CONFORMED COPY
Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
Among
INTERNATIONAL BUSINESS MACHINES CORPORATION
DUKE ACQUISITION CORP.
and
CROSSWORLDS SOFTWARE, INC.
Dated as of October 29, 2001
TABLE OF CONTENTS
ARTICLE I
The Merger
SECTION 1.01 Effective Time of the Merger .................................. 2
SECTION 1.02 Closing ....................................................... 2
SECTION 1.03 Effect of the Merger .......................................... 2
SECTION 1.04 Certificate of Incorporation and By-laws ...................... 2
SECTION 1.05 Directors ..................................................... 3
SECTION 1.06 Officers ...................................................... 3
ARTICLE II
Conversion of Securities
SECTION 2.01 Conversion of Capital Stock ................................... 3
SECTION 2.02 Exchange of Certificates ...................................... 5
ARTICLE III
Representations and Warranties
SECTION 3.01 Representations and Warranties of the Company ................. 8
SECTION 3.02 Representations and Warranties of Parent and Sub .............. 44
ARTICLE IV
Covenants Relating to Conduct of Business
SECTION 4.01 Conduct of Business ........................................... 46
SECTION 4.02 No Solicitation ............................................... 54
ARTICLE V
Additional Agreements
SECTION 5.01 Preparation of the Proxy Statement; Stockholders Meeting ...... 58
SECTION 5.02 Access to Information; Confidentiality ........................ 59
SECTION 5.03 Reasonable Efforts; Notification .............................. 59
SECTION 5.04 Stock Options; Restricted Shares; Warrants .................... 62
SECTION 5.05 Indemnification, Exculpation and Insurance .................... 65
SECTION 5.06 Fees .......................................................... 67
SECTION 5.07 Employee Matters .............................................. 68
SECTION 5.08 Public Announcements .......................................... 70
SECTION 5.09 Closing Date Balance Sheet .................................... 71
ARTICLE VI
Conditions Precedent
SECTION 6.01 Conditions to Each Party's Obligation to Effect the Merger .... 72
SECTION 6.02 Conditions to Obligations of Parent and Sub ................... 72
SECTION 6.03 Conditions to Obligation of the Company ....................... 74
SECTION 6.04 Frustration of Closing Conditions ............................. 75
ARTICLE VII
Termination, Amendment and Waiver
SECTION 7.01 Termination ................................................... 75
SECTION 7.02 Effect of Termination ......................................... 76
SECTION 7.03 Amendment ..................................................... 76
SECTION 7.04 Extension; Waiver ............................................. 77
ARTICLE VIII
General Provisions
SECTION 8.01 Nonsurvival of Representations and Warranties ................. 77
SECTION 8.02 Notices ....................................................... 77
SECTION 8.03 Definitions ................................................... 79
SECTION 8.04 Interpretation ................................................ 80
SECTION 8.05 Counterparts .................................................. 80
SECTION 8.06 Entire Agreement; No Third-Party Beneficiaries ................ 81
SECTION 8.07 Governing Law ................................................. 81
SECTION 8.08 Assignment .................................................... 81
SECTION 8.09 Consent to Jurisdiction ....................................... 81
SECTION 8.10 Waiver of Jury Trial .......................................... 82
SECTION 8.11 Enforcement ................................................... 82
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AGREEMENT AND PLAN OF MERGER dated as of
October 29, 2001 (this "Agreement"), by and among
INTERNATIONAL BUSINESS MACHINES CORPORATION, a New
York corporation ("Parent"), DUKE ACQUISITION CORP.,
a Delaware corporation and a wholly owned subsidiary
of Parent ("Sub"), and CROSSWORLDS SOFTWARE, INC., a
Delaware corporation (the "Company").
WHEREAS the Board of Directors of each of the Company and Sub
deems it in the best interests of their respective stockholders to consummate
the merger (the "Merger"), on the terms and subject to the conditions set forth
in this Agreement, of Sub with and into the Company in which the Company would
become a wholly owned subsidiary of Parent, and such Boards of Directors have
approved this Agreement and declared its advisability (and, in the case of the
Board of Directors of the Company, recommended that this Agreement be adopted by
the Company's stockholders);
WHEREAS, simultaneously with the execution and delivery of
this Agreement and as a condition and inducement to the willingness of Parent
and Sub to enter into this Agreement, Parent and certain stockholders of the
Company are entering into a stockholders agreement (the "Stockholders
Agreement") pursuant to which, among other things, such stockholders have agreed
to vote to adopt this Agreement and to take certain other actions in furtherance
of the Merger, in each case upon the terms and subject to the conditions set
forth therein;
WHEREAS Parent, Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and also to prescribe various conditions to the Merger;
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements set forth
herein, the parties hereto agree as follows:
ARTICLE I
The Merger
SECTION 1.01 Effective Time of the Merger. As soon as
practicable on or after the Closing Date (as defined in Section 1.02), the
parties shall (i) file a certificate of merger (the "Certificate of Merger") in
such form as is required by, and executed and acknowledged in accordance with,
the relevant provisions of the General Corporation Law of the State of Delaware
(the "DGCL") and (ii) make all other filings or recordings required under the
DGCL to effect the Merger. The Merger shall become effective at such time as the
Certificate of Merger is duly filed with the Secretary of State of the State of
Delaware or at such subsequent time as Parent and the Company shall agree and
specify in the Certificate of Merger (the date and time the Merger becomes
effective being the "Effective Time").
SECTION 1.02 Closing. The closing of the Merger (the
"Closing") will take place at 11:00 a.m., New York time, on a date to be
specified by the parties, which shall be not later than the second business day
after satisfaction or waiver of the conditions set forth in Article VI that by
their terms are not to be satisfied or waived at the Closing (the "Closing
Date"), at the offices of Cravath, Swaine & Xxxxx, 000 Xxxxxx Xxxxxx, Xxx Xxxx,
Xxx Xxxx 00000, unless another time, date or place is agreed to in writing by
Parent and the Company.
SECTION 1.03 Effect of the Merger. At the Effective Time, Sub
shall be merged with and into the Company, the separate corporate existence of
Sub shall cease and the Company shall continue as the surviving corporation (the
"Surviving Corporation"). The Merger shall have the effects set forth in Section
259 of the DGCL.
SECTION 1.04 Certificate of Incorporation and By-laws. (a) The
Amended and Restated Certificate of Incorporation of the Company, as in effect
immediately prior to the Effective Time, shall be the Certificate of
Incorporation of the Surviving Corporation until thereafter
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changed or amended as provided therein or by applicable law.
(b) The By-laws of Sub, as in effect immediately prior to the
Effective Time, shall be the By-laws of the Surviving Corporation until
thereafter changed or amended as provided therein or by applicable law.
SECTION 1.05 Directors. The directors of Sub immediately prior
to the Effective Time shall be the directors of the Surviving Corporation until
the earlier of their resignation or removal or until their respective successors
are duly elected and qualified, as the case may be.
SECTION 1.06 Officers. The officers of the Company immediately
prior to the Effective Time shall be the officers of the Surviving Corporation
until the earlier of their resignation or removal or until their respective
successors are duly elected and qualified, as the case may be.
ARTICLE II
Conversion of Securities
SECTION 2.01 Conversion of Capital Stock. At the Effective
Time, by virtue of the Merger and without any action on the part of the holder
of any shares of Common Stock, par value $0.001 per share, of the Company (the
"Company Common Stock"), or any shares of capital stock of Sub:
(a) Capital Stock of Sub. Each issued and outstanding share of
common stock of Sub shall be converted into and become one fully paid
and nonassessable share of common stock of the Surviving Corporation.
(b) Cancelation of Treasury Stock and Parent-Owned Stock. All
shares of Company Common Stock that are owned by the Company, as
treasury stock, Parent or Sub immediately prior to the Effective Time
shall automatically be canceled and retired and shall cease
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to exist and no consideration shall be delivered in exchange therefor.
(c) Conversion of Company Common Stock. Each share of Company
Common Stock issued and outstanding immediately prior to the Effective
Time (other than shares to be canceled and retired in accordance with
Section 2.01(b), the Appraisal Shares (as defined in Section 2.01(d))
and Restricted Shares (as defined in Section 3.01(c) and which shall be
cancelled in the manner set forth in Section 5.04(a)(i)(B))) shall be
converted into the right to receive $4.65 in cash, without interest
(the "Merger Consideration"). At the Effective Time all such shares
shall no longer be outstanding and shall automatically be cancelled and
shall cease to exist, and each holder of a certificate that immediately
prior to the Effective Time represented any such shares (a
"Certificate") shall cease to have any rights with respect thereto,
except the right to receive the Merger Consideration. The right of any
holder of any share of Company Common Stock to receive the Merger
Consideration shall be subject to and reduced by the amount of any
withholding that is required under applicable tax law.
(d) Appraisal Rights. Notwithstanding anything in this
Agreement to the contrary, shares (the "Appraisal Shares") of Company
Common Stock issued and outstanding immediately prior to the Effective
Time that are held by any holder who is entitled to demand and properly
demands appraisal of such shares pursuant to, and who complies in all
respects with, the provisions of Section 262 of the DGCL ("Section
262") shall not be converted into the right to receive the Merger
Consideration as provided in Section 2.01(c), but instead such holder
shall be entitled to payment of the fair value of such shares in
accordance with the provisions of Section 262. At the Effective Time,
the Appraisal Shares shall no longer be outstanding and shall
automatically be canceled and shall cease to exist, and each holder of
Appraisal Shares shall cease to have any rights with respect thereto,
except the right to receive the fair value of such shares in accordance
with the provisions of Section 262. Notwithstanding the foregoing, if
any such holder
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shall fail to perfect or otherwise shall waive, withdraw or lose the
right to appraisal under Section 262 or a court of competent
jurisdiction shall determine that such holder is not entitled to the
relief provided by Section 262, then the right of such holder to be
paid the fair value of such holder's Appraisal Shares under Section 262
shall cease and such Appraisal Shares shall be deemed to have been
converted at the Effective Time into, and shall have become, the right
to receive the Merger Consideration as provided in Section 2.01(c). The
Company shall serve prompt notice to Parent of any demands for
appraisal of any shares of Company Common Stock, withdrawals of such
demands and any other instruments served pursuant to the DGCL received
by the Company, and Parent shall have the right to participate in and
direct all negotiations and proceedings with respect to such demands.
The Company shall not, without the prior written consent of Parent,
make any payment with respect to, or settle or offer to settle, any
such demands, or agree to do or commit to do any of the foregoing.
SECTION 2.02 Exchange of Certificates. (a) Paying Agent. Prior
to the Effective Time, Parent shall designate a bank or trust company reasonably
acceptable to the Company to act as agent for the payment of the Merger
Consideration upon surrender of Certificates (the "Paying Agent"), and, from
time to time after the Effective Time, Parent shall make available, or cause the
Surviving Corporation to make available, to the Paying Agent funds in amounts
and at the times necessary for the payment of the Merger Consideration pursuant
to Section 2.01(c) upon surrender of Certificates, it being understood that any
and all interest earned on funds made available to the Paying Agent pursuant to
this Agreement shall be turned over to Parent.
(b) Exchange Procedure. As soon as reasonably practicable
after the Effective Time, the Paying Agent shall mail to each holder of record
of a Certificate (i) a form of letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates held
by such person shall pass, only upon proper delivery of the Certificates to the
Paying Agent and
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shall be in a form and have such other provisions as Parent may reasonably
specify) and (ii) instructions for use in effecting the surrender of the
Certificates in exchange for the Merger Consideration. Upon surrender of a
Certificate for cancelation to the Paying 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, and such other documents as may reasonably
be required by the Paying Agent, the holder of such Certificate shall be
entitled to receive in exchange therefor the amount of cash into which the
shares formerly represented by such Certificate shall have been converted
pursuant to Section 2.01(c), and the Certificate so surrendered shall forthwith
be canceled. In the event of a transfer of ownership of shares that is not
registered in the stock transfer books of the Company, payment may be made to a
person other than the person in whose name the Certificate so surrendered is
registered if such Certificate shall be properly endorsed or otherwise be in
proper form for transfer and the person requesting such payment shall pay any
transfer or other taxes required by reason of the payment to a person other than
the registered holder of such Certificate or establish to the satisfaction of
the Surviving Corporation that such tax has been paid or is not applicable. No
interest shall be paid or shall accrue on the cash payable upon surrender of any
Certificate.
(c) No Further Ownership Rights in Company Common Stock. All
cash paid upon the surrender of a Certificate in accordance with the terms of
this Article II shall be deemed to have been paid in full satisfaction of all
rights pertaining to the shares of Company Common Stock formerly represented by
such Certificate. At the close of business on the day on which the Effective
Time occurs the stock transfer books of the Company shall be closed, and there
shall be no further registration of transfers on the stock transfer books of the
Surviving Corporation of the shares that were outstanding immediately prior to
the Effective Time. If, after the Effective Time, Certificates are presented to
the Surviving Corporation or the Paying Agent for transfer or any other reason,
they shall be canceled and exchanged as provided in this Article II.
(d) No Liability. None of Parent, Sub, the Company or the
Paying Agent shall be liable to any person
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in respect of any cash delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law. If any Certificates shall not have
been surrendered prior to two years after the Effective Time (or immediately
prior to such earlier date on which any Merger Consideration would otherwise
escheat to or became the property of any Governmental Entity (as defined in
Section 3.01(d)), any such Merger Consideration in respect thereof shall, to the
extent permitted by applicable law, become the property of the Surviving
Corporation, free and clear of all claims or interest of any person previously
entitled thereto.
(e) Lost Certificates. If any Certificate shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by the
person claiming such Certificate to be lost, stolen or destroyed and, if
required by the Surviving Corporation, the posting by such person of a bond in
such reasonable amount as the Surviving Corporation may direct as indemnity
against any claim that may be made against it with respect to such Certificate,
the Paying Agent shall pay in respect of such lost, stolen or destroyed
Certificate the Merger Consideration.
(f) Withholding Rights. Parent, the Surviving Corporation or
the Paying Agent shall be entitled to deduct and withhold from the Merger
Consideration otherwise payable pursuant to this Agreement to any holder of
shares of Company Common Stock such amounts as Parent, the Surviving Corporation
or the Paying Agent is required to deduct and withhold with respect to the
making of such payment under the Internal Revenue Code of 1986, as amended (the
"Code"), or any provision of state, local or foreign tax law. To the extent that
amounts are so withheld and paid over to the appropriate taxing authority by
Parent, the Surviving Corporation or the Paying Agent, such withheld amounts
shall be treated for all purposes of this Agreement as having been paid to the
holder of the shares of Company Common Stock in respect of which such deduction
and withholding was made by Parent, the Surviving Corporation or the Paying
Agent.
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ARTICLE III
Representations and Warranties
SECTION 3.01 Representations and Warranties of the Company.
Except as set forth on the disclosure schedule (each section of which qualifies
the correspondingly numbered representation and warranty or covenant to the
extent expressly specified therein and such other representations and warranties
or covenants to the extent a matter in such section is disclosed in such a way
as to make its relevance to the information called for by such other
representation and warranty or covenant readily apparent) delivered by the
Company to Parent prior to the execution of this Agreement (the "Company
Disclosure Schedule") or, with respect to actions and matters arising after the
date of this Agreement, as expressly and specifically provided for by this
Agreement or the Company Disclosure Schedule, the Company represents and
warrants to Parent and Sub as follows:
(a) Organization, Standing and Corporate Power. Each of the
Company and its subsidiaries (as defined in Section 8.03) (i) is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, (ii) has all requisite corporate, company or
partnership power and authority to carry on its business as now being conducted
and (iii) is duly qualified or licensed to do business and is in good standing
in each jurisdiction in which the nature of its business or the ownership,
leasing or operation of its properties makes such qualification or licensing
necessary, other than where the failure to be so organized, existing, qualified
or licensed or in good standing (except in the case of clause (i) above with
respect to the Company) individually or in the aggregate could not reasonably be
expected to have a material adverse effect (as defined in Section 8.03) on the
Company. The Company has delivered to Parent complete and correct copies of its
Amended and Restated Certificate of Incorporation and its Amended and Restated
By-laws and the certificate of incorporation and by-laws (or similar
organizational documents) of each of its subsidiaries, in each case as amended
to the date of this Agreement. The Company has made available to Parent and its
representatives true and complete copies of the
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minutes (or in the case of draft minutes, the most recent drafts thereof) of all
meetings of the stockholders, the Board of Directors and each committee of the
Board of Directors of the Company and each of its subsidiaries held since June
1, 2000 (it being understood and agreed that, in respect of minutes (or draft
minutes) of meetings held after the date of this Agreement, the portions of such
minutes (or drafts thereof) that relate to any Takeover Proposal (as defined in
Section 4.02(a)) made after the date of this Agreement have been redacted).
(b) Subsidiaries. Section 3.01(b) of the Company Disclosure
Schedule lists each subsidiary of the Company. All the outstanding shares of
capital stock of or other equity or voting interests in each such subsidiary are
owned by the Company, by another wholly owned subsidiary of the Company or by
the Company and another wholly owned subsidiary of the Company, free and clear
of all pledges, claims, liens, charges, encumbrances and security interests of
any kind or nature whatsoever (collectively, "Liens"), and are duly authorized,
validly issued, fully paid and nonassessable. Except for the capital stock of or
other equity or voting interests in its subsidiaries, the Company does not own,
directly or indirectly, any capital stock of or other equity or voting interests
in any corporation, partnership, joint venture, association or other entity.
(c) Capital Structure. (i) The authorized capital stock of the
Company consists of 150,000,000 shares of Company Common Stock. At the close of
business on October 29, 2001, (A) 26,775,214 shares of Company Common Stock
(excluding treasury shares) were issued and outstanding, none of which were held
by any subsidiary of the Company, (B) no shares of Company Common Stock were
held by the Company in its treasury, (C) options to acquire 10,599,897 shares of
Company Common Stock from the Company pursuant to the 1996 Stock Option Plan (as
amended), the 1997 Stock Plan (as amended), the 1999 Executive Stock Plan, the
2000 Directors' Stock Option Plan and the 2000 Non-Executive Stock Plan
(collectively, the "Company Stock Plans") were issued and outstanding, (D) stock
purchase rights to acquire 6,666 shares of Company Common Stock pursuant to the
Company Stock Plans were issued and outstanding, (E) 13,069 shares of Company
Common Stock
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subject to a right of repurchase by the Company were held by service providers
to the Company or its subsidiaries ("Restricted Shares"), (F) warrants to
acquire 201,612 shares of Company Common Stock from the Company pursuant to the
warrant agreements set forth on Schedule 3.01(c) of the Company Disclosure
Schedule and previously provided in true and complete form to Parent or its
counsel (the "Warrants") were issued and outstanding and (G) 804,301 shares of
Company Common Stock were reserved and available for issuance pursuant to the
2000 Employee Stock Purchase Plan (the "ESPP"). The Company has delivered to
Parent a complete and correct list, as of the close of business on October 29,
2001, of all outstanding stock options or other rights to purchase or acquire
Company Common Stock granted under the Company Stock Plans or otherwise
(collectively, the "Stock Options"), including all Restricted Shares and all
outstanding Warrants, the number of shares of Company Common Stock subject to
each such Stock Option or Warrant, the grant dates and exercise prices and
vesting schedule of each such Stock Option or Warrant, the repurchase price of
each Restricted Share and the names of the holders of each Stock Option, Warrant
or Restricted Share. Other than the Stock Options, the Warrants and rights under
the ESPP, there are no outstanding rights of any person to receive Company
Common Stock under the Company Stock Plans or otherwise, or on a deferred basis
or otherwise. As of the close of business on October 29, 2001, there were
outstanding Stock Options and Warrants to purchase 4,025,526 shares of Company
Common Stock with exercise prices on a per share basis lower than the Merger
Consideration, and the weighted average exercise price of such Stock Options and
Warrants was equal to $3.7304. As of the close of business on October 29, 2001,
there were outstanding rights to purchase no more than 303,000 shares of Company
Common Stock under the ESPP. For the most recent bi-weekly payroll period ending
prior to October 29, 2001, the aggregate amount of accumulated payroll
deductions pursuant to the ESPP was $828,313.50 and the aggregate amount
actually deducted for that payroll period was $68,972.40).
(ii) Except as set forth above, as of the close of business on
October 29, 2001, no shares of capital stock of or other equity or
voting interests in the Company, or options, warrants or other rights
to
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acquire or receive any such stock or interests were issued, reserved
for issuance or outstanding. Since October 29, 2001, until the date of
this Agreement, (x) there have been no issuances by the Company of
shares of capital stock of or other equity or voting interests in the
Company other than issuances of shares of Company Common Stock pursuant
to the exercise of Stock Options, Warrants or rights under the ESPP, in
each case outstanding on such date as required by their terms as in
effect on the date of this Agreement and (y) there have been no
issuances by the Company of options, warrants or other rights to
acquire shares of capital stock or other equity or voting interests
from the Company, other than for rights that may have arisen under the
ESPP. There are no outstanding stock appreciation rights or other
rights (other than rights that may have arisen under the ESPP) that are
linked in any way to the price of the Company Common Stock or the value
of the Company or any part thereof that were not granted in tandem with
a related Stock Option.
(iii) All outstanding shares of capital stock of the Company
are, and all shares that may be issued pursuant to the Company Stock
Plans, the Warrants and the ESPP will be, when issued in accordance
with the terms thereof, duly authorized, validly issued, fully paid and
nonassessable and not subject to preemptive rights. There are no bonds,
debentures, notes or other indebtedness of the Company or any of it
subsidiaries, and no securities or other instruments or obligations of
the Company or any of its subsidiaries the value of which is in any way
based upon or derived from any capital or voting stock of the Company,
having the right to vote (or convertible into, or exchangeable for,
securities having the right to vote) on any matters on which
stockholders of the Company may vote. Except as set forth above and
except as expressly permitted under Section 4.01(a), there are no
securities, options, warrants, calls, rights, contracts, commitments,
agreements, instruments, arrangements, understandings, obligations or
undertakings of any kind to which the Company or any of its
subsidiaries is a party, or by which the Company or any of its
subsidiaries is bound,
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obligating the Company or any of its subsidiaries to issue, deliver or
sell, or cause to be issued, delivered or sold, additional shares of
capital stock of, or other equity or voting interests in, or securities
convertible into, or exchangeable or exercisable for, shares of capital
stock of or other equity or voting interests in the Company or any of
its subsidiaries or obligating the Company or any of its subsidiaries
to issue, grant, extend or enter into any such security, option,
warrant, call, right, contract, commitment, agreement, instrument,
arrangement, understanding, obligation or undertaking. Each Stock
Option intended to qualify as an "incentive stock option" under Section
422 of the Code so qualifies and the exercise price of each other Stock
Option is no less than the fair market value of a share of Company
Common Stock as determined on the date of grant of such Stock Option.
As of the date of this Agreement, the Subject Shares (as such term is
defined in the Stockholders Agreement) represent approximately 35.19%
of the shares of Company Common Stock outstanding. There are not any
outstanding contractual obligations of the Company or any of its
subsidiaries to (i) repurchase, redeem or otherwise acquire any shares
of capital stock of the Company or any of its subsidiaries or (ii) vote
or dispose of any shares of the capital stock of any of its
subsidiaries. The Company is not a party to any voting agreements with
respect to any shares of the capital stock of or other equity or voting
securities in the Company or any of its subsidiaries and, to the
knowledge of the Company, as of the date of this Agreement, there are
no irrevocable proxies and no voting agreements with respect to any
shares of the capital stock of or other equity or voting interests in
the Company or any of its subsidiaries.
(iv) All Stock Options may, by their terms, be converted into
an option to acquire Parent Common Stock (as defined in Section
5.04(a)) in accordance with and to the extent required by Section
5.04(a).
(v) The information set forth on Section 3.01(c)(v) of the
Company Disclosure Schedule with respect to the Warrants is true and
complete and each
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Warrant either (A) terminates automatically, without the need for any
action by any person, upon the consummation of the Merger or (B) has an
exercise price that is more than the Merger Consideration and becomes
exercisable on or after the Effective Time solely for the Merger
Consideration (the Warrants having the terms described in this clause
(B), the "Surviving Warrants").
(vi) The outstanding indebtedness of the Company and its
subsidiaries is as set forth on Section 3.01(c)(vi) of the Company
Disclosure Schedule. There are no outstanding guarantees (or any
similar instruments or contracts) of indebtedness by the Company or any
of its subsidiaries.
(d) Authority; Noncontravention. The Company has the requisite
corporate power and authority to execute and deliver this Agreement, to
consummate the transactions contemplated by this Agreement, subject, in the case
of the Merger, to obtaining the Stockholder Approval (as defined in Section
3.01(r)), and to comply with the provisions of this Agreement. The execution and
delivery of this Agreement by the Company, the consummation by the Company of
the transactions contemplated by this Agreement and the Stockholders Agreement
and the compliance by the Company with the provisions of this Agreement have
been duly authorized by all necessary corporate action on the part of the
Company and no other corporate proceedings on the part of the Company are
necessary to authorize this Agreement or to consummate the transactions
contemplated by this Agreement, subject, in the case of the Merger, to obtaining
the Stockholder Approval. This Agreement has been duly executed and delivered by
the Company and, assuming the due authorization, execution and delivery by
Parent and Sub, constitutes a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms (except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws). The Board of Directors of the Company, at a
meeting duly called and held at which all but one of the directors of the
Company were present either in person or by telephone, duly and with the
unanimous approval of those directors in attendance adopted resolutions (i)
approving and declaring advisable the Merger, this Agreement and the
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transactions contemplated by this Agreement, (ii) declaring that it is in the
best interests of the Company's stockholders that the Company enter into this
Agreement and consummate the Merger on the terms and subject to the conditions
set forth in this Agreement, (iii) declaring that the consideration to be paid
to the Company's stockholders in the Merger is fair to such stockholders, (iv)
directing that this Agreement be submitted to a vote at a meeting of the
Company's stockholders to be held as promptly as reasonably practicable
following the date of this Agreement, (v) recommending that such stockholders
adopt this Agreement and (vi) approving the Stockholders Agreement and the
transactions contemplated thereby, which resolutions have not been subsequently
rescinded, modified or withdrawn in any way except as is expressly and
specifically permitted under Section 4.02(b). The execution and delivery of this
Agreement and the Stockholders Agreement and the consummation of the
transactions contemplated hereby and thereby and compliance by the Company with
the provisions of this Agreement do not and will not conflict with, or result in
any violation or breach of, or default (with or without notice or lapse of time,
or both) under, or give rise to a right of, or result in, termination,
cancelation or acceleration of any obligation or to a loss of a material
benefit under, or result in the creation of any Lien in or upon any of the
properties or assets of the Company or any of its subsidiaries under, or give
rise to any increased, additional, accelerated or guaranteed rights or
entitlements under, any provision of (i) the Amended and Restated Certificate of
Incorporation or Amended and Restated By-laws of the Company or the certificate
of incorporation or by-laws (or similar organizational documents) of any of its
subsidiaries, (ii) any loan or credit agreement (including the Amended and
Restated Loan and Security Agreement dated as of September 18, 2000, as amended
to the date hereof, between the Company and Silicon Valley Bank), bond,
debenture, note, mortgage, indenture, guarantee, lease or other contract,
commitment, agreement, instrument, arrangement, understanding, obligation,
undertaking, permit, concession, franchise or license, whether oral or written
(each, including all amendments thereto, a "Contract") to which the Company or
any of its subsidiaries is a party or any of their respective properties or
assets is subject or (iii) subject to the
-14-
governmental filings and other matters referred to in the following sentence,
any (A) statute, law, ordinance, rule or regulation or (B) judgment, order or
decree, in each case applicable to the Company or any of its subsidiaries or
their respective properties or assets, other than, in the case of clauses (ii)
and (iii), any such conflicts, violations, breaches, defaults, rights, losses,
Liens or entitlements that individually or in the aggregate could not reasonably
be expected to (x) have a material adverse effect on the Company, (y) impair in
any material respect the ability of the Company to perform its obligations under
this Agreement or (z) prevent or materially impede, interfere with, hinder or
delay the consummation of any of the transactions contemplated by this
Agreement. No consent, approval, order or authorization of, or registration,
declaration or filing with any Federal, state or local, domestic or foreign,
government or any court, administrative agency or commission or other
governmental or regulatory authority or agency, domestic or foreign (a
"Governmental Entity"), is required by or with respect to the Company or any of
its subsidiaries in connection with the execution and delivery of this Agreement
by the Company, the consummation by the Company of the transactions contemplated
by this Agreement or the compliance by the Company with the provisions of this
Agreement, except for (1) the filing of a premerger notification and report form
by the Company under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976,
as amended (the "HSR Act") or any other applicable competition, merger control,
antitrust or similar law, (2) the filing with the Securities and Exchange
Commission (the "SEC") of a proxy statement relating to the adoption of this
Agreement by the Company's stockholders (as amended or supplemented from time to
time, the "Proxy Statement") and such reports under the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), as may be required in connection with
this Agreement, the Stockholders Agreement and the transactions contemplated
hereby and thereby, (3) the filing of the Certificate of Merger with the
Secretary of State of the State of Delaware and appropriate documents with the
relevant authorities of other states in which the Company or any of its
subsidiaries is qualified to do business, (4) any filings required under the
rules and regulations of The Nasdaq Stock Market Inc. and (5) such other
consents, approvals, orders, authorizations, registrations,
-15-
declarations and filings the failure of which to be obtained or made
individually or in the aggregate could not reasonably be expected to (x) have a
material adverse effect on the Company, (y) impair in any material respect the
ability of the Company to perform its obligations under this Agreement or (z)
prevent or materially impede, interfere with, hinder or delay the consummation
of any of the transactions contemplated by this Agreement.
(e) SEC Documents. The Company has filed with the SEC, and has
heretofore made available to Parent true and complete copies of, all reports,
schedules, forms, statements and other documents required to be filed with the
SEC by the Company since June 1, 2000 (together with all information
incorporated therein by reference, the "SEC Documents"). No subsidiary of the
Company is required to file any report, schedule, form, statement or other
document with the SEC. As of their respective dates, each of the SEC Documents
complied in all material respects with the requirements of the Securities Act of
1933, as amended (the "Securities Act") or the Exchange Act, as the case may be,
and the rules and regulations of the SEC promulgated thereunder applicable to
such SEC Documents, and none of the SEC Documents at the time they were filed
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. Except to the extent that information contained in any SEC Document
filed and publicly available prior to the date of this Agreement (a "Filed SEC
Document") has been revised or superseded by a later filed Filed SEC Document,
none of the SEC Documents contains any untrue statement of a material fact or
omits 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. The financial statements (including the related
notes) of the Company included in the SEC Documents complied, as of the date
filed, or will comply when filed, as to form in all material respects with
applicable accounting requirements and the published rules and regulations of
the SEC with respect thereto, have been or will be prepared in accordance with
generally accepted accounting principles ("GAAP") (except, in the case of
unaudited statements, as permitted by Form 10-Q of the SEC)
-16-
applied on a consistent basis during the periods involved (except as may be
indicated in the notes thereto) and fairly presented or will present in all
material respects the consolidated financial position of the Company and its
consolidated subsidiaries as of the dates thereof and their consolidated results
of operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal and recurring year-end audit adjustments and the
absence of footnotes). Except as set forth in the Filed SEC Documents, the
Company and its subsidiaries have no liabilities or obligations of any nature
(whether accrued, absolute, contingent or otherwise) which are or could
reasonably be expected to become material to the Company and its subsidiaries,
taken as a whole.
(f) Information Supplied. None of the information included or
incorporated by reference in the Proxy Statement will, at the date it is first
mailed to the Company's stockholders or at the time of the Stockholders Meeting
(as defined in Section 5.01(b)) or at the time of any amendment or supplement
thereof, 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, except that no representation is made by the Company with respect to
statements made or incorporated by reference therein based on information
supplied by Parent or Sub specifically for inclusion or incorporation by
reference in the Proxy Statement. The Proxy Statement will comply as to form in
all material respects with the requirements of the Exchange Act and the rules
and regulations promulgated thereunder.
(g) Absence of Certain Changes or Events. (i) Since the date
of the most recent audited financial statements included in the Filed SEC
Documents, the Company and its subsidiaries have conducted their respective
businesses only in the ordinary course consistent with past practice, and there
has not been (A) any material adverse effect on the Company or any state of
facts, change, development, effect or occurrence that could reasonably be
expected to result in a material adverse effect on the Company, (B) any
declaration, setting aside or payment of any dividend on, or other distribution
(whether in cash,
-17-
stock or property) in respect of, any of the Company's or any of its
subsidiaries' capital stock, except for dividends by a wholly owned subsidiary
of the Company to its parent, (C) any split, combination or reclassification of
any of the Company's or any of its subsidiaries' capital stock or any issuance
or the authorization of any issuance of any other securities in respect of, in
lieu of or in substitution for shares of capital stock or other securities of
the Company or any of its subsidiaries, (D) (w) any granting by the Company or
any of its subsidiaries of any increase in compensation or benefits, except for
normal increases of cash compensation prior to the date of this Agreement in the
ordinary course of business consistent with past practice, or any payment by the
Company or any of its subsidiaries of any bonus, except for bonuses made prior
to the date of this Agreement in the ordinary course of business consistent with
past practice, in each case to any current or former director, officer, employee
or consultant, (x) any granting by the Company or any of its subsidiaries to any
current or former director, officer, employee or consultant of any increase in
severance or termination pay, (y) any entry by the Company or any of its
subsidiaries into, or any amendment of, (1) any employment, deferred
compensation, severance, termination, employee benefit, loan, indemnification,
stock repurchase, stock option, consulting or similar agreement between the
Company or any of its subsidiaries, on the one hand, and any current or former
director, officer, employee or consultant of the Company or any of its
subsidiaries, on the other hand, or (2) any agreement between the Company or any
of its subsidiaries, on the one hand, and any current or former director,
officer, employee or consultant of the Company or any of its subsidiaries, on
the other hand, the benefits of which are contingent, or the terms of which are
materially altered, upon the occurrence of a transaction involving the Company
of the nature contemplated by this Agreement or the Stockholders Agreement (all
such agreements under this clause (y), collectively, "Benefit Agreements"), or
(z) any amendment to, or modification of, any Company Stock Plan, any Stock
Option, any Restricted Share award, any Warrant or the ESPP, (E) any damage,
destruction or loss, whether or not covered by insurance, that individually or
in the aggregate could reasonably be expected to have a material adverse effect
on the Company, (F) any change in financial or tax accounting methods,
-18-
principles or practices by the Company, except insofar as may have been required
by a change in GAAP or applicable law, (G) any tax election that individually or
in the aggregate could reasonably be expected to have a material adverse effect
on the Company or any of its tax attributes or any settlement or compromise of
any material income tax liability, (H) any revaluation by the Company of any of
its material assets or (I) any licensing or other agreement with regard to the
acquisition or disposition of any material Intellectual Property (as defined in
Section 3.01(p)) or rights thereto.
(ii) Since December 31, 2000, each of the Company and its
subsidiaries has continued all pricing, sales, receivables and payables
production practices in accordance with the ordinary course of business
consistent with past practice and has not engaged in (A) any trade loading
practices or any other promotional sales or discount activity with any customers
or distributors with the effect of accelerating to pre-Closing periods sales to
the trade or otherwise that would otherwise be expected (based on past practice)
to occur in post-Closing periods, (B) any practice which would have the effect
of accelerating to pre-Closing periods collections of receivables that would
otherwise be expected (based on past practice) to be made in post-Closing
periods, (C) any practice which would have the effect of postponing to
post-Closing periods payments by the Company or any of its subsidiaries that
would otherwise be expected (based on past practice) to be made in pre-Closing
periods or (D) any other promotional sales, discount activity or inventory
overstocking or understocking, in each case in this clause (D) in a manner
outside the ordinary course of business.
(h) Litigation. There is no suit, claim, action, investigation
or proceeding pending or, to the knowledge of the Company, threatened against or
affecting the Company or any of its subsidiaries (other than, in respect of
suits, claims, actions, investigations or proceedings arising after the date of
this Agreement, those that individually or in the aggregate could not reasonably
be expected to be material to the Company and its subsidiaries, taken as a
whole), nor is there any statute, law, ordinance, rule, regulation, judgment,
order or decree, of any Governmental Entity or arbitrator
-19-
outstanding against, or, to the knowledge of the Company, investigation by any
Governmental Entity involving, the Company or any of its subsidiaries (other
than statutes, laws, ordinances, rules, regulations, judgments, orders or
decrees arising after the date of this Agreement that individually or in the
aggregate could not reasonably be expected to be material to the Company and its
subsidiaries, taken as a whole).
(i) Contracts. (i) None of the Company or any of its
subsidiaries is a party to or bound by, and none of their properties or assets
are bound by or subject to, any written or oral:
(A) Contract not made in the ordinary course of business
entered into prior to the date of this Agreement;
(B) Contract pursuant to which the Company or any of its
subsidiaries has agreed not to compete with any person or to engage in
any activity or business, or pursuant to which any benefit is required
to be given or lost as a result of so competing or engaging;
(C) Contract pursuant to which the Company or any of its
subsidiaries is restricted in any material respect in the development,
marketing or distribution of their respective products or services;
(D) Contract with (i) any stockholder of the Company or any of
its subsidiaries, (ii) any affiliate of the Company or any of its
subsidiaries, (iii) any current or former director, officer, employee
or consultant of the Company or any of its subsidiaries or of any
affiliate of the Company or any of its subsidiaries (other than
employment agreements referred to in Section 3.01(k));
(E) license or franchise granted by the Company or any of its
subsidiaries pursuant to which the Company or any such subsidiary has
agreed to refrain from granting license or franchise rights to any
other person;
(F) Contract under which the Company or any of its
subsidiaries has incurred any indebtedness (other
-20-
than payables in the ordinary course of business) that is currently
owing or given any guarantee in respect of indebtedness;
(G) Contract creating or granting a Lien (including Liens upon
properties acquired under conditional sales, capital leases or other
title retention or security devices);
(H) material Contract (except for this Agreement) that
requires consent, approval or waiver of, or notice to, a Governmental
Entity or other third party in the event of or with respect to the
Merger or the transactions contemplated by the Stockholders Agreement,
including in order to avoid termination of or loss of a material
benefit under any such Contract;
(I) Contract providing for future performance by the Company
or such subsidiary in consideration of amounts previously paid to the
Company or such subsidiary;
(J) as of the date hereof, Contract providing for future
performance by the Company or such subsidiary with less than the
standard or usual Company or subsidiary charges to be due for such
performance;
(K) Contract of a nature for which the Company or such
subsidiary has a standard form agreement but that materially deviates
from such standard form agreement;
(L) Contract containing (whether in the Contract itself or by
operation of law) any provisions (w) dealing with a "change of control"
or similar event with respect to the Company or such subsidiary, (x)
prohibiting or imposing any restrictions on the assignment of all or
any portion thereof by the Company or any of its subsidiaries to any
other person (without regard to any exception permitting assignments to
subsidiaries or affiliates), or (y) having the effect of providing that
the consummation of any of the transactions contemplated by this
Agreement or the Stockholder Agreement or the
-21-
execution, delivery or effectiveness of this Agreement or the
Stockholder Agreement will conflict with, result in a violation or
breach of, or constitute a default under (with or without notice or
lapse of time or both), such Contract or give rise under such Contract
to any right of, or result in, a termination, right of first refusal,
amendment, revocation, cancelation or acceleration, or loss of
material benefit, or to any increased, guaranteed, accelerated or
additional rights or entitlements or any person or (z) having the
effect of providing that the consummation of any of the transactions
contemplated by this Agreement or the Stockholder Agreement or the
execution, delivery or effectiveness of this Agreement or the
Stockholder Agreement will require that a third party be provided with
access to source code or that any source code be released from escrow
and provided to any third party (any such provision of the nature
described in clauses (w), (x), (y) or (z), a "Restrictive Provision");
(M) Contract providing for payments of royalties or other
license fees to third parties;
(N) Contract granting a third party any license to
Intellectual Property that is not limited to the internal use of such
third party;
(O) as of the date hereof, Contract pursuant to which the
Company or any of its subsidiaries has been granted any license to
Intellectual Property;
(P) Contract providing confidential treatment by the Company
or any of its subsidiaries of third party information other than
non-disclosure agreements entered into by the Company in the ordinary
course of business consistent with past practice;
(Q) Contract granting the other party to such Contract or a
third party "most favored nation" status that, following the Merger,
would in any way apply to Parent or any of its subsidiaries (other than
the Company and its subsidiaries and their products or services (other
than any similar products or services
-22-
produced or offered by Parent or its subsidiaries (other than the
Company and its subsidiaries)));
(R) as of the date hereof, Contract that guarantees or
warrants that any of the products or services of the Company are fit
for any particular purpose or that guarantees a result or commits to
performance levels; or
(S) Contract providing for any license or franchise granted by
the Company or any of its subsidiaries pursuant to which the Company or
any of its subsidiaries has agreed to provide any third party with
access to source code or to provide for source code to be put in escrow
or to refrain from granting license or franchise rights to any other
person (any such Contract, an "Escrow Agreement");
(T) Contract containing any "non-solicitation" or similar
provision that restricts the Company or any of its subsidiaries;
(U) Contract providing for "exclusivity" or any similar
requirement or under which the Company or any of its subsidiaries is
restricted, or which after the Closing would restrict Parent or any of
its subsidiaries, with respect to distribution, licensing, marketing,
development or manufacture;
(V) Contract providing for arbitration or any similar dispute
resolution process;
(W) Contract not containing a waiver of incidental,
consequential, punitive and special damages in favor of the Company and
its subsidiaries (and their respective assignees) in all circumstances;
(X) Contract not containing a reasonable limitation on the
payment of direct damages by the Company or any of its subsidiaries in
connection herewith;
(Y) Contract entered into in the last five years in connection
with the settlement or other resolution of any suit, claim, action,
investigation or proceeding; and
-23-
(Z) Contract which (A) has aggregate future sums due from the
Company or any of its subsidiaries in excess of $50,000 and is not
terminable by the Company or any such subsidiary for no cost or (B) is
entered into prior to the date of this Agreement and is otherwise
material to the business of the Company and its subsidiaries, taken as
a whole, as presently conducted or as proposed to be conducted.
Each Contract of the Company and its subsidiaries is in full force and effect
and is a legal, valid and binding agreement of the Company or such subsidiary
and, to the knowledge of the Company or such subsidiary, of each other party
thereto, enforceable against the Company or any of its subsidiaries, as the case
may be, and, to the knowledge of the Company, against the other party or parties
thereto, in each case, in accordance with its terms, except for such failures to
be in full force and effect, to be legal valid and binding or to be enforceable
that individually or in the aggregate could not reasonably be expected to have a
material adverse effect on the Company, and except as enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium and other similar
laws. Each of the Company and its subsidiaries has performed or is performing
all material obligations required to be performed by it under its Contracts and
is not (with or without notice or lapse of time or both) in breach or default in
any material respect thereunder, and, to the knowledge of the Company or such
subsidiary, no other party to any of its Contracts is (with or without notice or
lapse of time or both) in breach or default in any material respect thereunder
except, in each case, for such breaches or defaults that individually or in the
aggregate could not reasonably be expected to have a material adverse effect on
the Company. Neither the Company nor any of its subsidiaries knows of any
circumstances that are reasonably likely to occur that could reasonably be
expected to materially adversely affect its ability to perform its obligations
under any material Contract.
(ii) The Company has delivered to Parent true and complete
copies of all material Contracts of the Company and its subsidiaries, including
copies of any (A) Escrow Agreements and (B) Contracts between the Company or any
of its subsidiaries and any of the ten largest customers of
-24-
the Company and its subsidiaries (determined on the basis of revenues received
by the Company or any of its subsidiaries in the four consecutive fiscal quarter
period ended September 30, 2001) (the "Major Customers"). The Company has
disclosed to Parent the material terms and status of all negotiations in respect
of any proposed Contracts with any Major Customer. None of the Major Customers
has terminated, failed to renew or requested any material amendment to any of
its Contracts, or any of its existing relationships, with the Company or any of
its subsidiaries.
(iii) Each Contract between the Company or any of its
subsidiaries, on the one hand, and any affiliate of the Company (excluding any
subsidiaries of the Company), on the other hand, was entered into in the
ordinary course of business consistent with past practice on an arm's-length
basis.
(j) Compliance with Laws. The Company and its subsidiaries
are, and since December 31, 1998, have been, in compliance with all statutes,
laws, ordinances, rules, regulations, judgments, orders and decrees of any
Governmental Entity applicable to their businesses or operations, except for
instances of possible noncompliance that individually or in the aggregate could
not reasonably be expected to (i) have a material adverse effect on the Company,
(ii) impair in any material respect the ability of the Company to perform its
obligations under this Agreement or (iii) prevent or materially impede,
interfere with, hinder or delay the consummation of any of the transactions
contemplated by this Agreement. None of the Company or any of its subsidiaries
has received, since December 31, 1998, a notice or other written communication
alleging a possible violation of any statute, law, ordinance, rule, regulation,
judgment, order or decree of any Governmental Entity applicable to its
businesses or operations, except for such violations that individually or in the
aggregate could not reasonably be expected to have a material adverse effect on
the Company. The Company and its subsidiaries have in effect all Federal, state
and local, domestic and foreign, governmental consents, approvals, orders,
authorizations, certificates, filings, notices, permits, concessions,
franchises, licenses and rights (collectively "Permits") necessary for them to
own, lease or operate their
-25-
properties and assets and to carry on their businesses as now conducted and
there has occurred no violation of, or default under, any such Permit, except
for the lack of Permits and for violations of, or defaults under, Permits, which
lack of Permits, violations or defaults individually or in the aggregate could
not reasonably be expected to have a material adverse effect on the Company. The
Merger, in and of itself, could not reasonably be expected to cause the
revocation, cancelation, non-renewal or adverse modification of any such
Permit, which revocation, cancelation, non-renewal or adverse modification
could reasonably be expected to have a material adverse effect on the Company.
(k) Absence of Changes in Benefit Plans; Employment
Agreements; Labor Relations. Except as disclosed in the Filed SEC Documents,
since the date of the most recent audited financial statements included in the
Filed SEC Documents, none of the Company or any of its subsidiaries has
terminated, adopted, amended or agreed to amend in any material respect any
collective bargaining agreement or any bonus, pension, profit sharing, deferred
compensation, incentive compensation, stock ownership, stock purchase, stock
appreciation, restricted stock, stock option, phantom stock, performance,
retirement, thrift, savings, stock bonus, paid time off, perquisite, fringe
benefit, vacation, severance, disability, death benefit, hospitalization,
medical or other welfare benefit or other material plan, program, arrangement or
understanding (whether or not legally binding) maintained, contributed to or
required to be maintained or contributed to by the Company, its subsidiaries or
any other person or entity that, together with the Company, is treated as a
single employer under Section 414(b), (c), (m) or (o) of the Code (each, a
"Commonly Controlled Entity"), in each case providing benefits to any current or
former director, officer, employee or independent contractor of the Company or
any of its subsidiaries and whether or not subject to United States law
(collectively, "Benefit Plans"), unless such amendment or agreement to amend is
required under applicable law, or has made any material change in any actuarial
or other assumption used to calculate funding obligations with respect to any
Benefit Plan that is a Pension Plan (as defined in Section 3.01(m)), or any
material change in the manner in which contributions to any
-26-
such Pension Plan are made or the basis on which such contributions are
determined. Except as disclosed in the Filed SEC Documents, neither the Company
nor any of its subsidiaries is party to any Benefit Agreement. There are no
collective bargaining or other labor union agreements to which the Company or
any of its subsidiaries is a party or by which it is bound. Since December 31,
1998, neither the Company nor any of its subsidiaries has encountered any labor
union organizing activity, or had any actual or threatened employee strikes,
work stoppages, slowdowns or lockouts.
(l) Environmental Matters. Except to the extent that the
inaccuracy of any of the following (or the circumstances giving rise to such
inaccuracy) could not reasonably be expected to have a material adverse effect
on the Company, (i) the Company and each of its subsidiaries are in compliance
with all applicable Environmental Laws (as defined below); and (ii) there are no
facts, circumstances or conditions that are reasonably likely to give rise to
any liability of, or form the basis of a claim against, the Company or any of
its Subsidiaries in connection with any Environmental Law. As used in this
Agreement, the term "Environmental Laws" shall mean any applicable Federal,
state or local, domestic or foreign, statutes, laws, regulations, ordinances,
rules, codes, enforceable requirements, agreements, orders, decrees, judgments
or injunctions issued, promulgated or entered into by any Governmental Entity
relating to protection of the environment, natural resources or human health and
safety.
(m) Employee Benefits Matters. (i) Section 3.01(m)(i) of the
Company Disclosure Schedule contains a list of all Benefit Plans and all
material Benefit Agreements, including without limitation each "employee welfare
benefit plan" (as defined in Section 3(1) of the Employee Retirement Income
Security Act of 1974, as amended "ERISA")) and "employee pension benefit plan"
(as defined in Section 3(2) of ERISA) (a "Pension Plan"). The Company has
provided to Parent true, complete and correct copies of (1) each Benefit Plan
and each material Benefit Agreement (or, in the case of any unwritten Benefit
Plans or Benefit Agreements, descriptions thereof), (2) the two most recent
annual reports required to be filed with respect to each
-27-
Benefit Plan (including reports filed on Form 5500), (3) the most recent summary
plan description prepared for each Benefit Plan, (4) each trust agreement and
group annuity contract relating to any Benefit Plan and (5) the most recent
determination or qualification letter issued by any Government Entity for each
Benefit Plan intended to qualify for favorable tax treatment. Each Benefit Plan
has been administered in accordance with its terms, except where the failure so
to be administered individually or in the aggregate could not reasonably be
expected to have a material adverse effect on the Company. The Company and its
subsidiaries and all the Benefit Plans are in compliance with all applicable
provisions of ERISA, the Code, and all other applicable laws, whether Federal,
state or local, domestic or foreign, except for instances of possible
noncompliance that individually or in the aggregate could not reasonably be
expected to have a material adverse effect on the Company. All Pension Plans
intended to be tax-qualified have been the subject of determination letters from
the IRS to the effect that such Pension Plans are qualified and exempt from
United States Federal income taxes under Sections 401(a) and 501(a),
respectively, of the Code or have remaining a period of time under applicable
Treasury regulations or IRS pronouncements in which to apply for such a letter
and make any amendments necessary to obtain such a favorable determination as to
the qualified status of each such Pension Plan; no such determination letter has
been revoked (or, to the knowledge of the Company, has revocation been
threatened); in the event any Pension Plan has not applied for such a
determination letter, the Company is in the process of preparing an application
for such determination letter and the Company is not aware of any reason why
such determination letter would not be issued by the IRS; no event occurred
relating to any such Pension Plan that would adversely affect the qualification
of such Pension Plan or materially increase the costs relating thereto or
require security under Section 307 of ERISA.
(ii) Neither the Company nor any Commonly Controlled Entity
has maintained, contributed to or been obligated to maintain or
contribute to, or has any actual or contingent liability under, any
Benefit Plan that is subject to Title IV of ERISA.
-28-
(iii) With respect to any Benefit Plan that is an employee welfare
benefit plan (each, a "Welfare Plan"), there are no understandings,
agreements or undertakings, written or oral, that would prevent any such
plan (including any such plan covering retirees or other former employees)
from being amended or terminated without material liability to the Company
or any of its subsidiaries on or at any time after the Effective Time. No
Welfare Plan provides benefits after termination of employment except
where the cost thereof is borne entirely by the former employee (or his
eligible dependents or beneficiaries) or as required by Section 4980B(f)
of the Code. The Company and its subsidiaries comply in all material
respects with the applicable requirements of Section 4980B(f) of the Code
with respect to each Benefit Plan that is a group health plan, as such
term is defined in Section 5000(b)(1) of the Code.
(iv) No current or former director, officer, employee or independent
contractor of the Company or any of its subsidiaries will be entitled to
any additional compensation or benefits or any acceleration of the time of
payment or vesting of any compensation or benefits under any Benefit Plan
or Benefit Agreement as a result of the transactions contemplated by this
Agreement or the Stockholders Agreement or any benefits under any Benefit
Plan or Benefit Agreement the value of which will be calculated on the
basis of any of the transactions contemplated by this Agreement or the
Stockholders Agreement.
(v) The deduction of any amount payable pursuant to the terms of the
Benefit Plans, Benefit Agreements or any other employment contracts or
arrangements will not be subject to disallowance under Section 162(m) of
the Code.
(vi) All reports, returns and similar documents with respect to all
Benefit Plans required to be filed with any Governmental Entity or
distributed to any Benefit Plan participant have been duly and timely
filed or distributed, except for failures to file or distribute that
individually or in the aggregate have
-29-
not had and could not reasonably be expected to have a material adverse
effect on the Company. The Company has received no notice of and, to the
knowledge of the Company there are no, pending investigations by any
Governmental Entity with respect to, or pending termination proceedings or
other claims (except claims for benefits payable in the normal operation
of the Benefit Plans), suits or proceedings against or involving any
Benefit Plan or asserting any rights or claims to benefits under, any
Benefit Plan that could give rise to any material liability, and, to the
knowledge of the Company, there are not any facts that individually or in
the aggregate have had or could reasonably be expected to have a material
adverse effect on the Company.
(vii) All contributions, premiums and benefit payments under or in
connection with the Benefit Plans that are required to have been made by
the Company or any of its subsidiaries as of the date of this Agreement in
accordance with the terms of the Benefit Plans have been timely made or
have been reflected on the most recent consolidated balance sheet filed or
incorporated by reference into the Filed Company SEC Documents. Neither
the Company nor any of its subsidiaries has incurred, or would reasonably
be expected to incur, any unfunded liabilities in relation to any Benefit
Plan. No Pension Plan has an "accumulated funding deficiency" (as such
term is defined in Section 302 of ERISA or Section 412 of the Code),
whether or not waived.
(viii) With respect to each Benefit Plan, (A) there has not occurred
any prohibited transaction in which the Company, any of its subsidiaries
or any of their employees has engaged that could subject the Company, its
subsidiaries or any of their employees, or, to the knowledge of the
Company, a trustee, administrator or other fiduciary of any trust created
under any Benefit Plan, to the tax or penalty on prohibited transactions
imposed by Section 4975 of the Code or the sanctions imposed under Title I
of ERISA and (B) neither the Company nor, to the knowledge of the Company,
any trustee, administrator or other fiduciary of any Benefit Plan nor any
agent of any of the foregoing has
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engaged in any transaction or acted in a manner that could, or failed to
act so as to, subject the Company or, to the knowledge of the Company, any
trustee, administrator or other fiduciary to any liability for breach of
fiduciary duty under ERISA or any other applicable law. No Benefit Plan or
related trust has been terminated, nor has there been any "reportable
event" (as that term is defined in Section 4043 of ERISA) for which the
30-day reporting requirement has not been waived with respect to any
Benefit Plan during the last five years, and no notice of a reportable
event will be required to be filed in connection with the transactions
contemplated hereby.
(ix) The Company and its subsidiaries do not have any material
liability or obligations, including under or on account of a Benefit Plan
or Benefit Agreement, arising out of the hiring of persons to provide
services to the Company or any of its subsidiaries and treating such
persons as consultants or independent contractors and not as employees of
the Company or its subsidiaries.
(x) There are no grievances, unfair labor practices, employment
discrimination charges, wrongful dismissal, pay equity or employment
equity complaints or claims against the Company or any of its subsidiaries
pending or threatened before any Governmental Entity, except those that
would not reasonably be expected to lead to material liability on the part
of the Company or any of its subsidiaries. The Company and its
subsidiaries are in material compliance with all labor, employment and
workplace safety laws.
(xi) On or prior to the date of this Agreement, the Company has
taken all such actions with respect to the Company's Executive Management
Retention Plan (such plan with an effective date of August 23, 2001) (as
set forth in Section 3.01(m)(xi) of the Company Disclosure Schedule, the
"Retention Plan") necessary (including amending the Retention Plan
pursuant to Section 10 thereof or obtaining any required consents) to
provide that, except to the extent required by Section 6(c) of the
Retention Plan, no Participant (as
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defined in the Retention Plan) shall be eligible to receive any payments
under the Retention Plan unless and until such Participant is continuously
employed by the Company or its successor during the 180 day period
following the Effective Time.
(n) Taxes. (i) Each of the Company and its subsidiaries and each
Company Affiliated Group (as defined in clause (x) below) has timely filed all
Federal, state and local, domestic and foreign, income and franchise tax returns
and reports and all other tax returns and reports required to be filed by it and
all such returns and reports are complete and correct, except for such failures
to file or to be complete and correct that individually or in the aggregate
could not reasonably be expected to result in a material liability on the part
of the Company or any of its subsidiaries. Each of the Company and its
subsidiaries and each Company Affiliated Group has timely paid all taxes due
with respect to the taxable periods covered by such returns and reports and all
other taxes, except where the failures so to pay individually or in the
aggregate could not reasonably be expected to result in a material liability on
the part of the Company or any of its subsidiaries, and the most recent
financial statements contained in the Filed SEC Documents reflect an adequate
reserve for all taxes payable by the Company and its subsidiaries for all
taxable periods and portions thereof through the date of such financial
statements.
(ii) No Federal, state or local, domestic or foreign, income or
franchise tax return or report or any other material tax return or report
of the Company or any of its subsidiaries or any Company Affiliated Group
is currently under audit or examination by any taxing authority, and no
written or unwritten notice of such an audit or examination has been
received by the Company or any of its subsidiaries, except for such audits
or examinations that individually or in the aggregate could not reasonably
be expected to result in a material liability on the part of the Company
or any of its subsidiaries. There is no deficiency, refund litigation,
proposed adjustment or matter in controversy with respect to any taxes due
and owing by the Company, any of its subsidiaries or any Company
Affiliated Group, except for those that
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individually or in the aggregate could not reasonably be expected to
result in a material liability on the part of the Company or any of its
subsidiaries. Each deficiency resulting from any audit or examination or
any concluded litigation relating to taxes by any taxing authority has
been timely paid, except where the failures so to pay individually or in
the aggregate could not reasonably be expected to result in a material
liability on the part of the Company or any of its subsidiaries. No issues
relating to taxes were raised by the relevant taxing authority during any
presently pending audit or examination, and no issues relating to taxes
were raised by the relevant taxing authority in any completed audit or
examination that could reasonably be expected to recur in a later taxable
period, in each case except for those that individually or in the
aggregate could not reasonably be expected to result in a material
liability on the part of the Company or any of its subsidiaries. All
assessments for taxes due and owing by the Company, any of its
subsidiaries or any Company Affiliated Group with respect to completed and
settled audits or examinations or concluded litigation have been paid. No
Federal, state or other material local, domestic or foreign, tax return or
report of the Company or any of its subsidiaries or any Company Affiliated
Group has ever been under audit or examination by any taxing authority.
(iii) There is no currently effective agreement or other document
extending, or having the effect of extending, the period of assessment or
collection of any material taxes, and no power of attorney with respect to
any taxes has been executed or filed with any taxing authority.
(iv) No material Liens for taxes exist with respect to any assets or
properties of the Company or any of its subsidiaries, except for statutory
Liens for taxes not yet due.
(v) None of the Company or any of its subsidiaries is a party to or
bound by any tax sharing agreement, tax indemnity obligation or similar
agreement, arrangement or practice with respect to
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taxes (including any advance pricing agreement, closing agreement or other
agreement relating to taxes with any taxing authority).
(vi) None of the Company or any of its subsidiaries will be required
to include in a taxable period ending after the Effective Time taxable
income attributable to income that accrued in a prior taxable period but
was not recognized in any prior taxable period as a result of the
installment method of accounting, the completed contract method of
accounting, the long-term contract method of accounting, the cash method
of accounting or Section 481 of the Code or comparable provisions of state
or local, domestic or foreign, tax law or for any other reason, except
where the inclusions of such income in a taxable period ending after the
Effective Time individually or in the aggregate could not reasonably be
expected to result in a material liability on the part of the Company or
any of its subsidiaries.
(vii) No amount or other entitlement that could be received (whether
in cash or property or the vesting of property) as a result of any of the
transactions contemplated by this Agreement or the Stockholders Agreement
by any director, officer, employee or independent contractor of the
Company or any of its affiliates who is a "disqualified individual" (as
such term is defined in proposed Treasury Regulation Section 1.280G-1)
under any Benefit Plan, Benefit Agreement or other compensation
arrangement currently in effect would be characterized as an "excess
parachute payment" (as such term is defined in Section 280G(b)(1) of the
Code) and no such disqualified individual is entitled to receive any
additional payment from the Company, the Surviving Corporation or any
other person in the event that the excise tax required by Section 4999(a)
of the Code is imposed on such disqualified individual.
(viii) The Company and its subsidiaries have complied with all
applicable statutes, laws, ordinances, rules and regulations relating to
the payment and withholding of taxes (including
-34-
withholding of taxes pursuant to Sections 1441, 1442, 3121 and 3402 of the
Code or similar provisions under any Federal, state or local, domestic or
foreign, laws) and have, within the time and the manner prescribed by law,
withheld from and paid over to the proper governmental authorities all
amounts required to be so withheld and paid over under applicable laws,
except where the failures to so comply, withhold and pay over individually
or in the aggregate could not reasonably be expected to result in a
material liability on the part of the Company or any of its subsidiaries.
(ix) Neither the Company nor any of its subsidiaries has constituted
either a "distributing corporation" or a "controlled corporation" in a
distribution of stock qualifying for tax-free treatment under Section 355
of the Code (i) in the two years prior to the date of this Agreement or
(ii) in a distribution that could otherwise constitute part of a "plan" or
"series of related transactions" (within the meaning of Section 355(e) of
the Code) in conjunction with the Merger.
(x) Each of the Company and its subsidiaries has disclosed on its
Federal income tax returns and reports all positions taken therein that
could give rise to a substantial understatement of Federal income tax
within the meaning of Code Section 6662.
(xi) Each of the Company and its subsidiaries has delivered, or will
deliver prior to Closing, to Parent and Sub complete and correct copies of
all resale certificates required to claim an exemption from sales and use
taxes by the taxing authority of any state in which the Company or any of
its subsidiaries has claimed an exemption from sales and use taxes.
(xii) All related-party transactions involving the Company or any of
its subsidiaries are at arm's-length and in compliance with Code Section
482 and the Treasury Regulations promulgated thereunder. Each of the
Company and its subsidiaries has maintained all necessary documentation in
connection with such related-party transactions in accordance with Code
-35-
Sections 482 and 6662 and the Treasury Regulations promulgated thereunder.
(xiii) As used in this Agreement, "taxes" shall include all (i)
Federal, state and local, domestic and foreign, income, franchise,
property, sales, excise, employment, payroll, social security,
value-added, ad valorem, transfer, withholding and other taxes, including
taxes based on or measured by gross receipts, profits, sales, use or
occupation, tariffs, levies, impositions, assessments or governmental
charges of any nature whatsoever, including any interest penalties or
additions with respect thereto, and any obligations under any agreements
or arrangements with any other person with respect to such amounts, (ii)
liability for the payment of any amounts of the type described in clause
(i) as a result of being a member of an affiliated, consolidated,
combined, unitary or aggregate group and (iii) liability for the payment
of any amounts as a result of an express or implied obligation to
indemnify any other person with respect to the payment of any amounts of
the type described in clause (i) or (ii). As used in this Agreement,
"Company Affiliated Group" shall mean each affiliated, combined,
consolidated or unitary group of which the Company or any of its
subsidiaries is or has been a member.
(o) Title to Properties. (i) The Company and each of its
subsidiaries has good and marketable title to, or valid leasehold interests in,
all of its material properties and assets except for such material properties
and assets as are no longer used or useful in the conduct of its businesses or
as have been disposed of in the ordinary course of business and except for
defects in title, easements, restrictive covenants and similar encumbrances that
individually or in the aggregate could not reasonably be expected to have a
material adverse effect on the Company. All such material assets and properties,
other than assets and properties in which the Company or any of its subsidiaries
has a leasehold interest, are free and clear of all Liens, except for Liens that
individually or in the aggregate could not reasonably be expected to have a
material adverse effect on the Company.
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(ii) Each of the Company and its subsidiaries has complied in all
material respects with the terms of all material leases to which it is a
party and under which it is in occupancy, and all such leases are in full
force and effect, except for such instances of noncompliance or failures
to be in full force and effect that individually or in the aggregate could
not reasonably be expected to have a material adverse effect on the
Company. The Company and its subsidiaries enjoy peaceful and undisturbed
possession under all such material leases, except for failures to do so
that individually or in the aggregate could not reasonably be expected to
have a material adverse effect on the Company.
(iii) Neither the Company nor any of its subsidiaries holds any fee
or other ownership interest in any real property. Section 3.01(o)(iii) of
the Company Disclosure Schedule sets forth a complete list of all real
property and interests in real property leased by the Company.
(p) Intellectual Property. (i) Section 3.01(p)(i) of the Company
Disclosure Schedule lists all patents, patent applications, trademarks,
trademark applications, tradenames, service marks, registered copyrights and
applications therefor and unregistered copyrightable works of authorship, if
any, owned by or licensed to the Company or any of its subsidiaries as of the
date of this Agreement. The Company has made available to Parent true and
correct copies of, and Section 3.01(p)(i) of the Company Disclosure Schedule
lists, all license agreements relating to Intellectual Property (as defined
below in clause (iv)) to which the Company or any of its subsidiaries is a party
as of the date of this Agreement.
(ii) Except to the extent that the inaccuracy of any of the
following (or the circumstances giving rise to such inaccuracy) could not
reasonably be expected to have a material adverse effect on the Company:
(A) the Company and each of its subsidiaries owns, or is
licensed or otherwise has the right to use (in each case, without
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payments to third parties and free and clear of any Liens), all
Intellectual Property used in or necessary to carry on its business
as now being conducted;
(B) all issued patents, patent applications, trademarks,
trademark applications, tradenames, service marks and copyrights of
the Company or any of its subsidiaries have been duly registered
and/or filed, as applicable, with or issued by each appropriate
Governmental Entity in each appropriate jurisdiction, all necessary
affidavits of continuing use have been filed, and all necessary
maintenance fees have been paid to continue all such rights in
effect;
(C) none of the Company or any of its subsidiaries or any of
its or their products or services has infringed upon or otherwise
violated, or is infringing on or otherwise violating, the rights of
any person with regard to any Intellectual Property owned by,
licensed to or otherwise used by the Company or any of its
subsidiaries;
(D) there is no suit, written claim, action, investigation or
proceeding pending or, to the knowledge of the Company, threatened
with respect to, and the Company has not been notified of, any
possible infringement or other violation by the Company or any of
its subsidiaries of the rights of any person with regard to any
Intellectual Property;
(E) to the knowledge of the Company, no person is infringing
on or otherwise violating any right of the Company or any of its
subsidiaries with respect to any Intellectual Property owned by,
licensed to and/or otherwise used by the Company or any of its
subsidiaries;
(F) each of the former or current members of management or key
personnel of the Company or any of its subsidiaries, including all
former and current employees, agents, consultants and
-38-
contractors who have contributed to or participated in the
conception and development of Intellectual Property owned or used by
the Company or any of its subsidiaries, have assigned or otherwise
transferred to the Company all ownership and other rights of any
nature whatsoever (to the extent permitted by law) of such person in
any Intellectual Property owned or used by the Company or any of its
subsidiaries and none of the former or current members of management
or key personnel of the Company or any of its subsidiaries,
including all former and current employees, agents, consultants and
contractors who have contributed to or participated in the
conception and development of Intellectual Property owned or used by
the Company or any of its subsidiaries, have a valid claim against
the Company or any of its subsidiaries in connection with the
involvement of such persons in the conception and development of
Intellectual Property owned or used by the Company or any of its
subsidiaries, and no such claim has been asserted or threatened;
(G) the execution and delivery of this Agreement do not, and
the consummation of the transactions contemplated by this Agreement
and compliance with the provisions of this Agreement will not,
conflict with, or result in any violation of, or default (with or
without notice or lapse of time, or both) under, or give rise to any
right, license or encumbrance relating to, Intellectual Property
owned by the Company or any of its subsidiaries or with respect to
which the Company or any of its subsidiaries now has or has had any
agreement with any third party, or any right of termination,
cancelation or acceleration of any material Intellectual Property
right or obligation set forth in any agreement to which the Company
or any of its subsidiaries is a party, or the loss or encumbrance of
any Intellectual Property or benefit related thereto, or result in
the creation of any Lien in or upon any Intellectual Property or
right;
-39-
(H) to the extent third party software is marketed to
customers of the Company or any of its subsidiaries together with
the Intellectual Property of the Company or any of its subsidiaries,
(x) the third party rights have been identified in Section 3.01(p)
of the Company Disclosure Schedule, (y) all necessary licenses have
been obtained and (z) no royalties or payments are due (or such
royalties and payments are identified in Section 3.01(p) of the
Company Disclosure Schedule);
(I) none of the trade secrets of the Company or any of its
subsidiaries has been published or disclosed by the Company or any
of its subsidiaries except pursuant to a non-disclosure agreement
that is in the standard form used by the Company that has been
provided to Parent prior to the date of this Agreement, or, to the
knowledge of the Company or any of its subsidiaries, by any other
person to any person except pursuant to licenses or Contracts
requiring such other persons to keep such trade secrets
confidential;
(J) no person has any marketing rights to the Intellectual
Property of the Company or any of its subsidiaries;
(K) neither the Company nor any of its subsidiaries has
assigned, sold or otherwise transferred ownership of any issued
patent, patent application, trademark, trademark application,
service xxxx, copyright or application therefor;
(L) except in the ordinary course of business consistent with
past practice, no licenses or rights have been granted to a third
party to distribute the source code of, or to use the source code to
create Derivative Works (as defined below in clause (iii)) of, any
product currently marketed by, commercially available from or under
development by the Company or any
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of its subsidiaries for which the Company legally owns the source
code; and
(M) the Company and each of its subsidiaries has taken all
reasonable and necessary steps to protect their Intellectual
Property and their rights thereunder, and to the knowledge of the
Company no material rights to Intellectual Property have been lost
or are in jeopardy of being lost through failure to act by the
Company or any of its subsidiaries.
(iii) As used in this Agreement, "Derivative Work" shall have the
meaning set forth in 17 U.S.C. Section 101.
(iv) As used in this Agreement, "Intellectual Property" shall mean
trademarks (registered or unregistered), service marks, brand names,
certification marks, trade dress, assumed names, trade names and other
indications of origin, the goodwill associated with the foregoing and
registrations in any jurisdiction of, and applications in any jurisdiction
to register, the foregoing, including any extension, modification or
renewal of any such registration or application; inventions, discoveries
and ideas, whether patented, patentable or not in any jurisdiction;
computer programs and software (including source code, object code and
data), know-how and any other technology; trade secrets and confidential
information and rights in any jurisdiction to limit the use or disclosure
thereof by a third party; writings and other works, whether copyrighted,
copyrightable or not in any jurisdiction; registrations or applications
for registration of copyrights in any jurisdiction, and any renewals or
extensions thereof; any similar intellectual property or proprietary
rights similar to any of the foregoing; licenses, immunities, covenants
not to xxx and the like relating to any of the foregoing; and any claims
or causes of action arising out of or related to any infringement, misuse
or misappropriation of any of the foregoing.
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(q) Insurance. Section 3.01(q) of the Company Disclosure Schedule
sets forth a complete and accurate list of all policies of fire, liability,
product liability, workmen's compensation, health and other forms of insurance
presently in effect with respect to the Company's and its subsidiaries'
business, true and complete copies of which have been delivered to, or made
available for review by, Parent. All such policies are valid, outstanding and
enforceable policies and provide insurance coverage for the properties, assets
and operations of the Company and each of its subsidiaries, of the kinds, in the
amounts and against the risks required to comply with applicable law. Neither
the Company nor any of its subsidiaries has been refused any insurance with
respect to any aspect of the operations of its business, nor has its coverage
been limited by any insurance carrier to which it has applied for insurance or
with which it has carried insurance. No notice of cancelation or termination has
been received with respect to any such policy. The activities and operations of
the Company and each of its subsidiaries have been conducted in a manner so as
to conform in all material respects to all applicable provisions of such
insurance policies.
(r) Disclosure. Neither the Company nor any of its subsidiaries has
knowingly failed to disclose to Parent any fact (other than those generally
affecting the lines of business in which the Company or any of its subsidiaries
operates) that could reasonably be expected to have a material adverse effect on
the Company or on the ability of the Company to perform its obligations under
this Agreement. No representation or warranty of the Company contained in this
Agreement contains or will contain any untrue statement of a material fact, or
omits or will omit to state any material fact necessary, in light of the
circumstances under which it was or will be made, in order to make the
statements herein or therein not misleading in any material respect.
(s) State Takeover Statutes. The approval of the Merger and the
Stockholders Agreement and the transactions contemplated thereby by the Board of
Directors of the Company referred to in Section 3.01(d) constitutes approval of
the Merger and the Stockholders Agreement and the transactions contemplated
thereby for purposes of
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Section 203 of the DGCL and represents the only action necessary to ensure that
Section 203 of the DGCL does not and will not apply to the execution and
delivery of this Agreement or the Stockholders Agreement or the consummation of
the Merger or the other transactions contemplated hereby or thereby. No other
state takeover or similar statute or regulation is applicable to this Agreement,
the Merger or the other transactions contemplated by this Agreement.
(t) Voting Requirements. The affirmative vote at the Stockholders
Meeting or any adjournment or postponement thereof of the holders of a majority
of the outstanding shares of Company Common Stock in favor of adopting this
Agreement (the "Stockholder Approval") is the only vote of the holders of any
class or series of the Company's capital stock necessary to approve or adopt
this Agreement, the Stockholders Agreement or the consummation of the
transactions contemplated hereby and thereby.
(u) Brokers; Schedule of Fees and Expenses. No broker, investment
banker, financial advisor or other person, other than Xxxxxx Xxxxxx Partners
LLC, the fees and expenses of which will be paid by the Company, is entitled to
any broker's, finder's, financial advisor's or other similar fee or commission,
or the reimbursement of expenses, in connection with the transactions
contemplated by this Agreement or the Stockholders Agreement based upon
arrangements made by or on behalf of the Company. The Company has delivered to
Parent true and complete copies of all agreements under which any such fees or
expenses are payable and all indemnification and other agreements related to the
engagement of the persons to whom such fees are payable. The fees and expenses
of any accountant, broker, financial advisor, consultant, legal counsel or other
person retained by the Company in connection with this Agreement or the
transactions contemplated hereby incurred or to be incurred by the Company in
connection with this Agreement and the transactions contemplated by this
Agreement will not exceed the fees and expenses set forth and identified by
category of advisor in Section 3.01(u) of the Company Disclosure Schedule.
(v) Opinion of Financial Advisor. The Company has received the
written opinion of Xxxxxx Xxxxxx Partners LLC, in customary form and based on
customary assumptions,
-43-
to the effect that the Merger Consideration to be received by the stockholders
of the Company pursuant to the Merger is fair to such stockholders from a
financial point of view as of the date hereof, a copy of which opinion has been
delivered to Parent.
SECTION 3.02 Representations and Warranties of Parent and Sub.
Parent and Sub represent and warrant to the Company as follows:
(a) Organization. Each of Parent and Sub is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization and has all requisite corporate power and
authority to carry on its business as now being conducted.
(b) Authority; Noncontravention. Parent and Sub have the requisite
corporate power and authority to execute and deliver this Agreement, to
consummate the transactions contemplated by this Agreement and to comply
with the provisions of this Agreement. The execution and delivery of this
Agreement by Parent and Sub, the consummation by Parent and Sub of the
transactions contemplated by this Agreement and the compliance by Parent
and Sub with the provisions of this Agreement have been duly authorized by
all necessary corporate action on the part of Parent and Sub and no other
corporate proceedings on the part of Parent or Sub are necessary to
authorize this Agreement or to consummate the transactions contemplated by
this Agreement. This Agreement has been duly executed and delivered by
Parent and Sub, as applicable, and, assuming the due authorization,
execution and delivery by the Company, constitutes a valid and binding
obligation of Parent and Sub, as applicable, enforceable against Parent
and Sub, as applicable, in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws. The execution and delivery of this
Agreement and the consummation of the transactions contemplated by this
Agreement and compliance by Parent and Sub with the provisions of this
Agreement do not and will not conflict with, or result in any
-44-
violation or breach of, or default (with or without notice or lapse of
time, or both) under, or give rise to a right of, or result in,
termination, cancelation or acceleration of any obligation or to a loss
of a material benefit under, or result in the creation of any Lien in or
upon any of the properties or assets of Parent or Sub under, or give rise
to any increased, additional, accelerated or guaranteed rights or
entitlements under, any provision of (i) the Certificate of Incorporation
or By-laws of Parent or Sub, (ii) any Contract to which Parent or Sub is
party or any of their respective properties or assets is subject or (iii)
subject to the governmental filings and other matters referred to in the
following sentence, any (A) statute, law, ordinance, rule or regulation or
(B) judgment, order or decree, in each case, applicable to Parent or Sub
or any of their respective properties or assets, other than, in the case
of clauses (ii) and (iii), any such conflicts, violations, breaches,
defaults, rights, losses, Liens or entitlements that individually or in
the aggregate could not reasonably be expected to impair in any material
respect the ability of each of Parent and Sub to perform its obligations
under this Agreement or prevent or materially impede, interfere with,
hinder or delay the consummation of any of the transactions contemplated
by this Agreement. No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity is
required by or with respect to Parent or Sub in connection with the
execution and delivery of this Agreement by Parent and Sub, the
consummation by Parent and Sub of the transactions contemplated by this
Agreement or the compliance by Parent or Sub with the provisions of this
Agreement, except for (1) the filing of a premerger notification and
report form under the HSR Act or any other applicable competition, merger
control, antitrust or similar law, (2) the filing of the Certificate of
Merger with the Secretary of State of the State of Delaware and
appropriate documents with the relevant authorities of other states in
which the Company or any of its subsidiaries is qualified to do business
and (3) such other consents, approvals, orders, authorizations,
registrations, declarations and filings the failure of
-45-
which to be obtained or made individually or in the aggregate could not
reasonably be expected to impair in any material respect the ability of
each of Parent and Sub to perform its obligations under this Agreement or
prevent or materially impede, interfere with, hinder or delay the
consummation of any of the transactions contemplated by this Agreement.
(c) Information Supplied. None of the information supplied or to be
supplied by Parent or Sub specifically for inclusion or incorporation by
reference in the Proxy Statement will (except to the extent revised or
superseded by amendments or supplements contemplated hereby), at the date
the Proxy Statement is first mailed to the Company's stockholders or at
the time of the Stockholders Meeting, contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading.
(d) Interim Operations of Sub. Sub was formed solely for the purpose
of engaging in the transactions contemplated by this Agreement, and Sub
has engaged in no business other than in connection with the transactions
contemplated by this Agreement.
ARTICLE IV
Covenants Relating to Conduct of Business
SECTION 4.01 Conduct of Business. (a) Conduct of Business by the
Company. During the period from the date of this Agreement to the Effective
Time, except with the prior consent of Parent or as expressly and specifically
contemplated by this Agreement, the Company shall, and shall cause its
subsidiaries to, carry on their respective businesses in the ordinary course
consistent with past practice and use their reasonable best efforts to comply
with all applicable laws, rules and regulations and, to the extent consistent
therewith, use their reasonable best efforts to keep available the services of
their present officers and employees and to preserve their assets
-46-
and technology and preserve their relationships with customers, suppliers,
licensors, licensees, distributors and others having business dealings with
them. Without limiting the generality of the foregoing, during the period from
the date of this Agreement to the Effective Time, except as consented to in
writing by Parent, as expressly and specifically contemplated by this Agreement
or as expressly and specifically set forth in Section 4.01 of the Company
Disclosure Schedule, the Company shall not, and shall not permit any of its
subsidiaries to:
(i) (x) declare, set aside or pay any dividends on, or make any
other distributions (whether in cash, stock or property) in respect of,
any of its capital stock, except for dividends by a direct or indirect
wholly owned subsidiary of the Company to its parent, (y) split, combine
or reclassify any of its capital stock or issue or authorize the issuance
of any other securities in respect of, in lieu of or in substitution for
shares of its capital stock or (z) purchase, redeem or otherwise acquire
any shares of capital stock or any other securities of the Company or its
subsidiaries or any options, warrants, calls or rights to acquire any such
shares or other securities (including any Stock Option or Warrant), other
than repurchases of Company Common Stock in connection with the
termination of the services of any employee of the Company or any of its
subsidiaries to the extent such repurchase is required by the Company
Stock Plans;
(ii) issue, deliver, sell, pledge or otherwise encumber any shares
of its capital stock, any other voting securities or any securities
convertible into, or exchangeable for, or any options, warrants, calls or
rights to acquire, any such shares, voting securities or convertible
securities (other than (A) the issuance of shares of Company Common Stock
upon the exercise of Stock Options, Warrants or rights under the ESPP
outstanding on the date of this Agreement and in accordance with their
present terms and (B) the granting of rights that may arise under the
terms of the ESPP, as modified by Section 5.07(b));
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(iii) amend or propose to amend its certificate of incorporation or
by-laws (or similar organizational documents);
(iv) acquire or agree to acquire (x) by merging or consolidating
with, or by purchasing a substantial portion of the assets of, or by
purchasing all of or a substantial equity interest in, or by any other
manner, any business or any corporation, partnership, limited liability
company, joint venture, association or other entity or division thereof or
(y) any assets other than acquisitions in the ordinary course of business
consistent with past practice of inventory, components, raw materials or
other immaterial assets;
(v) sell, lease, license, sell and leaseback, mortgage or otherwise
encumber or subject to any Lien or otherwise dispose of any of its
properties or assets (including any shares of capital stock, voting
securities or other rights, instruments or securities), except sales of
inventory or used equipment and licenses of Intellectual Property to
end-user customers for their internal use or solely as necessary for such
customers to use the Company's products and services, in each case in the
ordinary course of business consistent with past practice;
(vi) (x) repurchase, prepay or incur any indebtedness or guarantee
any indebtedness of another person or issue or sell any debt securities or
options, warrants, calls or other rights to acquire any debt securities of
the Company or any of its subsidiaries, guarantee any debt securities of
another person, enter into any "keep well" or other agreement to maintain
any financial statement condition of another person or enter into any
arrangement having the economic effect of any of the foregoing or (y) make
any loans, advances or capital contributions to, or investments in, any
other person, other than the Company or any direct or indirect wholly
owned subsidiary of the Company;
(vii) make any new capital expenditure or expenditures, or incur any
obligations or liabilities in connection therewith, which, individually is
in
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excess of $5,000 or, in the aggregate, are in excess of $50,000;
(viii)(x) pay, discharge, settle or satisfy any claims (including
claims of stockholders), liabilities or obligations (whether absolute,
accrued, asserted or unasserted, contingent or otherwise), other than the
payment, discharge or satisfaction in the ordinary course of business
consistent with past practice or as required by their terms as in effect
on the date of this Agreement, of claims, liabilities or obligations
reflected or reserved against in the most recent audited financial
statements (or the notes thereto) of the Company included in the Filed SEC
Documents (for amounts not in excess of such reserves) or incurred since
the date of such financial statements in the ordinary course of business
consistent with past practice, (y) waive, release, grant or transfer any
right of material value or (z) waive any material benefits of, or agree to
modify in any adverse respect, or fail to enforce, any confidentiality,
standstill or similar agreement to which the Company or any of its
subsidiaries is a party;
(ix) modify, amend or terminate any Contract (including any Contract
with any Major Customer) to which the Company or such subsidiary is a
party, including any arrangements involving material Intellectual
Property, or waive, release or assign any material rights or claims
thereunder, in each case in any manner which is in any way outside the
ordinary course of business or inconsistent with past practice or which in
any way could have an effect that is material and adverse to the Company
and its subsidiaries, taken as a whole;
(x) enter into any Contract (including any Contract with any Major
Customer), including any arrangements involving material Intellectual
Property, which is in any way outside the ordinary course of business or
inconsistent with past practice or which could in any way have an effect
that is material and adverse to the Company and its subsidiaries, taken as
a whole;
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(xi) enter into any Contract, or extend the term of any Contract to
which the Company or any of its subsidiaries is a party as of the date
hereof, that (A) provides for any use restrictions on the Company or any
of its subsidiaries with respect to confidential information, (B) includes
any arbitration or similar dispute resolution provision, (C) does not
contain a waiver of incidental, consequential, punitive, indirect and
special damages in favor of the Company and its subsidiaries (and their
respective assignees) in all circumstances, (D) does not include a
reasonable limitation on the payment of direct damages by the Company or
any of its subsidiaries in connection therewith, (E) contains any
non-competition, non-solicitation or similar provision that restricts the
Company or any of its subsidiaries, (F) provides for "exclusivity" or any
similar requirement or under which the Company or any of its subsidiaries
is restricted, or under which Parent or any of its subsidiaries would
after the Closing be restricted, with respect to distribution, licensing,
marketing, development or manufacturing, or (G) provides for the
assignment, sale or other transfer of any material rights in any
Intellectual Property owned or used by the Company or any of its
subsidiaries to any third party, in each of cases (A) to (G) in a manner
that is not reasonably satisfactory to Parent;
(xii) except as required to comply with applicable law or any
Contract, Benefit Plan or Benefit Agreement existing on the date of this
Agreement, (A) increase in any manner the compensation or fringe benefits
of, or pay any bonus to, any current or former director, officer, employee
or consultant of the Company or any of its subsidiaries, (B) pay to any
current or former director, officer, employee or consultant of the Company
or any of its subsidiaries any benefit not provided for under any
Contract, Benefit Plan or Benefit Agreement other than the payment of cash
compensation in the ordinary course of business consistent with past
practice, (C) grant any awards under any Benefit Plan (including the grant
of stock options, stock appreciation rights, stock based or stock related
awards, performance units or restricted stock or the removal of existing
restrictions in any
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Contract, Benefit Plan or Benefit Agreement or awards made thereunder),
(D) take any action to fund or in any other way secure the payment of
compensation or benefits under any Contract, Benefit Plan or Benefit
Agreement or (E) take any action to accelerate the vesting or payment of
any compensation or benefit under any Contract, Benefit Plan or Benefit
Agreement;
(xiii) form any subsidiary of the Company;
(xiv) enter into any Contract if consummation of the transactions
contemplated hereby or compliance by the Company with the provisions of
this Agreement will violate or conflict with, or result in any violation
or breach of, or default (with or without notice or lapse of time, or
both) under, or give rise to a right of, or result in, termination,
cancelation or acceleration of any obligation or to loss of a material
benefit under, or result in the creation of any Lien in or upon any of the
properties or assets of the Company or Parent or any of their respective
subsidiaries under, or give rise to any increased, additional, accelerated
or guaranteed rights or entitlements under, any provision of such
Contract;
(xv) enter into any Contract containing any restriction on the
ability of the Company or any of its subsidiaries to assign its rights,
interests or obligations thereunder, unless such restriction expressly
excludes any assignment to Parent or any of its subsidiaries in connection
with or following the consummation of the Merger and the other
transactions contemplated by this Agreement;
(xvi) take any action (or omit to take any action) if such action
(or omission) would or could reasonably be expected to result in (A) any
representation and warranty of the Company set forth in this Agreement
that is qualified as to materiality becoming untrue, (B) any such
representation and warranty that is not so qualified becoming untrue in
any material respect or (C) any condition to the Merger set forth in
Article VI not being satisfied;
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(xvii) adopt or enter into any collective bargaining agreement or
other labor union contract applicable to the employees of the Company or
any subsidiary thereof or terminate, either expressly or constructively,
the employment of any employee of the Company or any subsidiary thereof
that has an employment, severance or similar agreement or arrangement with
the Company or any of its subsidiaries;
(xviii) maintain insurance at less than current levels or otherwise
in a manner inconsistent with past practice;
(xix) commence any suit, claim, action or proceeding (other than a
suit, claim, action or proceeding in connection with the collection of
accounts receivable, to enforce the terms of this Agreement or as a result
of a suit, action or proceeding commenced against the Company or any of
its subsidiaries);
(xx) change its fiscal year, revalue any of its material assets or,
except as required by GAAP, make any changes in accounting methods,
principles or practices;
(xxi) engage in (A) any trade loading practices or any other
promotional sales or discount activity with any customers or distributors
with the effect of accelerating to pre-Closing periods sales to the trade
or otherwise that would otherwise be expected (based on past practice) to
occur in post-Closing periods, (B) any practice which would have the
effect of accelerating to pre-Closing periods collections of receivables
that would otherwise be expected (based on past practice) to be made in
post-Closing periods, (C) any practice which would have the effect of
postponing to post-Closing periods payments by the Company or any of its
subsidiaries that would otherwise be expected (based on past practice) to
be made in pre-Closing periods or (D) any other promotional sales,
discount activity or inventory overstocking or understocking, in each case
in this
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clause (D) in a manner outside the ordinary course of business; or
(xxii) authorize any of, or commit, resolve or agree to take any of,
the foregoing actions.
(b) Certain Tax Matters. During the period from the date of this
Agreement to the Effective Time, (i) the Company and each of its subsidiaries
shall timely file all Federal, state and local, domestic and foreign, income and
franchise tax returns and reports and all other material tax returns and reports
("Post-Signing Returns") required to be filed by each such entity (after taking
into account any extensions) and all Post-Signing Returns shall be complete and
correct; (ii) the Company and each of its subsidiaries will timely pay all taxes
due and payable in respect of such Post-Signing Returns that are so filed; (iii)
the Company will accrue a reserve in its books and records and financial
statements in accordance with past practice for all taxes payable by the Company
or any of its subsidiaries for which no Post-Signing Return is due prior to the
Effective Time; (iv) the Company and each of its subsidiaries will promptly
notify Parent of any suit, claim, action, investigation, proceeding or audit
(collectively, "Actions") pending against or with respect to the Company or any
of its subsidiaries in respect of any tax and will not settle or compromise any
such Action without Parent's consent; and (v) none of the Company or any of its
subsidiaries will make or change any material tax election without Parent's
consent, which consent shall not be unreasonably withheld.
(c) Advice of Changes; Filings. The Company and each of its
subsidiaries shall (i) confer on a regular and frequent basis with Parent to
report on operational matters and other matters requested by Parent and (ii)
promptly advise Parent orally and in writing of any change or event that could
reasonably be expected to have a material adverse effect on the Company. Upon
obtaining knowledge thereof, the Company shall give prompt notice to Parent of
any representation or warranty made by it contained in this Agreement becoming
untrue or inaccurate such that the condition set forth in Section 6.02(a) would
not be satisfied; provided, however, that no such notification shall affect the
representations, warranties, covenants or
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agreements of the parties or the conditions to the obligations of the parties
under this Agreement. The Company and Parent shall each promptly provide the
other copies of all filings made by such party with any Governmental Entity in
connection with this Agreement and the transactions contemplated hereby, other
than the portions of such filings that include confidential information not
directly related to the transactions contemplated by this Agreement.
(d) Litigation. The Company shall provide to Parent immediate
written notice and copies of all pleadings and correspondence in connection with
any suit, claim, action, investigation or proceeding before or by a Governmental
Entity against the Company, any of its subsidiaries and/or any of their
respective directors relating to the transactions contemplated by this
Agreement.
(e) Other Actions. Neither the Company nor its Board of Directors
shall take any action that would, or that could reasonably be expected to,
prevent or materially impede, interfere with, hinder or delay the consummation
of any of the transactions contemplated by this Agreement, the Stockholders
Agreement (including pursuant to the option to purchase Subject Shares granted
under Section 3(h) thereof) or have the effective result, directly or
indirectly, of depriving Parent of any material right or benefit to which it is
entitled under the Stockholders Agreement. The covenants and agreements of the
Company relating to the Stockholders Agreement contained in this Section 4.01(e)
shall survive termination of this Agreement.
SECTION 4.02 No Solicitation. (a) The Company shall not, nor shall
it permit any of its subsidiaries to, or authorize or permit any director,
officer or employee of the Company or any of its subsidiaries or any investment
banker, attorney, accountant or other advisor or representative of the Company
or any of its subsidiaries to, directly or indirectly, (i) solicit, initiate or
encourage, or take any other action knowingly to facilitate, any Takeover
Proposal (as defined below) or any inquiries or the making of any proposal that
constitutes or could reasonably be expected to lead to a Takeover Proposal or
(ii) enter into, continue or otherwise participate in
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any discussions or negotiations regarding, or furnish to any person any
information with respect to, or otherwise cooperate in any way with, any
Takeover Proposal; provided, however, that at any time prior to obtaining the
Stockholder Approval, the Board of Directors of the Company may, in response to
a bona fide written Takeover Proposal that such Board of Directors reasonably
determines in good faith constitutes or is reasonably likely to lead to a
Superior Proposal (as defined below), and which Takeover Proposal was
unsolicited and did not otherwise result from a breach of this Section 4.02, and
subject to compliance with Section 4.02(c) and (d), (A) furnish information with
respect to the Company and its subsidiaries to the person making such Takeover
Proposal (and its representatives) pursuant to a customary confidentiality
agreement, provided that all such information is provided on a prior or
substantially concurrent basis to Parent, and (B) participate in discussions or
negotiations with the person making such Takeover Proposal (and its
representatives) regarding such Takeover Proposal. Without limiting the
foregoing, it is understood that any violation in any material respect of the
restrictions set forth in the preceding sentence by any director, officer or
employee of the Company or any of its subsidiaries or any investment banker,
attorney, accountant or other advisor or representative of the Company or any of
its subsidiaries shall be deemed to be a breach of this Section 4.02(a) by the
Company.
The term "Takeover Proposal" means any inquiry, proposal or offer
from any person (other than by Parent or Sub) relating to, or that is reasonably
likely to lead to, any direct or indirect acquisition, in one transaction or a
series of transactions, including any merger, consolidation, tender offer,
exchange offer, stock acquisition, asset acquisition, binding share exchange,
business combination, recapitalization, liquidation, dissolution, joint venture
or similar transaction, of (A) assets or businesses that constitute or represent
15% or more of the total revenue, operating income, EBITDA or assets of the
Company and its subsidiaries, taken as a whole, or (B) 15% or more of the
outstanding shares of Company Common Stock or capital stock of, or other equity
or voting interests in, any of the Company's subsidiaries directly or indirectly
holding, individually or taken
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together, the assets or businesses referred to in clause (A) above, in each case
other than the transactions contemplated by this Agreement or the Stockholders
Agreement.
(b) Neither the Board of Directors of the Company nor any committee
thereof shall (i) withdraw (or modify in a manner adverse to Parent or Sub) or
propose publicly to withdraw (or modify in a manner adverse to Parent or Sub)
the recommendation or declaration of advisability by such Board of Directors or
any such committee of this Agreement or the Merger, or resolve or agree to take
any such action (any such action or any such resolution or agreement to take
such action being referred to herein as an "Adverse Recommendation Change"),
unless the Board of Directors or a committee thereof reasonably determines in
good faith that the failure to take such action would be reasonably likely to
result in a breach of its fiduciary duties under applicable law, (ii) recommend,
adopt or approve, or propose publicly to recommend, adopt or approve, any
Takeover Proposal, or withdraw its approval of the Merger, or resolve or agree
to take any such action, or (iii) cause or permit the Company to enter into any
letter of intent, memorandum of understanding, agreement in principle,
acquisition agreement, merger agreement, option agreement, joint venture
agreement, partnership agreement or other agreement (each, an "Acquisition
Agreement") constituting or related to, or which is intended to or is reasonably
likely to lead to, any Takeover Proposal (other than a confidentiality agreement
referred to in Section 4.02(a)) or resolve or agree to take any such action.
The term "Superior Proposal" means any bona fide binding written
offer not solicited by or on behalf of the Company or any of its subsidiaries
made by a third party that if consummated would result in such third party (or
in the case of a direct merger between such third party and the Company, the
stockholders of such third party) acquiring, directly or indirectly, more than
50% of the voting power of the Company Common Stock or all or substantially all
the assets of the Company and its subsidiaries, taken as a whole, for
consideration consisting of cash and/or securities that the Board of Directors
of the Company determines in its good faith
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judgment (after consultation with a financial advisor of nationally recognized
reputation) to have a higher value than the consideration to be received by the
Company's stockholders in connection with the Merger, taking into account, among
other things, any changes to the terms of this Agreement proposed by Parent in
response to such Superior Proposal or otherwise.
(c) In addition to the obligations of the Company set forth in
paragraphs (a) and (b) of this Section 4.02, the Company promptly shall advise
Parent in writing of any request for information that the Company reasonably
believes could lead to or contemplates a Takeover Proposal or of any Takeover
Proposal, or any inquiry the Company reasonably believes could lead to any
Takeover Proposal, the terms and conditions of such request, Takeover Proposal
or inquiry (including any subsequent material amendment or modification to such
terms and conditions) and the identity of the person making any such request,
Takeover Proposal or inquiry. The Company shall keep Parent informed on a
current basis in all material respects of the status and details (including
material amendments or proposed amendments) of any such request, Takeover
Proposal or inquiry.
(d) Nothing contained in this Section 4.02 or elsewhere in this
Agreement shall prohibit the Company from (i) taking and disclosing to its
stockholders a position contemplated by Rule 14e-2(a) promulgated under the
Exchange Act or (ii) making any disclosure to the Company's stockholders if, in
the good faith judgment of the Board of Directors of the Company, after
consultation with outside counsel, failure so to disclose would be inconsistent
with applicable law; provided, however, that in no event shall the Company or
its Board of Directors or any committee thereof take, agree or resolve to take
any action prohibited by Section 4.02(b)(i) (after giving effect to the final
clause thereof) or 4.02(b)(ii).
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ARTICLE V
Additional Agreements
SECTION 5.01 Preparation of the Proxy Statement; Stockholders Meeting.
(a) As promptly as reasonably practicable following the date of this Agreement,
the Company shall prepare and file with the SEC the Proxy Statement and the
Company shall use its reasonable best efforts to respond as promptly as
practicable to any comments of the SEC with respect thereto and to cause the
Proxy Statement to be mailed to the Company's stockholders as promptly as
reasonably practicable following the date of this Agreement. The Company shall
promptly notify Parent upon the receipt of any comments from the SEC or its
staff or any request from the SEC or its staff for amendments or supplements to
the Proxy Statement and shall provide Parent with copies of all correspondence
between the Company and its representatives, on the one hand, and the SEC and
its staff, on the other hand. Notwithstanding anything to the contrary stated
above, prior to filing or mailing the Proxy Statement (or any amendment or
supplement thereto) or responding to any comments of the SEC with respect
thereto, the Company shall (i) provide Parent an opportunity to review, comment
on and approve (which approval shall not be unreasonably withheld or delayed)
such document or response, (ii) include in such document or response all
comments reasonably proposed by Parent and (iii) not file or mail such document
or respond to the SEC prior to receiving Parent's approval, which approval shall
not be unreasonably withheld or delayed.
(b) The Company shall, as promptly as reasonably practicable following
the date of this Agreement, establish a record date (which will be as promptly
as reasonably practicable following the date of this Agreement) for, duly call,
give notice of, convene and hold a meeting of its stockholders (the
"Stockholders Meeting") for the purpose of obtaining the Stockholder Approval,
regardless of whether the Board of Directors of the Company determines at any
time that this Agreement is no longer advisable and recommends that the
stockholders of the Company reject it or any other Adverse Recommendation Change
has occurred. The Company shall cause the Stockholders Meeting to be held as
promptly as reasonably practicable after the date of
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this Agreement. Subject to Section 4.02(b)(i), the Company shall, through its
Board of Directors, recommend to its stockholders that they adopt this
Agreement, and shall include such recommendation in the Proxy Statement. Without
limiting the generality of the foregoing, the Company agrees that its
obligations pursuant to this Section 5.01(b) shall not be affected by the
commencement, public proposal, public disclosure or communication to the Company
or any other person of any Takeover Proposal.
SECTION 5.02 Access to Information; Confidentiality. The Company shall,
and shall cause each of its subsidiaries to, afford to Parent, and to Parent's
officers, employees, investment bankers, attorneys, accountants and other
advisors and representatives, full access during normal business hours during
the period prior to the Effective Time or the termination of this Agreement to
all their respective properties, books, contracts, commitments, directors,
officers, employees, attorneys, accountants, auditors (and, to the extent within
the Company's control, former auditors), other advisors and representatives and
records and, during such period, the Company shall, and shall cause each of its
subsidiaries to, make available to Parent (a) a copy of each report, schedule,
form, statement and other document filed or received by it during such period
pursuant to the requirements of Federal, state or local, domestic or foreign,
laws and (b) all other information concerning its business, properties and
personnel as Parent may reasonably request (including the work papers of KPMG
LLP). Except as required by law, Parent will hold, and will direct its officers,
employees, investment bankers, attorneys, accountants and other advisors and
representatives to hold, any and all information received from the Company,
directly or indirectly, in confidence in accordance with the Agreement for
Exchange of Confidentiality Information dated March 23, 1998, as supplemented on
July 13, 2001, between Parent and the Company (as it may be amended from time to
time, the "Confidentiality Agreement").
SECTION 5.03 Reasonable Efforts; Notification. (a) Upon the terms and
subject to the conditions set forth in this Agreement, each of the parties
agrees to use its reasonable efforts to take, or cause to be taken, all actions
that are necessary, proper or advisable to
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consummate and make effective the Merger and the other transactions contemplated
by this Agreement and the Stockholders Agreement, including using its 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
filings under the HSR Act and other registrations, declarations and filings with
Governmental Entities, if any), (iii) the taking of all reasonable steps as may
be necessary to avoid any suit, claim, action, investigation or proceeding by
any Governmental Entity and (iv) the obtaining of all necessary consents,
approvals or waivers from third parties. In connection with and without limiting
the foregoing, the Company and its Board of Directors shall, if any state
takeover statute or similar statute or regulation is or becomes applicable to
this Agreement, the Stockholders Agreement, the Merger or any of the other
transactions contemplated hereby or thereby, use their reasonable efforts to
ensure that the Merger and the other transactions contemplated hereby or thereby
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
this Agreement, the Stockholders Agreement, the Merger and the other
transactions contemplated hereby or thereby. Notwithstanding the foregoing or
any other provision of this Agreement to the contrary, in no event shall any
party hereto be obligated to (A) agree to, or proffer to, divest or hold
separate, or enter into any licensing or similar arrangement with respect to,
any assets (whether tangible or intangible) or any portion of any business of
Parent, the Company or any of their respective subsidiaries or (B) litigate any
suit, claim, action, investigation or proceeding, whether judicial or
administrative, (1) challenging or seeking to restrain or prohibit the
consummation of the Merger; (2) seeking to prohibit or limit in any material
respect the ownership or operation by the Company, Parent or any of their
respective affiliates of a material portion of the business or assets of the
Company and its subsidiaries, taken as a whole, or Parent and its subsidiaries,
taken as a whole, or to require any
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such person to dispose of or hold separate any material portion of the business
or assets of the Company and its subsidiaries, taken as a whole, or Parent and
its subsidiaries, taken as a whole, as a result of the Merger; or (3) seeking to
prohibit Parent or any of its affiliates from effectively controlling in any
material respect a substantial portion of the business or operations of the
Company or its subsidiaries. The Company and Parent will provide such
assistance, information and cooperation to each other as is reasonably required
to obtain any such nonactions, waivers, consents, approvals, orders and
authorizations and, in connection therewith, will notify the other person
promptly following the receipt of any comments from any Governmental Entity and
of any request by any Governmental Entity for amendments, supplements or
additional information in respect of any registration, declaration or filing
with such Governmental Entity and will supply the other person with copies of
all correspondence between such person or any of its representatives, on the one
hand, and any Governmental Entity, on the other hand.
(b) The Company shall give prompt notice to Parent of any
representation or warranty made by it contained in this Agreement becoming
untrue or inaccurate such that the condition set forth in Section 6.02(a) 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 the Company of any
representation or warranty made by it or Sub contained in this Agreement
becoming untrue or inaccurate such that the condition set forth in Section
6.03(a) 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.
(d) Without limiting the generality of the foregoing, the Company shall
give Parent the opportunity to participate in the defense of any litigation
against the Company and/or its directors relating to the transactions
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contemplated by this Agreement at the sole expense of Parent.
SECTION 5.04 Stock Options; Restricted Shares; Warrants. (a) Stock
Options; Restricted Shares. (i) As soon as practicable following the date of
this Agreement, the Company agrees that the Board of Directors of the Company
(or, if appropriate, any committee administering the Company Stock Plans) shall
adopt such resolutions or take such other actions (including obtaining any
required consents) as may be required to effect the following:
(A) The terms of each outstanding Stock Option, whether vested or
unvested, shall be adjusted as necessary to provide that, at the Effective
Time, each such Stock Option outstanding immediately prior to the
Effective Time shall be converted into an option to acquire, on the same
terms and conditions as were applicable under such Stock Option, the
number of shares of Parent common stock, par value $0.20 per share
("Parent Common Stock") (rounded down to the nearest whole share),
determined by multiplying the number of shares of Company Common Stock
subject to such Stock Option by a fraction (the "Option Exchange Ratio"),
the numerator of which is the Merger Consideration and the denominator of
which is the average closing price of Parent Common Stock on the New York
Stock Exchange Composite Transactions Tape on the ten trading days
immediately preceding the date on which the Effective Time occurs, at an
exercise price per share of Parent Common Stock equal to (A) the per share
exercise price for the shares of Company Common Stock otherwise
purchasable pursuant to such Stock Option divided by (B) the Option
Exchange Ratio (each, as so adjusted, an "Adjusted Option"); provided that
such exercise price shall be rounded up to the nearest whole cent.
(B) At the Effective Time, each Restricted Share shall be canceled and
shall cease to exist. In lieu of payment of the Merger Consideration for
each Restricted Share, Parent agrees to pay the Applicable Amount (as
defined below) to each holder of Restricted Shares promptly after each
Lapse Date (as defined below); provided that if such holder is not
employed
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by Parent or its affiliates on a Lapse Date, Parent shall not be required
to make, and such holder shall not be entitled to receive, the Applicable
Amount. For purposes hereof, (i) "Applicable Amount" means, in respect of
a holder of Restricted Shares, an amount equal to the product of the
Merger Consideration and the number of Restricted Shares held by such
holder with respect to which the Company's right to repurchase would have
lapsed on the applicable Lapse Date if such Restricted Shares had remained
outstanding and (ii) "Lapse Date" means, in respect of any Restricted
Shares, each date on which the Company's right to repurchase such
Restricted Shares would have lapsed if such Restricted Shares had remained
outstanding. Both the Applicable Amount and the Lapse Date shall be
determined (i) after giving effect to Section 5.07(c) and Section 5.07(d)
and (ii) with respect to each CIC Employee (as defined below), without
giving effect to the lapse of any Company repurchase rights that would not
have occurred (or would have occurred on a later date) if the transactions
contemplated by this Agreement had not occurred. For purposes hereof, a
"CIC Employee" means any employee of the Company or its subsidiaries who,
as of the date hereof, (A) participates in the Retention Plan or (B) is
party to a contract with the Company or its subsidiaries that provides
benefits or eligibility for enhanced severance payments in connection with
a corporate transaction involving the Company.
(C) Such other changes to the Company Stock Plans as Parent and the
Company may agree are appropriate to give effect to the Merger shall be
made.
(D) The adjustments provided in Section 5.04(a)(i)(A) with respect to
any Stock Options that are "incentive stock options" as defined in Section
422 of the Code shall be and are intended to be effected in a manner which
is consistent with Section 424(a) of the Code.
(ii) At the Effective Time, by virtue of the Merger and without the
need of any further corporate
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action, Parent shall assume the Company Stock Plans, with the result that all
obligations of the Company under the Company Stock Plans, including with respect
to Stock Options outstanding at the Effective Time, shall be obligations of
Parent following the Effective Time.
(iii) As soon as reasonably practicable after the Effective Time, but
in any event within 30 business days thereof, Parent shall prepare and file with
the SEC a registration statement on Form S-8 (or another appropriate form)
registering a number of shares of Parent Common Stock equal to the number of
shares subject to the Adjusted Options. Such registration statement shall be
kept effective (and the current status of the prospectus or prospectuses
required thereby shall be maintained) as long as any Adjusted Options may remain
outstanding.
(iv) As soon as reasonably practicable after the Effective Time, Parent
shall deliver to the holders of Stock Options appropriate notices setting forth
such holders' rights pursuant to the respective Company Stock Plans and the
agreements evidencing the grants of such Stock Options and that such Stock
Options and related agreements shall be assumed by Parent and shall continue in
effect on the same terms and conditions (subject to the adjustments required by
this Section 5.04 after giving effect to the Merger).
(v) A holder of an Adjusted Option may exercise such Adjusted Option in
whole or in part in accordance with its terms by delivering a properly executed
notice of exercise to Parent, together with the consideration therefor and the
Federal withholding tax information, if any, required in accordance with the
related Company Stock Plan.
(vi) The Company agrees to take all actions (if any) necessary to
ensure that (except as otherwise expressly and specifically contemplated by this
Section 5.04 and Section 5.07(c) and (d), and except to the extent required
under the respective terms of the Stock Options or Company Stock Plans which
terms are expressly and specifically disclosed in Section 5.04(a)(vi) of the
Company Disclosure Schedule) all restrictions or limitations on transfer and
vesting and all repurchase
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rights with respect to Stock Options awarded under the Company Stock Plans or
any other plan, program or arrangement of the Company, to the extent that such
restrictions or limitations shall not have already lapsed, shall remain in full
force and effect with respect to such options in accordance with their terms
after giving effect to the Merger and the assumption by Parent as set forth
above.
(b) Warrants. As soon as practicable following the date of this
Agreement, the Company shall use its reasonable efforts to take such actions as
may be required to amend each outstanding Surviving Warrant such that,
immediately prior to the Effective Time, each such Surviving Warrant shall be
cancelled.
(c) Rule 16b-3 Exemption. The Company shall take all reasonable steps
as may be required to cause the transactions contemplated by this Section 5.04
and any other dispositions of Company equity securities (including derivative
securities) in connection with this Agreement by each individual who is a
director or officer of the Company to be exempt under Rule 16b-3 promulgated
under the Exchange Act, such steps to be taken in accordance with the
Interpretive Letter dated January 12, 1999, issued by the SEC to Skadden, Arps,
Slate, Xxxxxxx & Xxxx LLP.
SECTION 5.05 Indemnification, Exculpation and Insurance. (a) Parent and
Sub agree that all rights to indemnification and exculpation from liabilities
for acts or omissions occurring at or prior to the Effective Time (and rights
for advancement of expenses) now existing in favor of the current or former
directors or officers of the Company and its subsidiaries as provided in their
respective certificates of incorporation or by-laws (or comparable
organizational documents) and any indemnification or other agreements of the
Company and/or its subsidiaries as in effect on the date of this Agreement shall
be assumed by the Surviving Corporation in the Merger, without further action,
at the Effective Time and shall survive the Merger and shall continue in full
force and effect in accordance with their terms, and Parent shall ensure that
the Surviving Corporation complies with and honors the foregoing obligations.
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(b) In the event that the Surviving Corporation or any of its
successors or assigns (i) consolidates with or merges into any other person and
is not the continuing or surviving corporation or entity of such consolidation
or merger or (ii) transfers or conveys all or substantially all its properties
and assets to any person, or if Parent dissolves the Surviving Corporation,
then, and in each such case, Parent shall cause proper provision to be made so
that the successors and assigns of the Surviving Corporation assume the
obligations set forth in this Section 5.05.
(c) For six years after the Effective Time, Parent shall maintain in
effect either (i) the Company's current directors' and officers' liability
insurance covering each person currently covered by the Company's directors' and
officers' liability insurance policy for acts or omissions occurring prior to
the Effective Time on terms with respect to such coverage and amounts no less
favorable in any material respect to such directors and officers than those of
such policy in effect on the date of this Agreement (provided that Parent may
substitute therefor policies of a reputable insurance company the material terms
of which, including coverage and amount, are no less favorable in any material
respect to such directors and officers than the insurance coverage otherwise
required under this Section 5.05(c)(i)); provided, however, that in no event
shall Parent be required to pay annualized aggregate premiums for insurance
under this Section 5.05(c)(i) in excess of 150% of the amount of the aggregate
premiums paid by the Company for the period from May 31, 2001, to May 31, 2002,
for such purpose (which premiums for such period are hereby represented and
warranted by the Company to be $619,725) (such 150% amount, the "Maximum
Premium"), provided that Parent shall nevertheless be obligated to provide such
coverage as may be obtained for the Maximum Premium, or (ii) policies of a
reputable insurance company for the entirety of such six year period (or if any
insurance maintained under Section 5.05(c)(i) expires or is terminated or
canceled during such six-year period, for the remainder of such six year period)
the material terms of which, including coverage and amount, are no less
favorable in any material respect to such directors and officers than the
insurance coverage otherwise required under Section 5.05(c)(i), provided,
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however, that in no event shall Parent be required to pay aggregate premiums for
insurance under this Section 5.05(c)(ii) in respect of such entire six year
period in excess of the maximum amount that Parent is obligated to pay under
Section 5.05(c)(i) in respect of directors' and officers' liability insurance.
(d) The provisions of this Section 5.05 (i) are intended to be for the
benefit of, and will be enforceable by, each indemnified party, his or her heirs
and his or her representatives and (ii) are in addition to, and not in
substitution for, any other rights to indemnification or contribution that any
such person may have by contract or otherwise.
SECTION 5.06 Fees. (a) Except as expressly set forth in this Section
5.06, all fees and expenses incurred in connection with this Agreement, the
Stockholder Agreement, the Merger and the other transactions contemplated hereby
and thereby shall be paid by the party incurring such fees or expenses, whether
or not the Merger is consummated.
(b) In the event that (i) (A) a Takeover Proposal has been made to the
Company or its stockholders or any person has announced an intention (whether or
not conditional and whether or not withdrawn) to make a Takeover Proposal or a
Takeover Proposal otherwise becomes known to the stockholders of the Company or
any person or group (within the meaning of the Exchange Act and the rules of the
SEC thereunder as in effect on the date hereof) acquires ownership, directly or
indirectly, beneficially or of record of 10% or more of the Company Common
Stock, (B) thereafter this Agreement is terminated by either Parent or the
Company pursuant to Section 7.01(b)(i) or 7.01(b)(iii) and (C) within 12 months
after such termination, the Company or any of its subsidiaries enters into any
Acquisition Agreement with respect to, or consummates, any Takeover Proposal
(solely for purposes of this Section 5.06(b)(i)(C), the term "Takeover Proposal"
shall have the meaning set forth in the definition of Takeover Proposal
contained in Section 4.02(a) except that all references to 10% shall be deemed
references to 40%), or (ii) this Agreement is terminated by Parent pursuant to
Section 7.01(c), then the Company shall pay Parent a fee
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equal to $4,800,000 (the "Termination Fee") by wire transfer of same day funds
to an account designated by Parent (x) in the case of a termination by Parent
pursuant to Section 7.01(c), within two business days after such termination and
(y) in the case of a payment as a result of any event referred to in Section
5.06(b)(i)(C), upon the first to occur of such events. The Company acknowledges
that the agreements contained in this Section 5.06(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 promptly to pay the amounts due pursuant to this Section 5.06(b),
and, in order to obtain such payment, Parent commences a suit that results in a
judgment against the Company for the amounts set forth in this Section 5.06(b),
the Company shall pay to Parent its reasonable costs and expenses (including
attorneys' fees and expenses) in connection with such suit and any appeal
relating thereto, together with interest on the amounts set forth in this
Section 5.06(b) at the prime rate of Citibank, N.A. in effect on the date such
payment was required to be made.
SECTION 5.07 Employee Matters. (a) Following the Effective Time, the
Surviving Corporation shall honor, or cause to be honored, all obligations of
the Company and its subsidiaries under Benefit Agreements and Benefit Plans in
accordance with the terms thereof. Nothing herein shall be construed to prohibit
the Surviving Corporation from amending or terminating such Benefit Agreements
and Benefit Plans in accordance with the terms thereof and with applicable law
or from terminating the employment of any employee of the Company or its
subsidiaries at any time following the Effective Time.
(b) The Company shall amend the ESPP on or prior to the date of this
Agreement, or take such other actions with respect to the ESPP (including making
any required determination under Section 20(a) of the ESPP) as are necessary,
(i) to terminate any ongoing Offering Periods (as defined in the ESPP) effective
as of the October 31, 2001 Purchase Date (as defined in the ESPP) after the
purchase scheduled to occur on such date, (ii) to ensure that no Offering Period
or Purchase Period (as defined in the ESPP) commences or continues between
October 31, 2001
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and the date of termination of this Agreement (if any such termination occurs),
(iii) to ensure that on and after November 1, 2001, there are no rights
outstanding under the ESPP to acquire Common Stock, and (iv) to terminate,
contingent on the occurrence of the Closing, the ESPP effective as of the
Closing Date.
(c) The Company shall take all necessary actions (including obtaining
all required consents but, except as consented to in writing by Parent,
excluding the payment of any money or the provision of any other benefit) so
that (i) each employment, severance, termination or change in control agreement
between the Company or its affiliates and the individuals listed in Section
5.07(c) of the Company Disclosure Schedule (each, an "Executive") is terminated
immediately prior to the Closing Date and (ii) each Executive irrevocably waives
any right or entitlement such Executive has to (A) severance or termination
benefits under existing agreements with, or plans or programs of, the Company or
its affiliates or (B) any other payment or benefit that is related to, or
contingent upon, the consummation of the transactions contemplated by this
Agreement, including, without limitation, the accelerated vesting of Stock
Options, the lapse of rights to repurchase shares of Company Common Stock held
by such Executive or the forgiveness of indebtedness owed by such Executive;
provided that (i) the Executives may participate in the Retention Plan, (ii) any
Executive party to an expatriate employment agreement shall not be required to
waive the provisions of such agreement regarding tax equalization obligations
for calendar years 2000 and 2001 and (iii) any Executive party to an employment
contract subject to German law shall terminate such contract as of the effective
time of the merger of the Company or its subsidiaries with and into Parent or
the Subsidiary. The effectiveness of any waiver required above shall be
contingent on the Closing, so that in the event of termination of this
Agreement, such waiver shall have no force and effect. For the avoidance of
doubt, if any Executive has received any benefit or payment described above
prior to the date the Company obtained the Executive's consent to the foregoing,
the Company shall be required to take all necessary actions (including obtaining
any required consents) to have such Executive relinquish or refund such benefit
or payment immediately prior to the Effective Time.
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(d) The Company shall take all necessary actions (including obtaining
required consents but, except as consented to in writing by Parent, excluding
the payment of any money or the provision of any other benefit) to amend any
contract, agreement or plan that the Company sponsors or to which it is a party
to provide that no "Good Reason Trigger" (as defined below) included in such
contract, agreement or plan may be exercised by any CIC Employee for any reason
during the period beginning on the date hereof and ending on the six-month
anniversary of the Effective Time (the "Suspension Period"), provided that as of
the end of the Suspension Period, any event occurring without the CIC Employee's
consent during such the Suspension Period that would have allowed such CIC
Employee to exercise a Good Reason Trigger shall be treated as if such event had
occurred on the last day of the Suspension Period. For this purpose, a "Good
Reason Trigger" is any provision or agreement that permits an CIC Employee to
unilaterally terminate his or her relationship with the Company or its
subsidiaries (or otherwise claim that the CIC Employee has been constructively
terminated) and receive severance or other benefits or payments.
(e) Notwithstanding anything to the contrary contained herein, in the
event that (i) either (A) an Executive does not consent to each of the actions
described in Section 5.07(c) and Section 5.07(d) or (B) the consent of an
Executive to any of the actions described in Section 5.07(c) and Section 5.07(d)
would be invalid under the law of any jurisdiction applicable to such Executive
and (ii) Parent and Sub elect to proceed with the transactions contemplated by
this Agreement, then (I) the Company shall take promptly after the date hereof
all necessary actions to exclude such Executive from participation in the
Retention Plan and (II) such Executive shall not be entitled to participate in
any program or plan established or maintained by Parent to provide additional
compensation to Executives in connection with the transactions contemplated by
this Agreement.
SECTION 5.08 Public Announcements. Parent and Sub, on the one hand, and
the Company, on the other hand, will, to the extent reasonably practicable,
consult with each other before issuing, and give each other a reasonable
opportunity to review and comment upon, any press release
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or other public statements with respect to this Agreement, the Stockholders
Agreement, the Merger and the other transactions contemplated hereby and
thereby, and shall not issue any such press release or make any such public
statement prior to such consultation, except as may be required by applicable
law, court process or by obligations pursuant to any listing agreement with any
national securities exchange or national securities quotation system. The
parties agree that the initial press release to be issued with respect to the
transactions contemplated by this Agreement and the Stockholders Agreement shall
be in the form heretofore agreed to by the parties.
SECTION 5.09 Closing Date Balance Sheet. The Company shall prepare and
deliver to Parent prior to Closing (i) an unaudited consolidated balance sheet
of the Company as of the last business day of the most recently completed full
month ending immediately preceding the Closing Date (or, if the Closing Date is
before the 15th day of the month, as of the last business day of the month
immediately preceding the most recently completed full month ending immediately
preceding the Closing Date), which balance sheet shall be prepared in accordance
with GAAP (except as permitted by Form 10-Q of the SEC) and on a basis
consistent with the unaudited balance sheets of the Company included in the SEC
Documents and shall fairly present in all material respects the consolidated
financial position of the Company and its consolidated subsidiaries as of the
date thereof, and (ii) the Company's best estimate (using actual data through at
least the end of the third business day immediately preceding the Closing Date)
of closing account information for all line items that would appear on a
consolidated balance sheet of the Company other than deferred revenue and line
items relating to stockholders' equity (deficit) as of the business day
immediately preceding the Closing Date. The Company shall provide to Parent any
information and back-up materials (including bank account information)
reasonably requested by Parent with respect thereto.
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ARTICLE VI
Conditions Precedent
SECTION 6.01 Conditions to Each Party's Obligation to Effect the
Merger. The respective obligation of each party to effect the Merger is subject
to the satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) Stockholder Approval. The Stockholder Approval shall have been
obtained.
(b) Antitrust. Any waiting period (and any extension thereof)
applicable to the Merger under the HSR Act or any other applicable
competition, merger control, antitrust or similar law shall have been
terminated or shall have expired.
(c) No Injunctions or Legal Restraints. No temporary restraining order,
preliminary or permanent injunction or other order or decree issued by any
court of competent jurisdiction or other legal restraint or prohibition
(collectively, "Legal Restraints") which has the effect of preventing the
consummation of the Merger shall be in effect.
SECTION 6.02 Conditions to Obligations of Parent and Sub. The
obligations of Parent and Sub to effect the Merger are further subject to the
satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) Representations and Warranties. The representations and warranties
of the Company contained herein that are qualified as to materiality shall
be true and correct, and the representations and warranties of the Company
contained herein that are not so qualified shall be true and correct in
all material respects, in each case as of the date of this Agreement and
as of the Closing Date with the same effect as though made as of the
Closing Date except that the accuracy of representations and warranties
that by their terms speak as of a specified date will be determined as of
such date. Parent shall have
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received a certificate signed on behalf of the Company by the chief
executive officer and chief financial officer of the Company to such
effect.
(b) Performance of Obligations of the Company. The Company shall have
performed in all material respects all obligations required to be
performed by it under this Agreement at or prior to the Closing Date, and
Parent shall have received a certificate signed on behalf of the Company
by the chief executive officer and the chief financial officer of the
Company to such effect.
(c) No Litigation. There shall not be pending any suit, action or
proceeding brought by any Governmental Entity or any other third party (or
any such suit, action or proceeding threatened by any Governmental Entity)
(i) challenging or seeking to restrain or prohibit the consummation of the
Merger; or (ii) seeking to prohibit or limit in any material respect the
ownership or operation by the Company, Parent or any of their respective
affiliates of a material portion of the business or assets of the Company
and its subsidiaries, taken as a whole, or Parent and its subsidiaries,
taken as a whole, or to require any such person to dispose of or hold
separate any material portion of the business or assets of the Company and
its subsidiaries, taken as a whole, or Parent and its subsidiaries, taken
as a whole, as a result of the Merger; or (iii) seeking to impose
limitations on the ability of Parent or any of its affiliates to acquire
or hold, or exercise full rights of ownership of, any shares of Company
Common Stock, including the right to vote the Company Common Stock on all
matters properly presented to the stockholders of the Company; or (iv)
seeking to prohibit Parent or any of its affiliates from effectively
controlling in any material respect a substantial portion of the business
or operations of the Company or its subsidiaries, in each case other than
any suit, action or proceeding referred to on Section 6.02(c) of the
Company Disclosure Schedule.
(d) Legal Restraint. No Legal Restraint that could reasonably be
expected to result, directly or
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indirectly, in any of the effects referred to in clauses (i) through (iv)
of paragraph (c) of this Section 6.02 shall be in effect.
(e) Consents. Parent shall have received evidence, in form and
substance reasonably satisfactory to it, that Parent or the Company shall
have obtained (i) all consents, approvals, authorizations, qualifications
and orders of all Governmental Entities or third parties required in
connection with this Agreement and the transactions contemplated by this
Agreement, except for those set forth in Section 6.02(e)(i) of the Company
Disclosure Schedule, and (ii) waivers of all Restrictive Provisions,
except for those set forth in Section 6.02(e)(ii) of the Company
Disclosure Schedule.
SECTION 6.03 Conditions to Obligation of the Company. The obligation of
the Company to effect the Merger is further subject to the satisfaction or
waiver on or prior to the Closing Date of the following conditions:
(a) Representations and Warranties. The representations and warranties
of Parent and Sub contained herein that are qualified as to materiality
shall be true and correct, and the representations and warranties of
Parent and Sub contained herein that are not so qualified shall be true
and correct in all material respects, in each case as of the date of this
Agreement and as of the Closing Date with the same effect as though made
as of the Closing Date except that the accuracy of representations and
warranties that by their terms speak as of a specified date will be
determined as of such date. The Company shall have received a certificate
signed on behalf of Parent by an authorized signatory of Parent to such
effect.
(b) Performance of Obligations of Parent and Sub. Parent and Sub shall
have performed in all material respects all obligations required to be
performed by them under this Agreement at or prior to the Closing Date,
and the Company shall have received a certificate signed on behalf of
Parent by an authorized signatory of Parent to such effect.
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SECTION 6.04 Frustration of Closing Conditions. None of the Company,
Parent or Sub may rely on the failure of any condition set forth in Section
6.01, 6.02 or 6.03, as the case may be, to be satisfied if such failure was
caused by such party's failure to use reasonable best efforts to consummate the
Merger and the other transactions contemplated by this Agreement and the
Stockholders Agreement, as required by and subject to Section 5.03.
ARTICLE VII
Termination, Amendment and Waiver
SECTION 7.01 Termination. This Agreement may be terminated, and the
Merger contemplated hereby may be abandoned, at any time prior to the Effective
Time, whether before or after the Stockholder Approval has been obtained:
(a) by mutual written consent of Parent, Sub and the Company;
(b) by either Parent or the Company:
(i) if the Merger shall not have been consummated by March 31, 2002 for
any reason; provided, however, that the right to terminate this Agreement
under this Section 7.01(b)(i) shall not be available to any party whose
action or failure to act has been a principal cause of or resulted in the
failure of the Merger to occur on or before such date and such action or
failure to act constitutes a breach of this Agreement;
(ii) if any Legal Restraint having the effect set forth in Section
6.01(c) shall be in effect and shall have become final and nonappealable;
or
(iii) if the Stockholder Approval shall not have been obtained at the
Stockholders Meeting duly convened therefor or at any adjournment or
postponement thereof;
(c) by Parent in the event (i) an Adverse Recommendation Change has
occurred or (ii) the Board of Directors of the Company or any committee
thereof
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shall have failed to confirm its recommendation and declaration of
advisability of this Agreement and the Merger within ten business days
after a written request by Parent that it do so;
(d) by Parent (i) if the Company shall have breached in any material
respect any of its representations, warranties, covenants or other
agreements contained in this Agreement, which breach or failure to perform
(A) would give rise to the failure of a condition set forth in Section
6.02(a) or 6.02(b), and (B) has not been or is incapable of being cured by
the Company within 25 days after its receipt of written notice thereof
from Parent; (ii) if any Legal Restraint having any of the effects
referred to in clauses (i) through (iv) of Section 6.02(c) shall be in
effect and shall have become final and nonappealable; or
(e) by the Company, if Parent shall have breached in any material
respect any of its representations, warranties, covenants or other
agreements contained in this Agreement, which breach or failure to perform
(i) would give rise to the failure of a condition set forth in Section
6.03(a) or 6.03(b), and (ii) has not been or is incapable of being cured
by Parent within 25 days after its receipt of written notice thereof from
the Company.
SECTION 7.02 Effect of Termination. In the event of termination of this
Agreement by either the Company or Parent as provided in Section 7.01, this
Agreement shall forthwith become void and have no effect, without any liability
or obligation on the part of Parent, Sub or the Company, other than the
provisions of Section 3.01(u), Section 4.01(e), the last sentence of Section
5.02, Section 5.06, this Section 7.02 and Article VIII, which shall survive any
such termination, and except to the extent that such termination results from a
material breach by a party of any of its representations, warranties, covenants
or agreements set forth in this Agreement.
SECTION 7.03 Amendment. This Agreement may be amended by the parties
hereto at any time, whether before
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or after the Stockholder Approval has been obtained; provided, however, that,
after the Stockholder Approval has been obtained, there shall be made no
amendment that by law requires further approval by stockholders of the parties
without the further approval of such stockholders. This Agreement may not be
amended except by an instrument in writing signed on behalf of each of the
parties hereto.
SECTION 7.04 Extension; Waiver. At any time prior to the Effective
Time, the parties may (a) extend the time for the performance of any of the
obligations or other acts of the other parties, (b) waive any inaccuracies in
the representations and warranties contained herein or in any document delivered
pursuant hereto or (c) waive compliance with any of the agreements or conditions
contained herein; provided, however, that, after the Stockholder Approval has
been obtained, there shall be made no waiver that by law requires further
approval by stockholders of the parties without the further approval of such
stockholders. Any agreement on the part of a party to any such extension or
waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party. The failure or delay by any party to this Agreement to
assert any of its rights under this Agreement or otherwise shall not constitute
a waiver of such rights nor shall any single or partial exercise by any party to
this Agreement of any of its rights under this Agreement preclude any other or
further exercise of such rights or any other rights under this Agreement.
ARTICLE VIII
General Provisions
SECTION 8.01 Nonsurvival of Representations and Warranties. None of the
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive the Effective Time. This Section 8.01
shall not limit any covenant or agreement of the parties which by its terms
contemplates performance after the Effective Time.
SECTION 8.02 Notices. All notices, requests, claims, demands and other
communications hereunder shall be
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in writing and shall be deemed given if delivered personally or sent by
overnight courier (providing proof of delivery) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
if to Parent or Sub, to:
International Business Machines Corporation
Xxx Xxxxxxx Xxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxx
Telecopy: (000) 000-0000
with a copy to:
International Business Machines Corporation
Xxx Xxxxxxx Xxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxxx, Esq.
Telecopy: (000) 000-0000
and with a copy to:
Cravath, Swaine & Xxxxx
Worldwide Plaza
000 Xxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxxxxx, Esq.
Telecopy: (000) 000-0000
if to the Company, to:
CrossWorlds Software, Inc.
000 Xxxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxx
Telecopy: (000) 000-0000
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with a copy to:
CrossWorlds Software, Inc.
000 Xxxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxx
Telecopy: (000) 000-0000
and with a copy to:
Venture Law Group
0000 Xxxx Xxxx Xxxx
Xxxxx Xxxx, XX 00000
Attention: Xxx X. Xxxxxxxx, Esq.
Telecopy: (000) 000-0000
and with a copy to:
Venture Law Group
Pier 1, Bay 0
Xxx Xxxxxxxxxxx
Xxx Xxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxxx, Esq.
Telecopy: (000) 000-0000
SECTION 8.03 Definitions. As used in this Agreement:
(a) an "affiliate" of any person means another person that directly or
indirectly, through one or more intermediaries, controls, is controlled
by, or is under common control with, such first person;
(b) as it relates to the Company, "knowledge" means, with respect to
any matter in question, that any officer of the Company has actual
knowledge of such matter;
(c) "material adverse effect" on or with respect to the Company means
any state of facts, change, development, effect or occurrence that is, or
could
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reasonably be expected to become, materially adverse to the business,
assets, condition (financial or otherwise) or results of operations of the
Company and its subsidiaries, taken as a whole;
(d) "person" means an individual, corporation, partnership, limited
liability company, joint venture, association, trust, Governmental Entity,
unincorporated organization or other entity; and
(e) a "subsidiary" of any person means another person of which more
than 50% of any class of capital stock, voting securities or other equity
interests are owned or controlled, directly or indirectly, by such first
person.
SECTION 8.04 Interpretation. When a reference is made in this Agreement
to an Article or to a Section, Subsection, Exhibit or Schedule, such reference
shall be to an Article of, a Section or Subsection of, or an Exhibit or Schedule
to, this Agreement unless otherwise indicated. 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. Whenever
the words "include", "includes" or "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation". The words
"hereof", "herein" and "hereunder" and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not to any particular
provision of this Agreement. The words "date hereof" shall refer to the date of
this Agreement. The term "or" is not exclusive. The word "extent" in the phrase
"to the extent" shall mean the degree to which a subject or other thing extends,
and such phrase shall not mean simply "if". The definitions contained in this
Agreement are applicable to the singular as well as the plural forms of such
terms. Any agreement or instrument defined or referred to herein or in any
agreement or instrument that is referred to herein means such agreement or
instrument as from time to time amended, modified or supplemented. References to
a person are also to its permitted successors and assigns.
SECTION 8.05 Counterparts. This Agreement may be executed in one or
more counterparts (including by
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telecopy), 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 parties.
SECTION 8.06 Entire Agreement; No Third-Party Beneficiaries. This
Agreement (a) constitutes the entire agreement, and supersedes all prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter of this Agreement, except for the Confidentiality
Agreement and any agreement entered into by the parties on the date of this
Agreement, and (b) except for the provisions of Section 5.05, is not intended to
confer upon any person other than the parties hereto any rights or remedies.
SECTION 8.07 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof.
SECTION 8.08 Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned, in whole or in part, by
operation of law or otherwise by any of the parties without the prior written
consent of the other parties, except that Sub may assign, in its sole
discretion, any of or all its rights, interests and obligations under this
Agreement to Parent or to any direct or indirect wholly owned subsidiary of
Parent, but no such assignment shall relieve Sub of any of its obligations
hereunder. Subject to the preceding sentence, this Agreement will be binding
upon, inure to the benefit of and be enforceable by, the parties and their
respective successors and assigns.
SECTION 8.09 Consent to Jurisdiction. Each of the parties hereto
irrevocably and unconditionally submits to the exclusive jurisdiction of (a) any
Delaware State court and (b) any Federal court of the United States of America
sitting in the State of Delaware, for the purposes of any suit, action or other
proceeding arising out of this Agreement or any transaction contemplated hereby
(and each agrees that no such action, suit or proceeding relating to this
Agreement shall be brought by it or any of its
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affiliates except in such courts). Each of the parties hereto further agrees
that, to the fullest extent permitted by applicable law, service of any process,
summons, notice or document by U.S. registered mail to such person's respective
address set forth above shall be effective service of process for any action,
suit or proceeding in Delaware with respect to any matters to which it has
submitted to jurisdiction as set forth above in the immediately preceding
sentence. Each of the parties hereto irrevocably and unconditionally waives (and
agrees not to plead or claim) any objection to the laying of venue of any
action, suit or proceeding arising out of this Agreement or the transactions
contemplated hereby in (a) any Delaware State court or (b) any Federal court of
the United State of America sitting in the State of Delaware, or that any such
action, suit or proceeding brought in any such court has been brought in an
inconvenient forum.
SECTION 8.10 Waiver of Jury Trial. Each party hereto hereby waives, to
the fullest extent permitted by applicable law, any right it may have to a trial
by jury in respect of any suit, action or other proceeding directly or
indirectly arising out of, under or in connection with this Agreement. Each
party hereto (a) certifies that no representative, agent or attorney of any
other party has represented, expressly or otherwise, that such party would not,
in the event of any action, suit or proceeding, seek to enforce the foregoing
waiver and (b) acknowledges that it and the other parties hereto have been
induced to enter into this Agreement, by, among other things, the mutual waiver
and certifications in this Section 8.10.
SECTION 8.11 Enforcement. The parties agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any court of the United States
located in the State of Delaware or in any Delaware state court, this being in
addition to any other remedy to which they are entitled at law or in equity.
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IN WITNESS WHEREOF, Parent, Sub and the Company have caused this
Agreement to be signed by their respective officers thereunto duly authorized,
all as of the date first written above.
INTERNATIONAL BUSINESS MACHINES CORPORATION,
by /s/ Xxxxx X. Xxxxxxx
------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Vice President,
Corporate Development
DUKE ACQUISITION CORP.,
by /s/ Xxxxxxx X. Xxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: President
CROSSWORLDS SOFTWARE, INC.,
by /s/ Xxxxxx X. Xxxxxxx
------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: President and CEO
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