EXHIBIT 2.3
LIONBRIDGE TECHNOLOGIES, INC.,
LTI ACQUISITION CORP.
AND
INT'X.XXX, INC.
AMENDED AND RESTATED
AGREEMENT AND PLAN OF REORGANIZATION
Dated as of March 30, 2000
TABLE OF CONTENTS
ARTICLE I. THE MERGER..............................................................................................1
1.1 The Merger....................................................................................................1
1.2 Effects of the Merger.........................................................................................1
1.3 Closing.......................................................................................................2
1.4 Approval by the Stockholders of INT'X.xxx.....................................................................2
1.5 Approval by the Stockholders of Parent........................................................................2
ARTICLE II. CONVERSION AND EXCHANGE OF SHARES; DISSENTING SHARES...................................................2
2.1 Conversion of Shares of INT'X.xxx Stock.......................................................................2
2.2 Escrow Shares.................................................................................................6
2.3 Dissenting Shares.............................................................................................6
2.4 Delivery of Evidence of Ownership.............................................................................6
2.5 No Further Ownership Rights in INT'X.xxx Stock................................................................7
2.6 No Fractional Shares..........................................................................................7
2.7 Assumption of Stock Options...................................................................................7
2.8 Notes.........................................................................................................8
2.9 Bridge Notes..................................................................................................8
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF INT'X.XXX...........................................................8
3.1 Organization, Standing and Power; Subsidiaries................................................................9
3.2 Capital Structure............................................................................................10
3.3 Authority....................................................................................................11
3.4 Compliance with Laws and Other Instruments; Non-Contravention................................................11
3.5 Technology and Intellectual Property Rights..................................................................12
3.6 Financial Statements; Business Information...................................................................14
3.7 Taxes........................................................................................................15
3.8 Absence of Certain Changes and Events........................................................................17
3.9 Leases in Effect.............................................................................................18
3.10 Personal Property; Real Estate...............................................................................18
3.11 Certain Transactions.........................................................................................19
3.12 Litigation and Other Proceedings.............................................................................19
3.13 No Defaults..................................................................................................20
3.14 Major Contracts..............................................................................................20
3.15 Material Reductions..........................................................................................21
3.16 Insurance and Banking Facilities.............................................................................21
3.17 Employees....................................................................................................21
3.18 Employee Benefit Plans.......................................................................................22
3.19 Certain Agreements...........................................................................................23
3.20 Guarantees and Suretyships...................................................................................23
3.21 Brokers and Finders..........................................................................................24
3.22 Certain Payments.............................................................................................24
3.23 Environmental Matters........................................................................................24
3.24 Enforceability of Contracts, etc.............................................................................24
3.25 Accounting Matters...........................................................................................25
3.26 Year 2000....................................................................................................25
3.27 Disclosure...................................................................................................25
3.28 Reliance.....................................................................................................25
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB...............................................26
4.1 Organization and Qualification...............................................................................26
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4.2 Capitalization...............................................................................................26
4.3 Authority Relative to this Agreement.........................................................................27
4.4 Non-Contravention............................................................................................27
4.5 Reports and Financial Statements.............................................................................27
4.6 Validity of Parent Merger Shares.............................................................................28
4.7 Consents and Approvals of Governmental Authorities...........................................................28
4.8 Absence of Certain Changes or Events.........................................................................28
4.9 Litigation and Other Proceedings.............................................................................29
4.10 Disclosure...................................................................................................29
4.11 Reliance.....................................................................................................29
4.12 Brokers and Finders..........................................................................................29
4.13 Accounting Matters...........................................................................................29
ARTICLE V. COVENANTS OF INT'X.XXX.................................................................................29
5.1 Conduct of Business in Ordinary Course.......................................................................29
5.2 Dividends, Issuance of, or Changes in Securities.............................................................30
5.3 Governing Documents..........................................................................................31
5.4 No Acquisitions..............................................................................................31
5.5 No Dispositions..............................................................................................31
5.6 Indebtedness.................................................................................................31
5.7 Compensation.................................................................................................31
5.8 Claims.......................................................................................................31
5.9 Access to Properties and Records.............................................................................31
5.10 Breach of Representations and Warranties.....................................................................32
5.11 Consents.....................................................................................................32
5.12 Tax Returns..................................................................................................32
5.13 Exclusivity; Acquisition Proposals...........................................................................32
5.14 Notice of Events.............................................................................................33
5.15 Reasonable Best Efforts......................................................................................33
5.16 Insurance....................................................................................................33
5.17 Financial Statements.........................................................................................33
5.18 Confidentiality and Assignment of Inventions Agreements......................................................33
ARTICLE VI. COVENANTS OF PARENT...................................................................................33
6.1 Breach of Representations and Warranties.....................................................................33
6.2 Additional Information; Access...............................................................................34
6.3 Consents.....................................................................................................34
6.4 Reasonable Best Efforts......................................................................................34
6.5 Officers and Directors.......................................................................................34
6.6 Nasdaq National Market Listing...............................................................................34
6.7 Notice of Events.............................................................................................34
6.8 Third Party Beneficiaries....................................................................................34
6.9 Directors of Parent..........................................................................................35
ARTICLE VII. ADDITIONAL AGREEMENTS................................................................................35
7.1 Preparation of the Form S-4 and the Proxy Statement; Stockholders Meeting....................................35
7.2 Legal Conditions to the Merger...............................................................................37
7.3 Employee Benefits............................................................................................37
7.4 Expenses.....................................................................................................38
7.5 Additional Agreements........................................................................................38
7.6 Public Announcements.........................................................................................38
7.7 Confidentiality..............................................................................................38
7.8 Pooling......................................................................................................39
7.9 INT'X.xxx Voting Agreement...................................................................................39
7.10 Parent Voting Agreement......................................................................................39
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7.11 Xxxx-Xxxxx-Xxxxxx Filing.....................................................................................40
7.12 Board of Directors Meetings..................................................................................40
7.13 Employment, Consulting and Noncompetition Agreements.........................................................40
7.14 INT'X.xxx Conversion.........................................................................................40
7.15 Debt Adjustments.............................................................................................41
ARTICLE VIII. CONDITIONS PRECEDENT................................................................................41
8.1 Conditions to Each Party's Obligation to Effect the Merger...................................................41
8.2 Conditions of Obligations of Parent and Merger Sub...........................................................42
8.3 Conditions of Obligation of INT'X.xxx........................................................................44
ARTICLE IX. INDEMNIFICATION.......................................................................................45
9.1 Indemnification Relating to Agreement........................................................................45
9.2 Third Party Claims...........................................................................................45
9.3 Limitations..................................................................................................46
9.4 Binding Effect...............................................................................................47
9.5 Time Limit...................................................................................................47
9.6 Sole Remedy..................................................................................................47
ARTICLE X. TERMINATION............................................................................................47
10.1 Mutual Agreement.............................................................................................47
10.2 Termination by Parent........................................................................................47
10.3 Termination by INT'X.xxx.....................................................................................47
10.4 Outside Date.................................................................................................48
10.5 Effect of Termination........................................................................................48
ARTICLE XI. MISCELLANEOUS.........................................................................................48
11.1 Entire Agreement.............................................................................................48
11.2 Governing Law; Consent to Jurisdiction.......................................................................48
11.3 Notices......................................................................................................49
11.4 Severability.................................................................................................50
11.5 Survival of Representations and Warranties...................................................................50
11.6 Assignment...................................................................................................51
11.7 Counterparts.................................................................................................51
11.8 Amendment....................................................................................................51
11.9 Extension, Waiver............................................................................................51
11.10 Interpretation...............................................................................................51
11.11 Knowledge....................................................................................................51
11.12 Transfer, Sales, Documentary, Stamp and Other Similar Taxes..................................................51
11.13 Acknowledgement..............................................................................................52
EXHIBITS
EXHIBIT 1.1 -- Merger Documents
EXHIBIT 2.2 -- Escrow Agreement
EXHIBIT 2.4 -- Letter of Transmittal
EXHIBIT 7.1 -- Registration Rights Agreement
EXHIBIT 7.8(b) -- INT'X.xxx Affiliate Agreement
EXHIBIT 7.8(c) -- Parent Affiliate Agreement
EXHIBIT 7.9 -- INT'X.xxx Voting Agreement
EXHIBIT 7.10 -- Parent Voting Agreement
Exhibit 7.14 -- Conversion Notice
EXHIBIT 8.2 -- Opinion of Xxxx, Gerber & Xxxxxxxxx
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EXHIBIT 8.3 -- Opinion of Xxxxx, Xxxxxxx & Xxxxxxxxx, LLP
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AMENDED AND RESTATED
AGREEMENT AND PLAN OF REORGANIZATION
AMENDED AND RESTATED AGREEMENT AND PLAN OF REORGANIZATION, dated as
of March 30, 2000 (this "AGREEMENT"), by and among Lionbridge Technologies,
Inc., a Delaware corporation ("PARENT"); LTI Acquisition Corp., a Delaware
corporation and a wholly-owned subsidiary of Parent ("MERGER SUB"); and
INT'X.xxx, Inc., a Delaware corporation ("INT'X.XXX"). This Agreement amends
and restates in its entirety the Agreement and Plan of Reorganization dated
as of January 19, 2000 (THE "PRIOR AGREEMENT") by and among Parent, Merger
Sub and INT'X.xxx. All Exhibits and Schedules delivered with or attached to
the Prior Agreement shall be deemed to be delivered herewith or attached
hereto, as the case may be.
Intending to be legally bound, and in consideration of the mutual
representations, warranties, covenants and agreements contained herein,
Parent, Merger Sub and INT'X.xxx agree as follows:
ARTICLE I
THE MERGER
1.1 THE MERGER. Subject to the terms and conditions hereof, and
in accordance with the Delaware General Corporation Law (the "DGCL"), Merger
Sub will be merged with and into INT'X.xxx (the "MERGER"). A Certificate of
Merger and any other required documents (collectively, the "MERGER
DOCUMENTS"), substantially in the form attached as EXHIBIT 1.1, will be duly
prepared, executed and acknowledged by INT'X.xxx and Merger Sub and
thereafter delivered to the Secretary of State of Delaware for filing in
accordance with the DGCL contemporaneously with the Closing (as defined in
Section 1.3). The Merger will become effective at such time as the Merger
Documents have been filed with the Secretary of State of Delaware (the
"EFFECTIVE TIME"). Following the Merger, INT'X.xxx will continue as the
surviving corporation of the Merger (the "SURVIVING CORPORATION") under the
laws of the State of Delaware, and the separate corporate existence of Merger
Sub will cease.
1.2 EFFECTS OF THE MERGER. At and after the Effective Time, (i)
the Merger will have all of the effects provided by the Certificate of Merger
and applicable law, (ii) the Certificate of Incorporation of INT'X.xxx will
be amended in the form attached as APPENDIX A to EXHIBIT 1.1 until duly
further amended, (iii) the bylaws of Merger Sub will be the bylaws of the
Surviving Corporation until duly amended, (iv) the directors of Merger Sub
will be the directors of the Surviving Corporation, to hold office in
accordance with the bylaws of the Surviving Corporation, (v) the officers of
INT'X.xxx will be the officers of the Surviving Corporation, to hold office
in accordance with the bylaws of the Surviving Corporation and (vi) the
issued and outstanding certificates for the capital stock of Merger Sub will
be the issued and outstanding certificates initially representing all of the
issued capital stock of the Surviving Corporation. The Merger is intended to
be a reorganization within the meaning of Section 368(a)(2)(E) of the
Internal Revenue Code of 1986, as amended (the "CODE"), and this Agreement is
intended to constitute a "plan of reorganization" within the meaning of the
regulations promulgated under Section 368 of the Code.
1.3 CLOSING. The closing of the transactions contemplated by
this Agreement (the "CLOSING") will take place as soon as practicable (but no
more than three (3) business days) after satisfaction or waiver of the last
to be fulfilled of the conditions set forth in Article VIII that by their
terms are not to occur at the Closing (the "CLOSING DATE"), but in no event
later than June 30, 2000, at the offices of Xxxxx, Xxxxxxx & Xxxxxxxxx, LLP
in Boston, Massachusetts, unless another date or place is agreed to in
writing by Parent and INT'X.xxx. If all of the conditions set forth in
Article VIII hereof are determined to be satisfied (or duly waived) at the
Closing, concurrently with the Closing the parties hereto will cause the
Merger to be consummated by the filing of the Merger Documents with the
Secretary of State of Delaware. The Closing will be deemed to have concluded
at the Effective Time.
1.4 APPROVAL BY THE STOCKHOLDERS OF INT'X.XXX. INT'X.xxx will
take all action necessary in accordance with the DGCL, its Charter Documents
(as defined below) and any agreements to which it is a party to solicit the
approval of this Agreement, the Merger and all of the transactions
contemplated hereby by all stockholders of INT'X.xxx by means of a duly
convened meeting of stockholders. INT'X.xxx will use its reasonable best
efforts to obtain such stockholder approval. INT'X.xxx represents and
warrants that its Board of Directors has duly (i) approved the Merger in
accordance with the DGCL and (ii) resolved to recommend to the stockholders
of INT'X.xxx that they approve this Agreement, the Merger and all of the
transactions contemplated hereby.
1.5 APPROVAL BY THE STOCKHOLDERS OF PARENT. Parent will take
all action necessary to obtain the approval of the issuance of its shares in
connection with the Merger by the stockholders of Parent by means of a duly
convened meeting of the stockholders of Parent, as required by the rules of
the Nasdaq Stock Market, in accordance with the applicable requirements of
the DGCL, its Charter Documents and any agreements to which it is a party.
Parent will use its reasonable best efforts to obtain such stockholder
approval. Parent represents and warrants that its Board of Directors has duly
(i) approved the Merger in accordance with the DGCL and (ii) resolved to
recommend to the stockholders of Parent that they approve the issuance of its
shares in connection with the Merger.
ARTICLE II
CONVERSION AND EXCHANGE OF SHARES; DISSENTING SHARES
2.1 CONVERSION OF SHARES OF INT'X.XXX STOCK. (a) Subject,
without limitation, to the provisions of Section 2.3 hereof, at the Effective
Time, all of (i) the shares of Series A common stock, $0.01 par value per
share, of INT'X.xxx ("INT'X.XXX SERIES A COMMON STOCK"), Series B common
stock, $0.01 par value per share, of INT'X.xxx ("INT'X.XXX SERIES B COMMON
STOCK" and along with the Int'l Series A Common Stock, the "INT'X.XXX COMMON
STOCK"), Series A preferred stock, $0.01 par value per share, of INT'X.xxx
("INT'X.XXX SERIES A PREFERRED STOCK"), and Series B preferred stock, $0.01
par value per share, of INT'X.xxx ("INT'X.XXX SERIES B PREFERRED STOCK" and
along with the INT'X.xxx Series A Common Stock, the INT'X.xxx Series B Common
Stock and the INT'X.xxx Series A Preferred Stock, "INT'X.XXX CAPITAL STOCK")
issued and outstanding immediately prior to the Effective Time excluding any
INT'X.xxx Capital Stock held by Parent or Merger Sub or any other subsidiary
of Parent, or by INT'X.xxx or any subsidiary of INT'X.xxx, which shares
("EXCLUDED SHARES") will be automatically canceled in the Merger without
payment of any consideration therefor, and excluding Dissenting Shares (as
defined in Section 2.3 hereof)) will automatically, by virtue of the Merger
and without any action on the part of the holder thereof, be converted into
shares of common
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stock, $0.01 par value per share, of Parent ("PARENT COMMON STOCK") in
accordance with Section 2.1(e), and cash (rounded down to the nearest whole
cent) in lieu of fractional shares, if any, pursuant to Section 2.6 below.
Shares of INT'X.xxx Capital Stock that are actually issued and outstanding
immediately prior to the Effective Time (excluding the Excluded Shares) are
sometimes referred to herein as the "OUTSTANDING INT'X.XXX CAPITAL STOCK
SHARES." All rights, warrants or options to acquire INT'X.xxx Common Stock
and securities convertible into INT'X.xxx Common Stock (except for the
INT'X.xxx Series A Preferred Stock, the INT'X.xxx Series B Preferred Stock,
the Series C preferred stock, $0.01 par value per share, of INT'X.xxx
("INT'X.XXX SERIES C PREFERRED STOCK") and the Series D preferred stock,
$0.01 par value per share, of INT'X.xxx ("INT'X.XXX SERIES D PREFERRED
STOCK") and the INT'X.xxx Notes (as defined in Section 2.8 below)) that are
outstanding immediately prior to the Effective Time and do not expire
pursuant to their terms on or before the Closing (each of which is
specifically identified in Section 3.2 of the INT'X.xxx Disclosure Schedule
(as defined below)) are sometimes referred to herein as the "OUTSTANDING
INT'X.XXX OPTIONS."
(b) The aggregate number of shares of Parent Common Stock
to be issued in exchange for the acquisition of all Outstanding INT'X.xxx
Capital Stock Shares and the assumption of all Outstanding INT'X.xxx Options
will be equal to the Modified Share Amount (as defined in (d) below). Such
shares are herein referred to as the "PARENT STOCK MERGER SHARES".
(c) Subject, without limitation, to the provisions of
Section 2.3 hereof, at the Effective Time, all of the shares of INT'X.xxx
Series C Preferred Stock issued and outstanding immediately prior to the
Effective Time (excluding any INT'X.xxx Series C Preferred Stock held by
Parent or Merger Sub or any other subsidiary of Parent, or by INT'X.xxx or
any subsidiary of INT'X.xxx, which shares ("EXCLUDED SERIES C SHARES") will
be automatically canceled in the Merger without payment of any consideration
therefor, and excluding Dissenting Shares (as defined in Section 2.3
hereof)), will automatically, by virtue of the Merger and without any action
on the part of the holder thereof, be converted into shares of Parent Common
Stock in accordance with Section 2.1(f), and cash (rounded down to the
nearest whole cent) in lieu of fractional shares, if any, pursuant to Section
2.6 below. Shares of INT'X.xxx Series C Preferred Stock that are actually
issued and outstanding immediately prior to the Effective Time, excluding the
Excluded Series C Shares, are sometimes referred to herein as the
"OUTSTANDING INT'X.XXX SERIES C SHARES." Subject, without limitation, to the
provisions of Section 2.3 hereof, at the Effective Time, all of the shares of
INT'X.xxx Series D Preferred Stock issued and outstanding immediately prior
to the Effective Time (excluding any INT'X.xxx Series D Preferred Stock held
by Parent or Merger Sub or any other subsidiary of Parent, or by INT'X.xxx or
any subsidiary of INT'X.xxx, which shares ("EXCLUDED SERIES D SHARES") will
be automatically canceled in the Merger without payment of any consideration
therefor, and excluding Dissenting Shares (as defined in Section 2.3
hereof)), will automatically, by virtue of the Merger and without any action
on the part of the holder thereof, be converted into shares of Parent Common
Stock in accordance with Section 2.1(g), and cash (rounded down to the
nearest whole cent) in lieu of fractional shares, if any, pursuant to Section
2.6 below. Shares of INT'X.xxx Series D Preferred Stock that are actually
issued and outstanding immediately prior to the Effective Time, excluding the
Excluded Series D Shares, are sometimes referred to herein as the
"OUTSTANDING INT'X.XXX SERIES D SHARES" and along with the Outstanding
INT'X.xxx Capital Stock Shares and the Outstanding INT'X.xxx Series C Shares,
collectively the "OUTSTANDING INT'X.XXX SHARES."
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(d) The aggregate number of shares of Parent Common Stock to
be issued in exchange for the acquisition of all Outstanding INT'X.xxx Series C
Shares will be equal to the INT'X.xxx Series C Base Amount divided by the Parent
Average Closing Price. Such shares are herein referred to as the "PARENT SERIES
C MERGER SHARES". The aggregate number of shares of Parent Common Stock to be
issued in exchange for the acquisition of all Outstanding INT'X.xxx Series D
Shares will be equal to the INT'X.xxx Series D Base Amount divided by the Parent
Average Closing Price. Such shares are herein referred to as the "PARENT SERIES
D MERGER SHARES" and along with the Parent Stock Merger Shares, the Note Payment
Shares (as defined in Section 2.9 below) and the Parent Series C Merger Shares,
collectively the "PARENT MERGER SHARES".
The following definitions will be used in making the foregoing
calculations and for all other purposes of this Agreement:
"INT'X.XXX SERIES C BASE AMOUNT" will mean the aggregate accrued
liquidation preference of INT'X.xxx Series C Preferred Stock calculated as of
the Closing Date in accordance with the terms of the Charter Documents of
INT'X.xxx.
"INT'X.XXX SERIES D BASE AMOUNT" will mean the aggregate accrued
liquidation preference of INT'X.xxx Series D Preferred Stock calculated as of
the Closing Date in accordance with the terms of the Charter Documents of
INT'X.xxx.
"PARENT AVERAGE CLOSING PRICE" will be equal to the weighted average
closing price of the Parent Common Stock as publicly reported by the Wall
Street Journal over the twenty Trading Days ending two Trading Days prior to
the Prior Agreement Date (as defined below).
"MODIFIED SHARE AMOUNT" will mean the Share Amount LESS (i) the
number of Convertible Note Payment Shares (as defined in Section 2.8 below)
(ii) the number of Debt Payment Shares (as defined in Section 7.15 below) and
(iii) such number of shares of Parent Common Stock having a value (as
determined using the Parent Average Closing Price) equal to any expenses to
be borne by the stockholders of INT'X.xxx pursuant to Section 7.4.
"SHARE AMOUNT" will mean 8,150,000 shares of Parent Common Stock
(appropriately adjusted for any stock split, stock dividend, recapitalization
or similar event).
"TRADING DAY" will mean days on which closing prices for purchases
and sales of Parent Common Stock are reported by the Nasdaq National Market.
(e) The ratio at which one Outstanding INT'X.xxx Capital
Stock Share will be converted into shares of Parent Common Stock at the
Effective Time is herein called the "CONVERSION RATIO" and will be calculated
as set forth in this Section 2.1(e). Subject to Section 2.3, at the Effective
Time, each Outstanding INT'X.xxx Capital Stock Share will be converted into
the right to receive that number (which may be a fraction) of shares of
Parent Common Stock that equals the quotient obtained by DIVIDING the number
of Parent Stock Merger Shares by the sum of the number of Outstanding
INT'X.xxx Capital Stock Shares PLUS the number of shares of INT'X.xxx Common
Stock issuable upon the exercise or conversion of all Outstanding INT'X.xxx
Options. Each holder of Outstanding INT'X.xxx Capital Stock Shares will be
entitled to receive that aggregate number of shares of Parent Common Stock
equal to the Conversion Ratio multiplied by the number of Outstanding
INT'X.xxx
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Capital Stock Shares held by such holder immediately prior to the Effective
Time, subject to Section 2.3 herein.
(f) The ratio at which one Outstanding INT'X.xxx Series C
Share will be converted into shares of Parent Common Stock at the Effective
Time is herein called the "SERIES C CONVERSION RATIO" and will be calculated
as set forth in this Section 2.1(f). Subject to Section 2.3, at the Effective
Time, each Outstanding INT'X.xxx Series C Share will be converted into the
right to receive that number (which may be a fraction) of shares of Parent
Common Stock that equals the quotient obtained by DIVIDING the number of
Parent Series C Merger Shares by the number of Outstanding INT'X.xxx Series C
Shares. Each holder of Outstanding INT'X.xxx Series C Shares will be entitled
to receive that aggregate number of shares of Parent Common Stock equal to
the Series C Conversion Ratio multiplied by the number of Outstanding
INT'X.xxx Series C Shares held by such holder immediately prior to the
Effective Time, subject to Section 2.3 herein.
(g) The ratio at which one Outstanding INT'X.xxx Series D
Share will be converted into shares of Parent Common Stock at the Effective
Time is herein called the "SERIES D CONVERSION RATIO" and will be calculated
as set forth in this Section 2.1(g). Subject to Section 2.3, at the Effective
Time, each Outstanding INT'X.xxx Series D Share will be converted into the
right to receive that number (which may be a fraction) of shares of Parent
Common Stock that equals the quotient obtained by DIVIDING the number of
Parent Series D Merger Shares by the number of Outstanding INT'X.xxx Series D
Shares. Each holder of Outstanding INT'X.xxx Series D Shares will be entitled
to receive that aggregate number of shares of Parent Common Stock equal to
the Series D Conversion Ratio multiplied by the number of Outstanding
INT'X.xxx Series D Shares held by such holder immediately prior to the
Effective Time, subject to Section 2.3 herein.
(h) At the Effective Time, each share of common stock,
$0.01 par value, of Merger Sub issued and outstanding immediately prior to
the Effective Time will, by virtue of the Merger and without any action on
the part of the holder hereof, be converted into one share of common stock,
$0.01 par value per share, of the Surviving Corporation.
2.2 ESCROW SHARES. Ten percent (10%) of the Parent Merger
Shares issuable at Closing (excluding any Parent Merger Shares issuable after
the Closing with respect to Outstanding INT'X.xxx Options, the Excluded
Shares, the Series C Excluded Shares and the Series D Excluded Shares),
rounded up to the nearest whole share (the "ESCROW SHARES") will be deposited
and held in escrow in accordance with the Escrow Agreement attached as
EXHIBIT 2.2 (the "ESCROW AGREEMENT") as the sole source of indemnification
payments that may become due to Parent pursuant to Article IX or otherwise
prior to the release of the Escrow Shares pursuant to Section 3.1 of the
Escrow Agreement; provided that the aggregate liability of any single
stockholder for indemnification obligations pursuant to Article IX of this
Agreement shall be equal to a dollar amount equal to the Parent Average
Closing Price multiplied by the aggregate number of Escrow Shares deposited
in escrow by or on behalf of such stockholder; and provided, further, that
each INT'X.xxx stockholder shall be severally (and not jointly) liable beyond
such holder's allocable portion of the Escrow Shares solely in respect of any
breach by such stockholder of any representation or warranty contained in a
Letter of Transmittal (as defined in Section 2.4 below) delivered by such
stockholder. The Escrow Shares will be withheld on a pro rata basis among the
holders of the Outstanding INT'X.xxx Shares based on the number of Parent
Merger Shares issuable at the closing to such holders. The exact number of
Escrow Shares held for the account of each INT'X.xxx stockholder will be
determined at the Closing by the agreement in writing of Parent
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and INT'X.xxx. The delivery of the Escrow Shares will be made on behalf of
the holders of the Outstanding INT'X.xxx Shares in accordance with the
provisions hereof, with the same force and effect as if such shares had been
delivered by Parent directly to such holders and subsequently delivered by
such holders to the Escrow Agent. The adoption of this Agreement by
stockholders of INT'X.xxx will also constitute their approval of the terms
and provisions of the Escrow Agreement, including, without limitation, the
appointment of Xxxxxx Xxxxxxxxxx as the Indemnification Representative (as
defined in the Escrow Agreement), which is an integral term of the Merger.
2.3 DISSENTING SHARES. Any holder of shares of INT'X.xxx
Capital Stock, INT'X.xxx Series C Preferred Stock and INT'X.xxx Series D
Preferred Stock (collectively, the "INT'X.XXX STOCK") that are outstanding on
the record date for the determination of which holders will be entitled to
vote for or against the Merger who objects to the Merger and complies with
all of the provisions of the DGCL concerning the rights of holders to dissent
from the Merger and require appraisal (such shares are referred to as
"DISSENTING SHARES") will be entitled to exercise appraisal rights pursuant
to Section 262 of the DGCL with respect to such Dissenting Shares PROVIDED
THAT such holder meets all of the requirements of the DGCL with respect to
such Dissenting Shares, and will not be entitled to receive Parent Merger
Shares, unless otherwise provided by the DGCL or agreed in writing by Parent.
INT'X.xxx will, after consultation with Parent, give such notices with
respect to appraisal rights as may be required by the DGCL as soon as
practicable.
2.4 DELIVERY OF EVIDENCE OF OWNERSHIP. Prior to the Closing,
Parent shall send a notice and transmittal form in substantially the form of
EXHIBIT 2.4 hereto (individually, a "Letter of Transmittal" and collectively,
the "LETTERS OF TRANSMITTAL") to each holder of a certificate or other
documentation representing Outstanding INT'X.xxx Shares, other than
Dissenting Shares, each holder of a certificate or other documentation
representing Outstanding INT'X.xxx Shares, other than Dissenting Shares, will
surrender such certificates or other documentation to Parent or its designee,
and, if not previously delivered, (i) a duly executed counterpart of the
Escrow Agreement, (ii) a duly executed Letter of Transmittal and (iii) such
other duly executed documentation as may be reasonably required by Parent to
effect a transfer of such shares, and upon such surrender and after the
Effective Time each such holder will be entitled to receive promptly from
Parent or its transfer agent certificates registered in the name of such
holder representing the applicable number of Parent Merger Shares, and the
cash (calculated pursuant to Section 2.6, which will be paid by check), to
which such holder is entitled pursuant to the provisions of this Agreement,
with a portion of such shares to be deposited in escrow pursuant to the
Escrow Agreement, as provided in Section 2.2. The adoption of this Agreement
by stockholders of INT'X.xxx will also constitute their approval of the terms
and provisions of the Letter of Transmittal. In the event any certificates or
instruments representing Outstanding INT'X.xxx Shares or Outstanding
INT'X.xxx Options shall have been lost, stolen or destroyed, upon the making
and delivery of an affidavit of that fact by the person claiming same to have
been lost, stolen or destroyed and the posting by such person of a bonding
such reasonable amount as Parent may direct as indemnity against any claim
that would be made against Parent with respect to such certificate or
instrument, Parent will issue in exchange for such lost, stolen or destroyed
certificate or instrument the Parent Merger Shares and cash deliverable in
respect thereof pursuant to this Agreement.
2.5 NO FURTHER OWNERSHIP RIGHTS IN INT'X.XXX STOCK. The Merger
and its approval by the stockholders of INT'X.xxx and the execution of this
Agreement will be deemed, at the Effective Time, to constitute full
satisfaction and termination of all rights and agreements pertaining to
INT'X.xxx Stock pursuant to the DGCL, by contract or otherwise, except for
any rights pertaining to this
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Agreement. After the Effective Time, there will be no transfers on the stock
transfer books of INT'X.xxx of INT'X.xxx Stock or exercises of any options,
warrants or other rights to acquire INT'X.xxx Stock. Prior to or upon
Closing, INT'X.xxx will cause rights to purchase or acquire INT'X.xxx Stock
other than the Outstanding INT'X.xxx Options assumed pursuant to Section 2.7
below to either be exercised or canceled. Until surrendered to Parent, each
certificate for INT'X.xxx Stock will, after the Effective Time, represent
only the right to receive the right to receive cash and Parent Merger Shares
into which the shares of INT'X.xxx Stock formerly represented thereby will
have been converted pursuant to this Agreement. Any dividends or other
distribution declared after the Effective Time with respect to Parent Common
Stock will be paid to the holder of any certificate for shares of INT'X.xxx
Stock when the holder thereof is entitled to receive a certificate for such
holder's Parent Merger Shares in accordance with this Agreement.
2.6 NO FRACTIONAL SHARES. No certificates or scrip for
fractional shares of Parent Common Stock will be issued, no Parent stock
split or dividend will be paid in respect of any fractional share interest,
and no such fractional share interest will entitle the owner thereof to vote
or to any rights of or as a stockholder of Parent. In lieu of such fractional
shares, any holder of Outstanding INT'X.xxx Shares who would otherwise be
entitled to a fraction of a share of Parent Common Stock (after aggregating
all fractional shares of Parent Common Stock to be received by such holder)
will be paid the cash value of such fraction (rounded down to the nearest
whole cent), which will be equal to such fraction MULTIPLIED BY the Parent
Average Closing Price.
2.7 ASSUMPTION OF STOCK OPTIONS. At the Effective Time, Parent
shall assume each Outstanding INT'X.xxx Option and each holder thereof (each
an "OPTION HOLDER") shall thereby be entitled to acquire, by virtue of the
Merger and without any action on the part of the Option Holder, on
substantially the same terms (including the dates and extent of
exercisability) and subject to the same conditions, including vesting, as
such Outstanding INT'X.xxx Option, the number of shares of Parent Common
Stock determined by MULTIPLYING the number of shares of INT'X.xxx Common
Stock for which such Outstanding INT'X.xxx Option is then exercisable in
accordance with its terms immediately prior to the Effective Time by the
Conversion Ratio (rounded down to the nearest whole share), at an exercise or
conversion price per share of Parent Common Stock (rounded up to the nearest
whole cent) determined by dividing the exercise price per share of INT'X.xxx
Common Stock of such Outstanding INT'X.xxx Option immediately prior to the
Effective Time by the Conversion Ratio.
2.8 NOTES. The $2,000,000 in convertible promissory notes dated
August 20, 1999 of INT'X.xxx and any interest accrued thereon (the "INT'X.XXX
NOTES") shall be paid in full and cancelled by delivery of the Convertible
Note Payment Shares to the holders thereof in proportion to their respective
interests in the INT'X.xxx Notes. "CONVERTIBLE NOTE PAYMENT SHARES" shall
mean a number of shares of Parent Common Stock determined by dividing the
aggregate principal amount payable under the INT'X.xxx Notes plus any
interest accrued on the INT'X.xxx Notes as of the Closing by the Parent
Average Closing Price. In lieu of any fractional shares, any holder of an
INT'X.xxx Note who would otherwise be entitled to a fraction of a share of
Parent Common Stock (after aggregating all fractional shares of Parent Common
Stock to be received by such holder) will be paid the cash value of such
fraction (rounded down to the nearest whole cent), which will be equal to
such fraction MULTIPLIED BY the Parent Average Closing Price.
-7-
2.9 Bridge NOTES. The (i) $2,000,000 in subordinated promissory
notes of INT'X.xxx dated January 14, 2000, (ii) $1,000,000 in subordinated
promissory notes of INT'X.xxx dated March 8, 2000 and (iii) up to an
additional $2,000,000 in subordinated promissory notes of INT'X.xxx issued to
existing investors of INT'X.xxx on terms identical to the promissory notes
described in clause (ii) and any interest accrued thereon (collectively, the
"INT'X.XXX BRIDGE NOTES") shall be paid in full and cancelled by delivery of
the Bridge Note Payment Shares to the holders thereof in proportion to their
respective interests in the INT'X.xxx Bridge Notes. "BRIDGE NOTE PAYMENT
SHARES" shall mean a number of shares of Parent Common Stock determined by
dividing the aggregate principal amount payable under the INT'X.xxx Bridge
Notes plus any interest accrued on the INT'X.xxx Bridge Notes as of the
Closing by the Parent Average Closing Price. The Bridge Note Payment Shares
along with the Convertible Note Payment Shares herein referred to as the
"NOTE PAYMENT SHARES." In lieu of any fractional shares, any holder of an
INT'X.xxx Bridge Note who would otherwise be entitled to a fraction of a
share of Parent Common Stock (after aggregating all fractional shares of
Parent Common Stock to be received by such holder) will be paid the cash
value of such fraction (rounded down to the nearest whole cent), which will
be equal to such fraction MULTIPLIED BY the Parent Average Closing Price.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF INT'X.XXX
Except as set forth in the disclosure schedule of INT'X.xxx dated as
of January 19, 2000 (the "PRIOR AGREEMENT DATE") and delivered herewith to
Parent (the "INT'X.XXX DISCLOSURE SCHEDULE") which identifies the section and
subsection to which each disclosure therein relates (PROVIDED, HOWEVER, that
INT'X.xxx will be deemed to have adequately disclosed with respect to any
section or subsection any matters that are clearly described elsewhere in
such document if the applicability of such disclosure to such non-referenced
sections or subsections is apparent), and whether or not the INT'X.xxx
Disclosure Schedule is referred to in a specific section or subsection,
INT'X.xxx represents and warrants to Parent and Merger Sub as follows:
3.1 ORGANIZATION, STANDING AND POWER; SUBSIDIARIES.
(a) INT'X.xxx is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, has
all requisite corporate power and authority to own, lease and operate its
properties and to carry on its businesses as now being conducted, and is duly
qualified and in good standing to do business in each jurisdiction in which a
failure to so qualify would have a material adverse effect on the Business
Condition (as hereinafter defined) of INT'X.xxx.
As used in this Agreement, "BUSINESS CONDITION" with
respect to any Person (as defined below) means the business, financial
condition, results of operations, assets or prospects (as defined below)
(without giving effect to the consequences of the transactions contemplated
by this Agreement and the announcement thereof, and other than any changes
arising out of conditions affecting the economy or industry of the Person in
general which does not affect the Person in a materially disproportionate
manner relative to other participants in the economy or such industry,
respectively) of such Person or Persons including its Subsidiaries taken as a
whole. In this Agreement, a "SUBSIDIARY" of any Person means a corporation,
partnership, limited liability company, joint venture or other entity
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of which such Person directly or indirectly owns or controls a majority of
the equity interests or voting securities or other interests that are
sufficient to elect a majority of the Board of Directors or other managers of
such corporation, partnership, limited liability company, joint venture or
other entity. In this Agreement, the "Material INT'X.xxx Subsidiaries" shall
mean the following Subsidiaries of INT'X.xxx: International Communications
Europe GmbH; International Language Engineering Corporation; International
Communications Asia; and ILE Netherlands BV. In this Agreement, "PROSPECTS"
means events, conditions, facts or developments that are known to INT'X.xxx
or any Subsidiary and that in the reasonable course of events are expected to
have an effect on future operations of the business as presently conducted by
INT'X.xxx and its Subsidiaries, but will exclude the results of any changes
that are made at the specific written direction of Parent, that are
specifically contemplated herein, or that directly result from this
transaction or the announcement hereof. In this Agreement, "PERSON" means any
natural person, corporation, partnership, limited liability company, joint
venture or other entity. In this Agreement, "ordinary course of business"
means in the ordinary course of business and consistent with past practices.
All Subsidiaries of INT'X.xxx and their jurisdiction of
incorporation are completely and correctly listed in Section 3.1 of the
INT'X.xxx Disclosure Schedule. Each Subsidiary is a corporation duly
organized and validly existing under the laws of the jurisdiction of its
incorporation. INT'X.xxx has delivered to Parent complete and correct copies
of the articles or certificate of incorporation, bylaws and/or other primary
charter and organizational documents ("CHARTER DOCUMENTS") of INT'X.xxx and
the Material INT'X.xxx Subsidiaries, in each case, as amended to the Prior
Agreement Date. The minute books and stock records of INT'X.xxx and its
Subsidiaries are complete. Section 3.1 of the INT'X.xxx Disclosure Schedule
contains a complete and correct list of the officers and directors of
INT'X.xxx and any stockholders who beneficially own (as defined in Rule 13d
of the Securities Act) 5% or more of the outstanding capital stock of
INT'X.xxx.
(b) INT'X.xxx does not currently own, and has not owned
since January 1, 1998, directly or indirectly, any capital stock or other
equity securities of any corporation or have direct or indirect equity or
ownership interest in any partnership, limited liability company, joint
venture or other entity. All of the outstanding shares of capital stock of
each Subsidiary of INT'X.xxx are owned beneficially and of record by
INT'X.xxx, one of its other Subsidiaries, or any combination thereof, in each
case free and clear of any security interests, liens, charges, restrictions,
claims, encumbrances or assessments of any nature whatsoever ("LIENS"); and
there are no outstanding subscriptions, warrants, options, convertible
securities, or other rights (contingent or other) pursuant to which any of
the Subsidiaries is or may become obligated to issue any shares of its
capital stock to any Person other than INT'X.xxx or one of the other
Subsidiaries.
3.2 CAPITAL STRUCTURE.
(a) As of January 17, 2000, the authorized capital stock of
INT'X.xxx consisted of (i) 5,472,047 shares of preferred stock, $0.01 par value
per share ("INT'X.XXX PREFERRED STOCK"), of which 867,047 shares had been
designated INT'X.xxx Series A Preferred Stock, 867,047 of which were issued and
outstanding, of which 3,500,000 shares had been designated INT'X.xxx Series B
Preferred Stock, 2,621,477 of which were issued and outstanding, of which 5,000
had been designated INT'X.xxx Series C Preferred Stock, 5,000 of which were
issued and outstanding, and of which 1,100,000 shares had been designated
INT'X.xxx Series D Preferred Stock, 936,991 of which were issued and
outstanding; and (ii) 14,527,953 shares of INT'X.xxx Common Stock, $0.01 par
value per
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share, of which 11,077,953 shares had been designated INT'X.xxx Series A
Common Stock, and 3,450,000 shares had been designated INT'X.xxx Series B
Common Stock, and 5,879,271 shares of Common Stock were issued and
outstanding and no shares of INT'X.xxx Common Stock were issued and held as
treasury shares by INT'X.xxx. The INT'X.xxx Disclosure Schedule sets forth
all holders of INT'X.xxx Common Stock and INT'X.xxx Preferred Stock and the
number of shares owned. The INT'X.xxx Disclosure Schedule also sets forth any
options, warrants, calls, conversion rights, commitments, agreements,
contracts, understandings, restrictions, arrangements or rights of any
character (each, an "INT'X.XXX OPTION") to which INT'X.xxx is a party or by
which INT'X.xxx may be bound obligating INT'X.xxx to issue, deliver or sell,
or cause to be issued, delivered or sold, additional shares of INT'X.xxx
Common Stock, or obligating INT'X.xxx to grant, extend, or enter into any
such option, warrant, call, conversion right, conversion payment, commitment,
agreement, contract, understanding, restriction, arrangement or right.
INT'X.xxx does not have any outstanding options, warrants, calls, conversion
rights, commitments, agreements, contracts, understandings, restrictions,
arrangements or rights of any character to which INT'X.xxx is a party or by
which INT'X.xxx may be bound obligating INT'X.xxx to issue, deliver or sell,
or cause to be issued, delivered or sold, additional shares of INT'X.xxx
Preferred Stock.
(b) All outstanding shares of INT'X.xxx Common Stock and
INT'X.xxx Preferred Stock are, and any shares of INT'X.xxx Common Stock issued
upon exercise of any Outstanding INT'X.xxx Options will be, validly issued,
fully paid, nonassessable and not subject to any preemptive rights (other than
those which have been duly waived), or to any agreement to which INT'X.xxx is a
party or by which INT'X.xxx may be bound. Except for the INT'X.xxx Notes,
INT'X.xxx does not have outstanding any bonds, debentures, notes or other
indebtedness the holders of which (i) have the right to vote (or convertible or
exercisable into securities having the right to vote) with holders of shares of
INT'X.xxx Common Stock on any matter ("INT'X.XXX VOTING DEBT") or (ii) are or
will become entitled to receive any payment as a result of the execution of this
Agreement or the completion of the transactions contemplated hereby.
3.3 AUTHORITY. The execution, delivery and performance of this
Agreement, the Prior Agreement and all other agreements contemplated hereby by
INT'X.xxx have been duly authorized by all necessary action of the Board of
Directors of INT'X.xxx, and if the Closing shall occur, shall have been duly
authorized by all necessary action of the stockholders of INT'X.xxx (the
"INT'X.XXX REQUISITE STOCKHOLDER APPROVAL"). Certified copies of the resolutions
adopted by the Board of Directors of INT'X.xxx and its stockholders approving
this Agreement, the Prior Agreement, all other agreements contemplated hereby
and the Merger have been or will be provided to Parent prior to the Closing.
INT'X.xxx has duly and validly executed and delivered this Agreement and has, or
prior to Closing, will have duly and validly executed and delivered all other
agreements contemplated hereby to be executed by INT'X.xxx, and each of this
Agreement and such other agreements constitutes or upon execution and delivery
at or prior to the Closing will constitute a valid, binding and enforceable
obligation of INT'X.xxx in accordance with its terms.
3.4 COMPLIANCE WITH LAWS AND OTHER INSTRUMENTS;
NON-CONTRAVENTION. INT'X.xxx and its Subsidiaries hold, and at all times have
held or subsequently obtained, all licenses, permits and authorizations from
all Governmental Entities (as defined below) necessary for the lawful conduct
of their respective businesses pursuant to all applicable statutes, laws,
ordinances, rules and regulations of all such Governmental Entities having
jurisdiction over them or any part of their operations. There are no material
violations or claimed violations known by INT'X.xxx or any Subsidiary of any
such
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license, permit or authorization or any such statute, law, ordinance, rule or
regulation. Assuming the receipt of all Consents (as defined below), neither
the execution, delivery or performance of this Agreement and all other
agreements contemplated hereby by INT'X.xxx, nor the consummation of the
Merger or any other transaction described herein, does or will, after the
giving of notice, or the lapse of time, or otherwise, conflict with, result
in a breach of, or constitute a default under, the Charter Documents of
INT'X.xxx or any Material INT'X.xxx Subsidiary or any federal, foreign, state
or local court or administrative order or process, statute, law, ordinance,
rule or regulation, or any contract, agreement or commitment to which
INT'X.xxx or any Material INT'X.xxx Subsidiary is a party, or under which
INT'X.xxx or any Material INT'X.xxx Subsidiary is obligated, or by which
INT'X.xxx or any Material INT'X.xxx Subsidiary or any of the rights,
properties or assets of INT'X.xxx are subject or bound; result in the
creation of any Lien upon, or otherwise adversely affect, any of the rights,
properties or assets of INT'X.xxx or any Material INT'X.xxx Subsidiary;
terminate, amend or modify, or give any party the right to terminate, amend,
modify, abandon or refuse to perform or comply with, any contract, agreement
or commitment to which INT'X.xxx or any Material INT'X.xxx Subsidiary is a
party, or under which INT'X.xxx or any Material INT'X.xxx Subsidiary is
obligated, or by which INT'X.xxx or any of the rights, properties or assets
of INT'X.xxx or any Material INT'X.xxx Subsidiary are subject or bound; or
accelerate, postpone or modify, or give any party the right to accelerate,
postpone or modify, the time within which, or the terms and conditions under
which, any liabilities, duties or obligations are to be satisfied or
performed, or any rights or benefits are to be received, under any contract,
agreement or commitment to which INT'X.xxx or any Material INT'X.xxx
Subsidiary is a party, or under which INT'X.xxx or any Material INT'X.xxx
Subsidiary may be obligated, or by which INT'X.xxx or any Material INT'X.xxx
Subsidiary or any of the rights, properties or assets of INT'X.xxx or any
Material INT'X.xxx Subsidiary are subject or bound. Section 3.4 of the
INT'X.xxx Disclosure Schedule sets forth each agreement, contract or other
instrument binding upon INT'X.xxx requiring a notice or consent (by its terms
or as a result of any conflict or other contravention required to be
disclosed in the INT'X.xxx Disclosure Schedule pursuant to the preceding
provisions of this Section 3.4) as a result of the execution, delivery or
performance of this Agreement and all other agreements contemplated hereby by
INT'X.xxx or the consummation of the Merger or any other transaction
described herein (each such notice or consent, a "CONSENT"). No consent,
approval, order, or authorization of or registration, declaration, or filing
with or exemption (also a "CONSENT") by, any court, administrative agency or
commission or other governmental authority or instrumentality, whether
domestic or foreign (each a "GOVERNMENTAL ENTITY") is required by or on
behalf of INT'X.xxx or any Material INT'X.xxx Subsidiary in connection with
the execution, delivery or performance of this Agreement and all other
agreements contemplated hereby by INT'X.xxx or the consummation of the Merger
or any other transaction described herein, except for the filing by INT'X.xxx
and Merger Sub of the appropriate Merger Documents with the Secretary of
State of Delaware.
3.5 TECHNOLOGY AND INTELLECTUAL PROPERTY RIGHTS.
(a) For the purposes of this Agreement, "INT'X.XXX
INTELLECTUAL PROPERTY" consists of the following intellectual property:
(i) all patents, trademarks, trade names, service marks, trade
dress, copyrights and any renewal rights therefor, mask works,
schematics, software, firmware, technology, manufacturing processes,
supplier lists, customer lists, trade secrets, know-how, moral rights
and applications and registrations for any of the foregoing;
-11-
(ii) all documents, records and files relating to design, end
user documentation, manufacturing, quality control, sales, marketing or
customer support for all intellectual property described herein;
(iii) all other tangible or intangible proprietary information
and materials; and
(iv) all license and other rights in any third party product
or any third party intellectual property described in (i) through (iii)
above;
that are owned or held by or on behalf of INT'X.xxx or any Material INT'X.xxx
Subsidiary or that are being used, and/or have been used since January 1, 1999,
or are currently under development by or for INT'X.xxx or any Material INT'X.xxx
Subsidiary for use, in the business of INT'X.xxx or any Material INT'X.xxx
subsidiary as it has been, is currently or is currently planned to be conducted
in 2000; PROVIDED, HOWEVER, that the term INT'X.xxx Intellectual Property does
not include any commercially available third party software or related
intellectual property.
(b) Section 3.5 of the INT'X.xxx Disclosure Schedule lists:
(i) all patents, copyright registrations, mask works, registered trademarks,
registered service marks, trade dress, any renewal rights for any of the
foregoing, and any applications and registrations for any of the foregoing, that
are included in INT'X.xxx Intellectual Property and owned by or on behalf of
INT'X.xxx or any Material INT'X.xxx Subsidiary; (ii) all hardware products and
tools, software products and tools and services that are currently published,
offered, or under development by INT'X.xxx or any Material INT'X.xxx Subsidiary;
and (iii) all licenses, sublicenses and other agreements to which INT'X.xxx is a
party and pursuant to which INT'X.xxx or any Material INT'X.xxx Subsidiary or
any other person is authorized to use any INT'X.xxx Intellectual Property or
exercise any other right with regard thereto.
(c) INT'X.xxx Intellectual Property consists solely of
items and rights that are either: (i) owned solely by INT'X.xxx; (ii) in the
public domain; or (iii) rightfully used and authorized for use by INT'X.xxx
pursuant to a valid license. All INT'X.xxx Intellectual Property that
consists of license or other rights to third party property is separately set
forth in Section 3.5 of the INT'X.xxx Disclosure Schedule. INT'X.xxx has all
rights in INT'X.xxx Intellectual Property necessary to carry out INT'X.xxx's,
and each of its Subsidiaries', current activities, their activities conducted
by them since January 1, 1999 and their future activities planned for 2000,
including without limitation rights to make, use, exclude others from using,
reproduce, modify, adapt, create derivative works based on, translate,
distribute (directly and indirectly), transmit, display and perform publicly,
license, rent, lease, assign and sell INT'X.xxx Intellectual Property in all
geographic locations and fields of use, and to sublicense any or all such
rights to third parties, including the right to grant further sublicenses.
(d) Assuming the receipt of all Consents, INT'X.xxx is not,
nor as a result of the execution or delivery of this Agreement and all other
agreements contemplated hereby, or performance of INT'X.xxx's obligations
hereunder or the consummation of the Merger, will INT'X.xxx be, in violation of
any license, sublicense or other agreement relating to any INT'X.xxx
Intellectual Property to which INT'X.xxx is a party or otherwise bound.
INT'X.xxx is not obligated to provide any consideration (whether financial or
otherwise) to any third party, nor is any third party otherwise entitled to any
consideration, with respect to any exercise of rights by INT'X.xxx or the
Surviving Corporation, as successor to INT'X.xxx, in INT'X.xxx Intellectual
Property.
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(e) To the knowledge of INT'X.xxx or any of the Material
INT'X.xxx Subsidiaries, the use, reproduction, modification, distribution,
licensing, sublicensing, sale, or any other exercise of rights in any
product, work, technology, service or process as used, provided, or offered
at any time, or as proposed for use, reproduction, modification,
distribution, licensing, sublicensing, sale, or any other exercise of rights,
by INT'X.xxx or any Material INT'X.xxx Subsidiary does not infringe any
copyright, patent, trade secret, trademark, service xxxx, trade name, firm
name, logo, trade dress, mask work, moral right, other intellectual property
right, right of privacy, or right in personal data of any Person. No claims
(i) challenging the validity, effectiveness, or ownership by INT'X.xxx or any
Material INT'X.xxx Subsidiary of any INT'X.xxx Intellectual Property, or (ii)
to the effect that the use, reproduction, modification, manufacturing,
distribution, licensing, sublicensing, sale, or any other exercise of rights
in any product, work, technology, service, or process as used, provided or
offered at any time, or as proposed for use, reproduction, modification,
distribution, licensing, sublicensing, sale, or any other exercise of rights,
by INT'X.xxx or any Material INT'X.xxx Subsidiary infringes or will infringe
on any intellectual property or other proprietary or personal right of any
Person have been asserted to INT'X.xxx or any Material INT'X.xxx Subsidiary
in writing by any Person. Neither INT'X.xxx nor any Subsidiary has received
notice of any legal or governmental proceedings, including interference,
re-examination, reissue, opposition, nullity, or cancellation proceedings
pending that relate to any INT'X.xxx Intellectual Property, other than any
review of pending applications for patent. Neither INT'X.xxx nor any
Subsidiary is aware of any information indicating that any such proceedings
are threatened or contemplated by any Governmental Entity or any other
Person. All granted or issued patents and mask works and all registered
trademarks and copyright registrations owned by INT'X.xxx are valid,
enforceable and subsisting. To the knowledge of INT'X.xxx, there is no
unauthorized use, infringement, or misappropriation of any INT'X.xxx
Intellectual Property by any third party, employee or former employee.
(f) INT'X.xxx and its Subsidiaries has secured from all
parties who have created any portion of, or otherwise have any rights in or
to, INT'X.xxx Intellectual Property, valid and enforceable written
assignments of any such work or other rights to INT'X.xxx.
(g) Each consultant and subcontractor of INT'X.xxx and its
Subsidiaries has entered into a confidentiality and assignment of inventions
agreement substantially in the form attached to Section 3.5 of the INT'X.xxx
Disclosure Schedule.
3.6 FINANCIAL STATEMENTS; BUSINESS INFORMATION.
(a) INT'X.xxx has delivered to Parent audited consolidated
balance sheets (the "BALANCE SHEETS") as of December 31, 1999 (the "BALANCE
SHEET DATE") and December 31, 1998, and audited consolidated statements of
income and cash flows for the years ended December 31, 1999, December 31,
1998 and December 31, 1997 (all of such balance sheets and statements of
income and cash flows are collectively referred to as the "FINANCIAL
STATEMENTS"). The Financial Statements: (i) are in accordance with the books
and records of INT'X.xxx; (ii) present fairly, in all material respects, the
financial position of INT'X.xxx as of the date indicated and the results of
its operations and cash flows for such periods; and (iii) have been prepared
in accordance with generally accepted accounting principles consistently
applied (subject, in the case of unaudited statements, to the absence of
footnote disclosure and in the case of unaudited interim statements to
year-end adjustments, which will not be material either individually or in
the aggregate and except as described in the Section 3.6 of the
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INT'X.xxx Disclosure Schedule). As of the Balance Sheet Date, there were no
material liabilities, claims or obligations of any nature, whether accrued,
absolute, contingent, anticipated or otherwise, whether due or to become due,
that are not shown or provided for either in the Balance Sheets or Section
3.6 of the INT'X.xxx Disclosure Schedule, and since the Balance Sheet Date,
INT'X.xxx has incurred no liabilities, claims or obligations of any nature,
whether accrued, absolute, contingent, anticipated or otherwise other than in
the ordinary course of business and except for liabilities incurred by
INT'X.xxx in connection with the preparation and execution of this Agreement
and the consummation of the transactions contemplated herein.
(b) All of the accounts, notes and other receivables which
are reflected in the Balance Sheets were acquired in the ordinary course of
business; and, except to the extent reserved against in the Balance Sheets,
all of the accounts, notes and other receivables which are reflected therein
have been collected in full, or, to the knowledge of INT'X.xxx or any
Subsidiary, are valid, binding and enforceable in accordance with their terms
in the ordinary course of business, and arise from bona fide transactions,
and neither INT'X.xxx nor any Subsidiary has received notice that the same
are subject to counterclaims, refusals to pay or other rights of setoff. All
of the accounts, notes and other receivables which have been acquired by
INT'X.xxx or any Subsidiary since the Balance Sheet Date were acquired in the
ordinary course of business and have been collected in full, or to the
knowledge of INT'X.xxx or any Subsidiary, are valid, binding and enforceable
in accordance with their terms in the ordinary course of business, and arise
from bona fide transactions, and neither INT'X.xxx nor any Subsidiary has
received notice that the same are subject to counterclaims, refusals to pay
or other rights of setoff, subject to an appropriate reserve. No accounts,
notes or other receivables are contingent upon the performance by INT'X.xxx
or any Subsidiary of any obligation or contract. No Person has any Lien on
any of such receivables and no agreement for deduction or discount has been
made with respect thereto.
(c) The business information previously prepared by
INT'X.xxx and delivered to Parent was prepared in good faith, based on
assumptions INT'X.xxx deemed, as of the date such information was delivered
to Parent, to be reasonable, and was prepared for planning purposes, although
no assurances are given that INT'X.xxx can or will engage in the activities
described therein or achieve the results projected therein.
3.7 TAXES.
(a) The term "TAXES" as used herein means all federal,
state, local and foreign income tax, alternative or add-on minimum tax,
estimated, gross income, gross receipts, sales, use, ad valorem, value added,
transfer, franchise, capital profits, lease, service, license, withholding,
payroll, employment, excise, severance, stamp, occupation, premium, property,
environmental or windfall profit taxes, customs, duties and other taxes,
governmental fees and other like assessments and charges of any kind
whatsoever, together with all interest, penalties, additions to tax and
additional amounts with respect thereto, and the term "TAX" means any one of
the foregoing Taxes. The term "TAX RETURNS" as used herein means all returns,
declarations, reports, claims for refund, information statements and other
documents relating to Taxes, including all schedules and attachments thereto,
and including all amendments thereof, and the term "TAX RETURN" means any one
of the foregoing Tax Returns.
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(b) INT'X.xxx and each of its Subsidiaries has timely filed
all Tax Returns required to be filed and has paid all Taxes owed (whether or
not shown as due on such Tax Returns), including, without limitation, all
Taxes which INT'X.xxx or such Subsidiary is obligated to withhold for amounts
owing to employees, creditors and third parties. All Tax Returns filed by
INT'X.xxx and each of its Subsidiaries were complete and correct in all
respects, and such Tax Returns correctly reflected the facts regarding the
income, business, assets, operations, activities, status and other matters of
INT'X.xxx and each of its Subsidiaries and any other information required to
be shown thereon. None of the Tax Returns filed by INT'X.xxx or any of its
Subsidiaries or Taxes payable by INT'X.xxx or any of its Subsidiaries have
been the subject of an audit, action, suit, proceeding, claim, examination,
deficiency or assessment by any Governmental Entity, and no such audit,
action, suit, proceeding, claim, examination, deficiency or assessment is
currently pending or, to the knowledge of INT'X.xxx or any of its
Subsidiaries, threatened. Neither INT'X.xxx nor any Subsidiary is currently
the beneficiary of any extension of time within which to file any Tax Return,
and neither INT'X.xxx nor any Subsidiary has waived any statute of limitation
with respect to any Tax or agreed to any extension of time with respect to a
Tax assessment or deficiency. All material elections with respect to Taxes
affecting INT'X.xxx or any Subsidiary, as of the Prior Agreement Date, are set
forth in the Financial Statements or in Section 3.7 of the INT'X.xxx
Disclosure Schedule. None of the Tax Returns filed by INT'X.xxx or any
Subsidiary contain a disclosure statement under former Section 6661 of the
Code or Section 6662 of the Code (or any similar provision of state, local or
foreign Tax law). Neither INT'X.xxx nor any Subsidiary is a party to any Tax
sharing agreement or similar arrangement. Neither INT'X.xxx nor any Subsidiary
has ever been a member of a group filing a consolidated federal income Tax
Return (other than a group the common parent of which was INT'X.xxx), and
neither INT'X.xxx nor any Subsidiary has any liability for the Taxes of any
Person (other than INT'X.xxx) under Treasury Regulation Section 1.1502-6 (or
any corresponding provision of state, local or foreign Tax law), as a
transferee or successor, by contract, or otherwise.
(c) Neither INT'X.xxx nor any Subsidiary is a party to any
agreement, contract, arrangement or plan that has resulted or would result,
separately or in the aggregate, in the payment of (i) any "excess parachute
payments" within the meaning of Section 280G of the Code (without regard to
the exceptions set forth in Sections 280G(b)(4) and 280G(b)(5) of the Code) or
(ii) any amount for which a deduction would be disallowed or deferred under
Section 162 or Section 404 of the Code. Neither INT'X.xxx nor any Subsidiary
has agreed to make any adjustment under Section 481(a) of the Code (or any
corresponding provision of state, local or foreign law) by reason of a change
in accounting method or otherwise, and INT'X.xxx will not be required to make
any such adjustment as a result of the transactions set forth in this
Agreement. Neither INT'X.xxx nor any Subsidiary has or has had a permanent
establishment in any foreign country, as defined in any applicable Tax treaty
or convention between the United States and such foreign country. No portion
of the Parent Merger Shares is subject to the Tax withholding provisions of
Section 3406 of the Code, or of Subchapter A of Chapter 3 of the Code or of
any other provision of law. None of the assets of INT'X.xxx or any Subsidiary
is property which is required to be treated as being owned by any other Person
pursuant to the so-called "safe harbor lease" provisions of former Section
168(f)(8) of the Code. None of the assets of INT'X.xxx or any Subsidiary
directly or indirectly secures any debt, the interest on which is tax exempt
under Section 103(a) of the Code. None of the assets of INT'X.xxx or any
Subsidiary is "tax-exempt use property" within the meaning of Section 168(h)
of the Code. No claim has ever been made by any Governmental Entity in a
jurisdiction where INT'X.xxx or any Subsidiary does not file Tax Returns that
it is or may be subject to Tax in that jurisdiction. Neither INT'X.xxx nor any
Subsidiary has participated in an international boycott as defined in Section
999 of the Code. None of
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the shares of outstanding capital stock of INT'X.xxx or any Subsidiary are
subject to a "substantial risk of forfeiture" within the meaning of Section 83
of the Code.
(d) There are no liens for Taxes (other than for ad valorem
Taxes not yet due and payable) upon the assets of INT'X.xxx or any Subsidiary.
The unpaid Taxes of INT'X.xxx and its Subsidiaries did not, as of the Balance
Sheet Date, exceed the reserve for actual Taxes (as opposed to any reserve for
deferred Taxes established to reflect timing differences between book and Tax
income) as shown on the Balance Sheets, and will not exceed such reserve as
adjusted for the passage of time through the Closing Date in accordance with
the past custom and practice of INT'X.xxx and its Subsidiaries in filing their
Tax Returns (taking into account any Taxes incurred as a result of the
transactions contemplated by this Agreement). Section 3.7 of the INT'X.xxx
Disclosure Schedule sets forth INT'X.xxx's and each Subsidiary's Tax basis in
each of their respective assets. Neither INT'X.xxx nor any Subsidiary is a
party to any joint venture, partnership, limited liability company or other
arrangement or contract which could be treated as a partnership for federal
income tax purposes.
3.8 ABSENCE OF CERTAIN CHANGES AND EVENTS. Except for
liabilities incurred in connection with this Agreement and the transactions
contemplated hereby, from the Balance Sheet Date, there has not been:
(a) Any transaction involving more than $50,000 entered into
by INT'X.xxx or any Subsidiary other than in the ordinary course of business;
any change (or any development or combination of developments of which
INT'X.xxx or any Subsidiary has knowledge which is reasonably likely to result
in such a change) in INT'X.xxx's Business Condition, other than changes in the
ordinary course of business which in the aggregate have not been and are not
expected to be materially adverse to INT'X.xxx's Business Condition; or,
without limiting the foregoing, any loss of or damage to any of the properties
of INT'X.xxx or any Subsidiary due to fire or other casualty or other loss,
whether or not insured, amounting to more than $50,000 in the aggregate;
(b) Any declaration, setting aside or payment of any
dividend or other distribution with respect to any shares of capital stock of
INT'X.xxx or any Subsidiary, or any repurchase, redemption, retirement or
other acquisition by INT'X.xxx or any Subsidiary of any outstanding shares of
capital stock, any INT'X.xxx Option, or other securities of, or other equity
or ownership interests in, INT'X.xxx or any Subsidiary;
(c) Any discharge or satisfaction of any Lien or payment or
satisfaction of any obligation or liability (whether absolute, accrued,
contingent or otherwise and whether due or to become due) other than current
liabilities shown on the Balance Sheets and current liabilities incurred since
the Balance Sheet Date in the ordinary course of business;
(d) Any amendment of any term of any outstanding security of
INT'X.xxx;
(e) Any incurrence, assumption or guarantee by INT'X.xxx or
any Subsidiary of any indebtedness for borrowed money other than in the
ordinary course of business and in an aggregate amount exceeding $50,000;
(f) Any creation or assumption by INT'X.xxx or any
Subsidiary of any Lien on any asset in an aggregate amount exceeding $20,000;
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(g) Any making of any loan, advance or capital contributions
to, or investment in, any Person by INT'X.xxx or any Subsidiary;
(h) Any sale, lease, pledge, transfer or other disposition
of any material capital asset;
(i) Any material transaction or commitment made, or any
material contract or agreement entered into, by INT'X.xxx or any Subsidiary
relating to its assets or business (including the acquisition or disposition
of any assets) with a value of $100,000 or more or any relinquishment by
INT'X.xxx or any Subsidiary of any contract or other right with a value of
$100,000 or more;
(j) Any (A) grant of any severance or termination pay to any
director, officer or employee of INT'X.xxx or any Subsidiary, (B) entering
into of any employment, severance, management, consulting, deferred
compensation or other similar agreement (or any amendment to any such existing
agreement) with any director, officer or employee of INT'X.xxx or any
Subsidiary, (C) change in benefits payable under existing severance or
termination pay policies or employment, severance, management, consulting or
other similar agreements, (D) change in compensation, bonus or other benefits
payable to directors, officers or employees of INT'X.xxx or any Subsidiary in
excess of 7% or (E) change in the payment or accrual policy with respect to
any of the foregoing;
(k) Any labor dispute or any activity or proceeding by a
labor union or representative thereof to organize any employees of INT'X.xxx
or any Material INT'X.xxx Subsidiary, or any lockouts, strikes, slowdowns,
work stoppages or threats thereof by or with respect to any employees of
INT'X.xxx or any Material INT'X.xxx Subsidiary;
(l) Any issuance or sale of any stock, bonds, phantom stock
interest or other securities of which INT'X.xxx or any Subsidiary is the
issuer, or the grant, issuance or change of any stock options, warrants, or
other rights to purchase securities of INT'X.xxx or any Subsidiary or phantom
stock interest in INT'X.xxx or any Subsidiary other than issuances of common
stock in connection with exercises of employee stock options;
(m) Any cancellation of any debts or claims or waiver of any
rights in an aggregate amount exceeding reserves in the Financial Statements
by $50,000 or more;
(n) Any sale, assignment or transfer of any INT'X.xxx
Intellectual Property, including licenses therefor;
(o) Any capital expenditures, or commitment to make any
capital expenditures, for additions to property, plant or equipment in an
aggregate amount exceeding $50,000; or
(p) Any agreement undertaking or commitment to do any of the
foregoing.
3.9 LEASES IN EFFECT. All real property leases and subleases as
to which INT'X.xxx or any Subsidiary is a party and any amendments or
modifications thereof are listed in Section 3.9 of the INT'X.xxx Disclosure
Schedule (each a "LEASE" and collectively, the "LEASES") and are valid, in
full force and effect and enforceable, and there are no existing defaults on
the part of INT'X.xxx or any Subsidiary, and neither INT'X.xxx nor any
Subsidiary has received or given notice of default or
-17-
claimed default with respect to any Lease, nor is there any event that with
notice or lapse of time, or both, would constitute a default on the part of
INT'X.xxx or any Subsidiary, or, to the knowledge of INT'X.xxx and its
Subsidiaries, any other party thereunder.
3.10 PERSONAL PROPERTY; REAL ESTATE. (a) INT'X.xxx has good and
marketable title, free and clear of all title defects and Liens (including,
without limitation, leases, chattel mortgages, conditional sale contracts,
purchase money security interests, collateral security arrangements and other
title or interest-retaining agreements) to all inventory, receivables,
furniture, machinery, equipment and other personal property, tangible or
otherwise, reflected on the Balance Sheets or used in INT'X.xxx's business,
except for acquisitions and dispositions since the Balance Sheet Date in the
ordinary course of business. The INT'X.xxx Disclosure Schedule lists (i) all
computer equipment and (ii) all other personal property, in each case having a
depreciated book value of $10,000 or more, which are used by INT'X.xxx or any
Subsidiary in the conduct of its business, and all such equipment and
property, in the aggregate, is in good operating condition and repair,
reasonable wear and tear excepted. There is no asset used or required by
INT'X.xxx in the conduct of its business as presently operated which is not
either owned by it or licensed or leased to it.
(b) Section 3.10 of the INT'X.xxx Disclosure Schedule
contains a schedule setting forth all real property which is owned or leased
by INT'X.xxx or any Subsidiary, or in which INT'X.xxx or any Subsidiary has
any other right, title or interest. Neither INT'X.xxx nor any Subsidiary owns
any real property. True and complete copies of each lease have been provided
to Parent, and such leases constitute the entire understanding relating to
INT'X.xxx's or any Subsidiary's use and occupancy of the leased premises.
(c) INT'X.xxx and each Subsidiary has obtained consents for
all alterations made as of the Prior Agreement Date to each leased premise
described in Section 3.10 of the INT'L Disclosure Schedule and, upon the
expiration or earlier termination of the lease or sublease with respect
thereto, shall not be obligated to remove any such alterations or restore the
premises to the condition they were in prior to the time such alterations were
undertaken, except for removal or restoration obligations which individually
or in the aggregate do not exceed $25,000. To the knowledge of INT'X.xxx and
its Subsidiaries, the improvements located on the real property described in
Section 3.10 of the INT'X.xxx Disclosure Schedule are not the subject of and
neither INT'X.xxx nor any Subsidiary has received written notice of any
official complaint or of a violation of any applicable zoning ordinance or
building code. There is no condemnation proceeding pending or, to the
knowledge of INT'X.xxx and its Subsidiaries, threatened against INT'X.xxx or
any Subsidiary and to the knowledge of INT'X.xxx and its Subsidiaries there
are no use or occupancy restrictions on the real property described in Section
3.10 of the INT'X.xxx Disclosure Schedule.
3.11 CERTAIN TRANSACTIONS. Except for (a) relationships with
INT'X.xxx or any Subsidiary as an officer, director, or employee thereof (and
compensation by INT'X.xxx or any Subsidiary in consideration of such services)
and (b) relationships with INT'X.xxx as security holders therein, none of the
directors, officers, or stockholders of INT'X.xxx, or any member of any of
their families, is presently a party to, or was a party to during the year
preceding the Prior Agreement Date, any transaction, or series of similar
transactions, with INT'X.xxx or any Subsidiary, in which the amount involved
exceeds $60,000, including, without limitation, any contract, agreement, or
other arrangement (i) providing for the furnishing of services to or by, (ii)
providing for rental of real or personal property to or from, or (iii)
otherwise requiring payments to or from, any such Person or any other Person in
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which any such Person has or had a 5%-or-more interest (as a stockholder,
partner, beneficiary, or otherwise) or is or was a director, officer,
employee, or trustee, but excluding any transaction pursuant to existing
employee benefit plans. None of INT'X.xxx's officers or directors has any
interest in any property, real or personal, tangible or intangible, including
inventions, copyrights, trademarks, or trade names, used in or pertaining to
the business of INT'X.xxx or the Material INT'X.xxx Subsidiaries, or, to the
knowledge of INT'X.xxx, any material supplier, distributor, or customer of
INT'X.xxx or the Material INT'X.xxx Subsidiaries, except for the normal rights
of a securityholder, and except for rights under existing employee benefit
plans.
3.12 LITIGATION AND OTHER PROCEEDINGS. There is no action, suit,
claim, proceeding, or to the knowledge of INT'X.xxx or any Subsidiary,
investigation pending against or, to the knowledge of INT'X.xxx or any
Subsidiary, threatened against INT'X.xxx or any Subsidiary or any of their
respective properties and assets before any court or arbitrator or any
Governmental Entity. Neither INT'X.xxx nor any Subsidiary is subject to any
order, writ, judgment, decree, or injunction.
3.13 NO DEFAULTS. INT'X.xxx and the Material INT'X.xxx
Subsidiaries are not, nor has INT'X.xxx or any Material INT'X.xxx Subsidiary
received notice that it would be with the passage of time, in default or
violation of any term, condition, or provision of (i) its Charter Documents;
(ii) any judgment, decree, or order applicable to INT'X.xxx or any Material
INT'X.xxx Subsidiary; or (iii) any loan or credit agreement, note, bond,
mortgage, indenture, contract, agreement, lease, license, or other instrument
to which INT'X.xxx or any Material INT'X.xxx Subsidiary is now a party or by
which it or any of its properties or assets may be bound, except for defaults
and violations which have been validly waived, or which, individually or in
the aggregate, would not have a material adverse effect on the Business
Condition of INT'X.xxx.
3.14 MAJOR CONTRACTS. Neither INT'X.xxx nor any Material INT'X.xxx
Subsidiary is a party to or subject to:
(a) Any union contract, or any employment contract or
arrangement in effect (other than "at-will" employment arrangements) providing
for future compensation, written or oral, with any officer, consultant,
director, or employee;
(b) Any plan or contract or arrangement, written or oral,
providing for non-standard bonuses, pensions, deferred compensation,
retirement payments, profit-sharing or the like;
(c) Any joint venture contract or arrangement or any other
agreement which has involved or is expected to involve a sharing of profits;
(d) Any OEM agreement, reseller or distribution agreement,
volume purchase agreement, corporate end user sales or service agreement,
reproduction or replication agreement or manufacturing agreement in which the
amount involved exceeds annually, or is expected to exceed in the aggregate
over the life of the contract, $50,000 or pursuant to which INT'X.xxx has
granted or received manufacturing rights, most favored nation pricing
provisions, or exclusive marketing, production, publishing or distribution
rights related to any product, group of products or territory;
(e) Any agreement, license, franchise, permit, indenture,
or authorization which has not been terminated or performed in its entirety
and not renewed which may be, by its terms, terminated,
-19-
impaired, or adversely affected by reason of the execution of this Agreement
and all other agreements contemplated hereby, the consummation of the Merger,
or the consummation of the transactions contemplated hereby or thereby;
(f) Except for trade indebtedness incurred in the ordinary
course of business, any instrument evidencing or related in any way to
indebtedness incurred in the acquisition of companies or other entities or
indebtedness for borrowed money by way of direct loan, sale of debt
securities, purchase money obligation, conditional sale, guarantee, or
otherwise which individually is in the amount of $50,000 or more;
(g) Any license agreement in effect, either as licensor or
licensee (excluding nonexclusive hardware and software licenses granted to
distributors or end-users and commercially available in-licensed software
applications);
(h) Any contract or agreement containing covenants
purporting to limit INT'X.xxx's or the Material INT'X.xxx Subsidiaries'
freedom to compete in any line of business in any geographic area; or
(i) Any contract or agreement not elsewhere specifically
disclosed pursuant to this Agreement, involving the payment or receipt by
INT'X.xxx of more than $250,000 in the aggregate.
For purposes of this Section 3.14, a contract, agreement or
arrangement shall be considered "in effect" if INT'X.xxx or any Material
Subsidiary shall have any obligations or liabilities pursuant to such
contract, agreement or arrangement.
All contracts, arrangements, plans, agreements, leases, licenses,
franchises, permits, indentures, authorizations, instruments and other
commitments which are listed in the INT'X.xxx Disclosure Schedule pursuant to
this Section 3.14 are valid and in full force and effect and neither INT'X.xxx
nor any Material INT'X.xxx Subsidiary has, nor, to the knowledge of INT'X.xxx
and the Material INT'X.xxx Subsidiaries, has any other party thereto, breached
any material provisions of, or entered into default in any material respect
under the terms thereof. INT'X.xxx has delivered to Parent copies of the
contracts or agreements, and descriptions of any verbal agreements or
arrangements, referred to in this Section 3.14 as in effect on the Prior
Agreement Date.
3.15 MATERIAL REDUCTIONS. None of the parties to any of the
contracts identified in the INT'X.xxx Disclosure Schedule pursuant to Section
3.14 have terminated, or in any way expressed in writing to INT'X.xxx or any
Subsidiary an intent to reduce or terminate the amount of its business with
INT'X.xxx or any Subsidiary in the future.
3.16 INSURANCE AND BANKING FACILITIES. Section 3.16 of the
INT'X.xxx Disclosure Schedule contains a complete and correct list of (i) all
contracts of insurance or indemnity of INT'X.xxx in force at the Prior
Agreement Date (including name of insurer or indemnitor, agent, annual
premium, coverage, deductible amounts and expiration date) and (ii) the names
and locations of all banks in which INT'X.xxx has accounts or safe deposit
boxes, the designation of each such account and safe deposit box, and the
names of all persons authorized to draw on or have access to each such account
and safe deposit box. All premiums and other payments due from INT'X.xxx with
respect to any such contracts of insurance or indemnity have been paid, and
neither INT'X.xxx nor any Material
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INT'X.xxx Subsidiary knows of any fact, act, or failure to act which has or
could reasonably be expected to cause any such contract to be canceled or
terminated. All known claims for insurance or indemnity have been presented or
are described in Section 3.16 of the INT'X.xxx Disclosure Schedule.
3.17 EMPLOYEES. The INT'X.xxx Disclosure Schedule sets forth a
list as of January 12, 2000 of (a) the names, titles, annual salaries and all
bonuses of all salaried employees of INT'X.xxx and its Subsidiaries (such term
meaning permanent and temporary, full-time and part-time employees) and (b)
the wage rates for non-salaried employees of INT'X.xxx and its Subsidiaries.
Any persons engaged by INT'X.xxx as independent contractors, rather than
employees, have been properly classified as such and have been so engaged in
accordance with all applicable federal, foreign, state or local laws. No
employee that INT'X.xxx or any Material INT'X.xxx Subsidiary wishes to retain
has stated to INT'X.xxx or any Material INT'X.xxx Subsidiary that such
employee intends to resign or retire as a result of the transactions
contemplated by this Agreement or otherwise within six months after the
Closing Date. Hours worked by and payments made to employees of INT'X.xxx and
its Subsidiaries have not been in violation of the Fair Labor Standards Act or
any other applicable federal, foreign, state or local laws dealing with such
matters. Neither INT'X.xxx nor any Subsidiary is engaged in any dispute or
litigation with an employee or former employee regarding matters pertaining to
intellectual property or assignment of inventions. Neither INT'X.xxx nor any
Subsidiary, to the knowledge of INT'X.xxx and its Subsidiaries, is subject to
a union organizing effort. Neither INT'X.xxx nor any Subsidiary has any
written contract of employment or other employment, severance or similar
agreement with any of its employees or any established policy or practice
relating thereto, and all of its employees are employees-at-will. Neither
INT'X.xxx nor any Subsidiary is a party to any pending, or to the knowledge of
INT'X.xxx and its Subsidiaries, threatened, labor dispute. INT'X.xxx and its
Subsidiaries have complied in all material respects with all applicable
foreign, federal, state and local laws, ordinances, rules and regulations and
requirements relating to the employment of labor, including but not limited to
the provisions thereof relating to wages, hours, collective bargaining and
ensuring equality of opportunity for employment. There are no claims pending,
or, to the knowledge of INT'X.xxx and its Subsidiaries, threatened to be
brought, in any court or administrative agency by any former or current
employees of INT'X.xxx and its Subsidiaries for compensation, pending
severance benefits, vacation time, vacation pay or pension benefits, or any
other claim pending, or, to the knowledge of INT'X.xxx and its Subsidiaries,
threatened in any court or administrative agency from any current or former
employee or any other Person arising out of INT'X.xxx's or its Subsidiary's
status as employer, whether in the form of claims for employment
discrimination, harassment, unfair labor practices, grievances, wrongful
discharge, or otherwise.
3.18 EMPLOYEE BENEFIT PLANS. Each Plan (as defined below)
covering active, former, or retired employees of INT'X.xxx or any Subsidiary
is listed in Section 3.18 of the INT'X.xxx Disclosure Schedule. "PLAN" means
any employee benefit plan as defined in ERISA (as defined below), maintained
or contributed to by INT'X.xxx or any of its Subsidiaries within the past six
years, and also includes any employment, severance or similar contract,
arrangement or policy and each plan or arrangement providing for insurance
coverage (including any self-insured arrangements), workers' compensation,
disability benefits, supplemental unemployment benefits, vacation benefits,
pension or retirement benefits or for deferred compensation, profit-sharing,
bonuses, phantom stock, stock options, stock appreciation rights or other
forms of incentive compensation or post-retirement insurance, compensation or
benefits in existence within the past three years or for which there is an
unsatisfied liability. INT'X.xxx has made available to Parent a copy (or
description if no document exists) of each Plan, and where applicable, any
related trust agreement, annuity, or insurance contract.
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All annual reports (Form 5500) required to be filed with the Internal Revenue
Service have been properly filed on a timely basis, and INT'X.xxx has provided
copies of the three most recently filed Forms 5500 for each applicable Plan.
Any Plan intended to be qualified under Section 401(a) of the Code has been
determined by the Internal Revenue Service to be so qualified or, if no such
determination letter has been received, the form of such Plan complies with
the Code's requirements for qualification, except those requirements for which
the remedial amendment period has not expired, and no event has occurred which
is reasonably likely to threaten the tax-exempt status of such Plan or any
trust for such Plan. No Plan is covered by Title IV of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), or Section 412 of the Code.
No "prohibited transaction," as defined in ERISA Section 406 or Code Section
4975 has occurred with respect to any Plan, unless such a transaction was
exempt from such rules or would not give rise to a material tax or penalty.
Each Plan has been maintained and administered in material compliance with its
terms and with the requirements prescribed by any and all statutes, including
but not limited to ERISA and the Code, which are applicable to such Plans.
There are no pending or, to the knowledge of INT'X.xxx and its Subsidiaries,
anticipated claims against or otherwise involving any of the Plans and no
suit, action, or other litigation (excluding claims for benefits incurred in
the ordinary course of Plan activities) is currently pending against or with
respect to any Plan for which there is an unsatisfied liability. All
contributions, reserves, or premium payments to the Plan accrued to the Prior
Agreement Date have been made or provided for in accordance with prior funding
and accrual practices. Within the six year period preceding the Closing Date,
neither INT'X.xxx nor any Subsidiary, nor any entity which is considered one
employer with INT'X.xxx or any Subsidiary under Section 414 of the Code or
Section 4001 of ERISA has ever maintained or contributed to or incurred
liability with respect to any Plan subject to Title IV of ERISA or any
"multi-employer plan" within the meaning of Section 4001(a)(3) of ERISA, and
neither INT'X.xxx nor any Subsidiary expects to incur any such liability.
There are no restrictions on the rights of INT'X.xxx or any Subsidiary to
amend or terminate any Plan, subject to any applicable notice requirements
without incurring any liability thereunder other than for benefits accrued
prior to the date of termination or amendment. Neither INT'X.xxx nor any
Subsidiary has engaged in and, to the knowledge of INT'X.xxx and its
Subsidiaries, it is not a successor or parent corporation to an entity that
has engaged in a transaction described in ERISA Section 4069. There have been
no written interpretations of, or announcements (whether or not written) by
INT'X.xxx or any Subsidiary relating to, or change in employee participation
or coverage under, any Plan that would increase the expense of maintaining
such Plan above the level of the expense incurred in respect thereof for the
fiscal year ended prior to the Prior Agreement Date. Neither INT'X.xxx nor any
of its ERISA affiliates has any liability in respect of post-employment or
post-retirement welfare benefits for retired employees of INT'X.xxx or any
Subsidiary. Neither INT'X.xxx nor any Material INT'X.xxx Subsidiary nor any of
their ERISA Affiliates has any liability with respect to welfare benefits for
former employees other than health care continuation benefits required to be
provided under applicable law or which do not exceed three months in duration.
No tax under Section 4980B or 4980D of the Code has been incurred in respect
of any Plan that is a group health plan, as defined in Section 5000(b)(1) of
the Code.
3.19 CERTAIN AGREEMENTS. Except as contemplated by this
Agreement, neither the execution and delivery of this Agreement and all other
agreements contemplated hereby, nor the consummation of the transactions
contemplated hereby will: (i) result in any payment by INT'X.xxx or any
Subsidiary (including, without limitation, severance, unemployment
compensation, parachute payment, bonus or otherwise) becoming due to any
director, employee, or independent contractor of INT'X.xxx or any Subsidiary
under any Plan, agreement, or otherwise, (ii) increase any benefits otherwise
payable under
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any Plan or agreement or (iii) result in the acceleration of the time of
payment or vesting of any such benefits.
3.20 GUARANTEES AND SURETYSHIPS. INT'X.xxx and its Subsidiaries
have no powers of attorney outstanding (other than those issued in the
ordinary course of business with respect to Tax matters), and INT'X.xxx and
its Subsidiaries have no material obligations or liabilities (absolute or
contingent) as guarantor, surety, cosigner, endorser, co-maker, indemnitor, or
otherwise respecting the obligations or liabilities of any Person.
3.21 BROKERS AND FINDERS. INT'X.xxx has not retained any broker,
finder, or investment banker in connection with this Agreement or any of the
transactions contemplated by this Agreement, nor does or will INT'X.xxx or any
Subsidiary owe any fee or other amount to any broker, finder, or investment
banker in connection with this Agreement or the transactions contemplated by
this Agreement.
3.22 CERTAIN PAYMENTS. Neither INT'X.xxx nor any Subsidiary, nor
to the knowledge of INT'X.xxx and its Subsidiaries, any Person acting on
behalf of INT'X.xxx or any Subsidiary has, directly or indirectly, on behalf
of or with respect to INT'X.xxx or any Subsidiary: (i) made an unreported
political contribution, (ii) made or received any payment which was not legal
to make or receive, (iii) engaged in any material transaction or made or
received any material payment which was not properly recorded on the books of
INT'X.xxx and its Subsidiaries, (iv) created or used any "off-book" bank or
cash account or "slush fund," or (v) engaged in any conduct constituting a
violation of the Foreign Corrupt Practices Act of 1977.
3.23 ENVIRONMENTAL MATTERS. INT'X.xxx and its Subsidiaries have
complied in all material respects with all applicable federal, state and local
laws (including, without limitation, case law, rules, regulations, orders,
judgments, decrees, permits, licenses and governmental approvals) which are
intended to protect the environment and/or human health or safety
(collectively, "ENVIRONMENTAL LAWS"); neither INT'X.xxx nor any Subsidiary has
handled, generated, used, stored, transported or disposed of any material,
substance or waste which is regulated by Environmental Laws ("HAZARDOUS
MATERIALS"), except for ordinary office and/or office-cleaning supplies,
products, equipment, fluids and wastes customarily found, and in quantities
customarily found, in a commercial office setting, which have been used in
compliance with Environmental Laws; (iii) to the knowledge of INT'X.xxx and
its Subsidiaries there is not now, nor has there ever been, any underground
storage tank or asbestos on any real property owned, operated or leased by
INT'X.xxx; (iv) INT'X.xxx has not conducted, nor is it aware of, any
environmental investigations, studies, audits, tests, reviews or analyses, the
purpose of which was to discover, identify, or otherwise characterize the
condition of the soil, groundwater, air or the presence of Hazardous Materials
at any real property owned, operated or leased by INT'X.xxx; and (v) to the
knowledge of INT'X.xxx and its Subsidiaries there are no "Environmental
Liabilities". For purposes of this Agreement, "ENVIRONMENTAL LIABILITIES" are
any claims, demands, or liabilities under Environmental Laws which (i) arise
out of or in any way relate to INT'X.xxx's or its Subsidiary's operations or
activities, or any real property at any time owned, operated or leased by
INT'X.xxx or a Subsidiary, or any stockholder's use or ownership thereof,
whether vested or unvested, contingent or fixed, actual or potential, and (ii)
arise from or relate to actions occurring (including any failure to act) or
conditions existing on or before the Closing Date.
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3.24 ENFORCEABILITY OF CONTRACTS, ETC.
(a) No Person that is a party to any contract, agreement,
commitment or plan to which INT'X.xxx or a Subsidiary is a party has a valid
defense, on account of non-performance or malfeasance by INT'X.xxx or a
Subsidiary, which would make any such contracts, agreement, commitment or plan
not valid and binding upon or enforceable against such parties in accordance
with their terms, except to the extent such enforceability may be subject to or
limited by bankruptcy, insolvency, reorganization, arrangement or similar laws
affecting the rights of creditors generally and usual equity principles.
(b) Neither INT'X.xxx, nor any Subsidiary, nor to the
knowledge of INT'X.xxx and its Subsidiaries, any other Person, is in breach or
violation of, or default under, any material contract, agreement, arrangement,
commitment or plan to which INT'X.xxx or a Subsidiary is a party, and no event
or action has occurred, is pending, or, to the knowledge of INT'X.xxx and its
Subsidiaries, is threatened, which, after the giving of notice, or the lapse of
time, or otherwise, would constitute a breach or a default by INT'X.xxx or a
Subsidiary or, to the knowledge of INT'X.xxx and its Subsidiaries, any other
Person, under any material contract, agreement, arrangement, commitment or plan
to which INT'X.xxx or a Subsidiary is a party.
3.25 ACCOUNTING MATTERS. To the knowledge of INT'X.xxx and its
Subsidiaries, neither INT'X.xxx nor any of its Subsidiaries or affiliates has
taken or agreed to, or plans to, take any action that would prevent Parent
from accounting for the Merger as a "pooling of interests" in accordance with
generally accepted accounting principles, Accounting Principles Board Opinion
No. 16 and all published rules, regulations and policies of the Securities
and Exchange Commission (the "Commission").
3.26 YEAR 2000. All computer and other systems, software
(whether embedded or otherwise), hardware and other products owned or
licensed by INT'X.xxx or its Subsidiaries and used in connection with the
services provided by INT'X.xxx or its Subsidiaries and, to the knowledge of
INT'X.xxx and its Subsidiaries, all computer and other systems, software
(whether embedded or otherwise), hardware and other products produced by any
third party that are licensed by INT'X.xxx, in each case, have been written,
manufactured and tested to be Year 2000 Ready. For purposes of this
Agreement, "YEAR 2000 READY" shall mean, with respect to any systems,
software (whether embedded or otherwise), product, equipment or facility,
that such system, product, equipment or facility is capable of correctly
processing, providing, receiving and manufacturing the date data within and
between the twentieth and twenty-first centuries, and its operations and
functionality has not been adversely affected and will not be adversely
affected in any material respect as a result of the advent of the Year 2000.
3.27 DISCLOSURE. Neither the representations or warranties made
by INT'X.xxx in this Agreement, nor the INT'X.xxx Disclosure Schedule or any
other certificate executed and delivered by INT'X.xxx pursuant to this
Agreement, when taken together, contains any untrue statement of a material
fact, or omits to state a material fact necessary to make the statements or
facts contained herein or therein not misleading in light of the
circumstances under which they were furnished.
3.28 RELIANCE. The foregoing representations and warranties are
made by INT'X.xxx with the knowledge and expectation that Parent and Merger
Sub are placing reliance thereon.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Except as set forth in either the documents delivered pursuant to
Section 4.5 or in the disclosure schedule of Parent dated as of the Prior
Agreement Date and delivered herewith to INT'X.xxx (the "PARENT DISCLOSURE
SCHEDULE") which identifies the section and subsection to which each disclosure
therein relates (PROVIDED, HOWEVER, that Parent will be deemed to have
adequately disclosed with respect to any section or subsection any matters that
are clearly described elsewhere in such document if the applicability of such
disclosure to such non-referenced sections or subsections is apparent, and
whether or not the Parent Disclosure Schedule is) referred to in a specific
section or subsection, Parent and Merger Sub jointly and severally represent and
warrant to INT'X.xxx as follows:
4.1 ORGANIZATION AND QUALIFICATION. Parent is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware, has all requisite corporate power and authority to own,
lease and operate its properties and to carry on its businesses as now being
conducted, and is duly qualified and in good standing to do business in each
jurisdiction in which a failure to so qualify would have a material adverse
effect on the Business Condition of Parent. Each Subsidiary of Parent is a
corporation duly organized and validly existing under the laws of the
jurisdiction of its incorporation, and Merger Sub is recently organized, is
in good standing, and has conducted no business activities, other than as
contemplated by this Agreement. In this Agreement, "Material Parent
Subsidiaries" shall mean the following: Lionbridge Technologies California,
Inc., Lionbridge Technologies (Ireland), Inc., Lionbridge Technologies, B.V.
and Lionbridge Technologies (France).
4.2 CAPITALIZATION. (a) The authorized capital stock of Parent
consists of 5,000,000 shares of preferred stock, $0.01 par value per share,
of which no shares are issued or outstanding or held in Parent's treasury,
and 100,000,000 shares of Parent Common Stock, of which, as of November 10,
1999: (a) 16,287,827 shares were validly issued and outstanding, fully paid
and nonassessable and (b) 5,221,201 shares were reserved for issuance
pursuant to Parent's stock option and stock purchase plans for its employees
and directors. Except for options and rights relating to shares described in
clause (b) of the preceding sentence and except as set forth in Section 4.2
of the Parent Disclosure Schedule or the Reports (as defined in Section 4.5),
there are no options, warrants or other rights, agreements or commitments or
understandings or rights of any character (contingent or otherwise)
obligating Parent to issue, deliver or sell or cause to be issued, delivered
or sold shares of its capital stock or any other securities convertible into
or evidencing the right to subscribe to shares of its capital stock. All of
the outstanding shares of capital stock of each Subsidiary of Parent are
owned beneficially and of record by Parent, one of its other Subsidiaries, or
any combination thereof, in each case, free and clear of any Liens; and there
are no outstanding subscriptions, warrants, options, convertible securities
or other rights (contingent or other) pursuant to which any of the
Subsidiaries is or may become obligated to issue any shares of its capital
stock to any Person other than Parent or one of the other Subsidiaries.
(b) The authorized capital stock of Merger Sub consists of
1,000 shares of common stock, par value $0.01 per share, of which 1,000 shares
are issued and outstanding, all of which shares are owned beneficially and of
record by Parent.
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4.3 AUTHORITY RELATIVE TO THIS AGREEMENT. The execution,
delivery and performance of this Agreement and all other agreements
contemplated hereby by Parent and Merger Sub have been duly authorized by all
necessary action of the Boards of Directors and stockholders of Parent and
Merger Sub. Certified copies of the resolutions adopted by the Boards of
Directors of Parent and Merger Sub and Parent as sole stockholder of Merger
Sub approving this Agreement, all other agreements contemplated hereby and
the Merger have been or will be provided to INT'X.xxx. Each of Parent and
Merger Sub has duly and validly executed and delivered this Agreement and
has, or prior to Closing, will have duly and validly executed and delivered
all other agreements contemplated hereby to be executed by it, and each of
this Agreement and such other agreements constitutes a valid, binding and
enforceable obligation of each of Parent and Merger Sub in accordance with
its terms.
4.4 NON-CONTRAVENTION. Neither the execution, delivery or
performance of this Agreement and all other agreements contemplated hereby by
Parent and Merger Sub, nor the consummation of the Merger or any other
transaction described herein, does or will, after the giving of notice, or
the lapse of time, or otherwise, conflict with, result in a breach of, or
constitute a default under, the Charter Documents of Parent or Merger Sub or
any federal, foreign, state or local court or administrative order or
process, statute, law, ordinance, rule or regulation, or any contract,
agreement or commitment to which Parent is a party, or under which Parent or
any Material Parent Subsidiary is obligated, or by which Parent or any
Material Parent Subsidiary or any of the rights, properties or assets of
Parent or any Material Parent Subsidiary are subject or bound; result in the
creation of any Lien upon, or otherwise adversely affect, any of the rights,
properties or assets of Parent or any Material Parent Subsidiary; terminate,
amend or modify, or give any party the right to terminate, amend, modify,
abandon or refuse to perform or comply with, any contract, agreement or
commitment to which Parent or any Material Parent Subsidiary is a party, or
under which Parent or any Material Parent Subsidiary is obligated, or by
which Parent or any Material Parent Subsidiary or any of the rights,
properties or assets of Parent or any Material Parent Subsidiary are subject
or bound; or accelerate, postpone or modify, or give any party the right to
accelerate, postpone or modify, the time within which, or the terms and
conditions under which, any liabilities, duties or obligations are to be
satisfied or performed, or any rights or benefits are to be received, under
any contract, agreement or commitment to which Parent or any Material Parent
Subsidiary is a party, or under which Parent or any Material Parent
Subsidiary may be obligated, or by which Parent or any of the rights,
properties or assets of Parent or any Material Parent Subsidiary are, subject
or bound.
4.5 REPORTS AND FINANCIAL STATEMENTS. (a) Parent has previously
furnished to INT'X.xxx true and correct copies of its (i) Prospectus dated as
of August 20, 1999 contained in Parent's Registration Statement on Form S-1,
(ii) Quarterly Report on Form 10-Q for the period ended September 30, 1999
(the "RECENT 10-Q") and (iii) all other reports filed by it with the
Commission under the Securities Exchange Act of 1934, as amended (the
"EXCHANGE ACT") since August 20, 1999.
(b) Parent hereby agrees to furnish to INT'X.xxx true and
correct copies of all reports filed by it with the Commission after the Prior
Agreement Date prior to the Closing all in the form (including exhibits) so
filed (collectively, the "REPORTS"). As of their respective dates, the
Reports complied or will comply in all material respects with the then
applicable published rules and regulations of the Commission with respect
thereto at the date of their issuance and did not or will not contain any
untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they
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were made, not misleading. As of the Prior Agreement Date, no additional
filings or amendments to previously filed Reports are required pursuant to
such rules and regulations. Each of the audited consolidated financial
statements and unaudited interim financial statements included in Parent's
Reports has been prepared in accordance with generally accepted accounting
principles applied on a consistent basis (except as may be indicated therein
or in the notes thereto) and fairly presents the financial position of the
entity or entities to which it relates as at its date or the results of
operations, stockholders' equity or cash flows of such entity or entities
(subject, in the case of unaudited statements, to the absence of footnote
disclosure and in the case of unaudited interim statements to year-end
adjustments, which will not be material either individually or in the
aggregate, and except as described in Section 4.5 of the Parent Disclosure
Schedule). As of the date of the Recent 10-Q, there were no material
liabilities, claims or obligations of any nature, whether accrued, absolute,
contingent, anticipated or otherwise, whether due or to become due, that are
not shown or provided for either in the Recent 10-Q or Section 4.5 of the
Parent Disclosure Schedule, and since the date of the Recent 10-Q, Parent has
incurred no liabilities, claims or obligations of any nature, whether
accrued, absolute, contingent, anticipated or otherwise other than in the
ordinary course of business and except for liabilities incurred by Parent in
connection with the preparation and execution of this Agreement and the
consummation of the transactions contemplated herein.
4.6 VALIDITY OF PARENT MERGER SHARES. The Parent Merger Shares
to be issued in the Merger will, when issued, be, validly issued, fully paid
and nonassessable.
4.7 CONSENTS AND APPROVALS OF GOVERNMENTAL AUTHORITIES. Except
for (a) the requirements of state securities (or "Blue Sky") laws, (b) the
filing and recording of the Merger Documents as provided by the DGCL, (c) the
filing of appropriate documents with the Nasdaq Stock Market, (d) the filing
of the Proxy Statement, the Form S-4 and a Form 8-K with the Commission, if
applicable, and (e) such other consents, approvals, orders, authorizations,
registrations, declarations and filings the failure of which to be obtained
or made, individually or in the aggregate, could not reasonably be expected
to impair in any material respect the ability of Parent or Merger Sub to
perform its obligations under this Agreement or prevent or materially delay
the consummation of any of the transactions contemplated by this Agreement,
no consent, approval or authorization of, or declaration, filing or
registration with, any Governmental Entity is required to be made or obtained
by Parent or Merger Sub in connection with the execution, delivery and
performance of this Agreement or the consummation of the transactions
contemplated hereby.
4.8 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except for
liabilities incurred in connection with this Agreement or the transactions
contemplated hereby, since September 30, 1999, there has not been any
material adverse change in the Business Condition of Parent.
4.9 LITIGATION AND OTHER PROCEEDINGS. There is no action, suit,
claim, proceeding, or to the knowledge of Parent or any Subsidiary
investigation pending against or, to the knowledge of Parent or any
Subsidiary, threatened against Parent or any Subsidiary or any of their
respective properties and assets before any court or arbitrator or any
Governmental Entity.
4.10 DISCLOSURE. Neither the representations or warranties made
by Parent in this Agreement, nor the Parent Disclosure Schedule or any other
certificate executed and delivered by Parent pursuant to this Agreement, when
taken together and with knowledge of the contents of the Reports, contains
any untrue statement of a material fact, or omits to state a material fact
necessary to make the
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statements or facts contained herein or therein not misleading in light of
the circumstances under which they were furnished. Prior to the Prior
Agreement Date, Parent has disclosed to INT'X.xxx all material strategic and
financing transactions which Parent has taken action in furtherance of and
involving Parent or any Parent Subsidiary.
4.11 RELIANCE. The foregoing representations and warranties are
made by Parent with the knowledge and expectation that INT'X.xxx are placing
reliance thereon.
4.12 BROKERS AND FINDERS. Except for Prudential Securities,
Inc., Parent has not retained any broker, finder, or investment banker in
connection with this Agreement or any of the transactions contemplated by
this Agreement.
4.13 ACCOUNTING MATTERS. To the knowledge of Parent, neither
Parent nor any of its affiliates has taken or agreed to, or plans to, take
any action that would prevent Parent from accounting for the Merger as a
"pooling of interest" in accordance with generally accepted accounting
principles, Accounting Principles board Opinion No. 16 and all published
rules, regulations and policies of the Commission.
ARTICLE V
COVENANTS OF INT'X.XXX
References in this Article V to INT'X.xxx shall be deemed to include
all Subsidiaries of INT'X.xxx. During the period from the Prior Agreement Date
(except as otherwise indicated) and continuing until the earlier of the
termination of this Agreement or the Effective Time, INT'X.xxx agrees (except as
expressly set forth in Section 5 of the Parent Disclosure Schedule contemplated
by this Agreement or otherwise permitted with Parent's prior written consent):
5.1 CONDUCT OF BUSINESS IN ORDINARY COURSE. INT'X.xxx will
carry on its business in the ordinary course in substantially the same manner
as heretofore conducted and, to the extent consistent with such business, use
all reasonable best efforts consistent with past practice and policies to
preserve intact its present business organization, keep available the
services of its present officers, consultants and employees and preserve its
relationships with customers, suppliers and distributors and others having
business dealings with it. INT'X.xxx will confer on a regular and frequent
basis with representatives of Parent to report operational matters of a
material nature and to report the general status of the ongoing operations of
the business of INT'X.xxx. The foregoing notwithstanding, INT'X.xxx will not:
(a) other than in the ordinary course of business consistent
with prior practice, enter into any material commitment or transaction,
including but not limited to any purchase of assets (other than raw materials,
supplies or cash equivalents) for a purchase price in excess of $50,000;
(b) grant any bonus, severance or termination pay to any
officer, director, independent contractor or employee of INT'X.xxx;
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(c) enter into or amend any agreements pursuant to which any
other party is granted support, service, marketing or publishing rights, other
than in the ordinary course of business consistent with prior practice, or is
granted distribution rights of any type or scope with respect to any products of
INT'X.xxx;
(d) other than in the ordinary course of business consistent
with prior practice, enter into or terminate any contracts, arrangements, plans,
agreements, leases, licenses, franchises, permits, indentures, authorizations,
instruments, or commitments, or amend or otherwise change in any material
respect the terms thereof in a manner adverse to INT'X.xxx;
(e) commence a lawsuit other than: (i) for the routine
collection of bills, (ii) in such cases where INT'X.xxx in good faith determines
that failure to commence suit would result in a material impairment of a
valuable aspect of INT'X.xxx's business PROVIDED THAT INT'X.xxx consults with
Parent prior to filing such suit, or (iii) for a breach of this Agreement or any
agreement related hereto;
(f) modify in any material respect existing discounts or other
terms and conditions with dealers, distributors and other resellers of
INT'X.xxx's products or services in a manner adverse to INT'X.xxx;
(g) accelerate the vesting or otherwise modify any INT'X.xxx
Option, restricted stock or other outstanding rights or other securities other
than any acceleration or modification that results from the execution and
performance of this Agreement or any of the transactions contemplated hereby;
(h) take any action which would make any representation or
warranty in this Agreement untrue or incorrect, as if made as of such time; or
(i) agree in writing or otherwise to take any of the foregoing
actions.
5.2 DIVIDENDS, ISSUANCE OF, OR CHANGES IN SECURITIES. INT'X.xxx
will not: (i) declare or pay any dividends on or make other distributions to
its stockholders (whether in cash, shares or property), (ii) issue, deliver,
sell, or authorize, propose, or agree to, or commit to the issuance,
delivery, or sale of any shares of its capital stock of any class, any
INT'X.xxx Voting Debt or any securities convertible into its capital stock,
any options, warrants, calls, conversion rights, commitments, agreements,
contracts, understandings, restrictions, arrangements or rights of any
character obligating INT'X.xxx to issue any such shares, INT'X.xxx Voting
Debt or other convertible securities except as any of the foregoing is
required by Outstanding INT'X.xxx Options; (iii) split, combine or reclassify
any of its capital stock or issue or authorize the issuance of any other
securities in respect of, in lieu of or in substitution for shares of capital
stock of INT'X.xxx, (iv) repurchase or otherwise acquire, directly or
indirectly, any shares of its capital stock or options or warrants related
thereto, or (v) take any action in furtherance of any of the foregoing.
5.3 GOVERNING DOCUMENTS. INT'X.xxx will not amend its Charter
Documents.
5.4 NO ACQUISITIONS. INT'X.xxx will not authorize, recommend,
propose or announce an intention to authorize, recommend or propose, or enter
into a letter of intent (whether or not binding), an agreement in principle
or an agreement with respect to any merger, consolidation or business
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combination (other than the Merger), or achieve a comparable effect through
any acquisition of assets or securities.
5.5 NO DISPOSITIONS. INT'X.xxx will not sell, lease, license,
transfer, mortgage, encumber or otherwise dispose of any of its material
assets or cancel, release, or assign any material indebtedness or claim,
except in the ordinary course of business.
5.6 INDEBTEDNESS. Except as contemplated in Section 2.9(iii),
INT'X.xxx will not incur any indebtedness for borrowed money by way of direct
loan, sale of debt securities, purchase money obligation, conditional sale,
guarantee or otherwise.
5.7 COMPENSATION. Except for the actions, adoptions,
amendments, modifications, and payments described in Section 5.1(b) of the
Parent Disclosure Schedule, INT'X.xxx will not adopt or amend, or modify in
any material respect, any Plan or pay any pension or retirement allowance not
required by any existing Plan. INT'X.xxx will not enter into or modify any
employment or severance contracts, increase the salaries, wage rates or
fringe benefits of its officers, directors or employees or pay bonuses or
other remuneration except for current salaries, severance and other
remuneration for which INT'X.xxx is obligated under arrangements existing
prior to the Balance Sheet Date to which INT'X.xxx is a party and which have
been disclosed in the INT'X.xxx Disclosure Schedule.
5.8 CLAIMS. INT'X.xxx will not settle any claim, action or
proceeding, except in the ordinary course of business consistent with prior
practice.
5.9 ACCESS TO PROPERTIES AND RECORDS. Subject to contractual
and other obligations, INT'X.xxx will give Parent and its representatives
full access, at a place reasonably acceptable to INT'X.xxx, during reasonable
business hours and following reasonable notice but in such a manner as not
unduly to disrupt the business of INT'X.xxx, to its senior management, senior
technical personnel, premises, properties, contracts, commitments, books,
records and affairs, and will provide Parent with such financial, technical
and operating data and other information pertaining to its business as Parent
may request. With INT'X.xxx's prior consent, which will not be unreasonably
withheld, Parent will be entitled in conjunction with INT'X.xxx personnel to
make appropriate inquiries of third parties in the course of its
investigation.
5.10 BREACH OF REPRESENTATIONS AND WARRANTIES. INT'X.xxx will
not take any action that would cause or constitute a breach of any of the
representations and warranties set forth in Article III or that would cause
any of such representations and warranties to be inaccurate in any material
respect or that would constitute a breach of any of its other obligations
under this Agreement. In the event of, and promptly after becoming aware of,
the occurrence of or the pending or threatened occurrence of any event that
would cause or constitute such a breach or inaccuracy, INT'X.xxx will give
detailed notice thereof to Parent and will use its reasonable best efforts to
prevent or remedy promptly such breach or inaccuracy.
5.11 CONSENTS. INT'X.xxx will promptly apply for or otherwise
seek and use reasonable best efforts to obtain, all Consents, and make all
filings with Governmental Entities, required with respect to the consummation
of the Merger.
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5.12 TAX RETURNS. INT'X.xxx will promptly provide or make
available to Parent copies of all tax returns, reports and information
statements that have been filed or are filed prior to the Closing Date.
5.13 EXCLUSIVITY; ACQUISITION PROPOSALS. Unless and until this
Agreement will have been terminated by either party pursuant to Article X
hereof and thereafter subject to Section 10.5, INT'X.xxx will not (and will
use its reasonable best efforts to ensure that none of its officers,
directors, stockholders, agents, representatives or affiliates) take or cause
or permit any Person to take, directly or indirectly, any of the following
actions with any party other than Parent and its designees: (i) solicit,
encourage, initiate or participate in any negotiations, inquiries, or
discussions with respect to any offer or proposal to acquire all or any
significant part of INT'X.xxx's business, assets or capital stock, whether by
merger, consolidation, other business combination, purchase of assets, tender
or exchange offer or otherwise (each of the foregoing, an "ACQUISITION
TRANSACTION"), (ii) disclose, in connection with an Acquisition Transaction,
any information not customarily disclosed to any Person other than Parent or
its representatives concerning INT'X.xxx's business or properties or afford
to any Person other than Parent or its representatives access to its
properties, books, or records, except in the ordinary course of business and
as required by law or pursuant to a governmental request for information,
(iii) enter into or execute any agreement relating to an Acquisition
Transaction, or (iv) make or authorize any public statement, recommendation
or solicitation in support of any Acquisition Transaction or any offer or
proposal relating to an Acquisition Transaction other than with respect to
the Merger PROVIDED, HOWEVER, that (a) INT'X.xxx may furnish or cause to be
furnished information concerning INT'X.xxx and its businesses, properties or
assets to a Person, (b) the Company may engage in discussions or negotiations
with such Person, (c) following receipt of a proposal or offer for an
Acquisition Transaction, may make disclosure to its stockholders and may
recommend such proposal or offer to its stockholders and (d) following
receipt of a proposal or offer for an Acquisition Transaction the Board of
Directors of INT'X.xxx may enter into an agreement in principle or a
definitive agreement with respect to such Acquisition Transaction, but in
each case referred to in the foregoing clauses (a) through (d) only to the
extent that the Board of Directors of INT'X.xxx shall conclude in good faith
after consultation with outside legal counsel that such action is necessary
or appropriate because failure to take such action would be inconsistent with
the fiduciary duties owed by the Board of Directors to the stockholders of
INT'X.xxx under applicable law; and PROVIDED, FURTHER, that the Board of
Directors of INT'X.xxx shall not take any of the foregoing actions referred
to in clauses (a) through (d) without prior written notice to Parent with
respect to such action. In the event that INT'X.xxx is contacted by any third
party expressing an interest in discussing an Acquisition Transaction,
INT'X.xxx will promptly notify Parent of such contact and the identity of the
party so contacting INT'X.xxx.
5.14 NOTICE OF EVENTS. Throughout the period between the Prior
Agreement Date and the Closing, INT'X.xxx will promptly advise and consult
with Parent regarding any and all material events and developments concerning
its financial position, results of operations, assets, liabilities or
business or any of the items or matters concerning INT'X.xxx covered by the
representations, warranties and covenants of INT'X.xxx contained in this
Agreement.
5.15 REASONABLE BEST EFFORTS. INT'X.xxx will use its reasonable
best efforts to effectuate the transactions contemplated hereby and to
fulfill and cause to be fulfilled the conditions to Closing under this
Agreement.
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5.16 INSURANCE. INT'X.xxx will use its reasonable best efforts
to maintain in force at the Effective Time policies of insurance of the same
character and coverage as those described in the INT'X.xxx Disclosure
Schedule, and INT'X.xxx will promptly notify Parent in writing of any changes
in such insurance coverage occurring prior to the Effective Time.
5.17 FINANCIAL STATEMENTS. INT'X.xxx will use its reasonable
best efforts to deliver to Parent audited consolidated balance sheets as of
December 31, 1997, December 31, 1998 and December 31, 1999 and audited
consolidated statements of income and consolidated cash flows for the twelve
months ended December 31, 1997, December 31, 1998 and December 31, 1999 no
later than February 28, 2000.
5.18 CONFIDENTIALITY AND ASSIGNMENT OF INVENTIONS AGREEMENTS.
XXXX.xxx shall use its reasonable best efforts to cause each officer and
employee of INT'X.xxx and its Subsidiaries to enter into a confidentiality
and assignment of inventions agreement substantially in the form of such
agreement used by Parent and its Subsidiaries in the country in which such
officer or employee performs services for INT'X.xxx. Any officer or employee
of INT'X.xxx or any Subsidiary who has not entered into such agreement shall
have been terminated by XXXX.xxx or such Subsidiary prior to the Closing.
ARTICLE VI
COVENANTS OF PARENT
During the period from the Prior Agreement Date and continuing until
the earlier of the termination of this Agreement or the Effective Time (or later
where so indicated), Parent and Merger Sub agree (except as expressly
contemplated by this Agreement or with INT'X.xxx's prior written consent):
6.1 BREACH OF REPRESENTATIONS AND WARRANTIES. Neither Parent
nor Merger Sub will take any action which would cause or constitute a breach
of any of the representations and warranties set forth in Article IV or which
would cause any of such representations and warranties to be inaccurate in
any material respect. In the event of, and promptly after becoming aware of,
the occurrence of or the pending or threatened occurrence of any event which
would cause or constitute such a breach or inaccuracy, Parent will give
detailed notice thereof to INT'X.xxx and will use its reasonable best efforts
to prevent or remedy promptly such breach or inaccuracy.
6.2 ADDITIONAL INFORMATION; ACCESS. Parent will provide
INT'X.xxx and its stockholders with the information relating to Parent
referred to in Section 4.5 and the information relating to Parent to be
included in the Form S-4. In addition, Parent will afford to INT'X.xxx and to
its counsel and to the persons expected to become stockholders of Parent
pursuant to the Merger access throughout the period prior to the Effective
Time to its senior management and all other information concerning Parent as
INT'X.xxx or such stockholder may reasonably request. Such stockholders will
also be afforded the opportunity to ask questions and to receive accurate and
complete answers from Parent concerning the terms and conditions of the
Merger and the issuance of the Parent Merger Shares pursuant thereto.
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6.3 CONSENTS. Parent will promptly apply for or otherwise seek,
and use its reasonable best efforts to obtain, all consents and approvals,
and make all filings, required with respect to the consummation of the Merger.
6.4 REASONABLE BEST EFFORTS. Each of Parent and Merger Sub will
use its reasonable best efforts to effectuate the transactions contemplated
hereby and to fulfill and cause to be fulfilled the conditions to Closing
under this Agreement.
6.5 OFFICERS AND DIRECTORS. Parent agrees that all rights to
indemnification and all limitations on liability existing on the Prior
Agreement Date in favor of, or for the benefit of, the present or former
officers and directors of INT'X.xxx and its Subsidiaries with respect to
actions taken in their capacities as directors or officers of INT'X.xxx or
such INT'X.xxx Subsidiary prior to the Effective Time as provided in the
Charter Documents of INT'X.xxx will survive the Merger and continue in full
force and effect following the Effective Time and will not be modified by
Parent. Notwithstanding the foregoing, the provisions of such Charter
Documents will have no effect on the obligations of any stockholders of
INT'X.xxx pursuant to Article IX of this Agreement or the Escrow Agreement.
6.6 NASDAQ NATIONAL MARKET LISTING. Parent will promptly
prepare and submit a NASDAQ listing application and will use its reasonable
best efforts to cause the Parent Merger Shares to be authorized for trading
on the Nasdaq National Market as soon as practicable.
6.7 NOTICE OF EVENTS. Throughout the period between the Prior
Agreement Date and the Closing, Parent will promptly advise and consult with
INT'X.xxx regarding any and all material adverse change to the
representations, warranties and covenants of Parent and Merger Sub contained
in this Agreement and will disclose to INT'X.xxx all material strategic and
financing transactions which Parent takes action in furtherance of which
involve Parent or any Parent Subsidiary.
6.8 THIRD PARTY BENEFICIARIES. Section 6.5 will survive the
consummation of the Merger, is intended to benefit the stockholders of
INT'X.xxx that receive Parent Merger Shares (the "NEW PARENT STOCKHOLDERS")
and the present and former officers and directors of INT'X.xxx and its
Subsidiaries, will be binding on Parent and its successors and assigns, and
will be enforceable by the officers and directors of INT'X.xxx and the New
Parent Stockholders.
6.9 DIRECTORS OF PARENT. Prior to the date of the mailing of
the Proxy Statement, Parent shall nominate Xxxxx Xxxxxx to serve as a
director of Parent in accordance with the policies for directors of Parent,
and Parent shall take such action as is necessary to cause such person to
become a director of Parent effective as of the Effective Time.
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ARTICLE VII
ADDITIONAL AGREEMENTS
In addition to the foregoing, Parent, Merger Sub, and INT'X.xxx each
agree to take the following actions after the execution of this Agreement.
7.1 PREPARATION OF THE FORM S-4 AND THE PROXY STATEMENT;
STOCKHOLDERS MEETING. (a) INT'X.xxx shall use its reasonable best efforts to
hold one or more special meetings of stockholders in accordance with the
applicable requirements of the DGCL and to obtain the INT'X.xxx Requisite
Stockholder Approval to enable the Merger to be effective on the Closing Date
(determined without regard to the condition to closing in Section 8.2(h)).
Parent shall use its reasonable best efforts to hold one or more special
meetings of stockholders to obtain the approval of the issuance of its shares
in connection with the Merger by the stockholders of Parent as required by
the rules of the Nasdaq Stock Market and in accordance with the applicable
requirements of the DCGL. In connection with obtaining the approval of its
stockholders, Parent shall prepare, with the assistance and cooperation of
INT'X.xxx, a Registration Statement on Form S-4 (the "FORM S-4"). The Form
S-4 shall constitute a joint proxy and a prospectus and shall be used for
purposes of offering the Parent Merger Shares to the stockholders of
INT'X.xxx, soliciting proxies from such stockholders for the purpose of
obtaining the INT'X.xxx Requisite Stockholder Approval and soliciting proxies
from stockholders of Parent for the purposes of obtaining approval of the
issuance of its shares in connection with the Merger by the stockholders of
Parent (such proxy/ prospectus statement, together with the accompanying
letter to stockholders, notice of meeting and form of proxy shall be referred
to herein as the "Proxy Statement"). INT'X.xxx agrees to fully cooperate with
Parent in the preparation of the Form S-4, and shall, upon request, furnish
Parent with all information concerning it and its affiliates, directors,
officers and stockholders as Parent may reasonably request in connection with
the preparation of the Form S-4. INT'X.xxx shall prepare the portions of the
Form S-4, relating to INT'X.xxx and its subsidiaries including but not
limited to financial information, management of INT'X.xxx, description of
INT'X.xxx's business, executive compensation of the INT'X.xxx, the
recommendation of INT'X.xxx's Board of Directors, appraisal rights, risk
factors relating to INT'X.xxx, and INT'X.xxx portions of background of the
Merger, reasons for the Merger, interests of certain persons in the Merger
and security ownership of certain beneficial owners and management. INT'X.xxx
shall also prepare the disclosure concerning all payments which in the
absence of stockholder approval would be "Parachute Payments" as defined in
Code Section 280G(b)(2), which shall be in form and substance satisfactory to
Parent and its counsel, to satisfy all requirements applicable to INT'X.xxx
of applicable state and federal securities laws, the DGCL and Code Section
280G(b)(5)(B) and the regulations thereunder. No filing of, or amendment or
supplement to, the Form S-4 will be made by Parent and no amendment or
supplement to the Proxy Statement will be made by Parent or INT'X.xxx without
providing the other party the opportunity to review and comment thereon.
Parent will advise INT'X.xxx, promptly after it receives notice thereof, of
the time when the Form S-4 has become effective or any supplement or
amendment has been filed, the issuance of any stop order, the suspension of
the qualification of the Parent Merger Shares for offering or sale in any
jurisdiction, or any request by the Commission for amendment of the Proxy
Statement or the Form S-4 or comments thereon and responses thereto or
requests by the Commission for additional information. If at any time prior
to the Effective Time any information relating to Parent or INT'X.xxx or any
of their respective affiliates, officers or directors, should be discovered
by the Parent or INT'X.xxx which should be set forth in an amendment or
supplement to any of the Form S-4 or the Proxy Statement, so that any of
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such documents would not include any misstatement of a material fact or omit
to state any material fact necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading, the party
which discovers such information shall promptly notify the other party hereto
and an appropriate amendment or supplement describing such information shall
be promptly filed with the Commission, and to the extent required by law,
disseminated to the stockholders of Parent and INT'X.xxx. If the Commission
requires a Tax opinion in connection with the filing of the Form S-4,
INT'X.xxx shall cause Xxxx, Gerber & Xxxxxxxxx, counsel to INT'X.xxx, to
provide such opinion in the form required by the Commission. The issuance of
such opinion shall be conditioned upon the receipt by Xxxx, Gerber &
Xxxxxxxxx of customary representation letters from each of INT'X.xxx and
Parent in a form reasonably agreed to by the parties.
(b) Parent shall file the Form S-4 with the Commission and
shall, with the assistance of INT'X.xxx, promptly respond to any comments from
the Commission on the Form S-4 and shall otherwise use its best efforts to have
the Form S-4 declared effective under the Securities Act as promptly
practicable. Promptly following such time as the Form S-4 is declared effective,
INT'X.xxx shall distribute the Proxy Statement to its stockholders and Parent
shall distribute the Proxy Statement to its stockholders. Parent shall comply
with all applicable provisions of and rules under the Securities Act and the
Exchange Act and state securities laws in the preparation and filing of the S-4
Registration Statement, the offering and issuance of the Parent Merger Shares,
the filing and distribution of the Proxy Statement, the solicitation of proxies
thereunder, and the calling and holding of the special meeting of stockholders
of Parent. Parent shall also ensure that any Form S-4 filed by Parent does not
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading (provided that Parent shall not be responsible for the accuracy and
completeness of information relating to INT'X.xxx or any of its subsidiaries or
any other information furnished by INT'X.xxx specifically for inclusion in the
S-4 Registration Statement).
(c) INT'X.xxx shall ensure that the Proxy Statement does not
contain an untrue statement of material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statement made,
under the circumstances under which it is made, not misleading (provided that
INT'X.xxx shall not be responsible for the accuracy or completeness of any
information relating to Parent or any of its Subsidiaries or furnished by Parent
specifically for inclusion in the Proxy Statement).
(d) INT'X.xxx, acting through its Board of Directors, shall
include in the Proxy Statement the unanimous recommendation of its Board of
Directors eligible to vote on such matters that its stockholders vote in favor
of the adoption of this Agreement and the approval of the Merger.
Notwithstanding the foregoing, the obligation set forth in the foregoing
sentence shall not apply (and the Board of Directors shall be permitted to
modify or withdraw any such recommendation previously made) if the Board of
Directors of INT'X.xxx concludes in good faith, after consultation with its
outside legal counsel, that fulfilling the obligations in the foregoing sentence
would violate the fiduciary duties of the Board of Directors under applicable
law; PROVIDED, HOWEVER, that nothing shall limit the obligation of INT'X.xxx to
otherwise use its reasonable best efforts to fulfill all of its obligations
under this Agreement, including without limitation, INT'X.xxx's obligations
under Section 7.1(a) and (c).
(e) Parent, acting through its Board of Directors, shall
include in the Proxy
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Statement the unanimous recommendation of its Board of Directors eligible to
vote on such matters that the stockholders of Parent vote in favor of the
issuance of its shares in connection with the Merger. Notwithstanding the
foregoing, the obligation set forth in the foregoing sentence shall not apply
(and the Board of Directors shall be permitted to modify or withdraw any such
recommendation previously made) if the Board of Directors of Parent concludes
in good faith, after consultation with its outside legal counsel, that
fulfilling the obligations in the foregoing sentence would violate the
fiduciary duties of the Board of Directors under applicable law; PROVIDED,
HOWEVER, that nothing shall limit the obligation of the Parent to otherwise
use its reasonable best efforts to fulfill all of its obligations under this
Agreement, including without limitation, Parent's obligations under Section
7.1(a) and (b).
(f) All resales of shares of Parent Common Stock by each
INT'X.xxx Affiliate (as defined in Section 7.8(b)) will be subject to the
restrictions imposed by the third restated registration rights agreement of
Parent (the "REGISTRATION RIGHTS AGREEMENT") in the form attached as EXHIBIT
7.1, which will be entered into by the INT'X.xxx Affiliates. Parent will be
entitled to place the legends as referred to in the Registration Rights
Agreement on each certificate evidencing any shares of Parent Common Stock to be
received by the INT'L Affiliates pursuant to the terms of this Agreement and to
issue appropriate stop transfer instructions to the transfer agent for shares of
Parent Common Stock consistent with the terms of the Registration Rights
Agreement.
7.2 LEGAL CONDITIONS TO THE MERGER. Each of Parent, Merger Sub,
and INT'X.xxx will use all reasonable best efforts to take actions necessary
to comply promptly with all legal requirements which may be imposed on it
with respect to the Merger. Each of Parent, Merger Sub and INT'X.xxx will use
all reasonable best efforts to take all actions to obtain (and to cooperate
with the other parties in obtaining) any consent required to be obtained or
made by INT'X.xxx, Merger Sub, or Parent in connection with the Merger, or
the taking of any action contemplated thereby or by this Agreement.
7.3 EMPLOYEE BENEFITS. Nothing contained herein will, subject
to Section 6.5, be considered as requiring INT'X.xxx or Parent to continue
any specific plan or benefit, or to confer upon any employee, beneficiary,
dependent, legal representative or collective bargaining agent of such
employee any right or remedy of any nature or kind whatsoever under or by
reason of this Agreement, including without limitation any right to
employment or to continued employment for any specified period, at any
specified location or under any specified job category, except as
specifically provided for in an offer letter or other agreement of
employment. It is specifically understood that continued employment with
INT'X.xxx or employment with Parent is not offered or implied for any other
employees of INT'X.xxx and any continuation of employment with INT'X.xxx
after the Closing will be at will except as specifically provided otherwise
in an offer letter or other agreement of employment. Parent agrees that it
will cause Merger Sub to comply with the WARN Act, to the extent applicable
to INT'x.xxx and its Subsidiaries in connection with actions taken at and
after the Effective Time.
7.4 EXPENSES. Whether or not the Merger is consummated, all
costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby and thereby, including investment banking,
legal and accounting expenses, will be paid by the party incurring such
expense; PROVIDED, HOWEVER, that any such expenses incurred by INT'X.xxx in
excess of $400,000 shall be borne by the stockholders of INT'X.xxx (without
regard to Section 9.4) through the determination of the Modified Share Amount
as set forth in Section 2.1(d); PROVIDED, FURTHER, that INT'X.xxx will
itemize any such investment banking, legal and accounting expenses of
INT'X.xxx prior to Closing
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and provide Parent with an invoice and certification from all organizations
providing such services at the Closing in a form reasonably acceptable to
Parent; and PROVIDED, FURTHER, that the provisions of this Section 7.4 shall
not be construed to relieve a party from liability resulting from such
party's breach of this Agreement.
7.5 ADDITIONAL AGREEMENTS. In case at any time after the
Effective Time any further action is reasonably necessary or desirable to
carry out the purposes of this Agreement or to vest the Surviving Corporation
with full title to all properties, assets, rights, approvals, immunities and
franchises of INT'X.xxx, the proper officers and directors of each
corporation which is a party to this Agreement will take all such necessary
action. Without limiting the foregoing, on or prior to the Closing Date,
INT'X.xxx will deliver to Parent a properly executed statement satisfying the
requirements of Treasury Regulation Sections 1.897-2(h) and 1.1445-2(c)(3) in
a form reasonably acceptable to Parent.
7.6 PUBLIC ANNOUNCEMENTS. Neither Parent nor INT'X.xxx will
directly or indirectly disseminate any press release or other announcement
concerning this Agreement or the transactions contemplated herein to any
third party (except to the directors, officers and employees of the parties
to this Agreement whose direct involvement is necessary for the consummation
of the transactions contemplated under this Agreement, to the attorneys,
advisors and accountants of the parties hereto, or except as Parent
determines in good faith to be required by applicable law after consultation
with INT'X.xxx) without the prior written agreement of the other parties.
7.7 CONFIDENTIALITY. INT'X.xxx and Parent have entered into a
Mutual Nondisclosure Agreement dated October 7, 1999 concerning each party's
obligations to protect the confidential information of the other party.
INT'X.xxx and Parent each hereby affirm each of their obligations under such
agreement. If this Agreement is terminated in accordance with Article X
hereof, Parent will, and will cause its accountants, counsel and other
representatives to deliver to INT'X.xxx all documents and other material, and
all copies thereof, obtained by Parent or on its behalf from INT'X.xxx in
connection with this Agreement, whether so obtained before or after the
execution hereof, and will not disclose any such information or documents to
any third parties or make any use of such. If this Agreement is terminated in
accordance with Article X hereof, INT'X.xxx will, and will cause its
accountants, counsel and other representatives to, deliver to Parent all
documents and other material, and all copies thereof, obtained by INT'X.xxx
or by an officer, director or representative of INT'X.xxx from Parent in
connection with this Agreement, whether so obtained before or after the
execution hereof, and will not disclose any such information or documents to
any third parties or make any use of such.
7.8 POOLING.
(a) Parent, the Merger Sub and INT'X.xxx will use all
reasonable best efforts, will cooperate fully and will take all actions as are
reasonably necessary to allow the Merger and other transactions contemplated by
this Agreement to be accounted for as a "pooling of interests" in accordance
with United States generally accepted accounting principles and applicable rules
and regulations of the Commission.
(b) INT'X.xxx has delivered to Parent prior to the Prior
Agreement Date a letter from INT'X.xxx, prepared after consultation with its
counsel, that identifies all persons it believes may be "affiliates" of
INT'X.xxx, as such term is used in Rule 145 under the Securities Act and
applicable
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accounting pronouncements of the Commission (each such Person, an "INT'X.XXX
AFFILIATE"). Each such INT'X.xxx Affiliate has executed and delivered to
Parent a written agreement (an "INT'X.XXX AFFILIATE AGREEMENT") in the form
of EXHIBIT 7.8(b) hereto to the effect that such INT'X.xxx Affiliate (i) has
not made and will not make any disposition of any shares of INT'X.xxx Common
Stock or INT'X.xxx Preferred Stock or other securities of INT'X.xxx in the
30-day period prior to the Effective Time, and (ii) will not make any
disposition of any of the Parent Merger Shares to be received by such Person
after the Effective Time until Parent shall have publicly released a report
including the combined financial results of Parent and INT'X.xxx for a period
of at least 30 days of combined operations of Parent and INT'X.xxx.
(c) Section 7.8(c) of the Parent Disclosure Schedule
identifies each executive officer and director of Parent (each such Person, a
"PARENT AFFILIATE"). Each such Parent Affiliate has executed and delivered to
INT'X.xxx a written agreement (a "Parent AFFILIATE AGREEMENT") in the form of
EXHIBIT 7.8(c) hereto to the effect that such Parent Affiliate (i) has not made
and will not make any disposition of any shares of Parent Common Stock in the
30-day period prior to the Effective Time, and (ii) will not make any
disposition of any shares of Parent Common Stock owned by such person until
Parent shall have publicly released a report including the combined financial
results of Parent and INT'X.xxx for a period of at least 30 days of combined
operations of Parent and INT'X.xxx.
7.9 INT'X.XXX VOTING AGREEMENT. Simultaneous with the execution
of the Prior Agreement, INT'X.xxx caused the voting agreement in the form
attached as EXHIBIT 7.9 (the "INT'X.XXX VOTING AGREEMENT") to be executed by
all directors, officers, affiliates and holders of 5% of the capital stock of
INT'X.xxx and their affiliates holding in the aggregate at least 60% of the
Outstanding INT'X.xxx Shares and at least 80% of each of the Outstanding
INT'X.xxx Series C Shares and the Outstanding INT'X.xxx Series D Shares, and
to be delivered to Parent.
7.10 PARENT VOTING AGREEMENT. Simultaneous with the execution of
the Prior Agreement, Parent caused the voting agreement in the form attached
as EXHIBIT 7.10 (the "PARENT VOTING AGREEMENT") to be executed by all
directors and officers of Parent and their affiliates holding in the
aggregate at least 60% of the Parent shares of Parent Common Stock
outstanding on the Prior Agreement Date, and to be delivered to INT'X.xxx.
7.11 XXXX-XXXXX-XXXXXX FILING. If and to the extent applicable,
Parent and INT'X.xxx agree to file, and to cause any other Person obligated
to do so as a result of such person's stock holdings in Parent or INT'X.xxx,
a Notification and Report Form in accordance with the notification
requirements of the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976 and
the rules and regulations thereunder (collectively, the "HSR ACT") with the
Antitrust Division of the United States Department of Justice and the Federal
Trade Commission and to use its and their reasonable best efforts to achieve
the prompt termination or expiration of the waiting period or any extension
thereof provided for under the HSR Act as a prerequisite to the consummation
of the transactions provided for herein.
7.12 BOARD OF DIRECTORS MEETINGS. After the Closing of the
Merger, for as long as Cornerstone Equity Investors IV, L.P. holds at least
one-half of the Parent Merger Shares issued to them in connection with the
Merger, Parent shall permit one (1) representative of Cornerstone Equity
Investors IV, L.P. (the "CORNERSTONE OBSERVER") to attend, in a non-voting
observer capacity, each meeting of the Board of Directors of Parent and each
meeting of any committee thereof and to participate in all discussions during
each such meeting. Parent shall send to the Cornerstone Observer
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notice of the time and place of any such meeting, in the same manner and at
the same time as notice is sent to its directors. Parent shall also provide
to the Cornerstone Observer copies of all notices, reports, minutes,
contracts and other documents, at the time and in the same manner as such
documents are provided to the Board of Directors of Parent, unless the Board
of Directors or management of Parent shall determine that delivery of such
notice and/or materials to the Cornerstone Observer may be detrimental to
Parent. Upon the request of the Board of Directors of the Company, the
Cornerstone Observer will excuse himself from any portion of Board or
committee meetings if the Board of Directors shall determine that the
Cornerstone Observer's presence may violate the attorney-client privilege or
may create a conflict of interest or may be otherwise detrimental to Parent.
Any materials furnished to the Cornerstone Observer and the discussions and
presentations in connection with or at any meeting shall be considered
confidential information and the Cornerstone Observer will keep such
materials and discussions confidential and will not disclose or divulge such
materials and discussions to any third party.
7.13 EMPLOYMENT, CONSULTING AND NONCOMPETITION AGREEMENTS.
Simultaneous with the execution of the Prior Agreement, INT'X.xxx will cause
each of Xxxxx Xxxxxx, [Xxxxxx Xxxxxxxxxx] and Xxxxxxxx Xxxxx to execute
employment or consulting and/or non-competition agreements with Parent to
become effective at the Effective Time in the form provided by Parent to
INT'X.xxx.
7.14 INT'X.XXX CONVERSION. Simultaneous with the execution of
the Prior Agreement, INT'X.xxx caused the conversion notice in the form
attached as EXHIBIT 7.14 to be executed by the holders of INT'X.xxx Series A
Preferred Stock who, together with the parties executing an INT'X.xxx Voting
Agreement, hold at least 51% of the outstanding shares of INT'X.xxx Series A
Preferred Stock and by the holders of INT'X.xxx Series B Preferred Stock who,
together with the parties executing an INT'X.xxx Voting Agreement, hold at
least 51% of the outstanding shares of INT'X.xxx Series B Preferred Stock,
INT'X.xxx shall cause such notices to be delivered to Parent. INT'X.xxx
hereby elects that all outstanding shares of INT'X.xxx Series A Preferred
Stock and all of the outstanding shares of INT'X.xxx Series B Preferred Stock
be converted to shares of INT'X.xxx Series A Common Stock immediately prior
to the Effective Time.
7.15 DEBT ADJUSTMENTS. In the event INT'X.xxx or its
Subsidiaries shall breach the covenants in Section 5.6 hereof, the aggregate
amount of all breaches of such Section 5.6 shall be deemed to be the "Debt
Adjustment Amount" for purposes of this Agreement. "Debt Payment Shares"
shall mean a number of shares of Parent Common Stock determined by dividing
the Debt Adjustment Amount plus any accrued interest on such amount as of the
Closing by the Parent Average Closing Price.
ARTICLE VIII
CONDITIONS PRECEDENT
8.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER.
The respective obligations of each party to effect the Merger will be subject
to the satisfaction prior to the Closing Date of the following conditions
unless waived:
(a) GOVERNMENTAL APPROVALS. Other than the filing of the
Merger Documents with the Secretary of State of Delaware, all statutory
requirements and all Consents of Governmental
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Entities legally required for the consummation of the Merger and the
transactions contemplated by this Agreement will have been filed, occurred,
or been obtained, other than such Consents for which the failure to obtain
would not have a material adverse effect on the consummation of the Merger or
the other transactions contemplated hereby or on the Business Condition of
Parent or INT'X.xxx. If and to the extent applicable, the filing and waiting
period requirements under the HSR Act will have been complied with and will
have expired or terminated.
(b) NO RESTRAINTS. No statute, rule or regulation, and no
final and nonappealable order, decree or injunction will have been enacted,
entered, promulgated or enforced by any court or Governmental Entity of
competent jurisdiction which enjoins or prohibits the consummation of the
Merger.
(c) PARENT STOCKHOLDER APPROVAL. The issuances of the
shares of Parent Common Stock in connection with the Merger will have been
approved by the requisite vote of the stockholders of Parent.
(d) QUOTATION. The shares of Parent Common Stock issuable
to INT'X.xxx's stockholders as contemplated by this Agreement shall have been
approved for quotation on the Nasdaq National Market, subject to official
notice of issuance.
(e) FORM S-4. The Form S-4 shall have become effective
under the Securities Act and shall not be the subject of any stop order or
proceedings seeking a stop order.
(f) PARENT POOLING LETTER. Parent will have received a
letter dated immediately prior to the Closing Date from
PricewaterhouseCoopers LLP, Parent's independent accountants, to the effect
that such firm concurs with Parent's management that no conditions exist that
would preclude Parent from accounting for the Merger as a "pooling of
interests" in accordance with United States generally accepted accounting
principles and applicable rules and regulations of the Commission and Parent
shall have delivered a copy of such letter to INT'X.xxx.
(g) INT'X.XXX POOLING LETTER. Xxxxxx Xxxxxxxx LLP shall
have delivered to INT'X.xxx a letter dated immediately prior to the Closing
Date to the effect that INT'X.xxx is "poolable" for accounting purposes under
Accounting Principles Board Opinion No. 16, United States generally accepted
accounting principles and applicable rules and regulations of the Commission
and INT'X.xxx shall have delivered a copy of such letter to Parent.
8.2 CONDITIONS OF OBLIGATIONS OF PARENT AND MERGER SUB. The
obligations of Parent and Merger Sub to effect the Merger are subject to the
satisfaction of the following conditions unless waived by Parent and Merger
Sub:
(a) REPRESENTATIONS AND WARRANTIES OF INT'X.XXX. The
representations and warranties of INT'X.xxx set forth in this Agreement will be
true and correct in all material respects as of the Prior Agreement Date and as
of the Closing Date as though made on and as of the Closing Date, except (i) as
otherwise contemplated by this Agreement, (ii) as a result of actions taken or
not taken pursuant to this Agreement or at the direction of or after
consultation with and written concurrence of Parent, (iii) for representations
and warranties specifically limited to an earlier date(s) and (iv) for breaches
which, individually or in the aggregate, would not have a material adverse
effect on the
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Business Condition of INT'X.xxx. Parent will have received a certificate
signed by the chief executive officer and the chief financial officer of
INT'X.xxx to such effect on the Closing Date.
(b) PERFORMANCE OF OBLIGATIONS OF INT'X.XXX. INT'X.xxx will
have performed all agreements and covenants required to be performed by it under
this Agreement prior to the Closing Date except (i) as otherwise contemplated or
permitted by this Agreement, (ii) as a result of actions taken or not taken at
the direction of or after consultation with and written concurrence of Parent
and (iii) for such failures to perform which, individually or in the aggregate,
would not have a material adverse effect on the Business Condition of INT'X.xxx;
provided, that INT'X.xxx hereby acknowledges and agrees that any breaches of the
covenants set forth in Section 5.6 hereof which individually or in the aggregate
exceed $1,000,000 will be deemed for purposes of this Section 8.2(b) to have a
material adverse effect on the Business Condition of INT'X.xxx. Parent will have
received a certificate signed by the chief executive officer and the chief
financial officer of INT'X.xxx to such effect on the Closing Date.
(c) ESCROW AGREEMENTS. Parent will have received from
INT'X.xxx and the Indemnification Representative a duly executed Escrow
Agreement.
(d) LEGAL ACTION. There will not be pending or threatened
in writing any action, proceeding or other application before any court or
Governmental Entity brought by any Person or Governmental Entity: (i)
challenging or seeking to prohibit the consummation of the transactions
contemplated by this Agreement; or (ii) seeking to prohibit or impose any
limitations on Parent's ownership or operation of all or any portion of
INT'X.xxx's business or assets, or to compel Parent to dispose of or hold
separate all or any portion of its or INT'X.xxx's business or assets as a
result of the transactions contemplated by the Agreement which, in any such
case described in this clause (ii), if successful would have a material
adverse effect on the Business Condition of INT'X.xxx.
(e) OPINION OF COUNSEL. Parent will have received an opinion
dated as of the Closing Date of Xxxx, Gerber & Xxxxxxxxx, counsel to INT'X.xxx,
covering the matters set forth in EXHIBIT 8.2.
(f) CONSENTS. Parent will have received duly executed
copies of all Consents specified in Section 3.4 of the INT'X.xxx Disclosure
Schedule except where the failure to receive any such Consent either
individually or together with all other failures to receive a Consent would
not have a material adverse effect on the Business Condition of INT'X.xxx,
and there will not be any Consents which are required to be disclosed in
INT'X.xxx Disclosure Schedule which have not been so disclosed, and have not
been received, if the failure to receive such Consents would have a material
adverse effect on the Business Condition of INT'X.xxx, in each case except
for such thereof as Parent and INT'X.xxx will have agreed in writing will not
be obtained.
(g) TERMINATION OF RIGHTS AND CERTAIN SECURITIES. Any
registration rights, rights of refusal, voting rights, rights to any
liquidation preference or redemption rights relating to any security of
INT'X.xxx will have been terminated or waived or satisfied as of the Closing.
(h) STOCKHOLDER APPROVALS. This Agreement and the Merger
will have been approved by stockholders of INT'X.xxx holding at least ninety
percent (90%) of the voting power of the Outstanding INT'X.xxx Shares.
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(i) TERMINATION OF 401K PLAN. The INT'X.xxx Board of Directors
will have passed and not rescinded resolutions satisfactory to Parent's counsel
effectively terminating INT'X.xxx's 401(k) Plan immediately prior to the
Closing.
(j) CORPORATE PROCEEDINGS SATISFACTORY. All corporate and
other proceedings to be taken by INT'X.xxx in connection with the transactions
contemplated hereby and all documents incident thereto will be satisfactory in
form and substance to Parent and its counsel, and Parent and its counsel will
have received all such counterpart originals or certified or other copies of
such documents as they reasonably may request.
(k) LETTER FROM XXXXXX XXXXXXXX. The Parent shall have
received a letter dated as of a date not more than two days prior to the date
that the Form S-4 is declared effective and shall have received a subsequent
similar letter dated as of a date not more than two days prior to the Effective
Time, from Xxxxxx Xxxxxxxx LLP, auditors for INT'X.xxx, addressed to Parent in a
customary form reasonably satisfactory to Parent, containing statements and
information of the type ordinarily included in an accountants' "comfort letters"
with respect to the financial statements and financial information of INT'X.xxx
included in the Form S-4.
(l) INT'X.XXX NOTES AND INT'X.XXX BRIDGE NOTES. The INT'X.xxx
Notes and INT'X.xxx Bridge Notes will have been cancelled and be of no further
force and effect.
(m) REGISTRATION RIGHTS AGREEMENT. Parent will have received
an executed Registration Rights Agreement from the INT'X.xxx Affiliates.
(n) TERMINATION OF CERTAIN AGREEMENT AND ARRANGEMENTS. The
agreements and arrangements described in Section 8.2(n) of the INT'X.xxx
Disclosure Schedule will have been terminated with no liability to INT'X.xxx and
evidence of such termination will have been delivered to Parent.
8.3 CONDITIONS OF OBLIGATION OF INT'X.XXX. The obligation of
INT'X.xxx to effect the Merger is subject to the satisfaction of the
following conditions unless waived by INT'X.xxx:
(a) REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB.
The representations and warranties of Parent and Merger Sub set forth in this
Agreement will be true and correct in all material respects as of the Prior
Agreement Date and as of the Closing Date as though made on and as of the
Closing Date, except (i) as otherwise contemplated by this Agreement, (ii) as a
result of actions taken or not taken pursuant to this Agreement, (iii) for
representations and warranties specifically limited to an earlier date(s) and
(iv) for breaches which, individually or in the aggregate, would not have a
material adverse effect on the Business Condition of Parent. INT'X.xxx will have
received a certificate signed on behalf of Parent by a duly authorized officer
of Parent to such effect on the Closing Date.
(b) PERFORMANCE OF OBLIGATIONS OF PARENT AND MERGER SUB.
Parent and Merger Sub will have performed all agreements and covenants required
to be performed by them under this Agreement prior to the Closing Date except
(i) as otherwise contemplated or permitted by this Agreement, and (ii) for such
failures to perform which, individually or in the aggregate, would not have
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a material adverse effect on the Business Condition of Parent. INT'X.xxx will
have received a certificate signed on behalf of Parent by officers of Parent
to such effect on the Closing Date.
(c) OPINION OF PARENT'S COUNSEL. INT'X.xxx have received an
opinion dated the Closing Date of Xxxxx, Xxxxxxx & Xxxxxxxxx, LLP, substantially
in the form attached as EXHIBIT 8.3.
(d) STOCKHOLDER APPROVAL. This Agreement and the Merger will
have been approved and adopted by the requisite vote of the stockholders of
Merger Sub, as required by the DGCL and Merger Sub's Certificate of
Incorporation (the "REQUISITE STOCKHOLDER APPROVAL").
(e) ESCROW AGREEMENT. Parent shall have duly executed and
delivered the Escrow Agreement.
(f) TAX-FREE REORGANIZATION. INT'X.xxx shall have received a
written opinion from Xxxx, Gerber & Xxxxxxxxx to the effect that the Merger
should constitute a reorganization within the meaning of Section 368 of the
Code. In preparing such tax opinion, counsel may rely on reasonable assumptions
and reasonable written representations from Parent and INT'X.xxx and their
respective officers relating thereto.
(g) LEGAL ACTION. There will not be pending or threatened in
writing any action, proceeding or other application before any court or
Governmental Entity brought by any Person or Governmental Entity: (i)
challenging or seeking to prohibit the consummation of the transactions
contemplated by this Agreement or (ii) restricting in any way the receipt,
ownership, or ability to dispose of the consideration to be received by any
stockholder of INT'X.xxx in the transactions contemplated by this Agreement;
PROVIDED, HOWEVER, that INT'X.xxx will automatically be deemed to waive this
condition if Parent agrees to indemnify, defend and hold any such named party
harmless against any such action.
(h) BOARD OF DIRECTORS. Xxxxx Xxxxxx shall have been elected
as a member of the Board of Directors of Parent.
(i) REGISTRATION RIGHTS AGREEMENT. Parent and any other party
required to execute the Registration Rights Agreement shall have duly executed
and delivered the Registration Rights Agreement to Cornerstone and Dakota.
ARTICLE IX
INDEMNIFICATION
9.1 INDEMNIFICATION RELATING TO AGREEMENT. Subject to Sections
9.3 and 9.5, as an integral term of the Merger, all stockholders of INT'X.xxx
who accept the Parent Merger Shares and execute the Escrow Agreement (which
is a condition to receiving such consideration), severally and not jointly,
hereby agree to defend, indemnify and hold Parent harmless from and against,
and to reimburse Parent with respect to, any and all losses, damages,
liabilities, claims, judgments, settlements, fines, costs and expenses
(including reasonable attorneys' fees), determined as provided in Section 9.3
("INDEMNIFIABLE AMOUNTS"), of every nature whatsoever incurred by Parent
(which will be deemed to include any of the
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foregoing incurred by the Surviving Corporation) by reason of or arising out
of or in connection with (i) any breach, or any claim (including claims by
parties other than Parent) that constitutes a breach, by INT'X.xxx of any
representation or warranty of INT'X.xxx contained in this Agreement or in any
certificate or other document delivered to Parent pursuant to this Agreement,
other than any breach or related claim in respect of actions taken or not
taken pursuant to this Agreement or at the written direction of or after
consultation with and written concurrence of Parent and (ii) the failure,
partial or total, of INT'X.xxx or any Subsidiary to perform any agreement or
covenant required by this Agreement to be performed by it or them other than
any breach or related claim in respect of actions taken or not taken pursuant
to this Agreement or at the written direction of or after consultation with
and written concurrence of Parent. The foregoing obligations to indemnify
Parent will be determined without regard to any right to indemnification to
which any Person may have in his or her capacity as an officer, director,
employee, agent or any other capacity of INT'X.xxx or any Subsidiary, and no
stockholder of INT'X.xxx will be entitled to any indemnification from
INT'X.xxx or the Surviving Corporation for amounts paid hereunder. There will
be no right of contribution or subrogation from Parent or the Surviving
Corporation for indemnification payments made by or for the account of the
stockholders of INT'X.xxx. Notwithstanding any provision in this Agreement to
the contrary, Indemnifiable Amounts shall not include (i) any lost profits,
lost revenues or lost business opportunities, or (ii) any amounts which shall
have been recovered by Parent under any insurance policies.
9.2 THIRD PARTY CLAIMS. With respect to any claims or demands
by third parties as to which Parent may seek indemnification hereunder
whenever Parent will have received a written notice that such a claim or
demand has been asserted or threatened, Parent will promptly notify the
"Indemnification Representative" (as designated in the Escrow Agreement) of
such claim or demand and of the facts within Parent's knowledge that relate
thereto. The Indemnification Representative will then have the right to
defend, contest, negotiate or settle any such claim or demand through counsel
of his own selection, reasonably satisfactory to Parent, and solely at the
Indemnification Representative's own cost and expense, which costs and
expenses will be reimbursed pursuant to the Escrow Agreement. Notwithstanding
the preceding sentence, the Indemnification Representative will not settle,
compromise, or offer to settle or compromise any such claim or demand without
the prior written consent of Parent, which consent will not be unreasonably
withheld. Without limiting Parent's rights to object for other reasons,
Parent may object to a settlement or compromise which includes any provision
which in its reasonable judgment may have an adverse impact on or establish
an adverse precedent for the Business Condition of Parent or any of its
Subsidiaries. If the Indemnification Representative gives notice to Parent
within thirty (30) calendar days after Parent has notified the
Indemnification Representative that any such claim or demand has been made in
writing, that the Indemnification Representative elects to have Parent
defend, contest, negotiate, or settle any such claim or demand, then Parent
will have the right to contest and/or settle any such claim or demand and
seek indemnification pursuant to this Article IX as to any Indemnifiable
Amounts; PROVIDED, HOWEVER, that Parent will not settle, compromise, or offer
to settle or compromise any such claim or demand without the prior written
consent (which may include a general or limited consent) of the
Indemnification Representative, which consent will not be unreasonably
withheld. If the Indemnification Representative fails to give written notice
to Parent of his intention to contest or settle any such claim or demand
within thirty (30) calendar days after Parent has notified the
Indemnification Representative that any such claim or demand has been made in
writing, or if any such notice is given but any such claim or demand is not
contested by the Indemnification Representative within a reasonable time
thereafter, Parent will have the right to contest and/or settle any such
claim or demand in its sole
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discretion and seek indemnification pursuant to this Article IX as to any
Indemnifiable Amounts. The adoption of this Agreement by the stockholders of
INT'X.xxx will also constitute their approval of the Indemnification
Representative.
9.3 LIMITATIONS. Notwithstanding any other provision in this
Article IX, Parent will be entitled to indemnification pursuant to this
Article IX only to the extent that the aggregate Indemnifiable Amounts (which
shall be determined for all purposes of this Article IX disregarding any
qualification in any representation or warranty as to "materially" or
"material" or "material adverse effect") exceed Five Hundred Thousand Dollars
($500,000) (the "THRESHOLD AMOUNT") PROVIDED THAT at such time as the amount
to which Parent is entitled to be indemnified exceeds the Threshold Amount,
Parent shall be entitled to be indemnified up to the full Indemnifiable
Amounts including the Threshold Amount. For purposes of indemnification under
this Agreement, each Parent Merger Share shall at all times be valued at the
Parent Average Closing Price. The aggregate amount to which Parent will be
entitled to be indemnified pursuant to this Article IX will not exceed a
dollar amount equal to the value of the aggregate number of Escrow Shares
held in escrow pursuant to the terms of the Escrow Agreement valued at the
Parent Average Closing Price per share , and the liability of any single
stockholder for indemnification obligations pursuant to this Article IX shall
be limited to such stockholder's PRO RATA share of any Indemnifiable Amounts
based on the number of Escrow Shares deposited in escrow by such stockholder
relative to the aggregate number of Escrow Shares and the aggregate liability
of any single stockholder for indemnification obligations pursuant to this
Article IX shall be equal to a dollar amount equal to the Parent Average
Closing Price multiplied by the aggregate number of Escrow Shares deposited
in escrow by such stockholder; PROVIDED, HOWEVER, that there will be no
limitation on the obligations of any person for Indemnifiable Amounts arising
out of criminal activity or fraud by such person, including, without
limitation, any actions in such person's capacity as an employee, officer or
director of INT'X.xxx or its Subsidiaries, or for any stockholder of
INT'X.xxx for breaches of any representation or warranty contained in the
Letter of Transmittal delivered by such stockholder.
9.4 BINDING EFFECT. The indemnification obligations contained
in this Article IX are an integral part of this Agreement and the Merger in
the absence of which Parent would not have entered into this Agreement.
9.5 TIME LIMIT. The representations, warranties, covenants and
agreements of INT'X.xxx set forth in this Agreement and the certificates and
schedules executed or delivered pursuant to this Agreement will survive the
Closing for one year; PROVIDED, HOWEVER, that claims relating to the
representations and warranties in Sections 3.6(a) and (b) may be made only on
or before the date that Parent publishes audited financial results for the
year ended December 31, 2000 covering combined operations of Parent and
INT'X.xxx.
9.6 SOLE REMEDY. Notwithstanding any other provision in this
Agreement to the contrary, the provisions of this Article IX and the
provisions of the Escrow Agreement will be the sole and exclusive remedy of
(and corresponding liability of any stockholder of INT'X.xxx, in such
stockholder's capacity as such, to) Parent, Merger Sub and the Surviving
Corporation for any damage, claim, cause of action or right of any nature
arising out of or relating to any breach of representations, warranties,
covenants and agreements of INT'X.xxx set forth in this Agreement and the
certificates and schedules executed or delivered by it pursuant to this
Agreement.
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ARTICLE X
TERMINATION
10.1 MUTUAL AGREEMENT. This Agreement may be terminated at any
time prior to the Effective Time by the written consent of Parent and
INT'X.xxx.
10.2 TERMINATION BY PARENT. This Agreement may be terminated by
Parent (PROVIDED THAT it is not then in material breach of any
representation, warranty, covenant or agreement contained in this Agreement)
alone, by means of written notice to INT'X.xxx, if there has been a material
breach by INT'X.xxx or any Subsidiary of any representation, warranty,
covenant or agreement set forth in this Agreement or other ancillary
agreements, which breach would in Parent's reasonable opinion render it
impossible for INT'X.xxx to satisfy the closing conditions contained in
Section 8.2 and has not been cured within twenty (20) business days following
receipt by INT'X.xxx of notice of such breach.
10.3 TERMINATION BY INT'X.XXX. (a) This Agreement may be
terminated by INT'X.xxx by means of written notice to Parent and payment of
the Termination Fee (as defined below) if it has fulfilled its obligations
under Section 7.1(a) and (c) hereof but has failed to obtain the INT'X.xxx
Requisite Stockholder Approval. The Termination Fee shall be paid by wire
transfer of immediately available funds to an account designated by Parent
and any termination pursuant to this Section 10.3(a) shall only be effective
upon receipt of the Termination Fee in such account. The "Termination Fee"
shall be a dollar amount equal to 5% of the result of multiplying (i) the
Parent Average Closing Price by (ii) the number of Parent Merger Shares that
would have been issuable by Parent if the Closing had occurred on the date of
such termination, assuming that there were no Excluded Shares, no Series C
Excluded Shares and no Series D Excluded Shares and that all Outstanding
INT'X.xxx Options were exercised immediately prior to such date.
(b) This Agreement may also be terminated by INT'X.xxx (PROVIDED
THAT it is not then in material breach of any representation, warranty,
covenant or agreement contained in this Agreement) alone, by means of written
notice to Parent, if there has been a material breach by Parent or any
Subsidiary of any representation, warranty, covenant or agreement set forth
in the Agreement or other ancillary agreements, which breach would in
INT'X.xxx's reasonable opinion render it impossible for INT'X.xxx to satisfy
the closing conditions contained in Section 8.3 and has not been cured within
twenty (20) business days following receipt by Parent of notice of such
breach,
10.4 OUTSIDE DATE. This Agreement may be terminated by Parent
alone or by INT'X.xxx alone by means of written notice if the Effective Time
does not occur on or prior to June 30, 2000; PROVIDED, HOWEVER, that the
right to terminate this Agreement pursuant to the preceding clause will not
be available to any party whose failure to fulfill any obligation under this
Agreement has been a significant cause of, or resulted in, the failure of the
Effective Time to occur on or before such date.
10.5 EFFECT OF TERMINATION. In the event of termination of this
Agreement by either INT'X.xxx or Parent as provided in this Article, this
Agreement will forthwith become void and have no effect, and there will be no
liability or obligation on the part of Parent, INT'X.xxx, Merger Sub or their
respective officers or directors, except that (i) the provisions of Sections
7.4, 7.6, 7.7 and 11.2 will survive any such termination and abandonment, and
(ii) no party will be released or relieved from any
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liability arising from the willful breach by such party prior to termination
of any of its representations, warranties, covenants or agreements as set
forth in this Agreement.
ARTICLE XI
MISCELLANEOUS
11.1 ENTIRE AGREEMENT. This Agreement, including the exhibits,
schedules and other agreements delivered pursuant to this Agreement contain
all of the terms and conditions agreed upon by the parties relating to the
subject matter of this Agreement and supersede all prior agreements,
negotiations, correspondence, undertakings and communications of the parties,
whether oral or written, respecting that subject matter.
11.2 GOVERNING LAW; CONSENT TO JURISDICTION. The Merger and this
Agreement will be governed by the internal laws of the State of Delaware.
Legal proceedings relating to this Agreement, the agreements executed in
connection with this Agreement or the transactions contemplated hereby or
thereby may be commenced only in the state or federal courts in the State of
Delaware. Each of the parties hereby consents to the exclusive jurisdiction
of such courts (and of the appropriate appellate courts) in any such action
or proceeding and waives any objection to venue laid therein. The foregoing
provisions will not be construed to preclude any party from bringing a
counter-claim in any action or proceeding properly commenced in accordance
with the foregoing provisions. Process in any such action or proceeding may
be served on any party anywhere in the world. Notwithstanding the foregoing,
any dispute relating to a claim under the Escrow Agreement will be resolved
in accordance with the arbitration provisions of the Escrow Agreement.
11.3 NOTICES. All notices, requests, demands or other
communications which are required or may be given pursuant to the terms of
this Agreement will be in writing and will be deemed to have been duly given:
(i) on the date of delivery if personally delivered by hand, (ii) upon the
third day after such notice is deposited in the United States mail, if mailed
by registered or certified mail, postage prepaid, return receipt requested,
(iii) upon the date scheduled for delivery after such notice is sent by a
nationally recognized overnight express courier or (iv) by fax upon written
confirmation (including the automatic confirmation that is received from the
recipient's fax machine) of receipt by the recipient of such notice:
IF TO PARENT OR MERGER SUB Lionbridge Technologies, Inc.
000 Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxx X. Xxxxx
Telephone No.: (000) 000-0000
Fax No.: (000) 000-0000
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WITH COPIES TO:
Xxxxx, Xxxxxxx & Xxxxxxxxx, LLP
000 Xxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxx, Esq. &
Xxxxx X. Xxxxxx, Esq.
Telephone No.: (000) 000-0000
Fax No.: (000) 000-0000
IF TO INT'X.XXX: INT'X.xxx, Inc.
000 Xxx Xxxxxxxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxxxxxxx 00000
Attention: Chief Executive Officer
Telephone No.: (000) 000-0000
Fax No.: (000) 000-0000
With copies to:
INT'X.xxx, Inc.
000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxxxx
Telephone No.: (000) 000-0000
Fax No.: (000) 000-0000
Cornerstone Equity IV, L.P.
000 Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, XX 00000
Attention: Xxxxxxx Xxxxxx
Telephone: (000) 000-0000
Fax No.: (000) 000-0000
Dakota/EGI, LLC
c/o Equity Group Investments
Two X. Xxxxxxxxx Xxxxx
Xxxxx 000
Xxxxxxx, XX 00000
Attn: Xxxxx Xxxxxx, Esq.
Telephone: (000) 000-0000
Fax No: (000) 000-0000
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Xxxx, Xxxxxx & Xxxxxxxxx
Xxx Xxxxx XxXxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Attn: Xxx Xxxxxxxxx
Telephone No.: (000) 000-0000
Fax No.: (000) 000-0000
Such addresses may be changed, from time to time, by means of a notice
given in the manner provided in this Section 11.3.
11.4 SEVERABILITY. If any provision of this Agreement is held to
be unenforceable for any reason, it will be modified rather than voided, if
possible, in order to achieve the intent of the parties to this Agreement to
the extent possible. In any event, all other provisions of this Agreement
will be deemed valid and enforceable to the full extent.
11.5 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties of Parent contained in this Agreement and
schedules and certificates executed or delivered pursuant to this Agreement,
will survive the Effective Time, but any claims for breach thereof may only
be made on or before the first yearly anniversary of the Closing.
11.6 ASSIGNMENT. No party to this Agreement may assign, by
operation of law or otherwise, all or any portion of its rights, obligations,
or liabilities under this Agreement without the prior written consent of
INT'X.xxx, Merger Sub and Parent, which consent may be withheld in the
absolute discretion of the party asked to grant such consent. Any attempted
assignment by Merger Sub or Parent, on the one hand, or by INT'X.xxx, on the
other hand, in violation of this Section 11.6 will be voidable and will
entitle INT'X.xxx or Parent, respectively, to terminate this Agreement at its
option.
11.7 COUNTERPARTS. This Agreement may be executed in two or more
partially or fully executed counterparts each of which will be deemed an
original and will bind the signatory, but all of which together will
constitute but one and the same instrument. The execution and delivery of a
Signature Page to this Agreement and Plan of Reorganization in the form
annexed to this Agreement, including a facsimile copy of the actual
signature, by any party hereto who will have been furnished the final form of
this Agreement will constitute the execution and delivery of this Agreement
by such party.
11.8 AMENDMENT. This Agreement may not be amended except by an
instrument in writing executed by INT'X.xxx, Merger Sub and Parent.
11.9 EXTENSION, WAIVER. At any time prior to the Effective Time,
any party hereto may, to the extent legally allowed and without prejudice to
the rights of any other party: (i) extend the time for the performance of any
of the obligations or other acts of any other party hereto to the party
extending such time, (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,
covenants 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 will
be valid only if set forth in an instrument in writing signed on behalf of
such party.
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11.10 INTERPRETATION. When a reference is made in this Agreement
to Sections, Exhibits or Schedules, such reference will be to a Section,
Exhibit or Schedule to this Agreement unless otherwise indicated. The words
"include," "includes," and "including" when used therein will be deemed in
each case to be followed by the words "without limitation." The table of
contents, index to defined terms, and headings contained in this Agreement
are for reference purposes only and will not affect in any way the meaning or
interpretation of this Agreement.
11.11 KNOWLEDGE. For purposes of this Agreement, the term
"KNOWLEDGE" (including any derivation thereof such as "know" or "knowing",
and similar such as "aware" and regardless of whether such word starts with
an initial capital) in reference to INT'X.xxx or any Subsidiary will mean the
knowledge of the directors and executive officers of INT'X.xxx or such
Subsidiary as the case may be, and in reference to Parent or any Subsidiary
will mean the knowledge of the directors and executive officers of Parent or
such Subsidiary as the case may be.
11.12 TRANSFER, SALES, DOCUMENTARY, STAMP AND OTHER SIMILAR
TAXES. Any and all transfer, sales, documentary, stamp and other similar
Taxes imposed in connection with the transactions contemplated by this
Agreement will be paid by the stockholder of INT'X.xxx with respect to which
such Tax relates. At Parent's discretion, the amount paid to any Person
pursuant to this Agreement will be reduced by the amount of Taxes payable by
such Person pursuant to this Section 11.12. Any amounts so withheld will be
promptly remitted to the appropriate taxing authority.
11.13 ACKNOWLEDGEMENT. Parent and INT'X.xxx hereby acknowledge
and agree that: (i) the promissory notes described in Section 2.9(ii) were
issued pursuant to Section 5.6 of the Parent Disclosure Schedule and Section
3.8(a) of the INT'X.xxx Disclosure Schedule, (ii) Parent has received the
INT'X.xxx financial projections dated as of March 25, 2000 and (iii) the
promissory notes described in Section 2.9(iii) will count as $2 million of
the $3 million of additional indebtedness permitted to be incurred by
INT'X.xxx pursuant to Section 5.6 of the Parent Disclosure Schedule without
resulting in a material adverse effect on the Business Condition of
INT'X.xxx. Parent hereby acknowledges that pursuant to Section 8.2(b)
INT'X.xxx may incur additional indebtedness of up to $1 million and, in
accordance with Section 5.6 of the Parent Disclosure Schedule, such $1
million of additional indebtedness shall not result in a material adverse
effect on the Business Condition of INT'X.xxx if such additional indebtedness
is treated as a Debt Adjustment Amount.
(THE REMAINDER OF THIS PAGE HAS BEEN LEFT BLANK INTENTIONALLY.)
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SIGNATURE PAGE TO
AGREEMENT AND PLAN OF REORGANIZATION
IN WITNESS WHEREOF, Parent, Merger Sub and, INT'X.xxx have executed
this Agreement as of the date first written above.
LIONBRIDGE TECHNOLOGIES, INC. INT'X.XXX, INC.
By: /s/ Xxxx X. Xxxxx By: /s/ Xxxxx X. Xxxxxx
----------------------------------- --------------------------------
Xxxx X. Xxxxx Xxxxx X. Xxxxxx
Chief Executive Officer & President Chief Executive Officer
LTI ACQUISITION CORP.
By: /s/ Xxxx X. Xxxxx
------------------------------------
Xxxx X. Xxxxx
Chief Executive Officer & President
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LIONBRIDGE TECHNOLOGIES, INC.,
LTI ACQUISITION CORP.
AND
INT'X.XXX, INC.
AMENDED AND RESTATED AGREEMENT AND PLAN OF REORGANIZATION
OMITTED SCHEDULES
INT'X.xxx Disclosure Schedule--This schedule sets forth exceptions to
INT'X.xxx's representations and warranties contained in the Amended and
Restated Agreement and Plan of Reorganization.
Parent Disclosure Schedule--This schedule sets forth exceptions to
Lionbridge's representations and warranties contained in the Amended and
Restated Agreement and Plan of Reorganization.
Lionbridge undertakes to deliver or cause to be delivered a copy of any
omitted schedule to the Securities and Exchange Commission upon its request.
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