of the
outstanding voting securities of Parent or any Parent Subsidiary or the filing
of a registration statement under the Securities Act in connection therewith;
(d) any Person having acquired beneficial ownership or the right to acquire
beneficial ownership of, or any "group" (as such term is defined under Section
13(d) of the Exchange Act) having been formed which beneficially owns or has
the right to acquire beneficial ownership of, forty-five percent or more of the
outstanding voting securities of Parent or any Parent Subsidiary; (e) any
solicitation in opposition to the adoption of this Agreement by the
stockholders of Parent; or (f) any public
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announcement of a proposal, plan or intention to do any of the foregoing or any
agreement to engage in any of the foregoing.
"Parent Disclosure Letter" means the disclosure letter, dated as of the
date of this Agreement, delivered by Parent to the Company concurrently with
the execution of this Agreement and forming a part hereof.
"Parent ERISA Affiliate" means Parent, any Parent Subsidiary and any other
trade or business (whether or not incorporated) that is or was under "common
control" with Parent or any Parent Subsidiary (within the meaning of ERISA
Section 4001) or with respect to which Parent or any Parent Subsidiary could
otherwise incur liability under Title IV of ERISA
"Parent Expenses" means an amount equal to the actual and reasonably
documented out-of-pocket fees and expenses incurred by Parent or Merger Sub in
connection with the Merger, this Agreement and the consummation of the
Transactions (provided that such reimbursable out-of-pocket fees and expenses
shall not exceed one-fourth of the Termination Fee).
"Parent Financial Advisor" has the meaning ascribed to it in Section 5.22.
"Parent Financial Statements" means each of (a) the audited consolidated
financial statements and unaudited condensed consolidated interim financial
statements of Parent (including any related notes and schedules) included (or
incorporated by reference) in Parent SEC Documents and (b) the interim
consolidated financial statements of Parent as of and through the period ended
November 30, 2001.
"Parent Intellectual Property" means all Intellectual Property that (a) is
owned by Parent; (b) is licensed to Parent; (c) was developed or created by or
for Parent; or (d) is currently used, or currently proposed or planned to be
used, in Parent's business or the business of any Parent Subsidiary.
"Parent Major Stockholder" means the Persons listed on Schedule 1.2 to
this Agreement.
"Parent Option" means an option or warrant to purchase shares of Parent
Common Stock.
"Parent Preferred Stock" means the preferred stock, par value $0.001 per
share, of Parent.
"Parent SEC Documents" means each form, report, schedule, statement and
other document required to be filed by Parent since March 31, 2000 (including
those that Parent may file after the date hereof until the Closing) under the
Exchange Act or the Securities Act or by the rules and regulations of the NNM,
including any financial statements or schedules included therein or
incorporated by reference, and any amendment to such document, whether or not
such amendment is required to be so filed.
"Parent Stock Price" means the closing price for a share of Parent Common
Stock as quoted on the NNM on the day during which the Effective Time occurs.
"Parent Stockholder Approval" has the meaning ascribed to it in Section
5.6.
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"Parent Subsidiary" means each Person which is a Subsidiary of the Parent.
"Parent Superior Proposal" means an unsolicited proposal in connection
with a Parent Competing Transaction not resulting from, arising out of or
otherwise by virtue of any breach of Section 6.6(a), which satisfies both
Section 6.6(a)(ii)(A) and Section 6.6(a)(ii)(B).
"Parent's knowledge" means the knowledge that the directors and officers
of Parent and any Parent Subsidiaries and the employees of Parent and any
Parent Subsidiary having responsibility for the particular subject matter at
issue have or would possess after reasonable investigation and inquiry.
"Person" means a natural person, partnership (general or limited),
corporation, limited liability company, business trust, joint stock company,
trust, unincorporated association, joint venture, Governmental Entity or other
entity or organization.
"Product" means any product designed, manufactured, shipped, sold,
marketed, distributed and/or otherwise introduced into the stream of commerce
by or on behalf of any Person, including any product sold in the United States
by any Person as the distributor, agent, or pursuant to any other contractual
relationship with a non-U.S. manufacturer.
"Proxy Statement/Prospectus" means the proxy statement to be filed by the
Company and Parent with the SEC pursuant to Section 6.13, together with all
amendments and supplements thereto and including the annexes thereto.
"Purchase Rights" means rights to purchase shares of Company Common Stock
under the Company ESPP.
"Qualifying Amendment" means an amendment or supplement to the Proxy
Statement/Prospectus or Registration Statement (including by incorporation by
reference) to the extent it contains (a) a change in the recommendation of the
board of directors of the Company or Parent as a result of such board of
directors concluding that a Company Superior Proposal or Parent Superior
Proposal, as the case may be, has been made, (b) a statement of the reasons of
such board of directors for making such change in its recommendation and (c)
additional information reasonably related to the foregoing.
"Registration Statement" means the registration statement on Form S-4 or
other appropriate registration form to be filed with the SEC by Parent in
connection with the offer and issuance of Parent Common Stock in or as a result
of the Merger.
"Restricted Stock" means Company Common Stock or Parent Common Stock as
applicable, that is restricted or that is otherwise subject to a repurchase or
redemption right or right of first refusal in favor of the Company or Parent,
as applicable.
"Rule 145 Affiliate" has the meaning ascribed to it in Section 6.16.
"Rule 145 Affiliate Agreement" has the meaning ascribed to it in Section
6.16.
"SEC" means the United States Securities and Exchange Commission.
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"Section 16 Information" means information regarding Company Insiders and
the number of shares of Company Common Stock or other Company equity securities
deemed to be beneficially owned by each such Company Insider and expected to be
exchanged for Parent Common Stock, or Parent Options, in each case, in
connection with the Merger which shall be provided by the Company to Parent
within ten Business Days prior to the Effective Time.
"Securities Act" means the Securities Act of 1933, as amended.
"Severance Agreements" means employment and severance agreements and
arrangements, as amended through the date of this Agreement, with respect to
employees and former employees of the Company or any Company Subsidiary or
Parent or any Parent Subsidiary, as the case may be.
"Subsidiary" means, with respect to any Person, any corporation or other
organization, whether incorporated or unincorporated, of which (a) at least a
majority of the securities or other interests having by their terms ordinary
voting power to elect a majority of the board of directors or others performing
similar functions with respect to such corporation or other organization is,
directly or indirectly, owned or controlled by such Person or by any one or
more of its Subsidiaries, or (b) such Person or any other Subsidiary of such
Person is a general partner (excluding any such partnership where such Person
or any Subsidiary of such Person does not have a majority of the voting
interest in such partnership).
"Surviving Corporation" has the meaning ascribed to it in Section 2.1.
"Tax" or "Taxes" means (a) any and all taxes, fees, levies, tariffs,
imposts and other charges of any kind (together with any and all interest,
penalties, additions to tax and additional amounts imposed with respect
thereto) imposed by any Governmental Entity or taxing authority, including,
without limitation, income, franchise, windfall or other profits, gross
receipts, excise, real property, personal property, assets, transfer,
withholding, unemployment insurance, license, lease, service, service use,
severance, occupation, premium, sales, use, capital stock, payroll, employment,
social security, workers' compensation, unemployment compensation or net worth
taxes; taxes or other charges in the nature of excise, withholding, ad valorem,
stamp, transfer, value-added or gains taxes; license, registration and
documentation fees; and customs duties, tariffs and similar charges; (b) any
liability for the payment of any amounts of the type described in (a) as a
result of being a member of an affiliated, combined, consolidated, unitary or
aggregate group for any taxable period; and (c) any liability for the payment
of amounts of the type described in (a) or (b) as a result of being a
transferee of, or a successor in interest to, any Person or as a result of an
express or implied obligation to indemnify any person.
"Tax Return" means any return, statement, report or form (including, any
estimated tax report or return, withholding tax report or return and
information report or return) required to be filed with respect to any Taxes.
"Termination Fee" means $5,133,126 to be paid as set forth in Section 9.1.
"Transactions" means the transactions provided for or contemplated by this
Agreement and the Voting Agreements, including the Merger.
9
"Voting Agreement" means each of (a) the agreements, dated as of the date
of this Agreement, between a Company Major Stockholder and Parent, pursuant to
which such Company Major Stockholder has agreed, among other things, to grant
Parent a proxy with respect to the voting of Company Common Stock held by such
Company Major Stockholder, and (b) the agreements, dated as of the date of this
Agreement, between a Parent Major Stockholder and the Company pursuant to which
such Parent Major Stockholder has agreed, among other things, to grant the
Company a proxy with respect to the voting of Parent Common Stock held by such
Parent Major Stockholder, both upon the terms and subject to the conditions set
forth therein.
"Voting Debt" means indebtedness having general voting rights and debt
convertible into securities having such rights.
"WARN Act" means the Worker Adjustment and Retaining Notification Act of
1988.
Section 1.2 Interpretation.
(a) When a reference is made in this Agreement to a section or article,
such reference shall be to a section or article of this Agreement unless
otherwise clearly indicated to the contrary.
(b) Whenever the words "include," "includes" or "including" are used in
this Agreement they shall be deemed to be followed by the words "without
limitation."
(c) The words "hereof," "herein" and "herewith" and words of similar
import shall, unless otherwise stated, be construed to refer to this Agreement
as a whole and not to any particular provision of this Agreement, and article,
section, paragraph, exhibit and schedule references are to the articles,
sections, paragraphs, exhibits and schedules of this Agreement unless otherwise
specified.
(d) The plural of any defined term shall have a meaning correlative to
such defined term, and words denoting any gender shall include all genders and
the neuter. Where a word or phrase is defined herein, each of its other
grammatical forms shall have a corresponding meaning.
(e) A reference to any party to this Agreement or any other agreement or
document shall include such party's successors and permitted assigns.
(f) A reference to any legislation or to any provision of any legislation
shall include any modification, amendment or re-enactment thereof, any
legislative provision substituted therefor and all rules, regulations and
statutory instruments issued under or related to such legislation.
(g) The parties have participated jointly in the negotiation and drafting
of this Agreement. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the parties, and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any provisions of this
Agreement.
10
(h) No prior draft of this Agreement nor any course of performance or
course of dealing shall be used in the interpretation or construction of this
Agreement.
ARTICLE 2
THE MERGER
Section 2.1 The Merger. Subject to the satisfaction or waiver of all
----------
of the conditions set forth in this Agreement and in accordance with the DGCL,
at the Effective Time, Merger Sub shall merge with and into the Company. As of
the Effective Time, the separate corporate existence of Merger Sub shall cease
and the Company shall continue as the surviving corporation (sometimes referred
to as the "Surviving Corporation") in the Merger as a wholly-owned Subsidiary
of Parent.
Section 2.2 Effective Time. Subject to the provisions of this
--------------
Agreement, at the Closing, the parties shall cause the Merger to be
consummated by filing with the Secretary of State of the State of Delaware the
Certificate of Merger and shall make all other filings or recordings required
under the DGCL. The Merger shall become effective at the Effective Time.
Section 2.3 Effects of the Merger. The Merger shall have the effects
---------------------
set forth in Section 259 of the DGCL. Without limiting the generality of the
foregoing, and subject thereto, at the Effective Time, all of the property,
rights, privileges, powers and franchises of each of the Company and Merger Sub
shall vest in the Surviving Corporation, and all debts, liabilities and duties
of each of the Company and Merger Sub shall become the debts, liabilities and
duties of the Surviving Corporation.
Section 2.4 Certificate of Incorporation and Bylaws of the Surviving
--------------------------------------------------------
Corporation. At the Effective Time, the certificate of incorporation of the
-----------
Company shall be amended and restated to be identical to the certificate of
incorporation of Merger Sub immediately prior to the Effective Time, and as so
amended, shall be the certificate of incorporation of the Surviving
Corporation, until thereafter amended in accordance with applicable law. At
the Effective Time, the bylaws of Merger Sub, as in effect immediately prior to
the Effective Time, shall be the bylaws of the Surviving Corporation, until
thereafter amended in accordance with applicable law.
Section 2.5 Directors and Officers of the Surviving Corporation. At
---------------------------------------------------
the Effective Time, the directors of Merger Sub immediately prior to the
Effective Time shall be the directors of the Surviving Corporation until their
successors are elected or appointed and qualified or until their earlier death,
resignation or removal in accordance with the certificate of incorporation and
the bylaws of the Surviving Corporation. At the Effective Time, Xxxxxx X.
Xxxxxxxxx, Xxxxxx X. Xxxxxx, Xx. and Xxxxxxx X. Xxxxxx shall be the Chief
Executive Officer, the Chief Technical Officer and Chief Financial Officer,
respectively of the Surviving Corporation until their earlier death,
resignation or removal in accordance with the certificate of incorporation and
the bylaws of the Surviving Corporation.
Section 2.6 Closing. The Closing of the Merger shall take place at
-------
10 a.m. (local time) on a date to be agreed upon by the parties, and if such
date is not agreed upon by the
11
parties, the Closing shall occur on the second Business Day after satisfaction
or waiver of all of the conditions set forth in Article 7, at the offices of
Xxxxxxx, Phleger & Xxxxxxxx, LLP, 000 Xxxxx Xxxx Xxxxxx, Xxx Xxxxxxx,
Xxxxxxxxxx 00000.
ARTICLE 3
EFFECTS OF THE MERGER ON
CAPITAL STOCK; EXCHANGE OF CERTIFICATES
Section 3.1 Effect on Company Capital Stock. As of the Effective
-------------------------------
Time by virtue of the Merger and without any action on the part of the holders
of any shares of Company Common Stock, each issued and outstanding share of
Company Common Stock (other than any shares of Company Common Stock to be
cancelled pursuant to Section 3.3) shall be converted into the right to receive
0.65882 (the "Exchange Ratio") fully paid and nonassessable shares of Parent
Common Stock. As of the Effective Time, all such shares of Company Common
Stock shall no longer be outstanding and shall automatically be cancelled and
retired and shall cease to exist. As of the Effective Time, each Company
Certificate, without any action on the part of Parent, the Company or the
holder of such share of Company Common Stock, shall be deemed to represent that
number of shares of Parent Common Stock determined by multiplying the shares of
Company Common Stock formerly represented by such Company Certificate by the
Exchange Ratio. Each holder of a Company Certificate shall cease to have any
rights with respect thereto, except the right to receive, upon the surrender of
any such Company Certificates, certificates representing the shares of Parent
Common Stock to be issued or paid in consideration therefor upon surrender of
such Company Certificate in accordance with Section 3.4 and cash in lieu of
fractional interests pursuant to Section 3.5.
Section 3.2 Conversion of Merger Sub Capital Stock. As of the
--------------------------------------
Effective Time, by virtue of the Merger and without any further action on the
part of the holder of shares of Merger Sub Common Stock, each issued and
outstanding share of Merger Sub Common Stock shall be converted into and become
one fully paid and nonassessable share of Common Stock, par value $0.01 per
share, of the Surviving Corporation.
Section 3.3 Cancellation of Treasury Stock and Parent-Owned Stock.
-----------------------------------------------------
Each share of Company Common Stock owned by the Company as treasury stock, any
Company Subsidiary, Parent, Merger Sub or any other wholly-owned Subsidiary of
Parent (other than shares in trust accounts, managed accounts, custodial
accounts and the like that are beneficially owned by third parties) shall be
cancelled and retired and shall cease to exist, and no consideration shall be
delivered in exchange therefor.
Section 3.4 Exchange of Company Certificates.
--------------------------------
(a) Parent shall designate the Exchange Agent to act as agent for the
holders of, and to receive in trust, the shares of Parent Common Stock and
funds to which holders of such shares shall become entitled pursuant to this
Article 3. At the Effective Time, Parent shall deposit, or cause to be
deposited, with the Exchange Agent for the benefit of holders of such shares
the
12
aggregate consideration to which such holders shall be entitled at the
Effective Time pursuant to Section 3.1 (the "Exchange Fund").
(b) As soon as reasonably practicable after the Effective Time (but in no
event later than seven days after the Effective Time), Parent shall cause the
Exchange Agent to mail to each holder of record of one or more Company
Certificates, (i) a letter of transmittal (which shall specify that delivery
shall be effected, and risk of loss and title to the Company Certificates shall
pass, only upon delivery of the Company Certificates to the Exchange Agent and
shall be in such form and have such other provisions not inconsistent with this
Agreement as Parent may reasonably specify) and (ii) instructions for effecting
the surrender of Company Certificates in exchange for certificates representing
shares of Parent Common Stock together with any dividends and other
distributions with respect thereto and any cash in lieu of fractional shares.
Upon surrender of a Company Certificate for cancellation to the Exchange Agent,
together with such letter of transmittal, duly executed and completed in
accordance with the instructions thereto, and such other documents as may be
reasonably required by the Exchange Agent, the holder of such Company
Certificate shall be entitled to receive in exchange therefor a certificate
representing that number of whole shares of Parent Common Stock (which shall be
credited in street name through Depository Trust Company unless a physical
certificate is specifically requested or is otherwise required by applicable
Law) and payment of cash in lieu of fractional shares which such holder has the
right to receive pursuant to this Article 3, and the Company Certificate so
surrendered shall be cancelled. If certificates representing shares of Parent
Common Stock are to be registered in the name of a Person or cash in lieu of
fractional shares to be paid to a Person other than the Person in whose name
the surrendered Company Certificate is registered, it shall be a condition to
the issuance of such certificates representing shares of Parent Common Stock
that the Company Certificate so surrendered shall be properly endorsed or shall
be otherwise in proper form for transfer and that the Person requesting such
payment shall have paid any transfer and other Taxes required by reason of the
issuance of certificates representing shares of Parent Common Stock to a Person
other than the registered holder of the Company Certificate surrendered or
shall have established to the satisfaction of Parent that such Tax either has
been paid or is not applicable.
(c) At the close of business on the day during which the Effective Time
occurs, the stock transfer books of the Company shall be closed, and thereafter
there shall be no further registration of transfers of shares of Company Common
Stock on the records of the Company.
(d) No dividends or other distributions with respect to Parent Common
Stock with a record date after the Effective Time shall be paid to the holder
of any unsurrendered Company Certificate with respect to the shares of Parent
Common Stock represented thereby, and no cash payment in lieu of fractional
shares shall be paid to any such holder pursuant to Section 3.5, until the
surrender of such Company Certificate in accordance with this Article 3.
Subject to the effect of applicable escheat or similar laws, following
surrender of any such Company Certificate, there shall be paid to the holder
thereof, without interest, (i) promptly after the time of such surrender, the
amount of any cash payable in lieu of fractional shares of Parent Common Stock
to which such holder is entitled pursuant to Section 3.5 and the amount of
dividends or other distributions with a record date after the Effective Time
theretofore paid with respect to such shares of Parent Common Stock, and (ii)
at the appropriate payment date, the amount of
13
dividends or other distributions with a record date after the Effective Time
and a payment date subsequent to such surrender payable with respect to such
shares of Parent Common Stock.
(e) All shares of Parent Common Stock issued upon the surrender for
exchange of Company Certificates in accordance with the terms of this Article 3
(including any cash paid pursuant to Section 3.4(d) or 3.5) shall be deemed to
have been issued and paid in full satisfaction of all rights pertaining to the
shares of Company Common Stock formerly represented by such Company
Certificates, subject, however, to the obligation of the Surviving Corporation,
if any, to pay any dividends or make any other distributions with a record date
prior to the Effective Time which may have been declared or made by the Company
on such shares of Company Common Stock in accordance with the terms of this
Agreement and which remain unpaid at the Effective Time. If, after the
Effective Time, Company Certificates are presented to the Surviving Corporation
or the Exchange Agent for any reason, they shall be canceled and exchanged as
provided in this Article 3, except as otherwise provided by Law.
Section 3.5 No Fractional Shares. No certificates representing
--------------------
fractional shares of Parent Common Stock shall be issued upon the surrender for
exchange of Company Certificates, and such fractional share interests shall not
entitle the owner thereof to vote or to any other rights of a stockholder of
Parent. Notwithstanding any other provision of this Agreement, each holder of
shares of Company Common Stock converted pursuant to Section 3.1 who would
otherwise have been entitled to receive a fraction of a share of Parent Common
Stock (after taking into account all Company Certificates delivered by such
holder) shall receive, in lieu thereof, cash (without interest) in an amount
equal to the product of (i) such fraction multiplied by (ii) the Parent Stock
Price.
Section 3.6 Termination of Exchange Fund. At any time following six
----------------------------
months after the Effective Time, Parent shall be entitled to require the
Exchange Agent to deliver to it any portion of the Exchange Fund which had been
made available to the Exchange Agent and which has not been disbursed to
holders of Company Certificates, and thereafter such holders shall be entitled
to look only to Parent (subject to abandoned property, escheat or other similar
laws) with respect to the shares of Parent Common Stock, cash in lieu of
fractional interests in a share of Parent Common Stock or any dividends or
distributions with respect to shares of Parent Common Stock payable upon due
surrender of their Company Certificates, without any interest thereon.
Notwithstanding the foregoing, neither Parent, the Surviving Corporation nor
the Exchange Agent shall be liable to any holder of a Company Certificate for
shares of Parent Common Stock, cash in lieu of fractional interests in a share
of Parent Common Stock or any dividends or distributions with respect to shares
of Parent Common Stock delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law. Any such shares, cash,
dividends or distributions in respect of such Company Certificate shall, to the
extent permitted by applicable law, become the property of Parent, free and
clear of all claims or interest of any Person previously entitled thereto. The
Exchange Agent shall invest any cash included in the Exchange Fund, as directed
by Parent, on a daily basis. Any interest and other income resulting from such
investments shall be paid to Parent, but any investment losses shall not reduce
the right of holders of shares to receive the consideration specified in this
Article 3.
Section 3.7 Certain Adjustments. If between the date hereof and the
-------------------
Effective Time, the outstanding shares of Company Common Stock or Parent Common
Stock shall be changed
14
into a different number of shares by reason of any reclassification,
recapitalization, split-up, combination or exchange of shares, or any dividend
payable in stock or other securities shall be declared thereon with a record
date within such period, the Exchange Ratio shall be adjusted accordingly to
provide to the holders of shares of Company Common Stock the same economic
effect as contemplated by this Agreement prior to such reclassification,
recapitalization, split-up, combination, exchange or dividend.
Section 3.8 Company Options and Restricted Stock.
------------------------------------
(a) As of the Effective Time, Parent shall assume each outstanding Company
Option, whether vested or unvested, together with all Company Stock Plans.
Each assumed Company Option shall continue to have, and be subject to, the same
terms and conditions set forth in the Company Stock Plan and the applicable
stock option agreement immediately prior to the Effective Time (giving effect
to the consummation of the Merger, as specified by such terms and conditions),
except that such assumed Company Option will be exercisable for that number of
shares of Parent Common Stock (rounded down to the nearest whole share) equal
to the product of (A) the number of shares of Company Common Stock subject to
such Company Option immediately prior to the Effective Time and (B) the
Exchange Ratio, at an exercise price per share (rounded up to the nearest whole
cent) equal to (y) the exercise price per share of Company Common Stock subject
to such Company Option divided by (z) the Exchange Ratio.
(b) The assumption of a Company Option by Parent shall not terminate or
modify (except as required hereunder) any right of first refusal, right of
repurchase, vesting schedule or other restriction on transferability relating
to a Company Option or the stock issuable upon the exercise thereof. Continuous
employment or service (in the case of a director or consultant) with the
Company or its Subsidiaries shall be credited to an optionee for purposes of
determining the number of shares subject to exercise, vesting or repurchase
after the Effective Time, and the provisions in the applicable Company Stock
Plan and stock option agreement evidencing the terms and conditions of any
Company Option relating to the exercisability of any Company Option upon
termination of an optionee's employment or service as a director shall not be
deemed triggered until such time as such optionee shall be neither an employee
or officer nor serving as a director of Parent or any Subsidiary of Parent.
After such assumption, Parent shall issue, upon any partial or total exercise
of any Company Option, in lieu of shares of Company Common Stock, the number of
shares of Parent Common Stock as described in Section 3.8(a). The assumption
by Parent of Company Options shall not give holders of such Company Options any
additional benefits which they did not have immediately prior to the Effective
Time and shall not create any or other agreement for or right to employment.
(c) The Company shall terminate the Company ESPP in accordance with its
terms, including without limitation, making all required notices and affording
all required opportunities to purchase shares of Common Stock to participants,
immediately prior to the Effective Time.
(d) Parent shall file with the SEC, as soon as reasonably practicable
following the Effective Time (but in no event later than seven days after the
Effective Time), a registration statement on Form S-8 (or any successor or
other appropriate forms), or another appropriate form (including a Form S-3
registration statement if required under applicable securities laws for
15
former employees of the Company who are not also former employees of Parent or
any Parent Subsidiary) with respect to the shares of Parent Common Stock
subject to assumed Company Options. The Company shall cooperate with Parent
with the preparation of such registration statement(s). Parent shall use
commercially reasonable efforts to maintain the effectiveness of such
registration statement or registration statements (and maintain the current
status of the prospectus or prospectuses contained therein) for so long as such
options remain outstanding.
(e) Prior to the Effective Time, the Company shall make such amendments,
if any, to the Company Stock Plans as shall be necessary to permit the
assumption contemplated by this Section 3.8. It is the intention of the
parties that (i) Company Options assumed by Parent shall qualify following the
Effective Time as incentive stock options as defined in Section 422 of the Code
to the same extent Company Options qualified as incentive stock options
immediately prior to the Effective Time, (ii) the assumption of Company Options
provided by this Section 3.8 shall satisfy the conditions of Section 424(a) of
the Code and (iii) the provisions of this Section 3.8 shall be applied
consistent with this intent. Parent shall take all corporate action necessary
to reserve for issuance a sufficient number of shares of Parent Common Stock
for issuance upon exercise of Company Options assumed by Parent.
(f) Except as may be otherwise agreed to by Parent and the Company, the
Company shall take all actions necessary to ensure that all stock option plans
established by the Company or any Company Subsidiary that are not Company Stock
Plans shall terminate as of the Effective Time and the provisions in any other
plan, program or arrangement providing for the issuance or grant of any other
interest in respect of the capital stock of the Company or any Company
Subsidiary are deleted, terminated and of no further force or effect as of the
Effective Time.
(g) All outstanding rights of the Company that it may hold immediately
prior to the Effective Time to repurchase shares of Restricted Stock shall be
assigned to Parent in the Merger and shall thereafter be exercisable by Parent
upon the same terms and conditions in effect immediately prior to the Effective
Time (giving effect to the consummation of the Merger, as specified by such
terms and conditions), except that the shares purchasable, and purchase price,
pursuant to the repurchase option shall be adjusted to reflect the Exchange
Ratio.
(h) If and to the extent necessary or required by the terms of the Company
Stock Plans or pursuant to the terms of any Company Option granted thereunder,
each of Parent and the Company shall use commercially reasonable efforts to
obtain the consent of each holder of outstanding Company Options or Restricted
Stock to the foregoing treatment of such Company Options or Restricted Stock.
Section 3.9 Lost, Stolen or Destroyed Company Certificates. If any
----------------------------------------------
Company Certificates are lost, stolen or destroyed, the Exchange Agent shall
issue in exchange for such lost, stolen or destroyed Company Certificates, upon
the making of an affidavit of that fact by the holder thereof, such shares of
Parent Common Stock (and cash in lieu of fractional shares) as may be required
pursuant to Section 3.1, provided, however, that Parent may, in its discretion
and as a condition precedent to the issuance thereof, require the owner of such
lost, stolen or destroyed Company Certificates to indemnify Parent against any
claim that may be made against Parent, the Surviving Corporation or the
Exchange Agent with respect to the Company Certificates alleged to have been
lost, stolen or destroyed.
16
Section 3.10 Withholding Rights. Parent shall be entitled to deduct and
------------------
withhold from the shares of Parent Common Stock otherwise payable pursuant to
this Agreement to any former holder of shares of Company Common Stock such
amounts as it reasonably determines it is required to deduct and withhold with
respect to the making of such payment under the Code or any provision of state,
local or foreign tax law. To the extent that amounts are so withheld by Parent,
such withheld amounts shall be treated for all purposes of this Agreement as
having been paid to the former holder of such shares of Company Common Stock in
respect of which such deduction and withholding was made by Parent.
Section 3.11 Taking of Necessary Action; Further Action. If, at any time
------------------------------------------
after the Effective Time, any further action is necessary or desirable to carry
out the purposes of this Agreement and to vest the Surviving Corporation with
full right, title and possession to all assets, property, rights, privileges,
powers and franchises of the Company, the officers and directors of the
Surviving Corporation are fully authorized in the name of their corporation or
otherwise to take, and will use good faith efforts to take, all such lawful and
necessary action, so long as such action is not inconsistent with this
Agreement.
ARTICLE 4
REPRESENTATIONS AND
WARRANTIES OF THE COMPANY
Except as set forth in the Company Disclosure Letter, the Company
represents and warrants to Parent and Merger Sub that all of the statements
contained in this Article 4 are true and correct. Each exception set forth in
the Company Disclosure Letter and each other response to this Agreement set
forth in the Company Disclosure Letter is identified by reference to, or has
been grouped under a heading referring to, a specific individual Section of
this Agreement and relates only to such Section, except to the extent that it
is reasonably apparent from a reading of such response (without reading any
related documents or attachments) that it also qualifies or applies to other
Sections of this Agreement.
Section 4.1 Organization; Qualification. The Company (a) is a
---------------------------
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware; (b) has all requisite corporate power and
authority to carry on its business as it is now being conducted and to own,
lease and operate its properties and assets; and (c) is duly qualified or
licensed to do business as a foreign corporation in good standing in every
jurisdiction in which such qualification is required, except for such
failures to be so qualified or licensed and in good standing as would
not be, individually or in the aggregate, reasonably likely to result
in a Material Adverse Effect to the Company. The Company has made
available to Parent complete and correct copies of its certificate of
incorporation and bylaws, each as presently in effect.
Section 4.2 Subsidiaries and Affiliates. Section 4.2 of the Company
---------------------------
Disclosure Letter sets forth the name, jurisdiction of incorporation and
authorized and outstanding capital of each Company Subsidiary and the
jurisdictions in which each Company Subsidiary is qualified to do business.
Except as set forth in Section 4.2 of the Company Disclosure Letter, the
Company does not own, directly or indirectly, any capital stock or other equity
securities of any
17
corporation or have any direct or indirect equity or ownership interest in any
business or other Person, other than publicly traded securities constituting
less than five percent of the outstanding equity of the issuing entity. All the
outstanding capital stock of each Company Subsidiary is, directly or indirectly,
owned (of record and beneficially) by the Company free and clear of any liens,
options or encumbrances of any kind, restrictions on transfers (other than
restrictions on transfer arising under applicable securities laws), claims or
charges of any kind, and is validly issued, fully paid and nonassessable, and
there are no outstanding options, rights or agreements of any kind relating to
the issuance, sale or transfer of any capital stock or other equity securities
of any Company Subsidiary to any Person except to the Company. Each Company
Subsidiary (a) is a corporation duly organized, validly existing and in good
standing under the laws of its state of incorporation; (b) has full corporate
power and authority to carry on its business as it is now being conducted and to
own, lease and operate its properties and assets; and (c) is duly qualified or
licensed to do business as a foreign corporation in good standing in every
jurisdiction in which such qualification is required, except for such failures
to be so qualified or licensed and in good standing as would not be,
individually or in the aggregate, reasonably likely to result in a Material
Adverse Effect to the Company. The Company has made available to Parent complete
and correct copies of the certificate of incorporation, bylaws or similar
organizational documents of each Company Subsidiary, as presently in effect.
With respect to any exception to ownership set forth in Section 4.2 of the
Company Disclosure Letter, such Section 4.2 completely and correctly identifies
the record and the beneficial owner of any such shares, whether such record or
beneficial owner is an employee, agent or Affiliate of the Company, and any
agreement, arrangement or understanding, whether written or oral, with respect
to such ownership.
Section 4.3 Capitalization
--------------
(a) The authorized capital stock of the Company consists of 250,000,000
shares of Company Common Stock and 10,000,000 shares of Company Preferred Stock
of which 250,000 shares are designated Series A Junior Participating Preferred
Stock. As of the date of this Agreement, (i) 65,814,559 shares of Company Common
Stock are issued and outstanding (1,009,458 shares of which are Restricted Stock
and 1,526,517 shares have been issued pursuant to Company Option exercises) and
1,214,608 shares of Company Common Stock are issued and held in the treasury of
the Company; (ii) no shares of Company Preferred Stock are issued, (iii)
9,806,753 shares of Company Common Stock are reserved for issuance under the
Company Stock Plans, of which 6,348,996 shares are subject to outstanding
Company Options and 3,457,757 shares are available for issuance thereunder, and
(iv) no shares of Company Common Stock are reserved for issuance pursuant to the
Company ESPP. Section 4.3(a) of the Company Disclosure Letter lists (s) the
holder of each outstanding Company Option, (t) if the holder is a former service
provider (including service as an employee), (u) the date such service
terminated, (v) the number of shares of Company Common Stock for which such
Company Option is exercisable, (w) the term of the Company Option, (x) the
exercise price of such Company Option, (y) the extent to which such Company
Option will vest or become exercisable upon consummation of any of the
Transactions or by termination of employment or change in position following
consummation of the Transactions, and (z) the vesting/exercise schedule of such
Company Option and (ii) all issued and outstanding shares of Restricted Stock,
the name of the applicable stockholder, the lapsing schedule for any such
shares, including the extent to which any such repurchase or redemption right or
right of first refusal has lapsed as of the date of this
18
Agreement, whether (and to what extent) the lapsing will be accelerated in any
way by the Transactions or by termination of employment or change in position
following consummation of the Transactions, and whether such holder has the sole
power to vote and dispose of such shares. Except as set forth in Section 4.3(a)
of the Company Disclosure Letter or as provided in stock option/Restricted Stock
agreements, no acceleration event shall occur with respect to Company Options or
Restricted Stock as a result of the Transactions or by termination of employment
or change in position following consummation of the Transactions, including
termination of service agreement in the case of a Person who is not an employee
of the Company. On the Closing Date, the Company shall deliver to Parent an
updated Section 4.3(a) of the Company Disclosure Letter that is current as of
such date. All the outstanding shares of the Company's capital stock are, and
all shares of Company Common Stock which may be issued pursuant to the exercise
of outstanding Company Options will be, when issued in accordance with the
respective terms of such Company Option, duly authorized, validly issued, fully
paid and nonassessable and not issued in violation of any preemptive rights.
Neither the Company nor any Company Subsidiary has any outstanding Voting Debt.
Except (I) as set forth above, and (II) the rights to purchase one
one-thousandth of a share of Series A Junior Participating Preferred Stock of
the Company (the "Company Rights") issued and issuable under the Stockholder
Rights Plan dated as of July 24, 2001 by and between the Company and Continental
Stock Transfer & Trust Company (the "Company Rights Plan"), as of the date
hereof, (x) there are no shares of capital stock of the Company authorized,
issued or outstanding; (y) there are no existing options, stock appreciation
rights, warrants, calls, pre-emptive rights, subscriptions or other rights,
agreements, arrangements, understandings or commitments of any character,
relating to the issued or unissued capital stock of the Company or any Company
Subsidiary, obligating the Company or any Company Subsidiary to issue, transfer
or sell or cause to be issued, transferred or sold any shares of capital stock
or Voting Debt of, or other equity interest in, the Company or any Company
Subsidiary or securities convertible into or exchangeable for such shares,
equity interests or Voting Debt, or obligating the Company or any Company
Subsidiary to grant, extend or enter into any such option, warrant, stock
appreciation right, call, subscription or other right, agreement, arrangement or
commitment; and (z) there are no outstanding contractual obligations of the
Company or any Company Subsidiary to repurchase, redeem or otherwise acquire any
shares of Company Common Stock, or the capital stock of the Company, or any
Company Subsidiary or Affiliate of the Company or to provide funds to make any
investment (in the form of a loan, capital contribution or otherwise) in any
Company Subsidiary or any other entity or Person. Except as contemplated by this
Agreement, set forth in the Company SEC Documents or described in this Section
4.3, there are no registration rights, and there is no rights agreement, "poison
pill" anti-takeover plan or other agreement or understanding to which the
Company or any of its Subsidiaries is a party or by which it or they are bound
with respect to any equity security of any class of the Company or any of its
Subsidiaries. Stockholders of the Company are not entitled to dissenters' or
appraisal rights under applicable state law in connection with the Merger.
(b) There are no voting trusts or other agreements or understandings to
which the Company or any Company Subsidiary is a party with respect to the
voting of the capital stock of the Company or any Company Subsidiary.
19
(c) Except as provided in Section 4.3(c) of the Company Disclosure
Letter, there are no Company Options, other than those issued pursuant to
Company Stock Plans. A copy of the documentation evidencing each out-of plan
grant has been provided to Parent.
Section 4.4 Authorization, Validity of Agreement, Company Action. The
----------------------------------------------------
Company has full corporate power and authority to execute and deliver this
Agreement, to perform its obligations under this Agreement and to consummate
the Transactions. The execution and delivery of, and the performance by the
Company of its obligations under, this Agreement and the consummation by it of
the Transactions, have been duly authorized by the Company's board of directors
and, except for obtaining the approval of its stockholders as contemplated by
Section 4.6, no other corporate action on the part of the Company or its
stockholders is necessary to authorize the execution and delivery by the
Company of this Agreement or the consummation by it of the Transactions. This
Agreement has been duly executed and delivered by the Company and, assuming due
and valid authorization, execution and delivery thereof by each of Parent and
Merger Sub, this Agreement is a valid and binding obligation of the Company
enforceable against the Company in accordance with its terms.
Section 4.5 Board Approvals Regarding Transactions. The Company's
--------------------------------------
board of directors, at a meeting duly called and held, has (a) determined that
each of this Agreement and the Merger are fair to, advisable and in the best
interests of the Company and the stockholders of the Company, (b) approved the
Transactions, (c) approved the Voting Agreements and the transactions
contemplated thereby and (d) recommended that the stockholders of the Company
adopt this Agreement, and none of the aforesaid actions by the Company's board
of directors has been amended, rescinded or modified. The action taken by the
Company's board of directors constitutes approval of the Merger and the other
Transactions by the Company's board of directors under the provisions of
Section 203 of the DGCL such that Section 203 of the DGCL does not apply to
this Agreement or the other Transactions. No other state takeover, anti-
takeover, moratorium, fair price, interested stockholder, business
combination or similar statute or rule is applicable to the Merger or the other
Transactions.
Section 4.6 Vote Required. The affirmative vote of the holders of at
-------------
least a majority of the outstanding shares of Company Common Stock on the
record date for the Company Stockholders' Meeting (the "Company Stockholder
Approval") is the only vote of the holders of any class or series of the
Company's capital stock necessary to adopt the Merger or this Agreement and no
other vote of any holders of shares of the Company's capital stock is necessary
to approve any of the Transactions.
Section 4.7 No Violations. None of the execution or delivery by the
-------------
Company of, or performance by the Company of its obligations under, this
Agreement, the consummation by the Company of the Transactions or compliance by
the Company with any of the provisions of this Agreement will (a) conflict with
or result in any breach of any provision of the certificate of incorporation,
the bylaws or similar organizational documents of the Company or any Company
Subsidiary, (b) result in a violation or breach of, or constitute (with or
without due notice or the passage of time or both) a default (or give rise to
any right of termination, amendment, cancellation or acceleration or loss of
any rights) under, any of the terms, conditions or provisions of any Company
Agreement or (c) subject to obtaining the Company Stockholder Approval and
compliance with the requirements specified in clauses (i) through (v) of
Section
20
4.8, conflict with or violate any permit, concession, franchise,
license, judgment, injunction, order, decree, statute, law, ordinance, rule or
regulation applicable to the Company or any of its Subsidiaries or any of its
or their properties or assets, except in the case of clauses (b) and (c) of
this Section 4.7 for any conflicts, violations, breaches, defaults,
terminations, cancellations, accelerations or losses which would not be,
individually or in the aggregate, reasonably likely to result in a Material
Adverse Effect to the Company.
Section 4.8 Consents and Approvals. No consent, approval, license,
----------------------
permit, order or authorization of, or registration, declaration, notice or
filing with any Governmental Entity or any stock market or stock exchange on
which shares of Company Common Stock are listed for trading is required by or
with respect to the Company or any of its Subsidiaries in connection with the
execution and delivery of this Agreement by the Company or the consummation by
the Company of the transactions contemplated by this Agreement, except for (i)
the pre-merger notification requirements under the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended, (the "HSR Act"), (ii) the filing of the
Certificate of Merger with the Delaware Secretary of State and appropriate
corresponding documents with the appropriate authorities of other states in
which the Company is qualified as a foreign corporation to transact business,
(iii) the filing of the Joint Proxy Statement/Prospectus with the SEC in
accordance with the Exchange Act, (iv) the filing of such reports, schedules or
materials under Section 13 or Rule 14a-12 of the Exchange Act and materials
under Rule 165 and Rule 425 of the Securities Act as may be required in
connection with this Agreement and the Transactions, (v) such consents,
approvals, orders, authorizations, registrations, declarations and filings as
may be required under applicable state securities laws and the laws of any
foreign country and (vi) such consents, authorizations, orders, filings,
approvals and registrations which, if not obtained or made, would not be
reasonably likely to result in a Material Adverse Effect to the Company.
Section 4.9 Reports and Company Financial Statements.
----------------------------------------
(a) The Company has timely filed the Company SEC Documents with the SEC or
the NNM, as applicable. As of their respective dates or, if amended, as of the
date of the last such amendment filed prior to the date of this Agreement, the
Company SEC Documents, including any financial statements or schedules included
therein (i) did not or will not at the time they were or are filed 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 made therein,
in the light of the circumstances under which they were made, not misleading
and (ii) at the time filed, were or will be prepared in compliance in all
material respects with the applicable requirements of the Exchange Act, the
Securities Act and the rules and regulations of the NNM, as the case may be.
(b) Each of the Company Financial Statements have been prepared from, and
are in accordance with, the books and records of the Company and the Company
Subsidiaries. The Company Financial Statements complied, as of their
respective dates, with applicable accounting requirements and rules and
regulations of the SEC and NNM. The Company Financial Statements have been
prepared in accordance with GAAP applied on a consistent basis (except as may
be indicated in the notes thereto and subject, in the case of interim condensed
consolidated financial statements, to normal, recurring and immaterial year-end
adjustments and the absence of certain notes) and fairly present in all
material respects (i) the consolidated
21
financial position of the Company and the Company Subsidiaries as of the dates
thereof and (ii) the consolidated results of operations, changes in
stockholders' equity and cash flows of the Company and the Company Subsidiaries
for the periods presented therein. The value of the intangible assets
reflected on the most recent Balance Sheet included in the Company Financial
Statements does not require any further write down under GAAP or the applicable
rules of the SEC.
Section 4.10 Books and Records. The books of account, minute books,
-----------------
stock record books and other records of each of the Company and the Company
Subsidiaries are complete and correct in all material respects and have been
maintained in accordance with the requirements of Section 13(b)(2) of the
Exchange Act, including an adequate system of internal controls. The minute
books of the Company contain accurate and complete records of all meetings held
of, and corporate action taken by, the stockholders, the Company's board of
directors and committees thereof, and no meeting of any of such stockholders,
the Company's board of directors or such committees has been held for which
minutes have not been prepared and are not contained in such minute books.
Section 4.11 No Undisclosed Liabilities. Except (a) as disclosed in
--------------------------
the Company SEC Documents filed prior to the date hereof or the Company
Financial Statements and (b) for liabilities and obligations incurred in the
ordinary course of business and consistent with past practice since the Balance
Sheet Date, neither the Company nor any Company Subsidiary has any liabilities
or obligations of any nature, whether or not accrued, contingent or otherwise,
that, individually or in the aggregate, result in, or are reasonably likely to
result in, a Material Adverse Effect to the Company.
Section 4.12 Absence of Certain Changes. Since the Balance Sheet Date,
--------------------------
except as disclosed in the Company SEC Documents filed prior to the date
hereof, (a) the Company and each Company Subsidiary has conducted its
respective business only in the ordinary and usual course consistent with past
practice, (b) there have not occurred any events or changes in or developments
with respect to the business, prospects, condition (financial or otherwise),
assets or results of operations of the Company and the Company Subsidiaries
(including the incurrence of any liabilities of any nature, whether or not
accrued, contingent or otherwise) taken as a whole, resulting in or which are
reasonably likely to result in, individually or in the aggregate, a Material
Adverse Effect to the Company and (c) the Company has not taken, resolved to
take or committed to take any action which would have been prohibited under
Section 6.1 if such section applied to the period between the Balance Sheet
Date and the date of this Agreement.
Section 4.13 Litigation. As of the date of this Agreement, except as
----------
described in Section 4.13 of the Company Disclosure Letter and the Company SEC
Documents filed prior to the date hereof, there is no action, suit, proceeding,
claim, arbitration or investigation pending or, to the knowledge of the
Company, threatened against or affecting the Company, any of its Subsidiaries,
or any of the officers or directors (in their respective capacity as such) of
the Company or any Company Subsidiary which, individually or in the aggregate,
has resulted in, or is reasonably likely to result in, a Material Adverse
Effect to the Company. There are no material judgments, orders or decrees
outstanding against the Company or any of its Subsidiaries, as of the date of
this Agreement only.
22
Section 4.14 Employee Benefit Plans.
-----------------------
(a) Section 4.14(a) of the Company Disclosure Letter lists each Company
Benefit Plan.
(b) With respect to each Company Benefit Plan, the Company has made
available to Parent a complete and correct copy of (i) such Company Benefit
Plan (or, if not written, a written summary of its material terms) and the most
recent summary plan description and all summaries of material modifications
issued since the date of the most recent summary plan description, if any,
related to such Company Benefit Plan, (ii) each trust agreement or other
funding arrangement, (iii) the most recent annual report ((Form 5500) filed
with the IRS) (and, if the most recent annual report is a Form 5500R, the most
recent Form 5500C filed with respect to such Company Benefit Plan), (iv) the
most recent actuarial report or financial statement, (v) the most recent
determination letter, if any, issued by the IRS and any pending request for a
determination letter and (vi) each registration statement, permit application
and prospectus. Neither the Company nor any Company ERISA Affiliate nor, to
the knowledge of the Company or any Company ERISA Affiliate, any other Person
or entity, has any express or implied commitment, whether legally enforceable
or not, to continue (for any period), modify, change or terminate any Company
Benefit Plan, other than with respect to a modification, change or termination
required by applicable Law.
(c) Except as would not be, individually or in the aggregate, reasonably
likely to result in a Material Adverse Effect to the Company, each Company
Benefit Plan has been administered in accordance with its terms and all
applicable laws, including ERISA and the Code (including the prohibited
transaction rules thereunder). Except as would not be, individually or in the
aggregate, reasonably likely to result in a Material Adverse Effect to the
Company, all contributions required to be made under the terms of any of the
Company Benefit Plans have, as of the date of this Agreement, been timely made
or, if not yet due, have been properly reflected in the Company's and the
Company Subsidiaries' financial accounting records prior to the date of this
Agreement. No suit, administrative proceeding, action or other adverse
proceeding or claim has been brought or threatened against or with respect to
any such Company Benefit Plan (other than routine benefits claims or relating
to qualified domestic relations orders (as that term is defined in Section
414(p) of the Code)) and there is no pending audit or inquiry by the IRS or
United States Department of Labor with respect to any Company Benefit Plan. No
event has occurred and, to the knowledge of the Company or any Company ERISA
Affiliate, there exists no condition or set of circumstances that could subject
the Company or any Company ERISA Affiliate to any material liability (other
than for routine benefit liabilities) relating in any way to any Company
Benefit Plan.
(d) Each Company Benefit Plan can be amended, discontinued or
terminated at any time (including after the Effective Time) in accordance with
its terms, without liability (other than (i) liability for benefits accrued
prior to the Effective Time, (ii) liability for ordinary administrative
expenses typically incurred in a termination event or (iii) liabilities for
which sufficient assets are set aside in a trust or insurance contract to
satisfy such liabilities or which are reflected on the most recent Balance
Sheet included in the Company Financial Statements).
(e) Each Company Benefit Plan and its related trust that is intended to
qualify under Section 401(a) and Section 501(a), respectively, of the Code has
received a favorable
23
determination letter from the IRS as to such qualified
status or has been established under a standardized prototype plan for which an
IRS opinion letter has been obtained by the plan sponsor and is valid as to the
adopting employer and, in either case, nothing material has occurred that could
adversely affect such qualified status.
(f) No Company Benefit Plan is a multi-employer pension plan (as defined
in Section 3(37) of ERISA) and no Company ERISA Affiliate has sponsored or
contributed to or been required to contribute to any such pension plan.
(g) With respect to each Benefit Plan that is subject to Title IV of ERISA
or the minimum funding rules of ERISA or Section 302 or 412 of the Code, (i) no
reportable event (within the meaning of Section 4043 of ERISA, other than an
event that is not required to be reported before or within thirty days of such
event) has occurred, to the knowledge of the Company or any Company ERISA
Affiliates, or is expected to occur, (ii) there was not an accumulated funding
deficiency (within the meaning of Section 302 of ERISA or Section 412 of the
Code), whether or not waived, as of the most recently ended plan year of such
Benefit Plan; and (iii) there is no "unfunded benefit liability" (within the
meaning of Section 4001(a)(18) of ERISA). No material liability under Title IV
of ERISA has been incurred by the Company or any Company ERISA Affiliate that
has not been satisfied in full, and to the knowledge of the Company or any
Company ERISA Affiliate, no condition exists that presents a material risk to
the Company or any Company ERISA Affiliate of incurring or being subject
(whether primarily, jointly or secondarily) to a material liability thereunder.
To the knowledge of the Company or any Company ERISA Affiliate, none of the
assets of the Company or any Company ERISA Affiliate is, or may reasonably be
expected to become, the subject of any lien arising under ERISA or Section
412(n) of the Code.
(h) Except as required by Law, no Company Benefit Plan provides any of the
following retiree or post-employment benefits to any person: medical,
disability or life insurance benefits. To the Company's knowledge, the Company
and each Company ERISA Affiliate is in material compliance with (i) the
requirements of the applicable health care continuation and notice provisions
of the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, and
(ii) the applicable requirements of the Health Insurance Portability and
Accountability Act of 1996, as amended.
(i) The Company has made available to Parent complete and correct copies
of (i) all employment agreements with officers and all consulting agreements of
the Company or any Company Subsidiary providing for annual compensation in
excess of $100,000, (ii) all severance plans, agreements, programs and policies
of the Company or any Company Subsidiary with or relating to their respective
employees, directors or consultants, and (iii) all plans, programs, agreements
and other arrangements of the Company or any Company Subsidiary with or
relating to their respective employees, directors or consultants which contain
"change of control" or similar provisions. No payment or benefit which may be
required to be made by the Company or any Company Subsidiary or which otherwise
may be required to be made under the terms of any Company Benefit Plan or other
arrangement will constitute a parachute payment under Section 280G of the Code
(without regard to Section 280G(b)(4)). The consummation of the Transactions
will not, alone or in conjunction with any other possible event (including
termination of employment), (x) entitle any current or former employee or other
service provider
24
of the Company or any Company Subsidiary to severance benefits or any other
payment, compensation or benefit (including forgiveness of indebtedness), except
as expressly provided by this Agreement, or (y) accelerate the time of payment
or vesting, or increase the amount of compensation or benefit due any such
employee or service provider, alone or in conjunction with any other possible
event (including termination of employment).
Section 4.15 Tax Matters.
-----------
(a) Except as would not be, individually or in the aggregate, reasonably
likely to result in a Material Adverse Effect to the Company, the Company and
each Company Subsidiary, and any affiliated, consolidated, combined, unitary or
aggregate group for Tax purposes of which the Company or any Company Subsidiary
is or has been a member, have (i) properly completed and timely filed all Tax
Returns that are required to be filed by them through the date of this
Agreement and all such Tax Returns are true, correct and complete in all
material respects and (ii) have duly paid or caused to be duly paid in full all
Taxes reflected on such Tax Returns or subsequently assessed by any
Governmental Entity responsible for the imposition of any Tax with respect to
such Tax Returns. Since the Balance Sheet Date, the Company and the Company
Subsidiaries have not incurred any liability for any Taxes other than in the
ordinary course of business. Neither the Company nor any Company Subsidiary
has received notice of any claim made by an authority in a jurisdiction where
the Company or any Company Subsidiary, as the case may be, does not file Tax
Returns, that the Company or any Company Subsidiary is or may be subject to
taxation by that jurisdiction.
(b) There is (i) no material claim for Taxes that is a lien against the
property or assets of the Company or any Company Subsidiary or that is being
asserted against the Company or any Company Subsidiary other than liens for
Taxes not yet due and payable, (ii) except as set forth in Section 4.15(b) of
the Company Disclosure Letter, no audit, administrative proceeding or court
proceeding with respect to Taxes or Tax Returns of the Company or any Company
Subsidiary that is being conducted or that is pending and no deficiency or
claim for Taxes that is being asserted by any Governmental Entity responsible
for the imposition of any Tax against the Company or any Company Subsidiary;
(iii) no extension of the statute of limitations on the assessment of any Taxes
that has been granted by the Company or any Company Subsidiary and is currently
in effect, and (iv) no agreement, contract or arrangement to which the Company
or any Company Subsidiary is a party that may result in the payment of any
amount that would not be deductible by reason of Section 162(m), 280G (without
regard to Section 280G(b)(4)) or 404 of the Code.
(c) Neither the Company nor any Company Subsidiary has filed any
disclosures under Section 6662 of the Code or comparable provisions of state,
local or foreign law to prevent the imposition of penalties with respect to any
Tax reporting position taken on any Tax Return.
(d) No federal, state, local or foreign audits, examinations or other
administrative proceedings are pending or, to the Company's knowledge,
threatened with regard to any Taxes or Tax Returns of the Company or of any
Company Subsidiary. There is no dispute or claim concerning any Tax liability
of the Company or any Company Subsidiary either claimed or raised by any taxing
authority in writing.
25
(e) Neither the Company nor any Company Subsidiary has filed a consent
pursuant to Section 341(f) of the Code (or any predecessor provision)
concerning collapsible corporations, or agreed to have Section 341(f)(2) of the
Code apply to any disposition of a "subsection (f) asset" (as such term is
defined in Section 341(f)(4) of the Code) owned by the Company or any Company
Subsidiary.
(f) Neither the Company nor any Company Subsidiary has been required to
include any material adjustment in taxable income for any Tax period (or
portion thereof) pursuant to Section 481 or 263A of the Code or any comparable
provision under state or foreign Tax laws as a result of transactions, events
or accounting methods employed prior the Effective Time other than any such
adjustments required as a result of the Merger.
(g) Neither the Company nor any Company Subsidiary is a party to any tax
sharing, tax indemnity or other agreement or arrangement with any entity not
consolidated in the Financial Statements most recently filed by the Company
with the SEC or has any liability or potential liability to another party under
any such agreement, and neither the Company nor any Company Subsidiary has any
liability or potential liability for Taxes of any Person under Section 1.1502-6
of the Treasury Regulations (or any similar provision of state, local or
foreign law), as a transferee or successor, by contract or otherwise.
(h) The Company and each Company Subsidiary has withheld and paid all
Taxes required to have been withheld and paid in connection with amounts paid
or owing to any employee, independent contractor, creditor, stockholder or
other third party.
(i) No power of attorney has been granted by the Company or any Company
Subsidiary with respect to any matters relating to Taxes that is currently in
effect.
(j) Neither the Company nor any Company Subsidiary has settled any claim,
audit or administrative or court proceeding with respect to Taxes.
(k) Neither the Company nor any Company Subsidiary is or has ever been a
"personal holding company" within the meaning of Section 542 of the Code or a
"United States real property holding corporation" within the meaning of Section
897 of the Code.
(l) Neither the Company nor any of its Affiliates has taken or agreed to
take any action (other than actions contemplated by this Agreement) that could
reasonably be expected to prevent the Merger from constituting a
"reorganization" under Section 368 of the Code. The Company is not aware of
any agreement or plan to which the Company or any of its Affiliates is a party
or other circumstances relating to the Company or any of its Affiliates that
could reasonably be expected to prevent the Merger from so qualifying as a
reorganization under Section 368 of the Code.
Section 4.16 Intellectual Property.
---------------------
(a) Section 4.16(a) of the Company Disclosure Letter contains a true
and complete list of all of the Company's and Company Subsidiaries' Intellectual
Property (other than unregistered copyrights, trade secrets and confidential
information) and applications and other filings and formal actions made or
taken pursuant to federal, state, local and foreign laws by the
26
Company and/or any Company Subsidiary to protect its interests in material
Company Intellectual Property.
(b) Except as set forth in Section 4.16(b) of the Company Disclosure
Letter, the Company and Company Subsidiaries have all rights in Company
Intellectual Property necessary to carry out their current and currently
contemplated and reasonably foreseeable activities except where the absence of
such right would not be reasonably likely to result in a Material Adverse
Effect to the Company.
(c) Except as would not be, individually or in the aggregate, reasonably
likely to result in a Material Adverse Effect to the Company, the reproduction,
manufacturing, distribution, licensing, sublicensing, sale or any other
exercise of rights in any Company Intellectual Property or Product, work,
technology or process as now used or offered or proposed for use, licensing or
sale by the Company or any Company Subsidiary does not infringe on any
copyright, trade secret, trademark, service xxxx, trade name, trade dress, firm
name, Internet domain name, logo, trade dress or mask work of any Person or, to
the knowledge of the Company or any Company Subsidiary as of the date hereof,
the patent of any Person. Except as set forth in Section 4.16(c) of the
Company Disclosure Letter, no written and material claims (i) challenging the
validity, effectiveness or ownership by the Company or any Company Subsidiary
of any of Company Intellectual Property, or (ii) to the effect that the use,
distribution, licensing, sublicensing, sale or any other exercise of rights in
any Product, work, technology or process as now used or offered or proposed for
use, licensing, sublicensing or sale by the Company or any Company Subsidiary
infringes or will infringe on any intellectual property or other proprietary
right of any Person have been asserted or, to the knowledge of the Company or
any Company Subsidiary, are threatened by any Person, nor are there, to the
Company's or any Company Subsidiary's knowledge, any valid grounds for any bona
fide claim of any such kind. All registered, granted or issued patents,
trademarks, Internet domain names and copyrights held by the Company and any
Company Subsidiary are subsisting. To the Company's or any Company
Subsidiary's knowledge, there is no material unauthorized use, infringement or
misappropriation of any Company Intellectual Property by any third party,
employee or former employee.
(d) Except as set forth in Section 4.16(d) of the Company Disclosure
Letter, there are no royalties, fees, honoraria or other payments payable by
the Company or any Company Subsidiary to any Person by reason of the ownership,
development, use, license, sale or disposition of Company Intellectual
Property, other than salaries and sales commissions paid to employees and sales
agents in the ordinary course of business.
(e) Neither the Company nor any Company Subsidiary is in violation of any
license, sublicense, agreement or instrument to which the Company or any
Company Subsidiary is a party or otherwise bound, nor to the knowledge of the
Company as of the date hereof, will execution or delivery of this Agreement, or
performance of the Company's obligations hereunder, cause the diminution,
termination or forfeiture of any Company Intellectual Property except as would
not be, individually or in the aggregate, reasonably likely to result in a
Material Adverse Effect to the Company. Section 4.16(e) of the Company
Disclosure Letter sets forth a list of all material Licenses by the Company or
any of Company Subsidiaries of Company Intellectual Property.
27
(f) Except as would not be, individually or in the aggregate, reasonably
likely to result in a Material Adverse Effect to the Company, the Company and
each of Company Subsidiaries have observed all material provisions of, and
performed all of their material obligations under, the license agreements to
which it is a party. Neither the Company, nor any Company Subsidiary, have
taken any action that could cause, or failed to take any action, the failure of
which could cause, (i) any source code, trade secret or other Company
Intellectual Property to be (A) released from an escrow or otherwise made
available to any person or entity other than those persons described in Section
4.16(f) of the Company Disclosure Letter or (B) dedicated to the public or
otherwise placed in the public domain or (ii) any other material adverse affect
to the protection of Company Intellectual Property under trade secret,
copyright, patent or other intellectual property laws.
Section 4.17 Employment Matters.
------------------
(a) Except as would not, individually or in the aggregate, be reasonably
expected to have a Material Adverse Effect, the Company and each Company
Subsidiary are in compliance in all respects with all currently applicable Laws
respecting employment, discrimination in employment, terms and conditions of
employment, wages, hours and occupational safety and health and employment
practices, and is not engaged in any unfair labor practice. The Company and
each Company Subsidiary have withheld all amounts required by Law or by
agreement to be withheld from the wages, salaries, and other payments to
employees, and neither the Company nor any Company Subsidiary is liable for any
arrears of wages or any Taxes or any penalty for failure to comply with any of
the foregoing. Neither the Company nor any Company Subsidiary is liable for
any payment to any trust or other fund or to any governmental or administrative
authority, with respect to unemployment compensation benefits, social security
or other benefits or obligations for employees (other than routine payments to
be made in the normal course of business and consistent with past practice).
Except as would not, individually or in the aggregate, be reasonably expected
to have a Material Adverse Effect, there are no pending claims against the
Company or any Company Subsidiary under any workers compensation plan or policy
or for long-term disability. Neither the Company nor any Company Subsidiary is
a party to any collective bargaining agreement or other labor union contract,
and neither the Company nor any Company Subsidiary knows of any activities or
proceedings of any labor union in connection with an attempt to organize any
such employees. To the Company's or any Company Subsidiary's knowledge, no
employees of the Company or any Company Subsidiary are in violation of any term
of any employment contract, patent disclosure agreement, non-competition
agreement, or any restrictive covenant to a former employer relating to the
right of any such employee to be employed by the Company or Company Subsidiary
because of the nature of the business conducted or presently proposed to be
conducted by the Company or any Company Subsidiary or to the use of trade
secrets or proprietary information of others. As of the date of this
Agreement, except as would not, individually or in the aggregate, be reasonably
expected to have a Material Adverse Effect, no employee of the Company or any
Company Subsidiary has given notice to the Company or any Company Subsidiary,
and the Company and each of the Company Subsidiaries is not otherwise aware,
that any such employee intends to terminate his or her employment with the
Company or any Company Subsidiary. Neither the Company nor any Company
Subsidiary is a party to any Severance Agreements.
28
(b) All officers, employees and consultants of the Company and each
Company Subsidiary have signed proprietary rights and confidentiality
agreements in substantially the form set forth on Section 4.17(b) of the
Company Disclosure Letter.
(c) Since the enactment of the WARN Act, neither the Company nor any
Company Subsidiary has effected (i) a plant closing as defined in the WARN Act
affecting any site of employment or facility or one or more operating units
within any site of employment or facility of the Company or any Company
Subsidiary or (ii) a mass layoff as defined in the WARN Act affecting the site
of employment or facility of the Company or any Company Subsidiary. None of
the Company nor any Company Subsidiary has been affected by any transaction or
is engaged in any layoffs or employment terminations sufficient in number to
trigger application of any similar state or local Law. Except as set forth in
Section 4.17(c) of the Company Disclosure Letter, none of the employees of the
Company or any Company Subsidiary has suffered an employment loss as defined in
the WARN Act during the preceding ninety-day period.
Section 4.18 Compliance with Laws. Except as would not be,
--------------------
individually or in the aggregate, reasonably likely to result in a
Material Adverse Effect to the Company, the Company and each of the Company
Subsidiaries are in compliance with, and have not violated any applicable Law
of any United States federal, state, local, or foreign Governmental Entity
which affects the business, properties or assets of the Company and any Company
Subsidiary, and no notice, charge, claim, action or assertion has been received
by the Company or any Company Subsidiary or has been filed, commenced or, to
the knowledge of the Company or any Company Subsidiary, threatened against the
Company or any Company Subsidiary alleging any such violation. All licenses,
permits and approvals required under such Laws are in full force and effect
except where the failure to be in full force and effect would not be,
individually or in the aggregate, reasonably likely to result in a Material
Adverse Effect to the Company.
Section 4.19 Contracts and Commitments.
-------------------------
(a) There are no contracts or agreements that are material contracts (as
defined in Item 601(b)(10) of Regulation S-K) with respect to the Company and
its Subsidiaries ("Company Material Contracts"), other than those Company
Material Contracts identified on the exhibit indices of the Company SEC
Documents filed prior to the date hereof. Each Company Material Contract is in
full force and effect and is enforceable in accordance with its terms. Neither
the Company nor any of its Subsidiaries nor, to the Company's knowledge, any
other party to any Company Material Contract is in violation of or in default
under (nor does there exist any condition which, upon the passage of time or
the giving of notice or both, would cause such a violation of or default under)
any loan or credit agreement, note, bond, mortgage, indenture, lease, permit,
concession, franchise, license or other contract, arrangement or understanding
to which it is a party or by which it or any of its properties or assets is
bound, except for violations or defaults which, individually or in the
aggregate, have not resulted in, and are not reasonably likely to result in, a
Material Adverse Effect to the Company.
(b) Section 4.19(b) of the Company Disclosure Letter sets forth a complete
and accurate list of each contract or agreement to which the Company or any of
its Subsidiaries is a party or bound with any Affiliate of the Company (other
than any Subsidiary which is a direct or indirect wholly owned subsidiary of
the Company). Complete and accurate copies of all the agreements,
29
contracts and arrangements set forth in Section 4.19(b) of the Company
Disclosure Letter have heretofore been furnished to Parent. Except as
disclosed in the Company SEC Documents filed prior to the date of this
Agreement, neither the Company nor any of its Subsidiaries has entered into any
transaction with any Affiliate of the Company or any of its Subsidiaries or any
transaction that would be subject to proxy statement disclosure pursuant to
Item 404 of Regulation S-K.
(c) The Company is not a party to or bound by any contract or agreement
that includes any non-competition, non-solicitation, standstill or other
similar restrictions or undertakings that has or would reasonably be expected
to have the effect of prohibiting or impairing the conduct of the business of
the Company or any of its Subsidiaries or Parent or any of its Subsidiaries as
currently conducted and as proposed to be conducted in any material respect.
Neither the Company nor any of its Subsidiaries has entered into (or is
otherwise bound by) any agreement under which it is restricted in any material
respect from selling, licensing or otherwise distributing any of its technology
or products, or providing services to, customers or potential customers or any
class of customers, in any geographic area, during any period of time or any
segment of the market or line of business.
(d) Neither the Company nor any of its Subsidiaries is a party to any
agreement under which a third party would be entitled to receive a license or
any other right to Company Intellectual Property as a result of the
transactions contemplated by this Agreement.
Section 4.20 Customers and Suppliers. There has not been any material
-----------------------
adverse change in the business relationship of the Company or any Company
Subsidiary with any customer who accounted for more than five percent of the
Company's sales (on a consolidated basis) during the period subsequent to
November 30, 2001, or any supplier from whom the Company and the Company
Subsidiaries purchased more than five percent of the goods or services (on a
consolidated basis) which they purchased during the same period.
Section 4.21 Information Supplied. None of the information supplied
--------------------
or to be supplied by the Company specifically for inclusion or incorporation by
reference in (a) the Registration Statement or (b) for inclusion in any filing
pursuant to Rule 165 and Rule 425 under the Securities Act or Rule 14a-12 under
the Exchange Act (each a "Regulation M-A Filing"), will contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading,
when, respectively, the Registration Statement becomes effective under the
Securities Act or at the time of the Regulation M-A Filing. None of the
information supplied or to be supplied by the Company specifically for
inclusion or incorporated by reference in the Proxy Statement/Prospectus will,
at the date it is first mailed to the Company's stockholders or at the time of
the Company Stockholders' Meeting, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. The Proxy
Statement/Prospectus and the Registration Statement will comply as to form in
all material respects with the requirements of the Securities Act and the
Exchange Act and the rules and regulations thereunder, except that no
representation or warranty is made by the Company with respect to statements
made or incorporated by reference therein based on information supplied
30
by Parent specifically for inclusion or incorporation by reference in the Proxy
Statement/Prospectus.
Section 4.22 Opinion of Financial Advisor. The board of directors of
----------------------------
the Company has received the opinion of Credit Suisse First Boston Corporation
(the"Company Financial Advisor") dated the date of this Agreement, to the effect
that, as of the date of such opinion, the Exchange Ratio is fair to the holders
of shares of Company Common Stock from a financial point of view.
Section 4.23 Rights Agreement. The Company has duly executed an
----------------
amendment, in a form previously approved by Parent, to the Company Rights Plan,
an executed copy of which has been delivered to Parent (the "Company Rights
Plan Amendment") that includes, among other things, (a) an exclusion of Parent
and Merger Sub from the definition of "Acquiring Person" thereunder and (b)
providing that the Company Rights Plan terminate before the Effective Time, and
taken all other action (excluding actions by the rights agent) necessary or
appropriate so that the entering into of this Agreement or the Voting
Agreements do not and will not result in the ability of any person to exercise
any of Company Rights under the Company Rights Plan or enable or require
Company Rights issued thereunder to separate from the shares of Company Common
Stock to which they are attached or to be triggered or become exercisable or
cease to be redeemable.
Section 4.24 Absence of Questionable Payments. Neither the Company nor
--------------------------------
any Company Subsidiary nor any director, officer, agent, employee or other
Person acting on behalf of the Company or any Company Subsidiary, has used any
corporate or other funds for unlawful contributions, payments, gifts, or
entertainment, or made any unlawful expenditures relating to political activity
to government officials or others or established or maintained any unlawful or
unrecorded funds in violation of Section 30A of the Exchange Act. Neither the
Company nor any Company Subsidiary nor any current director, officer, agent,
employee or other Person acting on behalf of the Company or any Company
Subsidiary, has accepted or received any unlawful contributions, payments,
gifts or expenditures. The Company and each Company Subsidiary is in
compliance with the provisions of Section 13(b) of the Exchange Act.
Section 4.25 Insider Interests. Except as set forth in the Company SEC
-----------------
Documents, no officer or director of the Company or any Company Subsidiary has
any material interest in any property, real or personal, tangible or
intangible, including inventions, patents, trademarks or trade names, used in
or pertaining to the business of the Company or any Company Subsidiary.
Section 4.26 Brokers or Finders. Except as set forth in Section 4.26
-------------------
of the Company Disclosure Letter, neither the Company nor any Company Subsidiary
or their respective Affiliates has an obligation to pay any agent, broker,
investment banker, financial advisor or other firm or Person any brokers' or
finder's fee or any other commission or similar fee in connection with any of
the Transactions. True and correct copies of all agreements between the
Company and the Company Financial Advisor including any fee arrangements are
included in Section 4.26 of Company Disclosure Letter.
Section 4.27 Insurance. The Company and each Company Subsidiary is
---------
presently insured, and during each of the past five calendar years has been
insured, against such risks as
31
companies engaged in a similar business would, in accordance with good business
practice, customarily be insured. All such policies are in full force and
effect and all premiums due thereon have been paid to the date hereof. The
Company and the Company Subsidiaries have complied in all material respects
with the terms of such policies.
Section 4.28 Properties.
----------
(a) The Company and the Company Subsidiaries have good and valid title,
free and clear of all Liens, to all their material properties and assets,
whether tangible or intangible, personal or mixed, reflected in the Company's
Financial Statements for the period ended November 30, 2001 as being owned by
the Company and the Company Subsidiaries as of the date thereof, other than (i)
any properties or assets that have been sold or otherwise disposed of in the
ordinary course of business since the date of such Financial Statements, (ii)
Liens disclosed in the notes to such Financial Statements and (iii) Liens
arising in the ordinary course of business after the date of such Financial
Statements. All fixtures, equipment and other property and assets that are
material to its business on a consolidated basis, held under leases or
sub-leases by the Company or any Company Subsidiary are held under valid
instruments enforceable in accordance with their respective terms, subject to
applicable laws of bankruptcy, insolvency or similar laws relating to
creditors' rights generally and to general principles of equity (whether
applied in a proceeding in law or equity). Substantially all of the Company's
and the Company Subsidiaries' equipment in regular use has been reasonably
maintained and is in serviceable condition, reasonable wear and tear excepted.
(b) Neither the Company nor any Company Subsidiaries owns or has ever
owned any real property.
(c) Section 4.28(c) of the Company Disclosure Letter sets forth a
complete and accurate list of all real property leased, subleased or licensed
by the Company or any of its Subsidiaries (collectively the "Company Leases")
and the location of the premises. Neither the Company, nor any of its
Subsidiaries nor, to the Company's knowledge, any other party is in default
under any of the Company Leases, except where the existence of such defaults,
individually or in the aggregate, has not resulted in, and is not reasonably
likely to result in a Material Adverse Effect to the Company. Neither the
Company nor any of its Subsidiaries leases, subleases or licenses any real
property to any person other than the Company and its Subsidiaries. The
Company has provided Parent with complete and accurate copies of all Company
Leases.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
OF PARENT AND MERGER SUB
Except as set forth in the Parent Disclosure Letter, each of Parent and
Merger Sub represent and warrant to the Company that all of the statements
contained in this Article 5 are true and correct. Each exception set forth in
the Parent Disclosure Letter and each other response to this Agreement set
forth in the Parent Disclosure Letter is identified by reference to, or has
been grouped under a heading referring to, a specific individual Section of
this Agreement
32
and relates only to such Section, except to the extent that it is reasonably
apparent from a reading of such response (without reading any related documents
or attachments) that it also qualifies or applies to other Sections of this
Agreement.
Section 5.1 Organization; Qualification Each of Parent and Merger Sub
---------------------------
(a) is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware; (b) has all requisite corporate power
and authority to carry on its business as it is now being conducted and to own,
lease and operate its properties and assets; and (c) is duly qualified or
licensed to do business as a foreign corporation in good standing in every
jurisdiction in which such qualification is required, except for such failures
to be so qualified or licensed and in good standing as would not be,
individually or in the aggregate, reasonably likely to result in a Material
Adverse Effect to Parent. Parent has made available to the Company complete
and correct copies of its certificate of incorporation and bylaws, each as
presently in effect. Merger Sub has conducted no business and has no
operations other than in connection with this Agreement and the Transactions.
Section 5.2 Subsidiaries and Affiliates. Section 5.2 of Parent
----------------------------
Disclosure Letter sets forth the name, jurisdiction of incorporation and
authorized and outstanding capital of each Parent Subsidiary and the
jurisdictions in which each Parent Subsidiary is qualified to do business.
Except as set forth in Section 5.2 of the Parent Disclosure Letter, Parent does
not own, directly or indirectly, any capital stock or other equity securities
of any corporation or have any direct or indirect equity or ownership interest
in any business or other Person, other than publicly traded securities
constituting less than five percent of the outstanding equity of the issuing
entity. All the outstanding capital stock of each Parent Subsidiary is,
directly or indirectly, owned (of record and beneficially) by Parent free and
clear of any liens, options or encumbrances of any kind, restrictions on
transfers (other than restrictions on transfer arising under applicable
securities laws), claims or charges of any kind, and is validly issued, fully
paid and nonassessable, and there are no outstanding options, rights or
agreements of any kind relating to the issuance, sale or transfer of any
capital stock or other equity securities of any Parent Subsidiary to any Person
except to Parent. Each Parent Subsidiary (a) is a corporation duly organized,
validly existing and in good standing under the laws of its state of
incorporation; (b) has full corporate power and authority to carry on its
business as it is now being conducted and to own, lease and operate its
properties and assets; and (c) is duly qualified or licensed to do business as
a foreign corporation in good standing in every jurisdiction in which such
qualification is required, except for such failures to be so qualified or
licensed and in good standing as would not be, individually or in the
aggregate, reasonably likely to result in a Material Adverse Effect to Parent.
Parent has made available to the Company complete and correct copies of the
certificate of incorporation, bylaws or similar organizational documents of
each Parent Subsidiary, as presently in effect. With respect to any exception
to ownership set forth in Section 5.2 of the Parent Disclosure Letter, such
Section 5.2 completely and correctly identifies the record and the beneficial
owner of any such shares, whether such record or beneficial owner is an
employee, agent or Affiliate of Parent, and any agreement, arrangement or
understanding, whether written or oral, with respect to such ownership.
Section 5.3 Capitalization
--------------
33
(a) The authorized capital stock of Parent consists of 100,000,000 shares
of Parent Common Stock and 20,000,000 shares of Parent Preferred Stock. As of
the date of this Agreement, (i) 51,867,374 shares of Parent Common Stock are
issued and outstanding and 1,667,581 shares of Parent Common Stock are issued
and held in the treasury of Parent; (ii) no shares of Parent Preferred Stock
are issued and outstanding and no shares of Parent Preferred Stock are issued
and held in the treasury of Parent, and (iii) 7,236,808 shares of Parent Common
Stock are reserved for issuance upon exercise of Parent Options issued under
Parent Stock Plans, of which 6,240,080 shares are subject to outstanding Parent
Options and 996,728 shares are available for issuance thereunder. Section
5.3(a) of the Parent Disclosure Letter lists (s) the holder of each outstanding
Parent Option, (t) if the holder is a former service provider (including
service as an employee), (u) the date such service terminated, (v) the number
of shares of Parent Common Stock for which such Parent Option is exercisable,
(w) the term of the Parent Option, (x) the exercise price of such Parent
Option, (y) the extent to which such Parent Option will vest or become
exercisable upon consummation of any of the Transactions or by termination of
employment or change in position following consummation of the Transactions,
and (z) the vesting/exercise schedule of such Parent Option and (ii) all issued
and outstanding shares of Restricted Stock, the name of the applicable
stockholder, the lapsing schedule for any such shares, including the extent to
which any such repurchase or redemption right or right of first refusal has
lapsed as of the date of this Agreement, whether (and to what extent) the
lapsing will be accelerated in any way by the Transactions or by termination of
employment or change in position following consummation of the Transactions,
and whether such holder has the sole power to vote and dispose of such shares.
Except as set forth in Section 5.3(a) of the Parent Disclosure Letter or as
provided in stock option/Restricted Stock agreements, no acceleration event
shall occur with respect to Parent Options or Restricted Stock as a result of
the Transactions or by termination of employment or change in position
following consummation of the Transactions, including termination of service
agreement in the case of a Person who is not an employee of Parent. On the
Closing Date, Parent shall deliver to the Company an updated Section 5.3(a)
that is current as of such date. All the outstanding shares of Parent's
capital stock are, and all shares of Parent Common Stock which may be issued
pursuant to the exercise of outstanding Parent Options will be, when issued in
accordance with the respective terms of such Parent Option, duly authorized,
validly issued, fully paid and nonassessable and not issued in violation of any
preemptive rights. Neither Parent nor any Parent Subsidiary has any
outstanding Voting Debt. Except (I) as set forth above and (II) for the
Transactions, as of the date hereof, (x) there are no shares of capital stock
of Parent authorized, issued or outstanding; (y) there are no existing options,
stock appreciation rights, warrants, calls, pre-emptive rights, subscriptions
or other rights, agreements, arrangements, understandings or commitments of any
character, relating to the issued or unissued capital stock of Parent or any
Parent Subsidiary, obligating Parent or any Parent Subsidiary to issue,
transfer or sell or cause to be issued, transferred or sold any shares of
capital stock or Voting Debt of, or other equity interest in, Parent or any
Parent Subsidiary or securities convertible into or exchangeable for such
shares, equity interests or Voting Debt, or obligating Parent or any Parent
Subsidiary to grant, extend or enter into any such option, warrant, call,
subscription or other right, agreement, arrangement or commitment; and (z)
there are no outstanding contractual obligations of Parent or any Parent
Subsidiary to repurchase, redeem or otherwise acquire any shares of Parent
Common Stock, or the capital stock of Parent, or any Parent Subsidiary or
Affiliate of Parent or to provide funds to make any investment (in the form of
a loan, capital contribution or otherwise) in any Parent Subsidiary or
34
any other entity or Person. Except as contemplated by this Agreement, set forth
in the Parent SEC Documents or described in this Section 5.3, there are no
registration rights, and there is no rights agreement, "poison pill"
anti-takeover plan or other agreement or understanding to which Parent or any
of its Subsidiaries is a party or by which it or they are bound with respect to
any equity security of any class of Parent or any of its Subsidiaries.
Stockholders of Parent are not entitled to dissenters' or appraisal rights
under applicable state law in connection with the Merger.
(b)Except as set forth in Section 5.3(b) of the Parent Disclosure Letter,
there are no voting trusts or other agreements or understandings to which
Parent or any Parent Subsidiary is a party with respect to the voting of the
capital stock of Parent or any Parent Subsidiary.
Section 5.4 Authorization, Validity of Agreement, Parent Action. Each of
---------------------------------------------------
Parent and Merger Sub has full corporate power and authority to execute and
deliver this Agreement, to perform its obligations under this Agreement and to
consummate the Transactions. The execution and delivery of, and the
performance by each of Parent and Merger Sub of their respective obligations
under this Agreement, and the consummation by each of Parent and Merger Sub of
the Transactions, have been duly authorized by each of Parent's and Merger
Sub's boards of directors and, except for obtaining the approval of Parent's
stockholders as contemplated by Section 5.6, no other corporate action on the
part of Parent or Merger Sub or their respective stockholders is necessary to
authorize the execution and delivery by Parent and Merger Sub of this Agreement
or the consummation by them of the Transactions. This Agreement has been duly
executed and delivered by each of Parent and Merger Sub and, assuming due and
valid authorization, execution and delivery thereof by the Company, this
Agreement is a valid and binding obligation of each of Parent and Merger Sub,
enforceable against each of them in accordance with its terms.
Section 5.5 Board Approvals Regarding Transactions. Parent's board of
--------------------------------------
directors, at a meeting duly called and held, has (a) determined that each of
this Agreement and the Merger are fair to, advisable and in the best interests
of Parent and the stockholders of Parent, (b) approved the Transactions, (c)
approved the Voting Agreements and the transactions contemplated thereby and
(d) recommended that the stockholders of Parent approve this Agreement, and
none of the aforesaid actions by Parent's board of directors has been amended,
rescinded or modified. The action taken by Parent's board of directors
constitutes approval of the Merger and the other Transactions by Parent's board
of directors under the provisions of Section 203 of the DGCL such that Section
203 of the DGCL does not apply to this Agreement or the other Transactions. No
other state takeover, anti-takeover, moratorium, fair price, interested
stockholder, business combination or similar statute or rule is applicable to
the Merger or the other Transactions
Section 5.6 Vote Required. The affirmative vote of the holders of at least
-------------
a majority of the shares of Parent Common Stock voted (the "Parent Stockholder
Approval") is the only vote of the holders of any class or series of Parent's
capital stock necessary to approve the Merger or this Agreement and no other
vote of any holders of shares of Parent's capital stock is necessary to approve
any of the Transactions.
Section 5.7 No Violations. None of the execution or delivery by Parent of,
-------------
or performance by Parent of its obligations under, this Agreement, the
consummation by Parent of
35
the Transactions or compliance by Parent with any of the provisions of this
Agreement will (a) conflict with or result in any breach of any provision of
the certificate of incorporation, the bylaws or similar organizational
documents of Parent or any Parent Subsidiary, (b) result in a violation or
breach of, or constitute (with or without due notice or the passage of time or
both) a default (or give rise to any right of termination, amendment,
cancellation or acceleration or loss of any rights) under, any of the terms,
conditions or provisions of any Parent Agreement or (c) subject to obtaining
Parent Stockholder Approval and compliance with the requirements specified in
clauses (i) through (v) of Section 5.8, conflict with or violate any permit,
concession, franchise, license, judgment, injunction, order, decree, statute,
law, ordinance, rule or regulation applicable to Parent or any of its
Subsidiaries or any of its or their properties or assets, except in the case of
clauses (b) and (c) of this Section 5.7 for any conflicts, violations,
breaches, defaults, terminations, cancellations, accelerations or losses which
would not be, individually or in the aggregate, reasonably likely to result in
a Material Adverse Effect to Parent
Section 5.8 Consents and Approvals. No consent, approval, license,
----------------------
permit, order or authorization of, or registration, declaration, notice or
filing with any Governmental Entity or any stock market or stock exchange on
which shares of Parent Common Stock are listed for trading is required by or
with respect to Parent or any of its Subsidiaries in connection with the
execution and delivery of this Agreement by Parent and Merger Sub or the
consummation by Parent of the transactions contemplated by this Agreement,
except for (i) the pre-merger notification requirements under the HSR Act, (ii)
the filing of the Certificate of Merger with the Delaware Secretary of State
and appropriate corresponding documents with the appropriate authorities of
other states in which Parent is qualified as a foreign corporation to transact
business, (iii) the filing of the Registration Statements on Form S-4 and Form
S-8 with the SEC in accordance with the Securities Act, (iv) the filing of the
Joint Proxy Statement/Prospectus with the SEC in accordance with the Exchange
Act, (v) the filing of such reports, schedules or materials under Section 13 or
Rule 14a-12 of the Exchange Act and materials under Rule 165 and Rule 425 of
the Securities Act as may be required in connection with this Agreement and the
Transactions, (vi) such consents, approvals, orders, authorizations,
registrations, declarations and filings as may be required under applicable
state securities laws and the laws of any foreign country and (vii) the filing
of a Notification Form: Listing of Additional Shares with the Nasdaq Stock
Market, Inc. for the listing of the shares of Parent Common Stock to be issued
in the Transactions, and (viii) such consents, authorizations, orders, filings,
approvals and registrations which, if not obtained or made, would not be
reasonably likely to result in a Material Adverse Effect to Parent.
Section 5.9 Reports and Parent Financial Statements.
---------------------------------------
(a) Parent has timely filed the Parent SEC Documents with the SEC or the
NNM, as applicable. As of their respective dates or, if amended, as of the
date of the last such amendment filed prior to the date of this Agreement, the
Parent SEC Documents, including any financial statements or schedules included
therein (i) did not or will not at the time they were or are filed 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 made therein,
in the light of the circumstances under which they were made, not misleading
and (ii) at the time filed, were or will be prepared in compliance in all
material respects with the applicable requirements of the Exchange Act, the
Securities Act and the rules and regulations of the NNM, as the case may be.
36
(b) Each of the Parent Financial Statements have been prepared from, and
are in accordance with, the books and records of Parent and Parent Subsidiaries.
The Parent Financial Statements complied, as of their respective dates, with
applicable accounting requirements and rules and regulations of the SEC and NNM.
The Parent Financial Statements have been prepared in accordance with GAAP
applied on a consistent basis (except as may be indicated in the notes thereto
and subject, in the case of interim condensed consolidated financial statements,
to normal, recurring and immaterial year-end adjustments and the absence of
certain notes) and fairly present in all material respects (i) the consolidated
financial position of Parent and Parent Subsidiaries as of the dates thereof and
(ii) the consolidated results of operations, changes in stockholders' equity and
cash flows of Parent and Parent Subsidiaries for the periods presented therein.
The value of the intangible assets reflected on the most recent Balance Sheet
included in the Parent Financial Statements does not require any further write
down under GAAP or the applicable rules of the SEC.
Section 5.10 Books and Records. The books of account, minute books,
-----------------
stock record books and other records of each of Parent and Parent Subsidiaries
are complete and correct in all material respects and have been maintained in
accordance with the requirements of Section 13(b)(2) of the Exchange Act,
including an adequate system of internal controls. The minute books of Parent
contain accurate and complete records of all meetings held of, and corporate
action taken by, the stockholders, Parent's board of directors and committees
thereof, and no meeting of any of such stockholders, Parent's board of
directors or such committees has been held for which minutes have not been
prepared and are not contained in such minute books.
Section 5.11 No Undisclosed Liabilities. Except (a) as disclosed in the
--------------------------
Parent SEC Documents filed prior to the date hereof or the Parent Financial
Statements and (b) for liabilities and obligations incurred in the ordinary
course of business and consistent with past practice since the Balance Sheet
Date, neither Parent nor any Parent Subsidiary has any liabilities or
obligations of any nature, whether or not accrued, contingent or otherwise,
that, individually or in the aggregate, result in, or are reasonably likely to
result in, a Material Adverse Effect to Parent.
Section 5.12 Absence of Certain Changes. Since the Balance Sheet Date,
--------------------------
except as disclosed in the Parent SEC Documents filed prior to the date hereof,
(a) Parent and each Parent Subsidiary has conducted its respective business
only in the ordinary and usual course consistent with past practice, (b) there
have not occurred any events or changes in or developments with respect to the
business, prospects, condition (financial or otherwise), assets or results of
operations of Parent and Parent Subsidiaries (including the incurrence of any
liabilities of any nature, whether or not accrued, contingent or otherwise)
taken as a whole, resulting in or which are reasonably likely to result in,
individually or in the aggregate, a Material Adverse Effect to Parent and (c)
Parent has not taken, resolved to take or committed to take any action which
would have been prohibited under Section 6.2 if such section applied to the
period between the Balance Sheet Date and the date of this Agreement.
Section 5.13 Litigation. Except as described in Section 5.13 of the
----------
Parent Disclosure Letter and the Parent SEC Documents filed prior to the date
hereof, there is no action, suit, proceeding, claim, arbitration or
investigation pending or, to the knowledge of Parent, threatened against or
affecting Parent or any of its Subsidiaries, or any of the officers or
directors (in their
37
respective capacity as such) of the Parent or any Parent Subsidiary which,
individually or in the aggregate, has resulted in, or is reasonably likely to
result in, a Material Adverse Effect to Parent. There are no material
judgments, orders or decrees outstanding against Parent or any of its
Subsidiaries.
Section 5.14 Employee Benefit Plans.
----------------------
(a) Section 5.14(a) of the Parent Disclosure Letter lists each Parent
Benefit Plan.
(b) With respect to each Parent Benefit Plan, Parent has made available
to the Company a complete and correct copy of (i) such Parent Benefit Plan (or,
if not written, a written summary of its material terms) and the most recent
summary plan description and all summaries of material modifications issued
since the date of the most recent summary plan description, if any, related to
such Parent Benefit Plan, (ii) each trust agreement or other funding
arrangement, (iii) the most recent annual report ((Form 5500) filed with the
IRS) (and, if the most recent annual report is a Form 5500R, the most recent
Form 5500C filed with respect to such Parent Benefit Plan), (iv) the most
recent actuarial report or financial statement, (v) the most recent
determination letter, if any, issued by the IRS and any pending request for a
determination letter and (vi) each registration statement, permit application
and prospectus. Neither Parent nor any Parent ERISA Affiliate nor, to the
knowledge of Parent or any Parent ERISA Affiliate, any other Person or entity,
has any express or implied commitment, whether legally enforceable or not, to
continue (for any period), modify, change or terminate any Parent Benefit Plan,
other than with respect to a modification, change or termination required by
applicable Law.
(c) Except as would not be, individually or in the aggregate, reasonably
likely to result in a Material Adverse Effect to Parent, each Parent Benefit
Plan has been administered in accordance with its terms and all applicable
laws, including ERISA and the Code (including the prohibited transaction rules
thereunder). Except as would not be, individually or in the aggregate,
reasonably likely to result in a Material Adverse Effect to Parent, all
contributions required to be made under the terms of any of the Parent Benefit
Plans have, as of the date of this Agreement, been timely made or, if not yet
due, have been properly reflected in Parent's and Parent Subsidiaries'
financial accounting records prior to the date of this Agreement. No suit,
administrative proceeding, action or other adverse proceeding or claim has been
brought or threatened against or with respect to any such Parent Benefit Plan
(other than routine benefits claims or relating to qualified domestic relations
orders (as that term is defined in Section 414(p) of the Code)) and there is no
pending audit or inquiry by the IRS or United States Department of Labor with
respect to any Parent Benefit Plan. No event has occurred and, to the
knowledge of Parent or any Parent ERISA Affiliate, there exists no condition or
set of circumstances that could subject Parent or any Parent ERISA Affiliate to
any material liability (other than for routine benefit liabilities) relating in
any way to any Parent Benefit Plan.
(d) Each Parent Benefit Plan can be amended, discontinued or terminated
at any time (including after the Effective Time) in accordance with its terms,
without liability (other than (i) liability for benefits accrued prior to the
Effective Time, (ii) liability for ordinary administrative expenses typically
incurred in a termination event or (iii) liabilities for which sufficient
assets are set aside in a trust or insurance contract to satisfy such
liabilities or which are reflected on the most recent Balance Sheet included in
the Parent Financial Statements).
38
(e) Each Parent Benefit Plan and its related trust that is intended to
qualify under Section 401(a) and Section 501(a), respectively, of the Code has
received a favorable determination letter from the IRS as to such qualified
status or has been established under a standardized prototype plan for which an
IRS opinion letter has been obtained by the plan sponsor and is valid as to the
adopting employer and, in either case, nothing material has occurred that could
adversely affect such qualified status.
(f) No Parent Benefit Plan is a multi-employer pension plan (as defined
in Section 3(37) of ERISA) and no Parent ERISA Affiliate has sponsored or
contributed to or been required to contribute to any such pension plan.
(g) With respect to each Benefit Plan that is subject to Title IV of
ERISA or the minimum funding rules of ERISA or Section 302 or 412 of the Code,
(i) no reportable event (within the meaning of Section 4043 of ERISA, other
than an event that is not required to be reported before or within thirty days
of such event) has occurred, to the knowledge of Parent or any Parent ERISA
Affiliates, or is expected to occur, (ii) there was not an accumulated funding
deficiency (within the meaning of Section 302 of ERISA or Section 412 of the
Code), whether or not waived, as of the most recently ended plan year of such
Benefit Plan; and (iii) there is no "unfunded benefit liability" (within the
meaning of Section 4001(a)(18) of ERISA). No material liability under Title IV
of ERISA has been incurred by Parent or any Parent ERISA Affiliate that has not
been satisfied in full, and to the knowledge of Parent or any Parent ERISA
Affiliate, no condition exists that presents a material risk to Parent or any
Parent ERISA Affiliate of incurring or being subject (whether primarily,
jointly or secondarily) to a material liability thereunder. To the knowledge
of Parent or any Parent ERISA Affiliate, none of the assets of Parent or any
Parent ERISA Affiliate is, or may reasonably be expected to become, the subject
of any lien arising under ERISA or Section 412(n) of the Code.
(h) Except as required by Law, no Parent Benefit Plan provides any of the
following retiree or post-employment benefits to any person: medical,
disability or life insurance benefits. To Parent's knowledge, Parent and each
Parent ERISA Affiliate is in material compliance with (i) the requirements of
the applicable health care continuation and notice provisions of the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, and (ii)
the applicable requirements of the Health Insurance Portability and
Accountability Act of 1996, as amended.
(i) Parent has made available to the Company complete and correct copies of
(i) all employment agreements with officers and all consulting agreements of
Parent or any Parent Subsidiary providing for annual compensation in excess of
$100,000, (ii) all severance plans, agreements, programs and policies of Parent
or any Parent Subsidiary with or relating to their respective employees,
directors or consultants, and (iii) all plans, programs, agreements and other
arrangements of Parent or any Parent Subsidiary with or relating to their
respective employees, directors or consultants which contain "change of control"
or similar provisions. No payment or benefit which may be required to be made by
Parent or any Parent Subsidiary or which otherwise may be required to be made
under the terms of any Parent Benefit Plan or other arrangement will constitute
a parachute payment under Section 280G of the Code (without regard to Section
280G(b)(4)). Except as set forth in Section 5.14(1) of the Parent Disclosure
Letter, the consummation of the Transactions will not, alone or in conjunction
with any other possible event (including termination of employment), (x) entitle
any current or former employee
39
or other service provider of Parent or any Parent Subsidiary to severance
benefits or any other payment, compensation or benefit (including forgiveness
of indebtedness), except as expressly provided by this Agreement, or (y)
accelerate the time of payment or vesting, or increase the amount of
compensation or benefit due any such employee or service provider, alone or in
conjunction with any other possible event (including termination of employment).
Section 5.15 Tax Matters
-----------
(a) Except as would not be, individually or in the aggregate, reasonably
likely to have a Material Adverse Effect to Parent, Parent and each Parent
Subsidiary, and any affiliated, consolidated, combined, unitary or aggregate
group for Tax purposes of which Parent or any Parent Subsidiary is or has been
a member, have (i) properly completed and timely filed all Tax Returns that are
required to be filed by them through the date of this Agreement and all such
Tax Returns are true, correct and complete in all material respects and (ii)
have duly paid or caused to be duly paid in full all Taxes reflected on such
Tax Returns or subsequently assessed by any Governmental Entity responsible for
the imposition of any Tax with respect to such Tax Returns. Since the Balance
Sheet Date, Parent and Parent Subsidiaries have not incurred any liability for
any Taxes other than in the ordinary course of business. Neither Parent nor
any Parent Subsidiary has received notice of any claim made by an authority in
a jurisdiction where the Parent or any Parent Subsidiary, as the case may be,
does not file Tax Returns, that Parent or any Parent Subsidiary is or may be
subject to taxation by that jurisdiction.
(b) There is (i) no material claim for Taxes that is a lien against the
property or assets of Parent or any Parent Subsidiary or that is
being asserted against Parent or any Parent Subsidiary other than liens for
Taxes not yet due and payable, (ii) except as set forth in Section 5.15(b)(ii)
of the Parent Disclosure Letter, no audit, administrative proceeding or court
proceeding with respect to Taxes or Tax Returns of the Parent or any Parent
Subsidiary that is being conducted or that is pending and no deficiency or
claim for Taxes that is being asserted by any Governmental Entity responsible
for the imposition of any Tax against Parent or any Parent Subsidiary; (iii) no
extension of the statute of limitations on the assessment of any Taxes that has
been granted by Parent or any Parent Subsidiary and is currently in effect, and
(iv) no agreement, contract or arrangement to which Parent or any Parent
Subsidiary is a party that may result in the payment of any amount that would
not be deductible by reason of Section 162(m), 280G or 404 of the Code.
(c) Neither Parent nor any Parent Subsidiary has filed any disclosures
under Section 6662 of the Code or comparable provisions of state, local or
foreign law to prevent the imposition of penalties with respect to any Tax
reporting position taken on any Tax Return.
(d) No federal, state, local or foreign audits, examinations or other
administrative proceedings are pending or, to Parent's knowledge, threatened
with regard to any Taxes or Tax Returns of Parent or of any Parent Subsidiary
There is no dispute or claim concerning any Tax liability of Parent or any
Parent Subsidiary either claimed or raised by any taxing authority in writing.
(e) Neither Parent nor any Parent Subsidiary has filed a consent pursuant
to Section 341(f) of the Code (or any predecessor provision) concerning
collapsible corporations, or agreed
40
to have Section 341(f)(2) of the Code apply to any disposition of a
"subsection (f) asset" (as such term is defined in Section 341(f)(4) of the
Code) owned by Parent or any Parent Subsidiary.
(f) Neither Parent nor any Parent Subsidiary has been required to include
any material adjustment in taxable income for any Tax period (or portion
thereof) pursuant to Section 481 or 263A of the Code or any comparable
provision under state or foreign Tax laws as a result of transactions, events
or accounting methods employed prior the Effective Time other than any such
adjustments required as a result of the Merger.
(g) Neither Parent nor any Parent Subsidiary is a party to any tax
sharing, tax indemnity or other agreement or arrangement with any entity not
consolidated in the Financial Statements most recently filed by Parent with the
SEC or has any liability or potential liability to another party under any such
agreement, and neither Parent nor any Parent Subsidiary has any liability or
potential liability for Taxes of any Person under Section 1.1502-6 of the
Treasury Regulations (or any similar provision of state, local or foreign law),
as a transferee or successor, by contract or otherwise.
(h) Parent and each Parent Subsidiary has withheld and paid all Taxes
required to have been withheld and paid in connection with amounts paid or
owing to any employee, independent contractor, creditor, stockholder or other
third party.
(i) No power of attorney has been granted by Parent or any Parent
Subsidiary with respect to any matters relating to Taxes that is currently in
effect.
(j) Neither Parent nor any Parent Subsidiary has settled any claim, audit
or administrative or court proceeding with respect to Taxes.
(k) Neither Parent nor any Parent Subsidiary is or has ever been a
"personal holding company" within the meaning of Section 542 of the Code or a
"United States real property holding corporation" within the meaning of Section
897 of the Code.
(l) Neither Parent nor any of its Affiliates has taken or agreed to take
any action (other than actions contemplated by this Agreement) that could
reasonably be expected to prevent the Merger from constituting a
"reorganization" under Section 368 of the Code. Parent is not aware of any
agreement or plan to which Parent or any of its Affiliates is a party or other
circumstances relating to Parent or any of its Affiliates that could reasonably
be expected to prevent the Merger from so qualifying as a reorganization under
Section 368 of the Code.
Section 5.16 Intellectual Property
---------------------
(a) Section 5.16(a) of the Parent Disclosure Letter contains a true and
complete list of all of Parent's and Parent Subsidiaries' Intellectual Property
(other than unregistered copyrights, trade secrets and confidential
information) and applications and other filings and formal actions made or
taken pursuant to federal, state, local and foreign laws by Parent and/or any
Parent Subsidiary to protect its interests in material Parent Intellectual
Property.
(b) Except as set forth in Section 5.16(b) of the Parent Disclosure Letter,
Parent and Parent Subsidiaries have all rights in Parent Intellectual Property
necessary to carry out their
41
current and currently contemplated and reasonably foreseeable activities except
where the absence of such right is not reasonably likely to result in a
Material Adverse Effect to Parent.
(c) Except as would not be, individually or in the aggregate, reasonably
likely to result in a Material Adverse Effect to Parent, the reproduction,
manufacturing, distribution, licensing, sublicensing, sale or any other
exercise of rights in any Parent Intellectual Property or Product, work,
technology or process as now used or offered or proposed for use, licensing or
sale by Parent or any Parent Subsidiary does not infringe on any copyright,
trade secret, trademark, service xxxx, trade name, trade dress, firm name,
Internet domain name, logo, trade dress or mask work of any Person or, to the
knowledge of Parent or any Parent Subsidiary as of the date hereof, the patent
of any Person. Except as set forth in Section 5.16(c) of the Parent Disclosure
Letter, no written and material claims (i) challenging the validity,
effectiveness or ownership by Parent or any Parent Subsidiary of any of Parent
Intellectual Property, or (ii) to the effect that the use, distribution,
licensing, sublicensing, sale or any other exercise of rights in any Product,
work, technology or process as now used or offered or proposed for use,
licensing, sublicensing or sale by Parent or any Parent Subsidiary infringes or
will infringe on any intellectual property or other proprietary right of any
Person have been asserted or, to the knowledge of Parent or any Parent
Subsidiary, are threatened by any Person, nor are there, to Parent's or any
Parent Subsidiary's knowledge, any valid grounds for any bona fide claim of any
such kind. All registered, granted or issued patents, trademarks, Internet
domain names and copyrights held by Parent and any Parent Subsidiary are
subsisting. To Parent's or any Parent Subsidiary's knowledge, there is no
material unauthorized use, infringement or misappropriation of any of Parent
Intellectual Property by any third party, employee or former employee
(d) Except as set forth in Section 5.16(d) of the Parent Disclosure Letter,
there are no royalties, fees, honoraria or other payments payable by Parent or
any Parent Subsidiary to any Person by reason of the ownership, development,
use, license, sale or disposition of Parent Intellectual Property, other than
salaries and sales commissions paid to employees and sales agents in the
ordinary course of business.
(e) Neither Parent nor any Parent Subsidiary is in violation of any
license, sublicense, agreement or instrument to which Parent or any Parent
Subsidiary is a party or otherwise bound, nor to the knowledge of Parent as of
the date hereof, will execution or delivery of this Agreement, or performance of
Parent's obligations hereunder, cause the diminution, termination or forfeiture
of any Parent Intellectual Property, except as would not be, individually or in
the aggregate, reasonably likely to result in a Material Adverse Effect to
Parent. Section 5.16(e) of the Parent Disclosure Letter sets forth a list of all
material Licenses by Parent or any of Parent Subsidiaries of Parent Intellectual
Property.
(f) Except as would not be, individually or in the aggregate, reasonably
likely to result in a Material Adverse Effect to Parent, Parent and each of
Parent Subsidiaries have observed all material provisions of, and performed all
of their material obligations under, the license agreements to which it is a
party. Neither Parent, nor any Parent Subsidiary, have taken any action that
could cause, or failed to take any action, the failure of which could cause, (i)
any source code, trade secret or other Parent Intellectual Property to be (A)
released from an escrow or otherwise made available to any person or entity
other than those persons described in Section 5.16(f) of the Parent Disclosure
Letter or (B) dedicated to the public or otherwise placed in the
42
public domain or (ii) any other material adverse affect to the protection of
Parent Intellectual Property under trade secret, copyright, patent or other
intellectual property laws.
Section 5.17 Employment Matters.
------------------
(a) Except as would not, individually or in the aggregate, be reasonably
expected to have a Material Adverse Effect, Parent and each Parent Subsidiary
are in compliance in all respects with all currently applicable Laws respecting
employment, discrimination in employment, terms and conditions of employment,
wages, hours and occupational safety and health and employment practices, and
is not engaged in any unfair labor practice. Parent and each Parent Subsidiary
have withheld all amounts required by Law or by agreement to be withheld from
the wages, salaries, and other payments to employees, and neither Parent nor
any Parent Subsidiary is liable for any arrears of wages or any Taxes or any
penalty for failure to comply with any of the foregoing. Neither Parent nor
any Parent Subsidiary is liable for any payment to any trust or other fund or
to any governmental or administrative authority, with respect to unemployment
compensation benefits, social security or other benefits or obligations for
employees (other than routine payments to be made in the normal course of
business and consistent with past practice). Except as would not, individually
or in the aggregate, be reasonably expected to have a Material Adverse Effect,
there are no pending claims against Parent or any Parent Subsidiary under any
workers compensation plan or policy or for long-term disability. Neither
Parent nor any Parent Subsidiary is a party to any collective bargaining
agreement or other labor union contract, and neither Parent nor any Parent
Subsidiary knows of any activities or proceedings of any labor union in
connection with an attempt to organize any such employees. To Parent's or any
Parent Subsidiary's knowledge, no employees of Parent or any Parent Subsidiary
are in violation of any term of any employment contract, patent disclosure
agreement, non-competition agreement, or any restrictive covenant to a former
employer relating to the right of any such employee to be employed by Parent or
Parent Subsidiary because of the nature of the business conducted or presently
proposed to be conducted by Parent or any Parent Subsidiary or to the use of
trade secrets or proprietary information of others. As of the date of this
Agreement, except as would not, individually or in the aggregate, be reasonably
expected to have a Material Adverse Effect, no employee of Parent or any Parent
Subsidiary has given notice to Parent or any Parent Subsidiary, and Parent and
each of Parent Subsidiaries is not otherwise aware, that any such employee
intends to terminate his or her employment with Parent or any Parent
Subsidiary. Neither Parent nor any Parent Subsidiary is a party to any
Severance Agreements.
(b) All officers, employees and consultants of Parent and each Parent
Subsidiary have signed proprietary rights and confidentiality agreements in
substantially the form set forth on Section 5.17(b) of the Parent Disclosure
Letter.
(c) Since the enactment of the WARN Act, neither Parent nor any Parent
Subsidiary has effected (i) a plant closing as defined in the WARN Act affecting
any site of employment or facility or one or more operating units within any
site of employment or facility of Parent or any Parent Subsidiary or (ii) a mass
layoff as defined in the WARN Act affecting the site of employment or facility
of Parent or any Parent Subsidiary. None of Parent nor any Parent Subsidiary
has been affected by any transaction or is engaged in any layoffs or employment
terminations sufficient in number to trigger application of any similar state or
local Law. Except as set forth on Section 5.17(c) of the Parent Disclosure
Letter, none of the employees of Parent
43
or any Parent Subsidiary has suffered an employment loss as defined in the WARN
Act during the preceding ninety-day period.
Section 5.18 Compliance with Laws. Except as would not be, individually
--------------------
or in the aggregate, reasonably likely to result in a Material Adverse Effect to
Parent, Parent and each of Parent Subsidiaries are in compliance with, and have
not violated any applicable Law of any United States federal, state, local,
or foreign Governmental Entity which affects the business, properties or assets
of Parent and any Parent Subsidiary, and no notice, charge, claim, action
or assertion has been received by Parent or any Parent Subsidiary or has
been filed, commenced or, to the knowledge of Parent or any Parent
Subsidiary, threatened against Parent or any Parent Subsidiary alleging any such
violation. All licenses, permits and approvals required under such Laws are in
full force and effect except where the failure to be in full force and effect
would not be, individually or in the aggregate, reasonably likely to result in a
Material Adverse Effect to Parent.
Section 5.19 Contracts and Commitments.
-------------------------
(a) There are no contracts or agreements that are material contracts (as
defined in Item 601(b)(10) of Regulation S-K) with respect to Parent and its
Subsidiaries ("Parent Material Contracts"), other than those Parent Material
Contracts identified on the exhibit indices of the Parent SEC Documents filed
prior to the date hereof. Each Parent Material Contract is in full force and
effect and is enforceable in accordance with its terms. Neither Parent nor any
of its Subsidiaries nor, to Parent's knowledge, any other party to any Parent
Material Contract is in violation of or in default under (nor does there exist
any condition which, upon the passage of time or the giving of notice or both,
would cause such a violation of or default under) any loan or credit agreement,
note, bond, mortgage, indenture, lease, permit, concession, franchise, license
or other contract, arrangement or understanding to which it is a party or by
which it or any of its properties or assets is bound, except for violations or
defaults which, individually or in the aggregate, have not resulted in, and are
not reasonably likely to result in, a Material Adverse Effect to Parent.
(b) Section 5.19(b) of the Parent Disclosure Letter sets forth a complete
and accurate list of each contract or agreement to which Parent or any of its
Subsidiaries is a party or bound with any Affiliate of Parent (other than any
Subsidiary which is a direct or indirect wholly owned subsidiary of Parent).
Complete and accurate copies of all the agreements, contracts and arrangements
set forth in Section 5.19(b) of the Parent Disclosure Letter have heretofore
been furnished to the Company. Except as disclosed in the Parent SEC Documents
filed prior to the date of this Agreement, neither Parent nor any of its
Subsidiaries has entered into any transaction with any Affiliate of Parent or
any of its Subsidiaries or any transaction that would be subject to proxy
statement disclosure pursuant to Item 404 of Regulation S-K.
(c) Parent is not a party to or bound by any contract or agreement that
includes any non-competition, non-solicitation, standstill or other similar
restrictions or undertakings that has or would reasonably be expected to have
the effect of prohibiting or impairing the conduct of the business of Parent or
any of its Subsidiaries or the Company or any of its Subsidiaries as currently
conducted and as proposed to be conducted in any material respect. Neither
Parent nor any of its Subsidiaries has entered into (or is otherwise bound by)
any agreement under which it
44
is restricted in any material respect from selling, licensing or otherwise
distributing any of its technology or products, or providing services to,
customers or potential customers or any class of customers, in any geographic
area, during any period of time or any segment of the market or line of
business.
(d) Neither Parent nor any of its Subsidiaries is a party to any agreement
under which a third party would be entitled to receive a license or any other
right to Parent Intellectual Property as a result of the transactions
contemplated by this Agreement.
Section 5.20 Customers and Suppliers. There has not been any material
-----------------------
adverse change in the business relationship of Parent or any Parent Subsidiary
with any customer who accounted for more than five percent of Parent's sales (on
a consolidated basis) during the period subsequent to November 30, 2001, or any
supplier from whom Parent and Parent Subsidiaries purchased more than five
percent of the goods or services (on a consolidated basis) which they purchased
during the same period.
Section 5.21 Information Supplied. None of the information supplied or to
--------------------
be supplied by Parent specifically for inclusion or incorporation by reference
in (a) the Registration Statement or (b) for inclusion in any Regulation M-A
Filing, will contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading, when, respectively, the Registration
Statement becomes effective under the Securities Act or at the time of the
Regulation M-A Filing. None of the information supplied or to be supplied by
Parent specifically for inclusion or incorporated by reference in the Proxy
Statement/Prospectus will, at the date it is first mailed to the Company's
stockholders or at the time of the Parent Stockholders' Meeting, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not misleading. The Proxy
Statement/Prospectus and the Registration Statement will comply as to form in
all material respects with the requirements of the Securities Act and the
Exchange Act and the rules and regulations thereunder, except that no
representation or warranty is made by Parent with respect to statements made or
incorporated by reference therein based on information supplied by Parent
specifically for inclusion or incorporation by reference in the Proxy
Statement/Prospectus.
Section 5.22 Opinion of Financial Advisor. Parent has received the opinion
----------------------------
of Xxxxxxx Xxxxx Xxxxxx, Inc. (the "Parent Financial Advisor") dated the date
of this Agreement, to the effect that, as of the date of such opinion, the
Exchange Ratio is fair to the holders of shares of Parent Common Stock from a
financial point of view.
Section 5.23 Absence of Questionable Payments. Neither Parent nor any
--------------------------------
Parent Subsidiary nor any director, officer, agent, employee or other Person
acting on behalf of Parent or any Parent Subsidiary, has used any corporate or
other funds for unlawful contributions, payments, gifts, or entertainment, or
made any unlawful expenditures relating to political activity to government
officials or others or established or maintained any unlawful or unrecorded
funds in violation of Section 30A of the Exchange Act. Neither Parent nor any
Parent Subsidiary nor any current director, officer, agent, employee or other
Person acting on behalf of Parent or any Parent Subsidiary, has accepted or
received any unlawful contributions, payments, gifts or
45
expenditures. Parent and each Parent Subsidiary is in compliance with the
provisions of Section 13(b) of the Exchange Act.
Section 5.24 Insider Interests. Except as set forth in the Parent SEC
-----------------
Documents, no officer or director of Parent or any Parent Subsidiary
has any material interest in any property, real or personal, tangible
or intangible, including inventions, patents, trademarks or trade names, used
in or pertaining to the business of Parent or any Parent Subsidiary.
Section 5.25 Brokers or Finders. Except as set forth in Section 5.25
------------------
of the Parent Disclosure Letter, neither Parent nor any Parent Subsidiary or
their respective Affiliates has an obligation to pay any agent, broker,
investment banker, financial advisor or other firm or Person any brokers' or
finder's fee or any other commission or similar fee in connection with any of
the Transactions. True and correct copies of all agreements between Parent and
the Parent Financial Advisor including any fee arrangements are included in
Section 5.25 of the Parent Disclosure Letter.
Section 5.26 Insurance. Parent and each Parent Subsidiary is presently
---------
insured, and during each of the past five calendar years has been insured,
against such risks as companies engaged in a similar business would, in
accordance with good business practice, customarily be insured. All such
policies are in full force and effect and all premiums due thereon have been
paid to the date hereof. Parent and Parent Subsidiaries have complied in all
material respects with the terms of such policies.
Section 5.27 Properties.
----------
(a) Parent and the Parent Subsidiaries have good and valid title, free and
clear of all Liens, to all their material properties and assets, whether
tangible or intangible, personal or mixed, reflected in Parent's Financial
Statements for the period ended November 30, 2001 as being owned by Parent and
the Parent Subsidiaries as of the date thereof, other than (i) any properties or
assets that have been sold or otherwise disposed of in the ordinary course of
business since the date of such Parent Financial Statements, (ii) Liens
disclosed in the notes to such Parent Financial Statements and (iii) Liens
arising in the ordinary course of business after the date of such Parent
Financial Statements. All fixtures, equipment and other property and assets that
are material to its business on a consolidated basis, held under leases or
sub-leases by Parent or any Parent Subsidiary are held under valid instruments
enforceable in accordance with their respective terms, subject to applicable
laws of bankruptcy, insolvency or similar laws relating to creditors' rights
generally and to general principles of equity (whether applied in a proceeding
in law or equity). Substantially all of the Parent's and the Parent
Subsidiaries' equipment in regular use has been reasonably maintained and is in
serviceable condition, reasonable wear and tear excepted.
(b) Neither Parent nor any Parent Subsidiaries owns or has ever owned any
real property.
(c) Section 5.27 of the Parent Disclosure Letter sets forth a complete
and accurate list of all real property leased, subleased or licensed by
Parent or any of its Subsidiaries (collectively the "Parent Leases") and the
location of the premises. Neither Parent, nor any of its Subsidiaries nor, to
Parent's knowledge, any other party is in default under any of the Parent
Leases, except
46
where the existence of such defaults, individually or in the aggregate, has not
resulted in, and is not reasonably likely to result in a Material Adverse
Effect to Parent. Neither Parent nor any of its Subsidiaries leases, subleases
or licenses any real property to any person other than Parent and its
Subsidiaries. Parent has provided the Company with complete and accurate copies
of all Parent Leases.
ARTICLE 6
COVENANTS
Section 6.1 Interim Operations of the Company. The Company covenants
---------------------------------
and agrees that prior to the Effective Time, except (i) if consistent with past
practice, (ii) as expressly contemplated by this Agreement, (iii) as set forth
in Section 6.1 of the Company Disclosure Letter or (iv) as agreed in writing by
Parent (which agreement shall not be unreasonably withheld), after the date
hereof:
(a) the business of the Company and of each Company Subsidiary shall be
conducted only in the usual, regular and ordinary course and substantially in
the same manner as heretofore conducted, and the Company and each Company
Subsidiary shall use commercially reasonable efforts to preserve its business
organization intact, keep available the services of its current officers and
employees and maintain its existing relations with licensors, customers,
suppliers, distributors, creditors, business partners and others having
business dealings with it, to the end that their respective goodwill and
ongoing business shall be unimpaired at the Effective Time;
(b) neither the Company nor any Company Subsidiary shall: (i) amend its
certificate of incorporation or bylaws or similar organizational documents,
(ii) issue, sell, transfer, pledge, dispose of or encumber any shares of any
class or series of its capital stock or Voting Debt, or securities convertible
into or exchangeable for, or options, warrants, calls, commitments or rights of
any kind to acquire, any shares of any class or series of its capital stock or
any Voting Debt, other than (x) the issuance of shares of Company Common Stock
reserved for issuance on the date of this Agreement pursuant to the exercise of
Company Options and Purchase Rights under the Company ESPP outstanding on the
date of this Agreement or (y) the issuance of Company Options to new
non-officer employees consistent with past practices in the ordinary course of
business, (iii) declare, set aside or pay any dividend or other distribution
payable in cash, stock or property with respect to any shares of any class or
series of its capital stock, (iv) split, combine or reclassify any shares of
any class or series of its capital stock or (v) redeem, purchase or otherwise
acquire directly or indirectly any shares of any class or series of its capital
stock, or enter into any instrument or security which consists of or includes a
right to acquire such shares, other than (1) the acquisition shares of Company
Common Stock from holders of Company Options in full or partial payment of the
exercise price or withholding taxes payable by such holder upon exercise of
Company Options to the extent required under the terms of such Company Options
as in effect on the date thereof; or (2) the repurchase of Restricted Stock
from former employees, directors and consultants in connection with any
termination of services to Company or any of its Subsidiaries;
47
(c) adopt or implement any stockholder rights plan or, except as provided
in Section 4.23, alter or further amend the Company Rights Plan or Company
Rights;
(d) neither the Company nor any Company Subsidiary shall (i) incur or
modify any indebtedness or other liability, other than in the ordinary course
of business consistent with past practice or (ii) modify, amend or terminate
any of its material contracts or waive, release or assign any material rights
or claims, except in the ordinary course of business consistent with past
practice;
(e) neither the Company nor any Company Subsidiary shall (i) incur or
assume any long-term debt, or except in the ordinary course of business, incur
or assume any short-term indebtedness in amounts not consistent with past
practice; (ii) modify the terms of any indebtedness or other liability, other
than modifications of short term debt in the ordinary course of business
consistent with past practice; (iii) assume, guarantee, endorse or otherwise
become liable or responsible (whether directly, contingently or otherwise) for
the obligations of any other Person, except as described in Section 6.1(e) of
the Company Disclosure Letter as being in the ordinary course of business
consistent with past practice; (iv) make any loans, advances or capital
contributions to, or investments in, any other Person (other than to or in
wholly owned Company Subsidiaries and expense advances to employees in the
ordinary course of business consistent with past practices); or (v) enter into
any material commitment or transaction (including any capital expenditure,
acquisition, sale or lease of assets or real estate or merger or consolidation
(except one involving only wholly-owned Company Subsidiaries));
(f) neither the Company nor any Company Subsidiary shall transfer, lease,
license, sell, mortgage, pledge, dispose of, or encumber any asset, other than
in the ordinary course of business consistent with past practice; or
(g) except as otherwise specifically provided in this Agreement, neither
the Company nor any Company Subsidiary shall make or offer to make any change
in the compensation payable or to become payable to any of its officers,
directors, employees, agents or consultants (other than normal recurring
increases in wages to employees who are not officers or directors or Affiliates
in the ordinary course of business consistent with past practice) or to Persons
providing management services, or enter into or amend any employment, stock
options, severance, consulting, termination or other agreement or employee
benefit plan or make any loans to any of its officers, directors, employees,
Affiliates, agents or consultants or make any change in its existing borrowing
or lending arrangements for or on behalf of any of such Persons pursuant to a
Company Benefit Plan or otherwise;
(h) except as otherwise specifically contemplated by this Agreement or as
set forth in Section 6.1(h) of the Company Disclosure Letter, neither the
Company nor any Company Subsidiary shall (i) pay or make any accrual or
arrangement for payment of any pension, retirement allowance or other employee
benefit pursuant to any existing plan, agreement or arrangement to any officer,
director, employee or Affiliate, (ii) pay, offer to pay or agree to pay or make
any accrual or arrangement for payment to any officers, directors, employees or
Affiliates of the Company or any Company Subsidiary of any amount relating to
unused vacation days (except payments and accruals made in the ordinary course
of business consistent with past practice), (iii) adopt or pay, grant, issue,
accelerate or accrue salary or other payments or benefits
48
pursuant to any pension, profit-sharing, bonus, extra compensation, incentive,
deferred compensation, stock purchase, stock option, stock appreciation right,
group insurance, severance pay, retirement or other employee benefit plan,
agreement or arrangement, or any employment or consulting agreement with or for
the benefit of any director, officer, employee, agent or consultant, whether
past or present, or amend in any material respect any such existing plan,
agreement or arrangement in a manner inconsistent with the foregoing, except as
may otherwise be required by applicable Law;
(i) neither the Company nor any Company Subsidiary shall permit any
insurance policy naming it as a beneficiary or a loss payable payee to be
cancelled or terminated without notice to and the prior consent of Parent,
except which are replaced with new policies providing for continuation of
similar coverage;
(j) neither the Company nor any Company Subsidiary shall revalue in any
material respect any of its assets, including writing down the value of
inventory or writing-off notes or accounts receivable, other than in the
ordinary course of business consistent with past practice or as required by a
change in GAAP promulgated after the date of this Agreement;
(k) neither the Company nor any Company Subsidiary shall settle or
compromise any pending or threatened suit, action or claim that (i) relates to
the Transactions or (ii) the settlement or compromise of which would involve
more than $75,000 and does not obligate the Company to take or refrain from
taking any action other than the payment of such sum or that would otherwise be
material to the Company and Company Subsidiaries, considering the Company
together with the Company Subsidiaries as a whole, or that relates to any
matters concerning Company Intellectual Property;
(l) neither the Company nor any Company Subsidiary shall pay, purchase,
discharge or satisfy any of its claims, liabilities or obligations (absolute,
accrued, asserted or unasserted, contingent or otherwise), other than the
payment, discharge or satisfaction in the ordinary course of business
consistent with past practice, of claims, liabilities or obligations reflected
or reserved against in, or contemplated by, the Company Financial Statements;
(m) neither the Company nor any Company Subsidiary will adopt a plan of
complete or partial liquidation, dissolution, merger, consolidation,
restructuring, recapitalization or other reorganization of the Company or any
Company Subsidiary (other than the Merger);
(n) neither the Company nor any Company Subsidiary will (i) change any of
the accounting methods used by it unless required by a change in GAAP
promulgated after the date of this Agreement or (ii) make any material election
relating to Taxes, change any material election relating to Taxes already made,
adopt any material accounting method relating to Taxes, change any material
accounting method relating to Taxes unless required by a change in GAAP or
change in the Code or the regulations under the Code promulgated after the date
of this Agreement, enter into any closing agreement relating to Taxes, settle
any claim or assessment relating to Taxes or consent to any claim or assessment
relating to Taxes or any waiver of the statute of limitations for any such
claim or assessment;
49
(o) neither the Company nor any Company Subsidiary will take, or agree to
commit to take, any action that would be reasonably likely to result in any of
the conditions set forth in Article 7 not being satisfied, or would make any
representation or warranty of the Company contained in this Agreement
inaccurate in any material respect at, or as of any time prior to, the
Effective Time, or that would materially impair the ability of the Company,
Parent or Merger Sub to consummate the Merger in accordance with the terms
thereof or materially delay such consummation;
(p) neither the Company nor any Company Subsidiary shall enter into any
agreement, contract, commitment, understanding or arrangement with any officer
or director of the Company or any Company Subsidiary with respect to any
property, real or personal, tangible or intangible, including inventions,
patents, trademarks or trade names, used in or pertaining to the business of
the Company or any Company Subsidiary or modify, amend or terminate any such
existing agreement, contract, commitment, understanding or arrangement; and
(q) neither the Company nor any Company Subsidiary will enter into any
agreement, contract, commitment, understanding or arrangement to do any of the
foregoing, or to authorize, recommend, propose or announce an intention to do
any of the foregoing.
Section 6.2 Interim Operations of Parent and Merger Sub. Parent
-------------------------------------------
covenants and agrees that prior to the Effective Time, except (i) if consistent
with past practice, (ii) as expressly contemplated by this Agreement, (iii) as
set forth in Section 6.2 of the Parent Disclosure Letter or (iv) as agreed in
writing by the Company (which agreement shall not be unreasonably withheld),
after the date hereof:
(a) the business of Parent and of each Parent Subsidiary shall be
conducted only in the usual, regular and ordinary course and substantially in
the same manner as heretofore conducted, and Parent and each Parent Subsidiary
shall use commercially reasonable efforts to preserve its business organization
intact, keep available the services of its current officers and employees and
maintain its existing relations with licensors, customers, suppliers,
distributors, creditors, business partners and others having business dealings
with it, to the end that their respective goodwill and ongoing business shall
be unimpaired at the Effective Time;
(b) neither Parent nor any Parent Subsidiary shall: (i) amend its
certificate of incorporation or bylaws or similar organizational documents,
(ii) issue, sell, transfer, pledge, dispose of or encumber any shares of any
class or series of its capital stock or Voting Debt, or securities convertible
into or exchangeable for, or options, warrants, calls, commitments or rights of
any kind to acquire, any shares of any class or series of its capital stock or
any Voting Debt, other than (x) the issuance of shares of Parent Common Stock
reserved for issuance on the date of this Agreement pursuant to the exercise of
Parent Options or (y) the issuance of Parent Options to new non-officer
employees consistent with past practices in the ordinary course of business,
(iii) declare, set aside or pay any dividend or other distribution payable in
cash, stock or property with respect to any shares of any class or series of
its capital stock, (iv) split, combine or reclassify any shares of any class or
series of its capital stock or (v) redeem, purchase or otherwise acquire
directly or indirectly any shares of any class or series of its capital stock,
or enter into any instrument or security which consists of or includes a right
to acquire such shares, other than (1) the acquisition of shares of Parent
Common Stock from holders of Parent Options
50
in full or partial payment of the exercise price or withholding taxes payable
by such holder upon exercise of Parent Options to the extent required under the
terms of such Parent Options as in effect on the date thereof; or (2) the
repurchase of Restricted Stock from former employees, directors and consultants
in connection with any termination of services to Parent or any of its
Subsidiaries;
(c) neither Parent nor any Parent Subsidiary shall (i) incur or modify any
indebtedness or other liability, other than in the ordinary course of business
consistent with past practice or (ii) modify, amend or terminate any of its
material contracts or waive, release or assign any material rights or claims,
except in the ordinary course of business consistent with past practice;
(d) neither Parent nor any Parent Subsidiary shall (i) incur or assume any
long-term debt, or except in the ordinary course of business, incur or assume
any short-term indebtedness in amounts not consistent with past practice; (ii)
modify the terms of any indebtedness or other liability, other than
modifications of short term debt in the ordinary course of business consistent
with past practice; (iii) assume, guarantee, endorse or otherwise become liable
or responsible (whether directly, contingently or otherwise) for the
obligations of any other Person, except as described in Section 6.2 of the
Parent Disclosure Letter as being in the ordinary course of business consistent
with past practice; (iv) make any loans, advances or capital contributions to,
or investments in, any other Person (other than to or in wholly owned Parent
Subsidiaries and expense advances to employees in the ordinary course of
business consistent with past practices); or (v) enter into any material
commitment or transaction (including any capital expenditure, acquisition, sale
or lease of assets or real estate or merger or consolidation (except one
involving only a wholly-owned Parent Subsidiary));
(e) neither Parent nor any Parent Subsidiary shall transfer, lease,
license, sell, mortgage, pledge, dispose of, or encumber any asset, other than
in the ordinary course of business consistent with past practice; or
(f) except as otherwise specifically provided in this Agreement, neither
Parent nor any Parent Subsidiary shall make or offer to make any change in the
compensation payable or to become payable to any of its officers, directors,
employees, agents or consultants (other than normal recurring increases in
wages to employees who are not officers or directors or Affiliates in the
ordinary course of business consistent with past practice) or to Persons
providing management services, or enter into or amend any employment, stock
options, severance, consulting, termination or other agreement or employee
benefit plan or make any loans to any of its officers, directors, employees,
Affiliates, agents or consultants or make any change in its existing borrowing
or lending arrangements for or on behalf of any of such Persons pursuant to a
Parent Benefit Plan or otherwise;
(g) except as otherwise specifically contemplated by this Agreement or as
set forth in Section 6.2 of the Parent Disclosure Letter, neither Parent nor
any Parent Subsidiary shall (i) pay or make any accrual or arrangement for
payment of any pension, retirement allowance or other employee benefit pursuant
to any existing plan, agreement or arrangement to any officer, director,
employee or Affiliate, (ii) pay, offer to pay or agree to pay or make any
accrual or arrangement for payment to any officers, directors, employees or
Affiliates of Parent or any Parent Subsidiary of any amount relating to unused
vacation days (except payments and accruals
51
made in the ordinary course of business consistent with past practice), (iii)
adopt or pay, grant, issue, accelerate or accrue salary or other payments or
benefits pursuant to any pension, profit-sharing, bonus, extra compensation,
incentive, deferred compensation, stock purchase, stock option, stock
appreciation right, group insurance, severance pay, retirement or other
employee benefit plan, agreement or arrangement, or any employment or
consulting agreement with or for the benefit of any director, officer,
employee, agent or consultant, whether past or present, or amend in any
material respect any such existing plan, agreement or arrangement in a manner
inconsistent with the foregoing, except as may otherwise be required by
applicable Law;
(h) neither Parent nor any Parent Subsidiary shall permit any insurance
policy naming it as a beneficiary or a loss payable payee to be cancelled or
terminated without notice to and the prior consent of the Company, except which
are replaced with new policies providing for continuation of similar coverage;
(i) neither Parent nor any Parent Subsidiary shall revalue in any material
respect any of its assets, including writing down the value of inventory or
writing-off notes or accounts receivable, other than in the ordinary course of
business consistent with past practice or as required by a change in GAAP
promulgated after the date of this Agreement;
(j) neither Parent nor any Parent Subsidiary shall settle or compromise
any pending or threatened suit, action or claim that (i) relates to the
Transactions or (ii) the settlement or compromise of which would involve more
than $75,000 and does not obligate Parent to take or refrain from taking any
action other than the payment of such sum or that would otherwise be material
to Parent and Parent Subsidiaries, considering Parent together with Parent
Subsidiaries as a whole, or that relates to any matters concerning Parent
Intellectual Property;
(k) neither Parent nor any Parent Subsidiary shall pay, purchase,
discharge or satisfy any of its claims, liabilities or obligations (absolute,
accrued, asserted or unasserted, contingent or otherwise), other than the
payment, discharge or satisfaction in the ordinary course of business
consistent with past practice, of claims, liabilities or obligations reflected
or reserved against in, or contemplated by, the Parent Financial Statements;
(l) neither Parent nor any Parent Subsidiary will adopt a plan of complete
or partial liquidation, dissolution, merger, consolidation, restructuring,
recapitalization or other reorganization of Parent or any Parent Subsidiary
(other than the Merger);
(m) neither Parent nor any Parent Subsidiary will (i) change any of the
accounting methods used by it unless required by a change in GAAP promulgated
after the date of this Agreement or (ii) make any material election relating to
Taxes, change any material election relating to Taxes already made, adopt any
material accounting method relating to Taxes, change any material accounting
method relating to Taxes unless required by a change in GAAP or change in the
Code or the regulations under the Code promulgated after the date of this
Agreement, enter into any closing agreement relating to Taxes, settle any claim
or assessment relating to Taxes or consent to any claim or assessment relating
to Taxes or any waiver of the statute of limitations for any such claim or
assessment;
52
(n) neither Parent nor any Parent Subsidiary will take, or agree to commit
to take, any action that would be reasonably likely to result in any of the
conditions set forth in Article 7 not being satisfied, or would make any
representation or warranty of Parent contained in this Agreement inaccurate in
any material respect at, or as of any time prior to, the Effective Time, or
that would materially impair the ability of Parent, the Company or Merger Sub
to consummate the Merger in accordance with the terms thereof or materially
delay such consummation;
(o) neither Parent nor any Parent Subsidiary shall enter into any
agreement, contract, commitment, understanding or arrangement with any officer
or director of Parent or any Parent Subsidiary with respect to any property,
real or personal, tangible or intangible, including inventions, patents,
trademarks or trade names, used in or pertaining to the business of Parent or
any Parent Subsidiary or modify, amend or terminate any such existing
agreement, contract, commitment, understanding or arrangement; and
(p) neither Parent nor any Parent Subsidiary will enter into any
agreement, contract, commitment, understanding or arrangement to do any of the
foregoing, or to authorize, recommend, propose or announce an intention to do
any of the foregoing.
Section 6.3 Access; Confidentiality.
-----------------------
(a) The Company shall (and shall cause each Company Subsidiary to) afford
to the officers, employees, accountants, counsel, financing sources and other
representatives of Parent, full access during the period prior to the Effective
Time, to all its properties, books, contracts, commitments and records and,
during such period, the Company shall (and shall cause each Company Subsidiary
to) furnish promptly to Parent (i) a copy of each report, schedule,
registration statement and other document filed or received by it during such
period pursuant to the requirements of federal securities laws and (ii) all
other information concerning its business, properties and personnel as Parent
may reasonably request. Access shall include the right to conduct such
environmental studies as Parent, in its reasonable discretion, shall deem
appropriate. Unless otherwise required by law or in order to comply with
disclosure requirements applicable to the Proxy Statement/Prospectus, Parent
will hold any such information which is nonpublic in confidence in accordance
with the provisions of the Confidentiality Agreement.
(b) Parent shall (and shall cause each Parent Subsidiary to) afford to the
officers, employees, accountants, counsel, financing sources and other
representatives of the Company, full access during the period prior to the
Effective Time, to all its properties, books, contracts, commitments and
records and, during such period, Parent shall (and shall cause each Parent
Subsidiary to) furnish promptly to the Company (i) a copy of each report,
schedule, registration statement and other document filed or received by it
during such period pursuant to the requirements of federal securities laws and
(ii) all other information concerning its business, properties and personnel as
the Company may reasonably request. Access shall include the right to conduct
such environmental studies as the Company, in its reasonable discretion, shall
deem appropriate. Unless otherwise required by law or in order to comply with
disclosure requirements applicable to the Proxy Statement/Prospectus, the
Company will hold any such information which is nonpublic in confidence in
accordance with the provisions of the Confidentiality Agreement
53
Section 6.4 Reasonable Efforts.
------------------
(a) Prior to the Closing, upon the terms and subject to the conditions of
this Agreement, Parent, Merger Sub and the Company agree to use commercially
reasonable efforts to take, or cause to be taken, all actions, and to do, or
cause to be done, all things necessary, proper or advisable (subject to any
applicable laws) to consummate the Merger and make effective the Merger and the
other Transactions as promptly as practicable including, (i) the preparation
and filing of all forms, registrations and notices required to be filed to
consummate the Merger and the other Transactions and the taking of such actions
as are necessary to obtain any requisite approvals, consents, orders,
exemptions or waivers by any third party or Governmental Entity, (ii) the
satisfaction of the other parties' conditions to Closing. In addition, no
party hereto shall take any action after the date of this Agreement to
materially delay the obtaining of, or result in not obtaining, any permission,
approval or consent from any Governmental Entity necessary to be obtained prior
to Closing. Notwithstanding the foregoing, or any other covenant herein
contained, in connection with the receipt of any necessary approvals under the
HSR Act, neither the Company nor any of Company Subsidiaries shall be entitled
to divest or hold separate or otherwise take or commit to take any action that
limits Parent's or the Surviving Corporation's freedom of action with respect
of, or their ability to retain, the Company or any Company Subsidiary or any
material portions thereof or any of the businesses, product lines, properties
or assets of the Company or any Subsidiary, without Parent's prior written
consent (which may be withheld in Parent's sole and absolute discretion).
(b) Prior to the Closing, each party shall promptly consult with the other
parties hereto with respect to, provide any necessary information with respect
to, and provide the other parties (or their respective counsel) with copies of,
all filings made by such party with any Governmental Entity or any other
information supplied by such party to a Governmental Entity in connection with
this Agreement, the Merger and the other Transactions. Each party hereto shall
promptly inform the other of any communication from any Governmental Entity
regarding any of the Transactions. If any party hereto or Affiliate thereof
receives a request for additional information or documentary material from any
such Governmental Entity with respect to any of the Transactions, then such
party shall endeavor in good faith to make, or cause to be made, as soon as
reasonably practicable and after consultation with the other parties, an
appropriate response in compliance with such request. To the extent that
transfers, amendments or modifications of permits (including environmental
permits) are required as a result of the execution of this Agreement or
consummation of any of the Transactions, the Company shall and shall cause the
Company Subsidiaries to use commercially reasonable efforts to effect such
transfers, amendments or modifications.
(c) The Company and Parent shall file as soon as practicable notifications
under the HSR Act and respond as promptly as practicable to any inquiries
received from the Federal Trade Commission and the Antitrust Division of the
Department of Justice for additional information or documentation and respond
as promptly as practicable to all inquiries and requests received from any
State Attorney General or other Governmental Entity in connection with
antitrust matters. Concurrently with the filing of notifications under the HSR
Act or as soon thereafter as practicable, the Company and Parent shall each
request early termination of the HSR Act waiting period.
54
(d) Notwithstanding the foregoing, nothing in this Agreement shall be
deemed to require Parent or any of its Subsidiaries to (i) divest or hold
separate any assets or otherwise restrict its conduct of business or (ii)
commence any litigation against any entity in order to facilitate the
consummation of any of the Transactions or to defend against any litigation
brought by any Governmental Entity seeking to prevent the consummation of any
of the Transactions.
Section 6.5 No Solicitation of Company Competing Transaction.
------------------------------------------------
(a) Neither the Company nor any Affiliate of the Company shall (and the
Company shall cause the officers, directors, employees, representatives and
agents of the Company, each Affiliate of the Company, and their respective
investment bankers, financial advisers, attorneys, accountants and other
agents, not to), directly or indirectly, encourage, solicit, participate in or
initiate or resume (including by way of furnishing or disclosing non-public
information), or take any action designed to facilitate, any discussions,
inquiries, negotiations or any other action that could reasonably be expected
to lead to the making of any proposals with respect to or concerning any
Company Competing Transaction. Nothing contained in this Section 6.5 or any
other provision of this Agreement shall prohibit the Company or the Company's
board of directors from (i) taking and disclosing to the Company's stockholders
a position with respect to a tender or exchange offer by a third party not
solicited, encouraged, discussed, continued or failed to be ceased or
terminated in contravention of this Agreement pursuant to Rule l4e-2 under the
Exchange Act, or (ii) making such disclosure to the Company's stockholders as,
in the good faith judgment of the board of directors of the Company, pursuant
to advice from outside counsel, is required under applicable law; provided,
that the Company may not, except as permitted by Section 6.5(c), withdraw or
modify, or propose to withdraw or modify, its position with respect to this
Agreement or approve or recommend, or propose to approve or recommend any
Company Competing Transaction, or enter into any agreement with respect to any
Company Competing Transaction. Upon execution of this Agreement, the Company
will immediately cease (and not resume) any existing activities, discussions or
negotiations with any parties conducted heretofore with respect to any of the
foregoing. Notwithstanding the foregoing, prior to adoption of this Agreement
by the Company's stockholders, the Company may furnish information concerning
its business, properties or assets to any corporation, partnership, Person or
other entity or group pursuant to appropriate confidentiality agreements (which
shall be no more permissive than the Confidentiality Agreement and shall permit
the disclosure contemplated by this Section 6.5(a)), and may negotiate and
participate in discussions and negotiations with such entity or group
concerning a Company Competing Transaction if:
(A) such entity or group has, on an unsolicited
basis, submitted a bona fide written proposal
to the board of directors of the Company
relating to any such transaction which the
board determines in good faith, consistent
with advice of an independent investment
banker, (1) is capable of being and likely to
be funded on the disclosed terms and (2) is
likely to be consummated in accordance with
its terms; and
(B) in the opinion of the board of directors of
the Company, the failure to take such action
would likely constitute a breach by the board
of directors of the Company's fiduciary
duties
55
to the Company's stockholders under
applicable law, determined only after receipt
of
(1) written opinion from the Company's
investment banking firm that the
Company Competing Transaction is
superior, from a financial point of
view, to the Merger, and
(2) written advice from independent legal
counsel to the Company that the failure
to provide such information or access
or to engage in such discussions or
negotiations would be likely to cause
the board of directors of the Company
to violate its fiduciary duties to the
Company's stockholders under applicable
law.
(b) The Company will promptly notify Parent of the existence of any
proposal, discussion, negotiation or inquiry of the type referred to in this
Section 6.5 received by the Company, any Company Subsidiary or any of their
respective representatives, and the Company will promptly communicate to Parent
the terms of any proposal, discussion, negotiation or inquiry which it, any
Company Subsidiary or any of their respective representatives may receive (and
will promptly provide to Parent copies of any written materials received by the
Company, any Company Subsidiary or their respective representatives in
connection with such proposal, discussion, negotiation or inquiry) and the
identity of the party making such proposal or inquiry or engaging in such
discussion or negotiation. The Company will promptly provide to Parent any
non-public information concerning the Company provided to any other party which
was not previously provided to Parent.
(c) Except as set forth in this Section 6.5(c), neither the Company's
board of directors nor any committee thereof shall (i) withdraw or modify, or
propose to withdraw or modify, or take any action in furtherance of the
withdrawal or modification, in a manner adverse to Parent or Merger Sub, the
approval or recommendation by such board of directors or any such committee of
this Agreement or the Merger, (ii) approve or recommend or propose to approve
or recommend or take any action in furtherance of approval or recommendation
of, any Company Competing Transaction or (iii) enter into any agreement with
respect to any Company Competing Transaction. Notwithstanding the foregoing,
prior to the adoption of this Agreement by the Company's stockholders, the
Company's board of directors may withdraw or modify its approval or
recommendation of this Agreement or the Merger, approve or recommend a Company
Superior Proposal, or enter into an agreement with respect to a Company
Superior Proposal, in each case at any time after the fifth Business Day
following Parent's receipt of written notice from the Company advising Parent
that the board of directors of the Company has received a Company Superior
Proposal which it intends to accept, specifying the terms and conditions of
such Company Superior Proposal, identifying the Person making such Company
Superior Proposal, but only if the Company shall have caused its financial and
legal advisors to negotiate in good faith with Parent to make such adjustments
in the terms and conditions of this Agreement as would enable the Company to
proceed with the transactions contemplated herein on such adjusted terms.
Nothing in this Agreement shall permit the Company to enter into any
56
agreement, arrangement or understanding with any third party providing for the
payment of fees or reimbursement of expenses if Parent makes a proposal in
response to such Superior Proposal.
Section 6.6 No Solicitation of Parent Competing Transaction.
-----------------------------------------------
(a) Neither Parent nor any Affiliate of Parent shall (and Parent shall
cause the officers, directors, employees, representatives and agents of Parent,
each Affiliate of Parent, and their respective investment bankers, financial
advisers, attorneys, accountants and other agents, not to), directly or
indirectly, encourage, solicit, participate in or initiate or resume (including
by way of furnishing or disclosing non-public information), or take any action
designed to facilitate, any discussions, inquiries, negotiations or any other
action that could reasonably be expected to lead to the making of any proposals
with respect to or concerning any Parent Competing Transaction. Nothing
contained in this Section 6.6 or any other provision of this Agreement shall
prohibit Parent or Parent's board of directors from (i) taking and disclosing
to Parent's stockholders a position with respect to a tender or exchange offer
by a third party not solicited, encouraged, discussed, continued or failed to
be ceased or terminated in contravention of this Agreement pursuant to Rule
l4e-2 under the Exchange Act, or (ii) making such disclosure to Parent's
stockholders as, in the good faith judgment of the board of directors of
Parent, pursuant to advice from outside counsel, is required under applicable
law; provided, that Parent may not, except as permitted by Section 6.6(c),
withdraw or modify, or propose to withdraw or modify, its position with respect
to this Agreement or approve or recommend, or propose to approve or recommend
any Parent Competing Transaction, or enter into any agreement with respect to
any Parent Competing Transaction. Upon execution of this Agreement, Parent
will immediately cease (and not resume) any existing activities, discussions or
negotiations with any parties conducted heretofore with respect to any of the
foregoing. Notwithstanding the foregoing, prior to the adoption of this
Agreement by Parent's stockholders, Parent may furnish information concerning
its business, properties or assets to any corporation, partnership, Person or
other entity or group pursuant to appropriate confidentiality agreements (which
shall be no more permissive than the Confidentiality Agreement and shall permit
the disclosure contemplated by this Section 6.6(a)), and may negotiate and
participate in discussions and negotiations with such entity or group
concerning a Parent Competing Transaction if:
(A) such entity or group has, on an unsolicited
basis, submitted a bona fide written proposal
to the board of directors of Parent relating
to any such transaction which the board
determines in good faith, consistent with
advice of an independent investment banker,
(1) is capable of being and likely to be
funded on the disclosed terms and (2) is
likely to be consummated in accordance with
its terms; and
(B) in the opinion of the board of directors of
Parent, the failure to take such action would
likely constitute a breach by the board of
directors of Parent's fiduciary duties to
Parent's stockholders under applicable law,
determined only after receipt of
57
(1) written opinion from Parent's
investment banking firm that the
Parent Competing Transaction is
superior, from a financial point of
view, to the Merger, and
(2) written advice from independent legal
counsel to Parent that the failure to
provide such information or access or
to engage in such discussions or
negotiations would be likely to cause
the board of directors of Parent to
violate its fiduciary duties to
Parent's stockholders under applicable
law.
(b) Parent will promptly notify the Company of the existence of any
proposal, discussion, negotiation or inquiry of the type referred to in this
Section 6.6 received by Parent, any Parent Subsidiary or any of their
respective representatives, and Parent will promptly communicate to the Company
the terms of any proposal, discussion, negotiation or inquiry which it, any
Parent Subsidiary or any of their respective representatives may receive (and
will promptly provide to the Company copies of any written materials received
by Parent, any Parent Subsidiary or their respective representatives in
connection with such proposal, discussion, negotiation or inquiry) and the
identity of the party making such proposal or inquiry or engaging in such
discussion or negotiation. Parent will promptly provide to the Company any
non-public information concerning Parent provided any other party which was not
previously provided to the Company.
(c) Except as set forth in this Section 6.6(c), neither Parent's board of
directors nor any committee thereof shall (i) withdraw or modify, or propose to
withdraw or modify, or take any action in furtherance of the withdrawal or
modification, in a manner adverse to the Company, the approval or
recommendation by such board of directors or any such committee of this
Agreement or the Merger, (ii) approve or recommend or propose to approve or
recommend or take any action in furtherance of approval or recommendation of,
any Parent Competing Transaction or (iii) enter into any agreement with respect
to any Parent Competing Transaction. Notwithstanding the foregoing, prior to
the adoption of this Agreement by Parent's stockholders, Parent's board of
directors may withdraw or modify its approval or recommendation of this
Agreement or the Merger, approve or recommend a Parent Superior Proposal, or
enter into an agreement with respect to a Parent Superior Proposal, in each
case at any time after the fifth Business Day following the Company's receipt
of written notice from Parent advising the Company that the board of directors
of Parent has received a Parent Superior Proposal which it intends to accept,
specifying the terms and conditions of such Parent Superior Proposal,
identifying the Person making such Parent Superior Proposal, but only if Parent
shall have caused its financial and legal advisors to negotiate in good faith
with the Company to make such adjustments in the terms and conditions of this
Agreement as would enable Parent to proceed with the transactions contemplated
herein on such adjusted terms. Nothing in this Agreement shall permit Parent
to enter into any agreement, arrangement or understanding with any third party
providing for the payment of fees or reimbursement of expenses if the Company
makes a proposal in response to such Superior Proposal.
Section 6.7 Publicity. The initial press release with respect to the
---------
execution of this Agreement shall be a joint press release reasonably
acceptable to each of Parent and the
58
Company. Thereafter, until the Effective Time, or the date this Agreement is
terminated pursuant to Article 8 (whichever occurs first), neither the Company,
Parent nor any of their respective Affiliates shall issue or cause the
publication of any press release or other announcement with respect to the
Merger, this Agreement or the other Transactions without prior consultation
with the other party, except as advised by outside counsel is required by law
or by any listing agreement with a national securities exchange or trading
market, in which case, prior consultation with the other party will be made to
the extent reasonably practicable.
Section 6.8 Notification of Certain Matters.
-------------------------------
(a) The Company shall give prompt notice to Parent, of (i) the occurrence
or non-occurrence of any event the occurrence or non-occurrence of which caused
or would reasonably be expected to cause any representation or warranty
contained in this Agreement to be untrue or inaccurate in any material respect
at or prior to the Effective Time and (ii) any material failure of the Company,
to comply with or satisfy any covenant, condition or agreement to be complied
with or satisfied by it hereunder; provided, however, that the delivery of any
notice pursuant to this Section 6.8 shall not limit or otherwise affect the
remedies of Parent.
(b) Parent shall give prompt notice to the Company, of (i) the occurrence
or non-occurrence of any event the occurrence or non-occurrence of which caused
or would reasonably be expected to cause any representation or warranty
contained in this Agreement to be untrue or inaccurate in any material respect
at or prior to the Effective Time and (ii) any material failure of Parent, to
comply with or satisfy any covenant, condition or agreement to be complied with
or satisfied by it hereunder; provided, however, that the delivery of any
notice pursuant to this Section 6.8 shall not limit or otherwise affect the
remedies of the Company.
Section 6.9 Parent Board of Directors. Each of Parent and the Company
-------------------------
shall use its respective best efforts to ensure that, as soon as practicable
after the Closing, the board of directors shall consist of seven directors
(four appointed by Parent and three appointed by the Company), among whom shall
be Xxxxx Xxxxxx, Xxxxxx X. Xxxxxxxxx and Xxxxxx X. Xxxxxx, Xx., as set forth in
the Proxy Statement/Prospectus.
Section 6.10 Exemption from Liability Under Section 16(b).
-------------------------------------------
(a) The board of directors of Parent, or a committee thereof consisting
exclusively of Non-Employee Directors (as such term is defined for purposes of
Rule 16b-3(d) under the Exchange Act), shall adopt a resolution in advance of
the Effective Time providing that the receipt by Company Insiders of Parent
Common Stock in exchange for shares of Company Common Stock , and of options to
purchase Parent Common Stock upon assumption of Company Options, in each case
pursuant to the Transactions and to the extent such securities are listed in
the Section 16 Information, is intended to be exempt pursuant to Rule 16b-3
under the Exchange Act.
(b) The board of directors of the Company (or a committee thereof
exclusively consisting of Non-Employee Directors) shall adopt a resolution in
advance of the Effective Time that exempts the disposition of Company equity
securities by Company Insiders pursuant to the
59
Transactions from the short-swing profits liability provisions of Section 16 by
reason of Rule 16b-3.
Section 6.11 Directors' and Officers' Insurance and Indemnification.
------------------------------------------------------
(a) For six years after the Effective Time, the Surviving Corporation (or
any successor to the Surviving Corporation) shall indemnify, defend and hold
harmless each Indemnified Party against all losses, claims, damages,
liabilities, costs, fees and expenses, including reasonable fees and
disbursements of counsel and judgments, fines, losses, claims, liabilities and
amounts paid in settlement (provided, that any such settlement is effected with
the written consent of Parent or the Surviving Corporation) arising out of
actions or omissions occurring at or prior to the Effective Time to the full
extent required under applicable Delaware law, the terms of the Company's
certificate of incorporation, bylaws or indemnity agreements in the form filed
as exhibits to Company SEC Documents, each as in effect at the date hereof, and
Parent or the Surviving Corporation shall also advance expenses as incurred to
the fullest extent permitted under applicable law, provided the Indemnified
Party to whom expenses are advanced provides an undertaking to repay such
advances if it is ultimately determined that such Indemnified Party is not
entitled to indemnification); provided, that if any claim or claims are
asserted or made within such six-year period, all rights to indemnification in
respect of any such claim or claims shall continue until disposition of any and
all such claims.
(b) Parent or the Surviving Corporation shall maintain the Company's
existing officers' and directors' liability insurance for a period of not less
than six years after the Effective Date; provided, that Parent may substitute
therefor policies of coverage and amounts containing terms no less favorable to
such former directors or officers as currently in effect for directors and
officers of Parent; provided, further, that in no event shall Parent or the
Surviving Corporation be required to pay aggregate annual premiums for
insurance under this Section 6.11(b) in excess of 125% of the aggregate annual
premium paid by Parent for coverage of its directors and officers in the twelve
months prior to the date of this Agreement; and provided, further, that if
Parent or the Surviving Corporation is unable to obtain the amount of insurance
required by this Section 6.11(b) for such aggregate premiums, Parent or the
Surviving Corporation shall obtain as much insurance as can be obtained for
aggregate premiums not in excess of 125% of the premiums paid by Parent for
coverage of its directors and officers in the twelve months prior to the date
of this Agreement.
(c) The provisions of this Section 6.11 are intended to be in addition to
the rights otherwise available to the current officers and directors of the
Company by law, charter, statute, bylaw or agreement, and shall operate for the
benefit of, and shall be enforceable by, each of the Indemnified Parties, their
heirs and their representatives.
(d) The Surviving Corporation shall pay all expenses, including reasonable
attorney's fees and costs, that may be incurred by any Indemnified Person in
enforcing the indemnity contained in this Section 6.11.
Section 6.12 State Takeover Laws. Notwithstanding any other provision
-------------------
in this Agreement, in no event shall the approval of the Transactions by the
board of directors of the Company under section 203 of the DGCL be withdrawn,
revoked or modified by the board of
60
directors of the Company. If any state takeover statute becomes or is deemed
to become applicable to the Agreement, the acquisition of shares of Company
Common Stock pursuant to the Merger or the other Transactions, the Company or
the applicable Company Subsidiary shall take all action necessary to render
such statute inapplicable to all of the foregoing.
Section 6.13 Preparation of the Registration Statement and the Proxy
-------------------------------------------------------
Statement/Prospectus; Stockholders' Meetings.
--------------------------------------------
(a) Proxy Statement/Prospectus. As soon as practicable following the date
--------------------------
of this Agreement, Parent and the Company shall prepare the Proxy
Statement/Prospectus and Parent shall prepare and file with the SEC the
Registration Statement, in which the Proxy Statement/Prospectus will be included
as a prospectus. The Proxy Statement/Prospectus will disclose that three of the
seven members of the board of directors of Parent will resign at the Effective
Time and shall be replaced by three designees of the Company immediately after
the Effective Time, as contemplated by Section 6.9 of this Agreement. Each of
Parent and the Company shall use commercially reasonable efforts to have the
Registration Statement declared effective under the Securities Act as promptly
as practicable after such filing. The Company will use all commercially
reasonable efforts to cause the Proxy Statement/Prospectus to be mailed to the
Company's stockholders as promptly as practicable after the Registration
Statement is declared effective under the Securities Act. Parent shall also take
any action required to be taken under any applicable state securities laws in
connection with the issuance of shares of Parent Common Stock in the Merger and
the assumption of Company Options, and the Company shall furnish all information
concerning the Company and the holders of Company Common Stock and Company
Options as may be reasonably requested in connection with any such action. No
filing of, or amendment or supplement to, the Registration Statement or the
Proxy Statement/Prospectus will be made by Parent without the Company's prior
consent (which shall not be unreasonably withheld) and without providing the
Company the opportunity to review and comment thereon; provided that with
respect to documents filed by a party which are incorporated by reference in the
Registration Statement or Proxy Statement/Prospectus, this right of approval
shall apply only with respect to information relating to the other party or its
business, financial condition or results of operations; and provided further
that the Company, in connection with a change in the recommendation of its board
of directors, may amend or supplement the Proxy Statement/Prospectus or
Registration Statement (including by incorporation by reference) pursuant to a
Qualifying Amendment. Each of Parent and the Company shall notify the other
promptly upon the receipt of any comments from the SEC or its staff or any other
government officials and of any request by the SEC or its staff or any other
government officials for amendments or supplements to the Registration
Statement, the Proxy Statement/Prospectus or any filing pursuant to this Section
6.13 or for additional information and shall supply the other with copies of all
correspondence between such party or any of its representatives, on the one
hand, and the SEC, or its staff or any other government officials, on the other
hand, with respect to the Registration Statement, the Proxy
Statement/Prospectus, the Merger or any filing pursuant to this Section 6.13.
Each of Parent and the Company shall use commercially reasonable efforts to
cause all documents that it is responsible for filing with the SEC or other
regulatory authorities under this Section 6.13 to comply in all material
respects with all applicable requirements of law and the rules and regulations
promulgated thereunder. Parent will advise the Company promptly after it
receives notice thereof, of the time when the Registration Statement has become
effective or any supplement or amendment has been filed, the
61
issuance of any stop order, the suspension of the qualification of the share of
Parent Common Stock issuable in connection with the Merger for offering or sale
in any jurisdiction, or any request by the SEC for amendment of the Proxy
Statement/Prospectus or the Registration Statement or comments thereon and
responses thereto or requests by the SEC for additional information. If at any
time prior to the Effective Time, any information relating to Parent or the
Company, or any of their respective Affiliates, officers or directors, should
be discovered by Parent or the Company which should be set forth in an
amendment or supplement to any of the Registration Statement or the Proxy
Statement/Prospectus, so that any of such documents would not include any
misstatement of a material fact or omit to state any material fact necessary to
make the statements therein, in light of the circumstances under which they
were made, not misleading, the party which discovers such information shall
promptly notify the other parties hereto and an appropriate amendment or
supplement describing such information shall be promptly filed with the SEC
and, to the extent required by law, disseminated to the stockholders of the
Company.
(b) Company Stockholders' Meeting.
-----------------------------
(i) The Company shall, as promptly as practicable after the
Registration Statement is declared effective under the Securities Act, duly
give notice of, convene and hold a meeting (the "Company Stockholders'
Meeting") of its stockholders entitled to vote thereof in accordance with the
DGCL for the purpose of obtaining the Company Stockholder Approval and shall,
subject to the provisions of Section 6.5(c), through its board of directors,
recommend to its stockholders the adoption of this Agreement.
(ii) Subject to Section 6.5(c), the Company shall use its best
efforts to solicit from its stockholders proxies in favor of the adoption and
approval of this Agreement and the approval of the Merger, and shall take all
other actions necessary or advisable to secure the vote or consent of its
stockholders required by the rules of The Nasdaq Stock Market, Inc. or DGCL to
obtain such approvals. The Company may adjourn or postpone the Company
Stockholders' Meeting (A) if and to the extent necessary to ensure that any
necessary supplement or amendment to the Proxy Statement/Prospectus is provided
to the Company's stockholders in advance of a vote on this Agreement and the
Merger, or (B) if, as of the time for which the Company Stockholders' Meeting
is originally scheduled (as set forth in the Proxy Statement/Prospectus), there
are insufficient shares of Company Common Stock represented (either in person
or by proxy) to constitute a quorum necessary to conduct the business of the
Company Stockholders' Meeting. The Company shall ensure that the Company
Stockholders' Meeting is called, noticed, convened, held and conducted, and
that all proxies solicited by the Company in connection with the Company
Stockholders' Meeting are solicited, in compliance with the DGCL, and the
certificate of incorporation and bylaws of the Company, the rules of The Nasdaq
Stock Market, Inc. and all other applicable legal requirements. Notwithstanding
anything to the contrary contained in this Agreement, the Company's obligation
to call, give notice of, convene and hold the Company Stockholders' Meeting in
accordance with this Section 6.13(b) shall not be limited to or otherwise
affected by the commencement, disclosure, announcement or submission to the
Company of any Company Superior Proposal or a Change in Company Recommendation.
62
(iii) Unless the board of directors of the Company shall have
withheld, withdrawn, amended, modified or changed its recommendation of this
Agreement and the Merger in compliance with Section 6.5, (A) the board of
directors of the Company shall unanimously recommend that the Company's
stockholders vote in favor of and adopt and approve this Agreement and approve
the Merger at the Company Stockholders' Meeting; (B) the Proxy
Statement/Prospectus shall include a statement to the effect that the board of
directors of the Company has unanimously recommended that the Company's
stockholders vote in favor of and adopt and approve this Agreement and approve
the Merger at the Company Stockholders' Meeting; and (C) neither the board of
directors of the Company nor any committee thereof shall withhold, withdraw,
amend, modify, change or propose or resolve to withhold, withdraw, amend,
modify or change, in each case in a manner adverse to Parent, the unanimous
recommendation of the board of directors of the Company that the Company's
stockholders vote in favor of and adopt and approve this Agreement and approve
the Merger. For all purposes of and under this Agreement, the foregoing
recommendation of the board of directors of the Company shall be deemed to have
been modified in a manner adverse to Parent if such recommendation by the board
of directors of the Company or any committee thereof shall no longer be
unanimous.
(iv) The Company will, notwithstanding any Change in Company
Recommendation, use commercially reasonable efforts to hold the Company
Stockholders' Meeting as soon as reasonably practicable after the date of this
Agreement.
(c) Parent Stockholders' Meeting.
----------------------------
(i) Parent shall, as promptly as practicable after the
Registration Statement is declared effective under the Securities Act, duly
give notice of, convene and hold a meeting (the "Parent Stockholders' Meeting")
of its stockholders entitled to vote thereof in accordance with the DGCL for
the purpose of obtaining Parent Stockholder Approval and shall, subject to the
provisions of Section 6.6(c), through its board of directors, recommend to its
stockholders the adoption of this Agreement. In addition, Parent shall seek
approval of an increase in the authorized number of shares of Parent Common
Stock.
(ii) Subject to Section 6.6(c), Parent shall use its best
efforts to solicit from its stockholders proxies in favor of the adoption and
approval of this Agreement and the approval of the Merger, and shall take all
other actions necessary or advisable to secure the vote or consent of its
stockholders required by the rules of The Nasdaq Stock Market, Inc. or DGCL to
obtain such approvals. Parent may adjourn or postpone the Parent Stockholders'
Meeting (A) if and to the extent necessary to ensure that any necessary
supplement or amendment to the Proxy Statement/Prospectus is provided to
Parent's stockholders in advance of a vote on this Agreement and the Merger, or
(B) if, as of the time for which the Parent Stockholders' Meeting is originally
scheduled (as set forth in the Proxy Statement/Prospectus), there are
insufficient shares of Parent Common Stock represented (either in person or by
proxy) to constitute a quorum necessary to conduct the business of the Parent
Stockholders' Meeting. Parent shall ensure that the Parent Stockholders' Meeting
is called, noticed, convened, held and conducted, and that all proxies solicited
by Parent in connection with the Parent Stockholders' Meeting are solicited, in
compliance with the DGCL, and the certificate of incorporation and bylaws of
Parent, the rules of The Nasdaq Stock Market, Inc. and all other applicable
legal requirements. Notwithstanding anything to the contrary contained in this
Agreement, Parent's obligation to
63
call, give notice of, convene and hold the Parent Stockholders' Meeting in
accordance with this Section 6.13(c) shall not be limited to or otherwise
affected by the commencement, disclosure, announcement or submission to Parent
of any Parent Superior Proposal or a Change in Parent Recommendation.
(iii) Unless the board of directors of Parent shall have
withheld, withdrawn, amended, modified or changed its recommendation of this
Agreement and the Merger in compliance with Section 6.6, (A) the board of
directors of Parent shall recommend that Parent's stockholders vote in favor of
and adopt and approve this Agreement and approve the Merger at the Parent
Stockholders' Meeting; (B) the Proxy Statement/Prospectus shall include a
statement to the effect that the board of directors of Parent has recommended
that Parent's stockholders vote in favor of and adopt and approve this Agreement
and approve the Merger at the Parent Stockholders' Meeting; and (C) neither the
board of directors of Parent nor any committee thereof shall withhold, withdraw,
amend, modify, change or propose or resolve to withhold, withdraw, amend, modify
or change, in each case in a manner adverse to the Company, the recommendation
of the board of directors of Parent that Parent's stockholders vote in favor of
and adopt and approve this Agreement and approve the Merger. For all purposes of
and under this Agreement, the foregoing recommendation of the board of directors
of Parent shall be deemed to have been modified in a manner adverse to the
Company if the number of directors of Parent supporting the recommendation
decreases.
(iv) Parent will, notwithstanding any Change in Parent
Recommendation, use commercially reasonable efforts to hold the Parent
Stockholders' Meeting as soon as reasonably practicable after the date of this
Agreement.
Section 6.14 Nasdaq National Market Quotations. The Company and
---------------------------------
Parent each agree to use commercially reasonable efforts to continue the
quotation of Company Common Stock and Parent Common Stock, respectively on
Nasdaq National Market during the term of this Agreement.
Section 6.15 Tax Treatment. Each of Parent, the Company and their
-------------
respective Subsidiaries shall use commercially reasonable efforts to cause the
Merger to qualify as a reorganization within the meaning of Section 368(a) of
the Code, and to obtain the opinions of counsel referred to in Sections 7.2(e)
and 7.3(e). Parent, the Company and Merger Sub shall each provide such
reasonable and customary representations to counsel as counsel may require to
enable them to render such opinions. Neither Parent, nor the Company, nor
their respective Subsidiaries, shall take any action which could reasonably be
expected to cause the Merger to fail to qualify as a reorganization within the
meaning of section 368(a) of the Code.
Section 6.16 Affiliate Legends. Section 6.16 of the Company
------------------
Disclosure Letter sets forth a list of those persons who are, in the Company's
reasonable judgment, "affiliates" of the Company within the meaning of Rule 145
promulgated under the Securities Act ("Rule 145 Affiliates"). Parent shall be
entitled to place appropriate legends on the certificates evidencing any shares
of Parent Common Stock to be received by Rule 145 Affiliates of the Company in
the Merger reflecting the restrictions set forth in Rule 145 promulgated under
the Securities Act and to issue appropriate stop transfer instructions to the
transfer agent for Parent Common Stock (provided that such legends or stop
transfer instructions shall be removed, one year after the
64
Effective Time, upon the request of any holder of shares of Parent Common Stock
issued in the Merger if such holder is not then a Rule 145 Affiliate of
Parent). The Company shall use its commercially reasonable efforts to cause
each of the Rule 145 Affiliates to enter into an affiliate agreement with
Parent (the "Rule 145 Affiliate Agreements").
Section 6.17 Conveyance Taxes. The Company and Parent shall cooperate
----------------
in the preparation, execution and filing of all Tax Returns, questionnaires,
applications or other documents regarding Taxes, transfer, recording,
registration and/or other fees which become payable in connection with the
transactions contemplated by this Agreement that are required or permitted to
be filed on or before the Effective Time.
Section 6.18 Nasdaq National Market Additional Listing. Parent shall,
-----------------------------------------
if required by the rules of The Nasdaq Stock Market, Inc., file with The Nasdaq
Stock Market, Inc. a Notification Form: Listing of Additional Shares with
respect to the shares of Parent Common Stock issuable in connection with the
Merger.
ARTICLE 7
CONDITIONS
Section 7.1 Conditions to Each Party's Obligation to Effect the Merger.
----------------------------------------------------------
The respective obligation of each party to effect the Merger shall be
subject to the satisfaction at or prior to the Effective Time of each of the
following conditions, any and all of which may be waived in whole or in part by
the Company, Parent or Merger Sub, as the case may be, to the extent permitted
by applicable law:
(a) This Agreement shall have been adopted by the requisite vote of the
holders of the shares of Company Common Stock and Parent Common Stock in order
to consummate the Merger.
(b) No statute, rule or regulation shall have been enacted or promulgated
by any Governmental Entity which prohibits the consummation of the Merger, and
there shall be no order or injunction of a court of competent jurisdiction in
effect precluding consummation of the Merger.
(c) The applicable waiting period under the HSR Act shall have expired or
been terminated.
(d) The Registration Statement shall have become effective under the
Securities Act and no stop order or proceedings seeking a stop order shall be
threatened by the SEC or shall have been initiated by the SEC.
(e) Parent shall have submitted to The Nasdaq Stock Market, Inc. a
Notification Form: Listing of Additional Shares with respect to the shares of
Parent Common Stock to be issued in the Merger.
65
Section 7.2 Conditions to Parent's and Merger Sub's Obligations to
------------------------------------------------------
Effect the Merger. The obligations of Parent and Merger Sub to consummate the
-----------------
Merger shall be subject to the satisfaction on or prior to the Closing Date of
each of the following conditions, any and all of which may be waived in whole
or in part by Parent and Merger Sub, to the extent permitted by applicable law.
(a) The representations and warranties of the Company set forth in Article
4 shall be true and correct as if made on and as of the Effective Time (other
than representations and warranties that speak only as of a specified date;
which shall be true and correct as of such specified date), except where the
failure to be true and correct (without regard to any materiality or Material
Adverse Effect to the Company qualifications contained in such representation
or warranty), individually or in the aggregate, have not resulted in and are
not reasonably likely to result in a Material Adverse Effect to the Company.
(b) The Company shall have complied in all material respects with its
obligations under this Agreement.
(c) At any time after the date of this Agreement there shall not have
occurred any Material Adverse Effect to the Company.
(d) Parent shall have received an officer's certificate duly executed by
each of the Chief Executive Officer and Chief Financial Officer of the Company
to the effect that the conditions set forth in Sections 7.2(a), 7.2(b) and
7.2(c) have been satisfied.
(e) Parent shall have received an opinion of Xxxxxxx, Phleger & Xxxxxxxx
LLP, in form and substance reasonably satisfactory to Parent, dated as of the
date during which the Effective Time occurs, substantially to the effect that,
on the basis of facts, representations and assumptions set forth in such
opinion, for United States federal income tax purposes, the Merger will
constitute a "reorganization" within the meaning of section 368(a) of the Code.
In rendering such opinion, Xxxxxxx, Phleger & Xxxxxxxx LLP shall receive and
may rely upon representations contained in certificates of the Company, Parent
and Merger Sub.
(f) The Company shall have provided the certification prescribed by
Section 1445 of the Code and the Treasury Regulations thereunder to Parent that
the Company has not been a "United States real property holding corporation"
within the meaning of Section 897(a)(2) during the five-year period prescribed
therein.
(g) The Company shall have delivered to Parent the Rule 145 Affiliate
Agreements obtained by the Company pursuant to Section 6.16.
(h) The Company shall have effected the Company Rights Plan Amendment.
(i) All consents of any Governmental Entity or third party set forth in
Schedule 7.2(i) to this Agreement shall have been obtained by the Company.
Section 7.3 Conditions to the Company's Obligations to Effect the
-----------------------------------------------------
Merger. The obligations of the Company to consummate the Merger shall be
------
subject to the satisfaction on or
66
prior to the Closing Date of each of the following conditions, any and all of
which may be waived in whole or in part by the Company, to the extent permitted
by applicable law.
(a) The representations and warranties of Parent and Merger Sub set forth
in Article 5 shall be true and correct as if made on and as of the Effective
Time (other than representations and warranties that speak only as of a
specified date; which shall be true and correct as of such specified date),
except where the failure to be true and correct (without regard to any
materiality or Material Adverse Effect to Parent qualifications contained in
such representation and warranty), individually or in the aggregate, have not
resulted in and are not reasonably likely to result in a Material Adverse
Effect to Parent.
(b) Each of Parent and Merger Sub shall have complied in all material
respects with its obligations under this Agreement.
(c) At any time after the date of this Agreement there shall not have
occurred any Material Adverse Effect to Parent.
(d) The Company shall have received an officer's certificate duly executed
by the Chief Financial Officer of Parent to the effect that the conditions set
forth in Sections 7.3(a), 7.3(b), and 7.3(c) have been satisfied.
(e) The Company shall have received an opinion of Xxxx and Xxxx LLP, in
form and substance reasonably satisfactory to the Company, dated as of the
Effective Time, substantially to the effect that, on the basis of facts,
representations and assumptions set forth in such opinion, for United States
federal income tax purposes, the Merger will constitute a "reorganization"
within the meaning of section 368(a) of the Code. In rendering such opinion,
Xxxx and Xxxx LLP shall receive and may rely upon representations contained in
certificates of the Company, Parent and Merger Sub.
(f) Parent shall have received written resignations from all but four of
its directors effective upon consummation of the Merger.
ARTICLE 8
TERMINATION
Section 8.1 Termination. This Agreement may be terminated or
-----------
abandoned at any time prior to the Effective Time, whether before or after
stockholder approval hereof:
(a) By the mutual written consent of Parent and the Company,
(b) By either of the Company or Parent,
(i) if any Governmental Entity shall have issued an order, decree
or ruling or taken any other action (which order, decree, ruling or other
action the parties hereto shall use their commercially reasonable efforts to
lift), which permanently restrains, enjoins or otherwise
67
prohibits the Merger and such order, decree, ruling or other action shall have
become final and non-appealable; or
(ii) if the Merger shall not have been consummated by September 1,
2002; provided, however, that the right to terminate this Agreement pursuant to
this Section 8.1(b)(ii) shall not be available to any party whose failure to
perform any of its obligations under this Agreement results in the failure of
the Merger to be consummated by such time; or
(iii) if at a Parent Stockholders' Meeting convened and held
pursuant to this Agreement, the Parent Stockholder Approval shall not have been
obtained; or
(iv) if at a Company Stockholders' Meeting convened and held
pursuant to this Agreement, the Company Stockholder Approval shall not have
been obtained.
(c) By the Company:
(i) if, prior to the Effective Time, Parent's board of directors
shall have, whether or not permitted by this Agreement, made a Change in the
Parent Recommendation; or
(ii) if prior to the Effective Time, Parent or Merger Sub shall
have breached in any material respect any of their respective representations,
warranties, covenants or other agreements contained in this Agreement, which
cannot be or has not been cured within thirty days after the giving of written
notice of such material breach by the Company to Parent; or
(iii) if after complying with Section 6.5 and executing an
agreement referred to in Section 9.1(b)(i), the Company pays the Termination
Fee and expenses in accordance with Section 9.1(b).
(d) By Parent (on behalf of itself and Merger Sub):
(i) if, prior to the Effective Time, the Company's board of
directors shall have, whether or not permitted by this Agreement, made a Change
in the Company Recommendation; or
(ii) if prior to the Effective Time, the Company shall have
breached in any material respect any representation, warranty, covenant or
other agreement contained in this Agreement, which cannot be or has not been
cured within thirty days after the giving of written notice of such material
breach by Parent to the Company; or
(iii) if after complying with Section 6.6 and executing an
agreement referred to in Section 9.1(c)(i), Parent pays the Termination Fee and
expenses in accordance with Section 9.1(c).
Section 8.2 Effect of Termination. If this Agreement is terminated,
---------------------
there shall be no liability on the part of any party to this Agreement except
for (a) fraud or intentional misstatement, (b) willful material breach of this
Agreement prior to such termination or abandonment of the Transactions or (c)
if applicable, the Termination Fee and expenses in
68
accordance with Section 9.1. Only Sections 6.5, 6.6, 8.1 and 8.2 and Article 9
shall survive the termination of this Agreement.
Section 8.3 Method of Termination. This Agreement may be terminated
---------------------
only upon receipt of notice from the party desiring to terminate this Agreement
that (a) states that it is terminating this Agreement, (b) specifies the
portion of Section 8.1 pursuant to which such termination is being effected and
(c) recites that such termination has been approved by proper action of the
board of directors of such party to this Agreement.
ARTICLE 9
MISCELLANEOUS
Section 9.1 Fees and Expenses.
-----------------
(a) Except as specifically provided to the contrary in this Agreement,
including Section 9.1(b), all costs and expenses incurred in connection with
this Agreement and the consummation of the Transactions shall be paid by the
party incurring such expenses, but each of Parent and the Company shall pay one
half of (x) the filing fee under the HSR Act and (y) the cost of printing and
mailing the Proxy Statement/Prospectus and the cost of printing the
Registration Statement.
(b) If
(i) during the term of this Agreement, the Company shall enter
into an agreement which accepts or implements a Company Superior Proposal; or
(ii) Parent shall terminate this Agreement pursuant to
Section 8.1(d)(i);
then the Company shall pay to Parent an amount equal to the
Termination Fee plus the Parent Expenses. The Termination Fee and
Parent's good faith estimate of the Parent Expenses shall be paid by
wire transfer of immediately available funds concurrently with the
execution of an agreement referred to in Section 9.1(b)(i) or within
one Business Day of receipt of notice of the termination referred to
in Section 9.1(b)(ii), whichever shall first occur, together with
delivery of a written acknowledgment by the Company of its obligation
to reimburse Parent for its actual expenses in excess of such
estimated expense payment.
(iii) If this Agreement is terminated pursuant to Section
8.1(b)(iv) then (A) within one Business Day of such termination, the Company
shall pay to Parent the Parent Expenses and (B) if prior to such termination
there shall have been publicly announced a Company Competing Transaction and
within nine months of such termination the Company shall enter into a
definitive agreement implementing any Company Competing Transaction, the
Company shall, concurrently with entering into such definitive agreement pay to
Parent the Termination Fee. The Termination Fee and Parent's good faith
estimate of the Parent Expenses shall be made by wire transfer of immediately
available funds together with delivery of a written acknowledgement by the
Company of its obligation to reimburse Parent for its actual expenses in excess
of such estimated payment.
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(c) If
(i) during the term of this Agreement, Parent shall enter into an
agreement which accepts or implements a Parent Superior Proposal; or
(ii) the Company shall terminate this Agreement pursuant to
Section 8.1(c)(i); then Parent shall pay to the Company an amount equal to the
Termination Fee plus the Company Expenses. The Termination Fee and the
Company's good faith estimate of the Company Expenses shall be paid by wire
transfer of immediately available funds concurrently with the execution of an
agreement referred to in Section 9.1(c)(i) or within one Business Day of
receipt of notice of the termination referred to in Section 9.1(c)(ii),
whichever shall first occur, together with delivery of a written acknowledgment
by Parent of its obligation to reimburse the Company for its actual expenses in
excess of such estimated expense payment.
(iii) If this Agreement is terminated pursuant to Section
8.1(b)(iii) then (A) within one Business Day of such termination, Parent shall
pay to the Company the Company Expenses and (B) if prior to such termination
there shall have been publicly announced a Parent Competing Transaction and
within nine months of such termination Parent shall enter into a definitive
agreement implementing any Parent Competing Transaction, Parent shall,
concurrently with entering into such definitive agreement pay to the Company
the Termination Fee. The Termination Fee and the Company's good faith estimate
of the Company Expenses shall be made by wire transfer of immediately available
funds together with delivery of a written acknowledgement by Parent of its
obligation to reimburse the Company for its actual expenses in excess of such
estimated payment.
Section 9.2 Amendment and Modification. Subject to applicable law,
--------------------------
this Agreement may be amended, modified and supplemented in any and all
respects, whether before or after any vote of the stockholders of the Company,
by written agreement of the parties, by action taken by their respective boards
of directors at any time prior to the Closing Date with respect to any of the
terms contained in this Agreement; provided, however, that after the approval
of this Agreement by the stockholders of the Company, no such amendment,
modification or supplement shall reduce the amount or change the form of the
consideration payable pursuant to Article 3.
Section 9.3 Non-survival of Representations and Warranties. None of
----------------------------------------------
the representations and warranties in this Agreement or in any schedule,
instrument or other document delivered pursuant to this Agreement shall survive
the Effective Time. The preceding sentence shall not limit any covenant or
agreement of the parties which by its terms contemplates performance after the
Effective Time.
Section 9.4 Notices. All notices and other communications hereunder
-------
shall be in writing and shall be deemed given if delivered personally,
telecopied (which is confirmed) or sent by an internationally recognized
overnight courier service, such as Federal Express, to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):
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(a) if to Parent or Merger Sub, to:
ValueClick, Inc.
0000 Xxxx Xxxxxxx Xxxxx
Xxxxx 000
Xxxxxxxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: President and Chief Executive Officer
Telecopy No.: (000) 000-0000
with a copy (which shall not constitute notice) to:
Xxxxxxx, Phleger & Xxxxxxxx, LLP
000 Xxxxx Xxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Telecopy No.: (000) 000-0000
and
if to the Company, to:
Be Free, Inc.
000 Xxxxx Xxxxxx Xxxx
Xxxxx 000
---------
Xxxxxxxxxxx, Xxxxxxxxxxxxx 00000
--------------------------------
Attention:
Telecopy No.: (000) 000-0000
with a copy (which shall not constitute notice) to:
Xxxx and Xxxx LLP
00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxx X. Xxxxxxxx, Esq.
Telecopy No.: (000) 000-0000
Section 9.5 Counterparts. This Agreement may be executed in one or
------------
more counterparts (whether delivered by facsimile or otherwise), each of which
shall be considered one and the same agreement and shall become effective when
two or more counterparts have been signed by each of the parties and delivered
to the other parties.
Section 9.6 Entire Agreement; No Third-Party Beneficiaries. This
----------------------------------------------
Agreement, the Voting Agreements, and the Confidentiality Agreement (including
the documents and the instruments referred to herein and therein): (a)
constitute the entire agreement and supersede all prior agreements,
negotiations, arrangements and understandings, whether written, electronic or
oral, among the parties with respect to the subject matter hereof and thereof,
and (b) except as provided in Sections 6.9 and 6.11, and Section 6.13 as it
relates to the election of members of the
71
board of directors, are not intended to confer upon any Person other than the
parties hereto and thereto any rights or remedies hereunder.
Section 9.7 Severability. Any term or provision of this Agreement
------------
that is held by a court of competent jurisdiction or other authority to be
invalid, void 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 invalid, void or unenforceable
term or provision in any other situation or in any other jurisdiction. If the
final judgment of a court of competent jurisdiction or other authority declares
that any term or provision hereof is invalid, void or unenforceable, the
parties agree that the court making such determination shall have the power to
and shall, subject to the discretion of such court, reduce the scope, duration,
area or applicability of the term or provision, to delete specific words or
phrases, or to replace any invalid, void 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.
Section 9.8 Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the laws of the State of New York, including
Section 5-1401 of New York General Obligations Law; provided, however, that the
Merger shall be governed by Delaware Law.
Section 9.9 Enforcement. The parties agree that irreparable damage
-----------
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached.
It is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any court of the United States or
New York state court sitting in the Borough of Manhattan, The City of New York,
this being in addition to any other remedy to which they are entitled at law or
in equity. In addition, each of the parties (a) consents to submit itself to
the personal jurisdiction of any Federal court or any New York state court
sitting in the Borough of Manhattan, The City of New York in the event any
dispute arises out of this Agreement or any of the Transactions, (b) agrees
that it will not attempt to deny or defeat such personal jurisdiction by motion
or other request for leave from any such court and (c) agrees that it will not
bring any action relating to this Agreement or any of the Transactions in any
court other than a Federal court or a New York state court sitting in the
Borough of Manhattan, The City of New York. EACH PARTY UNCONDITIONALLY AND
IRREVOCABLY WAIVES AND AGREES NOT TO ASSERT ANY RIGHT IT MAY HAVE TO TRIAL BY
JURY IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE TRANSACTIONS.
Section 9.10 Extension, Waiver. At any time prior to the Effective
-----------------
Time, the parties to this Agreement may (a) extend the time for the performance
of any of the obligations or other acts of the other parties to this Agreement,
(b) waive any inaccuracies in the representations and warranties of the other
parties contained in this Agreement or in any document delivered pursuant to
this Agreement or (c) subject to Section 9.2, waive compliance by the other
parties with any of the agreements or conditions contained in this Agreement.
Any agreement on the part of a party to any such extension or waiver shall be
valid only if set forth in an instrument in
72
writing signed on behalf of such party. The failure of any party to this
Agreement to assert any of its rights under this Agreement or otherwise shall
not constitute a waiver of those rights.
Section 9.11 Assignment. Neither this Agreement not any of the rights,
----------
interests or obligations hereunder shall be assigned by any of the parties to
this Agreement (whether by operation of law or otherwise) without the prior
written content of the other parties to this Agreement. Subject to the preceding
sentence, this Agreement will be binding upon, inure to the benefit of and be
enforceable by the parties and their respective successors and permitted
assigns.
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IN WITNESS WHEREOF, each of Parent, Merger Sub and the Company have caused
this Agreement to be signed by their respective duly authorized officers as of
the date first written above.
VALUECLICK, INC.
By /s/ Xxxxxx X. Xxxxxxx
------------------------------
Xxxxxx X. Xxxxxxx
Chief Operating Officer
BRAVO ACQUISITION I CORP.
By /s/ Xxxxxx X. Xxxxxxx
------------------------------
Xxxxxx X. Xxxxxxx
President
BE FREE, INC.
By /s/ Xxxxxx X. Xxxxxxxxx
------------------------------
Xxxxxx X. Xxxxxxxxx
Chief Executive Officer
Schedule 1.1
Company Major Stockholders
Xxxxxxx River Partnership VIII, XX
Xxxxxxx River Partnership VIII-A, LLC
Xxxxxx X. Xxxxxx, Xx.
Xxxxxx X. Xxxxxxxxx
Xxx X. Xxxxxxxxxxx
Dintersmith Family Limited Partnership
Xxxxxxx X. Xxxxxxx
X. Xxxxx Xxxxxx
Xxxxxxx X. Xxxxxx
Schedule 1.2
Parent Major Stockholders
Xxxxx X. Xxxxxx
Xxxxxx X. Xxxxxxxx
Xxxxx X. Xxxxx
Xxxxxx X. Xxxxx
Xxxxxx X. Xxxx
Xxxxx Xxxxxx
Xxxxxxx X. Xxxxxxx
Schedule 7.2(i)
Required Consents
Any required third party consent where the failure to obtain such consent
would be reasonably likely to result in a Material Adverse Effect to the
Surviving Corporation; provided, that Parent agrees, if requested by any such
third party or required by the terms of the relevant agreement, to either (x)
assume the obligations of the Company or its Subsidiary under the relevant
agreement or (y) waive the receipt of such consent as a closing condition under
Section 7.2(i) of the Merger Agreement.
