EXHIBIT 1
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AGREEMENT AND PLAN OF MERGER
BY AND AMONG
VIGNETTE CORPORATION
WHEELS ACQUISITION CORP.
AND
ONDISPLAY, INC.
MAY 21, 2000
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TABLE OF CONTENTS
PAGE
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Article I. The Offer..........................................................1
Section 1.1 The Offer.......................................................1
Section 1.2 Company Action..................................................3
Section 1.3 Directors.......................................................4
Article II. The Merger........................................................5
Section 2.1 The Merger......................................................5
Section 2.2 Effective Time; Closing.........................................5
Section 2.3 Effect of the Merger............................................5
Section 2.4 Certificate of Incorporation; Bylaws............................5
Section 2.5 Directors and Officers..........................................5
Section 2.6 Effect on Capital Stock.........................................5
Section 2.7 Exchange of Certificates........................................6
Section 2.8 No Further Ownership Rights in Company Common Stock.............9
Section 2.9 Restricted Stock...............................................10
Section 2.10 Tax Consequences..............................................10
Section 2.11 Taking of Necessary Action; Further Action....................10
Section 2.12 Dissenting Shares.............................................10
Article III. Representations and Warranties of Company.......................11
Section 3.1 Organization; Subsidiaries.....................................11
Section 3.2 Company Capitalization.........................................12
Section 3.3 Obligations With Respect to Capital Stock......................13
Section 3.4 Authority; Non-Contravention...................................13
Section 3.5 SEC Filings; Company Financial Statements......................14
Section 3.6 Absence of Certain Changes or Events...........................15
Section 3.7 Taxes..........................................................16
Section 3.8 Title to Properties............................................18
Section 3.9 Intellectual Property..........................................18
Section 3.10 Compliance with Laws..........................................20
Section 3.11 Litigation....................................................21
Section 3.12 Employee Benefit Plans........................................21
Section 3.13 Certain Agreements............................................25
Section 3.14 Brokers'and Finders'Fees......................................26
Section 3.15 Insurance.....................................................26
Section 3.16 Disclosure....................................................26
Section 3.17 Fairness Opinion..............................................27
Section 3.18 Affiliates....................................................27
Section 3.19 Lock-up Waivers...............................................27
Article IV. Representations and Warranties of Parent and Merger Sub..........27
Section 4.1 Organization of Parent and Merger Sub..........................27
Section 4.2 Parent and Merger Sub Capitalization...........................28
Section 4.3 Obligations With Respect to Capital Stock......................29
Section 4.4 Authority; Non-Contravention...................................29
Section 4.5 SEC Filings; Parent Financial Statements.......................30
Section 4.6 Absence of Certain Changes or Events...........................31
Section 4.7 Taxes..........................................................31
Section 4.8 Title to Properties............................................33
Section 4.9 Intellectual Property..........................................33
Section 4.10 Compliance with Laws..........................................34
Section 4.11 Litigation....................................................34
Section 4.12 Brokers'and Finders' Fees.....................................34
Section 4.13 Disclosure Documents..........................................35
Article V. Conduct Prior To The Effective Time...............................35
Section 5.1 Conduct of Business by Company.................................35
Section 5.2 Conduct of Business by Parent..................................38
Article VI. Additional Agreements............................................39
Section 6.1 Stockholder Approval; Preparation of Registration Statement
and Proxy Statement/Prospectus...............................39
Section 6.2 Antitrust Filings..............................................40
Section 6.3 No Solicitation................................................41
Section 6.4 Obligations of Merger Sub......................................43
Section 6.5 Voting of Shares...............................................43
Section 6.6 Registration Statement.........................................43
Section 6.7 Confidentiality; Access to Information.........................43
Section 6.8 Public Disclosure..............................................44
Section 6.9 Reasonable Efforts; Notification...............................44
Section 6.10 Stock Options and ESPP........................................45
Section 6.11 Form S-8......................................................46
Section 6.12 Indemnification...............................................46
Section 6.13 Nasdaq Listing................................................47
Section 6.14 Letters of Accountants........................................47
Section 6.15 Takeover Statutes.............................................47
Section 6.16 Certain Employee Benefits.....................................47
Section 6.17 Tax Matters...................................................47
Section 6.18 Employment Agreement..........................................47
Article VII. Conditions To The Merger........................................48
Section 7.1 Conditions to Obligations of Each Party to Effect the Merger...48
Article VIII. Termination, Amendment and Waiver..............................48
Section 8.1 Termination....................................................48
Section 8.2 Notice of Termination; Effect of Termination...................49
Section 8.3 Fees and Expenses..............................................50
Section 8.4 Amendment......................................................51
Section 8.5 Extension; Waiver..............................................51
Article IX. General Provisions...............................................51
Section 9.1 Non-Survival of Representations and Warranties.................51
Section 9.2 Notices........................................................51
Section 9.3 Interpretation; Certain Defined Terms..........................52
Section 9.4 Counterparts...................................................53
Section 9.5 Entire Agreement; Third Party Beneficiaries....................53
Section 9.6 Severability...................................................53
Section 9.7 Other Remedies; Specific Performance...........................54
Section 9.8 Governing Law..................................................54
Section 9.9 Rules of Construction..........................................54
Section 9.10 Assignment....................................................54
Section 9.11 Waiver Of Jury Trial..........................................54
INDEX OF EXHIBITS
Exhibit A Form of Voting Agreement
Exhibit B Form of Affiliate Letter
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and entered
into as of May 21, 2000, among Wheel Corporation, a Delaware corporation
("Parent"), Wheels Acquisition Corp., a Delaware corporation and a wholly owned
first-tier subsidiary of Parent ("Merger Sub"), and Hubcap, Inc., a Delaware
corporation ("Company").
RECITALS
A. The respective Boards of Directors of Parent, Merger Sub and Company
have approved this Agreement, and declared advisable that Merger Sub make an
exchange offer (the "Offer") to exchange shares of common stock, par value
$0.01 per share, of Parent ("Parent Common Stock") for all of the issued and
outstanding shares of common stock, par value $0.001 per share ("Company Common
Stock"), of Company (the "Shares") and the merger of Merger Sub with and into
Company (the "Merger") upon the terms and subject to the conditions of this
Agreement and in accordance with the General Corporation Law of the State of
Delaware ("Delaware Law").
B. It is intended that, for United States federal income tax purposes, the
Offer and the Merger (together, the "Transaction") shall be treated as an
integrated transaction and shall qualify as a "reorganization" within the
meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the
"Code"). For accounting purposes, the Merger is intended to be accounted for as
a "purchase" under United States generally accepted accounting principles
("GAAP").
C. Concurrently with the execution of this Agreement, and as a condition
and inducement to Parent's willingness to enter into this Agreement, certain
stockholders of Company are entering into a Voting Agreement with Parent in the
form of Exhibit A (the "Voting Agreement").
In consideration of the foregoing and the representations, warranties,
covenants and agreements set forth in this Agreement, the parties agree as
follows:
ARTICLE I.
THE OFFER
Section 1.1 The Offer. (a) Provided that (i) this Agreement shall not have
been terminated in accordance with Section 8.1 and (ii) none of the events set
forth in Annex I hereto shall have occurred and be continuing, Merger Sub
shall, as promptly as practicable after the date hereof, commence the Offer.
Each Share accepted by Merger Sub pursuant to the Offer shall be exchanged for
the right to receive from Merger Sub that number of fully paid and
nonassessable shares of Parent Common Stock equal to the Exchange Ratio. For
purposes of this
Agreement, the "Exchange Ratio" shall mean 1.58. The initial expiration date of
the Offer shall be the twentieth business day following commencement of the
Offer. The Offer shall be subject to the condition that there shall be validly
tendered in accordance with the terms of the Offer prior to the expiration date
of the Offer and not withdrawn a number of Shares which, together with the
Shares then owned by Parent and Merger Sub (if any) represents at least a
majority of the total number of outstanding Shares, assuming the exercise of
all currently exercisable options, rights and convertible securities (if any)
and the issuance of all Shares that Company is obligated to issue thereunder
(such total number of outstanding Shares being hereinafter referred to as the
"Fully Diluted Shares") (the "Minimum Condition") and to the other conditions
set forth in Annex I hereto. Parent and Merger Sub expressly reserve the right
to waive the conditions to the Offer and to make any change in the terms or
conditions of the Offer; provided that, without the prior written consent of
Company, no change may be made which decreases the number of Shares sought in
the Offer, changes the form or amount of consideration to be paid, imposes
conditions to the Offer in addition to those set forth in Annex I, changes or
waives the Minimum Condition or any of the other conditions set forth in Annex
I or imposes any conditions to the Offer in addition to those set forth in
Annex I, extends the Offer (except as set forth in the following two
sentences), or makes any other change to any of the terms and conditions to the
Offer which is adverse to the holders of Shares. Subject to the terms of the
Offer and this Agreement and the satisfaction (or waiver to the extent
permitted by this Agreement) of the conditions to the Offer, Merger Sub shall
accept for payment all Shares validly tendered and not withdrawn pursuant to
the Offer as soon as practicable after the applicable expiration date of the
Offer and shall pay for all such Shares promptly after acceptance; provided
that (x) Merger Sub shall extend the Offer for successive extension periods not
in excess of 10 business days per extension if, at the scheduled expiration
date of the Offer or any extension thereof, any of the conditions to the Offer
shall not have been satisfied, until such time as such conditions are satisfied
or waived, and (y) Merger Sub may extend the Offer if and to the extent
required by the applicable rules and regulations of the Securities Exchange
Commission ("SEC"). In addition, Merger Sub may extend the Offer after the
acceptance of Shares thereunder for a further period of time by means of a
subsequent offering period under Rule 14d-11 promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), of not more than 20
business days to meet the objective (which is not a condition to the Offer)
that there be validly tendered, in accordance with the terms of the Offer,
prior to the expiration date of the Offer (as so extended) and not withdrawn a
number of Shares which, together with Shares then owned by Parent and Merger
Sub, represents at least 90% of the outstanding Shares. Notwithstanding
anything to the contrary set forth herein, no certificates or scrip
representing fractional shares of Parent Common Stock shall be issued in
connection with the exchange of Parent Common Stock for Shares upon
consummation of the Offer, and in lieu thereof each tendering stockholder who
would otherwise be entitled to a fractional share of Parent Common Stock in the
Offer will be paid an amount in cash equal to the product obtained by
multiplying (A) the fractional share interest to which such holder would
otherwise be entitled by (B) the closing price for a share of Parent Common
Stock as reported on the NASDAQ National Market System on the first date Merger
Sub accepts Shares for exchange in the Offer.
(b) As soon as practicable after the date of this Agreement, Parent shall
prepare and file with the SEC a registration statement on Form S-4 to register
the offer and sale of Parent Common Stock pursuant to the Offer (the
"Registration Statement"). The
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Registration Statement will include a preliminary prospectus containing the
information required under Rule 14d-4(b) promulgated under the Exchange Act
(the "Preliminary Prospectus"). As soon as practicable on the date of
commencement of the Offer, Parent and Merger Sub shall (i) file with the SEC a
Tender Offer Statement on Schedule TO with respect to the Offer which will
contain or incorporate by reference all or part of the Preliminary Prospectus
and form of the related letter of transmittal (together with any supplements or
amendments thereto, collectively the "Offer Documents") and (ii) cause the
Offer Documents to be disseminated to holders of Shares. Parent, Merger Sub and
Company each agree promptly to correct any information provided by it for use
in the Registration Statement or the Offer Documents if and to the extent that
it shall have become false or misleading in any material respect, Parent and
Merger Sub agree to take all steps necessary to cause the Offer Documents as so
corrected to be filed with the SEC and to be disseminated to holders of Shares,
in each case as and to the extent required by applicable federal securities
laws. Company and its counsel shall be given a reasonable opportunity to review
and comment on the Schedule TO, the Registration Statement and the Offer
Documents and any material amendments thereto prior to their being filed with
the SEC.
Section 1.2 Company Action. (a) Company hereby consents to the Offer and
represents that its Board of Directors, at a meeting duly called and held, has
by unanimous vote of the directors participating therein (i) determined that
this Agreement and the transactions contemplated hereby, including the Offer
and the Merger, are advisable and are fair to and in the best interest of
Company's stockholders, (ii) approved and adopted this Agreement and the
transactions contemplated hereby, including the Offer and the Merger, which
approval constitutes approval under Section 203 of Delaware Law such that the
Offer, the Merger, this Agreement and the other transactions contemplated
hereby are not and shall not be subject to any restriction pursuant to Section
203 of Delaware Law, and (iii) resolved to recommend acceptance of the Offer
and approval and adoption of this Agreement and the Merger by Company's
stockholders (the recommendations referred to in this clause (iii) are
collectively referred to in this Agreement as the "Recommendations"). Company
further represents that FleetBoston Xxxxxxxxx Xxxxxxxx Inc. has rendered to
Company's Board of Directors its opinion that the consideration to be received
by Company's stockholders pursuant to this Agreement is fair to such
stockholders from a financial point of view. Company has been advised that all
of its directors and executive officers currently intend to tender their Shares
pursuant to the Offer.
(b) As soon as practicable on the day that the Offer is commenced, Company
will file with the SEC and disseminate to holders of Shares a
Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9")
which shall, subject to Section 6.3(b), reflect the Recommendations. Company,
Parent and Merger Sub each agree promptly to correct any information provided
by it for use in the Schedule 14D-9 if and to the extent that it shall have
become false or misleading in any material respect. Company agrees to take all
steps necessary to cause the Schedule 14D-9 as so corrected to be filed with
the SEC and to be disseminated to holders of Shares, in each case as and to the
extent required by applicable federal securities laws. Parent and its counsel
shall be given a reasonable opportunity to review and comment on the Schedule
14D-9 and any material amendments thereto prior to its being filed with the
SEC.
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(c) Company will promptly furnish Parent and Merger Sub pursuant to the
terms of the Confidentiality Agreement, dated as of May 1, 2000, between
Company and Parent (the "Confidentiality Agreement") with a list of its
stockholders, mailing labels and any available listing or computer file
containing the names and addresses of all record holders of Shares and lists of
securities positions of Shares held in stock depositories, in each case as of
the most recent practicable date, and will provide to Parent and Merger Sub
such additional information (including, without limitation, updated lists of
stockholders, mailing labels and lists of securities positions) and such other
assistance as Parent or Merger Sub may reasonably request in connection with
the Offer.
Section 1.3 Directors. (a) Effective upon the acceptance for payment by
Merger Sub of Shares pursuant to the Offer (the "Appointment Time"), Parent
shall be entitled to designate the number of directors, rounded up to the next
whole number, on Company's Board of Directors that equals the product of (i)
the total number of directors on Company's Board of Directors (giving effect to
the election of any additional directors pursuant to this Section 1.3) and (ii)
the percentage that the number of Shares owned by Parent or Merger Sub
(including Shares accepted for payment) bears to the total number of Shares
outstanding, and Company shall take all action reasonably necessary to cause
Parent's designees to be elected or appointed to Company's Board of Directors,
including, without limitation, increasing the number of directors, or seeking
and accepting resignations of incumbent directors, or both; provided that,
prior to the Effective Time (as defined below), Company's Board of Directors
shall always have at least two members who were directors of Company prior to
consummation of the Offer (each, a "Continuing Director"). If the number of
Continuing Directors is reduced to less than two for any reason prior to the
Effective Time, the remaining and departing Continuing Directors shall be
entitled to designate a person to fill the vacancy. Notwithstanding anything in
this Agreement to the contrary, if Parent's designees are elected to Company's
Board of Directors prior to the Effective Time, the affirmative vote of the
Continuing Directors shall be required for Company to (a) amend or terminate
this Agreement or agree or consent to any amendment or termination of this
Agreement, (b) waive any of Company's or any Company stockholder's rights,
benefits or remedies hereunder, (c) extend the time for performance of Parent's
and Merger Sub's respective obligations hereunder, or (d) approve any other
action by Company which is reasonably likely to adversely affect the interests
of the stockholders of Company (other than Parent, Merger Sub and their
affiliates (other than Company and its subsidiaries)), with respect to the
transactions contemplated by this Agreement.
(b) Company's obligations to appoint designees to its board of directors
shall be subject to Section 14(f) of the Exchange Act and Rule 14f-l
promulgated thereunder. Company shall promptly take all actions required
pursuant to Section 1.3 and Rule 14f-l in order to fulfill its obligations
under this Section 1.3 and shall include in the Schedule 14D-9 such information
with respect to Company and its officers and directors as is required under
Section 14(f) and Rule 14f-l to fulfill its obligations under this Section 1.3.
Parent will supply to Company in writing and be solely responsible for any
information with respect to itself and its nominees, officers, directors and
affiliates required by Section 14(f) and Rule 14f-1.
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ARTICLE II.
THE MERGER
Section 2.1 The Merger. Upon the terms and subject to the conditions of
this Agreement and the applicable provisions of Delaware Law, at the Effective
Time, Merger Sub shall be merged with and into Company, the separate corporate
existence of Merger Sub shall cease, and Company shall continue as the
surviving corporation of the Merger (the "Surviving Corporation").
Section 2.2 Effective Time; Closing. Subject to the provisions of this
Agreement, Company and Merger Sub will file a certificate of merger, in such
appropriate form as determined by the parties, with the Secretary of State of
the State of Delaware in accordance with the relevant provisions of Delaware
Law (the "Certificate of Merger") (the time of such filing (or such later time
as may be agreed in writing by Company and Parent and specified in the
Certificate of Merger) being the "Effective Time") as soon as practicable on or
after the Closing Date. The closing of the Merger (the "Closing") shall take
place at the offices of Xxxxx Xxxx & Xxxxxxxx, 0000 Xx Xxxxxx Xxxx, Xxxxx Xxxx,
Xxxxxxxxxx, at a time and date to be specified by the parties, which shall be
no later than the second business day after the satisfaction or waiver of the
conditions set forth in Article VII, or at such other time, date and location
as the parties hereto agree in writing (the "Closing Date").
Section 2.3 Effect of the Merger. At the Effective Time, the effect of the
Merger shall be as provided in this Agreement and the applicable provisions of
Delaware Law. Without limiting the generality of the foregoing, at the
Effective Time, the Surviving Corporation shall possess all the property,
rights, privileges, powers and franchises of Company and Merger Sub, and shall
be subject to all debts, liabilities and duties of Company and Merger Sub.
Section 2.4 Certificate of Incorporation; Bylaws. (a) At the Effective
Time, the Certificate of Incorporation of Merger Sub, as in effect immediately
prior to the Effective Time, shall be the Certificate of Incorporation of the
Surviving Corporation until thereafter amended as provided by law and such
Certificate of Incorporation of the Surviving Corporation; provided, however,
that at the Effective Time Article I of the Certificate of Incorporation of the
Surviving Corporation shall be amended to read: "The name of the corporation is
`OnDisplay, Inc.'"
(b) At the Effective Time, the Bylaws of Merger Sub, as in effect
immediately prior to the Effective Time, shall be the Bylaws of the Surviving
Corporation until thereafter amended.
Section 2.5 Directors and Officers. The initial directors of the Surviving
Corporation shall be the directors of Merger Sub immediately prior to the
Effective Time, until their respective successors are duly elected or appointed
and qualified. The initial officers of the Surviving Corporation shall be the
officers of Company immediately prior to the Effective Time, until their
respective successors are duly appointed.
Section 2.6 Effect on Capital Stock. Subject to the terms and conditions
of this Agreement, at the Effective Time, by virtue of the Merger and without
any action on the part of Merger Sub, Company or the holders of any of the
following securities:
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(a) Conversion of Company Common Stock. Each share of Company Common Stock
issued and outstanding immediately prior to the Effective Time, other than any
shares of Company Common Stock to be canceled pursuant to Section 2.6(b), will
be canceled and extinguished and automatically converted (subject to Section
2.6(e)) into the right to receive the number of shares of Parent Common Stock
equal to the Exchange Ratio upon surrender of the certificate representing such
share of Company Common Stock in the manner provided in Section 2.7 (together
with the cash in lieu of fractional shares of Parent Common Stock as specified
below, the "Merger Consideration"). No fraction of a share of Parent Common
Stock will be issued by virtue of the Merger, but in lieu thereof, a cash
payment shall be made pursuant to Section 2.7(e).
(b) Cancellation of Company-Owned and Parent-Owned Stock. Each share of
Company Common Stock held by Company or owned by Parent or Merger Sub
immediately prior to the Effective Time shall be canceled and extinguished
without any conversion thereof.
(c) Stock Options; Employee Stock Purchase Plan; Warrants. At the
Effective Time, all options or warrants to purchase Company Common Stock then
outstanding, whether under (i) Company's 1996 Stock Plan (the "Company Stock
Option Plan"), (ii) the Oberon Software Incorporated 1990 Stock Option Plan
(the "Oberon 1990 Plan"), (iii) the Oberon Software Incorporated 1998 Stock
Incentive Plan (the "Oberon 1998 Plan," and together with the Company Stock
Option Plan and the Oberon 1990 Plan, the "Company Option Plans"), or (iv)
otherwise, shall be assumed by Parent in accordance with Section 6.10 of this
Agreement. Rights outstanding under Company's 1999 Employee Stock Purchase Plan
(the "Company ESPP") shall be treated as set forth in Section 6.10 of this
Agreement.
(d) Capital Stock of Merger Sub. Each share of common stock, par value
$0.01 per share, of Merger Sub (the "Merger Sub Common Stock"), issued and
outstanding immediately prior to the Effective Time shall be converted into one
validly issued, fully paid and nonassessable share of common stock, $0.01 par
value per share, of the Surviving Corporation. Following the Effective Time,
each certificate evidencing ownership of shares of Merger Sub common stock
shall evidence ownership of such shares of capital stock of the Surviving
Corporation.
(e) Adjustments to Exchange Ratio. If, during the period between the date
of this Agreement and the Effective Time, any change in the outstanding shares
of capital stock of Parent or Company shall occur, including by reason of any
reclassification, recapitalization, stock split or combination, exchange or
readjustment of shares, or any stock dividend thereon with a record date during
such period, the Exchange Ratio, the Merger Consideration and any other amounts
payable pursuant to the Offer, the Merger or otherwise pursuant to this
Agreement shall be appropriately adjusted.
Section 2.7 Exchange of Certificates. (a) Exchange Agent. Parent shall
select an institution reasonably acceptable to Company to act as the exchange
agent (the "Exchange Agent") in the Merger.
(b) Exchange Fund. Promptly after the Effective Time, Parent shall make
available to the Exchange Agent for exchange in accordance with this Article
II, the shares of
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Parent Common Stock (such shares of Parent Common Stock, together with cash in
lieu of fractional shares and any dividends or distributions with respect
thereto, are hereinafter referred to as the "Exchange Fund") issuable pursuant
to Section 2.6 in exchange for outstanding shares of Company Common Stock.
(c) Exchange Procedures. Promptly after the Effective Time, Parent shall
instruct the Exchange Agent to mail to each holder of record of a certificate
or certificates ("Certificates") which immediately prior to the Effective Time
represented outstanding shares of Company Common Stock whose shares were
converted into the right to receive shares of Parent Common Stock pursuant to
Section 2.6, (i) a letter of transmittal in customary form (that shall specify
that delivery shall be effected, and risk of loss and title to the Certificates
shall pass, only upon proper delivery of the Certificates to the Exchange Agent
and shall contain such other provisions as Parent may reasonably specify) and
(ii) instructions for use in effecting the surrender of the Certificates in
exchange for certificates representing shares of Parent Common Stock. Upon
surrender of Certificates for cancellation to the Exchange Agent together with
such letter of transmittal, duly completed and validly executed in accordance
with the instructions thereto, the holders of such Certificates shall be
entitled to receive in exchange therefor certificates representing the number
of whole shares of Parent Common Stock into which their shares of Company
Common Stock were converted at the Effective Time, payment in lieu of
fractional shares that such holders have the right to receive pursuant to
Section 2.7(e) and any dividends or distributions payable pursuant to Section
2.7(d), and the Certificates so surrendered shall forthwith be canceled. Until
so surrendered, outstanding Certificates will be deemed from and after the
Effective Time, for all corporate purposes, to evidence only the right to
receive the number of full shares of Parent Common Stock into which such shares
of Company Common Stock shall have been so converted and the right to receive
an amount in cash in lieu of the issuance of any fractional shares in
accordance with Section 2.7(e) and any dividends or distributions payable
pursuant to Section 2.7(d). No interest will be paid or accrued on any cash in
lieu of fractional shares of Parent Common Stock or on any unpaid dividends or
distributions payable to holders of Certificates. In the event of a transfer of
ownership of shares of Company Common Stock which is not registered in the
transfer records of Company, a certificate representing the proper number of
shares of Parent Common Stock may be issued to a transferee if the Certificate
representing such shares of Company Common Stock is presented to the Exchange
Agent, accompanied by all documents required to evidence and effect such
transfer and by evidence that any applicable stock transfer taxes have been
paid.
(d) Distributions With Respect to Unexchanged Shares. No dividends or
other distributions declared or made after the date of this Agreement with
respect to Parent Common Stock with a record date after the Effective Time will
be paid to the holders of any unsurrendered Certificates with respect to the
shares of Parent Common Stock represented thereby until the holders of record
of such Certificates shall surrender such Certificates. Subject to applicable
law, following surrender of any such Certificates, the Exchange Agent shall
deliver to the holders of certificates representing whole shares of Parent
Common Stock issued in exchange therefor, without interest, (i) promptly, the
amount of any cash payable with respect to a fractional share of Parent Common
Stock to which such holder is entitled pursuant to Section 2.7(e) and the
amount of dividends or other distributions with a record date after the
Effective Time theretofore paid with respect to such whole shares of Parent
Common Stock, and (ii) at the
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appropriate payment date, the amount of dividends or other distributions with a
record date after the Effective Time but prior to surrender and a payment date
occurring after surrender, payable with respect to such whole shares of Parent
Common Stock.
(e) Fractional Shares. (i) As promptly as practicable following the
Effective Time, the Exchange Agent shall determine the excess of (A) the number
of full shares of Parent Common Stock delivered to the Exchange Agent pursuant
to Section 2.7(b), over (B) the aggregate number of full shares of Parent
Common Stock to be distributed to holders of Company Common Stock pursuant to
Section 2.7(c) (such excess, the "Excess Shares"). Following the Effective
Time, the Exchange Agent, as agent for the holders of Company Common Stock,
shall sell the Excess Shares at then prevailing prices on NASDAQ National
Market System in the manner set forth in paragraph (ii) of this Section 2.7(e).
(ii) The sale of the excess shares by the Exchange Agent shall be
executed on the NASDAQ National Market System and shall be executed in
round lots to the extent practicable. The Exchange Agent shall use all
commercially reasonable efforts to complete the sale of the Excess Shares
as promptly following the Effective Time as, in the Exchange Agent's
reasonable judgment, is practicable consistent with obtaining the best
execution of such sales in light of prevailing market conditions. Until
the net proceeds of such sales have been distributed to the holders of
Company Common Stock, the Exchange Agent will hold such proceeds in trust
for the holders of Company Common Stock. The Exchange Agent will determine
the portion of such net proceeds to which each holder of Company Common
Stock shall be entitled, if any, by multiplying the amount of the
aggregate net proceeds by a fraction the numerator of which is the amount
of the fractional share interest to which such holder of Company Common
Stock is entitled (after taking into account all shares of Parent Common
Stock to be issued to such holder) and the denominator of which is the
aggregate amount of fractional share interests to which all holders of
Company Common Stock are entitled. As soon as practicable after the
determination of the amount of cash, if any, to be paid to holders of
Company Common Stock with respect to fractional share interests, the
Exchange Agent shall promptly pay such amounts to such holders of Company
Common Stock in accordance with the terms of Section 2.7(c).
(iii) Notwithstanding the provisions of paragraphs (i) and (ii) of
this Section 2.7(e), Parent may decide, at its option, exercised prior to
the Effective Time, in lieu of the issuance and sale of Excess Shares and
the making of the payments contemplated in such paragraphs, that Parent
shall pay to the Exchange Agent an amount sufficient for the Exchange
Agent to pay each holder of Company Common Stock the amount such holder
would have received pursuant to Section 2.7(e)(ii) assuming that the sales
of Parent Common Stock were made at a price equal to the average of the
closing prices of the Parent Common Stock on the NASDAQ National Market
System for the ten consecutive trading days immediately following the
Effective Time and, in such case, all references herein to the cash
proceeds of the sale of the Excess Shares and similar references shall
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be deemed to mean and refer to the payments calculated as set forth in
this paragraph (iii). In such event, Excess Shares shall not be issued or
otherwise transferred to the Exchange Agent pursuant to Sections 2.7(b) or
(e).
(f) Required Withholding. Each of the Exchange Agent, Parent and the
Surviving Corporation shall be entitled to deduct and withhold from any
consideration payable or otherwise deliverable pursuant to this Agreement to
any holder or former holder of Company Common Stock such amounts as may be
required to be deducted or withheld therefrom under the Code or under any
provision of state, local or foreign tax law or under any other applicable
Legal Requirement (as defined in Section 3.2(c)). To the extent such amounts
are so deducted or withheld, such amounts shall be treated for all purposes
under this Agreement as having been paid to the person to whom such amounts
would otherwise have been paid.
(g) Lost, Stolen or Destroyed Certificates. In the event that any
Certificates shall have been lost, stolen or destroyed, the Exchange Agent
shall issue in exchange for such lost, stolen or destroyed Certificates, upon
the making of an affidavit of that fact by the holder thereof, certificates
representing the shares of Parent Common Stock into which the shares of Company
Common Stock represented by such Certificates were converted pursuant to
Section 2.6, cash for fractional shares, if any, as may be required pursuant to
Section 2.7(e) and any dividends or distributions payable pursuant to Section
2.7(d); provided, however, that Parent may, in its discretion and as a
condition precedent to the issuance of such certificates representing shares of
Parent Common Stock, cash and other distributions, require the owner of such
lost, stolen or destroyed Certificates to deliver a bond in such sum as it may
reasonably direct as indemnity against any claim that may be made against
Parent, the Surviving Corporation or the Exchange Agent with respect to the
Certificates alleged to have been lost, stolen or destroyed.
(h) No Liability. Notwithstanding anything to the contrary in this Section
2.7, neither the Exchange Agent, Parent, the Surviving Corporation nor any
party hereto shall be liable to a holder of shares of Parent Common Stock or
Company Common Stock for any amount properly paid to a public official pursuant
to any applicable abandoned property, escheat or similar law.
(i) Termination of Exchange Fund. Any portion of the Exchange Fund which
remains undistributed to the holders of Company Common Stock for six months
after the Effective Time shall be delivered to Parent, upon demand, and any
holders of Company Common Stock who have not theretofore complied with the
provisions of this Section 2.7 shall thereafter look only to Parent for the
shares of Parent Common Stock, any cash in lieu of fractional shares of Parent
Common Stock to which they are entitled pursuant to Section 2.7(e) and any
dividends or other distributions with respect to Parent Common Stock to which
they are entitled pursuant to Section 2.7(d), in each case, without any
interest thereon.
Section 2.8 No Further Ownership Rights in Company Common Stock. All
shares of Parent Common Stock issued in accordance with the terms hereof
(including any cash paid in respect thereof pursuant to Section 2.7(d) and (e))
shall be deemed to have been issued in full satisfaction of all rights
pertaining to such shares of Company Common Stock, and there shall be
9
no further registration of transfers on the records of the Surviving
Corporation of shares of Company Common Stock that were outstanding immediately
prior to the Effective Time. If after the Effective Time Certificates are
presented to the Surviving Corporation for any reason, they shall be canceled
and exchanged as provided in this Article II.
Section 2.9 Restricted Stock. If any shares of Company Common Stock that
are outstanding immediately prior to the Effective Time are unvested or are
subject to a repurchase option, risk of forfeiture or other condition providing
that such shares ("Company Restricted Stock") may be forfeited or repurchased
by Company upon any termination of the stockholders' employment, directorship
or other relationship with Company (and/or any affiliate of Company) under the
terms of any restricted stock purchase agreement or other agreement with
Company that does not by its terms provide that such repurchase option, risk of
forfeiture or other condition lapses upon consummation of the Merger, then the
shares of Parent Common Stock issued upon the conversion of such shares of
Company Common Stock in the Merger will continue to be unvested and subject to
the same repurchase options, risks of forfeiture or other conditions following
the Effective Time, and the certificates representing such shares of Parent
Common Stock may accordingly be marked with appropriate legends noting such
repurchase options, risks of forfeiture or other conditions. Company shall take
all actions that may be necessary to ensure that, from and after the Effective
Time, Parent is entitled to exercise any such repurchase option or other right
set forth in any such restricted stock purchase agreement or other agreement. A
listing of the holders of Company Restricted Stock, together with the number of
shares and the vesting schedule of Company Restricted Stock held by each, and
any information concerning any elections timely made under Section 83(b) of the
Code, is set forth in Part 2.9 of the Company Disclosure Letter.
Section 2.10 Tax Consequences. It is intended by the parties hereto that
the Transaction shall constitute a "reorganization" within the meaning of
Section 368(a) of the Code. The parties hereto adopt this Agreement as a "plan
of reorganization" within the meaning of Sections 1.368-2(g) and 1.368-3(a) of
the United States Income Tax Regulations.
Section 2.11 Taking of Necessary Action; Further Action. If, at any time
after the Effective Time, any further action is necessary or desirable to carry
out the purposes of this Agreement and to vest the Surviving Corporation with
full right, title and possession to all assets, property, rights, privileges,
powers and franchises of Company and Merger Sub, the officers and directors of
Company, Merger Sub and the Surviving Corporation will take all such lawful and
necessary action in the name of Company or Merger Sub. Parent shall cause
Merger Sub to perform all of its obligations relating to this Agreement and the
transactions contemplated hereby.
Section 2.12 Dissenting Shares. Notwithstanding Section 2.6, if the Merger
is effectuated pursuant to Section 253 of Delaware Law, Shares outstanding
immediately prior to the Effective Time and held by a holder who has demanded
appraisal for such Shares in accordance with Delaware Law shall not be
converted into a right to receive the Merger Consideration, unless such holder
fails to perfect or withdraws or otherwise loses his or her right to appraisal.
If after the Effective Time such holder fails to perfect or withdraws or loses
his or her right to appraisal, such Shares shall be treated as if they had been
converted as of the
10
Effective Time into a right to receive the Merger Consideration. Company shall
give Parent prompt notice of any demands received by Company for appraisal of
Shares, and Parent shall have the right to participate in all negotiations and
proceedings with respect to such demands. Company shall not, except with the
prior written consent of Parent, make any payment with respect to, or settle or
offer to settle, any such demands. Any amounts paid to a holder pursuant to a
right of appraisal will be paid by Company.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF COMPANY
As of the date of this Agreement and as of the Closing Date, except as
disclosed in (i) Company's Annual Report on Form 10-K for the year ending
December 31, 1999 and any Company SEC Reports (as defined below) filed
subsequent to such Form 10-K and prior to the date of this Agreement, or (ii)
the disclosure letter delivered by Company to Parent dated as of the date
hereof and certified by a duly authorized officer of Company (the "Company
Disclosure Letter"), Company represents and warrants to Parent and Merger Sub
as follows:
Section 3.1 Organization; Subsidiaries. (a) Company and each of its
subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and has all
requisite corporate power and authority, and all requisite qualifications to do
business as a foreign corporation, to conduct its business in the manner in
which its business is currently being conducted, except where the failure to
have such qualifications would not, individually or in the aggregate, have a
Material Adverse Effect (as defined in Section 9.3) on Company.
(b) Neither Company nor any of its subsidiaries identified in Part 3.1 of
the Company Disclosure Letter owns any capital stock of, or any equity interest
of any nature in, any corporation, partnership, joint venture arrangement or
other business entity, except for passive investments in equity interests of
public companies as part of the cash management program of Company. Neither
Company nor any of its subsidiaries has agreed or is obligated to make, or is
bound by any written, oral or other agreement, contract, subcontract, lease,
binding understanding, instrument, note, option, warranty, purchase order,
license, sublicense, insurance policy, benefit plan or legally binding
commitment or undertaking of any nature, as in effect as of the date hereof or
as may hereinafter be in effect under which it may become obligated to make any
future material investment in or material capital contribution to any other
entity. Neither Company, nor any of its subsidiaries, is a general partner of
any general partnership, limited partnership or other similar entity. Part 3.1
of the Company Disclosure Letter indicates the jurisdiction of organization of
each subsidiary of the Company and Company's direct or indirect equity interest
therein.
(c) Company has delivered or made available to Parent a true and correct
copy of the Certificate of Incorporation and Bylaws of Company and similar
governing instruments of each of its subsidiaries, each as amended to date
(collectively, the "Company Charter Documents"), and each such instrument is in
full force and effect. Neither Company nor any of its subsidiaries is in
violation of any of the provisions of Company Charter Documents.
11
Section 3.2 Company Capitalization. (a) The authorized capital stock of
Company consists solely of 100,000,000 shares of Company Common Stock, of which
there were 22,636,902 shares issued and outstanding as of May 16, 2000, and
10,000,000 shares of preferred stock, par value $0.001 per share, of which no
shares are issued or outstanding. All outstanding shares of Company Common
Stock are duly authorized, validly issued, fully paid and nonassessable and are
not subject to preemptive rights created by statute, the Certificate of
Incorporation or Bylaws of Company or any agreement or document to which
Company is a party or by which it is bound. As of the date of this Agreement,
there are no shares of Company Common Stock held in treasury by Company. From
and after the Effective Time, the shares of Parent Common Stock issued in
exchange for any shares of Company Restricted Stock will, without any further
act of Parent, Company or any other person, become subject to the restrictions,
conditions and other provisions of such Company Restricted Stock, and Parent
will automatically succeed to and become entitled to exercise Company's rights
and remedies under such Company Restricted Stock.
(b) As of the close of business on May 19, 2000, (i) 4,258,687 shares of
Company Common Stock are subject to issuance pursuant to outstanding options to
purchase Company Common Stock under the Company Stock Option Plan, the Oberon
1990 Plan, the Oberon 1998 Plan (collectively, the "Company Options"), and (ii)
1,500,000 shares of Company Common Stock are reserved for future issuance under
the Company ESPP. Part 3.2(b) of the Company Disclosure Letter sets forth the
following information with respect to each Company Option outstanding as of the
date of this Agreement: (i) the name of the optionee; (ii) the number of shares
of Company Common Stock subject to such Company Option; (iii) the exercise
price of such Company Option; (iv) the date on which such Company Option was
granted or assumed; (v) the date on which such Company Option expires and (vi)
whether the exercisability of such option will be accelerated in any way by the
transactions contemplated by this Agreement, and indicates the extent of any
such acceleration. Company has made available to Parent an accurate and
complete copy of the Company Stock Option Plan, the Oberon 1990 Plan, the
Oberon 1998 Plan, the Company ESPP and the standard forms of stock option
agreements evidencing Company Options. There are no options outstanding to
purchase shares of Company Common Stock other than pursuant to the Company
Stock Option Plans. All shares of Company Common Stock subject to issuance as
aforesaid, upon issuance on the terms and conditions specified in the
instruments pursuant to which they are issuable, will be duly authorized,
validly issued, fully paid and nonassessable.
(c) All outstanding shares of Company Common Stock, all outstanding
Company Options, and all outstanding shares of capital stock of each subsidiary
of Company have been issued and granted in compliance in all material respects
with (i) all applicable securities laws and other applicable Legal Requirements
and (ii) all requirements set forth in applicable agreements or instruments.
For the purposes of this Agreement, "Legal Requirements" means any federal,
state, local, municipal, foreign or other law, statute, constitution, principle
of common law, resolution, ordinance, code, edict, decree, rule, regulation,
ruling or requirement issued, enacted, adopted, promulgated, implemented or
otherwise put into effect by or under the authority of any Governmental Entity
(as defined in Section 3.4).
12
Section 3.3 Obligations With Respect to Capital Stock. Except as set forth
in Section 3.2 hereof or Part 3.3 of the Company Disclosure Letter, there are
no equity securities, partnership interests or similar ownership interests of
any class of Company equity security, or any securities exchangeable or
convertible into or exercisable for such equity securities, partnership
interests or similar ownership interests, issued, reserved for issuance or
outstanding. Company owns all of the securities of its subsidiaries identified
on Part 3.1 of the Company Disclosure Letter, free and clear of all claims and
Encumbrances, and there are no other equity securities, partnership interests
or similar ownership interests of any class of equity security of any
subsidiary of Company, or any security exchangeable or convertible into or
exercisable for such equity securities, partnership interests or similar
ownership interests, issued, reserved for issuance or outstanding. For purposes
of this Agreement, "Encumbrances" means any lien, pledge, hypothecation,
charge, mortgage, security interest, encumbrance, claim, infringement,
interference, option, right of first refusal, preemptive right, community
property interest or restriction of any nature (including any restriction on
the voting of any security, any restriction on the transfer of any security or
other asset, any restriction on the receipt of any income derived from any
asset, any restriction on the use of any asset and any restriction on the
possession, exercise or transfer of any other attribute of ownership of any
asset). There are no subscriptions, options, warrants, equity securities,
partnership interests or similar ownership interests, calls, rights (including
preemptive rights), commitments or agreements of any character to which Company
or any of its subsidiaries is a party or by which it is bound obligating
Company or any of its subsidiaries to issue, deliver or sell, or cause to be
issued, delivered or sold, or repurchase, redeem or otherwise acquire, or cause
the repurchase, redemption or acquisition of, any shares of capital stock,
partnership interests or similar ownership interests of Company or any of its
subsidiaries or obligating Company or any of its subsidiaries to grant, extend,
accelerate the vesting of or enter into any such subscription, option, warrant,
equity security, call, right, commitment or agreement. There are no
registration rights with respect to any equity security of any class of Company
or with respect to any equity security, partnership interest or similar
ownership interest of any class of any of its subsidiaries.
Section 3.4 Authority; Non-Contravention. (a) Company has all requisite
corporate power and authority to enter into this Agreement and, subject to the
Company Stockholder Approvals (as defined below), to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of Company, subject
only to the approval and adoption of this Agreement and the approval of the
Merger by Company's stockholders (the "Company Stockholder Approvals") and the
filing of the Certificate of Merger pursuant to Delaware Law. The affirmative
vote of the holders of a majority of the outstanding shares of Company Common
Stock is sufficient for Company's stockholders to approve and adopt this
Agreement and approve the Merger, and no other approval of any holder of any
securities of Company is required in connection with the consummation of the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by Company and, assuming the due execution and delivery by Parent and
Merger Sub, constitutes the valid and binding obligation of Company,
enforceable against Company in accordance with its terms, except as
enforceability may be limited by bankruptcy and other similar laws affecting
the rights of creditors generally and general principles of equity.
13
(b) The execution and delivery of this Agreement by Company does not, and
the performance of this Agreement by Company will not, (i) conflict with or
violate Company Charter Documents, (ii) subject to obtaining Company
Stockholder Approvals and compliance with the requirements set forth in Section
3.4(c), conflict with or violate any law, rule, regulation, order, judgment or
decree applicable to Company or any of its subsidiaries or by which Company or
any of its subsidiaries or any of their respective properties is bound or
affected, or (iii) result in any breach of or constitute a default (or an event
that with notice or lapse of time or both would become a default) under, or
impair Company's rights or alter the rights or obligations of any third party
under, or give to others any rights of termination, amendment, acceleration or
cancellation of, or result in the creation of an Encumbrance on any of the
properties or assets of Company or any of its subsidiaries pursuant to, any
note, bond, mortgage, indenture, agreement, lease, license, permit, franchise,
concession or other instrument or obligation to which Company or any of its
subsidiaries is a party or by which Company or any of its subsidiaries or its
or any of their respective assets are bound or affected, except, in the case of
clauses (ii) and (iii), for such conflicts, violations, breaches, defaults,
impairments, or rights which, individually or in the aggregate, would not have
a Material Adverse Effect on Company.
(c) No action by or in respect of, or filing with any court,
administrative agency or commission or other governmental authority or
instrumentality, foreign, domestic or supranational ("Governmental Entity") or
other person, is required to be obtained or made by Company in connection with
the execution and delivery of this Agreement or the consummation by Company of
the transactions contemplated hereby, except for (i) the filing of the
Certificate of Merger with the Secretary of State of the State of Delaware and
appropriate documents with the relevant authorities of other states in which
Company is qualified to do business, (ii) compliance with any applicable
requirements of the Securities Act of 1933, as amended (the "Securities Act"),
the Exchange Act, and any other applicable securities law, whether state or
foreign, (iii) such filings as may be required under the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), and (iv) such
other consents, authorizations, filings, approvals and registrations which if
not obtained or made would not have a Material Adverse Effect on Company or the
Surviving Corporation or have a material adverse effect on the ability of
Company to consummate the transactions contemplated by this Agreement.
Section 3.5 SEC Filings; Company Financial Statements. (a) Company has
filed all forms, reports and documents required to be filed by Company with the
SEC since the effective date of the registration statement for Company's
initial public offering and has made available to Parent such forms, reports
and documents in the form filed with the SEC. All such required forms, reports
and documents (including those that Company may file subsequent to the date
hereof) are referred to herein as the "Company SEC Reports." As of their
respective dates, the Company SEC Reports (i) were prepared in accordance with
the requirements of the Securities Act, or the Exchange Act, as the case may
be, and the rules and regulations of the SEC thereunder applicable to such
Company SEC Reports and (ii) did not at the time they were filed (or if amended
or superseded by a filing prior to the date of this Agreement, then on the date
of such filing) contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading, except to the extent corrected
14
prior to the date of this Agreement by a subsequently filed Company SEC Report.
None of Company's subsidiaries is required to file any forms, reports or other
documents with the SEC.
(b) Each of the consolidated financial statements of the Company
(including, in each case, any related notes thereto) contained in the Company
SEC Reports (the "Company Financials"), including each Company SEC Report filed
after the date hereof until the Closing, (i) comply as to form in all material
respects with the published rules and regulations of the SEC with respect
thereto, (ii) are prepared in accordance with GAAP applied on a consistent
basis throughout the periods involved (except as may be indicated in the notes
thereto or, in the case of unaudited interim financial statements, as may be
permitted by the SEC under Form 10-Q, 8-K or any successor form under the
Exchange Act) and (iii) fairly present the consolidated financial position of
Company and its subsidiaries as at the respective dates thereof and the
consolidated results of Company's operations and cash flows for the periods
indicated, except that the unaudited interim financial statements may not
contain footnotes and were or are subject to normal and recurring year-end
adjustments. Each of the financial statements of Oberon Software Incorporated
("Oberon") (including, in each case, any related notes thereto) contained in
the Company SEC Reports, including each Company SEC Report filed after the date
hereof until the Closing, (i) comply as to form in all material respects with
the published rules and regulations of the SEC with respect thereto, (ii) are
prepared in accordance with GAAP applied on a consistent basis throughout the
periods involved (except as may be indicated in the notes thereto), and (iii)
fairly present the financial position of Oberon as at the respective dates
thereof and the results of Oberon's operations and cash flows for the periods
indicated.
The balance sheet of Company contained in the Company SEC Reports as of
March 31, 2000 is hereinafter referred to as the "Company Balance Sheet."
Except as disclosed in the Company Financials or in the Company SEC Documents
filed, in each case, prior to the date hereof, neither Company nor any of its
subsidiaries has any material liabilities or obligations (absolute, accrued,
contingent or otherwise) which are, individually or in the aggregate, material
to the business, results of operations or financial condition of Company and
its subsidiaries taken as a whole, except for liabilities incurred since the
date of Company Balance Sheet in the ordinary course of business consistent
with past practices and liabilities.
(c) Company has heretofore furnished to Parent a complete and correct copy
of any amendments or modifications, which have not yet been filed with the SEC
but which are required to be filed, to agreements, documents or other
instruments which previously had been filed by Company with the SEC pursuant to
the Securities Act or the Exchange Act.
Section 3.6 Absence of Certain Changes or Events. (a) Since the date of
the Company Balance Sheet the business of Company and its subsidiaries has been
conducted in the ordinary course consistent with past practices (other than the
transactions contemplated by this Agreement) and, there has not been (i) any
event, occurrence, development or state of circumstances or facts that has had
or would reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on Company, (ii) any declaration, setting aside or
payment of any dividend on, or other distribution (whether in cash, stock or
property) in respect of, any of Company's or any of its subsidiaries' capital
stock, or any purchase, redemption or other acquisition by Company of any of
Company's capital stock or any other securities of
15
Company or its subsidiaries or any options, warrants, calls or rights to
acquire any such shares or other securities except for repurchases which are
not, individually or in the aggregate, material in amount from employees
following their termination pursuant to the terms of their pre-existing stock
option or purchase agreements, (iii) any material change by Company in its
accounting methods, principles or practices, except as required by concurrent
changes in GAAP, or (iv) any revaluation by Company of any of its material
assets, other than in the ordinary course of business.
(b) Since the date of the Company Balance Sheet and through the date of
this Agreement, there has not been (i) any amendment of any material term of
any outstanding security of the Company or any of its subsidiaries, (ii) any
incurrence, assumption or guarantee by Company or any of its Subsidiaries of
any indebtedness for borrowed money other than in the ordinary course of
business and in amounts and on terms consistent with past practices, (iii) any
split, combination or reclassification of any of Company's or any of its
subsidiaries' capital stock, (iv) any granting by Company or any of its
subsidiaries of any increase in compensation or fringe benefits to any of their
officers or employees, or any payment by Company or any of its subsidiaries of
any bonus to any of their officers or employees, or any granting by Company or
any of its subsidiaries of any increase in severance or termination pay, other
than in the ordinary course, consistent with past practice, or any entry by
Company or any of its subsidiaries into, or material modification or amendment
of, any currently effective employment, severance, termination or
indemnification agreement or any agreement the benefits of which are contingent
or the terms of which are materially altered upon the occurrence of a
transaction involving Company of the nature contemplated hereby, (v) any
creation or other incurrence by Company or any of its Subsidiaries of any Lien
on any material asset other than in the ordinary course of business consistent
with past practices, (vi) any making of any material loan, advance or capital
contributions to or investment in any Person other than loans, advances or
capital contributions to or investments in its wholly-owned subsidiaries (or
advances to employees) in the ordinary course of business consistent with past
practices, (vii) any damage, destruction or other casualty loss (whether or not
covered by insurance) affecting the business or assets of Company or any of its
Subsidiaries that has had or would reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect on Company, or (viii) any
material change in the pricing of the license fees Company charges for
licensing its software.
Section 3.7 Taxes. (a) Company and each of its subsidiaries have timely
filed all material federal, state, local and foreign returns, estimates,
information statements and reports ("Returns") relating to Taxes required to be
filed by or on behalf of Company and each of its subsidiaries with any Tax
authority. Such Returns are true, correct and complete in all material
respects, and Company and each of its subsidiaries have paid all Taxes shown to
be due on such Returns.
(b) Company and each of its subsidiaries have withheld with respect to its
employees all federal and state income Taxes, Taxes pursuant to the Federal
Insurance Contribution Act ("FICA"), Taxes pursuant to the Federal Unemployment
Tax Act ("FUTA") and other Taxes required to be withheld, except such Taxes as
are not material to Company.
16
(c) Neither Company nor any of its subsidiaries has been delinquent in the
payment of any material Tax, nor is there any material Tax deficiency
outstanding, proposed or assessed against Company or any of its subsidiaries.
Company and its subsidiaries have not executed any unexpired waiver of any
statute of limitations on or extending the period for the assessment or
collection of any Tax.
(d) No audit or other examination of any Return of Company or any of its
subsidiaries by any Tax authority is presently in progress, nor has Company or
any of its subsidiaries been notified of any request for such an audit or other
examination that is reasonably likely to result in any adjustment that is
material to Company.
(e) No adjustment relating to any Returns filed by Company or any of its
subsidiaries has been proposed in writing formally or informally by any Tax
authority to Company or any of its subsidiaries or any representative thereof
that is reasonably likely to be material to Company.
(f) Neither Company nor any of its subsidiaries has any material liability
for unpaid Taxes which have not been accrued for or reserved on Company Balance
Sheet in accordance with GAAP, whether asserted or unasserted, contingent or
otherwise, other than any liability for unpaid Taxes that may have accrued
since the date of the Company Balance Sheet in connection with the operation of
the business of Company and its subsidiaries in the ordinary course.
(g) There is no agreement, plan or arrangement to which Company or any of
its subsidiaries is a party, including this Agreement and the agreements
entered into in connection with this Agreement, covering any employee or former
employee of Company or any of its subsidiaries that, individually or
collectively, would be reasonably likely to give rise to the payment of any
amount that would not be deductible pursuant to Sections 280G, 404 or 162(m) of
the Code.
(h) Neither Company nor any of its subsidiaries has filed any consent
agreement under Section 341(f) of the Code or agreed to have Section 341(f)(2)
of the Code apply to any disposition of a subsection (f) asset (as defined in
Section 341(f)(4) of the Code) owned by Company.
(i) Neither Company nor any of its subsidiaries is party to or has any
obligation under any Tax-sharing, Tax indemnity or Tax allocation agreement or
arrangement.
(j) Company and its subsidiaries have not been and will not be required to
include any adjustment in taxable income for any Tax period (or portion
thereof) pursuant to Section 481 of the Code or any comparable provision under
state or foreign Tax laws as a result of transactions, events or accounting
methods employed prior to the Closing.
(k) Company has not been distributed in a transaction qualifying under
Section 355 of the Code within the last two years, nor has Company distributed
any corporation in a transaction qualifying under Section 355 of the Code
within the last two years.
17
(l) Company is not aware of any fact, circumstance, plan or intention on
the part of Company that would be reasonably likely to prevent the Transaction
from qualifying as a "reorganization" within the meaning of Section 368(a) of
the Code.
For the purposes of this Agreement, "Tax" or "Taxes" refers to (i) any and
all federal, state, local and foreign taxes, assessments and other governmental
charges, duties, impositions and liabilities relating to taxes, including taxes
based upon or measured by gross receipts, income, profits, sales, use and
occupation, and value added, ad valorem, transfer, franchise, withholding,
payroll, recapture, employment, excise and property taxes, together with all
interest, penalties and additions imposed with respect to such amounts, (ii)
any liability for payment of any amounts of the type described in clause (i) as
a result of being a member of an affiliated consolidated, combined or unitary
group, and (iii) any liability for amounts of the type described in clauses (i)
and (ii) as a result of any express or implied obligation to indemnify another
person or as a result of any obligations under any agreements or arrangements
with any other person with respect to such amounts and including any liability
for taxes of a predecessor entity.
Section 3.8 Title to Properties. (a) Company does not own and has not
owned any real property interests. Part 3.8 of the Company Disclosure Letter
list all real property leases to which Company is a party and each amendment
thereto that is in effect as of the date of this Agreement that provide for
annual payments in excess of $500,000. All such current leases are in full
force and effect, are valid and effective in accordance with their respective
terms, and there is not, under any of such leases, any existing default or
event of default (or event which with notice or lapse of time, or both, would
constitute a default) that would give rise to a material claim against Company.
(b) Company has good and valid title to, or, in the case of leased
properties and assets, valid leasehold interests in, all of its tangible
properties and assets, real, personal and mixed, used or held for use in its
business, free and clear of any Encumbrances, except as reflected in the
Company Financials and except for liens for Taxes not yet due and payable and
such Encumbrances which are not material in character, amount or extent.
Section 3.9 Intellectual Property. For the purposes of this Agreement, the
following terms have the following definitions:
"Intellectual Property" shall mean any or all of the following and all
rights in, arising out of, or associated therewith: (i) all United States,
international and foreign patents and applications therefor and all reissues,
divisions, renewals, extensions, provisionals, continuations and
continuations-in-part thereof; (ii) all inventions (whether patentable or not),
invention disclosures, improvements, trade secrets, proprietary information,
know how, technology, technical data and customer lists, and all documentation
relating to any of the foregoing; (iii) all copyrights, copyrights
registrations and applications therefor, and all other rights corresponding
thereto throughout the world; (iv) all industrial designs and any registrations
and applications therefor throughout the world; (v) all trade names, URLs,
logos, common law trademarks and service marks, trademark and service xxxx
registrations and applications therefor throughout the world; (vi) all
databases and data collections and all rights therein throughout the world;
(vii) all
18
moral and economic rights of authors and inventors, however denominated,
throughout the world, and (viii) any similar or equivalent rights to any of the
foregoing anywhere in the world.
"Company Intellectual Property" shall mean any Intellectual Property that
is owned by, or exclusively licensed to, Company or one of its subsidiaries.
"Registered Intellectual Property" means all United States, international
and foreign: (i) patents and patent applications (including provisional
applications); (ii) registered trademarks, applications to register trademarks,
intent-to-use applications, or other registrations or applications related to
trademarks; (iii) registered copyrights and applications for copyright
registration; and (iv) any other Intellectual Property that is the subject of
an application, certificate, filing, registration or other document issued,
filed with, or recorded by any Governmental Entity.
"Company Registered Intellectual Property" means all of the Registered
Intellectual Property owned by, or filed in the name of, Company or one of its
subsidiaries.
(a) No material Company Intellectual Property or product or service of
Company is subject to any proceeding or outstanding decree, order, judgment,
agreement, or stipulation (other than those imposed by applicable law)
restricting in any manner the use, transfer or licensing thereof by Company, or
which may affect the validity, use or enforceability of such Company
Intellectual Property.
(b) Each material item of Company Registered Intellectual Property is
valid and subsisting, all necessary registration, maintenance and renewal fees
currently due in connection with such Registered Intellectual Property have
been made and all necessary documents, recordations and certificates in
connection with such Registered Intellectual Property have been filed with the
relevant patent, copyright, trademark or other authorities in the United States
or foreign jurisdictions, as the case may be, for the purposes of maintaining
such Registered Intellectual Property, except, in each case, as would not
materially adversely affect such item of Company Registered Intellectual
Property.
(c) Company or one of its subsidiaries owns and has good and exclusive
title to, or has license (sufficient for the conduct of its business as
currently conducted) to, each material item of Company Intellectual Property
free and clear of any Encumbrance (excluding licenses and related
restrictions). The Company Intellectual Property constitutes all the
Intellectual Property necessary to, or used or held for use in, the conduct of
the business as currently conducted. The consummation of the transactions
contemplated by this Agreement will not alter, impair or extinguish any
material Company Intellectual Property.
(d) Neither Company nor any of its subsidiaries has transferred ownership
of, or granted any exclusive license with respect to, any Intellectual Property
that is or was material Company Intellectual Property, to any third party.
(e) Part 3.9(e) of the Company Disclosure Letter contains a true and
complete list of all in-bound OEM agreements and all distributor agreements to
which Company or any of its subsidiaries is a party. None of Company or its
subsidiaries is a party to any contract with a term of greater than one year
with a
19
long-distance telecommunications provider, Internet Service Provider, service
farm provider or computer hardware provider.
(f) To Company's knowledge, the operation of the business of Company and
its Subsidiaries as such business currently is conducted, including the design,
development, marketing and sale of the products or services of Company and its
subsidiaries (including with respect to products currently under development)
has not and does not infringe or misappropriate the Intellectual Property of
any third party or, to its knowledge, constitute unfair competition or trade
practices under the laws of any jurisdiction.
(g) None of Company or any of its subsidiaries has received written or
credible oral notice from any third party that the operation of the business of
Company and its subsidiaries or any act, product or service of Company and its
subsidiaries, infringes or misappropriates the Intellectual Property of any
third party or constitutes unfair competition or trade practices under the laws
of any jurisdiction. There is no claim, action, suit, investigation or
proceeding pending against, or, to the knowledge of Company, threatened against
or affecting, Company, any of its subsidiaries, any present or former officer,
director or employee of Company or any of its subsidiaries (i) based upon, or
challenging or seeking to deny or restrict, the rights of the Company or any
subsidiary in any of the Company Intellectual Property, (ii) alleging that the
use of the Company Intellectual Property or any services provided, processes
used or products manufactured, used, imported or sold by Company or any
subsidiary do or may conflict with, misappropriate, infringe or otherwise
violate any Intellectual Property of any third party or (iii) alleging that
Company or any of its subsidiaries have infringed, misappropriated or otherwise
violated any Intellectual Property of any third party.
(h) Except as set forth in Part 3.9(h) of the Company Disclosure Letter,
to Company's knowledge, no person has or is infringing or misappropriating any
Company Intellectual Property, which infringement or misappropriation,
individually or in the aggregate, would be material to Company.
(i) Company and its subsidiaries have taken reasonable steps to protect
Company's and its subsidiaries' rights in Company's and such subsidiaries'
confidential information and trade secrets, except where the failure to do so
would not would reasonably be expected to have a Material Adverse Effect on
Company.
(k) Except under license or service agreements with end users of products
of Company and its subsidiaries, none of Company and any of its subsidiaries
has given an indemnity in connection with any Intellectual Property right to
any person.
Section 3.10 Compliance with Laws. (a) Neither Company nor any of its
subsidiaries is in conflict with, or has violated or is in violation of (i) any
law, rule, regulation, order, judgment or decree applicable to Company or any
of its subsidiaries or by which Company or any of its subsidiaries or any of
their respective properties is bound or affected, or (ii) any note, bond,
mortgage, indenture, agreement, lease, license, permit, franchise or other
instrument or obligation to which Company or any of its subsidiaries is a party
or by which Company or any of its subsidiaries or its or any of their
respective properties is bound or affected, except for conflicts, violations
and defaults that, individually or in the aggregate, would not have a Material
20
Adverse Effect on Company. To Company's knowledge, no investigation or review
by any Governmental Entity is pending or, has been threatened in a writing
delivered to Company against Company or any of its subsidiaries, nor, to
Company's knowledge, has any Governmental Entity indicated an intention to
conduct an investigation of Company or any of its subsidiaries. There is no
judgment, injunction, order or decree binding upon Company or any of its
subsidiaries which has or could reasonably be expected to have the effect of
prohibiting or materially impairing any material business practice of Company
or any of its subsidiaries, or any acquisition of material property by Company
or any of its subsidiaries.
(b) Company and its subsidiaries hold all permits, licenses, variances,
exemptions, orders and approvals from governmental authorities (including,
without limitation all such permits required under environmental laws) that are
material to or required for the operation of the business of Company as
currently conducted (collectively, the "Company Permits"), and are in
compliance with the terms of Company Permits, except where the failure to hold
such Company Permits, or be in such compliance, would not, individually or in
the aggregate, would reasonably be expected to have a Material Adverse Effect
on Company.
(c) No written notice, notification, demand, request for information,
citation, summons or order has been received, no complaint has been filed, no
penalty has been assessed, and no investigation, action, claim, suit,
proceeding or review is pending or, to the knowledge of the Company, is
threatened by any governmental entity or other Person relating to or arising
out of any environmental law. There are no material liabilities of or relating
to the Company or any of its subsidiaries of any kind whatsoever, whether
accrued, contingent, absolute, determined, determinable or otherwise arising
under or relating to any environmental law and there are no facts, conditions,
situations or set of circumstances that could reasonably be expected to result
in or be the basis for any such material liability. For purposes of this
Section, the terms "Company" and "subsidiaries" shall include any entity that
is, in whole or in part, a predecessor of the Company or any of its
subsidiaries.
Section 3.11 Litigation. There are no claims, suits, actions,
investigations or proceedings (or any basis therefor) pending or, to the
knowledge of Company, threatened against, relating to or affecting Company, any
of its subsidiaries any officer, director or employee of Company or any of its
subsidiaries or any person for whom the Company or any subsidiary may be liable
or any of their respective properties, before any Governmental Entity or any
arbitrator that seeks to restrain or enjoin the consummation of the
transactions contemplated by this Agreement or which would reasonably be
expected, either singly or in the aggregate with all such claims, actions or
proceedings, to have a Material Adverse Effect on Company or have a material
adverse effect on the ability of the parties hereto to consummate the
transactions contemplated hereby. As of the date hereof, no director or
executive officer of Company has asserted a claim to seek indemnification from
Company under Company Charter Documents or any indemnification agreement
between Company and such person.
Section 3.12 Employee Benefit Plans. (a) Definitions. For purposes of this
Agreement, the following terms shall have the meanings set forth below:
21
(ii) "Company Employee Plan" shall mean any plan, program, policy,
practice, contract, agreement or other arrangement providing for
compensation, severance, termination pay, performance awards, stock or
stock-related awards, fringe benefits or other employee benefits or
remuneration of any kind, whether written or unwritten or otherwise,
funded or unfunded, including without limitation, each "employee benefit
plan," within the meaning of Section 3(3) of ERISA which is or has been
maintained, contributed to, or required to be contributed to, by Company
or any Affiliate for the benefit of any Employee;
(ii) "COBRA" shall mean the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended;
(iii) "DOL" shall mean the Department of Labor;
(iv) "Employee" shall mean any current, former, or retired employee,
officer, or director of Company or any subsidiary of Company;
(v) "Employee Agreement" shall mean each management, employment,
severance, consulting, relocation, repatriation, expatriation, visas, work
permit or similar agreement or contract between Company or any subsidiary
of Company, on the one hand, and any Employee or consultant of Company or
any subsidiary of Company, on the other hand;
(vi) "ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended;
(vii) "ERISA Affiliate" shall mean any other person or entity under
common control with Company within the meaning of Section 414(b), (c), (m)
or (o) of the Code and the regulations issued thereunder;
(viii) "FMLA" shall mean the Family Medical Leave Act of 1993, as
amended;
(ix) "International Employee Plan" shall mean each Company Employee
Plan that has been adopted or maintained by Company, whether informally or
formally, for the benefit of Employees outside the United States;
(x) "IRS" shall mean the Internal Revenue Service;
(xi) "Multiemployer Plan" shall mean any "Pension Plan" (as defined
below) which is a "multiemployer plan," as defined in Section 3(37) of
ERISA;
(xii) "PBGC" shall mean the Pension Benefit Guaranty Corporation; and
22
(xiii) "Pension Plan" shall mean each Company Employee Plan which is
an "employee pension benefit plan," within the meaning of Section 3(2) of
ERISA.
(b) Schedule. Part 3.12 of the Company Disclosure Letter contains an
accurate and complete list of each Company Employee Plan and each Employee
Agreement and, to the knowledge of Company, any other material benefit plan,
program, or arrangement in which an Employee is eligible to participate (each
plan other than a Company Employee Plan, an "Outsourced Plan"). Company does
not have any plan or commitment to establish any new Company Employee Plan, to
modify any Company Employee Plan or Employee Agreement (except to the extent
required by law or to conform any such Company Employee Plan or Employee
Agreement to the requirements of any applicable law), or to enter into any
Company Employee Plan or Employee Agreement, nor does it have any intention or
commitment to do any of the foregoing.
(c) Documents. Company has made available to Parent: (i) correct and
complete copies of all documents embodying each Company Employee Plan and each
Employee Agreement including all amendments thereto and written interpretations
thereof; (ii) the most recent annual actuarial valuations, if any, prepared for
each Company Employee Plan; (iii) the most recent annual report (Form Series
5500 and all schedules and financial statements attached thereto), if any,
required under ERISA or the Code in connection with each Company Employee Plan
or related trust; (iv) if Company Employee Plan is funded, the most recent
annual and periodic accounting of Company Employee Plan assets; (v) the most
recent summary plan description together with the summary of material
modifications thereto, if any, required under ERISA with respect to each
Company Employee Plan; (vi) the most recent IRS determination or opinion
letter, and all rulings relating to Company Employee Plans; (vii) all material
written agreements and contracts relating to each Company Employee Plan,
including, but not limited to, administrative service agreements, group annuity
contracts and group insurance contracts; (viii) all communications material to
any Employee or Employees relating to any Company Employee Plan and any
proposed Company Employee Plans, in each case, relating to any amendments,
terminations, establishments, increases or decreases in benefits, acceleration
of payments or vesting schedules or other events which would result in any
material liability to Company; and (ix) all registration statements and
prospectuses prepared in connection with each Company Employee Plan.
Additionally, the Company has provided information with respect to the
Outsourced Plans to the extent reasonably practicable.
(d) Employee Plan Compliance. Except in each case, as would not,
individually or in the aggregate, result in a material liability to Company or
as set forth on Part 3.12 of the Company Disclosure Letter: (i) Company has
performed in all material respects all obligations required to be performed by
it under, is not in default or violation of, and has no knowledge of any
default or violation by any other party to, each Company Employee Plan, and
each Company Employee Plan has been established and maintained in all material
respects in accordance with its terms and in compliance with all applicable
laws, statutes, orders, rules and regulations, including but not limited to
ERISA or the Code; (ii) each Company Employee Plan intended to qualify under
Section 401(a) of the Code has received an opinion, determination, advisory or
notification letter from the Internal Revenue Service that it is so qualified
or has
23
remaining a period of time to obtain such a letter from the IRS, and no event
has occurred since the date of such determination that could reasonably be
expected to result in the revocation of, or materially adversely affect, such
qualification; (iii) no "prohibited transaction," within the meaning of Section
4975 of the Code or Sections 406 and 407 of ERISA, and not otherwise exempt
under Section 408 of ERISA (or any administrative class exemption issued
thereunder), has occurred with respect to any Company Employee Plan; (iv) there
are no actions, suits or claims pending, or, to the knowledge of Company,
threatened or reasonably anticipated (other than routine claims for benefits)
against any Company Employee Plan or against the assets of any Company Employee
Plan; (v) each Company Employee Plan (other than currently outstanding stock
options) can be amended, terminated or otherwise discontinued after the
Effective Time in accordance with its terms, without liability to Parent,
Company or any of its Affiliates (other than expenses typically incurred in a
termination event); (vi) there are no audits, inquiries or proceedings pending
or, to the knowledge of Company, threatened by the IRS or DOL with respect to
any Company Employee Plan; (vii) neither Company nor any Affiliate is subject
to any penalty or tax with respect to any Company Employee Plan under Section
402(i) of ERISA or Sections 4975 through 4980 of the Code; and (viii) all
contributions due from Company or any Affiliate with respect to any of Company
Employee Plans have been made as required under ERISA or have been accrued on
the Company Balance Sheet.
(e) Pension Plans. Neither Company nor any ERISA Affiliate of Company has
now, nor has it ever, maintained, established, sponsored, participated in, or
contributed to, any Pension Plan which is subject to Title IV of ERISA or
Section 412 of the Code, that would result in material liability to Company.
(f) Multiemployer Plans. At no time has Company or any ERISA Affiliate of
Company contributed to or been requested to contribute to any Multiemployer
Plan, that would result in material liability to Company.
(g) No Post-Employment Obligations. No Company Employee Plan provides, or
has any liability to provide, retiree health benefits to any person for any
reason, except as may be required by COBRA or other applicable statute, and
Company has never represented, promised or contracted (whether in oral or
written form) to any Employee (either individually or to Employees as a group)
or any other person that such Employee(s) or other person would be provided
with retiree health benefits, except to the extent required by statute.
(h) Effect of Transaction. The execution of this Agreement and the
consummation of the transactions contemplated hereby will not (either alone or
upon the occurrence of any additional or subsequent events) constitute an event
under any Company Employee Plan, Employee Agreement, trust or loan that will or
may result in any payment (whether of severance pay or otherwise),
acceleration, forgiveness of indebtedness, vesting (other than full vesting as
a result of partial or full plan termination of a qualified plan),
distribution, increase in benefits or obligation to fund benefits with respect
to any Employee. There is no contract, plan or arrangement (written or
otherwise) covering any Employee or former Employee of Company that,
individually or collectively, could give rise to the payment of any amount that
would not be deductible pursuant to the terms of Section 280G or 162(m) of the
Code.
24
(i) Employment Matters. Company and each of its subsidiaries is in
compliance in all material respects with all applicable foreign, federal, state
and local laws, rules and regulations respecting employment, employment
practices, terms and conditions of employment and wages and hours, in each
case, with respect to Employees. There are no pending, or, to Company's
knowledge, threatened material claims or actions against Company under any
worker's compensation policy or long-term disability policy. To Company's
knowledge, no Employee of Company has materially violated any employment
contract, nondisclosure agreement or noncompetition agreement by which such
Employee is bound due to such Employee being employed by Company and disclosing
to Company or using trade secrets or proprietary information of any other
person or entity.
(j) Labor. Company does not know of any activities or proceedings of any
labor union to organize any Employees that would be material to Company. There
are no actions, suits, claims, labor disputes or grievances pending, or, to the
knowledge of Company, threatened relating to any labor, safety or
discrimination matters involving any Employee, including charges of unfair
labor practices or discrimination complaints, which would reasonably be
expected to, individually or in the aggregate, result in any material liability
to Company. Neither Company nor any of its subsidiaries has engaged in any
unfair labor practices within the meaning of the National Labor Relations Act
which would reasonably be expected to, individually or in the aggregate, result
in any material liability to Company. Company is not presently, nor has it been
in the past, a party to, or bound by, any collective bargaining agreement or
union contract with respect to Employees and no collective bargaining agreement
is being negotiated by Company.
(k) International Employee Plans. Each International Employee Plan has
been established, maintained and administered in material compliance with its
terms and conditions and with the requirements prescribed by any and all
statutory or regulatory laws that are applicable to such International Employee
Plan. Furthermore, no International Employee Plan has material unfunded
liabilities, that as of the Effective Time, will not be offset by insurance or
fully accrued. Except as required by law, no condition exists that would
prevent Company or Parent from terminating or amending any International
Employee Plan at any time for any reason in accordance with the terms of each
such International Employee Plan (other than expenses typically incurred in a
termination event).
3.13 Certain Agreements. As of the date hereof, neither Company nor any of
its subsidiaries is a party to or is bound by: (a) any employment or consulting
agreement or commitment with any employee or member of Company's Board of
Directors, that, individually or in the aggregate, is material to Company,
other than those that are terminable by Company or any of its subsidiaries on
no more than thirty days notice without liability or financial obligation,
except to the extent general principles of law may limit Company's or any of
its subsidiaries' ability to terminate employees at will;
(b) any agreement or plan, including any stock option plan, stock
appreciation right plan or stock purchase plan, any of the benefits of which
will be increased, or the vesting of benefits of which will be accelerated, by
the occurrence of any of the transactions contemplated by this Agreement or the
value of any of the benefits of which will be calculated on the basis of any of
the transactions contemplated by this Agreement;
25
(c) any material guaranty or any instrument evidencing indebtedness for
borrowed money by way of direct loan or sale of debt securities;
(d) any material agreement, obligation or commitment containing covenants
purporting to limit or which effectively limit Company's or any of its
subsidiaries' freedom to compete in any line of business or in any geographic
area or which would so limit Company or the Surviving Corporation or any of its
subsidiaries after the Effective Time;
(e) any agreement or commitment currently in force relating to the
disposition or acquisition by Company or any of its subsidiaries after the date
of this Agreement of a material amount of assets not in the ordinary course of
business, or pursuant to which Company has any material ownership or
participation interest in any corporation, partnership, joint venture,
strategic alliance or other business enterprise other than Company's
subsidiaries; or
(f) any agreement or commitment currently in force providing for capital
expenditures by Company or its subsidiaries in excess of $500,000.
The agreements required to be disclosed in the Company Disclosure Letter
pursuant to clauses (a) through (f) above or pursuant to Section 3.9 or are
required to be filed with any Company SEC Report ("Company Contracts") are
valid and in full force and effect, except to the extent that such invalidity
would not be material to Company. Neither Company nor any of its subsidiaries,
nor to Company's knowledge, any other party thereto, is in breach, violation or
default under, and neither Company nor any of its subsidiaries has received
written notice that it has breached, violated or defaulted, any of the terms or
conditions of any Company Contract in such a manner as would be material to
Company.
Section 3.14 Brokers' and Finders' Fees. Except for fees payable to
FleetBoston Xxxxxxxxx Xxxxxxxx Inc. pursuant to an engagement letter that has
been provided to Parent, Company has not incurred, nor will it incur, directly
or indirectly, any liability for brokerage or finders' fees or agents'
commissions or any similar charges in connection with this Agreement or any
transaction contemplated hereby.
Section 3.15 Insurance. Company and each of its subsidiaries have policies
of insurance and bonds of the type and in amounts customarily carried by
persons conducting business or owning assets similar to those of Company and
its subsidiaries. There is no material claim pending under any of such policies
or bonds as to which coverage has been questioned, denied or disputed by the
underwriters of such policies or bonds. All premiums due and payable under all
such policies have been paid and Company and its subsidiaries are otherwise in
compliance in all material respects with the terms of such policies and bonds.
To the knowledge of Company, there has been no threatened termination of, or
material premium increase with respect to, any of such material policies.
Section 3.16 Disclosure. Neither the Schedule 14D-9, nor any of the
information supplied or to be supplied by the Company or its subsidiaries or
representatives for inclusion or incorporation by reference in the Registration
Statement, the Post-Effective Amendment (as defined below) or the Offer
Documents will, at the respective times any such documents or any amendments or
supplements thereto are filed with the SEC, are first published, sent or given
to
26
stockholders or become effective under the Securities Act, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading. The
Schedule 14D-9 will comply as to form in all material respects with the
requirements of all applicable laws, including the Exchange Act and the rules
and regulations thereunder. No representations or warranty is made by Company
with respect to statements made or incorporated by reference in any such
documents based on information supplied by Parent or Merger Sub specifically
for inclusion or incorporation by reference therein.
Section 3.17 Fairness Opinion. Company's Board of Directors has received a
true and correct copy of an opinion from FleetBoston Xxxxxxxxx Xxxxxxxx Inc.,
dated as of the date hereof, to the effect that, as of the date hereof, the
consideration to be received by Company's stockholders in the Offer and the
Merger is fair to Company's stockholders from a financial point of view.
Section 3.18 Affiliates. Part 3.18 of the Company Disclosure Letter is a
complete list of those persons who may be deemed to be, in Company's reasonable
judgment, affiliates of Company within the meaning of Rule 145 promulgated
under the Securities Act. Except as set forth in Company SEC Reports, since the
date of Company's last proxy statement filed with the SEC, to the knowledge of
Company, no event has occurred as of the date of this Agreement that would be
required to be reported by Company pursuant to Item 404 of Regulation S-K
promulgated by the SEC.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
As of the date of this Agreement and as of the Closing Date, except as
disclosed in (i) Parent's Annual Report on Form 10-K for the year ending
December 31, 1999 and any Parent SEC Reports (as defined below) filed
subsequent to such Form 10-K and prior to the date of this Agreement, or (ii)
the disclosure letter delivered by Parent to Company dated as of the date
hereof and certified by a duly authorized officer of Parent (the "Parent
Disclosure Letter"), Parent and Merger Sub represent and warrant as follows:
Section 4.1 Organization of Parent and Merger Sub. (a) Each of Parent and
Merger Sub is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and has all
requisite corporate power and authority, and all requisite qualifications to do
business as a foreign corporation, to conduct its business in the manner in
which its business is currently being conducted, except where the failure to
have such qualifications would not, individually or in the aggregate, have a
Material Adverse Effect on Parent.
(b) Parent has delivered or made available to Company a true and correct
copy of the Certificate of Incorporation and Bylaws of Parent and Merger Sub,
each as amended to date (collectively, the "Parent Charter Documents"), and
each such instrument is in full force and effect. Neither Parent nor Merger Sub
is in violation of any of the provisions of the Parent Charter Documents.
27
Section 4.2 Parent and Merger Sub Capitalization. (a) The authorized
capital stock of Parent consists solely of 500,000,000 shares of Parent Common
Stock par value $.01 per share, of which there were 192,686,181 shares issued
and outstanding as of the close of business on April 30, 2000, and 10,000,000
shares of Preferred Stock, par value $0.01 per share, of which no shares are
issued or outstanding. All outstanding shares of Parent Common Stock are duly
authorized, validly issued, fully paid and nonassessable and are not subject to
preemptive rights created by statute, the Certificate of Incorporation or
Bylaws of Parent or any agreement or document to which Parent is a party or by
which it is bound.
As of May 19, 2000, there were 16,151,407 shares of Parent Common Stock
authorized under the 1999 Equity Incentive Plan, of which 7,836,696 were
subject to outstanding options, 7,123,759 were issued pursuant to outstanding
options and 1,190,952 were available for future grants.
As of May 19, 2000, there were 8,072,856 shares of Parent Common Stock
authorized under the 1999 Employee Stock Purchase Plan, of which 1,848,216 were
issued pursuant to outstanding options.
As of May 19, 2000, there were 1,500,000 shares of Parent Common Stock
authorized under the 1999 Non-Employee Director Option Plan, of which 20,000
were subject to outstanding options and 1,480,000 were available for future
grants.
As of May 19, 2000, there were no shares of Parent Common Stock authorized
for future grant under the 1995 Stock Option/ Stock Issuance Plan, and there
were 23,811,501 shares subject to outstanding options.
As of May 19, 2000, there were 24,000,000 shares of Parent Common Stock
authorized under the 1999 Supplemental Stock Option Plan, of which 23,887,500
were subject to outstanding options.
All shares of Parent Common Stock subject to issuance as aforesaid, upon
issuance on the terms and conditions specified in the instruments pursuant to
which they are issuable, would be duly authorized, validly issued, fully paid
and nonassessable.
(b) The authorized capital stock of Merger Sub consists of 1,000 shares of
common stock, $0.01 par value, all of which, as of the date hereof, are issued
and outstanding and are held by Parent. All of the outstanding shares of Merger
Sub's common stock have been duly authorized and validly issued, and are fully
paid and nonassessable. Merger Sub was formed for the purpose of consummating
the Merger and has no material assets or liabilities except as necessary for
such purpose.
(c) All outstanding shares of Parent Common Stock, all outstanding Parent
options, and all outstanding shares of capital stock of each subsidiary of
Parent have been issued and granted in compliance with (i) all applicable
securities laws and other applicable material Legal Requirements and (ii) all
material requirements set forth in applicable agreements or instruments.
28
(d) The Parent Common Stock to be issued in the Offer and the Merger, when
issued in accordance with the provisions of this Agreement, will be validly
issued, fully paid and nonassessable.
Section 4.3 Obligations With Respect to Capital Stock. Except as set forth
in Section 4.2, there are no equity securities, partnership interests or
similar ownership interests of any class of Parent equity security, or any
securities exchangeable or convertible into or exercisable for such equity
securities, partnership interests or similar ownership interests, issued,
reserved for issuance or outstanding. Except for securities Parent owns free
and clear of all claims and Encumbrances, directly or indirectly through one or
more subsidiaries, except for shares of capital stock or other similar
ownership interests of certain subsidiaries of Parent that are owned by certain
nominee equity holders as required by the applicable law of the jurisdiction of
organization of such subsidiaries and except with respect to the securities of
entities in which Parent holds, directly or indirectly, less than 20% of the
outstanding voting securities, as of the date of this Agreement, there are no
equity securities, partnership interests or similar ownership interests of any
class of equity security of any subsidiary of Parent, or any security
exchangeable or convertible into or exercisable for such equity securities,
partnership interests or similar ownership interests, issued, reserved for
issuance or outstanding. There are no subscriptions, options, warrants, equity
securities, partnership interests or similar ownership interests, calls, rights
(including preemptive rights), commitments or agreements of any character to
which Parent or any of its subsidiaries is a party or by which it is bound
obligating Parent or any of its subsidiaries to issue, deliver or sell, or
cause to be issued, delivered or sold, or repurchase, redeem or otherwise
acquire, or cause the repurchase, redemption or acquisition of, any shares of
capital stock, partnership interests or similar ownership interests of Parent
or any of its subsidiaries or obligating Parent or any of its subsidiaries to
grant, extend, accelerate the vesting of or enter into any such subscription,
option, warrant, equity security, call, right, commitment or agreement.
Section 4.4 Authority; Non-Contravention. (a) Each of Parent and Merger
Sub has all requisite corporate power and authority to enter into this
Agreement and to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of Parent and Merger Sub, subject only to the filing of the
Certificate of Merger pursuant to Delaware Law. No approval of any holder of
any securities of Parent is required in connection with the consummation of the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by each of Parent and Merger Sub and, assuming the due authorization,
execution and delivery by Company, constitutes the valid and binding
obligations of Parent and Merger Sub, respectively, enforceable against Parent
and Merger Sub in accordance with its terms, except as enforceability may be
limited by bankruptcy and other similar laws affecting the rights of creditors
generally and general principles of equity.
(b) The execution and delivery of this Agreement by each of Parent and
Merger Sub does not, and the performance of this Agreement by Parent and Merger
Sub will not, (i) conflict with or violate the Certificate of Incorporation or
Bylaws of Parent or Merger Sub, (ii) subject to compliance with the
requirements set forth in Section 4.4(c), conflict with or violate any law,
rule, regulation, order, judgment or decree applicable to Parent or Merger Sub
or
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by which any of their respective properties is bound or affected, or (iii)
result in any breach of or constitute a default (or an event that with notice
or lapse of time or both would become a default) under, or impair Parent's
rights or alter the rights or obligations of any third party under, or give to
others any rights of termination, amendment, acceleration or cancellation of;
or result in the creation of an Encumbrance on any of the properties or assets
of Parent or Merger Sub pursuant to, any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise, concession or other
instrument or obligation to which Parent or Merger Sub is a party or by which
Parent or Merger Sub or any of their respective properties are bound or
affected, except, in the case of clauses (ii) and (iii), for such conflicts,
violations, breaches, defaults, impairments, or rights which, individually or
in the aggregate, would not have a Material Adverse Effect on Parent. Part
4.4(b) of the Parent Disclosure Letter list all consents, waivers and approvals
under any of Parent's or any of its subsidiaries' agreements, contracts,
licenses or leases required to be obtained in connection with the consummation
of the transactions contemplated hereby, which, if individually or in the
aggregate not obtained, would result in a material loss of benefits to Parent
or the Surviving Corporation as a result of the Merger.
(c) No consent, approval, order or authorization of, or registration,
declaration or filing with any Governmental Entity or other person is required
to be obtained or made by Parent or Merger Sub in connection with the execution
and delivery of this Agreement or the consummation of the Offer or Merger,
except for (i) the filing of the Certificate of Merger with the Secretary of
State of the State of Delaware, (ii) compliance with any applicable
requirements of the Securities Act, the Exchange Act, and any other applicable
securities law, whether state or foreign, (iii) such filings as may be required
under the HSR Act and (iv) such other consents, authorizations, filings,
approvals and registrations which if not obtained or made would not be material
to Parent or the Surviving Corporation or have a material adverse effect on the
ability of the parties hereto to consummate the transactions contemplated
hereby.
Section 4.5 SEC Filings; Parent Financial Statements. (a) Parent has filed
all forms, reports and documents required to be filed by Parent with the SEC
since the effective date of the registration statement for Parent's initial
public offering, and has made available to Company such forms, reports and
documents in the form filed with the SEC. All such required forms, reports and
documents (including those that Parent may file subsequent to the date hereof)
are referred to herein as the "Parent SEC Reports." As of their respective
dates, the Parent SEC Reports (i) were prepared in all material respects in
accordance with the requirements of the Securities Act or the Exchange Act, as
the case may be, and the rules and regulations of the SEC thereunder applicable
to such Parent SEC Reports, and (ii) did not at the time they were filed (or if
amended or superseded by a filing prior to the date of this Agreement, then on
the date of such filing) contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading, except to the extent corrected prior to
the date of this Agreement by a subsequently filed Parent SEC Report. None of
Parent's subsidiaries is required to file any forms, reports or other documents
with the SEC.
(b) Each of the consolidated financial statements of Parent (including, in
each case, any related notes thereto) contained in the Parent SEC Reports (the
"Parent Financials"), including any Parent SEC Reports filed after the date
hereof until the Closing, (i) comply as to
30
form in all material respects with the published rules and regulations of the
SEC with respect thereto, (ii) are prepared in accordance with GAAP applied on
a consistent basis throughout the periods involved (except as may be indicated
in the notes thereto or, in the case of unaudited interim financial statements,
as may be permitted by the SEC under Form 1O-Q, 8-K or any successor form under
the Exchange Act) and (iii) fairly present the consolidated financial position
of Parent and its subsidiaries as at the respective dates thereof and the
consolidated results of Parent's operations and cash flows for the periods
indicated, except that the unaudited interim financial statements may not
contain footnotes and were or are subject to normal and recurring year-end
adjustments. The balance sheet of Parent contained in Parent SEC Reports as of
March 31, 2000 is hereinafter referred to as the "Parent Balance Sheet." Except
as disclosed in the Parent Financials or in the Parent SEC Documents filed, in
each case, prior to the date hereof, neither Parent nor any of its subsidiaries
has any material liabilities or obligations (absolute, accrued, contingent or
otherwise) which are, individually or in the aggregate, material to the
business, results of operations or financial condition of Parent and its
subsidiaries taken as a whole, except for liabilities incurred since the date
of the Parent Balance Sheet in the ordinary course of business consistent with
past practices and liabilities incurred in connection with this Agreement.
(c) Parent has heretofore furnished to Company a complete and correct copy
of any amendments or modifications, which have not yet been filed with the SEC
but which are required to be filed, to agreements, documents or other
instruments which previously had been filed by Parent with the SEC pursuant to
the Securities Act or the Exchange Act.
Section 4.6 Absence of Certain Changes or Events. Since the date of the
Parent Balance Sheet there has not been (i) any event, occurrence, development
or state of circumstances or facts that has had or would reasonably be expected
to have, individually or in the aggregate, a Material Adverse Effect on Parent,
(ii) any declaration, setting aside or payment of any dividend on, or other
distribution (whether in cash, stock or property) in respect of, any of
Parent's or any of its subsidiaries' capital stock, or any purchase, redemption
or other acquisition by Parent of any of Parent's capital stock or any other
securities of Parent or its subsidiaries or any options, warrants, calls or
rights to acquire any such shares or other securities except for repurchases
which are not, individually or in the aggregate, material in amount from
employees following their termination pursuant to the terms of their
pre-existing stock option or purchase agreements, (iii) any material change by
Parent in its accounting methods, principles or practices, except as required
by concurrent changes in GAAP or (iv) any revaluation by Parent of any of its
material assets, other than in the ordinary course of business.
Section 4.7 Taxes. (a) Parent and each of its subsidiaries have timely
filed all material Returns relating to Taxes required to be filed by or on
behalf of Parent and each of its subsidiaries with any Tax authority. Such
Returns are true, correct and complete in all material respects, and Parent and
each of its subsidiaries have paid all Taxes shown to be due on such Returns.
(b) Parent and each of its subsidiaries have withheld with respect to its
employees all federal and state income Taxes, Taxes pursuant to FICA, Taxes
pursuant to FUTA and other Taxes required to be withheld, except such Taxes as
are not material to Parent.
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(c) Neither Parent nor any of its subsidiaries has been delinquent in the
payment of any material Tax, nor is there any material Tax deficiency
outstanding, proposed or assessed against Parent or any of its subsidiaries.
Parent and its subsidiaries have not executed any unexpired waiver of any
statute of limitations on or extending the period for the assessment or
collection of any Tax.
(d) No audit or other examination of any Return of Parent or any of its
subsidiaries by any Tax authority is presently in progress, nor has Parent or
any of its subsidiaries been notified of any request for such an audit or other
examination that is reasonably likely to result in any adjustment that is
material to Parent.
(e) No adjustment relating to any Returns filed by Parent or any of its
subsidiaries has been proposed in writing formally or informally by any Tax
authority to Company or any of its subsidiaries or any representative thereof
that is reasonably likely to be material to Parent.
(f) Neither Parent nor any of its subsidiaries has any material liability
for unpaid Taxes which have not been accrued for or reserved on the Parent
Balance Sheet in accordance with GAAP, whether asserted or unasserted,
contingent or otherwise, other than any liability for unpaid Taxes that may
have accrued since the date of the Parent Balance Sheet in connection with the
operation of the business of Parent and its subsidiaries in the ordinary
course.
(g) Neither Parent nor any of its subsidiaries has filed any consent
agreement under Section 341(f) of the Code or agreed to have Section 341(f)(2)
of the Code apply to any disposition of a subsection (f) asset (as defined in
Section 341(f)(4) of the Code) owned by Parent.
(h) Neither Parent nor any of its subsidiaries is party to or has any
obligation under any Tax-sharing, Tax indemnity or Tax allocation agreement or
arrangement.
(i) Parent and its subsidiaries have not been and will not be required to
include any adjustment in taxable income for any Tax period (or portion
thereof) pursuant to Section 481 of the Code or any comparable provision under
state or foreign Tax laws as a result of transactions, events or accounting
methods employed prior to the Closing.
(j) None of Parent's or its subsidiaries' assets are tax exempt use
property within the meaning of Section 168(h) of the Code.
(k) Parent has not been distributed in a transaction qualifying under
Section 355 of the Code within the last two years, nor has Parent distributed
any corporation in a transaction qualifying under Section 355 of the Code
within the last two years.
(l) Parent is not aware of any fact, circumstance, plan or intention on
the part of Parent that would be reasonably likely to prevent the Transaction
from qualifying as a "reorganization" within the meaning of Section 368(a) of
the Code.
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Section 4.8 Title to Properties. Parent has good and valid title to, or,
in the case of leased properties and assets, valid leasehold interests in, all
of its tangible properties and assets, real, personal and mixed, used or held
for use in its business, free and clear of any Encumbrances, except as
reflected in the Parent Financials and except for liens for Taxes not yet due
and payable and such Encumbrances which are not material to Parent.
Section 4.9 Intellectual Property. For the purposes of this Agreement, the
following terms have the following definitions:
"Parent Intellectual Property" shall mean any Intellectual Property that
is owned by, or exclusively licensed to, Parent or one of its subsidiaries.
"Parent Registered Intellectual Property" means all of the Registered
Intellectual Property owned by, or filed in the name of, Parent or one of its
subsidiaries.
(a) No material Parent Intellectual Property or product or service of
Parent is subject to any proceeding or outstanding decree, order, judgment,
agreement or stipulation restricting in any manner the use, transfer or
licensing thereof by Parent, or which may affect the validity, use or
enforceability of such Parent Intellectual Property.
(b) Each material item of Parent Registered Intellectual Property is valid
and subsisting, all necessary registration, maintenance and renewal fees
currently due in connection with such Registered Intellectual Property have
been made and all necessary documents, recordations and certificates in
connection with such Registered Intellectual Property have been filed with the
relevant patent, copyright, trademark or other authorities in the United States
or foreign jurisdictions, as the case may be, for the purposes of maintaining
such Registered Intellectual Property except, in each case, as would not
materially adversely affect such item of Parent Registered Intellectual
Property.
(c) Parent or one of its subsidiaries owns and has good and exclusive
title to, or has license (sufficient for the conduct of its business as
currently conducted and as proposed to be conducted) to, each material item of
Parent Intellectual Property free and clear of any Encumbrance (excluding
licenses and related restrictions). To the knowledge of Parent, Parent or one
of its subsidiaries owns, or holds a valid license to, free and clear of all
Encumbrances, all material Intellectual Property necessary to, or used or held
for use in, the conduct of the business as currently conducted and as proposed
to be conducted by Parent and its subsidiaries.
(d) Neither Parent nor any of its subsidiaries has transferred ownership
of, or granted any license with respect to, any Intellectual Property that is
or was material Parent Intellectual Property, to any third party.
(e) To Parent's knowledge, the operation of the business of Parent and its
subsidiaries as such business currently is conducted, including the design,
development, marketing and sale of the products or services of Parent and its
subsidiaries (including with respect to products currently under development)
has not, does not and will not infringe or misappropriate the Intellectual
Property of any third party or, to its knowledge, constitute unfair competition
or trade practices under the laws of any jurisdiction.
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(f) Except as set forth in Part 4.9(f) of the Parent Disclosure Letter, no
person has or is infringing or misappropriating any Parent Intellectual
Property, which infringement or misappropriation, individually or in the
aggregate, would be material to Parent.
(g) Parent and its subsidiaries have taken reasonable steps to protect
Parent's and its subsidiaries' rights in Parent's and such subsidiaries'
confidential information and trade secrets, except where the failure to do so
would not reasonably be expected to have a Material Adverse Effect on Parent.
Section 4.10 Compliance with Laws. (a) Neither Parent nor any of its
subsidiaries is in conflict with, or has violated or is in violation of (i) any
law, rule, regulation, order, judgment or decree applicable to Parent or any of
its subsidiaries or by which Parent or any of its subsidiaries or any of their
respective properties is bound or affected, or (ii) any note, bond, mortgage,
indenture, agreement, lease, license, permit, franchise or other instrument or
obligation to which Parent or any of its subsidiaries is a party or by which
Parent or any of its subsidiaries or its or any of their respective properties
is bound or affected, except for conflicts, violations and defaults that,
individually or in the aggregate, would not have a Material Adverse Effect on
Parent. No investigation or review by any Governmental Entity is pending or, to
Parent's knowledge, has been threatened in a writing delivered to Parent
against Parent or any of its subsidiaries, nor, to Parent's knowledge, has any
Governmental Entity indicated an intention to conduct an investigation of
Parent or any of its subsidiaries. There is no judgment, injunction, order or
decree binding upon Parent or any of its subsidiaries which has or could
reasonably be expected to have the effect of prohibiting or materially
impairing any material business practice of Parent or any of its subsidiaries,
or any acquisition of material property by Parent or any of its subsidiaries.
(b) Parent and its subsidiaries hold all permits, licenses, variances,
exemptions, orders and approvals from governmental authorities that are
material to or required for the operation of the business of Parent as
currently conducted (collectively, the "Parent Permits"), and are in compliance
with the terms of the Parent Permits, except where the failure to hold such
Parent Permits, or be in such compliance, would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on Parent.
Section 4.11 Litigation. There are no claims, suits, actions or
proceedings pending or, to the knowledge of Parent, threatened against,
relating to or affecting Parent or any of its subsidiaries, before any
Governmental Entity or any arbitrator that seeks to restrain or enjoin the
consummation of the transactions contemplated by this Agreement or which would
reasonably be expected, either singly or in the aggregate with all such claims,
actions or proceedings, to have a Material Adverse Effect on Parent or have a
material adverse effect on the ability of the parties hereto to consummate the
transactions contemplated hereby. No director or executive officer of the
Parent has asserted a claim to seek indemnification from the Parent under
Parent Charter Documents or any indemnification agreements between Parent and
such person.
Section 4.12 Brokers' and Finders' Fees. Except for fees payable to Xxxxxx
Xxxxxxx Xxxx Xxxxxx, Parent has not incurred, nor will it incur, directly or
indirectly, any liability for
34
brokerage or finders' fees or agents' commissions or any similar charges in
connection with this Agreement or any transaction contemplated hereby.
Section 4.13 Disclosure Documents. Neither the Offer Documents or the
Registration Statement or the Post-Effective Amendment, nor any of the
information supplied or to be supplied by Parent or its subsidiaries or
representatives for inclusion or incorporation by reference in the Schedule
14D-9 or the Company Proxy Statement will, at the respective times any such
documents or any amendments or supplements thereto are filed with the SEC, are
first published, sent or given to stockholders or become effective under the
Securities Act or, in the case of the Company Proxy Statement, at the time of
the Company Stockholders Meeting, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading. The Offer Documents
and the Registration Statement and the Post-Effective Amendment will comply as
to form in all material respects with the requirements of all applicable laws,
including the Securities Act and the Exchange Act, as applicable, and the rules
and regulations thereunder. No representation or warranty is made by Parent or
Merger Sub with respect to statements made or incorporated by reference therein
based on information supplied by Company for inclusion or incorporation by
reference therein.
Section 4.14 Affiliates. Except as set forth in Parent SEC Reports, since
the date of Parent's last proxy statement filed with the SEC, to the knowledge
of Parent, no event has occurred as of the date of this Agreement that would be
required to be reported by Parent pursuant to Item 404 of Regulation S-K
promulgated by the SEC.
ARTICLE V.
CONDUCT PRIOR TO THE EFFECTIVE TIME
Section 5.1 Conduct of Business by Company. During the period from the
date of this Agreement and continuing until the earlier of the termination of
this Agreement pursuant to its terms or the Appointment Time, Company and each
of its subsidiaries shall, except to the extent that Parent shall otherwise
consent in writing and except as provided in Part 5.1 of Parent Disclosure
Letter, carry on its business in the ordinary course and in compliance in all
material respects with all applicable laws and regulations, pay its debts and
Taxes when due subject to good faith disputes over such debts or Taxes, pay or
perform other material obligations when due, and use its commercially
reasonable efforts to (i) preserve intact its present business organization,
(ii) keep available the services of its present officers and employees and
(iii) preserve its relationships with customers, suppliers, licensors,
licensees and others with which it has business dealings. In addition, during
that period Company will promptly notify Parent of any material event involving
its business or operations consistent with the agreements contained herein.
In addition, except as permitted by the terms of this Agreement, and
except as contemplated by this Agreement or provided in Schedule 5.1 of the
Company Disclosure Letter, without the prior written consent of Parent during
the period from the date of this Agreement and continuing until the earlier of
the termination of this Agreement pursuant to its terms or the
35
Appointment Time, Company shall not do any of the following and shall not
permit its subsidiaries to do any of the following:
(a) Waive any stock repurchase rights, accelerate, amend or change the
period of exercisability of options or restricted stock, reprice options
granted under any employee, consultant, director or other stock plans or
authorize cash payments in exchange for any options granted under any of such
plans;
(b) Grant any severance or termination pay to any officer or employee
except pursuant to written agreements in effect, or policies existing, on the
date hereof (or as required by applicable law) and as previously disclosed in
writing to Parent or adopt any new severance plan;
(c) Transfer or license to any person or entity or otherwise extend, amend
or modify in any material respect any rights to any material Company
Intellectual Property, other than non-exclusive licenses in the ordinary course
of business and consistent with past practice;
(d) Declare, set aside or pay any dividends on or make any other
distributions (whether in cash, stock, equity securities or property) in
respect of any capital stock of Company or split, combine or reclassify any
capital stock of Company or issue or authorize the issuance of any other
securities in respect of, in lieu of or in substitution for any capital stock
of Company;
(e) Purchase, redeem or otherwise acquire, directly or indirectly, any
shares of capital stock of Company or its subsidiaries, except repurchases of
unvested shares at cost in connection with the termination of the employment
relationship with any employee pursuant to stock option or purchase agreements
in effect on the date hereof;
(f) Issue, deliver, sell, authorize, pledge or otherwise encumber any
shares of capital stock or any securities convertible into shares of capital
stock, or subscriptions, rights, warrants or options to acquire any shares of
capital stock or any securities convertible into shares of capital stock, or
enter into other agreements or commitments of any character obligating it to
issue any such shares or convertible securities, other than the issuance,
delivery and/or sale of (i) shares of Company Common Stock pursuant to the
exercise of Company Options, (ii) shares of Company Common Stock issuable to
participants in the Company ESPP, (iii) shares of Company Common Stock issuable
to participants in Company's 401(k) Plan, in the case of (i), (ii) and (iii),
consistent with the terms thereof, and (iv) pursuant to grants of Company
Options to newly hired employees in the ordinary course of business, consistent
with past practice, and not to exceed in the aggregate pursuant to this clause
(iv) 400,000 shares of Company Common Stock;
(g) Cause, permit or propose any amendments to its Certificate of
Incorporation, Bylaws or other charter documents (or similar governing
instruments of any of its subsidiaries);
(h) Acquire or agree to acquire by merging or consolidating with, or,
except as required by agreements listed in Part 3.1 of the Disclosure Schedule,
by purchasing any equity interest in or a portion of the assets of, or by any
other manner, any business or any corporation, partnership, association or
other business organization or division thereof; or otherwise acquire
36
or agree to acquire any assets which are material, individually or in the
aggregate, to the business of Company or enter into any material joint
ventures, strategic relationships or alliances;
(i) Sell, lease, license, encumber or otherwise dispose of any properties
or assets which are material, individually or in the aggregate, to the business
of Company;
(j) Incur any indebtedness for borrowed money or guarantee any such
indebtedness of another person, issue or sell any debt securities or options,
warrants, calls or other rights to acquire any debt securities of Company,
enter into any "keep well" or other agreement to maintain any financial
statement condition or enter into any arrangement having the economic effect of
any of the foregoing, other than in the ordinary course of business, consistent
with past practice;
(k) Except as required to comply with any Legal Requirement or as set
forth in Part 3.12 of the Company Disclosure Letter, adopt or amend any
employee benefit plan or employee stock purchase or employee stock option plan,
or enter into any employment contract or collective bargaining agreement, pay
any special bonus or special remuneration to any director or employee, or
increase the salaries or wage rates or fringe benefits (including rights to
severance or indemnification) of its directors, officers, employees or
consultants other than with respect to employees and consultants (other than
officers) in the ordinary course of business, consistent with past practice, or
change in any material respect any management policies or procedures that are
material to the business of Company;
(1) Make any material capital expenditures, except in accordance with the
current Company annual budget and plan, as previously disclosed to Parent;
(m) Modify, amend or terminate any Company Contract to which Company or
any subsidiary thereof is a party or waive, release or assign any material
rights or claims thereunder other than in the ordinary course of business
consistent with past practice;
(n) Enter into any licensing or other agreement with regard to the
acquisition, distribution or licensing of any material Intellectual Property
other than licenses, distribution or other similar agreements entered into in
the ordinary course of business consistent with past practice;
(o) Revalue any of its assets or, except as required by GAAP, make any
change in accounting methods, principles or practices;
(p) Materially change the pricing of the license fees Company charges for
licensing its software;
(q) Take any action that would materially delay the consummation of the
transactions contemplated hereby; or
(r) Agree in writing or otherwise to take any of the actions described in
Section 5.1 (a) through (q) above.
37
Section 5.2 Conduct of Business by Parent. During the period from the date
of this Agreement and continuing until the earlier of the termination of this
Agreement pursuant to its terms or the Effective Time, Parent and each of its
subsidiaries shall, except to the extent that Company shall otherwise consent
in writing and except as provided in Part 5.2 of the Parent Disclosure Letter,
carry on its business in the usual, regular and ordinary course, in
substantially the same manner as heretofore conducted and in compliance in all
material respects with all applicable laws and regulations, pay its debts and
Taxes when due subject to good faith disputes over such debts or Taxes, pay or
perform other material obligations when due, and use its commercially
reasonable efforts consistent with past practices and policies to (i) preserve
intact its present business organization, (ii) keep available the services of
its present officers and employees and (iii) preserve its relationships with
customers, suppliers, licensors, licensees and others with which it has
business dealings; provided, however, that nothing in this Section 5.2 shall
prevent Parent or any of its subsidiaries from reviewing and pursuing any
acquisition opportunities.
In addition, except as permitted by the terms of this Agreement, and
except as contemplated by this Agreement or provided in Part 5.2 of the Parent
Disclosure Letter, without the prior written consent of Company, during the
period from the date of this Agreement and continuing until the earlier of the
termination of this Agreement pursuant to its terms or the Effective Time,
Parent shall not do any of the following and shall not permit its subsidiaries
to do any of the following:
(a) Declare, set aside or pay any dividends on or make any other
distributions (whether in cash, stock, equity securities or property) in
respect of any capital stock of Parent; provided that Parent shall not be
prohibited under this clause (a) from effecting any stock split, reverse stock
split, stock dividend, reorganization, recapitalization, reclassification or
other like change with respect to Parent Common Stock on or after the date
hereof;
(b) Purchase, redeem or otherwise acquire, directly or indirectly, any
shares of capital stock of Parent or its subsidiaries, except repurchases of
unvested shares at cost in connection with the termination of the employment
relationship with any employee pursuant to stock option or purchase agreements
in effect on the date hereof;
(c) Cause, permit or propose any amendments to its Certificate of
Incorporation, Bylaws or other charter documents;
(d) Except as required by GAAP, make any change in accounting methods,
principles or practices or any change in tax accounting methods or any tax
elections;
(e) Take any action that would materially delay the consummation of the
transactions contemplated hereby; or
(f) Agree in writing or otherwise to take any of the actions described in
Section 5.2 (a) through (e) above.
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ARTICLE VI.
ADDITIONAL AGREEMENTS
Section 6.1 Stockholder Approval; Preparation of Registration Statement
and Proxy Statement/Prospectus. (a) If approval of Company's stockholders is
required by applicable law in order to consummate the Merger other than
pursuant to Section 253 of Delaware Law, following the acceptance for exchange
of Shares pursuant to the Offer, Parent and Company shall, as soon as
practicable following the acceptance of Shares pursuant to the Offer, prepare
and Company shall file with the SEC the Company Proxy Statement and Parent and
Company shall prepare and Parent shall file with the SEC a post-effective
amendment to the Registration Statement (the "Post-Effective Amendment") for
the offer and sale of the Parent Stock pursuant to the Merger and in which the
Company Proxy Statement will be included as a prospectus. Each of Company and
Parent shall use all reasonable efforts to have the Post-Effective Amendment
declared effective under the Securities Act as promptly as practicable after
such filing. Company will use all reasonable efforts to cause the Company Proxy
Statement to be mailed to Company's stockholders as promptly as practicable
after the Post-Effective Amendment is declared effective under the Securities
Act. Parent shall also take any action (other than qualifying to do business in
any jurisdiction in which it is not now so qualified or to file a general
consent to service of process) required to be taken under any applicable state
securities laws in connection with the issuance of Parent Common Stock in the
Offer and the Merger and Company shall furnish all information concerning
Company and the holders of capital stock of Company as may be reasonably
requested in connection with any such action and the preparation, filing and
distribution of the Company Proxy Statement. No filing of, or amendment or
supplement to, or correspondence to the SEC or its staff with respect to, the
Post-Effective Amendment will be made by Parent, or the Company Proxy Statement
will be made by Company, without providing the other party a reasonable
opportunity to review and comment thereon. Parent will advise Company, promptly
after it receives notice thereof, of the time when the Post-Effective Amendment
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
Common Stock issuable in connection with the Merger for offering or sale in any
jurisdiction, or any request by the SEC for amendment of the Post-Effective
Amendment or comments thereon and responses thereto or requests by the SEC for
additional information. Company will advise Parent, promptly after it receives
notice thereof, of any request by the SEC for the amendment of the Company
Proxy Statement or comments thereon and responses thereto or requests by the
SEC for additional information. If at any time prior to the Effective Time any
information relating to Company or Parent, or any of their respective
affiliates, officers or directors, should be discovered by Company or Parent
which should be set forth in an amendment or supplement to either of the
Post-Effective Amendment or the Company 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 parties hereto and
an appropriate amendment or supplement describing such information shall be
promptly filed with the SEC and, to the extent required by law, disseminated to
the stockholders of Company.
39
(b) If approval of the Company's stockholders is required by applicable
law in order to consummate the Merger, Company shall establish, prior to or as
soon as practicable following the date upon which the Post-Effective Amendment
becomes effective, a record date (which shall be prior to or as soon as
practicable following the date upon which the Post-Effective Amendment becomes
effective) for, duly call, give notice of, convene and hold a meeting of its
stockholders (the "Company Stockholders Meeting") for the purpose of
considering and taking action upon this Agreement and the Merger and (with the
consent of Parent) such other matters as may in the reasonable judgment of
Company be appropriate for consideration at the Company Stockholders Meeting.
Once the Company Stockholders Meeting has been called and noticed, Company
shall not postpone or adjourn the Company Stockholders Meeting (other than for
the absence of a quorum) without the consent of Parent. Subject to Company's
right, pursuant to Section 6.3(b) hereof, to withdraw or modify the
Recommendations, the Board of Directors of Company shall include in the
Post-Effective Amendment and the Company Proxy Statement a copy of the
Recommendations as such Recommendations pertain to the Merger and this
Agreement. Notwithstanding the foregoing, if approval of the Company's
stockholders is required by applicable law in order to consummate the Merger,
the Board of Directors of Company shall submit this Agreement and the Merger
for approval to the Company's stockholders whether or not the Board of
Directors of Company determines in accordance with Section 6.3(b) after the
date hereof that this Agreement and the Merger are no longer advisable and
recommends that the stockholders of Company reject it. Unless the Board of
Directors of Company has withdrawn its recommendation of this Agreement and the
Merger in compliance with Section 6.3(b), Company shall use its reasonable best
efforts to solicit from stockholders of Company proxies in favor of this
Agreement and the Merger and shall take all other actions necessary or
advisable to secure the vote or consent of stockholders required by Delaware
Law to effect the Merger.
(c) Notwithstanding the foregoing clauses (a) and (b) above, if Merger Sub
shall acquire at least 90% of the outstanding Shares in the Offer, the parties
hereto shall take all necessary actions (including actions referred to in
clause (a) above, as applicable) to cause the Merger to become effective, as
soon as practicable after the expiration of the Offer, without a meeting of
stockholders of Company, in accordance with Section 253 of Delaware Law.
Section 6.2 Antitrust Filings. (a) Promptly after the date of this
Agreement, each of Company and Parent will prepare and file (i) with the United
States Federal Trade Commission and the Antitrust Division of the United States
Department of Justice Notification and Report Forms relating to the
transactions contemplated herein as required by the HSR Act, as well as
comparable pre-merger notification forms required by the merger notification or
control laws and regulations of any applicable jurisdiction, as agreed to by
the parties (the "Antitrust Filings") and (ii) any other filings required to be
filed by it under the Exchange Act, the Securities Act or any other federal,
state or foreign laws relating to the Merger and the transactions contemplated
by this Agreement (the "Other Filings"). Company and Parent each shall promptly
supply the other with any information which may be required in order to
effectuate any filings pursuant to this Section 6.2.
(b) Each of Company and Parent will notify the other promptly upon the
receipt of any comments from the SEC or its staff or any other government
officials in
40
connection with any filing made pursuant hereto and of any request by the SEC
or its staff or any other government officials for amendments or supplements to
the Registration Statement, the Post-Effective Amendment, the Company Proxy
Statement or any Antitrust Filings or Other Filings or for additional
information and will supply the other with copies of all correspondence between
such party or any of its representatives, on the one hand, and the SEC, or its
staff or any other government officials, on the other hand, with respect to the
Registration Statement, the Post-Effective Amendment, the Company Proxy
Statement, the Merger or any Antitrust Filing or Other Filing. Each of Company
and Parent will cause all documents that it is responsible for filing with the
SEC or other regulatory authorities under Section 6.1 and this Section 6.2 to
comply in all material respects with all applicable requirements of law and the
rules and regulations promulgated thereunder. Whenever any event occurs which
is required to be set forth in an amendment or supplement the Registration
Statement, the Post-Effective Amendment, the Company Proxy Statement or any
Antitrust Filing or Other Filing, Company or Parent, as the case may be, will
promptly inform the other of such occurrence and cooperate in filing with the
SEC or its staff or any other government officials, and/or mailing to
stockholders of Company and/or Parent, such amendment or supplement.
Section 6.3 No Solicitation. (a) From the date hereof until the
Appointment Date or termination of the Agreement in accordance with Article
VIII hereof, whichever is earlier, neither Company nor any of its subsidiaries
shall, nor shall Company or any of its subsidiaries authorize or permit any of
its or their officers, directors, employees, investment bankers, attorneys,
accountants, consultants or other agents or advisors to, directly or
indirectly, (i) solicit, initiate or knowingly take any action to facilitate or
encourage the submission or announcement of any Acquisition Proposal (as
defined below), (ii) enter into or participate in any discussions or
negotiations with, furnish any information relating to Company or any of its
subsidiaries or afford access to the business, properties, assets, books or
records of Company or any of its subsidiaries to, otherwise cooperate in any
way with, or knowingly assist, participate in, facilitate or encourage any
effort by any third party that has made an Acquisition Proposal, (iii) approve,
endorse or recommend any Acquisition Proposal or (iv) enter into any letter of
intent or similar document or any contract, agreement or commitment
contemplating or otherwise relating to any Acquisition Proposal.
(b) Notwithstanding the foregoing, the Board of Directors of Company,
directly or indirectly through advisors, agents or other intermediaries, may
(i) engage in negotiations or discussions with any third party that, subject to
Company's compliance with Section 6.3(a), has made (and not withdrawn) a bona
fide Acquisition Proposal that the Board of Directors of Company reasonably
determines (after consultation with Company's financial advisor) constitutes a
Superior Proposal, (ii) furnish to such third party nonpublic information
relating to Company or any of its subsidiaries pursuant to a confidentiality
agreement with terms no less favorable to Company than those contained in the
Confidentiality Agreement, (iii) take and disclose to its stockholders a
position contemplated by Rule 14e-2(a) under the Exchange Act or otherwise make
disclosure to them, (iv) following receipt of such an Acquisition Proposal,
withdraw, modify in a manner adverse to Parent, or fail to make its
Recommendations, and/or (v) take any action ordered to be taken by Company by
any court of competent jurisdiction if, in each case (1) neither Company nor
any representative of Company and its subsidiaries shall have violated any of
the restrictions set forth in this Section 6.3, (2) the Board of Directors of
41
Company determines in good faith, after consultation with its outside legal
counsel, that it is necessary for the Board of Directors to take such action in
order to satisfy its fiduciary obligations to Company's stockholders under
applicable law, (3) prior to furnishing any such nonpublic information to, or
entering into any such discussions with, such person or group, Company gives
Parent written notice of the identity of such person or group and all of the
material terms and conditions of such Acquisition Proposal and of Company's
intention to furnish nonpublic information to, or enter into discussions with,
such person or group, and Company receives from such person or group an
executed confidentiality agreement containing terms at least as restrictive
with regard to Company's confidential information as the Confidentiality
Agreement, (4) gives Parent prompt advance notice of its intent to furnish such
nonpublic information or enter into such discussions (which notice shall in no
event be given less than one business day prior to furnishing such information
or entering into such discussions), and (5) contemporaneously with furnishing
any such nonpublic information to such person or group, Company furnishes such
nonpublic information to Parent (to the extent such nonpublic information has
not been previously furnished by the Company to Parent). Company and its
subsidiaries will immediately cease any and all existing activities,
discussions or negotiations with any parties conducted heretofore with respect
to any Acquisition Proposal. Without limiting the foregoing, it is understood
that any violation of the restrictions set forth in the preceding two sentences
by any officer, director or employee of Company or any of its subsidiaries or
any investment banker, attorney or other advisor or representative of Company
or any of its subsidiaries shall be deemed to be a breach of this Section 6.3
by Company.
(c) In addition to the obligations of Company set forth in paragraph (a)
of this Section 6.3, Company as promptly as reasonably practicable shall advise
Parent orally and in writing of any Acquisition Proposal, or any inquiry with
respect to or which Company reasonably should believe would lead to any
Acquisition Proposal, the material terms and conditions of such Acquisition
Proposal or inquiry, and the identity of the person or group making any such
Acquisition Proposal or inquiry. Company will keep Parent informed as promptly
as reasonably practicable in all material respects of material amendments of
any such Acquisition Proposal or inquiry.
"Superior Proposal" means any bona fide, unsolicited written Acquisition
Proposal for at least a majority of the outstanding shares of Company Common
Stock on terms that the Board of Directors of Company determines in good faith
by a majority vote, after consultation with its financial advisor of nationally
recognized reputation and taking into account all the terms and conditions of
the Acquisition Proposal, are more favorable to the Company's stockholders than
as provided hereunder.
For purposes of this Agreement, "Acquisition Proposal" shall mean any
offer or proposal by a third party, other than Parent, Merger Sub or any
affiliate thereof, relating to: (A) any acquisition or purchase from Company by
any person or "group" (as defined under Section 13(d) of the Exchange Act and
the rules and regulations thereunder) of more than a 25% interest in the
outstanding voting securities of Company or any of its subsidiaries or any
tender offer or exchange offer that if consummated would result in any person
or "group" (as defined under Section 13(d) of the Exchange Act and the rules
and regulations thereunder) beneficially owning 25% or more of the outstanding
voting securities of Company or any of its subsidiaries or any
42
merger, consolidation, business combination or similar transaction involving
Company pursuant to which the stockholders of Company immediately preceding
such transaction would hold less than 75% of the equity interests in the
surviving or resulting entity of such transaction; (B) any sale, lease (other
than in the ordinary course of business), exchange, transfer, license (other
than in the ordinary course of business), acquisition, or disposition of more
than 25% of the consolidated assets of Company; or (C) any liquidation or
dissolution of Company.
Section 6.4 Obligations of Merger Sub. Parent will take all action
necessary to cause Merger Sub to perform its obligations under this Agreement
and to consummate the Offer and the Merger on the terms and subject to the
conditions set forth in this Agreement.
Section 6.5 Voting of Shares. Parent and Merger Sub agree to vote all
Shares acquired in the Offer or otherwise beneficially owned by them or any of
their subsidiaries in favor of approval and adoption of this Agreement and the
Merger at the Company Stockholder Meeting or pursuant to Section 253 of the
DGCL, on the terms and subject to the conditions set forth in this Agreement.
Section 6.6 Registration Statement. Parent shall promptly prepare and file
with the SEC under the Securities Act the Registration Statement and shall use
all reasonable efforts to cause the Registration Statement to be declared
effective by the SEC as promptly as practicable. Parent shall promptly take any
action required to be taken under foreign or state securities laws in
connection with the issuance of Parent Common Stock in the Merger. Parent shall
include as an exhibit to the Registration Statement a tax opinion of Xxxxx Xxxx
& Xxxxxxxx, in form and substance reasonably satisfactory to Parent and to
Company, on the basis of customary facts, representations and assumptions set
forth in such opinion (including without limitation assumptions that (i) the
minimum Condition shall be satisfied, and (ii) the Merger shall be completed
promptly following the Offer), to the effect that the Transaction will be
treated for federal income tax purposes as a reorganization within the meaning
of Section 368(a) of the Code.
Section 6.7 Confidentiality; Access to Information. (a) The parties
acknowledge that Company and Parent have previously executed the
Confidentiality Agreement which Confidentiality Agreement will continue in full
force and effect in accordance with its terms.
(b) Company will afford Parent and its accountants, counsel and other
representatives reasonable access during normal business hours to the
properties, books, records and personnel of Company during the period prior to
the Effective Time to obtain all information concerning the business, including
the status of product development efforts, properties, results of operations
and personnel of Company, as Parent may reasonably request, including without
limitation copies of working papers of accountants, contracts, and other
corporate documents, and access to other parties with whom it has business
dealings. Parent will afford Company and its accountants, counsel and other
representatives reasonable access during normal business hours to the
properties, books, records and personnel of Parent during the period prior to
the Effective Time to obtain all information concerning the business, including
the status of product development efforts, properties, results of operations
and personnel of Parent, as Company may reasonably request, including without
limitation copies of working papers of accountants,
43
contracts, and other corporate documents, and access to other parties with whom
it has business dealings. No information or knowledge obtained in any
investigation pursuant to this Section will affect or be deemed to modify any
representation or warranty contained herein or the conditions to the
obligations of the parties to consummate the Offer and the Merger.
Section 6.8 Public Disclosure. Parent and Company will consult with each
other, and to the extent practicable, agree, before issuing any press release
or otherwise making any public statement with respect to the Offer, Merger,
this Agreement or an Acquisition Proposal and will not issue any such press
release or make any such public statement prior to such consultation, except as
may be required by law or any listing agreement with a national securities
exchange; provided, however, that this Section 6.8 shall terminate in the event
the Board of Directors of Company shall withdraw its Recommendations. The
parties have agreed to the text of the joint press release announcing the
signing of this Agreement.
Section 6.9 Reasonable Efforts; Notification. (a) Upon the terms and
subject to the conditions set forth in this Agreement, each of the parties
agrees to use all reasonable efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, and to assist and cooperate with the
other parties in doing, all things necessary, proper or advisable to consummate
and make effective, in the most expeditious manner practicable, the Merger and
the other transactions contemplated by this Agreement, including using
reasonable efforts to accomplish the following: (i) the taking of all
reasonable acts necessary to cause the conditions precedent set forth in Annex
I and Article VII to be satisfied, (ii) the obtaining of all necessary actions
or nonactions, waivers, consents, approvals, orders and authorizations from
Governmental Entities and the making of all necessary registrations,
declarations and filings (including registrations, declarations and filings
with Governmental Entities, if any) and the taking of all reasonable steps as
may be necessary to avoid any suit, claim, action, investigation or proceeding
by any Governmental Entity, (iii) the obtaining of all necessary consents,
approvals or waivers from third parties, (iv) the defending of any suits,
claims, actions, investigations or proceedings, whether judicial or
administrative, challenging this Agreement or the consummation of the
transactions contemplated hereby, including seeking to have any stay or
temporary restraining order entered by any court or other Governmental Entity
vacated or reversed and (v) the execution or delivery of any additional
instruments necessary to consummate the transactions contemplated by, and to
carry out fully the purposes of, this Agreement. Notwithstanding anything in
this Agreement to the contrary, neither Parent nor any of its affiliates shall
be under any obligation to make proposals, execute or carry out agreements or
submit to orders providing for the sale or other disposition or holding
separate (through the establishment of a trust or otherwise) of any assets or
categories of assets of Parent, any of its affiliates or Company or its
subsidiaries or the holding separate of the shares of Company Common Stock (or
shares of stock of the Surviving Corporation) or imposing or seeking to impose
any limitation on the ability of Parent or any of its subsidiaries or
affiliates to conduct their business or own such assets or to acquire, hold or
exercise full rights of ownership of the shares of Company Common Stock (or
shares of stock of the Surviving Corporation).
(b) Each of Company and Parent will give prompt notice to the other of (i)
any notice or other communication from any person alleging that the consent of
such person is or may be required in connection with the transactions
contemplated hereby, (ii) any notice or other
44
communication from any Governmental Entity in connection with the transactions
contemplated hereby, (iii) any litigation relating to, involving or otherwise
affecting Company, Parent or their respective subsidiaries that relates to the
consummation of the transactions contemplated hereby. Company shall give prompt
notice to Parent of any representation or warranty made by it contained in this
Agreement becoming untrue or inaccurate, or any failure of Company to comply
with or satisfy in any material respect any covenant, condition or agreement to
be complied with or satisfied by it under this Agreement, in each case, such
that the conditions set forth in Annex I or Article VII would not be satisfied,
provided, however, that no such notification shall affect the representations,
warranties, covenants or agreements of the parties or the conditions to the
obligations of the parties under this Agreement. Parent shall give prompt
notice to Company of any representation or warranty made by it or Merger Sub
contained in this Agreement becoming untrue or inaccurate, or any failure of
Parent or Merger Sub to comply with or satisfy in any material respect any
covenant, condition or agreement to be complied with or satisfied by it under
this Agreement, in each case, such that the conditions set forth in Annex I or
Article VII would not be satisfied, provided, however, that no such
notification shall affect the representations, warranties, covenants or
agreements of the parties or the conditions to the obligations of the parties
under this Agreement.
Section 6.10 Stock Options and ESPP. (a) At the Effective Time, each
outstanding Company Option and each outstanding warrant to purchase Company
Common Stock, whether or not then exercisable, will be assumed by Parent. Each
Company Option so assumed by Parent under this Agreement will continue to have,
and be subject to, the same terms and conditions set forth in the Company Stock
Option Plan immediately prior to the Effective Time (including, without
limitation, any repurchase rights or vesting provisions), except that, subject
to Section 6.10(b), (i) each Company Stock Option will be exercisable (or will
become exercisable in accordance with its terms) for that number of whole
shares of Parent Common Stock equal to the product of the number of shares of
Company Common Stock that were issuable upon exercise of such Company Option
immediately prior to the Effective Time multiplied by the Exchange Ratio,
rounded down to the nearest whole number of shares of Parent Common Stock and
(ii) the per share exercise price for the shares of Parent Common Stock
issuable upon exercise of such assumed Company Option will be equal to the
quotient determined by dividing the exercise price per share of Company Common
Stock at which such Company Option was exercisable immediately prior to the
Effective Time by the Exchange Ratio, rounded up to the nearest whole cent.
Continuous employment with Company or its subsidiaries shall be credited to the
optionee for purposes of determining the vesting of all assumed Company Options
after the Effective Time.
(b) It is intended that Company Options assumed by Parent shall qualify
following the Effective Time as incentive stock options as defined in Section
422 of the Code to the extent Company Options qualified as incentive stock
options immediately prior to the Effective Time and the provisions of this
Section 6.10 shall be applied consistent with such intent in accordance with
Section 424 of the Code.
(c) At the Effective Time, the Company ESPP shall be assumed by Parent;
provided however, that no new offering period shall commence under the Company
ESPP and
45
no employee of Company or any of its subsidiaries not participating in the
Company ESPP as of the date hereof shall become a participant in the Company
ESPP after such date.
Section 6.11 Form S-8. Parent agrees to use its reasonable efforts to file
a registration statement on Form S-8 for the shares of Parent Common Stock
issuable with respect to assumed Company Options as soon as is reasonably
practicable (and in any event within 10 days) after the Effective Time and
shall maintain the effectiveness of such registration statement thereafter for
so long as any of such options or other rights remain outstanding.
Section 6.12 Indemnification. (a) From and after the Effective Time,
Parent shall, and shall cause the Surviving Corporation to, fulfill and honor
in all respects the obligations of Company pursuant to any indemnification
agreements between Company and its directors and officers as of the Effective
Time (the "Indemnified Parties") and any indemnification provisions under
Company's or the Surviving Corporation's Certificate of Incorporation or Bylaws
as in effect on the date hereof. The Certificate of Incorporation and Bylaws of
the Surviving Corporation will contain provisions with respect to exculpation
and indemnification that are at least as favorable to the Indemnified Parties
as those contained in the Certificate of Incorporation and Bylaws of Company as
in effect on the date hereof, which provisions will not be amended, repealed or
otherwise modified for a period of six years from the Effective Time in any
manner that would adversely affect the rights thereunder of individuals who,
immediately prior to the Effective Time, were directors, officers, employees or
agents of Company, unless such modification is required by law.
(b) In the event that Parent or any of its successors or assigns (i)
consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity of such consolidation or merger,
or (ii) transfers all or substantially all of its properties and assets to any
person in a single transaction or a series of transactions, then, and in each
such case, Parent shall make or cause to be made proper provision so that the
successors and assigns of Parent assume the indemnification obligations of
Parent under this Section 6.12 for the benefit of the Indemnified Parties.
(c) For a period of six years after the Effective Time, Parent will either
(i) cause the Surviving Corporation to maintain in effect, if available,
directors' and officers' liability insurance covering those persons who are
currently covered by Company's directors' and officers' liability insurance
policy on terms comparable to those applicable to the current directors and
officers of Company; provided, however, that in no event will Parent or the
Surviving Corporation be required to expend in excess of 150% of the annual
premium currently paid by Company for such coverage (or such coverage as is
available for such 150% of such annual premium), or (ii) if mutually agreed
between Company and Parent, purchase a directors' and officers' liability
insurance on terms comparable to those applicable to the current directors and
officers of Company covering all periods prior to the Effective Time.
(c) This Section 6.12 shall survive the consummation of the Merger, is
intended to benefit Company, the Surviving Corporation and each Indemnified
Party, shall be binding on all successors and assigns of the Surviving
Corporation and Parent, and shall be enforceable by the Indemnified Parties.
46
Section 6.13 Nasdaq Listing. Parent agrees to authorize for listing on
NASDAQ National Market System the shares of Parent Common Stock issuable, and
those required to be reserved for issuance, in connection with the Offer and
the Merger, effective upon official notice of issuance.
Section 6.14 Letters of Accountants. Company and Parent shall use their
respective reasonable efforts to cause to be delivered to Parent letters of
Company's and Parent's independent accountants, respectively, dated no more
than two business days before the date on which the Registration Statement
becomes effective (and satisfactory in form and substance to Parent), that is
customary in scope and substance for letters delivered by independent public
accountants in connection with registration statements similar to the
Registration Statement.
Section 6.15 Takeover Statutes. If any Takeover Statute is or may become
applicable to the Merger or the other transactions contemplated by this
Agreement, each of Parent and Company and their respective Boards of Directors
shall grant such approvals and take such lawful actions as are necessary to
ensure that such transactions may be consummated as promptly as practicable on
the terms contemplated by this Agreement and otherwise act to eliminate or
minimize the effects of such statute and any regulations promulgated thereunder
on such transactions. Company agrees that on and after the date hereof, it will
not adopt any "poison pill" rights plan or any similar antitakeover plan or
take any other action that would impede or prevent completion of the Offer, the
Merger or this Agreement.
Section 6.16 Certain Employee Benefits. Employees of Company and its
subsidiaries will be granted credit for purposes of eligibility, vesting and
vacation accrual for all service with Company and its subsidiaries under each
employee benefit plan, program or arrangement of Parent or its Affiliates in
which such Employees are eligible to participate. If Employees become eligible
to participate in a welfare plan maintained or contributed to by Parent or its
Affiliates, Parent will cause such plan to (i) waive any preexisting condition
exclusions and waiting period limitations for conditions covered under the
applicable welfare plan under which Company employees participate (but only to
the extent corresponding exclusions and limitations were satisfied by such
Employees under the applicable welfare plans maintained or contributed to by
Company); and (ii) credit any deductible or out of pocket expenses or offsets
(or similar expenses) incurred by the Employees and their beneficiaries under
such plans during the portion of the calendar year prior to such participation.
Section 6.17 Tax Matters. Each of Parent, Merger Sub and Company agrees
that it will not take any action, or fail to take any action, which action or
failure to act would be reasonably likely to cause the Transaction to fail to
qualify as a "reorganization" within the meaning of Section 368(a) of the Code.
Each of Parent, Merger Sub and Company agrees to use its reasonable efforts to
make representations to Xxxxx Xxxx & Xxxxxxxx and Xxxxxx Xxxxxxx Xxxxxxxx &
Xxxxxx in support of their tax opinions in Section 6.6 and in Annex I.
Section 6.18 Employment Agreement. Company agrees to cooperate with Parent
in its efforts to negotiate employment or other agreements with key employees
identified by Parent between the date hereof and the Effective Time.
47
ARTICLE VII.
CONDITIONS TO THE MERGER
Section 7.1 Conditions to Obligations of Each Party to Effect the Merger.
The obligations of Company, Parent and Merger Sub to consummate the Merger are
subject to the satisfaction of the following conditions:
(a) if required by Delaware law, this Agreement shall have been approved
and adopted by the stockholders of Company;
(b) Merger Sub shall have accepted for exchange and exchanged all of the
Shares tendered pursuant to the Offer;
(c) no provision of any applicable law or regulation and no judgment,
injunction, order or decree shall prohibit the consummation of the Merger;
(d) the Registration Statement or the Post-Effective Amendment, as the
case may be, shall have been declared effective and no stop order suspending
effectiveness shall be in effect and no proceedings for such purpose shall be
pending before or threatened by the SEC; and
(e) the shares of Parent Common Stock to be issued in the Merger shall
have been approved for listing on the NASDAQ National Market System, subject to
official notice of issuance.
ARTICLE VIII.
TERMINATION, AMENDMENT AND WAIVER
Section 8.1 Termination. This Agreement may be terminated and the Merger
may be abandoned at any time prior to the Appointment Date (notwithstanding any
approval of this Agreement by the stockholders of Company):
(a) by mutual written agreement of Company and Parent; or
(b) by either Company or Parent, if:
(i) the Offer shall have expired or been terminated in accordance
with the terms of this Agreement without Parent or Merger Sub having
accepted for exchange any Shares pursuant to the Offer, provided that
Parent and Merger Sub shall not be permitted to terminate this Agreement
pursuant to this Section 8.1(b)(i) if the Offer is terminated or expires
without Shares having been accepted for exchange as a result of a breach
by Parent or Merger Sub of this Agreement; or
48
(ii) the Offer has not been consummated on or before September 30,
2000 (the "End Date); provided, however, that the right to terminate this
Agreement under this Section 8.1(b)(ii) shall not be available to any
party whose failure to fulfill any obligation under this Agreement has
been the principal cause of or resulted in the failure of the Offer to
have been consummated on or before such date and such action or failure to
act constitutes a material breach of this Agreement; or
(iii) there shall be any applicable law or regulation that makes
consummation of the Merger illegal or otherwise prohibited or any
judgment, injunction, order or decree of any court or governmental body
having competent jurisdiction enjoining Company or Parent from
consummating the Merger is entered and such judgment, injunction, judgment
or order shall have become final and nonappealable; or
(iv) (A) any representation or warranty of the other party contained
in this Agreement shall be or have become inaccurate such that, in the
aggregate, such inaccuracies would reasonably be expected to have a
Material Adverse Effect on such other party, or (B) the other party fails
to perform any material covenant contained in this Agreement; provided,
however, that such inaccuracy or failure to perform has not been or is
incapable of being cured by such other party within 30 days following
receipt by the terminating party of notice of such inaccuracy or failure
to perform; or
(c) by Parent if a Triggering Event shall have occurred.
For purposes of this Agreement, a "Triggering Event" shall be deemed to
have occurred if, prior to the Appointment Time: (i) the Board of Directors of
Company or any committee thereof shall have approved or recommended to Company
stockholders any Acquisition Proposal, (ii) the Board of Directors of Company
or any committee thereof shall for any reason have withdrawn or shall have
amended or modified in a manner adverse to Parent its Recommendations; (iii)
Company shall have failed to include in the Offer Documents, the Schedule 14D-9
or the Post-Effective Amendment the Recommendations; or (iv) a tender or
exchange offer relating to 40% or more of the Shares shall have been commenced
by a person unaffiliated with Parent, and Company shall not have sent to its
securityholders pursuant to Rule 14e-2 promulgated under the Securities Act,
within 10 business days after such tender or exchange offer is first published
sent or given, a statement disclosing that Company recommends rejection of such
tender or exchange offer.
The party desiring to terminate this Agreement pursuant to this Section
8.1 (other than pursuant to Section 8.1(a)) shall give notice of such
termination to the other party.
Section 8.2 Notice of Termination; Effect of Termination. Any proper
termination of this Agreement under Section 8.1 above will be effective
immediately upon the delivery of written notice of the terminating party to the
other parties hereto. In the event of the termination of this Agreement under
Section 8.1, this Agreement shall be of no further force or effect without
liability of any party (or any stockholder, director, officer, employee, agent,
consultant or
49
representative of such party) to the other parties hereto, except (i) as set
forth in this Section 8.2, Section 8.3 and Article 9, each of which shall
survive the termination of this Agreement, and (ii) that nothing herein shall
relieve any party from liability for any willful breach of this Agreement. No
termination of this Agreement shall affect the obligations of the parties
contained in the Confidentiality Agreement, all of which obligations shall
survive termination of this Agreement in accordance with their terms. In the
event that Company gives Parent notice of an inaccuracy or failure to perform
such that this Agreement would be subject to termination pursuant to Section
8.1(b)(iv), Parent shall cause Merger Sub to not consummate the Offer until
such inaccuracy or failure to perform is cured.
Section 8.3 Fees and Expenses. (a) General. Except as set forth in this
Section 8.3, all fees and expenses incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the party incurring
such expenses whether or not the Merger is consummated; provided, however, that
Parent and Company shall share equally all fees and expenses, other than
attorneys' and accountants fees and expenses, incurred in relation to the
printing and filing with the SEC of the Registration Statement (including
financial statements and exhibits) and any amendments or supplements thereto.
(b) Company Payments. If this Agreement is terminated by Parent or
Company, as applicable, prior to the appointment time pursuant to Sections
8.1(b)(i) or (ii) or Section 8.1(c), Company shall promptly, but in any event
no later than two days after the date of such termination, pay Parent a fee
equal to $50 million in immediately available funds (the "Termination Fee");
provided, that in the case of a termination under Section 8.1(b)(i) or (ii)
prior to which no Triggering Event has occurred, (i) such payment shall be made
only if (A) following the date of this Agreement and prior to the termination
of this Agreement, any Acquisition Proposal shall have been publicly announced
or shall have become publicly known and not withdrawn at least 5 business days
prior to the scheduled expiration date of the Offer, and (B) within 12 months
following the termination of this Agreement, either a Company Acquisition (as
defined below) is consummated, or Company enters into an agreement providing
for a Company Acquisition and such Company Acquisition is later consummated,
and (ii) such payment shall be made promptly, but in any event no later than
two days after the consummation of such Company Acquisition. Company
acknowledges that the agreements contained in this Section 8.3(b) are an
integral part of the transactions contemplated by this Agreement, and that,
without these agreements, Parent would not enter into this Agreement.
Accordingly, if Company fails to pay in a timely manner the amounts due
pursuant to this Section 8.3(b), and, in order to obtain such payment, Parent
makes a claim that results in a judgment against Company, Company shall pay to
Parent its reasonable costs and expenses (including reasonable attorneys' fees
and expenses) in connection with such suit, together with interest on the
amounts set forth in this Section 8.3(b) at the prime rate of The Chase
Manhattan Bank in effect on the date such payment was required to be made.
Payment of the fees described in this Section 8.3(b) shall not be in lieu of
damages incurred in the event of breach of this Agreement.
For the purposes of this Agreement, "Company Acquisition" shall mean any
of the following transactions (other than the transactions contemplated by this
Agreement): (i) a sale or other disposition by Company of a business or assets
representing 40% or more of the consolidated net revenues, net income or assets
of Company immediately prior to such sale; (ii)
50
the acquisition by any person or group (including by way of a tender offer or
an exchange offer or issuance by Company), directly or indirectly, of
beneficial ownership or a right to acquire beneficial ownership of shares
representing 40% or more of any class of equity securities of Company; or (iii)
a merger, consolidation, business combination, recapitalization, liquidation,
dissolution or similar transaction involving Company (other than a transaction
in which Company is the acquiror and in which the current Company stockholders
retain more than 60%, directly or indirectly, of the surviving or successor
corporation); it being understood that a widely distributed offering of Company
Common Stock shall not constitute a Company Acquisition.
Section 8.4 Amendment. Subject to applicable law, this Agreement may be
amended by the parties hereto at any time by execution of an instrument in
writing signed on behalf of each of Parent and Company.
Section 8.5 Extension; Waiver. At any time prior to the Effective Time any
party hereto may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties
hereto, (ii) waive any inaccuracies in the representations and warranties made
to such party contained herein or in any document delivered pursuant hereto and
(iii) waive compliance with any of the agreements or conditions for the benefit
of such party contained herein. Any agreement on the part of a party hereto to
any such extension or waiver shall be valid only if set forth in an instrument
in writing signed on behalf of such party. Delay in exercising any right under
this Agreement shall not constitute a waiver of such right.
ARTICLE IX.
GENERAL PROVISIONS
Section 9.1 Non-Survival of Representations and Warranties. The
representations and warranties of Company, Parent and Merger Sub contained in
this Agreement shall terminate at the Effective Time, and only the covenants
that by their terms survive the Effective Time shall survive the Effective
Time.
Section 9.2 Notices. All notices and other communications hereunder shall
be in writing and shall be deemed given upon delivery either personally or by
commercial delivery service, or sent via facsimile (receipt confirmed) to the
parties at the following addresses or facsimile numbers (or at such other
address or facsimile numbers for a party as shall be specified by like notice):
(a) if to Parent or Merger Sub, to:
Vignette Corporation
000 Xxxxx Xxxxx Xxxxxxxxxx
Xxxxxx, Xxxxx 00000
Attention: Senior Vice President-Corporate Development
Facsimile No.: 000-000-0000
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with a copy to:
Xxxxx Xxxx & Xxxxxxxx
0000 Xx Xxxxxx Xxxx
Xxxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxx
Facsimile No.: 000-000-0000
(b) if to Company, to:
OnDisplay, Inc.
00000 Xxxxxxx Xxxxxxxxx
Xxxxx 000
Xxx Xxxxx, XX 00000
Attention: Xxxxx Xxxxxxx
Facsimile No.: 000-000-0000
with a copy to:
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
One Market
Xxxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Attention: Xxxxxxx X.Xxxxxxx
Xxxxxx X. Xxxxx
Facsimile No.: 000-000-0000
Section 9.3 Interpretation; Certain Defined Terms. (a) When a reference is
made in this Agreement to Exhibits, such reference shall be to an Exhibit to
this Agreement unless otherwise indicated. When a reference is made in this
Agreement to Sections, such reference shall be to a Section of this Agreement
unless otherwise indicated. The words "include," "includes" and "including"
when used herein shall be deemed in each case to be followed by the words
"without limitation." The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. When reference is made herein to
"the business of" an entity, such reference shall be deemed to include the
business of all direct and indirect subsidiaries of such entity. Reference to
the subsidiaries of an entity shall be deemed to include all direct and
indirect subsidiaries of such entity.
(b) For purposes of this Agreement, the term "knowledge" means with
respect to a party hereto, with respect to any matter in question, that any of
the executive officers of such party has actual knowledge of such matter, after
reasonable inquiry of such matter. For purposes of this definition, the
"executive officers" of Company shall be those person listed on Part 9.3(b) of
the Company Disclosure Letter.
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(c) For purposes of this Agreement, the term "Material Adverse Effect"
when used in connection with an entity means any change, event, circumstance or
effect that is or is reasonably likely to be materially adverse to the
business, assets (including intangible assets), capitalization, financial
condition, operations or results of operations of such entity taken as a whole
with its subsidiaries, except to the extent that any such change, event,
circumstance or effect results from (i) changes in general economic conditions,
(ii) changes affecting the industry generally in which such entity operates
(provided that such changes do not affect such entity in a substantially
disproportionate manner), (iii) changes in the trading prices for such entity's
capital stock, and (iv) changes that are attributable to the announcement or
pendency of or compliance with this Agreement or the transactions contemplated
hereby or to actions taken by Company that are jointly agreed between Company
and Parent.
(d) For purposes of this Agreement, the term "person" shall mean any
individual, corporation (including any non-profit corporation), general
partnership, limited partnership, limited liability partnership, joint venture,
estate, trust, company (including any limited liability company or joint stock
company), firm or other enterprise, association, organization, entity or
Governmental Entity.
(e) For purposes of this Agreement, "subsidiary" of a specified entity
will be any corporation, partnership, limited liability company, joint venture
or other legal entity of which the specified entity (either alone or through or
together with any other subsidiary) owns, directly or indirectly, 50% or more
of the stock or other equity or partnership interests the holders of which are
generally entitled to vote for the election of the Board of Directors or other
governing body of such corporation or other legal entity.
Section 9.4 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each
of the parties and delivered to the other party, it being understood that all
parties need not sign the same counterpart.
Section 9.5 Entire Agreement; Third Party Beneficiaries. This Agreement,
its Exhibits and the documents and instruments and other agreements among the
parties hereto as contemplated by or referred to herein, including the Company
Disclosure Letter and the Parent Disclosure Letter (a) constitute the entire
agreement among the parties with respect to the subject matter hereof and
supersede all prior agreements and understandings, both written and oral, among
the parties with respect to the subject matter hereof, it being understood that
the Confidentiality Agreement shall continue in full force and effect until the
Closing and shall survive any termination of this Agreement; and (b) are not
intended to confer upon any other person any rights or remedies hereunder,
other than the Continuing Directors, except as specifically provided in Section
6.12.
Section 9.6 Severability. In the event that any provision of this
Agreement or the application thereof, becomes or is declared by a court of
competent jurisdiction to be illegal, void or unenforceable, the remainder of
this Agreement will continue in full force and effect and the application of
such provision to other persons or circumstances will be interpreted so as
reasonably to effect the intent of the parties hereto. The parties further
agree to replace such void
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or unenforceable provision of this Agreement with a valid and enforceable
provision that will achieve, to the extent possible, the economic, business and
other purposes of such void or unenforceable provision.
Section 9.7 Other Remedies; Specific Performance. Except as otherwise
provided herein, any and all remedies herein expressly conferred upon a party
will be deemed cumulative with and not exclusive of any other remedy conferred
hereby, or by law or equity upon such party, and the exercise by a party of any
one remedy will not preclude the exercise of any other remedy. The parties
hereto agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to seek an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
hereof in any court of the United States or any state having jurisdiction, this
being in addition to any other remedy to which they are entitled at law or in
equity.
Section 9.8 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, regardless of
the laws that might otherwise govern under applicable principles of conflicts
of law thereof.
Section 9.9 Rules of Construction. The parties hereto agree that they have
been represented by counsel during the negotiation and execution of this
Agreement and, therefore, waive the application of any law, regulation, holding
or rule of construction providing that ambiguities in an agreement or other
document will be construed against the party drafting such agreement or
document.
Section 9.10 Assignment. No party may assign either this Agreement or any
of its rights, interests, or obligations hereunder without the prior written
consent of the other parties hereto. Subject to the preceding sentence, this
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and permitted assigns. Any purported
assignment in violation of this Section shall be void.
Section 9.11 Waiver Of Jury Trial. EACH OF PARENT, COMPANY AND MERGER SUB
HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING
OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR THE ACTIONS OF PARENT, COMPANY OR MERGER SUB
IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT HEREOF.
* * * * *
IN WITNESS WHEREOF, the parties hereto have caused this Agreement and Plan
of Merger to be executed by their duly authorized respective officers as of the
date first written above.
VIGNETTE CORPORATION
By /s/ Xxxx X. Xxxx
-----------------------------------------
Name: Xxxx X. Xxxx
Title: Chief Financial Officer
WHEELS ACQUISITION CORP.
By /s/ Xxxx X. Xxxx
-----------------------------------------
Name: Xxxx X. Xxxx
Title: President and Assistant Secretary
ONDISPLAY, INC.
By /s/ Xxxx X. Pine
-----------------------------------------
Name: Xxxx X. Pine
Title: Chairman and Chief Executive Officer
55
ANNEX I
CONDITIONS TO THE OFFER
Notwithstanding any other provision of the Offer, subject to the terms of
this Agreement, Merger Sub shall not be required to accept for exchange or
exchange or deliver any shares of Parent Common Stock for (subject to any
applicable rules and regulations of the SEC, including Rule 14e-1(c) under the
Exchange Act (relating to Merger Sub's obligation to pay for or return tendered
Shares after the termination or withdrawal of the Offer)) any Shares tendered,
if by the expiration of the Offer (as it may be extended in accordance with the
requirements of Section 1.1), (1) the Minimum Condition shall not have been
satisfied, (2) the applicable waiting period under the HSR Act shall not have
expired or been terminated, (3) the Registration Statement shall not have
become effective under the Securities Act or shall be the subject of any stop
order or proceedings seeking a stop order, (4) the shares of Parent Common
Stock to be issued in the Offer and the Merger shall not have been approved for
listing on the NASDAQ National Market System, subject to official notice of
issuance, (5) Parent shall not have received an opinion of Xxxxx Xxxx &
Xxxxxxxx, in form and substance reasonably satisfactory to Parent and to
Company, on the basis of reasonable customary facts, representations and
assumptions set forth in such opinion, to the effect that the Transaction will
be treated for federal income tax purposes as a reorganization within the
meaning of Section 368(a) of the Code and that each of Parent, Merger Sub and
Company will be a party to the reorganization within the meaning of Section
368(b) of the Code, (6) Company shall not have received an opinion of Xxxxxx
Xxxxxxx Xxxxxxxx and Xxxxxx, Professional Corporation, in form and substance
reasonably satisfactory to Parent and to Company, on the basis of reasonable
customary facts, representations and assumptions set forth in such opinion, to
the effect that the Transaction will be treated for federal income tax purposes
as a reorganization within the meaning of Section 368(a) of the Code and that
each of Parent, Merger Sub and Company will be a party to the reorganization
within the meaning of Section 368(b) of the Code; provided, however, that if
Xxxxxx Xxxxxxx Xxxxxxxx and Xxxxxx does not render such opinion, this condition
shall nonetheless be deemed to be satisfied if Xxxxx Xxxx & Xxxxxxxx renders
such opinion to the Company or (6) at any time on or after the date of this
Agreement and prior to the acceptance for exchange of Shares pursuant to the
Offer, any of the following conditions exist and are continuing:
(a) there shall be instituted or pending any action or proceeding by any
government or governmental authority or agency, domestic, foreign or
supranational, before any court or governmental authority or agency, domestic,
foreign or supranational challenging or seeking to make illegal, to delay
materially or otherwise directly or indirectly to restrain or prohibit the
making of the Offer, the acceptance for payment of or payment for some or all
of the Shares by Parent or Merger Sub or the consummation of the Merger; or
(b) a judgment, order, decree, statute, law, ordinance, rule or
regulation, entered, enacted, promulgated, enforced or issued by any court,
government or governmental authority or agency, domestic, foreign or
supranational or any other legal restraint or prohibition preventing the
consummation of the Offer or making the Offer illegal shall be in effect; or
56
(c) Company shall have failed to perform in any material respect any of
its covenants, obligations or agreements under this Agreement such that the
aggregate of all such breaches would reasonably be expected to have a Material
Adverse Affect on Company; or
(d) the representations and warranties of Company contained in this
Agreement, disregarding all qualifications and exceptions contained therein
relating to materiality or Material Adverse Effect or any similar standard or
qualification, shall be true at and as of the expiration of the Offer as if
made at and as of such time (other than representations or warranties that
address matters only as of a certain date, which shall be true and correct as
of such date), with such exceptions as would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect on Company;
or
(e) the Merger Agreement shall have been terminated in accordance with its
terms.
The foregoing conditions are for the sole benefit of Parent and Merger Sub
and may, subject to the terms of the Merger Agreement, be waived by Parent and
Merger Sub in their reasonable discretion in whole at any time or in part from
time to time.
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