AGREEMENT AND PLAN OF MERGER
BY AND AMONG
DIVINE, INC.,
DES ACQUISITION COMPANY
AND
ESHARE COMMUNICATIONS, INC.
JULY 8, 2001
TABLE OF CONTENTS
ARTICLE I The Merger; Effective Time; Closing.............................1
1.1 The Merger......................................................1
1.2 Effective Time..................................................2
1.3 Closing.........................................................2
1.4 Effect of the Merger............................................2
ARTICLE II Certificate of Incorporation and Bylaws of
the Surviving Corporation..................................2
2.1 Certificate of Incorporation; Name..............................2
2.2 Bylaws .........................................................2
ARTICLE III Directors and Officers of the Surviving Corporation.............2
3.1 Directors.......................................................2
3.2 Officers........................................................3
ARTICLE IV Merger Consideration; Conversion or Cancellation of Shares
in the Merger..............................................3
4.1 Share Consideration for the Merger; Conversion or Cancellation
of Shares in the Merger....................................3
4.2 Payment for Shares in the Merger................................5
4.3 Cash For Fractional Parent Shares...............................6
4.4 Transfer of Shares after the Effective Time.....................6
4.5 Lost, Stolen or Destroyed Certificates..........................7
ARTICLE V Representations and Warranties..................................7
5.1 Representations and Warranties of Parent and Merger Sub.........7
5.2 Representations and Warranties of the Company..................17
ARTICLE VI Additional Covenants and Agreements............................35
6.1 Conduct of Business of the Company.............................35
6.2 No Solicitation................................................38
6.3 Meeting of Shareholders........................................40
6.4 Registration Statement.........................................40
6.5 Reasonable Efforts.............................................41
6.6 Access to Information..........................................41
6.7 Publicity......................................................42
6.8 Affiliates of the Company and Parent...........................42
6.9 Maintenance of Insurance.......................................42
6.10 Representations and Warranties.................................42
6.11 Filings; Other Action..........................................42
6.12 Tax-Free Reorganization Treatment..............................43
6.13 Company Employee Stock Purchase Plan...........................43
6.14 Nasdaq Listing.................................................43
6.15 Indemnification................................................43
6.16 Auditors' Letters..............................................44
6.17 Sale of Company Software Products..............................44
6.18 Issuance of Option Grants......................................44
6.19 Self Tender Offer Prohibition..................................44
ARTICLE VII Conditions.....................................................44
7.1 Conditions to Each Party's Obligations.........................44
7.2 Conditions to the Obligations of the Company...................45
7.3 Conditions to the Obligations of Parent........................46
ARTICLE VIII Termination....................................................47
8.1 Termination by Mutual Consent..................................47
8.2 Termination by either the Company or Parent....................47
8.3 Termination by the Company.....................................47
8.4 Termination by Parent..........................................48
8.5 Effect of Termination; Termination Fee.........................49
ARTICLE IX Miscellaneous and General......................................50
9.1 Payment of Expenses............................................50
9.2 Non-Survival of Representations and Warranties.................50
9.3 Modification or Amendment......................................50
9.4 Waiver of Conditions...........................................50
9.5 Counterparts...................................................51
9.6 Governing Law; Jurisdiction....................................51
9.7 Notices........................................................51
9.8 Entire Agreement; Assignment...................................52
9.9 Parties in Interest............................................52
9.10 Certain Definitions............................................52
9.11 Severability...................................................54
9.12 Specific Performance...........................................54
9.13 Recovery of Attorney's Fees....................................54
9.14 Captions.......................................................54
9.15 No Strict Construction.........................................54
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TABLE OF DEFINED TERMS
Agreement..........................................................Introduction
Authorized Representatives..........................................Section 6.7
Average Market Value............................................Section 9.10(a)
Cash Adjustment Payment..........................................Section 4.1(e)
Certificates of Merger..............................................Section 1.2
Certificates.....................................................Section 4.2(b)
Closing.............................................................Section 1.3
Closing Date........................................................Section 1.3
Code...................................................................Recitals
Commercial Software..............................................Section 5.2(o)
Company............................................................Introduction
Company Acquisition Proposal.....................................Section 6.3(a)
Company Affiliate...................................................Section 6.8
Company Affiliate Letter............................................Section 6.8
Company Contract.................................................Section 5.2(p)
Company Disclosure Schedule.........................................Section 5.2
Company Embedded Products........................................Section 5.2(o)
Company Financial Statements.................................Section 5.2(h)(ii)
Company Insurance Policies.......................................Section 5.2(u)
Company Intellectual Property Rights.............................Section 5.2(o)
Company International Employee Plans.............................Section 5.2(n)
Company Key Employees............................................Section 5.2(p)
Company Option...................................................Section 4.1(c)
Company Option Plans.............................................Section 5.2(b)
Company Plan Affiliate........................................Section 5.2(n)(i)
Company Proprietary Rights.......................................Section 5.2(o)
Company Scheduled Plans.......................................Section 5.2(n)(i)
Company SEC Reports...........................................Section 5.2(h)(i)
Company Shares...................................................Section 4.1(a)
Company Software.................................................Section 5.2(o)
Company Software Authors.........................................Section 5.2(o)
Company Shareholders Meeting........................................Section 6.3
Company Superior Proposal........................................Section 6.3(a)
Confidentiality Agreement...........................................Section 6.7
DGCL................................................................Section 1.1
Effective Time......................................................Section 1.2
Encumbrance.....................................................Section 9.10(b)
Environmental Costs and Liabilities..............................Section 5.2(s)
Environmental Laws...............................................Section 5.2(s)
ERISA...........................................................Section 9.10(c)
ESPP.............................................................Section 5.2(b)
Exchange Act.....................................................Section 5.1(g)
Exchange Agent...................................................Section 4.2(a)
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Exchange Ratio...................................................Section 4.1(a)
Fractional Securities Fund..........................................Section 4.3
GBCC................................................................Section 1.1
Governmental Entity.............................................Section 9.10(d)
Hazardous Material...............................................Section 5.2(s)
HSR Act..........................................................Section 5.1(g)
Indemnified Personnel..............................................Section 6.16
Knowledge.......................................................Section 9.10(e)
Material Adverse Effect.........................................Section 9.10(f)
Merger.................................................................Recitals
Merger Sub.........................................................Introduction
NNM.................................................................Section 4.3
Parent.............................................................Introduction
Parent Contract..................................................Section 5.1(p)
Parent Common Stock..............................................Section 5.1(c)
Parent Disclosure Schedule..........................................Section 5.1
Parent Embedded Products.........................................Section 5.1(o)
Parent Financial Statements..................................Section 5.1(i)(ii)
Parent Insurance Policies........................................Section 5.2(t)
Parent Plan Affiliate.........................................Section 5.1(n)(i)
Parent Proprietary Rights........................................Section 5.1(o)
Parent Scheduled Plans........................................Section 5.1(n)(i)
Parent SEC Reports............................................Section 5.1(i)(i)
Parent Shares....................................................Section 4.1(a)
Parent Stockholders Meeting......................................Section 5.1(l)
Parties............................................................Introduction
Person..........................................................Section 9.10(h)
Post-Merger Exercise Price.......................................Section 4.1(c)
Proxy Statement.....................................................Section 6.5
Restraints.......................................................Section 7.1(c)
Returns.........................................................Section 9.10(i)
S-4 Registration Statement..........................................Section 6.5
SEC...........................................................Section 5.1(i)(i)
Securities Act...................................................Section 5.1(g)
Share Consideration..............................................Section 4.2(a)
Significant Tax Agreement.......................................Section 9.10(j)
Stock Merger Exchange Fund.......................................Section 4.2(a)
Software Distribution Agreement....................................Section 6.17
Subsidiary......................................................Section 9.10(k)
Substitute Option................................................Section 4.1(c)
Surviving Corporation...............................................Section 1.1
Szlam..................................................................Recitals
Tax.............................................................Section 9.10(l)
Taxes...........................................................Section 9.10(l)
Termination Fee..................................................Section 8.5(c)
iv
Transaction Expenses................................................Section 9.1
Voting Agreement.......................................................Recitals
v
EXHIBITS
Form of Voting Agreement..............................................Exhibit A
Form of Company Affiliate Letter......................................Exhibit B
Form of Software Distribution Agreement...............................Exhibit C
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and entered
into as of July 8, 2001, by and among divine, inc., a Delaware corporation
("Parent"), DES Acquisition Company, a Delaware corporation and a direct
wholly-owned Subsidiary of Parent ("Merger Sub"), and eshare communications,
Inc., a Georgia corporation (the "Company"). Parent, Merger Sub and the Company
are referred to collectively herein as the "Parties." Capitalized terms used
herein are defined as referenced in the Table of Defined Terms contained herein.
RECITALS
WHEREAS, the Board of Directors of each of Parent, Merger Sub and the
Company have determined that it is in the best interests of each corporation and
their respective stockholders and shareholders, as the case may be, that the
Company and Parent enter into a business combination through the merger of the
Company with and into the Merger Sub (the "Merger") and, in furtherance thereof,
have approved the Merger and declared the Merger advisable to its respective
stockholders or shareholders, as applicable;
WHEREAS, pursuant to the Merger, the outstanding shares of common stock of
the Company shall be converted into shares of common stock of Parent at the rate
set forth herein;
WHEREAS, for federal income tax purposes, it is intended that the Merger
shall qualify as a reorganization within the meaning of Section 368 of the
Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, concurrently with the execution hereof, Szlam Partners, L.P.
("Szlam") is entering into a voting agreement in the form attached as EXHIBIT A
hereto (the "Voting Agreement");
NOW, THEREFORE, in consideration of the mutual representations, warranties,
covenants and agreements set forth herein, the Parties hereby agree as follows:
ARTICLE I
THE MERGER; EFFECTIVE TIME; CLOSING
1.1 THE MERGER. Upon the terms and subject to the conditions set forth in
this Agreement, and in accordance with the Delaware General Corporation Law (the
"DGCL") and the Georgia Business Corporation Code (the "GBCC"), at the Effective
Time, the Company shall be merged with and into Merger Sub, the separate
corporate existence of the Company shall thereupon cease, and Merger Sub shall
be the successor or surviving corporation and shall continue its existence under
the laws of the State of Delaware. Merger Sub, as the surviving corporation
after the consummation of the Merger, is sometimes hereinafter referred to as
the "Surviving Corporation."
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1.2 EFFECTIVE TIME. Subject to the provisions of this Agreement, the
Parties shall cause the Merger to be consummated by filing duly executed
certificates of merger of Merger Sub and the Company (the "Certificates of
Merger") with the Office of the Secretary of State of the States of Delaware and
Georgia, as the case may be, in such form as required by, and executed in
accordance with, the relevant provisions of the DGCL and the GBCC as applicable,
as soon as practicable on the Closing Date, and shall take all other action
required by law to effect the Merger. The Merger shall become effective upon
such filing or at such time thereafter as is provided in the Certificates of
Merger (the "Effective Time").
1.3 CLOSING. Unless this Agreement shall have been terminated and the
transactions herein contemplated shall have been abandoned pursuant to Article
VIII, the closing of the Merger (the "Closing") shall take place at 10:00 a.m.,
local time, at the offices of counsel for Parent, on the second business day
after all of the conditions to the obligations of the Parties to consummate the
Merger as set forth in Article VII have been satisfied or waived, or such other
date, time or place as is agreed to in writing by the Parties (the "Closing
Date").
1.4 EFFECT OF THE MERGER. At the Effective Time, the effect of the Merger
shall be as provided in this Agreement and the applicable provisions of the DGCL
and the GBCC. Without limiting the generality of the foregoing, and subject
thereto, at the Effective Time, all property, rights, privileges, powers and
franchises of the Company and Merger Sub shall vest in the Surviving
Corporation, and all debts, liabilities and duties of the Company and Merger Sub
shall become the debts, liabilities and duties of the Surviving Corporation.
ARTICLE II
CERTIFICATE OF INCORPORATION AND BYLAWS OF THE SURVIVING CORPORATION
2.1 CERTIFICATE OF INCORPORATION; NAME. At the Effective Time, the
Certificate of Incorporation of Merger Sub immediately prior to the Effective
Time shall be the Certificate of Incorporation of the Surviving Corporation,
until thereafter amended as provided therein and by applicable law, and the name
of the Surviving Corporation shall be the Company's name.
2.2 BYLAWS. At the Effective Time, the by-laws of Merger Sub in effect
immediately prior to the Effective Time shall be the by-laws of the Surviving
Corporation, until thereafter amended as provided therein and by applicable law.
ARTICLE III
DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION
3.1 DIRECTORS. The directors of Merger Sub shall be the initial directors
of the Surviving Corporation, until their respective successors have been duly
elected or appointed and qualified or until their earlier death, resignation or
removal in accordance with the Surviving Corporation's Certificate of
Incorporation and by-laws.
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3.2 OFFICERS. The officers of Merger Sub shall be the initial officers of
the Surviving Corporation, until their successors have been duly elected or
appointed and qualified or until their earlier death, resignation or removal in
accordance with the Surviving Corporation's Certificate of Incorporation and
by-laws.
ARTICLE IV
MERGER CONSIDERATION; CONVERSION OR CANCELLATION OF SHARES IN THE MERGER
4.1 SHARE CONSIDERATION FOR THE MERGER; CONVERSION OR CANCELLATION OF
SHARES IN THE MERGER. At the Effective Time, the manner of converting or
canceling shares of the Company and Parent shall be as follows:
(a) CONVERSION OF COMPANY STOCK. Subject to adjustment, if applicable,
pursuant to Sections 4.1(e) and 4.1(f) hereof, and subject to the
provisions of Section 4.3 hereof, each share of common stock, no par value
("Company Shares"), of the Company issued and outstanding immediately prior
to the Effective Time (excluding any Company Shares described in Section
4.1(d)), shall, by virtue of the Merger and without any action on the part
of the holder thereof, be converted automatically into the right to receive
1.30 shares of Class A common stock, $0.001 par value, of Parent ("Parent
Shares"). All Company Shares to be converted into Parent Shares pursuant to
this Section 4.1(a) shall, by virtue of the Merger and without any action
on the part of the holders thereof, cease to be outstanding, be canceled
and cease to exist, and each holder of a certificate representing any such
Company Shares shall thereafter cease to have any rights with respect to
such Company Shares, except the right to receive for each of the Company
Shares, upon the surrender of such certificate in accordance with Section
4.2, the number of Parent Shares specified above and cash in lieu of
fractional shares. The ratio of Company Shares per share of Parent Shares,
as adjusted from time to time pursuant to Sections 4.1(e) and 4.1(f)
hereof, is sometimes hereinafter referred to as the "Exchange Ratio."
(b) STOCK OF MERGER SUB. Each stock certificate representing shares of
Merger Sub issued and outstanding immediately prior to the Effective Time
shall continue to represent ownership of such shares of capital stock of
the Surviving Corporation.
(c) OUTSTANDING OPTIONS. Prior to the Effective Time, each option to
purchase Company Shares (each, a "Company Option") that is outstanding and
unexercised pursuant to the Company Option Plans in effect on the date
hereof shall (i) be terminated if the result of dividing (A) the exercise
price of such Company Option by (B) the Exchange Ratio and rounding the
result to the nearest tenth of one cent (hereinafter, the "Post-Merger
Exercise Price"), is greater than the closing sale price of the Parent
Shares on the trading day immediately preceding the Effective Time, and
(ii) if the Post-Merger Exercise Price of such Company Option is less than
or equal to the closing sale price of the Parent Shares on the trading day
immediately preceding the Effective Time, become and represent an option to
purchase (a "Substitute Option") the number of Parent Shares (rounded to
the nearest full share) determined by multiplying (X) the number of Company
Shares subject to such Company Option immediately prior to the Effective
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Time by (Y) the Exchange Ratio, at an exercise price per share of Parent
Shares equal to the Post-Merger Exercise Price. It is the intent of the
Parties that the Substitute Options shall qualify following the Effective
Time as "incentive stock options" as defined in Section 422 of the Code to
the extent that the related Company Options qualified as incentive stock
options immediately prior to the Effective Time, and the provisions of this
Section 4.1(c) shall be applied consistent with such intent. Parent shall
pay cash to holders of Company Options in lieu of issuing fractional Parent
Shares upon the exercise of Substitute Options for Parent Shares. After the
Effective Time, except as provided above in this Section 4.1(c), each
Substitute Option shall be exercisable upon the same terms and conditions
as were applicable under the related Company Option immediately prior to
the Effective Time after giving effect to any provision contained in such
Company Option providing for accelerated vesting as a result of this
Agreement. The Company agrees that, after the date of this Agreement, it
will not grant any stock appreciation rights or limited stock appreciation
rights and will not permit cash payments to holders of Company Options in
lieu of the substitution therefor of Substitute Options, as described in
this Section 4.1(c). Parent will reserve a sufficient number of Parent
Shares (i) for issuance under this Section 4.1(c) and (ii) for issuance
under Section 6.18.
(d) CANCELLATION OF PARENT OWNED AND TREASURY STOCK. All of the
Company Shares that are owned by Parent, any direct or indirect
wholly-owned Subsidiary of Parent or by the Company as treasury stock shall
automatically cease to be outstanding, shall be canceled and shall cease to
exist and no Parent Shares shall be delivered in exchange therefor.
(e) ADJUSTMENT TO EXCHANGE RATIO. If the Average Market Value of
Parent Shares is $2.82 or greater, then the Exchange Ratio (prior to any
adjustment pursuant to Section 4.1(f), if applicable) shall be adjusted
to an amount equal to $3.653 divided by the Average Market Value of
Parent Shares. If the Average Market Value of Parent Shares is $2.39 or
less, then the Exchange Ratio (prior to any adjustment pursuant to
Section 4.1(f), if applicable) shall be adjusted to an amount equal to
$3.12 divided by the greater of (x) the Average Market Value of Parent
Shares or (y) $1.00. If the number of Parent Shares to be issued in the
Merger pursuant to the adjustment set forth in the foregoing sentence
exceeds 28,546,506 Parent Shares (prior to any adjustment pursuant to
Section 4.1(f), if applicable), then Parent may elect to pay cash in
lieu of all or any portion of the Parent Shares otherwise issuable to
Company shareholders in the Merger in excess of 28,546,506 Parent Shares
(as adjusted pursuant to Section 4.1(f), if applicable), in an amount
per share equal to the Average Market Value of Parent Shares (the "Cash
Adjustment Payment"), provided that such election is made prior to the
date on which the Proxy Statement with respect to the Company
Shareholders Meeting is first mailed to the Company's shareholders, or
on a later date so long as the timing of such election shall not cause
the Closing Date contemplated in the Proxy Statement with respect to the
Company Shareholders Meeting to be delayed.
(f) ADJUSTMENT FOR ORGANIC CHANGES. In the event of any
reclassification, stock split or stock dividend with respect to Parent
Shares, any change or conversion of Parent
4
Shares into other securities or any other dividend or distribution in
Parent Shares with respect to outstanding Parent Shares (or if a record
date with respect to any of the foregoing should occur) prior to the
Effective Time, appropriate and proportionate adjustments, if any, shall
be made to the Exchange Ratio, and all references to the Exchange Ratio
in this Agreement shall be deemed to be to the Exchange Ratio as so
adjusted.
4.2 PAYMENT FOR SHARES IN THE MERGER. The manner of making payment for
Shares in the Merger shall be as follows:
(a) EXCHANGE AGENT. On or prior to the Closing Date, Parent shall make
available to Computershare Investor Services, LLC, or other entity mutually
agreed upon by the Parties (the "Exchange Agent"), for the benefit of the
holders of Company Shares, a sufficient number of certificates representing
the Parent Shares required to effect the delivery of the aggregate
consideration in Parent Shares, cash for the Fractional Securities Fund and
the Cash Adjustment Payment, if any, required to be issued pursuant to
Section 4.1 (collectively, the "Share Consideration" and the certificates
representing the Parent Shares comprising such aggregate Share
Consideration being referred to hereinafter as the "Stock Merger Exchange
Fund"). The Exchange Agent shall, pursuant to irrevocable instructions,
deliver the Share Consideration out of the Stock Merger Exchange Fund and
the Fractional Securities Fund. The Stock Merger Exchange Fund and the
Fractional Securities Fund shall not be used for any purpose other than as
set forth in this Agreement.
(b) EXCHANGE PROCEDURES. Promptly after the Effective Time, the
Exchange Agent shall mail to each holder of record of a certificate or
certificates that immediately prior to the Effective Time represented
outstanding Company Shares (the "Certificates") (i) a form of letter of
transmittal, in a form reasonably satisfactory to the Parties (which shall
specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon proper delivery of the Certificates to
the Exchange Agent) and (ii) instructions for use in effecting the
surrender of the Certificates for payment therefor. Subject to Section 4.5,
upon surrender of Certificates for cancellation to the Exchange Agent,
together with such letter of transmittal duly executed and any other
required documents, the holder of such Certificates shall be entitled to
receive for each of the Company Shares represented by such Certificates the
Share Consideration, without interest, allocable to such Certificates and
the Certificates so surrendered shall forthwith be canceled. Until so
surrendered, such Certificates shall represent solely the right to receive
the Share Consideration allocable to such Certificates.
(c) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES. No dividends or
other distributions that are declared after the Effective Time on Parent
Shares and payable to the holders of record thereof after the Effective
Time will be paid to Persons entitled by reason of the Merger to receive
Parent Shares until such Persons surrender their Certificates as provided
in Section 4.2(b) above. Upon such surrender, there shall be paid to the
Person in whose name the Parent Shares are issued any dividends or other
5
distributions having a record date after the Effective Time and payable
with respect to such Parent Shares between the Effective Time and the time
of such surrender. After such surrender there shall be paid to the Person
in whose name the Parent Shares are issued any dividends or other
distributions on such Parent Shares which shall have a record date after
the date of such surrender. In no event shall the Persons entitled to
receive such dividends or other distributions be entitled to receive
interest on such dividends or other distributions.
(d) TRANSFERS OF OWNERSHIP. If any certificate representing Parent
Shares is to be issued in a name other than that in which the Certificate
surrendered in exchange therefor is registered, it shall be a condition of
such exchange that the Certificate so surrendered shall be properly
endorsed and otherwise in proper form for transfer and that the Person
requesting such exchange shall pay to the Exchange Agent any transfer or
other taxes required by reason of the issuance of certificates for such
Parent Shares in a name other than that of the registered holder of the
Certificate surrendered, or shall establish to the satisfaction of the
Exchange Agent that such tax has been paid or is not applicable.
(e) NO LIABILITY. Neither the Exchange Agent nor any of the Parties
shall be liable to a holder of Company Shares for any Parent Shares, Cash
Adjustment Payment, if any, cash in lieu of fractional Parent Shares or any
dividend to which the holders thereof are entitled, that are delivered to a
public official pursuant to applicable escheat law. The Exchange Agent
shall not be entitled to vote or exercise any rights of ownership with
respect to the Parent Shares held by it from time to time hereunder, except
that it shall receive and hold all dividends or other distributions paid or
distributed with respect to such Parent Shares for the account of the
Persons entitled thereto.
(f) TERMINATION OF FUNDS. Subject to applicable law, any portion of
the Stock Merger Exchange Fund, the Cash Adjustment Payment, if any, and
the Fractional Securities Fund that remains unclaimed by the former
shareholders of the Company for one (1) year after the Effective Time shall
be delivered to Parent, upon demand of Parent, and any former shareholder
of the Company shall thereafter look only to Parent for payment of their
applicable claim for the Share Consideration for their Company Shares.
4.3 CASH FOR FRACTIONAL PARENT SHARES. No fractional Parent Shares shall be
issued in the Merger. Each holder of Parent Shares shall be entitled to receive
in lieu of any fractional Parent Shares to which such holder otherwise would
have been entitled pursuant to Section 4.2 (after taking into account all Parent
Shares then held of record by such holder) a cash payment in an amount equal to
the product of (i) the fractional interest of a Parent Share to which such
holder otherwise would have been entitled and (ii) the closing sale price of a
Parent Share on the Nasdaq National Market ("NNM") on the trading day
immediately prior to the Effective Time (the cash comprising such aggregate
payments in lieu of fractional Parent Shares being hereinafter referred to as
the "Fractional Securities Fund").
4.4 TRANSFER OF SHARES AFTER THE EFFECTIVE TIME. All Share Consideration
issued upon the surrender for exchange of Company Shares in accordance with the
terms hereof (including any cash paid in respect thereof) shall be deemed to
have been issued in full satisfaction of all
6
rights pertaining to such Company Shares, and no further registration of
transfers shall be made. If, after the Effective Time, Certificates are
presented to the Surviving Corporation for any reason, they shall be canceled
and exchanged as provided in this Article IV.
4.5 LOST, STOLEN OR DESTROYED CERTIFICATES. In the event any Certificates
evidencing Company Shares shall have been lost, stolen or destroyed, the
Exchange Agent shall issue in exchange for such lost, stolen or destroyed
certificates, upon the making of an affidavit of that fact by the holder
thereof, such Parent Shares, cash for fractional shares, if any, and any
dividends or other distributions to which the holders thereof are entitled;
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 certificates to deliver a customary bond in such sum as it may
reasonably direct as indemnity against any claim that may be made against
Parent, the Surviving Corporation or the Exchange Agent with respect to the
certificates alleged to have been lost, stolen or destroyed.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.1 REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB. Parent and
Merger Sub hereby represent and warrant to the Company that the statements
contained in this Section 5.1 are true and correct, except to the extent
specifically set forth on the disclosure schedule delivered contemporaneously
with this Agreement by Parent to the Company (the "Parent Disclosure Schedule").
The Parent Disclosure Schedule shall be arranged in sections and paragraphs
corresponding to the lettered and numbered paragraphs contained in this Section
5.1, and the disclosure in any paragraph shall qualify only the corresponding
paragraph in this Section 5.1 or other paragraphs or sections to which it is
clearly apparent (from a plain reading of the disclosure) that such disclosure
relates.
(a) CORPORATE ORGANIZATION AND QUALIFICATION. Except as set forth in
Section 5.1(a) of the Parent Disclosure Schedule, each of Parent and each
of its Subsidiaries is a corporation duly organized, validly existing and
in good standing under the laws of its jurisdiction of incorporation and is
qualified and in good standing as a foreign corporation in each
jurisdiction where the properties owned, leased or operated, or the
business conducted, by it require such qualification, except where failure
to be so could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on Parent. Each of Parent and
its Subsidiaries has all requisite power and authority (corporate or
otherwise) to own its properties and to carry on its business as it is now
being conducted.
(b) OPERATIONS OF MERGER SUB. Merger Sub is a direct, wholly-owned
Subsidiary of Parent, was formed solely for the purpose of engaging in the
transactions contemplated hereby, has engaged in no other business
activities and has conducted its operations only as contemplated hereby.
7
(c) CAPITALIZATION. The authorized capital stock of Parent consists of
(i) 2,500,000,000 shares of Class A common stock, $0.001 par value per
share ("Parent Common Stock"), of which 138,973,759 shares were issued and
outstanding on May 31, 2001, (ii) 100,000,000 shares of Class C common
stock, $0.001 par value per share, of which 6,777,777 were issued and
outstanding on the date hereof, 50,000,000 shares of preferred stock,
$0.001 par value per share, 500,000 shares of which have been designated
Series A Junior Participating Preferred Stock. No shares of Series A Junior
Participating Preferred Stock are issued and outstanding as of the date
hereof. All of the outstanding shares of capital stock of Parent have been
duly authorized and validly issued and are fully paid and nonassessable.
The authorized capital stock of Merger Sub consists of 1,000 shares of
common stock, $0.001 par value, 1,000 shares of which are issued and
outstanding and held by Parent. Schedule 5.1(c) of the Parent Disclosure
Schedule sets forth all rights with respect to registration of Parent
Common Stock under the Securities Act, including, but not limited to,
demand rights or piggy-back registration rights, granted by Parent since
July 11, 2000 through the date hereof.
(d) LISTINGS. Parent's securities are not listed, or quoted, for
trading on any U.S. domestic or foreign securities exchange, other than the
NNM.
(e) AUTHORITY RELATIVE TO THIS AGREEMENT. The Board of Directors of
Merger Sub has declared the Merger advisable, and Merger Sub has the
requisite corporate power and authority to approve, authorize, execute and
deliver this Agreement and to consummate the transactions contemplated
hereby. The Board of Directors of Parent has declared the Merger and the
related issuance of Parent Shares advisable, has duly and validly
authorized this Agreement and the consummation by Parent of the
transactions contemplated hereby and Parent has the requisite corporate
power and authority to approve, authorize, execute and deliver this
Agreement and to consummate the transactions contemplated hereby. No other
corporate proceedings on the part of Parent are necessary to authorize this
Agreement or to consummate the transactions contemplated hereby, other than
the approval of this Agreement and the Merger by the stockholders of Parent
in accordance with the DGCL, if necessary. This Agreement and the
consummation by Parent and Merger Sub of the transactions contemplated
hereby have been duly and validly authorized by the Boards of Directors of
Parent and Merger Sub and by Parent as the sole Stockholder of Merger Sub.
This Agreement has been duly and validly executed and delivered by Parent
and Merger Sub and, assuming this Agreement constitutes the valid and
binding agreement of the Company, constitutes the valid and binding
agreement of Parent and Merger Sub, enforceable against Parent and Merger
Sub in accordance with its terms, subject, as to enforceability, to
bankruptcy, insolvency, reorganization and other laws of general
applicability relating to or affecting creditors' rights and to general
principles of equity.
(f) PRESENT COMPLIANCE WITH OBLIGATIONS AND LAWS. Neither Parent nor
any of its Subsidiaries is: (i) in violation of its Certificate of
Incorporation, by-laws or similar documents; (ii) in default in the
performance of any obligation, agreement or condition of any debt
instrument which (with or without the passage of time or the giving of
notice, or
8
both) affords to any Person the right to accelerate any indebtedness or
terminate any right; (iii) in default under or breach of (with or without
the passage of time or the giving of notice) any other contract to which it
is a party or by which it or its assets are bound; or (iv) in violation of
any law, regulation, administrative order or judicial order, decree or
judgment (domestic or foreign) applicable to it or its business or assets,
except where any violation, default or breach under items (ii), (iii), or
(iv) could not reasonably be expected to, individually or in the aggregate,
have a Material Adverse Effect on Parent.
(g) CONSENTS AND APPROVALS; NO VIOLATION. Neither the execution and
delivery of this Agreement nor the consummation by Parent of the
transactions contemplated hereby will (i) conflict with or result in any
breach of any provision of the respective Certificate of Incorporation (or
other similar documents) or by-laws (or other similar documents) of Parent
or any of its Subsidiaries; (ii) require any consent, approval,
authorization or permit of, or registration or filing with or notification
to, any governmental or regulatory authority, in each case, by or on behalf
of Parent or any of its Subsidiaries, except (A) in connection with the
applicable requirements, if any, of the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), (B) pursuant to the
applicable requirements of the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder (the "Securities Act") and the
Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder (the "Exchange Act"), and the NNM, (C) the filing of
the Certificates of Merger pursuant to the DGCL and the GBCC and
appropriate documents with the relevant authorities of other states in
which Parent is authorized to do business, (D) as may be required by any
applicable state securities laws, (E) the consents, approvals, orders,
authorizations, registrations, declarations and filings required under the
antitrust or competition laws of foreign countries, or (F) where the
failure to obtain such consent, approval, authorization or permit, or to
make such registration, filing or notification, could not reasonably be
expected to, individually or in the aggregate, have a Material Adverse
Effect on Parent or adversely affect the ability of Parent to consummate
the transactions contemplated hereby; (iii) result in a violation or breach
of, or constitute (with or without notice or lapse of time or both) a
default (or give rise to any right of termination, cancellation or
acceleration or lien or other charge or encumbrance) under any of the
terms, conditions or provisions of any indenture, note, license, lease,
agreement or other instrument or obligation to which Parent or any of its
Subsidiaries is a party or by which any of their assets may be bound,
except for such violations, breaches and defaults (or rights of
termination, cancellation or acceleration or lien or other charge or
encumbrance) as to which requisite waivers or consents have been obtained
or which, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect on Parent or adversely affect
the ability of Parent to consummate the transactions contemplated hereby;
(iv) cause the suspension or revocation of any authorizations, consents,
approvals or licenses currently in effect which, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect
on Parent; or (v) assuming the consents, approvals, authorizations or
permits and registrations, filings or notifications referred to in this
Section 5.1(g) are duly and timely obtained or made, violate any order,
writ, injunction, decree, statute, rule or regulation applicable to Parent
or any of its
9
Subsidiaries or to any of their respective assets, except for violations
which, individually or in the aggregate, could not reasonably be expected
to have a Material Adverse Effect on Parent or adversely affect the ability
of Parent to consummate the transactions contemplated hereby.
(h) LITIGATION. Except as set forth in the Parent SEC Reports filed
prior to the date hereof or in Schedule 5.1(h) of the Parent Disclosure
Schedule, there are no actions, suits, claims, investigations or
proceedings pending or, to the Knowledge of Parent, threatened against
Parent or any of its Subsidiaries that, individually or in the aggregate,
could reasonably be expected to result in obligations or liabilities of
Parent or any of its Subsidiaries that, individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect on Parent or
a Material Adverse Effect on the Parties' ability to consummate the
transactions contemplated by this Agreement. Neither Parent nor any of its
Subsidiaries is subject to any outstanding judgment, order, writ,
injunction or decree which (i) has or may have the effect of prohibiting or
impairing any business practice of Parent or any of its Subsidiaries, any
acquisition of property (tangible or intangible) by Parent or any of its
Subsidiaries, the conduct of the business by Parent or any of its
Subsidiaries, or Parent's ability to perform its obligations under this
Agreement or (ii), insofar as can be reasonably foreseen, individually or
in the aggregate, could reasonably be expected to have a Material Adverse
Effect on Parent.
(i) SEC REPORTS; FINANCIAL STATEMENTS.
(i) Parent has filed all forms, reports and documents with the
Securities and Exchange Commission (the "SEC") required or deemed
advisable to be filed by it pursuant to the federal securities laws
and the SEC rules and regulations thereunder, all of which complied in
all material respects with all applicable requirements of the
Securities Act and the Exchange Act (collectively, the "Parent SEC
Reports"). None of the Parent SEC Reports, including, without
limitation, any financial statements or schedules included therein, at
the time filed (or if amended or superseded by a filing prior to the
date of this Agreement, then on the date of such filing) contained any
untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they
were made, not misleading. None of Parent's Subsidiaries is required
to file any forms, reports or other documents with the SEC.
(ii) The consolidated balance sheets and the related consolidated
statements of income, stockholders' equity (deficit) and cash flows
(including the related notes thereto) of Parent included in the Parent
SEC Reports (collectively, "Parent Financial Statements") comply as to
form in all material respects with applicable accounting requirements
and the published rules and regulations of the SEC with respect
thereto, have been prepared in accordance with generally accepted
accounting principles applied on a basis consistent throughout the
periods involved (except as otherwise noted therein or, in the case of
unaudited
10
interim financial statements, as may be permitted by the SEC on Form
10-Q under the Exchange Act), and present fairly the consolidated
financial position of Parent and its consolidated Subsidiaries as of
their respective dates, and the consolidated results of their
operations and their cash flows for the periods presented therein,
except that the unaudited interim financial statements do not include
footnote disclosure of the type associated with audited financial
statements and were or are subject to normal and recurring year-end
adjustments which were not or are not expected to be material in
amount.
(iii) Since December 31, 2000, there has not been any material
change, by Parent or any of its Subsidiaries, in accounting
principles, methods or policies for financial accounting purposes,
except as required by concurrent changes in generally accepted
accounting principles, or as disclosed in the Company SEC Reports.
There are no material amendments or modifications to agreements,
documents or other instruments which previously had been filed by
Parent with the SEC pursuant to the Securities Act or the Exchange
Act, which have not yet been filed with the SEC but which are required
to be filed.
(j) NO LIABILITIES. Neither Parent nor any of its Subsidiaries has any
material indebtedness, obligations or liabilities of any kind (whether
accrued, absolute, contingent or otherwise, and whether due or to become
due or asserted or unasserted), and, to the Knowledge of Parent, there is
no reasonable basis for the assertion of any claim with respect to any
indebtedness, obligation or liability of any nature against Parent or any
of its Subsidiaries, except for indebtedness, obligations and liabilities
(i) which are fully reflected in, reserved against or otherwise described
in the most recent Parent Financial Statements, (ii) which have been
incurred after the date of the most recent Parent Financial Statements in
the ordinary course of business, consistent with past practice, (iii) which
are obligations to perform under executory contracts in the ordinary course
of business (none of which is a liability resulting from a breach of
contract or warranty, tort, infringement or legal action), or (iv) which
could not reasonably be expected to have, individually or in the aggregate,
a Material Adverse Effect on Parent.
(k) ABSENCE OF CERTAIN CHANGES OF EVENTS. Except as described in the
Parent SEC Reports or in Section 5.1(k) of the Parent Disclosure Schedule,
since December 31, 2000, except with respect to the actions contemplated by
this Agreement, there has not been (i) any Material Adverse Effect on
Parent as of the date hereof; (ii) any damage, destruction or loss of any
assets of Parent or any of its Subsidiaries (whether or not covered by
insurance) that has had or could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on Parent;
(iii) any material change by Parent in its accounting methods, principles
or practices; (iv) any material revaluation by Parent or any of its
Subsidiaries of any of its assets, including, without limitation, writing
down the value of capitalized software or inventory or deferred tax assets
or writing off notes or accounts receivable other than in the ordinary
course of business; (v) any labor dispute or charge of unfair labor
practice (other than routine individual grievances), which, individually or
in the aggregate, has had or could reasonably be expected to have
11
a Material Adverse Effect on Parent, any activity or proceeding by a labor
union or representative thereof to organize any employee of Parent or any
of its Subsidiaries or any campaign being conducted to solicit
authorization from employees to be represented by such labor union in each
case which, individually or in the aggregate, has had or could reasonably
be expected to have a Material Adverse Effect on Parent; or (vi) any waiver
by Parent or any of its Subsidiaries of any rights of material value.
(l) S-4 REGISTRATION STATEMENT AND PROXY STATEMENT/PROSPECTUS. None of
the information supplied or to be supplied by Parent for inclusion or
incorporation by reference in the S-4 Registration Statement or the Proxy
Statement will (i) in the case of the S-4 Registration Statement, at the
time it becomes effective or at the Effective Time, contain any untrue
statement of a material fact or omit to state any material fact required to
be stated therein or necessary in order to make the statements therein not
misleading, or (ii) in the case of the Proxy Statement, at the time of the
mailing of the Proxy Statement and at the time of the Company Shareholders
Meeting and Parent Stockholders Meeting (if necessary) and at the Effective
Time, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they are
made, not misleading. If at any time prior to the Effective Time any event
with respect to Parent, Merger Sub or any of their respective affiliates,
officers and directors or any of its Subsidiaries should occur which is
required to be described in an amendment of, or a supplement to, the Proxy
Statement or the S-4 Registration Statement, Parent shall promptly inform
the Company, such event shall be so described, and such amendment or
supplement shall be promptly filed with the SEC and, as required by law,
disseminated to the shareholders of the Company. The S-4 Registration
Statement will (with respect to Parent and Merger Sub) comply as to form in
all material respects with the requirements of the Securities Act. The
Proxy Statement will (with respect to Parent and Merger Sub) comply as to
form in all material respects with the requirements of the Exchange Act.
Notwithstanding the foregoing, Parent and Merger Sub make no representation
or warranty with respect to any information supplied by, or related to, the
Company or any of its affiliates or advisors which is contained in any of
the foregoing documents.
(m) TAXES.
(i) Except as set forth in Section 5.1(m) of the Parent
Disclosure Schedule, Parent and each of its Subsidiaries has timely
filed (after taking into account any extensions to file) all federal,
state, local and foreign Returns required by applicable Tax law to be
filed by Parent and each of its Subsidiaries. All Taxes owed by Parent
or any of its Subsidiaries to a taxing authority, or for which Parent
or any of its Subsidiaries is liable, whether to a taxing authority or
to other Persons or entities under a Significant Tax Agreement, as of
the date hereof, have been paid and, as of the Effective Time, will
have been paid. All Returns were true and correct in all material
respects when filed. Other than any reserve for deferred Taxes
established to reflect timing differences between book and Tax
treatment, Parent has made accruals for Taxes on the Parent Financial
Statements
12
which are adequate to cover any Tax liability of Parent and each of
its Subsidiaries determined in accordance with generally accepted
accounting principles through the date of the Parent Financial
Statements.
(ii) Parent and each of its Subsidiaries have withheld with
respect to its employees, creditors, independent contractors,
shareholders or other parties all federal and state income taxes,
FICA, FUTA and other Taxes required to be withheld.
(iii) Except as set forth in Section 5.1(m) of the Parent
Disclosure Schedule, there is no Tax deficiency outstanding, assessed,
or to Parent's Knowledge, proposed against Parent or any of its
Subsidiaries. Neither Parent nor any of its Subsidiaries have executed
or requested any waiver of any statute of limitations on or extending
the period for the assessment or collection of any federal or material
state Tax that is still in effect. There are no liens for Taxes on the
assets of Parent or of any of its Subsidiaries other than with respect
to Taxes not yet due and payable.
(iv) Except as set forth in Section 5.1(m) of the Parent
Disclosure Schedule, to Parent's Knowledge, no federal or state Tax
audit or other examination of Parent or any of its Subsidiaries is
presently in progress, nor has Parent or any of its Subsidiaries been
notified either in writing or orally of any request for such federal
or state Tax audit or other examination.
(v) Neither Parent nor any of its Subsidiaries has filed any
consent agreement under Section 341(f) of the Code or agreed to have
Section 341(f)(2) of the Code apply to any disposition of a subsection
(f) asset (as defined in Section 341(f)(4) of the Code) owned by
Parent.
(n) EMPLOYEE BENEFITS.
(i) For purposes hereof, the term "Parent Scheduled Plans" means
each "employee pension benefit plan" (as such term is defined in
Section 3(2) of ERISA), "employee welfare benefit plan" (as such term
is defined in Section 3(1) of ERISA), material personnel or payroll
policy (including vacation time, holiday pay, service awards, moving
expense reimbursement programs and sick leave) or material fringe
benefit, severance agreement or plan or any medical, hospital, dental,
life or disability plan, pension benefit plan, excess benefit plan,
bonus, stock option, stock purchase or other incentive plan (including
any equity or equity-based plan), tuition reimbursement, automobile
use, club membership, parental or family leave, top hat plan or
deferred compensation plan, salary reduction agreement,
change-of-control agreement, employment agreement, consulting
agreement, or collective bargaining agreement, indemnification
agreement, retainer agreement, or any other material benefit plan,
policy, program, arrangement, agreement or contract, whether or not
written or terminated, with respect to any employee, former employee,
director, independent
13
contractor, or any beneficiary or dependent thereof maintained,
sponsored, adopted or administered by Parent or any current or former
Parent Plan Affiliate or to which Parent or any current or former
Parent Plan Affiliate has made contributions to, obligated itself or
had any liability (whether accrued, absolute, contingent or otherwise,
and whether due or to become due or asserted or unasserted) with
respect thereto. A "Parent Plan Affiliate" is each entity which is, or
has even been, treated as a single employer with Parent pursuant to
Section 4001 of ERISA or Section 414 of the Code.
(ii) Each Parent Scheduled Plan (1) has been in compliance and
currently complies in form and in operation with all applicable
requirements of ERISA and the Code, and any other legal requirements;
(2) has been and is operated and administered in compliance with its
terms (except as otherwise required by law); (3) has been and is
operated in compliance with applicable legal requirements in such a
manner as to qualify, where appropriate, for both Federal and state
purposes, for income tax exclusions to its participants, tax-exempt
income for its funding vehicle, and the allowance of deductions and
credits with respect to contributions thereto.
(iii) With respect to each Parent Scheduled Plan, there are no
claims or other proceedings pending or, to the Knowledge of Parent,
threatened with respect to the assets thereof (other than routine
claims for benefits).
(iv) With respect to each Parent Scheduled Plan, no Person: (1)
has entered into any "prohibited transaction," as such term is defined
in ERISA or the Code and the regulations, administrative rulings and
case law thereunder that is not otherwise exempt under Code Section
4975 or ERISA Section 408 (or any administrative class exemption
issued thereunder); (2) has breached a fiduciary obligation or
violated Sections 402, 403, 405, 503, 510 or 511 of ERISA; (3) has any
liability for any failure to act or comply in connection with the
administration or investment of the assets of such plans; or (4)
engaged in any transaction or otherwise acted with respect to such
plans in such a manner which could subject Parent, or any fiduciary or
plan administrator or any other Person dealing with any such plan, to
liability under Section 409 or 502 of ERISA or Sections 4972 or 4976
through 4980B of the Code.
(v) With respect to any Parent Scheduled Plan which is a welfare
plan as defined in Section 3(1) of ERISA; (1) each such welfare plan
which is intended to meet the requirements for tax-favored treatment
under Subchapter B of Chapter 1 of the Code materially meets such
requirements; and (2) there is no disqualified benefit (as such term
is defined in Code Section 4976(b)) which would subject Parent or any
Parent Plan Affiliate to a tax under Code Section 4976(a).
(vi) Neither Parent nor any current or former Parent Plan
Affiliate has, or has ever had, any liability (including, but not
limited to, any contingent
14
liability) with respect to any plan subject to Title IV of ERISA or
Section 412 of the Code or any plan maintained by any former Parent
Plan Affiliate.
(o) PARENT INTANGIBLE PROPERTY.
(i) Parent owns, or is licensed, or otherwise possesses legally
enforceable rights, to use, sell or license, as applicable, all
Proprietary Rights (excluding in each case Commercial Software) used,
sold, distributed or licensed in or as a part of the business of
Parent and its Subsidiaries as currently conducted ("Parent
Proprietary Rights").
(ii) Except as set forth in Section 5.1(o) of the Parent
Disclosure Schedule, or except for Commercial Software and Parent
Embedded Products for which Parent has valid non-exclusive licenses
that are adequate for the conduct of Parent's business, Parent is the
sole and exclusive owner of the Parent Proprietary Rights (free and
clear of any Encumbrances), and has sole and exclusive rights to the
use and distribution therefor or the material covered thereby in
connection with the services or products in respect of which such
Parent Proprietary Rights are currently being used, sold, licensed or
distributed.
(iii) Except as disclosed in Section 5.1(o) of the Parent
Disclosure Schedule, (A) Parent has not materially infringed on any
intellectual property rights of any third Persons and (B) none of the
Parent Proprietary Rights materially infringes on any intellectual
property rights of any third Persons.
(iv) Except as disclosed in Section 5.1(o) of the Parent
Disclosure Schedule, no actions, suits, claims, investigations or
proceedings with respect to the Parent Proprietary Rights are pending
or, to the Knowledge of Parent, threatened by any Person, (A) alleging
that the manufacture, sale, licensing, distributing or use of any
Parent Proprietary Rights as now manufactured, sold, licensed,
distributed or used by Parent or any third party infringes on any
intellectual property rights of any third party or Parent, (B) against
the use or distribution by Parent or any third party of any
technology, know-how or computer software used in the business of
Parent and its Subsidiaries as currently conducted or (iii)
challenging the ownership by Parent, validity or effectiveness of any
such Parent Proprietary Rights.
(v) For the purpose of this Section 5.1(o), the following terms
have the following definitions: (A) the term "Commercial Software"
means packaged commercially available software programs generally
available to the public which have been licensed to Parent pursuant to
end-user licenses that permit the use of such programs without a right
to modify, distribute or sublicense the same; (B) the term "Parent
Embedded Products" means all software that are incorporated in any
existing product or service of Parent; and (C) the term "Proprietary
Rights" means (1) patents, patent applications, patent disclosures and
inventions, (2) trademarks, service marks, trade dress, trade names,
Internet domain names and
15
corporate names (in their respective state of incorporation) and
registrations and applications for registration thereof, (3)
copyrights and registrations and applications for registration
thereof, (4) mask works and registrations and applications for
registration thereof, (5) computer software, data and documentation
(in both source code and object code form), (6) trade secrets and
other confidential and proprietary information (including, but not
limited to, inventions (whether patentable or unpatentable), know-how
and copyrightable works, (7) other confidential and proprietary
intellectual property rights, (8) copies and tangible embodiments
thereof (in whatever form or medium) and (9) all renewals, extensions,
revivals and resuscitations thereof.
(p) AGREEMENTS, CONTRACTS AND COMMITMENTS; MATERIAL CONTRACTS. Except
as set forth in Section 5.1(m) of the Parent Disclosure Schedule, (i) each
material agreement, contract, obligation, promise or undertaking (whether
written or oral and whether express or implied) to which Parent is a party
or by which Parent or its assets is or may become bound (a "Parent
Contract") is in full force and effect; and (ii) no condition exists or
event has occurred that to the Knowledge of Parent, (whether with or
without notice or lapse of time or both, or the happening or occurrence of
any other event) would constitute a default by Parent or a Subsidiary of
Parent or, to the Knowledge of Parent, any other party thereto under, or
result in a right in termination of, any Parent Contract, except as could
not, individually or in the aggregate, be reasonably expected to result in
a Material Adverse Effect on Parent.
(q) UNLAWFUL PAYMENTS AND CONTRIBUTIONS. To the Knowledge of Parent,
neither Parent, any Subsidiary of Parent nor any of their respective
directors, officers, employees or agents has, with respect to the
businesses of Parent or its Subsidiaries, (i) used any funds for any
unlawful contribution, endorsement, gift, entertainment or other unlawful
expense relating to political activity; (ii) made any direct or indirect
unlawful payment to any foreign or domestic government official or
employee; (iii) violated or is in violation of any provision of the Foreign
Corrupt Practices Act of 1977, as amended; or (iv) made any bribe, rebate,
payoff, influence payment, kickback or other unlawful payment to any Person
or entity.
(r) INSURANCE. The insurance policies (including "self-insurance"
programs) now maintained by Parent (the "Parent Insurance Policies") are in
full force and effect, Parent is not in material default under any of the
Parent Insurance Policies and no claim for coverage under any of the Parent
Insurance Policies has been denied. Parent has not received any notice of
cancellation or intent to cancel or increase or intent to increase premiums
with respect to such insurance policies nor, to the Knowledge of Parent, is
there any basis for any such action.
(s) LABOR AND EMPLOYEE RELATIONS. None of the employees of Parent or
any of its Subsidiaries is represented in his or her capacity as an
employee of such company by any labor organization. Neither Parent nor any
of its Subsidiaries has recognized any labor organization nor has any labor
organization been elected as the collective bargaining
16
agent of any of their employees, nor has Parent or any of its Subsidiaries
signed any collective bargaining agreement or union contract recognizing
any labor organization as the bargaining agent of any of their employees.
To the Knowledge of Parent, there is no active or current union
organization activity involving the employees of Parent or any of its
Subsidiaries, nor has there ever been union representation involving
employees of Parent or any of its Subsidiaries. To the Knowledge of Parent,
Parent and each of its Subsidiaries is in compliance with all Federal,
foreign (as applicable), and state laws regarding employment practices,
including laws relating to workers' safety, sexual harassment or
discrimination, except where the failure to so be in compliance,
individually or in the aggregate, would not have a Material Adverse Effect
on Parent. To the Knowledge of Parent, none of the Parent Key Employees has
any plans to terminate his or her employment with Parent or any of its
Subsidiaries.
(t) PERMITS. Parent and each of its Subsidiaries hold all licenses,
permits, registrations, orders, authorizations, approvals and franchises
that are required to permit it to conduct its businesses as presently
conducted, except where the failure to hold such licenses, permits,
registrations, orders, authorizations, approvals or franchises could not
reasonably be expected to, individually or in the aggregate, have a
Material Adverse Effect on Parent. All such licenses, permits,
registrations, orders, authorizations, approvals and franchises are now,
and will be after the Closing, valid and in full force and effect, except
where the failure to be valid and in full force and effect or to have the
benefit of any such license, permit, registration, order, authorization,
approval or franchise could not reasonably be expected to, individually or
in the aggregate, have a Material Adverse Effect on Parent. Neither Parent
nor any of its Subsidiaries has received any notification of any asserted
present failure (or past and unremedied failure) by it to have obtained any
such license, permit, registration, order, authorization, approval or
franchise, except where such failure could not reasonably be expected to,
individually or in the aggregate, have a Material Adverse Effect on Parent.
5.2 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to Parent and Merger Sub that the statements contained
in this Section 5.2 are true and correct, except to the extent specifically set
forth on the disclosure schedule delivered contemporaneously with this Agreement
by the Company to Parent and Merger Sub (the "Company Disclosure Schedule"). The
Company Disclosure Schedule shall be arranged in sections and paragraphs
corresponding to the lettered and numbered paragraphs contained in this Section
5.2, and the disclosure in any paragraph shall qualify only the corresponding
paragraph in this Section 5.2 or other paragraphs or sections to which it is
clearly apparent (from a plain reading of the disclosure) that such disclosure
relates.
(a) CORPORATE ORGANIZATION AND QUALIFICATION. Each of the Company and
its Subsidiaries is a corporation duly organized, validly existing and in
good standing under the laws of its jurisdiction of incorporation and is
qualified and in good standing as a foreign corporation in each
jurisdiction where the properties owned, leased or operated, or the
business conducted, by it require such qualification, except where failure
to be so could not, individually or in the aggregate, reasonably be
expected to have a Material
17
Adverse Effect on the Company. Each of the Company and its Subsidiaries has
all requisite power and authority (corporate or otherwise) to own its
properties and to carry on its business as it is now being conducted. All
of the Subsidiaries of the Company are set forth in Section 5.2(a) of the
Company Disclosure Schedule. The Company has heretofore made available to
Parent complete and correct copies of its Articles of Incorporation and
by-laws and the charter documents of its Subsidiaries, each as amended.
(b) CAPITALIZATION. The authorized capital stock of the Company
consists of (i) 100,000,000 shares of common stock, no par value per share,
of which 21,930,551 shares were issued and outstanding on the date hereof,
and (ii) 20,000,000 shares of preferred stock, no par value per share, none
of which are issued or outstanding. All of the outstanding shares of
capital stock of the Company and its Subsidiaries have been duly authorized
and validly issued and are fully paid and nonassessable. The Company has no
outstanding stock appreciation rights, phantom stock or similar rights. All
outstanding shares of capital stock or other equity interests of the
Subsidiaries of the Company are owned by the Company or a direct or
indirect wholly-owned Subsidiary of the Company, free and clear of all
liens, pledges, charges, encumbrances, claims and options of any nature.
Except for options to purchase 3,690,719 Company Shares issued pursuant to
the Melita International Corporation 1992 Stock Option Plan, as amended,
the Melita International Corporation 1997 Stock Option Plan, as amended,
and the eshare Technologies, Inc. Stock Option and Restricted Stock
Purchase Plan, as amended (collectively, the "Company Option Plans"), there
are no outstanding or authorized options, warrants, calls, rights
(including preemptive rights), commitments or any other agreements of any
character which the Company or any of its Subsidiaries is a party to, or
may be bound by, requiring it to issue, transfer, grant, sell, purchase,
redeem or acquire any shares of capital stock or any of its securities or
rights convertible into, exchangeable for, or evidencing the right to
subscribe for, any shares of capital stock of the Company or any of its
Subsidiaries. As of the date hereof, no Company Shares have been made
available for issuance pursuant to the Melita International Corporation
Employee Stock Purchase Plan (the "ESPP"). There are no shareholder
agreements, voting trusts or other agreements or understandings to which
the Company is a party or to which it is bound relating to the voting of
any shares of the capital stock of the Company. No existing rights with
respect to the registration of Company Shares under the Securities Act,
including, but not limited to, demand rights or piggy-back registration
rights, shall apply with respect to any Parent Shares issuable in
connection with the Merger or upon exercise of Substitute Options. The
Company has provided to Parent a list, as of the date hereof of the
outstanding options and warrants to acquire Company Shares, the name of the
holder of such option or warrant, the exercise price of such option or
warrant, the number of shares as to which such option or warrant will have
vested at such date and whether the exercisability of such option or
warrant will be accelerated in any way by the transactions contemplated by
this Agreement and the extent of acceleration, if any, and any adjustments
to such options or warrants resulting from the consummation of the
transactions contemplated by this Agreement. Since May 29, 2001, no Company
Options or other options or warrants convertible or exchangeable for
Company Shares have been
18
issued or accelerated or had their terms modified. Szlam has executed and
delivered the Voting Agreement.
(c) FAIRNESS OPINION. The Board of Directors of the Company has
received an opinion in writing from Broadview International LLC, to the
effect that, as of the date hereof and based upon and subject to the
matters stated therein, the consideration to be received by the holders of
Company Shares in the Merger is fair to such holders from a financial point
of view and a copy of such opinion has been provided to Parent, and such
opinion has not been withdrawn, revoked or modified.
(d) AUTHORITY RELATIVE TO THIS AGREEMENT. The Board of Directors of
the Company has declared the Merger advisable, and the Company has the
requisite corporate power and authority to approve, authorize, execute and
deliver this Agreement and to consummate the transactions contemplated
hereby. This Agreement and the consummation by the Company of the
transactions contemplated hereby have been duly and validly authorized by
the Board of Directors of the Company, and no other corporate proceedings
on the part of the Company are necessary to authorize this Agreement or to
consummate the transactions contemplated hereby (other than the approval of
this Agreement and the Merger by the shareholders of the Company in
accordance with the GBCC). This Agreement has been duly and validly
executed and delivered by the Company and, assuming this Agreement
constitutes the valid and binding agreement of Parent and Merger Sub,
constitutes the valid and binding agreement of the Company, enforceable
against the Company in accordance with its terms, subject, as to
enforceability, to bankruptcy, insolvency, reorganization and other laws of
general applicability relating to or affecting creditors' rights and to
general principles of equity.
(e) PRESENT COMPLIANCE WITH OBLIGATIONS AND LAWS. Neither the Company
nor any of its Subsidiaries is: (i) in violation of its Articles of
Incorporation or by-laws or similar documents; (ii) in default in the
performance of any obligation, agreement or condition of any debt
instrument which (with or without the passage of time or the giving of
notice, or both) affords to any Person the right to accelerate any
indebtedness or terminate any right; (iii) in default under or breach of
(with or without the passage of time or the giving of notice) any other
contract to which it is a party or by which it or its assets are bound; or
(iv) in violation of any law, regulation, administrative order or judicial
order, decree or judgment (domestic or foreign) applicable to it or its
business or assets, except where any violation, default or breach under
items (ii), (iii), or (iv) could not reasonably be expected to,
individually or in the aggregate, have a Material Adverse Effect on the
Company.
(f) CONSENTS AND APPROVALS; NO VIOLATION. Neither the execution and
delivery of this Agreement by the Company nor the consummation by the
Company of the transactions contemplated hereby will (i) conflict with or
result in any breach of any provision of its Certificate of Incorporation
or by-laws; (ii) require any consent, approval, authorization or permit of,
or registration or filing with or notification to, any governmental or
regulatory authority, in each case, by or on behalf of the Company or
19
any of its Subsidiaries, except (A) in connection with the applicable
requirements, if any, of the HSR Act, (B) pursuant to the applicable
requirements of the Securities Act and the Exchange Act and the NNM, (C)
the filing of the Certificates of Merger pursuant to the DGCL and the GBCC
and appropriate documents with the relevant authorities of other states in
which the Company is authorized to do business, (D) as may be required by
any applicable state securities laws, (E) such consents, approvals, orders,
authorizations, registrations, declarations and filings as may be required
under the antitrust or competition laws of any foreign country or (F) where
the failure to obtain such consent, approval, authorization or permit, or
to make such registration, filing or notification, could not reasonably be
expected to, individually or in the aggregate, have a Material Adverse
Effect on the Company or adversely affect the ability of the Company to
consummate the transactions contemplated hereby; (iii) result in a
violation or breach of, or constitute (with or without notice or lapse of
time or both) a default (or give rise to any right of termination,
cancellation or acceleration or lien or other charge or encumbrance) under
any of the terms, conditions or provisions of any indenture, note, license,
lease, agreement or other instrument or obligation to which the Company or
any of its Subsidiaries is a party or by which any of their assets may be
bound, except for such violations, breaches and defaults (or rights of
termination, cancellation, or acceleration or lien or other charge or
encumbrance) as to which requisite waivers or consents have been obtained
or which, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect on the Company or adversely
affect the ability of the Company to consummate the transactions
contemplated hereby; (iv) cause the suspension or revocation of any
authorizations, consents, approvals or licenses currently in effect which,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect on the Company; or (v) assuming the consents,
approvals, authorizations or permits and registrations, filings or
notifications referred to in this Section 5.2(f) are duly and timely
obtained or made, violate any order, writ, injunction, decree, statute,
rule or regulation applicable to the Company or any of its Subsidiaries or
to any of their respective assets, except for violations which could not
reasonably be expected to, individually or in the aggregate, have a
Material Adverse Effect on the Company or adversely affect the ability of
the Company to consummate the transactions contemplated hereby.
(g) LITIGATION. Except as disclosed in Company SEC Reports filed prior
to the date hereof, or as set forth in Section 5.2(g) of the Company
Disclosure Schedule, there are no actions, suits, claims, investigations or
proceedings pending or, to the Knowledge of the Company, threatened against
the Company or any of its Subsidiaries that, individually or in the
aggregate, could reasonably be expected to result in obligations or
liabilities of the Company or any of its Subsidiaries that would have, or
that would otherwise have, individually or in the aggregate, a Material
Adverse Effect on the Company or a Material Adverse Effect on the Parties'
ability to consummate the transactions contemplated by this Agreement.
Neither the Company nor any of its Subsidiaries is subject to any
outstanding judgment, order, writ, injunction or decree which (i) has or
may have the effect of prohibiting or impairing any business practice of
the Company or any of its Subsidiaries, any acquisition of property
(tangible or
20
intangible) by the Company or any of its Subsidiaries, the conduct of the
business by the Company or any of its Subsidiaries, or Company's ability to
perform its obligations under this Agreement or (ii), insofar as can be
reasonably foreseen, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect on the Company.
(h) SEC REPORTS; FINANCIAL STATEMENTS.
(i) The Company has filed all forms, reports and documents with
the SEC required or deemed advisable to be filed by it pursuant to the
federal securities laws and the SEC rules and regulations thereunder,
all of which complied in all material respects with all applicable
requirements of the Securities Act and the Exchange Act (the "Company
SEC Reports"). None of the Company SEC Reports, including, without
limitation, any financial statements or schedules included therein, at
the time filed (or if amended or superseded by a filing prior to the
date of this Agreement, then on the date of such filing) contained any
untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they
were made, not misleading. None of the Company's Subsidiaries is
required to file any forms, reports or other documents with the SEC.
(ii) The consolidated balance sheets and the related statements
of income, shareholders' equity or deficit and cash flow (including
the related notes thereto) of the Company included in the Company SEC
Reports (collectively, the "Company Financial Statements") comply as
to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with generally
accepted accounting principles applied on a basis consistent
throughout the periods involved (except as otherwise noted therein or,
in the case of unaudited interim financial statements, as may be
permitted by the SEC on Form 10-Q under the Exchange Act), and present
fairly the consolidated financial position of the Company and its
consolidated Subsidiaries as of their respective dates, and the
results of its operations and its cash flow for the periods presented
therein, except that the unaudited interim financial statements do not
include footnote disclosure of the type associated with audited
financial statements and were or are subject to normal and recurring
year-end adjustments which were not or are not expected to be material
in amount.
(iii) Since December 31, 2000, there has not been any material
change, by the Company or any of its Subsidiaries in accounting
principles, methods or policies for financial accounting purposes,
except as required by concurrent changes in generally accepted
accounting principles, or as disclosed in the Company SEC Reports.
There are no material amendments or modifications to agreements,
documents or other instruments which previously had been filed by
21
the Company with the SEC pursuant to the Securities Act or the
Exchange Act, which have not been filed with the SEC but which are
required to be filed.
(i) NO LIABILITIES. Neither the Company nor any of its Subsidiaries
has any material indebtedness, obligations or liabilities of any kind
(whether accrued, absolute, contingent or otherwise, and whether due or to
become due or asserted or unasserted), and, to the Knowledge of the
Company, there is no reasonable basis for the assertion of any claim with
respect to any indebtedness, obligation or liability of any nature against
the Company or any of its Subsidiaries, except for indebtedness,
obligations and liabilities (i) which are fully reflected in, reserved
against or otherwise described in the most recent Company Financial
Statements, (ii) which have been incurred after the most recent company
Financial Statements in the ordinary course of business, consistent with
past practice, (iii) which are obligations to perform under executory
contracts in the ordinary course of business (none of which is a liability
resulting from a breach of contract or warranty, tort, infringement or
legal action) or (iv) which, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect on the Company.
(j) ABSENCE OF CERTAIN CHANGES OF EVENTS. Except as described in the
Company SEC Reports, since December 31, 2000, except with respect to the
actions contemplated by this Agreement, the Company has conducted its
business only in the ordinary course and in a manner consistent with past
practice and, since such date, there has not been (i) any Material Adverse
Effect on the Company, (ii) any damage, destruction or loss of assets of
the Company or any of its Subsidiaries (whether or not covered by
insurance) that has had or could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on the Company,
(iii) any material change by the Company in its accounting methods,
principles or practices; (iv) any material revaluation by the Company or
any of its Subsidiaries of any of its assets, including, without
limitation, writing down the value of capitalized software or inventory or
deferred tax assets or writing off notes or accounts receivable other than
in the ordinary course of business; (v) any labor dispute or charge of
unfair labor practice (other than routine individual grievances), which,
individually or in the aggregate, has had or could reasonably be expected
to have a Material Adverse Effect on the Company, any activity or
proceeding by a labor union or representative thereof to organize any
employee of the Company or any of its Subsidiaries or any campaign being
conducted to solicit authorization from employees to be represented by such
labor union in each case which, individually or in the aggregate, has had
or could reasonably be expected to have a Material Adverse Effect on the
Company; (vi) any waiver by the Company or any of its Subsidiaries of any
rights of material value or (vii) any other action or event that would have
required the consent of Parent pursuant to Section 6.1 had such action or
event occurred after the date of this Agreement.
(k) BROKERS AND FINDERS. Except for the fees and expenses payable to
Broadview International LLC, which fees and expenses are determined
pursuant to its agreement with the Company, a true and complete copy of
which (including all amendments) has
22
been furnished to Parent, neither the Company nor any of its Subsidiaries
has employed any investment banker, broker, finder, consultant or
intermediary in connection with the transactions contemplated by this
Agreement which would be entitled to any investment banking, brokerage,
finder's or similar fee or commission in connection with this Agreement or
the transactions contemplated hereby.
(l) S-4 REGISTRATION STATEMENT AND PROXY STATEMENT/PROSPECTUS. None of
the information supplied or to be supplied by the Company for inclusion or
incorporation by reference in the S-4 Registration Statement or the Proxy
Statement will (i) in the case of the S-4 Registration Statement, at the
time it becomes effective or at the Effective Time, contain any untrue
statement of a material fact or omit to state any material fact required to
be stated therein or necessary in order to make the statements therein not
misleading, or (ii) in the case of the Proxy Statement, at the time of the
mailing of the Proxy Statement, at the time of the Company Shareholders
Meeting and Parent Stockholders Meeting (if necessary), and at the
Effective Time, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which
they are made, not misleading. If at any time prior to the Effective Time
any event with respect to the Company, its officers and directors or any of
its Subsidiaries should occur which is required to be described in an
amendment of, or a supplement to, the Proxy Statement or the S-4
Registration Statement, the Company shall promptly inform Parent so that
such event may be so described and such amendment or supplement promptly
filed with the SEC and, as required by law, disseminated to the
shareholders of the Company. The S-4 Registration Statement will (with
respect to the Company) comply as to form in all material respects with the
requirements of the Securities Act. The Proxy Statement will (with respect
to the Company) comply as to form in all material respects with the
requirements of the Exchange Act. Notwithstanding the foregoing, the
Company makes no representation or warranty with respect to any information
supplied by, or related to, Parent or Merger Sub or any of their affiliates
or advisors which is contained in any of the foregoing documents.
(m) TAXES.
(i) Except as set forth in Section 5.2 (m) of the Company
Disclosure Schedule, the Company and each of its Subsidiaries has
timely filed (after taking into account any extensions to file) all
federal, state, local and foreign Returns required by applicable Tax
law to be filed by the Company and each of its Subsidiaries. All Taxes
owed by the Company or any of its Subsidiaries to a taxing authority,
or for which the Company or any of its Subsidiaries is liable, whether
to a taxing authority or to other Persons or entities under a
Significant Tax Agreement, as of the date hereof, have been paid and,
as of the Effective Time, will have been paid. All Returns were true
and correct in all material respects when filed. Other than any
reserve for deferred Taxes established to reflect timing differences
between book and Tax treatment, the Company has made accruals for
Taxes on the Company Financial Statements which are
23
adequate to cover any Tax liability of the Company and each of its
Subsidiaries determined in accordance with generally accepted
accounting principles through the date of the Company Financial
Statements.
(ii) The Company and each of its Subsidiaries have withheld with
respect to its employees, creditors, independent contractors,
shareholders or other parties all federal and state income taxes,
FICA, FUTA and other Taxes required to be withheld.
(iii) There is no Tax deficiency outstanding, assessed, or to the
Company's Knowledge, proposed against the Company or any of its
Subsidiaries. Neither the Company nor any of its Subsidiaries have
executed or requested any waiver of any statute of limitations on or
extending the period for the assessment or collection of any federal
or material state Tax that is still in effect. There are no liens for
Taxes on the assets of Company or of any of its Subsidiaries other
than with respect to Taxes not yet due and payable.
(iv) No federal or state Tax audit or other examination of the
Company or any of its Subsidiaries is presently in progress, nor has
the Company or any of its Subsidiaries been notified either in writing
or orally of any request for such federal or state Tax audit or other
examination.
(v) Neither the Company nor any of its Subsidiaries has filed any
consent agreement under Section 341(f) of the Code or agreed to have
Section 341(f)(2) of the Code apply to any disposition of a subsection
(f) asset (as defined in Section 341(f)(4) of the Code) owned by the
Company.
(vi) Neither the Company nor any of its Subsidiaries is a party
to (A) any agreement with a party other than the Company or any of its
Subsidiaries providing for the allocation or payment of Tax
liabilities or payment for Tax benefits with respect to a
consolidated, combined or unitary Return which Return includes or
included the Company or any Subsidiary or (B) any Significant Tax
Agreement other than any Significant Tax Agreement described in (A).
(vii) Except for the group of which the Company and its
Subsidiaries are now presently members, neither the Company nor any of
its Subsidiaries has ever been a member of an affiliated group of
corporations within the meaning of Section 1504 of the Code. There is
no excess loss account, deferred intercompany gain or loss, or
intercompany items as such terms are defined in the regulations
promulgated under the Code, that exist with respect to the Company or
any of its Subsidiaries.
(viii) Neither the Company nor any of its Subsidiaries is a party
to any joint venture, partnership or other arrangement or contract
which could be treated as a partnership for federal income tax
purposes.
24
(ix) Neither the Company nor any of its Subsidiaries has agreed
to make nor is it required to make any adjustment under Section 481(a)
of the Code by reason of a change in accounting method or otherwise
which have not yet been taken into account.
(x) There is no contract, agreement, plan or arrangement covering
any individual or entity treated as an individual included in the
business or assets of the Company or its Subsidiaries that,
individually or collectively, could give rise to the payment by the
Company, a Subsidiary, Merger Sub or Parent of an amount that would
not be deductible by reason of Sections 280G or 162(m) of the Code or
similar provisions of Tax law.
(xi) The Company is not, and has not at any time been, a "United
States real property holding corporation" within the meaning of
Section 897 (c)(2) of the Code.
(n) EMPLOYEE BENEFITS.
(i) For purposes hereof, the term "Company Scheduled Plans" means
each "employee pension benefit plan" (as such term is defined in
Section 3(2) of ERISA), "employee welfare benefit plan" (as such term
is defined in Section 3(1) of ERISA), material personnel or payroll
policy (including vacation time, holiday pay, service awards, moving
expense reimbursement programs and sick leave) or material fringe
benefit, severance agreement or plan or any medical, hospital, dental,
life or disability plan, pension benefit plan, excess benefit plan,
bonus, stock option, stock purchase or other incentive plan (including
any equity or equity-based plan), tuition reimbursement, automobile
use, club membership, parental or family leave, top hat plan or
deferred compensation plan, salary reduction agreement,
change-of-control agreement, employment agreement, consulting
agreement, or collective bargaining agreement, indemnification
agreement, retainer agreement, or any other material benefit plan,
policy, program, arrangement, agreement or contract, whether or not
written or terminated, with respect to any employee, former employee,
director, independent contractor, or any beneficiary or dependent
thereof maintained, sponsored, adopted or administered by the Company
or any current or former Company Plan Affiliate or to which the
Company or any current or former Company Plan Affiliate has made
contributions to, obligated itself or had any liability (whether
accrued, absolute, contingent or otherwise, and whether due or to
become due or asserted or unasserted) with respect thereto. A "Company
Plan Affiliate" is each entity which is, or has even been, treated as
a single employer with the Company pursuant to Section 4001 of ERISA
or Section 414 of the Code. The Company has provided Parent with
copies of all employee manuals of the Company and its Subsidiaries
that include personnel policies applicable to any of their respective
employees.
25
(ii) The Company has made available to Parent a complete and
accurate copy of each written Company Scheduled Plan, together with,
if applicable, a copy of audited financial statements, actuarial
reports and Form 5500 Annual Reports (including required schedules),
if any, for the three (3) most recent plan years, the most recent IRS
determination letter or IRS recognition of exemption; each other
material letter, ruling or notice issued by a governmental body with
respect to each such plan, a copy of each trust agreement, insurance
contract or other funding vehicle, if any, with respect to each such
plan, the current summary plan description and summary of material
modifications thereto with respect to each such plan and Form 5310.
Section 5.2(n) of the Company Disclosure Schedule contains a
description of the material terms of any unwritten Company Scheduled
Plan as comprehended to the Closing Date. There are no negotiations,
demands or proposals which are pending or threatened which concern
matters now covered, or that would be covered, by the foregoing types
of unwritten Company Scheduled Plans.
(iii) Each Company Scheduled Plan (1) has been in compliance and
currently complies in form and in operation with all applicable
requirements of ERISA and the Code, and any other legal requirements;
(2) has been and is operated and administered in compliance with its
terms (except as otherwise required by law); (3) has been and is
operated in compliance with applicable legal requirements in such a
manner as to qualify, where appropriate, for both Federal and state
purposes, for income tax exclusions to its participants, tax-exempt
income for its funding vehicle, and the allowance of deductions and
credits with respect to contributions thereto. Each Company Scheduled
Plan which is intended to be qualified under Section 401(a) of the
Code has received a favorable determination letter or recognition of
exemption from the Internal Revenue Service on which the Company can
rely.
(iv) With respect to each Company Scheduled Plan, there are no
claims or other proceedings pending or, to the Knowledge of the
Company, threatened with respect to the assets thereof (other than
routine claims for benefits).
(v) With respect to each Company Scheduled Plan, no Person: (1)
has entered into any "prohibited transaction," as such term is defined
in ERISA or the Code and the regulations, administrative rulings and
case law thereunder that is not otherwise exempt under Code Section
4975 or ERISA Section 408 (or any administrative class exemption
issued thereunder); (2) has breached a fiduciary obligation or
violated Sections 402, 403, 405, 503, 510 or 511 of ERISA; (3) has any
liability for any failure to act or comply in connection with the
administration or investment of the assets of such plans; or (4)
engaged in any transaction or otherwise acted with respect to such
plans in such a manner which could subject Parent, or any fiduciary or
plan administrator or any other Person dealing with any such plan, to
liability under Section 409 or 502 of ERISA or Sections 4972 or 4976
through 4980B of the Code.
26
(vi) Each Company Scheduled Plan (other than any stock option
plan) may be amended, terminated, modified or otherwise revised by the
Company or Parent, on and after the Closing, without further liability
to the Company or Parent (other than ordinary administrative expenses
or routine claims for benefit plans).
(vii) None of the Company or any current or former Company Plan
Affiliate has at any time participated in, made contributions to or
had any other liability with respect to any Company Scheduled Plan
which is a "multi-employer plan" as defined in Section 4001 of ERISA,
a "multi-employer plan" within the meaning of Section 3(37) of ERISA,
a "multiple employer plan" within the meaning of Section 413(c) of the
Code, a "multiple employer welfare arrangement" within the meaning of
Section 3(40) of ERISA or a plan that is subject to Title IV of ERISA.
(viii) No Company Scheduled Plan provides, or reflects or
represents any liability to provide retiree health coverage to any
person for any reason, except as may be required by COBRA or
applicable state insurance laws, and neither the Company nor any
Company Plan Affiliate has any liability (whether accrued, absolute,
contingent or otherwise, and whether due or to become due to asserted
or unasserted) to any current or former employee, consultant or
director (either individually or as a group) to provide retiree health
coverage, except to the extent required by applicable continuation
coverage statutes.
(ix) Neither the Company nor a Company Plan Affiliate has any
liability for any excise tax imposed by Code Sections 4971, 4972,
4977, or 4979.
(x) With respect to any Company Scheduled Plan which is a welfare
plan as defined in Section 3(1) of ERISA; (1) each such welfare plan
which is intended to meet the requirements for tax-favored treatment
under Subchapter B of Chapter 1 of the Code materially meets such
requirements; and (2) there is no disqualified benefit (as such term
is defined in Code Section 4976(b)) which would subject the Company or
any Company Plan Affiliate to a tax under Code Section 4976(a).
(xi) Each Company Scheduled Plan that has been adopted or
maintained by the Company or any Company Plan Affiliate, whether
informally or formally, or with respect to which the Company or any
Company Plan Affiliate will or may have any liability, for the benefit
of the Company Employees who perform services outside the United
States (the "Company International Employee Plans") has been
established, maintained and administered in compliance with its terms
and conditions and with the requirements prescribed by any and all
statutory or regulatory laws that are applicable to such Company
International Employee Plan. Furthermore, no Company International
Employee Plan has unfunded liabilities, that, as of the Effective
Time, will not be offset by insurance or fully accrued. Except as
required by law, no condition exists that would
27
prevent the Company or any Company Plan Affiliate from terminating or
amending any Company International Employee Plan at any time for any
reason without liability to the Company or any Company Plan Affiliate
(other than ordinary administration expenses or routine claims for
benefits).
(xii) Neither the Company nor any current or former Company Plan
Affiliate has, or has ever had, any liability (including, but not
limited to, any contingent liability) with respect to any plan subject
to Title IV of ERISA or Section 412 of the Code or any plan maintained
by any former Company Plan Affiliate.
(xiii) Other than by reason of actions taken following the
Closing, neither the execution of this Agreement nor the consummation
of the transactions contemplated by this Agreement will (1) entitle
any current or former employee of the Company to severance pay,
unemployment compensation or any other payment, (2) accelerate the
time of payment or vesting of any payment (other than for a terminated
or frozen tax-qualified plan, pursuant to a requirement herein to
freeze or terminate such plan), cause the forgiveness of any
indebtedness, or increase the amount of any compensation due to any
such employee or former employee, (3) result in any prohibited
transaction described in Section 406 of ERISA or Section 4975 of the
Code for which an exemption is not available, or (4) give rise to the
payment of any amount that would not be deductible pursuant to the
terms of Section 280G of the Code.
(xiv) The Company has not entered into any contract, agreement or
arrangement covering any employee that gives rise to the payment of
any amount that would not be deductible pursuant to the terms of
Section 162(m) of the Code.
(xv) The Company Option Plans and the ESPP are "broadly-based
plans" as defined under the rules and regulations of the NNM and have
been approved by Company shareholders at duly convened shareholders
meetings with respect to which the Company solicited proxies in favor
of each of the Company Option Plans and the ESPP.
(o) COMPANY INTANGIBLE PROPERTY.
(i) Except as set forth in Section 5.2(o) of the Company
Disclosure Schedule, the Company owns, or is licensed, or otherwise
possesses legally enforceable rights, to use, sell or license, as
applicable, all Proprietary Rights (excluding in each case Commercial
Software) used, sold, distributed or licensed in or as a part of the
business of the Company and its Subsidiaries as currently conducted
(the "Company Proprietary Rights"). Except as disclosed in Section
5.2(o) of the Company Disclosure Schedule, the Company has licenses
for all copies of Commercial Software used in its business and the
Company does not have any obligation to pay fees, royalties and other
amounts at any time pursuant to any such license.
28
(ii) Except for Commercial Software and Company Embedded Products
for which the Company has valid non-exclusive licenses that are
adequate for the conduct of the Company's business, the Company is the
sole and exclusive owner of the Company Proprietary Rights (free and
clear of any Encumbrances), and has sole and exclusive rights to the
use and distribution therefor or the material covered thereby in
connection with the services or products in respect of which such
Company Proprietary Rights are currently being used, sold, licensed or
distributed. The Company is not contractually obligated to pay
compensation to any third party with respect to the use or
distribution of any Company Proprietary Rights, except pursuant to the
Contracts set forth in Section 5.2(o) of the Company Disclosure
Schedule.
(iii) Except as disclosed in Section 5.2(o) of the Company
Disclosure Schedule, (A) the Company has not materially infringed on
any intellectual property rights of any third Persons and (B) none of
the Company Proprietary Rights materially infringes on any
intellectual property rights of any third Persons.
(iv) Except as disclosed in Section 5.2(o) of the Company
Disclosure Schedule, no actions, suits, claims, investigations or
proceedings with respect to the Company Proprietary Rights are pending
or, to the Knowledge of the Company, threatened by any Person, (A)
alleging that the manufacture, sale, licensing, distributing or use of
any Company Proprietary Rights as now manufactured, sold, licensed,
distributed or used by the Company or any third party infringes on any
intellectual property rights of any third party or the Company, (B)
against the use or distribution by the Company or any third party of
any technology, know-how or computer software used in the business of
the Company and its Subsidiaries as currently conducted or (iii)
challenging the ownership by the Company, validity or effectiveness of
any such Company Proprietary Rights.
(v) Except as disclosed in Section 5.2(o) of the Company
Disclosure Schedule, the Company has not entered into any agreement,
contract or commitment under which the Company is restricted, and the
Company is not otherwise restricted, from (A) selling, licensing or
otherwise distributing any products to any class or type of customers
or directly or through any type of channel in any geographic area or
during any period of time, or (B) combining, incorporating, embedding
or bundling or allowing others to combine, incorporate, embed or
bundle any of its products with those of another party, as each such
restriction may effect any product currently being developed, marketed
or sold by the Company or that otherwise would have a Material Adverse
Effect on the Company.
(vi) The Company has taken reasonable security measures to
safeguard and maintain its rights in all of the Company Proprietary
Rights. To the
29
Company's Knowledge, except as set forth in Section 5.2(o) of the
Company Disclosure Schedule, all copies of the source code to Company
Software and Company trade secrets are physically in the control of
the Company at the Company's facilities. All officers, employees and
consultants of the Company who have access to proprietary information
have executed and delivered to the Company an agreement regarding the
protection of proprietary information, and the assignment to or
ownership by the Company of all Company Proprietary Rights arising
from the services performed for the Company by such Persons. To the
Knowledge of the Company, no current or prior officers, employees or
consultants of the Company claim, and the Company is not aware of any
grounds to assert a claim to, any ownership interest in any Company
Proprietary Right as a result of having been involved in the
development of such property while employed by or consulting to the
Company or otherwise.
(vii) All authors of the software included in the Company
Proprietary Rights (the "Company Software") or any other Person who
participated in the development of the Company Software or any portion
thereof or performed any work related to the Company Software (such
authors and other persons or entities are collectively referred to as
the "Company Software Authors") made his or her contribution to the
Company Software within the scope of employment with the Company, as a
"work made for hire," and was directed by the Company to work on the
Company Software, or as a consultant who assigned all rights to such
products to the Company. Except as set forth in Section 5.2(o) of the
Company Disclosure Schedule, the Company Software and every portion
thereof are an original creation of the Company Software Authors and
do not contain any source code or portions of source code (including
any "canned program") created by any persons other than the Company
Software Authors. The Company has not, by any of its acts or
omissions, or by acts or omissions of its affiliates, directors,
officers, employees, agents, or representatives caused any of its
proprietary rights in the Company Software, including copyrights,
trademarks, and trade secrets to be transferred, diminished, or
adversely affected to any material extent.
(viii) There are no material defects in the Company's software
products, and such products shall perform in substantial accordance
with related documentation and promotional material supplied by
Company, and there are no material errors in any documentation,
specifications, manuals, user guides, promotional material, internal
notes and memos, technical documentation, drawings, flow charts,
diagrams, source language statements, demo disks, benchmark test
results, and other written materials related to, associated with or
used or produced in the development of the Company's software
products. Except as disclosed in Section 5.2(o) of the Company
Disclosure Schedule, computer software included in the Company
Proprietary Rights does not contain any "back door," "time bomb,"
"Trojan horse," "worm," "drop dead device," "virus" (as these terms
are commonly used in the computer software industry), or
30
other software routines designed to permit unauthorized access, to
disable or erase software or data, or to perform any other similar
type of functions.
(ix) No government funding or university or college facilities
were used in the development of the computer software programs or
applications owned by the Company.
(x) For the purpose of this Section 5.2(o), the following terms
have the following definitions: (A) the term "Commercial Software"
means packaged commercially available software programs generally
available to the public which have been licensed to the Company
pursuant to end-user licenses that permit the use of such programs
without a right to modify, distribute or sublicense the same; (B) the
term "Company Embedded Products" means software that are incorporated
in any existing product or service of the Company; and (C) the term
"Proprietary Rights" means (1) patents, patent applications, patent
disclosures and inventions, (2) trademarks, service marks, trade
dress, trade names, Internet domain names and the Company's corporate
name (in its state of incorporation) and registrations and
applications for registration thereof, (3) copyrights and
registrations and applications for registration thereof, (4) mask
works and registrations and applications for registration thereof, (5)
computer software, data and documentation (in both source code and
object code form), (6) trade secrets and other confidential and
proprietary information (including, but not limited to, inventions
(whether patentable or unpatentable), know-how and copyrightable
works, (7) other confidential and proprietary intellectual property
rights, (8) copies and tangible embodiments thereof (in whatever form
or medium) and (9) all renewals, extensions, revivals and
resuscitations thereof.
(p) AGREEMENTS, CONTRACTS AND COMMITMENTS; MATERIAL CONTRACTS. Except
as set forth in Section 5.2(p) of the Company Disclosure Schedule, neither
the Company nor any of its Subsidiaries is a party to or is bound by:
(i) any contract relating to the borrowing of money, the guaranty
of another Person's borrowing of money, or the creation of an
encumbrance or lien on the assets of the Company or any of its
Subsidiaries and with outstanding obligations in excess of $500,000;
(ii) any employment or consulting agreement, contract or
commitment with any officer or director level employee or member of
the Company's Board of Directors or any other employee who is one of
the fifty (50) most highly compensated employees, including base
salary and bonuses (the "Company Key Employees"), other than those
that are terminable by the Company or any of its Subsidiaries on no
more than thirty (30) days notice without liability or financial
obligation or benefits generally available to employees of the
Company, except to the extent general principles of wrongful
termination law may limit the Company's or any of its Subsidiaries'
ability to terminate employees at will;
31
(iii) any agreement of indemnification or guaranty by the Company
or any of its Subsidiaries not entered into in the ordinary course of
business other than indemnification agreements between the Company or
any of its Subsidiaries and any of its officers or directors in
standard forms as filed by the Company with the SEC;
(iv) any agreement, contract or commitment containing any
covenant limiting the freedom of the Company or any of its
Subsidiaries to engage in any line of business or conduct business in
any geographical area, compete with any person or granting any
exclusive distribution rights or limits the use or exploitation of the
Company Intellectual Property Rights;
(v) any contract for capital expenditures in excess of
$1,000,000;
(vi) any agreement, contract or commitment currently in force
relating to the disposition or acquisition of assets not in the
ordinary course of business; or
(vii) any agreement, contract or commitment for the purchase of
any ownership interest in any corporation, partnership, joint venture
or other business enterprise for consideration in excess of $500,000,
in any case, which includes all escrow and earn-out agreements with
outstanding obligations.
A true and complete copy (including all material amendments) of each
agreement, contract, obligation, promise or undertaking (whether written or
oral and whether express or implied) to which the Company is a party or by
which the Company or its assets is or may become bound (a "Company
Contract"), or a summary of each oral contract, has been made available to
Parent. Each Company Contract is in full force and effect. No condition
exists or event has occurred that, (whether with or without notice or lapse
of time or both, or the happening or occurrence of any other event) would
constitute a default by the Company or a Subsidiary of the Company or, to
the Knowledge of the Company, any other party thereto under, or result in a
right in termination of, any Company Contract, except as could not,
individually or in the aggregate, be reasonably expected to result in a
Material Adverse Effect on the Company.
(q) UNLAWFUL PAYMENTS AND CONTRIBUTIONS. To the Knowledge of the
Company, neither the Company, any Subsidiary of the Company nor any of
their respective directors, officers, employees or agents has, with respect
to the businesses of the Company or its Subsidiaries, (i) used any funds
for any unlawful contribution, endorsement, gift, entertainment or other
unlawful expense relating to political activity; (ii) made any direct or
indirect unlawful payment to any foreign or domestic government official or
employee; (iii) violated or is in violation of any provision of the Foreign
Corrupt Practices Act of 1977, as amended; or (iv) made any bribe, rebate,
payoff, influence payment, kickback or other unlawful payment to any Person
or entity.
(r) LISTINGS. The Company's securities are not listed, or quoted, for
trading on any U.S. domestic or foreign securities exchange, other than the
NNM.
32
(s) ENVIRONMENTAL MATTERS. Except as disclosed in the Company SEC
Reports filed prior to the date hereof, the Company and its Subsidiaries
and the operations, assets and properties thereof are in material
compliance with all Environmental Laws; (ii) there are no judicial or
administrative actions, suits, proceedings or investigations pending or, to
the Knowledge of the Company, threatened against the Company or any
Subsidiary of the Company alleging the violation of any Environmental Law
and neither the Company nor any Subsidiary of the Company has received
notice from any governmental body or Person alleging any violation of or
liability under any Environmental Laws, in either case which could
reasonably be expected to result in material Environmental Costs and
Liabilities; (iii) to the Knowledge of the Company, there are no facts,
circumstances or conditions relating to, arising from, associated with or
attributable to the Company or its Subsidiaries or any real property
currently or previously owned, operated or leased by the Company or its
Subsidiaries that could reasonably be expected to result in material
Environmental Costs and Liabilities; and (iv) to the Knowledge of the
Company, neither the Company nor any of its Subsidiaries has ever
generated, transported, treated, stored, handled or disposed of any
Hazardous Material at any site, location or facility in a manner that could
create any material Environmental Costs and Liabilities under any
Environmental Law, and no such Hazardous Material has been or is currently
present on, in, at or under any real property owned or used by the Company
or any of its Subsidiaries in a manner that could create any material
Environmental Costs and Liabilities (including without limitation,
containment by means of any underground or aboveground storage tank). For
the purpose of this Section 5.2(s), the following terms have the following
definitions: (X) "Environmental Costs and Liabilities" means any losses,
liabilities, obligations, damages, fines, penalties, judgments, actions,
claims, costs and expenses (including, without limitation, fees,
disbursements and expenses of legal counsel, experts, engineers and
consultants and the costs of investigation and feasibility studies,
remedial or removal actions and cleanup activities) arising from or under
any Environmental Law; (Y) "Environmental Laws" means any applicable
federal, state, local or foreign law (including common law), statute, code,
ordinance, rule, regulation or other requirement relating to the
environment, natural resources, or public or employee health and safety;
and (Z) "Hazardous Material" means any substance, material or waste
regulated by federal, state or local government, including, without
limitation, any substance, material or waste which is defined as a
"hazardous waste," "hazardous material," "hazardous substance," "toxic
waste" or "toxic substance" under any provision of Environmental Law and
including but not limited to petroleum and petroleum products.
(t) TITLE TO PROPERTIES; LIENS; CONDITION OF PROPERTIES. The Company
and its Subsidiaries have good and marketable title to, or a valid
leasehold interest in, the real and personal property, shown on the most
recent Company Financial Statement or acquired after the date thereof. None
of the property owned or used by the Company or any of its Subsidiaries is
subject to any mortgage, pledge, deed of trust, lien (other than for taxes
not yet due and payable), conditional sale agreement, security title,
encumbrance, or other adverse claim or interest of any kind. Since December
31, 2000, there has not been any sale, lease, or any other disposition or
distribution by the Company or any of its Subsidiaries of any of its assets
or properties material to the
33
Company and its Subsidiaries, taken as a whole, except transactions in the
ordinary course of business, consistent with past practices.
(u) INSURANCE. All insurance policies (including "self-insurance"
programs) now maintained by the Company (the "Company Insurance Policies")
are in full force and effect, the Company is not in default under any of
the Company Insurance Policies, and no claim for coverage under any of the
Company Insurance Policies has been denied. The Company has not received
any notice of cancellation or intent to cancel or increase or intent to
increase premiums with respect to such insurance policies nor, to the
Knowledge of the Company, is there any basis for any such action.
(v) LABOR AND EMPLOYEE RELATIONS.
(i) Except as set forth in Section 5.2(v) of the Company
Disclosure Schedule, (A) None of the employees of the Company or any
of its Subsidiaries is represented in his or her capacity as an
employee of such company by any labor organization; (B) neither the
Company nor any of its Subsidiaries has recognized any labor
organization nor has any labor organization been elected as the
collective bargaining agent of any of their employees, nor has the
Company or any of its Subsidiaries signed any collective bargaining
agreement or union contract recognizing any labor organization as the
bargaining agent of any of their employees; and (C) to the Knowledge
of the Company, there is no active or current union organization
activity involving the employees of the Company or any of its
Subsidiaries, nor has there ever been union representation involving
employees of the Company or any of its Subsidiaries.
(ii) The Company has made available to Parent a description of
all written employment policies under which the Company and each of
its Subsidiaries is operating.
(iii) The Company and each of its Subsidiaries is in compliance
with all Federal, foreign (as applicable), and state laws regarding
employment practices, including laws relating to workers' safety,
sexual harassment or discrimination, except where the failure to so be
in compliance, individually or in the aggregate, would not have a
Material Adverse Effect on the Company.
(iv) To the Knowledge of the Company, none of the Company Key
Employees has any plans to terminate his or her employment with the
Company or any of its Subsidiaries.
(w) PERMITS. The Company and each of its Subsidiaries hold all
licenses, permits, registrations, orders, authorizations, approvals and
franchises that are required to permit it to conduct its businesses as
presently conducted, except where the failure to hold such licenses,
permits, registrations, orders, authorizations, approvals or franchises
could not reasonably be expected to, individually or in the aggregate, have
a Material Adverse Effect on the Company. All such licenses, permits,
registrations, orders, authorizations,
34
approvals and franchises are now, and will be after the Closing, valid and
in full force and effect, and Surviving Corporation shall have full benefit
of the same, except where the failure to be valid and in full force and
effect or to have the benefit of any such license, permit, registration,
order, authorization, approval or franchise could not reasonably be
expected to, individually or in the aggregate, have a Material Adverse
Effect on the Company or Surviving Corporation. Neither the Company nor any
of its Subsidiaries has received any notification of any asserted present
failure (or past and unremedied failure) by it to have obtained any such
license, permit, registration, order, authorization, approval or franchise,
except where such failure could not reasonably be expected to, individually
or in the aggregate, have a Material Adverse Effect on the Company or
Surviving Corporation.
(x) TRANSACTIONS WITH AFFILIATES. Except as set forth in the Company
SEC Reports filed prior to the date of this Agreement, since the date of
Company's last proxy statement to its shareholders, no event has occurred
that would be required to be reported by Company as a Certain Relationship
or Related Transaction, pursuant to Item 404 of Regulation S-K promulgated
by the SEC.
ARTICLE VI
ADDITIONAL COVENANTS AND AGREEMENTS
6.1 CONDUCT OF BUSINESS OF THE COMPANY. During the period from the date of
this Agreement and continuing until the earlier of the termination of this
Agreement pursuant to its terms and the Effective Time, the Company (which for
the purposes of this Section 6.1 shall include the Company and each of its
Subsidiaries) agrees, except to the extent that Parent shall otherwise consent
in writing (which consent shall not be unreasonably withheld or delayed), to
carry on its business and to cause each of its Subsidiaries to carry on its
business in the usual, regular and ordinary course in substantially the same
manner as heretofore conducted, and to use and cause each of its Subsidiaries to
use all commercially reasonable efforts consistent with past practices and
policies to preserve intact its present business organizations, keep available
the services of its present officers and employees and preserve its
relationships with customers, suppliers, distributors, licensors, licensees, and
others having business dealings with the Company or any such Subsidiaries, to
the end that the goodwill and ongoing businesses of Company and each of its
Subsidiaries be unimpaired at the Effective Time. Except as expressly provided
for by this Agreement, the Company shall not, and shall not permit any of its
Subsidiaries to, prior to the Effective Time or earlier termination of this
Agreement pursuant to its terms, without the prior written consent of Parent
(which consent shall not be unreasonably withheld or delayed):
(a) Except as provided in this Agreement, accelerate, amend or change
the period of exercisability of options or restricted stock, or reprice
options granted under the Company Option Plans or authorize cash payments
in exchange for any options granted under any of such plans;
35
(b) Enter into any material partnership arrangements, joint
development agreements or strategic alliances;
(c) Except as provided in the benefit plans and agreements of the
Company or any of its Subsidiaries listed in Section 5.2(n)(i) of the
Company Disclosure Letter, or as required by law, grant any severance or
termination pay (i) to any executive officer or (ii) to any other employee
except payments made in connection with the termination of employees who
are not executive officers in amounts consistent with Parent's policies and
past practices or pursuant to written agreements outstanding, or policies
existing, on the date hereof and as previously disclosed in writing to
Parent or pursuant to written agreements consistent with the past
agreements of the Company or any of its Subsidiaries under similar
circumstances;
(d) Transfer or license to any person or entity or otherwise extend,
amend or modify any rights to the Company Intellectual Property Rights
(including rights to resell or relicense the Company Intellectual Property
Rights) or enter into grants to future patent rights, other than on
standard forms of the Company or any of its Subsidiaries entered into in
the ordinary course of business consistent with past practices; PROVIDED,
HOWEVER, that such standard forms shall provide for a non-exclusive license
of Company Intellectual Property Rights terminable at will by the Company
on no more than thirty days' notice.
(e) Commence any material litigation other than (i) for the routine
collection of bills, (ii) for software piracy, or (iii) in such cases where
the Company in good faith determines that failure to commence suit would
result in the material impairment of a valuable aspect of the business of
the Company or any of its Subsidiaries, provided that the Company consults
with the Parent prior to the filing of such a suit and keeps Parent advised
of the status and details of such litigation (except that the Company shall
not require the approval of, and shall not be required to consult with,
Parent with respect to any claim, suit or proceeding by the Company against
Parent or any of its affiliates);
(f) Declare or pay any dividends on or make any other distributions
(whether in cash, stock or property) in respect of any of its capital
stock, or split, combine or reclassify any of its capital stock or issue or
authorize the issuance of any other securities in respect of, in lieu of or
in substitution for shares of capital stock of the Company;
(g) Repurchase or otherwise acquire, directly or indirectly, any
shares of its capital stock except from former employees, directors and
consultants in accordance with agreements existing as of the date hereof
and listed in Section 5.2(n)(i) of the Company Disclosure Letter requiring
the repurchase of shares in connection with any termination of service to
the Company or any of its Subsidiaries;
(h) Issue, deliver, sell or authorize or propose the issuance,
delivery, grant or sale of, any shares of its capital stock of any class or
securities convertible into, or any subscriptions, rights, warrants or
options to acquire, or enter into other agreements or commitments of any
character obligating it to issue any such shares or other convertible
36
securities, other than (i) the issuance of Company Shares pursuant to the
exercise of Company stock options or warrants therefor outstanding as of
the date of this Agreement, and (ii) Company Shares issuable to
participants in the ESPP consistent with the terms of that Plan;
(i) Cause, permit or propose any amendments to the Company's
Certificate of Incorporation or Bylaws;
(j) Sell, lease, license, encumber or otherwise dispose of any of the
properties or assets of the Company or any of its Subsidiaries, except in
the ordinary course of business consistent with past practice;
(k) Incur any material indebtedness for borrowed money (other than
ordinary course trade payables or pursuant to existing credit facilities in
the ordinary course of business) or guarantee any such prohibited
indebtedness or issue or sell any debt securities or warrants or rights to
acquire debt securities of the Company or any of its Subsidiaries or
guarantee any debt securities of others;
(l) Except as required by law, adopt or amend any Company Scheduled
Plan or increase the salaries or wage rates of any of its employees (except
for wage increases in the ordinary course of business and consistent with
past practices), including but not limited to (but without limiting the
generality of the foregoing), the adoption or amendment of any stock
purchase or option plan, the entering into of any employment contract or
the payment of any special bonus or special remuneration to any director or
employee;
(m) Revalue any of the assets of the Company or any of its
Subsidiaries, including without limitation writing down the value of
inventory, writing off notes or accounts receivable, other than in the
ordinary course of business consistent with past practice;
(n) Except as set forth in the Company Disclosure Schedule, pay,
discharge or satisfy in an amount in excess of $100,000 (in any one case)
or $250,000 (in the aggregate), any claim, liability or obligation
(absolute, accrued, asserted or unasserted, contingent or otherwise),
including, without limitation, under any employment contract or with
respect to any bonus or special remuneration, other than the payment,
discharge or satisfaction in the ordinary course of business of liabilities
of the type reflected or reserved against in the Company Financial
Statements (or reflected in the notes thereto);
(o) Except as required by applicable Tax law, make or change any
material election in respect of Taxes, adopt or change in any material
respect any accounting method in respect of Taxes, file any material Return
or any amendment to a material Return, enter into any closing agreement,
settle any claim or assessment in respect of Taxes (except settlements
effected solely through payment of immaterial sums of money), or consent to
any extension or waiver of the limitation period applicable to any claim or
assessment in respect of Taxes; or
37
(p) Take, or agree in writing or otherwise to take, any of the actions
described in Section 6.1(a) through (o) above, or any action which would
cause or would be reasonably likely to cause any of the conditions to the
Merger set forth in Sections 7.1 or 7.3, not to be satisfied.
6.2 NO SOLICITATION.
(a) From and after the date of this Agreement until the Effective Time
or the earlier termination of this Agreement in accordance with its terms,
the Company will not, and will not permit any of its Subsidiaries or its or
their respective directors, officers, investment bankers, affiliates,
representatives and agents to, (i) solicit, initiate, or encourage
(including by way of furnishing unsolicited information), or take any other
action to facilitate, any inquiries or proposals that constitute, or could
reasonably be expected to lead to, any Company Acquisition Proposal, or
(ii) engage in, or enter into, any negotiations or discussions concerning
any Company Acquisition Proposal. Notwithstanding the foregoing, in the
event that, notwithstanding compliance with the preceding sentence, the
Company receives a Company Acquisition Proposal that is or may reasonably
be expected to lead to a Company Superior Proposal, the Company may, to the
extent that the Board of Directors of the Company determines in good faith
(in reliance on the opinion of its outside counsel) that such action would,
in the absence of the foregoing proscriptions, be required by its fiduciary
duties, participate in discussions regarding any Company Acquisition
Proposal in order to be informed and make a determination with respect
thereto. In such event, the Company shall, (i) promptly inform Parent of
the material terms and conditions of such Company Acquisition Proposal,
including the identity of the Person making such Company Acquisition
Proposal and (ii) promptly keep Parent informed of the status including any
material change to the terms of any such Company Acquisition Proposal. As
used herein, the term "Company Acquisition Proposal" shall mean any bona
fide inquiry, proposal or offer relating to any (i) merger, consolidation,
business combination, or similar transaction involving the Company or any
Subsidiary of the Company, (ii) sale, lease or other disposition, directly
or indirectly, by merger, consolidation, share exchange or otherwise, of
any assets of the Company or any Subsidiary of the Company in one or more
transactions, (iii) issuance, sale, or other disposition of (including by
way of merger, consolidation, share exchange or any similar transaction)
securities (or options, rights or warrants to purchase such securities, or
securities convertible into such securities) of the Company or any
Subsidiary of the Company, (iv) liquidation, dissolution, recapitalization
or other similar type of transaction with respect to the Company or any
Subsidiary of the Company, (v) tender offer or exchange offer for Company
securities; in the case of (i), (ii), (iii), (iv) or (v) above, which
transaction would result in a third party (or its shareholders) acquiring
more than fifty percent (50%) of the voting power of the Company or the
assets representing more than fifty percent (50%) of the net income, net
revenue or assets of the Company on a consolidated basis, (vi) transaction
which is similar in form, substance or purpose to any of the foregoing
transactions, or (vii) public announcement of an agreement, proposal, plan
or intention to do any of the foregoing, PROVIDED, HOWEVER, that the term
"Company Acquisition Proposal" shall not include the
38
Merger and the transactions contemplated thereby. For purposes of this
Agreement, "Company Superior Proposal" means any offer not solicited after
the date of this Agreement by the Company, or by other persons in violation
of the first sentence of this Section 6.2(a), and made by a third party to
consummate a tender offer, exchange offer, merger, consolidation or similar
transaction which would result in such third party (or its shareholders)
owning, directly or indirectly, more than fifty percent (50%) of the
Company Shares then outstanding (or of the surviving entity in a merger) or
all or substantially all of the assets of Company and its Subsidiaries,
taken together, and otherwise on terms which the Board of Directors of the
Company determines in good faith (based on its consultation with a
financial advisor of nationally recognized reputation and considering such
other matters that it deems relevant) would, if consummated, result in a
transaction more favorable to the Company's shareholders from a financial
point of view than the Merger and, taking into account, in the reasonable
good faith judgment of the Board of Directors of the Company after
consultation with its financial advisor, the availability to the person or
entity making such Company Superior Proposal of the financial means to
conclude such transaction. The Company will immediately cease any and all
existing activities, discussions or negotiations with any parties conducted
heretofore with respect to any of the foregoing.
(b) Neither the Board of Directors of the Company nor any committee
thereof shall, except as required by their fiduciary duties as determined
in good faith (in reliance on the opinion of its outside counsel), (i)
withdraw or modify, or propose to withdraw or modify, in a manner adverse
to Parent or Merger Sub, the approval or recommendation by the Board of
Directors of the Company or such committee of this Agreement or the Merger,
(ii) approve, recommend, or otherwise support or endorse any Company
Acquisition Proposal, or (iii) cause the Company to enter into any letter
of intent, agreement in principle, acquisition agreement or similar
agreement with respect to any Company Acquisition Proposal. Nothing
contained in this Section 6.2 shall prohibit the Company from taking and
disclosing to its shareholders a position contemplated by Rule 14d-9 or
14e-2 promulgated under the Exchange Act or from making any disclosure to
the Company's shareholders if, in the good faith judgment of the Board of
Directors of the Company (in reliance upon the opinion of its outside
counsel), such disclosure is necessary for the Board of Directors to comply
with its fiduciary duties under applicable law; PROVIDED, HOWEVER, that,
except as required by their fiduciary duties as determined in good faith
and in reliance upon the opinion of its outside counsel, neither the
Company nor its Board of Directors nor any committee thereof shall withdraw
or modify, or propose publicly to withdraw or modify, its position with
respect to this Agreement or the Merger or approve or recommend or propose
publicly to approve or recommend, a Company Acquisition Proposal.
(c) In addition to the obligations of the Company set forth in
paragraphs (a) and (b) of this Section 6.2, the Company will promptly (and
in any event within twenty-four (24) hours) advise Parent, orally and in
writing, if any Company Acquisition Proposal is made or, to its Knowledge,
proposed to be made or any information or access to properties, books or
records of the Company is requested in connection with a Company
39
Acquisition Proposal, the principal terms and conditions of any such
Company Acquisition Proposal or potential Company Acquisition Proposal or
inquiry (and will disclose any written materials received by the Company in
connection with such Company Acquisition Proposal, potential Company
Acquisition Proposal or inquiry) and the identity of the party making such
Company Acquisition Proposal, potential Company Acquisition Proposal or
inquiry. The Company will keep Parent advised of the status and details
(including amendments and proposed amendments) of any such request or
Company Acquisition Proposal.
6.3 MEETING OF SHAREHOLDERS.
(a) Promptly after the date hereof, the Company shall take all action
necessary in accordance with the GBCC and its Articles of Incorporation and
by-laws to convene a meeting of shareholders ("Company Shareholders
Meeting") to be held as promptly as practicable after the S-4 Registration
Statement is declared effective by the SEC for the purposes of voting upon
this Agreement and the Merger. Neither the Board of Directors of the
Company nor any committee thereof shall, except as required by their
fiduciary duties as determined in good faith (in reliance on the opinion of
its outside counsel), withdraw or modify, or propose to withdraw or modify,
in a manner adverse to Parent, the approval or recommendation by the Board
of Directors of the Company or such committee of this Agreement or the
Merger. Nothing contained in this Section 6.3(a) shall prohibit the Company
from making any disclosure to the Company's shareholders if, in the good
faith judgment of the Board of Directors of the Company (in reliance upon
the opinion of its outside counsel), such disclosure is necessary for the
Board of Directors to comply with its fiduciary duties under applicable
law. The Company shall deliver to Parent, concurrent with the execution and
delivery of this Agreement, the Voting Agreement executed by Szlam.
(b) If necessary, Parent shall take all action necessary in accordance
with the DGCL and its Certificate of Incorporation and by-laws to convene a
meeting of stockholders (the "Parent Stockholders Meeting") to be held as
promptly as practicable after the S-4 Registration Statement is declared
effective by the SEC for the purposes of voting upon this Agreement and the
Merger. Neither the Board of Directors of Parent nor any committee thereof
shall, except as required by their fiduciary duties as determined in good
faith (in reliance on the opinion of its outside counsel), withdraw or
modify, or propose to withdraw or modify, in a manner adverse to the
Company, the approval or recommendation by the Board of Directors of Parent
or such committee of this Agreement or the Merger. Nothing contained in
this Section 6.3(b) shall prohibit Parent from making any disclosure to
Parent's stockholders if, in the good faith judgment of the Board of
Directors of Parent (in reliance upon the opinion of its outside counsel),
such disclosure is necessary for the Board of Directors to comply with its
fiduciary duties under applicable law.
6.4 REGISTRATION STATEMENT. Parent will, as promptly as practicable,
prepare and file with the SEC a registration statement on Form S-4 (the "S-4
Registration Statement"), containing
40
a proxy statement/prospectus and a form of proxy, in connection with the
registration under the Securities Act of the Parent Shares issuable upon
conversion of the Company Shares and the other transactions contemplated hereby.
The Company and Parent will, as promptly as practicable, prepare and file with
the SEC a proxy statement that will be the same proxy statement/prospectus
contained in the S-4 Registration Statement and a form of proxy, in connection
with the vote of the Company's (and Parent's, if necessary) shareholders, or
stockholders, as applicable, with respect to the Merger (such proxy
statement/prospectus, together with any amendments thereof or supplements
thereto, in each case in the form or forms mailed to the Company's (and
Parent's, if necessary) shareholders, or stockholders, as applicable, is herein
called the "Proxy Statement"). The Company and Parent will, and will cause their
accountants and lawyers to, use their reasonable efforts to have or cause the
S-4 Registration Statement declared effective as promptly as practicable
thereafter, including, without limitation, causing their accountants to deliver
necessary or required instruments such as opinions, consents and certificates,
and will take any other action required or necessary to be taken under federal
or state securities laws or otherwise in connection with the registration
process, it being understood and agreed that Xxxxxx, Xxxxxxx & Xxxxxx, LLP,
counsel to the Company, will render the tax opinion referred to in Section 6.12
below on the date the preliminary Proxy Statement is first filed with the SEC.
The Company and Parent (if necessary) will use its reasonable efforts to cause
the Proxy Statement to be mailed to its shareholders, or stockholders, as
applicable, at the earliest practicable date and the Company and Parent (if
necessary) shall each use its commercially reasonable efforts to hold the
Company Shareholders Meeting and the Parent Stockholders Meeting, as the case
may be, as soon as practicable after the S-4 Registration Statement is declared
effective by the SEC. Parent shall also take any action required to be taken
under state blue sky or other securities laws in connection with the issuance of
Parent Shares in the Merger.
6.5 REASONABLE EFFORTS. The Parties shall: (a) promptly make their
respective filings and thereafter make any other required submissions under all
applicable laws with respect to the Merger and the other transactions
contemplated hereby; and (b) use their reasonable efforts to promptly take, or
cause to be taken, all other actions and do, or cause to be done, all other
things necessary, proper or appropriate to consummate and make effective the
transactions contemplated by this Agreement as soon as practicable.
6.6 ACCESS TO INFORMATION. Upon reasonable notice, Parent, on the one
hand, and the Company, on the other, shall (and shall cause each of their
Subsidiaries to) afford to officers, employees, counsel, accountants and
other authorized representatives of the other such party (the "Authorized
Representatives") reasonable access, during normal business hours throughout
the period prior to the Effective Time, to their properties, assets, books
and records and, during such period, shall (and shall cause each of their
Subsidiaries to) furnish promptly to such Authorized Representatives all
information concerning their business, properties, assets and personnel as
may reasonably be requested for purposes of appropriate and necessary due
diligence, provided that no investigation pursuant to this Section 6.6 shall
affect or be deemed to modify any of the representations or warranties made
by the Parties. The Parties each agree to treat (and cause their Authorized
Representatives to treat) any and all information provided pursuant to this
Section 6.6 in strict compliance with the terms of that certain
Confidentiality Agreement, entered
41
by and between the Company and Parent, dated March 30, 2001 (the
"Confidentiality Agreement").
6.7 PUBLICITY. The Parties agree that they will consult with each other
concerning any proposed press release or public announcement pertaining to the
Merger in order to agree upon the text of any such press release or the making
of such public announcement, which agreement shall not be unreasonably withheld,
except as may be required by applicable law or by obligations pursuant to any
listing agreement with a national securities exchange or national automated
quotation system, in which case the party proposing to issue such press release
or make such public announcement shall use reasonable efforts to consult in good
faith with the other party before issuing any such press release or making any
such public announcement.
6.8 AFFILIATES OF THE COMPANY AND PARENT. The Company has identified the
Persons listed on Section 6.8 of the Company Disclosure Schedule as "affiliates"
of the Company for purposes of Rule 145 promulgated under the Securities Act
(each, a "Company Affiliate") and the Company will use its reasonable efforts to
obtain as promptly as practicable from each Company Affiliate written agreements
in the form attached hereto as EXHIBIT B (the "Company Affiliate Letter") that
such Company Affiliate will not sell, pledge, transfer or otherwise dispose of
any Parent Shares issued to such Company Affiliate pursuant to the Merger,
except in compliance with Rule 145 promulgated under the Securities Act or an
exemption from the registration requirements of the Securities Act.
6.9 MAINTENANCE OF INSURANCE. Between the date hereof and through the
Effective Time, the Company will maintain in full force and effect all of its
and its Subsidiaries presently existing policies of insurance or insurance
comparable to the coverage afforded by such policies.
6.10 REPRESENTATIONS AND WARRANTIES. Each of the Company and Parent shall
give prompt notice to the other of any circumstances that would cause any of its
representations and warranties set forth in Section 5.1 or 5.2, as the case may
be, that are qualified as to materiality or Material Adverse Effect not to be
true and correct, and those that are not so qualified not to be true and correct
in all material respects, in each case at and as of the Effective Time.
6.11 FILINGS; OTHER ACTION. Subject to the terms and conditions herein
provided, the Parties shall: (a) promptly make their respective filings and
thereafter make any other required submissions under the HSR Act, the Securities
Act and the Exchange Act, and comparable foreign laws, rules and regulations,
with respect to the Merger; (b) cooperate in the preparation of such filings or
submissions under the HSR Act and comparable foreign laws, rules and
regulations; and (c) use reasonable efforts promptly to take, or cause to be
taken, all other actions and do, or cause to be done, all other things
necessary, proper or appropriate under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement as
soon as practicable. Notwithstanding anything to the contrary contained herein,
nothing in this Agreement will require Parent, whether pursuant to an order of
the Federal Trade Commission or the United States Department of Justice or
otherwise, to dispose of any assets, lines of business or equity interests in
order to obtain the consent of the Federal Trade Commission or the United States
Department of Justice to the transactions contemplated by this Agreement.
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6.12 TAX-FREE REORGANIZATION TREATMENT. Prior to the Effective Time, the
Parties shall use their commercially reasonable efforts to cause the Merger to
be treated as a reorganization within the meaning of Section 368(a) of the Code
and shall not knowingly take or fail to take any action which action or failure
to act would jeopardize the qualification of the Merger as a reorganization
within the meaning of Section 368(a) of the Code. So long as the Merger
qualifies as a reorganization described in Section 368(a) of the Code, each of
Parent, Merger Sub, and the Company (i) shall not file any Return or take any
position inconsistent with the treatment of the Merger as a reorganization
described in Section 368(a) of the Code, and (ii) shall comply with the
recordkeeping and information-reporting requirements set forth in Treas. Reg.
Section 1.368-3. Furthermore, prior to the Effective Time, the Parties shall use
their commercially reasonable efforts to obtain the tax opinions specified in
Section 7.1(f) of the Agreement.
6.13 COMPANY EMPLOYEE STOCK PURCHASE PLAN. The Company shall not commence
any "purchase periods" under the ESPP after April 1, 2001, and shall apply all
amounts deducted and withheld thereunder to purchase Company Shares in
accordance with the provisions thereof.
6.14 NASDAQ LISTING. Parent agrees to authorize for listing on the NNM the
shares of Parent Common Stock issuable in connection with the Merger, upon
official notice of issuance.
6.15 INDEMNIFICATION.
(a) From and after the Effective Time, the Surviving Corporation will
fulfill and honor in all respects the obligations of the Company to
indemnify and hold harmless the Company's and its Subsidiaries' present and
former directors, officers, employees, and agents and their heirs,
executors and assigns (collectively, the "Indemnified Personnel"). The
Certificate of Incorporation and by-laws of the Surviving Corporation will
contain provisions with respect to indemnification and elimination of
liability for monetary damages at least as favorable to the Indemnified
Personnel as those set forth in the current Articles of Incorporation and
by-laws of the Company, and for a period of six years from the Effective
Time, those provisions will not be repealed or amended or otherwise
modified in any manner that would adversely affect the rights thereunder of
the Indemnified Personnel, except to the extent, if any, that such
modification is required by applicable law.
(b) For a period of six years after the Effective Time, the Surviving
Corporation will either (i) maintain in effect, if available, directors'
and officers' liability insurance covering those persons who are currently
covered by the Company's directors' and officers' liability insurance
policy on terms comparable to those applicable to the current directors and
officers of the Company; PROVIDED, HOWEVER, that in no event will the
Surviving Corporation be required to expend in excess of 150% of the annual
premium currently paid by the Company for such coverage (or such coverage
as is available for such 150% of such annual premium), or (ii) if mutually
agreed between the Company and the Surviving Corporation, purchase a
directors' and officers' liability insurance policy on terms comparable to
those applicable to the current directors and officers of the Company
covering all periods prior to the Effective Time.
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6.16 AUDITORS' LETTERS. The Company shall use its best efforts to cause to
be delivered to Parent a letter of Xxxxxx Xxxxxxxx LLP, independent auditors to
the Company, dated a date within two business days before the date on which the
Registration Statement becomes effective, and addressed to the Company, in form
and substance reasonably satisfactory to Parent and customary in scope and
substance for letters delivered by independent public accountants in connection
with registration statements similar to the Registration Statement. The Parent
shall use its best efforts to cause to be delivered to the Company a letter of
KPMG, LLP, independent auditors to Parent, dated a date within two business days
before the date on which the Registration Statement becomes effective, and
addressed to Parent, in form and substance reasonably satisfactory to the
Company and customary in scope and substance for letters delivered by
independent public accountants in connection with registration statements
similar to the Registration Statement.
6.17 SALE OF COMPANY SOFTWARE PRODUCTS. Concurrently with the execution and
delivery of this Agreement, Parent and the Company have entered into a Software
Distribution Agreement in the form attached as EXHIBIT C hereto (the "Software
Distribution Agreement") pursuant to which the Company will grant Parent a
license to market, sell, distribute, license and sublicense certain software
products sold by the Company on the terms specified in the Software Distribution
Agreement.
6.18 ISSUANCE OF OPTION GRANTS. Promptly after the Effective Time, Parent
shall grant options to purchase shares of Parent Common Stock representing 13%
of the aggregate amount of Parent Shares issued pursuant to the conversion
rights contained in Section 4.1(a) to persons serving as employees of the
Company immediately prior to the Effective Time. These options will have an
exercise price per share equal to the closing sale price per share of the Parent
Common Stock as reported on the NNM on the trading day immediately prior to the
date of grant of the options, shall vest in three equal installments with the
first installment vesting on the date of grant and the second and third
installments vesting on the second and third annual anniversaries of the date of
grant, and shall otherwise be subject to such terms and conditions commonly
provided under Parent's 2001 Stock Incentive Plan.
6.19 SELF TENDER OFFER PROHIBITION. Parent shall not commence or otherwise
engage in a "self tender offer" pursuant to Section 13e-4 of the Exchange Act
prior to the Closing Date.
ARTICLE VII
CONDITIONS
7.1 CONDITIONS TO EACH PARTY'S OBLIGATIONS. The respective obligations of
each Party to consummate the Merger are subject to the satisfaction or waiver by
each of the Parties of the following conditions:
(a) this Agreement and the Merger shall have been approved and adopted
by the requisite vote under applicable law of the shareholders of the
Company and stockholders of Parent (if necessary);
44
(b) the SEC shall have declared the S-4 Registration Statement
effective; no stop order suspending the effectiveness of the S-4
Registration Statement or any part thereof shall have been issued and no
proceeding for that purpose, and no similar proceeding in respect of the
Proxy Statement, shall have been initiated or threatened in writing by the
SEC; and all requests for additional information on the part of the SEC
shall have been complied with to the reasonable satisfaction of the
Parties;
(c) no judgment, order, decree, statute, law, ordinance, rule or
regulation, entered, enacted, promulgated, enforced or issued by any court
or other Governmental Entity of competent jurisdiction or other legal
restraint or prohibition preventing the consummation of the Merger or
making the Merger illegal (collectively, "Restraints") shall be in effect,
and there shall not be pending any suit, action or proceeding by any
Governmental Entity preventing the consummation of the Merger; PROVIDED,
HOWEVER, that each of the Parties shall have used reasonable efforts to
prevent the entry of such Restraints and to appeal as promptly as possible
any such Restraints that may be entered;
(d) the waiting period(s) under the HSR Act and all applicable
material foreign antitrust, competition and merger laws, if any, shall have
expired or been terminated;
(e) the Parent Shares issuable to shareholders and other
securityholders of the Company pursuant to this Agreement shall have been
authorized for listing on the NNM upon official notice of issuance; and
(f) Parent and the Company shall each have received written opinions
from their respective tax counsel (Xxxxxx Xxxxxx Xxxxx and Xxxxxx, Xxxxxxx
& Xxxxxx, LLP, respectively), in form and substance reasonably satisfactory
to them, to the effect that for federal income tax purposes the Merger will
constitute a reorganization within the meaning of Section 368(a) of the
Code and such opinions shall not have been withdrawn; provided, however,
that if the counsel to either Parent or Company does not render such
opinion, this condition shall nonetheless be deemed to be satisfied with
respect to such Party if counsel to the other Party renders such opinion to
such Party. The Parties to this Agreement agree to make such reasonable
representations as requested by such counsel for the purpose of rendering
such opinions.
7.2 CONDITIONS TO THE OBLIGATIONS OF THE COMPANY. The obligations of the
Company to consummate the Merger are subject to the fulfillment at or prior to
the Effective Time of the following conditions, any or all of which may be
waived in whole or in part by the Company to the extent permitted by applicable
law:
(a) the representations and warranties of Parent set forth in Section
5.1 that are qualified as to materiality or Material Adverse Effect shall
be true and correct and those that are not so qualified shall be true and
correct in all material respects, in each case as of the date of this
Agreement, and as of the Effective Time with the same force and effect as
if made on and as of the Effective Time (except to the extent expressly
made as of an earlier date, in which case as of such date), in each case
except as permitted or contemplated by this Agreement (it being understood
that for purposes of determining the
45
accuracy of such representations and warranties any update or modification
to the Parent's Disclosure Schedule made or purported to have been made
without the Company's written consent thereto shall be disregarded);
(b) Parent shall have performed or complied in all material respects
with its agreements and covenants required to be performed or complied with
under this Agreement as of or prior to the Effective Time; and
(c) Parent shall have delivered to the Company a certificate to the
effect that each of the conditions specified in Section 7.1 (as it relates
to Parent) and clauses (a) and (b) of this Section 7.2 has been satisfied
in all respects.
7.3 CONDITIONS TO THE OBLIGATIONS OF PARENT. The obligation of Parent to
consummate the Merger is subject to the fulfillment at or prior to the Effective
Time of the following conditions, any or all of which may be waived in whole or
in part by Parent to the extent permitted by applicable law:
(a) the representations and warranties of the Company set forth in
Section 5.2 that are qualified as to materiality or Material Adverse
Effect, or in Sections 5.2(a), (b) or (d) shall be true and correct and
those that are not so qualified shall be true and correct in all material
respects, in each case as of the date of this Agreement, and as of the
Effective Time with the same force and effect as if made on and as of the
Effective Time (except to the extent expressly made as of an earlier date,
in which case as of such date), in each case except as permitted or
contemplated by this Agreement (it being understood that for purposes of
determining the accuracy of such representations or warranties any update
or modifications to the Company's Disclosure Schedule made or purported to
have been made without Parent's written consent thereto shall be
disregarded);
(b) the Company shall have performed or complied with in all material
respects its agreements and covenants required to be performed or complied
with under this Agreement as of or prior to the Effective Time;
(c) the Company shall have delivered to Parent a certificate of its
Chief Executive Officer and Chief Financial Officer to the effect that each
of the conditions specified in Section 7.1 (as it relates to the Company)
and clauses (a) and (b) of this Section 7.3 has been satisfied in all
respects;
(d) to the extent the option agreement or option plan governing any
Company Option does not currently permit the Company to take any of the
actions contemplated by Section 4.1(c) hereof, the Company shall have
entered into agreements with the holders of such Company Options which
allow the Company to take the actions contemplated by Section 4.1(c)
hereof, which agreements shall be in form and substance reasonably
acceptable to Parent; and
(e) the Company shall have received all written consents, assignments,
waivers, authorizations or other certificates necessary to provide for the
continuation in full force
46
and effect of any and all material contracts and leases of the Company and
for the Company to consummate the transactions contemplated hereby.
ARTICLE VIII
TERMINATION
8.1 TERMINATION BY MUTUAL CONSENT. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time, before or after
gaining the requisite approval of the shareholders of the Company and the
stockholders of Parent (if necessary), by the mutual written consent of the
Company and Parent.
8.2 TERMINATION BY EITHER THE COMPANY OR PARENT. This Agreement may be
terminated and the Merger may be abandoned by action of the Board of Directors
of either the Company or Parent if:
(a) the Merger shall not have been consummated by December 31, 2001;
PROVIDED, HOWEVER, that the right to terminate this Agreement under this
Section 8.2(a) shall not be available to any party whose failure to fulfill
any obligation under this Agreement has been the principal cause of or
resulted in the failure of the Merger to occur on or before such date and
such action or failure to act constitutes a material breach of this
Agreement;
(b) if any Restraint shall be in effect and shall have become final
and nonappealable;
(c) at the duly held Company Shareholders Meeting (including any
adjournments thereof), the requisite approval of the Company's shareholders
shall not have been obtained; PROVIDED, HOWEVER, that the Company's right
to terminate this Agreement under this Section 8.2(c) shall not be
available to the Company if the Company has not complied with its
obligations under Sections 6.2 and 6.3(a); or
(d) if necessary, at the duly held Parent Stockholders Meeting
(including any adjournments thereof) the requisite approval of Parent's
stockholders shall not have been obtained; PROVIDED, HOWEVER, that Parent's
right to terminate this Agreement under this Section 8.2(d) shall not be
available to Parent if Parent has not complied with its obligations under
Section 6.3(b).
8.3 TERMINATION BY THE COMPANY. This Agreement may be terminated by the
Company upon written notice to Parent and the Merger may be abandoned at any
time prior to the Effective Time, before or after the approval by holders of the
Company Shares, by action of the Board of Directors of the Company, if:
(a) Parent shall have breached or failed to perform any of the
representations, warranties, covenants or other agreements contained in
this Agreement, or if any representation or warranty shall have become
untrue, in either case such that (i) the
47
conditions set forth in Section 7.2(a) or (b) would not be satisfied as of
the time of such breach or as of such time as such representation or
warranty shall have become untrue and (ii) such breach or failure to be
true has not been or is incapable of being cured within twenty (20)
business days following receipt by Parent of notice of such failure to
comply;
(b) the Parent Stockholders Meeting is necessary, the Board of
Directors of Parent or any committee thereof, shall have withdrawn or
modified in a manner adverse to the Company its approval or recommendation
of the Merger or this Agreement, or Parent shall have failed to include in
the Proxy Statement the recommendation of the Board of Directors of Parent
in favor of approval of the Merger and this Agreement; or
(c) on any date after the date the S-4 Registration Statement is
declared effective by the SEC, but prior to the date of the Company
Shareholders Meeting, if as of the date on which notice of termination
pursuant to this Section 8.3(c) is given, the Parent Share Rolling Average
shall be less than $1.00.
8.4 TERMINATION BY PARENT. This Agreement may be terminated by Parent upon
written notice to the Company and the Merger may be abandoned at any time prior
to the Effective Time, before or after any action of the Board of Directors of
Parent, if:
(a) the Company shall have breached or failed to perform any of the
representations, warranties, covenants or other agreements contained in
this Agreement, or if any representation or warranty shall have become
untrue, in either case such that (i) the conditions set forth in Section
7.3(a) or (b) would not be satisfied as of the time of such breach or as of
such time as such representation or warranty shall have become untrue and
(ii) such breach or failure to be true has not been or is incapable of
being cured within twenty (20) business days following receipt by the
breaching party of notice of such failure to comply;
(b) (i) the Board of Directors of the Company or any committee
thereof, shall have withdrawn or modified in a manner adverse to Parent its
approval or recommendation of the Merger or this Agreement, (ii) the
Company shall have failed to include in the Proxy Statement the
recommendation of the Board of Directors of the Company in favor of
approval of the Merger and this Agreement, (iii) in connection with a Rule
14d-9 disclosure, the Board of Directors of the Company shall have taken
any action other than a rejection of a Rule 14d-9 proposal, (iv) the Board
of Directors of the Company or any committee thereof shall have recommended
any Company Acquisition Proposal, (v) the Company or any of its officers or
directors shall have entered into discussions or negotiations in violation
of Section 6.2, (vi) the Board of Directors of the Company or any committee
thereof shall have resolved to do any of the foregoing or (vii) any Company
Acquisition Proposal is consummated or an agreement with respect to any
Company Acquisition Proposal is signed; or
(c) if Szlam has breached the Voting Agreement in any material
respect, or if the Voting Agreement has been determined to be
unenforceable.
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8.5 EFFECT OF TERMINATION; TERMINATION FEE.
(a) Except as set forth in this Section 8.5, in the event of
termination of this Agreement by either Parent or the Company as provided
in this Article VIII, this Agreement shall forthwith become void and there
shall be no liability or obligation on the part of the Parties or their
respective affiliates, officers, directors or shareholders except (x) with
respect to the treatment of confidential information pursuant to Section
6.6, the payment of expenses pursuant to Section 9.1, and Article IX
generally, (y) to the extent that such termination results from the willful
breach of a Party of any of its representations or warranties, or any of
its covenants or agreements or (z) with respect to any intentional or
knowing misrepresentations in connection with or pursuant to this Agreement
or the transactions contemplated hereby.
(b) In the event that (i) this Agreement is terminated by either the
Company or Parent (x) pursuant to Section 8.2(a) due to the Company
Shareholders Meeting not occurring as a result of a Company Acquisition
Proposal or (y) pursuant to Section 8.2(c), or (ii) this Agreement is
terminated by Parent pursuant to Sections 8.4(a), 8.4(b) or 8.4(c), then
the Company shall promptly, but in no event later than the date of such
termination, pay Parent a fee equal to $2,000,000 (the "Termination Fee"),
payable by wire transfer of same day funds. The Company acknowledges that
the agreements contained in this Section 8.5(b) are an integral part of the
transactions contemplated by this Agreement, and that, without these
agreements, Parent would not enter into this Agreement, and accordingly, if
the Company fails promptly to pay the amount due pursuant to this Section
8.5(b), and, in order to obtain such payment, Parent commences a suit which
results in a judgment against the Company for the fee set forth in this
Section 8.5(b), the Company shall pay to Parent its costs and expenses
(including reasonable attorneys' fees and expenses) in connection with such
suit, together with interest on the amount of the fee at the prime rate of
Citibank, N.A. in effect on the date such payment was required to be made.
(c) In the event that this Agreement is terminated by the Company
pursuant to Sections 8.3(a) or 8.3(b), then Parent shall promptly, but in
no event later than the date of such termination, pay the Company a fee
equal to the Termination Fee, payable by wire transfer of same day funds.
Parent acknowledges that the agreements contained in this Section 8.5(c)
are an integral part of the transactions contemplated by this Agreement,
and that, without these agreements, the Company would not enter into this
Agreement, and accordingly, if Parent fails promptly to pay the amount due
pursuant to this Section 8.5(c), and, in order to obtain such payment, the
Company commences a suit which results in a judgment against Parent for the
fee set forth in this Section 8.5(b), Parent shall pay to the Company its
costs and expenses (including reasonable attorneys' fees and expenses) in
connection with such suit, together with interest on the amount of the fee
at the prime rate of Citibank, N.A. in effect on the date such payment was
required to be made.
49
(d) In the event both Parent and the Company would otherwise be
entitled to receive the Termination Fee under this Section 8.5 in
connection with the termination of this Agreement, neither party shall be
required to make any payment under this Section 8.5.
(e) If this Agreement is terminated under circumstances in which
Parent or the Company is entitled to receive the Termination Fee, (i) the
obligation to pay the Termination Fee shall survive the termination of this
Agreement and (ii) the payment of the Termination Fee shall be the sole and
exclusive remedy available to Parent or the Company, as applicable, except
in the event of (A) a willful breach by the defaulting party of any
provision of this Agreement or (B) an intentional or knowing
misrepresentation in connection with this Agreement or the transactions
contemplated hereby, in which event the party entitled to the Termination
Fee shall have all rights, powers and remedies against the other party that
may be available at law or in equity. All rights, powers and remedies
provided under this Agreement or otherwise available in respect hereof at
law or in equity shall be cumulative and not alternative, and the exercise
of any such right, power or remedy by any Party shall not preclude the
simultaneous or later exercise of any other such right, power or remedy by
such Party.
ARTICLE IX
MISCELLANEOUS AND GENERAL
9.1 PAYMENT OF EXPENSES. Whether or not the Merger shall be consummated,
each Party shall pay its own expenses incident to preparing for, entering into
and carrying out this Agreement and the consummation of the transactions
contemplated hereby (the "Transaction Expenses").
9.2 NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties made in Sections 5.1 and 5.2 hereof shall not survive beyond the
Effective Time or a termination of this Agreement, except to the extent a
willful breach of such representation or intentional or knowing
misrepresentation formed the basis for such termination. This Section 9.2 shall
not limit any covenant or agreement of the Parties which by its terms
contemplates performance after the Effective Time or after termination of this
Agreement pursuant to Article VIII, including the payment of any Termination
Fee.
9.3 MODIFICATION OR AMENDMENT. Subject to the applicable provisions of the
DGCL and GBCC, at any time prior to the Effective Time, the Parties, by
resolution of their respective Board of Directors, may modify or amend this
Agreement, by written agreement executed and delivered by duly authorized
officers of the respective Parties; provided, however, that after approval of
the Merger by the shareholders of the Company is obtained, no amendment which
requires further shareholder approval shall be made without such approval of
shareholders.
9.4 WAIVER OF CONDITIONS. The conditions to each of the Parties'
obligations to consummate the Merger are for the sole benefit of such party and
may be waived by such party in whole or in part to the extent permitted by
applicable law.
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9.5 COUNTERPARTS. For the convenience of the Parties, this Agreement may be
executed in any number of counterparts, each such counterpart being deemed to be
an original instrument, and all such counterparts shall together constitute the
same agreement.
9.6 GOVERNING LAW; JURISDICTION.
(a) This Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware, without giving effect to the
principles of conflicts of law thereof.
(b) Each of Parent, Merger Sub and the Company hereby irrevocably
submits in any suit, action or proceeding arising out of or related to this
Agreement or any other instrument, document or agreement executed or
delivered in connection herewith and the transactions contemplated hereby
and thereby, whether arising in contract, tort, equity or otherwise, to the
exclusive jurisdiction of any state or federal court located in the State
of Delaware and waives any and all objections to jurisdiction that it may
have under the laws of the United States or of any state.
(c) Each of Parent, Merger Sub and the Company waives any objection
that it may have (including, without limitation, any objection of the
laying of venue or based on FORUM NON CONVENIENS) to the location of the
court in any proceeding commenced in accordance with this Section 9.6.
9.7 NOTICES. Any notice, request, instruction or other document to be given
hereunder by any party to the other Parties shall be deemed delivered upon
actual receipt and shall be in writing and delivered personally or sent by
registered or certified mail, postage prepaid, reputable overnight courier, or
by facsimile transmission (with a confirming copy sent by reputable overnight
courier), as follows:
(a) if to Parent or Merger Sub, to:
divine, inc.
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxx Xxxxxxxx, Esq.
Facsimile: (000) 000-0000
with a copy to:
Xxxxxx Xxxxxx Xxxxx
000 Xxxx Xxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxxx X. Xxxx, Esq.
Facsimile: (000) 000-0000
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(b) if to the Company, to:
eshare communications, Inc.
0000 Xxxxxxxxx Xxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxx 00000
Attention: Xxxx Xxxxxxx
Facsimile: (000) 000-0000
with a copy to:
Xxxxxx, Xxxxxxx & Xxxxxx, LLP
1600 Atlanta Financial Center
0000 Xxxxxxxxx Xxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxxxxx, Esq.
Facsimile: (000) 000-0000
or to such other Persons or addresses as may be designated in writing by the
party to receive such notice.
9.8 ENTIRE AGREEMENT; ASSIGNMENT. This Agreement, including the Exhibits
and Disclosure Schedules, together with the Confidentiality Agreement, (i)
constitutes the entire agreement among the Parties with respect to the subject
matter hereof and supersedes all other prior or contemporaneous agreements and
understandings, both written and oral, among the Parties or any of them with
respect to the subject matter hereof, and (ii) shall not be assigned by
operation of law or otherwise (and any attempt to do so shall be void).
9.9 PARTIES IN INTEREST. This Agreement shall be binding upon and inure
solely to the benefit of each party hereto and their respective successors and
assigns. Nothing in this Agreement, express or implied, other than the right to
receive the consideration payable in the Merger pursuant to Article IV hereof,
is intended to or shall confer upon any other Person any rights, benefits or
remedies of any nature whatsoever under or by reason of this Agreement.
9.10 Certain Definitions. As used herein:
(a) "Average Market Value" means the arithmetic average (rounded to
the nearest five decimal places) of the closing sale price per share of the
Parent Shares as reported on the NNM for the ten (10) consecutive trading
days ending two trading days prior to the Closing Date.
(b) "Encumbrance" means any claim, lien, pledge, charge, security
interest, equitable interest, option, right of first refusal or preemptive
right, condition, or other restriction of any kind, including any
restriction on use, voting (in the case of any security), transfer, receipt
of income, or exercise of any other attribute of ownership.
(c) "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
52
(d) "Governmental Entity" means the United States or any state, local
or foreign government, or instrumentality, division, subdivision, agency,
department or authority of any thereof.
(e) "Knowledge" with respect to a party hereto shall mean the actual
knowledge of any of the executive officers of such party.
(f) "Material Adverse Effect" shall mean any adverse change in the
business, operations, liabilities (contingent or otherwise), results of
operations or financial performance, condition or prospects of Parent or
any of its Subsidiaries or the Company or any of its Subsidiaries, as the
case may be, which is material to Parent and its Subsidiaries, taken as a
whole, or the Company and its Subsidiaries, taken as a whole, as the case
may be; provided, however, that in no event shall any of the following, in
and of themselves, constitute a Material Adverse Effect: (i) any change in
or effect on the business of Parent or any of its Subsidiaries or the
Company or any of its Subsidiaries, as applicable, caused by, relating to
or resulting from, directly or indirectly, the transactions contemplated by
this Agreement or the announcement thereof; (ii) any change in the market
price or trading volume of the Company Shares or Parent Shares, as
applicable, on or after the date of this Agreement; or (iii) any adverse
change, effect or occurrence attributable to the United States economy as a
whole, the industries in which Parent or the Company, as applicable,
compete or the foreign economies in any non-United States locations where
Parent or the Company, as applicable, have material operations or sales.
(g) "Parent Share Rolling Average" means the arithmetic average
(rounded to the nearest five decimal places) of the closing sale price per
share of the Parent Shares as reported on the NNM for the ten (10)
consecutive trading days ending on the trading day immediately prior to the
date on which such value is being calculated.
(h) "Person" means any individual, sole proprietorship, partnership,
joint venture, trust, unincorporated association, corporation, entity or
Governmental Entity.
(i) "Returns" means all returns, declarations, reports, statements and
other documents required to be filed in respect of Taxes, and any claims
for refund for Taxes, including any amendments or supplements to any of the
foregoing.
(j) "Significant Tax Agreement" is any agreement to which the Company
or any Subsidiary of the Company is a party under which the Company or any
Subsidiary could reasonably be expected to be liable to another party under
such agreement in an amount in excess of $25,000 in respect of Taxes
payable by such other party to any taxing authority.
(k) "Subsidiary" shall mean, when used with reference to any entity,
(i) any entity of which fifty percent (50%) or more of the outstanding
voting securities or interests or (ii) any entity of which 50% of the
economic interests, in the case of partnerships or limited liability
companies, are owned directly or indirectly by such former entity.
53
(l) "Tax" or "Taxes" refers to any and all federal, state, local and
foreign, taxes, assessments and other governmental charges, duties,
impositions and liabilities relating to taxes, including without limitation
taxes based upon or measured by gross receipts, income, profits, sales, use
and occupation, and value added, ad valorem, transfer, franchise, net
worth, capital stock, withholding, payroll, recapture, employment, excise
and property taxes, together with all interest, penalties and additions
imposed with respect to such amounts and including any liability for taxes
of a predecessor entity; provided, however, that the term "Tax" or "Taxes"
shall not be deemed to include claims by any governmental authority under
an escheat, unclaimed property, or similar provision of applicable law.
9.11 SEVERABILITY. If any term or other provision of this Agreement is
invalid, illegal or unenforceable, all other provisions of this Agreement shall
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner materially
adverse to any party.
9.12 SPECIFIC PERFORMANCE. The Parties acknowledge that irreparable damage
would result if this Agreement were not specifically enforced, and they
therefore consent that the rights and obligations of the Parties under this
Agreement may be enforced by a decree of specific performance issued by a court
of competent jurisdiction. Such remedy shall, however, not be exclusive and
shall be in addition to any other remedies which any party may have under this
Agreement or otherwise.
9.13 RECOVERY OF ATTORNEY'S FEES. In the event of any litigation between
the Parties relating to this Agreement, the prevailing party shall be entitled
to recover its reasonable attorney's fees and costs (including court costs) from
the non-prevailing party, provided that if both Parties prevail in part, the
reasonable attorney's fees and costs shall be awarded by the court in such
manner as it deems equitable to reflect the relative amounts and merits of the
Parties' claims.
9.14 CAPTIONS. The Article, Section and paragraph captions herein are for
convenience of reference only, do not constitute part of this Agreement and
shall not be deemed to limit or otherwise affect any of the provisions hereof.
9.15 NO STRICT CONSTRUCTION. The language used in this Agreement will be
deemed to be the language chosen by the parties hereto to express their mutual
intent, and no rule of strict construction will be used against any party
hereto.
[END OF DOCUMENT;
SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by
the duly authorized officers of the Parties hereto and shall be effective as of
the date first hereinabove written.
DIVINE, INC.
By: /s/ Xxxx Xxxxxxxx
-------------------------------------
Name: Xxxx Xxxxxxxx
-------------------------------------
Its: Senior Vice-President
-------------------------------------
DES ACQUISITION COMPANY
By: /s/ Xxxx Xxxxxxxx
-------------------------------------
Name: Xxxx Xxxxxxxx
-------------------------------------
Its: President
-------------------------------------
ESHARE COMMUNICATIONS, INC.
By: /s/ Xxxxxx X. Xxxxxxxxx
-------------------------------------
Name: Xxxxxx X. Xxxxxxxxx
-------------------------------------
Its: Chief Operating Officer
-------------------------------------
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