AGREEMENT AND PLAN OF REORGANIZATION
This AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made
and entered into as of May 22, 2001 among eXcelon Corporation, a Delaware
corporation ("Parent"), Comet Acquisition Corp., a Delaware corporation and a
wholly-owned subsidiary of Parent ("Merger Sub"), and C-bridge Internet
Solutions, Inc., a Delaware corporation (the "Company").
RECITALS
A. The Boards of Directors of each of the Company, Parent and Merger
Sub believe it is in the best interests of each company and their respective
stockholders that the Company and Merger Sub combine into a single company
through the merger of Merger Sub with and into the Company (the "Merger")
and, in furtherance thereof, have approved the Merger.
B. Pursuant to the Merger, among other things, the outstanding
shares of Common Stock of the Company shall be converted into shares of
Common Stock of Parent at the exchange rate determined herein.
C. The Company, Parent and Merger Sub desire to make certain
representations and warranties and other agreements in connection with the
Merger.
D. For accounting purposes, it is intended that the Merger be
accounted for as a purchase under generally accepted accounting principles.
E. The parties intend, by executing this Agreement, to adopt a plan
of reorganization within the meaning of Section 368 of the Internal Revenue
Code of 1986, as amended (the "Code").
NOW, THEREFORE, in consideration of the covenants, promises and
representations set forth herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties agree as follows:
ARTICLE I
THE MERGER
1.1 THE MERGER. At the Effective Time (as defined in Section 1.2)
and subject to and upon the terms and conditions of this Agreement and the
applicable provisions of the Delaware General Corporation Law ("Delaware
Law"), Merger Sub shall be merged with and into the Company, the separate
corporate existence of Merger Sub shall cease and the Company shall continue
as the surviving corporation. The Company as the surviving corporation after
the Merger is hereinafter sometimes referred to as the "Surviving
Corporation."
1.2 EFFECTIVE TIME. Subject to the provisions of this Agreement, the
parties hereto shall cause the Merger to be consummated by filing a
Certificate of Merger (the "Certificate of Merger") with the Secretary of
State of the State of Delaware, in accordance with the relevant
provisions of Delaware Law (the date and time of such filing being the
"Effective Time") as soon as practicable on or after the Closing Date (as
herein defined). The closing of the Merger (the "Closing") shall take place
at the offices of Xxxxx, Xxxx & Xxxxx LLP 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 VI, or at
such other time, date and location as the parties hereto agree (the "Closing
Date").
1.3 EFFECT OF THE MERGER. At the Effective Time, the effect of the
Merger shall be as provided in this Agreement and the applicable provisions
of Delaware Law. Without limiting the generality of the foregoing, and
subject thereto, at the Effective Time, all the property, rights, privileges,
powers and franchises of the Company and Merger Sub shall vest in the
Surviving Corporation, and all debts, liabilities and duties of the Company
and Merger Sub shall become the debts, liabilities and duties of the
Surviving Corporation.
1.4 CERTIFICATE OF INCORPORATION; BY-LAWS.
(a) At the Effective Time, the Certificate of Incorporation of
Merger Sub, in the form attached as EXHIBIT 1.4(a) hereto, shall be the
Certificate of Incorporation of the Surviving Corporation until thereafter
amended as provided by Delaware Law and such Certificate of Incorporation;
provided, however, that Article FIRST of the Certificate of Incorporation of
the Surviving Corporation shall be amended to read as follows: "The name of
the corporation is C-bridge Internet Solutions, Inc."
(b) The By-laws of Merger Sub, in the form attached as EXHIBIT 1.4(b)
hereto, shall be the By-laws of the Surviving Corporation until thereafter
amended.
1.5 DIRECTORS AND OFFICERS. Xxxxxx X. Xxxxxxx and Xxxxxx Xxxxxxx
shall be the initial directors of the Surviving Corporation, until their
respective successors are duly elected or appointed and qualified. The
following persons shall initially hold the following offices of the Surviving
Corporation, until their respective successors are duly elected or appointed
and qualified:
Xxxxxx Xxxxxxx: President
Treasurer: Xxxxx Xxxxxx
Secretary: Xxxxxxxx X. Xxxxxxxx
1.6 EFFECT ON CAPITAL STOCK. At the Effective Time, by virtue of the
Merger and without any action on the part of Merger Sub, the Company or the
holders of any of the following securities:
(a) CONVERSION OF COMPANY COMMON STOCK. Each share of Common Stock,
par value $.01 per share, of the Company (the "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 1.6(b) and
any Dissenting Shares (as defined in and to the extent provided in Section
1.7(a) and subject to Section 1.6(f) below) will be canceled and extinguished
and be converted automatically into the right to receive 1.2517 (the
"Exchange Ratio") shares of Common Stock, par value $.001 per share, of
Parent (the "Parent
Common Stock"), and the amount of cash, if any, in lieu of fractional shares
specified in Section 1.6(f) below.
(b) CANCELLATION OF PARENT-OWNED STOCK. Each share of Company Common
Stock owned by Merger Sub, Parent or any direct or indirect wholly owned
subsidiary of Parent or of the Company immediately prior to the Effective
Time shall be canceled and extinguished without any conversion thereof and no
payment shall be made with respect thereto. Any shares of Company Common
Stock held in the treasury of the Company immediately prior to the Effective
Time shall be canceled and extinguished without any conversion thereof and no
payment shall be made with respect thereto.
(c) STOCK OPTIONS; EMPLOYEE STOCK PURCHASE PLAN. At the Effective
Time, all options to purchase Company Common Stock then outstanding under the
Company's 2000 Stock Incentive Plan, its 1999 Stock Incentive Plan, its 1999
Director Stock Option Plan and its 1997 Stock Incentive Plan (collectively,
the "Company Stock Option Plans") shall be assumed by Parent in accordance
with Section 5.12 hereof. At the Effective Time, in accordance with the terms
of the Company's 1999 Employee Stock Purchase Plan (the "Company ESPP"), all
rights to purchase shares of Company Common Stock under the Company ESPP
shall be converted into rights to purchase a number of shares of Parent
Common Stock as provided in the Company ESPP.
(d) CAPITAL STOCK OF MERGER SUB. Each share of Common Stock, par
value $.001 per share, of Merger Sub issued and outstanding immediately prior
to the Effective Time shall be converted into and exchanged for one validly
issued, fully paid and nonassessable share of Common Stock, par value $.001
per share, of the Surviving Corporation. Each stock certificate of Merger Sub
evidencing ownership of any such shares shall continue to evidence ownership
of such shares of capital stock of the Surviving Corporation.
(e) ADJUSTMENTS TO EXCHANGE RATIO. The Exchange Ratio shall be
adjusted to reflect fully the effect of any stock split, reverse stock split,
stock dividend (including any dividend or distribution of securities
convertible into Parent Common Stock or Company Common Stock),
reorganization, recapitalization or other like change with respect to Parent
Common Stock or Company Common Stock occurring after the date hereof and
prior to the Effective Time.
(f) FRACTIONAL SHARES. No fraction of a share of Parent Common Stock
will be issued by virtue of the Merger, but in lieu thereof each holder of
shares of Company Common Stock who would otherwise be entitled to a fraction
of a share of Parent Common Stock (after aggregating all fractional shares of
Parent Common Stock to be received by such holder) shall receive from Parent
an amount of cash (rounded to the nearest whole cent) equal to the product of
(i) such fraction, multiplied by (ii) the average closing price of a share of
Parent Common Stock for the ten most recent days that Parent Common Stock has
traded ending on the trading day immediately prior to the Effective Time, as
reported on the Nasdaq National Market.
1.7 DISSENTING SHARES.
(a) Notwithstanding any provision of this Agreement to the contrary,
the shares of any holder of Company Common Stock who has demanded and
perfected appraisal rights for such shares in accordance with Delaware Law
and who, as of the Effective Time, has not effectively withdrawn or lost such
appraisal rights ("Dissenting Shares"), shall not be converted into or
represent a right to receive Parent Common Stock pursuant to Section 1.6, but
the holder thereof shall only be entitled to such rights as are granted by
Delaware Law.
(b) Notwithstanding the provisions of subsection (a), if any holder
of shares of Company Common Stock who demands appraisal of such shares under
Delaware Law shall effectively withdraw the right to appraisal, then, as of
the later of the Effective Time or the occurrence of such event, such
holder's shares shall automatically be converted into and represent only the
right to receive Parent Common Stock, plus cash, if any, in lieu of
fractional shares pursuant to Section 1.6(f), in each case without interest
thereon.
(c) The Company shall give Parent (i) prompt notice of any written
demands for appraisal of any shares of Company Common Stock, withdrawals of
such demands, and any other instruments served pursuant to Delaware Law and
received by the Company which relate to any such demand for appraisal and
(ii) the opportunity to participate in all negotiations and proceedings which
take place prior to the Effective Time with respect to demands for appraisal
under Delaware Law.
1.8 SURRENDER OF CERTIFICATES.
(a) EXCHANGE AGENT. Equiserve, L.P., or another similar institution
selected by Parent, shall act as the exchange agent (the "Exchange Agent") in
the Merger.
(b) PARENT TO PROVIDE COMMON STOCK. Promptly after the Effective
Time, Parent shall deposit with the Exchange Agent for exchange in accordance
with this Article I, through such reasonable procedures as Parent may adopt,
and as the Exchange Agent may require, certificates representing the shares
of Parent Common Stock issuable pursuant to Section 1.6 in exchange for
outstanding shares of Company Common Stock, and cash in an amount sufficient
for payment in lieu of fractional shares pursuant to Section 1.6(f) (such
certificates for Parent Common Stock, together with any dividends or
distributions with respect thereto, and such amounts of cash, being referred
to as the "Exchange Fund.")
(c) EXCHANGE PROCEDURES. Promptly after the Effective Time, Parent
shall cause to be mailed to each holder of record of a certificate or
certificates (the "Certificates") which immediately prior to the Effective
Time represented outstanding shares of Company Common Stock whose shares were
converted into the right to receive shares of Parent Common Stock pursuant to
Section 1.6, (i) a letter of transmittal (which shall specify that delivery
shall be effected, and risk of loss and title to the Certificates shall pass,
only upon delivery of the Certificates to the Exchange Agent and shall be in
customary form and have such other provisions as Parent may reasonably
specify) and (ii) instructions for use in effecting the surrender of the
Certificates in exchange for certificates representing shares of Parent
Common Stock. Upon surrender of a Certificate for cancellation to the
Exchange Agent as specified in such letter of transmittal or to such other
agent or agents as may be appointed by Parent and are reasonably acceptable
to the Company, together with such letter of transmittal, duly completed
and validly executed in accordance with the instructions thereto, the holder
of such Certificate shall be entitled to receive promptly in exchange
therefor a certificate representing the number of whole shares of Parent
Common Stock together with any dividends or other distributions to which such
holder is entitled pursuant to Section 1.8(d) and payment in lieu of
fractional shares which such holder has the right to receive pursuant to
Section 1.6, and the Certificate so surrendered shall forthwith be canceled.
Until so surrendered, each outstanding Certificate that, prior to the
Effective Time, represented shares of Company Common Stock will be deemed
from and after the Effective Time, for all corporate purposes, other than the
payment of dividends, to evidence the ownership of the number of full shares
of Parent Common Stock into which such shares of Company Common Stock shall
have been so converted, together with any dividends or other distributions to
which such holder is entitled pursuant to Section 1.8(d), and the right to
receive an amount in cash in lieu of the issuance of any fractional shares in
accordance with Section 1.6.
(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 holder of any unsurrendered Certificate with respect to
the shares of Parent Common Stock represented thereby until the holder of
record of such Certificate shall surrender such Certificate. Subject to
applicable law, following surrender of any such Certificate, there shall be
paid to the record holder of the certificates representing whole shares of
Parent Common Stock issued in exchange therefor, without interest, at the
time of such surrender, the amount of dividends or other distributions with a
record date after the Effective Time payable with respect to such whole
shares of Parent Common Stock.
(e) TRANSFERS OF OWNERSHIP. If any certificate for shares of Parent
Common Stock is to be issued in a name other than that in which the
certificate surrendered in exchange therefor is registered, it will be a
condition of the issuance thereof that the certificate so surrendered will be
properly endorsed and otherwise in proper form for transfer and that the
person requesting such exchange will have paid to Parent or any agent
designated by it any transfer or other taxes required by reason of the
issuance of a certificate for shares of Parent Common Stock in any name other
than that of the registered holder of the certificate surrendered, or
established to the satisfaction of Parent or any agent designated by it that
such tax has been paid or is not payable.
(f) NO LIABILITY. Notwithstanding anything to the contrary in this
Section 1.8, none of the Exchange Agent, the Surviving Corporation or any
party hereto shall be liable to a holder of shares of Parent Common Stock or
Company Common Stock for any amount properly paid to a public official
pursuant to any applicable abandoned property, escheat or similar law.
(g) DISTRIBUTION OF EXCHANGE FUND. Any portion of the Exchange Fund
which remains undistributed to the holders of Company Common Stock for one
year after the Effective Time shall be delivered to Parent, upon demand. Any
holders of Company Common Stock who have not theretofore complied with this
Section 1.8 shall thereafter look only to Parent for the shares of Parent
Common Stock to which they are entitled pursuant to Section 1.6(a), any
dividends or other distributions with respect to Parent Common Stock to which
they are entitled
pursuant to Section 1.8(d) and any cash in lieu of fractional shares of
Parent Common Stock to which they are entitled pursuant to Section 1.6(f).
(h) PAYMENT OF EXCHANGE AGENT EXPENSES. Parent shall pay all charges
and expenses of the Exchange Agent in connection with the exchange of
certificates for Parent Common Stock and cash in lieu of fractional shares.
1.9 NO FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON STOCK. All shares
of Parent Common Stock issued upon the surrender for exchange of shares of
Company Common Stock in accordance with the terms hereof (including any cash
paid in respect thereof) shall be deemed to have been issued in full
satisfaction of all rights pertaining to such shares of Company Common Stock,
and there shall be no further registration of transfers on the records of the
Surviving Corporation of shares of Company Common Stock which were
outstanding immediately prior to the Effective Time. If, after the Effective
Time, Certificates are presented to the Surviving Corporation for any reason,
they shall be canceled and exchanged as provided in this Article I.
1.10 LOST, STOLEN OR DESTROYED CERTIFICATES. In the event any
certificates evidencing shares of Company Common Stock 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, such shares of Parent Common Stock and cash
for fractional shares, if any, as may be required pursuant to Section 1.6 or
Section 1.8; provided, however, that Parent or Exchange Agent may, in its
discretion and as a condition precedent to the issuance thereof, 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 or the Exchange Agent with respect to the certificates
alleged to have been lost, stolen or destroyed.
1.11 TAX AND ACCOUNTING CONSEQUENCES. It is intended by the parties
hereto that the Merger shall (i) constitute a reorganization within the
meaning of Section 368 of the Code and (ii) be accounted for as a purchase
under generally accepted accounting principles.
1.12 TAKING OF NECESSARY ACTIONS; FURTHER ACTION. If, at any time
after the Effective Time, any other 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 the Company and Merger Sub, the officers and
directors of the Company and Merger Sub are fully authorized in the name of
their respective corporations or otherwise to take, and will take, all such
lawful and necessary action, so long as such action is consistent with this
Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Merger Sub,
subject to the exceptions specifically disclosed in writing in the disclosure
letter supplied by the Company to Parent (the "Company Schedules") and dated
as of the date hereof, as set forth below.
2.1 ORGANIZATION OF THE COMPANY. The Company and, except as set
forth in the Company Schedules, each of its material subsidiaries (which
material subsidiaries are set forth in the
Company Schedules) is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation, has
the corporate power to own, lease and operate its property and to carry on
its business as now being conducted and as proposed to be conducted, and is
duly qualified to do business and in good standing as a foreign corporation
in each jurisdiction in which the failure to be so qualified would have a
Material Adverse Effect (as defined below) on the Company. The Company has
delivered to Parent a true and complete list of all of the Company's
subsidiaries, together with the jurisdiction of incorporation of each
subsidiary. The Company owns, directly or indirectly through one or more
subsidiaries, 100% of the capital stock or other equity interests of each of
its subsidiaries. All such shares of capital stock or other equity interests
directly or indirectly held by the Company have been duly authorized and
validly issued and are fully paid and nonassessable. Except as set forth in
the Company SEC Reports (as defined below in Section 2.5), the Company does
not directly or indirectly own any equity or similar interest in, or any
interest convertible into or exchangeable or exercisable for any interest in,
any corporation, partnership, joint venture or other business association or
entity other than the securities of any publicly-traded entity held for
investment only and constituting less than 5% of the outstanding capital
stock of any such entity. The Company has delivered or made available to
Parent and its counsel a true and correct copy of the Certificate of
Incorporation and By-laws of the Company and similar governing instruments of
its material subsidiaries, each as amended to date. For purposes of this
Agreement, a "Material Adverse Effect" shall mean a material adverse effect
on the business, properties, assets (including intangible assets),
liabilities, financial condition, or results of operations of a Person (as
defined below) and its subsidiaries, taken as a whole. For purposes of this
Agreement, "Person" shall mean any natural person, corporation, general
partnership, limited partnership, limited liability company, proprietorship
or other business organization.
2.2 COMPANY CAPITAL STRUCTURE. The authorized capital stock of the
Company consists of 50,000,000 shares of Common Stock, $.01 par value, of
which 21,520,965 shares were issued and outstanding and 512,708 shares were
held in the Company's treasury as of May 4, 2001, and 5,000,000 shares of
Preferred Stock, $0.01 par value, all of which are undesignated and none of
which is issued or outstanding. All issued and outstanding shares of Company
Common Stock have been duly authorized, and all such issued and outstanding
shares have been validly issued, are fully paid and nonassessable, are not
subject to any preemptive rights (and were not issued in violation of any
preemptive rights) and are free of any liens or encumbrances other than any
liens or encumbrances created by or imposed upon the holders thereof. Each of
the outstanding shares of Company Common Stock and outstanding shares of
capital stock or other equity interests of the Company's subsidiaries was
issued in compliance with all applicable federal and state laws concerning
the issuance of securities. No bonds, debentures, notes or other indebtedness
of the Company having the right to vote on any matters on which stockholders
of the Company may vote are issued or outstanding. As of May 21, 2001, the
Company had reserved (i) 17,200,000 shares of Common Stock for issuance to
employees, directors and consultants pursuant to the Company Stock Option
Plans, under which options were outstanding for 10,823,483 shares and
2,553,284 shares remained available for future option grants and (ii) 750,000
shares of Common Stock for issuance pursuant to the Company ESPP. 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, shall be duly authorized, validly issued, fully paid and
nonassessable. The Company Schedules include a list of all issuances of
capital stock by the Company since January 1, 1998 (other than issuances
pursuant to options under the
Company Stock Option Plans and the Company ESPP) and also list for each
outstanding option at May 4, 2001, the name of the holder of such option, the
number of shares subject to such option, the exercise price of such option,
the number of shares as to which such option will have been vested at May 4,
2001 and, if the exercisability of such option will be accelerated in any way
by the transactions contemplated by this Agreement or for any other reason,
an indication of the extent of such acceleration. Such list also describes
any repricing of options which has taken place since January 1, 1998. The
Company Schedules also include a list of all the participants in the Company
ESPP and the number of shares of Company Common Stock which will be issuable
to the participants therein for the offering period ending June 30, 2001 if
all current participants continue to contribute at current levels (assuming
the purchase price of such shares to be 85% of the fair market value of the
Company Common Stock on the first day of the current offering period). Since
May 4, 2001, there have been no changes in the capital structure of the
Company other than issuances of Company Common Stock (i) upon the exercise of
options granted under the Company Stock Option Plans and (ii) pursuant to the
Company ESPP.
2.3 OBLIGATIONS WITH RESPECT TO CAPITAL STOCK. Except as set forth
in Section 2.2 and except as permitted by Section 4.1(g), there are no equity
securities of any class of the Company, or any security exchangeable into or
exercisable for such equity securities, issued, reserved for issuance or
outstanding. Except for securities the Company owns, directly or indirectly
through one or more subsidiaries, there are no equity securities of any class
of any subsidiary of the Company, or any security exchangeable into or
exercisable for such equity securities, issued, reserved for issuance or
outstanding. Except as set forth in Section 2.2 or the Company Schedules and
except as permitted by Section 4.1(g), there are no options, warrants, equity
securities, calls, rights, commitments or agreements of any character to
which the Company or any of its subsidiaries is a party or by which it is
bound obligating the Company or any of its subsidiaries to issue, deliver or
sell, or cause to be issued, delivered or sold, additional shares of capital
stock of the Company or any of its subsidiaries or obligating the Company or
any of its subsidiaries to grant, extend, accelerate the vesting of or enter
into any such option, warrant, equity security, call, right, commitment or
agreement. To the best knowledge of the Company, except for the Company
Stockholder Agreements to be entered into by certain Company stockholders
with Parent in connection with the Merger pursuant to Section 5.20, there are
no agreements or understandings affecting or relating to the voting,
issuance, purchase, redemption, registration, repurchase or transfer of the
shares of capital stock of the Company.
2.4 AUTHORITY. The Company has all requisite corporate power and
authority to enter into this Agreement and the other documents and agreements
contemplated hereby to be entered into by it (the "Company Transaction
Documents") and to consummate the transactions contemplated hereby and
thereby. The execution and delivery on behalf of the Company of this
Agreement and each of the other Company Transaction Documents and the
consummation of the transactions contemplated hereby and thereby have been
duly authorized by all necessary corporate action on the part of the Company,
subject only to the approval of the Merger by the vote of the holders of a
majority of the issued and outstanding Company Common Stock pursuant to
Delaware Law and the Certificate of Incorporation and bylaws of the Company.
(It is assumed, for purposes of the preceding sentence, that neither Parent
nor Merger Sub is an "interested stockholder" of the Company, as defined in
Section 203 of the Delaware law.). This Agreement has been duly executed and
delivered by the Company and constitutes the valid and binding obligation of
the Company, enforceable in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization and other similar laws affecting
creditors' rights generally, and by general principles of equity (whether
considered in a proceeding in equity or at law). The execution and delivery
of this Agreement and each of the other Company Transaction Documents by the
Company does not, and the consummation of the transactions contemplated
hereby and thereby will not, conflict with, or result in any violation of, or
default under (with or without notice or lapse of time, or both), or give
rise to a right of termination, cancellation or acceleration of any
obligation or loss of any benefit under, or, in the case of clause (iii)
below, result in or require the creation or imposition of, (i) any provision
of the Certificate of Incorporation, as amended, or By-laws, as amended, of
the Company or similar governing instruments of any of its subsidiaries or
(ii) except as disclosed in the Company Schedules, any mortgage, indenture,
lease, contract or other agreement or instrument disclosed in the Company
Schedules pursuant to Section 2.11 or of the type referred to in clause (i)
or (ii) of Section 2.12, or, other than as provided in the next paragraph
below, any permit, concession, franchise, license, judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to the Company or its
properties or assets, or (iii) any indebtedness of the Company or any of its
subsidiaries, except for any such conflict, violation, or default, in the
case of clauses (ii) or (iii), that could not reasonably be expected to have
a Material Adverse Effect on the Company or to adversely affect the ability
of the parties to consummate the Merger.
No consent, approval, order or authorization of, or registration,
declaration or filing with, any court, administrative agency or commission or
other governmental authority or instrumentality ("Governmental Entity"), is
required by or with respect to the Company in connection with the execution and
delivery of this Agreement or any of the other Company Transaction Documents, or
the consummation of the transactions contemplated hereby or thereby, except for
(i) the filing of the Form S-4 Registration Statement with the Securities and
Exchange Commission ("SEC") in accordance with the Securities Act of 1933, as
amended (the "Securities Act"), (ii) the filing of the Certificate of Merger
with the Delaware Secretary of State, (iii) the filing of the Proxy Statement
(as defined in Section 2.21) with the SEC in accordance with the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), (iv) the filing of a Form
8-K with the SEC, (v) such consents, approvals, orders, authorizations,
registrations, declarations and filings as may be required under applicable
federal and state securities laws and the laws of any foreign country, rules and
regulations of the National Association of Securities Dealers, Inc. (the "NASD")
and (vi) such other consents, authorizations, filings, approvals and
registrations which, if not obtained or made, would not have a Material Adverse
Effect on the Company or adversely affect the ability of the parties to
consummate the Merger. Except as disclosed in the Company Schedules, the
execution, delivery and performance of this Agreement and all other documents
contemplated hereby will not result in or give rise to any material penalty,
forfeiture, right of termination, amendment or cancellation, or restriction on
business operations of the Company or any of its subsidiaries. The Company
Schedules list all agreements that could reasonably be interpreted to require
the consent of any Person not a party to this Agreement with respect to the
execution, delivery or performance of this Agreement by the Company and its
subsidiaries, where (i) such agreements are material to the operation of the
Company and its subsidiaries, taken as a whole or (ii) the failure to obtain
such consent could reasonably be expected to have a Material Adverse Effect on
the Company or to adversely affect the ability of the parties to consummate the
Merger.
2.5 SEC FILINGS; COMPANY FINANCIAL STATEMENTS.
(a) The Company has timely filed all forms, reports and documents
required to be filed by it with the SEC since December 17, 1999 (the "Company
Pre-Signing SEC Documents") and the Company will timely file with the SEC all
forms, reports and documents required to be so filed after the date of this
Agreement but before the Effective Time (the "Company Post-Signing SEC
Documents" and collectively with the Company Pre-Signing SEC Documents, the
"Company SEC Reports"). Except as set forth in the Company Schedules, as of
their respective dates, the Company SEC Reports (i) were prepared, and in the
case of Company Post-Signing SEC Documents, will be 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 subsequent filing), and in the case of Company Post-Signing SEC Documents,
will not, 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. None of the Company's subsidiaries is required to file any
forms, reports or other documents with the SEC.
(b) Each of the consolidated financial statements (including, in each
case, any related notes and schedules thereto) contained in the Company SEC
Reports (the "Company Financials") or that will be contained in the Company
Post-Signing SEC Documents, (x) complies or will comply, as the case may be, as
to form in all material respects with the published rules and regulations of the
SEC with respect thereto, (y) was or will be, as the case may be, prepared in
accordance with generally accepted accounting principles applied on a consistent
basis throughout the periods involved (except as may be indicated in the notes
thereto) and (z) fairly presented or will fairly present, as the case may be,
the consolidated financial position of the Company and its subsidiaries as at
the respective dates thereof and the consolidated results of its operations and
cash flows for the periods indicated, except that the unaudited interim
financial statements were or will be subject to normal and recurring year-end
adjustments which were not, or will not be expected to be, material in amount.
The audited balance sheet of the Company as of December 31, 2000 contained in
the Company SEC Reports is hereinafter referred to as the "Company Balance
Sheet."
(c) The 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 the Company
with the SEC pursuant to the Securities Act or the Exchange Act.
2.6 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since the date of the Company
Balance Sheet, except with respect to the actions contemplated by this
Agreement, the Company and its subsidiaries have conducted their businesses only
in the ordinary course and in a manner consistent with past practice and, since
such date, there has not been (i) any Material Adverse Change (as defined below)
in the Company, or any development that reasonably would be expected to cause a
Material Adverse Change in the Company; (ii) any damage, destruction or loss
(whether or not covered by insurance) suffered by the Company or any of its
properties having a Material Adverse Effect on the Company; (iii) any material
change by the Company in
its accounting methods, principles or practices; (iv) any material
revaluation by the Company of any of its assets, including, without
limitation, writing down the value of capitalized software or inventory or
writing off notes or accounts receivable other than in the ordinary course of
business; or (v) any other action or event that would have required the
consent of Parent pursuant to Section 4.1 had such action or event occurred
after the date of this Agreement. For purposes of this Agreement, a "Material
Adverse Change" shall mean a material adverse change in the business, assets
(including intangible assets), liabilities, financial condition or results of
operations of a Person and its subsidiaries, taken as a whole.
Notwithstanding the foregoing, none of the following shall, in and of itself,
be deemed to constitute a "Material Adverse Change" for purposes of this
Agreement: (a) any change attributable to or arising out of general economic
conditions or the operation of the financial markets in general, (b) any
change that generally affects the industries in which a Person operates and
that is not specifically related to, and does not have a materially
disproportionate effect (relative to other industry participants) on, such
Person, (c) any change in the market price or trading volume of such Person's
common stock, (d) failure of a Person to achieve any particular level of
revenues or results of operations for any period commencing after March 31,
2001, or (e) the initiation or threat of initiation of litigation that seeks
to enjoin or prevent, or that seeks damages in respect of, the consummation
of the Merger.
2.7 TAXES.
(a) DEFINITION OF TAXES. For the purposes of this Agreement, "Tax" or
"Taxes" refers to any and all federal, state, local and foreign taxes,
assessments and other government charges, duties, impositions and liabilities
relating to taxes, including taxes based upon or measured by gross receipts,
income, profits, sales, use and occupation, and value added, ad valorem,
transfer, franchise, withholding, payroll, recapture, employment, excise and
property taxes, together with all interest, penalties and additions imposed with
respect to such amounts and any obligations under any agreements or arrangements
with any other person with respect to such amounts and including any liability
for taxes of a predecessor entity.
(b) TAX RETURNS AND AUDITS.
(i) The Company and each of its subsidiaries has timely filed all
federal, state, local and foreign returns, estimates, information statements and
reports ("Returns") relating to Taxes required to be filed by the Company and
each of its subsidiaries, except such Returns which are not material to the
Company, and has paid all Taxes shown to be due on such Returns or is contesting
them in good faith.
(ii) Except as is not material to the Company, the Company and each of
its subsidiaries as of the Effective Time will have withheld with respect to its
employees all federal and state income taxes, FICA, FUTA and other Taxes
required to be withheld.
(iii) Except as is not material to the Company, neither the Company nor
any of its subsidiaries has been delinquent in the payment of any Tax nor is
there any Tax deficiency outstanding, proposed or assessed against the Company
or any of its
subsidiaries, nor has the Company or any of its subsidiaries executed any
waiver of any state of limitations on or extending the period for the
assessment or collection of any Tax.
(iv) Except as is not material to the Company, no audit or other
examination of any Return of the Company or any of its subsidiaries is presently
in progress, nor has the Company or any of its subsidiaries been notified of any
request for such an audit or other examination.
(v) Neither the Company nor any of its subsidiaries has any liability
for unpaid federal, state, local or foreign Taxes which have not been accrued
for or reserved on the Company Balance Sheet (in conformity with GAAP,
consistently applied), whether asserted or unasserted, contingent or otherwise,
which is material to the Company.
(vi) None of the Company's assets are treated as "tax-exempt use
property" within the meaning of Section 168(h) of the Code.
(vii) There is no contract, agreement, plan or arrangement, including
but not limited to the provisions of this Agreement, covering any employee or
former employee of the Company or any of its subsidiaries that, individually or
collectively, could give rise to the payment of any amount that would not be
deductible pursuant to Sections 280G, 404 or 162 of the Code.
(viii) Neither the Company nor any of its subsidiaries has filed any
consent agreement under Section 341(f) of the Code or agreed to have Section
341(f)(2) of the Code apply to any disposition of a subsection (f) asset (as
defined in Section 341(f)(4) of the Code) owned by the Company.
(ix) The Company is not, and has not been at any time, a "United States
real property holding corporation" within the meaning of Section 897(c)(2) of
the Code.
2.8 RESTRICTIONS ON BUSINESS ACTIVITIES. There is no material
agreement, judgment, injunction, order or decree binding upon the Company which
has or could reasonably be expected to have the effect of prohibiting or
materially impairing any material current business practice of the Company, any
acquisition of material property by the Company or the conduct of business by
the Company as currently conducted or as proposed to be conducted by the
Company.
2.9 ABSENCE OF LIENS AND ENCUMBRANCES. The Company and each of its
subsidiaries has good and valid title to, or, in the case of leased properties
and assets, valid leasehold interests in, all of its material tangible
properties and assets, real, personal and mixed, used in its business, free and
clear of any liens or encumbrances except as reflected in the Company Financial
Statements or as permitted by Section 4.1(j) and except for liens for taxes not
yet due and payable and such imperfections of title and encumbrances, if any,
which are not material in character, amount or extent, and which do not
materially detract from the value, or materially interfere with the present use,
of the property subject thereto or affected thereby.
2.10 INTELLECTUAL PROPERTY.
(a) The Company, directly or indirectly, owns, or is licensed or
otherwise possesses legally enforceable rights to use, all patents, trademarks,
trade names, service marks, copyrights, and any applications therefor,
maskworks, net lists, schematics, technology, know-how, computer software
programs or applications (in both source code and object code form), and
tangible or intangible proprietary information or material (excluding Commercial
Software as defined in Paragraph (g) below) that are used in or necessary to
conduct the business of the Company as currently conducted or as proposed to be
conducted by the Company (the "Company Intellectual Property Rights").
(b) The Company Schedules set forth a complete list of all (i) patents,
(ii) trademarks, (iii) registered copyrights, trademarks, trade names and
service marks and (iv) any applications therefor, included in the Company
Intellectual Property Rights, and specify, where applicable, the jurisdictions
in which each such Company Intellectual Property Right has been issued or
registered or in which an application for such issuance and registration has
been filed, including the respective registration or application numbers, the
date of such registration or application, and the names of all registered
owners. The Company Schedules also set forth a complete list of all material
licenses, sublicenses and other agreements as to which the Company is a party
and pursuant to which the Company or any other person is authorized to use any
Company Intellectual Property Right (excluding end-user, VAR and OEM licenses
granted to customers in the ordinary course of business ("End-User Licenses") or
other trade secret material to the Company, and includes the identity of all
parties thereto, a description of the nature and subject matter thereof, the
applicable royalty and the term thereof. The Company is not in violation of any
license, sublicense or agreement described on such list except such violations
as do not materially impair the Company's rights under such license, sublicense
or agreement. The execution and delivery of this Agreement by the Company, and
the consummation of the transactions contemplated hereby, will neither cause the
Company to be in violation or default under any such license, sublicense or
agreement, nor entitle any other party to any such license, sublicense or
agreement to terminate or modify such license, sublicense or agreement.
(c) The Company is the sole and exclusive owner or licensee of, with
all right, title and interest in and to (free and clear of any liens or
encumbrances), the Company Intellectual Property Rights, and has sole and
exclusive rights (and is not contractually obligated to pay any compensation to
any third party in respect thereof) to the use thereof or the material covered
thereby in connection with the services or products in respect of which the
Company Intellectual Property Rights are being used. No claims with respect to
the Company Intellectual Property Rights have been asserted or, to the knowledge
of the Company, are threatened by any person nor are there any valid grounds, to
the knowledge of the Company, for any bona fide claims (i) to the effect that
the manufacture, sale, licensing or use of any of the products of the Company or
any of its subsidiaries as now manufactured, sold, licensed or used or proposed
for manufacture, sale, licensing or use by the Company infringes on any
copyright, patent, trademark, service xxxx or trade secret, (ii) against the use
by the Company or any of its subsidiaries of any trademarks, service marks,
trade names, trade secrets, copyrights, patents, technology, know-how or
computer software programs and applications used in the Company's business as
currently conducted or as proposed to be conducted by the Company, or (iii)
challenging the ownership by the Company, validity or effectiveness of any of
the Company
Intellectual Property Rights. All registered trademarks, service marks and
copyrights held by the Company are valid and subsisting.
(d) To the knowledge of the Company, there is no material unauthorized
use, infringement or misappropriation of any of the Company Intellectual
Property Rights by any third party, including any employee or former employee of
the Company.
(e) No Company Intellectual Property Right or product of the Company or
any of its subsidiaries is subject to any outstanding decree, order, judgment,
or stipulation restricting in any manner the licensing thereof by the Company or
any of its subsidiaries. Neither the Company nor any of its subsidiaries has
entered into any agreement (other than exclusive distribution agreements
identified as such in the Company Schedules) under which the Company or its
subsidiaries is restricted from selling, licensing or otherwise distributing any
of its products to any class of customers, in any geographic area, during any
period of time or in any segment of the market.
(f) The Company and its subsidiaries have a practice to secure, and
have secured, from all consultants and contractors who contribute or have
contributed to the creation or development of Company Intellectual Property
Rights valid written assignments by such persons to the Company and its
subsidiaries of the rights to such contributions. The Company and its
subsidiaries have taken reasonable and appropriate steps to protect and preserve
the confidentiality of their trade secrets. The Company has required each
employee to execute a proprietary information and confidentiality agreement
substantially in the Company's standard form, a copy of which is set forth in
the Company Schedules.
(g) "Commercial Software" means packaged commercially available
software programs generally available to the public through retail dealers in
computer software which have been licensed to the Company (or, in the case of
Section 3.10, to Parent) pursuant to end-user licenses and which are used in the
Company's business (or in Parent's business in the case of Section 3.10) but are
in no way a component of or incorporated in or specifically required to develop
or support any of the Company's (or of Parent's in the case of Section 3.10)
products and related trademarks, technology and know-how.
2.11 AGREEMENTS, CONTRACTS AND COMMITMENTS. Except as set forth in the
Company Schedules, neither the Company nor any of its subsidiaries has, nor is
it a party to nor is it bound by:
(a) any collective bargaining agreements,
(b) any bonus, deferred compensation, incentive compensation, pension,
profit-sharing or retirement plans, or any other employee benefit plans or
arrangements,
(c) any employment or consulting agreement, contract or commitment with
any officer or director level employee, not terminable by the Company on thirty
(30) days notice without liability, except to the extent general principles of
wrongful termination law may limit the Company's ability to terminate employees
at will,
(d) any agreement or plan, including, without limitation, any stock
option plan, stock appreciation right plan or stock purchase plan, any of the
benefits of which will be increased, or the vesting of benefits of which will be
accelerated, by the occurrence of any of the transactions contemplated by this
Agreement or the value of any of the benefits of which will be calculated on the
basis of any of the transactions contemplated by this Agreement,
(e) any agreement of indemnification or guaranty not entered into in
the ordinary course of business other than such agreements or guarantees between
the Company and any of its subsidiaries, officers or directors,
(f) any agreement, contract or commitment containing any covenant
limiting the freedom of the Company to engage in any line of business or compete
with any person,
(g) any agreement, contract or commitment relating to capital
expenditures and involving future obligations in excess of $200,000,
(h) any agreement, contract or commitment relating to the disposition
or acquisition of assets not in the ordinary course of business or any ownership
interest in any corporation, partnership, joint venture or other business
enterprise,
(i) any mortgages, indentures, loans or credit agreements, security
agreements or other agreements or instruments relating to the borrowing of money
or extension of credit,
(j) any joint marketing or development agreement (excluding agreements
with resellers, value added resellers or independent software vendors entered
into in the ordinary course of business that do not permit such resellers or
vendors to modify the Company's software products),
(k) any distribution agreement (identifying any that contain
exclusivity provisions),
(l) any lease of real property involving the payment by the Company of
$250,000 per year or more in any individual case,
(m) any agreement or commitment with any affiliate of the Company, or
(n) any other agreement, contract or commitment (including personal
property leases) which involves payment by the Company of $250,000 or more and
is not cancelable without penalty within thirty (30) days or (other than
agreements for the provision by the Company of services entered into in the
ordinary course of its business) that involves payment to the Company of
$250,000 or more in any individual case.
2.12 NO DEFAULT. Neither the Company nor any of its subsidiaries has
breached, or received in writing any claim or threat that it has breached, any
of the terms or conditions of any (i) agreement, contract or commitment that
was, is or will be required to be filed as an exhibit to the Company SEC Reports
or (ii) any agreement under which the Company or any of its subsidiaries
licenses from a third party any Company Intellectual Property Rights included in
the
Company's products in such a manner as would permit any other party to cancel
or terminate the same or would permit any other party to seek material
damages from the Company thereunder. Each of the agreements, contracts and
commitments referred to in clauses (i) and (ii) above that has not expired or
been terminated in accordance with its terms is in full force and effect and,
except as otherwise disclosed, is not subject to any material default
thereunder of which the Company is aware by any party obligated to the
Company pursuant thereto.
Except as set forth in the Company Schedules, all contracts required by
Item 601(b)(10) of Regulation S-K to be filed as exhibits to the Company's
Pre-Signing SEC Reports have been so filed.
2.13 GOVERNMENTAL AUTHORIZATION; COMPLIANCE. The Company holds all
permits, licenses, variances, exemptions, orders and approvals of all
Governmental Entities which are material to the operation of the Company's
business as currently conducted (the "Company Permits"). The Company is in
material compliance with the terms of the Company Permits. Except as disclosed
in the Company SEC Reports filed prior to the date of this Agreement, the
business of the Company is not being, and has not been, conducted in violation
of any law, ordinance or regulation of any Governmental Entity, except for
violations or possible violations which individually or in the aggregate are
not, and insofar as reasonably can be foreseen, in the future will not be,
material to the Company. As of the date of this Agreement, no investigation or
review by any Governmental Entity with respect to the Company is pending or, to
the knowledge of the Company, threatened, nor has any Governmental Entity
indicated an intention to conduct the same.
2.14 LITIGATION. There is no action, suit proceeding, claim,
arbitration or investigation pending, or as to which the Company or any of its
subsidiaries has received any notice of assertion nor, to the Company's
knowledge, is there a reasonable basis to expect such notice of assertion
against the Company or any of its subsidiaries which, (a) if determined
adversely to the Company or any of its subsidiaries reasonably would be expected
to be material to the Company, or which in any manner challenges or seeks to
prevent, enjoin, alter or delay any of the transactions contemplated by this
Agreement, or (b) is or could reasonably be expected to become of a character
required to be disclosed pursuant to Item 401(f) of Regulation S-K.
2.15 ENVIRONMENTAL MATTERS.
(a) DEFINITION OF HAZARDOUS MATERIAL. The term "Hazardous Material"
as used in this Agreement shall mean any substance that has been designated
by any Governmental Entity or by applicable federal, state or local law to be
radioactive, toxic, hazardous or otherwise a danger to health or the
environment, including, without limitation, PCBs, asbestos, petroleum,
urea-formaldehyde and all substances listed as hazardous substances pursuant
to the Comprehensive Environmental Response, Compensation, and Liability Act
of 1980, as amended, 42 U.S.C. Sections 9601, ET SEQ., or deemed as a
hazardous waste pursuant to the Solid Waste Disposal Act, as amended, 42
U.S.C. Sections 6901, ET SEQ., or deemed as a hazardous material pursuant to
the Massachusetts Oil and Hazardous Material Release Prevention and Response
Act, X.X. x. 21E, Sections 1, ET SEQ. or similar laws of any other state, and
the regulations promulgated pursuant to said laws.
(b) DEFINITION OF HAZARDOUS MATERIALS ACTIVITIES. The term "Hazardous
Materials Activities" as used in this Agreement shall mean the transportation,
storage, use, sale, manufacture, disposal, release of any Hazardous Material or
the exposure of any employee or other person to Hazardous Materials.
(c) PERMITS. The Company currently holds all environmental approvals,
permits, licenses, registrations, clearances and consents (the "Environmental
Permits") necessary for the conduct of the Company's Hazardous Material
Activities and other businesses of the Company as such activities and businesses
are currently being conducted.
(d) ENVIRONMENTAL LIABILITIES. Except for such matters as are not
reasonably likely to have a Material Adverse Effect on the Company, or as would
not otherwise require disclosure under the Securities Act, each of the Company
and its subsidiaries has complied with all applicable Environmental Laws. No
material action, proceeding, revocation proceeding, amendment procedure, writ,
injunction or claim, or notice of violation is pending, or to the Company's
knowledge, threatened concerning any Environmental Permit, Hazardous Material,
or any Hazardous Materials Activity of the Company or any of its subsidiaries.
The Company is not aware of any fact or circumstance which could (i) involve the
Company or any of its subsidiaries in any material litigation or otherwise
impose upon the Company any material liability relating to any Hazardous
Materials Activities, or (ii) reasonably be expected to result in any claims,
liability, investigations, costs or restrictions on ownership, use or transfer
of any of its properties pursuant to any Environmental Law.
(e) DEFINITION OF ENVIRONMENTAL LAWS. The term "Environmental Laws"
shall mean any federal, state, local or foreign law, regulation, treaty, order,
decree, permit, authorization, policy, opinion, common law or agency requirement
relating to (a) the protection, investigation or restoration of the environment,
health and safety, or natural resources or exposure to any harmful or hazardous
material, including petroleum and petroleum-based products, formaldehyde, PCBs
and asbestos, (b) the handling, use, presence, disposal, release or threatened
release of any chemical substance or wastewater or (c) noise, odor, wetlands,
pollution, contamination or any injury or threat of injury to persons or
property.
2.16 BROKERS' AND FINDERS' FEES. Except for fees payable to Xxxxxxxxx
Xxxxxxxx, Inc. pursuant to the engagement letter dated April 26, 2001, a copy of
which has been provided to Parent, the Company has not incurred, nor will it
incur, directly or indirectly, any liability for brokerage or finders' fees or
agent's commissions or any similar charges in connection with this Agreement,
the Merger or any transaction contemplated hereby.
2.17 LABOR MATTERS. There are no pending material claims against the
Company or any of its subsidiaries under any workers' compensation plan or
policy or for long-term disability. The Company and each of its United States
subsidiaries, has complied in all material respects with all applicable
provisions of the Consolidated Omnibus Budget Reconciliation Act of 1985
("COBRA") and has no material obligations with respect to any former employees
or qualifying beneficiaries thereunder. Except as is not material to the
Company's business and operations, neither the Company nor any of its
subsidiaries has given to or received from any current employee of the Company
or any of its subsidiaries notice of termination of employment.
2.18 EMPLOYEE BENEFIT PLANS.
(a) The Company Schedules contain a compete list of all Benefit Plans
(as hereinafter defined) sponsored or maintained by the Company or under which
the Company is obligated. The Company has made available to Parent (i) accurate
and complete copies of all Benefit Plan documents and all other material
documents relating thereto, including (if applicable) all summary plan
descriptions, summary annual reports and insurance contracts, (ii) accurate and
complete detailed summaries of all unwritten Benefit Plans, (iii) accurate and
complete copies of the most recent financial statements and actuarial reports
with respect to all Benefit Plans for which financial statements or actuarial
reports are required or have been prepared and (iv) accurate and complete copies
of all annual reports for all Benefit Plans (for which annual reports are
required) prepared within the last three years. "Benefit Plans" means all
employee benefit plans within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), and any related or
separate contracts, plans, trusts, programs, policies, arrangements, practices,
customs and understandings, in each case whether formal or informal, that
provide benefits of economic value to any present or former employee of the
Company (or, in the case of Section 3.18, Parent) or present or former
beneficiary, dependent or assignee of any such employee or former employee.
(b) All Benefit Plans of the Company conform (and at all times have
conformed) in all material respects to, and are being administered and operated
(and have at all time been administered and operated) in material compliance
with, the requirements of ERISA, the Code and all other applicable laws or
governmental regulations. All returns, reports and disclosure statements
required to be made under ERISA and the Code with respect to all Benefit Plans
have been timely filed or delivered. There have not been any "prohibited
transactions," as such term is defined in Section 4975 of the Code or Section
406 of ERISA involving any of the Benefit Plans, that could subject the Company
to any material penalty or tax imposed under the Code or ERISA.
(c) Any Benefit Plan that is intended to be qualified under Section
401(a) of the Code and exempt from tax under Section 501(a) of the Code has been
determined by the Internal Revenue Service to be so qualified or an application
for such determination is pending. Any such determination that has been obtained
remains in effect and has not been revoked, and with respect to any application
that is pending, the Company has no reason to suspect that such application for
determination will be denied. Nothing has occurred since the date of any such
determination that is reasonably likely to affect adversely such qualification
or exemption, or result in the imposition of excise taxes or income taxes on
unrelated business income under the Code or ERISA with respect to any Benefit
Plan.
(d) The Company does not sponsor a defined benefit plan subject to
Title IV of ERISA, nor does it have a current or contingent obligation to
contribute to any multiemployer plan (as defined in Section 3(37) of ERISA). The
Company does not have any liability with respect to any employee benefit plan
(as defined in Section 3(3) of ERISA) other than with respect to the Benefit
Plans. For purposes of this Section 2.18, the term "the Company" shall include
any corporation that is a member of any controlled group of corporations (as
defined in Section 414(b) of the Code) that includes the Company, any trade or
business (whether or not incorporated) that is under common control (as defined
in Section 414(c) of the Code) with the
Company, any organization (whether or not incorporated) that is a member of
an affiliated service group (as defined in Section 414(m) of the Code) that
includes the Company and any other entity required to be aggregated with the
Company pursuant to the regulations issued under Section 414(o) of the Code.
(e) There are no pending or, to the knowledge of the Company,
threatened claims by or on behalf of any Benefit Plans, or by or on behalf of
any individual participants or beneficiaries of any Benefit Plans, alleging any
breach of fiduciary duty on the part of the Company or any of its officers,
directors or employees under ERISA or any other applicable regulations, or
claiming benefit payments (other than those made in the ordinary operation of
such plans), nor is there, to the knowledge of the Company, any basis for such
claim. The Benefit Plans are not the subject of any pending (or to the knowledge
of the Company, any threatened) investigation or audit by the Internal Revenue
Service, the Department of Labor or the Pension Benefit Guaranty Corporation
("PBGC").
(f) The Company has timely made all required contributions under the
Benefit Plans including the payment of any premiums payable to the PBGC and
other insurance premiums.
(g) With respect to any Benefit Plan that is an employee welfare
benefit plan (within the meaning of Section 3(1) of ERISA) (a "Welfare Plan") or
a pension plan, (i) each Welfare Plan for which contributions are claimed by the
Company as deductions under any provision of the Code is in material compliance
with all applicable requirements pertaining to such deduction, (ii) with respect
to any welfare benefit fund (within the meaning of Section 419 of the Code)
related to a Welfare Plan, there is no disqualified benefit (within the meaning
of Section 4976(b) of the Code) that would result in the imposition of a tax
under Section 4976(a) of the Code, (iii) any Benefit Plan that is a group health
plan (within the meaning of Section 4980B(g)(2) of the Code) complies, and in
each and every case has complied, with all of the applicable material
requirements of Section 4980B of the Code, ERISA, Title XXII of the Public
Health Service Act and the Social Security Act, and (iv) all Welfare Plans may
be amended or terminated at any time on or after the Closing Date. No Benefit
Plan provides any health, life or other welfare coverage to employees of the
Company beyond termination of their employment with the Company by reason or
retirement or otherwise, other than coverage as may be required under Section
4980B of the Code or Part 6 of ERISA, or under the continuation of coverage
provisions of the laws of any state or locality.
2.19 COMPLIANCE WITH LAWS. The Company and each of its subsidiaries has
complied in all material respects with, is not in material violation of, and has
not received any notices of violation with respect to, any applicable federal,
state, local or foreign statute, law, regulation, judgment, order or decree with
respect to the conduct of its business, or the ownership or operation of its
business, except in any such case as reasonably would not be expected to be
material to the Company.
2.20 CHANGE OF CONTROL PAYMENTS. Except as set forth in the Company
Schedules, the execution and delivery of, and performance of the transactions
contemplated by, this Agreement will not constitute an event under any Benefit
Plan or agreement that will or may reasonably be expected to result in any
payment (whether severance pay or otherwise), acceleration, vesting or
increase in benefits with respect to current or former officers, directors or
employees of the Company whether or not any such payment would be an "excess
parachute payment" (within the meaning of Section 280G of the Code).
2.21 REGISTRATION STATEMENT; PROXY STATEMENT/PROSPECTUS. The
information supplied by the Company for inclusion in the Registration
Statement (as defined in Section 3.21) will not, at the time the Registration
Statement becomes effective under the Securities Act, contain any untrue
statement of a material fact or omit to state any material fact required to
be stated therein or necessary in order to make the statements therein not
misleading. The information supplied by the Company for inclusion in the
joint proxy statement/prospectus to be sent to the stockholders of the
Company and the stockholders of Parent in connection with the meeting of the
Company's stockholders to consider the Merger (the "Company Stockholders'
Meeting") and in connection with the meeting of Parent's stockholders to
consider the Merger (the "Parent Stockholders' Meeting") (such joint proxy
statement/prospectus as amended or supplemented is referred to herein as the
"Proxy Statement") shall not, on the date the Proxy Statement is first mailed
to the Company's stockholders and Parent's stockholders, at the time of the
Company Stockholders' Meeting or Parent Stockholders' Meeting, or at the
Effective Time, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which
they are made, not false or misleading, or omit to state any material fact
necessary to correct any statement in any earlier communication with respect
to the solicitation of proxies for the Company Stockholders' Meeting or
Parent Stockholders' Meeting which has become false or misleading. The Proxy
Statement will comply as to form in all material respects with the provisions
of the Exchange Act and the rules and regulations thereunder. If at any time
prior to the Effective Time any event relating to the Company or any of its
affiliates, officers or directors should be discovered by the Company which
should be set forth in an amendment to the Registration Statement or a
supplement to the Proxy Statement, the Company will promptly inform Parent.
Notwithstanding the foregoing, the Company makes no representation or
warranty with respect to any information supplied by Parent or Merger Sub
which is contained in any of the foregoing documents.
2.22 BOARD APPROVAL. The Board of Directors of the Company has, on
or prior to the date hereof, unanimously approved this Agreement and the
Merger, has recommended approval and adoption of this Agreement by the
stockholders of the Company and has adopted (and not amended, revoked or
rescinded) the resolutions to such effect contained in the Company Schedules.
2.23 FAIRNESS OPINION. The Company has received a written opinion
from Xxxxxxxxx Xxxxxxxx, Inc. dated as of May 22, 2001, that, as of the date
of such opinion, the Exchange Ratio is fair to the Company's stockholders
from a financial point of view, and has delivered to Parent a copy of such
opinion.
2.24 NO EXISTING DISCUSSIONS. Except for discussions or negotiations
relating to the transactions contemplated hereby, as of the date hereof the
Company is not engaged, directly or indirectly, in any discussions or
negotiations with any other party with respect to any Acquisition Proposal
(as defined in Section 5.4 hereof).
2.25 ANTI-TAKEOVER LAWS INAPPLICABLE. No "fair price," "business
combination," "moratorium," "control share acquisition" or other form of
anti-takeover statute or regulations, including, without limitation, Section
203 of the Delaware Law or Chapter 110C or 110E of the Massachusetts General
Laws, is or will be applicable to the execution, delivery or performance by
the Company of this Agreement or the consummation of the Merger and the other
transactions contemplated hereby.
2.26 REORGANIZATION. To the knowledge of the Company, neither it nor
any of its affiliates has taken any action, failed to take any action or
agreed to take any action or is aware of any circumstances that would prevent
the Merger from qualifying as a reorganization within the meaning of Section
368(a) of the Code.
2.27 ABSENCE OF UNDISCLOSED LIABILITIES. There are no liabilities or
obligations (whether absolute or contingent, matured or unmatured) of the
Company or any of its subsidiaries, including but not limited to liabilities
for Taxes, of a nature required by GAAP to be reflected, or reserved against,
in the Company Balance Sheet and that are not so reflected, or reserved
against. Except as described in the Company Schedules or reflected or
reserved against in the Financial Statements, since December 31, 2000,
neither the Company nor any of its subsidiaries has incurred any material
liabilities or obligations (whether absolute or contingent, matured or
unmatured), other than liabilities or obligations incurred in the ordinary
course of business consistent with past practice which do not have, and could
not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on the Company.
2.28 DISSENTERS' RIGHTS. The shares of Company Common Stock are
listed on the Nasdaq Stock Market and no stockholder of the Company has or
will have any appraisal or dissenters' rights pursuant to the certificate of
incorporation of the Company or any law arising from, or in connection with,
the consummation of the Merger and the other transactions contemplated hereby.
2.29 INSURANCE. Each of the Company and its subsidiaries is insured
with financially responsible insurers in such amounts and against such risks
and losses as are customary for companies conducting business as conducted by
the Company and its subsidiaries. Since January 1, 2001, neither the Company
nor any of its subsidiaries has received notice of cancellation or
termination with respect to any material insurance policy of the Company or
its subsidiaries which has not been cured.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub represent and warrant to the Company, subject
to the exceptions specifically disclosed in the disclosure letter supplied by
Parent to the Company (the "Parent Schedules") and dated as of the date
hereof as follows:
3.1 ORGANIZATION OF PARENT. Parent and, except as set forth in the
Parent Schedules, each of its material subsidiaries (which material
subsidiaries are set forth in the Parent Schedules) is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, has the corporate power to own, lease and
operate its property
and to carry on its business as now being conducted and as proposed to be
conducted, and is duly qualified to do business and in good standing as a
foreign corporation in each jurisdiction in which the failure to be so
qualified would have a Material Adverse Effect on Parent. Parent has
delivered to the Company a true and complete list of all of Parent's
subsidiaries, together with the jurisdiction of incorporation of each
subsidiary. Parent owns, directly or indirectly through one or more
subsidiaries, 100% of the capital stock or other equity interests of each of
its subsidiaries. All such shares of capital stock or other equity interests
directly or indirectly held by Parent have been duly authorized and validly
issued and are fully paid and nonassessable. Except as set forth in the
Parent SEC Reports (as defined in Section 3.5), Parent does not directly or
indirectly own any equity or similar interest in, or any interest convertible
into or exchangeable or exercisable for any interest in, any corporation,
partnership, joint venture or other business association or entity other than
the securities of any publicly-traded entity held for investment only and
constituting less than 5% of the outstanding capital stock of any such
entity. Parent has delivered or made available to the Company and its counsel
a true and correct copy of the Certificate of Incorporation and By-laws of
Parent and similar governing instruments of its material subsidiaries, each
as amended to date.
3.2 PARENT CAPITAL STRUCTURE.
(a) The authorized capital stock of Parent consists of 200,000,000
shares of Parent Common Stock of which 29,659,376 shares were issued and
outstanding as of May 8, 2001, and 5,000,000 shares of Preferred Stock, $.01
par value, all of which are undesignated and none of which is issued or
outstanding. The authorized capital stock of Merger Sub consists of 1,000
shares of common stock, $.01 par value ("Merger Sub Common Stock"), 100
shares of which, as of the date hereof, are issued and outstanding and are
held by Parent. All issued and outstanding shares of Parent Common Stock and
Merger Sub Common Stock have been duly authorized, and all such issued and
outstanding shares have been validly issued, are fully paid and
nonassessable, are not subject to any preemptive rights (and were not issued
in violation of any preemptive rights) and are free of any liens or
encumbrances other than any liens or encumbrances created by or imposed upon
the holders thereof. Each of the outstanding shares of Parent Common Stock
and outstanding shares of capital stock or other equity interests of Parent's
subsidiaries was issued in compliance with all applicable federal and state
laws concerning the issuance of securities. No bonds, debentures, notes or
other indebtedness of the Parent having the right to vote on any matters on
which stockholders of the Parent may vote are issued or outstanding. As of
May 8, 2001, Parent had reserved (i) 4,582,000 shares of Common Stock for
issuance to executives, key employees and consultants of Parent or its
subsidiaries pursuant to its 1989 Incentive and Nonqualified Stock Option
Plan, as amended, under which options were outstanding for 345,736 shares and
no shares remained available for future option grants, (ii) 4,000,000 shares
of Common Stock for issuance to executives, key employees and consultants of
the Company or its subsidiaries pursuant to its 1995 Nonqualified Stock
Option Plan, as amended, under which options were outstanding for 66,169
shares and no shares remained available for future option grants, (iii)
4,700,000 shares of Common Stock for issuance to employees, directors and
consultants and other individuals providing services to Parent or its
subsidiaries pursuant to its 1996 Incentive and Nonqualified Stock Option
Plan, as amended, under which options were outstanding for 3,786,602 shares
and 412,248 shares remained available for future option grants, (iv)
7,500,000 shares of Common Stock for issuance to employees pursuant to its
1997 Nonqualified Stock Option Plan, as amended, under which
options were outstanding for 6,534,379 shares and 530,342 shares remained
available for future option grants and (v) 700,000 shares of Common Stock for
issuance under its 1996 Employee Stock Purchase Plan, as amended (the "Parent
ESPP"). 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, shall be duly authorized, validly
issued, fully paid and nonassessable. The Parent Schedules include a list of
all issuances of capital stock by Parent since January 1, 1998 (other than
issuances pursuant to the option plans and options described in clauses (i)
and (ii) above (the "Parent Stock Option Plans") and the Parent ESPP) and
also list for each outstanding option at May 8, 2001, the name of the holder
of such option, the number of shares subject to such option, the exercise
price of such option, the number of shares as to which such option will have
been vested at May 8, 2001 and, if the exercisability of such option will be
accelerated in any way by the transactions contemplated by this Agreement or
for any other reason, an indication of the extent of such acceleration. Such
list also describes any repricing of options which has taken place since
January 1, 1998. The Parent Schedules also include a list of all the
participants in the Parent ESPP and the number of shares of Parent Common
Stock which will be issuable to the participants therein for the offering
period ending October 31, 2001 if all current participants continue to
contribute at current levels (assuming the purchase price of such shares to
be 85% of the fair market value of the Parent Common Stock on the first day
of the current offering period). Since May 8, 2001, there have been no
changes in the capital structure of Parent other than issuances of Parent
Common Stock (i) upon the exercise of options granted under the Parent Stock
Option Plans and (ii) pursuant to the Parent ESPP.
(b) The shares of Parent Common Stock to be issued pursuant to the
Merger, upon exercise of Company Stock Options to be assumed by Parent by
reason of the Merger or under the Company ESPP following the Merger will,
upon issuance, be duly authorized, validly issued, fully paid and
non-assessable and will not have been issued in violation of any subscriptive
or preemptive rights.
3.3 OBLIGATIONS WITH RESPECT TO CAPITAL STOCK. Except as set forth
in Section 3.2 and except as permitted by Section 4.2(g), there are no equity
securities of any class of Parent, or any security exchangeable into or
exercisable for such equity securities, issued, reserved for issuance or
outstanding. Except for securities Parent owns, directly or indirectly
through one or more subsidiaries, there are no equity securities of any class
of any subsidiary of Parent, or any security exchangeable into or exercisable
for such equity securities, issued, reserved for issuance or outstanding.
Except as set forth in Section 3.2 or the Parent Schedules and except as
permitted by Section 4.2(g), there are no options, warrants, equity
securities, calls, 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, additional shares of capital stock 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 option, warrant, equity security, call, right, commitment or agreement.
To the best knowledge of Parent, except for the Parent Stockholder Agreements
to be entered into by certain Parent stockholders with the Company in
connection with the Merger pursuant to Section 5.20, there are no agreements
or understandings affecting or relating to the voting, issuance, purchase,
redemption, registration, repurchase or transfer of the shares of capital
stock of the Parent.
3.4 AUTHORITY. Parent and Merger Sub have all requisite corporate
power and authority to enter into this Agreement and the other documents and
agreements contemplated hereby to be entered into by them (the "Parent
Transaction Documents") and to consummate the transactions contemplated
hereby and thereby. The execution and delivery on behalf of the Parent and
Merger Sub of this Agreement and each of the other Parent Transaction
Documents and the consummation of the transactions contemplated hereby and
thereby have been duly authorized by all necessary corporate action on the
part of Parent and Merger Sub, subject only to the approval of the issuance
of the shares of Parent Common Stock to be issued in the Merger by the vote
of a majority of the issued and outstanding Parent Common Stock present or
represented by proxy at the Parent Stockholders' Meeting. This Agreement has
been duly executed and delivered by Parent and Merger Sub and constitutes the
valid and binding obligations of Parent and Merger Sub, enforceable in
accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization and
other similar laws affecting creditors' rights generally, and by general
principles of equity (whether considered in a proceeding of equity or at
law). The execution and delivery of this Agreement and each of the other
Parent Transaction Documents does not, and the consummation of the
transactions contemplated hereby and thereby will not, conflict with, or
result in any violation of, or default under (with or without notice or lapse
of time, or both), or give rise to a right of termination, cancellation or
acceleration of any obligation or loss of a benefit under, or, in the case of
clause (iii) below, result in or require the creation or imposition of, (i)
any provision of the Certificate of Incorporation or By-laws of Parent or
Merger Sub or (ii) except as disclosed in the Parent Schedules, any mortgage,
indenture, lease, contract or other agreement or instrument disclosed in the
Parent Schedules pursuant to Section 3.11 or of the type referred to in
clause (i) or (ii) of Section 3.12, or, other than as provided in the next
paragraph below, any permit, concession, franchise, license, judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to Parent or
its properties or assets, or (iii) any indebtedness of the Parent or any of
its subsidiaries; except for any such conflict, violation, or default in the
case of clauses (ii) or (iii) that could not reasonably be expected to have a
Material Adverse Effect on the Parent.
No consent, approval, order or authorization of, or registration,
declaration or filing with, any Governmental Entity is required by or with
respect to Parent and Merger Sub in connection with the execution and
delivery of this Agreement or any of the other Parent Transaction Documents
by Parent and Merger Sub or the consummation by Parent and Merger Sub of the
transactions contemplated hereby or thereby, except for (i) the filing of the
Form S-4 Registration Statement with the SEC in accordance with the
Securities Act, (ii) the filing of the Certificate of Merger with the
Delaware Secretary of State, (iii) the filing of the Proxy Statement with the
SEC in accordance with the Exchange Act, (iv) the filing of a Form 8-K with
the SEC, (v) the filing of the registration statement on Form S-8 with the
SEC required to be filed pursuant to Section 5.13, (vi) the listing of Parent
Common Stock issuable pursuant to the Merger on the Nasdaq Stock Market,
(vii) such consents, approvals, orders, authorizations, registrations,
declarations and filings as may be required under applicable federal and
state securities laws and the laws of any foreign country, (viii) such other
consents, authorizations, filings, approvals and registrations which, if not
obtained or made, would not have a Material Adverse Effect on Parent or
adversely affect the ability of the parties to consummate the Merger. Except
as disclosed in the Parent Schedules, the execution, delivery and performance
of this Agreement and all other documents contemplated hereby will not result
in or give rise to any material penalty, forfeiture, right of termination,
amendment or cancellation, or restriction on business operations of the
Parent or any of its subsidiaries (other than the Surviving Corporation). The
Parent Schedules list all agreements that could reasonably be interpreted to
require the consent of any Person not a party to this Agreement with respect
to the execution, delivery or performance of this Agreement by the Parent and
its subsidiaries, taken as a whole where (i) such agreements are material to
the operation of the Parent and its subsidiaries or (ii) the failure to
obtain such consent would reasonably be expected to have a Material Adverse
Effect on the Parent or adversely affect the ability of the parties to
consummate the Merger.
3.5 SEC FILINGS, PARENT FINANCIAL STATEMENTS.
(a) Parent has timely filed all forms, reports and documents
required to be filed by it with the SEC since July 23, 1996 (the "Parent
Pre-Signing SEC Documents") and the Parent will timely file with the SEC all
forms, reports and documents required to be so filed after the date of this
Agreement but before the Effective Time (the "Parent Post-Signing SEC
Documents" and, collectively with the Parent Pre-Signing SEC Documents, the
"Parent SEC Reports"). As of their respective dates, the Parent 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 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 subsequent 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 made the statements
therein, in the light of the circumstances under which they were made, not
misleading. None of Parent's subsidiaries is required to file any form,
reports or other documents with the SEC.
(b) Each of the consolidated financial statements (including, in
each case, any related notes and schedules thereto) contained in the Parent
SEC Reports (the "Parent Financials") or that will be contained in the Parent
Post-Signing SEC Documents, (x) complies or will comply, as the case may be,
as to form in all material respects with the published rules and regulations
of the SEC with respect thereto, (y) was or will be, as the case may be,
prepared in accordance with generally accepted accounting principles applied
on a consistent basis throughout the periods involved (except as may be
indicated in the notes thereto) and (z) fairly presented, or will fairly
present, as the case may be, the consolidated financial position of Parent
and its subsidiaries as at the respective dates thereof and the consolidated
results of its operations and cash flows for the periods indicated, except
that the unaudited interim financial statements were or will be subject to
normal and recurring year-end adjustments which were not or will not be
expected to be material in amount. The audited balance sheet of Parent as of
December 31, 2000 contained in the Parent SEC Reports is hereinafter referred
to as the "Parent Balance Sheet."
(c) Parent has heretofore furnished to the Company a complete and
correct copy of any amendments or modifications, which have not yet been
filed with the SEC but which are required to be filed, to agreements,
documents or other instruments which previously had been filed by Parent with
the SEC pursuant to the Securities Act or the Exchange Act.
3.6 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since the date of the
Parent Balance Sheet, except with respect to the actions contemplated by this
Agreement, Parent and its subsidiaries
have conducted their businesses only in the ordinary course and in a manner
consistent with past practice and, since such date, there has not been (i)
any Material Adverse Change in Parent, or any development that reasonably
would be expected to cause a Material Adverse Change in Parent; (ii) any
damage, destruction or loss (whether or not covered by insurance) suffered by
Parent or any of its properties having a Material Adverse Effect on Parent;
(iii) any material change by Parent in its accounting methods, principles or
practices; (iv) any material revaluation by Parent of any of its assets
including, without limitation, writing down the value of capitalized software
or inventory or writing off notes or accounts receivable other than in the
ordinary course of business; or (v) any other action or event that would have
required the consent of the Company pursuant to Section 4.2 had such action
or event occurred after the date of this Agreement.
3.7 TAXES.
(a) Parent and each of its subsidiaries has timely filed all Returns
relating to Taxes required to be filed by Parent and each of its
subsidiaries, except such Returns which are not material to Parent, and has
paid all Taxes shown to be due on such Returns, or is contesting them in good
faith.
(b) Except as is not material to Parent, Parent and each of its
subsidiaries as of the Effective Time will have withheld with respect to its
employees all federal and state income taxes, FICA, FUTA and other Taxes
required to be withheld.
(c) Except as is not material to Parent, neither Parent nor any of
its subsidiaries has been delinquent in the payment of any Tax nor is there
any Tax deficiency outstanding, proposed or assessed against Parent or any of
its subsidiaries nor has Parent or any of its subsidiaries executed any
waiver of any statute of limitations on or extending the period for the
assessment or collection of any Tax.
(d) Except as is not material to Parent, no audit or other
examination of any Return of Parent or any of its subsidiaries is presently
in progress, nor has Parent or any of its subsidiaries been notified of any
request for such an audit or other examination.
(e) Neither Parent nor any of its subsidiaries has any liability for
unpaid federal, state, local or foreign Taxes which have not been accrued for
or reserved against on the Parent Balance Sheet (in conformity with GAAP,
consistently applied), whether asserted or unasserted, contingent or
otherwise, which is material to Parent.
(f) None of Parent's assets are treated as "tax-exempt use property"
within the meaning of Section 168(h) of the Code.
(g) Except as set forth in the Parent Schedules, there is no
contract, agreement, plan or arrangement, including but not limited to the
provisions of this Agreement, covering any employee or former employee of
Parent or any of its subsidiaries that, individually or collectively, could
give rise to the payment of any amount that would not be deductible pursuant
to Sections 280G, 404 or 162 of the Code.
(h) 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.
(i) Parent is not, and has not been at any time, a "United States
real property holding corporation" within the meaning of Section 897(c)(2) of
the Code.
3.8 RESTRICTIONS ON BUSINESS ACTIVITIES. There is no material
agreement, judgment, injunction, order or decree binding upon Parent which
has or reasonably would be expected to have the effect of prohibiting or
materially impairing any material current business practice of Parent, any
acquisition of material property by Parent or the conduct of business by
Parent as currently conducted or as proposed to be conducted by Parent.
3.9 ABSENCE OF LIENS AND ENCUMBRANCES. Parent and each of its
subsidiaries has good and valid title to, or, in the case of leased
properties and assets, valid leasehold interests in, all of its material
tangible properties and assets, real, personal and mixed, used in its
business, free and clear of any liens or encumbrances except as reflected in
the Parent Financial Statements or permitted by Section 4.2(j) and except for
liens for taxes not yet due and payable and such imperfections of title and
encumbrances, if any, which are not material in character, amount or extent,
and which do not materially detract from the value, or materially interfere
with the present use, of the property subject thereto or affected thereby.
3.10 INTELLECTUAL PROPERTY.
(a) Parent, directly or indirectly, owns, or is licensed or
otherwise possesses legally enforceable rights to use, all patents,
trademarks, trade names, service marks, copyrights, and any applications
therefor, maskworks, net lists, schematics, technology, know-how, computer
software programs or applications (in both source code and object code form),
and tangible or intangible proprietary information or material (excluding
Commercial Software) that are used in or necessary to conduct the business of
Parent as currently conducted or as proposed to be conducted by Parent (the
"Parent Intellectual Property Rights").
(b) The Parent Schedules set forth a complete list of all (i)
patents, (ii) trademarks, (iii) registered copyrights, trademarks, trade
names and service marks and (iv) any applications therefor, included in the
Parent Intellectual Property Rights, and specify, where applicable, the
jurisdictions in which each such Parent Intellectual Property Right has been
issued or registered or in which an application for such issuance and
registration has been filed, including the respective registration or
application numbers, the date of such registration or application, and the
names of all registered owners. The Parent Schedules also set forth a
complete list of all material licenses, sublicenses and other agreements as
to which Parent is a party and pursuant to which Parent or any other person
is authorized to use any Parent Intellectual Property Right (excluding
End-User Licenses) or other trade secret material to Parent, and includes the
identity of all parties thereto, a description of the nature and subject
matter thereof, the applicable royalty and the term thereof. Parent is not in
violation of any license, sublicense or agreement described on such list
except such violations as do not materially impair Parent's rights under such
license, sublicense or agreement. The execution and
delivery of this Agreement by Parent, and the consummation of the
transactions contemplated hereby, will neither cause Parent to be in
violation or default under any such license, sublicense or agreement, nor
entitle any other party to any such license, sublicense or agreement to
terminate or modify such license, sublicense or agreement.
(c) Parent is the sole and exclusive owner or licensee of, with all
right, title and interest in and to (free and clear of any liens or
encumbrances), Parent Intellectual Property Rights, and has sole and
exclusive rights (and is not contractually obligated to pay any compensation
to any third party in respect thereof) to the use thereof or the material
covered thereby in connection with the services or products in respect of
which the Parent Intellectual Property Rights are being used. No claims with
respect to Parent Intellectual Property Rights have been asserted or, to the
knowledge of Parent, are threatened by any person, nor are there any valid
grounds, to the knowledge of Parent, for any bona fide claims (i) to the
effect that the manufacture, sale, licensing or use of any of the products of
Parent or any of its subsidiaries as now manufactured, sold, licensed or used
or proposed for manufacture, sale, licensing or use by Parent infringes on
any copyright, patent, trademark, service xxxx or trade secret, (ii) against
the use by Parent or any of its subsidiaries of any trademarks, service
marks, trade names, trade secrets, copyrights, patents, technology, know-how
or computer software programs and applications used in Parent's business as
currently conducted or as proposed to be conducted by Parent, or (iii)
challenging the ownership by Parent, validity or effectiveness of any of
Parent Intellectual Property Rights. All registered trademarks, service marks
and copyrights held by Parent are valid and subsisting.
(d) To the knowledge of Parent, there is no material unauthorized
use, infringement or misappropriation of any Parent Intellectual Property
Rights by any third party, including any employee or former employee of
Parent.
(e) No Parent Intellectual Property Right or product of Parent or
any of its subsidiaries is subject to any outstanding decree, order,
judgment, or stipulation restricting in any manner the licensing thereof by
Parent or any of its subsidiaries. Neither Parent nor any of its subsidiaries
has entered into any agreement (other than exclusive distribution agreements
identified as such in the Parent Schedules) under which Parent or its
subsidiaries is restricted from selling, licensing or otherwise distributing
any of its products to any class of customers, in any geographic area, during
any period of time or in any segment of the market.
(f) Parent and its subsidiaries have a practice to secure, and have
secured, from all consultants and contractors who contribute or have
contributed to the creation or development of Parent Intellectual Property
Rights valid written assignments by such persons to the Parent and its
subsidiaries of the rights to such contributions. The Parent and its
subsidiaries have taken reasonable and appropriate steps to protect and
preserve the confidentiality of their trade secrets. The Parent has required
each employee to execute a proprietary information and confidentiality
agreement substantially in the Parent's standard form, a copy of which is set
forth in the Parent Schedules.
3.11 AGREEMENTS, CONTRACTS AND COMMITMENTS. Except as set forth in
the Parent Schedules, neither Parent nor any of its subsidiaries has, nor is
it a party to nor is it bound by:
(a) any collective bargaining agreements,
(b) any bonus, deferred compensation, incentive compensation,
pension, profit-sharing or retirement plans, or any other employee benefit
plans or arrangements,
(c) any employment or consulting agreement, contract or commitment
with any officer or director level employee, not terminable by Parent on
thirty (30) days notice without liability, except to the extent general
principles of wrongful termination law may limit Parent's ability to
terminate employees at will,
(d) any agreement or plan, including, without limitation, any stock
option plan, stock appreciation right plan or stock purchase plan, any of the
benefits of which will be increased, or the vesting of benefits of which will
be accelerated, by the occurrence of any of the transactions contemplated by
this Agreement or the value of any of the benefits of which will be
calculated on the basis of any of the transactions contemplated by this
Agreement,
(e) any agreement of indemnification or guaranty not entered into in
the ordinary course of business other than such agreements or guarantees
between Parent and any of its subsidiaries, officers or directors,
(f) any agreement, contract or commitment containing any covenant
limiting the freedom of Parent to engage in any line of business or compete
with any person,
(g) any agreement, contract or commitment relating to capital
expenditures and involving future obligations in excess of $200,000,
(h) any agreement, contract or commitment relating to the
disposition or acquisition of assets not in the ordinary course of business
or any ownership interest in any corporation, partnership, joint venture or
other business enterprise,
(i) any mortgages, indentures, loans or credit agreements, security
agreements or other agreements or instruments relating to the borrowing of
money or extension of credit,
(j) any joint marketing or development agreement (excluding
agreements with resellers, value added resellers or independent software
vendors entered into in the ordinary course of business that do not permit
such resellers or vendors to modify Parent's software products),
(k) any distribution agreement (identifying any that contain
exclusivity provisions),
(l) any lease of real property involving the payment by the Parent
of $250,000 per year or more in any individual case,
(m) any agreement or commitment with any affiliate of Parent, or
(n) any other agreement, contract or commitment (including personal
property leases) which involves payment by Parent of $250,000 or more and is
not cancelable without penalty within thirty (30) days or (other than
agreements for the provision by the Parent of services entered into in the
ordinary course of its business) that involves payment to the Parent of
$250,000 or more in any individual case.
3.12 NO DEFAULT. Neither Parent nor any of its subsidiaries has
breached, or received in writing any claim or threat that it has breached,
any of the terms or conditions of any (i) agreement, contract or commitment
that was, is or will be required to be filed as an exhibit to the Parent SEC
Reports or (ii) any agreement under which Parent or any of its subsidiaries
licenses from a third party any Parent Intellectual Property Rights included
in Parent's products in such a manner as would permit any other party to
cancel or terminate the same or would permit any other party to seek material
damages from Parent thereunder. Each of the agreements, contracts and
commitments referred to in clauses (i) and (ii) above that has not expired or
been terminated in accordance with its terms is in full force and effect and,
except as otherwise disclosed, is not subject to any material default
thereunder of which Parent is aware by any party obligated to Parent pursuant
thereto.
All contracts required by Item 601(b)(10) of Regulation S-K to be
filed as exhibits to the Parent's Pre-Signing SEC Reports have been so filed.
3.13 GOVERNMENTAL AUTHORIZATION; COMPLIANCE. Parent holds all
permits, licenses, variances, exemptions, orders and approvals of all
Governmental Entities which are material to the operation of Parent's
business as currently conducted (the "Parent Permits"). Parent is in material
compliance with the terms of the Parent Permits. Except as disclosed in the
Parent SEC Reports filed prior to the date of this Agreement, the business of
Parent is not being, and has not been, conducted in violation of any law,
ordinance or regulation of any Governmental Entity, except for violations or
possible violations which individually or in the aggregate are not, and
insofar as reasonably can be foreseen, in the future will not be, material to
Parent. As of the date of this Agreement, no investigation or review by any
Governmental Entity with respect to Parent is pending or, to the knowledge of
Parent, threatened, nor has any Governmental Entity indicated an intention to
conduct the same.
3.14 LITIGATION. There is no action, suit, proceeding, claim,
arbitration or investigation pending, or as to which Parent or any of its
subsidiaries has received any notice of assertion nor, to Parent's knowledge,
is there a reasonable basis to expect such notice of assertion against Parent
or any of its subsidiaries which, (a) if determined adversely to Parent or
any of its subsidiaries reasonably would be expected to be material to
Parent, or which in any manner challenges or seeks to prevent, enjoin, alter
or materially delay any of the transactions contemplated by this Agreement,
or (b) is or could reasonably be expected to become of a character required
to be disclosed pursuant to Item 401(f) of Regulation S-K.
3.15 ENVIRONMENTAL MATTERS.
(a) PERMITS. Parent currently holds all Environmental Permits
necessary for the conduct of the Company's Hazardous Material Activities and
other businesses of the Company as such activities and businesses are
currently being conducted.
(b) ENVIRONMENTAL LIABILITIES. Except for such matters as are not
reasonably likely to have a Material Adverse Effect on the Parent, or would
not otherwise require disclosure under the Securities Act, each of the Parent
and its subsidiaries has complied with all applicable Environmental Laws. No
material action, proceeding, revocation proceeding, amendment procedure,
writ, injunction or claim, or notice of violation is pending, or to Parent's
knowledge, threatened concerning any Environmental Permit, Hazardous
Material, or any Hazardous Materials Activity of Parent or any of its
subsidiaries. Parent is not aware of any fact or circumstance which could (i)
involve Parent or any of its subsidiaries in any material litigation or
otherwise impose upon Parent any material liability relating to any Hazardous
Materials Activities or (ii) reasonably be expected to result in any claims,
liability, investigations, costs or restrictions on ownership, use or
transfer of any of its properties pursuant to any Environmental Law.
3.16 BROKER'S AND FINDERS' FEES. Except for fees payable to XX Xxxxx
Securities Corporation pursuant to the engagement letter dated July 11, 2000,
as amended by a supplemental agreement dated May 7, 2001, copies of which
have been provided to the Company, Parent has not incurred, and will not
incur, directly or indirectly, any liability for brokerage or finders' fees
or agents' commissions or any similar charges in connection with this
Agreement, the Merger or any transaction contemplated hereby.
3.17 LABOR MATTERS. There are no pending material claims against
Parent or any of its subsidiaries under any workers' compensation plan or
policy or for long-term disability. Parent and each of its United States
subsidiaries, has complied in all material respects with all applicable
provisions of COBRA and has no material obligations with respect to any
former employees or qualifying beneficiaries thereunder. Except as is not
material to Parent's business and operations, neither Parent nor any of its
subsidiaries has given to or received from any current employee of Parent or
any of its subsidiaries notice of termination of employment.
3.18 EMPLOYEE BENEFIT PLANS.
(a) The Parent Schedules contain a compete list of all Benefit Plans
sponsored or maintained by Parent or under which Parent is obligated. Parent
has made available to the Company (i) accurate and complete copies of all
Benefit Plan documents and all other material documents relating thereto,
including (if applicable) all summary plan descriptions, summary annual
reports and insurance contracts, (ii) accurate and complete detailed
summaries of all unwritten Benefit Plans, (iii) accurate and complete copies
of the most recent financial statements and actuarial reports with respect to
all Benefit Plans for which financial statements or actuarial reports are
required or have been prepared and (iv) accurate and complete copies of all
annual reports for all Benefit Plans (for which annual reports are required)
prepared within the last three years.
(b) All Benefit Plans of Parent conform (and at all times have
conformed) in all material respects to, and are being administered and
operated (and have at all time been administered and operated) in material
compliance with, the requirements of ERISA, the Code and all other applicable
laws or governmental regulations. All returns, reports and disclosure
statements required to be made under ERISA and the Code with respect to all
Benefit Plans have been timely filed or delivered. There have not been any
"prohibited transactions," as such term
is defined in Section 4975 of the Code or Section 406 of ERISA involving any
of the Benefit Plans, that could subject Parent to any material penalty or
tax imposed under the Code or ERISA.
(c) Any Benefit Plan that is intended to be qualified under Section
401(a) of the Code and exempt from tax under Section 501(a) of the Code has
been determined by the Internal Revenue Service to be so qualified or an
application for such determination is pending. Any such determination that
has been obtained remains in effect and has not been revoked, and with
respect to any application that is pending, Parent has no reason to suspect
that such application for determination will be denied. Nothing has occurred
since the date of any such determination that is reasonably likely to affect
adversely such qualification or exemption, or result in the imposition of
excise taxes or income taxes on unrelated business income under the Code or
ERISA with respect to any Benefit Plan.
(d) Parent does not sponsor a defined benefit plan subject to Title
IV of ERISA, nor does it have a current or contingent obligation to
contribute to any multiemployer plan (as defined in Section 3(37) of ERISA).
Parent does not have any liability with respect to any employee benefit plan
(as defined in Section 3(3) of ERISA) other than with respect to the Benefit
Plans. For purposes of this Section 3.18, the term "Parent" shall include any
corporation that is a member of any controlled group of corporations (as
defined in Section 414(b) of the Code) that includes Parent, any trade or
business (whether or not incorporated) that is under common control (as
defined in Section 414(c) of the Code) with Parent, any organization (whether
or not incorporated) that is a member of an affiliated service group (as
defined in Section 414(m) of the Code) that includes Parent and any other
entity required to be aggregated with Parent pursuant to the regulations
issued under Section 414(o) of the Code.
(e) There are no pending or, to the knowledge of Parent, threatened
claims by or on behalf of any Benefit Plans, or by or on behalf of any
individual participants or beneficiaries of any Benefit Plans, alleging any
breach of fiduciary duty on the part of Parent or any of its officers,
directors or employees under ERISA or any other applicable regulations, or
claiming benefit payments (other than those made in the ordinary operation of
such plans), nor is there, to the knowledge of Parent, any basis for such
claim. The Benefit Plans are not the subject of any pending (or to the
knowledge of Parent, any threatened) investigation or audit by the Internal
Revenue Service, the Department of Labor or the PBGC.
(f) Parent has timely made all required contributions under the
Benefit Plans including the payment of any premiums payable to the PBGC and
other insurance premiums.
(g) With respect to any Benefit Plan that is a Welfare Plan or a
pension plan, (i) each Welfare Plan for which contributions are claimed by
Parent as deductions under any provision of the Code is in material
compliance with all applicable requirements pertaining to such deduction,
(ii) with respect to any welfare benefit fund (within the meaning of Section
419 of the Code) related to a Welfare Plan, there is no disqualified benefit
(within the meaning of Section 4976(b) of the Code) that would result in the
imposition of a tax under Section 4976(a) of the Code, (iii) any Benefit Plan
that is a group health plan (within the meaning of Section 4980B(g)(2) of the
Code) complies, and in each and every case has complied, with all of the
applicable material requirements of Section 4980B of the Code, ERISA, Title
XXII of the Public Health Service Act and the Social Security Act, and (iv)
all Welfare Plans may be amended or
terminated at any time on or after the Closing Date. No Benefit Plan provides
any health, life or other welfare coverage to employees of the Company beyond
termination of their employment with the Company by reason or retirement or
otherwise, other than coverage as may be required under Section 4980B of the
Code or Part 6 of ERISA, or under the continuation of coverage provisions of
the laws of any state or locality.
3.19 COMPLIANCE WITH LAWS. Parent and each of its subsidiaries has
complied in all material respects with, is not in material violation of, and
has not received any notices of violation with respect to, any applicable
federal, state, local or foreign statute, law, regulation, judgment, order or
decree with respect to the conduct of its business, or the ownership or
operation of its business, except in any such case as reasonably would not be
expected to be material to Parent.
3.20 CHANGE OF CONTROL PAYMENTS. Except as set forth in the Parent
Schedules, the execution and delivery of, and performance of the transactions
contemplated by, this Agreement will not constitute an event under any
Benefit Plan or agreement that will or may reasonably be expected to result
in any payment (whether severance pay or otherwise), acceleration, vesting or
increase in benefits with respect to current or former officers, directors or
employees of the Parent whether or not any such payment would be an "excess
parachute payment" (within the meaning of Section 280G of the Code).
3.21 REGISTRATION STATEMENT; PROXY STATEMENT/PROSPECTUS. Subject to
the accuracy of the information regarding the Company provided by the Company
specifically for inclusion in the joint proxy statement and registration
statement on Form S-4 (or such other or successor form as shall be
appropriate) (including any amendments or supplements thereto, the
"Registration Statement"), pursuant to which the shares of Parent Common
Stock to be issued in the Merger will be registered with the SEC, such
Registration Statement will not, at the time it becomes effective under the
Securities Act, contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements included
therein not misleading. The information supplied by Parent for inclusion in
the Proxy Statement included in the Registration Statement shall not, on the
date the Proxy Statement is first mailed to stockholders, at the time of the
Company Stockholders' Meeting or Parent Stockholders' Meeting, or at the
Effective Time, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which
they are made, not false or misleading; or omit to state any material fact
necessary to correct any statement in any earlier communication with respect
to the solicitation of proxies for the Company Stockholders' Meeting or
Parent Stockholders' Meeting which has become false or misleading. The Proxy
Statement will comply as to form in all material respects with the provisions
of the Exchange Act and the rules and regulations thereunder. If at any time
prior to the Effective Time any event relating to Parent, Merger Sub or any
of their respective affiliates, officers or directors should be discovered by
Parent or Merger Sub which should be set forth in an amendment to the
Registration Statement or a supplement to the Proxy Statement, Parent or
Merger Sub will promptly inform the Company. Notwithstanding the foregoing,
Parent and Merger Sub make no representation or warranty with respect to any
information supplied by the Company which is contained in any of the
foregoing documents.
3.22 BOARD APPROVAL. The Boards of Directors of Parent and Merger
Sub have, on or prior to the date hereof, unanimously approved this Agreement
and the Merger, and the Board of Directors of Parent has recommended approval
the stockholders of Parent of the issuance of the shares of Parent Common
Stock issuable in connection with the Merger and have adopted (and not
amended, revoked or rescinded) resolutions to such effect contained in the
Parent Schedules.
3.23 FAIRNESS OPINION. Parent has received a written opinion from XX
Xxxxx Securities Corporation, dated as of May 22, 2001, that, as of the date
of such opinion, the Exchange Ratio is fair to Parent from a financial point
of view, and has delivered to the Company a copy of such opinion.
3.24 NO EXISTING DISCUSSIONS. Except for discussions or negotiations
relating to the transactions contemplated hereby, as of the date hereof
Parent is not engaged, directly or indirectly, in any discussions or
negotiations with any other party with respect to any Acquisition Proposal.
3.25 ANTI-TAKEOVER LAWS INAPPLICABLE. No "fair price," "business
combination," "moratorium," "control share acquisition" or other form of
anti-takeover statute or regulations, including, without limitation, Section
203 of the Delaware Law or Chapter 110C or 110E of the Massachusetts General
Laws, is or will be applicable to the execution, delivery or performance of
this Agreement by the Parent or Merger Sub or the consummation of the Merger
and the other transactions contemplated hereby.
3.26 REORGANIZATION. To the knowledge of the Parent, neither it nor
any of its affiliates has taken any action, failed to take any action or
agreed to take any action or is aware of any circumstances that would prevent
the Merger from qualifying as a reorganization within the meaning of Section
368(a) of the Code.
3.27 ABSENCE OF UNDISCLOSED LIABILITIES. There are no liabilities or
obligations (whether absolute or contingent, matured or unmatured) of the
Parent or any of its subsidiaries, including but not limited to liabilities
for Taxes, of a nature required by GAAP to be reflected, or reserved against,
in the Parent Balance Sheet and that are not so reflected, or reserved
against. Except as described in the Parent Schedules or reflected or reserved
against in the Financial Statements, since December 31, 2000, neither the
Parent nor any of its subsidiaries has incurred any material liabilities or
obligations (whether absolute or contingent, matured or unmatured), other
than liabilities or obligations incurred in the ordinary course of business
consistent with past practice which do not have, and could not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect
on the Parent.
3.28 INSURANCE. Each of the Parent and its subsidiaries is insured
with financially responsible insurers in such amounts and against such risks
and losses as are customary for companies conducting business as conducted by
the Parent and its subsidiaries. Since January 1, 2001, neither the Parent
nor any of its subsidiaries has received notice of cancellation or
termination with respect to any material insurance policy of the Parent or
its subsidiaries which has not been cured.
3.29 MERGER SUB. Merger Sub was formed solely for the purpose of
engaging in the transactions contemplated by this Agreement and has engaged
in no other business activities and has conducted its operations only as
contemplated hereby. Merger Sub has no subsidiaries or assets, liabilities or
obligations of any nature other than incident to its formation and incident
to this Agreement. There are no shares of capital stock of Merger Sub
reserved for issuance and Merger Sub does not have any commitment to
authorize, issue or sell any such shares, except pursuant to this Agreement.
ARTICLE IV
CONDUCT PRIOR TO THE EFFECTIVE TIME
4.1 CONDUCT OF BUSINESS OF THE 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 and the Effective Time, the Company
(which for the purposes of this Section 4.1 shall include the Company and
each of its subsidiaries) agrees, except as otherwise expressly contemplated
by this Agreement, or as described in Section 4.1 of the Company Schedules,
and, except to the extent that Parent shall otherwise consent in writing, to
carry on its business in the usual, regular and ordinary course in
substantially the same manner as heretofore conducted and in material
compliance with all applicable laws and regulations, to pay its debts and
taxes when due subject to good faith disputes over such debts or taxes, to
pay or perform other material obligations when due, and to use all reasonable
efforts consistent with past practices and policies to preserve intact the
Company's present business organizations, keep available the services of its
present officers and employees and preserve its relationships with customers,
suppliers, distributors, licensors, licensees, and others having business
dealings with the Company, to the end that the Company's goodwill and ongoing
businesses be unimpaired at the Effective Time. The Company shall promptly
notify Parent of any event or occurrence not in the ordinary course of
business of the Company, and will not enter into or amend any agreement or
take any action which reasonably would be expected to have a Material Adverse
Effect on the Company. Except as expressly contemplated by this Agreement or
disclosed in the Company Schedules, the Company shall not prior to the
Effective Time or earlier termination of this Agreement pursuant to its
terms, without the prior written consent of Parent:
(a) Accelerate, amend or change the period of exercisability of
options or restricted stock, or reprice options granted under the employee
stock plans of the Company or authorize cash payments in exchange for any
options granted under any of such plans;
(b) Grant any severance or termination pay (i) to any executive
officer or (ii) to any other employee except payments made in connection with
the termination of employees who are not executive officers in amounts
consistent with the Company's policies and past practices or pursuant to
written agreements outstanding, or policies existing, on the date hereof and
as previously disclosed in writing to Parent or pursuant to written
agreements consistent with the Company's prior agreements under similar
circumstances;
(c) Transfer or license to any person or entity or otherwise extend,
amend or modify any rights to the Company's Intellectual Property Rights or
enter into grants to future patent rights, other than licenses in connection
with the sale of goods or services entered into in the ordinary course of
business consistent with past practices;
(d) Commence any litigation other than (i) for the routine
collection of bills, (ii) for software piracy, or (iii) in such cases where
the Company in good faith determines that failure to commence suit would
result in the material impairment of a valuable aspect of the Company's
business, provided that the Company consults with Parent prior to the filing
of such a suit;
(e) Declare or pay any dividends on or make any other distributions
(whether in cash, stock or property) in respect of any of its capital stock,
or split, combine or reclassify any of its capital stock or issue or
authorize the issuance of any other securities in respect of, in lieu of or
in substitution for shares of capital stock of the Company;
(f) Repurchase or otherwise acquire, directly or indirectly, any
shares of its capital stock except from former employees, directors and
consultants in accordance with agreements existing as of the date hereof
requiring the repurchase of shares in connection with any termination of
service to the Company;
(g) Issue, deliver or sell or authorize or propose the issuance,
delivery or sale of, any shares of its capital stock of any class or
securities convertible into, or subscriptions, rights, warrants or options to
acquire, or enter into other agreements or commitments of any character
obligating it to issue any such shares or other convertible securities, other
than (i) the issuance of shares of Company Common Stock pursuant to the
exercise of Company stock options or warrants therefor outstanding as of the
date of this Agreement, (ii) options to purchase shares of Company Common
Stock granted to new employees in the ordinary course of business, consistent
with past practice or granted to the Company's non-employee directors
pursuant to automatic grants under the Company's 1999 Director Stock Option
Plan, (iii) shares of Company Common Stock issuable upon the exercise of the
options referred to in clause (ii), and (iv) shares of Company Common Stock
issuable to participants in the Company ESPP consistent with the terms of
that plan;
(h) Cause, permit or propose any amendments to the Company's
Certificate of Incorporation or By-laws;
(i) Except as set forth on the Company Schedules, acquire or agree
to acquire by merging or consolidating with, or by purchasing any equity
interest in or a material portion of the assets of, or by any other manner,
any business or any corporation, partnership interest, association or other
business organization or division thereof, or otherwise acquire or agree to
acquire any assets which are material, individually or in the aggregate, to
the business of the Company, or enter into any joint ventures, strategic
partnerships or alliances or purchase any distributors;
(j) Sell, lease, license, encumber or otherwise dispose of any of
the Company's properties or assets which are material, individually or in the
aggregate, to the business of the Company, except in the ordinary course of
business consistent with past practice;
(k) Incur any indebtedness for borrowed money (other than ordinary
course trade payables or pursuant to existing credit facilities in the
ordinary course of business) or
guarantee any such indebtedness or issue or sell any debt securities or
warrants or rights to acquire debt securities of the Company or guarantee any
debt securities of others;
(l) Adopt or amend (except to the extent required to conform to
applicable law) any employee benefit or stock purchase or option plan, or
enter into any employment contract, pay any special bonus or special
remuneration to any director or employee, or increase the salaries or wage
rates of its employees other than in the ordinary course of business,
consistent with past practice;
(m) Revalue any of the Company's assets, including without
limitation writing down the value of inventory or writing off notes or
accounts receivable other than in the ordinary course of business consistent
with past practice;
(n) Pay, discharge or satisfy in an amount in excess of $100,000 (in
any one case) or $250,000 (in the aggregate), any claim, liability or
obligation (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction in the ordinary
course of business of liabilities of the type reflected or reserved against
in the Company Financials (or the notes thereto);
(o) Make or change any material election in respect of Taxes, adopt
or change any accounting method in respect of Taxes, file any material Return
or any amendment to a material Return, enter into any closing agreement,
settle any claim or assessment in respect of Taxes (except settlements
effected solely through payment of immaterial sums of money), or consent to
any extension or waiver of the limitation period applicable to any claim or
assessment in respect of Taxes;
(p) Take any action with the knowledge that such action would, or is
reasonably likely to, prevent the Merger from qualifying as a reorganization
within the meaning of Section 368(a) of the Code; or
(q) Take, or agree in writing or otherwise to take, any of the
actions described in Sections 4.l(a) through (p) above, or any action which
would cause or would be reasonably likely to cause any of the conditions to
the Merger set forth in Sections 6.1 or 6.3 not to be satisfied.
4.2 CONDUCT OF BUSINESS 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 and the Effective Time, Parent (which for the
purposes of this Section 4.2 shall include Parent and each of its
subsidiaries) agrees, except as otherwise expressly contemplated by this
Agreement, or as described in Section 4.2 of the Parent Schedules, and except
to the extent that the Company shall otherwise consent in writing, to carry
on its business in the usual, regular and ordinary course in substantially
the same manner as heretofore conducted and in material compliance with all
applicable laws and regulations, to pay its debts and taxes when due subject
to good faith disputes over such debts or taxes, to pay or perform other
material obligations when due, and to use all reasonable efforts consistent
with past practices and policies to preserve intact Parent's present business
organizations, keep available the services of its present officers and
employees and preserve its relationships with customers, suppliers,
distributors, licensors, licensees, and
others having business dealings with Parent, to the end that Parent's
goodwill and ongoing businesses be unimpaired at the Effective Time. Parent
shall promptly notify the Company of any event or occurrence not in the
ordinary course of business of Parent, and will not enter into or amend any
agreement or take any action which reasonably would be expected to have a
Material Adverse Effect on Parent. Except as expressly contemplated by this
Agreement or disclosed in the Parent Schedules, Parent shall not prior to the
Effective Time or earlier termination of this Agreement pursuant to its
terms, without the prior written consent of the Company:
(a) Accelerate, amend or change the period of exercisability of
options or restricted stock or reprice options granted under the employee
stock plans of Parent or authorize cash payments in exchange for any options
granted under any of such plans;
(b) Grant any severance or termination pay (i) to any executive
officer or (ii) to any other employee except payments made in connection with
the termination of employees who are not executive officers in amounts
consistent with Parent's policies and past practices or pursuant to written
agreements outstanding, or policies existing, on the date hereof and as
previously disclosed in writing to the Company or pursuant to written
agreements consistent with Parent's prior agreements under similar
circumstances;
(c) Transfer or license to any person or entity or otherwise extend,
amend or modify any rights to Parent's Intellectual Property Rights or enter
into grants to future patent rights, other than licenses in connection with
the sale of goods or services entered into in the ordinary course of business
consistent with past practices;
(d) Commence any litigation other than (i) for the routine
collection of bills, (ii) for software piracy, or (iii) in such cases where
Parent in good faith determines that failure to commence suit would result in
the material impairment of a valuable aspect of Parent's business, provided
that Parent consults with the Company prior to the filing of such a suit;
(e) Declare or pay any dividends on or make any other distributions
(whether in cash, stock or property) in respect of any of its capital stock,
or split, combine or reclassify any of its capital stock or issue or
authorize the issuance of any other securities in respect of, in lieu of or
in substitution for shares of capital stock of Parent;
(f) Repurchase or otherwise acquire, directly or indirectly, any
shares of its capital stock except from former employees, directors and
consultants in accordance with agreements existing as of the date hereof
requiring the repurchase of shares in connection with any termination of
service to Parent;
(g) Issue, deliver or sell or authorize or propose the issuance,
delivery or sale of any shares of its capital stock of any class or
securities convertible into, or subscriptions, rights, warrants or options to
acquire, or enter into other agreements or commitments of any character
obligating it to issue any such shares or other convertible securities, other
than (i) the issuance of shares of Parent Common Stock pursuant to the
exercise of Parent stock options or warrants therefor outstanding as of the
date of this Agreement, (ii) options to purchase shares of Parent Common
Stock granted to new employees in the ordinary course of business, consistent
with past practice or granted to non-employee directors of Parent pursuant to
automatic grants pursuant to Parent's stock option plans, (iii) shares of
Parent Common Stock issuable upon the exercise of the options referred to in
clause (ii), and (iv) shares of Parent Common Stock issuable to participants
in the Parent ESPP consistent with the terms of that plan;
(h) Cause, permit or propose any amendments to Parent's Certificate
of Incorporation or By-laws;
(i) Except as set forth on the Parent Schedules, acquire or agree to
acquire by merging or consolidating with, or by purchasing any equity
interest in or a material portion of the assets of, or by any other manner,
any business or any corporation, partnership interest, association or other
business organization or division thereof, or otherwise acquire or agree to
acquire any assets which are material, individually or in the aggregate, to
the business of Parent, or enter into any joint ventures, strategic
partnerships or alliances or purchase any distributors;
(j) Sell, lease, license, encumber or otherwise dispose of any of
Parent's properties or assets which are material, individually or in the
aggregate, to the business of Parent, except in the ordinary course of
business and except for security interests granted pursuant to the SVB
Facility (as defined below);
(k) Incur any indebtedness for borrowed money (other than ordinary
course trade payables, indebtedness pursuant to existing credit facilities in
the ordinary course of business, or indebtedness incurred pursuant to
additional credit facilities with Silicon Valley Bank or another similar
commercial lender in an aggregate principal amount not exceeding $5,000,000
(the "SVB Facility") (and Parent agrees that it will provide the Company with
reasonable prior notice of its intention of enter into the SVB Facility and
will consult with the Company regarding the terms and conditions of the SVB
Facility)) or guarantee any such indebtedness or issue or sell any debt
securities or warrants or rights to acquire debt securities of Parent or
guarantee any debt securities of others;
(l) Adopt or (except to the extent necessary to comply with
applicable law) amend any employee benefit or stock purchase or option plan,
or enter into any employment contract, pay any special bonus or special
remuneration to any director or employee, or increase the salaries or wage
rates of its employees other than in the ordinary course of business,
consistent with past practice;
(m) Revalue any of Parent's assets, including without limitation
writing down the value of inventory or writing off notes or accounts
receivable other than in the ordinary course of business;
(n) Pay, discharge or satisfy in an amount in excess of $100,000 (in
any one case) or $250,000 (in the aggregate), any claim, liability or
obligation (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction in the ordinary
course of business of liabilities of the type reflected or reserved against
in the Parent Financials (or the notes thereto);
(o) Make or change any material election in respect of Taxes, adopt
or change any accounting method in respect of Taxes, file any material Return
or any amendment to a
material Return, enter into any closing agreement, settle any claim or
assessment in respect of Taxes (except settlements effected solely through
payment of immaterial sums of money), or consent to any extension or waiver
of the limitation period applicable to any claim or assessment in respect of
Taxes;
(p) Take any action with the knowledge that such action would, or is
reasonably likely to, prevent the Merger from qualifying as a reorganization
within the meaning of Section 368(a) of the Code; or
(q) Take, or agree in writing or otherwise to take, any of the
actions described in Sections 4.2(a) through (p) above, or any action which
would cause or would be reasonably likely to cause any of the conditions to
the Merger set forth in Sections 6.1 or 6.2 not to be satisfied.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 PROXY STATEMENT/PROSPECTUS; REGISTRATION STATEMENT.
(a) As promptly as practicable after the execution of this
Agreement, Parent and the Company shall prepare and file with the SEC the
Proxy Statement and Parent shall prepare and file with the SEC the
Registration Statement in which the Proxy Statement will be included as a
prospectus. Parent agrees to provide the Company with an opportunity to
review and comment on the Registration Statement before filing. Each of
Parent and Company shall use its reasonable efforts to have the Registration
Statement declared effective as soon thereafter as practicable and to take
any action required to be taken under any applicable federal or state
securities law in connection with the issuance of Parent Common Stock in the
Merger. Each of Parent and the Company shall furnish all information
concerning it and the holders of its capital stock as the other may
reasonably request in connection with such actions. Each party agrees to
provide the other parties promptly with copies of all correspondence from and
all responsive correspondence to the SEC regarding the Proxy Statement and
the Registration Statement. Each party agrees to notify the other parties
promptly of all stop orders or threatened stop orders of which it becomes
aware with respect to the Registration Statement. The Proxy Statement shall
include the fairness opinions of Xxxxxxxxx Xxxxxxxx, Inc. and XX Xxxxx
Securities Corporation referred to in Sections 2.23 and 3.23, respectively.
The Proxy Statement shall also include the recommendations of (i) the Board
of Directors of the Company in favor of the Merger, which shall not be
withdrawn, modified or withheld, except as permitted by Section 5.4(d) below
and (ii) the Board of Directors of Parent in favor of the Merger, which shall
not be withdrawn, modified or withheld except as permitted by Section 5.4(d)
below.
(b) The Company and Parent each hereby (i) consents to the use of
its name and, on behalf of its subsidiaries and affiliates, the names of such
subsidiaries and affiliates, and to the inclusion of financial statements and
business information relating to such party and its subsidiaries and
affiliates (in each case, to the extent required by applicable securities
laws) in the Registration Statement; (ii) agrees to use its reasonable
efforts to obtain the written consent of any Person retained by it which may
be required to be named (as an expert or otherwise) in such Registration
Statement; and (iii) agrees to cooperate, and to use its reasonable efforts
to
cause its subsidiaries and affiliates to cooperate, with any legal counsel,
investment banker, accountant or other agent or representative retained by
any of the parties specified in clause (i) in connection with the preparation
of any and all information required, as determined after consultation with
each party's counsel, to be disclosed by applicable securities laws in such
Registration Statement.
5.2 MEETINGS OF STOCKHOLDERS. Promptly after the date hereof, the
Company shall take all action necessary in accordance with Delaware Law and
its Certificate of Incorporation and By-laws to convene the Company
Stockholders' Meeting to be held as promptly as practicable for the purpose
of voting upon this Agreement and the Merger. The Company shall consult with
Parent and use all reasonable efforts to hold the Company Stockholders'
Meeting on the same day as the Parent Stockholders' Meeting. Promptly after
the date hereof, Parent shall take all action necessary in accordance with
Delaware Law and its Certificate of Incorporation and By-laws to convene the
Parent Stockholders' Meeting to be held as promptly as practicable for the
purpose of voting upon the issuance of Parent Common Stock pursuant to the
Merger. Parent shall consult with the Company and shall use all reasonable
efforts to hold the Parent Stockholders' Meeting on the same day as the
Company Stockholders' Meeting.
5.3 ACCESS TO INFORMATION, CONFIDENTIALITY.
(a) During the period prior to the Effective Time, each party shall
afford the other party and its accountants, counsel and other representatives
reasonable access, upon reasonable prior notice and during normal business
hours, to all information concerning the business, including the status of
product development efforts, properties, assets and liabilities and personnel
of such party as the other party may reasonably request. No information or
knowledge obtained in any investigation pursuant to this Section 5.3 shall
affect or be deemed to modify any representation or warranty contained herein
or the conditions to the obligations of the parties to consummate the Merger.
(b) The parties acknowledge that Parent and the Company have
previously executed a Mutual Agreement of Confidentiality dated as of April
5, 2001 (the "Confidentiality Agreement"), which Confidentiality Agreement
shall continue in full force and effect in accordance with its terms
notwithstanding any termination or abandonment of this Agreement or the
Merger.
5.4 NO SOLICITATION.
(a) From and after the date of this Agreement until the Effective
Time, the Company and its subsidiaries will not, and will cause their
respective directors, officers, employees, representatives, investment
bankers, agents and affiliates not to, directly or indirectly, (i) solicit or
encourage submission of any inquiries, proposals or offers by any person,
entity or group (other than Parent and its affiliates, agents and
representatives), or (ii) participate in any discussions or negotiations
with, or disclose any information concerning the Company or any of its
subsidiaries to, or afford any access to the properties, books or records of
the Company or any of its subsidiaries to, or otherwise assist, facilitate or
encourage, or enter into any agreement or understanding with, any person,
entity or group (other than Parent and its affiliates, agents and
representatives), in connection with any Acquisition Proposal with respect to
the
Company. From and after the date of this Agreement until the Effective Time,
Parent and its subsidiaries will not, and will cause their respective
directors, officers, employees, representatives, investment bankers, agents
and affiliates not to, directly or indirectly, (i) solicit or encourage
submission of any inquiries, proposals or offers by any person, entity or
group (other than the Company and its affiliates, agents and
representatives), or (ii) participate in any discussions or negotiations
with, or disclose any information concerning Parent or any of its
subsidiaries to, or afford any access to the properties, books or records of
Parent or any of its subsidiaries to, or otherwise assist, facilitate or
encourage, or enter into any agreement or understanding with, any person,
entity or group (other than the Company and its affiliates, agents and
representatives), in connection with any Acquisition Proposal with respect to
Parent. For the purposes of this Agreement, an "Acquisition Proposal" shall
mean any proposal relating to the possible acquisition of the Company or
Parent, as the case may be, whether by way of merger, consolidation, business
combination, purchase of or tender offer for at least 50% of the capital
stock of the Company or Parent, as the case may be, purchase, sale, exchange,
transfer or other disposition of at least 50% of the assets of the Company or
Parent, as the case may be, or otherwise. In addition, subject to the other
provisions of this Section 5.4, from and after the date of this Agreement
until the Effective Time, the Company and its subsidiaries will not, and will
cause their respective directors, officers, employees, representatives,
investment bankers, agents and affiliates not to, directly or indirectly,
make or authorize any statement, recommendation or solicitation in support of
any Acquisition Proposal with respect to the Company made by any person,
entity or group (other than Parent and/or Merger Sub). The Company will
immediately cease any and all existing activities, discussions or
negotiations with any parties conducted heretofore with respect to any of the
foregoing. Subject to the other provisions of this Section 5.4, from and
after the date of this Agreement until the Effective Time, Parent and its
subsidiaries will not, and will cause their respective directors, officers,
employees, representatives, investment bankers, agents and affiliates not to,
directly or indirectly, make or authorize any statement, recommendation or
solicitation in support of any Acquisition Proposal with respect to Parent
made by any person, entity or group (other than the Company). Parent will
immediately cease any and all existing activities, discussions or
negotiations with any parties conducted heretofore with respect to any of the
foregoing.
(b) Notwithstanding the provisions of paragraph (a) above, if, prior
to the approval of this Agreement and the Merger by the stockholders of the
Company at the Company Stockholders' Meeting, the Board of Directors of the
Company (individually or collectively) shall receive in writing a bona fide
Acquisition Proposal or indication of interest in making an Acquisition
Proposal, and provided that the Company shall not directly or indirectly have
solicited or encouraged the submission of such Acquisition Proposal or
indication of interest in violation of paragraph (a) above, then in such
event the Company may, to the extent the Board of Directors of the Company
determines, in good faith, after consultation with outside legal counsel,
that to do so would be consistent with the Board's fiduciary duties under
applicable law and would be reasonably likely to lead to a Superior Proposal,
and subject to the requirements of paragraph (c) below, participate in
discussions or negotiations with or, furnish information to, the person,
entity or group from which it received such Acquisition Proposal or
indication of interest. Notwithstanding the provisions of paragraph (a)
above, if, prior to the approval of this Agreement and the Merger by the
stockholders of Parent at the Parent Stockholders' Meeting, the Board of
Directors of Parent (individually or collectively) shall receive in writing a
bona fide Acquisition Proposal or indication of interest in making an
Acquisition Proposal, and provided
that Parent shall not directly or indirectly have solicited or encouraged the
submission of such Acquisition Proposal or indication of interest in
violation of paragraph (a) above, then in such event Parent may, to the
extent the Board of Directors of Parent determines, in good faith, after
consultation with outside legal counsel, that to do so would be consistent
with the Board's fiduciary duties under applicable law and would be
reasonably likely to lead to a Superior Proposal, and subject to the
requirements of paragraph (c) below, participate in discussions or
negotiations with, or furnish information to the person, entity or group from
which it received such Acquisition Proposal or indication of interest. For
purposes of this Agreement, a "Superior Proposal" means an unsolicited bona
fide Acquisition Proposal which the Board of Directors of the Company or
Parent, as the case may be, determines in good faith, after consultation with
its independent financial advisors, would result, if consummated, in a
transaction more favorable to the stockholders of the Company or Parent, as
the case may be, from a financial point of view than the Merger and for which
financing, to the extent required, is then committed or which, in the good
faith judgment of the Board of Directors (based upon the advice of
independent financial advisors), is reasonably capable of being financed by
such person, entity or group and which is likely to be consummated.
Notwithstanding the foregoing, if the Board of Directors of the Parent or the
Company, as the case may be, shall receive a bona fide, unsolicited
Acquisition Proposal as to which financing is not committed and if the Board
of Directors shall determine in good faith that such Acquisition Proposal
would, but for the question of the financial capability of the proposed
acquiror, constitute a Superior Proposal, then in such event the Board of
Directors of the Parent or the Company, as the case may be, and its financial
advisor may, for the purpose of determining whether such proposal constitutes
a Superior Proposal, conduct such limited inquiries of the proponent of such
Acquisition Proposal as are necessary for the sole purpose of ascertaining
whether the proposed transaction is reasonably capable of being consummated
by such proponent so as to constitute a Superior Proposal.
(c) The Company may furnish information with respect to a Superior
Proposal or conduct the limited inquiries contemplated by the last sentence
of paragraph (b) above only if the Company (i) first notifies Parent of the
information proposed to be disclosed, (ii) first complies with the provisions
of paragraph (e) below and (iii) provides such information pursuant to a
confidentiality agreement at least as restrictive as the Confidentiality
Agreement. Parent may furnish information with respect to a Superior Proposal
or conduct the limited inquiries contemplated by the last sentence of
paragraph (b) above only if Parent (i) first notifies the Company of the
information proposed to be disclosed, (ii) first complies with the provisions
of paragraph (e) below and (iii) provides such information pursuant to a
confidentiality agreement at least as restrictive as the Confidentiality
Agreement.
(d) In the event the Company receives a Superior Proposal, nothing
contained in this Agreement shall prevent the Board of Directors of the
Company from approving such Superior Proposal or recommending such Superior
Proposal to the Company's stockholders, if the Board determines in good
faith, after consultation with outside legal counsel, that such action is
consistent with by its fiduciary duties under applicable law, and in such
case, the Board may amend or withdraw its recommendation of the Merger;
PROVIDED, however, that the Company's Board of Directors may not take any of
the foregoing actions until after the fifth business day following Parent's
receipt of written notice from the Company advising Parent that the Board of
Directors of the Company is prepared to recommend a Superior Proposal to the
Company's stockholders, specifying the terms and conditions of such Superior
Proposal and identifying the
person making such Superior Proposal. During this five business day period,
Parent may make, and in such event the Company shall consider, a
counterproposal to such Superior Proposal, and, subject to the fiduciary
duties of the Company's Board of Directors, the Company shall itself
negotiate, and shall cause its financial and legal advisors to negotiate on
its behalf, with Parent with respect to the terms and conditions of such
counterproposal for a reasonable period of time given the terms and
conditions of such counterproposal and such Superior Proposal. Subject to the
right of termination set forth in Section 7.1(f), except to the extent
expressly set forth in this Section 5.4, nothing shall relieve the Company
from complying with all other terms of this Agreement. In the event Parent
receives a Superior Proposal, nothing contained in this Agreement shall
prevent the Board of Directors of Parent from approving such Superior
Proposal or recommending such Superior Proposal to Parent's stockholders, if
the Board determines in good faith, after consultation with outside legal
counsel, that such action is required by its fiduciary duties under
applicable law, and in such case, the Board may amend or withdraw its
recommendation of the Merger; PROVIDED, however, that Parent's Board of
Directors may not take any of the foregoing actions until after the fifth
business day following the Company's receipt of written notice from Parent
advising the Company that the Board of Directors of Parent is prepared to
recommend a Superior Proposal to Parent's stockholders, specifying the terms
and conditions of such Superior Proposal and identifying the person making
such Superior Proposal. During this five business day period, the Company may
make, and in such event Parent shall consider, a counterproposal to such
Superior Proposal, and, subject to the fiduciary duties of Parent's Board of
Directors, Parent shall itself negotiate, and shall cause its financial and
legal advisors to negotiate on its behalf, with the Company with respect to
the terms and conditions of such counterproposal for a reasonable period of
time given the terms and conditions of such counterproposal and such Superior
Proposal. Subject to the right of termination set forth in Section 7.1(g),
except to the extent expressly set forth in this Section 5.4, nothing shall
relieve Parent from complying with all other terms of this Agreement.
(e) The Company will (i) notify Parent immediately if any inquiry or
proposal is made or any information or access is requested in connection with
an Acquisition Proposal or potential Acquisition Proposal and (ii)
immediately communicate to Parent the terms and conditions of any such
Acquisition Proposal or potential Acquisition Proposal or inquiry and the
identity of the offeror or potential offeror. Parent will (i) notify the
Company immediately if any inquiry or proposal is made or any information or
access is requested in connection with an Acquisition Proposal or potential
Acquisition Proposal and (ii) immediately communicate to the Company the
terms and conditions of any such Acquisition Proposal or potential
Acquisition Proposal or inquiry and the identity of the offeror or potential
offeror.
(f) Nothing contained in this Section 5.4 shall prevent the Company,
Parent or their respective Boards of Directors from complying with the
provisions of Rule 14e-2(a) and 14d-9 promulgated under the Exchange Act.
(g) Nothing contained in this Section 5.4 shall prohibit the Company
or Parent, as the case may be, from advising any Person making an Acquisition
Proposal that it is bound by the terms of this Agreement or from negotiating
the confidentiality agreement described in Section 5.4(c) above.
5.5 EXPENSES.
(a) Except as set forth in this Section 5.5, 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 the Company shall
share equally all fees and expenses, other than attorneys', accountants' and
financial advisors' fees, incurred in connection with the printing and filing
of the Registration Statement (including financial statements and exhibits)
and any amendments or supplements thereto.
(b) If this Agreement is terminated by Parent pursuant to Section
7.1(b)(ii) or by any party pursuant to Section 7.1(f), then the Company shall
pay Parent for all of its reasonable out-of-pocket expenses, including but
not limited to attorney's fees, accounting fees, financial printer expenses,
filing fees and fees and expenses of financial advisors incurred since March
1, 2001 in connection with this Agreement and the Merger ("Out of Pocket
Expenses"), not to exceed $1,750,000, upon written request therefor. If this
Agreement is terminated by the Company pursuant to Section 7.1(c)(ii) or
pursuant to Section 7.1(g), then Parent shall pay the Company's Out-of-Pocket
Expenses incurred since March 1, 2001, not to exceed $1,750,000, upon written
request therefor.
(c) If this Agreement is terminated by Parent pursuant to Section
7.1(b)(ii) or by any party pursuant to Section 7.1(f), then the Company shall
immediately upon such termination pay to Parent a termination fee of
$3,000,000 by wire transfer of immediately available funds to an account
designated by Parent. If this Agreement is terminated by the Company pursuant
to Section 7.1(c)(ii) or by any party pursuant to Section 7.1(g), then Parent
shall immediately upon such termination pay to the Company a termination fee
of $3,000,000 by wire transfer of immediately available funds to an account
designated by the Company.
5.6 PUBLIC DISCLOSURE. Parent and the Company shall consult with
each other before issuing any press release or otherwise making any public
statement with respect to the Merger or this Agreement and shall not issue
any such press release or make any such public statement prior to such
consultation, except as may be required by law or regulation or any listing
agreement with a national securities exchange or the Nasdaq National Market,
and in any event in accordance with the terms of the Confidentiality
Agreement.
5.7 AUDITORS' LETTERS. The Company shall use its reasonable efforts
to cause to be delivered to Parent letters of Xxxxxx Xxxxxxxx LLP,
independent auditors to the Company, dated (a) a date within two business
days before the date on which the Registration Statement becomes effective,
and (b) two business days before the Closing, and addressed to Parent, in
form and substance reasonably satisfactory to Parent and customary in scope
and substance for letters delivered by independent public accountants in
connection with registration statements similar to the Registration
Statement. The Parent shall use its reasonable efforts to be delivered to the
Company a letter of PricewaterhouseCoopers LLP, independent auditors to the
Parent, dated (a) a date within two business days before the date on which
the Registration Statement becomes effective, and (b) two business days
before the Closing, and addressed to the Company, in form and substance
reasonably satisfactory to the Company and customary in scope and substance
for letters delivered by independent public accountants in connection with
registration statements similar to the Registration Statement.
5.8 FIRPTA. The Company shall deliver to the Internal Revenue
Service a notice that the Company Common Stock is not a "U.S. Real Property
Interest" as defined in and in accordance with the requirements of Treasury
Regulation Section 1.897-2(h)(2).
5.9 LEGAL REQUIREMENTS. Each of Parent and the Company will take all
reasonable actions necessary or desirable to comply promptly with all legal
requirements which may be imposed on them with respect to the consummation of
the transactions contemplated by this Agreement (including furnishing all
information required in connection with approvals of or filings with any
Governmental Entity, and prompt resolution of any litigation prompted hereby)
and will promptly cooperate with and furnish information to any party hereto
necessary in connection with any such requirements imposed upon any of them
or their respective subsidiaries in connection with the consummation of the
transactions contemplated by this Agreement, and will take all reasonable
actions necessary to obtain (and will cooperate with the other parties hereto
in obtaining) any consent, approval, order or authorization of, or any
registration, declaration or filing with, any Governmental Entity or other
public or private third party required to be obtained or made in connection
with the Merger or taking of any action contemplated by this Agreement.
5.10 BLUE SKY LAWS. Parent shall take such steps as may be necessary
to comply with the securities and blue sky laws of all jurisdictions which
are applicable to the issuance of Parent Common Stock pursuant hereto. The
Company shall use its best efforts to assist Parent as may be necessary to
comply with the securities and blue sky laws of all jurisdictions which are
applicable in connection with the issuance of Parent Common Stock pursuant
hereto.
5.11 BEST EFFORTS AND FURTHER ASSURANCES. Each of the parties to
this Agreement shall use its reasonable efforts to effectuate the
transactions contemplated hereby and to fulfill and cause to be fulfilled the
conditions to closing under this Agreement (including resolution of any
litigation prompted hereby). Each party hereto, at the reasonable request of
another party hereto, shall execute and deliver such other instruments and do
and perform such other acts and things as may be necessary or desirable for
effecting completely the consummation of the transactions contemplated hereby.
5.12 STOCK OPTIONS.
(a) Each outstanding option to purchase shares of Company Common
Stock (each a "Company Stock Option") under the Company Stock Option Plans,
whether vested or unvested, and each Company Stock Option Plan under which
any such Company Stock Option was granted, will be assumed by Parent at the
Effective Time, and the Company and the Parent shall each take such actions
as are necessary or appropriate to effect such assumption. Each Company Stock
Option so assumed by Parent under this Agreement shall continue to have, and
be subject to, the same terms and conditions set forth in the applicable
Company Stock Option Plan immediately prior to the Effective Time, except
that (i) such Company Stock Option shall be exercisable (when vested) for
that number of whole shares of Parent Common Stock equal to the product of
the number of shares of Company Common Stock that were issuable upon exercise
of such Company Stock Option immediately prior to the Effective Time
multiplied by the Exchange Ratio, rounded down to the nearest whole number of
shares of Parent Common Stock, and (ii) the per share exercise price for the
shares of Parent Common Stock issuable upon
exercise of such assumed Company Stock Option shall be equal to the quotient
determined by dividing the exercise price per share of Company Common Stock
at which such Company Stock Option was exercisable immediately prior to the
Effective Time by the Exchange Ratio, rounded up to the nearest whole cent.
Subject to the provisions of the Employment Contracts (as defined below),
nothing in this Section 5.12 shall affect the complete acceleration of
vesting, in accordance with the terms thereof as in effect on the date
hereof, of those Company Stock Options identified in the Company Schedules as
subject to such complete acceleration as a result of the transactions
contemplated by this Agreement.
(b) After the Effective Time, Parent or the Surviving Corporation
shall issue to each holder of an outstanding Company Stock Option a document
evidencing the foregoing assumption of such Company Stock Option by Parent.
(c) It is the intention of the parties that the Company Stock
Options assumed by Parent qualify following the Effective Time as incentive
stock options as defined in Section 422 of the Code to the extent the Company
Stock Options qualified as incentive stock options immediately prior to the
Effective Time.
(d) The Board of Directors or Compensation Committee of the Company
and Parent shall each grant all approvals and take all other actions required
pursuant to Rules 16b-3(d) and 16b-3(e) under the Exchange Act to cause the
disposition in the Merger of the Company Common Stock and Company Stock
Options, the acquisition in the Merger of Parent Common Stock and the
assumption in the Merger of options to purchase Company Common Stock to be
exempt from the provisions of Section 16(b) of the Exchange Act.
5.13 FORM S-8. Parent shall cause to be taken all corporate action
necessary to reserve for issuance a sufficient number of shares of Parent
Common Stock for delivery upon exercise of assumed Company Stock Options and
with respect to the Company ESPP. Parent agrees to file a registration
statement on Form S-8 for the shares of Parent Common Stock issuable with
respect to assumed Company Stock Options and with respect to the Company ESPP
no later than ten business days after the Closing Date and to use its
reasonable efforts to cause such registration statement to become effective
and to remain effective so long as any Company Stock Options remain
outstanding.
5.14 CERTAIN BENEFIT PLANS. Parent shall take such reasonable
actions as are necessary to allow eligible employees of the Company to
participate in the benefit program of Parent, or alternative benefit programs
substantially comparable to those applicable to employees of Parent on
similar terms, as soon as practicable after the Effective Time in accordance
with the terms of such programs. To the extent that any benefit plan of
Parent (a "Parent Plan") becomes applicable to any employee or former
employee of the Company or its subsidiaries, Parent shall grant, or cause to
be granted, to such employees or former employees for their service with the
Company and its subsidiaries (and any of their predecessors) for the purpose
of determining eligibility to participate and nonforfeitability of benefits
under such Parent Plan and for purposes of benefit accrual under vacation and
severance pay plans (but only to the extent such service was credited under
similar plans of the Company and its subsidiaries).
5.15 INDEMNIFICATION.
(a) After the Effective Time, Parent and the Surviving Corporation
shall indemnify and hold harmless each person who has at any time prior to
the Effective Time been an officer, director or employee of the Company or
other person entitled to be indemnified by the Company pursuant to its
Certificate of Incorporation and By-laws as they are currently in effect on
the date hereof to the same extent as provided in such Certificate of
Incorporation and By-laws; provided that it is understood that the foregoing
undertaking shall not grant to any such officers, directors or employees or
other person rights of indemnity against either Parent or Surviving
Corporation more extensive than those such persons may currently have against
the Company.
(b) After the Effective Time, Parent and the Surviving Corporation
shall indemnify the persons who immediately prior to the Effective Time were
directors or officers of the Company against (i) all actions, claims,
damages, costs, expenses, liabilities or judgments or amounts that are paid
in settlement with the approval of the indemnifying party of or in connection
with any claim, action, suit, proceeding or investigation based in whole or
in part on or arising in whole or in part out of the fact that such person is
or was a director or officer of the Company, in each case to the full extent
a corporation is permitted under Delaware Law to indemnify its own directors
and officers (and Parent and the Surviving Corporation, as the case may be,
will pay expenses in advance of the final disposition of any such actual
proceeding to each indemnified party to the full extent permitted by law upon
receipt of any undertaking contemplated by Section 145 of the Delaware
General Corporation Law). In connection with such indemnification, (x) any
counsel retained by the indemnified parties for any period after the
Effective Time shall be reasonably satisfactory to the Parent and Surviving
Corporation, (y) after the Effective Time, the Surviving Corporation and
Parent shall pay the reasonable fees and expenses of such counsel, promptly
after statements therefor are received and (z) the Surviving Corporation and
Parent will cooperate in the defense of any such matter; provided, that
neither the Surviving Corporation nor Parent shall be liable for any
settlement effected without its prior written consent, which consent will not
unreasonably be withheld. Neither the Surviving Corporation nor the Parent
shall be liable for the fees and expenses of more than one law firm for all
the indemnified parties, with respect to any single action unless there is,
under applicable standards of professional conduct, a conflict on any
significant issue between the positions of any two or more indemnified
parties.
(c) For a period of six years after the Effective Time, Parent shall
cause the Surviving Corporation to use reasonable efforts to maintain in
effect, if available, directors' and officers' liability insurance covering
those persons who are currently covered by the Company's directors' and
officers' liability insurance policy (a copy of which has been heretofore
delivered to Parent) on terms comparable to those applicable to the then
current directors and officers of Parent; provided, that in no event shall
Parent or the Surviving Corporation be required to expend in excess of 200%
of the annual premium currently paid by the Company for such coverage or such
coverage as is available for such 200% of the annual premium.
(d) This Section shall survive the consummation of the Merger, is
intended to benefit the Indemnified Parties, and shall be binding on all
successors and assigns of the Parent and Surviving Corporation.
5.16 TAX-FREE REORGANIZATION. Parent and the Company shall each use
all reasonable efforts to cause the Merger to be treated as a reorganization
within the meaning of Section 368 of the Code.
5.17 NASDAQ LISTING. Parent agrees to authorize for listing on the
Nasdaq National Market the shares of Parent Common Stock issuable, and those
required to be reserved for issuance, in connection with the Merger, upon
official notice of issuance.
5.18 EXECUTIVE OFFICERS OF THE PARENT; BOARD REPRESENTATION.
Promptly following the Effective Time of the Merger, the Board of Directors
of Parent shall take all necessary and appropriate action to:
(a) elect the following persons (each of whom will report to the
Chief Executive Officer) to the offices of Parent set forth below:
Chief Executive Officer Xxxxxx Xxxxxxx
President Xxxx Xxxxxx
Chief Operating Officer Xxxxxx Xxxxxxxx
Chief Financial Officer Xxxxx Xxxxxx
Chief Marketing Officer Xxxxxxx Xxxx;
Secretary and General Counsel Xxxxxxxx X. Xxxxxxxx; and
(b) cause the number of directors comprising the full Board of
Directors of Parent to be eight (8) persons, and to cause the Board of
Directors of Parent to consist of (i) Xxxxxx X. Xxxxxxx, who shall be a Class
II Director and Chairman of the Board, (ii) Xxxxxx X. Bay, who shall be a
Class I Director, (iii) Xxxxx X. Xxxxx, who shall be a Class III Director,
(iv) Xxxxxx X. Xxxxx, who shall be a Class I Director, (v) Xxxxxx Xxxxxxx,
who shall be a Class II Director, (vi) Xxxxxxx Xxxx, who shall be a Class III
Director, (vii) Xxxxxxx Xxxxxx, who shall be a Class II Director and (viii)
Xxxxxx Xxxxxxxxx, who shall be a Class I Director.
5.19 EMPLOYMENT CONTRACTS. Concurrently with the execution and
delivery of this Agreement, Parent shall execute and deliver, in the forms
contained in the Parent Schedules, employment contracts for each of Xxxxxx X.
Xxxxxxx, Xxxxxx Xxxxxxx, Xxxxxx Xxxxxxxx and Xxxxx Xxxxxx (collectively, the
"Employment Contracts"). The Employment Contract between Parent and Xx.
Xxxxxxx will, among other things, provide for the grant by Parent as of the
Effective Time of an option or options to purchase a total of 1,000,000
shares of Parent Common Stock.
5.20 VOTING AGREEMENTS. No later than May 29, 2001, the Company
shall cause each of its directors and executive officers, each of Xxxxxx
Xxxxxxxxxxx, Xxxx Xxxxxxx, Xxxxxxx Xxxx and Insight Capital Partners and each
affiliate of any of them who holds Company Common Stock to execute and
deliver to Parent an Irrevocable Proxy and Voting Agreement in the form
applicable to such Person and attached hereto as EXHIBIT 5.20A, pursuant to
which such Person agrees to vote all of such Person's shares of Company
Common Stock to approve this Agreement and the Merger and against any other
Acquisition Proposal, and grants Parent an irrevocable proxy to so vote such
Person's shares of Company Common Stock (each a "Company Stockholder
Agreement"). Concurrently with the execution and delivery of this Agreement,
Parent shall cause each director and executive officer of the Parent,
including Xxxxxx
X. Xxxxxxx, to execute and deliver to the Company an Irrevocable Proxy and
Voting Agreement in the form attached hereto as EXHIBIT 5.20B, pursuant to
which each such Person agrees to vote all of his or her shares of Parent
Common Stock to approve this Agreement and the Merger and against any other
Acquisition Proposal, and grants the Company an irrevocable proxy to so vote
his or her shares of Parent Common Stock for such purpose (each a "Parent
Stockholder Agreement").
5.21 UPDATE DISCLOSURE. From and after the date of this Agreement
until the Effective Time, each party hereto shall promptly notify the other
parties hereto in writing, of (a) any representation or warranty made by it
in connection with this Agreement becoming untrue or inaccurate in any
material respect, (b) the occurrence, or non-occurrence, of any event the
occurrence, or non-occurrence, of which would be likely to cause any
condition to the obligations of any party to effect the Merger and the other
transactions contemplated by this Merger Agreement not to be satisfied, or
(c) the failure of the Company or Parent or Merger Sub, as the case may be,
to comply with or satisfy any covenant, condition or agreement to be complied
with or satisfied by it pursuant to this Agreement which would be likely to
result in any condition to the obligations of any party to effect the Merger
and the other transactions contemplated by this Agreement not to be
satisfied; provided, however, that the delivery of any notice pursuant to
this Section 5.22 shall not cure any breach of any representation or warranty
requiring disclosure of such matter prior to the date of this Agreement or
otherwise limit or affect the rights and remedies available hereunder to the
party receiving such notice. The Company shall attach to the closing
certificate contemplated by Section 6.3(a) below an updated version of the
Company Schedules as of the Closing Date solely to reflect events occurring
between the date of this Agreement and the Closing Date, or shall notify
Parent that no changes to the Company Schedules are required. Parent shall
attach to the closing certificate contemplated by Section 6.2(a) below an
updated version of the Parent Schedules as of the Closing Date solely to
reflect events occurring between the date of this Agreement and the Closing
Date, or shall notify the Company that no changes to the Parent Schedules are
required.
5.22 UNAUDITED FINANCIAL INFORMATION. The Company and Parent will
each cause to be prepared and will furnish to the other as promptly as
practicable an unaudited consolidated balance sheet of the Company and the
Parent, as the case may be, as of the last day of each month ending after May
30, 2001 (the "Unaudited Balance Sheets") and the related unaudited
consolidated statements of income and cash flows of the Company and the
Parent, as the case may be, for the one-month periods then ended (together
with the Unaudited Balance Sheets, the "Unaudited Financial Statements"). The
Company and the Parent will ensure that their respective Unaudited Financial
Statements are complete and correct in all material respects, have been
prepared in accordance with the books and records of the Company and the
Parent, as the case may be, and present fairly the respective consolidated
financial positions of the Company and the Parent and their respective
consolidated results of operations and cash flows as of and for the
respective dates and time periods in accordance with GAAP applied on a basis
consistent with prior accounting periods, except as noted thereon and subject
to normal and recurring year-end adjustments which are not expected to be
material in amount.
5.23 TRANSITIONS PERIOD BENEFITS. For the period ending no sooner
than June 30, 2002 (the "Transition Period"), Parent shall, or shall cause
the Surviving Corporation to, either maintain the total package of employee
benefits received by employees of the Company and its
subsidiaries immediately before the Effective Time or replace all or any such
programs with a similar aggregate package of employee benefits maintained for
similarly situated employees of Parent; provided, that the aggregate level of
such similar aggregate package provided during the Transition Period shall be
substantially similar to the aggregate level of the total package provided by
the Company and its subsidiaries immediately before the Effective Time.
5.24 AMENDMENT OF COMPANY ESPP. Prior to the Effective Time, the
Company shall amend the Company ESPP to provide that all rights to purchase
shares of Company Common Stock under the Company ESPP shall be converted at
the Effective Time into rights to purchase shares of Parent Common Stock, and
to provide further that any offering period under the Company ESPP that is in
effect as of the Effective Time shall terminate on the earlier to occur of
the usual termination date thereof or the termination date of the Parent ESPP
Offering Period then in effect.
5.25 INCREASE OF PARENT STOCK OPTION POOL. Parent shall take all
necessary action to increase by 3,000,000 shares (as adjusted for stock
splits, stock dividends, combinations of shares and similar events) the total
number of shares of Parent Common Stock available at the Effective Time for
issuance pursuant to stock options granted or to be granted under Parent's
stock option plans (including, but not limited to, the stock option
contemplated by the Employment Contract for Xxxxxx Xxxxxxx provided for by
Section 5.19).
ARTICLE VI
CONDITIONS TO THE MERGER
6.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY TO EFFECT THE MERGER.
The respective obligations of each party to this Agreement to effect the
Merger shall be subject to the satisfaction at or prior to the Effective Time
of the following conditions:
(a) STOCKHOLDER APPROVAL. This Agreement and the Merger shall have
been approved and adopted by the requisite vote under applicable law of the
stockholders of each of the Company, Merger Sub and Parent.
(b) REGISTRATION STATEMENT EFFECTIVE. The SEC shall have declared
the Registration Statement effective. No stop order suspending the
effectiveness of the Registration Statement or any part thereof shall have
been issued and no proceeding for that purpose, and no similar proceeding in
respect of the Proxy Statement, shall have been initiated or threatened in
writing by the SEC; and all requests for additional information on the part
of the SEC shall have been complied with to the reasonable satisfaction of
the parties hereto. Parent shall have received all other federal or state
securities permits and other authorizations necessary to issue the shares of
Parent Common Stock issuable to stockholders of the Company pursuant to this
Agreement and upon exercise of assumed Company Stock Options and with respect
to the Company ESPP.
(c) NO INJUNCTIONS OR RESTRAINTS; ILLEGALITY. No temporary
restraining order, preliminary or permanent injunction or other order issued
by any court of competent jurisdiction
or other legal or regulatory restraint or prohibition preventing the
consummation of the Merger shall be in effect.
(d) TAX OPINIONS. Parent and the Company shall each have received
substantially identical written opinions from their counsel, Xxxxx, Xxxx &
Xxxxx LLP and Xxxxxx, Xxxx & Xxxxxxxx LLP, respectively, in form and
substance reasonably satisfactory to them, to the effect that the Merger will
constitute a reorganization within the meaning of Section 368(a) of the Code.
The parties to this Agreement agree to make reasonable representations as
requested by such counsel for the purpose of rendering such opinions.
(e) NASDAQ LISTING. The shares of Parent Common Stock issuable to
stockholders of the Company pursuant to this Agreement and such other shares
required to be reserved for issuance in connection with the Merger shall have
been authorized for listing on the Nasdaq National Market upon official
notice of issuance.
6.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF COMPANY. The obligations
of the Company to consummate and effect this Agreement and the transactions
contemplated hereby shall be subject to the satisfaction at or prior to the
Effective Time of each of the following conditions, any of which may be
waived, in writing, exclusively by the Company:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Parent and Merger Sub contained in this Agreement shall be true
and correct when made and on and as of the Effective Time, except for changes
contemplated by this Agreement and except for those representations and
warranties which address matters only as of a particular date (which shall
remain true and correct as of such date), with the same force and effect as
if made on and as of the Effective Time, and the updated Parent Schedules, if
any, delivered pursuant to Section 5.21 above shall not disclose any breach,
inaccuracy or omission in such representations and warranties, as originally
made herein, except, in all such cases, for such breaches, inaccuracies or
omissions of such representations and warranties which, considered in the
aggregate, have neither had nor reasonably would be expected to have a
Material Adverse Effect on Parent; and the Company shall have received a
certificate to such effect signed on behalf of Parent by the President and
Chief Financial Officer of Parent.
(b) AGREEMENTS AND COVENANTS. Parent and Merger Sub shall have
performed or complied in all material respects with all agreements and
covenants required by this Agreement to be performed or complied with by them
on or prior to the Effective Time, and the Company shall have received a
certificate to such effect signed by the President and Chief Financial
Officer of Parent.
(c) THIRD PARTY CONSENTS. The Company shall have been furnished with
evidence satisfactory to it that Parent has obtained the consents, approvals
and waivers set forth in Exhibit A.
(d) LEGAL OPINION. The Company shall have received a legal opinion
from Xxxxx, Xxxx & Xxxxx LLP, counsel to Parent, in substantially the form
attached hereto as Exhibit B.
(e) MATERIAL ADVERSE CHANGE. Since the date of this Agreement, there
shall not have occurred any Material Adverse Change in Parent.
6.3 ADDITIONAL CONDITIONS TO THE OBLIGATIONS OF PARENT AND MERGER
SUB. The obligations of Parent and Merger Sub to consummate and effect this
Agreement and the transactions contemplated hereby shall be subject to the
satisfaction at or prior to the Effective Time of each of the following
conditions, any of which may be waived, in writing, exclusively by Parent:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company contained in this Agreement as executed shall be
true and correct when made and on and as of the Effective Time, except for
changes contemplated by this Agreement and except for those representations
and warranties which address matters only as of a particular date (which
shall remain true and correct as of such date), with the same force and
effect as if made on and as of the Effective Time, and the updated Company
Schedules, if any, delivered pursuant to Section 5.21 above shall not
disclose any breach, inaccuracy or omission in such representations and
warranties, as originally made herein, except, in all such cases, for such
breaches, inaccuracies or omissions of such representations and warranties
which, considered in the aggregate, have neither had nor reasonably could be
expected to have a Material Adverse Effect on the Company or Parent; and
Parent and Merger Sub shall have received a certificate to such effect signed
on behalf of the Company by the President and Chief Financial Officer of the
Company.
(b) AGREEMENTS AND COVENANTS. The Company shall have performed or
complied in all material respects with all agreements and covenants required
by this Agreement to be performed or complied with by it on or prior to the
Effective Time, and the Parent and Merger Sub shall have received a
certificate to such effect signed by the President and Chief Financial
Officer of the Company.
(c) THIRD PARTY CONSENTS. Parent shall have been furnished with
evidence satisfactory to it that the Company has obtained the consents,
approvals and waivers set forth in Exhibit C.
(d) LEGAL OPINION. Parent shall have received a legal opinion from
Xxxxxx, Xxxx & Xxxxxxxx LLP, legal counsel to the Company, in substantially
the form attached hereto as Exhibit D.
(e) MATERIAL ADVERSE CHANGE. Since the date of this Agreement, there
shall not have occurred any Material Adverse Change in the Company.
(f) BELLINI EMPLOYMENT CONTRACT. The Employment Contract between
Parent and Xxxxxx Xxxxxxx shall be in full force and effect as of the
Effective Time.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
7.1 TERMINATION. This Agreement may be terminated and the Merger
abandoned at any time prior to the Effective Time:
(a) by mutual written consent of the Company and Parent;
(b) by Parent if:
(i) there has been a breach of any representation, warranty,
covenant or agreement contained in this Agreement on the part of the Company
and such breach has not been cured within five (5) business days after
written notice to the Company (provided, that Parent is not in material
breach of the terms of this Agreement; and provided further, that no cure
period shall be required for a breach which by its nature cannot be cured)
such that the conditions set forth in Section 6.3(a) or Section 6.3(b), as
the case may be, will not be satisfied, or
(ii) the Board of Directors of the Company amends, withholds or
withdraws its recommendation of the Merger (provided that Parent is not in
material breach of the terms of this Agreement);
(c) by the Company if:
(i) there has been a breach of any representation, warranty,
covenant or agreement contained in this Agreement on the part of Parent or
Merger Sub and such breach has not been cured within five (5) days after
written notice to Parent (provided, that the Company is not in material
breach of the terms of this Agreement; and provided further, that no cure
period shall be required for a breach which by its nature cannot be cured)
such that the conditions set forth in Section 6.2(a) or Section 6.2(b), as
the case may be, will not be satisfied, or
(ii) the Board of Directors of Parent amends, withholds or withdraws
its recommendation of the Merger (provided the Company is not in material
breach of the terms of this Agreement);
(d) by any party hereto if (i) there shall be a final,
non-appealable order of a federal or state court in effect preventing
consummation of the Merger; (ii) there shall be any final action taken, or
any statute, rule, regulation or order enacted, promulgated or issued or
deemed applicable to the Merger by any Governmental Entity which would make
consummation of the Merger illegal or which would prohibit Parent's ownership
or operation of all or a material portion of the business of the Company, or
compel Parent to dispose of or hold separate all or a material portion of the
business or assets of the Company or Parent as a result of the Merger; (iii)
if the Company's stockholders do not approve the Merger and this Agreement at
the Company Stockholders' Meeting (provided that the Company may not
terminate in these circumstances if it is in material breach of the term of
this Agreement); or (iv) if Parent's stockholders do not approve the Merger
and this Agreement at the Parent Stockholders' Meeting (provided that Parent
may not terminate in these circumstances if it is in material breach of the
terms of this Agreement);
(e) by any party hereto if the Merger shall not have been
consummated by October 31, 2001; provided that the right to terminate this
Agreement under this Section 7.1(e) shall not be available to any party whose
willful failure to fulfill any material obligation under this Agreement has
been the cause of, or resulted in, the failure of the Effective Time to occur
on or before such date;
(f) by any party hereto if the Board of Directors of the Company
accepts or approves a Superior Proposal, or recommends a Superior Proposal to
the stockholders of the Company pursuant to Section 5.4(d) above;
(g) by any party hereto if the Board of Directors of Parent accepts
or approves a Superior Proposal, or recommends a Superior Proposal to the
stockholders of Parent pursuant to Section 5.4(d) above.
Where action is taken to terminate this Agreement pursuant to this
Section 7.1, it shall be sufficient for such action to be authorized by the
Board of Directors (as applicable) of the party taking such action.
7.2 EFFECT OF TERMINATION.
(a) Subject to Section 7.2(b), in the event of termination of this
Agreement as provided in Section 7.1, this Agreement shall forthwith become
void and there shall be no liability or obligation on the part of Parent,
Merger Sub, the Company or their respective officers, directors, stockholders
or affiliates, except to the extent that such termination results from the
breach by a party hereto of any of its representations, warranties, covenants
or agreements set forth in this Agreement, and, provided that the provisions
of Sections 5.3(b), 5.5 and 5.21 and Article VIII of this Agreement shall
remain in full force and effect and survive any termination of this Agreement.
(b) Any termination of this Agreement by the Company pursuant to
section 7.1(f) shall be of no force or effect unless prior to such
termination the Company shall have satisfied in full all of its obligations
to Parent under clauses (b) and (c) of Section 5.5. Any termination of this
Agreement by Parent or Merger Sub pursuant to Section 7.1(g) shall be of no
force or effect unless prior to such termination Parent shall have satisfied
in full all of its obligations to the Company under clauses (b) and (c) of
Section 5.5.
7.3 NOTICE OF TERMINATION. Subject to Section 7.2(b) hereof, any
termination of this Agreement under Section 7.1 hereof will be effective
immediately upon the delivery of written notice of the terminating party to
the other parties hereto.
7.4 AMENDMENT. 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 the parties hereto.
7.5 EXTENSION; WAIVER. At any time prior to the Effective Time any
party hereto may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties
hereto, (ii) waive any inaccuracies in the representations and warranties
made to such party contained herein or in any document delivered pursuant
hereto and (iii) waive compliance with any of the agreements or conditions
for the benefit of such party contained herein. Any agreement on the part of
a party hereto to any such extension or waiver shall be valid only if set
forth in an instrument in writing signed on behalf of such party.
ARTICLE VIII
GENERAL PROVISIONS
8.1 NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of the Company, Parent and Merger Sub
contained in this Agreement shall terminate at the Effective Time, and only
the covenants that by their terms survive the Effective Time shall survive
the Effective Time.
8.2 NOTICES. All notices and other communications hereunder shall be
in writing and shall be deemed given if delivered personally or sent via
telecopy (receipt confirmed), or on the first business day after being sent
by commercial delivery service, or on the third business day after being
mailed by registered or certified mail (return receipt requested) to the
parties at the following addresses or telecopy numbers (or at such other
address or telecopy numbers for a party as shall be specified by like notice):
(a) if to Parent or Merger Sub, to:
eXcelon Corporation
00 Xxxx Xxxx
Xxxxxxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx
Telecopy No.: (000) 000-0000
with a copy to:
Xxxxx, Xxxx & Xxxxx LLP
Xxx Xxxx Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxx X. Xxxxxxxxx, Xx., Esq.
Telecopy No.: (000) 000-0000
(b) if to the Company, to:
C-bridge Internet Solutions, Inc.
000 Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Chief Executive Officer
Telecopy No.: (000) 000-0000
with a copy to:
Xxxxxx, Xxxx & Xxxxxxxx LLP
0000 Xxxxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Attention: Xxxxxxxxx Xxxxxxxxx
Telecopy No.: (000) 000-0000
8.3 INTERPRETATION. When a reference is made in this Agreement to
Exhibits, such reference shall be to an Exhibit to 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.
8.4 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each
of the parties and delivered to the other party, it being understood that all
parties need not sign the same counterpart.
8.5 ENTIRE AGREEMENT. This Agreement and the documents and
instruments and other agreements among the parties hereto as contemplated by
or referred to herein, including the Company Schedules and the Parent
Schedules (a) constitute the entire agreement among the parties with respect
to the subject matter hereof and supersede all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof, it being understood that the Confidentiality Agreement
shall continue in full force and effect until the Closing and shall survive
any termination of this Agreement; and (b) are not intended to confer upon
any other person any rights or remedies hereunder, except as specifically set
forth in Section 5.15.
8.6 SEVERABILITY. In the event that any provision of this Agreement
or the application thereof, becomes or is declared by a court of competent
jurisdiction to be illegal, void or unenforceable, the remainder of this
Agreement will continue in full force and effect and the application of such
provision to other persons or circumstances will be interpreted so as
reasonably to effect the intent of the parties hereto. The parties further
agree to replace such void or unenforceable provision of this Agreement with
a valid and enforceable provision that will achieve, to the extent possible,
the economic, business and other purposes of such void or unenforceable
provision.
8.7 OTHER REMEDIES. 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 parry of any one remedy will
not preclude the exercise of any other remedy.
8.8 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. Each of the parties hereto irrevocably consents to the exclusive
jurisdiction of any state or federal court within the State of Delaware, in
connection with any matter based upon or arising out of this Agreement or the
matters contemplated herein, agrees that process may be served upon them in
any manner authorized by the laws of the State of Delaware for such persons
and waives and covenants not to assert or plead any objection which they
might otherwise have to such jurisdiction and such process.
8.9 RULES OF CONSTRUCTION. The parties hereto agree that they have
been represented by counsel during the negotiation and execution of this
Agreement and, therefore, waive the
application of any law, regulation, holding or rule of construction providing
that ambiguities in an agreement or other document will be construed against
the party drafting such agreement or document.
8.10 ASSIGNMENT. No party may assign either this Agreement or any of
its rights, interests, or obligations hereunder without the prior written
approval of the other parties.
8.11 SPECIFIC PERFORMANCE. In addition to any other remedies which
any party may have at law or in equity, (a) the Company hereby acknowledges
that the Company Common Stock and the Company is unique, and that the harm to
Parent resulting from breaches by the Company of its obligations cannot be
adequately compensated by damages and (b) Parent and Merger Sub hereby
acknowledge that the Parent Common Stock and Parent and Merger Sub are
unique, and that the harm to the Company resulting from breaches by Parent or
Merger Sub of their respective obligations cannot be adequately compensated
by damages. Accordingly, each party agrees that the other parties shall have
the right to have all obligations, undertakings, agreements, covenants and
other provisions of this Merger Agreement specifically performed by such
party and that the other parties shall have the right to obtain an order or
decree of such specific performance in any of the courts of the United States
of America or of any state or other political subdivision thereof.
IN WITNESS WHEREOF, Parent, Merger Sub and the Company have caused
this Agreement to be signed by themselves or their duly authorized respective
officers, all as of the date first written above.
EXCELON CORPORATION C-BRIDGE INTERNET
SOLUTIONS, INC.
By: /s/ Xxxxxx X. Xxxxxxx By: /s/ Xxxxxx X. Xxxxxxx
-------------------------------- -----------------------------------
Name: Name:
Title: Title:
COMET ACQUISITION CORP.
By: /s/ Xxxxxx X. Xxxxxxx
--------------------------------
Name:
Title:
SCHEDULES AND EXHIBITS OMITTED
IN ACCORDANCE WITH ITEM 601(b)(2) OF REGULATION S-K
DISCLOSURE SCHEDULES OF PARENT
DISCLOSURE SCHEDULES OF COMPANY
EXHIBIT 1.4(a): Certificate of Incorporation of Merger Sub
EXHIBIT 1.4(b): By-laws of Merger Sub
EXHIBIT 5.20A: Form of Voting Agreement for Company Stockholders
EXHIBIT 5.20B: Form of Voting Agreement for Parent Stockholders
EXHIBIT A (Section 6.2(c)): Consents, approvals and waivers required of Parent
(a) EXHIBIT B (Section 6.2(d)): Legal opinion of Xxxxx, Xxxx & Xxxxx LLP
(b) EXHIBIT C (Section 6.3(c)):Consents, approvals and waivers required of
Company
(c) EXHIBIT D (Section 6.3(d)): Legal opinion of Xxxxxx, Xxxx & Xxxxxxxx LLP
EXHIBIT 5.19: Employment Contracts
THE COMPANY WILL FURNISH SUPPLEMENTALLY A COPY OF ANY OMITTED SCHEDULE OR
EXHIBIT TO THE SECURITIES AND EXCHANGE COMMISSION UPON REQUEST, PROVIDED
HOWEVER, THAT THE COMPANY OR PARENT MAY REQUEST CONFIDENTIAL TREATMENT
PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED, FOR ANY
SCHEDULE OR EXHIBIT SO FURNISHED.
