Exhibit 10.50
LIONBRIDGE TECHNOLOGIES, INC.,
LTI ACQUISITION CORP.
AND
INT'X.XXX, INC.
AGREEMENT AND PLAN OF REORGANIZATION
Dated as of January 19, 2000
TABLE OF CONTENTS
ARTICLE I. THE MERGER...............................................................................................1
1.1 The Merger....................................................................................................1
1.2 Effects of the Merger.........................................................................................1
1.3 Closing.......................................................................................................1
1.4 Approval by the Stockholders of INT'X.xxx.....................................................................2
1.5 Approval by the Stockholders of Parent........................................................................2
ARTICLE II. CONVERSION AND EXCHANGE OF SHARES; DISSENTING SHARES....................................................2
2.1 Conversion of Shares of INT'X.xxx Stock.......................................................................2
2.2 Escrow Shares.................................................................................................5
2.3 Dissenting Shares.............................................................................................6
2.4 Delivery of Evidence of Ownership.............................................................................6
2.5 No Further Ownership Rights in INT'X.xxx Stock................................................................7
2.6 No Fractional Shares..........................................................................................7
2.7 Assumption of Stock Options...................................................................................7
2.8 Notes.........................................................................................................8
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF INT'X.XXX............................................................8
3.1 Organization, Standing and Power; Subsidiaries................................................................8
3.2 Capital Structure.............................................................................................9
3.3 Authority....................................................................................................10
3.4 Compliance with Laws and Other Instruments; Non-Contravention................................................11
3.5 Technology and Intellectual Property Rights..................................................................12
3.6 Financial Statements; Business Information...................................................................14
3.7 Taxes........................................................................................................15
3.8 Absence of Certain Changes and Events........................................................................16
3.9 Leases in Effect.............................................................................................18
3.10 Personal Property; Real Estate................................................................................18
3.11 Certain Transactions..........................................................................................19
3.12 Litigation and Other Proceedings..............................................................................19
3.13 No Defaults...................................................................................................20
3.14 Major Contracts...............................................................................................20
3.15 Material Reductions...........................................................................................21
3.16 Insurance and Banking Facilities..............................................................................21
3.17 Employees.....................................................................................................21
3.18 Employee Benefit Plans........................................................................................22
3.19 Certain Agreements............................................................................................23
3.20 Guarantees and Suretyships....................................................................................23
3.21 Brokers and Finders...........................................................................................24
3.22 Certain Payments..............................................................................................24
3.23 Environmental Matters.........................................................................................24
3.24 Enforceability of Contracts, etc..............................................................................24
3.25 Accounting Matters............................................................................................25
3.26 Year 2000.....................................................................................................25
3.27 Disclosure....................................................................................................25
3.28 Reliance......................................................................................................25
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB................................................26
4.1 Organization and Qualification...............................................................................26
4.2 Capitalization...............................................................................................26
4.3 Authority Relative to this Agreement.........................................................................27
4.4 Non-Contravention............................................................................................27
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4.5 Reports and Financial Statements.............................................................................27
4.6 Validity of Parent Merger Shares.............................................................................28
4.7 Consents and Approvals of Governmental Authorities...........................................................28
4.8 Absence of Certain Changes or Events.........................................................................28
4.9 Litigation and Other Proceedings.............................................................................29
4.10 Disclosure....................................................................................................29
4.11 Reliance......................................................................................................29
4.12 Brokers and Finders...........................................................................................29
4.13 Accounting Matters............................................................................................29
ARTICLE V. COVENANTS OF INT'X.XXX..................................................................................29
5.1 Conduct of Business in Ordinary Course.......................................................................29
5.2 Dividends, Issuance of, or Changes in Securities.............................................................30
5.3 Governing Documents..........................................................................................31
5.4 No Acquisitions..............................................................................................31
5.5 No Dispositions..............................................................................................31
5.6 Indebtedness.................................................................................................31
5.7 Compensation.................................................................................................31
5.8 Claims.......................................................................................................31
5.9 Access to Properties and Records.............................................................................31
5.10 Breach of Representations and Warranties......................................................................32
5.11 Consents......................................................................................................32
5.12 Tax Returns...................................................................................................32
5.13 Exclusivity; Acquisition Proposals............................................................................32
5.14 Notice of Events..............................................................................................33
5.15 Reasonable Best Efforts.......................................................................................33
5.16 Insurance.....................................................................................................33
5.17 Financial Statements..........................................................................................33
ARTICLE VI. COVENANTS OF PARENT....................................................................................34
6.1 Breach of Representations and Warranties.....................................................................34
6.2 Additional Information; Access...............................................................................34
6.3 Consents.....................................................................................................34
6.4 Reasonable Best Efforts......................................................................................34
6.5 Officers and Directors.......................................................................................34
6.6 Nasdaq National Market Listing...............................................................................35
6.7 Notice of Events.............................................................................................35
6.8 Third Party Beneficiaries....................................................................................35
ARTICLE VII. ADDITIONAL AGREEMENTS.................................................................................35
7.1 Preparation of the Form S-4 and the Proxy Statement; Stockholders Meeting.....................................35
7.2 Legal Conditions to the Merger...............................................................................38
7.3 Employee Benefits............................................................................................38
7.4 Expenses.....................................................................................................38
7.5 Additional Agreements........................................................................................38
7.6 Public Announcements.........................................................................................39
7.7 Confidentiality..............................................................................................39
7.8 Pooling......................................................................................................39
7.9 INT'X.xxx Voting Agreement...................................................................................40
7.10 Parent Voting Agreement.......................................................................................40
7.11 Xxxx-Xxxxx-Xxxxxx Filing......................................................................................40
7.12 Board of Directors Meetings...................................................................................40
7.13 Employment and Noncompetition Agreements......................................................................41
7.14 INT'X.xxx Conversion........................................................................................41
ARTICLE VIII. CONDITIONS PRECEDENT.................................................................................41
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8.1 Conditions to Each Party's Obligation to Effect the Merger...................................................41
8.2 Conditions of Obligations of Parent and Merger Sub...........................................................42
8.3 Conditions of Obligation of INT'X.xxx........................................................................44
ARTICLE IX. INDEMNIFICATION........................................................................................46
9.1 Indemnification Relating to Agreement........................................................................46
9.2 Third Party Claims...........................................................................................46
9.3 Limitations..................................................................................................47
9.4 Binding Effect...............................................................................................47
9.5 Time Limit...................................................................................................47
9.6 Sole Remedy..................................................................................................48
ARTICLE X. TERMINATION.............................................................................................48
10.1 Mutual Agreement..............................................................................................48
10.2 Termination by Parent.........................................................................................48
10.3 Termination by INT'X.xxx......................................................................................48
10.4 Outside Date..................................................................................................49
10.5 Effect of Termination.........................................................................................49
ARTICLE XI. MISCELLANEOUS..........................................................................................49
11.1 Entire Agreement.............................................................................................49
11.2 Governing Law; Consent to Jurisdiction.......................................................................49
11.3 Notices......................................................................................................50
11.4 Severability.................................................................................................51
11.5 Survival of Representations and Warranties...................................................................51
11.6 Assignment...................................................................................................51
11.7 Counterparts.................................................................................................52
11.8 Amendment....................................................................................................52
11.9 Extension, Waiver............................................................................................52
11.10 Interpretation................................................................................................52
11.11 Knowledge.....................................................................................................52
11.12 Transfer, Sales, Documentary, Stamp and Other Similar Taxes...................................................52
EXHIBITS
EXHIBIT 1.1 -- Merger Documents
EXHIBIT 2.2 -- Escrow Agreement Exhibit 2.4 -- Letter of Transmittal
EXHIBIT 7.1 -- Registration Rights Agreement
EXHIBIT 7.8(b) -- INT'X.xxx Affiliate Agreement
EXHIBIT 7.8(c) -- Parent Affiliate Agreement
EXHIBIT 7.9 -- INT'X.xxx Voting Agreement
EXHIBIT 7.10 -- Parent Voting Agreement
Exhibit 7.14 -- Conversion Notice
EXHIBIT 8.2 -- Opinion of Xxxx, Gerber & Xxxxxxxxx
EXHIBIT 8.3 -- Opinion of Xxxxx, Xxxxxxx & Xxxxxxxxx, LLP
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AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION, dated as of January 19, 2000
(this "AGREEMENT"), by and among Lionbridge Technologies, Inc., a Delaware
corporation ("PARENT"); LTI Acquisition Corp., a Delaware corporation and a
wholly-owned subsidiary of Parent ("MERGER SUB"); and INT'X.xxx, Inc., a
Delaware corporation ("INT'X.XXX").
Intending to be legally bound, and in consideration of the mutual
representations, warranties, covenants and agreements contained herein, Parent,
Merger Sub and INT'X.xxx agree as follows:
ARTICLE I
THE MERGER
1.1 THE MERGER. Subject to the terms and conditions hereof, and in
accordance with the Delaware General Corporation Law (the "DGCL"), Merger Sub
will be merged with and into INT'X.xxx (the "MERGER"). A Certificate of Merger
and any other required documents (collectively, the "MERGER DOCUMENTS"),
substantially in the form attached as EXHIBIT 1.1, will be duly prepared,
executed and acknowledged by INT'X.xxx and Merger Sub and thereafter delivered
to the Secretary of State of Delaware for filing in accordance with the DGCL
contemporaneously with the Closing (as defined in Section 1.3). The Merger will
become effective at such time as the Merger Documents have been filed with the
Secretary of State of Delaware (the "EFFECTIVE TIME"). Following the Merger,
INT'X.xxx will continue as the surviving corporation of the Merger (the
"SURVIVING CORPORATION") under the laws of the State of Delaware, and the
separate corporate existence of Merger Sub will cease.
1.2 EFFECTS OF THE MERGER. At and after the Effective Time, (i) the
Merger will have all of the effects provided by the Certificate of Merger and
applicable law, (ii) the Certificate of Incorporation of INT'X.xxx will be
amended in the form attached as APPENDIX A to EXHIBIT 1.1 until duly further
amended, (iii) the bylaws of Merger Sub will be the bylaws of the Surviving
Corporation until duly amended, (iv) the directors of Merger Sub will be the
directors of the Surviving Corporation, to hold office in accordance with the
bylaws of the Surviving Corporation, (v) the officers of INT'X.xxx will be the
officers of the Surviving Corporation, to hold office in accordance with the
bylaws of the Surviving Corporation and (vi) the issued and outstanding
certificates for the capital stock of Merger Sub will be the issued and
outstanding certificates initially representing all of the issued capital stock
of the Surviving Corporation. The Merger is intended to be a reorganization
within the meaning of Section 368(a)(2)(E) of the Internal Revenue Code of 1986,
as amended (the "CODE"), and this Agreement is intended to constitute a "plan of
reorganization" within the meaning of the regulations promulgated under Section
368 of the Code.
1.3 CLOSING. The closing of the transactions contemplated by this
Agreement (the "CLOSING") will take place as soon as practicable (but no more
than three (3) business days) after satisfaction or waiver of the last to be
fulfilled of the conditions set forth in Article VIII that by their terms are
not to occur at the Closing (the "CLOSING DATE"), but in no event later than
June 30, 2000, at the offices of Xxxxx, Xxxxxxx & Xxxxxxxxx, LLP in Boston,
Massachusetts, unless another date or place is agreed to in writing by Parent
and INT'X.xxx. If all of the conditions set forth in Article VIII hereof are
determined to be satisfied (or duly waived) at the Closing, concurrently with
the Closing the parties hereto will cause the Merger to be consummated by the
filing of the Merger Documents with the Secretary of State of Delaware. The
Closing will be deemed to have concluded at the Effective Time.
1.4 APPROVAL BY THE STOCKHOLDERS OF INT'X.XXX. INT'X.xxx will take all
action necessary in accordance with the DGCL, its Charter Documents (as defined
below) and any agreements to which it is a party to solicit the approval of this
Agreement, the Merger and all of the transactions contemplated hereby by all
stockholders of INT'X.xxx by means of a duly convened meeting of stockholders.
INT'X.xxx will use its reasonable best efforts to obtain such stockholder
approval. INT'X.xxx represents
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and warrants that its Board of Directors has duly (i) approved the Merger in
accordance with the DGCL and (ii) resolved to recommend to the stockholders of
INT'X.xxx that they approve this Agreement, the Merger and all of the
transactions contemplated hereby.
1.5 APPROVAL BY THE STOCKHOLDERS OF PARENT. Parent will take all action
necessary to obtain the approval of the issuance of its shares in connection
with the Merger by the stockholders of Parent by means of a duly convened
meeting of the stockholders of Parent, as required by the rules of the Nasdaq
Stock Market, in accordance with the applicable requirements of the DGCL, its
Charter Documents and any agreements to which it is a party. Parent will use its
reasonable best efforts to obtain such stockholder approval. Parent represents
and warrants that its Board of Directors has duly (i) approved the Merger in
accordance with the DGCL and (ii) resolved to recommend to the stockholders of
Parent that they approve the issuance of its shares in connection with the
Merger.
ARTICLE II
CONVERSION AND EXCHANGE OF SHARES; DISSENTING SHARES
2.1 CONVERSION OF SHARES OF INT'X.XXX STOCK. (a) Subject, without
limitation, to the provisions of Section 2.3 hereof, at the Effective Time, all
of (i) the shares of Series A common stock, $0.01 par value per share, of
INT'X.xxx ("INT'X.XXX SERIES A COMMON STOCK"), Series B common stock, $0.01 par
value per share, of INT'X.xxx ("INT'X.XXX SERIES B COMMON STOCK" and along with
the Int'l Series A Common Stock, the "INT'X.XXX COMMON STOCK"), Series A
preferred stock, $0.01 par value per share, of INT'X.xxx ("INT'X.XXX SERIES A
PREFERRED Stock"), and Series B preferred stock, $0.01 par value per share, of
INT'X.xxx ("INT'X.XXX SERIES B PREFERRED Stock" and along with the INT'X.xxx
Series A Common Stock, the INT'X.xxx Series B Common Stock and the INT'X.xxx
Series A Preferred Stock, "INT'X.XXX CAPITAL STOCK") issued and outstanding
immediately prior to the Effective Time excluding any INT'X.xxx Capital Stock
held by Parent or Merger Sub or any other subsidiary of Parent, or by INT'X.xxx
or any subsidiary of INT'X.xxx, which shares ("EXCLUDED SHARES") will be
automatically canceled in the Merger without payment of any consideration
therefor, and excluding Dissenting Shares (as defined in Section 2.3 hereof))
will automatically, by virtue of the Merger and without any action on the part
of the holder thereof, be converted into shares of common stock, $0.01 par value
per share, of Parent ("PARENT COMMON STOCK") in accordance with Section 2.1(e),
and cash (rounded down to the nearest whole cent) in lieu of fractional shares,
if any, pursuant to Section 2.6 below. Shares of INT'X.xxx Capital Stock that
are actually issued and outstanding immediately prior to the Effective Time
(excluding the Excluded Shares) are sometimes referred to herein as the
"OUTSTANDING INT'X.XXX CAPITAL STOCK SHARES." All rights, warrants or options to
acquire INT'X.xxx Common Stock and securities convertible into INT'X.xxx Common
Stock (except for the INT'X.xxx Series A Preferred Stock, the INT'X.xxx Series B
Preferred Stock, the Series C preferred stock, $0.01 par value per share, of
INT'X.xxx ("INT'X.XXX SERIES C PREFERRED STOCK") and the Series D preferred
stock, $0.01 par value per share, of INT'X.xxx ("INT'X.XXX SERIES D PREFERRED
STOCK") and the INT'X.xxx Notes (as defined in Section 2.8 below)) that are
outstanding immediately prior to the Effective Time and do not expire pursuant
to their terms on or before the Closing (each of which is specifically
identified in Section 3.2 of the INT'X.xxx Disclosure Schedule (as defined
below)) are sometimes referred to herein as the "OUTSTANDING INT'X.XXX OPTIONS."
(b) The aggregate number of shares of Parent Common Stock to
be issued in exchange for the acquisition of all Outstanding INT'X.xxx Capital
Stock Shares and the assumption of all Outstanding INT'X.xxx Options will be
equal to the Modified Share Amount (as defined in (d) below). Such shares are
herein referred to as the "PARENT STOCK MERGER SHARES".
(c) Subject, without limitation, to the provisions of Section
2.3 hereof, at the Effective Time, all of the shares of INT'X.xxx Series C
Preferred Stock issued and outstanding immediately prior to the Effective Time
(excluding any INT'X.xxx Series C Preferred Stock held by Parent or Merger Sub
or any other subsidiary of Parent, or by INT'X.xxx or any subsidiary of
INT'X.xxx, which shares ("EXCLUDED SERIES C SHARES") will be automatically
canceled in the Merger without payment of any consideration therefor, and
excluding Dissenting Shares (as defined in Section 2.3 hereof)), will
automatically, by virtue
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of the Merger and without any action on the part of the holder thereof, be
converted into shares of Parent Common Stock in accordance with Section 2.1(f),
and cash (rounded down to the nearest whole cent) in lieu of fractional shares,
if any, pursuant to Section 2.6 below. Shares of INT'X.xxx Series C Preferred
Stock that are actually issued and outstanding immediately prior to the
Effective Time, excluding the Excluded Series C Shares, are sometimes referred
to herein as the "OUTSTANDING INT'X.XXX SERIES C SHARES." Subject, without
limitation, to the provisions of Section 2.3 hereof, at the Effective Time, all
of the shares of INT'X.xxx Series D Preferred Stock issued and outstanding
immediately prior to the Effective Time (excluding any INT'X.xxx Series D
Preferred Stock held by Parent or Merger Sub or any other subsidiary of Parent,
or by INT'X.xxx or any subsidiary of INT'X.xxx, which shares ("EXCLUDED SERIES D
SHARES") will be automatically canceled in the Merger without payment of any
consideration therefor, and excluding Dissenting Shares (as defined in Section
2.3 hereof)), will automatically, by virtue of the Merger and without any action
on the part of the holder thereof, be converted into shares of Parent Common
Stock in accordance with Section 2.1(g), and cash (rounded down to the nearest
whole cent) in lieu of fractional shares, if any, pursuant to Section 2.6 below.
Shares of INT'X.xxx Series D Preferred Stock that are actually issued and
outstanding immediately prior to the Effective Time, excluding the Excluded
Series D Shares, are sometimes referred to herein as the "OUTSTANDING INT'X.XXX
SERIES D SHARES" and along with the Outstanding INT'X.xxx Capital Stock Shares
and the Outstanding INT'X.xxx Series C Shares, collectively the "OUTSTANDING
INT'X.XXX SHARES."
(d) The aggregate number of shares of Parent Common Stock to
be issued in exchange for the acquisition of all Outstanding INT'X.xxx Series C
Shares will be equal to the INT'X.xxx Series C Base Amount divided by the Parent
Average Closing Price. Such shares are herein referred to as the "PARENT SERIES
C MERGER SHARES". The aggregate number of shares of Parent Common Stock to be
issued in exchange for the acquisition of all Outstanding INT'X.xxx Series D
Shares will be equal to the INT'X.xxx Series D Base Amount divided by the Parent
Average Closing Price. Such shares are herein referred to as the "PARENT SERIES
D MERGER SHARES" and along with the Parent Stock Merger Shares and the Parent
Series C Merger Shares, collectively the "PARENT MERGER SHARES".
The following definitions will be used in making the foregoing
calculations and for all other purposes of this Agreement:
"INT'X.XXX SERIES C BASE AMOUNT" will mean the aggregate accrued
liquidation preference of INT'X.xxx Series C Preferred Stock calculated as of
the Closing Date in accordance with the terms of the Charter Documents of
INT'X.xxx.
"INT'X.XXX SERIES D BASE AMOUNT" will mean the aggregate accrued
liquidation preference of INT'X.xxx Series D Preferred Stock calculated as of
the Closing Date in accordance with the terms of the Charter Documents of
INT'X.xxx.
"PARENT AVERAGE CLOSING PRICE" will be equal to the weighted average
closing price of the Parent Common Stock as publicly reported by the Wall Street
Journal over the twenty Trading Days ending two Trading Days prior to the date
of this Agreement.
"MODIFIED SHARE AMOUNT" will mean the Share Amount LESS (i) the number
of Note Payment Shares (as defined in Section 2.8 below) (ii) the number of Debt
Payment Shares (as defined in Section 7.15 below) and (iii) such number of
shares of Parent Common Stock having a value (as determined using the Parent
Average Closing Price) equal to any expenses to be borne by the stockholders of
INT'X.xxx pursuant to Section 7.4.
"SHARE AMOUNT" will mean 8,500,000 shares of Parent Common Stock
(appropriately adjusted for any stock split, stock dividend, recapitalization or
similar event).
"TRADING DAY" will mean days on which closing prices for purchases and
sales of Parent Common Stock are reported by the Nasdaq National Market.
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(e) The ratio at which one Outstanding INT'X.xxx Capital Stock
Share will be converted into shares of Parent Common Stock at the Effective Time
is herein called the "CONVERSION RATIO" and will be calculated as set forth in
this Section 2.1(e). Subject to Section 2.3, at the Effective Time, each
Outstanding INT'X.xxx Capital Stock Share will be converted into the right to
receive that number (which may be a fraction) of shares of Parent Common Stock
that equals the quotient obtained by DIVIDING the number of Parent Stock Merger
Shares by the sum of the number of Outstanding INT'X.xxx Capital Stock Shares
PLUS the number of shares of INT'X.xxx Common Stock issuable upon the exercise
or conversion of all Outstanding INT'X.xxx Options. Each holder of Outstanding
INT'X.xxx Capital Stock Shares will be entitled to receive that aggregate number
of shares of Parent Common Stock equal to the Conversion Ratio multiplied by the
number of Outstanding INT'X.xxx Capital Stock Shares held by such holder
immediately prior to the Effective Time, subject to Section 2.3 herein.
(f) The ratio at which one Outstanding INT'X.xxx Series C
Share will be converted into shares of Parent Common Stock at the Effective Time
is herein called the "SERIES C CONVERSION RATIO" and will be calculated as set
forth in this Section 2.1(f). Subject to Section 2.3, at the Effective Time,
each Outstanding INT'X.xxx Series C Share will be converted into the right to
receive that number (which may be a fraction) of shares of Parent Common Stock
that equals the quotient obtained by DIVIDING the number of Parent Series C
Merger Shares by the number of Outstanding INT'X.xxx Series C Shares. Each
holder of Outstanding INT'X.xxx Series C Shares will be entitled to receive that
aggregate number of shares of Parent Common Stock equal to the Series C
Conversion Ratio multiplied by the number of Outstanding INT'X.xxx Series C
Shares held by such holder immediately prior to the Effective Time, subject to
Section 2.3 herein.
(g) The ratio at which one Outstanding INT'X.xxx Series D
Share will be converted into shares of Parent Common Stock at the Effective Time
is herein called the "SERIES D CONVERSION RATIO" and will be calculated as set
forth in this Section 2.1(g). Subject to Section 2.3, at the Effective Time,
each Outstanding INT'X.xxx Series D Share will be converted into the right to
receive that number (which may be a fraction) of shares of Parent Common Stock
that equals the quotient obtained by DIVIDING the number of Parent Series D
Merger Shares by the number of Outstanding INT'X.xxx Series D Shares. Each
holder of Outstanding INT'X.xxx Series D Shares will be entitled to receive that
aggregate number of shares of Parent Common Stock equal to the Series D
Conversion Ratio multiplied by the number of Outstanding INT'X.xxx Series D
Shares held by such holder immediately prior to the Effective Time, subject to
Section 2.3 herein.
(h) At the Effective Time, each share of common stock, $0.01
par value, of Merger Sub issued and outstanding immediately prior to the
Effective Time will, by virtue of the Merger and without any action on the part
of the holder hereof, be converted into one share of common stock, $0.01 par
value per share, of the Surviving Corporation.
2.2 ESCROW SHARES. Ten percent (10%) of the Parent Merger Shares
issuable at Closing (excluding any Parent Merger Shares issuable after the
Closing with respect to Outstanding INT'X.xxx Options, the Excluded Shares, the
Series C Excluded Shares and the Series D Excluded Shares), rounded up to the
nearest whole share (the "ESCROW SHARES") will be deposited and held in escrow
in accordance with the Escrow Agreement attached as EXHIBIT 2.2 (the "ESCROW
AGREEMENT") as the sole source of indemnification payments that may become due
to Parent pursuant to Article IX or otherwise prior to the release of the Escrow
Shares pursuant to Section 3.1 of the Escrow Agreement; provided that the
aggregate liability of any single stockholder for indemnification obligations
pursuant to Article IX of this Agreement shall be equal to a dollar amount equal
to the Parent Average Closing Price multiplied by the aggregate number of Escrow
Shares deposited in escrow by or on behalf of such stockholder; and provided,
further, that each INT'X.xxx stockholder shall be severally (and not jointly)
liable beyond such holder's allocable portion of the Escrow Shares solely in
respect of any breach by such stockholder of any representation or warranty
contained in a Letter of Transmittal (as defined in Section 2.4 below) delivered
by such stockholder. The Escrow Shares will be withheld on a pro rata basis
among the holders of the Outstanding INT'X.xxx Shares based on the number of
Parent Merger Shares issuable at the closing to such holders. The exact number
of Escrow Shares held for the account of each INT'X.xxx stockholder will be
determined at the Closing by the agreement in writing of Parent and INT'X.xxx.
The delivery of the
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Escrow Shares will be made on behalf of the holders of the Outstanding INT'X.xxx
Shares in accordance with the provisions hereof, with the same force and effect
as if such shares had been delivered by Parent directly to such holders and
subsequently delivered by such holders to the Escrow Agent. The adoption of this
Agreement by stockholders of INT'X.xxx will also constitute their approval of
the terms and provisions of the Escrow Agreement, including, without limitation,
the appointment of Xxxxxx Xxxxxxxxxx as the Indemnification Representative (as
defined in the Escrow Agreement), which is an integral term of the Merger.
2.3 DISSENTING SHARES. Any holder of shares of INT'X.xxx Capital Stock,
INT'X.xxx Series C Preferred Stock and INT'X.xxx Series D Preferred Stock
(collectively, the "INT'X.XXX STOCK") that are outstanding on the record date
for the determination of which holders will be entitled to vote for or against
the Merger who objects to the Merger and complies with all of the provisions of
the DGCL concerning the rights of holders to dissent from the Merger and require
appraisal (such shares are referred to as "DISSENTING SHARES") will be entitled
to exercise appraisal rights pursuant to Section 262 of the DGCL with respect to
such Dissenting Shares PROVIDED THAT such holder meets all of the requirements
of the DGCL with respect to such Dissenting Shares, and will not be entitled to
receive Parent Merger Shares, unless otherwise provided by the DGCL or agreed in
writing by Parent. INT'X.xxx will, after consultation with Parent, give such
notices with respect to appraisal rights as may be required by the DGCL as soon
as practicable.
2.4 DELIVERY OF EVIDENCE OF OWNERSHIP. Prior to the Closing, Parent
shall send a notice and transmittal form in substantially the form of EXHIBIT
2.4 hereto (individually, a "Letter of Transmittal" and collectively, the
"LETTERS OF TRANSMITTAL") to each holder of a certificate or other documentation
representing Outstanding INT'X.xxx Shares, other than Dissenting Shares, each
holder of a certificate or other documentation representing Outstanding
INT'X.xxx Shares, other than Dissenting Shares, will surrender such certificates
or other documentation to Parent or its designee, and, if not previously
delivered, (i) a duly executed counterpart of the Escrow Agreement, (ii) a duly
executed Letter of Transmittal and (iii) such other duly executed documentation
as may be reasonably required by Parent to effect a transfer of such shares, and
upon such surrender and after the Effective Time each such holder will be
entitled to receive promptly from Parent or its transfer agent certificates
registered in the name of such holder representing the applicable number of
Parent Merger Shares, and the cash (calculated pursuant to Section 2.6, which
will be paid by check), to which such holder is entitled pursuant to the
provisions of this Agreement, with a portion of such shares to be deposited in
escrow pursuant to the Escrow Agreement, as provided in Section 2.2. The
adoption of this Agreement by stockholders of INT'X.xxx will also constitute
their approval of the terms and provisions of the Letter of Transmittal. In the
event any certificates or instruments representing Outstanding INT'X.xxx Shares
or Outstanding INT'X.xxx Options shall have been lost, stolen or destroyed, upon
the making and delivery of an affidavit of that fact by the person claiming same
to have been lost, stolen or destroyed and the posting by such person of a
bonding such reasonable amount as Parent may direct as indemnity against any
claim that would be made against Parent with respect to such certificate or
instrument, Parent will issue in exchange for such lost, stolen or destroyed
certificate or instrument the Parent Merger Shares and cash deliverable in
respect thereof pursuant to this Agreement.
2.5 NO FURTHER OWNERSHIP RIGHTS IN INT'X.XXX STOCK. The Merger and its
approval by the stockholders of INT'X.xxx and the execution of this Agreement
will be deemed, at the Effective Time, to constitute full satisfaction and
termination of all rights and agreements pertaining to INT'X.xxx Stock pursuant
to the DGCL, by contract or otherwise, except for any rights pertaining to this
Agreement. After the Effective Time, there will be no transfers on the stock
transfer books of INT'X.xxx of INT'X.xxx Stock or exercises of any options,
warrants or other rights to acquire INT'X.xxx Stock. Prior to or upon Closing,
INT'X.xxx will cause rights to purchase or acquire INT'X.xxx Stock other than
the Outstanding INT'X.xxx Options assumed pursuant to Section 2.7 below to
either be exercised or canceled. Until surrendered to Parent, each certificate
for INT'X.xxx Stock will, after the Effective Time, represent only the right to
receive the right to receive cash and Parent Merger Shares into which the shares
of INT'X.xxx Stock formerly represented thereby will have been converted
pursuant to this Agreement. Any dividends or other distribution declared after
the Effective Time with respect to Parent Common Stock will be paid to
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the holder of any certificate for shares of INT'X.xxx Stock when the holder
thereof is entitled to receive a certificate for such holder's Parent Merger
Shares in accordance with this Agreement.
2.6 NO FRACTIONAL SHARES. No certificates or scrip for fractional
shares of Parent Common Stock will be issued, no Parent stock split or dividend
will be paid in respect of any fractional share interest, and no such fractional
share interest will entitle the owner thereof to vote or to any rights of or as
a stockholder of Parent. In lieu of such fractional shares, any holder of
Outstanding INT'X.xxx Shares who would otherwise be entitled to a fraction of a
share of Parent Common Stock (after aggregating all fractional shares of Parent
Common Stock to be received by such holder) will be paid the cash value of such
fraction (rounded down to the nearest whole cent), which will be equal to such
fraction MULTIPLIED BY the Parent Average Closing Price.
2.7 ASSUMPTION OF STOCK OPTIONS. At the Effective Time, Parent shall
assume each Outstanding INT'X.xxx Option and each holder thereof (each an
"OPTION HOLDER") shall thereby be entitled to acquire, by virtue of the Merger
and without any action on the part of the Option Holder, on substantially the
same terms (including the dates and extent of exercisability) and subject to the
same conditions, including vesting, as such Outstanding INT'X.xxx Option, the
number of shares of Parent Common Stock determined by MULTIPLYING the number of
shares of INT'X.xxx Common Stock for which such Outstanding INT'X.xxx Option is
then exercisable in accordance with its terms immediately prior to the Effective
Time by the Conversion Ratio (rounded down to the nearest whole share), at an
exercise or conversion price per share of Parent Common Stock (rounded up to the
nearest whole cent) determined by dividing the exercise price per share of
INT'X.xxx Common Stock of such Outstanding INT'X.xxx Option immediately prior to
the Effective Time by the Conversion Ratio.
2.8 NOTES. The $2,000,000 in convertible promissory notes dated August
20, 1999 of INT'X.xxx and any interest accrued thereon (the "INT'X.XXX Notes")
shall be paid in full and cancelled by delivery of the Note Payment Shares to
the holders thereof in proportion to their respective interests in the INT'X.xxx
Notes. "Note Payment Shares" shall mean a number of shares of Parent Common
Stock determined by dividing $2,000,000 plus any interest accrued on the
INT'X.xxx Notes as of the Closing by the Parent Average Closing Price. In lieu
of any fractional shares, any holder of an INT'X.xxx Note who would otherwise be
entitled to a fraction of a share of Parent Common Stock (after aggregating all
fractional shares of Parent Common Stock to be received by such holder) will be
paid the cash value of such fraction (rounded down to the nearest whole cent),
which will be equal to such fraction MULTIPLIED BY the Parent Average Closing
Price.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF INT'X.XXX
Except as set forth in the disclosure schedule of INT'X.xxx dated as of
the date hereof and delivered herewith to Parent (the "INT'X.XXX DISCLOSURE
SCHEDULE") which identifies the section and subsection to which each disclosure
therein relates (PROVIDED, HOWEVER, that INT'X.xxx will be deemed to have
adequately disclosed with respect to any section or subsection any matters that
are clearly described elsewhere in such document if the applicability of such
disclosure to such non-referenced sections or subsections is apparent), and
whether or not the INT'X.xxx Disclosure Schedule is referred to in a specific
section or subsection, INT'X.xxx represents and warrants to Parent and Merger
Sub as follows:
3.1 ORGANIZATION, STANDING AND POWER; SUBSIDIARIES.
(a) INT'X.xxx is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, has all
requisite corporate power and authority to own, lease and operate its properties
and to carry on its businesses as now being conducted, and is duly qualified and
in good standing to do business in each jurisdiction in which a failure to so
qualify would have a material adverse effect on the Business Condition (as
hereinafter defined) of INT'X.xxx.
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As used in this Agreement, "BUSINESS CONDITION" with respect
to any Person (as defined below) means the business, financial condition,
results of operations, assets or prospects (as defined below) (without giving
effect to the consequences of the transactions contemplated by this Agreement
and the announcement thereof, and other than any changes arising out of
conditions affecting the economy or industry of the Person in general which does
not affect the Person in a materially disproportionate manner relative to other
participants in the economy or such industry, respectively) of such Person or
Persons including its Subsidiaries taken as a whole. In this Agreement, a
"SUBSIDIARY" of any Person means a corporation, partnership, limited liability
company, joint venture or other entity of which such Person directly or
indirectly owns or controls a majority of the equity interests or voting
securities or other interests that are sufficient to elect a majority of the
Board of Directors or other managers of such corporation, partnership, limited
liability company, joint venture or other entity. In this Agreement, the
"Material INT'X.xxx Subsidiaries" shall mean the following Subsidiaries of
INT'X.xxx: International Communications Europe GmbH; International Language
Engineering Corporation; International Communications Asia; and ILE Netherlands
BV. In this Agreement, "PROSPECTS" means events, conditions, facts or
developments that are known to INT'X.xxx or any Subsidiary and that in the
reasonable course of events are expected to have an effect on future operations
of the business as presently conducted by INT'X.xxx and its Subsidiaries, but
will exclude the results of any changes that are made at the specific written
direction of Parent, that are specifically contemplated herein, or that directly
result from this transaction or the announcement hereof. In this Agreement,
"PERSON" means any natural person, corporation, partnership, limited liability
company, joint venture or other entity. In this Agreement, "ordinary course of
business" means in the ordinary course of business and consistent with past
practices.
All Subsidiaries of INT'X.xxx and their jurisdiction of
incorporation are completely and correctly listed in Section 3.1 of the
INT'X.xxx Disclosure Schedule. Each Subsidiary is a corporation duly organized
and validly existing under the laws of the jurisdiction of its incorporation.
INT'X.xxx has delivered to Parent complete and correct copies of the articles or
certificate of incorporation, bylaws and/or other primary charter and
organizational documents ("CHARTER DOCUMENTS") of INT'X.xxx and the Material
INT'X.xxx Subsidiaries, in each case, as amended to the date hereof. The minute
books and stock records of INT'X.xxx and its Subsidiaries are complete. Section
3.1 of the INT'X.xxx Disclosure Schedule contains a complete and correct list of
the officers and directors of INT'X.xxx and any stockholders who beneficially
own (as defined in Rule 13d of the Securities Act) 5% or more of the outstanding
capital stock of INT'X.xxx.
(b) INT'X.xxx does not currently own, and has not owned since
January 1, 1998, directly or indirectly, any capital stock or other equity
securities of any corporation or have direct or indirect equity or ownership
interest in any partnership, limited liability company, joint venture or other
entity. All of the outstanding shares of capital stock of each Subsidiary of
INT'X.xxx are owned beneficially and of record by INT'X.xxx, one of its other
Subsidiaries, or any combination thereof, in each case free and clear of any
security interests, liens, charges, restrictions, claims, encumbrances or
assessments of any nature whatsoever ("LIENS"); and there are no outstanding
subscriptions, warrants, options, convertible securities, or other rights
(contingent or other) pursuant to which any of the Subsidiaries is or may become
obligated to issue any shares of its capital stock to any Person other than
INT'X.xxx or one of the other Subsidiaries.
3.2 CAPITAL STRUCTURE.
(a) As of January 17, 2000, the authorized capital stock of
INT'X.xxx consisted of (i) 5,472,047 shares of preferred stock, $0.01 par value
per share ("INT'X.XXX PREFERRED STOCK"), of which 867,047 shares had been
designated INT'X.xxx Series A Preferred Stock, 867,047 of which were issued and
outstanding, of which 3,500,000 shares had been designated INT'X.xxx Series B
Preferred Stock, 2,621,477 of which were issued and outstanding, of which 5,000
had been designated INT'X.xxx Series C Preferred Stock, 5,000 of which were
issued and outstanding, and of which 1,100,000 shares had been designated
INT'X.xxx Series D Preferred Stock, 936,991 of which were issued and
outstanding; as of the date of this Agreement; and (ii) 14,527,953 shares of
INT'X.xxx Common Stock, $0.01 par value per share, of which 11,077,953 shares
had been designated INT'X.xxx Series A Common Stock, and 3,450,000 shares had
been designated INT'X.xxx Series B Common Stock, and 5,879,271 shares of Common
Stock
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were issued and outstanding as of the date of this Agreement and no shares of
INT'X.xxx Common Stock were issued and held as treasury shares by INT'X.xxx. The
INT'X.xxx Disclosure Schedule sets forth all holders of INT'X.xxx Common Stock
and INT'X.xxx Preferred Stock and the number of shares owned. The INT'X.xxx
Disclosure Schedule also sets forth any options, warrants, calls, conversion
rights, commitments, agreements, contracts, understandings, restrictions,
arrangements or rights of any character (each, an "INT'X.XXX OPTION") to which
INT'X.xxx is a party or by which INT'X.xxx may be bound obligating INT'X.xxx to
issue, deliver or sell, or cause to be issued, delivered or sold, additional
shares of INT'X.xxx Common Stock, or obligating INT'X.xxx to grant, extend, or
enter into any such option, warrant, call, conversion right, conversion payment,
commitment, agreement, contract, understanding, restriction, arrangement or
right. INT'X.xxx does not have any outstanding options, warrants, calls,
conversion rights, commitments, agreements, contracts, understandings,
restrictions, arrangements or rights of any character to which INT'X.xxx is a
party or by which INT'X.xxx may be bound obligating INT'X.xxx to issue, deliver
or sell, or cause to be issued, delivered or sold, additional shares of
INT'X.xxx Preferred Stock.
(b) All outstanding shares of INT'X.xxx Common Stock and
INT'X.xxx Preferred Stock are, and any shares of INT'X.xxx Common Stock issued
upon exercise of any Outstanding INT'X.xxx Options will be, validly issued,
fully paid, nonassessable and not subject to any preemptive rights (other than
those which have been duly waived), or to any agreement to which INT'X.xxx is a
party or by which INT'X.xxx may be bound. Except for the INT'X.xxx Notes,
INT'X.xxx does not have outstanding any bonds, debentures, notes or other
indebtedness the holders of which (i) have the right to vote (or convertible or
exercisable into securities having the right to vote) with holders of shares of
INT'X.xxx Common Stock on any matter ("INT'X.XXX VOTING DEBT") or (ii) are or
will become entitled to receive any payment as a result of the execution of this
Agreement or the completion of the transactions contemplated hereby.
3.3 AUTHORITY. The execution, delivery and performance of this
Agreement and all other agreements contemplated hereby by INT'X.xxx have been
duly authorized by all necessary action of the Board of Directors of INT'X.xxx,
and if the Closing shall occur, shall have been duly authorized by all necessary
action of the stockholders of INT'X.xxx (the "INT'X.xxx Requisite Stockholder
Approval"). Certified copies of the resolutions adopted by the Board of
Directors of INT'X.xxx and its stockholders approving this Agreement, all other
agreements contemplated hereby and the Merger have been or will be provided to
Parent prior to the Closing. INT'X.xxx has duly and validly executed and
delivered this Agreement and has, or prior to Closing, will have duly and
validly executed and delivered all other agreements contemplated hereby to be
executed by INT'X.xxx, and each of this Agreement and such other agreements
constitutes or upon execution and delivery at or prior to the Closing will
constitute a valid, binding and enforceable obligation of INT'X.xxx in
accordance with its terms.
3.4 COMPLIANCE WITH LAWS AND OTHER INSTRUMENTS; NON-CONTRAVENTION.
INT'X.xxx and its Subsidiaries hold, and at all times have held or subsequently
obtained, all licenses, permits and authorizations from all Governmental
Entities (as defined below) necessary for the lawful conduct of their respective
businesses pursuant to all applicable statutes, laws, ordinances, rules and
regulations of all such Governmental Entities having jurisdiction over them or
any part of their operations. There are no material violations or claimed
violations known by INT'X.xxx or any Subsidiary of any such license, permit or
authorization or any such statute, law, ordinance, rule or regulation. Assuming
the receipt of all Consents (as defined below), neither the execution, delivery
or performance of this Agreement and all other agreements contemplated hereby by
INT'X.xxx, nor the consummation of the Merger or any other transaction described
herein, does or will, after the giving of notice, or the lapse of time, or
otherwise, conflict with, result in a breach of, or constitute a default under,
the Charter Documents of INT'X.xxx or any Material INT'X.xxx Subsidiary or any
federal, foreign, state or local court or administrative order or process,
statute, law, ordinance, rule or regulation, or any contract, agreement or
commitment to which INT'X.xxx or any Material INT'X.xxx Subsidiary is a party,
or under which INT'X.xxx or any Material INT'X.xxx Subsidiary is obligated, or
by which INT'X.xxx or any Material INT'X.xxx Subsidiary or any of the rights,
properties or assets of INT'X.xxx are subject or bound; result in the creation
of any Lien upon, or otherwise adversely affect, any of the rights, properties
or assets of INT'X.xxx or any Material INT'X.xxx Subsidiary; terminate, amend
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or modify, or give any party the right to terminate, amend, modify, abandon or
refuse to perform or comply with, any contract, agreement or commitment to which
INT'X.xxx or any Material INT'X.xxx Subsidiary is a party, or under which
INT'X.xxx or any Material INT'X.xxx Subsidiary is obligated, or by which
INT'X.xxx or any of the rights, properties or assets of INT'X.xxx or any
Material INT'X.xxx Subsidiary are subject or bound; or accelerate, postpone or
modify, or give any party the right to accelerate, postpone or modify, the time
within which, or the terms and conditions under which, any liabilities, duties
or obligations are to be satisfied or performed, or any rights or benefits are
to be received, under any contract, agreement or commitment to which INT'X.xxx
or any Material INT'X.xxx Subsidiary is a party, or under which INT'X.xxx or any
Material INT'X.xxx Subsidiary may be obligated, or by which INT'X.xxx or any
Material INT'X.xxx Subsidiary or any of the rights, properties or assets of
INT'X.xxx or any Material INT'X.xxx Subsidiary are subject or bound. Section 3.4
of the INT'X.xxx Disclosure Schedule sets forth each agreement, contract or
other instrument binding upon INT'X.xxx requiring a notice or consent (by its
terms or as a result of any conflict or other contravention required to be
disclosed in the INT'X.xxx Disclosure Schedule pursuant to the preceding
provisions of this Section 3.4) as a result of the execution, delivery or
performance of this Agreement and all other agreements contemplated hereby by
INT'X.xxx or the consummation of the Merger or any other transaction described
herein (each such notice or consent, a "CONSENT"). No consent, approval, order,
or authorization of or registration, declaration, or filing with or exemption
(also a "CONSENT") by, any court, administrative agency or commission or other
governmental authority or instrumentality, whether domestic or foreign (each a
"GOVERNMENTAL ENTITY") is required by or on behalf of INT'X.xxx or any Material
INT'X.xxx Subsidiary in connection with the execution, delivery or performance
of this Agreement and all other agreements contemplated hereby by INT'X.xxx or
the consummation of the Merger or any other transaction described herein, except
for the filing by INT'X.xxx and Merger Sub of the appropriate Merger Documents
with the Secretary of State of Delaware.
3.5 TECHNOLOGY AND INTELLECTUAL PROPERTY RIGHTS.
(a) For the purposes of this Agreement, "INT'X.XXX
INTELLECTUAL PROPERTY" consists of the following intellectual property:
(i) all patents, trademarks, trade names, service marks, trade
dress, copyrights and any renewal rights therefor, mask works,
schematics, software, firmware, technology, manufacturing processes,
supplier lists, customer lists, trade secrets, know-how, moral rights
and applications and registrations for any of the foregoing;
(ii) all documents, records and files relating to design, end
user documentation, manufacturing, quality control, sales, marketing or
customer support for all intellectual property described herein;
(iii) all other tangible or intangible proprietary information
and materials; and
(iv) all license and other rights in any third party product
or any third party intellectual property described in (i) through (iii)
above;
that are owned or held by or on behalf of INT'X.xxx or any Material INT'X.xxx
Subsidiary or that are being used, and/or have been used since January 1, 1999,
or are currently under development by or for INT'X.xxx or any Material INT'X.xxx
Subsidiary for use, in the business of INT'X.xxx or any Material INT'X.xxx
subsidiary as it has been, is currently or is currently planned to be conducted
in 2000; PROVIDED, HOWEVER, that the term INT'X.xxx Intellectual Property does
not include any commercially available third party software or related
intellectual property.
(b) Section 3.5 of the INT'X.xxx Disclosure Schedule lists:
(i) all patents, copyright registrations, mask works, registered trademarks,
registered service marks, trade dress, any renewal rights for any of the
foregoing, and any applications and registrations for any of the foregoing, that
are included in INT'X.xxx Intellectual Property and owned by or on behalf of
INT'X.xxx or any Material INT'X.xxx Subsidiary; (ii) all hardware products and
tools, software products and tools and services that are currently published,
offered, or under development by INT'X.xxx or any Material INT'X.xxx
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Subsidiary; and (iii) all licenses, sublicenses and other agreements to which
INT'X.xxx is a party and pursuant to which INT'X.xxx or any Material INT'X.xxx
Subsidiary or any other person is authorized to use any INT'X.xxx Intellectual
Property or exercise any other right with regard thereto.
(c) INT'X.xxx Intellectual Property consists solely of items
and rights that are either: (i) owned solely by INT'X.xxx; (ii) in the public
domain; or (iii) rightfully used and authorized for use by INT'X.xxx pursuant to
a valid license. All INT'X.xxx Intellectual Property that consists of license or
other rights to third party property is separately set forth in Section 3.5 of
the INT'X.xxx Disclosure Schedule. INT'X.xxx has all rights in INT'X.xxx
Intellectual Property necessary to carry out INT'X.xxx's, and each of its
Subsidiaries', current activities, their activities conducted by them since
January 1, 1999 and their future activities planned for 2000, including without
limitation rights to make, use, exclude others from using, reproduce, modify,
adapt, create derivative works based on, translate, distribute (directly and
indirectly), transmit, display and perform publicly, license, rent, lease,
assign and sell INT'X.xxx Intellectual Property in all geographic locations and
fields of use, and to sublicense any or all such rights to third parties,
including the right to grant further sublicenses.
(d) Assuming the receipt of all Consents, INT'X.xxx is not,
nor as a result of the execution or delivery of this Agreement and all other
agreements contemplated hereby, or performance of INT'X.xxx's obligations
hereunder or the consummation of the Merger, will INT'X.xxx be, in violation of
any license, sublicense or other agreement relating to any INT'X.xxx
Intellectual Property to which INT'X.xxx is a party or otherwise bound.
INT'X.xxx is not obligated to provide any consideration (whether financial or
otherwise) to any third party, nor is any third party otherwise entitled to any
consideration, with respect to any exercise of rights by INT'X.xxx or the
Surviving Corporation, as successor to INT'X.xxx, in INT'X.xxx Intellectual
Property.
(e) To the knowledge of INT'X.xxx or any of the Material
INT'X.xxx Subsidiaries, the use, reproduction, modification, distribution,
licensing, sublicensing, sale, or any other exercise of rights in any product,
work, technology, service or process as used, provided, or offered at any time,
or as proposed for use, reproduction, modification, distribution, licensing,
sublicensing, sale, or any other exercise of rights, by INT'X.xxx or any
Material INT'X.xxx Subsidiary does not infringe any copyright, patent, trade
secret, trademark, service xxxx, trade name, firm name, logo, trade dress, mask
work, moral right, other intellectual property right, right of privacy, or right
in personal data of any Person. No claims (i) challenging the validity,
effectiveness, or ownership by INT'X.xxx or any Material INT'X.xxx Subsidiary of
any INT'X.xxx Intellectual Property, or (ii) to the effect that the use,
reproduction, modification, manufacturing, distribution, licensing,
sublicensing, sale, or any other exercise of rights in any product, work,
technology, service, or process as used, provided or offered at any time, or as
proposed for use, reproduction, modification, distribution, licensing,
sublicensing, sale, or any other exercise of rights, by INT'X.xxx or any
Material INT'X.xxx Subsidiary infringes or will infringe on any intellectual
property or other proprietary or personal right of any Person have been asserted
to INT'X.xxx or any Material INT'X.xxx Subsidiary in writing by any Person.
Neither INT'X.xxx nor any Subsidiary has received notice of any legal or
governmental proceedings, including interference, re-examination, reissue,
opposition, nullity, or cancellation proceedings pending that relate to any
INT'X.xxx Intellectual Property, other than any review of pending applications
for patent. Neither INT'X.xxx nor any Subsidiary is aware of any information
indicating that any such proceedings are threatened or contemplated by any
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Governmental Entity or any other Person. All granted or issued patents and mask
works and all registered trademarks and copyright registrations owned by
INT'X.xxx are valid, enforceable and subsisting. To the knowledge of INT'X.xxx,
there is no unauthorized use, infringement, or misappropriation of any INT'X.xxx
Intellectual Property by any third party, employee or former employee.
(f) INT'X.xxx and its Subsidiaries has secured from all
parties who have created any portion of, or otherwise have any rights in or to,
INT'X.xxx Intellectual Property, valid and enforceable written assignments of
any such work or other rights to INT'X.xxx.
(g) Each consultant and subcontractor of INT'X.xxx and its
Subsidiaries has entered into a confidentiality and assignment of inventions
agreement substantially in the form attached TO SECTION 3.5 OF THE INT'X.XXX
DISCLOSURE SCHEDULE.
3.6 FINANCIAL STATEMENTS; BUSINESS INFORMATION.
(a) INT'X.xxx has delivered to Parent an unaudited
consolidated balance sheet (the "UNAUDITED BALANCE SHEET") as of October 31,
1999 (the "UNAUDITED BALANCE SHEET DATE") and audited consolidated balance
sheets (the "AUDITED BALANCE SHEETS") as of February 28, 1999 (the "AUDITED
BALANCE SHEET DATE") and December 31, 1997, unaudited consolidated statements of
income and cash flows for the eight-month period ended -October 31, 1999 and
audited consolidated statements of income and cash flows for its fiscal years
ended December 31, 1997 and February 28, 1999 (all of such balance sheets and
statements of income and cash flows are collectively referred to as the
"FINANCIAL STATEMENTS"). The Financial Statements: (i) are in accordance with
the books and records of INT'X.xxx; (ii) present fairly, in all material
respects, the financial position of INT'X.xxx as of the date indicated and the
results of its operations and cash flows for such periods; and (iii) have been
prepared in accordance with generally accepted accounting principles
consistently applied (subject, in the case of unaudited statements, to the
absence of footnote disclosure and in the case of unaudited interim statements
to year-end adjustments, which will not be material either individually or in
the aggregate and except as described in the Section 3.6 of the INT'X.xxx
Disclosure Schedule). As of the Unaudited Balance Sheet Date, there were no
material liabilities, claims or obligations of any nature, whether accrued,
absolute, contingent, anticipated or otherwise, whether due or to become due,
that are not shown or provided for either in the Unaudited Balance Sheet or
Section 3.6 of the INT'X.xxx Disclosure Schedule, and since the Unaudited
Balance Sheet Date, INT'X.xxx has incurred no liabilities, claims or obligations
of any nature, whether accrued, absolute, contingent, anticipated or otherwise
other than in the ordinary course of business and except for liabilities
incurred by INT'X.xxx in connection with the preparation and execution of this
Agreement and the consummation of the transactions contemplated herein.
(b) All of the accounts, notes and other receivables which are
reflected in the Unaudited Balance Sheet were acquired in the ordinary course of
business; and, except to the extent reserved against in the Unaudited Balance
Sheet, all of the accounts, notes and other receivables which are reflected
therein have been collected in full, or, to the knowledge of INT'X.xxx or any
Subsidiary, are valid, binding and enforceable in accordance with their terms in
the ordinary course of business, and arise from bona fide transactions, and
neither INT'X.xxx nor any Subsidiary has received notice that the same are
subject to counterclaims, refusals to pay or other rights of setoff. All of the
accounts, notes and other receivables which have been acquired by INT'X.xxx or
any Subsidiary since the Unaudited Balance Sheet Date were acquired in the
ordinary course of business and have been collected in full, or to the knowledge
of INT'X.xxx or any Subsidiary, are valid, binding and enforceable in accordance
with their terms in the ordinary course of business, and arise from bona fide
transactions, and neither INT'X.xxx nor any Subsidiary has received notice that
the same are subject to counterclaims, refusals to pay
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or other rights of setoff, subject to an appropriate reserve. No accounts, notes
or other receivables are contingent upon the performance by INT'X.xxx or any
Subsidiary of any obligation or contract. No Person has any Lien on any of such
receivables and no agreement for deduction or discount has been made with
respect thereto.
(c) The business information previously prepared by INT'X.xxx
and delivered to Parent was prepared in good faith, based on assumptions
INT'X.xxx deemed, as of the date such information was delivered to Parent, to be
reasonable, and was prepared for planning purposes, although no assurances are
given that INT'X.xxx can or will engage in the activities described therein or
achieve the results projected therein.
3.7 TAXES.
(a) The term "TAXES" as used herein means all federal, state,
local and foreign income tax, alternative or add-on minimum tax, estimated,
gross income, gross receipts, sales, use, ad valorem, value added, transfer,
franchise, capital profits, lease, service, license, withholding, payroll,
employment, excise, severance, stamp, occupation, premium, property,
environmental or windfall profit taxes, customs, duties and other taxes,
governmental fees and other like assessments and charges of any kind whatsoever,
together with all interest, penalties, additions to tax and additional amounts
with respect thereto, and the term "TAX" means any one of the foregoing Taxes.
The term "TAX RETURNS" as used herein means all returns, declarations, reports,
claims for refund, information statements and other documents relating to Taxes,
including all schedules and attachments thereto, and including all amendments
thereof, and the term "TAX RETURN" means any one of the foregoing Tax Returns.
(b) INT'X.xxx and each of its Subsidiaries has timely filed
all Tax Returns required to be filed and has paid all Taxes owed (whether or not
shown as due on such Tax Returns), including, without limitation, all Taxes
which INT'X.xxx or such Subsidiary is obligated to withhold for amounts owing to
employees, creditors and third parties. All Tax Returns filed by INT'X.xxx and
each of its Subsidiaries were complete and correct in all respects, and such Tax
Returns correctly reflected the facts regarding the income, business, assets,
operations, activities, status and other matters of INT'X.xxx and each of its
Subsidiaries and any other information required to be shown thereon. None of the
Tax Returns filed by INT'X.xxx or any of its Subsidiaries or Taxes payable by
INT'X.xxx or any of its Subsidiaries have been the subject of an audit, action,
suit, proceeding, claim, examination, deficiency or assessment by any
Governmental Entity, and no such audit, action, suit, proceeding, claim,
examination, deficiency or assessment is currently pending or, to the knowledge
of INT'X.xxx or any of its Subsidiaries, threatened. Neither INT'X.xxx nor any
Subsidiary is currently the beneficiary of any extension of time within which to
file any Tax Return, and neither INT'X.xxx nor any Subsidiary has waived any
statute of limitation with respect to any Tax or agreed to any extension of time
with respect to a Tax assessment or deficiency. All material elections with
respect to Taxes affecting INT'X.xxx or any Subsidiary, as of the date of this
Agreement, are set forth in the Financial Statements or in Section 3.7 of the
INT'X.xxx Disclosure Schedule. None of the Tax Returns filed by INT'X.xxx or any
Subsidiary contain a disclosure statement under former Section 6661 of the Code
or Section 6662 of the Code (or any similar provision of state, local or foreign
Tax law). Neither INT'X.xxx nor any Subsidiary is a party to any Tax sharing
agreement or similar arrangement. Neither INT'X.xxx nor any Subsidiary has ever
been a member of a group filing a consolidated federal income Tax Return (other
than a group the common parent of which was INT'X.xxx), and neither INT'X.xxx
nor any Subsidiary has any liability for the Taxes of any Person (other than
INT'X.xxx) under Treasury Regulation Section 1.1502-6 (or any corresponding
provision of state, local or foreign Tax law), as a transferee or successor, by
contract, or otherwise.
(c) Neither INT'X.xxx nor any Subsidiary is a party to any
agreement, contract, arrangement or plan that has resulted or would result,
separately or in the aggregate, in the payment of (i) any "excess parachute
payments" within the meaning of Section 280G of the Code (without regard to the
exceptions set forth in Sections 280G(b)(4) and 280G(b)(5) of the Code) or (ii)
any amount for which a deduction would be disallowed or deferred under Section
162 or Section 404 of the Code. Neither INT'X.xxx nor any Subsidiary has agreed
to make any adjustment under Section 481(a) of the Code (or
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any corresponding provision of state, local or foreign law) by reason of a
change in accounting method or otherwise, and INT'X.xxx will not be required to
make any such adjustment as a result of the transactions set forth in this
Agreement. Neither INT'X.xxx nor any Subsidiary has or has had a permanent
establishment in any foreign country, as defined in any applicable Tax treaty or
convention between the United States and such foreign country. No portion of the
Parent Merger Shares is subject to the Tax withholding provisions of Section
3406 of the Code, or of Subchapter A of Chapter 3 of the Code or of any other
provision of law. None of the assets of INT'X.xxx or any Subsidiary is property
which is required to be treated as being owned by any other Person pursuant to
the so-called "safe harbor lease" provisions of former Section 168(f)(8) of the
Code. None of the assets of INT'X.xxx or any Subsidiary directly or indirectly
secures any debt, the interest on which is tax exempt under Section 103(a) of
the Code. None of the assets of INT'X.xxx or any Subsidiary is "tax-exempt use
property" within the meaning of Section 168(h) of the Code. No claim has ever
been made by any Governmental Entity in a jurisdiction where INT'X.xxx or any
Subsidiary does not file Tax Returns that it is or may be subject to Tax in that
jurisdiction. Neither INT'X.xxx nor any Subsidiary has participated in an
international boycott as defined in Section 999 of the Code. None of the shares
of outstanding capital stock of INT'X.xxx or any Subsidiary are subject to a
"substantial risk of forfeiture" within the meaning of Section 83 of the Code.
(d) There are no liens for Taxes (other than for ad valorem
Taxes not yet due and payable) upon the assets of INT'X.xxx or any Subsidiary.
The unpaid Taxes of INT'X.xxx and its Subsidiaries did not, as of the Balance
Sheet Date, exceed the reserve for actual Taxes (as opposed to any reserve for
deferred Taxes established to reflect timing differences between book and Tax
income) as shown on the Unaudited Balance Sheet, and will not exceed such
reserve as adjusted for the passage of time through the Closing Date in
accordance with the past custom and practice of INT'X.xxx and its Subsidiaries
in filing their Tax Returns (taking into account any Taxes incurred as a result
of the transactions contemplated by this Agreement). Section 3.7 of the
INT'X.xxx Disclosure Schedule sets forth INT'X.xxx's and each Subsidiary's Tax
basis in each of their respective assets. Neither INT'X.xxx nor any Subsidiary
is a party to any joint venture, partnership, limited liability company or other
arrangement or contract which could be treated as a partnership for federal
income tax purposes.
3.8 ABSENCE OF CERTAIN CHANGES AND EVENTS. Except for liabilities
incurred in connection with this Agreement and the transactions contemplated
hereby, from the Unaudited Balance Sheet Date, there has not been:
(a) Any transaction involving more than $50,000 entered into
by INT'X.xxx or any Subsidiary other than in the ordinary course of business;
any change (or any development or combination of developments of which INT'X.xxx
or any Subsidiary has knowledge which is reasonably likely to result in such a
change) in INT'X.xxx's Business Condition, other than changes in the ordinary
course of business which in the aggregate have not been and are not expected to
be materially adverse to INT'X.xxx's Business Condition; or, without limiting
the foregoing, any loss of or damage to any of the properties of INT'X.xxx or
any Subsidiary due to fire or other casualty or other loss, whether or not
insured, amounting to more than $50,000 in the aggregate;
(b) Any declaration, setting aside or payment of any dividend
or other distribution with respect to any shares of capital stock of INT'X.xxx
or any Subsidiary, or any repurchase, redemption, retirement or other
acquisition by INT'X.xxx or any
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Subsidiary of any outstanding shares of capital stock, any INT'X.xxx Option, or
other securities of, or other equity or ownership interests in, INT'X.xxx or any
Subsidiary;
(c) Any discharge or satisfaction of any Lien or payment or
satisfaction of any obligation or liability (whether absolute, accrued,
contingent or otherwise and whether due or to become due) other than current
liabilities shown on the Unaudited Balance Sheet and current liabilities
incurred since the Unaudited Balance Sheet Date in the ordinary course of
business;
(d) Any amendment of any term of any outstanding security of
INT'X.xxx;
(e) Any incurrence, assumption or guarantee by INT'X.xxx or
any Subsidiary of any indebtedness for borrowed money other than in the ordinary
course of business and in an aggregate amount exceeding $50,000;
(f) Any creation or assumption by INT'X.xxx or any Subsidiary
of any Lien on any asset in an aggregate amount exceeding $20,000;
(g) Any making of any loan, advance or capital contributions
to, or investment in, any Person by INT'X.xxx or any Subsidiary;
(h) Any sale, lease, pledge, transfer or other disposition of
any material capital asset;
(i) Any material transaction or commitment made, or any
material contract or agreement entered into, by INT'X.xxx or any Subsidiary
relating to its assets or business (including the acquisition or disposition of
any assets) with a value of $100,000 or more or any relinquishment by INT'X.xxx
or any Subsidiary of any contract or other right with a value of $100,000 or
more;
(j) Any (A) grant of any severance or termination pay to any
director, officer or employee of INT'X.xxx or any Subsidiary, (B) entering into
of any employment, severance, management, consulting, deferred compensation or
other similar agreement (or any amendment to any such existing agreement) with
any director, officer or employee of INT'X.xxx or any Subsidiary, (C) change in
benefits payable under existing severance or termination pay policies or
employment, severance, management, consulting or other similar agreements, (D)
change in compensation, bonus or other benefits payable to directors, officers
or employees of INT'X.xxx or any Subsidiary in excess of 7% or (E) change in the
payment or accrual policy with respect to any of the foregoing;
(k) Any labor dispute or any activity or proceeding by a labor
union or representative thereof to organize any employees of INT'X.xxx or any
Material INT'X.xxx Subsidiary, or any lockouts, strikes, slowdowns, work
stoppages or threats thereof by or with respect to any employees of INT'X.xxx or
any Material INT'X.xxx Subsidiary;
(l) Any issuance or sale of any stock, bonds, phantom stock
interest or other securities of which INT'X.xxx or any Subsidiary is the issuer,
or the grant, issuance
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or change of any stock options, warrants, or other rights to purchase securities
of INT'X.xxx or any Subsidiary or phantom stock interest in INT'X.xxx or any
Subsidiary other than issuances of common stock in connection with exercises of
employee stock options;
(m) Any cancellation of any debts or claims or waiver of any
rights in an aggregate amount exceeding reserves in the Financial Statements by
$50,000 or more;
(n) Any sale, assignment or transfer of any INT'X.xxx
Intellectual Property, including licenses therefor;
(o) Any capital expenditures, or commitment to make any
capital expenditures, for additions to property, plant or equipment in an
aggregate amount exceeding $50,000; or
(p) Any agreement undertaking or commitment to do any of the
foregoing.
3.9 LEASES IN EFFECT. All real property leases and subleases as to
which INT'X.xxx or any Subsidiary is a party and any amendments or modifications
thereof are listed in Section 3.9 of the INT'X.xxx Disclosure Schedule (each a
"LEASE" and collectively, the "LEASES") and are valid, in full force and effect
and enforceable, and there are no existing defaults on the part of INT'X.xxx or
any Subsidiary, and neither INT'X.xxx nor any Subsidiary has received or given
notice of default or claimed default with respect to any Lease, nor is there any
event that with notice or lapse of time, or both, would constitute a default on
the part of INT'X.xxx or any Subsidiary, or, to the knowledge of INT'X.xxx and
its Subsidiaries, any other party thereunder.
3.10 PERSONAL PROPERTY; REAL ESTATE. (a) INT'X.xxx has good and
marketable title, free and clear of all title defects and Liens (including,
without limitation, leases, chattel mortgages, conditional sale contracts,
purchase money security interests, collateral security arrangements and other
title or interest-retaining agreements) to all inventory, receivables,
furniture, machinery, equipment and other personal property, tangible or
otherwise, reflected on the Unaudited Balance Sheet or used in INT'X.xxx's
business, except for acquisitions and dispositions since the Unaudited Balance
Sheet Date in the ordinary course of business. The INT'X.xxx Disclosure Schedule
lists (i) all computer equipment and (ii) all other personal property, in each
case having a depreciated book value of $10,000 or more, which are used by
INT'X.xxx or any Subsidiary in the conduct of its business, and all such
equipment and property, in the aggregate, is in good operating condition and
repair, reasonable wear and tear excepted. There is no asset used or required by
INT'X.xxx in the conduct of its business as presently operated which is not
either owned by it or licensed or leased to it.
(b) Section 3.10 of the INT'X.xxx Disclosure Schedule contains
a schedule setting forth all real property which is owned or leased by INT'X.xxx
or any Subsidiary, or in which INT'X.xxx or any Subsidiary has any other right,
title or interest. Neither INT'X.xxx nor any Subsidiary owns any real property.
True and complete copies of each lease have been provided to Parent, and such
leases constitute the entire understanding relating to INT'X.xxx's or any
Subsidiary's use and occupancy of the leased premises.
(c) INT'X.xxx and each Subsidiary has obtained consents for
all alterations made as of the date hereof to each leased premise described in
Section 3.10 of the INT'L Disclosure Schedule and, upon the expiration or
earlier termination of the lease or sublease with respect thereto, shall not be
obligated to remove any such
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alterations or restore the premises to the condition they were in prior to the
time such alterations were undertaken, except for removal or restoration
obligations which individually or in the aggregate do not exceed $25,000. To the
knowledge of INT'X.xxx and its Subsidiaries, the improvements located on the
real property described in Section 3.10 of the INT'X.xxx Disclosure Schedule are
not the subject of and neither INT'X.xxx nor any Subsidiary has received written
notice of any official complaint or of a violation of any applicable zoning
ordinance or building code. There is no condemnation proceeding pending or, to
the knowledge of INT'X.xxx and its Subsidiaries, threatened against INT'X.xxx or
any Subsidiary and to the knowledge of INT'X.xxx and its Subsidiaries there are
no use or occupancy restrictions on the real property described in Section 3.10
of the INT'X.xxx Disclosure Schedule.
3.11 CERTAIN TRANSACTIONS. Except for (a) relationships with INT'X.xxx
or any Subsidiary as an officer, director, or employee thereof (and compensation
by INT'X.xxx or any Subsidiary in consideration of such services) and (b)
relationships with INT'X.xxx as security holders therein, none of the directors,
officers, or stockholders of INT'X.xxx, or any member of any of their families,
is presently a party to, or was a party to during the year preceding the date of
this Agreement, any transaction, or series of similar transactions, with
INT'X.xxx or any Subsidiary, in which the amount involved exceeds $60,000,
including, without limitation, any contract, agreement, or other arrangement (i)
providing for the furnishing of services to or by, (ii) providing for rental of
real or personal property to or from, or (iii) otherwise requiring payments to
or from, any such Person or any other Person in which any such Person has or had
a 5%-or-more interest (as a stockholder, partner, beneficiary, or otherwise) or
is or was a director, officer, employee, or trustee, but excluding any
transaction pursuant to existing employee benefit plans. None of INT'X.xxx's
officers or directors has any interest in any property, real or personal,
tangible or intangible, including inventions, copyrights, trademarks, or trade
names, used in or pertaining to the business of INT'X.xxx or the Material
INT'X.xxx Subsidiaries, or, to the knowledge of INT'X.xxx, any material
supplier, distributor, or customer of INT'X.xxx or the Material INT'X.xxx
Subsidiaries, except for the normal rights of a securityholder, and except for
rights under existing employee benefit plans.
3.12 LITIGATION AND OTHER PROCEEDINGS. There is no action, suit, claim,
proceeding, or to the knowledge of INT'X.xxx or any Subsidiary, investigation
pending against or, to the knowledge of INT'X.xxx or any Subsidiary, threatened
against INT'X.xxx or any Subsidiary or any of their respective properties and
assets before any court or arbitrator or any Governmental Entity. Neither
INT'X.xxx nor any Subsidiary is subject to any order, writ, judgment, decree, or
injunction.
3.13 NO DEFAULTS. INT'X.xxx and the Material INT'X.xxx Subsidiaries are
not, nor has INT'X.xxx or any Material INT'X.xxx Subsidiary received notice that
it would be with the passage of time, in default or violation of any term,
condition, or provision of (i) its Charter Documents; (ii) any judgment, decree,
or order applicable to INT'X.xxx or any Material INT'X.xxx Subsidiary; or (iii)
any loan or credit agreement, note, bond, mortgage, indenture, contract,
agreement, lease, license, or other instrument to which INT'X.xxx or any
Material INT'X.xxx Subsidiary is now a party or by which it or any of its
properties or assets may be bound, except for defaults and violations which have
been validly waived, or which, individually or in the aggregate, would not have
a material adverse effect on the Business Condition of INT'X.xxx.
3.14 MAJOR CONTRACTS. Neither INT'X.xxx nor any Material INT'X.xxx
Subsidiary is a party to or subject to:
(a) Any union contract, or any employment contract or
arrangement in effect (other than "at-will" employment arrangements) providing
for future compensation, written or oral, with any officer, consultant,
director, or employee;
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(b) Any plan or contract or arrangement, written or oral,
providing for non-standard bonuses, pensions, deferred compensation, retirement
payments, profit-sharing or the like;
(c) Any joint venture contract or arrangement or any other
agreement which has involved or is expected to involve a sharing of profits;
(d) Any OEM agreement, reseller or distribution agreement,
volume purchase agreement, corporate end user sales or service agreement,
reproduction or replication agreement or manufacturing agreement in which the
amount involved exceeds annually, or is expected to exceed in the aggregate over
the life of the contract, $50,000 or pursuant to which INT'X.xxx has granted or
received manufacturing rights, most favored nation pricing provisions, or
exclusive marketing, production, publishing or distribution rights related to
any product, group of products or territory;
(e) Any agreement, license, franchise, permit, indenture, or
authorization which has not been terminated or performed in its entirety and not
renewed which may be, by its terms, terminated, impaired, or adversely affected
by reason of the execution of this Agreement and all other agreements
contemplated hereby, the consummation of the Merger, or the consummation of the
transactions contemplated hereby or thereby;
(f) Except for trade indebtedness incurred in the ordinary
course of business, any instrument evidencing or related in any way to
indebtedness incurred in the acquisition of companies or other entities or
indebtedness for borrowed money by way of direct loan, sale of debt securities,
purchase money obligation, conditional sale, guarantee, or otherwise which
individually is in the amount of $50,000 or more;
(g) Any license agreement in effect, either as licensor or
licensee (excluding nonexclusive hardware and software licenses granted to
distributors or end-users and commercially available in-licensed software
applications);
(h) Any contract or agreement containing covenants purporting
to limit INT'X.xxx's or the Material INT'X.xxx Subsidiaries' freedom to compete
in any line of business in any geographic area; or
(i) Any contract or agreement not elsewhere specifically
disclosed pursuant to this Agreement, involving the payment or receipt by
INT'X.xxx of more than $250,000 in the aggregate.
For purposes of this Section 3.14, a contract, agreement or arrangement
shall be considered "in effect" if INT'X.xxx or any Material Subsidiary shall
have any obligations or liabilities pursuant to such contract, agreement or
arrangement.
All contracts, arrangements, plans, agreements, leases, licenses,
franchises, permits, indentures, authorizations, instruments and other
commitments which are listed in the INT'X.xxx Disclosure Schedule pursuant to
this Section 3.14 are valid and in full force and effect and neither INT'X.xxx
nor any Material INT'X.xxx Subsidiary has, nor, to the knowledge of INT'X.xxx
and the Material INT'X.xxx Subsidiaries, has any other party thereto, breached
any material provisions of, or entered into default in any material respect
under the terms thereof. INT'X.xxx has delivered to Parent copies of the
contracts or agreements,
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and descriptions of any verbal agreements or arrangements, referred to in this
Section 3.14 as in effect on the date of this Agreement.
3.15 MATERIAL REDUCTIONS. None of the parties to any of the contracts
identified in the INT'X.xxx Disclosure Schedule pursuant to Section 3.14 have
terminated, or in any way expressed in writing to INT'X.xxx or any Subsidiary an
intent to reduce or terminate the amount of its business with INT'X.xxx or any
Subsidiary in the future.
3.16 INSURANCE AND BANKING FACILITIES. Section 3.16 of the INT'X.xxx
Disclosure Schedule contains a complete and correct list of (i) all contracts of
insurance or indemnity of INT'X.xxx in force at the date of this Agreement
(including name of insurer or indemnitor, agent, annual premium, coverage,
deductible amounts and expiration date) and (ii) the names and locations of all
banks in which INT'X.xxx has accounts or safe deposit boxes, the designation of
each such account and safe deposit box, and the names of all persons authorized
to draw on or have access to each such account and safe deposit box. All
premiums and other payments due from INT'X.xxx with respect to any such
contracts of insurance or indemnity have been paid, and neither INT'X.xxx nor
any Material INT'X.xxx Subsidiary knows of any fact, act, or failure to act
which has or could reasonably be expected to cause any such contract to be
canceled or terminated. All known claims for insurance or indemnity have been
presented or are described in Section 3.16 of the INT'X.xxx Disclosure Schedule.
3.17 EMPLOYEES. The INT'X.xxx Disclosure Schedule sets forth a list as
of January 12, 2000 of (a) the names, titles, annual salaries and all bonuses of
all salaried employees of INT'X.xxx and its Subsidiaries (such term meaning
permanent and temporary, full-time and part-time employees) and (b) the wage
rates for non-salaried employees of INT'X.xxx and its Subsidiaries. Any persons
engaged by INT'X.xxx as independent contractors, rather than employees, have
been properly classified as such and have been so engaged in accordance with all
applicable federal, foreign, state or local laws. No employee that INT'X.xxx or
any Material INT'X.xxx Subsidiary wishes to retain has stated to INT'X.xxx or
any Material INT'X.xxx Subsidiary that such employee intends to resign or retire
as a result of the transactions contemplated by this Agreement or otherwise
within six months after the Closing Date. Hours worked by and payments made to
employees of INT'X.xxx and its Subsidiaries have not been in violation of the
Fair Labor Standards Act or any other applicable federal, foreign, state or
local laws dealing with such matters. Neither INT'X.xxx nor any Subsidiary is
engaged in any dispute or litigation with an employee or former employee
regarding matters pertaining to intellectual property or assignment of
inventions. Neither INT'X.xxx nor any Subsidiary, to the knowledge of INT'X.xxx
and its Subsidiaries, is subject to a union organizing effort. Neither INT'X.xxx
nor any Subsidiary has any written contract of employment or other employment,
severance or similar agreement with any of its employees or any established
policy or practice relating thereto, and all of its employees are
employees-at-will. Neither INT'X.xxx nor any Subsidiary is a party to any
pending, or to the knowledge of INT'X.xxx and its Subsidiaries, threatened,
labor dispute. INT'X.xxx and its Subsidiaries have complied in all material
respects with all applicable foreign, federal, state and local laws, ordinances,
rules and regulations and requirements relating to the employment of labor,
including but not limited to the provisions thereof relating to wages, hours,
collective bargaining and ensuring equality of opportunity for employment. There
are no claims pending, or, to the knowledge of INT'X.xxx and its Subsidiaries,
threatened to be brought, in any court or administrative agency by any former or
current employees of INT'X.xxx and its Subsidiaries for compensation, pending
severance benefits, vacation time, vacation pay or pension benefits, or any
other claim pending, or, to the knowledge of INT'X.xxx and its Subsidiaries,
threatened in any court or administrative agency from any current or former
employee or any other Person arising out of INT'X.xxx's or its Subsidiary's
status as employer, whether in the form of claims for employment discrimination,
harassment, unfair labor practices, grievances, wrongful discharge, or
otherwise.
3.18 EMPLOYEE BENEFIT PLANS. Each Plan (as defined below) covering
active, former, or retired employees of INT'X.xxx or any Subsidiary is listed in
Section 3.18 of the INT'X.xxx Disclosure Schedule. "PLAN" means any employee
benefit plan as defined in ERISA (as defined below), maintained or contributed
to by INT'X.xxx or any of its Subsidiaries within the past six years, and also
includes any employment, severance or similar contract, arrangement or policy
and each plan or arrangement providing for insurance coverage (including any
self-insured arrangements), workers' compensation, disability
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benefits, supplemental unemployment benefits, vacation benefits, pension or
retirement benefits or for deferred compensation, profit-sharing, bonuses,
phantom stock, stock options, stock appreciation rights or other forms of
incentive compensation or post-retirement insurance, compensation or benefits in
existence within the past three years or for which there is an unsatisfied
liability. INT'X.xxx has made available to Parent a copy (or description if no
document exists) of each Plan, and where applicable, any related trust
agreement, annuity, or insurance contract. All annual reports (Form 5500)
required to be filed with the Internal Revenue Service have been properly filed
on a timely basis, and INT'X.xxx has provided copies of the three most recently
filed Forms 5500 for each applicable Plan. Any Plan intended to be qualified
under Section 401(a) of the Code has been determined by the Internal Revenue
Service to be so qualified or, if no such determination letter has been
received, the form of such Plan complies with the Code's requirements for
qualification, except those requirements for which the remedial amendment period
has not expired, and no event has occurred which is reasonably likely to
threaten the tax-exempt status of such Plan or any trust for such Plan. No Plan
is covered by Title IV of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), or Section 412 of the Code. No "prohibited transaction,"
as defined in ERISA Section 406 or Code Section 4975 has occurred with respect
to any Plan, unless such a transaction was exempt from such rules or would not
give rise to a material tax or penalty. Each Plan has been maintained and
administered in material compliance with its terms and with the requirements
prescribed by any and all statutes, including but not limited to ERISA and the
Code, which are applicable to such Plans. There are no pending or, to the
knowledge of INT'X.xxx and its Subsidiaries, anticipated claims against or
otherwise involving any of the Plans and no suit, action, or other litigation
(excluding claims for benefits incurred in the ordinary course of Plan
activities) is currently pending against or with respect to any Plan for which
there is an unsatisfied liability. All contributions, reserves, or premium
payments to the Plan accrued to the date of this Agreement have been made or
provided for in accordance with prior funding and accrual practices. Within the
six year period preceding the Closing Date, neither INT'X.xxx nor any
Subsidiary, nor any entity which is considered one employer with INT'X.xxx or
any Subsidiary under Section 414 of the Code or Section 4001 of ERISA has ever
maintained or contributed to or incurred liability with respect to any Plan
subject to Title IV of ERISA or any "multi-employer plan" within the meaning of
Section 4001(a)(3) of ERISA, and neither INT'X.xxx nor any Subsidiary expects to
incur any such liability. There are no restrictions on the rights of INT'X.xxx
or any Subsidiary to amend or terminate any Plan, subject to any applicable
notice requirements without incurring any liability thereunder other than for
benefits accrued prior to the date of termination or amendment. Neither
INT'X.xxx nor any Subsidiary has engaged in and, to the knowledge of INT'X.xxx
and its Subsidiaries, it is not a successor or parent corporation to an entity
that has engaged in a transaction described in ERISA Section 4069. There have
been no written interpretations of, or announcements (whether or not written) by
INT'X.xxx or any Subsidiary relating to, or change in employee participation or
coverage under, any Plan that would increase the expense of maintaining such
Plan above the level of the expense incurred in respect thereof for the fiscal
year ended prior to the date hereof. Neither INT'X.xxx nor any of its ERISA
affiliates has any liability in respect of post-employment or post-retirement
welfare benefits for retired employees of INT'X.xxx or any Subsidiary. Neither
INT'X.xxx nor any Material INT'X.xxx Subsidiary nor any of their ERISA
Affiliates has any liability with respect to welfare benefits for former
employees other than health care continuation benefits required to be provided
under applicable law or which do not exceed three months in duration. No tax
under Section 4980B or 4980D of the Code has been incurred in respect of any
Plan that is a group health plan, as defined in Section 5000(b)(1) of the Code.
3.19 CERTAIN AGREEMENTS. Except as contemplated by this Agreement,
neither the execution and delivery of this Agreement and all other agreements
contemplated hereby, nor the consummation of the transactions contemplated
hereby will: (i) result in any payment by INT'X.xxx or any Subsidiary
(including, without limitation, severance, unemployment compensation, parachute
payment, bonus or otherwise) becoming due to any director, employee, or
independent contractor of INT'X.xxx or any Subsidiary under any Plan, agreement,
or otherwise, (ii) increase any benefits otherwise payable under any Plan or
agreement or (iii) result in the acceleration of the time of payment or vesting
of any such benefits.
3.20 GUARANTEES AND SURETYSHIPS. INT'X.xxx and its Subsidiaries have no
powers of attorney outstanding (other than those issued in the ordinary course
of business with respect to Tax matters), and INT'X.xxx and its Subsidiaries
have no material obligations or liabilities (absolute or contingent) as
-22-
guarantor, surety, cosigner, endorser, co-maker, indemnitor, or otherwise
respecting the obligations or liabilities of any Person.
3.21 BROKERS AND FINDERS. INT'X.xxx has not retained any broker,
finder, or investment banker in connection with this Agreement or any of the
transactions contemplated by this Agreement, nor does or will INT'X.xxx or any
Subsidiary owe any fee or other amount to any broker, finder, or investment
banker in connection with this Agreement or the transactions contemplated by
this Agreement.
3.22 CERTAIN PAYMENTS. Neither INT'X.xxx nor any Subsidiary, nor to the
knowledge of INT'X.xxx and its Subsidiaries, any Person acting on behalf of
INT'X.xxx or any Subsidiary has, directly or indirectly, on behalf of or with
respect to INT'X.xxx or any Subsidiary: (i) made an unreported political
contribution, (ii) made or received any payment which was not legal to make or
receive, (iii) engaged in any material transaction or made or received any
material payment which was not properly recorded on the books of INT'X.xxx and
its Subsidiaries, (iv) created or used any "off-book" bank or cash account or
"slush fund," or (v) engaged in any conduct constituting a violation of the
Foreign Corrupt Practices Act of 1977.
3.23 ENVIRONMENTAL MATTERS. INT'X.xxx and its Subsidiaries have
complied in all material respects with all applicable federal, state and local
laws (including, without limitation, case law, rules, regulations, orders,
judgments, decrees, permits, licenses and governmental approvals) which are
intended to protect the environment and/or human health or safety (collectively,
"ENVIRONMENTAL LAWS"); neither INT'X.xxx nor any Subsidiary has handled,
generated, used, stored, transported or disposed of any material, substance or
waste which is regulated by Environmental Laws ("HAZARDOUS MATERIALS"), except
for ordinary office and/or office-cleaning supplies, products, equipment, fluids
and wastes customarily found, and in quantities customarily found, in a
commercial office setting, which have been used in compliance with Environmental
Laws; (iii) to the knowledge of INT'X.xxx and its Subsidiaries there is not now,
nor has there ever been, any underground storage tank or asbestos on any real
property owned, operated or leased by INT'X.xxx; (iv) INT'X.xxx has not
conducted, nor is it aware of, any environmental investigations, studies,
audits, tests, reviews or analyses, the purpose of which was to discover,
identify, or otherwise characterize the condition of the soil, groundwater, air
or the presence of Hazardous Materials at any real property owned, operated or
leased by INT'X.xxx; and (v) to the knowledge of INT'X.xxx and its Subsidiaries
there are no "Environmental Liabilities". For purposes of this Agreement,
"ENVIRONMENTAL LIABILITIES" are any claims, demands, or liabilities under
Environmental Laws which (i) arise out of or in any way relate to INT'X.xxx's or
its Subsidiary's operations or activities, or any real property at any time
owned, operated or leased by INT'X.xxx or a Subsidiary, or any stockholder's use
or ownership thereof, whether vested or unvested, contingent or fixed, actual or
potential, and (ii) arise from or relate to actions occurring (including any
failure to act) or conditions existing on or before the Closing Date.
3.24 ENFORCEABILITY OF CONTRACTS, ETC.
(a) No Person that is a party to any contract, agreement,
commitment or plan to which INT'X.xxx or a Subsidiary is a party has a valid
defense, on account of non-performance or malfeasance by INT'X.xxx or a
Subsidiary, which would make any such contracts, agreement, commitment or plan
not valid and binding upon or enforceable against such parties in accordance
with their terms, except to the extent such enforceability may be subject to or
limited by bankruptcy, insolvency, reorganization, arrangement or similar laws
affecting the rights of creditors generally and usual equity principles.
(b) Neither INT'X.xxx, nor any Subsidiary, nor to the
knowledge of INT'X.xxx and its Subsidiaries, any other Person, is in breach or
violation of, or default under, any material contract, agreement, arrangement,
commitment or plan to which INT'X.xxx or a Subsidiary is a party, and no event
or action has occurred, is pending, or,
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to the knowledge of INT'X.xxx and its Subsidiaries, is threatened, which, after
the giving of notice, or the lapse of time, or otherwise, would constitute a
breach or a default by INT'X.xxx or a Subsidiary or, to the knowledge of
INT'X.xxx and its Subsidiaries, any other Person, under any material contract,
agreement, arrangement, commitment or plan to which INT'X.xxx or a Subsidiary is
a party.
3.25 ACCOUNTING MATTERS. To the knowledge of INT'X.xxx and its
Subsidiaries, neither INT'X.xxx nor any of its Subsidiaries or affiliates has
taken or agreed to, or plans to, take any action that would prevent Parent from
accounting for the Merger as a "pooling of interests" in accordance with
generally accepted accounting principles, Accounting Principles Board Opinion
No. 16 and all published rules, regulations and policies of the Securities and
Exchange Commission (the "Commission").
3.26 YEAR 2000. All computer and other systems, software (whether
embedded or otherwise), hardware and other products owned or licensed by
INT'X.xxx or its Subsidiaries and used in connection with the services provided
by INT'X.xxx or its Subsidiaries and, to the knowledge of INT'X.xxx and its
Subsidiaries, all computer and other systems, software (whether embedded or
otherwise), hardware and other products produced by any third party that are
licensed by INT'X.xxx, in each case, have been written, manufactured and tested
to be Year 2000 Ready. For purposes of this Agreement, "YEAR 2000 READY" shall
mean, with respect to any systems, software (whether embedded or otherwise),
product, equipment or facility, that such system, product, equipment or facility
is capable of correctly processing, providing, receiving and manufacturing the
date data within and between the twentieth and twenty-first centuries, and its
operations and functionality has not been adversely affected and will not be
adversely affected in any material respect as a result of the advent of the Year
2000.
3.27 DISCLOSURE. Neither the representations or warranties made by
INT'X.xxx in this Agreement, nor the INT'X.xxx Disclosure Schedule or any other
certificate executed and delivered by INT'X.xxx pursuant to this Agreement, when
taken together, contains any untrue statement of a material fact, or omits to
state a material fact necessary to make the statements or facts contained herein
or therein not misleading in light of the circumstances under which they were
furnished.
3.28 RELIANCE. The foregoing representations and warranties are made by
INT'X.xxx with the knowledge and expectation that Parent and Merger Sub are
placing reliance thereon.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Except as set forth in either the documents delivered pursuant to
Section 4.5 or in the disclosure schedule of Parent dated as of the date hereof
and delivered herewith to INT'X.xxx (the "PARENT DISCLOSURE SCHEDULE") which
identifies the section and subsection to which each disclosure therein relates
(PROVIDED, HOWEVER, that Parent will be deemed to have adequately disclosed with
respect to any section or subsection any matters that are clearly described
elsewhere in such document if the applicability of such disclosure to such
non-referenced sections or subsections is apparent, and whether or not the
Parent Disclosure Schedule is) referred to in a specific section or subsection,
Parent and Merger Sub jointly and severally represent and warrant to INT'X.xxx
as follows:
4.1 ORGANIZATION AND QUALIFICATION. Parent is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, has all requisite corporate power and authority to own, lease and
operate its properties and to carry on its businesses as now being conducted,
and is duly qualified and in good standing to do business in each jurisdiction
in which a failure to so qualify would have a material adverse effect on the
Business Condition of Parent. Each Subsidiary of Parent is a corporation duly
organized and validly existing under the laws of the jurisdiction of its
incorporation, and Merger Sub is recently organized, is in good standing, and
has conducted no business activities, other than as contemplated by this
Agreement. In this Agreement, "Material Parent Subsidiaries" shall mean the
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following: Lionbridge Technologies California, Inc., Lionbridge Technologies
(Ireland), Inc., Lionbridge Technologies, B.V. and Lionbridge Technologies
(France).
4.2 CAPITALIZATION. (a) The authorized capital stock of Parent consists
of 5,000,000 shares of preferred stock, $0.01 par value per share, of which no
shares are issued or outstanding or held in Parent's treasury, and 100,000,000
shares of Parent Common Stock, of which, as of November 10, 1999: (a) 16,287,827
shares were validly issued and outstanding, fully paid and nonassessable and (b)
5,221,201 shares were reserved for issuance pursuant to Parent's stock option
and stock purchase plans for its employees and directors. Except for options and
rights relating to shares described in clause (b) of the preceding sentence and
except as set forth in Section 4.2 of the Parent Disclosure Schedule or the
Reports (as defined in Section 4.5), there are no options, warrants or other
rights, agreements or commitments or understandings or rights of any character
(contingent or otherwise) obligating Parent to issue, deliver or sell or cause
to be issued, delivered or sold shares of its capital stock or any other
securities convertible into or evidencing the right to subscribe to shares of
its capital stock. All of the outstanding shares of capital stock of each
Subsidiary of Parent are owned beneficially and of record by Parent, one of its
other Subsidiaries, or any combination thereof, in each case, free and clear of
any Liens; and there are no outstanding subscriptions, warrants, options,
convertible securities or other rights (contingent or other) pursuant to which
any of the Subsidiaries is or may become obligated to issue any shares of its
capital stock to any Person other than Parent or one of the other Subsidiaries.
(b) The authorized capital stock of Merger Sub consists of
1,000 shares of common stock, par value $0.01 per share, of which 1,000 shares
are issued and outstanding, all of which shares are owned beneficially and of
record by Parent.
4.3 AUTHORITY RELATIVE TO THIS AGREEMENT. The execution, delivery and
performance of this Agreement and all other agreements contemplated hereby by
Parent and Merger Sub have been duly authorized by all necessary action of the
Boards of Directors and stockholders of Parent and Merger Sub. Certified copies
of the resolutions adopted by the Boards of Directors of Parent and Merger Sub
and Parent as sole stockholder of Merger Sub approving this Agreement, all other
agreements contemplated hereby and the Merger have been or will be provided to
INT'X.xxx. Each of Parent and Merger Sub has duly and validly executed and
delivered this Agreement and has, or prior to Closing, will have duly and
validly executed and delivered all other agreements contemplated hereby to be
executed by it, and each of this Agreement and such other agreements constitutes
a valid, binding and enforceable obligation of each of Parent and Merger Sub in
accordance with its terms.
4.4 NON-CONTRAVENTION. Neither the execution, delivery or performance
of this Agreement and all other agreements contemplated hereby by Parent and
Merger Sub, nor the consummation of the Merger or any other transaction
described herein, does or will, after the giving of notice, or the lapse of
time, or otherwise, conflict with, result in a breach of, or constitute a
default under, the Charter Documents of Parent or Merger Sub or any federal,
foreign, state or local court or administrative order or process, statute, law,
ordinance, rule or regulation, or any contract, agreement or commitment to which
Parent is a party, or under which Parent or any Material Parent Subsidiary is
obligated, or by which Parent or any Material Parent Subsidiary or any of the
rights, properties or assets of Parent or any Material Parent Subsidiary are
subject or bound; result in the creation of any Lien upon, or otherwise
adversely affect, any of the rights, properties or assets of Parent or any
Material Parent Subsidiary; terminate, amend or modify, or give any party the
right to terminate, amend, modify, abandon or refuse to perform or comply with,
any contract, agreement or commitment to which Parent or any Material Parent
Subsidiary is a party, or under which Parent or any Material Parent Subsidiary
is obligated, or by which Parent or any Material Parent Subsidiary or any of the
rights, properties or assets of Parent or any Material Parent Subsidiary are
subject or bound; or accelerate, postpone or modify, or give any party the right
to accelerate, postpone or modify, the time within which, or the terms and
conditions under which, any liabilities, duties or obligations are to be
satisfied or performed, or any rights or benefits are to be received, under any
contract, agreement or commitment to which Parent or any Material Parent
Subsidiary is a party, or under which Parent or any Material Parent Subsidiary
may be obligated, or by which Parent or any of the rights, properties or assets
of Parent or any Material Parent Subsidiary are, subject or bound.
4.5 REPORTS AND FINANCIAL STATEMENTS. (a) Parent has previously
furnished to INT'X.xxx true and correct copies of its (i) Prospectus dated as of
August 20, 1999 contained in Parent's Registration Statement on Form S-1, (ii)
Quarterly Report on Form 10-Q for the period ended September 30, 1999 (the
"RECENT 10-Q") and (iii) all other reports filed by it with the Commission under
the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT") since
August 20, 1999.
(b) Parent hereby agrees to furnish to INT'X.xxx true and
correct copies of all reports filed by it with the Commission after the date
hereof prior to the Closing all in the form (including exhibits) so filed
(collectively, the "REPORTS"). As of their respective dates, the Reports
complied or will comply in all material respects with the then applicable
published rules and regulations of the Commission with respect thereto at the
date of their issuance and did not or will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. As of the date hereof, no additional
filings or amendments to previously filed Reports are required pursuant to such
rules and regulations. Each of the audited consolidated financial statements and
unaudited interim financial statements included in Parent's Reports has been
prepared in accordance with generally accepted accounting principles applied on
a consistent basis (except as may be indicated therein or in the notes thereto)
and fairly presents the financial position of the entity or entities to which it
relates as at its date or the results of operations, stockholders' equity or
cash flows of such entity or entities (subject, in the case of unaudited
statements, to the absence of footnote disclosure and in the case of unaudited
interim statements to year-end adjustments, which will not be material either
individually or in the aggregate, and except as described in Section 4.5 of the
Parent Disclosure Schedule). As of the date of the Recent 10-Q, there were no
material liabilities, claims or obligations of any nature, whether accrued,
absolute, contingent, anticipated or otherwise, whether due or to become due,
that are not shown or provided for either in the Recent 10-Q or Section 4.5 of
the Parent Disclosure Schedule, and since the date of the Recent 10-Q, Parent
has incurred no liabilities, claims or obligations of any nature, whether
accrued, absolute, contingent, anticipated or otherwise other than in the
ordinary course of business and except for liabilities incurred by Parent in
connection with the preparation and execution of this Agreement and the
consummation of the transactions contemplated herein.
4.6 VALIDITY OF PARENT MERGER SHARES. The Parent Merger Shares to be
issued in the Merger will, when issued, be, validly issued, fully paid and
nonassessable.
4.7 CONSENTS AND APPROVALS OF GOVERNMENTAL AUTHORITIES. Except for (a)
the requirements of state securities (or "Blue Sky") laws, (b) the filing and
recording of the Merger Documents as provided by the DGCL, (c) the filing of
appropriate documents with the Nasdaq Stock Market, (d) the filing of the Proxy
Statement, the Form S-4 and a Form 8-K with the Commission, if applicable, and
(e) such other consents, approvals, orders, authorizations, registrations,
declarations and filings the failure of which to be obtained or made,
individually or in the aggregate, could not reasonably be expected to impair in
any material respect the ability of Parent or Merger Sub to perform its
obligations under this Agreement or prevent or materially delay the consummation
of any of the transactions contemplated by this Agreement, no consent, approval
or authorization of, or declaration, filing or registration with, any
Governmental Entity is required to be made or obtained by Parent or Merger Sub
in connection with the execution, delivery and performance of this Agreement or
the consummation of the transactions contemplated hereby.
4.8 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except for liabilities
incurred in connection with this Agreement or the transactions contemplated
hereby, since September 30, 1999, there has not been any material adverse change
in the Business Condition of Parent.
4.9 LITIGATION AND OTHER PROCEEDINGS. There is no action, suit, claim,
proceeding, or to the knowledge of Parent or any Subsidiary investigation
pending against or, to the knowledge of Parent or any Subsidiary, threatened
against Parent or any Subsidiary or any of their respective properties and
assets before any court or arbitrator or any Governmental Entity.
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4.10 DISCLOSURE. Neither the representations or warranties made by
Parent in this Agreement, nor the Parent Disclosure Schedule or any other
certificate executed and delivered by Parent pursuant to this Agreement, when
taken together and with knowledge of the contents of the Reports, contains any
untrue statement of a material fact, or omits to state a material fact necessary
to make the statements or facts contained herein or therein not misleading in
light of the circumstances under which they were furnished. Prior to the date of
this Agreement, Parent has disclosed to INT'X.xxx all material strategic and
financing transactions which Parent has taken action in furtherance of and
involving Parent or any Parent Subsidiary.
4.11 RELIANCE. The foregoing representations and warranties are made by
Parent with the knowledge and expectation that INT'X.xxx are placing reliance
thereon.
4.12 BROKERS AND FINDERS. Except for Prudential Securities, Inc.,
Parent has not retained any broker, finder, or investment banker in connection
with this Agreement or any of the transactions contemplated by this Agreement.
4.13 ACCOUNTING MATTERS. To the knowledge of Parent, neither Parent nor
any of its affiliates has taken or agreed to, or plans to, take any action that
would prevent Parent from accounting for the Merger as a "pooling of interest"
in accordance with generally accepted accounting principles, Accounting
Principles board Opinion No. 16 and all published rules, regulations and
policies of the Commission.
ARTICLE V
COVENANTS OF INT'X.XXX
References in this Article V to INT'X.xxx shall be deemed to include
all Subsidiaries of INT'X.xxx. During the period from the date of this Agreement
(except as otherwise indicated) and continuing until the earlier of the
termination of this Agreement or the Effective Time, INT'X.xxx agrees (except as
expressly set forth in Section 5 of the Parent Disclosure Schedule contemplated
by this Agreement or otherwise permitted with Parent's prior written consent):
5.1 CONDUCT OF BUSINESS IN ORDINARY COURSE. INT'X.xxx will carry on its
business in the ordinary course in substantially the same manner as heretofore
conducted and, to the extent consistent with such business, use all reasonable
best efforts consistent with past practice and policies to preserve intact its
present business organization, keep available the services of its present
officers, consultants and employees and preserve its relationships with
customers, suppliers and distributors and others having business dealings with
it. INT'X.xxx will confer on a regular and frequent basis with representatives
of Parent to report operational matters of a material nature and to report the
general status of the ongoing operations of the business of INT'X.xxx. The
foregoing notwithstanding, INT'X.xxx will not:
(a) other than in the ordinary course of business consistent
with prior practice, enter into any material commitment or transaction,
including but not limited to any purchase of assets (other than raw materials,
supplies or cash equivalents) for a purchase price in excess of $50,000;
(b) grant any bonus, severance or termination pay to any
officer, director, independent contractor or employee of INT'X.xxx;
(c) enter into or amend any agreements pursuant to which any
other party is granted support, service, marketing or publishing rights, other
than in the ordinary course of business consistent
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with prior practice, or is granted distribution rights of any type or scope with
respect to any products of INT'X.xxx;
(d) other than in the ordinary course of business consistent
with prior practice, enter into or terminate any contracts, arrangements, plans,
agreements, leases, licenses, franchises, permits, indentures, authorizations,
instruments, or commitments, or amend or otherwise change in any material
respect the terms thereof in a manner adverse to INT'X.xxx;
(e) commence a lawsuit other than: (i) for the routine
collection of bills, (ii) in such cases where INT'X.xxx in good faith determines
that failure to commence suit would result in a material impairment of a
valuable aspect of INT'X.xxx's business PROVIDED THAT INT'X.xxx consults with
Parent prior to filing such suit, or (iii) for a breach of this Agreement or any
agreement related hereto;
(f) modify in any material respect existing discounts or other
terms and conditions with dealers, distributors and other resellers of
INT'X.xxx's products or services in a manner adverse to INT'X.xxx;
(g) accelerate the vesting or otherwise modify any INT'X.xxx
Option, restricted stock or other outstanding rights or other securities other
than any acceleration or modification that results from the execution and
performance of this Agreement or any of the transactions contemplated hereby;
(h) take any action which would make any representation or
warranty in this Agreement untrue or incorrect, as if made as of such time; or
(i) agree in writing or otherwise to take any of the foregoing
actions.
5.2 DIVIDENDS, ISSUANCE OF, OR CHANGES IN SECURITIES. INT'X.xxx will
not: (i) declare or pay any dividends on or make other distributions to its
stockholders (whether in cash, shares or property), (ii) issue, deliver, sell,
or authorize, propose, or agree to, or commit to the issuance, delivery, or sale
of any shares of its capital stock of any class, any Company Voting Debt or any
securities convertible into its capital stock, any options, warrants, calls,
conversion rights, commitments, agreements, contracts, understandings,
restrictions, arrangements or rights of any character obligating INT'X.xxx to
issue any such shares, INT'X.xxx Voting Debt or other convertible securities
except as any of the foregoing is required by Outstanding INT'X.xxx Options;
(iii) split, combine or reclassify any of its capital stock or issue or
authorize the issuance of any other securities in respect of, in lieu of or in
substitution for shares of capital stock of INT'X.xxx, (iv) repurchase or
otherwise acquire, directly or indirectly, any shares of its capital stock or
options or warrants related thereto, or (v) take any action in furtherance of
any of the foregoing.
5.3 GOVERNING DOCUMENTS. INT'X.xxx will not amend its Charter
Documents.
5.4 NO ACQUISITIONS. INT'X.xxx will not authorize, recommend, propose
or announce an intention to authorize, recommend or propose, or enter into a
letter of intent (whether or not binding), an agreement in principle or an
agreement with respect to any merger, consolidation or business combination
(other than the Merger), or achieve a comparable effect through any acquisition
of assets or securities.
5.5 NO DISPOSITIONS. INT'X.xxx will not sell, lease, license, transfer,
mortgage, encumber or otherwise dispose of any of its material assets or cancel,
release, or assign any material indebtedness or claim, except in the ordinary
course of business.
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5.6 INDEBTEDNESS. INT'X.xxx will not incur any indebtedness for
borrowed money by way of direct loan, sale of debt securities, purchase money
obligation, conditional sale, guarantee or otherwise.
5.7 COMPENSATION. Except for the actions, adoptions, amendments,
modifications, and payments described in Section 5.1(b) of the Parent Disclosure
Schedule, INT'X.xxx will not adopt or amend, or modify in any material respect,
any Plan or pay any pension or retirement allowance not required by any existing
Plan. INT'X.xxx will not enter into or modify any employment or severance
contracts, increase the salaries, wage rates or fringe benefits of its officers,
directors or employees or pay bonuses or other remuneration except for current
salaries, severance and other remuneration for which INT'X.xxx is obligated
under arrangements existing prior to the Unaudited Balance Sheet Date to which
INT'X.xxx is a party and which have been disclosed in the INT'X.xxx Disclosure
Schedule.
5.8 CLAIMS. INT'X.xxx will not settle any claim, action or proceeding,
except in the ordinary course of business consistent with prior practice.
5.9 ACCESS TO PROPERTIES AND RECORDS. Subject to contractual and other
obligations, INT'X.xxx will give Parent and its representatives full access, at
a place reasonably acceptable to INT'X.xxx, during reasonable business hours and
following reasonable notice but in such a manner as not unduly to disrupt the
business of INT'X.xxx, to its senior management, senior technical personnel,
premises, properties, contracts, commitments, books, records and affairs, and
will provide Parent with such financial, technical and operating data and other
information pertaining to its business as Parent may request. With INT'X.xxx's
prior consent, which will not be unreasonably withheld, Parent will be entitled
in conjunction with INT'X.xxx personnel to make appropriate inquiries of third
parties in the course of its investigation.
5.10 BREACH OF REPRESENTATIONS AND WARRANTIES. INT'X.xxx will not take
any action that would cause or constitute a breach of any of the representations
and warranties set forth in Article III or that would cause any of such
representations and warranties to be inaccurate in any material respect or that
would constitute a breach of any of its other obligations under this Agreement.
In the event of, and promptly after becoming aware of, the occurrence of or the
pending or threatened occurrence of any event that would cause or constitute
such a breach or inaccuracy, INT'X.xxx will give detailed notice thereof to
Parent and will use its reasonable best efforts to prevent or remedy promptly
such breach or inaccuracy.
5.11 CONSENTS. INT'X.xxx will promptly apply for or otherwise seek and
use reasonable best efforts to obtain, all Consents, and make all filings with
Governmental Entities, required with respect to the consummation of the Merger.
5.12 TAX RETURNS. INT'X.xxx will promptly provide or make available to
Parent copies of all tax returns, reports and information statements that have
been filed or are filed prior to the Closing Date.
5.13 EXCLUSIVITY; ACQUISITION PROPOSALS. Unless and until this
Agreement will have been terminated by either party pursuant to Article X hereof
and thereafter subject to Section 10.5, INT'X.xxx will not (and will use its
reasonable best efforts to ensure that none of its officers, directors,
stockholders, agents, representatives or affiliates) take or cause or permit any
Person to take, directly or indirectly, any of the following actions with any
party other than Parent and its designees: (i) solicit, encourage, initiate or
participate in any negotiations, inquiries, or discussions with respect to any
offer or proposal to acquire all or any significant part of INT'X.xxx's
business, assets or capital stock, whether by merger, consolidation, other
business combination, purchase of assets, tender or exchange offer or otherwise
(each of the foregoing, an "ACQUISITION TRANSACTION"), (ii) disclose, in
connection with an Acquisition Transaction, any information not customarily
disclosed to any Person other than Parent or its representatives concerning
INT'X.xxx's business or properties or afford to any Person other than Parent or
its representatives access to its properties, books, or records, except in the
ordinary course of business and as required by law or pursuant to a governmental
request for information, (iii) enter into or execute any agreement relating to
an Acquisition Transaction, or (iv) make or authorize any public statement,
recommendation or solicitation in support of any Acquisition Transaction or any
offer or proposal relating to an Acquisition Transaction other than with respect
to the Merger PROVIDED, HOWEVER, that (a) INT'X.xxx may furnish or cause to be
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furnished information concerning INT'X.xxx and its businesses, properties or
assets to a Person, (b) the Company may engage in discussions or negotiations
with such Person, (c) following receipt of a proposal or offer for an
Acquisition Transaction, may make disclosure to its stockholders and may
recommend such proposal or offer to its stockholders and (d) following receipt
of a proposal or offer for an Acquisition Transaction the Board of Directors of
INT'X.xxx may enter into an agreement in principle or a definitive agreement
with respect to such Acquisition Transaction, but in each case referred to in
the foregoing clauses (a) through (d) only to the extent that the Board of
Directors of INT'X.xxx shall conclude in good faith after consultation with
outside legal counsel that such action is necessary or appropriate because
failure to take such action would be inconsistent with the fiduciary duties owed
by the Board of Directors to the stockholders of INT'X.xxx under applicable law;
and PROVIDED, FURTHER, that the Board of Directors of INT'X.xxx shall not take
any of the foregoing actions referred to in clauses (a) through (d) without
prior written notice to Parent with respect to such action. In the event that
INT'X.xxx is contacted by any third party expressing an interest in discussing
an Acquisition Transaction, INT'X.xxx will promptly notify Parent of such
contact and the identity of the party so contacting INT'X.xxx.
5.14 NOTICE OF EVENTS. Throughout the period between the date of this
Agreement and the Closing, INT'X.xxx will promptly advise and consult with
Parent regarding any and all material events and developments concerning its
financial position, results of operations, assets, liabilities or business or
any of the items or matters concerning INT'X.xxx covered by the representations,
warranties and covenants of INT'X.xxx contained in this Agreement.
5.15 REASONABLE BEST EFFORTS. INT'X.xxx will use its reasonable best
efforts to effectuate the transactions contemplated hereby and to fulfill and
cause to be fulfilled the conditions to Closing under this Agreement.
5.16 INSURANCE. INT'X.xxx will use its reasonable best efforts to
maintain in force at the Effective Time policies of insurance of the same
character and coverage as those described in the INT'X.xxx Disclosure Schedule,
and INT'X.xxx will promptly notify Parent in writing of any changes in such
insurance coverage occurring prior to the Effective Time.
5.17 FINANCIAL STATEMENTS. INT'X.xxx will use its reasonable best
efforts to deliver to Parent audited consolidated balance sheets as of December
31, 1997, December 31, 1998 and December 31, 1999 and audited consolidated
statements of income and consolidated cash flows for the twelve months ended
December 31, 1997, December 31, 1998 and December 31, 1999 no later than
February 28, 2000.
5.18 CONFIDENTIALITY AND ASSIGNMENT OF INVENTIONS AGREEMENTS. XXXX.xxx
shall use its reasonable best efforts to cause each officer and employee of
INT'X.xxx and its Subsidiaries to enter into a confidentiality and assignment of
inventions agreement substantially in the form of such agreement used by Parent
and its Subsidiaries in the country in which such officer or employee performs
services for INT'X.xxx. Any officer or employee of INT'X.xxx or any Subsidiary
who has not entered into such agreement shall have been terminated by XXXX.xxx
or such Subsidiary prior to the Closing.
ARTICLE VI
COVENANTS OF PARENT
During the period from the date of this Agreement and continuing until
the earlier of the termination of this Agreement or the Effective Time (or later
where so indicated), Parent and Merger Sub agree (except as expressly
contemplated by this Agreement or with INT'X.xxx's prior written consent):
6.1 BREACH OF REPRESENTATIONS AND WARRANTIES. Neither Parent nor Merger
Sub will take any action which would cause or constitute a breach of any of the
representations and warranties set forth in Article IV or which would cause any
of such representations and warranties to be inaccurate in any material respect.
In the event of, and promptly after becoming aware of, the occurrence of or the
pending or threatened occurrence of any event which would cause or constitute
such a breach or inaccuracy, Parent
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will give detailed notice thereof to INT'X.xxx and will use its reasonable best
efforts to prevent or remedy promptly such breach or inaccuracy.
6.2 ADDITIONAL INFORMATION; ACCESS. Parent will provide INT'X.xxx and
its stockholders with the information relating to Parent referred to in Section
4.5 and the information relating to Parent to be included in the Form S-4. In
addition, Parent will afford to INT'X.xxx and to its counsel and to the persons
expected to become stockholders of Parent pursuant to the Merger access
throughout the period prior to the Effective Time to its senior management and
all other information concerning Parent as INT'X.xxx or such stockholder may
reasonably request. Such stockholders will also be afforded the opportunity to
ask questions and to receive accurate and complete answers from Parent
concerning the terms and conditions of the Merger and the issuance of the Parent
Merger Shares pursuant thereto.
6.3 CONSENTS. Parent will promptly apply for or otherwise seek, and use
its reasonable best efforts to obtain, all consents and approvals, and make all
filings, required with respect to the consummation of the Merger.
6.4 REASONABLE BEST EFFORTS. Each of Parent and Merger Sub will use its
reasonable best efforts to effectuate the transactions contemplated hereby and
to fulfill and cause to be fulfilled the conditions to Closing under this
Agreement.
6.5 OFFICERS AND DIRECTORS. Parent agrees that all rights to
indemnification and all limitations on liability existing on the date hereof in
favor of, or for the benefit of, the present or former officers and directors of
INT'X.xxx and its Subsidiaries with respect to actions taken in their capacities
as directors or officers of INT'X.xxx or such INT'X.xxx Subsidiary prior to the
Effective Time as provided in the Charter Documents of INT'X.xxx will survive
the Merger and continue in full force and effect following the Effective Time
and will not be modified by Parent. Notwithstanding the foregoing, the
provisions of such Charter Documents will have no effect on the obligations of
any stockholders of INT'X.xxx pursuant to Article IX of this Agreement or the
Escrow Agreement.
6.6 NASDAQ NATIONAL MARKET LISTING. Parent will promptly prepare and
submit a NASDAQ listing application and will use its reasonable best efforts to
cause the Parent Merger Shares to be authorized for trading on the Nasdaq
National Market as soon as practicable.
6.7 NOTICE OF EVENTS. Throughout the period between the date of this
Agreement and the Closing, Parent will promptly advise and consult with
INT'X.xxx regarding any and all material adverse change to the representations,
warranties and covenants of Parent and Merger Sub contained in this Agreement
and will disclose to INT'X.xxx all material strategic and financing transactions
which Parent takes action in furtherance of which involve Parent or any Parent
Subsidiary.
6.8 THIRD PARTY BENEFICIARIES. Section 6.5 will survive the
consummation of the Merger, is intended to benefit the stockholders of INT'X.xxx
that receive Parent Merger Shares (the "NEW PARENT Stockholders") and the
present and former officers and directors of INT'X.xxx and its Subsidiaries,
will be binding on Parent and its successors and assigns, and will be
enforceable by the officers and directors of INT'X.xxx and the New Parent
Stockholders.
6.9 DIRECTORS OF PARENT. Prior to the date of the mailing of the Proxy
Statement, Parent shall nominate Xxxxx Xxxxxx to serve as a director of Parent
in accordance with the policies for directors of Parent, and Parent shall take
such action as is necessary to cause such person to become a director of Parent
effective as of the Effective Time.
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ARTICLE VII
ADDITIONAL AGREEMENTS
In addition to the foregoing, Parent, Merger Sub, and INT'X.xxx each
agree to take the following actions after the execution of this Agreement.
7.1 PREPARATION OF THE FORM S-4 AND THE PROXY STATEMENT;
STOCKHOLDERS MEETING . (a) INT'X.xxx shall use its reasonable best efforts to
hold one or more special meetings of stockholders in accordance with the
applicable requirements of the DGCL and to obtain the INT'X.xxx Requisite
Stockholder Approval to enable the Merger to be effective on the Closing Date
(determined without regard to the condition to closing in Section 8.2(h)).
Parent shall use its reasonable best efforts to hold one or more special
meetings of stockholders to obtain the approval of the issuance of its shares
in connection with the Merger by the stockholders of Parent as required by
the rules of the Nasdaq Stock Market and in accordance with the applicable
requirements of the DCGL. In connection with obtaining the approval of its
stockholders, Parent shall prepare, with the assistance and cooperation of
INT'X.xxx, a Registration Statement on Form S-4 (the "Form S-4"). The Form
S-4 shall constitute a joint proxy and a prospectus and shall be used for
purposes of offering the Parent Merger Shares to the stockholders of
INT'X.xxx, soliciting proxies from such stockholders for the purpose of
obtaining the INT'X.xxx Requisite Stockholder Approval and soliciting proxies
from stockholders of Parent for the purposes of obtaining approval of the
issuance of its shares in connection with the Merger by the stockholders of
Parent (such proxy/ prospectus statement, together with the accompanying
letter to stockholders, notice of meeting and form of proxy shall be referred
to herein as the "Proxy Statement"). INT'X.xxx agrees to fully cooperate with
Parent in the preparation of the Form S-4, and shall, upon request, furnish
Parent with all information concerning it and its affiliates, directors,
officers and stockholders as Parent may reasonably request in connection with
the preparation of the Form S-4. INT'X.xxx shall prepare the portions of the
Form S-4, relating to INT'X.xxx and its subsidiaries including but not
limited to financial information, management of INT'X.xxx, description of
INT'X.xxx's business, executive compensation of the INT'X.xxx, the
recommendation of INT'X.xxx's Board of Directors, appraisal rights, risk
factors relating to INT'X.xxx, and INT'X.xxx portions of background of the
Merger, reasons for the Merger, interests of certain persons in the Merger
and security ownership of certain beneficial owners and management. INT'X.xxx
shall also prepare the disclosure concerning all payments which in the
absence of stockholder approval would be "Parachute Payments" as defined in
Code Section 280G(b)(2), which shall be in form and substance satisfactory to
Parent and its counsel, to satisfy all requirements applicable to INT'X.xxx
of applicable state and federal securities laws, the DGCL and Code Section
280G(b)(5)(B) and the regulations thereunder. No filing of, or amendment or
supplement to, the Form S-4 will be made by Parent and no amendment or
supplement to the Proxy Statement will be made by Parent or INT'X.xxx without
providing the other party the opportunity to review and comment thereon.
Parent will advise INT'X.xxx, promptly after it receives notice thereof, of
the time when the Form S-4 has become effective or any supplement or
amendment has been filed, the issuance of any stop order, the suspension of
the qualification of the Parent Merger Shares for offering or sale in any
jurisdiction, or any request by the Commission for amendment of the Proxy
Statement or
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the Form S-4 or comments thereon and responses thereto or requests by the
Commission for additional information. If at any time prior to the Effective
Time any information relating to Parent or INT'X.xxx or any of their respective
affiliates, officers or directors, should be discovered by the Parent or
INT'X.xxx which should be set forth in an amendment or supplement to any of the
Form S-4 or the Proxy Statement, so that any of such documents would not include
any misstatement of a material fact or omit to state any material fact necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading, the party which discovers such information shall
promptly notify the other party hereto and an appropriate amendment or
supplement describing such information shall be promptly filed with the
Commission, and to the extent required by law, disseminated to the stockholders
of Parent and INT'X.xxx. If the Commission requires a Tax opinion in connection
with the filing of the Form S-4, INT'X.xxx shall cause Xxxx, Gerber & Xxxxxxxxx,
counsel to INT'X.xxx, to provide such opinion in the form required by the
Commission. The issuance of such opinion shall be conditioned upon the receipt
by Xxxx, Gerber & Xxxxxxxxx of customary representation letters from each of
INT'X.xxx and Parent in a form reasonably agreed to by the parties.
(b) Parent shall file the Form S-4 with the Commission and
shall, with the assistance of INT'X.xxx, promptly respond to any comments from
the Commission on the Form S-4 and shall otherwise use its best efforts to have
the Form S-4 declared effective under the Securities Act as promptly
practicable. Promptly following such time as the Form S-4 is declared effective,
INT'X.xxx shall distribute the Proxy Statement to its stockholders and Parent
shall distribute the Proxy Statement to its stockholders. Parent shall comply
with all applicable provisions of and rules under the Securities Act and the
Exchange Act and state securities laws in the preparation and filing of the S-4
Registration Statement, the offering and issuance of the Parent Merger Shares,
the filing and distribution of the Proxy Statement, the solicitation of proxies
thereunder, and the calling and holding of the special meeting of stockholders
of Parent. Parent shall also ensure that any Form S-4 filed by Parent does not
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading (provided that Parent shall not be responsible for the accuracy and
completeness of information relating to INT'X.xxx or any of its subsidiaries or
any other information furnished by INT'X.xxx specifically for inclusion in the
S-4 Registration Statement).
(c) INT'X.xxx shall ensure that the Proxy Statement does not
contain an untrue statement of material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statement made,
under the circumstances under which it is made, not misleading (provided that
INT'X.xxx shall not be responsible for the accuracy or completeness of any
information relating to Parent or any of its Subsidiaries or furnished by Parent
specifically for inclusion in the Proxy Statement).
(d) INT'X.xxx, acting through its Board of Directors, shall
include in the Proxy Statement the unanimous recommendation of its Board of
Directors eligible to vote on such matters that its stockholders vote in favor
of the adoption of this Agreement and the approval of the Merger.
Notwithstanding the foregoing, the obligation set forth in the foregoing
sentence shall not apply (and the Board of Directors shall be permitted to
modify or withdraw any such recommendation previously made) if the Board of
Directors of INT'X.xxx concludes in good faith, after consultation with its
outside legal
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counsel, that fulfilling the obligations in the foregoing sentence would violate
the fiduciary duties of the Board of Directors under applicable law; PROVIDED,
HOWEVER, that nothing shall limit the obligation of INT'X.xxx to otherwise use
its reasonable best efforts to fulfill all of its obligations under this
Agreement, including without limitation, INT'X.xxx's obligations under Section
7.1(a) and (c).
(e) Parent, acting through its Board of Directors, shall
include in the Proxy Statement the unanimous recommendation of its Board of
Directors eligible to vote on such matters that the stockholders of Parent vote
in favor of the issuance of its shares in connection with the Merger.
Notwithstanding the foregoing, the obligation set forth in the foregoing
sentence shall not apply (and the Board of Directors shall be permitted to
modify or withdraw any such recommendation previously made) if the Board of
Directors of Parent concludes in good faith, after consultation with its outside
legal counsel, that fulfilling the obligations in the foregoing sentence would
violate the fiduciary duties of the Board of Directors under applicable law;
PROVIDED, HOWEVER, that nothing shall limit the obligation of the Parent to
otherwise use its reasonable best efforts to fulfill all of its obligations
under this Agreement, including without limitation, Parent's obligations under
Section 7.1 (a) and (b).
(f) All resales of shares of Parent Common Stock by each
INT'X.xxx Affiliate (as defined in Section 7.8(b)) will be subject to the
restrictions imposed by the third restated registration rights agreement of
Parent (the "REGISTRATION RIGHTS AGREEMENT") in the form attached as EXHIBIT
7.1, which will be entered into by the INT'X.xxx Affiliates. Parent will be
entitled to place the legends as referred to in the Registration Rights
Agreement on each certificate evidencing any shares of Parent Common Stock to be
received by the INT'L Affiliates pursuant to the terms of this Agreement and to
issue appropriate stop transfer instructions to the transfer agent for shares of
Parent Common Stock consistent with the terms of the Registration Rights
Agreement.
7.2 LEGAL CONDITIONS TO THE MERGER. Each of Parent, Merger Sub, and
INT'X.xxx will use all reasonable best efforts to take actions necessary to
comply promptly with all legal requirements which may be imposed on it with
respect to the Merger. Each of Parent, Merger Sub and INT'X.xxx will use all
reasonable best efforts to take all actions to obtain (and to cooperate with the
other parties in obtaining) any consent required to be obtained or made by
INT'X.xxx, Merger Sub, or Parent in connection with the Merger, or the taking of
any action contemplated thereby or by this Agreement.
7.3 EMPLOYEE BENEFITS. Nothing contained herein will, subject to
Section 6.5, be considered as requiring INT'X.xxx or Parent to continue any
specific plan or benefit, or to confer upon any employee, beneficiary,
dependent, legal representative or collective bargaining agent of such employee
any right or remedy of any nature or kind whatsoever under or by reason of this
Agreement, including without limitation any right to employment or to continued
employment for any specified period, at any specified location or under any
specified job category, except as specifically provided for in an offer letter
or other agreement of employment. It is specifically understood that continued
employment with INT'X.xxx or employment with Parent is not offered or implied
for any other employees of INT'X.xxx and any continuation of employment with
INT'X.xxx after the Closing will be at will except as specifically provided
otherwise in an offer letter or other agreement of employment. Parent agrees
that it will cause Merger Sub to comply with the WARN Act, to the extent
applicable to INT'x.xxx and its Subsidiaries in connection with actions taken at
and after the Effective Time.
7.4 EXPENSES. Whether or not the Merger is consummated, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby and thereby, including investment banking, legal and
accounting expenses, will be paid by the party incurring such expense; PROVIDED,
HOWEVER, that any such expenses incurred by INT'X.xxx in excess of $400,000
shall be borne by the stockholders of INT'X.xxx (without regard to Section 9.4)
through the determination of the Modified Share Amount as set forth in Section
2.1(d); PROVIDED, FURTHER, that INT'X.xxx will itemize any such investment
banking, legal and accounting expenses of INT'X.xxx prior to Closing and provide
Parent with an invoice and certification from all organizations providing such
services at the Closing in a form reasonably acceptable to Parent; and PROVIDED,
FURTHER, that the provisions of this Section 7.4 shall not be construed to
relieve a party from liability resulting from such party's breach of this
Agreement.
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7.5 ADDITIONAL AGREEMENTS. In case at any time after the Effective Time
any further action is reasonably necessary or desirable to carry out the
purposes of this Agreement or to vest the Surviving Corporation with full title
to all properties, assets, rights, approvals, immunities and franchises of
INT'X.xxx, the proper officers and directors of each corporation which is a
party to this Agreement will take all such necessary action. Without limiting
the foregoing, on or prior to the Closing Date, INT'X.xxx will deliver to Parent
a properly executed statement satisfying the requirements of Treasury Regulation
Sections 1.897-2(h) and 1.1445-2(c)(3) in a form reasonably acceptable to
Parent.
7.6 PUBLIC ANNOUNCEMENTS. Neither Parent nor INT'X.xxx will directly or
indirectly disseminate any press release or other announcement concerning this
Agreement or the transactions contemplated herein to any third party (except to
the directors, officers and employees of the parties to this Agreement whose
direct involvement is necessary for the consummation of the transactions
contemplated under this Agreement, to the attorneys, advisors and accountants of
the parties hereto, or except as Parent determines in good faith to be required
by applicable law after consultation with INT'X.xxx) without the prior written
agreement of the other parties.
7.7 CONFIDENTIALITY. INT'X.xxx and Parent have entered into a Mutual
Nondisclosure Agreement dated October 7, 1999 concerning each party's
obligations to protect the confidential information of the other party.
INT'X.xxx and Parent each hereby affirm each of their obligations under such
agreement. If this Agreement is terminated in accordance with Article X hereof,
Parent will, and will cause its accountants, counsel and other representatives
to deliver to INT'X.xxx all documents and other material, and all copies
thereof, obtained by Parent or on its behalf from INT'X.xxx in connection with
this Agreement, whether so obtained before or after the execution hereof, and
will not disclose any such information or documents to any third parties or make
any use of such. If this Agreement is terminated in accordance with Article X
hereof, INT'X.xxx will, and will cause its accountants, counsel and other
representatives to, deliver to Parent all documents and other material, and all
copies thereof, obtained by INT'X.xxx or by an officer, director or
representative of INT'X.xxx from Parent in connection with this Agreement,
whether so obtained before or after the execution hereof, and will not disclose
any such information or documents to any third parties or make any use of such.
7.8 POOLING.
(a) Parent, the Merger Sub and INT'X.xxx will use all
reasonable best efforts, will cooperate fully and will take all actions as are
reasonably necessary to allow the Merger and other transactions contemplated by
this Agreement to be accounted for as a "pooling of interests" in accordance
with United States generally accepted accounting principles and applicable rules
and regulations of the Commission.
(b) INT'X.xxx has delivered to Parent prior to the date of
this Agreement a letter from INT'X.xxx, prepared after consultation with its
counsel, that identifies all persons it believes may be "affiliates" of
INT'X.xxx, as such term is used in Rule 145 under the Securities Act and
applicable accounting pronouncements of the Commission (each such Person, an
"INT'X.XXX AFFILIATE"). Each such INT'X.xxx Affiliate has executed and delivered
to Parent a written agreement (an "INT'X.XXX AFFILIATE AGREEMENT") in the form
of EXHIBIT 7.8(B) hereto to the effect that such INT'X.xxx Affiliate (i) has not
made and will not make any disposition of any shares of INT'X.xxx Common Stock
or INT'X.xxx Preferred Stock or other securities of INT'X.xxx in the 30-day
period prior to the Effective Time, and (ii) will not make any disposition of
any of the Parent Merger Shares to be received by such Person after the
Effective Time until Parent shall have publicly released a report including the
combined financial results of Parent and INT'X.xxx for a period of at least 30
days of combined operations of Parent and INT'X.xxx.
(c) Section 7.8(c) of the Parent Disclosure Schedule
identifies each executive officer and director of Parent (each such Person, a
"PARENT AFFILIATE"). Each such Parent Affiliate has executed and delivered to
INT'X.xxx a written agreement (a "Parent AFFILIATE AGREEMENT") in the form of
EXHIBIT 7.8(C) hereto to the effect that such Parent Affiliate (i) has not made
and will not make any disposition of any shares of Parent Common Stock in the
30-day period prior to the Effective Time, and (ii)
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will not make any disposition of any shares of Parent Common Stock owned by such
person until Parent shall have publicly released a report including the combined
financial results of Parent and INT'X.xxx for a period of at least 30 days of
combined operations of Parent and INT'X.xxx.
7.9 INT'X.XXX VOTING AGREEMENT. Simultaneous with the execution of this
Agreement, INT'X.xxx will cause the voting agreement in the form attached as
EXHIBIT 7.9 (the "INT'X.XXX VOTING AGREEMENT") to be executed by all directors,
officers, affiliates and holders of 5% of the capital stock of INT'X.xxx and
their affiliates holding in the aggregate at least 60% of the Outstanding
INT'X.xxx Shares and at least 80% of each of the Outstanding INT'X.xxx Series C
Shares and the Outstanding INT'X.xxx Series D Shares, and to be delivered to
Parent.
7.10 PARENT VOTING AGREEMENT. Simultaneous with the execution of this
Agreement, Parent will cause the voting agreement in the form attached as
EXHIBIT 7.10 (the "PARENT VOTING AGREEMENT") to be executed by all directors and
officers of Parent and their affiliates holding in the aggregate at least 60% of
the Parent shares of Parent Common Stock outstanding on the date hereof, and to
be delivered to INT'X.xxx.
7.11 XXXX-XXXXX-XXXXXX FILING. If and to the extent applicable, Parent
and INT'X.xxx agree to file, and to cause any other Person obligated to do so as
a result of such person's stock holdings in Parent or INT'X.xxx, a Notification
and Report Form in accordance with the notification requirements of the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976 and the rules and
regulations thereunder (collectively, the "HSR ACT") with the Antitrust Division
of the United States Department of Justice and the Federal Trade Commission and
to use its and their reasonable best efforts to achieve the prompt termination
or expiration of the waiting period or any extension thereof provided for under
the HSR Act as a prerequisite to the consummation of the transactions provided
for herein.
7.12 BOARD OF DIRECTORS MEETINGS. After the Closing of the Merger, for
as long as Cornerstone Equity Investors IV, L.P. holds at least one-half of the
Parent Merger Shares issued to them in connection with the Merger, Parent shall
permit one (1) representative of Cornerstone Equity Investors IV, L.P. (the
"CORNERSTONE OBSERVER") to attend, in a non-voting observer capacity, each
meeting of the Board of Directors of Parent and each meeting of any committee
thereof and to participate in all discussions during each such meeting. Parent
shall send to the Cornerstone Observer notice of the time and place of any such
meeting, in the same manner and at the same time as notice is sent to its
directors. Parent shall also provide to the Cornerstone Observer copies of all
notices, reports, minutes, contracts and other documents, at the time and in the
same manner as such documents are provided to the Board of Directors of Parent,
unless the Board of Directors or management of Parent shall determine that
delivery of such notice and/or materials to the Cornerstone Observer may be
detrimental to Parent. Upon the request of the Board of Directors of the
Company, the Cornerstone Observer will excuse himself from any portion of Board
or committee meetings if the Board of Directors shall determine that the
Cornerstone Observer's presence may violate the attorney-client privilege or may
create a conflict of interest or may be otherwise detrimental to Parent. Any
materials furnished to the Cornerstone Observer and the discussions and
presentations in connection with or at any meeting shall be considered
confidential information and the Cornerstone Observer will keep such materials
and discussions confidential and will not disclose or divulge such materials and
discussions to any third party.
7.13 EMPLOYMENT, CONSULTING AND NONCOMPETITION AGREEMENTS. Simultaneous
with the execution of this Agreement, INT'X.xxx will cause each of Xxxxx Xxxxxx
[, Xxxxxx Xxxxxxxxxx] and Xxxxxxxx Xxxxx to execute employment or consulting
and/or non-competition agreements with Parent to become effective at the
Effective Time in the form provided by Parent to INT'X.xxx.
7.14 INT'X.XXX CONVERSION. Simultaneous with the execution of this
Agreement, INT'X.xxx will cause the conversion notice in the form attached as
EXHIBIT 7.14 to be executed by the holders of INT'X.xxx Series A Preferred Stock
who, together with the parties executing an INT'X.xxx Voting Agreement, hold at
least 51% of the outstanding shares of INT'X.xxx Series A Preferred Stock and by
the holders of INT'X.xxx Series B Preferred Stock who, together with the parties
executing an INT'X.xxx Voting Agreement, hold at least 51% of the outstanding
shares of INT'X.xxx Series B Preferred Stock,
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INT'X.xxx shall cause such notices to be delivered to Parent. INT'X.xxx hereby
elects that all outstanding shares of INT'X.xxx Series A Preferred Stock and all
of the outstanding shares of INT'X.xxx Series B Preferred Stock be converted to
shares of INT'X.xxx Series A Common Stock immediately prior to the Effective
Time.
7.15 Debt Adjustments. In the event INT'X.xxx or its Subsidiaries shall
breach the covenants in Section 5.6 hereof, the aggregate amount of all breaches
of such Section 5.6 shall be deemed to be the "Debt Adjustment Amount" for
purposes of this Agreement. "Debt Payment Shares" shall mean a number of shares
of Parent Common Stock determined by dividing the Debt Adjustment Amount plus
any accrued interest on such amount as of the Closing by the Parent Average
Closing Price.
ARTICLE VIII
CONDITIONS PRECEDENT
8.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
respective obligations of each party to effect the Merger will be subject to the
satisfaction prior to the Closing Date of the following conditions unless
waived:
(a) GOVERNMENTAL APPROVALS. Other than the filing of the
Merger Documents with the Secretary of State of Delaware, all statutory
requirements and all Consents of Governmental Entities legally required for the
consummation of the Merger and the transactions contemplated by this Agreement
will have been filed, occurred, or been obtained, other than such Consents for
which the failure to obtain would not have a material adverse effect on the
consummation of the Merger or the other transactions contemplated hereby or on
the Business Condition of Parent or INT'X.xxx. If and to the extent applicable,
the filing and waiting period requirements under the HSR Act will have been
complied with and will have expired or terminated.
(b) NO RESTRAINTS. No statute, rule or regulation, and no
final and nonappealable order, decree or injunction will have been enacted,
entered, promulgated or enforced by any court or Governmental Entity of
competent jurisdiction which enjoins or prohibits the consummation of the
Merger.
(c) PARENT STOCKHOLDER APPROVAL. The issuances of the shares
of Parent Common Stock in connection with the Merger will have been approved by
the requisite vote of the stockholders of Parent.
(d) QUOTATION. The shares of Parent Common Stock issuable to
INT'X.xxx's stockholders as contemplated by this Agreement shall have been
approved for quotation on the Nasdaq National Market, subject to official notice
of issuance.
(e) FORM S-4. The Form S-4 shall have become effective under
the Securities Act and shall not be the subject of any stop order or proceedings
seeking a stop order.
(f) PARENT POOLING LETTER. Parent will have received a letter
dated immediately prior to the Closing Date from PricewaterhouseCoopers LLP,
Parent's independent accountants, to the effect that such firm concurs with
Parent's management that no conditions exist that would preclude Parent from
accounting for the Merger as a "pooling of interests" in accordance with United
States generally accepted accounting principles and applicable rules and
regulations of the Commission and Parent shall have delivered a copy of such
letter to INT'X.xxx.
(g) INT'X.XXX POOLING LETTER. Xxxxxx Xxxxxxxx LLP shall have
delivered to INT'X.xxx a letter dated immediately prior to the Closing Date to
the effect that INT'X.xxx is "poolable" for accounting purposes under Accounting
Principles Board Opinion No. 16, United States generally accepted accounting
principles and applicable rules and regulations of the Commission and INT'X.xxx
shall have delivered a copy of such letter to Parent.
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8.2 CONDITIONS OF OBLIGATIONS OF PARENT AND MERGER SUB. The obligations
of Parent and Merger Sub to effect the Merger are subject to the satisfaction of
the following conditions unless waived by Parent and Merger Sub:
(a) REPRESENTATIONS AND WARRANTIES OF INT'X.XXX. The
representations and warranties of INT'X.xxx set forth in this Agreement will be
true and correct in all material respects as of the date of this Agreement and
as of the Closing Date as though made on and as of the Closing Date, except (i)
as otherwise contemplated by this Agreement, (ii) as a result of actions taken
or not taken pursuant to this Agreement or at the direction of or after
consultation with and written concurrence of Parent, (iii) for representations
and warranties specifically limited to an earlier date(s) and (iv) for breaches
which, individually or in the aggregate, would not have a material adverse
effect on the Business Condition of INT'X.xxx. Parent will have received a
certificate signed by the chief executive officer and the chief financial
officer of INT'X.xxx to such effect on the Closing Date.
(b) PERFORMANCE OF OBLIGATIONS OF INT'X.XXX. INT'X.xxx will
have performed all agreements and covenants required to be performed by it under
this Agreement prior to the Closing Date except (i) as otherwise contemplated or
permitted by this Agreement, (ii) as a result of actions taken or not taken at
the direction of or after consultation with and written concurrence of Parent
and (iii) for such failures to perform which, individually or in the aggregate,
would not have a material adverse effect on the Business Condition of INT'X.xxx;
provided, that INT'X.xxx hereby acknowledges and agrees that any breaches of the
covenants set forth in Section 5.6 hereof which individually or in the aggregate
exceed $3,000,000 will be deemed for purposes of this Section 8.2(b) to have a
material adverse effect on the Business Condition of INT'X.xxx. Parent will have
received a certificate signed by the chief executive officer and the chief
financial officer of INT'X.xxx to such effect on the Closing Date.
(c) ESCROW AGREEMENTS. Parent will have received from
INT'X.xxx and the Indemnification Representative a duly executed Escrow
Agreement.
(d) LEGAL ACTION. There will not be pending or threatened in
writing any action, proceeding or other application before any court or
Governmental Entity brought by any Person or Governmental Entity: (i)
challenging or seeking to prohibit the consummation of the transactions
contemplated by this Agreement; or (ii) seeking to prohibit or impose any
limitations on Parent's ownership or operation of all or any portion of
INT'X.xxx's business or assets, or to compel Parent to dispose of or hold
separate all or any portion of its or INT'X.xxx's business or assets as a result
of the transactions contemplated by the Agreement which, in any such case
described in this clause (ii), if successful would have a material adverse
effect on the Business Condition of INT'X.xxx.
(e) OPINION OF COUNSEL. Parent will have received an opinion
dated as of the Closing Date of Xxxx, Gerber & Xxxxxxxxx, counsel to INT'X.xxx,
covering the matters set forth in EXHIBIT 8.2.
(f) CONSENTS. Parent will have received duly executed copies
of all Consents specified in Section 3.4 of the INT'X.xxx Disclosure Schedule
except where the failure to receive any such Consent either individually or
together with all other failures to receive a Consent would not have a material
adverse effect on the Business Condition of INT'X.xxx, and there will not be any
Consents which are required to be disclosed in INT'X.xxx Disclosure Schedule
which have not been so disclosed, and have not been received, if the failure to
receive such Consents would have a material adverse effect on the Business
Condition of INT'X.xxx, in each case except for such thereof as Parent and
INT'X.xxx will have agreed in writing will not be obtained.
(g) TERMINATION OF RIGHTS AND CERTAIN SECURITIES. Any
registration rights, rights of refusal, voting rights, rights to any liquidation
preference or redemption rights relating to any security of INT'X.xxx will have
been terminated or waived or satisfied as of the Closing.
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(h) STOCKHOLDER APPROVALS. This Agreement and the Merger will
have been approved by stockholders of INT'X.xxx holding at least ninety percent
(90%) of the voting power of the Outstanding INT'X.xxx Shares.
(i) TERMINATION OF 401K PLAN. The INT'X.xxx Board of Directors
will have passed and not rescinded resolutions satisfactory to Parent's counsel
effectively terminating INT'X.xxx's 401(k) Plan immediately prior to the
Closing.
(j) CORPORATE PROCEEDINGS SATISFACTORY. All corporate and
other proceedings to be taken by INT'X.xxx in connection with the transactions
contemplated hereby and all documents incident thereto will be satisfactory in
form and substance to Parent and its counsel, and Parent and its counsel will
have received all such counterpart originals or certified or other copies of
such documents as they reasonably may request.
(k) LETTER FROM XXXXXX XXXXXXXX. The Parent shall have
received a letter dated as of a date not more than two days prior to the date
that the Form S-4 is declared effective and shall have received a subsequent
similar letter dated as of a date not more than two days prior to the Effective
Time, from Xxxxxx Xxxxxxxx LLP, auditors for INT'X.xxx, addressed to Parent in a
customary form reasonably satisfactory to Parent, containing statements and
information of the type ordinarily included in an accountants' "comfort letters"
with respect to the financial statements and financial information of INT'X.xxx
included in the Form S-4.
(l) INT'X.XXX NOTES. The INT'X.xxx Notes will have been
cancelled and be of no further force and effect.
(m) REGISTRATION RIGHTS AGREEMENT. Parent will have received
an executed Registration Rights Agreement from the INT'X.xxx Affiliates.
(n) Termination of Certain Agreement and Arrangements. The
agreements and arrangements described in Section 8.2(n) of the INT'X.xxx
Disclosure Schedule will have been terminated with no liability to INT'X.xxx and
evidence of such termination will have been delivered to Parent.
8.3 CONDITIONS OF OBLIGATION OF INT'X.XXX. The obligation of INT'X.xxx
to effect the Merger is subject to the satisfaction of the following conditions
unless waived by INT'X.xxx:
(a) REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB.
The representations and warranties of Parent and Merger Sub set forth in this
Agreement will be true and correct in all material respects as of the date of
this Agreement and as of the Closing Date as though made on and as of the
Closing Date, except (i) as otherwise contemplated by this Agreement, (ii) as a
result of actions taken or not taken pursuant to this Agreement, (iii) for
representations and warranties specifically limited to an earlier date(s) and
(iv) for breaches which, individually or in the aggregate, would not have a
material adverse effect on the Business Condition of Parent. INT'X.xxx will have
received a certificate signed on behalf of Parent by a duly authorized officer
of Parent to such effect on the Closing Date.
(b) PERFORMANCE OF OBLIGATIONS OF PARENT AND MERGER SUB.
Parent and Merger Sub will have performed all agreements and covenants required
to be performed by them under this Agreement prior to the Closing Date except
(i) as otherwise contemplated or permitted by this Agreement, and (ii) for such
failures to perform which, individually or in the aggregate, would not have a
material adverse effect on the Business Condition of Parent. INT'X.xxx will have
received a certificate signed on behalf of Parent by officers of Parent to such
effect on the Closing Date.
(c) OPINION OF PARENT'S COUNSEL. INT'X.xxx have received an
opinion dated the Closing Date of Xxxxx, Xxxxxxx & Xxxxxxxxx, LLP, substantially
in the form attached as EXHIBIT 8.3.
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(d) STOCKHOLDER APPROVAL. This Agreement and the Merger will
have been approved and adopted by the requisite vote of the stockholders of
Merger Sub, as required by the DGCL and Merger Sub's Certificate of
Incorporation (the "Requisite Stockholder Approval").
(e) ESCROW AGREEMENT. Parent shall have duly executed and
delivered the Escrow Agreement.
(f) TAX-FREE REORGANIZATION. INT'X.xxx shall have received a
written opinion from Xxxx, Gerber & Xxxxxxxxx to the effect that the Merger
should constitute a reorganization within the meaning of Section 368 of the
Code. In preparing such tax opinion, counsel may rely on reasonable assumptions
and reasonable written representations from Parent and INT'X.xxx and their
respective officers relating thereto.
(g) LEGAL ACTION. There will not be pending or threatened in
writing any action, proceeding or other application before any court or
Governmental Entity brought by any Person or Governmental Entity: (i)
challenging or seeking to prohibit the consummation of the transactions
contemplated by this Agreement or (ii) restricting in any way the receipt,
ownership, or ability to dispose of the consideration to be received by any
stockholder of INT'X.xxx in the transactions contemplated by this Agreement;
PROVIDED, HOWEVER, that INT'X.xxx will automatically be deemed to waive this
condition if Parent agrees to indemnify, defend and hold any such named party
harmless against any such action.
(h) BOARD OF DIRECTORS. Xxxxx Xxxxxx shall have been elected
as a member of the Board of Directors of Parent.
(i) REGISTRATION RIGHTS AGREEMENT. Parent and any other party
required to execute the Registration Rights Agreement shall have duly executed
and delivered the Registration Rights Agreement to Cornerstone and Dakota.
ARTICLE IX
INDEMNIFICATION
9.1 INDEMNIFICATION RELATING TO AGREEMENT. Subject to Sections 9.3 and
9.5, as an integral term of the Merger, all stockholders of INT'X.xxx who accept
the Parent Merger Shares and execute the Escrow Agreement (which is a condition
to receiving such consideration), severally and not jointly, hereby agree to
defend, indemnify and hold Parent harmless from and against, and to reimburse
Parent with respect to, any and all losses, damages, liabilities, claims,
judgments, settlements, fines, costs and expenses (including reasonable
attorneys' fees), determined as provided in Section 9.3 ("INDEMNIFIABLE
AMOUNTS"), of every nature whatsoever incurred by Parent (which will be deemed
to include any of the foregoing incurred by the Surviving Corporation) by reason
of or arising out of or in connection with (i) any breach, or any claim
(including claims by parties other than Parent) that constitutes a breach, by
INT'X.xxx of any representation or warranty of INT'X.xxx contained in this
Agreement or in any certificate or other document delivered to Parent pursuant
to this Agreement, other than any breach or related claim in respect of actions
taken or not taken pursuant to this Agreement or at the written direction of or
after consultation with and written concurrence of Parent and (ii) the failure,
partial or total, of INT'X.xxx or any Subsidiary to perform any agreement or
covenant required by this Agreement to be performed by it or them other than any
breach or related claim in respect of actions taken or not taken pursuant to
this Agreement or at the written direction of or after consultation with and
written concurrence of Parent. The foregoing obligations to indemnify Parent
will be determined without regard to any right to indemnification to which any
Person may have in his or her capacity as an officer, director, employee, agent
or any other capacity of INT'X.xxx or any Subsidiary, and no stockholder of
INT'X.xxx will be entitled to any indemnification from INT'X.xxx or the
Surviving Corporation for amounts paid hereunder. There will be no right of
contribution or subrogation from Parent or the Surviving Corporation for
indemnification payments made by or for the account of the stockholders of
INT'X.xxx. Notwithstanding any provision in this Agreement
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to the contrary, Indemnifiable Amounts shall not include (i) any lost profits,
lost revenues or lost business opportunities, or (ii) any amounts which shall
have been recovered by Parent under any insurance policies.
9.2 THIRD PARTY CLAIMS. With respect to any claims or demands by third
parties as to which Parent may seek indemnification hereunder whenever Parent
will have received a written notice that such a claim or demand has been
asserted or threatened, Parent will promptly notify the "Indemnification
Representative" (as designated in the Escrow Agreement) of such claim or demand
and of the facts within Parent's knowledge that relate thereto. The
Indemnification Representative will then have the right to defend, contest,
negotiate or settle any such claim or demand through counsel of his own
selection, reasonably satisfactory to Parent, and solely at the Indemnification
Representative's own cost and expense, which costs and expenses will be
reimbursed pursuant to the Escrow Agreement. Notwithstanding the preceding
sentence, the Indemnification Representative will not settle, compromise, or
offer to settle or compromise any such claim or demand without the prior written
consent of Parent, which consent will not be unreasonably withheld. Without
limiting Parent's rights to object for other reasons, Parent may object to a
settlement or compromise which includes any provision which in its reasonable
judgment may have an adverse impact on or establish an adverse precedent for the
Business Condition of Parent or any of its Subsidiaries. If the Indemnification
Representative gives notice to Parent within thirty (30) calendar days after
Parent has notified the Indemnification Representative that any such claim or
demand has been made in writing, that the Indemnification Representative elects
to have Parent defend, contest, negotiate, or settle any such claim or demand,
then Parent will have the right to contest and/or settle any such claim or
demand and seek indemnification pursuant to this Article IX as to any
Indemnifiable Amounts; PROVIDED, HOWEVER, that Parent will not settle,
compromise, or offer to settle or compromise any such claim or demand without
the prior written consent (which may include a general or limited consent) of
the Indemnification Representative, which consent will not be unreasonably
withheld. If the Indemnification Representative fails to give written notice to
Parent of his intention to contest or settle any such claim or demand within
thirty (30) calendar days after Parent has notified the Indemnification
Representative that any such claim or demand has been made in writing, or if any
such notice is given but any such claim or demand is not contested by the
Indemnification Representative within a reasonable time thereafter, Parent will
have the right to contest and/or settle any such claim or demand in its sole
discretion and seek indemnification pursuant to this Article IX as to any
Indemnifiable Amounts. The adoption of this Agreement by the stockholders of
INT'X.xxx will also constitute their approval of the Indemnification
Representative.
9.3 LIMITATIONS. Notwithstanding any other provision in this Article
IX, Parent will be entitled to indemnification pursuant to this Article IX only
to the extent that the aggregate Indemnifiable Amounts (which shall be
determined for all purposes of this Article IX disregarding any qualification in
any representation or warranty as to "materially" or "material" or "material
adverse effect") exceed Five Hundred Thousand Dollars ($500,000) (the "THRESHOLD
AMOUNT") PROVIDED THAT at such time as the amount to which Parent is entitled to
be indemnified exceeds the Threshold Amount, Parent shall be entitled to be
indemnified up to the full Indemnifiable Amounts including the Threshold Amount.
For purposes of indemnification under this Agreement, each Parent Merger Share
shall at all times be valued at the Parent Average Closing Price. The aggregate
amount to which Parent will be entitled to be indemnified pursuant to this
Article IX will not exceed a dollar amount equal to the value of the aggregate
number of Escrow Shares held in escrow pursuant to the terms of the Escrow
Agreement valued at the Parent Average Closing Price per share , and the
liability of any single stockholder for indemnification obligations pursuant to
this Article IX shall be limited to such stockholder's PRO RATA share of any
Indemnifiable Amounts based on the number of Escrow Shares deposited in escrow
by such stockholder relative to the aggregate number of Escrow Shares and the
aggregate liability of any single stockholder for indemnification obligations
pursuant to this Article IX shall be equal to a dollar amount equal to the
Parent Average Closing Price multiplied by the aggregate number of Escrow Shares
deposited in escrow by such stockholder; PROVIDED, HOWEVER, that there will be
no limitation on the obligations of any person for Indemnifiable Amounts arising
out of criminal activity or fraud by such person, including, without limitation,
any actions in such person's capacity as an employee, officer or director of
INT'X.xxx or its Subsidiaries, or for any stockholder of INT'X.xxx for breaches
of any representation or warranty contained in the Letter of Transmittal
delivered by such stockholder.
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9.4 BINDING EFFECT. The indemnification obligations contained in this
Article IX are an integral part of this Agreement and the Merger in the absence
of which Parent would not have entered into this Agreement.
9.5 TIME LIMIT. The representations, warranties, covenants and
agreements of INT'X.xxx set forth in this Agreement and the certificates and
schedules executed or delivered pursuant to this Agreement will survive the
Closing for one year; PROVIDED, HOWEVER, that claims relating to the
representations and warranties in Sections 3.6(a) and (b) may be made only on or
before the date that Parent publishes audited financial results covering at
least 30 days combined operations of Parent and INT'X.xxx.
9.6 SOLE REMEDY. Notwithstanding any other provision in this Agreement
to the contrary, the provisions of this Article IX and the provisions of the
Escrow Agreement will be the sole and exclusive remedy of (and corresponding
liability of any stockholder of INT'X.xxx, in such stockholder's capacity as
such, to) Parent, Merger Sub and the Surviving Corporation for any damage,
claim, cause of action or right of any nature arising out of or relating to any
breach of representations, warranties, covenants and agreements of INT'X.xxx set
forth in this Agreement and the certificates and schedules executed or delivered
by it pursuant to this Agreement.
ARTICLE X
TERMINATION
10.1 MUTUAL AGREEMENT. This Agreement may be terminated at any time
prior to the Effective Time by the written consent of Parent and INT'X.xxx.
10.2 TERMINATION BY PARENT. This Agreement may be terminated by Parent
(PROVIDED THAT it is not then in material breach of any representation,
warranty, covenant or agreement contained in this Agreement) alone, by means of
written notice to INT'X.xxx, if there has been a material breach by INT'X.xxx or
any Subsidiary of any representation, warranty, covenant or agreement set forth
in this Agreement or other ancillary agreements, which breach would in Parent's
reasonable opinion render it impossible for INT'X.xxx to satisfy the closing
conditions contained in Section 8.2 and has not been cured within twenty (20)
business days following receipt by INT'X.xxx of notice of such breach.
10.3 TERMINATION BY INT'X.XXX. (a) This Agreement may be terminated by
INT'X.xxx by means of written notice to Parent and payment of the Termination
Fee (as defined below) if it has fulfilled its obligations under Section 7.1(a)
and (c) hereof but has failed to obtain the INT'X.xxx Requisite Stockholder
Approval. The Termination Fee shall be paid by wire transfer of immediately
available funds to an account designated by Parent and any termination pursuant
to this Section 10.3(a) shall only be effective upon receipt of the Termination
Fee in such account. THE "TERMINATION FEE" SHALL BE A DOLLAR AMOUNT EQUAL TO 5%
OF THE RESULT OF MULTIPLYING (I) THE PARENT AVERAGE CLOSING PRICE BY (II) THE
NUMBER OF PARENT MERGER SHARES THAT WOULD HAVE BEEN ISSUABLE BY PARENT IF THE
CLOSING HAD OCCURRED ON THE DATE OF SUCH TERMINATION, ASSUMING THAT THERE WERE
NO EXCLUDED SHARES, NO SERIES C EXCLUDED SHARES AND NO SERIES D EXCLUDED SHARES
AND THAT ALL OUTSTANDING INT'X.XXX OPTIONS WERE EXERCISED IMMEDIATELY PRIOR TO
SUCH DATE.
(B) This Agreement may also be terminated by INT'X.xxx (PROVIDED THAT
it is not then in material breach of any representation, warranty, covenant or
agreement contained in this Agreement) alone, by means of written notice to
Parent, if there has been a material breach by Parent or any Subsidiary of any
representation, warranty, covenant or agreement set forth in the Agreement or
other ancillary agreements, which breach would in INT'X.xxx's reasonable opinion
render it impossible for INT'X.xxx to satisfy the closing conditions contained
in Section 8.3 and has not been cured within twenty (20) business days following
receipt by Parent of notice of such breach,
10.4 OUTSIDE DATE. This Agreement may be terminated by Parent alone or
by INT'X.xxx alone by means of written notice if the Effective Time does not
occur on or prior to June 30, 2000;
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PROVIDED, HOWEVER, that the right to terminate this Agreement pursuant to the
preceding clause will not be available to any party whose failure to fulfill any
obligation under this Agreement has been a significant cause of, or resulted in,
the failure of the Effective Time to occur on or before such date.
10.5 EFFECT OF TERMINATION. In the event of termination of this
Agreement by either INT'X.xxx or Parent as provided in this Article, this
Agreement will forthwith become void and have no effect, and there will be no
liability or obligation on the part of Parent, INT'X.xxx, Merger Sub or their
respective officers or directors, except that (i) the provisions of Sections
7.4, 7.6, 7.7 and 11.2 will survive any such termination and abandonment, and
(ii) no party will be released or relieved from any liability arising from the
willful breach by such party prior to termination of any of its representations,
warranties, covenants or agreements as set forth in this Agreement.
ARTICLE XI
MISCELLANEOUS
11.1 ENTIRE AGREEMENT. This Agreement, including the exhibits,
schedules and other agreements delivered pursuant to this Agreement contain all
of the terms and conditions agreed upon by the parties relating to the subject
matter of this Agreement and supersede all prior agreements, negotiations,
correspondence, undertakings and communications of the parties, whether oral or
written, respecting that subject matter.
11.2 GOVERNING LAW; CONSENT TO JURISDICTION. The Merger and this
Agreement will be governed by the internal laws of the State of Delaware. Legal
proceedings relating to this Agreement, the agreements executed in connection
with this Agreement or the transactions contemplated hereby or thereby may be
commenced only in the state or federal courts in the State of Delaware. Each of
the parties hereby consents to the exclusive jurisdiction of such courts (and of
the appropriate appellate courts) in any such action or proceeding and waives
any objection to venue laid therein. The foregoing provisions will not be
construed to preclude any party from bringing a counter-claim in any action or
proceeding properly commenced in accordance with the foregoing provisions.
Process in any such action or proceeding may be served on any party anywhere in
the world. Notwithstanding the foregoing, any dispute relating to a claim under
the Escrow Agreement will be resolved in accordance with the arbitration
provisions of the Escrow Agreement.
11.3 NOTICES. All notices, requests, demands or other communications
which are required or may be given pursuant to the terms of this Agreement will
be in writing and will be deemed to have been duly given: (i) on the date of
delivery if personally delivered by hand, (ii) upon the third day after such
notice is deposited in the United States mail, if mailed by registered or
certified mail, postage prepaid, return receipt requested, (iii) upon the date
scheduled for delivery after such notice is sent by a nationally recognized
overnight express courier or (iv) by fax upon written confirmation (including
the automatic confirmation that is received from the recipient's fax machine) of
receipt by the recipient of such notice:
IF TO PARENT OR MERGER SUB Lionbridge Technologies, Inc.
-------------------------- 000 Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxx X. Xxxxx
Telephone No.: (000) 000-0000
Fax No.: (000) 000-0000
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WITH COPIES TO:
Xxxxx, Xxxxxxx & Xxxxxxxxx, LLP
000 Xxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxx, Esq. &
Xxxxx X. Xxxxxx, Esq.
Telephone No.: (000) 000-0000
Fax No.: (000) 000-0000
IF TO INT'X.XXX: INT'X.xxx, Inc.
----------------
000 Xxx Xxxxxxxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxxxxxxx 00000
Attention: Chief Executive Officer
Telephone No.: (000) 000-0000
Fax No.: (000) 000-0000
With copies to:
INT'X.xxx, Inc.
000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxxxx
Telephone No.: (000) 000-0000
Fax No.: (000) 000-0000
Cornerstone Equity IV, L.P.
000 Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, XX 00000
Attention: Xxxxxxx Xxxxxx
Telephone: (000) 000-0000
Fax No.: (000) 000-0000
Dakota/EGI, LLC
c/o Equity Group Investments
Two X. Xxxxxxxxx Xxxxx
Xxxxx 000
Xxxxxxx, XX 00000
Attn: Xxxxx Xxxxxx, Esq.
Telephone: (000) 000-0000
Fax No: (000) 000-0000
Xxxx, Xxxxxx & Xxxxxxxxx
Two Xxxxx XxXxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Attn: Xxx Xxxxxxxxx
Telephone No.: (000) 000-0000
Fax No.: (000) 000-0000
Such addresses may be changed, from time to time, by means of a notice
given in the manner provided in this Section 11.3.
11.4 SEVERABILITY. If any provision of this Agreement is held to be
unenforceable for any reason, it will be modified rather than voided, if
possible, in order to achieve the intent of the parties to this
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Agreement to the extent possible. In any event, all other provisions of this
Agreement will be deemed valid and enforceable to the full extent.
11.5 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties of Parent contained in this Agreement and schedules and
certificates executed or delivered pursuant to this Agreement, will survive the
Effective Time, but any claims for breach thereof may only be made on or before
the first yearly anniversary of the Closing.
11.6 ASSIGNMENT. No party to this Agreement may assign, by operation of
law or otherwise, all or any portion of its rights, obligations, or liabilities
under this Agreement without the prior written consent of INT'X.xxx, Merger Sub
and Parent, which consent may be withheld in the absolute discretion of the
party asked to grant such consent. Any attempted assignment by Merger Sub or
Parent, on the one hand, or by INT'X.xxx, on the other hand, in violation of
this Section 11.6 will be voidable and will entitle INT'X.xxx or Parent,
respectively, to terminate this Agreement at its option.
11.7 COUNTERPARTS. This Agreement may be executed in two or more
partially or fully executed counterparts each of which will be deemed an
original and will bind the signatory, but all of which together will constitute
but one and the same instrument. The execution and delivery of a Signature Page
to this Agreement and Plan of Reorganization in the form annexed to this
Agreement, including a facsimile copy of the actual signature, by any party
hereto who will have been furnished the final form of this Agreement will
constitute the execution and delivery of this Agreement by such party.
11.8 AMENDMENT. This Agreement may not be amended except by an
instrument in writing executed by INT'X.xxx, Merger Sub and Parent.
11.9 EXTENSION, WAIVER. At any time prior to the Effective Time, any
party hereto may, to the extent legally allowed and without prejudice to the
rights of any other party: (i) extend the time for the performance of any of the
obligations or other acts of any other party hereto to the party extending such
time, (ii) waive any inaccuracies in the representations and warranties made to
such party contained herein or in any document delivered pursuant hereto, and
(iii) waive compliance with any of the agreements, covenants or conditions for
the benefit of such party contained herein. Any agreement on the part of a party
hereto to any such extension or waiver will be valid only if set forth in an
instrument in writing signed on behalf of such party.
11.10 INTERPRETATION. When a reference is made in this Agreement to
Sections, Exhibits or Schedules, such reference will be to a Section, Exhibit or
Schedule to this Agreement unless otherwise indicated. The words "include,"
"includes," and "including" when used therein will be deemed in each case to be
followed by the words "without limitation." The table of contents, index to
defined terms, and headings contained in this Agreement are for reference
purposes only and will not affect in any way the meaning or interpretation of
this Agreement.
11.11 KNOWLEDGE. For purposes of this Agreement, the term "KNOWLEDGE"
(including any derivation thereof such as "know" or "knowing", and similar such
as "aware" and regardless of whether such word starts with an initial capital)
in reference to INT'X.xxx or any Subsidiary will mean the knowledge of the
directors and executive officers of INT'X.xxx or such Subsidiary as the case may
be, and in reference to Parent or any Subsidiary will mean the knowledge of the
directors and executive officers of Parent or such Subsidiary as the case may
be.
11.12 TRANSFER, SALES, DOCUMENTARY, STAMP AND OTHER SIMILAR TAXES. Any
and all transfer, sales, documentary, stamp and other similar Taxes imposed in
connection with the transactions contemplated by this Agreement will be paid by
the stockholder of INT'X.xxx with respect to which such Tax relates. At Parent's
discretion, the amount paid to any Person pursuant to this Agreement will be
reduced by the amount of Taxes payable by such Person pursuant to this Section
11.12. Any amounts so withheld will be promptly remitted to the appropriate
taxing authority.
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SIGNATURE PAGE TO
AGREEMENT AND PLAN OF REORGANIZATION
IN WITNESS WHEREOF, Parent, Merger Sub and, INT'X.xxx have executed
this Agreement as of the date first written above.
LIONBRIDGE TECHNOLOGIES, INC. INT'X.XXX, INC.
By: /s/ Xxxx X. Xxxxx By: /s/ Xxxxx X. Xxxxxx
-------------------------------------- ----------------------------
Xxxx X. Xxxxx Name: Xxxxx X. Xxxxxx
Chief Executive Officer & President Title: Chief Executive Officer
LTI ACQUISITION CORP.
By: /s/ Xxxx X. Xxxxx
--------------------------------------
Xxxx X. Xxxxx
Chief Executive Officer & President
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