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EXHIBIT 1
FORM OF
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
BY AND AMONG
PEREGRINE SYSTEMS, INC.
SODA ACQUISITION CORPORATION
AND
HARBINGER CORPORATION
DATED AS OF APRIL 5, 2000
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TABLE OF CONTENTS
PAGE
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ARTICLE I THE MERGER...................................................................................................2
1.1 The Merger...........................................................................................2
1.2 Effective Time; Closing..............................................................................2
1.3 Effect of the Merger.................................................................................2
1.4 Articles of Incorporation; Bylaws....................................................................2
1.5 Directors and Officers...............................................................................2
1.6 Effect on Capital Stock..............................................................................3
1.7 Surrender of Certificates............................................................................4
1.8 No Further Ownership Rights in Company Common Stock..................................................6
1.9 Lost, Stolen or Destroyed Certificates...............................................................6
1.10 Tax and Accounting Consequences......................................................................6
1.11 Taking of Necessary Action; Further Action...........................................................6
ARTICLE II REPRESENTATIONS AND WARRANTIES OF COMPANY...................................................................7
2.1 Organization and Qualification; Subsidiaries.........................................................7
2.2 Articles of Incorporation and Bylaws.................................................................8
2.3 Capitalization.......................................................................................8
2.4 Authority Relative to this Agreement.................................................................9
2.5 No Conflict; Required Filings and Consents...........................................................10
2.6 Compliance; Permits..................................................................................11
2.7 SEC Filings; Financial Statements....................................................................11
2.8 No Undisclosed Liabilities...........................................................................12
2.9 Absence of Certain Changes or Events.................................................................12
2.10 Absence of Litigation................................................................................13
2.11 Employee Benefit Plans...............................................................................13
2.12 Labor Matters........................................................................................16
2.13 Registration Statement/Joint Proxy Statement/Prospectus..............................................16
2.14 Restrictions on Business Activities..................................................................16
2.15 Title to Property....................................................................................16
2.16 Taxes................................................................................................17
2.17 Environmental Matters................................................................................18
2.18 Brokers..............................................................................................19
2.19 Intellectual Property................................................................................19
2.20 Agreements, Contracts and Commitments................................................................22
2.21 Insurance............................................................................................24
2.22 Opinion of Financial Advisor.........................................................................24
2.23 Board Approval.......................................................................................24
2.24 Vote Required........................................................................................24
2.25 State Takeover Statutes..............................................................................24
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER
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SUB.........................................................................................25
3.1 Organization and Qualification; Subsidiaries.........................................................25
3.2 Certificate of Incorporation and Bylaws..............................................................25
3.3 Capitalization.......................................................................................25
3.4 Parent Common Stock..................................................................................26
3.5 Authority Relative to this Agreement.................................................................26
3.6 SEC Filings; Financial Statements....................................................................26
3.7 No Undisclosed Liabilities...........................................................................27
3.8 Compliance; Permits..................................................................................27
3.9 Absence of Certain Changes or Events.................................................................27
3.10 Absence of Litigation................................................................................28
3.11 Registration Statement; Joint Proxy Statement/Prospectus.............................................28
3.12 Brokers..............................................................................................28
3.13 Opinion of Financial Advisor.........................................................................28
3.14 Board Approval.......................................................................................29
3.15 Vote Required........................................................................................29
ARTICLE IV CONDUCT PRIOR TO THE EFFECTIVE TIME.........................................................................29
4.1 Conduct of Business by Company.......................................................................29
4.2 Conduct of Business by Parent........................................................................32
ARTICLE V ADDITIONAL AGREEMENTS........................................................................................33
5.1 Joint Proxy Statement/Prospectus; Registration Statement.............................................33
5.2 Shareholder and Stockholder Meetings.................................................................34
5.3 Confidentiality; Access to Information...............................................................34
5.4 No Solicitation......................................................................................35
5.5 Public Disclosure....................................................................................37
5.6 Reasonable Efforts; Notification.....................................................................37
5.7 Third Party Consents.................................................................................38
5.8 Stock Options and Employee Benefits; Warrants........................................................38
5.9 Form S-8.............................................................................................39
5.10 Indemnification......................................................................................39
5.11 Nasdaq Listing.......................................................................................40
5.12 Affiliates...........................................................................................40
5.13 Regulatory Filings; Reasonable Efforts...............................................................40
5.14 Parent Board of Directors............................................................................41
5.15 Shareholder Litigation...............................................................................41
ARTICLE VI CONDITIONS TO THE MERGER....................................................................................41
6.1 Conditions to Obligations of Each Party to Effect the Merger.........................................41
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6.2 Additional Conditions to Obligations of Company......................................................42
6.3 Additional Conditions to the Obligations of Parent and Merger Sub....................................42
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER..........................................................................43
7.1 Termination..........................................................................................43
7.2 Notice of Termination; Effect of Termination.........................................................45
7.3 Fees and Expenses....................................................................................45
7.4 Amendment............................................................................................47
7.5 Extension; Waiver....................................................................................47
ARTICLE VIII GENERAL PROVISIONS........................................................................................47
8.1 Survival of Representations and Warranties...........................................................47
8.2 Notices..............................................................................................47
8.3 Interpretation; Definitions..........................................................................48
8.4 Counterparts.........................................................................................49
8.5 Entire Agreement; Third Party Beneficiaries..........................................................49
8.6 Severability.........................................................................................50
8.7 Other Remedies; Specific Performance.................................................................50
8.8 Governing Law........................................................................................50
8.9 Rules of Construction................................................................................50
8.10 Assignment...........................................................................................50
INDEX OF EXHIBITS
Exhibit A-1 Form of Company Voting Agreement
Exhibit A-2 Form of Parent Voting Agreement
Exhibit B Form of Stock Option Agreement
Exhibit C Form of Affiliate Agreement
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AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
This AGREEMENT AND PLAN OF MERGER AND REORGANIZATION is made and
entered into as of April 5, 2000, among Peregrine Systems, Inc., a Delaware
corporation ("PARENT"), Soda Acquisition Corporation, a Delaware corporation and
a wholly-owned subsidiary of Parent ("MERGER SUB"), and Harbinger Corporation, a
Georgia corporation ("COMPANY").
RECITALS
A. Upon the terms and subject to the conditions of this Agreement
(as defined in Section 1.2 below) and in accordance with the Georgia Business
Corporation Code ("GEORGIA LAW") and the Delaware General Corporation Law
("DELAWARE LAW"), Parent and Company intend to enter into a business combination
transaction.
B. The Board of Directors of Company (i) has determined that the
Merger (as defined in Section 1.1) is consistent with and in furtherance of the
long-term business strategy of Company and fair to, and in the best interests
of, Company and its shareholders, (ii) has unanimously approved and declared
advisable this Agreement, and has approved the Merger (as defined in Section
1.1) and the other transactions contemplated by this Agreement, and (iii) has
determined to recommend that the shareholders of Company adopt and approve this
Agreement and approve the Merger.
C. The Board of Directors of Parent (i) has determined that
the Merger is consistent with and in furtherance of the long-term business
strategy of Parent and is fair to, and in the best interests of, Parent and its
stockholders, (ii) has approved this Agreement, the Merger and the other
transactions contemplated by this Agreement, and (iii) has determined to
recommend that the stockholders of Parent approve the issuance of shares of
Parent Common Stock (as defined below) pursuant to the Merger (the "SHARE
ISSUANCE").
D. Concurrently with the execution of this Agreement, (i) as a
condition and inducement to Parent's willingness to enter into this Agreement,
each affiliate of Company is entering into Voting Agreements in the form
attached hereto as Exhibit A-1 (the "COMPANY VOTING AGREEMENTS") and (ii) as a
condition and inducement to Company's willingness to enter into this Agreement,
certain affiliates of Parent are entering into Voting Agreements in the form
attached hereto as Exhibit A-2 (the "PARENT VOTING AGREEMENT").
E. Concurrently with the execution of this Agreement, and as a
condition and inducement to Parent's willingness to enter into this Agreement,
Company shall execute and deliver a Stock Option Agreement in favor of Parent in
the form attached hereto as Exhibit B (the "STOCK OPTION AGREEMENT").
F. The parties intend, by executing this Agreement, to adopt a
plan of reorganization within the meaning of Section 368 of the Internal Revenue
Code of 1986, as amended (the "CODE").
NOW, THEREFORE, in consideration of the covenants, promises and
representations set forth herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties agree
as follows:
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ARTICLE I
THE MERGER
1.1 The Merger. At the Effective Time (as defined in Section 1.2)
and subject to and upon the terms and conditions of this Agreement and the
applicable provisions of Georgia Law and Delaware Law, Merger Sub shall be
merged with and into Company (the "MERGER"), the separate corporate existence of
Merger Sub shall cease, and Company shall continue as the surviving corporation
and as a wholly-owned subsidiary of Parent. Company as the surviving corporation
after the Merger is hereinafter sometimes referred to as the "SURVIVING
CORPORATION."
1.2 Effective Time; Closing. Subject to the provisions of this
Agreement, the parties hereto shall cause the Merger to be consummated by filing
a certificate of merger with the Secretary of State of the State of Georgia in
accordance with the relevant provisions of Georgia Law (the "CERTIFICATE OF
MERGER") and a certificate of merger with the Secretary of State of the State of
Delaware in accordance with the relevant provisions of Delaware Law (the
"DELAWARE CERTIFICATE OF MERGER") (the time of the later of such filings (or
such later time as may be agreed in writing by Company and Parent and specified
in the Certificate of Merger) being the "EFFECTIVE TIME") as soon as practicable
on or after the Closing Date (as herein defined). The closing of the Merger (the
"CLOSING") shall take place at the offices of Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx,
Professional Corporation, 000 Xxxx Xxxx Xxxx, Xxxx Xxxx, Xxxxxxxxxx 00000-0000
at a time and date to be specified by the parties, which shall be no later than
the second business day after the satisfaction or waiver of all of the
conditions set forth in Article VI, or at such other time, date and location as
the parties hereto agree in writing (the "CLOSING DATE").
1.3 Effect of the Merger. At the Effective Time, the effect of the
Merger shall be as provided in this Agreement and the applicable provisions of
Georgia Law and Delaware Law. Without limiting the generality of the foregoing,
and subject thereto, at the Effective Time, all the property, rights,
privileges, powers, and franchises of Company and Merger Sub shall vest in the
Surviving Corporation, and all debts, liabilities and duties of Company and
Merger Sub shall become the debts, liabilities, and duties of the Surviving
Corporation.
1.4 Articles of Incorporation; Bylaws.
(a) At the Effective Time, the Articles of Incorporation
of Company, as in effect immediately prior to the Effective Time, shall be the
Articles of Incorporation of the Surviving Corporation until thereafter amended
as provided by law and such Articles of Incorporation of the Surviving
Corporation.
(b) The Bylaws of Company, as in effect immediately prior
to the Effective Time, shall be, at the Effective Time, the Bylaws of the
Surviving Corporation until thereafter amended.
1.5 Directors and Officers. The initial directors of the Surviving
Corporation shall be the directors of Merger Sub immediately prior to the
Effective Time, each to hold office in accordance
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with the Articles of Incorporation and Bylaws of the Surviving Corporation until
their respective successors are duly elected or appointed and qualified. The
initial officers of the Surviving Corporation shall be the officers of Merger
Sub immediately prior to the Effective Time, each to hold office in accordance
with the Articles of Incorporation and Bylaws of the Surviving Corporation until
their respective successors are duly appointed.
1.6 Effect on Capital Stock. Subject to the terms and conditions
of this Agreement, at the Effective Time, by virtue of the Merger and without
any action on the part of Merger Sub, Company or the holders of any of the
following securities, the following shall occur:
(a) Conversion of Company Common Stock. Each share of
Common Stock, par value $.0001 per share, of Company (the "COMPANY COMMON
STOCK") issued and outstanding immediately prior to the Effective Time, other
than any shares of Company Common Stock to be cancelled pursuant to Section
1.6(b), will be cancelled and extinguished and automatically converted (subject
to Sections 1.6(e) and (f)) into the right to receive that number of shares of
Common Stock, $0.001 par value per share, of Parent (the "PARENT COMMON STOCK")
equal to 0.75 (the "EXCHANGE RATIO") upon surrender of the certificate
representing such share of Company Common Stock in the manner provided in
Section 1.7 (or in the case of a lost, stolen or destroyed certificate, upon
delivery of an affidavit (and bond, if required) in the manner provided in
Section 1.9). If any shares of Company Common Stock outstanding immediately
prior to the Effective Time are unvested or are subject to a repurchase option,
risk of forfeiture or other condition under any applicable restricted stock
purchase agreement or other agreement with the Company, then the shares of
Parent Common Stock issued in exchange for such shares of Company Common Stock
will also be unvested and subject to the same repurchase option, risk of
forfeiture or other condition, and the certificates representing such shares of
Parent Common Stock may accordingly be marked with appropriate legends. The
Company shall take all action that may be necessary to ensure that, from and
after the Effective Time, Parent is entitled to exercise any such repurchase
option or other right set forth in any such restricted stock purchase agreement
or other agreement.
(b) Cancellation of Parent-Owned Stock. Each share of
Company Common Stock held by Company or owned by Merger Sub, Parent or any
direct or indirect wholly-owned subsidiary of Company or of Parent immediately
prior to the Effective Time shall be cancelled and extinguished without any
conversion thereof.
(c) Stock Options; Warrants; Employee Stock Purchase
Plans. At the Effective Time, each outstanding Warrant (as defined in Section
2.3), all options to purchase Company Common Stock and stock appreciation rights
then outstanding under Company's Amended and Restated 1989 Stock Option Plan
(the "1989 PLAN"), Company's 1996 Stock Option Plan, as amended, (the "INCENTIVE
PLAN"), Company's 1993 Stock Option Plan for Nonemployee Directors (the
"DIRECTOR PLAN" and, together with the 1989 Plan and the Incentive Plan, the
"COMPANY OPTION PLANS"), and each of the Company Option Plans shall be assumed
by Parent in accordance with Section 5.8 hereof. Purchase rights outstanding
under Company's Amended and Restated Employee Stock Purchase Plan (the "ESPP")
shall be treated as set forth in Section 5.8.
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(d) Capital Stock of Merger Sub. Each share of Common
Stock, $0.001 par value per share, of Merger Sub (the "MERGER SUB COMMON STOCK")
issued and outstanding immediately prior to the Effective Time shall be
converted into one validly issued, fully paid and nonassessable share of Common
Stock, $0.001 par value per share, of the Surviving Corporation. Each
certificate evidencing ownership of shares of Merger Sub Common Stock shall
evidence ownership of such shares of capital stock of the Surviving Corporation.
(e) Adjustments to Exchange Ratio. The Exchange Ratio
shall be adjusted to reflect proportionately and equitably the effect of any
stock split, reverse stock split, stock dividend (including any dividend or
distribution of securities convertible into Parent Common Stock or Company
Common Stock), reorganization, recapitalization, reclassification or other like
change with respect to Parent Common Stock or Company Common Stock occurring on
or after the date hereof and prior to the Effective Time.
(f) Fractional Shares. No fraction of a share of Parent
Common Stock will be issued by virtue of the Merger, but in lieu thereof, each
holder of shares of Company Common Stock who would otherwise be entitled to a
fraction of a share of Parent Common Stock (after aggregating all fractional
shares of Parent Common Stock that otherwise would be received by such holder)
shall, upon surrender of such holder's Certificates(s) (as defined in Section
1.7(c)), receive from Parent an amount of cash (rounded to the nearest whole
cent), without interest, equal to the product of (i) such fraction and (ii) the
average closing price of Parent Common Stock for the five trading days
immediately preceding the last full trading day prior to the Effective Time, as
reported on the Nasdaq National Market System ("NASDAQ").
1.7 Surrender of Certificates.
(a) Exchange Agent. Parent shall select a bank or trust
company reasonably acceptable to Company to act as the exchange agent (the
"EXCHANGE AGENT") in the Merger.
(b) Parent to Provide Common Stock. Within five (5)
business days after the Effective Time, Parent shall make available to the
Exchange Agent, for exchange in accordance with this Article I, (i) the shares
of Parent Common Stock issuable pursuant to Section 1.6 in exchange for
outstanding shares of Company Common Stock and (ii) cash in an amount sufficient
for payment in lieu of fractional shares pursuant to Section 1.6(f) and any
dividends or distributions to which holders of shares of Company Common Stock
may be entitled pursuant to Section 1.7(d).
(c) Exchange Procedures. As soon as practicable after the
Effective Time, Parent shall cause the Exchange Agent to mail to each holder of
record (as of the Effective Time) of a certificate or certificates (the
"CERTIFICATES"), which immediately prior to the Effective Time represented
outstanding shares of Company Common Stock whose shares were converted into the
right to receive shares of Parent Common Stock pursuant to Section 1.6, cash in
lieu of any fractional shares pursuant to Section 1.6(f), and any dividends or
other distributions pursuant to Section 1.7(d), (i) a letter of transmittal
(which shall specify that delivery shall be effected, and risk of loss and title
to the Certificates shall pass, only upon delivery of the Certificates to the
Exchange Agent and shall contain such other provisions as Parent may reasonably
specify) and (ii) instructions
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for use in effecting the surrender of the Certificates in exchange for
certificates representing shares of Parent Common Stock, cash in lieu of any
fractional shares pursuant to Section 1.6(f) and any dividends or other
distributions pursuant to Section 1.7(d). Upon surrender of Certificates for
cancellation to the Exchange Agent or to such other agent or agents as may be
appointed by Parent, together with such letter of transmittal, duly completed
and validly executed in accordance with the instructions thereto, the holders of
such Certificates shall be entitled to receive in exchange therefor certificates
representing the number of whole shares of Parent Common Stock into which their
shares of Company Common Stock were converted at the Effective Time, payment in
lieu of fractional shares which such holders have the right to receive pursuant
to Section 1.6(f) and any dividends or distributions payable pursuant to Section
1.7(d), and the Certificates so surrendered shall forthwith be cancelled. Until
so surrendered, outstanding Certificates will be deemed from and after the
Effective Time, for all corporate purposes, subject to Section 1.7(d) as to the
payment of dividends, to evidence only the ownership of the number of full
shares of Parent Common Stock into which such shares of Company Common Stock
shall have been so converted and the right to receive an amount in cash in lieu
of the issuance of any fractional shares in accordance with Section 1.6(f) and
any dividends or distributions payable pursuant to Section 1.7(d).
(d) Distributions With Respect to Unexchanged Shares. No
dividends or other distributions declared or made after the date of this
Agreement with respect to Parent Common Stock with a record date after the
Effective Time will be paid to the holders of any unsurrendered Certificate(s)
with respect to the shares of Parent Common Stock represented thereby until the
holders of record of such Certificate(s) shall surrender such Certificate(s).
Subject to applicable law, following surrender of any such Certificate(s), the
Exchange Agent shall deliver to the record holders thereof, without interest, a
certificate(s) representing whole shares of Parent Common Stock issued in
exchange therefor along with payment in lieu of fractional shares pursuant to
Section 1.6(f) hereof and the amount of any such dividends or other
distributions with a record date after the Effective Time payable with respect
to such whole shares of Parent Common Stock.
(e) Transfers of Ownership. If any certificate
representing shares of Parent Common Stock is to be issued in a name other than
that in which the Certificate surrendered in exchange therefor is registered, it
will be a condition of the issuance thereof that the Certificate so surrendered
will be properly endorsed and otherwise in proper form for transfer and that the
persons requesting such exchange will have paid any transfer or other taxes
required by reason of the issuance of certificates representing shares of Parent
Common Stock in any name other than that of the registered holder of the
Certificates surrendered, or established to the satisfaction of Parent or any
agent designated by it that such tax has been paid or is not payable.
(f) Required Withholding. Each of the Exchange Agent,
Parent, and the Surviving Corporation shall be entitled to deduct and withhold
from any consideration payable or otherwise deliverable pursuant to this
Agreement to any holder or former holder of Company Common Stock such amounts as
may be required to be deducted or withheld therefrom under the Code or under any
provision of state, local or foreign tax law or under any other applicable legal
requirement. To the extent such amounts are so deducted or withheld, such
amounts shall be treated
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for all purposes under this Agreement as having been paid to the person to whom
such amounts would otherwise have been paid.
(g) No Liability. Notwithstanding anything to the
contrary in this Section 1.7, neither of the Exchange Agent, Parent, the
Surviving Corporation, or any party hereto shall be liable to a holder of shares
of Parent Common Stock or Company Common Stock for any amount properly paid to a
public official pursuant to any applicable abandoned property, escheat, or
similar law.
1.8 No Further Ownership Rights in Company Common Stock. All
shares of Parent Common Stock issued upon the surrender for exchange of Shares
of Company Common Stock in accordance with the terms hereof (together with any
cash paid in respect thereof pursuant to Section 1.6(f) and 1.7(d)) shall be
deemed to have been issued in full satisfaction of all rights pertaining to such
shares of Company Common Stock, and there shall be no further registration of
transfers on the records of the Surviving Corporation of shares of Company
Common Stock which were outstanding immediately prior to the Effective Time. If,
after the Effective Time, Certificates are presented to the Surviving
Corporation for any reason, they shall be cancelled and exchanged as provided in
this Article I.
1.9 Lost, Stolen or Destroyed Certificates. In the event that any
Certificate shall have been lost, stolen, or destroyed, the Exchange Agent shall
issue in exchange for such lost, stolen, or destroyed Certificates, upon the
making of an affidavit of that fact by the holder thereof, certificates
representing the shares of Parent Common Stock into which the shares of Company
Common Stock represented by such Certificates were converted pursuant to Section
1.6, cash for fractional shares, if any, as may be required pursuant to Section
1.6(f) and any dividends or distributions payable pursuant to Section 1.7(d);
provided, however, that Parent may, in its discretion and as a condition
precedent to the issuance of such certificates representing shares of Parent
Common Stock, cash, and other distributions, require the owner of such lost,
stolen, or destroyed Certificate to deliver a bond in such sum as it may
reasonably direct as indemnity against any claim that may be made against
Parent, the Surviving Corporation, or the Exchange Agent with respect to the
Certificates alleged to have been lost, stolen or destroyed.
1.10 Tax and Accounting Consequences.
(a) It is intended by the parties hereto that the Merger
shall constitute a reorganization within the meaning of Section 368 of the Code.
The parties hereto adopt this Agreement as a "plan of reorganization" within the
meaning of Sections 1.368-2(g) and 1.368-3(a) of the United States Income Tax
Regulations.
(b) It is intended by the parties hereto that the Merger
shall be treated as a purchase for accounting purposes.
1.11 Taking of Necessary Action; Further Action. If, at any time
after the Effective Time, any further action is necessary or desirable to carry
out the purposes of this Agreement and to vest the Surviving Corporation with
full right, title, and possession to all assets, property, rights, privileges,
powers and franchises of Company and Merger Sub, the officers and directors of
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Company and Merger Sub are fully authorized in the manner of their respective
corporations or otherwise to take, and will take, all such lawful and necessary
action.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF COMPANY
As of the date hereof and as of the Closing Date, Company represents
and warrants to Parent and Merger Sub, subject to such exceptions as are
specifically disclosed in writing in the disclosure schedules, dated as of the
date hereof delivered by Company to Parent (the "COMPANY SCHEDULE"), as follows.
The Company Schedule shall be arranged in sections corresponding to the numbered
sections contained in this Article and the disclosure in any paragraph shall
qualify other sections in this Article only to the extent it is reasonably
apparent from a reading of such disclosure that it also qualifies such other
sections.
2.1 Organization and Qualification; Subsidiaries.
(a) Each of Company and its subsidiaries is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has the requisite corporate power and
authority to own, lease and operate its assets and properties and to carry on
its business as it is now being conducted. Each of Company and its subsidiaries
is in possession of all franchises, grants, authorizations, licenses, permits,
easements, consents, certificates, approvals and orders ("APPROVALS") necessary
to own, lease and operate the properties it purports to own, operate or lease
and to carry on its business as it is now being conducted, except where the
failure to have such Approvals would not, individually or in the aggregate, have
a Material Adverse Effect on Company. Each of Company and its subsidiaries is
duly qualified or licensed as a foreign corporation to do business, and is in
good standing, in each jurisdiction where the character of the properties owned,
leased or operated by it or the nature of its activities makes such
qualification or licensing necessary, except for such failures to be so duly
qualified or licensed and in good standing that would not, either individually
or in the aggregate, have a Material Adverse Effect on Company.
(b) Company has no subsidiaries except for the
corporations identified in Section 2.1(b) of the Company Schedule. Neither
Company nor any of its subsidiaries has agreed nor is obligated to make nor be
bound by any written, oral or other agreement, contract, subcontract, lease,
binding understanding, instrument, note, option, warranty, purchase order,
license, sublicense, insurance policy, benefit plan, commitment or undertaking
of any nature, as of the date hereof or as may hereafter be in effect (a
"CONTRACT") under which it may become obligated to make, any future investment
in or capital contribution to any other entity. Neither Company nor any of its
subsidiaries directly or indirectly owns any equity or similar interest in or
any interest convertible, exchangeable or exercisable for, any equity or similar
interest in, any corporation, partnership, joint venture or other business,
association or entity, other than passive investments in equity interests of
public companies constituting less than 5% interests therein as part of
Company's cash management program.
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2.2 Articles of Incorporation and Bylaws. Company has previously
furnished to Parent a complete and correct copy of its Articles of Incorporation
and Bylaws as amended to date (together, the "COMPANY CHARTER DOCUMENTS"). Such
Company Charter Documents and equivalent organizational documents of each of its
subsidiaries are in full force and effect. Company is not in violation of any of
the provisions of the Company Charter Documents, and no subsidiary of Company is
in violation of its equivalent organizational documents.
2.3 Capitalization.
(a) The authorized capital stock of Company consists of
100,000,000 shares of Company Common Stock, par value $0.0001 per share, and
20,000,000 shares of Preferred Stock, without par value ("COMPANY PREFERRED
STOCK"). At the close of business on March 31, 2000, (i) 40,057,369 shares of
Company Common Stock were issued and outstanding, all of which are validly
issued, fully paid and nonassessable; (ii) 4,323,050 shares of Company Common
Stock were held in treasury by Company or by subsidiaries of Company; (iii)
233,633 shares of Company Common Stock were available for future issuance
pursuant to Company's ESPP; (iv) 6,505,987 shares of Company Common Stock were
reserved for issuance upon the exercise of outstanding options to purchase
Company Common Stock under the Incentive Plan; (v) 346,874 shares of Company
Common Stock were reserved for issuance upon the exercise of outstanding options
to purchase Company Common Stock under the Director Plan; (vi) 266,168 shares of
Company Common Stock were reserved for issuance upon the exercise of outstanding
options to purchase Company Common Stock under the 1989 Plan; (vii) 8,007,468
shares of Company Common Stock were reserved for issuance upon the exercise of
the Stock Option Agreement; (viii) 43,200 shares of Company Common Stock were
reserved for issuance upon the exercise of outstanding warrants to purchase
Company Common Stock (the "WARRANTS"); (ix) 106,473 shares of Company Common
Stock were available for future grant under the Incentive Plan; (x) 83,814
shares of Company Common Stock were available for future grant under the
Director Plan; and (xi) no shares of Company Common Stock were reserved for
future grant under the 1989 Plan. As of the date hereof, no shares of Company
Preferred Stock were issued or outstanding. There are no commitments or
agreements of any character to which the Company is bound obligating the Company
to accelerate the vesting of any Company Stock Option as a result of the Merger.
(b) Section 2.3(b) of the Company Schedule sets forth the
following information with respect to each Company Stock Option (as defined in
Section 5.8) outstanding as of the date of this Agreement: (i) the name and
address of the optionee; (ii) the particular plan pursuant to which such Company
Stock Option was granted; (iii) the number of shares of Company Common Stock
subject to such Company Stock Option; (iv) the exercise price of such Company
Stock Option; (v) the date on which such Company Stock Option was granted; (vi)
the applicable vesting schedule; and (vii) the date on which such Company Stock
Option expires. Company has made available to Parent accurate and complete
copies of all stock option plans pursuant to which the Company has granted such
Company Stock Options that are currently outstanding and the form of all stock
option agreements evidencing such Company Stock Options. All shares of Company
Common Stock subject to issuance as aforesaid, upon issuance on the terms and
conditions specified in the
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instrument pursuant to which they are issuable, would be duly authorized,
validly issued, fully paid and nonassessable.
(c) All outstanding shares of Company Common Stock, all
outstanding Company Stock Options, and all outstanding shares of capital stock
of each subsidiary of the Company have been issued and granted in compliance
with (i) all applicable securities laws and other applicable Legal Requirements
(as defined below) and (ii) all requirements set forth in applicable Contracts.
For the purposes of this Agreement, "LEGAL REQUIREMENTS" means any federal,
state, local, municipal, foreign or other law, statute, constitution, principle
of common law, resolution, ordinance, code, edict, decree, rule, regulation,
ruling or requirement issues, enacted, adopted, promulgated, implemented or
otherwise put into effect by or under the authority of any Governmental Entity
(as defined below) and (ii) all requirements set forth in applicable contracts,
agreements, and instruments.
(d) Section 2.3(d) of the Company Schedule describes the
interests of all persons in the subsidiaries of Company, other than interests
held by the Company or any other of its subsidiaries and other than interests of
subsidiaries held by certain nominee holders as required by the laws of a
subsidiary's jurisdiction of incorporation (which interests do not materially
affect the Company's control of such subsidiary).
(e) Except as set forth in Section 2.3(d) and except for
the Stock Option Agreement, there are no subscriptions, options, warrants,
equity securities, partnership interests or similar ownership interests, calls,
rights (including preemptive rights), commitments or agreements of any character
to which Company or any of its subsidiaries is a party or by which it is bound
obligating Company or any of its subsidiaries to issue, deliver or sell, or
cause to be issued, delivered or sold, or repurchase, redeem or otherwise
acquire, or cause the repurchase, redemption or acquisition of, any shares of
capital stock, partnership interests or similar ownership interests of the
Company or any of its subsidiaries or obligating the Company or any of its
subsidiaries to grant, extend, accelerate the vesting of or enter into any such
subscription, option, warrant, equity security, call, right, commitment or
agreement. As of the date of this Agreement, except as contemplated by this
Agreement, there are no registration rights and there is, except for the Company
Voting Agreements, no voting trust, proxy, rights plan, antitakeover plan or
other agreement or understanding to which the Company or any of its subsidiaries
is a party or by which they are bound with respect to any equity security of any
class of the Company or with respect to any equity security, partnership
interest or similar ownership interest of any class of any of its subsidiaries.
Shareholders of the Company will not be entitled to dissenters' rights under
Georgia Law in connection with the Merger.
2.4 Authority Relative to this Agreement. Company has all
necessary corporate power and authority to execute and deliver this Agreement
and the Stock Option Agreement and to perform its obligations hereunder and
thereunder and, subject to obtaining the approval of the shareholders of Company
of the Merger, to consummate the transactions contemplated hereby and thereby.
The execution and delivery of this Agreement and the Stock Option Agreement by
Company and the consummation by Company of the transactions contemplated hereby
and thereby have been duly and
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validly authorized by all necessary corporate action on the part of Company, and
no other corporate proceedings on the part of Company are necessary to authorize
this Agreement and the Stock Option Agreement or to consummate the transactions
so contemplated (other than, with respect to the Merger, the approval and
adoption of this Agreement by holders of a majority of the outstanding shares of
Company Common Stock in accordance with Georgia Law, the Company Charter
Documents) and duly adopted resolutions of the Board of Directors of Company.
This Agreement and the Stock Option Agreement have been duly and validly
executed and delivered by Company and, assuming the due authorization, execution
and delivery by Parent and Merger Sub, constitute legal and binding obligations
of Company, enforceable against Company in accordance with their respective
terms.
2.5 No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement and the
Stock Option Agreement by Company do not, and the performance of this Agreement
and the Stock Option Agreement by Company will not, (i) conflict with or violate
the Company Charter Documents or the equivalent organizational documents of any
of Company's subsidiaries; (ii) subject to obtaining the approval of Company's
shareholders of the Merger and compliance with the requirements set forth in
Section 2.5(b) below, conflict with, or result in any violation of, any law,
rule, regulation, order, judgment or decree applicable to Company or any of its
subsidiaries or by which either Company or any of its subsidiaries or any of
their respective properties is bound or affected; or (iii) result in any breach
of or constitute a default (or an event that with notice or lapse of time or
both would become a default) under, or impair Company's or any of its
subsidiaries' rights or alter the rights or obligations of any third party
under, or give to others any rights of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien or encumbrance on any of
the properties or assets of Company or any of its subsidiaries pursuant to, any
note, bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which Company or any of its
subsidiaries is a party or by which Company or any of its subsidiaries or its or
any of their respective properties are bound or affected. Except where such
conflict, violation, breach, default, impairment or other effect could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on Company.
(b) The execution and delivery of this Agreement and the
Stock Option Agreement by Company do not, and the performance of this Agreement
by Company will not, require any consent, waiver, approval, authorization or
permit of, or filing with or notification to, any court, administrative agency,
commission, governmental or regulatory authority, domestic or foreign (a
"GOVERNMENTAL ENTITY"), except (A) for applicable requirements, if any, of the
Securities Act of 1933, as amended (the "SECURITIES ACT"), the Securities
Exchange Act of 1934, as amended (the "EXCHANGE ACT"), state securities laws
("BLUE SKY LAWS"), the pre-merger notification requirements (the "HSR Approval")
of the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the
"HSR ACT"), the rules and regulations of Nasdaq, and the filing and recordation
of the Certificate of Merger as required by Georgia Law and the Delaware
Certificate of Merger as required by Delaware Law and (B) where the failure to
obtain such consents, approvals, authorizations or permits, or to make such
filings or notifications, could not, individually or in the
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aggregate, reasonably be expected to have a Material Adverse Effect on the
parties hereto, prevent consummation of the Merger or otherwise prevent the
parties hereto from performing their obligations under this Agreement.
2.6 Compliance; Permits.
(a) Neither Company nor any of its subsidiaries is in
conflict with, or in default or violation of, (i) any law, rule, regulation,
order, judgment or decree applicable to Company or any of its subsidiaries or by
which its or any of their respective properties is bound or affected or (ii) any
note, bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which Company or any of its
subsidiaries is a party or by which Company or any of its subsidiaries or its or
any of their respective properties is bound or affected, except for any
conflicts, defaults or violations that (individually or in the aggregate) would
not cause the Company to lose any material benefit or incur any material
liability. No investigation or review by any governmental or regulatory body or
authority is pending or, to the knowledge of Company, threatened against Company
or its subsidiaries, nor has any governmental or regulatory body or authority
indicated an intention to conduct the same, other than, in each such case, those
the outcome of which could not, individually or in the aggregate, reasonably be
expected to have the effect of prohibiting or materially impairing any business
practice of the Company or any of its subsidiaries, any acquisition of material
property by the Company or any of its subsidiaries or the conduct of business by
the Company or any of its subsidiaries.
(b) Company and its subsidiaries hold all permits,
licenses, variances, exemptions, orders and approvals from governmental
authorities, the absence of which could not reasonably be expected to have a
Material Adverse Effect on Company (collectively, the "COMPANY PERMITS").
Company and its subsidiaries are in compliance in all material respects with the
terms of the Company Permits.
2.7 SEC Filings; Financial Statements.
(a) Company has made available to Parent a correct and
complete copy of each report, schedule, registration statement and definitive
proxy statement filed by Company with the Securities and Exchange Commission
("SEC") since December 31, 1999 (the "COMPANY SEC REPORTS"), which are all the
forms, reports and documents required to be filed by Company with the SEC since
December 31, 1999. The Company SEC Reports (A) were prepared in accordance with
the requirements of the Securities Act or the Exchange Act, as the case may be,
and (B) did not at the time they were filed (and if amended or superseded by a
filing prior to the date of this Agreement, then on the date of such filing)
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. None of Company's subsidiaries is required to file any reports or
other documents with the SEC.
(b) Each of the consolidated financial statements
(including, in each case, any related notes thereto) contained in the Company
SEC Reports was prepared in accordance with generally accepted accounting
principles ("GAAP") applied on a consistent basis throughout the
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periods involved (except as may be indicated in the notes thereto or, in the
case of unaudited financial statements, do not contain footnotes as permitted by
the SEC on Form 10-Q, Form 8-K or any successor form under the Exchange Act) and
each fairly presents the consolidated financial position of Company and its
subsidiaries at the respective dates thereof and the consolidated results of its
operations and cash flows for the periods indicated, except that the unaudited
interim financial statements were or are subject to normal adjustments which
were not or are not expected to be material in amount.
(c) Company has previously furnished to Parent a complete
and correct copy of any amendments or modifications, which have not yet been
filed with the SEC but which are required to be filed, to agreements, documents
or other instruments which previously had been filed by Company with the SEC
pursuant to the Securities Act or the Exchange Act.
2.8 No Undisclosed Liabilities. Neither Company nor any of its
subsidiaries has any liabilities (absolute, accrued, contingent or otherwise)
which, individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect on Company and its subsidiaries taken as a whole, except
(i) liabilities provided for in Company's balance sheet as of December 31, 1999
and (ii) liabilities incurred since December 31, 1999 in the ordinary and usual
course of business, consistent with past practice. None of the liabilities
described in the foregoing sections (i) or (ii) could reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect on Company.
2.9 Absence of Certain Changes or Events. Since December 31, 1999,
there has not been: (i) any Material Adverse Effect on Company; (ii) any
declaration, setting aside or payment of any dividend on, or other distribution
(whether in cash, stock, or property) in respect of, any of Company's or any of
its subsidiaries' capital stock, or any purchase, redemption or other
acquisition by Company of any of Company's capital stock or any other securities
of Company or its subsidiaries or any options, warrants, calls or rights to
acquire any such shares or other securities except for repurchases from
employees following their termination pursuant to the terms of their
pre-existing stock option or purchase agreements; (iii) any split, combination
or reclassification of any of Company's or any of its subsidiaries' capital
stock; (iv) any granting by Company or any of its subsidiaries of any increase
in compensation or fringe benefits, except for normal increases of cash
compensation to non-officer employees in the ordinary and usual course of
business consistent with past practice, or any payment by Company or any of its
subsidiaries of any bonus, except for bonuses made to non-officer employees in
the ordinary course of business consistent with past practice, or any granting
by Company or any of its subsidiaries of any increase in severance or
termination pay or any entry by Company or any of its subsidiaries into any
currently effective employment, severance, termination or indemnification
agreement or any agreement the benefits of which are contingent or the terms of
which are materially altered upon the occurrence of a transaction involving
Company of the nature contemplated hereby; (v) entry by Company or any of its
subsidiaries into any licensing or other agreement with regard to the
acquisition or disposition of any Intellectual Property (as defined in Section
2.19) other than licenses in the ordinary and usual course of business,
consistent with past practice, or any amendment or consent with respect to any
licensing agreement filed or required to be filed by Company with the SEC; (vi)
any material change
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by Company in its accounting methods, principles or practices, except as
required by concurrent changes in GAAP; or (vii) any material revaluation by
Company of any of its assets, including, without limitation, writing down the
value of capitalized inventory or writing off notes or accounts receivable or
any sale of assets of the Company other than in the ordinary and usual course of
business, consistent with past practice.
2.10 Absence of Litigation. There are no claims, actions, suits or
proceedings pending or, to the knowledge of Company, threatened (or, to the
knowledge of Company, any governmental or regulatory investigation pending or
threatened) against Company or any of its subsidiaries or any properties or
rights of Company or any of its subsidiaries, before any court, arbitrator or
administrative, governmental or regulatory authority or body, domestic or
foreign which, if decided adversely to Company, could reasonably be expected to
have a Material Adverse Effect on Company.
2.11 Employee Benefit Plans.
(a) All employee compensation, incentive, material fringe
or benefit plans, programs, policies, commitments or other arrangements or
remuneration of any kind (whether or not set forth in a written document and
including, without limitation, all "employee benefit plans" within the meaning
of Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA")) for the benefit of any active, former employee, director or
consultant of Company ("EMPLOYEE"), any domestic subsidiary of Company or any
trade or business (whether or not incorporated) which is a member of a
controlled group or which is under common control with Company within the
meaning of Section 414 of the Code (a "PLAN AFFILIATE"), or with respect to
which Company has or may in the future have liability, are listed in Section
2.11(a) of the Company Schedule (the "PLANS"); provided, however, consulting
agreements not material to the Company's business or operations are not listed
on Schedule 2.11(a). Company has made available to Parent correct and complete
copies of all (i) documents embodying each Plan including (without limitation)
all amendments thereto, all related trust documents, and all material written
agreements and contracts relating to each such Plan; (ii) the three (3) most
recent annual reports (Form Series 5500 and all schedules and financial
statements attached thereto), if any, required under ERISA or the Code in
connection with each Plan; (iii) the most recent summary plan description
together with the summary(ies) of material modifications thereto, if any,
required under ERISA with respect to each Plan; (iv) all Internal Revenue
Service ("IRS") or United States Department of Labor ("DOL") determination,
opinion, notification and advisory letters; (v) all material correspondence to
or from any governmental agency relating to any Plan; (vi) all COBRA (as defined
below) forms and related notices (or such forms and notices as required under
comparable law); (vii) all discrimination tests for each Plan for the most
recent three (3) plan years; (viii) the most recent annual actuarial valuations,
if any, prepared for each Plan; (ix) if the Plan is funded, the most recent
annual and periodic accounting of Plan assets; (x) all material written
agreements and contracts relating to each Plan, including, but not limited to,
administrative service agreements, group annuity contracts and group insurance
contracts; (xi) all material communications to employees or former employees
regarding in each case, relating to any amendments, terminations,
establishments, increases or decreases in benefits, acceleration of payments or
vesting schedules or other events which would
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result in any material liability under any Plan or proposed Plan; (xii) all
policies pertaining to fiduciary liability insurance covering the fiduciaries
for each Plan; and (xiii) all registration statements, annual reports (Form 11-K
and all attachments thereto) and prospectuses prepared in connection with any
Plan.
(b) Each Plan has been established, maintained and
administered in all material respects in compliance with its terms and with the
requirements prescribed by any and all statutes, orders, rules and regulations
(foreign or domestic), including but not limited to ERISA and the Code, which
are applicable to such Plans. No suit, action or other litigation (excluding
claims for benefits incurred in the ordinary course of Plan activities) is
pending, or to the knowledge of Company, threatened, against or with respect to
any such Plan. There are no audits, inquiries or proceedings pending or, to the
knowledge of Company, threatened by the IRS or DOL with respect to any Plan. All
contributions, reserves or premium payments required to be made or accrued as of
the date hereof to the Plans have been timely made or accrued. Any Plan intended
to be qualified under Section 401(a) of the Code and each trust intended to
qualify under Section 501(a) of the Code (i) has either obtained a favorable
determination notification, advisory and/or opinion letter, as applicable, as to
its qualified status from the IRS or still has a remaining period of time under
applicable Treasury Regulations or IRS pronouncements in which to apply for such
letter and to make any amendments necessary to obtain a favorable determination
and (ii) incorporates or has been amended to incorporate all provisions required
to comply with the Tax Reform Act of 1986 and subsequent legislation enacted on
or before December 6, 1994. Company does not have any plan or commitment to
establish any new Plan, to modify any Plan (except to the extent required by law
or to conform any such Plan to the requirements of any applicable law, in each
case as previously disclosed to Parent in writing, or as required by this
Agreement), or to enter into any new Plan. Each Plan (including any stock option
plan in respect of future stock grants) can be amended, terminated or otherwise
discontinued after the Effective Time in accordance with its terms, without
liability to Parent, Company or any of its Plan Affiliates (other than ordinary
administration expenses).
(c) Neither Company nor any Plan Affiliate has at any
time ever maintained, established, sponsored, participated in, or contributed to
any plan subject to Title IV of ERISA or Section 412 of the Code or to any
multiple employer plan, or to any plan described in Section 413 of the Code, at
no time has Company or any Plan Affiliate contributed to or been obligated to
contribute to any "multiemployer plan," as such term is defined in ERISA.
Neither Company, nor any of its Plan Affiliates, nor any officer or director of
Company or any of its Plan Affiliates is subject to any liability, penalty or
tax under Sections 4975 through 4980B of the Code or Title I of ERISA. No
"prohibited transaction," within the meaning of Section 4975 of the Code or
Sections 406 and 407 of ERISA, and not otherwise exempt under Section 408 of
ERISA (or any administrative class exemption thereunder) or Section 4975 of the
Code, has occurred with respect to any Plan.
(d) Neither Company nor any Plan Affiliate has, prior to
the Effective Time and in any material respect, violated any of the health
continuation requirements of the Consolidated Omnibus Budget Reconciliation Act
of 1985, as amended ("COBRA"), the requirements of the Family Medical Leave Act
of 1993, as amended, the requirements of the Women's Health and
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Cancer Rights Act, as amended, the requirements of the Newborns' and Mothers'
Health Protection Act of 1996, as amended, or any similar provisions of state
law applicable to Employees of the Company or any of its Plan Affiliates. None
of the Plans promises or provides retiree health benefits to any person except
as required by applicable law, and neither Company nor any of its Plan
Affiliates has represented, promised or contracted (whether in oral or written
form) to provide such retiree benefits to any employee, former employee,
director, consultant or other person, except to the extent required by statute.
(e) Neither Company nor any of its subsidiaries is bound
by or subject to (and none of its respective assets or properties is bound by or
subject to) any arrangement with any labor union. No employee of Company or any
of its subsidiaries is represented by any labor union or covered by any
collective bargaining agreement and, to the knowledge of Company, no campaign to
establish such representation is in progress. There is no pending or, to the
knowledge of Company, threatened labor dispute involving Company or any of its
subsidiaries and any group of its employees nor has Company or any of its
subsidiaries experienced any labor interruptions over the past three (3) years,
and Company and its subsidiaries consider their relationships with their
employees to be good. The Company and its subsidiaries are in compliance in all
material respects with all applicable material foreign, federal, state and local
laws, rules and regulations respecting employment, employment practices, terms
and conditions of employment and wages and hours.
(f) Neither the execution and delivery of this Agreement
nor the consummation of the transactions contemplated hereby will (i) result in
any payment (including severance, unemployment compensation, golden parachute,
bonus or otherwise) becoming due to any shareholder, director or employee of
Company or any of its subsidiaries under any Plan or otherwise, (ii) materially
increase any benefits otherwise payable under any Plan, or (iii) result in the
acceleration of the time of payment or vesting of any such benefits. Without
limiting the foregoing, no payment or benefit which will or maybe made by the
Company with respect to any person as a result of the transactions contemplated
by this Agreement will be characterized as an "excess parachute payment," within
the meaning of Section 280G(b)(1) of the Code.
(g) Each employee compensation, incentive, fringe or
benefit plans, program, policy, commitment or other remuneration of any kind
(whether or not set forth in a written document) that has been adopted or
maintained by Company or any Plan Affiliate, whether informally or formally, or
with respect to which Company or any Plan Affiliate will or may have any
liability, for the benefit of Employees who perform services outside the United
States (each an "INTERNATIONAL EMPLOYEE PLAN") has been established, maintained
and administered in compliance with its terms and conditions and with the
requirements prescribed by any and all statutory or regulatory laws that are
applicable to such International Employee Plan. Furthermore, no International
Employee Plan has unfunded liabilities, that as of the Effective Time, will not
be offset by insurance or fully accrued. Except as required by law, no condition
exists that would prevent Company or Parent from terminating or amending any
International Employee Plan at any time for any reason without liability to
Company or its Plan Affiliates (other than ordinary administration expenses or
routine claims for benefits).
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2.12 Labor Matters. (i) There are no controversies pending or, to
the knowledge of each of Company and its respective subsidiaries, threatened,
between Company or any of its subsidiaries and any of their respective employees
that would reasonably be expected, individually or in the aggregate, to have a
Material Adverse Effect on Company; (ii) as of the date of this Agreement,
neither Company nor any of its subsidiaries is a party to any collective
bargaining agreement or other labor union contract applicable to persons
employed by Company or its subsidiaries nor does Company or its subsidiaries
know of any activities or proceedings of any labor union to organize any such
employees; and (iii) as of the date of this Agreement, neither Company nor any
of its subsidiaries has any knowledge of any strikes, slowdowns, work stoppages
or lockouts, or threats thereof, by or with respect to any employees of Company
or any of its subsidiaries.
2.13 Registration Statement/Joint Proxy Statement/Prospectus.
None of the information supplied or to be supplied by Company for inclusion or
incorporation by reference in (i) the registration statement on Form S-4 to be
filed with the SEC by Parent in connection with the issuance of the Parent
Common Stock in or as a result of the Merger (the "S-4") will, at the time the
S-4 becomes effective under the Securities Act, contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading; and (ii) the joint
proxy statement/prospectus to be filed with the SEC by Company pursuant to
Section 5.1 hereof (the "JOINT PROXY STATEMENT/PROSPECTUS") will, at the dates
mailed to the shareholders of Company, at the times of the shareholders meeting
of Company (the "COMPANY SHAREHOLDERS' MEETING") in connection with the
transactions contemplated hereby, at the dates mailed to the stockholders of
Parent, at the times of the stockholders' meeting of Parent (the "PARENT
STOCKHOLDERS' MEETING") in connection with the Share Issuance and as of the
Effective Time, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they are made,
not misleading. The Joint Proxy Statement/Prospectus will comply as to form in
all material respects with the provisions of the Exchange Act and the rules and
regulations promulgated by the SEC thereunder. Notwithstanding the foregoing,
the Company makes no representation or warranty with respect to any information
supplied by Parent or Merger Sub which is contained in any of the foregoing
documents.
2.14 Restrictions on Business Activities. There is no agreement,
commitment, judgment, injunction, order or decree binding upon Company or its
subsidiaries or to which the Company or any of its subsidiaries is a party which
has or could reasonably be expected to have the effect of prohibiting or
materially impairing any business practice of Company or any of its
subsidiaries, any acquisition of property by Company or any of its subsidiaries
or the conduct of business by Company or any of its subsidiaries as currently
conducted.
2.15 Title to Property. Neither Company nor any of its subsidiaries
owns any material real property. Company and each of its subsidiaries have good
and valid title to all of their material properties and assets, free and clear
of all liens, charges and encumbrances except liens for taxes not yet due and
payable and such liens or other imperfections of title, if any, as do not
materially detract from the value of or interfere with the present use of the
property affected thereby; and all leases
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pursuant to which Company or any of its subsidiaries lease from others material
real or personal property are in good standing, valid and effective in
accordance with their respective terms, and there is not, under any of such
leases, any existing material default or event of default (or any event which
with notice or lapse of time, or both, would constitute a material default and
in respect of which Company or subsidiary has not taken adequate steps to
prevent such default from occurring). All the plants, structures and equipment
of Company and its subsidiaries, except such as may be under construction, are
in good operating condition and repair, in all material respects.
2.16 Taxes.
(a) For the purposes of this Agreement, "TAX" or "TAXES"
refers to any and all federal, state, local and foreign taxes, assessments and
other governmental charges, duties, impositions and liabilities relating to
taxes, including taxes based upon or measured by gross receipts, income,
profits, sales, use and occupation, and value added, ad valorem, transfer,
franchise, withholding, payroll, recapture, employment, excise and property
taxes, together with all interest, penalties and additions imposed with respect
to such amounts and any obligations under any agreements or arrangements with
any other person with respect to such amounts and including any liability for
taxes of a predecessor entity.
(b) (i) The Company and each of its subsidiaries
have timely filed all federal, state, local and foreign returns, estimates,
information statements and reports ("RETURNS") relating to Taxes required to be
filed by the Company and each of its subsidiaries with any Tax authority, except
Returns which are not material to the Company. Such returns are true and correct
in all material respects and have been completed in accordance with applicable
law, and the Company and each of its subsidiaries have paid all Taxes shown to
be due on such Returns.
(ii) The Company and each of its subsidiaries as
of the Effective Time will have withheld with respect to its employees all
federal and state income taxes, Taxes pursuant to the Federal Insurance
Contribution Act, Taxes pursuant to the Federal Unemployment Tax Act and other
Taxes required to be withheld, except Taxes which are not material to the
Company.
(iii) Neither the Company nor any of its
subsidiaries has been delinquent in the payment of any material Tax nor is there
any material Tax deficiency outstanding, proposed or assessed against the
Company or any of its subsidiaries, nor has the Company or any of its
subsidiaries executed any unexpired waiver of any statute of limitations on or
extending the period for the assessment or collection of any Tax.
(iv) No audit or other examination of any Return
of the Company or any of its subsidiaries by any Tax authority is presently in
progress, nor has the Company or any of its subsidiaries been notified of any
request for such an audit or other examination.
(v) No adjustment relating to any Returns filed
by the Company or any of its subsidiaries has been proposed in writing formally
or informally by any Tax authority to the Company or any of its subsidiaries or
any representative thereof.
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(vi) Neither the Company nor any of its
subsidiaries has any liability for any material unpaid Taxes which has not been
accrued for or reserved on the Company balance sheet dated December 31, 1999 in
accordance with GAAP, whether asserted or unasserted, contingent or otherwise,
which is material to the Company, other than any liability for unpaid Taxes that
may have accrued since June 30, 1999 in connection with the operation of the
business of the Company and its subsidiaries in the ordinary course.
(vii) There is no contract, agreement, plan or
arrangement to which the Company or any of its subsidiaries is a party as of the
date of this Agreement, including but not limited to the provisions of this
Agreement, covering any employee or former employee of the Company or any of its
subsidiaries that, individually or collectively, would reasonably be expected to
give rise to the payment of any amount that would not be deductible pursuant to
Sections 280G, 404 or 162(m) of the Code. There is no contract, agreement, plan
or arrangement to which the Company or any of its subsidiaries is a party or by
which it is bound to compensate any individual for excise taxes paid pursuant to
Section 4999 of the Code.
(viii) Neither the Company nor any of its
subsidiaries has filed any consent agreement under Section 341(f) of the Code or
agreed to have Section 341(f)(2) of the Code apply to any disposition of a
subsection (f) asset (as defined in Section 341(f)(4) of the Code) owned by the
Company or any of its subsidiaries.
(ix) Neither the Company nor any of its
subsidiaries is party to or has any obligation under any tax-sharing, tax
indemnity or tax allocation agreement or arrangement.
(x) None of the Company's or its subsidiaries'
assets are tax exempt use property within the meaning of Section 168(h) of the
Code.
2.17 Environmental Matters. Company (i) has
obtained all applicable permits, licenses and other authorizations that are
required under Environmental Laws the absence of which would have a Material
Adverse Effect on Company; and (ii) is in compliance in all material respects
with all material terms and conditions of such required permits, licenses and
authorizations, and also is in compliance in all material respects with all
other material limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules and timetables contained in such laws or
contained in any regulation, code, plan, order, decree, judgment, notice or
demand letter issued, entered, promulgated or approved thereunder.
"ENVIRONMENTAL LAWS" means all Federal, state, local and foreign laws and
regulations relating to pollution of the environment (including ambient air,
surface water, ground water, land surface or subsurface strata) or the
protection of human health and worker safety, including, without limitation,
laws and regulations relating to emissions, discharges, releases or threatened
releases of Hazardous Materials, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of Hazardous Materials. "HAZARDOUS MATERIALS" means chemicals,
pollutants, contaminants, wastes, toxic substances, radioactive and biological
materials, asbestos-containing materials, hazardous substances, petroleum and
petroleum products or any fraction thereof, excluding, however, Hazardous
Materials contained in products typically used for office and janitorial
purposes properly and safely maintained in accordance with Environmental Laws.
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2.18 Brokers. Except for fees payable to Xxxxxxx Xxxxx & Co.
pursuant to an engagement letter dated March 21, 2000, a copy of which has been
provided to Parent, Company has not incurred, nor will it incur, directly or
indirectly, any liability for brokerage or finders' fees or agents' commissions
or any similar charges in connection with this Agreement or any transaction
contemplated hereby
2.19 Intellectual Property. For the purposes of this Agreement, the
following terms have the following definitions:
"INTELLECTUAL PROPERTY" shall mean any or all of the following and all
rights in, or arising out of: (i) all United States and foreign patents
and applications therefor and all reissues, divisions, renewals,
extensions, provisionals, continuations and continuations-in-part
thereof ("PATENTS"); (ii) all inventions (whether patentable or not),
invention disclosures, improvements, trade secrets, proprietary
information, know how, technology, technical data and customer lists,
and all documentation relating to any of the foregoing; (iii) all
copyrights, copyright registrations and applications therefor and all
other rights corresponding thereto throughout the world; (iv) all
semiconductor and semiconductor circuit designs; (v) all rights to all
mask works and reticles, mask work registrations and applications
therefor; (vi) all industrial designs and any registrations and
applications therefor throughout the world; (vii) all trade names,
logos, common law trademarks and service marks; trademark and service
xxxx registrations and applications therefor and all goodwill
associated therewith throughout the world; (viii) all databases and
data collections and all rights therein throughout the world; (ix) all
computer software including all source code, object code, firmware,
development tools, files, records and data, all media on which any of
the foregoing is recorded, all Web addresses, sites and domain names;
(x) any similar, corresponding or equivalent rights to any of the
foregoing; and (xi) all documentation related to any of the foregoing.
"COMPANY INTELLECTUAL PROPERTY" shall mean any Intellectual Property
that is owned by or exclusively licensed to the Company or any of its
subsidiaries. Without in any way limiting the generality of the
foregoing, Company Intellectual Property includes all Intellectual
Property owned or licensed by the Company related to the Company's
products, including without limitation all rights in any design code,
documentation, and tooling for packaging of semiconductors in
connection with all current products and products in design and
development.
"REGISTERED INTELLECTUAL PROPERTY" shall mean all United States,
international and foreign: (i) patents, patent applications (including
provisional applications); (ii) registered trademarks, applications to
register trademarks, intent-to-use applications, or other registrations
or applications related to trademarks; (iii) registered copyrights and
applications for copyright registration; (iv) any mask work
registrations and applications to register mask works; and (v) any
other Company Intellectual Property that is the subject of an
application, certificate, filing, registration or other document issued
by, filed with, or recorded by, any state, government or other public
legal authority.
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"COMPANY REGISTERED INTELLECTUAL PROPERTY" means all of the Registered
Intellectual Property owned by, or filed in the name of, the Company or
any of its subsidiaries.
(a) Section 2.19(a) of the Company Schedule is a complete
and accurate list of all Company Registered Intellectual Property and specifies,
where applicable, the jurisdictions in which each such item of Company
Registered Intellectual Property has been issued or registered and lists any
proceedings or actions before any court, tribunal (including the United States
Patent and Trademark Office (the "PTO") or equivalent authority anywhere in the
world) related to any of the Company Registered Intellectual Property.
(b) Company has made available to Parent a complete and
accurate price list of all products and services currently offered by Company or
any of its subsidiaries ("COMPANY PRODUCTS").
(c) No Company Intellectual Property or Company Product
is subject to any proceeding or outstanding decree, order, judgment, contract,
license, agreement, or stipulation restricting in any manner the use, transfer,
or licensing thereof by Company or any of its subsidiaries, or which may affect
the validity, use or enforceability of such Company Intellectual Property or
Company Product, except for provisions contained in the documents granting
licenses as ownership to any portion of the Company Intellectual Property or
Company Product and in amendments thereto and provisions of licenses granted to
customers of Company.
(d) Each material item of Company Registered Intellectual
Property is valid and subsisting, all necessary registration, maintenance and
renewal fees currently due in connection with such Company Registered
Intellectual Property have been made and all necessary documents, recordations
and certificates in connection with such Company Registered Intellectual
Property have been filed with the relevant patent, copyright, trademark or other
authorities in the United States or foreign jurisdictions, as the case may be,
for the purposes of maintaining such Company Registered Intellectual Property.
(e) Company owns and has good and exclusive title to,
each material item of Company Intellectual Property free and clear of any lien
or encumbrance (excluding non-exclusive licenses and related restrictions
granted in the ordinary course). Without limiting the foregoing: (i) Company is
the exclusive owner of all trademarks and trade names used in connection with
the operation or conduct of the business of Company and its subsidiaries,
including the sale, distribution or provision of any Company Products by Company
or its subsidiaries; (ii) Company owns exclusively, and has good title to, all
copyrighted works that are Company Products or which Company or any of its
subsidiaries otherwise purports to own; and (iii) to the extent that any Patents
would be infringed by any Company Products, Company is the exclusive owner of
such Patents.
(f) To the extent that any technology, software or
material Intellectual Property has been developed or created independently or
jointly by a third party for Company or any of its subsidiaries or is
incorporated into any of the Company Products, Company has a written agreement
with such third party with respect thereto and Company thereby either (i) has
obtained ownership of, and is the exclusive owner of, or (ii) has obtained a
perpetual, non-terminable license (sufficient for
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the conduct of its business as currently conducted and as proposed to be
conducted) to all such third party's Intellectual Property in such work,
material or invention by operation of law or by valid assignment, to the fullest
extent it is legally possible to do so.
(g) Neither Company nor any of its subsidiaries has
transferred ownership of, or granted any exclusive license with respect to, any
Intellectual Property that is or was material Company Intellectual Property, to
any third party, or permitted Company's rights in such material Company
Intellectual Property to lapse or enter the public domain.
(h) Section 2.19(h) of the Company Schedule lists all
material contracts, licenses and agreements to which Company or any of its
subsidiaries is a party: (i) with respect to Company Intellectual Property
licensed or transferred to any third party (other than end-user licenses in the
ordinary course); or (ii) pursuant to which a third party has licensed or
transferred any material Intellectual Property to Company.
(i) All material contracts, licenses and agreements
relating to either (i) Company Intellectual Property or (ii) Intellectual
Property of a third party licensed to Company or any of its subsidiaries, are in
full force and effect. The consummation of the transactions contemplated by this
Agreement will neither violate nor result in the breach, modification,
cancellation, termination or suspension of such contracts, licenses and
agreements. Each of Company and its subsidiaries is in material compliance with,
and has not materially breached any term of any such contracts, licenses and
agreements and, to the knowledge of Company, all other parties to such
contracts, licenses and agreements are in compliance with, and have not
materially breached any term of, such contracts, licenses and agreements.
Following the Closing Date, the Surviving Corporation will be permitted to
exercise all of Company's rights under such contracts, licenses and agreements
to the same extent Company and its subsidiaries would have been able to had the
transactions contemplated by this Agreement not occurred and without the payment
of any additional amounts or consideration other than ongoing fees, royalties or
payments which Company would otherwise be required to pay. Neither this
Agreement nor the transactions contemplated by this Agreement, including the
assignment to Parent or Merger Sub by operation of law or otherwise of any
contracts or agreements to which the Company is a party, will result in (i)
either Parent's or the Merger Sub's granting to any third party any right to or
with respect to any material Intellectual Property right owned by, or licensed
to, either of them, (ii) either the Parent's or the Merger Sub's being bound by,
or subject to, any non-compete or other material restriction on the operation or
scope of their respective businesses, or (iii) either the Parent's or the Merger
Sub's being obligated to pay any royalties or other material amounts to any
third party in excess of those payable by Parent or Merger Sub, respectively,
prior to the Closing.
(j) The operation of the business of the Company and its
subsidiaries as such business currently is conducted, including (i) Company's
and its subsidiaries' design, development, manufacture, distribution,
reproduction, marketing or sale of the products or services of Company and its
subsidiaries (including Company Products) and (ii) the Company's use of any
product, device or process, has not, does not and will not infringe or
misappropriate the Intellectual Property
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of any third party or constitute unfair competition or trade practices under the
laws of any jurisdiction.
(k) Neither Company nor any of its subsidiaries has
received notice from any third party that the operation of the business of
Company or any of its subsidiaries or any act, product or service of Company or
any of its subsidiaries, infringes or misappropriates the Intellectual Property
of any third party or constitutes unfair competition or trade practices under
the laws of any jurisdiction.
(l) To the knowledge of Company, no person has or is
infringing or misappropriating any Company Intellectual Property.
(m) Company and each of its subsidiaries has taken
reasonable steps to protect Company's and its subsidiaries' rights in Company's
confidential information and trade secrets that it wishes to protect or any
trade secrets or confidential information of third parties provided to Company
or any of its subsidiaries, and, without limiting the foregoing, each of Company
and its subsidiaries has and enforces a policy requiring each employee and
contractor to execute a proprietary information/confidentiality agreement
substantially in the form provided to Parent and all current and former
employees and contractors of Company and any of its subsidiaries have executed
such an agreement, except where the failure to do so is not reasonably expected
to be material to Company.
2.20 Agreements, Contracts and Commitments. Neither Company nor
any of its subsidiaries is a party to or is bound by:
(a) any employment or consulting agreement, contract or
commitment with any officer or member of Company's Board of Directors, other
than those that are terminable by Company or any of its subsidiaries on no more
than thirty (30) days' notice without liability or financial obligation to the
Company (other than termination provisions provided by law);
(b) any agreement or plan for the benefit of any
director, employee or consultant, including, without limitation, any stock
option plan, stock appreciation right plan or stock purchase plan, any of the
benefits of which will be increased, or the vesting of benefits of which will be
accelerated, by the occurrence of any of the transactions contemplated by this
Agreement or the value of any of the benefits of which will be calculated on the
basis of any of the transactions contemplated by this Agreement;
(c) any agreement of indemnification or any guaranty
other than any agreement of indemnification entered into in connection with the
sale or license of software products in the ordinary course of business or
guaranty of a subsidiary's obligation by Company;
(d) any agreement, contract or commitment containing any
covenant limiting in any respect the right of Company or any of its subsidiaries
to engage in any line of business or to compete with any person or granting any
exclusive distribution rights;
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(e) any agreement, contract or commitment currently in
force relating to the disposition or acquisition by Company or any of its
subsidiaries after the date of this Agreement of a material amount of assets not
in the ordinary course of business or pursuant to which Company or any of its
subsidiaries has any material ownership interest in any corporation,
partnership, joint venture or other business enterprise other than Company's
subsidiaries;
(f) any dealer, distributor, joint marketing or
development agreement (other than reseller agreements not material to Company's
business) currently in force under which Company or any of its subsidiaries have
continuing material obligations to jointly market any product, technology or
service and which may not be canceled without penalty upon notice of ninety (90)
days or less;
(g) any agreement, contract or commitment currently in
force to provide source code to any third party for any product or technology
that is material to Company and its subsidiaries taken as a whole (other than
(i) licenses granted in the ordinary course of business to the Company's
customers to use (but not to copy, sublicense, market, or otherwise distribute)
source code that do not in any way impair Company's ownership interests in such
source code and (ii) agreements requiring the Company to place source code in
escrow for the benefit of a customer in the event of the Company's default,
bankruptcy, insolvency, or similar event);
(h) any agreement, contract or commitment currently in
force to license any third party to manufacture or reproduce any Company
product, service or technology, or any agreement, contract or commitment
currently in force to sell or distribute any Company products, service or
technology except agreements with distributors or sales representative in the
normal course of business cancelable without penalty upon notice of ninety (90)
days or less and substantially in the form previously provided to Parent;
(i) any mortgages, indentures, guarantees, loans or
credit agreements, security agreements or other agreements or instruments
relating to the borrowing of money or extension of credit in excess of $250,000
individually or $500,000 in the aggregate, other than between Company and its
subsidiaries and except as disclosed in the Company's balance sheet as of
December 31, 1999 or in the related footnotes;
(j) any settlement agreement entered into within three
(3) years prior to the date of this Agreement that involves a continuing
material obligation of Company; or
(k) any other agreement that has an aggregate value of
(or represents future aggregate obligations in excess of) $2,000,000 or more
individually.
Neither Company nor any of its subsidiaries, nor to Company's knowledge
any other party to a Company Contract (as defined below), is in breach,
violation or default under, and neither Company nor any of its subsidiaries has
received written notice that it has breached, violated or defaulted under, any
of the terms or conditions of any of the agreements, contracts or commitments to
which Company or any of its subsidiaries is a party or by which it is bound that
are required to be disclosed in the Company Schedule (any such agreement,
contract or commitment, a "COMPANY
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CONTRACT") in such a manner as would permit any other party to cancel or
terminate any such Company Contract, or would permit any other party to seek
damages or other remedies (for any or all of such breaches, violations or
defaults, in the aggregate), the effect of which would not, individually or in
the aggregate have a Material Adverse Effect on Company.
2.21 Insurance. Company maintains insurance policies and fidelity
bonds covering the assets, business, equipment, properties, operations,
employees, officers and directors of Company and its subsidiaries (collectively,
the "INSURANCE POLICIES") which are of the type and in amounts customarily
carried by persons conducting businesses similar to those of Company and its
subsidiaries. There is no material claim by Company or any of its subsidiaries
pending under any of the material Insurance Policies as to which coverage has
been questioned, denied or disputed by the underwriters of such policies or
bonds.
2.22 Opinion of Financial Advisor. Company has been advised by its
financial advisor, Xxxxxxx Xxxxx & Co., that in its opinion, as of the date of
this Agreement, the Exchange Ratio is fair to the shareholders of Company from a
financial point of view. Company shall provide Parent a copy of the written
confirmation of such opinion, dated as of the date of this Agreement, promptly
after receipt thereof.
2.23 Board Approval. The Board of Directors of Company has, as of
the date of this Agreement, unanimously (i) approved and declared advisable this
Agreement and has approved the Merger and the other transactions contemplated
hereby, (ii) determined that the Merger is consistent with and in furtherance of
the long-term business strategy of Company and fair to, and in the best
interests of, Company and its shareholders and (iii) determined to recommended
that the shareholders of Company adopt and approve this Agreement and approve
the Merger.
2.24 Vote Required. The affirmative vote of a majority of the votes
that holders of the outstanding shares of Company Common Stock are entitled to
vote with respect to the Merger is the only vote of the holders of any class or
series of Company's capital stock necessary to approve this Agreement and the
transactions contemplated hereby.
2.25 State Takeover Statutes. The Board of Directors of the Company
has approved the Merger, the Merger Agreement, the Stock Option Agreement, the
Company Voting Agreements and the transactions contemplated hereby and thereby,
and such approval is sufficient to render inapplicable to the Merger, the Merger
Agreement, the Stock Option Agreement, the Company Voting Agreements and the
transactions contemplated hereby and thereby the provisions of Code Section
14-2-1110 et seq. and 14-2-1131 et seq. of the Georgia Law to the extent, if
any, such section is applicable to the Merger, the Merger Agreement, the Stock
Option Agreement, the Company Voting Agreements and the transactions
contemplated hereby and thereby. To Company's knowledge, no other state takeover
statute or similar statute or regulation applies to or purports to apply to the
Merger, the Merger Agreement, the Stock Option Agreement, the Company Voting
Agreements or the transactions contemplated hereby and thereby.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub jointly and severally represent and warrant to
Company, subject to such exceptions as are specifically disclosed in writing in
the disclosure schedules dated as of the date hereof delivered by Parent to
Company (the "PARENT SCHEDULE"), as follows. The Parent Schedule shall be
arranged in sections corresponding to the numbered sections contained in this
Article and the disclosure in any paragraph shall qualify other sections in this
Article only to the extent it is reasonably apparent from a reading of such
disclosure that it also qualifies such other sections.
3.1 Organization and Qualification; Subsidiaries. Each of Parent
and its subsidiaries is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation and has
the requisite corporate power and authority to own, lease and operate its assets
and properties and to carry on its business as it is now being conducted, except
where the failure to do so would not, individually or in the aggregate, have a
Material Adverse Effect on Parent. Each of Parent and its subsidiaries is in
possession of all Approvals necessary to own, lease and operate the properties
it purports to own, operate or lease and to carry on its business as it is now
being conducted, except where the failure to have such Approvals would not,
individually or in the aggregate, have a Material Adverse Effect on Parent. Each
of Parent and its subsidiaries is duly qualified or licensed as a foreign
corporation to do business, and is in good standing, in each jurisdiction where
the character of the properties owned, leased or operated by it or the nature of
its activities makes such qualification or licensing necessary, except for such
failures to be so duly qualified or licensed and in good standing that would
not, either individually or in the aggregate, have a Material Adverse Effect on
Parent.
3.2 Certificate of Incorporation and Bylaws. Parent has previously
furnished to Company complete and correct copies of its Certificate of
Incorporation and Bylaws as amended to date (together, the "PARENT CHARTER
DOCUMENTS"). Such Parent Charter Documents and equivalent organizational
documents of each of its subsidiaries are in full force and effect. Parent is
not in violation of any of the provisions of the Parent Charter Documents, and
no subsidiary of Parent is in violation of any of its equivalent organizational
documents.
3.3 Capitalization. The authorized capital stock of Parent
consists of (i) 200,000,000 shares of Parent Common Stock, and (ii) 5,000,000
shares of Preferred Stock, $0.001 par value per share ("PARENT PREFERRED
STOCK"). At the close of business on March 31, 2000, (i) 109,228,419 shares of
Parent Common Stock were issued and outstanding, (ii) 157,472 shares of Parent
Common Stock were held in treasury by Parent or by subsidiaries of Parent, (iii)
609,764 shares of Parent Common Stock were reserved for future issuance pursuant
to Parent's employee stock purchase plan, and (iv) 19,853,100 shares of Parent
Common Stock were reserved for issuance upon the exercise of outstanding options
to purchase Parent Common Stock. As of the date hereof, no shares of Parent
Preferred Stock were issued or outstanding. The authorized capital stock of
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Merger Sub consists of 1,000 shares of common stock, par value $0.001 per
share, all of which, as of the date hereof, are issued and outstanding.
3.4 Parent Common Stock. The Parent Common Stock to be issued
pursuant to the Merger has been duly authorized and will, when issued in
accordance with this Agreement be validly issued, fully paid, and unassessable
and will not be subject to any restrictions on resale under the Securities Act,
other than restrictions imposed by Rule 145 under the Securities Act.
3.5 Authority Relative to this Agreement. Each of Parent and
Merger Sub has all necessary corporate power and authority to execute and
deliver this Agreement and the Stock Option Agreement and to perform its
obligations hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby. The execution and delivery of this Agreement
and the Stock Option Agreement by Parent and Merger Sub and the consummation by
Parent and Merger Sub of the transactions contemplated hereby and thereby have
been duly and validly authorized by all necessary corporate action on the part
of Parent and Merger Sub, and no other corporate proceedings on the part of
Parent or Merger Sub are necessary to authorize this Agreement and the Stock
Option Agreement, or to consummate the transactions so contemplated, subject
only to the approval of the Share Issuance by Parent's stockholders and the
filing of the Certificate of Merger pursuant to Georgia Law and the Delaware
Certificate of Merger pursuant to Delaware Law. This Agreement and the Stock
Option Agreement have been duly and validly executed and delivered by Parent and
Merger Sub and, assuming the due authorization, execution and delivery by
Company, constitute legal and binding obligations of Parent and Merger Sub,
enforceable against Parent and Merger Sub in accordance with their respective
terms.
3.6 SEC Filings; Financial Statements.
(a) Parent has made available to Company a correct and
complete copy of each report, schedule, registration statement and definitive
proxy statement filed by Parent with the SEC on or after April 1, 1999 (the
"PARENT SEC REPORTS"), which are all the forms, reports and documents required
to be filed by Parent with the SEC since April 1, 1999. The Parent SEC Reports
(A) were prepared in accordance with the requirements of the Securities Act or
the Exchange Act, as the case may be, and (B) did not at the time they were
filed (or if amended or superseded by a filing prior to the date of this
Agreement, then on the date of such filing) contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. None of Parent's subsidiaries is
required to file any reports or other documents with the SEC.
(b) Each of the consolidated financial statements
(including, in each case, any related notes thereto) contained in the Parent SEC
Reports was prepared in accordance with GAAP applied on a consistent basis
throughout the periods involved (except as may be indicated in the notes thereto
or, in the case of unaudited statements, do not contain footnotes as permitted
by Form 10-Q of the Exchange Act) and each fairly presents the consolidated
financial position of Parent and its subsidiaries at the respective dates
thereof and the consolidated results of its operations and cash flows for the
periods indicated, except that the unaudited interim financial
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statements were or are subject to normal adjustments which were not or are not
expected to be material in amount.
(c) Parent has previously furnished to Company a complete
and correct copy of any amendments or modifications, which have not yet been
filed with the SEC but which are required to be filed, to agreements, documents
or other instruments which previously had been filed by Parent with the SEC
pursuant to the Securities Act or the Exchange Act.
3.7 No Undisclosed Liabilities. Neither Parent nor any of its
subsidiaries has any liabilities (absolute, accrued, contingent, or otherwise),
which, individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect on Parent and its subsidiaries, taken as a whole, except
(i) liabilities provided for in Company's balance sheet as of December 31, 1999;
(ii) liabilities provided for in the balance sheet as of October 31, 1999 of
Telco Research Corporation Limited ("TELCO"), a copy of which has been made
available to Company; (iii) liabilities of Xxxxxxxx Management Group, a Nevada
corporation acquired by Parent in March 2000 ("XXXXXXXX"), which liabilities are
not material to Parent and its subsidiaries, taken as a whole; and (iv)
liabilities incurred since December 31, 1999 by Parent and its subsidiaries
(including Telco and Xxxxxxxx) and liabilities incurred by Telco between October
31, 1999 and December 31, 2000. None of the liabilities described in the
foregoing sections (i), (ii), (iii), or (iv) could reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect on Parent.
3.8 Compliance; Permits.
(a) Neither Parent nor any of its subsidiaries is in
conflict with, or in default or violation of, (i) any law, rule, regulation,
order, judgment or decree applicable to Parent or any of its subsidiaries or by
which its or any of their respective properties is bound or affected or (ii) any
note, bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which Parent or any of its
subsidiaries is a party or by which Parent or any of its subsidiaries or its or
any of their respective properties is bound or affected, except for any
conflicts, defaults or violations that (individually or in the aggregate) would
not cause the Parent to lose any material benefit or incur any material
liability. No investigation or review by any governmental or regulatory body or
authority is pending or, to the knowledge of Parent, threatened against Parent
or its subsidiaries, nor has any governmental or regulatory body or authority
indicated an intention to conduct the same, other than, in each such case, those
the outcome of which could not, individually or in the aggregate, reasonably be
expected to have the effect of prohibiting or materially impairing any business
practice of Parent or any of its subsidiaries, any acquisition of material
property by Parent or any of its subsidiaries or the conduct of business by
Parent or any of its subsidiaries.
(b) Parent and its subsidiaries hold all permits,
licenses, variances, exemptions, orders and approvals from governmental
authorities, the absence of which could not reasonably be expected to have a
Material Adverse Effect on Parent (collectively, the "PARENT PERMITS"). Parent
and its subsidiaries are in compliance in all material respects with the terms
of the Parent Permits.
3.9 Absence of Certain Changes or Events. Since December 31, 1999,
there has not been: (i) any Material Adverse Effect on Parent, (ii) any
declaration, setting aside or payment of any
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dividend on, or other distribution (whether in cash, stock or property) in
respect of, any of Parent's or any of its subsidiaries' capital stock (other
than a two-for-one stock split in the form of a dividend effected in February
2000), or any purchase, redemption or other acquisition by Parent of any of
Parent's capital stock or any other securities of Parent or its subsidiaries or
any options, warrants, calls or rights to acquire any such shares or other
securities except for repurchases from employees following their termination
pursuant to the terms of their pre-existing stock option or purchase agreements,
(iii) any split, combination or reclassification of any of Parent's or any of
its subsidiaries' capital stock, (iv) any material change by Parent in its
accounting methods, principles or practices, except as required by concurrent
changes in GAAP, or (v) any material revaluation by Parent of any of its assets,
including, without limitation, writing down the value of capitalized inventory
or writing off notes or accounts receivable or any sale of assets of the Parent
other than in the ordinary course of business.
3.10 Absence of Litigation. There are no claims, actions, suits or
proceedings pending or, to the knowledge of Parent, threatened (or, to the
knowledge of Parent, any governmental or regulatory investigation pending or
threatened) against Parent or any of it subsidiaries or any properties or rights
of Parent or any of its subsidiaries, before any court, arbitrator or
administrative, governmental or regulatory authority or body, domestic or
foreign, which, if decided adversely to Parent, could reasonably be expected to
have a Material Adverse Effect on Parent.
3.11 Registration Statement; Joint Proxy Statement/Prospectus. None
of the information supplied or to be supplied by Parent for inclusion or
incorporation by reference in (i) the S-4 will, at the time the S-4 becomes
effective under the Securities Act, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they are made, not misleading; and (ii) the Joint Proxy
Statement/Prospectus will, at the dates mailed to the shareholders of Company
and of Parent, at the time of the Company Shareholders' Meeting, the time of the
Parent Shareholders' Meeting and as of the Effective Time, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading. The S-4 will comply
as to form in all material respects with the provisions of the Securities Act
and the rules and regulations promulgated by the SEC thereunder. Notwithstanding
the foregoing, Parent makes no representation or warranty with respect to any
information supplied by the Company which is contained in any of the foregoing
documents.
3.12 Brokers. Except for fees payable to Deutsche Bank Securities,
Inc., Parent has not incurred, nor will it incur, directly or indirectly, any
liability for brokerage or finders' fees or agents' commissions or any similar
charges in connection with this Agreement or any transaction contemplated
hereby.
3.13 Opinion of Financial Advisor. Parent's Board of Directors has
received an opinion from Deutsche Bank Securities, Inc., dated as of the date
hereof, to the effect that as of the date hereof, the Exchange Ratio is fair to
Parent from a financial point of view.
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3.14 Board Approval. The Board of Directors of Parent has, as of
the date of this Agreement, unanimously (i) has determined that the Merger is
consistent with and in furtherance of the long-term business strategy of Parent
and is fair to, and in the best interests of, Parent and its stockholders; (ii)
has approved this Agreement, the Merger and the other transactions contemplated
by this Agreement; and (iii) has determined to recommend that the stockholders
of Parent approve the Share Issuance.
3.15 Vote Required. The affirmative vote of a majority of the
shares of Parent Common Stock that cast votes regarding the Share Issuance in
person or by proxy at the Parent Stockholders' Meeting is the only vote of the
holders of any class or series of Parent's capital stock necessary to approve
this Agreement and the transactions contemplated hereby.
ARTICLE IV
CONDUCT PRIOR TO THE EFFECTIVE TIME
4.1 Conduct of Business by Company. During the period from the
date of this Agreement and continuing until the earlier of the termination of
this Agreement pursuant to its terms or the Effective Time, Company and each of
its subsidiaries shall, except to the extent that Parent shall otherwise consent
in writing, carry on its business, in the usual, regular and ordinary course and
in compliance with all applicable laws and regulations, pay its debts and taxes
when due and pay or perform other material obligations when due, subject to good
faith disputes over such debts, taxes, and obligations, and use its commercially
reasonable efforts, consistent with past practices (except as set forth in
Schedule 4.1), and policies to (i) preserve intact its present business
organization, (ii) keep available the services of its present officers and
employees and (iii) preserve its relationships with customers, suppliers,
distributors, licensors, licensees, and others with which it has business
dealings, except in each case as set forth in Section 4.1 of the Company
Schedule.
In addition, except as expressly permitted by the terms of this
Agreement and, except in each case as set forth in Section 4.1 of the Company
Schedule, without the prior written consent of Parent, during the period from
the date of this Agreement and continuing until the earlier of the termination
of this Agreement pursuant to its terms or the Effective Time, Company shall not
do any of the following and shall not permit its subsidiaries to do any of the
following:
(a) Waive any stock repurchase rights, accelerate, amend
or change the period of exercisability of options or restricted stock, or
reprice options granted under any employee, consultant, director or other stock
plans or authorize cash payments in exchange for any options granted under any
of such plans except pursuant to plans and agreements existing as of the date
hereof the relevant terms of which are described in the Company Schedule;
(b) Grant any severance or termination pay to any officer
or employee except pursuant to written agreements outstanding, or policies
existing, on the date hereof and as previously disclosed in writing or made
available to Parent, or adopt any new severance plan;
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(c) Transfer or license to any person or entity or
otherwise extend, amend or modify any rights to the Company Intellectual
Property, or enter into grants to transfer or license to any person future
patent rights, other than in the ordinary course of business consistent with
past practices, provided that in no event shall Company license to any person or
entity on an exclusive basis or sell any Company Intellectual Property;
(d) Declare, set aside or pay any dividends on or make
any other distributions (whether in cash, stock, equity securities or property)
in respect of any capital stock or split, combine or reclassify any capital
stock or issue or authorize the issuance of any other securities in respect of,
in lieu of or in substitution for any capital stock;
(e) Purchase, redeem or otherwise acquire, directly or
indirectly, any shares of capital stock of Company or its subsidiaries, except
repurchases of unvested shares at cost in connection with the termination of the
employment relationship with any employee pursuant to stock option or purchase
agreements in effect on the date hereof;
(f) Issue, deliver, sell, authorize, pledge or otherwise
encumber or propose any of the foregoing with respect to, any shares of capital
stock or any securities convertible into shares of capital stock, or
subscriptions, rights, warrants or options to acquire any shares of capital
stock or any securities convertible into shares of capital stock, or enter into
other agreements or commitments of any character obligating it to issue any such
shares or convertible securities, other than (x) the issuance delivery and/or
sale of (i) shares of Company Common Stock pursuant to the exercise of stock
options outstanding as of the date of this Agreement or granted pursuant to
clause (y) hereof, and (ii) shares of Company Common Stock issuable to
participants in the ESPP consistent with the terms thereof and (y) the granting
of non-discretionary stock options to non-employee directors under the Director
Plan in an amount not to exceed options to purchase 135,000 shares in the
aggregate;
(g) Cause, permit or propose any amendments to the
Company Charter Documents (or similar governing instruments of any of its
subsidiaries);
(h) Acquire or agree to acquire by merging or
consolidating with, or by purchasing any equity interest in or a portion of the
assets of, or by any other manner, any business or any corporation, partnership,
association or other business organization or division thereof, or otherwise
acquire or agree to acquire any assets or enter into any joint ventures,
strategic partnerships or alliances;
(i) Sell, lease, license, encumber or otherwise dispose
of any properties or assets except sales of inventory or non-exclusive licenses
of Company intellectual property in the ordinary course of business consistent
with past practice and, except for the sale, lease or disposition (other than
through licensing) of property or assets which are not material, individually or
in the aggregate, to the business of Company and its subsidiaries;
(j) Incur any indebtedness for borrowed money or
guarantee any such indebtedness of another person, issue or sell any debt
securities or options, warrants, calls or other
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rights to acquire any debt securities of Company, enter into any "keep well" or
other agreement to maintain any financial statement condition or enter into any
arrangement having the economic effect of any of the foregoing other than in
connection with the financing of ordinary course trade payables consistent with
past practice;
(k) Adopt or amend any employee benefit plan, policy or
arrangement, any employee stock purchase or employee stock option plan, or enter
into any employment contract or collective bargaining agreement (other than
offer letters and letter agreements entered into in the ordinary course of
business consistent with past practice with employees who are terminable "at
will"), pay any special bonus or special remuneration to any director or
employee, or increase the salaries or wage rates or fringe benefits (including
rights to severance or indemnification) of its directors, officers, employees or
consultants;
(l) (i) Pay, discharge, settle or satisfy any claims,
liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), or litigation (whether or not commenced prior to the
date of this Agreement) other than the payment, discharge, settlement or
satisfaction, in the ordinary course of business consistent with past practice
or in accordance with their terms, or liabilities recognized or disclosed in the
most recent consolidated financial statements (or the notes thereto) of Company
included in the Company SEC Reports or incurred since the date of such financial
statements, or (ii) waive the benefits of, agree to modify in any manner,
terminate, release any person from or fail to enforce any confidentiality or
similar agreement to which Company or any of its subsidiaries is a party or of
which Company or any of its subsidiaries is a beneficiary;
(m) Make any individual or series of related payments
outside of the ordinary course of business (other than payments to financial,
legal, accounting or other professional service advisors not in excess of the
estimates thereof set forth in Section 4.1 of the Company Schedule);
(n) Except in the ordinary course of business consistent
with past practice, modify, amend or terminate any material contract or
agreement to which Company or any subsidiary thereof is a party or waive, delay
the exercise of, release or assign any material rights or claims thereunder;
(o) Enter into or materially modify any contracts,
agreements, or obligations relating to the distribution, sale, license or
marketing by third parties of Company's products or products licensed by Company
on an exclusive basis;
(p) Revalue any of its assets or, except as required by
GAAP, make any change in accounting methods, principles or practices;
(q) Incur or enter into any agreement, contract or
commitment outside of the ordinary course of business calling for payments by
Company in excess of $350,000 individually;
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(r) Engage in any action that could cause the Merger to
fail to qualify as a "reorganization" under Section 368(a) of the Code, whether
or not otherwise permitted by the provisions of this Article IV;
(s) Engage in any action with the intent to directly or
indirectly adversely impact any of the transactions contemplated by this
Agreement;
(t) Make any tax election that, individually or in the
aggregate, is reasonably likely to adversely affect in any material respect the
tax liability or tax attributes of Company or any of its subsidiaries or settle
or compromise any material income tax liability; or
(u) Agree in writing or otherwise to take any of the
actions described in Section 4.1 (a) through (t) above.
4.2 Conduct of Business by Parent. During the period from the date
of this Agreement and continuing until the earlier of the termination of this
Agreement pursuant to its terms or the Effective Time, Parent shall not do any
of the following and shall not permit its subsidiaries to do any of the
following:
(a) Declare, set aside, or pay any dividends or make any
other distributions (whether in cash, stock, equity securities or property) in
respect to Parent's capital stock, except where (i) an adjustment is made to the
Exchange Ratio in accordance with Section 1.6(e) or (ii) the holders of Company
Common Stock will otherwise receive an equivalent, proportional dividend or
distribution (based on the Exchange Ratio, as adjusted pursuant to Section
1.6(e)) in connection with the Merger as if they had been holders of Parent
Common Stock on the record date for such dividend or distribution;
(b) Purchase, redeem, or otherwise acquire, directly or
indirectly, any shares of capital stock of Parent or its subsidiaries in any
amounts that would adversely affect Parent's financial condition or liquidity;
(c) Effect any amendment to the Company's Certificate of
Incorporation that would have an adverse effect on the rights of holders of
Parent's Common Stock (including the Parent Common Stock to be issued pursuant
to this Agreement);
(d) Engage in any action that could cause the Merger to
fail to qualify as a "reorganization" under Section 368(a) of the Code, whether
or not otherwise permitted by the provisions of this Article IV;
(e) Engage in any action with the intent to directly or
indirectly adversely impact any of the transactions contemplated by this
Agreement;
(f) Following the filing of the S-4, acquire or agree to
acquire any business or any corporation, partnership, association or other
business organization or division if such
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acquisition or agreement would require the inclusion in the S-4 of proforma
financial information regarding such acquisition; or
(g) Agree in writing or otherwise to take any of the
actions described in Section 4.1 (a) through (f) above.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 Joint Proxy Statement/Prospectus; Registration Statement.
(a) As promptly as practicable after the execution of
this Agreement, Parent and Company shall jointly prepare and shall file with the
SEC a document or documents that will constitute (i) the S-4 and (ii) the Joint
Proxy Statement/Prospectus. Each of the parties hereto shall use commercially
reasonable efforts to cause the S-4 to become effective as promptly as
practicable after the date hereof, and, prior to the effective date of the S-4,
the parties hereto shall take all action required under any applicable Laws in
connection with the issuance of shares of Parent Common Stock pursuant to the
Merger. Parent or Company, as the case may be, shall furnish all information
concerning Parent or Company as the other party may reasonably request in
connection with such actions and the preparation of the S-4 and the Joint Proxy
Statement/Prospectus. As promptly as practicable after the effective date of the
S-4, the Joint Proxy Statement/Prospectus shall be mailed to the shareholders of
Company and of Parent. Each of the parties hereto shall cause the Joint Proxy
Statement/Prospectus to comply as to form and substances to such party in all
material respects with the applicable requirements of (i) the Exchange Act, (ii)
the Securities Act, (iii) the rules and regulations of the Nasdaq.
(b) The Joint Proxy Statement/Prospectus shall include
the approval of this Agreement and the Merger and the recommendation of the
Board of Directors of Company to Company's shareholders that they vote in favor
of approval of this Agreement and the Merger, subject to the right of the Board
of Directors of the Company to withdraw its recommendation and to recommend a
Superior Proposal determined to be such in compliance with Section 5.4 of this
Agreement; provided, however, that the Board of Directors of Company shall
submit this Agreement to Company's shareholders whether or not at any time
subsequent to the date hereof such board determines that it can no longer make
such recommendation. The Joint Proxy Statement/Prospectus shall also include the
approval of the Share Issuance and the recommendation of the Board of Directors
of Parent to Parent's stockholders that they vote in favor of approval of the
Share Issuance.
(c) No amendment or supplement to the Joint Proxy
Statement/Prospectus or the S-4 shall be made without the approval of Parent and
Company, which approval shall not be unreasonably withheld or delayed. Each of
the parties hereto shall advise the other parties hereto, promptly after it
receives notice thereof, of the time when the S-4 has become effective or any
supplement or amendment has been filed, of the issuance of any stop order, of
the suspension of the
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qualification of the Parent Common Stock issuable in connection with the Merger
for offering or sale in any jurisdiction, or of any request by the SEC for
amendment of the Joint Proxy Statement/Prospectus or the S-4 or comments thereon
and responses thereto or requests by the SEC for additional information.
5.2 Shareholder and Stockholder Meetings. Company shall call and
hold the Company Shareholders' Meeting and Parent shall call and hold the Parent
Stockholders' Meeting as promptly as practicable after the date hereof for the
purpose of voting upon the adoption and approval of this Agreement and the
approval of the Merger (in the case of the Company Shareholders' Meeting) and
the Share Issuance (in the case of the Parent Stockholders' Meeting) pursuant to
the Joint Proxy Statement/Prospectus, and Company and Parent shall use all
reasonable efforts to hold the Parent Stockholders' Meeting and the Company
Shareholders' Meeting on the same day and as soon as practicable after the date
on which the S-4 becomes effective. Nothing herein shall prevent Company or
Parent from adjourning or postponing the Company Shareholders' Meeting or the
Parent Stockholders' Meeting, as the case may be, if there are insufficient
shares of Company Common Stock or Parent Common Stock, as the case may be,
necessary to conduct business at their respective meetings of the shareholders
or stockholders. The Board of Directors of Company shall submit this Agreement
and the Merger for shareholder approval pursuant to Section 14-2-1103(c) of
Georgia Law subject only to the condition of shareholder approval as described
in Section 2.24. Unless Company's Board of Directors has withdrawn its
recommendation of this Agreement and the Merger in compliance with Section 5.4,
Company shall use commercially reasonable efforts to solicit from its
shareholders proxies in favor of the adoption and approval of this Agreement and
the approval of the Merger pursuant to the Joint Proxy Statement/Prospectus and
shall take all other commercially reasonable action necessary or advisable to
secure the vote or consent of shareholders required by Georgia Law or applicable
stock exchange requirements to obtain such approval. Parent shall use
commercially reasonable efforts to solicit from its stockholders proxies in
favor of the Share Issuance pursuant to the Joint Proxy Statement/Prospectus and
shall take all other commercially reasonable action necessary or advisable to
secure the vote or consent of stockholders required by the Delaware Law or
applicable stock exchange requirements to obtain such approval. Company shall
call and hold the Company Shareholders' Meeting for the purpose of voting upon
the adoption and approval of this Agreement and the approval of the Merger
whether or not Company's Board of Directors at any time subsequent to the date
hereof determines that this Agreement is no longer advisable or recommends that
Company's shareholders reject it.
5.3 Confidentiality; Access to Information.
(a) The parties acknowledge that Company and Parent have
previously executed a Confidentiality Agreement, dated as of March 1, 2000 (the
"CONFIDENTIALITY AGREEMENT"), which Confidentiality Agreement will continue in
full force and effect in accordance with its terms.
(b) Each of the Company and Parent will afford the other
and the other's accountants, counsel and other representatives reasonable access
to its properties, books, records and personnel during the period prior to the
Effective Time to obtain all information concerning its business as such other
party may reasonably request. No information or knowledge obtained in any
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investigation pursuant to this Section 5.3 will affect or be deemed to modify
any representation or warranty contained herein or the conditions to the
obligations of the parties to consummate the Merger.
5.4 No Solicitation.
(a) From and after the date of this Agreement until the
Effective Time or termination of this Agreement pursuant to Article VII, Company
and its subsidiaries will not, nor will they authorize or permit any of their
respective officers, directors, affiliates or employees or any investment
banker, attorney or other advisor or representative retained by any of them to,
directly or indirectly, (i) solicit, initiate, encourage or induce the making,
submission or announcement of any Acquisition Proposal (as defined below), (ii)
participate in any discussions or negotiations regarding, or furnish to any
person any information with respect to, or take any other action to facilitate
any inquiries or the making of any proposal that constitutes or would reasonably
be expected to lead to, any Acquisition Proposal, (iii) engage in discussions
with any person with respect to any Acquisition Proposal, (iv) approve, endorse
or recommend any Acquisition Proposal or (v) enter into any letter of intent or
similar document or any contract, agreement or commitment contemplating or
otherwise relating to any Acquisition Transaction (as defined below); provided,
however, that nothing contained in this Section 5.4 shall prohibit the Board of
Directors of Company from (i) complying with Rule 14d-9 or 14e-2(a) promulgated
under the Exchange Act with regard to a tender or exchange offer or (ii) in
response to an unsolicited, bona fide written Acquisition Proposal that
Company's Board of Directors reasonably concludes constitutes a Superior Offer
(as defined below), engaging in discussions or participating in negotiations
with and furnishing information to the party making such Acquisition Proposal to
the extent (A) the Board of Directors of the Company determines in good faith
after consultation with its outside legal counsel that failure to take such
action would be inconsistent with its fiduciary obligations under applicable
law, (B) (x) at least two business days prior to furnishing any such nonpublic
information to, or entering into discussions or negotiations with, such party,
Company gives Parent written notice of Company's intention to furnish nonpublic
information to, or enter into discussions or negotiations with, such party and
(y) Company receives from such party an executed confidentiality agreement
containing customary limitations on the use and disclosure of all nonpublic
written and oral information furnished to such party by or on behalf of Company,
and (C) contemporaneously with furnishing any such nonpublic information to such
party, Company furnishes such nonpublic information to Parent (to the extent
such nonpublic information has not been previously furnished by the Company to
Parent). Company and its subsidiaries will immediately cease any and all
existing activities, discussions or negotiations with any parties conducted
heretofore with respect to any Acquisition Proposal. Without limiting the
foregoing, it is understood that any violation of the restrictions set forth in
this Section 5.4 by any officer, director or employee of Company or any of its
subsidiaries or any investment banker, attorney or other advisor or
representative of Company or any of its subsidiaries shall be deemed to be a
breach of this Section 5.4 by Company.
For purposes of this Agreement, "ACQUISITION PROPOSAL" shall mean any
offer or proposal (other than an offer or proposal by Parent) relating to any
Acquisition Transaction. For the purposes of this Agreement, "ACQUISITION
TRANSACTION" shall mean any transaction or series of related
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transactions other than the transactions contemplated by this Agreement
involving: (A) any acquisition or purchase from the Company by any person or
"group" (as defined under Section 13(d) of the Exchange Act and the rules and
regulations thereunder) of more than a 15% interest in the total outstanding
voting securities of the Company or any of its subsidiaries or any tender offer
or exchange offer that if consummated would result in any person or "group" (as
defined under Section 13(d) of the Exchange Act and the rules and regulations
thereunder) beneficially owning 15% or more of the total outstanding voting
securities of the Company or any of its subsidiaries or any merger,
consolidation, business combination or similar transaction involving the Company
pursuant to which the shareholders of the Company immediately preceding such
transaction hold less than [85]% of the equity interests in the surviving or
resulting entity of such transaction; (B) any sale, lease (other than in the
ordinary course of business), exchange, transfer, license (other than in the
ordinary course of business), acquisition or disposition of more than 15% of the
assets of the Company; or (C) any liquidation, dissolution, recapitalization or
other significant corporate reorganization of the Company; and (C) "SUPERIOR
PROPOSAL" shall mean an Acquisition Proposal with respect to which (x) if any
cash consideration is involved, shall not be subject to any financing
contingency (or, after consultation with Company's financial advisors, the Board
of Directors shall have determined in good faith that such financing is
reasonably likely to be obtained by such acquiring party on a timely basis), and
with respect to which Company's Board of Directors shall have determined in good
faith (after consultation with Company's financial advisors) that the acquiring
party is capable of consummating the proposed Acquisition Transaction on the
terms proposed, and (y) Company's Board of Directors shall have determined in
good faith that the proposed Acquisition Transaction provides greater value to
the shareholders of Company than the Merger (taking into account the advice of
Company's independent financial advisors).
(b) In addition to the obligations of Company set forth in
paragraph (a) of this Section 5.4, Company as promptly as practicable, and in
any event within 24 hours, shall advise Parent orally and in writing of any
request for information which Company reasonably believes would lead to an
Acquisition Proposal or of any Acquisition Proposal, or any inquiry with respect
to or which Company reasonably believes would lead to any Acquisition Proposal,
the material terms and conditions of such request, Acquisition Proposal or
inquiry, and the identity of the person or group making any such request,
Acquisition Proposal or inquiry. Company will keep Parent informed in all
material respects of the status and terms (including material amendments or
proposed amendments) of any such request, Acquisition Proposal or inquiry. In
addition to the foregoing, Company shall (i) provide Parent with at least 48
hours prior notice (or such lesser prior notice as provided to the members of
Company's Board of Directors but in no event less than eight hours) of any
meeting of Company's Board of Directors at which Company's Board of Directors is
reasonably expected to consider an Acquisition Proposal and (ii) provide Parent
with at least 48 hours prior written notice (or such lesser prior notice as
provided to the members of the Company's Board of Directors but in no event less
than eight hours) of a meeting of Company's Board of Directors at which
Company's Board of Directors is reasonably expected to recommend a Superior
Offer to its shareholders and together with such notice a copy of the definitive
documentation relating to such Superior Offer.
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5.5 Public Disclosure. Parent and Company will consult with each
other and agree before issuing any press release or otherwise making any public
statement with respect to the Merger, this Agreement or an Acquisition Proposal
and will not issue any such press release or make any such public statement
prior to such agreement, except as may be required by law or any listing
agreement with a national securities exchange, in which case reasonable efforts
to consult with the other party will be made prior to any such release or public
statement. The parties have agreed to the text of the joint press release
announcing the signing of this Agreement.
5.6 Reasonable Efforts; Notification.
(a) Upon the terms and subject to the conditions set
forth in this Agreement (including the provisions of Section 5.4), each of the
parties agrees to use commercially reasonable efforts to take, or cause to be
taken, all actions, and to do, or cause to be done, and to assist and cooperate
with the other parties in doing, all things necessary, proper or advisable to
consummate and make effective, in the most expeditious manner practicable, the
Merger and the other transactions contemplated by this Agreement, including
using commercially reasonable efforts to accomplish the following: (i) the
taking of all reasonable acts necessary to cause the conditions precedent set
forth in Article VI to be satisfied, (ii) the obtaining of all necessary actions
or nonactions, waivers, consents, approvals, orders and authorizations from
Governmental Entities and the making of all necessary registrations,
declarations and filings (including registrations, declarations and filings with
Governmental Entities, if any) and the taking of all reasonable steps as may be
necessary to avoid any suit, claim, action, investigation or proceeding by any
Governmental Entity, (iii) the obtaining of all necessary consents, approvals or
waivers from third parties, (iv) the defending of any suits, claims, actions,
investigations or proceedings, whether judicial or administrative, challenging
this Agreement or the consummation of the transactions contemplated hereby,
including seeking to have any stay or temporary restraining order entered by any
court or other Governmental Entity vacated or reversed and (v) the execution or
delivery of any additional instruments necessary to consummate the transactions
contemplated by, and to fully carry out the purposes of, this Agreement. In
connection with and without limiting the foregoing, Company and its Board of
Directors shall, if any state takeover statute or similar statute or regulation
is or becomes applicable to the Merger, this Agreement or any of the
transactions contemplated by this Agreement, use commercially reasonable efforts
to ensure that the Merger and the other transactions contemplated by this
Agreement may be consummated as promptly as practicable on the terms
contemplated by this Agreement and otherwise to minimize the effect of such
statute or regulation on the Merger, this Agreement and the transactions
contemplated hereby. Notwithstanding anything herein to the contrary, nothing in
this Agreement shall be deemed to require Parent or Company or any subsidiary or
affiliate thereof to agree to any divestiture by itself or any of its affiliates
of shares of capital stock or of any business, assets or property, or the
imposition of any material limitation on the ability of any of them to conduct
their business or to own or exercise control of such assets, properties and
stock.
(b) Company shall give prompt notice to Parent of any
representation or warranty made by it contained in this Agreement becoming
untrue or inaccurate, or any failure of Company to comply with or satisfy in any
material respect any covenant, condition or agreement to be
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complied with or satisfied by it under this Agreement, in each case, such that
the conditions set forth in Section 6.3(a) or 6.3(b) would not be satisfied;
provided, however, that no such notification shall affect the representations,
warranties, covenants or agreements of the parties or the conditions to the
obligations of the parties under this Agreement.
(c) Parent shall give prompt notice to Company of any
representation or warranty made by it or Merger Sub contained in this Agreement
becoming untrue or inaccurate, or any failure of Parent or Merger Sub to comply
with or satisfy in any material respect any covenant, condition or agreement to
be complied with or satisfied by it under this Agreement, in each case, such
that the conditions set forth in Section 6.2(a) or 6.2(b) would not be
satisfied; provided, however, that no such notification shall affect the
representations, warranties, covenants or agreements of the parties or the
conditions to the obligations of the parties under this Agreement.
5.7 Third Party Consents. As soon as practicable following the
date hereof, Parent and Company will each use its commercially reasonable
efforts to obtain any consents, waivers and approvals under any of its or its
subsidiaries' respective agreements, contracts, licenses or leases required to
be obtained in connection with the consummation of the transactions contemplated
hereby.
5.8 Stock Options and Employee Benefits; Warrants.
(a) At the Effective Time, each outstanding option to
purchase shares of Company Common Stock (each, a "COMPANY STOCK OPTION") under
the Company Option Plans, whether or not vested, shall by virtue of the Merger
be assumed by Parent. Each Company Stock Option and Warrant so assumed by Parent
under this Agreement will continue to have, and be subject to, the same terms
and conditions of such options or Warrant immediately prior to the Effective
Time (including, without limitation, any repurchase rights or vesting provisions
of outstanding options), except that (i) each Company Stock Option and Warrant
will be exercisable (or will become exercisable in accordance with its terms)
for that number of whole shares of Parent Common Stock equal to the product of
the number of shares of Company Common Stock that were issuable upon exercise of
such Company Stock Option and Warrant immediately prior to the Effective Time
multiplied by the Exchange Ratio, rounded down to the nearest whole number of
shares of Parent Common Stock and (ii) the per share exercise price for the
shares of Parent Common Stock issuable upon exercise of such assumed Company
Stock Option and Warrant will be equal to the quotient determined by dividing
the exercise price per share of Company Common Stock at which such Company Stock
Option and each outstanding Warrant was exercisable immediately prior to the
Effective Time by the Exchange Ratio, rounded up to the nearest whole cent.
(b) ESPP. Prior to the Effective Time, outstanding
purchase rights under Company's ESPP shall be exercised in accordance with
Sections 14 and 16 of the ESPP and each share of Company Common Stock purchased
pursuant to such exercise shall by virtue of the Merger, and without any action
on the part of the holder thereof, be converted into the right to receive a
number of shares of Parent Common Stock equal to the Exchange Ratio without
issuance of certificates representing issued and outstanding shares of Company
Common Stock to ESPP
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participants. Company agrees that it shall terminate the ESPP immediately
following the aforesaid purchase of shares of Company Common Stock thereunder.
(c) 401(k) Plans. Company and its Plan Affiliates, as
applicable, shall each terminate (i) any and all group severance, separation or
salary continuation plans, programs, or arrangements and (ii) any and all 401(k)
plans, effective as of the day immediately preceding the Closing Date. Parent
shall receive from Company evidence that Company's and each Plan Affiliate's, as
applicable, program(s) have been terminated pursuant to resolutions of each such
entity's Board of Directors (the form and substance of such resolutions shall be
subject to review and approval of Parent), effective as of the day immediately
preceding the Effective Time.
(d) Service Credit. To the extent permitted by Parent's
employee benefit plan and applicable law, Parent will use reasonable efforts, or
will cause Company to use reasonable efforts, give individuals who are employed
by Company and its subsidiaries as of the Effective Time ("AFFECTED EMPLOYEES")
full credit for purposes of eligibility, vesting, benefit accrual (excluding,
however, benefit accrual under any defined benefit pension plans) and
determination of the level of benefits under any employee benefit plans or
arrangements maintained by Parent or any subsidiary of Parent for such Affected
Employees' service with Company or any subsidiary of the Company to the same
extent recognized by Company immediately prior to the Effective Time. To the
extent permitted by Parent's employee benefit plans and applicable law, Parent
will, or will cause Company to (i) waive all limitations as to preexisting
conditions, exclusions and waiting periods with respect to participation and
coverage requirements applicable to the Affected Employees under any welfare
benefit plans that such employees may be eligible to participate in after the
Effective Time, other than limitations or waiting periods that are already in
effect with respect to such employees and that have not been satisfied as of the
Effective Time under any welfare plan maintained for the Affected Employees
immediately prior to the Effective Time, and (ii) provide each Affected Employee
with credit for any co-payments and deductibles paid prior to the Effective Time
in satisfying any applicable deductible or out-of-pocket requirements under any
welfare plans that such employees are eligible to participate in after the
Effective Time.
5.9 Form S-8. Parent agrees to file a registration statement on
Form S-8 for the shares of Parent Common Stock issuable with respect to assumed
Company Stock Options as soon as is reasonably practicable (and in any event
within twenty business days) after the Effective Time.
5.10 Indemnification.
(a) From and after the Effective Time, Parent will, and
will cause the Surviving Corporation to, fulfill and honor in all respects the
obligations of Company pursuant to any indemnification agreements between
Company and its directors and officers in effect immediately prior to the
Effective Time and any indemnification provisions under the Company Charter
Documents as in effect on the date hereof. The Certificate of Incorporation and
Bylaws of the Surviving Corporation will contain provisions with respect to
exculpation and indemnification that are at least as favorable to the
indemnified parties thereunder (the "INDEMNIFIED PARTIES") as those contained in
the Company Charter Documents as in effect on the date hereof, which provisions
will not be amended, repealed or otherwise modified for a period of six years
from the Effective Time in
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any manner that would adversely affect the rights thereunder of the Indemnified
Parties, unless such modification is required by law.
(b) For a period of six years after the Effective Time,
Parent will, and will cause the Surviving Corporation to, use its commercially
reasonable efforts to maintain in effect directors' and officers' liability
insurance covering those persons or classes of persons who are currently covered
by Company's directors' and officers' liability insurance policy with coverage
in an amount and scope at least as favorable as that applicable to the current
directors and officers of Company; provided, however, that in no event will
Parent or the Surviving Corporation be required to expend an annual premium for
such coverage in excess of 150% of the annual premium most recently paid by
Company (the "PREMIUM CAP"); provided, further, that if the annual premium for
such coverage would at any time exceed the Premium Cap, then the Surviving
Corporation shall maintain insurance policies that provide the maximum coverage
available at an annual premium equal to the Premium Cap.
(c) The provisions of this Section 5.10 are intended to
be in addition to the rights otherwise available to the Indemnified Parties by
law, charter, statute, bylaw or agreement, and shall operate for the benefit of,
and shall be enforceable by, each of the Indemnified Parties.
5.11 Nasdaq Listing. Parent agrees to authorize for listing on
Nasdaq the shares of Parent Common Stock issuable, and those required to be
reserved for issuance, in connection with the Merger, upon official notice of
issuance.
5.12 Affiliates. Set forth in Section 5.12 of the Company Schedule
is a list of those persons who may be deemed to be, in Company's reasonable
judgment, affiliates of Company within the meaning of Rule 145 promulgated under
the Securities Act (each, a "COMPANY AFFILIATE"). Company will provide Parent
with such information and documents as Parent reasonably requests for purposes
of reviewing such list. Company will use its commercially reasonable efforts to
deliver or cause to be delivered to Parent, as promptly as practicable on or
following the date hereof, from each Company Affiliate an executed affiliate
agreement in substantially the form attached hereto as Exhibit C (the "COMPANY
AFFILIATE AGREEMENT"), each of which will be in full force and effect as of the
Effective Time. Parent will be entitled to place appropriate legends on the
certificates evidencing any Parent Common Stock to be received by a Company
Affiliate pursuant to the terms of this Agreement, and to issue appropriate stop
transfer instructions to the transfer agent for the Parent Common Stock,
consistent with the terms of the Company Affiliate Agreement.
5.13 Regulatory Filings; Reasonable Efforts. As soon as may be
reasonably practicable, Company and Parent each shall file with the United
States Federal Trade Commission (the "FTC") and the Antitrust Division of the
United States Department of Justice ("DOJ") Notification and Report Forms
relating to the transactions contemplated herein as required by the HSR Act, as
well as comparable pre-merger notification forms required by the merger
notification or control laws and regulations of any applicable jurisdiction, as
agreed to by the parties. Company and Parent each shall promptly (a) supply the
other with any information which may be required in order to effectuate such
filings and (b) supply any additional information which reasonably may be
required
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by the FTC, the DOJ or the competition or merger control authorities of any
other jurisdiction and which the parties may reasonably deem appropriate;
provided, however, that Parent shall not be required to agree to any divestiture
by Parent or the Company or any of Parent's subsidiaries or affiliates of shares
of capital stock or of any business, assets or property of Parent or its
subsidiaries or affiliates or of the Company, its affiliates, or the imposition
of any material limitation on the ability of any of them to conduct their
businesses or to own or exercise control of such assets, properties and stock.
5.14 Parent Board of Directors. The Board of Directors of Parent
will take all actions necessary such that two members of Company's Board of
Directors reasonably acceptable to Parent, at least one of whom is an
independent director of the Company's Board of Directors, shall be appointed to
Parent's Board of Directors as of the Effective Time with a term expiring at the
next annual meeting of Parent's stockholders.
5.15 Shareholder Litigation. Until the earlier of termination of
this Agreement in accordance with its terms or the Effective Time, Company shall
give Parent the opportunity to participate in the defense or settlement of any
shareholder litigation against Company or members of its Board of Directors
relating to this Agreement and the transactions contemplated hereby or
otherwise, and shall not settle any such litigation without Parent's prior
written consent.
ARTICLE VI
CONDITIONS TO THE MERGER
6.1 Conditions to Obligations of Each Party to Effect the Merger.
The respective obligations of each party to this Agreement to effect the Merger
shall be subject to the satisfaction at or prior to the Closing of the following
conditions:
(a) Shareholder and Stockholder Approvals. This Agreement
shall have been approved and adopted, and the Merger shall have been duly
approved, by the requisite vote under applicable law, by the shareholders of
Company. The Share Issuance shall have been approved by the requisite vote under
applicable Nasdaq rules by the stockholders of Parent.
(b) Registration Statement Effective; Joint Proxy
Statement. The SEC shall have declared the S-4 effective. No stop order
suspending the effectiveness of the S-4 or any part thereof shall have been
issued and no proceeding for that purpose, and no similar proceeding in respect
of the Joint Proxy Statement/Prospectus, shall be pending or shall then be
threatened in writing by the SEC.
(c) No Order; HSR Act. No Governmental Entity shall have
enacted, issued, promulgated, enforced or entered any statute, rule, regulation,
executive order, decree, injunction or other order (whether temporary,
preliminary or permanent) which is in effect and which has the effect of making
the Merger illegal or otherwise prohibiting consummation of the Merger. All
waiting periods, if any, under the HSR Act relating to the transactions
contemplated hereby will
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have expired or terminated early and all material foreign antitrust approvals
required to be obtained prior to the Merger in connection with the transactions
contemplated hereby shall have been obtained.
(d) Tax Opinions. Parent and Company shall each have
received written opinions from their respective tax counsel, in form and
substance reasonably satisfactory to them, to the effect that the Merger will
constitute a reorganization within the meaning of Section 368(a) of the Code and
such opinions shall not have been withdrawn; provided, however, that if the
counsel to either Parent or Company does not render such opinion, this condition
shall nonetheless be deemed to be satisfied with respect to such party if
counsel to the other party renders such opinion to such party. The parties to
this Agreement agree to make such reasonable representations as requested by
such counsel for the purpose of rendering such opinions.
6.2 Additional Conditions to Obligations of Company. The
obligation of Company to consummate and effect the Merger shall be subject to
the satisfaction at or prior to the Closing Date of each of the following
conditions, any of which may be waived, in writing, exclusively by Company:
(a) Representations and Warranties. Each representation
and warranty of Parent and Merger Sub contained in this Agreement (i) shall have
been true and correct in all material respects as of the date of this Agreement
and (ii) shall be true and correct on and as of the Closing Date with the same
force and effect as if made on the Closing Date except, in the case of each of
clauses (i) and (ii), (A) for such failures to be true and correct that do not
in the aggregate constitute a Material Adverse Effect on Parent and Merger Sub,
and (B) for those representations and warranties which address matters only as
of a particular date (which representations shall have been true and correct
(subject to the qualifications set forth in the preceding clause (A)) as of such
particular date) (it being understood that, for purposes of determining the
accuracy of such representations and warranties, (i) all "Material Adverse
Effect" qualifications and other qualifications based on the word "material"
contained in such representations and warranties shall be disregarded and (ii)
any update of or modification to the Parent Schedule made or purported to have
been made after the date of this Agreement shall be disregarded). Company shall
have received a certificate with respect to the foregoing signed on behalf of
Parent by an authorized officer of Parent.
(b) Agreements and Covenants. Parent and Merger Sub shall
have performed or complied in all material respects with all agreements and
covenants required by this Agreement to be performed or complied with by them on
or prior to the Closing Date, and Company shall have received a certificate to
such effect signed on behalf of Parent by an authorized officer of Parent.
6.3 Additional Conditions to the Obligations of Parent and
Merger Sub. The obligations of Parent and Merger Sub to consummate and effect
the Merger shall be subject to the satisfaction at or prior to the Closing Date
of each of the following conditions, any of which may be waived, in writing,
exclusively by Parent:
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(a) Representations and Warranties. Each representation
and warranty of Company contained in this Agreement (i) shall have been true and
correct in all material respects as of the date of this Agreement and (ii) shall
be true and correct on and as of the Closing Date with the same force and effect
as if made on and as of the Closing Date except, in the case of each of clauses
(i) and (ii), (A) for such failures to be true and correct that do not in the
aggregate constitute a Material Adverse Effect on the Company provided, however,
such Material Adverse Effect qualifier shall be inapplicable with respect to
representations and warranties contained in Section 2.3(a), 2.3(e), 2.23, and
2.24, which shall be true and correct in all material respects, and (B) for
those representations and warranties which address matters only as of a
particular date (which representations shall have been true and correct (subject
to the qualifications set forth in the preceding clause (A)) as of such
particular date) (it being understood that, for purposes of determining the
accuracy of such representations and warranties, (i) all "Material Adverse
Effect" qualifications and other qualifications based on the word "material"
contained in such representations and warranties shall be disregarded and (ii)
any update of or modification to the Company Schedule made or purported to have
been made after the date of this Agreement shall be disregarded). Parent shall
have received a certificate with respect to the foregoing signed on behalf of
Company by an authorized officer of Company.
(b) Agreements and Covenants. Company shall have
performed or complied in all material respects with all agreements and covenants
required by this Agreement to be performed or complied with by it at or prior to
the Closing Date, and Parent shall have received a certificate to such effect
signed on behalf of Company by the Chief Executive Officer and the Chief
Financial Officer of Company.
(c) Consents. Company shall have obtained all consents,
waivers and approvals required in connection with the consummation of the
transactions contemplated hereby in connection with the agreements, contracts,
licenses or leases set forth on Schedule 6.3(c).
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
7.1 Termination. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after the requisite approval of
the shareholders of Company:
(a) by mutual written consent duly authorized by the
Boards of Directors of Parent and Company;
(b) by either Company or Parent, by written notice to the
other, if the Merger shall not have been consummated by October 31, 2000 for any
reason; provided, however, that the right to terminate this Agreement under this
Section 7.1(b) shall not be available to any party whose action or failure to
act has been a principal cause of the failure of the Merger to occur on or
before such date and such action or failure to act constitutes a breach of this
Agreement;
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(c) by either Company or Parent, by written notice to the
other, if a Governmental Entity shall have issued an order, decree or ruling or
taken any other action that has the effect of permanently restraining, enjoining
or otherwise prohibiting the Merger and is final and nonappealable;
(d) by either Company or Parent, by written notice to the
other, if (i) the required approval of the shareholders of Company contemplated
by the first sentence of Section 6.1(a) of this Agreement shall not have been
obtained by reason of the failure to obtain the required vote at a meeting of
Company shareholders duly convened therefor or at any adjournment or
postponement therefor or (ii) the required approval by the stockholders of
Parent of the Share Issuance required under applicable Nasdaq rules shall not
have been obtained by reason of the failure to obtain the required vote at a
meeting of Parent stockholders duly convened therefor or at any adjournment or
postponement thereof;
(e) by Company, by written notice to Parent, upon a
breach of any representation, warranty, covenant or agreement on the part of
Parent set forth in this Agreement, or if any representation or warranty of
Parent shall have become untrue, in either case such that the conditions set
forth in Section 6.2(a) or Section 6.2(b) would not be satisfied as of the time
of such breach or as of the time such representation or warranty shall have
become untrue, provided, that if such inaccuracy in Parent's representations and
warranties or breach by Parent is curable by Parent, then Company may not
terminate this Agreement under this Section 7.1(e) for thirty (30) days after
delivery of written notice from Company to Parent of such breach, provided
Parent continues to exercise commercially reasonable efforts to cure such breach
(it being understood that Company may not terminate this Agreement pursuant to
this paragraph (e) if such breach by Parent is cured during such thirty (30)-day
period);
(f) by Parent, by written notice to Company, upon a
breach of any representation, warranty, covenant or agreement on the part of
Company set forth in this Agreement, or if any representation or warranty of
Company shall have become untrue, in either case such that the conditions set
forth in Section 6.3(a) or Section 6.3(b) would not be satisfied as of the time
of such breach or as of the time such representation or warranty shall have
become untrue, provided, that if such inaccuracy in Company's representations
and warranties or breach by Company is curable by Company, then Parent may not
terminate this Agreement under this Section 7.1(f) for thirty (30) days after
delivery of written notice from Parent to Company of such breach, provided
Company continues to exercise commercially reasonable efforts to cure such
breach (it being understood that Parent may not terminate this Agreement
pursuant to this paragraph (f) such breach by Company is cured during such
thirty (30)-day period); or
(g) by Parent, by written notice to Company, if (i) the
Board of Directors of Company withdraws, modifies or changes its recommendation
of this Agreement or the Merger in a manner adverse to Parent or its
stockholders, (ii) the Board of Directors of Company shall have recommended to
the shareholders of Company an Acquisition Proposal, (iii) the Company fails to
comply with Section 5.4, (iv) a bona fide Acquisition Proposal shall have been
publicly announced or otherwise become publicly known and the Board of Directors
of Company shall have (A) failed
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to recommend against acceptance of such by its shareholders (including by taking
no position, or indicating its inability to take a position, with respect to the
acceptance by its shareholders of an Acquisition Proposal involving a tender
offer or exchange offer) or (B) failed to reconfirm its approval and
recommendation of this Agreement and the transactions contemplated hereby within
ten business days thereafter, or (v) the Board of Directors of Company resolves
to take any of the actions described above.
7.2 Notice of Termination; Effect of Termination. Any termination
of this Agreement under Section 7.1 above will be effective immediately upon the
delivery of written notice of the terminating party to the other parties hereto
(or such later time as may be required by Section 7.1). In the event of the
termination of this Agreement as provided in Section 7.1, this Agreement shall
be of no further force or effect, except (i) as set forth in this Section 7.2,
Section 5.3(a), Section 7.3 and Article 8, each of which shall survive the
termination of this Agreement, and (ii) nothing herein shall relieve any party
from liability for fraud in connection with, or any willful breach of, this
Agreement.
7.3 Fees and Expenses.
(a) General. Except as set forth in this Section 7.3, all
fees and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such
expenses whether or not the Merger is consummated; provided, however, that
Parent and Company shall share equally all fees and expenses, other than
attorneys' and accountants fees and expenses, incurred in relation to the
printing and filing of the Joint Proxy Statement/Prospectus (including any
preliminary materials related thereto) and the S-4 (including financial
statements and exhibits) and any amendments or supplements thereto.
(b) Termination Fee.
(i) In the event that (A) Parent shall terminate
this Agreement pursuant to Section 7.1(g), or (B) this Agreement shall be
terminated (x) pursuant to Section 7.1(b) or (y) pursuant to Section 7.1(d)(i)
and, in the case of clause (B)(x) or clause (B)(y), (1) prior to such
termination, a bona fide Acquisition Proposal shall have been announced or shall
otherwise have become publicly known and (2) within 12 months after such
termination, Company shall enter into a definitive agreement providing for any
Company Acquisition or any Company Acquisition shall be consummated, then, in
the case of clause (A) or (B), respectively, Company shall pay to Parent cash
and issue to Parent shares of Company Common Stock, in such combination as
Company may elect (provided that the cash component must be at least $20
million) with an aggregate value (such shares of Company Common Stock to be
valued at $24.125 per share for all purposes of this Section 7.3(b)(i)) of $50
million (the "TERMINATION FEE"). In the event this Agreement shall be terminated
as set forth in clause (A), the Termination Fee shall be payable in two
installments of equal value, the first of which shall be paid contemporaneously
with the termination of this Agreement pursuant to Section 7.1(g), and the
second of which shall be due and payable on the 30th day after such termination.
In the event this Agreement shall be terminated as set forth in clause (B), the
Termination Fee shall be payable in two installments of equal value, the first
of which shall be paid contemporaneously with the execution of a definitive
agreement providing for the Company
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Acquisition, and the second of which shall be due and payable on the earlier to
occur of (i) the consummation of such Company Acquisition and (ii) the 90th days
after the date of execution of the definitive agreement relating to such Company
Acquisition. If Company satisfies its obligation to pay the Termination Fee in
part by delivering to Parent shares of Company Common Stock (the "TERMINATION
FEE SHARES"), then Parent shall be entitled to registration rights with respect
to such shares as described in the Option Agreement (treating the Termination
Fee Shares for all purposes of Section 7 of the Option Agreement as if they were
Option Shares (as defined in the Option Agreement)).
(ii) The Company acknowledges that the agreements
contained in this Section 7.3(b) are an integral part of the transactions
contemplated by this Agreement, and that, without these agreements, Parent would
not enter into this Agreement; accordingly, if the Company fails to pay in a
timely manner the amounts due pursuant to this Section 7.3(b) and, in order to
obtain such payment, Parent makes a claim that results in a judgment against the
Company for the amounts set forth in this Section 7.3(b), the Company shall pay
to Parent its actual out-of-pocket costs and expenses (including reasonable
attorneys' fees and expenses) in connection with such suit, together with
interest on the amounts set forth in this Section 7.3(b) at the prime rate of
Citibank, N.A. in effect on the date such payment was required to be made.
Payment of the fees described in this Section 7.3(b) shall not be in lieu of
damages incurred in the event of fraud in connection with or willful breach of
this Agreement.
(iii) In the event that Parent shall terminate
this Agreement pursuant to Section 7.1(f), then Company shall promptly reimburse
Parent for Parent's costs and expenses in connection with this Agreement and the
transactions contemplated hereby.
(iv) For the purposes of this Agreement, "COMPANY
ACQUISITION" shall mean any of the following transactions (other than the
transactions contemplated by this Agreement): (i) a merger, consolidation,
business combination, recapitalization, liquidation, dissolution or similar
transaction involving the Company pursuant to which the shareholders of the
Company immediately preceding such transaction hold less than 60% of the
aggregate equity interests in the surviving or resulting entity of such
transaction, (ii) a sale or other disposition by the Company of assets
representing in excess of 40% of the aggregate fair market value of the
Company's business immediately prior to such sale or (iii) the acquisition by
any person or "group" (as defined under Section 13(d) of the Exchange Act)
(including by way of a tender offer or an exchange offer or issuance by the
Company), directly or indirectly, of beneficial ownership or a right to acquire
beneficial ownership of shares representing in excess of 40% of the voting power
of the then outstanding shares of capital stock of the Company.
(v) For purposes only of this Section 7.3(b),
each reference to "15%" in the definition of Acquisition Transaction set forth
in Section 5.4(a) shall be deemed to be "40%," and the reference to "85%" in
such definition shall be deemed to be "60%."
(vi) In the event that Company shall terminate
this Agreement pursuant to Section 7.1(e), then Parent shall promptly reimburse
Company for Company's costs and expenses in connection with this Agreement and
the transactions contemplated hereby.
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7.4 Amendment. Subject to applicable law, this Agreement may be
amended by the parties hereto at any time by execution of an instrument in
writing signed on behalf of each of Parent, Merger Sub and Company.
7.5 Extension; Waiver. At any time prior to the Effective Time,
any party hereto may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties made to such
party contained herein or in any document delivered pursuant hereto and (iii)
waive compliance with any of the agreements or conditions for the benefit of
such party contained herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party. Delay in exercising any right under this
Agreement shall not constitute a waiver of such right.
ARTICLE VIII
GENERAL PROVISIONS
8.1 Survival of Representations and Warranties. The
representations and warranties of Company, Parent and Merger Sub contained in
this Agreement shall terminate at the Effective Time, and only the covenants
that by their terms survive the Effective Time shall survive the Effective Time.
8.2 Notices. All notices and other communications hereunder shall
be in writing and shall be deemed given if delivered personally or by commercial
delivery service, or sent via telecopy (receipt confirmed) to the parties at the
following addresses or telecopy numbers (or at such other address or telecopy
numbers for a party as shall be specified by like notice):
(a) if to Parent or Merger Sub, to:
Peregrine Systems, Inc.
00000 Xxxx Xxxxx Xxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx Xxxxxx
Xxxx Xxxxxx
Telecopy No.: (000) 000-0000
with copies to:
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
Professional Corporation
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxx
Telecopy No.: (000) 000-0000
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and
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
Professional Corporation
Xxxxx Xxxxxx Xxxxx
Xxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxx
Telecopy No.: (000) 000-0000
(b) if to Company, to:
Harbinger Corporation
0000 Xxxxx Xxxx Xxxxxxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxx Xxxxxxx
Xxxxx X. Xxxxxxxxxxx
Telecopy No.: (000) 000-0000
and (000) 000-0000
with a copy to:
Xxxxxxx, Phleger & Xxxxxxxx LLP
Two Embarcadero Place
0000 Xxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxx X. Xxxxxx
Telecopy No.: (000) 000-0000 and (000) 000-0000
and
Xxxxxx Xxxxxxx & Xxxxxx LLP
1600 Atlanta Financial Center
0000 Xxxxxxxxx Xxxx, XX
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxx X. Xxxxx
Telecopy No.: (000) 000-0000
8.3 Interpretation; Definitions.
(a) When a reference is made in this Agreement to
Exhibits, such reference shall be to an Exhibit to this Agreement unless
otherwise indicated. When a reference is made in this Agreement to Sections,
such reference shall be to a Section of this Agreement. Unless otherwise
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indicated the words "include," "includes" and "including" when used herein shall
be deemed in each case to be followed by the words "without limitation." The
table of contents and headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. When reference is made herein to "the business of" an entity,
such reference shall be deemed to include the business of all direct and
indirect subsidiaries of such entity. Reference to the subsidiaries of an entity
shall be deemed to include all direct and indirect subsidiaries of such entity.
(b) For purposes of this Agreement:
(i) the term "KNOWLEDGE" means with respect to a
party hereto, with respect to any matter in question, knowledge of the executive
officers of such party after reasonable inquiry;
(ii) the term "MATERIAL ADVERSE EFFECT" when used
in connection with an entity means any change, event, violation, inaccuracy,
circumstance or effect, individually or when aggregated with other such changes,
events, violations, inaccuracies, circumstances or effects, that is materially
adverse to the business, assets, liabilities, financial condition or results of
operations of such entity and its subsidiaries taken as a whole; provided,
however, in no event shall either of the following, alone or in combination, be
deemed to constitute, nor shall either of the following be taken into account in
determining whether there has been or will be a Material Adverse Effect on any
entity: (A) any change in such entity's stock price or trading volume or the
failure to meet or exceed Wall Street research analysts' or such entity's
internal earnings or other estimates or projections in and of itself constitute
a Material Adverse Effect or (B) any change, event, violation, inaccuracy,
circumstance or effect that such entity successfully bears the burden of proving
results from (x) changes affecting the industry in which such entity operates
generally (which changes do not disproportionately affect such entity), (y)
changes affecting the United States economy generally or (z) the public
announcement or pendency of the transactions contemplated hereby;
(iii) the term "PERSON" shall mean any individual,
corporation (including any non-profit corporation), general partnership, limited
partnership, limited liability partnership, joint venture, estate, trust,
company (including any limited liability company or joint stock company), firm
or other enterprise, association, organization, entity or Governmental Entity;
and
(iv) the term "SUBSIDIARY" shall mean any
corporation, association, joint venture, partnership, or similar business
arrangement or entity in which Company or Parent, as the case may require, owns
50% or more of the outstanding voting interests.
8.4 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party, it being understood that all
parties need not sign the same counterpart.
8.5 Entire Agreement; Third Party Beneficiaries. This Agreement
and the documents and instruments and other agreements among the parties hereto
as contemplated by or referred to
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herein, including the Company Disclosure Schedule and the Parent Disclosure
Schedule (a) constitute the entire agreement among the parties with respect to
the subject matter hereof and supersede all prior agreements and understandings,
both written and oral, among the parties with respect to the subject matter
hereof, it being understood that the Confidentiality Agreement shall continue in
full force and effect until the Closing and shall survive any termination of
this Agreement; and (b) are not intended to confer upon any other person any
rights or remedies hereunder, except as specifically provided in Section 5.10.
8.6 Severability. In the event that any provision of this
Agreement, or the application thereof, becomes or is declared by a court of
competent jurisdiction to be illegal, void or unenforceable, the remainder of
this Agreement will continue in full force and effect and the application of
such provision to other persons or circumstances will be interpreted so as
reasonably to effect the intent of the parties hereto. The parties further agree
to replace such void or unenforceable provision of this Agreement with a valid
and enforceable provision that will achieve, to the extent possible, the
economic, business and other purposes of such void or unenforceable provision.
8.7 Other Remedies; Specific Performance. Except as otherwise
provided herein, any and all remedies herein expressly conferred upon a party
will be deemed cumulative with and not exclusive of any other remedy conferred
hereby, or by law or equity upon such party, and the exercise by a party of any
one remedy will not preclude the exercise of any other remedy. The parties
hereto agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to seek an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
hereof in any court of the United States or any state having jurisdiction, this
being in addition to any other remedy to which they are entitled at law or in
equity.
8.8 Governing Law. Except to the extent mandatorily governed by
Georgia Law, this Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware, regardless of the laws that might
otherwise govern under applicable principles of conflicts of law thereof.
8.9 Rules of Construction. The parties hereto agree that they have
been represented by counsel during the negotiation and execution of this
Agreement and, therefore, waive the application of any law, regulation, holding
or rule of construction providing that ambiguities in an agreement or other
document will be construed against the party drafting such agreement or
document.
8.10 Assignment. No party may assign either this Agreement or any
of its rights, interests, or obligations hereunder without the prior written
approval of the other parties. Subject to the preceding sentence, this Agreement
shall be binding upon and shall inure to the benefit of the parties hereto and
their respective successors and permitted assigns.
*****
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55
IN WITNESS WHEREOF, the parties hereto have caused this Agreement and
Plan of Reorganization to be executed by their duly authorized respective
officers as of the date first written above.
PEREGRINE SYSTEMS, INC.
a Delaware corporation
By:
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Name:
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Title:
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SODA ACQUISITION CORPORATION
a Georgia corporation
By:
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Name:
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Title:
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HARBINGER CORPORATION
a Georgia corporation
By:
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Name:
----------------------------------------
Title:
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[SIGNATURE PAGE TO AGREEMENT AND
PLAN OF MERGER AND REORGANIZATION]
