EXHIBIT 10.02
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
SYMANTEC CORPORATION,
OUTLAW ACQUISITION CORPORATION
AND
ON TECHNOLOGY CORPORATION
OCTOBER 27, 2003
TABLE OF CONTENTS
Page
ARTICLE 1 THE MERGER...................................................... 1
1.1 The Merger...................................................... 1
1.2 Effective Time; Closing......................................... 1
1.3 Effect of the Merger............................................ 1
1.4 Articles of Incorporation; Bylaws............................... 2
1.5 Directors and Officers.......................................... 2
1.6 Effect on Capital Stock......................................... 2
1.7 Exchange........................................................ 4
1.8 Alternative Transaction Structure............................... 5
1.9 Taking of Necessary Action; Further Action...................... 5
1.10 Dissenting Shares............................................... 5
ARTICLE 2 REPRESENTATIONS AND WARRANTIES OF COMPANY....................... 6
2.1 Organization; Subsidiaries...................................... 6
2.2 Company Capitalization.......................................... 7
2.3 Obligations With Respect to Capital Stock....................... 9
2.4 Authority; Non-Contravention.................................... 9
2.5 SEC Filings; Company Financial Statements....................... 10
2.6 Absence of Certain Changes or Events............................ 11
2.7 Taxes........................................................... 13
2.8 Title and Operation of Properties............................... 16
2.9 Intellectual Property........................................... 16
2.10 Compliance with Laws............................................ 20
2.11 Litigation...................................................... 20
2.12 Employee Benefit Plans.......................................... 21
2.13 Environmental Matters........................................... 26
2.14 Certain Contracts............................................... 27
2.15 Customers, Distributors, OEMs and VARs.......................... 29
2.16 Brokers' and Finders' Fees...................................... 30
2.17 Insurance....................................................... 30
2.18 Disclosure...................................................... 30
2.19 Board Approval.................................................. 31
2.20 Fairness Opinion................................................ 31
2.21 Privacy......................................................... 31
2.22 DGCL Section 203................................................ 31
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB......... 32
3.1 Organization of Parent and Merger Sub........................... 32
3.2 Authority; Non-Contravention.................................... 32
3.3 SEC Filings..................................................... 33
3.4 Brokers' and Finders' Fees...................................... 33
3.5 Disclosure...................................................... 33
3.6 Interim Operations of Merger Sub................................ 34
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TABLE OF CONTENTS
(continued)
Page
3.7 Financing....................................................... 34
ARTICLE 4 CONDUCT PRIOR TO THE EFFECTIVE TIME............................. 34
4.1 Conduct of Business by Company.................................. 34
ARTICLE 5 ADDITIONAL AGREEMENTS........................................... 36
5.1 Proxy Statement, Antitrust and Other Filings.................... 36
5.2 Meeting of Company Stockholders................................. 38
5.3 No Solicitation................................................. 40
5.4 Confidentiality; Access to Information.......................... 41
5.5 Public Disclosure............................................... 42
5.6 Reasonable Efforts; Notification................................ 42
5.7 Third Party Consents............................................ 43
5.8 ESPP............................................................ 43
5.9 Indemnification................................................. 43
5.10 Section 16 Matters.............................................. 44
5.11 Termination of Company Plans.................................... 44
5.12 Employee Benefit Matters........................................ 44
ARTICLE 6 CONDITIONS TO THE MERGER........................................ 45
6.1 Conditions to Obligations of Each Party to Effect the Merger.... 45
6.2 Additional Conditions to Obligations of Company................. 45
6.3 Additional Conditions to the Obligations of Parent and Merger
Sub .......................................................... 46
ARTICLE 7 TERMINATION, AMENDMENT AND WAIVER............................... 48
7.1 Termination..................................................... 48
7.2 Notice of Termination; Effect of Termination.................... 49
7.3 Fees and Expenses............................................... 50
7.4 Amendment....................................................... 51
7.5 Extension; Waiver............................................... 51
ARTICLE 8 GENERAL PROVISIONS.............................................. 51
8.1 Non-Survival of Representations and Warranties.................. 51
8.2 Notices......................................................... 51
8.3 Interpretation; Certain Defined Terms........................... 52
8.4 Counterparts.................................................... 54
8.5 Entire Agreement; Third Party Beneficiaries..................... 54
8.6 Severability.................................................... 54
8.7 Other Remedies; Specific Performance............................ 54
8.8 Governing Law................................................... 54
8.9 Rules of Construction........................................... 54
8.10 Assignment...................................................... 55
8.11 Attorneys' Fees................................................. 55
8.12 Waiver Of Jury Trial............................................ 55
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AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (this "AGREEMENT") is made and entered into as
of October 27, 2003, among Symantec Corporation, a Delaware corporation
("PARENT"), Outlaw Acquisition Corporation, a Delaware corporation and a wholly
owned first-tier subsidiary of Parent ("MERGER SUB"), and ON Technology
Corporation, a Delaware corporation ("COMPANY").
RECITALS
A. The respective Boards of Directors of Parent, Merger Sub and Company
have approved this Agreement, and declared advisable the merger of Merger Sub
with and into Company (the "MERGER") upon the terms and subject to the
conditions of this Agreement and in accordance with the Delaware General
Corporation Law ("DELAWARE LAW").
B. Parent, Merger Sub and Company desire to make certain representations,
warranties, covenants and agreements in connection with the Merger and to
prescribe various conditions to the Merger.
NOW, THEREFORE, in consideration of the foregoing and the mutual promises,
covenants and conditions contained herein, the parties agree as follows:
ARTICLE 1
THE MERGER
1.1 The Merger. Upon the terms and subject to the conditions of this
Agreement and the applicable provisions of Delaware Law, at the Effective Time,
Merger Sub shall be merged with and into Company, the separate corporate
existence of Merger Sub shall cease, and Company shall continue as the surviving
corporation of the Merger (the "SURVIVING CORPORATION").
1.2 Effective Time; Closing. Subject to the provisions of this Agreement,
the parties hereto shall cause the Merger to be consummated by filing the
certificate of merger, substantially in the form attached hereto as Exhibit A,
(the "CERTIFICATE OF MERGER") with the Secretary of State of the State of
Delaware in accordance with the relevant provisions of Delaware Law (the time of
such filing (or such later time as may be agreed in writing by Company and
Parent and specified in the Certificate of Merger) being the "EFFECTIVE TIME")
as soon as practicable on or after the Closing Date. The closing of the Merger
(the "CLOSING") shall take place at the offices of Fenwick & West LLP, located
at 000 Xxxxxxxxxx Xxxxxx, Xxxxxxxx Xxxx, Xxxxxxxxxx, at a time and date to be
specified by the parties, which shall be no later than the third business day
after the satisfaction or waiver of the conditions set forth in Sections 6.1 and
6.3(d) below, or at such other time, date and location as the parties hereto
agree in writing (the "CLOSING DATE").
1.3 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 Delaware
Law. Without limiting the generality of the foregoing, at the Effective Time,
all the property, rights, privileges, powers and franchises of Company and
Merger Sub shall vest in the Surviving Corporation, and all
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debts, liabilities and duties of Company and Merger Sub shall become the debts,
liabilities and duties of the Surviving Corporation.
1.4 Articles of Incorporation; Bylaws.
(a) At the Effective Time, subject to Section 5.9, the Certificate
of Incorporation of Company shall be amended and restated in its entirety to be
identical to the Certificate of Incorporation of Merger Sub, as in effect
immediately prior to the Effective Time, until thereafter amended in accordance
with Delaware Law and as provided in such Certificate of Incorporation;
provided, however, that at the Effective Time, ARTICLE 1 of the Certificate of
Incorporation of the Surviving Corporation shall be amended and restated in its
entirety to read as follows: "The name of the corporation is "ON TECHNOLOGY"
(b) At the Effective Time, subject to Section 5.9, the Bylaws of
Company shall be amended and restated in their entirety to be identical to the
Bylaws of Merger Sub, as in effect immediately prior to the Effective Time,
until thereafter amended in accordance with Delaware Law and as provided in such
Bylaws.
1.5 Directors and Officers. The initial directors of the Surviving
Corporation shall be the directors of Merger Sub immediately prior to the
Effective Time, until their respective successors are duly elected or appointed
and qualified. The initial officers of the Surviving Corporation shall be the
officers of Merger Sub immediately prior to the Effective Time, until their
respective successors are duly appointed.
1.6 Effect on Capital Stock. Subject to the terms and conditions of this
Agreement, at the Effective Time, by virtue of the Merger and without any action
on the part of Merger Sub, Company or the holders of any securities of Company,
the following shall occur:
(a) Conversion of Company Common Stock. Each share of common stock,
$.01 par value per share, of Company, ("COMPANY COMMON STOCK") (excluding
Dissenting Shares (defined in Section 1.10 below), and including any shares of
Company Common Stock issued upon exercise of Company Options (defined in Section
1.6(c) below) prior to the Effective Time) that are issued and outstanding
immediately prior to the Effective Time shall, by virtue of the Merger and
without the need for any further action on the part of the holder thereof
(except as expressly provided herein), be converted into and represent the right
to receive $4.00 in cash, without interest, upon surrender of the certificate
representing such share of Company Common Stock in the manner provided in
Section 1.7.
(b) Cancellation of Company-Owned Stock. Notwithstanding Section 1.6(a),
each share of Company Common Stock held of record by Company immediately prior
to the Effective Time shall be cancelled and extinguished without any conversion
thereof.
(c) Company Options.
(i) Parent is not assuming, and shall not assume, any obligations or
liabilities under (A) Company's Amended and Restated 1992 Employee and
Consultant Stock Option and Incentive Plan, (B) Company's 2002 Employee and
Consultant Stock Option and Incentive Plan, (C) Company's 1995 Directors Stock
Option Plan and (D) Company's 2002
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Directors Stock Option Plan, as amended. For purposes of this Agreement, the
stock option plans referenced in (A) through (D) above are referred to as the
"COMPANY STOCK OPTION PLANS," and the options granted pursuant to Company Stock
Option Plans are referred to as the "COMPANY OPTIONS"). Subject to Section 4.1,
Company shall take all actions necessary to ensure that (i) all Company Options,
to the extent not exercised prior to the Effective Time, shall terminate and be
cancelled as of the Effective Time and thereafter shall be of no further force
or effect (other than the right to receive the cash consideration provided in
Section 1.7(a) below), (ii) no Company Options are granted after the date
hereof, and (iii) the Company Stock Option Plans and any and all other
outstanding option arrangements or plans of Company shall terminate as of the
Effective Time.
(ii) Parent shall not substitute any equivalent option or right for
any Company Option, and the Company has determined that all outstanding Company
Options shall be cancelled, without any acceleration of vesting (except as set
forth in Part 2.2(b) of the Company Disclosure Letter), if unexercised as of the
Effective Time. Subject to the terms and conditions of this Agreement, at the
Effective Time, the portion of each Company Option outstanding immediately prior
to the Effective Time that is vested and exercisable for Company Common Stock
(after giving effect to any accelerated vesting contingent upon the Closing (as
described in Part 2.2(b) of the Company Disclosure Letter) shall, by virtue of
the Merger and without the need for any further action on the part of the holder
thereof (except as expressly provided herein), be converted into and represent
the right to receive as consideration for cancellation of each such option, an
amount of cash, without interest, equal to the product of (A) the number of
shares of Company Common Stock receivable upon exercise of such Company Option
multiplied by (B) ($4.00, less the exercise price per share attributable to such
Company Option); provided, however, that the Surviving Corporation and Parent
shall be entitled to deduct and withhold from such payment made to the holder of
a Company Option the amount of withholding for taxes required to be deducted and
withheld as a result of the transactions contemplated by this Section
1.6(c)(ii). The amount of cash each holder of a Company Option is entitled to
receive for the Company Options held by such holder shall be rounded to the
nearest cent and computed after aggregating cash amounts for Company Options
held by such holder. Notwithstanding the foregoing, if the exercise price per
share provided for in any such cancelled Company Option equals or exceeds $4.00,
no cash shall be paid with regard to such cancelled Company Option to the holder
of such Company Option.
(d) ESPP. Rights outstanding under Company's 1995 Employee Stock Purchase
Plan (the "COMPANY ESPP") shall be treated as set forth in Section 5.8 of this
Agreement.
(e) Capital Stock of Merger Sub. Each share of common stock, par value
$0.001 per share, of Merger Sub (the "MERGER SUB COMMON STOCK"), issued and
outstanding immediately prior to the Effective Time shall be converted into one
validly issued, fully paid and nonassessable share of common stock, $0.001 par
value per share, of the Surviving Corporation. Following the Effective Time,
each certificate evidencing ownership of shares of Merger Sub Common Stock shall
evidence ownership of such shares of capital stock of the Surviving Corporation.
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1.7 Exchange.
(a) On or prior to the Closing Date, Parent shall deposit with
American Stock Transfer and Trust Company (the "EXCHANGE AGENT") cash for the
benefit of the holders of shares of Company Common Stock and vested and
exercisable Company Options in an amount sufficient to permit the full payment
of the cash amounts to which Company stockholders and holders of vested and
exercisable Company Options are entitled pursuant to Sections 1.6(a) and
1.6(c)(ii), assuming that no stockholder of the Company will perfect any rights
to appraisal of his, her or its shares and assuming that each holder of Company
Options tenders his, her or its option pursuant to Section 1.6(c)(ii) (the
"EXCHANGE FUND"). Parent shall instruct the Exchange Agent to mail, as soon as
practicable after the Effective Time, but in no event later than five business
days thereafter, to each holder of record of a certificate or certificates that
immediately prior to the Effective Time represented outstanding shares of
Company Stock (the "COMPANY STOCK CERTIFICATES") and each holder of Company
Options (the instruments representing such Company Options being referred to as
the "COMPANY OPTION CERTIFICATES," and collectively with the Company Stock
Certificates, the "COMPANY CERTIFICATES") the following: (i) a letter of
transmittal in customary form (which shall specify that delivery shall be
effected, and risk of loss and title to the Company Certificates shall pass,
only upon proper delivery of the Company Certificates to the Exchange Agent and
shall be in such form and have such other provisions as Parent may reasonably
specify) and (ii) instructions for use in effecting the surrender of the Company
Certificates in exchange for the cash amounts specified in Section 1.6(a) and
Section 1.6(c)(ii). Upon surrender of a Company Certificate for cancellation or
upon delivery of an affidavit of lost certificate or option instrument, as
applicable, and an indemnity in form and substance reasonably satisfactory to
Parent and consistent with past practice of Company (an "AFFIDAVIT") (together
with any required Form W-9 or Form W-8) to the Exchange Agent, together with
such letter of transmittal, duly completed and validly executed in accordance
with the instructions thereto, the Exchange Agent shall pay by check to each
tendering holder of a Company Certificate or an Affidavit (each, a "TENDERING
COMPANY HOLDER") the cash amounts to which such Tendering Company Holder is
entitled pursuant to Sections 1.6(a) and 1.6(c)(ii). No interest will be paid or
accrued on any cash payable to holders of Company Certificates.
(b) After the Effective Time, there shall be no further registration
of transfers on the stock transfer books of Company or its transfer agent of any
shares of Company's capital stock that were outstanding immediately prior to the
Effective Time. If, after the Effective Time, any Company Certificates or
Affidavits are presented for any reason, they shall be cancelled and exchanged
as provided in this Section 1.7.
(c) Until Company Certificates are surrendered or an Affidavit with
respect to any lost Company Certificates is delivered pursuant to Section
1.7(a), such Company Certificates shall be deemed, for all purposes, to evidence
ownership of the right to receive from Parent the amount of cash into which the
shares of Company Stock or the Company Options represented by such Company
Certificates shall have been converted pursuant to Sections 1.6(a) and
1.6(c)(ii).
(d) Each of the Exchange Agent, Parent and the Surviving Corporation
shall be entitled but not required to deduct and withhold from any consideration
payable or otherwise deliverable pursuant to this Agreement to any holder or
former holder of Company Common Stock such amounts as may be required to be
deducted or withheld therefrom under the Internal
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Revenue Code of 1986, as amended (the "CODE") or under any provision of state,
local or foreign tax law or under any other applicable Legal Requirement (as
defined in Section 2.2(c)). To the extent such amounts are so deducted or
withheld, such amounts shall be treated for all purposes under this Agreement as
having been paid to the person to whom such amounts would otherwise have been
paid.
(e) Notwithstanding anything to the contrary in this Section 1.7,
neither the Exchange Agent, Parent, the Surviving Corporation nor any party
hereto shall be liable to a holder of shares of Company Common Stock for any
amount properly paid to a public official pursuant to any applicable abandoned
property, escheat or similar law.
(f) Any portion of the Exchange Fund which remains undistributed to
the holders of Company Common Stock for twelve months after the Effective Time
shall be delivered to Parent, upon demand, and any holders of Company Common
Stock who have not theretofore complied with the provisions of this Section 1.7
shall thereafter look only to Parent for any cash to which they are entitled
pursuant to Sections 1.6(a) and 1.6(c) without any interest thereon.
1.8 Alternative Transaction Structure. The parties agree that prior to the
first preliminary filing of the Proxy Statement to be filed with the SEC as
contemplated herein, Parent may change the method of effecting the business
combination with Company, including by merging Company with Parent or any other
affiliate of Parent, and Company shall cooperate in such efforts, including by
entering into an appropriate amendment to this Agreement (to the extent such
amendment does not substantively affect this Agreement or adversely affect the
rights and obligations of Company or its stockholders); provided however that
any such other affiliate shall become a party to, and agree to be bound by, the
terms of this Agreement and that any action taken pursuant to this Section 1.8
shall not (i) alter or change the kind or amount of consideration to be issued
to the holders of Company Common Stock and Company Options as provided for in
this Agreement, (ii) materially delay the receipt of any required regulatory
approval or (iii) otherwise cause the closing conditions in ARTICLE 6 to be not
capable of being fulfilled (unless duly waived by the party entitled to the
benefits thereof).
1.9 Taking of Necessary Action; Further Action. If, at any time after the
Effective Time, any further action is necessary or desirable to carry out the
purposes of this Agreement and to vest the Surviving Corporation with full
right, title and possession to all assets, property, rights, privileges, powers
and franchises of Company and Merger Sub, the officers and directors of Company
and Merger Sub will take all such lawful and necessary action. Parent shall
cause Merger Sub to perform all of its obligations relating to this Agreement
and the transactions contemplated hereby.
1.10 Dissenting Shares. Notwithstanding anything in this Agreement to the
contrary, shares of Company Common Stock outstanding immediately prior to the
Effective Time and held by a holder who has not voted in favor of the Merger or
consented thereto in writing and who is entitled to demand and properly demands
appraisal for such shares of Company Common Stock in accordance with Delaware
Law (the "DISSENTING SHARES") shall not be converted into a right to receive the
payment of cash amounts pursuant to Section 1.6(a) unless and until such holder
fails to perfect or withdraws or otherwise loses his, her or its right to
appraisal but shall be
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converted into the right to receive such consideration as may be determined to
be due with respect to such Dissenting Shares pursuant to Delaware Law. If,
after the Effective Time, such holder fails to perfect or withdraws or otherwise
loses his, her or its right to appraisal, such Dissenting Shares shall be
treated as if they had been converted as of the Effective Time into the right to
receive payment of cash amounts pursuant to Section 1.6(a), without any interest
thereon. The Company shall give Parent prompt notice of any demands received by
the Company for appraisal of Company Common Stock, and Parent shall have the
right to participate in all negotiations and proceedings with respect to such
demands. The Company shall not, except with the prior written consent of Parent
or as may be required under applicable law, make any payment with respect to, or
settle or offer to settle, any such demands.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF COMPANY
In order to induce Parent and Merger Sub to enter into this Agreement, Company
represents and warrants to Parent and Merger Sub, subject to the exceptions to
specifically identified representations and warranties disclosed in the
disclosure letter delivered by Company to Parent dated as of the date hereof and
certified by a duly authorized officer of Company (the "COMPANY DISCLOSURE
LETTER"), (disclosure of any fact or item in a specific section of the Company
Disclosure Letter shall be deemed to be disclosed in each other section of the
Company Disclosure Letter to the extent it is clear, notwithstanding the absence
of a specific cross-reference, from a reading of the Company Disclosure Letter
that the disclosure is applicable to such other sections of the Company
Disclosure Letter) as follows:
2.1 Organization; Subsidiaries.
(a) Company and each of its subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has all requisite corporate power and
authority, and all requisite qualifications to do business as a foreign
corporation, to conduct its business in the manner in which its business is
currently being conducted, except where the failure to be so organized, existing
or in good standing or to have such power, authority or qualifications would
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect (as defined in Section 8.3) on Company.
(b) All of the subsidiaries of Company are listed in Part 2.1(b) of
the Company Disclosure Letter. Neither Company nor any of its subsidiaries owns
any capital stock of, or any equity interest of any nature in, any corporation,
partnership, limited liability company, joint venture arrangement or other
business entity, other than the entities identified in Part 2.1(b) of the
Company Disclosure Letter and other than such capital stock or other equity
interest that has no material value and does not subject the Company or any of
its subsidiaries to any material risk of loss. Company owns directly, or
indirectly through other wholly-owned subsidiaries, all of the outstanding
shares of capital stock or all of the partnership or other equity interests of
each of
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the subsidiaries listed in Part 2.1 (b) of the Company Disclosure Letter. Each
of the outstanding shares of capital stock of, or partnership or other equity
interests in, each of the subsidiaries listed in Part 2.1 (b) of the Company
Disclosure Letter is owned, directly or indirectly, by Company free and clear of
all liens, pledges, security interests, claims, options or other encumbrances
and neither Company nor any nor any of its subsidiaries has any agreement or
commitment to sell or transfer any of such stock or interests. Except as set
forth in Part 2.2(b) of the Company Disclosure Letter, neither Company nor any
of its subsidiaries has agreed or is obligated to make any future investment in
or capital contribution or loans or other advances to any other entity. There
are no outstanding or authorized options, warrants, rights, agreements or
commitments to which Company or any of its subsidiaries is a party or which are
binding on any of them providing for the issuance, disposition, transfer or
acquisition of any capital stock of any of the subsidiaries listed in Part 2.1
(b) of the Company Disclosure Letter. Those subsidiaries listed in Part 2.1(b)
of the Company Disclosure Letter that, in each individual case, is a subsidiary
through which the Company or other subsidiaries conducts business, or which owns
assets with an aggregate value of, or which has aggregate liabilities of,
$50,000 or more, or the loss of which would reasonably be expected to have a
Material Adverse Effect on the Company are identified as such in Part 2.1(b) of
the Company Disclosure Letter and referred to as the "Material Subsidiaries."
Each outstanding share of capital stock of each Material Subsidiary of Company
is duly authorized, validly issued, fully paid and nonassessable and was not
issued in violation of any preemptive or similar rights.
(c) Except as set forth in Part 2.1(c) of the Company Disclosure
Letter, neither Company, nor any of its subsidiaries, is, or has, at any time
since January 1, 2000, been a general partner of any general partnership,
limited partnership or other entity. Part 2.1(b) of the Company Disclosure
Letter indicates the jurisdiction of organization of each entity listed therein
and Company's direct or indirect equity interest therein.
(d) Company has delivered or made available to Parent a true and
correct copy of the Certificate of Incorporation and Bylaws of Company and
similar governing instruments of each of its Material Subsidiaries each as
amended to date (collectively, the "COMPANY CHARTER DOCUMENTS"), and each such
Company Charter Document is in full force and effect. Neither Company nor any of
its Material Subsidiaries is in violation of any of the provisions of their
respective Company Charter Documents.
2.2 Company Capitalization.
(a) The authorized capital stock of Company consists solely of
50,000,000 shares of Company Common Stock, of which there were 23,912,106 shares
issued and outstanding as of the close of business on October 21, 2003, and
2,000,000 shares of preferred stock, $.01 par value per share, none of which are
issued or outstanding. Each outstanding share of Company Common Stock is duly
authorized, validly issued, fully paid and nonassessable and was not issued in
violation of any preemptive or similar rights.
(b) As of the date of this Agreement:
(i) 4,068,687 shares of Company Common Stock are subject to
issuance pursuant to outstanding options under Company's Amended and Restated
1992 Employee and Consultant Stock Option and Incentive Plan;
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(ii) 937,875 shares of Company Common Stock are subject to
issuance pursuant to outstanding options under Company's 2002 Employee and
Consultant Stock Option and Incentive Plan;
(iii) 62,500 shares of Company Common Stock are subject to
issuance pursuant to outstanding options under Company's 1995 Directors Stock
Option Plan;
(iv) 100,000 shares of Company Common Stock are subject to
issuance pursuant to outstanding options under Company's 2002 Directors Stock
Option Plan, as amended and;
(v) 421,598 shares of Company Common Stock are reserved for
future issuance under Company ESPP.
Part 2.2(b) of the Company Disclosure Letter sets forth the following
information with respect to each Company Option outstanding as of the date of
this Agreement: (i) the name of the optionee; (ii) the number of shares of
Company Common Stock subject to such Company Option; (iii) the exercise price of
such Company Option; (iv) the date on which such Company Option was granted or
assumed; (v) the vesting schedule of such Company Option, and the extent to
which such Company Option is vested as of the date of this Agreement; (vi) the
date on which such Company Option expires; and (vii) whether the exercisability
of such option will be accelerated in any way by the transactions contemplated
by this Agreement, and indicates the extent of any such acceleration. Company
has delivered to Parent an accurate and complete copy of Company Stock Option
Plans, the standard form of all stock option agreements under each of Company
Stock Option Plans, and the option agreement for each Company Option that does
not conform to the standard option agreement under the respective Company Stock
Option Plan. There are no options outstanding to purchase shares of Company
Common Stock other than Company Options and pursuant to Company's ESPP. All
shares of Company Common Stock subject to issuance as aforesaid in this Section
2.2(b), upon issuance on the terms and conditions specified in the instruments
pursuant to which they are issuable, will be duly authorized, validly issued,
fully paid and nonassessable. There are no Contracts (as defined below in
Section 2.14) of any character to which Company is bound obligating Company to
accelerate the vesting of any Company Option as a result of the Merger, except
accelerated vesting pursuant to Company Stock Option Plans, and agreements
evidencing acceleration of vesting for Company Options, all of which
acceleration is described in Part 2.2(b) of the Company Disclosure Schedule.
There are no outstanding or authorized stock appreciation, "phantom stock," or
other similar plans or Contracts with respect to Company or any of its
subsidiaries. At the Effective Time, the Company Options shall be terminated
without further obligation or liability of Company, Parent or the Surviving
Corporation.
(c) Except as set forth in Part 2.2(c) of the Company Disclosure
Letter, all outstanding shares of Company Common Stock, all outstanding Company
Options, and all outstanding shares of capital stock of each subsidiary of
Company have been issued and granted in compliance with (i) all applicable
securities laws and other applicable Legal Requirements and (ii) all
requirements set forth in applicable agreements or instruments. For the purposes
of this Agreement, "LEGAL REQUIREMENTS" means any federal, state, local,
municipal, foreign or other law of any Governmental Entity (as defined in
Section 2.4), except where the failure to have
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been issued and granted in compliance with such securities laws and other
requirements would not reasonably be expected to have a Material Adverse Effect
on the Company.
2.3 Obligations With Respect to Capital Stock. Except for securities
Company owns free and clear of all claims and Encumbrances (as defined in
Section 8.3), directly or indirectly through one or more subsidiaries, and
except for shares of capital stock or other similar ownership interests of
certain subsidiaries of Company that are owned by certain nominee equity holders
as required by the applicable law of the jurisdiction of organization of such
subsidiaries, there are no equity securities of any subsidiary of Company, or
any security exchangeable or convertible into or exercisable for such equity
securities, issued, reserved for issuance or outstanding. Except as set forth in
Part 2.3 of the Company Disclosure Letter, there are no subscriptions, options,
warrants, equity securities, partnership interests or similar ownership
interests, calls, rights (including preemptive rights) or other Contracts of any
character to which Company or any of its subsidiaries is a party or by which it
is bound obligating Company or any of its subsidiaries to issue, deliver or
sell, or cause to be issued, delivered or sold, or repurchase, redeem or
otherwise acquire, or cause the repurchase, redemption or acquisition of, any
shares of capital stock, partnership interests or similar ownership interests of
Company or any of its subsidiaries or obligating Company or any of its
subsidiaries to grant, extend, accelerate the vesting of, extend the exercise
period of, or enter into any such subscription, option, warrant, equity
security, call, right or other Contract. Neither Company nor any of its
subsidiaries have any authorized, issued, or outstanding bonds, debentures,
notes or other indebtedness having the right to vote on any matters on which the
Company's stockholders have the right to vote. Except as set forth in Part 2.3
of the Company Disclosure Letter, there are no registration rights and there is
no voting trust, proxy, rights agreement, "poison pill" anti-takeover plan or
other agreement or understanding to which Company is a party or by which it is
bound with respect to any equity security of any class of Company or with
respect to any equity security, partnership interest or similar ownership
interest of any class of any of its subsidiaries.
2.4 Authority; Non-Contravention.
(a) Company has all requisite corporate power and authority to enter
into this Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Company, subject only to the approval and
adoption of this Agreement and the approval of the Merger by Company's
stockholders (the "COMPANY STOCKHOLDER APPROVALS") and the filing of the
Certificate of Merger pursuant to Delaware Law. The affirmative vote of the
holders of a majority of the outstanding shares of Company Common Stock is
sufficient for Company's stockholders to approve and adopt this Agreement and
approve the Merger, and no other approval of any holder of any securities of
Company is required in connection with the consummation of the transactions
contemplated hereby. This Agreement has been duly executed and delivered by
Company and, assuming the due authorization, execution and delivery by Parent
and Merger Sub, constitutes the valid and binding obligation of Company,
enforceable against Company in accordance with its terms, except as
enforceability may be limited by bankruptcy and other similar laws affecting the
rights of creditors generally and general principles of equity.
- 9 -
(b) The execution and delivery of this Agreement by Company does
not, and the performance of this Agreement by Company will not, (i) conflict
with or violate the Company Charter Documents, (ii) subject to obtaining the
Company Stockholder Approvals and compliance with the requirements set forth in
Section 2.4(c), conflict with or violate any Legal Requirement applicable to
Company or any of its Material Subsidiaries or by which Company or any of its
Material Subsidiaries or any of their respective properties is bound or
affected, or (iii) result in any breach of or constitute a default (or an event
that with notice or lapse of time or both would become a default) under, or
impair Company's or any of its Material Subsidiaries' rights or alter the rights
or obligations of any third party under, or give to others any rights of
termination, amendment, acceleration or cancellation of rights under, or result
in the creation of an Encumbrance on any of the properties or assets of Company
or any of its Material Subsidiaries pursuant to, any Company Contract (as
defined below in Section 2.14) to which Company or any of its Material
Subsidiaries is a party or by which Company or any of its Material Subsidiaries
or its or any of their respective assets are bound or affected except as set
forth in Part 2.4(b) of the Company Disclosure Letter. Part 2.4(b) of the
Company Disclosure Letter list all material consents, waivers and approvals
under any Company Contract required to be obtained in connection with the
consummation of the transactions contemplated hereby.
(c) No consent, approval, order or authorization of, or
registration, declaration or filing with any court, administrative agency or
commission or other governmental authority or instrumentality, foreign or
domestic ("GOVERNMENTAL ENTITY"), is required to be obtained or made by Company
or any Material Subsidiary in connection with the execution and delivery of this
Agreement or the consummation of the Merger, except for (i) the filing of the
Certificate of Merger with the Secretary of State of the State of Delaware and
appropriate documents with the relevant authorities of other states in which
Company is qualified to do business, (ii) the filing of the Proxy Statement (as
defined in Section 2.18) with the Securities and Exchange Commission ("SEC") in
accordance with the Securities Exchange Act of 1934, as amended (the "EXCHANGE
ACT"), (iii) such consents, approvals, orders, authorizations, registrations,
declarations and filings as may be required under the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended (the "HSR ACT") as well as
comparable pre-merger notification forms required by the merger notification or
control laws and regulations of any applicable jurisdiction, (iv) consents set
forth in Part 2.4(c) of the Company Disclosure Letter, and (v) such other
consents, authorizations, filings, approvals and registrations which if not
obtained or made would not be material to Company, Parent or the Surviving
Corporation or have a material adverse effect on the ability of the parties
hereto to consummate the Merger within the time frame in which the Merger would
otherwise be consummated in the absence of such requirement.
2.5 SEC Filings; Company Financial Statements.
(a) Company has filed all forms, reports and documents required to
be filed by Company with the SEC since January 1, 2000. All such forms, reports
and documents (including those that Company may file subsequent to the date
hereof) are referred to herein as the "COMPANY SEC REPORTS." As of their
respective dates, and giving effect to any amendments thereto filed prior to the
date hereof, the Company SEC Reports (i) were prepared in all material respects
in accordance with the requirements of the Securities Act of 1933, as amended
(the "SECURITIES ACT"), or the Exchange Act, as the case may be, and the rules
and regulations of the SEC thereunder applicable to such Company SEC Reports and
(ii) did not at the time they were
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filed (or if amended or superseded by a filing prior to the date of this
Agreement, then on the date of such filing) contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, except to the extent
corrected prior to the date of this Agreement by a subsequently filed Company
SEC Report. None of Company's subsidiaries is required to file any forms,
reports or other documents with the SEC.
(b) Each of the consolidated financial statements (including, in
each case, any related notes thereto) contained in the Company SEC Reports,
including each Company SEC Report filed after the date hereof until the Closing
(the "COMPANY FINANCIALS"), (i) complied or, for such subsequently filed
reports, will comply as to form in all material respects with the published
rules and regulations of the SEC with respect thereto, (ii) was prepared in
accordance with United States generally accepted accounting principles ("GAAP")
applied on a consistent basis throughout the periods involved (except as may be
indicated in the notes thereto or, in the case of unaudited interim financial
statements, that the unaudited interim financial statements may not contain
footnotes and were or are subject to normal year-end adjustments) and (iii)
fairly presented in all material respects the consolidated financial position of
Company and its subsidiaries as at the respective dates thereof and the
consolidated results of Company's and its subsidiaries' operations and cash
flows for the periods indicated.
(c) Part 2.5(c) of the Company Disclosure Letter contains
consolidated financial statements (including any related notes thereto) as of
September 30, 2003 that (i) comply as to form in all material respects with the
published rules and regulations of the SEC with respect thereto, (ii) were
prepared in accordance with United States GAAP applied on a consistent basis
throughout the periods involved (except as may be indicated in the notes
thereto, or except that they may not contain footnotes and are subject to normal
year-end adjustments) and (iii) fairly present in all material respects the
consolidated financial position of Company and its subsidiaries as of September
30, 2003 and the consolidated results of Company's and its subsidiaries'
operations and cash flows for the periods indicated therein. The information
contained in the Company's financial statements for the period ending September
30, 2003 that is filed by Company in an SEC Report after the date hereof shall
not differ materially from the information in the Company financial statements
contained in Part 2.5(c) of the Company Disclosure Letter. The balance sheet as
of September 30, 2003 contained in Part 2.5(c) of the Company Disclosure Letter
is hereinafter referred to as the "COMPANY BALANCE SHEET."
(d) Company has devised and maintains a system of internal
accounting controls sufficient to provide reasonable assurances that: (i)
transactions are executed in accordance with management's general or specific
authorization; (ii) transactions are recorded as necessary (1) to permit
preparation of financial statements in conformity with GAAP or any other
criteria applicable to such statements and (2) to maintain accountability for
assets; and (iii) the amount recorded for assets on Company's books and records
is compared with the existing assets at reasonable intervals and appropriate
action is taken with respect to any differences.
2.6 Absence of Certain Changes or Events. Except as set forth in Part 2.6
of the Company Disclosure Letter, since the date of the Company Balance Sheet
there has not been:
(a) any Material Adverse Effect with respect to Company;
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(b) any amendment or change in the Company Charter Documents;
(c) any declaration, setting aside or payment of any dividend on, or
the making of any other distribution in respect of, the capital stock of
Company, or any split, combination or recapitalization of the capital stock of
Company or any redemption, purchase or other acquisition of any capital stock of
Company or any change in any rights, preferences, privileges or restrictions of
any outstanding security of Company;
(d) any split, combination or reclassification of any of Company's
or any of its subsidiaries' capital stock;
(e) except as set forth in Part 2.2(b) of the Company Disclosure
Letter, any grant or issuance of any options, warrants or other rights to
acquire securities from Company or any of its subsidiaries, directly or
indirectly, or any offer, issuance or sale by Company or any of its subsidiaries
of any debt or equity securities of Company or any of its subsidiaries, except
for options to purchase Company Common Stock granted pursuant to the Company
Stock Option Plans, which option grants are reflected in Part 2.2(b) of the
Company Disclosure Letter;
(f) except as set forth in Part 2.2(b) of the Company Disclosure
Letter, any (i) grant of any severance or termination pay to (or amendment to
any existing arrangement with) any director, officer or employee of Company or
any of its subsidiaries, (ii) material increase in benefits payable under any
existing severance or termination pay policies or employment agreements of
Company, or (iii) other change or increase in the compensation payable or to
become payable to any of the directors, officers or employees of Company or any
of its subsidiaries or in any bonus or pension, insurance or other benefit
payment or arrangement (including stock awards, stock option grants, stock
appreciation rights or stock option grants) made to or with any of such
directors, officers, employees or agents;
(g) except as set forth in Part 2.2(b) of the Company Disclosure
Letter, any acceleration or release of any vesting condition to the right to
exercise any option or other right to purchase or otherwise acquire any shares
of Company's or any of its subsidiaries' capital stock, or any acceleration or
release of any right to repurchase shares of Company's or any of its
subsidiaries' capital stock upon the stockholder's termination of employment or
services with Company, either contingent upon the occurrence of transactions
such as those contemplated by this Agreement or otherwise;
(h) entry by Company or any of its subsidiaries into, or material
modification, amendment or cancellation of, any Contract for the purchase,
license, sale, assignment or other disposition or transfer, of any of the assets
(including intangible assets), properties or goodwill of Company or any of its
subsidiaries (other than purchase orders for the sale of products or services,
or non-exclusive licenses of any products of Company or any of its subsidiaries,
in the ordinary course of business consistent with past practice);
(i) any material change in the manner in which Company or any of its
subsidiaries extends discounts, credits or warranties to customers or otherwise
deals with its customers;
- 12 -
(j) the entering into by Company or any of its subsidiaries of any
transaction, contract or agreement that by its terms requires or contemplates a
current and/or future financial commitment, expense (inclusive of overhead
expense) or obligation on the part of Company or any of its subsidiaries that
involves in excess of $200,000 (other than purchase orders for the purchase or
sale of products or services, or non-exclusive licenses of any products of
Company or any of its subsidiaries, in the ordinary course of business
consistent with past practice);
(k) any incurrence of a liability by the Company or any of its
subsidiaries (absolute, accrued, contingent or otherwise) except for liabilities
incurred since the date of the Company Balance Sheet in the ordinary course of
business consistent with past practices.
(l) any payment or discharge by Company or any of its subsidiaries
of any liability of Company or any of its subsidiaries or Encumbrance on any
asset or property of Company or any of its subsidiaries of an amount in excess
of $200,000 for any liability or Encumbrance (other than payments in the
ordinary course of business consistent with past practice);
(m) any change with respect to the management, supervisory or other
key personnel of Company, any termination of employment of a material number of
employees, or any labor dispute or claim of unfair labor practices involving
Company or any of its subsidiaries;
(n) any damage, destruction or loss of any property or material
asset of Company or any of its subsidiaries, whether or not covered by
insurance, that has had or would reasonably be expected to have a Material
Adverse Effect on the Company;
(o) any material change by Company in its accounting methods,
principles or practices;
(p) any material revaluation by Company or any of its subsidiaries
of any of their material assets, including writing off notes or accounts
receivable other than in the ordinary course of business; or
(q) any agreement or commitment to do any of the foregoing.
2.7 Taxes.
(a) Except as set forth in Part 2.7 of the Company Disclosure
Letter, Company and each of its subsidiaries have timely filed all material
federal, state, local and foreign returns, estimates, information statements and
reports ("RETURNS") relating to Taxes (as defined below) required to be filed by
or on behalf of Company and each of its subsidiaries with any Tax authority,
such Returns are true, correct and complete in all material respects, and
Company and each of its subsidiaries have paid all Taxes required to be paid.
(b) Company and each of its subsidiaries have withheld all federal
and state income taxes, Taxes pursuant to the Federal Insurance Contribution Act
("FICA"), Taxes pursuant to the Federal Unemployment Tax Act ("FUTA") and other
Taxes required to be withheld, and Company and its subsidiaries have paid such
Taxes to the appropriate Tax authorities by the applicable due date.
- 13 -
(c) Except as set forth in Part 2.7 of the Company Disclosure
Letter, neither Company nor any of its subsidiaries has been delinquent in the
payment of any material Tax nor is there any material Tax deficiency
outstanding, proposed or assessed against Company or any of its subsidiaries,
nor has Company or any of its subsidiaries executed any unexpired waiver of any
statute of limitations on or extending the period for the assessment or
collection of any Tax.
(d) Except as set forth in Part 2.7 of the Company Disclosure
Letter, no audit or other examination of any Return of Company or any of its
subsidiaries by any Tax authority is presently in progress, nor has Company or
any of its subsidiaries been notified of any request for such an audit or other
examination.
(e) Except as set forth in Part 2.7 of the Company Disclosure
Letter, no adjustment relating to any Returns filed by Company or any of its
subsidiaries has been proposed formally or informally by any Tax authority to
Company or any of its subsidiaries or any representative thereof.
(f) Neither Company nor any of its subsidiaries has any liability
for unpaid Taxes which has not been accrued for or reserved on the Company
Balance Sheet in accordance with GAAP, whether asserted or unasserted,
contingent or otherwise, other than any liability for unpaid Taxes that may have
accrued since the date of the Company Balance Sheet in connection with the
operation of the business of Company and its subsidiaries in the ordinary
course.
(g) Except as set forth in Part 2.7 of the Company Disclosure
Letter, there is no agreement, plan or arrangement to which Company or any of
its subsidiaries is a party, including this Agreement and the agreements entered
into in connection with this Agreement, covering any employee or former employee
of Company or any of its subsidiaries that, individually or collectively, would
be reasonably likely to give rise to the payment of any amount that would not be
deductible pursuant to Sections 280G, 404 or 162 of the Code. There is no
Contract to which Company or any of its subsidiaries is a party or by which it
is bound to compensate any individual for excise taxes paid pursuant to Section
4999 of the Code.
(h) Neither 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 Company or its subsidiaries.
(i) Neither Company nor any of its subsidiaries is party to or has
any obligation under any tax-sharing, tax indemnity or tax allocation agreement
or arrangement, other than among Company and its wholly owned subsidiaries.
(j) Except as may be required as a result of the Merger, Company and
its subsidiaries have not been and will not be required to include any
adjustment in Taxable income for any Tax period (or portion thereof) pursuant to
Section 481 of the Code or any comparable provision under state or foreign Tax
laws as a result of transactions, events or accounting methods employed prior to
the Closing.
(k) None of Company's or its subsidiaries' assets are tax-exempt use
property within the meaning of Section 168(h) of the Code.
- 14 -
(l) Company has not been distributed in a transaction qualifying
under Section 355 of the Code within the last two years, nor has Company
distributed any corporation in a transaction qualifying under Section 355 of the
Code within the last two years.
(m) Company has timely filed all information returns or reports,
including Forms 1099, that are required to be filed, and has accurately reported
in all material respects all information required to be included on such returns
or reports.
(n) Company is not a party to any joint venture, partnership or
other agreement or arrangement which is treated as a partnership for federal
income tax purposes and does not own a single member limited liability company
which is treated as a disregarded entity.
(o) Except as set forth in Part 2.7 of the Company Disclosure
Letter, the Company does not and has not had a permanent establishment in any
foreign country, as defined in any applicable Tax treaty or convention between
the United States of America and such foreign country.
(p) No notice of deficiency or similar document of any Tax authority
has been received by the Company, and there are no liabilities for Taxes with
respect to the issues that have been raised (and are currently pending) by any
Tax authority.
(q) There are no liens for Taxes (other than for current Taxes not
yet due and payable or those being contested in good faith) upon the material
assets of the Company.
(r) Neither the Company nor any subsidiary has any liability for the
taxes of any person (other than the Company or any Subsidiary) under Section
1.1502-6 of the Treasury Regulations (or any similar provision of state, local,
or foreign law) as a transferee or successor, by contract or otherwise.
(s) Neither the Company nor any subsidiary has consummated, has
participated in, or is currently participating in any transaction which was or
is a "tax shelter" transaction as defined in Sections 6662, 6011, 6012, or 6111
of the Code or the Treasury Regulations promulgated thereunder.
For the purposes of this Agreement, "TAX" or "TAXES" refers to (i) any and all
federal, state, local and foreign taxes, assessments and other governmental
charges, duties, impositions and liabilities relating to taxes, including taxes
based upon or measured by gross receipts, income, profits, sales, use and
occupation, and value added, ad valorem, transfer, franchise, withholding,
payroll, recapture, employment, excise and property taxes, together with all
interest, penalties and additions imposed with respect to such amounts, (ii) any
liability for payment of any amounts of the type described in clause (i) as a
result of being a member of an affiliated consolidated, combined or unitary
group, and (iii) any liability for amounts of the type described in clauses (i)
and (ii) as a result of any express or implied obligation to indemnify another
person or as a result of any obligations under any agreements or arrangements
with any other person with respect to such amounts and including any liability
for taxes of a predecessor entity.
- 15 -
2.8 Title and Operation of Properties.
(a) Part 2.8 of the Company Disclosure Letter lists all real
property owned by Company or any of its subsidiaries and all real property
leases to which Company or any of its subsidiaries is a party and each amendment
thereto that is in effect as of the date of this Agreement that have a book
value in excess of $100,000 or provide for annual payments in excess of
$100,000, respectively. All such current leases are in full force and effect,
are valid and effective in accordance with their respective terms, and there is
not, under any of such leases, any existing default or event of default (or
event which with notice or lapse of time, or both, would constitute a default)
that would give rise to a material claim against Company or any of its
subsidiaries that would have a Material Adverse Effect on Company.
(b) Company or one of its subsidiaries has good title to all the
property and assets reflected in the Company Balance Sheet as being owned by
Company or any of its subsidiaries or acquired after the date thereof which are
material to Company (except properties sold or otherwise disposed of since the
date thereof in the ordinary course of business), free and clear of any
Encumbrances, except as reflected in the Company Financials and except for
Encumbrances for Taxes not yet due and payable and such Encumbrances which are
not material in character, amount or extent. The Company and each subsidiary
owns, or has the right to use under a valid lease or license, the material
assets and properties used by Company or such subsidiary, as the case may be, in
the conduct of their respective businesses.
2.9 Intellectual Property.
(a) For the purposes of this Agreement, the following terms have the
following definitions:
(i) "BUSINESS" means the business of Company as presently
conducted.
(ii) "COMPANY IP ASSETS" means, collectively, (A) the Company IP
Rights; (B) all embodiments of any Company IP Rights, in whatever form, format
or media; (C) all applications, registrations, filings and other formal
governmental actions made or submitted by Company pursuant to applicable laws to
secure, perfect, maintain or protect its interest in any Company IP Right; and
(D) all information of a technical nature, documentation, manuals, software
Source Code and object code, software libraries, data bases, algorithms, screen
displays and graphical interfaces, used in or necessary to the conduct of the
business of Company and its subsidiaries as presently conducted.
(iii) "COMPANY IP RIGHTS" means all Intellectual Property Rights
used in the conduct of the Business.
(iv) "COMPANY IP RIGHTS AGREEMENT" means any contract governing
any Company IP Right.
(v) "INTELLECTUAL PROPERTY RIGHTS" means, collectively, all of
the following intangible legal rights in any and all jurisdictions throughout
the world, whether or not filed, perfected, registered or recorded and now
existing, filed, issued or acquired: (A) issued
- 16 -
patents, pending patent applications, patent disclosures, and patent rights,
including any and all continuations, continuations-in-part, divisionals,
provisionals, reissues, reexaminations, utility, model and design patents or any
extensions thereof, and inventions; (B) works of authorship and rights
associated with works of authorship, including copyrights, copyright
applications and copyright registrations; (C) Moral Rights; (D) rights in
trademarks, trademark registrations, and applications therefor, trade names,
service marks, service names, logos, or trade dress (collectively, "MARKS"), and
any goodwill symbolized by such Marks; (E) rights relating to trade secrets
(including those trade secrets defined in the Uniform Trade Secrets Act and
under corresponding foreign statutory and common law); (F) Internet domain
names, World Wide Web URLs or addresses, any goodwill associated therewith and
any other rights relating thereto granted by any governmental or
quasi-governmental authority, including Internet domain name registrars; and (G)
claims, causes of action, defenses, and rights to xxx for past infringement
relating to the enforcement of any of the foregoing.
(vi) "MORAL RIGHTS" means any right to claim authorship to or to
object to any distortion, mutilation, or other modification or other derogatory
action in relation to a work, whether or not such would be prejudicial to the
author's reputation, and any similar right, existing under common or statutory
law of any country in the world or under any treaty, regardless of whether or
not such right is denominated or generally referred to as a "moral right."
(vii) "COMPANY-OWNED IP ASSETS" means Company IP Assets that are
owned or exclusively licensed to Company.
(viii) "COMPANY-LICENSED IP ASSETS" means Company IP Assets that
are licensed to the Company from a third party.
(b) The Company (i) owns and has independently developed or (ii) has
the valid right or license to all Company IP Assets. Delivery and performance of
this Agreement and the consummation of the Merger and the other transactions
contemplated by this Agreement and will not result in any termination of, or
other restriction being imposed on, any such Company IP Assets.
(c) Neither the execution, delivery and performance of this
Agreement nor the consummation of the Merger or the other transactions
contemplated by this Agreement will: (i) constitute a material breach of or
default under any Company IP Rights Agreement; (ii) cause the forfeiture or
termination of, or give rise to a right of forfeiture or termination of, any
Company IP Right or Company IP Rights Agreement; or (iii) materially alter or
impair the right of Company to use, make, market, distribute, or sell any
Company IP Asset or portion thereof. Except as set forth in Part 2.9(c) of the
Company Disclosure Letter, there are no material amount of royalties, honoraria,
fees or other payments payable by Company to any Person (other than salaries
payable to employees, consultants and independent contractors not contingent on
or related to use of their work product) as a result of the ownership, use,
possession, license-in, sale, marketing, advertising or disposition of any
Company IP Asset by Company and none will become payable as a result of the
consummation of the transactions contemplated by this Agreement. Notwithstanding
the foregoing, Part 2.9(c) of the Company Disclosure Letter contains a true and
complete list of all royalties, fees, and other payments payable by Company
- 17 -
to any Person as a result of the use, distribution, licensing, or sale of any
Company-Licensed IP Assets with or as Company products.
(d) Except as set forth in Part 2.9(d) of the Company Disclosure
Letter, neither the use, development, manufacture, marketing, distribution or
sale of any product (including any Intellectual Property Right related thereto)
or service currently made, marketed, distributed, or sold by Company, or
currently under development by Company and intended by Company to be distributed
within three (3) months of the date of this Agreement, violates in any material
respect any contract between Company and any other Person or infringes or
misappropriates in any material respect any Intellectual Property Right of any
other Person. There is no pending or threatened written claim or litigation
contesting the validity, ownership or right of Company to exercise any Company
IP Right. Since 1997, the Company has not received any written notice asserting
that any Company IP Asset or the proposed use, manufacture, marketing,
distribution or sale thereof conflicts or will conflict with the rights of any
other Person nor, to Company's knowledge, is there any legitimate basis for any
such assertion. The Company has not received any correspondence from any third
party offering Company a license under such third party's registered
Intellectual Property Rights, in connection with any Company product or service.
(e) To Company's knowledge, no current or former employee,
consultant or independent contractor of Company: (i) is in material violation of
any term or covenant of any contract relating to employment, patent disclosure,
invention assignment, non-disclosure or non-competition or any other contract
with any other party by virtue of such employee's, consultant's or independent
contractor's being employed by, or performing services for, Company or using
trade secrets or proprietary information of others without permission; or (ii)
has developed any technology, software or other copyrightable, patentable or
otherwise proprietary work for Company that is subject to any agreement under
which such employee, consultant or independent contractor has assigned or
otherwise granted to any Person (other than Company) any rights (including
Intellectual Property Rights) in or to such technology, software or other
copyrightable, patentable or otherwise proprietary work. To the Company's
knowledge, the employment of any employee of Company or the use by Company of
the services of any consultant or independent contractor does not subject
Company to any liability to any other Person for improperly soliciting such
employee, consultant or independent contractor to work for Company.
(f) All current and former officers, employees, consultants and
independent contractors of Company having access to proprietary information of
Company have executed and delivered to Company an agreement regarding the
protection of Company proprietary information, except where the failure to
execute and delivery such agreement would not have a Material Adverse Effect on
the Company. The Company has secured valid written assignments from all of
Company's current and former employees, consultants and independent contractors
who were materially involved in, or who made a material contribution to, the
creation or development of any Company-Owned IP Assets, of the rights to such
contributions that may be owned by such Persons or that Company does not already
own by operation of law. No current or former director, officer, employee,
consultant or independent contractor of Company has any rights in any Company IP
Assets.
- 18 -
(g) Part 2.9(g) of the Company Disclosure Letter contains a true and
complete list of (i) all registrations made in any and all jurisdictions
throughout the world by or on behalf of Company of any Intellectual Property
Rights, and (ii) all applications, registrations, filings and other formal
written governmental actions made or taken pursuant to applicable laws by
Company to secure, perfect, protect or maintain its interest in Company IP
Rights, including all patent applications, copyright applications, and
applications for registration of trademarks and service marks.
(h) The Company-Owned IP Assets are free and clear of all
Encumbrances and licenses (other than licenses and rights listed on Part
2.9(h)(i) of the Company Disclosure Letter and non-exclusive licenses granted in
the ordinary course of the Company Business consistent with past practices). To
the knowledge of Company, the right, license and interest of Company in and to
all Company-Licensed IP Assets are free and clear of all Encumbrances and
licenses (other than licenses and rights listed on Part 2.9(h)(ii) of the
Company Disclosure Letter and non-exclusive licenses granted in the ordinary
course of the Company Business consistent with past practices).
(i) The Company has not misappropriated any third party's trade
secrets or infringed any trade secret rights in creating or using any lists of
prospective or current customers, except where any such misappropriation or
infringement would not have, individually or in the aggregate, a Material
Adverse Effect on the Company.
(j) Except as set forth in Part 2.9(j) of the Company Disclosure
Letter, neither Company nor any other Person acting on its behalf has disclosed
or delivered to any Person, or permitted the disclosure or delivery to any
escrow agent or other Person of, any Company Source Code. No event has occurred,
and no circumstance or condition exists, that (with or without notice or lapse
of time, or both) would reasonably be expected to, result in the disclosure or
delivery by Company or any Person acting on their behalf to any Person of any
Company Source Code. Part 2.9(j) of the Company Disclosure Letter identifies
each agreement pursuant to which Company has deposited, or is or may be required
to deposit, with an escrow holder or any other Person, any Company Source Code,
and describes whether the execution of this Agreement or the other transactions
contemplated by this Agreement would reasonably be expected to result in the
release from escrow of any Company Source Code. "SOURCE CODE" means any human
readable version of a computer software program, in whole or in part, in any
preferred form of the work for making modifications, including any warnier
diagrams, flow charts, technical notes or comments related thereto. "COMPANY
SOURCE CODE" means, collectively, any software Source Code, any material portion
or aspect of the software Source Code, or any material proprietary information
or algorithm contained in or relating to any software Source Code, of any
Company IP Asset.
(k) All software developed by or for Company and licensed by Company
to customers and all services provided by or through Company to customers on or
prior to the Closing Date conform in all material respects to applicable
contractual commitments, product specifications and product documentation.
(l) No government entity, university, college, other educational
institution or research center has any right, title or interest in or to any
Company IP Right.
- 19 -
(m) Part 2.9 (m) of the Company disclosure letter contains a true
and complete list of all Public Software that forms part of any Company IP
Assets, or that is incorporated in whole or in part, or has been distributed, in
whole or in part, in conjunction with any Company IP Asset or Company product.
"PUBLIC SOFTWARE" means any software that contains, includes, incorporates, or
has instantiated therein, or is derived in any manner (in whole or in part)
from, any software that is distributed as free software, open source software
(e.g., Linux) or similar licensing or distribution models, including software
licensed or distributed under any of the following licenses or distribution
models, or licenses or distribution models similar to any of the following: (i)
GNU's General Public License (GPL) or Lesser/Library GPL (LGPL); (ii) the
Artistic License (e.g., PERL); (iii) the Mozilla Public License; (iv) the
Netscape Public License; (v) the Sun Community Source License (SCSL); (vi) the
Sun Industry Standards License (SISL); (vii) the BSD License; and (viii) the
Apache License.
2.10 Compliance with Laws. Except as set forth in Part 2.10 of the Company
Disclosure Letter:
(a) Neither Company nor any of its subsidiaries is in conflict with,
or in default or in violation of, any Legal Requirement applicable to Company or
any of its subsidiaries or by which Company or any of its subsidiaries or any of
their respective properties is bound or affected, except where such conflict,
default or violation would not have a Material Adverse Effect on the Company.
Except as set forth in Part 2.7 of the Company Disclosure Letter, no
investigation or review by any Governmental Entity is pending or, to Company's
knowledge, has been threatened in writing against Company or any of its
subsidiaries. To Company's knowledge, there is no Legal Requirement binding upon
Company or any of its subsidiaries which has or could reasonably be expected to
have the effect of prohibiting or materially impairing any material business
practice of Company or any of its subsidiaries, or any acquisition of material
property by Company or any of its subsidiaries.
(b) Company and its subsidiaries hold all permits, licenses,
variances, exemptions, orders and approvals from governmental authorities that
are material to or required for the operation of the business of Company and its
subsidiaries as currently conducted (collectively, the "COMPANY PERMITS"), and
are in material compliance with the terms of the Company Permits.
2.11 Litigation. Except as set forth in Part 2.11 of the Company
Disclosure Letter, there are no claims, suits, actions or proceedings pending
or, to the knowledge of Company, threatened in writing against Company or any of
its subsidiaries, before any Governmental Entity or any arbitrator that seeks to
restrain or enjoin the consummation of the transactions contemplated by this
Agreement or which could reasonably be expected, either singularly or in the
aggregate with all such claims, actions or proceedings, to have a material
adverse effect on the ability of the parties hereto to consummate the Merger or
to be material to Company or Parent following the Merger. No Governmental Entity
has at any time challenged or questioned in a writing delivered to Company or
filed in any legal proceeding or otherwise the legal right of Company or any of
its subsidiaries to conduct its business as currently conducted. As of the date
hereof, no event has occurred, and no claim, dispute or other condition or
circumstance exists, and as of the Effective Time, no such claim, dispute or
other condition or circumstance will occur or exist, that will, or that would
reasonably be expected to, cause or provide a bona fide
- 20 -
basis for a director or officer of Company or any of its subsidiaries to seek
indemnification in a material amount from Company or any of its subsidiaries and
no such director or officer is currently seeking indemnification from Company or
any of its subsidiaries.
2.12 Employee Benefit Plans.
(a) Definitions. With the exception of the definition of "Affiliate"
set forth in Section 2.12(a)(i) below (which definition shall apply only to this
Section 2.12), for purposes of this Agreement, the following terms shall have
the meanings set forth below:
(i) "AFFILIATE" shall mean any other person or entity under
common control with Company within the meaning of Section 414(b), (c), (m) or
(o) of the Code and the regulations issued thereunder;
(ii) "COMPANY EMPLOYEE PLAN" shall mean any plan, program,
policy, practice, contract, agreement or other arrangement providing for
compensation, severance, termination pay, performance awards, stock or
stock-related awards, fringe benefits or other employee benefits or remuneration
of any kind, whether written or unwritten or otherwise, funded or self-funded,
including, each "EMPLOYEE BENEFIT PLAN," within the meaning of Section 3(3) of
ERISA which is or has been maintained, contributed to, or required to be
contributed to, by Company or any Affiliate for the benefit of any Employee;
(iii) "DOL" shall mean the Department of Labor;
(iv) "EMPLOYEE" shall mean any current, former, or retired
employee, officer, or director of Company or any Affiliate;
(v) "EMPLOYEE AGREEMENT" shall mean each management, employment,
severance, consulting, indemnification or similar agreement or contract between
Company or any Affiliate and any Employee or consultant and each relocation,
repatriation, or expatriation agreement, visa, or work permit that involves
expense to Company in excess of $20,000.
(vi) "ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as amended;
(vii) "IRS" shall mean the Internal Revenue Service;
(viii) "MULTIEMPLOYER PLAN" shall mean any "PENSION PLAN" (as
defined below) which is a "multiemployer plan," as defined in Section 3(37) of
ERISA;
(ix) "PBGC" shall mean the Pension Benefit Guaranty Corporation;
and
(x) "PENSION PLAN" shall mean each Company Employee Plan which is
an "employee pension benefit plan," within the meaning of Section 3(2) of ERISA.
- 21 -
(b) Schedule. Part 2.12(b) of the Company Disclosure Letter contains
an accurate and complete list of each Company Employee Plan and each Employee
Agreement. Neither Company nor any of its Affiliates have any plan or commitment
to establish any new Company Employee Plan, to modify any Company Employee Plan
or Employee Agreement (except to the extent required by law or to conform any
such Company Employee Plan or Employee Agreement to the requirements of any
applicable law, in each case as previously disclosed to Parent in writing, or as
required by this Agreement), or to enter into any Company Employee Plan or
Employee Agreement, nor do they have any intention or commitment to do any of
the foregoing.
(c) Documents. Company has provided to Parent: (i) correct and
complete copies of all documents embodying each Company Employee Plan and trust
and each Employee Agreement including all amendments thereto and written
interpretations thereof; (ii) the most recent annual actuarial valuations, if
any, prepared for each Company Employee Plan; (iii) the three (3) most recent
annual reports (Form Series 5500 and all schedules, accountant opinions, and
financial statements attached thereto) and summary annuals reports, if any,
required under ERISA or the Code in connection with each Company Employee Plan
or related trust; (iv) if the Company Employee Plan is funded, the most recent
annual and periodic accounting of Company Employee Plan assets; (v) the most
recent summary plan description together with the summary of material
modifications thereto, if any, required under ERISA with respect to each Company
Employee Plan; (vi) all IRS determination, opinion, notification and advisory
letters, and rulings relating to Company Employee Plans and any pending request
for such letters or rulings, and copies of all applications and correspondence
to or from the IRS or the DOL with respect to any Company Employee Plan,
including any filings under the IRS's Employee Plan Compliance Resolution System
Program or any of its predecessors or the United States Department of Labor
Delinquent Filer Program; (vii) all written agreements and contracts relating to
each Company Employee Plan, including, but not limited to, administrative
service agreements, group annuity contracts and group insurance contracts;
(viii) all communications material to any Employee or Employees relating to any
Company Employee Plan relating to any amendments, terminations, establishments,
increases or decreases in benefits, acceleration of payments or vesting
schedules or other events which would result in any material liability to
Company or its Affiliates; (ix) the most recent nondiscrimination tests
performed under the Code (including 401(k) and 401(m) tests), as applicable, for
each Company Employee Plan; and (x) all registration statements and prospectuses
prepared in connection with each Company Employee Plan.
(d) Employee Plan Compliance. Except as set forth in Part 2.12 of
the Company Disclosure Letter, (i) (A) Company or one of its Affiliates has
performed in all material respects all obligations required to be performed by
Company or its Affiliates under, and (B) Neither Company nor any of its
Affiliates is in default or violation of, or has knowledge of any material
default or violation by any other party to, each Company Employee Plan, and each
Company Employee Plan has been established and maintained in all material
respects in accordance with its terms and in compliance with all applicable
laws, statutes, orders, rules and regulations, including but not limited to
ERISA or the Code; (ii) each Company Employee Plan intended to qualify under
Section 401(a) of the Code and each trust intended to qualify under Section
501(a) of the Code has either received a favorable determination letter from the
IRS with respect to each such Plan as to its qualified status under the Code,
ERISA and the Uruguay Round Agreements Act, the Uniformed Services Employment
and Reemployment Rights Act of
- 22 -
1994, the Small Business Job Protection Act of 1996 and the Taxpayer Relief Act
of 1997 (collectively referred to as "GUST"), has remaining a period of time
under applicable Treasury regulations or IRS pronouncements in which to apply
for such a determination letter and make any amendments necessary to obtain a
favorable determination or, if reliance is permitted under IRS Announcement
2001-77, the favorable opinion letter or advisory letter of the master and
prototype or volume submitter plan sponsor of such Company Employee Plan, and no
event has occurred which would adversely affect the status of such determination
letter or the qualified status of such Plan; (iii) no "prohibited transaction,"
within the meaning of Section 4975 of the Code or Sections 406 and 407 of ERISA,
and not otherwise exempt under Section 408 of ERISA, has occurred with respect
to any Company Employee Plan; (iv) there are no actions, administrative
proceedings, suits or claims pending, or, to the knowledge of Company,
threatened or reasonably anticipated (other than routine claims for benefits)
against any Company Employee Plan or against the assets of any Company Employee
Plan; (v) each Company Employee Plan can be amended, terminated or otherwise
discontinued after the Effective Time in accordance with its terms, without
liability to Parent, Company or any of its Affiliates (other than ordinary
administration expenses typically incurred in a termination event); (vi) there
are no audits, inquiries or proceedings pending or, to the knowledge of Company,
threatened by the IRS or DOL with respect to any Company Employee Plan; (vii)
neither Company nor any Affiliate is subject to any penalty or tax with respect
to any Company Employee Plan under Section 402(i) of ERISA or Sections 4975
through 4980 of the Code; and (viii) all contributions due from Company or any
Affiliate with respect to any of the Company Employee Plans, including any
Company Employee Plan intended to be qualified under Section 401(a) of the Code
and having a cash or deferred arrangement governed by Section 401(k) of the
Code, have been made as required under ERISA or have been accrued on the Company
Balance Sheet. (ix) All filings and reports as to each Employee Plan required to
have been submitted to the IRS or the DOL have been duly submitted. (x) Each
Company Employee Plan has been administered in accordance with its terms and all
applicable laws, including ERISA and the Code, and all individuals who, pursuant
to the terms of any Company Employee Plan, are entitled to participate in such
Company Employee Plan, are currently participating or have been offered an
opportunity to do so or have declined in writing or otherwise in accordance with
the terms of such Company Employee Plan. (xi) With respect to the Company
Employee Plans, no event has occurred and, to the knowledge of Company, there
exists no condition or set of circumstances in connection with which Company or
any Company Subsidiary could be subject to any material liability (other than
for routine benefit liabilities) under the terms of, or with respect to, such
Company Employee Plans, ERISA, the Code or any other applicable law.
(e) Pension Plans. Neither Company nor any Affiliate does now, or
has ever, maintained, established, sponsored, participated in, or contributed
to, any Pension Plan which is subject to Title IV of ERISA or Section 412 of the
Code.
(f) Multiemployer Plans. At no time has Company or any of its
Affiliates contributed to or been requested to contribute to any Multiemployer
Plan, or any multiple employer plan under Section 413(c) of the Code.
(g) No Post-Employment Obligations. Except as set forth in Part 2.12
of the Company Disclosure Letter, no Company Employee Plan or Employment
Agreement provides, or has any liability to provide, retiree life insurance,
retiree health or other retiree employee
- 23 -
welfare benefits to any person for any reason, except as may be required by the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA"),
the Family Medical Leave Act of 1993, as amended ("FMLA"), the Americans with
Disabilities Act of 1990, as amended, the Health Insurance Portability and
Accountability Act of 1996, as amended, and the Women's Health and Cancer Rights
Act of 1998, and the regulations thereunder or other applicable statute or has
any liability under the Worker Adjustment and Retraining Notification Act, as
amended ("WARN") or the California Worker Adjustment and Retraining Notification
Act, as amended, and neither Company nor its subsidiaries has ever represented,
promised or contracted (whether in oral or written form) to any Employee (either
individually or to Employees as a group) or any other person that such
Employee(s) or other person would be provided with retiree life insurance,
retiree health or other retiree employee welfare benefit, except to the extent
required by statute.
(h) COBRA; FMLA. The group health plans (as defined in Section
4980B(g) of the Code) that benefit employees of Company or its Affiliates are in
compliance, in all material respects, with the continuation coverage
requirements of Section 4980B of the Code and Sections 601 through 608 of ERISA,
the Americans with Disabilities Act of 1990, as amended, the Health Insurance
Portability and Accountability Act of 1996, as amended, the Women's Health and
Cancer Rights Act of 1998 and FMLA, and the regulations thereunder, as such
requirements affect Company, its Affiliates and its Employees. As of the Closing
Date, there will be no material outstanding, uncorrected violations under COBRA,
with respect to any of the Company's Employee Plans, covered employees, or
qualified beneficiaries.
(i) Effect of Transaction. Except as set forth in Part 2.12 of the
Company Disclosure Letter, the execution of this Agreement and the consummation
of the transactions contemplated hereby will not (either alone or upon the
occurrence of any additional or subsequent events) constitute an event under any
Company Employee Plan, Employee Agreement, trust or loan that will result in any
payment (whether of severance pay or otherwise), acceleration, forgiveness of
indebtedness, extension of the exercise period, vesting, distribution, increase
in benefits or obligation to fund benefits with respect to any Employee. Except
as set forth in Part 2.12 of the Company Disclosure Letter, no payment or
benefit which will or may be made by Company or its Affiliates with respect to
any Employee as a result of the transactions contemplated by this Agreement, or
which has been made by Company or its Affiliates with respect to any Employee,
could reasonably be characterized as a "parachute payment," within the meaning
of Section 280G(b)(1) of the Code or be treated as a nondeductible expense
within the meaning of Section 162 of the Code.
(j) Employment Arrangements. Part 2.12(j) of the Company Disclosure
Letter contains a true and complete list of the names, dates of hire, positions,
salaries, bonus arrangements, status as exempt or non-exempt, and place of work
of all current United States employees and independent contractors of Company
and each subsidiary. Part 2.12(j) of the Company Disclosure Letter additionally
lists each current United States employee of Company or any subsidiary who is
not fully able to perform work because of disability or other leave and the
expected date of return to full service. Company has provided to Parent the
additional following information for each of its and its subsidiaries'
international employees: city/country of employment; rate of annual
remuneration; date of hire; manager's name and work location. Except as may be
required by applicable local law, the employment of each of the employees of
- 24 -
Company or any subsidiary is at will and neither Company nor any subsidiary has
any obligation to provide any particular form or period of notice prior to
terminating the employment of any of their respective employees or consultants.
As of the date hereof, Company has not, and to Company's knowledge no other
Person has, (i) entered into any contract, agreement or instrument that
obligates or purports to obligate Parent to make an offer of employment to any
present or former employee or consultant of the Company that is not listed on
Part 2.12j of the Company Disclosure Letter and/or (ii) promised or otherwise
provided any assurances (contingent or otherwise) to any present or former
employee or consultant of Company that is not listed on Part 2.12j of the
Company Disclosure Letter any terms or conditions of employment with Parent
following the Effective Time.
(k) Compliance. Company and each of its subsidiaries is in
compliance in all material respects with all applicable foreign, federal, state
and local laws, rules and regulations respecting employment, employment
practices, terms and conditions of employment and wages and hours, in each case,
with respect to Employees and consultants.
(l) Employment Matters. There are no pending, or, to Company's
knowledge, threatened (in writing) claims or actions against Company or any of
its subsidiaries under any worker's compensation policy or long-term disability
policy. To Company's knowledge, no employees or consultants of Company or any of
its subsidiaries are in violation of any term of any employment contract, patent
disclosure agreement, noncompetition agreement, or any restrictive covenant to a
former employer relating to the right of any such employee or consultant to be
employed or engaged by Company or any of its subsidiaries because of the nature
of the business conducted or presently proposed to be conducted by Company or
any of its subsidiaries or to the use of trade secrets or proprietary
information of others.
(m) Disqualified Individuals. Part 2.12(m) of the Company Disclosure
Letter lists each Person who Company reasonably believes is, or may be, with
respect to Company, any subsidiary and/or any ERISA Affiliate, a "disqualified
individual" (within the meaning of Section 280G of the Code and the regulations
promulgated thereunder), as determined as of the date hereof.
(n) Labor. No work stoppage or labor strike against Company or any
of its subsidiaries is pending or threatened. Company does not know of any
activities or proceedings of any labor union to organize any Employees. There
are no suits, labor disputes or grievances pending, or, to the knowledge of
Company, threatened in writing relating to any labor, safety or discrimination
matters involving any Employee or consultant, including charges of unfair labor
practices or discrimination complaints, which, if adversely determined, would,
individually or in the aggregate, result in any material liability to Company or
any of its subsidiaries. Neither Company nor any of its subsidiaries is
presently, nor has been in the past, a party to, or bound by, any collective
bargaining agreement or union contract with respect to Employees and no
collective bargaining agreement is being negotiated by Company or any of its
subsidiaries.
(o) Foreign Plans. Each compensation and benefit plan required to be
maintained or contributed to by the law of the relevant jurisdiction outside of
the United States (each such plan, a "FOREIGN PLAN") is listed in Part 2.12(o)
of the Company Disclosure Letter. As regards to each Foreign Plan, (i) such
Foreign Plan is in compliance in all material respects
- 25 -
with the provisions of the laws of each jurisdiction in which such Foreign Plan
is maintained, to the extent those laws are applicable to such Foreign Plan,
(ii) all material contributions to, and material payments from, such Foreign
Plan which may have been required to be made in accordance with the terms of
such Foreign Plan, and, when applicable, the law of the jurisdiction in which
such Foreign Plan is maintained, have been timely made or shall be made by the
Effective Time, and all such contributions to such Foreign Plan, and all
payments under such Foreign Plan, for any period ending before the Effective
Time that are not yet, but will be, required to be made, are reflected as an
accrued liability on the Company Balance Sheet to the extent required by GAAP,
(iii) Company, any of its subsidiaries, and each ERISA Affiliate has materially
complied with all applicable reporting and notice requirements, and such Foreign
Plan has obtained from the governmental entity having jurisdiction with respect
to such Foreign Plan any required determinations, if any, that such Foreign Plan
is in compliance with the laws of the relevant jurisdiction if such
determinations are required in order to give effect to such Foreign Plan, (iv)
such Foreign Plan has been administered in all material respects at all times in
accordance with its terms and applicable law and regulations, (v) to the
knowledge of Company, there are no pending investigations by any governmental
body involving such Foreign Plan, and no pending written claims (except for
claims for benefits payable in the normal operation of such Foreign Plan), suits
or proceedings against such Foreign Plan or asserting any rights or claims to
benefits under such Foreign Plan, and (vi) the consummation of the transactions
contemplated by this Agreement will not by itself create or otherwise result in
any liability with respect to such Foreign Plan other than the triggering of
payment to participants.
2.13 Environmental Matters.
(a) Hazardous Material. Except as would not result in material
liability to Company or any of its subsidiaries, to the Company's knowledge no
underground storage tanks and no amount of any substance that has been
designated by any Governmental Entity or by applicable federal, state or local
law to be radioactive, toxic, hazardous or otherwise a danger to health or the
environment, including PCBs, asbestos, petroleum, urea-formaldehyde and all
substances listed as hazardous substances pursuant to the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as amended, or
defined as a hazardous waste pursuant to the United States Resource Conservation
and Recovery Act of 1976, as amended, and the regulations promulgated pursuant
to said laws, but excluding office and janitorial supplies (a "HAZARDOUS
MATERIAL") are present, as a result of the actions of Company or any of its
subsidiaries in, on or under any property, including the land and the
improvements, ground water and surface water thereof that Company or any of its
subsidiaries has at any time owned, operated, occupied or leased.
(b) Hazardous Materials Activities. Except as would not result in a
material liability to Company (in any individual case or in the aggregate) to
the Company's knowledge (i) neither Company nor any of its subsidiaries has
transported, stored, used, manufactured, disposed of released or exposed its
employees or others to Hazardous Materials in violation of any law in effect on
or before the Closing Date, and (ii) neither Company nor any of its subsidiaries
has disposed of, transported, sold, used, released, exposed its employees or
others to or manufactured any product containing a Hazardous Material
(collectively "HAZARDOUS MATERIALS ACTIVITIES") in violation of any rule,
regulation, treaty or statute promulgated by any
- 26 -
Governmental Entity in effect prior to or as of the date hereof to prohibit,
regulate or control Hazardous Materials or any Hazardous Material Activity.
(c) Permits. Company and its subsidiaries currently hold all
environmental approvals, permits, licenses, clearances and consents
("ENVIRONMENTAL PERMITS") material to and necessary for the conduct of Company's
and its subsidiaries' Hazardous Material Activities and other businesses of
Company and its subsidiaries as such activities and businesses are currently
being conducted.
(d) Environmental Liabilities. No material action, proceeding,
revocation proceeding, amendment procedure, writ or injunction is pending, and
to Company's knowledge, no material action, proceeding, revocation proceeding,
amendment procedure, writ or injunction has been threatened by any Governmental
Entity against Company or any of its subsidiaries in a writing delivered to
Company or any of its subsidiaries concerning any Environmental Permit of
Company or any of its subsidiaries, Hazardous Material or any Hazardous
Materials Activity of Company or any of its subsidiaries.
2.14 Certain Contracts. For purposes of this Agreement, the term
"CONTRACT" shall mean any written, oral or other agreement, contract,
subcontract, lease, assignments, mortgages, transactions, understanding,
instrument, note, option, warranty, purchase order, license, sublicense,
insurance policy, benefit plan or legally binding commitment, obligation or
undertaking of any nature. Part 2.14 of the Company Disclosure Letter sets forth
a list of each of the following Contracts to which Company or any of its
subsidiaries is a party or by which Company or any of its subsidiaries or any of
Company's or any of its subsidiaries' assets or properties is bound:
(a) any Contract providing for payments (whether fixed, contingent
or otherwise) by or to Company in an aggregate amount of $200,000 or more over
the duration of the Contract;
(b) any Contract providing for the development of any software,
content (including textual content and visual, photographic or graphics
content), technology or intellectual property for Company, or providing for the
purchase or license of any software, content (including textual content and
visual or graphics content), technology or intellectual property to Company,
which software, content, technology or intellectual property is in any manner
used or incorporated (or is contemplated by Company to be used or incorporated)
in connection with any aspect or element of any product, service or technology
of Company (other than software generally available to the public at a per copy
license fee of less than $50,000 per copy);
(c) any distribution, marketing, sales representative or similar
Contract under which any third party is authorized to sell, sublicense, lease,
distribute, market or take orders for any product, service or technology owned,
marketed, licensed or provided by Company or any of its subsidiaries;
- 27 -
(d) any joint venture or partnership Contract, any Contract relating
to a limited liability company or any other agreement that has involved, or is
reasonably expected to involve, a sharing of profits, expenses or losses with
any other party;
(e) any Contract for the future purchase, sale, license, provision
or manufacture of products, materials, supplies, equipment or services requiring
payment to or from Company or any of its subsidiaries in an amount in excess of
$200,000 per annum or in an aggregate amount of $300,000 or more over the
duration of the contract or agreement that is not terminable by Company or its
subsidiary on 60 or fewer days notice without cost or other liability to Company
or its subsidiary;
(f) any Contract in which Company or any of its subsidiaries has
granted or received most favored customer pricing provisions, exclusive sales,
distribution, marketing or on-line distribution rights, rights of refusal,
rights of first negotiation or similar rights with respect to any product,
service, technology or Company IP Asset that is now or hereafter owned by it,
provided to Company or any of its subsidiaries or provided by Company or any of
its subsidiaries;
(g) any Contract or commitment for or relating to the employment of
any director, officer, employee or consultant of Company or any other type of
contract or understanding with any officer, employee or consultant of Company
that is not immediately terminable by Company without cost or other liability;
(h) any indenture, mortgage, trust deed, promissory note, loan
agreement, security agreement, guarantee or other Contract or commitment for the
borrowing of money or extension of a line of credit or for a leasing transaction
of a type required to be capitalized in accordance with GAAP;
(i) any lease or other Contract under which Company or any of its
subsidiaries is lessee of or holds or operates any items of tangible personal
property or real property providing for annual payments (whether fixed,
contingent or otherwise) by Company in the aggregate amount of $200,000 or more;
(j) any Contract that restricts Company or any of its subsidiaries
from engaging in any aspect of the Business; from participating or competing in
any line of business or market; from freely setting prices for Company's
products, services or technologies (including most favored customer pricing
provisions); from engaging in any business in any market or geographic area; or
from soliciting potential employees, consultants, contractors or other suppliers
or customers;
(k) any Contract (i) pursuant to which any Person is authorized to
use any Company IP Asset other than non-exclusive licenses granted in the
ordinary course of the Company Business consistent with past practices, or (ii)
pursuant to which Company is authorized to distribute, sublicense, or sell any
third party's software or other technology.
(l) any Contract relating to the sale, issuance, grant, exercise,
award, purchase, repurchase or redemption of any shares of capital stock or
other securities of Company or any options, warrants or other rights to purchase
or otherwise acquire any such shares of
- 28 -
capital stock, other securities or options, warrants or other rights therefor,
except for those agreements conforming to the standard agreements under the
Company Stock Option Plans;
(m) any Contract with or commitment to any labor union;
(n) any agreement of guarantee, support, indemnification (including,
without limitation, any Contract by which the Company has agreed to provide
indemnification to any of its officers or directors), assumption or endorsement
of, or any similar commitment with respect to, the obligations, liabilities
(whether accrued, absolute, contingent or otherwise) or indebtedness of any
other Person;
(o) any Contract currently in force relating to the disposition or
acquisition by Company or any of its subsidiaries after the date of this
Agreement of a material amount of assets not in the ordinary course of business,
or pursuant to which Company or any of its subsidiaries has any material
ownership or participation interest in any corporation, partnership, joint
venture, strategic alliance or other business enterprise other than Company's
subsidiaries;
(p) any agreement granting to a third party a power of attorney to
act on behalf of Company or any of its subsidiaries;
(q) any Contract with any affiliate of Company; or
(r) any other Contract that is material to the Business or the
assets of Company.
A true and complete copy of each agreement or document required by these
subsections (a) through (r) of this Section to be listed on Part 2.14 of the
Company Disclosure Letter (such agreements and documents being hereinafter
collectively referred to as the "COMPANY CONTRACTS") has been provided to
Parent's counsel. The Company is not, nor to Company's knowledge is any other
party, in material breach or default under any Company Contract. No event has
occurred, and no circumstance or condition exists, that (with or without notice
or lapse of time) will, or would reasonably be expected to, (i) result in a
violation or breach by Company of any of the provisions of any Company Contract,
(ii) to Company's knowledge give any third party, the right to (A) declare a
Default or exercise any remedy under any Company Contract, (B) a material
refund, rebate, chargeback or penalty under any Company Contract, (C) accelerate
the maturity or performance of any obligation of Company under any Company
Contract, or (D) cancel, terminate or modify any Company Contract. The Company
has not received any written notice regarding any actual or possible violation
or breach of, or default under, any Company Contract. The Company has no
material liability for renegotiation of United States government contracts or
subcontracts, if any. A "DEFAULT" means (a) any actual breach or default, (b)
the occurrence of an event that with the passage of time or the giving of notice
or both would constitute a breach or default or (c) the occurrence of an event
that with or without the passage of time or the giving of notice or both would
give rise to a right of termination, renegotiation or acceleration.
2.15 Customers, Distributors, OEMs and VARs. Part 2.15 of the Company
Disclosure Letter sets forth a true, correct and complete list of (a) each
purchaser of Company's and its subsidiaries' products and services representing
more than $150,000 of sales revenue during the
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twelve months ended December 31, 2002, or the nine months ended September 30,
2003 and (b) dealer, distributor, original equipment manufacturer or other
reseller for Company's and its subsidiaries' products and services representing
more than $150,000 of sales revenue during the twelve months ended December 31,
2002, or the nine months ended September 30, 2003. Part 2.15 of the Company
Disclosure Letter indicates names, addresses and total sales by product for such
period for each party listed thereon. Company has good commercial working
relationships with its customers, dealers, distributors, original equipment
manufacturers, and other resellers of Company's and its subsidiaries' products
and services and since December 31, 2002, no party accounting for five percent
(5%) or more of Company's consolidated sales revenues, has canceled or otherwise
terminated its relationship with Company or its subsidiaries, decreased or
limited materially its purchases from Company and its subsidiaries or has given
written notice that it intends to take any such action.
2.16 Brokers' and Finders' Fees. Except for fees payable to Investec, Inc.
pursuant to an engagement letter dated September 25, 2002, as amended, and to
Xxxxx Xxxxxxxx LLP pursuant to an engagement letter dated October 21, 2003,
copies of each of which have been provided to Parent, Company has not incurred,
nor will it incur, directly or indirectly, any liability for brokerage or
finders' fees or agents' commissions or any similar charges in connection with
this Agreement or any transaction contemplated hereby.
2.17 Insurance. Company and each of its subsidiaries have policies of
insurance and bonds of the type and in amounts customarily carried by persons
conducting business or owning assets similar to those of Company and its
subsidiaries. There is no material claim pending under any of such policies or
bonds as to which coverage has been questioned, denied or disputed by the
underwriters of such policies or bonds. All premiums due and payable under all
such policies have been paid and Company and its subsidiaries are otherwise in
compliance in all material respects with the terms of such policies and bonds.
To the knowledge of Company, there has been no threatened termination of, or
material premium increase with respect to, any of such policies.
2.18 Disclosure. The Proxy Statement to be filed with the SEC in
connection with the solicitation of proxies from Company stockholders for the
Company Stockholder Approvals (as amended or supplemented, the "PROXY
STATEMENT") shall not, on the date the Proxy Statement is mailed to Company's
stockholders, at the time of the meeting of Company's stockholders (the "COMPANY
STOCKHOLDERS' MEETING") to consider the Company Stockholder Approvals, or as of
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 false or misleading. The Proxy Statement will comply as to form in all
material respects with the provisions of the Exchange Act and the applicable
rules and regulations thereunder. If at any time prior to the Effective Time any
event relating to Company or any of its affiliates, officers or directors should
be discovered by Company which is required to be set forth in a supplement to
the Proxy Statement, Company shall promptly inform Parent. Notwithstanding the
foregoing, Company makes no representation or warranty with respect to
statements included or incorporated by reference in the Proxy Statement based on
any information supplied by Parent or Merger Sub.
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2.19 Board Approval. The Board of Directors of Company has, as of the date
of this Agreement, (i) unanimously determined that the Merger is fair to, and in
the best interests of Company and its stockholders, and has approved this
Agreement and (ii) declared the advisability of the Merger to the stockholders
of Company and recommends that the stockholders of Company approve and adopt
this Agreement and approve the Merger.
2.20 Fairness Opinion. Company's Board of Directors has received a written
opinion from Xxxxx Xxxxxxxx LLP, dated as of the date hereof, 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 Company's stockholders in the
Merger is fair to Company's stockholders from a financial point of view, and has
delivered to Parent a copy of such opinion.
2.21 Privacy. The Company and its subsidiaries have complied with all
applicable Legal Requirements relating to (a) the privacy of users of Company
products or services and xxx.xx.xxx (the "COMPANY WEBSITE"), and (b) the
collection, storage and transfer of any personally identifiable information
collected by Company or any of its subsidiaries or by third parties having
authorized access to Company's or any Company subsidiary's records, except where
the failure to so comply would not have a Material Adverse Effect on the
Company. The privacy practices of the Company and its subsidiaries conform, and
at all times have conformed, in all material respects to all of Company's and
its subsidiaries' contractual obligations to their respective customers. The
Company Website and all material materials distributed or marketed by Company
have at all times made all privacy practice disclosures to users or customers as
required by applicable law, except where the failure to make such disclosures
would not have a Material Adverse Effect on the Company, and none of such
disclosures made or contained in the Company Website or in any such materials
have been inaccurate, misleading or deceptive or in violation of any applicable
law in a manner that would have a Material Adverse Effect on the Company. No
claims have been asserted in writing or, to the knowledge of Company, are
threatened in writing against Company or any of its subsidiaries by any person
or entity alleging a violation of such person's or entity's privacy rights with
respect to the privacy practices of Company. To the knowledge of Company, there
has been no unauthorized access to or other misuse of personal and user
information described in this Section 2.21, except as disclosed in Part 2.21 of
the Company Disclosure Letter or where such access or misuse would not have a
Material Adverse Effect on the Company.
2.22 DGCL Section 203. Company's Board of Directors has taken all actions
so that the restrictions contained in Section 203 of the Delaware Law applicable
to a "business combination" (as defined in such Section 203) will not apply to
the execution, delivery or performance of this Agreement or the consummation of
the Merger or the transactions contemplated by this Agreement. No other
anti-takeover, control share acquisition, fair price, moratorium or other
similar statute or regulation (each, a "TAKEOVER STATUTE") applies or purports
to apply to this Agreement, the Merger or the other transactions contemplated
hereby, which has not been waived.
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ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
In order to induce Company to enter into this Agreement, Parent and Merger Sub
represent and warrant to Company, subject to the exceptions to specifically
identified representations and warranties disclosed in the disclosure letter
delivered by Parent to Company dated as of the date hereof and certified by a
duly authorized officer of Parent (the "PARENT DISCLOSURE LETTER"), as follows:
3.1 Organization of Parent and Merger Sub.
(a) Each of Parent and Merger Sub is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation and has all requisite corporate power and authority, and all
requisite qualifications to do business as a foreign corporation, to conduct its
business in the manner in which its business is currently being conducted.
(b) Parent has delivered or made available to Company a true and
correct copy of the Certificate of Incorporation and Bylaws of Parent and the
Articles of Incorporation and Bylaws of Merger Sub, each as amended to date
(collectively, the "PARENT CHARTER DOCUMENTS"), and each such instrument is in
full force and effect. Neither Parent nor Merger Sub is in violation of any of
the provisions of the Parent Charter Documents.
3.2 Authority; Non-Contravention.
(a) Each of Parent and Merger Sub has all requisite corporate power and
authority to enter into this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by all necessary corporate action on the part of Parent and Merger Sub, subject
only to the filing of the Certificate of Merger pursuant to Delaware Law. This
Agreement has been duly executed and delivered by each of Parent and Merger Sub
and, assuming the due authorization, execution and delivery by Company,
constitutes the valid and binding obligations of Parent and Merger Sub,
respectively, enforceable against Parent and Merger Sub in accordance with their
terms, except as enforceability may be limited by bankruptcy and other similar
laws affecting the rights of creditors generally and general principles of
equity.
(b) The execution and delivery of this Agreement by each of Parent and
Merger Sub does not, and the performance of this Agreement by Parent and/or
Merger Sub will not, (i) conflict with or violate the Parent Charter Documents,
(ii) subject to compliance with the requirements set forth in Section 3.2(c),
conflict with or violate any Legal Requirement applicable to Parent or Merger
Sub or by which any of their respective properties is bound or affected, or
(iii) result in any breach of or constitute a default (or an event that with
notice or lapse of time or both would become a default) under, or impair
Parent's rights or alter the rights or obligations of any third party under, or
give to others any rights of termination, amendment, acceleration or
cancellation of, or result in the creation of an Encumbrance on any of the
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properties or assets of Parent or Merger Sub pursuant to, Contract to which
Parent or Merger Sub is a party or by which Parent or Merger Sub or any of their
respective assets are bound or affected.
(c) No consent, approval, order or authorization of, or registration
with any Governmental Entity is required to be obtained or made by Parent or
Merger Sub in connection with the execution and delivery of this Agreement or
the consummation of the Merger, except for (i) the filing of the Certificate of
Merger with the Secretary of State of the State of Delaware, (ii) such consents,
approvals, orders, authorizations, registrations, declarations and filings as
may be required under the HSR Act and the antitrust laws of any foreign country,
and (iii) such other consents, authorizations, filings, approvals and
registrations which if not obtained or made would not be material to Parent or
the Surviving Corporation or have a material adverse effect on the ability of
the parties hereto to consummate the Merger within the time frame in which the
Merger would otherwise be consummated in the absence of such requirement.
3.3 SEC Filings. Parent has filed all forms, reports and documents
required to be filed by Parent with the SEC since January 1, 2000. All such
forms, reports and documents (including those that Parent may file subsequent to
the date hereof) are referred to herein as the "PARENT SEC REPORTS." As of their
respective dates and giving effect to any amendments thereto filed prior to the
date hereof, the Parent SEC Reports (i) were prepared in all material respect in
accordance with the requirements of the Securities Act, or the Exchange Act, as
the case may be, and the rules and regulations of the SEC thereunder applicable
to such Parent SEC Reports and (ii) did not at the time they were filed (or if
amended or superseded by a filing prior to the date of this Agreement, then on
the date of such filing) contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading, except to the extent corrected prior to the date of
this Agreement by a subsequently filed Parent SEC Report. None of Parent's
subsidiaries is required to file any forms, reports or other documents with the
SEC.
3.4 Brokers' and Finders' Fees. Except for fees payable to Xxxxxx
Brothers, Parent has not incurred, nor will it incur, directly or indirectly,
any liability for brokerage or finders' fees or agents' commissions or any
similar charges in connection with this Agreement or any transaction
contemplated hereby.
3.5 Disclosure. If at any time prior to the Effective Time any event
relating to Company or Parent or any of their respective affiliates, officers or
directors should be discovered by Parent which is required to be set forth in a
supplement to the Proxy Statement, Parent shall promptly inform Company. The
information supplied or to be supplied by Parent or Merger Sub for inclusion or
incorporation by reference in the Proxy Statement, as amended or supplemented,
shall not, on the date the Proxy Statement is mailed to Company's stockholders,
at the time of the meeting of Company's Stockholders' Meeting or as of 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 false or misleading.
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3.6 Interim Operations of Merger Sub. Merger Sub was formed solely for the
purpose of engaging in the transactions contemplated by this Agreement and has
not engaged in any business activities or conducted any operations other than in
connection with this Agreement.
3.7 Financing. Parent has, and will have available to it upon the
consummation of the Merger, sufficient funds to consummate the transactions
contemplated by this Agreement, including payment in full of the cash amounts to
which Company stockholders and holders of Company Options will be entitled
pursuant to Section 1.6(a) and Section 1.6(c)(ii) at the Effective Time.
ARTICLE 4
CONDUCT PRIOR TO THE EFFECTIVE TIME
4.1 Conduct of Business by 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 or the Effective Time, except as expressly
contemplated by this Agreement or except as set forth in Part 4.1 of the Company
Disclosure Letter or except to the extent that Parent shall otherwise consent in
writing (which consent shall not be unreasonably withheld, delayed or
conditioned), Company shall and shall cause each of its Material Subsidiaries to
carry on its business in the ordinary course, consistent with past practice and
in compliance in all material respects with all applicable Legal Requirements,
pay its debts and Taxes when due subject to good faith disputes over such debts
or Taxes, pay or perform other material obligations when due, and use its
commercially reasonable efforts consistent with past practices and policies to
(i) preserve intact its present business organization, (ii) keep available the
services of its present officers and employees and (iii) preserve its
relationships with customers, suppliers, licensors, licensees, and others with
which it has business dealings.
In addition, without limiting the generality of the foregoing, during the period
from the date of this Agreement and continuing until the earlier of the
termination of this Agreement pursuant to its terms or the Effective Time,
except as expressly contemplated by this Agreement or except as set forth in
Part 4.1 of the Company Disclosure Letter or except to the extent that Parent
shall otherwise consent in writing (which consent shall not be unreasonably
withheld, delayed or conditioned) Company shall not do any of the following and
shall not permit its subsidiaries to do any of the following:
(a) Terminate, waive or fail to exercise any stock repurchase rights
by which Company Common Stock may be repurchased for a per share price of less
than $4.00, accelerate, amend or change the period of exercisability of options
to purchase Company Common Stock or restricted Company Common Stock or change
repurchase rights applicable to restricted Company Common Stock, or reprice any
outstanding options to purchase Company Common Stock or authorize cash payments
in exchange for any options to purchase Company Common Stock;
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(b) Grant, pay or agree to grant or pay any severance or termination
pay to any employee except pursuant to written agreements in effect, or policies
existing, on the date hereof and as disclosed in Part 2.12 of the Company
Disclosure Letter, or adopt any new severance plan;
(c) Transfer or license to any person or entity or otherwise extend,
amend or modify in any material respect any Company IP Rights, other than
non-exclusive licenses in the ordinary course of business and consistent with
past practice;
(d) Declare, set aside or pay any dividends on or make any other
distributions (whether in cash, stock, equity securities or property) in respect
of any capital stock of Company or split, combine or reclassify any capital
stock of Company or issue or authorize the issuance of any other securities in
respect of, in lieu of or in substitution for any capital stock;
(e) Purchase, redeem or otherwise acquire, directly or indirectly,
any shares of capital stock of Company or its subsidiaries, except repurchases
of unvested shares at cost in connection with the termination of the employment
relationship with any employee pursuant to stock option or purchase agreements
in effect on the date hereof;
(f) Issue, deliver, sell, authorize, pledge or otherwise encumber
any shares of capital stock or any securities convertible into shares of capital
stock of Company, including, without limitation, any options under the Company
Stock Option Plans, or subscriptions, rights, warrants or options to acquire any
shares of capital stock of Company or any securities convertible into shares of
capital stock of Company, or enter into other agreements or commitments of any
character obligating it to issue any such shares or convertible securities,
other than the issuance delivery and/or sale of (i) shares of Company Common
Stock pursuant to the exercise of Company Options outstanding as of the date of
this Agreement and (ii) shares of Company Common Stock issuable to participants
in the Company ESPP consistent with the terms thereof;
(g) Cause, permit or propose any amendments to the Company Charter
Documents;
(h) Subject to the provisions of Sections 5.2(c), 5.2(d) and 5.3(a),
acquire or agree to acquire by merging or consolidating with, or by purchasing
any equity interest in or a portion of the assets of, or by any other manner,
any business or any corporation, partnership, association or other business
organization or division thereof; or otherwise acquire or agree to acquire any
assets that are material, individually or in the aggregate, to the business of
Company and its subsidiaries or enter into any material joint ventures,
strategic relationships or alliances;
(i) Sell, lease, license, encumber or otherwise dispose of any
properties or assets which are material, individually or in the aggregate, to
the business of Company and its subsidiaries;
(j) Incur any indebtedness for borrowed money or guarantee any such
indebtedness of another person, issue or sell any debt securities or options,
warrants, calls or other rights to acquire any debt securities of Company or any
of its subsidiaries, enter into any
- 35 -
"keep well" or other Contract to maintain any financial statement condition or
enter into any arrangement having the economic effect of any of the foregoing;
(k) Adopt or amend (except to the extent necessary to maintain the
tax-qualified status of such Company Employee Plan) any employee benefit plan,
Company Employee Plan, Employment Agreement, employee stock purchase or employee
stock option plan, or enter into any employment contract or arrangement or
collective bargaining agreement (other than offer letters and letter agreements
entered into in the ordinary course of business consistent with past practice,
and in substantial conformance to the Company's standard offer letter that has
been provided to Parent, with employees who are terminable "at will"), pay any
special bonus or special remuneration to any director or employee, make any loan
or provide any advance to any director or employee, or increase the salaries or
wage rates or fringe benefits (including rights to severance or indemnification)
of its directors, employees or consultants other than in the ordinary course of
business, consistent with past practice, or change in any material respect any
management policies or procedures;
(l) Make any material capital expenditures outside of the ordinary
course of business or outside of the budget previously provided to Parent;
(m) Materially modify, amend or terminate any Company Contract or
waive, release or assign any material rights or claims thereunder;
(n) Enter into any Contract with regard to the acquisition or
licensing of any material Intellectual Property Rights (as defined in Section
2.9) other than licenses, distribution Contracts, or other similar Contracts
entered into in the ordinary course of business consistent with past practice;
(o) Except as required by GAAP, materially revalue any of its assets
or make any change in accounting methods, principles or practices;
(p) Without limiting the foregoing, take any action or fail to take
any action reasonably within Company's control, that would cause any
representation or warranty of Company to cease to be true and accurate as of the
Closing as though then first made; or
(q) Agree in writing or otherwise commit or negotiate to take any of
the actions described in Section 4.1(a) through (p) above.
ARTICLE 5
ADDITIONAL AGREEMENTS
5.1 Proxy Statement, Antitrust and Other Filings.
(a) As promptly as practicable after the execution of this
Agreement, Company will prepare and file the Proxy Statement with the SEC.
Company will respond in good faith to any comments of the SEC and will cause the
Proxy Statement to be mailed to its
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stockholders at the earliest practicable time. Promptly after the date of this
Agreement, each of Company and Parent will prepare and file (i) with the United
States Federal Trade Commission and the Antitrust Division of the United States
Department of Justice Notification and Report Forms relating to the transactions
contemplated herein as required by the HSR Act, as well as comparable pre-merger
notification forms required by the merger notification or control laws and
regulations of any applicable jurisdiction, (the "ANTITRUST FILINGS") and (ii)
any other filings required to be filed by it under the Exchange Act, the
Securities Act or any other federal, state or foreign laws relating to the
Merger and the transactions contemplated by this Agreement (the "OTHER
FILINGS").
(b) Parent and Company each shall promptly supply the other with any
information that may be required in order to effectuate any filings or
application pursuant to Section 5.1(a). Each of Company and Parent will notify
the other promptly (i) upon the occurrence of any event which is required to be
set forth in an amendment or supplement to the Proxy Statement, or any Antitrust
Filing or Other Filing or (ii) upon the receipt of any comments from the SEC or
its staff or any other government officials in connection with any filing made
pursuant hereto and of any request by the SEC or its staff or any other
government officials for amendments or supplements to the Proxy Statement or any
Antitrust Filings or Other Filings or for additional information and will supply
the other with copies of all correspondence between such party or any of its
representatives, on the one hand, and the SEC, or its staff or any other
government officials, on the other hand, with respect to the Proxy Statement,
the Merger or any Antitrust Filing or Other Filing. Subject to applicable Legal
Requirements and the confidentiality agreement, dated as of November 13, 2002
between Company and Parent (the "CONFIDENTIALITY AGREEMENT"), each of Company
and Parent shall consult with the other prior to taking a position with respect
to any such filing, shall permit the other to review and discuss in advance, and
consider in good faith the views of the other in connection with any analyses,
appearances, presentations, memoranda, briefs, white papers, arguments, opinions
and proposals before making or submitting any of the foregoing to any
Governmental Entity by or on behalf of any party hereto in connection with any
investigations or proceedings in connection with this Agreement or the
transactions contemplated hereby (including under any antitrust or fair trade
Legal Requirement), coordinate with the other in preparing and exchanging such
information and promptly provide the other (and its counsel) with copies of all
filings, presentations or submissions (and a summary of any oral presentations)
made by such party with any Governmental Entity in connection with this
Agreement or the transactions contemplated hereby; provided that with respect to
any such filing, presentation or submission, each of Parent and Company need not
supply the other (or its counsel) with copies (or in case of oral presentations,
a summary) to the extent that any law, treaty, rule or regulation of any
Governmental Entity applicable to such party requires such party or its
Subsidiaries to restrict or prohibit access to any such properties or
information or where such properties or information is subject to the
attorney-client privilege (it being understood that the participation and
cooperation contemplated herein is not intended to constitute, nor shall be
deemed to constitute, any form of direct or indirect waiver of the
attorney-client privilege maintained by any party hereto). Each of Company and
Parent will cause all documents that it is responsible for filing with the SEC
or other regulatory authorities under this Section 5.1 to comply in all material
respects with all applicable requirements of law and the rules and regulations
promulgated thereunder.
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5.2 Meeting of Company Stockholders.
(a) Promptly after the date hereof, Company will take all action
necessary in accordance with the Delaware Law and the Company Charter Documents
to convene and hold the Company Stockholders' Meeting to be held as promptly as
practicable, and in any event (to the extent permissible under applicable law)
within 60 days after the mailing of the Proxy Statement, for the purpose of
voting upon approval and adoption of this Agreement and approval of the Merger.
Subject to Section 5.2(c), Company will use its commercially reasonable efforts
to solicit from its stockholders proxies in favor of the adoption and approval
of this Agreement and the approval of the Merger and will use commercially
reasonable efforts to take all other action necessary to secure the vote or
consent of its stockholders required by the rules of the Nasdaq Stock Market,
Delaware Law and the Company Charter Documents to obtain such approvals. Company
shall ensure that the Company Stockholders' Meeting is called, noticed,
convened, held and conducted, and that all proxies solicited by Company in
connection with the Company Stockholders' Meeting are solicited, in compliance
with the Delaware Law, the Company Charter Documents, the rules of the Nasdaq
Stock Market, the rules and regulations of the SEC and all other applicable
Legal Requirements. Company's obligation to call, give notice of, convene and
hold the Company Stockholders' Meeting in accordance with this Section 5.2(a)
shall not be limited or otherwise affected by the commencement, disclosure,
announcement or submission to Company of any Acquisition Proposal (as defined in
Section 5.3), or Superior Offer, or by any withdrawal, amendment or modification
of the recommendation of the Board of Directors of Company with respect to this
Agreement or the Merger.
(b) Subject to Section 5.2(c): (i) the Board of Directors of Company
shall unanimously recommend that Company's stockholders vote in favor of and
adopt and approve this Agreement and approve the Merger at the Company
Stockholders' Meeting; (ii) the Proxy Statement shall include a statement to the
effect that the Board of Directors of Company has unanimously recommended that
Company's stockholders vote in favor of and adopt and approve this Agreement and
the Merger at the Company Stockholders' Meeting; and (iii) neither the Board of
Directors of Company nor any committee thereof shall withdraw, amend or modify,
or propose or resolve to withdraw, amend or modify in a manner adverse to
Parent, the unanimous recommendation of the Board of Directors of Company that
Company's stockholders vote in favor of and adopt and approve this Agreement and
the Merger. For purposes of this Agreement, said recommendation of the Board of
Directors shall be deemed to have been modified in a manner adverse to Parent if
said recommendation shall no longer be unanimous, provided, that for all
purposes of this Agreement, an action by the Board of Directors of Company or a
committee thereof shall be unanimous if each member of the Board of Directors or
such committee has approved such action other than (i) any such member who has
appropriately abstained from voting on such matter because of an actual or
potential conflict of interest and (ii) any such member who is unable to vote in
connection with such action as a result of death or disability.
(c) Nothing in this Agreement shall prevent the Board of Directors
of Company from withholding, withdrawing, amending or modifying its unanimous
recommendation in favor of the Merger if (i) a Superior Offer (as defined below)
is made to Company and is not withdrawn, (ii) Company shall have provided
written notice to Parent (a "NOTICE OF SUPERIOR OFFER") advising Parent that
Company has received a Superior Offer,
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specifying all of the material terms and conditions of such Superior Offer and
identifying the person or entity making such Superior Offer, (iii) Parent shall
not have, within five business days of Parent's receipt of the Notice of
Superior Offer, made an offer that Company's Board of Directors determines in
its good faith judgment (after consultation with its financial advisor) to be at
least as favorable to Company's stockholders as such Superior Offer (it being
agreed that the Board of Directors of Company shall convene a meeting to
consider any such offer by Parent promptly following the receipt thereof), (iv)
the Board of Directors of Company concludes in good faith, after consultation
with its outside counsel, that, in light of such Superior Offer, the failure to
withhold, withdraw, amend or modify such recommendation would constitute a
breach of or would be inconsistent with the fiduciary obligations of the Board
of Directors of Company under applicable law and (v) Company shall not have
violated any of the restrictions set forth in Section 5.3 or this Section 5.2.
Company shall provide Parent with at least three business days prior notice (or
such lesser prior notice as provided to the members of Company's Board of
Directors but in no event less than twenty-four hours) of any meeting of
Company's Board of Directors at which Company's Board of Directors is reasonably
expected to consider any Acquisition Proposal to determine whether such
Acquisition Proposal is a Superior Offer. Nothing contained in this Section
5.2(c) shall limit Company's obligation to hold and convene the Company
Stockholders' Meeting (regardless of whether the unanimous recommendation of the
Board of Directors of Company shall have been withdrawn, amended or modified).
For purposes of this Agreement, "SUPERIOR OFFER" shall mean an unsolicited, bona
fide written offer made by a third party to consummate, on terms that the Board
of Directors of Company determines, in its reasonable judgment (after receiving
the written advice of Investec or another financial advisor of national
standing), to be more favorable to Company stockholders from a financial point
of view than the terms of the Merger; provided, however, that any such offer
shall not be deemed to be a "Superior Offer" if such offer is conditioned upon
the offeror's obtaining financing needed to complete such transaction, any of
the following transactions (other than the transactions contemplated by this
Agreement): (i) a merger, consolidation or similar transaction involving Company
pursuant to which the stockholders of Company immediately preceding such
transaction hold less than 50% of the aggregate equity interests in the
surviving or resulting entity of such transaction, or (ii) the acquisition by
any person or "group" (as defined under Section 13(d) of the Exchange Act and
the rules and regulations thereunder) (including by way of a tender offer or an
exchange offer or a two-step transaction involving a tender offer followed by a
merger involving Company), directly or indirectly, of ownership of shares
representing 100% of the voting power of the then outstanding shares of capital
stock of Company.
(d) Nothing contained in this Agreement shall prohibit Company or
its Board of Directors from taking and disclosing to its stockholders a position
contemplated by Rules 14d-9 and 14e-2(a) promulgated under the Exchange Act;
provided, however, that the Board of Directors of Company shall not recommend
that the stockholders of Company tender their shares in connection with a tender
offer except to the extent that the Board of Directors determines in its good
faith judgment, after consultation with outside counsel and its financial
advisor, that the tender offer constitutes a Superior Offer and that such
recommendation is required in order for the Board of Directors of Company to
comply with its fiduciary duties to Company's stockholders under applicable law.
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5.3 No Solicitation.
(a) From and after the date of this Agreement until the Effective
Time or termination of this Agreement pursuant to ARTICLE 7 and subject to
Section 5.2(c), Company and its subsidiaries will not, nor will they authorize
or permit any of their respective officers, directors, affiliates or employees
or any financial advisor, attorney or other advisor or representative retained
by any of them to, directly or indirectly, (i) solicit, initiate or knowingly
encourage, the making, submission or announcement of any Acquisition Proposal
(as hereinafter defined), (ii) participate in any discussions or negotiations
regarding, or furnish to any person any non-public information with respect to,
or take any other action to intentionally facilitate any inquiries or the making
of any proposal that constitutes, or may reasonably be expected to lead to, any
Acquisition Proposal, (iii) engage in discussions with any person with respect
to any Acquisition Proposal, except to inform any person as to the existence of
these provisions, (iv) approve, endorse or recommend any Acquisition Proposal or
(v) enter into any letter of intent or any other Contract contemplating or
otherwise relating to any Acquisition Proposal; provided, however, that prior to
the approval of this Agreement and the Merger at the Company Stockholders'
Meeting, this Section 5.3(a) shall not prohibit Company from furnishing
nonpublic information regarding Company and its subsidiaries to, or entering
into discussions with, any person or group who has submitted (and not withdrawn)
to Company an unsolicited, written, bona fide Acquisition Proposal, or
approving, endorsing or recommending such Acquisition Proposal in a manner
consistent with Section 5.2(c) that the Board of Directors of Company reasonably
concludes (after receiving the written advice of its financial advisor) would
constitute a Superior Offer and, if accepted, is likely to be consummated if (1)
neither Company nor any representative of Company and its subsidiaries shall
have violated any of the restrictions set forth in this Section 5.3, and (2) the
Board of Directors of Company concludes in good faith, after consultation with
its outside legal counsel, that failure to take such action would constitute a
breach of or be inconsistent with the fiduciary obligations of the Board of
Directors of Company under applicable law. Prior to furnishing any such
nonpublic information to, or entering into any such discussions with, such
person or group, Company shall give Parent written notice of the identity of
such person or group and all of the material terms and conditions of such
Acquisition Proposal and of Company's intention to furnish nonpublic information
to, or enter into discussions with, such person or group, and Company shall
receive from such person or group an executed confidentiality agreement
containing terms at least as restrictive with regard to Company's confidential
information as the Confidentiality Agreement (as defined in Section 5.1).
Company shall give Parent at least three business days advance notice of its
intent to furnish such nonpublic information or enter into such discussions.
Contemporaneously with furnishing any such nonpublic information to such person
or group, Company shall furnish such nonpublic information to Parent (to the
extent such nonpublic information has not been previously furnished by Company
to Parent). Company and its subsidiaries will immediately cease any and all
existing activities, discussions or negotiations with any parties conducted
heretofore with respect to any Acquisition Proposal. Without limiting the
foregoing, it is understood that any violation of the restrictions set forth in
the preceding two sentences by any officer, director or employee of Company or
any of its subsidiaries or any financial adviser, attorney or other adviser or
representative of Company or any of its subsidiaries shall be deemed to be a
breach of this Section 5.3 by Company. Nothing in this Section 5.3 shall permit
Company to enter into any contract with respect to an Acquisition Proposal
(other than a
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confidentiality agreement) during the term of this Agreement, except as provided
in Section 5.2(c).
For purposes of this Agreement, "ACQUISITION PROPOSAL" shall mean any
offer or proposal (other than an offer or proposal by Parent) relating to, or
involving a Company Acquisition: (A) any acquisition or purchase by any person
or "group" (as defined under Section 13(d) of the Exchange Act and the rules and
regulations thereunder) of more than a 10% interest in the total outstanding
voting securities of Company or any of its subsidiaries or any tender offer or
exchange offer that if consummated would result in any person or "group" (as
defined under Section 13(d) of the Exchange Act and the rules and regulations
thereunder) beneficially owning 10% or more of the total outstanding voting
securities of Company or any of its subsidiaries or any merger, consolidation,
business combination or similar transaction involving Company pursuant to which
the stockholders of Company immediately preceding such transaction hold less
than 90% of the equity interests in the surviving or resulting entity of such
transaction in the same proportion as they hold such equity interest preceding
such transaction; (B) any sale, lease (other than in the ordinary course of
business), exchange, transfer, license (other than in the ordinary course of
business), acquisition, or disposition of any material portion of the assets of
Company and its subsidiaries; or (C) any liquidation or dissolution of Company.
(b) In addition to the obligations of Company set forth in paragraph
(a) of this Section 5.3, Company as promptly as practicable shall advise Parent
orally and in writing of any request for non-public information which Company
reasonably believes would lead to an Acquisition Proposal or of any Acquisition
Proposal, the material terms and conditions of such request or Acquisition
Proposal, and the identity of the person or group making any such request or
Acquisition Proposal. Company will (i) keep Parent informed as promptly as
practicable in all material respects of the status and details (including
material amendments or proposed amendments) of any such request, Acquisition
Proposal or inquiry and (ii) provide to Parent as promptly as practicable a copy
of all written materials provided to Company in connection with any such request
or Acquisition Proposal.
5.4 Confidentiality; Access to Information.
(a) Confidentiality Agreement. The parties acknowledge that Company
and Parent have previously executed the Confidentiality Agreement, which will
continue in full force and effect in accordance with its terms.
(b) Access to Information. Company will afford Parent and its
accountants, counsel and other representatives reasonable access during normal
business hours to the properties, books, records and personnel of Company during
the period prior to the Effective Time to obtain all information concerning the
business, properties, results of operations and personnel of Company, as Parent
may reasonably request, in a manner that does not unreasonably disrupt the
Company's business and subject to the Confidentiality Agreement. No information
or knowledge obtained in any investigation pursuant to this Section 5.4 will
affect or be deemed to modify any representation or warranty contained herein or
the conditions to the obligations of the parties to consummate the Merger.
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5.5 Public Disclosure. Parent and Company will consult with each other,
and to the extent reasonably practicable, agree, before issuing any press
release or otherwise making any public statement with respect to the Merger,
this Agreement or an Acquisition Proposal and will not issue any such press
release or make any such public statement prior to such consultation, except as
may be required by law or any listing agreement with a national securities
exchange. The parties have agreed to the text of the joint press release
announcing the signing of this Agreement.
5.6 Reasonable Efforts; Notification.
(a) Upon the terms and subject to the conditions set forth in this
Agreement, each of the parties agrees to use all commercially reasonable efforts
to take, or cause to be taken, all actions, and to do, or cause to be done, and
to assist and cooperate with the other parties in doing, all things necessary,
proper or advisable to consummate and make effective, in the most expeditious
manner practicable, the Merger and the other transactions contemplated by this
Agreement, including using commercially reasonable efforts to accomplish the
following: (i) the taking of all commercially reasonable acts necessary to cause
the conditions precedent set forth in ARTICLE 6 to be satisfied, (ii) the
obtaining of all necessary actions or nonactions, waivers, consents, approvals,
orders and authorizations from Governmental Entities and the making of all
necessary registrations, declarations and filings (including registrations,
declarations and filings with Governmental Entities, if any) and the taking of
all commercially reasonable steps as may be necessary to avoid any suit, claim,
action, investigation or proceeding by any Governmental Entity, (iii) the
obtaining of all necessary consents, approvals or waivers from third parties,
(iv) the defending of any suits, claims, actions, investigations or proceedings,
whether judicial or administrative, challenging this Agreement or the
consummation of the transactions contemplated hereby, including seeking to have
any stay or temporary restraining order entered by any court or other
Governmental Entity vacated or reversed, (v) the execution or delivery by
Company officers of any filings with the Internal Revenue Service under Internal
Revenue Code Section 9100 or with any other Governmental Entity which filings
Parent reasonably determines to be necessary to maximize and secure tax
attributes of Company or the Surviving Corporation, and (vi) the execution or
delivery of any additional instruments necessary to consummate the transactions
contemplated by, and to fully carry out the purposes of, this Agreement.
Notwithstanding anything in this Agreement to the contrary, neither Parent nor
any of its subsidiaries or affiliates shall be under any obligation to consent
or otherwise agree to, or to make proposals to sell or otherwise dispose or hold
separate (through the establishment of a trust or otherwise) any assets or
categories of assets of Parent, any of its affiliates or Company, or hold
separate the Company Common Stock (or shares of stock of the Surviving
Corporation), or any limitation or regulation on the ability of Parent or any of
its subsidiaries or affiliates to freely conduct their business or own assets or
to acquire, hold or exercise full rights of ownership of the shares of Company
Common Stock (or shares of stock of the Surviving Corporation).
(b) Each of Company and Parent will give prompt notice to the other
of (i) any notice or other communication from any person alleging that the
consent of such person is or may be required in connection with the Merger, (ii)
any notice or other communication from any Governmental Entity in connection
with the Merger, (iii) any litigation relating to, involving or otherwise
affecting Company, Parent or their respective subsidiaries that relates to or
may reasonably be expected to affect, the consummation of the Merger. Company
shall give prompt
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notice to Parent of any representation or warranty made by it contained in this
Agreement becoming untrue or inaccurate in any material respects, or any failure
of Company to comply with or satisfy in any material respect any covenant,
condition or agreement to be complied with or satisfied by it under this
Agreement, in each case, such that the conditions set forth in Section 6.3 would
not be satisfied; provided, however, that no such notification shall affect the
representations, warranties, covenants or agreements of the parties or the
conditions to the obligations of the parties under this Agreement. Parent shall
give prompt notice to Company of any representation or warranty made by it or
Merger Sub contained in this Agreement becoming untrue or inaccurate, or any
failure of Parent or Merger Sub to comply with or satisfy in any material
respect any covenant, condition or agreement to be complied with or satisfied by
it under this Agreement, in each case, such that the conditions set forth in
Section 6.2 would not be satisfied; provided, however, that no such notification
shall affect the representations, warranties, covenants or agreements of the
parties or the conditions to the obligations of the parties under this
Agreement.
(c) In order to facilitate the integration of the operations of
Parent and Company and their subsidiaries and to permit the coordination of
their related operations on a timely basis, and in an effort to accelerate the
earliest time possible following the Effective Time the benefits expected to be
realized by the parties as a result of the Merger, Company shall, and shall
cause its subsidiaries to, consult with Parent on all strategic and operational
matters to the extent such consultation is not in violation of applicable law,
including laws regarding exchange of information and other laws regarding
competition. Subject to the forgoing limitations, Company will, and will cause
its subsidiaries to, make available to Parent at its facilities and those of its
subsidiaries, where determined by Parent to be appropriate and necessary, office
space in order to assist in observing all operations and reviewing all matters
concerning the affairs of Company.
5.7 Third Party Consents. As soon as practicable following the date
hereof, Parent and Company will each use its commercially reasonable efforts to
obtain any material consents, waivers and approvals under any of its or its
subsidiaries' respective Contracts required to be obtained in connection with
the consummation of the transactions contemplated hereby.
5.8 ESPP. Company shall take all actions necessary pursuant to the terms
of the Company ESPP in order to shorten the Participation Period(s) under such
plan that includes the Effective Time (the "CURRENT OFFERINGS") such that a new
purchase date for each such Participation Period shall occur prior to the
Effective Time and shares shall be purchased by Company ESPP participants prior
to the Effective Time. The Current Offerings shall expire immediately following
such new purchase date, and the Company ESPP shall terminate immediately prior
to the Effective Time. Subsequent to such new purchase date, Company shall take
no action, pursuant to the terms of the Company ESPP, to commence any new
offering period.
5.9 Indemnification.
(a) For a period of six (6) years after the Effective Time, Parent
will cause the Surviving Corporation to fulfill and honor in all respects the
obligations of Company pursuant to any Contracts providing for indemnification
between Company and its directors and
- 43 -
officers as of the Effective Time (the "INDEMNIFIED PARTIES") and any
indemnification provisions under Company's Certificate of Incorporation or
Bylaws as in effect on the date hereof, in each case, subject to applicable law.
The Certificate of Incorporation and Bylaws of the Surviving Corporation will
contain provisions with respect to exculpation, indemnification and advancement
of fees and expenses that are at least as favorable to the Indemnified Parties
as those contained in the Certificate of Incorporation and Bylaws of Company as
in effect on the date hereof, which provisions will not be amended, repealed or
otherwise modified in any manner that would adversely affect the rights
thereunder of any Indemnified Party, subject to applicable law. Without limiting
the foregoing, Parent shall provide each Indemnified Party with liability
insurance for a period of six (6) years after the Effective Time no less
favorable in coverage and amount than any applicable insurance in effect
immediately prior to the Effective Time. An "Indemnified Party" shall be and
"Indemnified Parties" shall include each person who is or was a director or
officer of the Company or any Material Subsidiary of the Company at anytime
prior to Effective Time.
(b) This Section 5.9 shall survive the consummation of the Merger,
is intended to benefit Company, the Surviving Corporation and each Indemnified
Party, shall be binding on all successors and assigns of the Surviving
Corporation and Parent, and shall be enforceable by the Indemnified Parties.
5.10 Section 16 Matters. Company shall take all such steps as may be
required (to the extent permitted under applicable law) to cause any disposition
of Company Common Stock (including derivative securities with respect to Company
Common Stock) resulting from the transactions contemplated by Article I of this
Agreement by each Company Insider to be exempt under Rule 16b-3 promulgated
under the Exchange Act. "COMPANY INSIDERS" shall mean those officers and
directors of Company who are be subject to the reporting requirement of Section
16(b) of the Exchange Act with respect to Company.
5.11 Termination of Company Plans. Effective as of no later than the day
immediately preceding the Closing Date, Company shall terminate any and all
Company Employee Plans intended to include a Code Section 401(k) cash or
deferred arrangement (each, a "401(K) PLAN") (unless Parent provides written
notice to Company that such 401(k) plans shall not be terminated). Unless Parent
provides such written notice to Company, no later than five (5) business days
prior to the Closing Date, Company shall provide Parent with evidence that such
Company Employee Plan(s) have been terminated (effective as of the day
immediately preceding the Closing Date) pursuant to resolutions of the Board of
Directors of the Company. The form and substance of such resolutions shall be
subject to review and approval of Parent. Company also shall take such other
actions in furtherance of terminating any Company Employee Plan or Employee
Agreement as Parent may reasonably require. In the event that termination of a
401(k) Plan would reasonably be anticipated to trigger liquidation charges,
surrender charges or other fees, then Company shall take such actions as are
necessary to reasonably estimate the amount of such charges and/or fees and
provide such estimate in writing to Parent no later than fifteen (15) calendar
days prior to the Closing Date.
5.12 Employee Benefit Matters. As promptly as reasonably practicable after
the Effective Time, Parent shall enroll those persons who were employees of
Company or its subsidiaries immediately prior to the Effective Time and who
remain employees of the
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Surviving Corporation or its subsidiaries or become employees of Parent
following the Effective Time ("CONTINUING EMPLOYEES") in Parent's employee
benefit plans for which such employees are eligible (the "PARENT PLANS"),
including its medical plan, dental plan, life insurance plan and disability
plan, to the extent permitted by the terms of the applicable Parent Plans, on
substantially similar terms applicable to employees of Parent who are similarly
situated based on levels of responsibility. Without limiting the generality of
the foregoing, Parent shall recognize the prior service with the Company of each
of the Continuing Employees in connection with Parent's PTO policy, for purposes
of eligibility, vesting and levels of benefits. Notwithstanding anything in this
Section 5.12 to the contrary, this Section 5.12 shall not operate to (a)
duplicate any benefit provided to any Continuing Employee or to fund any such
benefit, (b) require Parent to continue to maintain any employee benefit plan in
effect following the Effective Time for Parent's employees, including the
Continuing Employees, or (c) be construed to mean the employment of the
Continuing Employees is not terminable by Parent at will at any time, with or
without cause, for any reason or no reason.
ARTICLE 6
CONDITIONS TO THE MERGER
6.1 Conditions to Obligations of Each Party to Effect the Merger. The
respective obligations of each party to this Agreement to effect the Merger
shall be subject to the satisfaction at or prior to the Closing Date of the
following conditions:
(a) Company Stockholder Approval. This Agreement shall have been
approved and adopted, and the Merger shall have been approved, by the requisite
vote of the stockholders of Company under applicable law, the rules of the
Nasdaq Stock Market and the Company Charter Documents.
(b) No Order; HSR Act. No Governmental Entity shall have enacted,
issued, promulgated, enforced or entered any statute, rule, regulation,
executive order, decree, injunction or other order (whether temporary,
preliminary or permanent) which is in effect and which has the effect of making
the Merger illegal or otherwise prohibiting consummation of the Merger. All
waiting periods, if any, under the HSR Act relating to the transactions
contemplated hereby will have expired or been terminated. Any foreign antitrust
approvals required to be obtained prior to the consummation of the Merger shall
have been obtained.
6.2 Additional Conditions to Obligations of Company. The obligation of
Company to consummate and effect the Merger shall be subject to the satisfaction
at or prior to the Closing Date of each of the following conditions, any of
which may be waived, in writing, exclusively by Company:
(a) Representations and Warranties. Each representation and warranty
of Parent and Merger Sub contained in this Agreement shall be true and correct
in all material respects (except for any statements in a representation or
warranty that expressly include a
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standard of materiality, which statements shall be true and correct in all
respects giving effect to such standard) as of the date of this Agreement and as
of the Closing Date with the same force and effect as if made on the Closing
Date, except that those representations and warranties which address matters
only as of a particular date (other than the date of this Agreement) shall
remain true and correct in all material respects (except for any statements in a
representation or warranty that expressly include a standard of materiality,
which statements shall be true and correct in all respects giving effect to such
standard) as of such date (it being understood that, for purposes of determining
the accuracy of such representations and warranties, any update of or
modification to the Parent Disclosure Letter made or purported to have been made
after the execution of this Agreement shall be given effect only if accepted in
writing by the Company. Company shall have received a certificate with respect
to the foregoing signed on behalf of Parent by an officer of Parent.
(b) Agreements and Covenants. Parent and Merger Sub shall have
performed or complied in all material respects with all agreements and covenants
required by this Agreement to be performed or complied with by them on or prior
to the Closing Date, and Company shall have received a certificate to such
effect signed on behalf of Parent by an officer of Parent.
6.3 Additional Conditions to the Obligations of Parent and Merger Sub. The
obligations of Parent and Merger Sub to consummate and effect the Merger shall
be subject to the satisfaction at or prior to the Closing Date of each of the
following conditions, any of which may be waived, in writing, exclusively by
Parent:
(a) Representations and Warranties. Each representation and warranty
of Company contained in this Agreement shall be true and correct in all material
respects (except for any statements in a representation or warranty that
expressly include a standard of materiality, which statements shall be true and
correct in all respects giving effect to such standard) as of the date of this
Agreement and as of the Closing Date with the same force and effect as if made
on the Closing Date, except that those representations and warranties which
address matters only as of a particular date (other than the date of this
Agreement) shall remain true and correct in all material respects (except for
any statements in a representation or warranty that expressly include a standard
of materiality, which statements shall be true and correct in all respects
giving effect to such standard) as of such date (it being understood that, for
purposes of determining the accuracy of such representations and warranties, any
update of or modification to the Company Disclosure Letter made or purported to
have been made after the execution of this Agreement shall be given effect only
if accepted in writing by Parent. Parent shall have received a certificate with
respect to the foregoing signed on behalf of Company by the Chief Executive
Officer or Chief Financial Officer of Company.
(b) Agreements and Covenants. Company shall have performed or
complied in all material respects with all agreements and covenants required by
this Agreement to be performed or complied with by it at or prior to the Closing
Date, and Parent shall have received a certificate to such effect signed on
behalf of Company by the Chief Executive Officer or Chief Financial Officer of
Company.
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(c) Legal Opinions. Parent shall have received the written legal
opinion of Linklaters Oppenhoff & Xxxxxx, legal counsel to Company, dated as of
the Closing Date, opining to the matters set forth in Exhibit B.
(d) No Restraints. There shall not be instituted, pending or
threatened any action, proceeding or hearing by any Governmental Entity (i)
seeking to restrain, prohibit, regulate or otherwise interfere with the
ownership or operation by Parent or any of its subsidiaries of all or any
portion of the business of Company or any of its subsidiaries or of Parent or
any of its subsidiaries or to compel Parent or any of its subsidiaries to
dispose of or hold separate all or any portion of the business or assets of
Company or any of its subsidiaries or of Parent or any of its subsidiaries, (ii)
seeking to impose or confirm limitations or regulations on the ability of Parent
or any of its subsidiaries effectively to exercise full rights of ownership of
the shares of Company Common Stock (or shares of stock of the Surviving
Corporation) including the right to vote any such shares on any matters properly
presented to stockholders or freely conduct Company's business or (iii) seeking
to require divestiture by Parent or any of its subsidiaries of any such assets
or shares.
(e) Consents. (i) All material required approvals or consents of any
Governmental Entity or other person in connection with the Merger and the
consummation of the other transactions contemplated hereby shall have been
obtained and become final and non-appealable (and all relevant statutory,
regulatory or other governmental waiting periods, shall have expired), and (ii)
all such approvals and consents which have been obtained shall have been so
obtained on terms that are not reasonably likely to materially affect the
ownership or operations of business by Parent.
(f) Dissenting Shares. The number of Dissenting Shares immediately
prior to the Effective Time shall not exceed three percent of the number of
shares of Company Common Stock outstanding immediately prior to the Effective
Time.
(g) Acknowledgements of Holders of Company Options. Holders of all
Company Options outstanding under Company's 1995 Directors Stock Option Plan and
2002 Directors Stock Option Plan shall have executed an acknowledgement to the
effect that (a) in connection with the Merger, such holders are entitled to only
the payments contemplated by Section 1.6(c)(ii) in exchange for their Company
Options and (b) on the Closing Date, such Company Options shall terminate
without further obligation or Liability of the Company, Acquiror or the
Surviving Corporation (other than to make the payments contemplated by Section
1.6(c)(ii)).
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ARTICLE 7
TERMINATION, AMENDMENT AND WAIVER
7.1 Termination. This Agreement may be terminated at any time prior to the
Effective Time, whether before or after the requisite approvals of the
stockholders of Company:
(a) by mutual written consent duly authorized by the Boards of
Directors of Parent and Company;
(b) by either Company or Parent if the Merger shall not have been
consummated by March 1, 2004 (the "OUTSIDE DATE") for any reason; provided,
however, that the right to terminate this Agreement under this Section 7.1(b)
shall not be available to any party whose action or failure to act has been a
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 breach of this
Agreement;
(c) by either Company or Parent if a Governmental Entity shall have
issued an order, decree or ruling or taken any other action, in any case having
the effect of permanently restraining, enjoining or otherwise prohibiting the
Merger, which order, decree, ruling or other action is final and nonappealable;
(d) by either Company or Parent, if the approval and adoption of
this Agreement and the approval of the Merger by the stockholders of Company
shall not have been obtained by reason of the failure to obtain the required
vote at a meeting of Company stockholders duly convened therefore or at any
adjournment thereof; provided, however, that the right to terminate this
Agreement under this Section 7.1(d) shall not be available to Company where the
failure to obtain Company stockholder approval shall have been caused by the
action or failure to act of Company and such action or failure to act
constitutes a material breach by Company of this Agreement;
(e) by Parent (at any time prior to the adoption and approval of
this Agreement and the Merger by the required vote of the stockholders of
Company) if a Triggering Event (as defined below) shall have occurred;
(f) by Company, upon a breach of any representation, warranty,
covenant or agreement on the part of Parent or Merger Sub set forth in this
Agreement, or if any representation or warranty of Parent or Merger Sub shall
have become untrue, in either case such that the conditions set forth in Section
6.2(a) or Section 6.2(b) would not be satisfied as of the time of such breach or
as of the time such representation or warranty shall have become untrue;
provided that if such inaccuracy in Parent's or Merger Sub's representations and
warranties or breach by Parent or Merger Sub is curable prior to the Outside
Date by Parent or Merger Sub through the exercise of its commercially reasonable
efforts, then Company may not terminate this Agreement under this Section 7.1(g)
for 30 days after delivery of written notice from Company to Parent of such
breach, provided Parent or Merger Sub, as applicable, continues to exercise
commercially reasonable efforts to cure such breach (it being understood that
Company may not terminate this Agreement pursuant to this Section 7.1(g) if such
breach by Parent or
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Merger Sub is cured during such 30-day period, or if Company shall have
materially breached this Agreement); or
(g) by Parent, upon a breach of any representation, warranty,
covenant or agreement on the part of Company set forth in this Agreement, or if
any representation or warranty of Company shall have become untrue, in either
case such that the conditions set forth in Section 6.3(a) or Section 6.3(b)
would not be satisfied as of the time of such breach or as of the time such
representation or warranty shall have become untrue; provided that if such
inaccuracy in Company's representations and warranties or breach by Company, is
curable prior to the Outside Date by Company through the exercise of its
commercially reasonable efforts, then Parent may not terminate this Agreement
under this Section 7.1(g) for 30 days after delivery of written notice from
Parent to Company of such breach, provided Company continues to exercise
commercially reasonable efforts to cure such breach (it being understood that
Parent may not terminate this Agreement pursuant to this section 7.1(g) if such
breach by Company is cured during such 30-day period, or if Parent or Merger Sub
shall have materially breached this Agreement).
For the purposes of this Agreement, a "TRIGGERING EVENT" shall be deemed to have
occurred if: (i) the Board of Directors of Company or any committee thereof
shall for any reason have withdrawn or shall have amended or modified in a
manner adverse to Parent its unanimous recommendation in favor of the adoption
and approval of the Agreement or the approval of the Merger; (ii) Company shall
have failed to include in the Proxy Statement the unanimous recommendation of
the Board of Directors of Company in favor of the adoption and approval of the
Agreement and the approval of the Merger; (iii) the Board of Directors of
Company fails to reaffirm its unanimous recommendation in favor of the adoption
and approval of the Agreement and the approval of the Merger within 10 business
days after Parent requests in writing that such recommendation be reaffirmed;
(iv) the Board of Directors of Company or any committee thereof shall have
approved or publicly recommended any Acquisition Proposal; (v) Company shall
have entered into any letter of intent or other Contract with respect to any
Acquisition Proposal (other than a confidentiality agreement); (vi) Company
shall have materially breached any of the provisions of Sections 5.2 or 5.3; or
(vii) a tender or exchange offer relating to securities of Company shall have
been commenced by a person unaffiliated with Parent, and Company shall not have
sent to its security holders pursuant to Rule 14e-2 promulgated under the
Securities Act, within 10 business days after such tender or exchange offer is
first published sent or given, a statement disclosing that Company recommends
rejection of such tender or exchange offer.
7.2 Notice of Termination; Effect of Termination. Any proper termination
of this Agreement under Section 7.1 above will be effective immediately upon the
delivery of written notice of the terminating party to the other parties hereto.
In the event of the termination of this Agreement as provided in Section 7.1,
this Agreement shall become void and of no further force or effect with no
liability on the part of any party hereto, except (i) as set forth in this
Section 7.2, Section 7.3 and ARTICLE 8, each of which shall survive the
termination of this Agreement, and (ii) nothing herein shall relieve any party
from liability for any willful breach of this Agreement. No termination of this
Agreement shall affect the obligations of the parties contained in the
Confidentiality Agreement, all of which obligations shall survive termination of
this Agreement in accordance with their terms.
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7.3 Fees and Expenses.
(a) General. Except as set forth in this Section 7.3, each party
shall bear its respective legal, auditors', and financial advisors' fees and
other out-of-pocket professional fees and expenses incurred with respect to this
Agreement, the Merger and the transactions contemplated hereby ("TRANSACTION
EXPENSES"); provided, however, that:
(i) Parent shall bear all fees and expenses (other than Company's
attorneys' and accountants' fees and expenses) incurred in relation to filings
under the HSR Act and other required Antitrust Filings; and
(ii) In the event that this Agreement is terminated by Parent
pursuant to Section 7.1(d) Company shall promptly, but in no event later than
two days after the date of such termination, reimburse Parent for its reasonable
Transaction Expenses.
(b) Company Payments. In the event that this Agreement is terminated
by Parent or Company, as applicable, pursuant to Sections 7.1(b), 7.1(d), 7.1(e)
or 7.1(g), Company shall promptly, but in no event later than two days after the
date of such termination, pay Parent a fee equal to $3,135,000 in immediately
available funds (the "TERMINATION FEE"), less any amounts actually paid by
Company to Parent pursuant to Section 7.3(a)(ii) hereof; provided, that in the
case of a termination under Sections 7.1(b), 7.1(d) or 7.1(g) prior to which no
Triggering Event has occurred, such payment shall be made only if (A) following
the date of this Agreement and prior to the termination of this Agreement, a
person has publicly announced an Acquisition Proposal and (B) within nine months
following the termination of this Agreement, either (x) a Company Acquisition
(as defined below) is consummated, or (y) Company enters into a Contract
providing for a Company Acquisition and thereafter such Company Acquisition is
consummated, substantially upon the terms provided in such Contract, and (ii)
such payment shall be made promptly, but in no event later than two days after
the consummation of any such Company Acquisition or the entry by Company into
any such Contract. Company acknowledges that the agreements contained in this
Section 7.3(b) are an integral part of the transactions contemplated by this
Agreement, the amount of, and the basis for payment of, the Termination Fee are
reasonable and appropriate in all respects, and that, without these agreements,
Parent would not enter into this Agreement. Accordingly, if Company fails to pay
in a timely manner the Termination Fee due pursuant to this Section 7.3(b), and,
in order to obtain such payment, Parent makes a claim that results in a judgment
against Company for the amounts set forth in this Section 7.3(b), Company shall
pay to Parent its reasonable costs and expenses (including attorneys' fees and
expenses) in connection with such suit, together with interest on the amounts
set forth in this Section 7.3(b) at the prime rate of Bank of America, N.A. in
effect on the date such payment was required to be made. Payment of the fees
described in this Section 7.3(b) shall not be in lieu of damages incurred in the
event of breach of this Agreement.
For the purposes of this Agreement, "COMPANY ACQUISITION" shall mean any of the
following transactions (other than the transactions contemplated by this
Agreement); (i) a merger, consolidation, business combination, recapitalization,
liquidation, dissolution or similar transaction involving Company pursuant to
which the stockholders of Company immediately preceding such transaction hold
less than 50% of the aggregate equity interests in the surviving or resulting
entity of such transaction, (ii) a sale or other disposition by Company or any
of its
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subsidiaries of assets (in a transaction or series of transactions) representing
in excess of 50% of the aggregate fair market value of Company's business
immediately prior to such sale, (iii) the acquisition by any person or "group"
(including by way of a tender offer or an exchange offer or issuance by
Company), directly or indirectly, of beneficial ownership or a right to acquire
beneficial ownership of shares representing in excess of 50% of the voting power
of the then outstanding shares of capital stock of Company.
7.4 Amendment. Subject to applicable law, this Agreement may be amended by
the parties hereto, by action taken or authorized by their respective Boards of
Directors, at any time before or after approval of the matters presented in
connection with the Merger by the stockholders of Company; provided, after any
such approval, no amendment shall be made which by law or in accordance with the
rules of any relevant stock exchange or the Nasdaq Stock Market requires further
approval by such stockholders without such further stockholder approval. This
Agreement may not be amended except by execution of an instrument in writing
signed on behalf of each of Parent, Merger Sub and Company. The agreement of
Parent to any Amendment shall be deemed to be the agreement of Merger Sub to
such amendment.
7.5 Extension; Waiver. At any time prior to the Effective Time any party
hereto may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties made to such
party contained herein or in any document delivered pursuant hereto and (iii)
waive compliance with any of the agreements or conditions for the benefit of
such party contained herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party. The agreement of Parent to any Amendment
shall be deemed to be the agreement of Merger Sub to such amendment. Delay in
exercising any right under this Agreement shall not constitute a waiver of such
right.
ARTICLE 8
GENERAL PROVISIONS
8.1 Non-Survival of Representations and Warranties. The representations
and warranties of Company, Parent and Merger Sub contained in this Agreement
shall terminate at the Effective Time, and only the covenants that by their
terms survive the Effective Time shall survive the Effective Time.
8.2 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed duly given (i) on the date of delivery if delivered
personally, (ii) on the date of confirmation of receipt (or, the first business
day following such receipt if the date is not a business day) of transmission by
facsimile, or (iii) on the date of confirmation of receipt (or, the first
business day following such receipt if the date is not a business day) if
delivered by a nationally recognized courier service. Subject to the foregoing,
all notices hereunder shall be delivered as set forth below, or pursuant to such
other instructions as may be designated in writing by the party to receive such
notice:
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If to Parent or Merger Sub, to:
Symantec Corporation
00000 Xxxxxxx Xxxxx Xxxx.
Xxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxxx, Xx. V.P. and General Counsel
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
with a copy to:
Fenwick & West LLP
Silicon Valley Center
000 Xxxxxxxxxx Xxxxxx
Xxxxxxxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Fax Number: (000) 000-0000
if to Company, to:
ON Technology Corporation
Waltham Xxxxx
000 Xxxxxx Xxxxxx, Xxxxxxxx 0
Xxxxxxx, XX 00000-0000
Attention: Xxxxxx X. Xxxxxxxxx, Chief Financial Officer
Fax Number: (000) 000-0000
with a copy to:
Xxxxxxx Xxxxxx & Green, P.C.
000 Xxxxxxxxxx Xxxxxx
00xx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000-0000
Attention: Xxxxx Xxxxx, Esq.
Fax Number: (000) 000-0000
8.3 Interpretation; Certain Defined Terms.
(a) When a reference is made in this Agreement to Exhibits, such
reference shall be to an Exhibit to this Agreement unless otherwise indicated.
When a reference is made in this Agreement to Articles or Sections, such
reference shall be to an Article or a Section of this Agreement unless otherwise
indicated. The words "INCLUDE," "INCLUDES" and "INCLUDING" when used herein
shall be deemed in each case to be followed by the words "WITHOUT LIMITATION."
The table of contents and headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. When reference is made herein to "THE BUSINESS OF" an entity,
such reference shall be deemed to include the business of all direct and
indirect subsidiaries of such entity. Reference to the subsidiaries of an entity
shall be deemed to include all direct and indirect subsidiaries of such entity.
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(b) For purposes of this Agreement, other than Section 2.12, the
term "AFFILIATES" shall mean a person that directly, or indirectly through one
or more intermediaries, controls, or is controlled by, or is under common
control with, the first-mentioned person;
(c) For purposes of this Agreement, "ENCUMBRANCES" means any lien,
pledge, hypothecation, charge, mortgage, security interest, encumbrance, claim,
infringement, interference, option, right of first refusal, preemptive right,
community property interest or restriction of any nature (including any
restriction on the voting of any security, any restriction on the transfer of
any security or other asset, any restriction on the receipt of any income
derived from any asset, any restriction on the use of any asset and any
restriction on the possession, exercise or transfer of any other attribute of
ownership of any asset).
(d) For purposes of this Agreement, the term "KNOWLEDGE" means with
respect to a party hereto, with respect to any matter in question, that any of
the corporate executive officers or directors of such party (as identified in
the case of Company and Parent in such party's proxy statement as filed with the
SEC for its most recent annual meeting of stockholders) has actual knowledge of
such matter. A party's corporate executive officer or director will be deemed to
have actual knowledge of a matter if such knowledge could be obtained by
reasonable inquiry of the individual(s) employed by such party charged with
administrative or operational responsibility for such matters for such party.
(e) For purposes of this Agreement, the term "MATERIAL ADVERSE
EFFECT," when used in connection with an entity, means any change, event,
circumstance or effect that is or is reasonably likely to be materially adverse
to the business, assets (including intangible assets), financial condition,
operations or results of operations of such entity taken as a whole with its
subsidiaries, except to the extent that any such change, event, circumstance or
effect proximately results from any of the following (none of which shall in and
of itself constitute a Material Adverse Effect): (i) changes in general economic
conditions or changes affecting the industry generally in which such entity
operates (provided that such changes do not affect such entity in a
substantially disproportionate manner), (ii) mere changes in the trading prices
or volume for such entity's capital stock, (iii) the public announcement or
pendency of the transactions contemplated by this Agreement on customers,
prospective customers, suppliers, distributors, partners, OEMs, licensors or
employees of such entity, or (iv) such entity's performing any of its
obligations under this Agreement.
(f) For purposes of this Agreement, the term "PERSON" shall mean any
individual, corporation (including any non-profit corporation), general
partnership, limited partnership, limited liability partnership, joint venture,
estate, trust, company (including any limited liability company or joint stock
company), firm or other enterprise, association, organization, entity or
Governmental Entity.
(g) For purposes of this Agreement, "SUBSIDIARY" of a specified
entity will be any corporation, partnership, limited liability company, joint
venture or other legal entity of which the specified entity (either alone or
through or together with any other subsidiary) owns, directly or indirectly, 50%
or more of the stock or other equity or partnership interests the holders of
which are generally entitled to vote for the election of the Board of Directors
or other governing body of such corporation or other legal entity.
- 53 -
8.4 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party, it being understood that all
parties need not sign the same counterpart.
8.5 Entire Agreement; Third Party Beneficiaries. This Agreement, its
Exhibits and the documents and instruments and other agreements among the
parties hereto as contemplated by or referred to herein, including the Company
Disclosure Letter and the Parent Disclosure Letter and any non-competition
agreement between Parent and employees of Company or its subsidiaries (a)
constitute the entire agreement among the parties with respect to the subject
matter hereof and supersede all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter hereof,
including that certain letter dated September 30, 2003 by and between Parent and
Company it being understood that the Confidentiality Agreement shall continue in
full force and effect until the Closing and shall survive any termination of
this Agreement; and (b) are not intended to confer upon any other person any
rights or remedies hereunder, except as specifically provided in Section 5.8.
8.6 Severability. In the event that any provision of this Agreement or the
application thereof, becomes or is declared by a court of competent jurisdiction
to be illegal, void or unenforceable, the remainder of this Agreement will
continue in full force and effect and the application of such provision to other
persons or circumstances will be interpreted so as reasonably to effect the
intent of the parties hereto. The parties further agree to replace such void or
unenforceable provision of this Agreement with a valid and enforceable provision
that will achieve, to the extent possible, the economic, business and other
purposes of such void or unenforceable provision.
8.7 Other Remedies; Specific Performance. Except as otherwise provided
herein, any and all remedies herein expressly conferred upon a party will be
deemed cumulative with and not exclusive of any other remedy conferred hereby,
or by law or equity upon such party, and the exercise by a party of any one
remedy will not preclude the exercise of any other remedy. The parties hereto
agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to seek an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
hereof in any court of the United States or any state having jurisdiction, this
being in addition to any other remedy to which they are entitled at law or in
equity.
8.8 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, regardless of the laws that
might otherwise govern under applicable principles of conflicts of law thereof.
8.9 Rules of Construction. The parties hereto agree that they have been
represented by counsel during the negotiation and execution of this Agreement
and, therefore, waive the application of any law, regulation, holding or rule of
construction providing that ambiguities in an agreement or other document will
be construed against the party drafting such agreement or document.
- 54 -
8.10 Assignment. No party may assign either this Agreement or any of its
rights, interests, or obligations hereunder without the prior written consent of
the other parties hereto. Subject to the preceding sentence, this Agreement
shall be binding upon and shall inure to the benefit of the parties hereto and
their respective successors and permitted assigns. Any purported assignment in
violation of this Section shall be void.
8.11 Attorneys' Fees. Should suit be brought to enforce or interpret any
part of this Agreement, the prevailing party shall be entitled to recover, as an
element of the costs of suit and not as damages, reasonable attorneys' fees to
be fixed by the court (including costs, expenses and fees on any appeal). The
prevailing party shall be entitled to recover its costs of suit.
8.12 Waiver Of Jury Trial. EACH OF PARENT, COMPANY AND MERGER SUB HEREBY
IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE ACTIONS OF PARENT, COMPANY OR MERGER SUB IN
THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT HEREOF.
* * * * *
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In Witness Whereof, the parties hereto have caused this Agreement and Plan of
Merger to be executed by their duly authorized respective officers as of the
date first written above.
SYMANTEC CORPORATION
By: ________________________________
Name: Xxxx X. Xxxxxxxx
Title: Chairman and Chief Executive Officer
OUTLAW ACQUISITION CORPORATION
By: ________________________________
Name: Xxxxxx X. Xxxxxxxxx
Title: Secretary
ON TECHNOLOGY CORPORATION
By: ________________________________
Name: Xxxxxx X. Xxxxxxx
Title: President and Chief Executive Officer
[SIGNATURE PAGE TO AGREEMENT AND PLAN OF MERGER]
LIST OF EXHIBITS
Exhibit A Form of Certificate of Merger
Exhibit B Matters to be Covered in the Opinion of Linklaters Oppenhoff &
Xxxxxx
