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Exhibit 1
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
XXXXXXXX.XXX, INC.,
NeoIII ACQUISITION CORP.
AND
ECLIPSYS CORPORATION
MARCH 30, 2000
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TABLE OF CONTENTS
Page
ARTICLE I THE MERGER ............................................................................... 2
1.1 The Merger ......................................................................... 2
1.2 Effective Time; Closing ............................................................ 2
1.3 Effect of the Merger ............................................................... 2
1.4 Certificate of Incorporation; Bylaws ............................................... 2
1.5 Directors and Officers ............................................................. 2
1.6 Effect on Capital Stock ............................................................ 3
1.7 Exchange of Certificates ........................................................... 3
1.8 No Further Ownership Rights in Company Common Stock ................................ 6
1.9 Restricted Stock ................................................................... 7
1.10 Tax Consequences ................................................................... 7
1.11 Taking of Necessary Action; Further Action ......................................... 7
ARTICLE II REPRESENTATIONS AND WARRANTIES OF COMPANY ............................................... 7
2.1 Organization; Subsidiaries ......................................................... 8
2.2 Company Capitalization ............................................................. 8
2.3 Obligations with Respect to Capital Stock .......................................... 9
2.4 Authority; Non-Contravention ....................................................... 10
2.5 SEC Filings; Company Financial Statements .......................................... 11
2.6 Absence of Certain Changes or Events ............................................... 12
2.7 Taxes .............................................................................. 13
2.8 Title to Properties ................................................................ 15
2.9 Intellectual Property .............................................................. 15
2.10 Compliance with Laws ............................................................... 17
2.11 Litigation ......................................................................... 17
2.12 Employee Benefit Plans ............................................................. 18
2.13 Environmental Matters .............................................................. 22
2.14 Certain Agreements ................................................................. 23
2.15 Brokers' and Finders' Fees ......................................................... 23
2.16 Insurance .......................................................................... 24
2.17 Disclosure ......................................................................... 24
2.18 Board Approval ..................................................................... 25
2.19 Opinion of Financial Advisor ....................................................... 25
2.20 Anti-Takeover Protections .......................................................... 25
2.21 Affiliates ......................................................................... 25
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB ................................ 25
3.1 Organization of Parent and Merger Sub .............................................. 26
3.2 Parent and Merger Sub Capitalization ............................................... 26
3.3 Obligations With Respect to Capital Stock .......................................... 27
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3.4 Authority; Non-Contravention ....................................................... 28
3.5 SEC Filings; Parent Financial Statements ........................................... 29
3.6 Absence of Certain Changes or Events ............................................... 30
3.7 Taxes .............................................................................. 30
3.8 Title to Properties ................................................................ 32
3.9 Intellectual Property .............................................................. 32
3.10 Compliance with Laws ............................................................... 34
3.11 Litigation ......................................................................... 34
3.12 Employee Benefit Plans ............................................................. 34
2.13 Environmental Matters .............................................................. 38
3.14 Certain Agreements ................................................................. 39
3.15 Brokers' and Finders' Fees ......................................................... 39
3.16 Insurance .......................................................................... 40
3.17 Disclosure ......................................................................... 40
3.18 Board Approval ..................................................................... 40
3.19 Opinion of Financial Advisor ....................................................... 40
3.20 Anti-Takeover Protections .......................................................... 41
ARTICLE IV CONDUCT PRIOR TO THE EFFECTIVE TIME ..................................................... 41
4.1 Conduct of Business by Company ..................................................... 41
4.2 Conduct of Business by Parent ...................................................... 44
ARTICLE V ADDITIONAL AGREEMENTS .................................................................... 47
5.1 Proxy Statement/Prospectus; Registration Statement; Antitrust and Other Filings .... 47
5.2 Meeting of Company Stockholders .................................................... 48
5.3 Meeting of Parent Stockholders ..................................................... 50
5.4 No Solicitation .................................................................... 50
5.5 Confidentiality; Access to Information ............................................. 52
5.6 Public Disclosure .................................................................. 52
5.7 Reasonable Efforts; Notification ................................................... 53
5.8 Third Party Consents ............................................................... 54
5.9 Stock Options and ESPP ............................................................. 54
5.10 Form S-8 ........................................................................... 55
5.11 Indemnification .................................................................... 55
5.12 Parent Board of Directors; Executive Officers ...................................... 56
5.13 Nasdaq Listing ..................................................................... 56
5.14 Letters of Accountants ............................................................. 56
5.15 Takeover Statutes .................................................................. 56
5.16 Certain Employee Benefits .......................................................... 56
5.17 Registration Rights ................................................................ 57
5.18 Acquisitions of Company Stock ...................................................... 57
ARTICLE VI CONDITIONS TO THE MERGER ................................................................ 57
6.1 Conditions to Obligations of Each Party to Effect the Merger ....................... 57
6.2 Additional Conditions to Obligations of Company .................................... 58
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6.3 Additional Conditions to the Obligations of Parent and Merger Sub .................. 59
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER ...................................................... 60
7.1 Termination ........................................................................ 60
7.2 Notice of Termination Effect of Termination ........................................ 62
7.3 Fees and Expenses .................................................................. 63
7.4 Amendment .......................................................................... 64
7.5 Extension; Waiver .................................................................. 64
ARTICLE VIII GENERAL PROVISIONS .................................................................... 64
8.1 Non-Survival of Representations and Warranties ..................................... 64
8.2 Notices ............................................................................ 64
8.3 Interpretation; Certain Defined Terms .............................................. 65
8.4 Counterparts ....................................................................... 66
8.5 Entire Agreement; Third Party Beneficiaries ........................................ 66
8.6 Severability ....................................................................... 67
8.7 Other Remedies; Specific Performance ............................................... 67
8.8 Governing Law ...................................................................... 67
8.9 Rules of Construction .............................................................. 67
8.10 Assignment ......................................................................... 67
8.11 Waiver Of Jury Trial ............................................................... 67
INDEX OF EXHIBITS
Exhibit A Form of Company Voting Agreement
Exhibit B Form of Parent Voting Agreement
Exhibit C Form of Certificate of Incorporation of Surviving Corporation
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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this "AGREEMENT") is made and entered
into as of March 30, 2000, among Xxxxxxxx.xxx, Inc., a Delaware corporation
("PARENT"), NeoIII Acquisition Corp., a Delaware corporation and a wholly owned
first-tier subsidiary of Parent ("MERGER SUB"), and Eclipsys Corporation, a
Delaware corporation ("COMPANY").
RECITALS
A. The respective Boards of Directors of Parent, Merger Sub and Company
have approved this Agreement, and declared advisable the merger of Merger Sub
with and into Company (the "MERGER") upon the terms and subject to the
conditions of this Agreement and in accordance with the General Corporation Law
of the State of Delaware ("DELAWARE LAW").
B. For United States federal income tax purposes, the Merger is intended to
qualify as a "reorganization" pursuant to the provisions of Section 368 of the
Internal Revenue Code of 1986, as amended (the "CODE"). For accounting purposes,
the Merger is intended to be accounted for as a purchase under United States
generally accepted accounting principles ("GAAP").
C. Concurrently with the execution of this Agreement, and as a condition
and inducement to Parent's willingness to enter into this Agreement, certain
stockholders of Company are entering into Voting Agreements with Parent in the
form of Exhibit A (the "COMPANY VOTING AGREEMENTS").
D. Concurrently with the execution of this Agreement, and as a condition
and inducement to Company's willingness to enter into this Agreement, certain
stockholders of Parent are entering into Voting Agreements with Company and
HEALTHvision, Inc., a Delaware corporation ("HEALTHVISION") in the form of
Exhibit B (the "PARENT VOTING AGREEMENTS").
E. Concurrently with the execution of this Agreement, Parent is entering
into an Agreement and Plan of Merger (the "HEALTHVISION MERGER AGREEMENT")
between Parent and Healthvision, an Outsourcing and Operating Agreement (the
"NOVATION OPERATING AGREEMENT") among Parent, Novation, LLC, a Delaware limited
liability company ("NOVATION"), VHA Inc., a Delaware corporation ("VHA"),
University Healthsystem Consortium, an Illinois corporation ("UHC"), and
Healthcare Purchasing Partners International, LLC, a Delaware limited liability
company ("HPPI"), and Common Stock and Warrant Agreements between Parent and
VHA, and Parent and UHC, respectively (the "STOCK AND WARRANT AGREEMENTS" and,
together with the Novation Operating Agreement, the "NOVATION DOCUMENTS," and
the Novation Documents together with the Healthvision Merger Agreement, the
"RELATED AGREEMENTS"), copies of each of which and all related documents are
attached to the Parent Disclosure Letter (as defined in the introduction to
Article III).
In consideration of the foregoing and the representations, warranties,
covenants and agreements set forth in this Agreement, the parties agree as
follows:
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ARTICLE I
THE MERGER
1.1 The Merger. Upon the terms and subject to the conditions of this
Agreement and the applicable provisions of Delaware Law, at the Effective Time,
Merger Sub shall be merged with and into Company, the separate corporate
existence of Merger Sub shall cease, and Company shall continue as the surviving
corporation of the Merger (the "SURVIVING CORPORATION").
1.2 Effective Time; Closing. Subject to the provisions of this Agreement,
the parties hereto shall cause the Merger to be consummated by filing a
certificate of merger, in such appropriate form as determined by the parties,
with the Secretary of State of the State of Delaware in accordance with the
relevant provisions of Delaware Law (the "CERTIFICATE OF MERGER") (the time of
such filing (or such later time as may be agreed in writing by Company and
Parent and specified in the Certificate of Merger) being the "EFFECTIVE TIME")
as soon as practicable on or after the Closing Date. The closing of the Merger
(the "CLOSING") shall take place at the offices of Fenwick & West LLP, Two Palo
Alto Square, Palo Alto, California, 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 in writing (the
"CLOSING DATE").
1.3 Effect of the Merger. At the Effective Time, the effect of the Merger
shall be as provided in this Agreement and the applicable provisions of Delaware
Law. Without limiting the generality of the foregoing, at the Effective Time,
all the property, rights, privileges, powers and franchises of Company and
Merger Sub shall vest in the Surviving Corporation, and all debts, liabilities
and duties of Company and Merger Sub shall become the debts, liabilities and
duties of the Surviving Corporation.
1.4 Certificate of Incorporation; Bylaws.
(a) At the Effective Time, the Certificate of Incorporation of Company,
as in effect immediately prior to the Effective Time, shall be amended to read
in its entirety as set forth in Exhibit C, and thereafter shall be the
Certificate of Incorporation of the Surviving Corporation until thereafter
amended.
(b) At the Effective Time, the Bylaws of Merger Sub, as in effect
immediately prior to the Effective Time, shall be the Bylaws of the Surviving
Corporation until thereafter amended.
1.5 Directors and Officers. The initial directors of the Surviving
Corporation shall be the directors of Merger Sub immediately prior to the
Effective Time, until their respective successors are duly elected or appointed
and qualified. The initial officers of the Surviving Corporation shall be the
officers of Merger Sub immediately prior to the Effective Time, until their
respective successors are duly appointed.
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1.6 Effect on Capital Stock. Subject to the terms and conditions of this
Agreement, at the Effective Time, by virtue of the Merger and without any action
on the part of Merger Sub, Company or the holders of any of the following
securities:
(a) Conversion of Company Common Stock. Each share of common stock, par
value $0.01 per share, of Company ("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), will be canceled
and extinguished and automatically converted (subject to Section 1.6(e)) into
the right to receive 1.344 (the "EXCHANGE RATIO") of a share of common stock,
par value $0.001 per share, of Parent ("PARENT COMMON STOCK") upon surrender of
the certificate representing such share of Company Common Stock in the manner
provided in Section 1.7. No fraction of a share of Parent Common Stock will be
issued by virtue of the Merger, but in lieu thereof, a cash payment shall be
made pursuant to Section 1.7(e).
(b) Cancellation of Company-Owned and Parent-Owned Stock. Each share of
Company Common Stock held by Company or owned by Merger Sub, Parent or any
direct or indirect wholly owned subsidiary of Company or of Parent immediately
prior to the Effective Time shall be canceled and extinguished without any
conversion thereof.
(c) Stock Options; Employee Stock Purchase Plan. At the Effective Time,
all options to purchase Company Common Stock then outstanding under Company's
1996 Stock Option Plan, 1998 Stock Incentive Plan and 1999 Stock Incentive Plan
(collectively, the "COMPANY STOCK OPTION PLANS") shall be assumed by Parent in
accordance with Section 5.9 of this Agreement. Rights outstanding under
Company's 1998 Employee Stock Purchase Plan (the "COMPANY ESPP") shall be
treated as set forth in Section 5.9 of this Agreement.
(d) Capital Stock of Merger Sub. Each share of common stock, par value
$0.01 per share, of Merger Sub (the "MERGER SUB COMMON STOCK"), issued and
outstanding immediately prior to the Effective Time shall be converted into one
validly issued, fully paid and nonassessable share of common stock, $0.01 par
value per share, of the Surviving Corporation. Following the Effective Time,
each certificate evidencing ownership of shares of Merger Sub common stock shall
evidence ownership of such shares of capital stock of the Surviving Corporation.
(e) Adjustments to Exchange Ratio. The Exchange Ratio shall be adjusted
to reflect appropriately the effect of any stock split, reverse stock split,
stock dividend (including any dividend or distribution of securities convertible
into Parent Common Stock or Company Common Stock), reorganization,
recapitalization, reclassification or other like change with respect to Parent
Common Stock or Company Common Stock occurring on or after the date hereof and
prior to the Effective Time.
1.7 Exchange of Certificates.
(a) Exchange Agent. Parent shall select an institution reasonably
acceptable to Company to act as the exchange agent (the "EXCHANGE AGENT") in the
Merger.
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(b) Exchange Fund. Promptly after the Effective Time, Parent shall
deposit with the Exchange Agent for exchange in accordance with this Article I,
the shares of Parent Common Stock (such shares of Parent Common Stock, together
with cash in lieu of fractional shares and any dividends or distributions with
respect thereto, are hereinafter referred to as the "EXCHANGE FUND") issuable
pursuant to Section 1.6 in exchange for outstanding shares of Company Common
Stock.
(c) Exchange Procedures. Promptly after the Effective Time, Parent
shall instruct the Exchange Agent to mail to each holder of record of a
certificate or certificates ("CERTIFICATES") which immediately prior to the
Effective Time represented outstanding shares of Company Common Stock whose
shares were converted into shares of Parent Common Stock pursuant to Section
1.6, (i) a letter of transmittal in customary form (that shall specify that
delivery shall be effected, and risk of loss and title to the Certificates shall
pass, only upon proper delivery of the Certificates to the Exchange Agent and
shall contain such other provisions as Parent may reasonably specify) and (ii)
instructions for use in effecting the surrender of the Certificates in exchange
for certificates representing shares of Parent Common Stock. Upon surrender of
Certificates for cancellation to the Exchange Agent together with such letter of
transmittal, duly completed and validly executed in accordance with the
instructions thereto, the holders of such Certificates shall be entitled to
receive in exchange therefor certificates representing the number of whole
shares of Parent Common Stock into which their shares of Company Common Stock
were converted at the Effective Time, payment in lieu of fractional shares that
such holders have the right to receive pursuant to Section 1.7(e) and any
dividends or distributions payable pursuant to Section 1.7(d), and the
Certificates so surrendered shall forthwith be canceled. Until so surrendered,
outstanding Certificates will be deemed from and after the Effective Time, for
all corporate purposes, to evidence only the ownership of the number of full
shares of Parent Common Stock into which such shares of Company Common Stock
shall have been so converted and the right to receive an amount in cash in lieu
of the issuance of any fractional shares in accordance with Section 1.7(e) and
any dividends or distributions payable pursuant to Section 1.7(d). No interest
will be paid or accrued on any cash in lieu of fractional shares of Parent
Common Stock or on any unpaid dividends or distributions payable to holders of
Certificates. In the event of a transfer of ownership of shares of Company
Common Stock which is not registered in the transfer records of Company, a
certificate representing the proper number of shares of Parent Common Stock may
be issued to a transferee if the Certificate representing such shares of Company
Common Stock is presented to the Exchange Agent, accompanied by all documents
required to evidence and effect such transfer and by evidence that any
applicable stock transfer taxes have been paid.
(d) Distributions With Respect to Unexchanged Shares. No dividends or
other distributions declared or made after the date of this Agreement with
respect to Parent Common Stock with a record date after the Effective Time will
be paid to the holders of any unsurrendered Certificates with respect to the
shares of Parent Common Stock represented thereby until the holders of record of
such Certificates shall surrender such Certificates. Subject to applicable law,
following surrender of any such Certificates, the Exchange Agent shall deliver
to the holders of certificates representing whole shares of Parent Common Stock
issued in exchange therefor, without interest, (i) promptly, the amount of any
cash payable with respect to a fractional share of Parent Common Stock to which
such holder is entitled pursuant to Section
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1.7(e) and the amount of dividends or other distributions with a record date
after the Effective Time theretofore paid with respect to such whole shares of
Parent Common Stock, and (ii) at the appropriate payment date, the amount of
dividends or other distributions with a record date after the Effective Time but
prior to surrender and a payment date occurring after surrender, payable with
respect to such whole shares of Parent Common Stock.
(e) Fractional Shares. (i) As promptly as practicable following the
Effective Time, the Exchange Agent shall determine the excess of (A) the number
of full shares of Parent Common Stock delivered to the Exchange Agent pursuant
to Section 1.7(b), over (B) the aggregate number of full shares of Parent Common
Stock to be distributed to holders of Company Common Stock pursuant to Section
1.7(c) (such excess, the "EXCESS SHARES"). Following the Effective Time, the
Exchange Agent, as agent for the holders of Company Common Stock, shall sell the
Excess Shares at then prevailing prices on the Nasdaq Stock Market in the manner
set forth in paragraph (ii) of this Section 1.7(e).
(ii) The sale of the Excess Shares by the Exchange Agent shall be
executed on the Nasdaq Stock Market and shall be executed in round lots to the
extent practicable. The Exchange Agent shall use all commercially reasonable
efforts to complete the sale of the Excess Shares as promptly following the
Effective Time as, in the Exchange Agent's reasonable judgment, is practicable
consistent with obtaining the best execution of such sales in light of
prevailing market conditions. Until the net proceeds of such sales have been
distributed to the holders of Company Common Stock, the Exchange Agent will hold
such proceeds in trust for the holders of Company Common Stock. The Exchange
Agent will determine the portion of such net proceeds to which each holder of
Company Common Stock shall be entitled, if any, by multiplying the amount of the
aggregate net proceeds by a fraction the numerator of which is the amount of the
fractional share interest to which such holder of Company Common Stock is
entitled (after taking into account all shares of Parent Common Stock to be
issued to such holder) and the denominator of which is the aggregate amount of
fractional share interests to which all holders of Company Common Stock are
entitled. As soon as practicable after the determination of the amount of cash,
if any, to be paid to holders of Company Common Stock with respect to fractional
share interests, the Exchange Agent shall promptly pay such amounts to such
holders of Company Common Stock in accordance with the terms of Section 1.7(c).
(iii) Notwithstanding the provisions of paragraphs (i) and (ii)
of this Section 1.7(e), Parent may decide, at its option, exercised prior to the
Effective Time, in lieu of the issuance and sale of Excess Shares and the making
of the payments contemplated in such paragraphs, that Parent shall pay to the
Exchange Agent an amount sufficient for the Exchange Agent to pay each holder of
Company Common Stock the amount such holder would have received pursuant to
Section 1.7(e)(ii) assuming that the sales of Parent Common Stock were made at a
price equal to the average of the closing prices of the Parent Common Stock on
the Nasdaq Stock Market for the ten consecutive trading days immediately
following the Effective Time and, in such case, all references herein to the
cash proceeds of the sale of the Excess Shares and similar references shall be
deemed to mean and refer to the payments calculated as set forth in this
paragraph (iii). In such event, Excess Shares shall not be issued or otherwise
transferred to the Exchange Agent pursuant to Sections 1.7(b) or (e).
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(f) Required Withholding. Each of the Exchange Agent, Parent and the
Surviving Corporation shall be entitled to deduct and withhold from any
consideration payable or otherwise deliverable pursuant to this Agreement to any
holder or former holder of Company Common Stock such amounts as may be required
to be deducted or withheld therefrom under the Code or under any provision of
state, local or foreign tax law or under any other applicable Legal Requirement
(as defined in Section 2.2(b)). To the extent such amounts are so deducted or
withheld, such amounts shall be treated for all purposes under this Agreement as
having been paid to the person to whom such amounts would otherwise have been
paid.
(g) Lost, Stolen or Destroyed Certificates. In the event that any
Certificates shall have been lost, stolen or destroyed, the Exchange Agent shall
issue in exchange for such lost, stolen or destroyed Certificates, upon the
making of an affidavit of that fact by the holder thereof, certificates
representing the shares of Parent Common Stock into which the shares of Company
Common Stock represented by such Certificates were converted pursuant to Section
1.6, cash for fractional shares, if any, as may be required pursuant to Section
1.7(e) and any dividends or distributions payable pursuant to Section 1.7(d);
provided, however, that Parent may, in its discretion and as a condition
precedent to the issuance of such certificates representing shares of Parent
Common Stock, cash and other distributions, require the owner of such lost,
stolen or destroyed Certificates to deliver a bond in such sum as it may
reasonably direct as indemnity against any claim that may be made against
Parent, the Surviving Corporation or the Exchange Agent with respect to the
Certificates alleged to have been lost, stolen or destroyed.
(h) No Liability. Notwithstanding anything to the contrary in this
Section 1.7, neither the Exchange Agent, Parent, the Surviving Corporation nor
any party hereto shall be liable to a holder of shares of Parent Common Stock or
Company Common Stock for any amount properly paid to a public official pursuant
to any applicable abandoned property, escheat or similar law.
(i) Termination of Exchange Fund. Any portion of the Exchange Fund
which remains undistributed to the holders of Company Common Stock for twelve
months after the Effective Time shall be delivered to Parent, upon demand, and
any holders of Company Common Stock who have not theretofore complied with the
provisions of this Section 1.7 shall thereafter look only to Parent for the
shares of Parent Common Stock, any cash in lieu of fractional shares of Parent
Common Stock to which they are entitled pursuant to Section 1.7(e) and any
dividends or other distributions with respect to Parent Common Stock to which
they are entitled pursuant to Section 1.7(d), in each case, without any interest
thereon.
1.8 No Further Ownership Rights in Company Common Stock. All shares of
Parent Common Stock issued in accordance with the terms hereof (including any
cash paid in respect thereof pursuant to Section 1.7(d) and (e)) shall be deemed
to have been issued in full satisfaction of all rights pertaining to such shares
of Company Common Stock, and there shall be no further registration of transfers
on the records of the Surviving Corporation of shares of Company Common Stock
that were outstanding immediately prior to the Effective Time. If after the
Effective Time Certificates are presented to the Surviving Corporation for any
reason, they shall be canceled and exchanged as provided in this Article I.
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1.9 Restricted Stock. If any shares of Company Common Stock that are
outstanding immediately prior to the Effective Time are unvested or are subject
to a repurchase option, risk of forfeiture or other condition providing that
such shares ("COMPANY RESTRICTED STOCK") may be forfeited or repurchased by the
Company upon any termination of the stockholders' employment, directorship or
other relationship with the Company (and/or any affiliate of the Company) under
the terms of any restricted stock purchase agreement or other agreement with the
Company that does not by its terms provide that such repurchase option, risk of
forfeiture or other condition lapses upon consummation of the Merger, then the
shares of Parent Common Stock issued upon the conversion of such shares of
Company Common Stock in the Merger will continue to be unvested and subject to
the same repurchase options, risks of forfeiture or other conditions following
the Effective Time, and the certificates representing such shares of Parent
Common Stock may accordingly be marked with appropriate legends noting such
repurchase options, risks of forfeiture or other conditions. Company shall take
all actions that may be necessary to ensure that, from and after the Effective
Time, Parent is entitled to exercise any such repurchase option or other right
set forth in any such restricted stock purchase agreement or other agreement. A
listing of the holders of Company Restricted Stock, together with the number of
shares and the vesting schedule of Company Restricted Stock held by each, is set
forth in Part 1.9 of the Company Disclosure Letter.
1.10 Tax and Accounting Consequences. It is intended by the parties hereto
that the Merger shall constitute a "reorganization" within the meaning of
Section 368 of the Code. The parties hereto adopt this Agreement as a "plan of
reorganization" within the meaning of Sections 354(a) and 361(a) of the Code and
Treas. Reg. Sections 1.368-2(g) and 1.368-3(a). It is intended by the parties
that the Merger shall qualify for accounting treatment as a purchase.
1.11 Taking of Necessary Action; Further Action. If, at any time after the
Effective Time, any further action is necessary or desirable to carry out the
purposes of this Agreement and to vest the Surviving Corporation with full
right, title and possession to all assets, property, rights, privileges, powers
and franchises of Company and Merger Sub, the officers and directors of Company
and Merger Sub will take all such lawful and necessary action. Parent shall
cause Merger Sub to perform all of its obligations relating to this Agreement
and the transactions contemplated hereby.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF COMPANY
As of the date of this Agreement and as of the Closing Date, Company
represents and warrants to Parent and Merger Sub, subject to the exceptions
specifically disclosed in writing in the disclosure letter and referencing a
specific representation delivered by Company to Parent dated as of the date
hereof and certified by a duly authorized officer of Company (the "COMPANY
DISCLOSURE LETTER"), as follows:
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2.1 Organization; Subsidiaries.
(a) Company and each of its subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has all requisite corporate power and
authority, and all requisite qualifications to do business as a foreign
corporation, to conduct its business in the manner in which its business is
currently being conducted, except where the failure to be so organized, existing
or in good standing or to have such power, authority or qualifications would
not, individually or in the aggregate, have a Material Adverse Effect (as
defined in Section 8.3) on Company.
(b) Other than the corporations identified in Part 2.1 of the Company
Disclosure Letter, neither Company nor any of the other corporations identified
in Part 2.1 of the Company Disclosure Letter owns any capital stock of, or any
equity interest of any nature in, any corporation, partnership, joint venture
arrangement or other business entity, other than the entities identified in Part
2.1 of the Company Disclosure Letter, except for passive investments in equity
interests of public companies as part of the cash management program of Company.
Neither Company nor any of its subsidiaries is obligated to make any material
future investment in or capital contribution to any other entity. Part 2.1 of
the Company Disclosure Letter indicates the jurisdiction of organization of each
entity listed therein and Company's direct or indirect equity interest therein.
(c) Company has delivered or made available to Parent a true and
correct copy of the Certificate of Incorporation (including any Certificates of
Designation) and Bylaws of Company and similar governing instruments of each of
its subsidiaries, each as amended to date (collectively, the "COMPANY CHARTER
DOCUMENTS"), and each such instrument is in full force and effect. Neither
Company nor any of its subsidiaries is in violation of any of the provisions of
the Company Charter Documents.
2.2 Company Capitalization.
(a) The authorized capital stock of Company consists solely of
200,000,000 shares of Company Common Stock, of which there were 36,530,325
shares issued and outstanding as of the close of business on March 14, 2000,
5,000,000 shares of non-voting common stock, par value $0.01 per share, none of
which are issued or outstanding as of the date of this Agreement or as of the
Effective Time, and 5,000,000 shares of preferred stock, par value $0.01 per
share, none of which are issued or outstanding as of the date of this Agreement
or as of the Effective Time. All outstanding shares of Company Common Stock are
duly authorized, validly issued, fully paid and nonassessable and are not
subject to any rights of rescission or preemptive rights created by statute, the
Company Charter Documents or any agreement or document to which Company is a
party or by which it is bound. As of the date of this Agreement, there are no
shares of Company Common Stock held in treasury by Company.
(b) As of the close of business on March 14, 2000, (i) 5,669,130 shares
of Company Common Stock are subject to issuance pursuant to outstanding options
to purchase Company Common Stock under the Company Stock Option Plans ("COMPANY
OPTIONS") for an aggregate exercise price of $99,634,227, and (ii) 150,000
shares of Company Common Stock are
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reserved for future issuance under the Company ESPP. Since March 14, 2000,
Company has granted an additional 1,000,000 Company Options having an aggregate
exercise price of $25,812,500 only to persons who have agreed in writing to
waive acceleration of the vesting of such Company Options and any other Company
Options granted under Company's 1999 Stock Incentive Plan upon consummation of
the Merger and the other transactions contemplated by the Related Agreements
pursuant to a form of waiver acceptable to Parent. Part 2.2(b) of the Company
Disclosure Letter sets forth the following information with respect to each
Company Option outstanding as of the date of this Agreement: (i) the name of the
optionee; (ii) the number of shares of Company Common Stock subject to such
Company Option vested and unvested on the date of this Agreement; (iii) the
exercise price of such Company Option; (iv) the date on which such Company
Option was granted or assumed; (v) the date on which such Company Option expires
and (vi) whether the exercisability of such option will be accelerated in any
way by the transactions contemplated by this Agreement, and indicates the extent
of any such acceleration. Company has made available to Parent an accurate and
complete copy of each of the Company Stock Option Plans and the form of all
stock option agreements evidencing Company Options. There are no options
outstanding to purchase shares of Company Common Stock other than pursuant to
the Company Stock Option Plans. All shares of Company Common Stock subject to
issuance as aforesaid, upon issuance on the terms and conditions specified in
the instruments pursuant to which they are issuable, will be duly authorized,
validly issued, fully paid and nonassessable. Other than as set forth on Part
2.2(b) of the Company Disclosure Letter, there are no commitments or agreements
of any character to which the Company is bound obligating Company to accelerate
the vesting of any Company Option as a result of the Merger.
(c) All outstanding shares of Company Common Stock, all outstanding
Company Options, and all outstanding shares of capital stock of each subsidiary
of Company have been issued and granted in material compliance with (i) all
applicable securities laws and other applicable material Legal Requirements and
(ii) all material requirements set forth in applicable agreements or
instruments. For the purposes of this Agreement, "LEGAL REQUIREMENTS" means any
federal, state, local, municipal, foreign or other law, statute, constitution,
principle of common law, resolution, ordinance, code, edict, decree, rule,
regulation, ruling or requirement issued, enacted, adopted, promulgated,
implemented or otherwise put into effect by or under the authority of any
Governmental Entity (as defined in Section 2.4).
2.3 Obligations with Respect to Capital Stock. Except as set forth in
Section 2.2 or Part 2.3 of the Company Disclosure Letter, there are no equity
securities, partnership interests or similar ownership interests of any class of
Company equity security, or any securities exchangeable or convertible into or
exercisable for such equity securities, partnership interests or similar
ownership interests, issued, reserved for issuance or outstanding. All stock and
rights to purchase stock of any subsidiary of Company are owned free and clear
of all Encumbrances. For purposes of this Agreement, "ENCUMBRANCES" means any
lien, pledge, hypothecation, charge, mortgage, security interest, encumbrance,
claim, option, right of first refusal, preemptive right, community property
interest or restriction of any nature (including any restriction on the voting
of any security, any restriction on the transfer of any security or other asset,
any restriction on the receipt of any income derived from any asset, any
restriction on the use of any asset and any restriction on the possession,
exercise or transfer of any other attribute of ownership of any asset)
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(other than (i) liens for Taxes (as defined in Section 2.7) not yet due and
payable; (ii) liens reflected on the Company Balance Sheet or Parent Balance
Sheet (each as defined below), as applicable; (iii) liens which are not material
in character, amount or extent, and which do not materially detract from the
value or materially interfere with the use of the property subject thereto or
affected thereby; and (iv) contractor's liens). Except as set forth in Section
2.2, or Part 2.2 or Part 2.3 of the Company Disclosure Letter, there are no
subscriptions, options, warrants, equity securities, partnership interests or
similar ownership interests, calls, rights (including preemptive rights),
commitments or agreements of any character to which Company or any of its
subsidiaries is a party or by which it is bound obligating Company or any of its
subsidiaries to issue, deliver or sell, or cause to be issued, delivered or
sold, or repurchase, redeem or otherwise acquire, or cause the repurchase,
redemption or acquisition of, any shares of capital stock, partnership interests
or similar ownership interests of Company or any of its subsidiaries or
obligating Company or any of its subsidiaries to grant, extend, accelerate the
vesting of or enter into any such subscription, option, warrant, equity
security, call, right, commitment or agreement. There are no registration
rights, and there is no voting trust, proxy, rights agreement, "poison pill"
anti-takeover plan or other agreement or understanding to which Company is a
party or by which it is bound with respect to any equity security of any class
of Company or with respect to any equity security, partnership interest or
similar ownership interest of any class of any of its subsidiaries. Stockholders
of Company will not be entitled to dissenters' or appraisal rights under
applicable state law in connection with the Merger.
2.4 Authority; Non-Contravention.
(a) Company has all requisite corporate power and authority to enter
into this Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Company, subject only to the approval and
adoption of this Agreement and the approval of the Merger by Company's
stockholders (the "COMPANY STOCKHOLDER APPROVALS") and the filing of the
Certificate of Merger pursuant to Delaware Law. The affirmative vote of the
holders of a majority of the outstanding shares of Company Common Stock is
sufficient for Company's stockholders to approve and adopt this Agreement and
approve the Merger, and no other approval of any holder of any securities of
Company is required in connection with the consummation of the transactions
contemplated hereby. This Agreement has been duly executed and delivered by
Company and, assuming the due execution and delivery by Parent and Merger Sub,
constitutes the valid and binding obligation of Company, enforceable against
Company in accordance with its terms, except as enforceability may be limited by
bankruptcy and other similar laws affecting the rights of creditors generally
and general principles of equity.
(b) The execution and delivery of this Agreement by Company does not,
and the performance of this Agreement by Company will not, (i) conflict with or
violate the Company Charter Documents, (ii) subject to obtaining the Company
Stockholder Approvals and compliance with the requirements set forth in Section
2.4(c), conflict with or violate any law, rule, regulation, order, judgment or
decree applicable to Company or any of its subsidiaries or by which Company or
any of its subsidiaries or any of their respective properties is bound or
affected, or (iii) result in any breach of or constitute a default (or an event
that with notice or
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lapse of time or both would become a default) under, or impair Company's rights
or alter the rights or obligations of any third party under, or give to others
any rights of termination, amendment, acceleration or cancellation of, or result
in the creation of an Encumbrance on any of the properties or assets of Company
or any of its subsidiaries pursuant to, any note, bond, mortgage, indenture,
agreement, lease, license, permit, franchise or other instrument or obligation
to which Company or any of its subsidiaries is a party or by which Company or
any of its subsidiaries or its or any of their respective assets are bound or
affected, except, in the case of clauses (ii) and (iii), for such conflicts,
violations, breaches, defaults, impairments, or rights which, individually or in
the aggregate, would not have a Material Adverse Effect on Company. Part 2.4(b)
of the Company Disclosure Letter lists all consents, waivers and approvals under
any of Company's or any of its subsidiaries' agreements, licenses or leases
required to be obtained in connection with the consummation of the transactions
contemplated hereby, which, if individually or in the aggregate not obtained,
would have a Material Adverse Effect on Company, Parent or the Surviving
Corporation as a result of the Merger or would materially and adversely affect
Company's Intellectual Property (as defined below).
(c) 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, foreign or domestic
("GOVERNMENTAL ENTITY"), is required to be obtained or made by Company in
connection with the execution and delivery of this Agreement or the consummation
of the Merger, except for (i) the filing of the Certificate of Merger with the
Secretary of State of the State of Delaware and appropriate documents with the
relevant authorities of other states in which the Company is qualified to do
business, (ii) the filing of the Proxy Statement/Prospectus (as defined in
Section 2.17) with the Securities and Exchange Commission ("SEC") in accordance
with the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), and a
Schedule 13D with regard to the Parent Voting Agreements in accordance with the
Exchange Act, and the effectiveness of the Registration Statement (as defined in
Section 2.17), (iii) such consents, approvals, orders, authorizations,
registrations, declarations and filings as may be required under applicable
federal, foreign and state securities (or related) laws and the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR
ACT"), and the securities or antitrust laws of any foreign country, and (iv)
such other consents, authorizations, filings, approvals and registrations which
if not obtained or made would not have a Material Adverse Effect on Company,
Parent or the Surviving Corporation or would not have a material adverse effect
on the ability of the parties hereto to consummate the Merger.
2.5 SEC Filings; Company Financial Statements.
(a) Company has filed all forms, reports and documents required to be
filed by Company with the SEC since the effective date of the registration
statement (the "COMPANY INITIAL REGISTRATION STATEMENT") of Company's initial
public offering and has made available to Parent such forms, reports and
documents in the form filed with the SEC. All such required forms, reports and
documents (including those that Company may file subsequent to the date hereof)
and the Company Initial Registration Statement are referred to herein as the
"COMPANY SEC REPORTS." As of their respective dates, the Company SEC Reports (i)
were prepared in accordance with the requirements of the Securities Act of 1933,
as amended (the "SECURITIES ACT"), or the Exchange Act, as the case may be, and
the rules and regulations of the SEC
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thereunder applicable to such Company SEC Reports and (ii) did not at the time
they were filed (or if amended or superseded by a filing prior to the date of
this Agreement, then on the date of such filing) contain any untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, except to the extent
corrected prior to the date of this Agreement by a subsequently filed Company
SEC Report. None of Company's subsidiaries is required to file any forms,
reports or other documents with the SEC.
(b) Each of the consolidated financial statements (including, in each
case, any related notes thereto) contained in the Company SEC Reports (the
"COMPANY FINANCIALS"), including each Company SEC Report filed after the date
hereof until the Closing, (i) complied as to form in all material respects with
the published rules and regulations of the SEC with respect thereto, (ii) was
prepared in accordance with GAAP applied on a consistent basis throughout the
periods involved (except as may be indicated in the notes thereto or, in the
case of unaudited interim financial statements, as may be permitted by the SEC
on Form 10-Q, 8-K or any successor form under the Exchange Act) and (iii) fairly
presented the consolidated financial position of Company and its subsidiaries as
at the respective dates thereof and the consolidated results of Company's
operations and cash flows for the periods indicated, except that the unaudited
interim financial statements may not contain footnotes and were or are subject
to normal and recurring year-end adjustments. The balance sheet of Company
contained in Company SEC Reports as of December 31, 1999 is hereinafter referred
to as the "COMPANY BALANCE SHEET." Except as disclosed in the Company Financials
filed on or prior to the date hereof, since the date of the Company Balance
Sheet, neither Company nor any of its subsidiaries has any liabilities required
under GAAP to be set forth on a balance sheet (absolute, accrued, contingent or
otherwise) which are, individually or in the aggregate, material to the
business, results of operations or financial condition of Company and its
subsidiaries taken as a whole, except for liabilities incurred since the date of
the Company Balance Sheet in the ordinary course of business consistent with
past practices and liabilities incurred in connection with this Agreement.
2.6 Absence of Certain Changes or Events. Since the date of the Company
Balance Sheet through the date of this Agreement, there has not been: (i) any
Material Adverse Effect with respect to Company, (ii) any declaration, setting
aside or payment of any dividend on, or other distribution (whether in cash,
stock or property) in respect of, any of Company's or any of its subsidiaries'
capital stock, or any purchase, redemption or other acquisition by Company of
any of Company's capital stock or any other securities of Company or its
subsidiaries or any options, warrants, calls or rights to acquire any such
shares or other securities except for repurchases from employees following their
termination pursuant to the terms of their pre-existing stock option or purchase
agreements, (iii) any split, combination or reclassification of any of Company's
or any of its subsidiaries' capital stock, (iv) any granting by Company or any
of its subsidiaries of any increase in compensation or fringe benefits to any of
their officers or employees, or any payment by Company or any of its
subsidiaries of any bonus to any of their officers or employees, or any granting
by Company or any of its subsidiaries of any increase in severance or
termination pay or any entry by Company or any of its subsidiaries into, or
material modification or amendment of, any currently effective employment,
severance, termination or indemnification agreement or any agreement the
benefits of which are contingent or the terms of
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which are materially altered upon the occurrence of a transaction involving
Company of the nature contemplated hereby, in each case, other than in the
ordinary course of business consistent with past practice, (v) any material
change or alteration in the policy of Company relating to the granting of stock
options or other equity compensation to its employees and consultants other than
in the ordinary course of business consistent with past practice, (vi) entry by
Company or any of its subsidiaries into, or material modification, amendment or
cancellation of, any licensing or other agreement with regard to the
acquisition, distribution or licensing of any material Intellectual Property (as
defined in Section 2.9) other than licenses, distribution agreements,
advertising agreements, or other similar agreements entered into in the ordinary
course of business consistent with past practice, (vii) any material change by
Company in its accounting methods, principles or practices, except as required
by concurrent changes in GAAP, or (viii) any material revaluation by Company of
any of its material assets, including writing off notes or accounts receivable
other than in the ordinary course of business.
2.7 Taxes.
(a) Company and each of its subsidiaries have timely filed all material
Returns federal, state, local and foreign returns, estimates, information
statements and reports ("RETURNS") relating to Taxes required to be filed by or
on behalf of Company and each of its subsidiaries with any Tax authority, such
Returns are true, correct and complete in all material respects, and Company and
each of its subsidiaries have paid all Taxes shown to be due on such Returns.
(b) Company and each of its subsidiaries have withheld with respect to
its employees all federal and state income Taxes, Taxes pursuant to the Federal
Insurance Contribution Act ("FICA"), Taxes pursuant to the Federal Unemployment
Tax Act ("FUTA") and other Taxes required to be withheld, except such Taxes
which are not material to Company.
(c) Neither Company nor any of its subsidiaries has been delinquent in
the payment of any material Tax nor is there any material Tax deficiency
outstanding, proposed or assessed against Company or any of its subsidiaries,
nor has Company or any of its subsidiaries executed any unexpired waiver of any
statute of limitations on or extending the period for the assessment or
collection of any Tax.
(d) No audit or other examination of any Return of Company or any of
its subsidiaries by any Tax authority is presently in progress, nor has Company
or any of its subsidiaries been notified of any request for such an audit or
other examination.
(e) No adjustment relating to any Returns filed by Company or any of
its subsidiaries has been proposed in writing formally or informally by any Tax
authority to Company or any of its subsidiaries or any Tax or financial
representative thereof.
(f) Neither Company nor any of its subsidiaries has any liability for
unpaid Taxes which has not been accrued for or reserved on the Company Balance
Sheet in accordance with GAAP, whether asserted or unasserted, contingent or
otherwise, which is material to Company, other than any liability for unpaid
Taxes that may have accrued since the
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date of the Company Balance Sheet in connection with the operation of the
business of Company and its subsidiaries in the ordinary course.
(g) There is no agreement, plan or arrangement to which Company or any
of its subsidiaries is a party, including this Agreement and the agreements
entered into in connection with this Agreement, covering any employee or former
employee of Company or any of its subsidiaries that, individually or
collectively, would be reasonably likely to give rise to the payment of any
amount that would not be deductible pursuant to Sections 280G, 404 or 162(m) of
the Code. There is no contract, agreement, plan or arrangement to which the
Company is a party or by which it is bound to compensate any individual for
excise taxes paid pursuant to Section 4999 of the Code.
(h) Neither Company nor any of its subsidiaries has filed any consent
agreement under Section 341(f) of the Code or agreed to have Section 341(f)(2)
of the Code apply to any disposition of a subsection (f) asset (as defined in
Section 341(f)(4) of the Code) owned by Company.
(i) Neither Company nor any of its subsidiaries is party to or has any
obligation under any Tax-sharing, Tax indemnity or Tax allocation agreement or
arrangement.
(j) Except as may be required as a result of the Merger, Company and
its subsidiaries have not been and will not be required to include any
adjustment in taxable income for any Tax period (or portion thereof) pursuant to
Section 481 of the Code or any comparable provision under state or foreign Tax
laws as a result of transactions, events or accounting methods employed prior to
the Closing.
(k) None of Company's or its subsidiaries' assets are tax exempt use
property within the meaning of Section 168(h) of the Code.
(l) Company has not been distributed in a transaction qualifying under
Section 355 of the Code within the last two years, nor has Company distributed
any corporation in a transaction qualifying under Section 355 of the Code within
the last two years.
For the purposes of this Agreement, "TAX" or "TAXES" refers to (i) any
and all federal, state, local and foreign taxes, assessments and other
governmental charges, duties, impositions and liabilities relating to taxes,
including taxes based upon or measured by gross receipts, income, profits,
sales, use and occupation, and value added, ad valorem, transfer, franchise,
withholding, payroll, recapture, employment, excise and property taxes, together
with all interest, penalties and additions imposed with respect to such amounts,
(ii) any liability for payment of any amounts of the type described in clause
(i) as a result of being a member of an affiliated consolidated, combined or
unitary group, and (iii) any liability for amounts of the type described in
clauses (i) and (ii) as a result of any express or implied obligation to
indemnify another person or as a result of any obligations under any agreements
or arrangements with any other person with respect to such amounts and including
any liability for taxes of a predecessor entity.
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2.8 Title to Properties.
(a) All real property leases to which Company is a party and each
amendment thereto that is in effect as of the date of this Agreement that
provide for annual payments in excess of $250,000 are in full force and effect
and are valid and enforceable in accordance with their respective terms, and
there is not, under any of such leases, any existing default or event of default
(or event which with notice or lapse of time, or both, would constitute a
default) that would give rise to a material claim against Company which could
reasonably be expected to have a Material Adverse Effect on Company.
(b) Company has good and valid title to, or, in the case of leased
properties and assets, valid leasehold interests in, all of its tangible
properties and assets, real, personal and mixed, used or held for use in its
business, free and clear of any Encumbrances, except as reflected in Company
Financials and except where the failure to have valid title or a valid leasehold
interest would not have a Material Adverse Effect on Company.
2.9 Intellectual Property. For the purposes of this Agreement, the
following terms have the following definitions:
"INTELLECTUAL PROPERTY" shall mean any or all of the following and all
rights in, arising out of, or associated therewith: (i) all United States,
international and foreign patents and applications therefor and all reissues,
divisions, renewals, extensions, provisionals, continuations and
continuations-in-part thereof; (ii) all inventions (whether patentable or not),
invention disclosures, improvements, trade secrets, proprietary information,
know how, technology, technical data and customer lists, and all documentation
relating to any of the foregoing; (iii) all copyrights, copyrights registrations
and applications therefor, and all other rights corresponding thereto throughout
the world; (iv) all industrial designs and any registrations and applications
therefor throughout the world; (v) all trade names, URLs, logos, common law
trademarks and service marks, trademark and service xxxx registrations and
applications therefor throughout the world; (vi) all databases and data
collections and all rights therein throughout the world; (vii) all moral and
economic rights of authors and inventors, however denominated, throughout the
world, and (viii) any similar or equivalent rights to any of the foregoing
anywhere in the world.
"COMPANY INTELLECTUAL PROPERTY" shall mean any Intellectual Property that
is owned by, or exclusively licensed to, Company or one of its subsidiaries.
"REGISTERED INTELLECTUAL PROPERTY" means all United States, international
and foreign: (i) patents and patent applications (including provisional
applications); (ii) registered trademarks, applications to register trademarks,
intent-to-use applications, or other registrations or applications related to
trademarks; (iii) registered copyrights and applications for copyright
registration; and (iv) any other Intellectual Property that is the subject of an
application, certificate, filing, registration or other document issued, filed
with, or recorded by any Governmental Entity.
"COMPANY REGISTERED INTELLECTUAL PROPERTY" means all of the Registered
Intellectual Property owned by, or filed in the name of, Company or one of its
subsidiaries.
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(a) No material Company Intellectual Property or product or service of
Company is subject to any proceeding, agreement, or stipulation to which Company
is a party, or any outstanding decree, order or judgment, the proceeding arising
out of which Company was either a party or of which Company has knowledge,
restricting in any manner the use, transfer, or licensing thereof by Company, or
which may affect the validity, use or enforceability of such Company
Intellectual Property.
(b) Each material item of Company Registered Intellectual Property is
valid and subsisting, all necessary registration, maintenance and renewal fees
currently due in connection with such Company Registered Intellectual Property
have been made and all necessary documents, recordations and certificates in
connection with such Company Registered Intellectual Property have been filed
with the relevant patent, copyright, trademark or other authorities in the
United States or foreign jurisdictions, as the case may be, for the purposes of
maintaining such Company Registered Intellectual Property, except, in each case,
as would not materially adversely affect such item of Company Registered
Intellectual Property.
(c) Company or one of its subsidiaries owns and has good and exclusive
title to, or has license sufficient for the conduct of its business as currently
conducted to, each material item of Company Intellectual Property free and clear
of any Encumbrance (excluding licenses and related restrictions).
(d) Neither Company nor any of its subsidiaries has transferred
ownership of, or granted any exclusive license with respect to, any Intellectual
Property that is or was material Company Intellectual Property, to any third
party.
(e) Part 2.9(e) of the Company Disclosure Letter lists all material
contracts, licenses and agreements to which Company is a party (i) pursuant to
which any exclusive rights with respect to any item of Company Intellectual
Property are licensed, granted or transferred to any third party; or (ii)
pursuant to which a third party has licensed, transferred, sold or distributed
any material Intellectual Property to Company.
(f) The operation of the business of Company as such business currently
is conducted, including Company's design, development, marketing and sale of the
products or services of Company (including with respect to products currently
under development) has not, does not and will not materially infringe or
materially misappropriate the Intellectual Property of any third party or, to
its knowledge, constitute unfair competition or trade practices under the laws
of any jurisdiction.
(g) Company has not received written notice from any third party that
the operation of the business of Company or any act, product or service of
Company, infringes or misappropriates the Intellectual Property of any third
party or constitutes unfair competition or trade practices under the laws of any
jurisdiction, which allegation, if true, would have a Material Adverse Effect on
Company.
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(h) To the knowledge of Company, no person has or is infringing or
misappropriating any Company Intellectual Property, which infringement or
misappropriation, individually or in the aggregate, would have a Material
Adverse Effect on Company.
(i) Company and its subsidiaries have taken reasonable steps to protect
Company's and its subsidiaries' rights in Company's and such subsidiaries'
confidential information and trade secrets, except where the failure to do so
would not have a Material Adverse Effect on Company.
(j) None of the Company Intellectual Property or product or service of
Company contains any defect in connection with processing data containing dates
in leap years or in the year 2000 or any preceding or following years, which
defects, individually or in the aggregate, would have a Material Adverse Effect
on Company.
2.10 Compliance with Laws.
(a) Neither Company nor any of its subsidiaries is in conflict with, or
in default or in violation of (i) any law, rule, regulation, order, judgment or
decree applicable to Company or any of its subsidiaries or by which Company or
any of its subsidiaries or any of their respective properties is bound or
affected, or (ii) any note, bond, mortgage, indenture, agreement, lease,
license, permit, franchise or other instrument or obligation to which Company or
any of its subsidiaries is a party or by which Company or any of its
subsidiaries or its or any of their respective properties is bound or affected,
except for conflicts, violations and defaults that, individually or in the
aggregate, would not have a Material Adverse Effect on Company. To Company's
knowledge, no investigation or review by any Governmental Entity is pending or
has been threatened in a writing delivered to Company against Company or any of
its subsidiaries. There is no agreement with any Governmental Entity, judgment,
injunction, order or decree binding upon Company or any of its subsidiaries
which has or could reasonably be expected to have the effect of prohibiting or
materially impairing any material business practice of Company or any of its
subsidiaries, or any acquisition of material property by Company or any of its
subsidiaries.
(b) Company and its subsidiaries hold all permits, licenses,
exemptions, orders and approvals from governmental authorities that are material
to or required for the operation of the business of Company as currently
conducted (collectively, the "COMPANY PERMITS"), and are in compliance with the
terms of the Company Permits, except where the failure to hold such Company
Permits, or be in such compliance, would not, individually or in the aggregate,
have a Material Adverse Effect on Company.
2.11 Litigation. There are no claims, suits, actions or proceedings pending
or, to the knowledge of Company, threatened against, relating to or affecting
Company or any of its subsidiaries, before any Governmental Entity or any
arbitrator that seeks to restrain or enjoin the consummation of the transactions
contemplated by this Agreement or which could reasonably be expected, either
singularly or in the aggregate with all such claims, actions or proceedings, to
have a Material Adverse Effect on Company or on the Surviving Corporation
following the
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Merger or have a material adverse effect on the ability of the parties hereto to
consummate the Merger.
2.12 Employee Benefit Plans.
(a) Definitions. With the exception of the definition of "Affiliate"
set forth in Section 2.12(a)(i) below (which definition shall apply only to this
Section 2.12), for purposes of this Agreement, the following terms shall have
the meanings set forth below:
(i) "AFFILIATE" shall mean any other person or entity under common
control with Company within the meaning of Section 414(b), (c), (m) or (o) of
the Code and the regulations issued thereunder;
(ii) "COMPANY EMPLOYEE PLAN" shall mean any plan, program, policy,
practice, contract, agreement or other arrangement providing for compensation,
severance, termination pay, performance awards, stock or stock-related awards,
fringe benefits or other employee benefits or remuneration of any kind, whether
written or unwritten or otherwise, funded or unfunded, including without
limitation, each "EMPLOYEE BENEFIT PLAN," within the meaning of Section 3(3) of
ERISA which is maintained, contributed to, or required to be contributed to, by
Company or any Affiliate for the benefit of any Employee;
(iii) "COBRA" shall mean the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended;
(iv) "DOL" shall mean the Department of Labor;
(v) "EMPLOYEE" shall mean any current, former, or retired
employee, officer, or director of Company or any Affiliate;
(vi) "EMPLOYEE AGREEMENT" shall mean each management, employment,
severance, consulting, relocation, repatriation, expatriation, visas, work
permit or similar agreement or contract between Company or any Affiliate and any
Employee or consultant (excluding any offer letter or other agreement that does
not subject Company to any potential liability in excess of $200,000);
(vii) "ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as amended;
(viii) "FMLA" shall mean the Family Medical Leave Act of 1993, as
amended;
(ix) "INTERNATIONAL EMPLOYEE PLAN" shall mean each Company
Employee Plan that has been adopted or maintained by Company, whether informally
or formally, for the benefit of Employees outside the United States;
(x) "IRS" shall mean the Internal Revenue Service;
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(xi) "MULTIEMPLOYER PLAN" shall mean any "PENSION PLAN" (as
defined below) which is a "multiemployer plan," as defined in Section 3(37) of
ERISA;
(xii) "PBGC" shall mean the Pension Benefit Guaranty Corporation;
and
(xiii) "PENSION PLAN" shall mean each Company Employee Plan which
is an "employee pension benefit plan," within the meaning of Section 3(2) of
ERISA.
(b) Schedule. Part 2.12 of the Company Disclosure Letter contains an
accurate and complete list of each Company Employee Plan and each Employee
Agreement. Company does not have any plan or commitment to establish any new
Company Employee Plan, to modify any Company Employee Plan or Employee Agreement
(except to the extent required by law or to conform any such Company Employee
Plan or Employee Agreement to the requirements of any applicable law, or as
required by this Agreement), or to enter into any Company Employee Plan or
Employee Agreement, nor does it have any intention or commitment to do any of
the foregoing.
(c) Documents. Company has provided or has made available to Parent:
(i) correct and complete copies of all documents embodying each Company Employee
Plan and each Employee Agreement including all amendments thereto and written
interpretations thereof; (ii) the most recent annual actuarial valuations, if
any, prepared for each Company Employee Plan; (iii) the three most recent annual
reports (Form Series 5500 and all schedules and financial statements attached
thereto), if any, required under ERISA or the Code in connection with each
Company Employee Plan or related trust; (iv) if the Company Employee Plan is
funded, the most recent annual and periodic accounting of Company Employee Plan
assets; (v) the most recent summary plan description together with the summary
of material modifications thereto, if any, required under ERISA with respect to
each Company Employee Plan; (vi) all IRS determination, opinion, notification
and advisory letters, and rulings relating to Company Employee Plans and copies
of all applications and correspondence to or from the IRS or the DOL with
respect to any Company Employee Plan; (vii) all material written agreements and
contracts relating to each Company Employee Plan, including, but not limited to,
administrative service agreements, group annuity contracts and group insurance
contracts; (viii) all communications material to any Employee or Employees
relating to any Company Employee Plan and any proposed Company Employee Plans,
in each case, relating to any amendments, terminations, establishments,
increases or decreases in benefits, acceleration of payments or vesting
schedules or other events which would result in any material liability to
Company; (ix) all COBRA forms and related notices; and (x) all registration
statements and prospectuses prepared in connection with each Company Employee
Plan.
(d) Employee Plan Compliance. Except, in each case, as would not,
individually or in the aggregate, have a Material Adverse Effect on Company: (i)
Company has performed in all material respects all obligations required to be
performed by it under, is not in default or violation of, and has no knowledge
of any default or violation by any other party to, each Company Employee Plan,
and each Company Employee Plan has been established and maintained in all
material respects in accordance with its terms and in compliance with all
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applicable laws, statutes, orders, rules and regulations, including but not
limited to ERISA or the Code; (ii) each Company Employee Plan intended to
qualify under Section 401(a) of the Code and each trust intended to qualify
under Section 501(a) of the Code has either received a favorable determination
letter from the IRS with respect to each such Plan as to its qualified status
under the Code or has remaining a period of time under applicable Treasury
regulations or IRS pronouncements in which to apply for such a determination
letter and make any amendments necessary to obtain a favorable determination and
no event has occurred which would adversely affect the status of such
determination letter or the qualified status of such Plan; (iii) no "prohibited
transaction," within the meaning of Section 4975 of the Code or Sections 406 and
407 of ERISA, and not otherwise exempt under Section 408 of ERISA, has occurred
with respect to any Company Employee Plan; (iv) there are no actions, suits or
claims pending, or, to the knowledge of Company, threatened or reasonably
anticipated (other than routine claims for benefits) against any Company
Employee Plan or against the assets of any Company Employee Plan; (v) each
Company Employee Plan can be amended, terminated or otherwise discontinued after
the Effective Time in accordance with its terms, without liability to Parent,
Company or any of its Affiliates (other than ordinary administration expenses
typically incurred in a termination event); (vi) there are no audits, inquiries
or proceedings pending or, to the knowledge of Company, threatened by the IRS or
DOL with respect to any Company Employee Plan; (vii) neither Company nor any
Affiliate is subject to any material penalty or tax with respect to any Company
Employee Plan under Section 402(i) of ERISA or Sections 4975 through 4980 of the
Code; and (viii) all contributions due from the Company or any Affiliate with
respect to any of the Company Employee Plans have been made as required under
ERISA or have been accrued on the Company Balance Sheet.
(e) Pension Plans. Company does not now, nor has it ever, maintained,
established, sponsored, participated in, or contributed to, any Pension Plan
which is subject to Title IV of ERISA or Section 412 of the Code.
(f) Multiemployer Plans. At no time has Company contributed to or been
required to contribute to any Multiemployer Plan.
(g) No Post-Employment Obligations. No Company Employee Plan provides,
or has any liability to provide, retiree life insurance, retiree health or other
retiree employee welfare benefits to any person for any reason, except as may be
required by COBRA or other applicable statute, and Company has never
represented, promised or contracted (whether in oral or written form) to any
Employee (either individually or to Employees as a group) or any other person
that such Employee(s) or other person would be provided with retiree life
insurance, retiree health or other retiree employee welfare benefit, except to
the extent required by statute.
(h) COBRA; FMLA. Except as would not have a Material Adverse Effect on
Company, neither Company nor any Affiliate has, prior to the Effective Time
violated any of the health care continuation requirements of COBRA, the
requirements of FMLA or any similar provisions of state law applicable to its
Employees.
(i) Effect of Transaction. The execution of this Agreement and the
consummation of the transactions contemplated hereby will not (either alone or
upon the
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occurrence of any additional or subsequent events) constitute an event under any
Company Employee Plan, Employee Agreement, trust or loan that will or may result
in any payment (whether of severance pay or otherwise), acceleration,
forgiveness of indebtedness, vesting, distribution, increase in benefits or
obligation to fund benefits with respect to any Employee. No payment or benefit
which will or may be made by Company or its Affiliates with respect to any
Employee as a result of the transactions contemplated by this Agreement will be
characterized as an "excess parachute payment," within the meaning of Section
280G(b)(1) of the Code or will be treated as a nondeductible expense within the
meaning of Section 162 of the Code.
(j) Employment Matters. Except, in each case, as would not,
individually or in the aggregate, have a Material Adverse Effect on Company,
Company and each of its subsidiaries: (i) is in compliance in all material
respects with all applicable foreign, federal, state and local laws, rules and
regulations respecting employment, employment practices, terms and conditions of
employment and wages and hours, in each case, with respect to Employees; (ii)
has withheld all amounts required by law or by agreement to be withheld from the
wages, salaries and other payments to Employees; (iii) has properly classified
independent contractors for purposes of federal and applicable state tax laws,
laws applicable to employee benefits and other applicable laws; (iv) is not
liable for any arrears of wages or any taxes or any penalty for failure to
comply with any of the foregoing; and (v) is not liable for any material payment
to any trust or other fund or to any governmental or administrative authority,
with respect to unemployment compensation benefits, social security or other
benefits or obligations for Employees (other than routine payments to be made in
the normal course of business and consistent with past practice). There are no
pending, or, to Company's knowledge, threatened material claims or actions
against Company under any worker's compensation policy or long-term disability
policy. To Company's knowledge, no Employee of Company has violated in any
material manner any employment contract, nondisclosure agreement or
noncompetition agreement by which such Employee is bound due to such Employee
being employed by Company and disclosing to Company or using trade secrets or
proprietary information of any other person or entity.
(k) Labor. No work stoppage or labor strike against Company is pending,
threatened or reasonably anticipated. Company does not know of any activities or
proceedings of any labor union to organize any Employees. There are no actions,
suits, claims, labor disputes or grievances pending, or, to the knowledge of
Company, threatened relating to any labor, safety or discrimination matters
involving any Employee, including charges of unfair labor practices or
discrimination complaints, which, if adversely determined, would, individually
or in the aggregate, result in any material liability to Company. Neither
Company nor any of its subsidiaries has engaged in any unfair labor practices
within the meaning of the National Labor Relations Act. Company is not
presently, nor has it been in the past, a party to, or bound by, any collective
bargaining agreement or union contract with respect to Employees and no
collective bargaining agreement is being negotiated by Company.
(l) International Employee Plan. Each International Employee Plan has
been established, maintained and administered in material compliance with its
terms and conditions and with the requirements prescribed by any and all
statutory or regulatory laws that are applicable to such International Employee
Plan. Furthermore, no International Employee Plan has unfunded liabilities, that
as of the Effective Time, will not be offset by insurance or fully
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accrued. Except as required by law, no condition exists that would prevent
Company or Parent from terminating or amending any International Employee Plan
at any time for any reason.
2.13 Environmental Matters. During the period that Company has leased or
owned its properties or leased, owned or operated any facilities, there have
been no disposals, releases or threatened releases of Hazardous Materials (as
defined below) on, from or under any such properties or facilities that would
have a Material Adverse Effect on Company. Company has no knowledge of any
presence, disposals, releases or threatened releases of Hazardous Materials on,
from or under any of such properties or facilities, which may have occurred
prior to Company or any of its subsidiaries having taken possession of any of
such properties or facilities which might reasonably be expected to have a
Material Adverse Effect on Company. None of the properties or facilities
currently leased or owned by Company or any of its subsidiaries or any
properties or facilities previously leased or owned by Company or any of its
subsidiaries is in violation of any federal, state or local law, ordinance,
regulation or order relating to industrial hygiene or to the environmental
conditions on, under or about such properties or facilities, including, but not
limited to, soil and ground water condition which violation would have a
Material Adverse Effect on Company. During Company's occupancy of any properties
or facilities owned or leased at any time by Company, neither Company, nor to
Company's knowledge, any third party, has used, generated, manufactured,
released or stored on, under or about such properties and facilities or
transported to or from such properties and facilities any Hazardous Materials
that would have or is reasonably likely to have a Material Adverse Effect on
Company. During the time that Company or any of its subsidiaries has owned or
leased the properties and facilities currently occupied by it or any properties
and facilities previously occupied by Company or any of its subsidiaries, there
has been no material litigation, proceeding or administrative action brought or
threatened against Company or any of its subsidiaries, or any material
settlement reached by Company or any of its subsidiaries with, any party or
parties alleging the presence, disposal, release or threatened release of any
Hazardous Materials on, from or under any of such properties or facilities.
For purposes of this Agreement, the terms "DISPOSAL," "RELEASE," and
"THREATENED RELEASE" have the definitions assigned thereto by the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C.
Section 9601 et seq., as amended ("CERCLA"). For the purposes of this Section
2.13, "HAZARDOUS MATERIALS" mean any hazardous or toxic substance, material or
waste which is or becomes prior to the Closing Date, regulated under, or defined
as a "hazardous substance," "pollutant," "contaminant," "toxic chemical,"
"hazardous material," "toxic substance" or "hazardous chemical" under (i)
CERCLA; (ii) the Emergency Planning and Community Right-to-Know Act, 42 U.S.C.
Section 11001 et seq.; (iii) the Hazardous Materials Transportation Act, 49
U.S.C. Section 1801, et seq.; (iv) the Toxic Substances Control Act, 15 U.S.C.
Section 2601 et seq.; (v) the Occupational Safety and Health Act of 1970, 29
U.S.C. Section 651 et seq.; (vi) regulations promulgated under any of the above
statutes; or (vii) any other applicable federal, state or local statute,
ordinance, rule or regulation that has a scope or purpose similar to those
identified above.
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2.14 Certain Agreements. Other than the Related Agreements, except as
otherwise set forth in Part 2.14 of the Company Disclosure Letter, neither
Company nor any of its subsidiaries is a party to or is bound by:
(a) other than as disclosed in Part 2.12 of the Company Disclosure
Letter, any employment agreement or commitment with any officer or member of
Company's Board of Directors, other than those that are terminable by Company or
any of its subsidiaries on no more than thirty days notice without liability or
financial obligation, except to the extent general principles of wrongful
termination law may limit Company's or any of its subsidiaries' ability to
terminate employees at will, or any consulting agreement;
(b) any material agreement of indemnification, any material guaranty or
any material instrument evidencing indebtedness for borrowed money by way of
direct loan, sale of debt securities or purchase money obligation;
(c) any agreement or obligation containing covenants purporting to
limit or which effectively limit the Company's or any of its subsidiaries'
freedom to compete in any line of business or in any geographic area or which
would so limit Company or Surviving Corporation or any of its subsidiaries after
the Effective Time or granting any exclusive distribution or other exclusive
rights;
(d) any agreement or obligation currently in force relating to the
disposition or acquisition by Company or any of its subsidiaries after the date
of this Agreement of a material amount of assets not in the ordinary course of
business, or pursuant to which Company has any material ownership or
participation interest in any corporation, partnership, joint venture, strategic
alliance or other business enterprise other than Company's subsidiaries;
(e) other than Company's standard source code escrow agreement for the
benefit of Company's customers (in the form provided to Parent), any agreement
or obligation currently in force to provide source code to any third party for
any product or technology;
(f) any agreement or obligation with any affiliate of Company; or
(g) any agreement or obligation currently in force requiring annual
capital expenditures by Company or its subsidiaries in excess of $1,000,000.
The agreements required to be disclosed in the Company Disclosure Letter
pursuant to clauses (a) through (g) above or pursuant to Section 2.9 or filed
with any Company SEC Report ("COMPANY CONTRACTS") are valid and in full force
and effect, except to the extent that such invalidity would not have a Material
Adverse Effect on Company. Neither Company nor any of its subsidiaries, nor to
Company's knowledge, any other party thereto, is in breach, violation or default
under, and neither Company nor any of its subsidiaries has received written
notice that it has breached, violated or defaulted, any of the terms or
conditions of any Company Contract in such a manner as would have a Material
Adverse Effect on Company.
2.15 Brokers' and Finders' Fees. Except for fees payable to Warburg Dillon
Read LLC pursuant to an engagement letter, a copy of which has been provided to
Parent, Company
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has not incurred, nor will it incur, directly or indirectly, any liability for
brokerage or finders' fees or agents' commissions or any similar charges in
connection with this Agreement or any transaction contemplated hereby.
2.16 Insurance. Company and each of its subsidiaries have policies of
insurance and bonds of the type and in amounts customarily carried by persons
conducting business or owning assets similar to those of the Company and its
subsidiaries. There is no material claim pending under any of such policies or
bonds as to which coverage has been questioned, denied or disputed by the
underwriters of such policies or bonds. All premiums due and payable under all
such policies have been paid and the Company and its subsidiaries are otherwise
in compliance in all material respects with the terms of such policies and
bonds.
2.17 Disclosure. The information supplied by Company for inclusion in the
Registration Statement on Form S-4 (or any similar successor form thereto) to be
filed by Parent with the SEC in connection with the issuance of Parent Common
Stock in the Merger (the "REGISTRATION STATEMENT") shall not at the time the
Registration Statement is filed with the SEC and 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 required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they are made, not misleading. The information supplied by Company
for inclusion or incorporation by reference in the proxy statement/prospectus to
be filed with the SEC as part of the Registration Statement (the "PROXY
STATEMENT/PROSPECTUS") shall not (i) on the date the Proxy Statement/Prospectus
is mailed to Company's stockholders or to Parent's stockholders, (ii) at the
time of the meeting of Company's stockholders (the "COMPANY STOCKHOLDERS'
MEETING") to consider the Company Stockholder Approvals, and (iii) at the time
of the meeting of Parent's stockholders (the "PARENT STOCKHOLDERS' MEETING") to
consider the approval of (1) the issuance of shares of Parent Common Stock
pursuant to the Merger and the Related Agreements and (2) an amendment to
Parent's Certificate of Incorporation to increase the authorized number of
shares of Parent Common Stock in order to permit the issuance of shares of
Parent Common Stock pursuant to the Merger and the transactions contemplated by
the Related Agreements (the "PARENT STOCKHOLDER APPROVALS") or as of the
Effective Time, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they are made,
not 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/Prospectus will comply
as to form in all material respects with the applicable provisions of the
Securities Act, the Exchange Act and the rules and regulations thereunder. If at
any time prior to the Effective Time any event relating to Company or any of its
affiliates, officers or directors should be discovered by Company which is
required to be set forth in an amendment to the Registration Statement or a
supplement to the Proxy Statement/Prospectus, Company shall promptly inform
Parent. Notwithstanding the foregoing, 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.
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2.18 Board Approval. The Board of Directors of Company has, as of the date
of this Agreement, (i) determined that the Merger is fair to, and in the best
interests of Company and its stockholders, and has approved this Agreement and
(ii) declared the advisability of the Merger and recommends that the
stockholders of Company approve and adopt this Agreement and approve the Merger.
2.19 Opinion of Financial Advisor. Company's Board of Directors has
received an opinion from Warburg Dillon Read LLC, dated as of the date of this
Agreement, to the effect that, as of such date, the Exchange Ratio is fair to
holders of Company's Common Stock from a financial point of view, a copy of the
written opinion of which will be delivered to Parent after receipt thereof by
Company.
2.20 Anti-Takeover Protections. The Board of Directors of Company has taken
all actions so that the restrictions contained in Section 203 of the Delaware
General Corporation Law applicable to a "business combination" (as defined in
such Section 203) will not apply to the execution, delivery or performance of
this Agreement or to the consummation of the Merger or the other transactions
contemplated by this Agreement. For the three years prior to the date of this
Agreement, none of Company, its "affiliates" nor "associates" (as such terms are
defined in Section 203 of the Delaware Law) were the owner of 15% or more of the
outstanding voting stock of Parent. To Company's knowledge, no other
anti-takeover, control share acquisition, fair price, moratorium or other
similar statute or regulation ("TAKEOVER STATUTE") applies or purports to apply
to this Agreement, the Merger or the other transactions contemplated hereby.
Company is not a party to, and Company's equity securities will not be affected
by, any rights agreement, "poison pill" or similar plan, agreement or
arrangement which would have an adverse effect on the ability of Parent to
consummate the Merger or the other transactions contemplated hereby.
2.21 Affiliates. Part 2.21 of the Company Disclosure Letter is a complete
list of those persons who may be deemed to be, in Company's reasonable judgment,
affiliates of Company within the meaning of Rule 145 promulgated under the
Securities Act ("COMPANY AFFILIATES"). Except as set forth in the Company SEC
Reports, since the date of the Company's last proxy statement filed with the
SEC, no event has occurred as of the date of this Agreement that would be
required to be reported by the Company pursuant to Item 404 of Regulation S-K
promulgated by the SEC.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
As of the date of this Agreement and as of the Closing Date, Parent and
Merger Sub represent and warrant to Company, subject to the exceptions
specifically disclosed in writing in the disclosure letter and referencing a
specific representation delivered by Parent to Company dated as of the date
hereof and certified by a duly authorized officer of Parent (the "PARENT
DISCLOSURE LETTER"), as follows:
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3.1 Organization of Parent and Merger Sub.
(a) Parent and each of its subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has all requisite corporate power and
authority, and all requisite qualifications to do business as a foreign
corporation, to conduct its business in the manner in which its business is
currently being conducted, except where the failure to be so organized, existing
or in good standing or to have such power, authority or qualifications would
not, individually or in the aggregate, have a Material Adverse Effect on Parent.
(b) Other than the corporations identified in Part 3.1 of the Parent
Disclosure Letter, neither Parent nor any of the other corporations identified
in Part 3.1 of the Parent Disclosure Letter owns any capital stock of, or any
equity interest of any nature in, any corporation, partnership, joint venture
arrangement or other business entity, other than the entities identified in Part
3.1 of the Parent Disclosure Letter, except for passive investments in equity
interests of public companies as part of the cash management program of Parent.
Neither Company nor any of its subsidiaries is obligated to make any material
future investment in or capital contribution to any other entity. Part 3.1 of
the Parent Disclosure Letter indicates the jurisdiction of organization of each
entity listed therein and Parent's direct or indirect equity interest therein.
(b) Parent has delivered or made available to Company a true and
correct copy of the Certificate of Incorporation (including any Certificates of
Designation) and Bylaws of Parent and similar governing instruments of each of
its subsidiaries, each as amended to date (collectively, the "PARENT CHARTER
DOCUMENTS"), and each such instrument is in full force and effect. Neither
Parent nor any of its subsidiaries is in violation of any of the provisions of
the Parent Charter Documents.
3.2 Parent and Merger Sub Capitalization.
(a) The authorized capital stock of Parent consists solely of
200,000,000 shares of Parent Common Stock, of which there were 64,773,413 shares
issued and outstanding as of the close of business on March 28, 2000, and
5,000,000 shares of Preferred Stock, par value $0.001 per share, of which no
shares are issued or outstanding. All outstanding shares of Parent Common Stock
are duly authorized, validly issued, fully paid and nonassessable and are not
subject to any right of rescission or preemptive rights created by statute, the
Parent Charter Documents or any agreement or document to which Parent is a party
or by which it is bound. As of the date of this Agreement, there are no shares
of Parent Common Stock held in treasury by Parent.
(b) As of the close of business on March 28, 2000, (i) 7,242,904 shares
of Parent Common Stock are subject to issuance pursuant to outstanding options
("PARENT OPTIONS") to purchase Parent Common Stock under Parent's 1997 Stock
Plan and 1999 Equity Incentive Plan ("PARENT STOCK OPTION PLANS") for an
aggregate exercise price of $45,865,480, (ii) 142,551 shares of Parent Common
Stock are subject to issuance pursuant to Parent Options other than pursuant to
the Parent Stock Option Plans for an aggregate exercise price of $512,704,
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and (iii) 750,000 shares of Parent Common Stock are reserved for future issuance
under Parent's 1998 Equity Employee Stock Purchase Plan ("PARENT ESPP"). Parent
has made available to Company an accurate and complete copy of each of the
Parent Stock Option Plans and the form of all stock option agreements evidencing
Parent Options. All shares of Parent Common Stock subject to issuance as
aforesaid, upon issuance on the terms and conditions specified in the
instruments pursuant to which they are issuable, will be duly authorized,
validly issued, fully paid and nonassessable. Other than as set forth on Part
3.2(b) of the Parent Disclosure Letter, there are no commitments or agreements
of any character to which the Parent is bound obligating Parent to accelerate
the vesting of any Parent Option as a result of the Merger.
(c) The authorized capital stock of Merger Sub consists of 1,000 shares
of common stock, $0.01 par value, 100 of which, as of the date hereof, are
issued and outstanding and are held by Parent. All of the outstanding shares of
Merger Sub's common stock have been duly authorized and validly issued, and are
fully paid and nonassessable. Merger Sub was formed for the purpose of
consummating the Merger and has no material assets or liabilities except as
necessary for such purpose.
(c) All outstanding shares of Parent Common Stock, all outstanding
Parent Options, and all outstanding shares of capital stock of each subsidiary
of Parent have been issued and granted in material compliance with (i) all
applicable securities laws and other applicable material Legal Requirements and
(ii) all material requirements set forth in applicable agreements or
instruments.
(d) The Parent Common Stock to be issued in the Merger, when issued in
accordance with the provisions of this Agreement, will be validly issued, fully
paid and nonassessable.
3.3 Obligations With Respect to Capital Stock. Except as set forth in
Section 3.2 or Part 3.3 of the Parent Disclosure Letter, there are no equity
securities, partnership interests or similar ownership interests of any class of
Parent equity security, or any securities exchangeable or convertible into or
exercisable for such equity securities, partnership interests or similar
ownership interests, issued, reserved for issuance or outstanding. All stock and
rights to purchase stock of any subsidiary of Parent are owned free and clear of
all Encumbrances. Except as set forth in Section 3.2 or Part 3.2 or Part 3.3 of
the Parent Disclosure Letter, there are no subscriptions, options, warrants,
equity securities, partnership interests or similar ownership interests, calls,
rights (including preemptive rights), commitments or agreements of any character
to which Parent or any of its subsidiaries is a party or by which it is bound
obligating Parent or any of its subsidiaries to issue, deliver or sell, or cause
to be issued, delivered or sold, or repurchase, redeem or otherwise acquire, or
cause the repurchase, redemption or acquisition of, any shares of capital stock,
partnership interests or similar ownership interests of Parent or any of its
subsidiaries or obligating Parent or any of its subsidiaries to grant, extend,
accelerate the vesting of or enter into any such subscription, option, warrant,
equity security, call, right, commitment or agreement. There are no registration
rights, and there is no voting trust, proxy, rights agreement, "poison pill"
anti-takeover plan or other agreement or understanding to which Parent is a
party or by which it is bound with respect to any equity security of any class
of Parent or with respect to any equity security, partnership interest or
similar ownership interest of any
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class of any of its subsidiaries.
3.4 Authority; Non-Contravention.
(a) Each of Parent and Merger Sub has all requisite corporate power and
authority to enter into this Agreement and the Related Agreements and to
consummate the transactions contemplated hereby and thereby. The execution and
delivery of this Agreement and the Related Agreements 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 Parent Stockholder Approvals and the filing of the Certificate of
Merger pursuant to Delaware Law. The affirmative vote of the holders of a
majority in interest of the stock present or represented by proxy at the Parent
Stockholders' Meeting is sufficient for Parent's stockholders to approve the
issuance of shares of Parent Common Stock in the Merger and pursuant to the
Related Agreements, and the affirmative vote of the holders of a majority of the
outstanding shares of Parent Common Stock entitled to vote is sufficient for
Parent's stockholders to approve the amendment to Parent's Certificate of
Incorporation, and no other approval of any holder of any securities of Parent
is required in connection with the consummation of the transactions contemplated
hereby. This Agreement and the Related Agreements have been duly executed and
delivered by each of Parent and Merger Sub, as applicable, and, assuming the due
authorization, execution and delivery by Company or the other parties thereto,
constitute the valid and binding obligations of Parent and Merger Sub,
respectively, enforceable against Parent and Merger Sub in accordance with their
terms, except as enforceability may be limited by bankruptcy and other similar
laws affecting the rights of creditors generally and general principles of
equity.
(b) The execution and delivery of this Agreement and the Related
Agreements by each of Parent and Merger Sub does not, and the performance of
this Agreement and the Related Agreements by Parent and Merger Sub will not, (i)
conflict with or violate the Parent Charter Documents, (ii) subject to obtaining
the Parent Stockholder Approvals and compliance with the requirements set forth
in Section 3.4(c), conflict with or violate any law, rule, regulation, order,
judgment or decree applicable to Parent or Merger Sub or by which any of their
respective properties is bound or affected, or (iii) result in any breach of or
constitute a default (or an event that with notice or lapse of time or both
would become a default) under, or impair Parent's rights or alter the rights or
obligations of any third party under, or give to others any rights of
termination, amendment, acceleration or cancellation of; or result in the
creation of an Encumbrance on any of the properties or assets of Parent or
Merger Sub pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which Parent or Merger Sub is a party or by which Parent or Merger Sub or any
of their respective properties are bound or affected, except, in the case of
clauses (ii) and (iii), for such conflicts, violations, breaches, defaults,
impairments, or rights which, individually or in the aggregate, would not have a
Material Adverse Effect on Parent. Part 3.4(b) of the Parent Disclosure Letter
lists all consents, waivers and approvals under any of Parent's or any of its
subsidiaries' agreements, contracts, licenses or leases required to be obtained
in connection with the consummation of the transactions contemplated hereby,
which, if individually or in the aggregate not obtained, would have a Material
Adverse Effect on Parent,
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Company or the Surviving Corporation as a result of the Merger or would
materially and adversely affect Parent's Intellectual Property.
(c) No consent, approval, order or authorization of, or registration,
declaration or filing with any Governmental Entity is required to be obtained or
made by Parent or Merger Sub in connection with the execution and delivery of
this Agreement or the consummation of the Merger, except for (i) the filing of
the Certificate of Merger with the Secretary of State of the State of Delaware,
(ii) the filing of the Proxy Statement/Prospectus and the Registration Statement
with the SEC and a Schedule 13D with regard to the Company Voting Agreements in
accordance with the Securities Act and the Exchange Act, and the effectiveness
of the Registration Statement, (iii) such consents, approvals, orders,
authorizations, registrations, declarations and filings as may be required under
applicable federal, foreign and state securities (or related) laws and the HSR
Act and the securities or antitrust laws of any foreign country, and (iv) such
other consents, authorizations, filings, approvals and registrations which if
not obtained or made would not have a Material Adverse Effect on Parent or the
Surviving Corporation or have a material adverse effect on the ability of the
parties hereto to consummate the Merger.
3.5 SEC Filings; Parent Financial Statements.
(a) Parent has filed all forms, reports and documents required to be
filed by Parent with the SEC since the effective date of the registration
statement (the "PARENT INITIAL REGISTRATION STATEMENT") of Parent's initial
public offering, and has made available to Company such forms, reports and
documents in the form filed with the SEC. All such required forms, reports and
documents (including those that Parent may file subsequent to the date hereof)
and the Parent Initial Registration Statement are referred to herein as 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 filing) contain any untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, except to the extent
corrected prior to the date of this Agreement by a subsequently filed Parent SEC
Report. None of Parent's subsidiaries is required to file any forms, reports or
other documents with the SEC.
(b) Each of the consolidated financial statements (including, in each
case, any related notes thereto) contained in the Parent SEC Reports (the
"PARENT FINANCIALS"), including any Parent SEC Reports filed after the date
hereof until the Closing, (i) complied as to form in all material respects with
the published rules and regulations of the SEC with respect thereto, (ii) was
prepared in accordance with GAAP applied on a consistent basis throughout the
periods involved (except as may be indicated in the notes thereto or, in the
case of unaudited interim financial statements, as may be permitted by the SEC
on Form 10-Q, 8-K or any successor form under the Exchange Act) and (iii) fairly
presented the consolidated financial position of Parent and its subsidiaries as
at the respective dates thereof and the consolidated results of Parent's
operations and cash flows for the periods indicated, except that the unaudited
interim financial statements may not contain footnotes and were or are subject
to normal and recurring year-end
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adjustments. The balance sheet of Parent contained in Parent SEC Reports as of
September 30, 1999 is hereinafter referred to as the "PARENT BALANCE SHEET."
Except as disclosed in the Parent Financials filed on or prior to the date
hereof, since the date of the Parent Balance Sheet neither Parent nor any of its
subsidiaries has any liabilities required under GAAP to be set forth on a
balance sheet (absolute, accrued, contingent or otherwise) which are,
individually or in the aggregate, material to the business, results of
operations or financial condition of Parent and its subsidiaries taken as a
whole, except for liabilities incurred since the date of the Parent Balance
Sheet in the ordinary course of business consistent with past practices and
liabilities incurred in connection with this Agreement.
3.6 Absence of Certain Changes or Events. Since the date of the Parent
Balance Sheet there has not been (i) any Material Adverse Effect with respect to
Parent, (ii) any declaration, setting aside or payment of any dividend on, or
other distribution (whether in cash, stock or property) in respect of, any of
Parent's or any of its subsidiaries' capital stock, or any purchase, redemption
or other acquisition by Parent of any of Parent's capital stock or any other
securities of Parent or its subsidiaries or any options, warrants, calls or
rights to acquire any such shares or other securities except for repurchases
from employees following their termination pursuant to the terms of their
pre-existing stock option or purchase agreements, (iii) any split, combination
or reclassification of any of Parent's or any of its subsidiaries' capital
stock, (iv) any granting by Parent or any of its subsidiaries of any increase in
compensation or fringe benefits to any of their officers or employees, or any
payment by Parent or any of its subsidiaries of any bonus to any of their
officers or employees, or any granting by Parent or any of its subsidiaries of
any increase in severance or termination pay or any entry by Parent or any of
its subsidiaries into, or material modification or amendment of, any currently
effective employment, severance, termination or indemnification agreement or any
agreement the benefits of which are contingent or the terms of which are
materially altered upon the occurrence of a transaction involving Parent of the
nature contemplated hereby, in each case, other than in the ordinary course of
business consistent with past practice, (v) any material change or alteration in
the policy of Parent relating to the granting of stock options or other equity
compensation to its employees and consultants other than in the ordinary course
of business consistent with past practice, (vi) entry by Parent or any of its
subsidiaries into, or material modification, amendment or cancellation of, any
licensing or other agreement with regard to the acquisition, distribution or
licensing of any material Intellectual Property other than licenses,
distribution agreements, advertising agreements, or other similar agreements
entered into in the ordinary course of business consistent with past practice,
(vii) any material change by Parent in its accounting methods, principles or
practices, except as required by concurrent changes in GAAP, or (viii) any
material revaluation by Parent of any of its material assets, including writing
off notes or accounts receivable other than in the ordinary course of business.
3.7 Taxes.
(a) Parent and each of its subsidiaries have timely filed all material
Returns relating to Taxes required to be filed by or on behalf of Parent and
each of its subsidiaries with any Tax authority, such Returns are true, correct
and complete in all material respects, and Parent and each of its subsidiaries
have paid all Taxes shown to be due on such Returns.
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(b) Parent and each of its subsidiaries have withheld with respect to
its employees all federal and state income Taxes, Taxes pursuant to FICA, Taxes
pursuant to FUTA and other Taxes required to be withheld, except such Taxes
which are not material to Parent.
(c) Neither Parent nor any of its subsidiaries has been delinquent in
the payment of any material Tax nor is there any material Tax deficiency
outstanding, proposed or assessed against Parent or any of its subsidiaries, nor
has Parent or any of its subsidiaries executed any unexpired waiver of any
statute of limitations on or extending the period for the assessment or
collection of any Tax.
(d) No audit or other examination of any Return of Parent or any of its
subsidiaries by any Tax authority is presently in progress, nor has Parent or
any of its subsidiaries been notified of any request for such an audit or other
examination.
(e) No adjustment relating to any Returns filed by Parent or any of its
subsidiaries has been proposed in writing formally or informally by any Tax
authority to Parent or any of its subsidiaries or any Tax or financial
representative thereof.
(f) Neither Parent nor any of its subsidiaries has any liability for
unpaid Taxes which has not been accrued for or reserved on the Parent Balance
Sheet in accordance with GAAP, whether asserted or unasserted, contingent or
otherwise, which is material to Parent, other than any liability for unpaid
Taxes that may have accrued since the date of the Parent Balance Sheet in
connection with the operation of the business of Parent and its subsidiaries in
the ordinary course.
(g) There is no agreement, plan or arrangement to which Parent or any
of its subsidiaries is a party, including this Agreement and the agreements
entered into in connection with this Agreement, covering any employee or former
employee of Parent or any of its subsidiaries that, individually or
collectively, would be reasonably likely to give rise to the payment of any
amount that would not be deductible pursuant to Sections 280G, 404 or 162(m) of
the Code. There is no contract, agreement, plan or arrangement to which the
Parent is a party or by which it is bound to compensate any individual for
excise taxes paid pursuant to Section 4999 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) Neither Parent nor any of its subsidiaries is party to or has any
obligation under any Tax-sharing, Tax indemnity or Tax allocation agreement or
arrangement.
(j) Except as may be required as a result of the Merger, Parent and its
subsidiaries have not been and will not be required to include any adjustment in
taxable income for any Tax period (or portion thereof) pursuant to Section 481
of the Code or any comparable provision under state or foreign Tax laws as a
result of transactions, events or accounting methods employed prior to the
Closing.
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(k) None of Parent's or its subsidiaries' assets are tax exempt use
property within the meaning of Section 168(h) of the Code.
(l) Parent has not been distributed in a transaction qualifying under
Section 355 of the Code within the last two years, nor has Parent distributed
any corporation in a transaction qualifying under Section 355 of the Code within
the last two years.
For the purposes of this Agreement, "TAX" or "TAXES" refers to (i) any
and all federal, state, local and foreign taxes, assessments and other
governmental charges, duties, impositions and liabilities relating to taxes,
including taxes based upon or measured by gross receipts, income, profits,
sales, use and occupation, and value added, ad valorem, transfer, franchise,
withholding, payroll, recapture, employment, excise and property taxes, together
with all interest, penalties and additions imposed with respect to such amounts,
(ii) any liability for payment of any amounts of the type described in clause
(i) as a result of being a member of an affiliated consolidated, combined or
unitary group, and (iii) any liability for amounts of the type described in
clauses (i) and (ii) as a result of any express or implied obligation to
indemnify another person or as a result of any obligations under any agreements
or arrangements with any other person with respect to such amounts and including
any liability for taxes of a predecessor entity.
3.8 Title to Properties.
(a) All real property leases to which Parent is a party and each
amendment thereto that is in effect as of the date of this Agreement that
provide for annual payments in excess of $250,000 are in full force and effect
and are valid and enforceable in accordance with their respective terms, and
there is not, under any of such leases, any existing default or event of default
(or event which with notice or lapse of time, or both, would constitute a
default) that would give rise to a material claim against Parent which could
reasonably be expected to have a Material Adverse Effect on Parent.
(b) Parent has good and valid title to, or, in the case of leased
properties and assets, valid leasehold interests in, all of its tangible
properties and assets, real, personal and mixed, used or held for use in its
business, free and clear of any Encumbrances, except as reflected in Parent
Financials and except where the failure to have valid title or a valid leasehold
interest would not have a Material Adverse Effect on Parent.
3.9 Intellectual Property. For the purposes of this Agreement, the
following terms have the following definitions:
"PARENT INTELLECTUAL PROPERTY" shall mean any Intellectual
Property that is owned by, or exclusively licensed to, Parent or one of its
subsidiaries.
"PARENT REGISTERED INTELLECTUAL PROPERTY" means all of the
Registered Intellectual Property owned by, or filed in the name of, Parent or
one of its subsidiaries.
(a) No material Parent Intellectual Property or product or service of
Parent is subject to any proceeding, agreement, or stipulation to which Parent
is a party, or any
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outstanding decree, order or judgment, the proceeding arising out of which
Parent was either a party or of which Parent has knowledge, restricting in any
manner the use, transfer, or licensing thereof by Parent, or which may affect
the validity, use or enforceability of such Parent Intellectual Property.
(b) Each material item of Parent Registered Intellectual
Property is valid and subsisting, all necessary registration, maintenance and
renewal fees currently due in connection with such Parent Registered
Intellectual Property have been made and all necessary documents, recordations
and certificates in connection with such Parent Registered Intellectual Property
have been filed with the relevant patent, copyright, trademark or other
authorities in the United States or foreign jurisdictions, as the case may be,
for the purposes of maintaining such Parent Registered Intellectual Property,
except, in each case, as would not materially adversely affect such item of
Parent Registered Intellectual Property.
(c) Parent or one of its subsidiaries owns and has good and
exclusive title to, or has license sufficient for the conduct of its business as
currently conducted to, each material item of Parent Intellectual Property free
and clear of any Encumbrance (excluding licenses and related restrictions).
(d) Neither Parent nor any of its subsidiaries has transferred
ownership of, or granted any exclusive license with respect to, any Intellectual
Property that is or was material Parent Intellectual Property, to any third
party.
(e) Part 3.9(e) of the Parent Disclosure Letter lists all
material contracts, licenses and agreements to which Parent is a party (i)
pursuant to which any exclusive rights with respect to Parent Intellectual
Property are licensed, granted or transferred to any third party; or (ii)
pursuant to which a third party has licensed, transferred, sold or distributed
any material Intellectual Property to Parent.
(f) The operation of the business of Parent as such business
currently is conducted, including Parent's design, development, marketing and
sale of the products or services of Parent (including with respect to products
currently under development) has not, does not and will not materially infringe
or materially misappropriate the Intellectual Property of any third party or, to
its knowledge, constitute unfair competition or trade practices under the laws
of any jurisdiction.
(g) Parent has not received written notice from any third
party that the operation of the business of Parent or any act, product or
service of Parent, infringes or misappropriates the Intellectual Property of any
third party or constitutes unfair competition or trade practices under the laws
of any jurisdiction, which allegation, if true, would have a Material Adverse
Effect on Parent.
(h) To the knowledge of Parent, no person has or is infringing
or misappropriating any Parent Intellectual Property, which infringement or
misappropriation, individually or in the aggregate, would have a Material
Adverse Effect on Parent.
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(i) Parent and its subsidiaries have taken reasonable steps to
protect Parent's and its subsidiaries' rights in Parent's and such subsidiaries'
confidential information and trade secrets, except where the failure to do so
would not have a Material Adverse Effect on Parent.
(j) None of the Parent Intellectual Property or product or
service of Parent contains any defect in connection with processing data
containing dates in leap years or in the year 2000 or any preceding or following
years, which defects, individually or in the aggregate, would have a Material
Adverse Effect on Parent.
3.10 Compliance with Laws.
(a) Neither Parent nor any of its subsidiaries is in conflict
with, or in default or in violation of (i) any law, rule, regulation, order,
judgment or decree applicable to Parent or any of its subsidiaries or by which
Parent or any of its subsidiaries or any of their respective properties is bound
or affected, or (ii) any note, bond, mortgage, indenture, agreement, lease,
license, permit, franchise or other instrument or obligation to which Parent or
any of its subsidiaries is a party or by which Parent or any of its subsidiaries
or its or any of their respective properties is bound or affected, except for
conflicts, violations and defaults that, individually or in the aggregate, would
not have a Material Adverse Effect on Parent. To Parent's knowledge, no
investigation or review by any Governmental Entity is pending or has been
threatened in a writing delivered to Parent against Parent or any of its
subsidiaries. There is no agreement with any Governmental Entity, judgment,
injunction, order or decree binding upon Parent or any of its subsidiaries which
has or could reasonably be expected to have the effect of prohibiting or
materially impairing any material business practice of Parent or any of its
subsidiaries, or any acquisition of material property by Parent or any of its
subsidiaries.
(b) Parent and its subsidiaries hold all permits, licenses,
exemptions, orders and approvals from governmental authorities that are material
to or required for the operation of the business of Parent as currently
conducted (collectively, the "PARENT PERMITS"), and are in compliance with the
terms of the Parent Permits, except where the failure to hold such Parent
Permits, or be in such compliance, would not, individually or in the aggregate,
have a Material Adverse Effect on Parent.
3.11 Litigation. There are no claims, suits, actions or proceedings
pending or, to the knowledge of Parent, threatened against, relating to or
affecting Parent or any of its subsidiaries, before any Governmental Entity or
any arbitrator that seeks to restrain or enjoin the consummation of the
transactions contemplated by this Agreement or which could reasonably be
expected, either singularly or in the aggregate with all such claims, actions or
proceedings, to have a Material Adverse Effect on Parent or on the Surviving
Corporation following the Merger or have a material adverse effect on the
ability of the parties hereto to consummate the Merger.
3.12 Employee Benefit Plans.
(a) Definitions. With the exception of the definition of
"Affiliate" set forth in Section 3.12(a)(i) below (which definition shall apply
only to this Section 3.12), for purposes of this Agreement, the following terms
shall have the meanings set forth below:
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(i) "AFFILIATE" shall mean any other person or entity under common
control with Parent within the meaning of Section 414(b), (c), (m) or (o) of the
Code and the regulations issued thereunder;
(ii) "PARENT EMPLOYEE PLAN" shall mean any plan, program, policy,
practice, contract, agreement or other arrangement providing for compensation,
severance, termination pay, performance awards, stock or stock-related awards,
fringe benefits or other employee benefits or remuneration of any kind, whether
written or unwritten or otherwise, funded or unfunded, including without
limitation, each "EMPLOYEE BENEFIT PLAN," within the meaning of Section 3(3) of
ERISA which is maintained, contributed to, or required to be contributed to, by
Parent or any Affiliate for the benefit of any Parent Employee;
(iii) "PARENT EMPLOYEE" shall mean any current, former, or retired
employee, officer, or director of Parent or any Affiliate;
(iv) "PARENT EMPLOYEE AGREEMENT" shall mean each management,
employment, severance, consulting, relocation, repatriation, expatriation,
visas, work permit or similar agreement or contract between Parent or any
Affiliate and any Parent Employee or consultant (excluding any offer letter or
other agreement that does not subject Parent to any potential liability in
excess of $200,000);
(v) "INTERNATIONAL PARENT EMPLOYEE PLAN" shall mean each Parent
Employee Plan that has been adopted or maintained by Parent, whether informally
or formally, for the benefit of Parent Employees outside the United States; and
(vi) "PENSION PLAN" shall mean each Parent Employee Plan which is
an "employee pension benefit plan," within the meaning of Section 3(2) of ERISA.
(b) Schedule. Part 3.12 of the Parent Disclosure Letter contains an
accurate and complete list of each Parent Employee Plan. Parent does not have
any plan or commitment to establish any new Parent Employee Plan, to modify any
Parent Employee Plan (except to the extent required by law or to conform any
such Parent Employee Plan to the requirements of any applicable law, or as
required by this Agreement), or to enter into any Parent Employee Plan, nor does
it have any intention or commitment to do any of the foregoing.
(c) Documents. Parent has provided or has made available to Company:
(i) correct and complete copies of all documents embodying each Parent Employee
Plan (substituting for such including all amendments thereto and written
interpretations thereof); (ii) the most recent annual actuarial valuations, if
any, prepared for each Parent Employee Plan; (iii) the three most recent annual
reports (Form Series 5500 and all schedules and financial statements attached
thereto), if any, required under ERISA or the Code in connection with each
Parent Employee Plan or related trust; (iv) if the Parent Employee Plan is
funded, the most recent annual and periodic accounting of Parent Employee Plan
assets; (v) the most recent summary plan description together with the summary
of material modifications thereto, if any, required under ERISA with respect to
each Parent Employee Plan; (vi) all IRS determination, opinion, notification and
advisory letters, and rulings relating to Parent Employee Plans and copies of
all
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applications and correspondence to or from the IRS or the DOL with respect to
any Parent Employee Plan; (vii) all material written agreements and contracts
relating to each Parent Employee Plan, including, but not limited to,
administrative service agreements, group annuity contracts and group insurance
contracts; (viii) all communications material to any Parent Employee or Parent
Employees relating to any Parent Employee Plan and any proposed Parent Employee
Plans, in each case, relating to any amendments, terminations, establishments,
increases or decreases in benefits, acceleration of payments or vesting
schedules or other events which would result in any material liability to
Parent; (ix) all COBRA forms and related notices; and (x) all registration
statements and prospectuses prepared in connection with each Parent Employee
Plan.
(d) Employee Plan Compliance. Except, in each case, as would not,
individually or in the aggregate, have a Material Adverse Effect on Parent (i)
Parent has performed in all material respects all obligations required to be
performed by it under, is not in default or violation of, and has no knowledge
of any default or violation by any other party to, each Parent Employee Plan,
and each Parent Employee Plan has been established and maintained in all
material respects in accordance with its terms and in compliance with all
applicable laws, statutes, orders, rules and regulations, including but not
limited to ERISA or the Code; (ii) each Parent Employee Plan intended to qualify
under Section 401(a) of the Code and each trust intended to qualify under
Section 501(a) of the Code has either received a favorable determination letter
from the IRS with respect to each such Plan as to its qualified status under the
Code or has remaining a period of time under applicable Treasury regulations or
IRS pronouncements in which to apply for such a determination letter and make
any amendments necessary to obtain a favorable determination and no event has
occurred which would adversely affect the status of such determination letter or
the qualified status of such Plan; (iii) no "prohibited transaction," within the
meaning of Section 4975 of the Code or Sections 406 and 407 of ERISA, and not
otherwise exempt under Section 408 of ERISA, has occurred with respect to any
Parent Employee Plan; (iv) there are no actions, suits or claims pending, or, to
the knowledge of Parent, threatened or reasonably anticipated (other than
routine claims for benefits) against any Parent Employee Plan or against the
assets of any Parent Employee Plan; (v) each Parent Employee Plan can be
amended, terminated or otherwise discontinued after the Effective Time in
accordance with its terms, without liability to Parent, Parent or any of its
Affiliates (other than ordinary administration expenses typically incurred in a
termination event); (vi) there are no audits, inquiries or proceedings pending
or, to the knowledge of Parent, threatened by the IRS or DOL with respect to any
Parent Employee Plan; (vii) neither Parent nor any Affiliate is subject to any
material penalty or tax with respect to any Parent Employee Plan under Section
402(i) of ERISA or Sections 4975 through 4980 of the Code; and (viii) all
contributions due from the Parent or any Affiliate with respect to any of the
Parent Employee Plans have been made as required under ERISA or have been
accrued on the Parent Balance Sheet.
(e) Pension Plans. Parent does not now, nor has it ever, maintained,
established, sponsored, participated in, or contributed to, any Pension Plan
which is subject to Title IV of ERISA or Section 412 of the Code.
(f) Multiemployer Plans. At no time has Parent contributed to or been
required to contribute to any Multiemployer Plan.
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(g) No Post-Employment Obligations. No Parent Employee Plan provides,
or has any liability to provide, retiree life insurance, retiree health or other
retiree employee welfare benefits to any person for any reason, except as may be
required by COBRA or other applicable statute, and Parent has never represented,
promised or contracted (whether in oral or written form) to any Parent Employee
(either individually or to Parent Employees as a group) or any other person that
such Parent Employee(s) or other person would be provided with retiree life
insurance, retiree health or other retiree employee welfare benefit, except to
the extent required by statute.
(h) COBRA; FMLA. Except as would not have a Material Adverse Effect on
Parent, neither Parent nor any Affiliate has, prior to the Effective Time
violated any of the health care continuation requirements of COBRA, the
requirements of FMLA or any similar provisions of state law applicable to its
Parent Employees.
(i) Effect of Transaction. The execution of this Agreement and the
consummation of the transactions contemplated hereby will not (either alone or
upon the occurrence of any additional or subsequent events) constitute an event
under any Parent Employee Plan, Parent Employee Agreement, trust or loan that
will or may result in any payment (whether of severance pay or otherwise),
acceleration, forgiveness of indebtedness, vesting, distribution, increase in
benefits or obligation to fund benefits with respect to any Parent Employee. No
payment or benefit which will or may be made by Parent or its Affiliates with
respect to any Parent Employee as a result of the transactions contemplated by
this Agreement will be characterized as an "excess parachute payment," within
the meaning of Section 280G(b)(1) of the Code or will be treated as a
nondeductible expense within the meaning of Section 162 of the Code.
(j) Employment Matters. Except, in each case, as would not,
individually or in the aggregate, have a Material Adverse Effect on Parent,
Parent and each of its subsidiaries: (i) is in compliance in all material
respects with all applicable foreign, federal, state and local laws, rules and
regulations respecting employment, employment practices, terms and conditions of
employment and wages and hours, in each case, with respect to Parent Employees;
(ii) has withheld all amounts required by law or by agreement to be withheld
from the wages, salaries and other payments to Parent Employees; (iii) has
properly classified independent contractors for purposes of federal and
applicable state tax laws, laws applicable to employee benefits and other
applicable laws; (iv) is not liable for any arrears of wages or any taxes or any
penalty for failure to comply with any of the foregoing; and (v) is not liable
for any material payment to any trust or other fund or to any governmental or
administrative authority, with respect to unemployment compensation benefits,
social security or other benefits or obligations for Parent Employees (other
than routine payments to be made in the normal course of business and consistent
with past practice). There are no pending, or, to Parent's knowledge, threatened
material claims or actions against Parent under any worker's compensation policy
or long-term disability policy. To Parent's knowledge, no Parent Employee has
violated in any material manner any employment contract, nondisclosure agreement
or noncompetition agreement by which such Parent Employee is bound due to such
Parent Employee being employed by Parent and disclosing to Parent or using trade
secrets or proprietary information of any other person or entity.
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(k) Labor. No work stoppage or labor strike against Parent is pending,
threatened or reasonably anticipated. Parent does not know of any activities or
proceedings of any labor union to organize any Parent Employees. There are no
actions, suits, claims, labor disputes or grievances pending, or, to the
knowledge of Parent, threatened or reasonably anticipated relating to any labor,
safety or discrimination matters involving any Parent Employee, including
charges of unfair labor practices or discrimination complaints, which, if
adversely determined, would, individually or in the aggregate, result in any
material liability to Parent. Neither Parent nor any of its subsidiaries has
engaged in any unfair labor practices within the meaning of the National Labor
Relations Act. Parent is not presently, nor has it been in the past, a party to,
or bound by, any collective bargaining agreement or union contract with respect
to Parent Employees and no collective bargaining agreement is being negotiated
by Parent.
(l) International Employee Plan. Each International Employee Plan has
been established, maintained and administered in material compliance with its
terms and conditions and with the requirements prescribed by any and all
statutory or regulatory laws that are applicable to such International Employee
Plan. Furthermore, no International Employee Plan has unfunded liabilities, that
as of the Effective Time, will not be offset by insurance or fully accrued.
Except as required by law, no condition exists that would prevent Parent or
Parent from terminating or amending any International Employee Plan at any time
for any reason.
3.13 Environmental Matters. During the period that Parent has leased or
owned its properties or leased, owned or operated any facilities, there have
been no disposals, releases or threatened releases of Hazardous Materials (as
defined below) on, from or under any such properties or facilities that would
have a Material Adverse Effect on Parent. Parent has no knowledge of any
presence, disposals, releases or threatened releases of Hazardous Materials on,
from or under any of such properties or facilities, which may have occurred
prior to Parent or any of its subsidiaries having taken possession of any of
such properties or facilities which might reasonably be expected to have a
Material Adverse Effect on Parent. None of the properties or facilities
currently leased or owned by Parent or any of its subsidiaries or any properties
or facilities previously leased or owned by Parent or any of its subsidiaries is
in violation of any federal, state or local law, ordinance, regulation or order
relating to industrial hygiene or to the environmental conditions on, under or
about such properties or facilities, including, but not limited to, soil and
ground water condition which violation would have a Material Adverse Effect on
Parent. During Parent's occupancy of any properties or facilities owned or
leased at any time by Parent, neither Parent, nor to Parent's knowledge, any
third party, has used, generated, manufactured, released or stored on, under or
about such properties and facilities or transported to or from such properties
and facilities any Hazardous Materials that would have or is reasonably likely
to have a Material Adverse Effect on Parent. During the time that Parent or any
of its subsidiaries has owned or leased the properties and facilities currently
occupied by it or any properties and facilities previously occupied by Parent or
any of its subsidiaries, there has been no material litigation, proceeding or
administrative action brought or threatened against Parent or any of its
subsidiaries, or any material settlement reached by Parent or any of its
subsidiaries with, any party or parties alleging the presence, disposal, release
or threatened release of any Hazardous Materials on, from or under any of such
properties or facilities.
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3.14 Certain Agreements. Other than the Related Agreements, except as
otherwise set forth in Part 3.14 of the Parent Disclosure Letter, neither Parent
nor any of its subsidiaries is a party to or is bound by:
(a) other than as disclosed in Part 3.12 of the Parent Disclosure
Letter, any employment agreement or commitment with any officer or member of
Parent's Board of Directors, other than those that are terminable by Parent or
any of its subsidiaries on no more than thirty days notice without liability or
financial obligation, except to the extent general principles of wrongful
termination law may limit Parent's or any of its subsidiaries' ability to
terminate employees at will, or any consulting agreement;
(b) any material agreement of indemnification, any material guaranty or
any material instrument evidencing indebtedness for borrowed money by way of
direct loan, sale of debt securities or purchase money obligation;
(c) any agreement or obligation containing covenants purporting to
limit or which effectively limit the Parent's or any of its subsidiaries'
freedom to compete in any line of business or in any geographic area or which
would so limit Parent or Surviving Corporation or any of its subsidiaries after
the Effective Time or granting any exclusive distribution or other exclusive
rights;
(d) any agreement or obligation currently in force relating to the
disposition or acquisition by Parent or any of its subsidiaries after the date
of this Agreement of a material amount of assets not in the ordinary course of
business, or pursuant to which Parent has any material ownership or
participation interest in any corporation, partnership, joint venture, strategic
alliance or other business enterprise other than Parent's subsidiaries;
(e) any agreement or obligation currently in force to provide source
code to any third party for any product or technology;
(f) any agreement or obligation with any affiliate of Parent; or
(g) any agreement or commitment currently in force requiring capital
expenditures by Parent or its subsidiaries in excess of $1,000,000.
The agreements required to be disclosed in the Parent Disclosure Letter
pursuant to clauses (a) through (g) above or pursuant to Section 3.9 or filed
with any Parent SEC Report ("PARENT CONTRACTS") are valid and in full force and
effect, except to the extent that such invalidity would not have a Material
Adverse Effect on Parent. Neither Parent nor any of its subsidiaries, nor to
Parent's knowledge, any other party thereto, is in breach, violation or default
under, and neither Parent nor any of its subsidiaries has received written
notice that it has breached, violated or defaulted, any of the terms or
conditions of any Parent Contract in such a manner as would have a Material
Adverse Effect on Parent.
3.15 Brokers' and Finders' Fees. Except for fees payable to Xxxxxxx Xxxxx &
Co., Parent has not incurred, nor will it incur, directly or indirectly, any
liability for brokerage or
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finders' fees or agents' commissions or any similar charges in connection with
this Agreement or any transaction contemplated hereby.
3.16 Insurance. Parent and each of its subsidiaries have policies of
insurance and bonds of the type and in amounts customarily carried by persons
conducting business or owning assets similar to those of the Parent and its
subsidiaries. There is no material claim pending under any of such policies or
bonds as to which coverage has been questioned, denied or disputed by the
underwriters of such policies or bonds. All premiums due and payable under all
such policies have been paid and the Parent and its subsidiaries are otherwise
in compliance in all material respects with the terms of such policies and
bonds.
3.17 Disclosure. The information supplied by Parent for inclusion in the
Registration Statement shall not at the time the Registration Statement is filed
with the SEC and 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 required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading. The information supplied by Parent for inclusion or incorporation by
reference in the Proxy Statement/Prospectus shall not, on the date the Proxy
Statement/Prospectus is mailed to Company's stockholders or to Parent's
stockholders, at the time of Company Stockholders' Meeting, at the time of the
Parent Stockholders' Meeting or as of the Effective Time, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not 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 Company
Stockholders' Meeting or the Parent Stockholders' Meeting which has become false
or misleading. The Registration Statement and Proxy Statement/Prospectus will
comply as to form in all material respects with the provisions of the Securities
Act and the rules and regulations thereunder. If at any time prior to the
Effective Time, any event relating to Parent or any of its affiliates, officers
or directors should be discovered by Parent which is required to be set forth in
an amendment to the Registration Statement or a supplement to the Proxy
Statement/Prospectus, Parent shall promptly inform Company. Notwithstanding the
foregoing, Parent makes no representation or warranty with respect to any
information supplied by Company which is contained in any of the foregoing
documents.
3.18 Board Approval. The Board of Directors of Parent has, as of the date
of this Agreement, (i) determined that the Merger is fair to, and in the best
interests of Parent and its stockholders, and has approved this Agreement and
(ii) recommends that the stockholders of Parent approve the issuance of shares
of Parent Common Stock pursuant to the Merger and the Related Agreements, and
the amendment of Parent's Certificate of Incorporation.
3.19 Opinion of Financial Advisor. Parent's Board of Directors has received
an opinion from Xxxxxxx Xxxxx & Co., dated as of the date of this Agreement, to
the effect that, as of such date, the exchange of consideration in the
Transaction is fair to Parent from a financial point of view, a copy of the
written opinion of which will be delivered to Company after receipt thereof by
Parent. The transactions contemplated by this Agreement and the Related
Agreements are collectively referred to herein as the "TRANSACTION".
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3.20 Anti-Takeover Protections. The Board of Directors of Parent has taken
all actions so that the restrictions contained in Section 203 of the Delaware
General Corporation Law applicable to a "business combination" (as defined in
such Section 203) will not apply to the execution, delivery or performance of
this Agreement or to the consummation of the Merger or the other transactions
contemplated by this Agreement. For the three years prior to the date of this
Agreement, none of Parent, its "affiliates" nor "associates" (as such terms are
defined in Section 203 of the Delaware Law) were the owner of 15% or more of the
outstanding voting stock of Company. To Parent's knowledge, no other Takeover
Statute applies or purports to apply to this Agreement, the Merger or the other
transactions contemplated hereby.
ARTICLE IV
CONDUCT PRIOR TO THE EFFECTIVE TIME
4.1 Conduct of Business by Company. During the period from the date of this
Agreement and continuing until the earlier of the termination of this Agreement
pursuant to its terms or the Effective Time, Company and each of its
subsidiaries shall, except to the extent that Parent shall otherwise consent in
writing, carry on its business in the usual, regular and ordinary course, in
substantially the same manner as heretofore conducted and in compliance in all
material respects with all applicable material laws and regulations, pay its
debts and Taxes when due subject to good faith disputes over such debts or
Taxes, pay or perform other material obligations when due, and use its
commercially reasonable efforts consistent with past practices and policies to
(i) preserve intact its present business organization, (ii) keep available the
services of its present officers and employees and (iii) preserve its
relationships with customers, suppliers, licensors, licensees, and others with
which it has business dealings. In addition, Company will promptly notify Parent
of any material adverse event involving its business or operations.
In addition, except as permitted by the terms of this Agreement, and except
as contemplated by this Agreement or the Related Agreements or provided in Part
4.1 of the Company Disclosure Letter, without the prior written consent of
Parent, during the period from the date of this Agreement and continuing until
the earlier of the termination of this Agreement pursuant to its terms or the
Effective Time, Company shall not do any of the following and shall not permit
its subsidiaries to do any of the following:
(a) Waive any stock repurchase rights, accelerate, amend or change the
period of exercisability of options or restricted stock, or reprice options
granted under any employee, consultant, director or other stock plans or
authorize cash payments in exchange for any options granted under any of such
plans;
(b) Grant any severance or termination pay to any officer or employee
except pursuant to written agreements in effect, or policies existing, on the
date hereof and as previously disclosed in writing to Parent, or adopt any new
severance plan;
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(c) Transfer or license to any person or entity or otherwise extend,
amend or modify in any material respect any rights to the Company Intellectual
Property, other than non-exclusive licenses in the ordinary course of business
and consistent with past practice;
(d) Declare, set aside or pay any dividends on or make any other
distributions (whether in cash, stock, equity securities or property) in respect
of any capital stock or split, combine or reclassify any capital stock or issue
or authorize the issuance of any other securities in respect of, in lieu of or
in substitution for any capital stock;
(e) Purchase, redeem or otherwise acquire, directly or indirectly, any
shares of capital stock of Company or its subsidiaries, except repurchases of
unvested shares at cost in connection with the termination of the employment
relationship with any employee pursuant to stock option or purchase agreements
in effect on the date hereof;
(f) Issue, deliver, sell, authorize, pledge or otherwise encumber any
shares of capital stock or any securities convertible into shares of capital
stock, or subscriptions, rights, warrants or options to acquire any shares of
capital stock or any securities convertible into shares of capital stock, or
enter into other agreements or commitments of any character obligating it to
issue any such shares or convertible securities, other than the grant, issuance,
delivery and/or sale of (i) shares of Company Common Stock pursuant to the
exercise of Company Options outstanding on the date of this Agreement, or
granted in accordance with clause (iii) of this Section 4.1(f), (ii) shares of
Company Common Stock issuable to participants in the Company ESPP consistent
with the terms thereof, (iii) Company Options granted to newly-hired employees
in the ordinary course of business in amounts comparable to similarly situated
Company employees, and in an aggregate amount not to exceed 330,870, none of
which Company Options shall provide for or permit any acceleration of the
exercisability thereof in connection with the Merger or any of the transactions
contemplated by this Agreement, and (iv) shares of Company Common Stock issued
in connection with acquisitions and commercial transactions permitted under
Section 4.1(h) below;
(g) Cause, permit or propose any amendments to its Certificate of
Incorporation, Bylaws or other charter documents (or similar governing
instruments of any of its subsidiaries);
(h) Acquire or agree to acquire by merging or consolidating with, or by
purchasing any equity interest in or a portion of the assets of, or by any other
manner, any business or any corporation, partnership, association or other
business organization or division thereof; or otherwise acquire or agree to
acquire any assets which are material, individually or in the aggregate, to the
business of Company or enter into any material joint ventures, strategic
relationships or alliances, or enter into any commercial transaction involving
the issuance or potential issuance of equity securities of Company; provided,
that Company shall not be prohibited hereunder from making or agreeing to make
acquisitions, or entering into commercial transactions involving the issuance or
potential issuance of Company Common Stock, all of which together do not involve
the issuance or potential issuance of more than 290,000 shares of Company Common
Stock in the aggregate, and none of which acquisitions, agreements or commercial
transactions could reasonably be expected to delay the effectiveness of the
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Registration Statement, the consummation of the Merger or the other transactions
contemplated by this Agreement or the Related Agreements; provided, further,
that Company shall provide written notice to Parent prior to signing any
agreement regarding any such acquisition or transaction;
(i) Sell, lease, license, encumber or otherwise dispose of any
properties or assets which are material, individually or in the aggregate, to
the business of Company;
(j) Incur any indebtedness for borrowed money or guarantee any such
indebtedness of another person, issue or sell any debt securities or options,
warrants, calls or other rights to acquire any debt securities of Company, enter
into any "keep well" or other agreement to maintain any financial statement
condition or enter into any arrangement having the economic effect of any of the
foregoing other than (i) in connection with the financing of ordinary course
trade payables consistent with past practice, (ii) pursuant to existing credit
facilities in the ordinary course of business or (iii) in aggregate amount not
to exceed $1,000,000;
(k) (i) Adopt or amend any employee benefit plan or employee stock
purchase or employee stock option plan, or enter into any employment contract or
collective bargaining agreement (other than offer letters and letter agreements
entered into in the ordinary course of business consistent with past practice
with employees who are terminable "at will"), or (ii) pay any special bonus or
special remuneration to any director or employee, or increase the salaries or
wage rates or fringe benefits (including rights to severance or indemnification)
of its directors, officers, employees or consultants other than in the ordinary
course of business, consistent with past practice, or change in any material
respect any management policies or procedures;
(1) Make any capital expenditures outside of the ordinary course of
business or any capital expenditures in excess of $500,000, individually, or
$4,000,000, in the aggregate;
(m) Materially modify, amend or terminate any Company Contract or other
material contract or agreement to which Company or any subsidiary thereof is a
party, or waive, release or assign any material rights or claims thereunder,
except in the ordinary course of business;
(n) Enter into any licensing or other agreement with regard to the
acquisition, distribution or licensing of any material Company Intellectual
Property (as defined in Section 2.9) other than licenses, distribution
agreements, advertising agreements, or other similar agreements entered into in
the ordinary course of business consistent with past practice;
(o) Materially revalue any of its assets or, except as required by
GAAP, make any change in accounting methods, principles or practices;
(p) Initiate or settle any material litigation, arbitration, mediation
or other legal proceeding;
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(q) Take or permit any action with the intent to directly or indirectly
adversely impact any of the transactions contemplated by this Agreement,
including the treatment of same for tax purposes as a "reorganization"; or
(r) Agree in writing or otherwise to take any of the actions described
in Section 4.1 (a) through (q) above.
4.2 Conduct of Business by Parent. During the period from the date of this
Agreement and continuing until the earlier of the termination of this Agreement
pursuant to its terms or the Effective Time, Parent and each of its subsidiaries
shall, except to the extent that Company shall otherwise consent in writing,
carry on its business in the usual, regular and ordinary course, in
substantially the same manner as heretofore conducted and in compliance in all
material respects with all applicable material laws and regulations, pay its
debts and Taxes when due subject to good faith disputes over such debts or
Taxes, pay or perform other material obligations when due, and use its
commercially reasonable efforts consistent with past practices and policies to
(i) preserve intact its present business organization, (ii) keep available the
services of its present officers and employees and (iii) preserve its
relationships with customers, suppliers, licensors, licensees, and others with
which it has business dealings. In addition, Parent will promptly notify Company
of any material adverse event involving its business or operations.
In addition, except as permitted by the terms of this Agreement, and except
as contemplated by this Agreement or the Related Agreements or provided in Part
4.2 of the Parent Disclosure Letter, without the prior written consent of
Company, during the period from the date of this Agreement and continuing until
the earlier of the termination of this Agreement pursuant to its terms or the
Effective Time, Parent shall not do any of the following and shall not permit
its subsidiaries to do any of the following:
(a) Waive any stock repurchase rights, accelerate, amend or change the
period of exercisability of options or restricted stock, or reprice options
granted under any employee, consultant, director or other stock plans or
authorize cash payments in exchange for any options granted under any of such
plans;
(b) Grant any severance or termination pay to any officer or employee
except pursuant to written agreements in effect, or policies existing, on the
date hereof and as previously disclosed in writing to Company, or adopt any new
severance plan;
(c) Transfer or license to any person or entity or otherwise extend,
amend or modify in any material respect any rights to the Parent Intellectual
Property, other than non-exclusive licenses in the ordinary course of business
and consistent with past practice;
(d) Declare, set aside or pay any dividends on or make any other
distributions (whether in cash, stock, equity securities or property) in respect
of any capital stock or split, combine or reclassify any capital stock or issue
or authorize the issuance of any other securities in respect of, in lieu of or
in substitution for any capital stock;
(e) Purchase, redeem or otherwise acquire, directly or indirectly, any
shares of capital stock of Parent or its subsidiaries, except repurchases of
unvested shares at cost in
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connection with the termination of the employment relationship with any employee
pursuant to stock option or purchase agreements in effect on the date hereof;
(f) Issue, deliver, sell, authorize, pledge or otherwise encumber any
shares of capital stock or any securities convertible into shares of capital
stock, or subscriptions, rights, warrants or options to acquire any shares of
capital stock or any securities convertible into shares of capital stock, or
enter into other agreements or commitments of any character obligating it to
issue any such shares or convertible securities, other than the grant, issuance,
delivery and/or sale of (i) shares of Parent Common Stock pursuant to the
exercise of Parent Options outstanding on the date of this Agreement, or granted
in accordance with clause (iii) of this Section 4.2(f), (ii) shares of Parent
Common Stock issuable to participants in the Parent ESPP consistent with the
terms thereof, (iii) Parent Options granted to newly-hired employees in the
ordinary course of business in amounts comparable to similarly situated Parent
employees, and in an aggregate amount not to exceed 550,000, none of which
Parent Options shall provide for or permit any acceleration of the
exercisability thereof in connection with the Merger or any of the transactions
contemplated by this Agreement, and (iv) shares of Parent Common Stock issued in
connection with acquisitions and commercial transactions permitted under Section
4.2(h) below;
(g) Cause, permit or propose any amendments to its Certificate of
Incorporation, Bylaws or other charter documents (or similar governing
instruments of any of its subsidiaries), other than an amendment to its
Certificate of Incorporation to increase the authorized number of shares of
Parent Common Stock;
(h) Acquire or agree to acquire by merging or consolidating with, or by
purchasing any equity interest in or a portion of the assets of, or by any other
manner, any business or any corporation, partnership, association or other
business organization or division thereof; or otherwise acquire or agree to
acquire any assets which are material, individually or in the aggregate, to the
business of Parent, or enter into any material joint ventures, strategic
relationships or alliances, or enter into any commercial transaction involving
the issuance or potential issuance of equity securities of Parent; provided,
that Parent shall not be prohibited hereunder from (x) acquiring EquipMD, Inc.
pursuant to the Agreement and Plan of Merger among Parent, Augustacorp, Inc. and
EquipMD, Inc. (a true and complete copy of which has been provided to Company)
or (y) making or agreeing to make acquisitions, or entering into commercial
transactions involving the issuance or potential issuance of Parent Common
Stock, all of which together do not involve the issuance or potential issuance
of more than 500,000 shares of Parent Common Stock in the aggregate, and none of
which acquisitions, agreements or commercial transactions could reasonably be
expected to delay the effectiveness of the Registration Statement, the
consummation of the Merger or the other transactions contemplated by this
Agreement or the Related Agreements; provided, further, that Parent shall
provide written notice to Company prior to signing any agreement regarding any
such acquisition or transaction;
(i) Sell, lease, license, encumber or otherwise dispose of any
properties or assets which are material, individually or in the aggregate, to
the business of Parent;
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(j) Incur any indebtedness for borrowed money or guarantee any such
indebtedness of another person, issue or sell any debt securities or options,
warrants, calls or other rights to acquire any debt securities of Parent, enter
into any "keep well" or other agreement to maintain any financial statement
condition or enter into any arrangement having the economic effect of any of the
foregoing other than (i) in connection with the financing of ordinary course
trade payables consistent with past practice, (ii) equipment leasing
arrangements or (iii) in aggregate amount not to exceed $1,000,000;
(k) (i) Adopt or amend any employee benefit plan or employee stock
purchase or employee stock option plan, or enter into any employment contract or
collective bargaining agreement (other than offer letters and letter agreements
entered into in the ordinary course of business consistent with past practice
with employees who are terminable "at will") other than an increase in the
number of shares of Parent Common Stock reserved for issuance under the Parent
Stock Option Plans or the Parent ESPP, or (ii) pay any special bonus or special
remuneration to any director or employee, or increase the salaries or wage rates
or fringe benefits (including rights to severance or indemnification) of its
directors, officers, employees or consultants other than in the ordinary course
of business, consistent with past practice, or change in any material respect
any management policies or procedures;
(1) Make any capital expenditures outside of the ordinary course of
business or any capital expenditures in excess of $1,000,000, individually, or
$10,000,000, in the aggregate;
(m) Materially modify, amend or terminate any Parent Contract or other
material contract or agreement to which Parent or any subsidiary thereof is a
party, or waive, release or assign any material rights or claims thereunder,
except in the ordinary course of business;
(n) Enter into any licensing or other agreement with regard to the
acquisition, distribution or licensing of any material Parent Intellectual
Property (as defined in Section 2.9) other than licenses, distribution
agreements, advertising agreements, or other similar agreements entered into in
the ordinary course of business consistent with past practice;
(o) Materially revalue any of its assets or, except as required by
GAAP, make any change in accounting methods, principles or practices;
(p) Initiate or settle any material litigation, arbitration, mediation
or other legal proceeding;
(q) Take or permit any action with the intent to directly or indirectly
adversely impact any of the transactions contemplated by this Agreement,
including the treatment of same for tax purposes as a "reorganization"; or
(r) Agree in writing or otherwise to take any of the actions described
in Section 4.2 (a) through (q) above.
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ARTICLE V
ADDITIONAL AGREEMENTS
5.1 Proxy Statement/Prospectus; Registration Statement; Antitrust and Other
Filings.
(a) As promptly as practicable after the execution of this Agreement,
Company and Parent will prepare and file with the SEC, the Proxy
Statement/Prospectus and Parent will prepare and file with the SEC the
Registration Statement in which the Proxy Statement/Prospectus will be included
as a prospectus. Each of Company and Parent will respond to any comments of the
SEC, will use its respective commercially reasonable efforts to have the
Registration Statement declared effective under the Securities Act as promptly
as practicable after such filing and each of Company and Parent will cause the
Proxy Statement/Prospectus to be mailed to its respective stockholders at the
earliest practicable time after the Registration Statement is declared effective
by the SEC. Promptly after the date of this Agreement, each of the Company and
Parent will prepare and file (i) with the United States Federal Trade Commission
and the Antitrust Division of the United States Department of Justice
Notification and Report Forms relating to the transactions contemplated herein
as required by the HSR Act, as well as comparable pre-merger notification forms
required by the merger notification or control laws and regulations of any
applicable jurisdiction, as agreed to by the parties (the "ANTITRUST FILINGS")
and (ii) any other filings required to be filed by it under the Exchange Act,
the Securities Act or any other federal, state or foreign laws relating to the
Merger and the transactions contemplated by this Agreement (the "OTHER
FILINGS"). The Company and Parent each shall promptly supply the other with any
information which may be required in order to effectuate any filings pursuant to
this Section 5.1.
(b) Each of the Company and Parent will notify the other promptly upon the
receipt of any comments from the SEC or its staff or any other government
officials in connection with any filing made pursuant hereto and of any request
by the SEC or its staff or any other government officials for amendments or
supplements to the Registration Statement, the Proxy Statement/Prospectus or any
Antitrust Filings or Other Filings or for additional information and will supply
the other with copies of all correspondence between such party or any of its
representatives, on the one hand, and the SEC, or its staff or any other
government officials, on the other hand, with respect to the Registration
Statement, the Proxy Statement/Prospectus, the Merger or any Antitrust Filing or
Other Filing. Each of the Company and Parent will cause all documents that it is
responsible for filing with the SEC or other regulatory authorities under this
Section 5.1 to comply in all material respects with all applicable requirements
of law and the rules and regulations promulgated thereunder. Whenever any event
occurs which is required to be set forth in an amendment or supplement to the
Proxy Statement/Prospectus, the Registration Statement or any Antitrust Filing
or Other Filing, the Company or Parent, as the case may be, will promptly inform
the other of such occurrence and cooperate in filing with the SEC or its staff
or any other government officials, and/or mailing to stockholders of the Company
and/or Parent, such amendment or supplement.
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5.2 Meeting of Company Stockholders.
(a) Promptly after the date hereof, Company will take all action
necessary in accordance with the Delaware Law and its Certificate of
Incorporation and Bylaws to convene the Company Stockholders' Meeting to be held
as promptly as practicable, and in any event (to the extent permissible under
applicable law) within 45 days after the declaration of effectiveness of the
Registration Statement (provided that Company and Parent will notice the Company
Stockholders' Meeting and the Parent Stockholders' Meeting to be held on the
same day, and if Parent adjourns or postpones the Parent Stockholders' Meeting,
Company may adjourn or postpone the Company Stockholders' Meeting in order that
they be held on the same day), for the purpose of voting upon approval and
adoption of this Agreement and approval of the Merger. Subject to Section
5.2(c), Company will use its commercially reasonable efforts to solicit from its
stockholders proxies in favor of the adoption and approval of this Agreement and
the approval of the Merger and will take all other action necessary or advisable
to secure the vote or consent of its stockholders required by the rules of the
Nasdaq Stock Market or Delaware Law to obtain such approvals. Notwithstanding
anything to the contrary contained in this Agreement, Company may adjourn or
postpone the Company Stockholders' Meeting to the extent necessary to ensure
that any necessary supplement or amendment to the Proxy Statement/Prospectus is
provided to Company's stockholders in advance of a vote on the Merger and this
Agreement or, if as of the time for which Company Stockholders' Meeting is
originally scheduled (as set forth in the Proxy Statement/Prospectus) there are
insufficient shares of Company Common Stock represented (either in person or by
proxy) to constitute a quorum necessary to conduct the business of the Company
Stockholders' Meeting. Company shall ensure that the Company Stockholders'
Meeting is called, noticed, convened, held and conducted, and that all proxies
solicited by the Company in connection with the Company Stockholders' Meeting
are solicited, in compliance with the Delaware Law, its Certificate of
Incorporation and Bylaws, the rules of the Nasdaq Stock Market and all other
applicable legal requirements. Company's obligation to call, give notice of,
convene and hold the Company Stockholders' Meeting in accordance with this
Section 5.2(a) shall not be limited to or otherwise affected by the
commencement, disclosure, announcement or submission to Company of any
Acquisition Proposal or Superior Offer, or by any withdrawal, amendment or
modification of the recommendation of the Board of Directors of Company with
respect to this Agreement or the Merger.
(b) Subject to Section 5.2(c), to the fullest extent permitted by
applicable law: (i) the Board of Directors of Company shall recommend that
Company's stockholders vote in favor of and adopt and approve this Agreement and
approve the Merger at the Company Stockholders' Meeting; (ii) the Proxy
Statement/Prospectus shall include a statement to the effect that the Board of
Directors of Company has recommended that Company's stockholders vote in favor
of and adopt and approve this Agreement and the Merger at the Company
Stockholders' Meeting; and (iii) neither the Board of Directors of Company nor
any committee thereof shall withdraw, amend or modify, or propose or resolve to
withdraw, amend or modify in a manner adverse to Parent, the recommendation of
the Board of Directors of Company that Company's stockholders vote in favor of
and adopt and approve this Agreement and the Merger.
(c) Nothing in this Agreement shall prevent the Board of Directors of
the Company from withholding, withdrawing, amending or modifying its
recommendation in favor
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of the Merger if (i) a Superior Offer (as defined below) is made to the Company
and is not withdrawn, (ii) the Company shall have provided written notice to
Parent (a "NOTICE OF SUPERIOR OFFER") advising Parent that the Company has
received a Superior Offer, specifying all of the material terms and conditions
of such Superior Offer and identifying the person or entity making such Superior
Offer, (iii) Parent shall not have, within three business days of Parent's
receipt of the Notice of Superior Offer, made an offer that the Company's Board
of Directors by a majority vote determines in its good faith judgment (after
consultation with a financial advisor of national standing) to be at least as
favorable to Company's stockholders as such Superior Offer (it being agreed that
the Board of Directors of Company shall convene a meeting to consider any such
offer by Parent promptly following the receipt thereof), (iv) the Board of
Directors of Company concludes in good faith, after consultation with its
outside counsel, that, in light of such Superior Offer, the withholding,
withdrawal, amendment or modification of such recommendation is required in
order for the Board of Directors of Company to comply with its fiduciary
obligations to Company's stockholders under applicable law and (v) Company shall
not have violated any of the restrictions set forth in Section 5.4 or this
Section 5.2. Company shall provide Parent with at least one day prior notice (or
such lesser prior notice as provided to the members of the Company's Board of
Directors) of any meeting of the Company's Board of Directors at which Company's
Board of Directors is reasonably expected to consider any Acquisition Proposal
(as defined in Section 5.4) to determine whether such Acquisition Proposal is a
Superior Offer. Nothing contained in this Section 5.2(c) shall limit the
Company's obligation to hold and convene the Company Stockholders' Meeting
(regardless of whether the recommendation of the Board of Directors of Company
shall have been withdrawn, amended or modified).
For purposes of this Agreement, "SUPERIOR OFFER" shall mean an
unsolicited, bona fide written offer made by a third party to consummate any of
the following transactions: (i) a merger or consolidation involving Company
pursuant to which the stockholders of Company immediately preceding such
transaction hold less than 50% of the equity interest in the surviving or
resulting entity of such transaction or (ii) the acquisition by any person or
group (including by way of a tender offer or an exchange offer or a two step
transaction involving a tender offer followed with reasonable promptness by a
merger involving the Company), directly or indirectly, of ownership of 100% of
the then outstanding shares of capital stock of the Company, on terms that the
Board of Directors of the Company determines, in its reasonable judgment (after
consultation with a financial advisor of national standing) to be more favorable
to the Company stockholders than the terms of the Merger; provided, however,
that any such offer shall not be deemed to be a "Superior Offer" if any
financing required to consummate the transaction contemplated by such offer is
not committed and is not likely in the reasonable judgment of the Company's
Board of Directors (after consultation with its financial advisor) to be
obtained by such third party on a timely basis.
(d) Nothing contained in this Agreement shall prohibit Company or its
Board of Directors from taking and disclosing to its stockholders a position
contemplated by Rules 14d-9 and 14e-2(a) promulgated under the Exchange Act, or
otherwise required by applicable law.
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5.3 Meeting of Parent Stockholders.
(a) Promptly after the date hereof, Parent will take all action
necessary in accordance with the Delaware Law and its Certificate of
Incorporation and Bylaws to convene the Parent Stockholders' Meeting to be held
as promptly as practicable, and in any event (to the extent permissible under
applicable law) within 45 days after the declaration of effectiveness of the
Registration Statement (provided that Company and Parent will notice the Company
Stockholders' Meeting and the Parent Stockholders' Meeting to be held on the
same day, and if Company adjourns or postpones the Company Stockholders'
Meeting, Parent may adjourn or postpone the Parent Stockholders' Meeting in
order that they be held on the same day), for the purpose of voting upon the
Parent Stockholder Approvals. Parent will use its commercially reasonable
efforts to solicit from its stockholders proxies in favor of the approval of the
Parent Stockholder Approvals and will take all other action necessary or
advisable to secure the vote or consent of its stockholders required by the
rules of the Nasdaq Stock Market or Delaware Law to obtain such approvals.
Notwithstanding anything to the contrary contained in this Agreement, Parent may
adjourn or postpone the Parent Stockholders' Meeting to the extent necessary to
ensure that any necessary supplement or amendment to the Proxy
Statement/Prospectus is provided to Parent's stockholders in advance of a vote
on the Parent Stockholder Approval or, if as of the time for which Parent
Stockholders' Meeting is originally scheduled (as set forth in the Proxy
Statement/Prospectus) there are insufficient shares of Parent Common Stock
represented (either in person or by proxy) to constitute a quorum necessary to
conduct the business of the Parent Stockholders' Meeting. Parent shall ensure
that the Parent Stockholders' Meeting is called, noticed, convened, held and
conducted, and that all proxies solicited by Parent in connection with the
Parent Stockholders' Meeting are solicited, in compliance with the Delaware Law,
its Certificate of Incorporation and Bylaws, the rules of the Nasdaq Stock
Market and all other applicable legal requirements.
(b) (i) The Board of Directors of Parent shall recommend that Parent's
stockholders approve the Parent Stockholder Approval at the Parent Stockholders'
Meeting; (ii) the Proxy Statement/Prospectus shall include a statement to the
effect that the Board of Directors of Parent has recommended that Parent's
stockholders approve the Parent Stockholder Approval at the Company
Stockholders' Meeting; and (iii) neither the Board of Directors of Parent nor
any committee thereof shall withdraw, amend or modify, or propose or resolve to
withdraw, amend or modify in a manner adverse to Company, the recommendation of
the Board of Directors of Parent that Parent's stockholders approve the Parent
Stockholder Approval.
(c) Nothing contained in this Agreement shall prohibit Parent or its
Board of Directors from taking and disclosing to its stockholders a position
contemplated by Rules 14d-9 and 14e-2(a) promulgated under the Exchange Act, or
otherwise required by applicable law.
5.4 No Solicitation.
(a) From and after the date of this Agreement until the Effective Time
or termination of this Agreement pursuant to Article VII, Company and its
subsidiaries will not, nor will they authorize or permit any of their respective
officers, directors, affiliates or employees or any investment banker, attorney
or other advisor or representative retained by any of them to,
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directly or indirectly, (i) solicit, initiate, encourage or induce the making,
submission or announcement of any Acquisition Proposal (as hereinafter defined),
(ii) participate in any discussions or negotiations regarding, or furnish to any
person any non-public information with respect to, or take any other action to
facilitate any inquiries or the making of any proposal that constitutes an
Acquisition Proposal, (iii) engage in discussions with any person with respect
to any Acquisition Proposal, except as to the existence of these provisions,
(iv) approve, endorse or recommend any Acquisition Proposal or (v) enter into
any letter of intent or similar document or any contract, agreement or
commitment contemplating or otherwise relating to any Acquisition Proposal;
provided, however, that prior to the approval of this Agreement and the Merger
at the Company Stockholders' Meeting, Company may furnish nonpublic information
regarding Company and its subsidiaries to, or entering into discussions or
negotiations with, any person or group who has submitted (and not withdrawn) to
Company an unsolicited, written, bona fide Acquisition Proposal that the Board
of Directors of Company reasonably concludes (after consultation with a
financial advisor of national standing) may constitute a Superior Offer if (1)
neither Company nor any representative of Company and its subsidiaries shall
have violated any of the restrictions set forth in this Section 5.4, (2) the
Board of Directors of Company concludes in good faith, after consultation with
its outside legal counsel, that such action is required in order for the Board
of Directors of Company to comply with its fiduciary obligations to Company's
stockholders under applicable law, (3) 36 hours prior to furnishing any such
nonpublic information to, or entering into any such discussions with, such
person or group, Company gives Parent written notice of the identity of such
person or group and all of the material terms and conditions of such Acquisition
Proposal and of Company's intention to furnish nonpublic information to, or
enter into discussions with, such person or group, and Company receives from
such person or group an executed confidentiality agreement containing terms at
least as restrictive with regard to Company's confidential information as the
Confidentiality Agreement (as defined in Section 5.5), and (4) contemporaneously
with furnishing any such nonpublic information to such person or group, Company
furnishes such nonpublic information to Parent (to the extent such nonpublic
information has not been previously furnished by the Company to Parent). Company
and its subsidiaries will immediately cease any and all existing activities,
discussions or negotiations with any parties conducted heretofore with respect
to any Acquisition Proposal. Without limiting the foregoing, it is understood
that any violation of the restrictions set forth in the preceding two sentences
by any officer, director or employee of Company or any of its subsidiaries or
any investment banker, attorney or other advisor or representative of Company or
any of its subsidiaries shall be deemed to be a breach of this Section 5.4 by
Company.
For purposes of this Agreement, "ACQUISITION PROPOSAL" shall mean any
offer or proposal (other than an offer or proposal by Parent) relating to any
transaction or series of related transactions other than the transactions
contemplated by this Agreement involving: (A) any acquisition or purchase from
the Company by any person or "group" (as defined under Section 13(d) of the
Exchange Act and the rules and regulations thereunder) of more than a 15%
interest in the total outstanding voting securities of the Company or any of its
subsidiaries or any tender offer or exchange offer that if consummated would
result in any person or "group" (as defined under Section 13(d) of the Exchange
Act and the rules and regulations thereunder) beneficially owning 15% or more of
the total outstanding voting securities of the Company or any of its
subsidiaries or any merger, consolidation, business combination or similar
transaction involving
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the Company pursuant to which the stockholders of the Company immediately
preceding such transaction hold less than 85% of the equity interests in the
surviving or resulting entity of such transaction; (B) any sale, lease (other
than in the ordinary course of business), exchange, transfer, license (other
than in the ordinary course of business), acquisition, or disposition of more
than 15% of the assets of the Company; or (C) any liquidation or dissolution of
the Company.
(b) In addition to the obligations of Company set forth in paragraph
(a) of this Section 5.4, Company as promptly as practicable shall advise Parent
orally and in writing of any request for non-public information which Company
reasonably believes would lead to an Acquisition Proposal or of any Acquisition
Proposal, or any inquiry with respect to or which Company reasonably should
believe would lead to any Acquisition Proposal, the material terms and
conditions of such request, Acquisition Proposal or inquiry, and the identity of
the person or group making any such request, Acquisition Proposal or inquiry.
Company will keep Parent informed as promptly as practicable in all material
respects of the status and details (including material amendments or proposed
amendments) of any such request, Acquisition Proposal or inquiry.
5.5 Confidentiality; Access to Information.
(a) The parties acknowledge that Company and Parent have previously
executed a mutual nondisclosure agreement, dated as of March 5, 2000 (the
"CONFIDENTIALITY AGREEMENT"), which Confidentiality Agreement will continue in
full force and effect in accordance with its terms; provided, that nothing in
this Agreement or the Confidentiality Agreement will restrict communications
with parties to the Related Agreements.
(b) Access to Information. Company will afford Parent and its
accountants, counsel and other representatives reasonable access during normal
business hours to the properties, books, records and personnel of Company during
the period prior to the Effective Time to obtain all information concerning the
business, including the status of product development efforts, properties,
results of operations and personnel of Company, as Parent may reasonably
request. Parent will afford Company and its accountants, counsel and other
representatives reasonable access during normal business hours to the
properties, books, records and personnel of Parent during the period prior to
the Effective Time to obtain all information concerning the business, including
the status of product development efforts, properties, results of operations and
personnel of Parent, as Company may reasonably request. No information or
knowledge obtained in any investigation pursuant to this Section 5.5 will affect
or be deemed to modify any representation or warranty contained herein or the
conditions to the obligations of the parties to consummate the Merger.
5.6 Public Disclosure. Parent and Company will consult with each other, and
to the extent practicable, agree, before issuing any press release or otherwise
making any public statement with respect to the Merger, this Agreement or any
Acquisition Proposal and will not issue any such press release or make any such
public statement prior to such consultation, except as may be required by law or
any listing agreement with a national securities exchange. The parties have
agreed to the text of the joint press release announcing the signing of this
Agreement.
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5.7 Reasonable Efforts; Notification.
(a) Upon the terms and subject to the conditions set forth in this
Agreement, each of the parties agrees to use all reasonable efforts to take, or
cause to be taken, all actions, and to do, or cause to be done, and to assist
and cooperate with the other parties in doing, all things necessary, proper or
advisable to consummate and make effective, in the most expeditious manner
practicable, the Merger and the other transactions contemplated by this
Agreement and the Related Agreements, including using reasonable efforts to
accomplish the following: (i) the taking of all reasonable acts necessary to
cause the conditions precedent set forth in Article VI to be satisfied, (ii) the
obtaining of all necessary actions or nonactions, waivers, consents, approvals,
orders and authorizations from Governmental Entities and the making of all
necessary registrations, declarations and filings (including registrations,
declarations and filings with Governmental Entities, if any) and the taking of
all reasonable steps as may be necessary to avoid any suit, claim, action,
investigation or proceeding by any Governmental Entity, (iii) the obtaining of
all necessary consents, approvals or waivers from third parties, (iv) the
defending of any suits, claims, actions, investigations or proceedings, whether
judicial or administrative, challenging this Agreement or the consummation of
the transactions contemplated hereby, including seeking to have any stay or
temporary restraining order entered by any court or other Governmental Entity
vacated or reversed and (v) the execution or delivery of any additional
instruments necessary to consummate the transactions contemplated by, and to
fully carry out the purposes of, this Agreement. Notwithstanding anything in
this Agreement to the contrary, neither Parent nor any of its affiliates shall
be under any obligation to make proposals, execute or carry out agreements or
submit to orders providing for the sale or other disposition or holding separate
(through the establishment of a trust or otherwise) of any material assets or
categories of assets of Parent, any of its affiliates or Company or the holding
separate of the shares of Company Common Stock (or shares of stock of the
Surviving Corporation) or imposing or seeking to impose any material limitation
on the ability of Parent or any of its subsidiaries or affiliates to conduct
their business or own such assets or to acquire, hold or exercise full rights of
ownership of the shares of Company Common Stock (or shares of stock of the
Surviving Corporation).
(b) Each of Company and Parent will give prompt notice to the other of
(i) any notice or other communication from any person alleging that the consent
of such person is or may be required in connection with the Merger, (ii) any
notice or other communication from any Governmental Entity in connection with
the Merger, (iii) any litigation relating to, involving or otherwise affecting
Company, Parent or their respective subsidiaries that relates to the
consummation of the Merger. Company shall give prompt notice to Parent of any
representation or warranty made by it contained in this Agreement becoming
untrue or inaccurate, or any failure of Company to comply with or satisfy in any
material respect any covenant, condition or agreement to be complied with or
satisfied by it under this Agreement, in each case, such that the conditions set
forth in Section 6.3 would not be satisfied, provided, however, that no such
notification shall affect the representations, warranties, covenants or
agreements of the parties or the conditions to the obligations of the parties
under this Agreement. Parent shall give prompt notice to Company of any
representation or warranty made by it or Merger Sub contained in this Agreement
becoming untrue or inaccurate, or any failure of Parent or Merger Sub to comply
with or satisfy in any material respect any covenant, condition or agreement to
be complied with
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or satisfied by it under this Agreement, in each case, such that the conditions
set forth in Section 6.2 would not be satisfied, provided, however, that no such
notification shall affect the representations, warranties, covenants or
agreements of the parties or the conditions to the obligations of the parties
under this Agreement.
5.8 Third Party Consents. As soon as practicable following the date hereof,
Parent and Company will each use its commercially reasonable efforts to obtain
any material consents, waivers and approvals under any of its or its
subsidiaries' respective agreements, contracts, licenses or leases required to
be obtained in connection with the consummation of the transactions contemplated
hereby. As soon as practicable following the date hereof, Parent will use its
commercially reasonable efforts to obtain any material consents, waivers and
approvals under any of its or its subsidiaries' respective agreements,
contracts, licenses or leases required to be obtained in connection with the
consummation of the transactions contemplated by the Related Agreements.
5.9 Stock Options and ESPP.
(a) At the Effective Time, each outstanding Company Option, whether or
not then exercisable, will be assumed by Parent. Each Company Option so assumed
by Parent under this Agreement will continue to have, and be subject to, the
same terms and conditions set forth in the Company Stock Option Plan pursuant to
which such Company Option was issued immediately prior to the Effective Time
(including, without limitation, any repurchase rights or vesting provisions),
except that (i) each Company Option will be exercisable (or will become
exercisable in accordance with its terms) for that number of whole shares of
Parent Common Stock equal to the product of the number of shares of Company
Common Stock that were issuable upon exercise of such Company Option immediately
prior to the Effective Time multiplied by the Exchange Ratio, rounded down to
the nearest whole number of shares of Parent Common Stock and (ii) the per share
exercise price for the shares of Parent Common Stock issuable upon exercise of
such assumed Company Option will be equal to the quotient determined by dividing
the exercise price per share of Company Common Stock at which such Company
Option was exercisable immediately prior to the Effective Time by the Exchange
Ratio, rounded up to the nearest whole cent. Continuous employment with Company
or its subsidiaries shall be credited to the optionee for purposes of
determining the vesting of all assumed Company Options after the Effective Time.
(b) It is intended that Company Options assumed by Parent shall qualify
following the Effective Time as incentive stock options as defined in Section
422 of the Code to the extent Company Options qualified as incentive stock
options immediately prior to the Effective Time and the provisions of this
Section 5.9 shall be applied consistent with such intent.
(c) Company shall take all actions necessary pursuant to the terms of
the Company ESPP in order to terminate the Company ESPP and each "Option" (as
defined in the Company ESPP) thereunder immediately prior to the Effective Time;
provided, that Company will give advance notice of such termination to each
holder of an Option not less than ten days preceding such termination, and each
holder of an Option shall have the right to exercise such
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Option in full based on such holder's payroll deductions then credited to such
holder's account as of the date determined by the Board of Directors of Company.
(d) Prior to the grant of any Company Options permitted under Section
4.1(f), Company agrees to amend the Company Stock Option Plans to eliminate for
all Company Options granted after the date of this Agreement the acceleration of
the vesting of such Company Options upon consummation of the Merger or the other
transactions contemplated hereby. Company agrees to use its best efforts to
cause the holders of Company Options under the Company's 1999 Stock Incentive
Plan to waive any acceleration of the vesting of such Company Options upon
consummation of the Merger or the transactions contemplated by the Related
Agreements. Parent agrees to use its best efforts to cause the holders of Parent
Options to waive any acceleration of the vesting of such Parent Options upon
consummation of the Merger or the transactions contemplated by the Related
Agreements.
5.10 Form S-8. Parent agrees to file a registration statement on Form S-8
for the shares of Parent Common Stock issuable with respect to assumed Company
Options as soon as is reasonably practicable after the Effective Time and shall
maintain the effectiveness of such registration statement thereafter for so long
as any of such options or other rights remain outstanding.
5.11 Indemnification.
(a) From and after the Effective Time, Parent will cause the Surviving
Corporation to fulfill and honor in all respects the obligations of Company
pursuant to any indemnification agreements between Company and its directors and
officers as of the Effective Time (the "INDEMNIFIED PARTIES") and any
indemnification provisions under Company's Certificate of Incorporation or
Bylaws as in effect on the date hereof. The Certificate of Incorporation and
Bylaws of the Surviving Corporation will contain provisions with respect to
exculpation and indemnification that are at least as favorable to the
Indemnified Parties as those contained in the Certificate of Incorporation and
Bylaws of Company as in effect on the date hereof, which provisions will not be
amended, repealed or otherwise modified for a period of six years from the
Effective Time in any manner that would adversely affect the rights thereunder
of individuals who, immediately prior to the Effective Time, were directors or
officers of Company, unless such modification is required by law.
(b) For a period of six years after the Effective Time, Parent will
cause the Surviving Corporation to use its commercially reasonable efforts to
maintain in effect, if available, directors' and officers' liability insurance
covering those persons who are currently covered by Company's directors' and
officers' liability insurance policy on terms comparable to those applicable to
the current directors and officers of Company; provided, however, that in no
event will Parent or the Surviving Corporation be required to expend in excess
of 200% of the annual premium currently paid by Company for such coverage (or
such coverage as is available for such 200% of such annual premium).
(c) This Section 5.11 shall survive the consummation of the Merger, is
intended to benefit Company, the Surviving Corporation and each Indemnified
Party, shall be
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binding on all successors and assigns of the Surviving Corporation and Parent,
and shall be enforceable by the Indemnified Parties.
5.12 Parent Board of Directors; Executive Officers. The Board of Directors
of Parent will take all actions reasonably necessary such that as soon as
practicable following the Effective Time, (i) the size of Parent's Board of
Directors shall be increased to nine, and the following persons shall be
appointed to Parent's Board of Directors to fill the five vacancies in the
following classes: three persons nominated by Company, one of whom shall be
Xxxxxx X. Xxxxxx, who shall be appointed to Class III, one of whom shall be
affiliated with General Atlantic Partners, LLC, who shall be appointed to Class
I, and the other of whom shall be appointed to Class II, one person shall be
appointed by Healthvision to Class I, and one person shall be appointed by VHA
to Class I, and (ii) Xxxxxx X. Xxxxxx shall be elected Chairperson of the Board
of Directors of Parent, and Xxxxxx Xxxxxxx shall be elected Chief Executive
Officer and President of Parent. Under the Parent Charter Documents, the terms
of Class I Directors expire in 2000, the terms of Class II Directors expire in
2001 and the terms of Class III Directors expire in 2002. The Class I Directors
appointed pursuant to this Section shall be appointed following Parent's annual
meeting in 2000, or, if such annual meeting is held following the Effective Time
and such person so elects, following the Effective Time but prior to such annual
meeting. Class I Directors appointed following such annual meeting shall have
terms that end in 2003, subject to such directors' earlier resignation or
removal.
5.13 Nasdaq Listing. Parent agrees to authorize for listing on the Nasdaq
Stock Market the shares of Parent Common Stock issuable, and those required to
be reserved for issuance, in connection with the Merger, effective upon official
notice of issuance.
5.14 Letters of Accountants. Company and Parent shall use their respective
reasonable efforts to cause to be delivered to Parent a letter of Company's and
Parent's independent accountants, respectively, dated no more than two business
days before the date on which the Registration Statement becomes effective (and
satisfactory in form and substance to Company and Parent), that is customary in
scope and substance for letters delivered by independent public accountants in
connection with registration statements similar to the Registration Statement.
5.15 Takeover Statutes. If any Takeover Statute is or may become applicable
to the Merger or the other transactions contemplated by this Agreement, each of
Parent and Company and their respective Boards of Directors shall grant such
approvals and take such lawful actions as are necessary to ensure that such
transactions may be consummated as promptly as practicable on the terms
contemplated by this Agreement and otherwise act to eliminate or minimize the
effects of such Takeover Statute and any regulations promulgated thereunder on
such transactions.
5.16 Certain Employee Benefits. As soon as practicable after the execution
of this Agreement, Parent and Company shall confer and work together in good
faith to agree upon mutually acceptable employee benefit and compensation
arrangements which carry out the agreements set forth in the following two
sentences. Parent will use reasonable efforts to arrange that, as soon as
reasonably practicable after the Effective Time, Parent's benefit arrangements
and employee plans provide similar or comparable benefits to Company's employees
generally
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as is provided to Parent's employees who are similarly situated. Parent's
benefit arrangements and employee plans shall give full credit for each
participant's continuous period of service with Company prior to the Effective
Time for all purposes for which length of service prior to the Effective Time is
recognized under Parent benefit arrangements and employee plans. At Parent's
request, Company agrees that it and its subsidiaries shall terminate any and all
Company Employee Plans, if appropriate (other than contractual agreements
disclosed in the Company Disclosure Letter) immediately prior to the Effective
Time.
5.17 Registration Rights. Parent agrees to use its reasonable efforts to
cause the holders of existing registration rights regarding Parent Common Stock
to surrender their existing registration rights in exchange for the registration
rights provided under the Registration Rights Agreement attached hereto as
Schedule 5.17 (the "NEW PARENT REGISTRATION RIGHTS AGREEMENT"). Company agrees
to use its reasonable efforts to cause the holders of existing registration
rights regarding Company Common Stock to surrender their existing rights in
exchange for the registration rights provided to such party under the New Parent
Registration Rights Agreement. Upon receipt by Parent of a valid termination of
all Company registration rights held by a party, Parent shall grant to such
party the registration rights set forth in the New Parent Registration Rights
Agreement applicable to such party.
5.18 Acquisitions of Company Stock. From the date of this Agreement through
the earlier of the Effective Time or the termination of this Agreement in
accordance with its terms, Parent agrees that it will not purchase shares of
Company Common Stock or otherwise intentionally acquire the right to vote shares
of Company Common Stock, without the Company's consent.
ARTICLE VI
CONDITIONS TO THE MERGER
6.1 Conditions to Obligations of Each Party to Effect the Merger. The
respective obligations of each party to this Agreement to effect the Merger
shall be subject to the satisfaction at or prior to the Closing Date of the
following conditions:
(a) Company Stockholder Approval. This Agreement shall have been
approved and adopted, and the Merger shall have been approved, by the requisite
vote of the stockholders of Company under applicable law and the Company Charter
Documents.
(b) Parent Stockholder Approval. The issuance of shares of Parent
Common Stock pursuant to the Merger shall have been approved by the requisite
vote of the stockholders of Parent under applicable law and the Parent Charter
Documents.
(c) Registration Statement Effective; Proxy Statement. 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
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purpose, and no similar proceeding in respect of the Proxy Statement/Prospectus,
shall have been initiated or threatened in writing by the SEC.
(d) No Order; HSR Act. No Governmental Entity shall have enacted,
issued, promulgated, enforced or entered any statute, rule, regulation,
executive order, decree, injunction or other order (whether temporary,
preliminary or permanent) which is in effect and which has the effect of making
the Merger illegal or otherwise prohibiting consummation of the Merger. All
waiting periods, if any, under the HSR Act relating to the transactions
contemplated hereby will have expired or been terminated.
(e) Nasdaq Listing. The shares of Parent Common Stock to be issued in
the Merger shall have been approved for listing on the Nasdaq Stock Market,
subject to official notice of issuance.
(f) Consents. (i) All required approvals or consents of any
Governmental Entity or other person in connection with the Merger and the
consummation of the other transactions contemplated hereby and by the Related
Agreements shall have been obtained (and all relevant statutory, regulatory or
other governmental waiting periods, shall have expired) unless the failure to
receive any such approval or consent would not be reasonably likely, directly or
indirectly, to result in a Material Adverse Effect on Parent and its
subsidiaries, Company and its subsidiaries and Healthvision and its
subsidiaries, taken as a whole, and (ii) all such approvals and consents which
have been obtained shall be on terms that are not reasonably likely, directly or
indirectly, to result in a Material Adverse Effect on Parent and its
subsidiaries, Company and its subsidiaries and Healthvision and its
subsidiaries, taken as a whole.
(g) No Restraints. There shall not be instituted or pending any action
or proceeding by any Governmental Entity (i) seeking to restrain, prohibit or
otherwise interfere with the ownership or operation by Parent or any of its
subsidiaries of all or any material portion of the business of Company or any of
its subsidiaries or of Parent or any of its subsidiaries or to compel Parent or
any of its subsidiaries to dispose of or hold separate all or any material
portion of the business or assets of Company or any of its subsidiaries or of
Parent or any of its subsidiaries, (ii) seeking to impose or confirm limitations
on the ability of Parent or any of its subsidiaries effectively to exercise full
rights of ownership of the shares of Company Common Stock (or shares of stock of
the Surviving Corporation) including the right to vote any such shares on any
matters properly presented to stockholders or (iii) seeking to require
divestiture by Parent or any of its subsidiaries of any such shares.
6.2 Additional Conditions to Obligations of Company. The obligation of
Company to consummate and effect the Merger shall be subject to the satisfaction
at or prior to the Closing Date of each of the following conditions, any of
which may be waived, in writing, exclusively by Company:
(a) Representations and Warranties. The representations and warranties
of Parent and Merger Sub contained in this Agreement, disregarding all
qualifications and exceptions contained therein relating to materiality or
Material Adverse Effect or any similar standard or qualification, shall be true
and correct on and as of the Closing Date as if made on
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and as of the Closing Date (other than representations and warranties that
address matters only as of a particular date, which shall be true and correct as
of such date), except where the failure of such representations or warranties to
be true or correct would not have, individually or in the aggregate, a Material
Adverse Effect on Parent. It is understood that, for purposes of determining the
accuracy of such representations and warranties, any update of or modification
to the Parent Disclosure Letter made or purported to have been made after the
execution of this Agreement shall be disregarded. Company shall have received a
certificate with respect to the foregoing signed on behalf of Parent by the
Chief Executive Officer or 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 Closing Date, and Company shall have received a certificate to such
effect signed on behalf of Parent by the Chief Executive Officer or Chief
Financial Officer of Parent.
(c) Material Adverse Effect. No Material Adverse Effect with respect to
Parent shall have occurred since the date of this Agreement and be continuing.
(d) Tax Opinion. Company shall have received an opinion of Xxxx and
Xxxx LLP, dated as of the Closing Date, in form and substance reasonably
satisfactory to it, on the basis of the facts, representations and assumptions
set forth or referred to in such opinion, that the Merger will constitute a
reorganization within the meaning of Section 368(a) of the Code and that each of
Parent and Company will be a party to the reorganization within the meaning of
Section 368(a) of the Code. The parties to this Agreement agree to make such
reasonable representations as requested by such counsel for the purpose of
rendering such opinions.
(e) Related Transactions. (i) The Novation Documents shall have become
effective and shall be in full force and effect in accordance with their terms,
and Company shall have a received a certificate to such effect executed by the
Chief Executive Officers of Parent and Novation, and (ii) Company shall have
received a certificate executed by the Chief Executive Officers of each of
Parent and Healthvision, that such parties are ready, willing and able to
consummate the transactions contemplated by the Healthvision Merger Agreement.
6.3 Additional Conditions to the Obligations of Parent and Merger Sub. The
obligations of Parent and Merger Sub to consummate and effect the Merger shall
be subject to the satisfaction at or prior to the Closing Date of each of the
following conditions, any of which may be waived, in writing, exclusively by
Parent:
(a) Representations and Warranties. The representations and warranties
of Company contained in this Agreement, disregarding all qualifications and
exceptions contained therein relating to materiality or Material Adverse Effect
or any similar standard or qualification, shall be true and correct on and as of
the Closing Date as if made on and as of the Closing Date (other than
representations and warranties that address matters only as of a particular
date, which shall be true and correct as of such date), except where the failure
of such representations or warranties to be true or correct would not have,
individually or in the aggregate, a Material
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Adverse Effect on Company. It is understood that, for purposes of determining
the accuracy of such representations and warranties, any update of or
modification to the Company Disclosure Letter made or purported to have been
made after the execution of this Agreement shall be disregarded. Parent shall
have received a certificate with respect to the foregoing signed on behalf of
Company by the Chief Executive Officer or Chief Financial Officer of Company.
(b) Agreements and Covenants. Company shall have performed or complied
in all material respects with all agreements and covenants required by this
Agreement to be performed or complied with by it at or prior to the Closing
Date, and Parent shall have received a certificate to such effect signed on
behalf of Company by the Chief Executive Officer or Chief Financial Officer of
Company.
(c) Material Adverse Effect. No Material Adverse Effect with respect to
Company shall have occurred since the date of this Agreement and be continuing.
(d) Tax Opinion. Parent shall have received an opinion of Fenwick &
West LLP, dated as of the Closing Date, in form and substance reasonably
satisfactory to it, on the basis of the facts, representations and assumptions
set forth or referred to in such opinion, that the Merger will constitute a
reorganization within the meaning of Section 368(a) of the Code and that each of
Parent and Company will be a party to the reorganization within the meaning of
Section 368(a) of the Code. The parties to this Agreement agree to make such
reasonable representations as requested by such counsel for the purpose of
rendering such opinions.
(e) Related Transactions. (i) The Novation Documents shall have become
effective and shall be in full force and effect in accordance with their terms,
and Parent shall have a received a certificate to such effect executed by the
Chief Executive Officer of Novation; provided, that the foregoing condition
shall be deemed to have been satisfied if (A) the transactions contemplated by
the Stock and Warrant Agreements have not closed due to the failure to satisfy
the condition set forth in Section 8.4 of such agreements, (B) each other
condition to the obligation of Parent to consummate such transactions in such
agreements shall have been satisfied or waived, and (C) neither Stock and
Warrant Agreement nor the Novation Operating Agreement shall have been
terminated in accordance with its respective terms, and (ii) Parent shall have
received a certificate executed by the Chief Executive Officer of Healthvision
that Healthvision is ready, willing and able to consummate the transactions
contemplated by the Healthvision Merger Agreement.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
7.1 Termination. This Agreement may be terminated at any time prior to the
Effective Time, whether before or after the requisite approvals of the
stockholders of Company or Parent:
(a) by mutual written consent duly authorized by the Boards of
Directors of Parent and Company;
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(b) by either Company or Parent if the Merger shall not have been
consummated by September 30, 2000 for any reason; provided, however, that the
right to terminate this Agreement under this Section 7.1(b) shall not be
available to any party whose action or failure to act has been a principal cause
of or resulted in the failure of the Merger to occur on or before such date and
such action or failure to act constitutes a breach of this Agreement;
(c) by either Company or Parent if a Governmental Entity shall have
issued an order, decree or ruling or taken any other action, in any case having
the effect of permanently restraining, enjoining or otherwise prohibiting the
Merger, which order, decree, ruling or other action is final and nonappealable;
(d) by either Company or Parent, if the approval and adoption of this
Agreement, and the approval of the Merger, by the stockholders of Company shall
not have been obtained by reason of the failure to obtain the required vote at a
meeting of Company stockholders duly convened therefore or at any adjournment
thereof; provided, however, that the right to terminate this Agreement under
this Section 7.1(d) shall not be available to Company where the failure to
obtain the Company stockholder approval shall have been caused by the action or
failure to act of Company and such action or failure to act constitutes a
material breach by Company of this Agreement;
(e) by either Company or Parent, if the approval of the issuance of
shares of Parent Common Stock pursuant to the Merger shall not have been
obtained by reason of the failure to obtain the respective required votes at a
meeting of Parent stockholders duly convened therefore or at any adjournment
thereof; provided, however, that the right to terminate this Agreement under
this Section 7.1(e) shall not be available to Parent where the failure to obtain
the Parent stockholder approvals shall have been caused by the action or failure
to act of Parent and such action or failure to act constitutes a material breach
by Parent of this Agreement;
(f) by Parent (at any time prior to the adoption and approval of this
Agreement and the Merger by the required vote of the stockholders of Company) if
a Triggering Event (as defined below) shall have occurred; provided, however,
that Parent shall not have the right to terminate this Agreement under this
Section 7.1(f) in response to the occurrence of the Triggering Event set forth
in clause (iii) of the definition thereof if at the time the event set forth in
such clause (iii) occurs Parent is in material breach of this Agreement which
breach has not been cured as of such time;
(g) by Company, upon a breach of any representation, warranty, covenant
or agreement on the part of Parent set forth in this Agreement, or if any
representation or warranty of Parent shall have become untrue, in either case
such that the conditions set forth in Section 6.2(a) or Section 6.2(b) would not
be satisfied as of the time of such breach or as of the time such representation
or warranty shall have become untrue, provided that if such inaccuracy in
Parent's representations and warranties or breach by Parent is curable by Parent
through the exercise of its commercially reasonable efforts, then Company may
not terminate this Agreement under this Section 7.1(g) for 30 days after
delivery of written notice from Company to Parent of such breach, provided
Parent continues to exercise commercially reasonable efforts to cure such
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breach (it being understood that Company may not terminate this Agreement
pursuant to this paragraph (g) if such breach by Parent is cured during such
30-day period, or if Company shall have materially breached this Agreement);
(h) by Parent, upon a breach of any representation, warranty, covenant
or agreement on the part of Company set forth in this Agreement, or if any
representation or warranty of Company shall have become untrue, in either case
such that the conditions set forth in Section 6.3(a) or Section 6.3(b) would not
be satisfied as of the time of such breach or as of the time such representation
or warranty shall have become untrue, provided that if such inaccuracy in
Company's representations and warranties or breach by Company is curable by
Company through the exercise of its commercially reasonable efforts, then Parent
may not terminate this Agreement under this Section 7.1(h) for 30 days after
delivery of written notice from Parent to Company of such breach, provided
Company continues to exercise commercially reasonable efforts to cure such
breach (it being understood that Parent may not terminate this Agreement
pursuant to this paragraph (h) if such breach by Company is cured during such
30-day period, or if Parent shall have materially breached this Agreement); or
(i) by either Company or Parent, if any of the Related Agreements has
been validly terminated by a party thereto in accordance with its terms.
For the purposes of this Agreement, a "TRIGGERING EVENT" shall be
deemed to have occurred if: (i) the Board of Directors of Company or any
committee thereof shall for any reason have withdrawn or shall have amended or
modified in a manner adverse to Parent its recommendation in favor of the
adoption and approval of the Agreement or the approval of the Merger; (ii)
Company shall have failed to include in the Proxy Statement/Prospectus the
recommendation of the Board of Directors of Company in favor of the adoption and
approval of the Agreement and the approval of the Merger; (iii) the Board of
Directors of Company fails to reaffirm its recommendation in favor of the
adoption and approval of the Agreement and the approval of the Merger within 10
business days after Parent requests in writing that such recommendation be
reaffirmed at any time following the public announcement of an Acquisition
Proposal; (iv) the Board of Directors of Company or any committee thereof shall
have approved or publicly recommended any Acquisition Proposal; (v) Company
shall have entered into any letter of intent of similar document or any
agreement, contract or commitment accepting any Acquisition Proposal; (vi)
Company shall have materially breached any of the provisions of Sections 5.2 or
5.4; or (vii) a tender or exchange offer relating to securities of Company shall
have been commenced by a person unaffiliated with Parent, and Company shall not
have sent to its securityholders pursuant to Rule 14e-2 promulgated under the
Securities Act, within 10 business days after such tender or exchange offer is
first published sent or given, a statement disclosing that Company recommends
rejection of such tender or exchange offer.
7.2 Notice of Termination Effect of Termination. Any proper termination of
this Agreement under Section 7.1 above will be effective immediately upon the
delivery of written notice of the terminating party to the other parties hereto.
In the event of the termination of this Agreement as provided in Section 7.1,
this Agreement shall be of no further force or effect, except (i) as set forth
in this Section 7.2, Section 7.3 and Article 8, each of which shall survive the
termination of this Agreement, and (ii) nothing herein shall relieve any party
from liability
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for any willful breach of this Agreement. No termination of this Agreement shall
affect the obligations of the parties contained in the Confidentiality
Agreement, all of which obligations shall survive termination of this Agreement
in accordance with its terms.
7.3 Fees and Expenses.
(a) General. Except as set forth in this Section 7.3, all fees and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses whether
or not the Merger is consummated; provided, however, that Parent, Company and
Healthvision shall share equally all fees and expenses, other than attorneys'
and accountants fees and expenses, incurred in relation to the preparation and
filing with the SEC of the Proxy Statement/Prospectus (including any preliminary
materials related thereto) and the Registration Statement (including financial
statements and exhibits) and any amendments or supplements thereto, provided,
that Parent and Company shall share equally the expenses of printing the
finalized Proxy Statement/Prospectus (including any preliminary materials
related thereto) and any supplements thereto.
(b) Company Payments. In the event that this Agreement is terminated by
Parent or the Company, as applicable, pursuant to Sections 7.1(d), 7.1(f) or
7.1(h), Company shall promptly, but in no event later than two days after the
date of such termination, pay Parent a fee equal to $50 million in immediately
available funds; provided, that in the case of a termination under Sections
7.1(d) or 7.1(h) prior to which no Triggering Event has occurred, (i) such
payment shall be made only if (A) following the date of this Agreement and prior
to the termination of this Agreement, a person has publicly announced a bona
fide Acquisition Proposal and (B) within nine months following the termination
of this Agreement either a Company Acquisition (as defined below) is
consummated, or the Company enters into an agreement providing for a Company
Acquisition and such Company Acquisition is later consummated with the person
(or another person controlling, controlled by or under common control with, such
person) with whom such agreement was entered into (regardless of when such
consummation occurs if the Company has entered into such an agreement within
such nine-month period) and (ii) such payment shall be made promptly, but in no
event later than two days after the consummation of such Company Acquisition
(regardless of when such consummation occurs if the Company has entered into
such an agreement within such nine-month period). Company acknowledges that the
agreements contained in this Section 7.3(b) are an integral part of the
transactions contemplated by this Agreement, and that, without these agreements,
Parent would not enter into this Agreement. Accordingly, if the Company fails to
pay in a timely manner the amounts due pursuant to this Section 7.3(b), and, in
order to obtain such payment, Parent makes a claim that results in a judgment
against the Company for the amounts set forth in this Section 7.3(b), Company
shall pay to Parent its reasonable costs and expenses (including reasonable
attorneys' fees and expenses) in connection with such suit, together with
interest on the amounts set forth in this Section 7.3(b) at the prime rate of
The Chase Manhattan Bank in effect on the date such payment was required to be
made. Payment of the fees described in this Section 7.3(b) shall not be in lieu
of damages incurred in the event of breach of this Agreement.
For the purposes of this Agreement, "COMPANY ACQUISITION" shall mean
any of the following transactions (other than the transactions contemplated by
this Agreement); (i) a
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merger, consolidation, business combination, recapitalization, liquidation,
dissolution or similar transaction involving the Company pursuant to which the
stockholders of the Company immediately preceding such transaction hold less
than 50% of the aggregate equity interests in the surviving or resulting entity
of such transaction, (ii) a sale or other disposition by the Company of assets
representing in excess of 50% of the aggregate fair market value of the
Company's business immediately prior to such sale, or (iii) the acquisition by
any person or group (including by way of a tender offer or an exchange offer or
issuance by Company), directly or indirectly, of beneficial ownership or a right
to acquire beneficial ownership of shares representing in excess of 50% of the
voting power of the then outstanding shares of capital stock of the Company.
7.4 Amendment. Subject to applicable law, this Agreement may be amended by
the parties hereto at any time by execution of an instrument in writing signed
on behalf of each of Parent and Company. Parent will not agree to any amendment
of any Related Agreement without the prior written consent of Company (which
consent shall not be unreasonably withheld or delayed).
7.5 Extension; Waiver. At any time prior to the Effective Time any party
hereto may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties made to such
party contained herein or in any document delivered pursuant hereto and (iii)
waive compliance with any of the agreements or conditions for the benefit of
such party contained herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party. Delay in exercising any right under this
Agreement shall not constitute a waiver of such right.
ARTICLE VIII
GENERAL PROVISIONS
8.1 Non-Survival of Representations and Warranties. The representations and
warranties of Company, Parent and Merger Sub contained in this Agreement shall
terminate at the Effective Time, and only the covenants that by their terms
survive the Effective Time shall survive the Effective Time.
8.2 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given upon delivery either personally or by
commercial delivery service, or sent via facsimile (receipt confirmed) to the
parties at the following addresses or facsimile numbers (or at such other
address or facsimile numbers for a party as shall be specified by like notice):
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(a) if to Parent or Merger Sub, to:
Xxxxxxxx.xxx, Inc.
0000-0 Xxxxx Xxxxxxxxx
Xxxxx Xxxxx, Xxxxxxxxxx 00000
Attention: Chief Financial Officer
Facsimile No.: 000-000-0000
with a copy to:
Fenwick & West LLP
Xxx Xxxx Xxxx Xxxxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxx
Xxxxxxx X. Xxxxx
Facsimile No.: 000-000-0000
(b) if to Company, to:
Eclipsys Corporation
000 Xxxx Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx Xxxxx, Xxxxxxx 00000
Attention: Chief Executive Officer
Facsimile No.: 000-000-0000
with a copy to:
Xxxx and Xxxx LLP
00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxx Xxxxxxx
Xxxxxx X. Xxxxx
Facsimile No.: 000-000-0000
In the event that Parent shall give or receive a notice relating to a
Material Adverse Effect on either Parent or Healthvision pursuant to the
Healthvision Merger Agreement, Parent shall also deliver a copy of such notice
to Company.
8.3 Interpretation; Certain Defined Terms.
(a) When a reference is made in this Agreement to Exhibits, such
reference shall be to an Exhibit to this Agreement unless otherwise indicated.
When a reference is made in this Agreement to Sections, such reference shall be
to a Section of this Agreement unless otherwise indicated. The words "INCLUDE,"
"INCLUDES" and "INCLUDING" when used herein shall be deemed in each case to be
followed by the words "WITHOUT LIMITATION." The table of contents and headings
contained in this Agreement are for reference purposes only and shall not affect
in
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any way the meaning or interpretation of this Agreement. When reference is made
herein to "THE BUSINESS OF" an entity, such reference shall be deemed to include
the business of all direct and indirect subsidiaries of such entity. Reference
to the subsidiaries of an entity shall be deemed to include all direct and
indirect subsidiaries of such entity.
(b) For purposes of this Agreement, the term "KNOWLEDGE" means with
respect to a party hereto, with respect to any matter in question, that any of
the officers of such party has actual knowledge of such matter, after reasonable
inquiry of such matter.
(c) For purposes of this Agreement, the term "MATERIAL ADVERSE EFFECT"
when used in connection with an entity means any change, event, violation,
inaccuracy, circumstance or effect that is or is reasonably likely to be
materially adverse to the business, assets (including intangible assets),
capitalization, financial condition, operations or results of operations of such
entity taken as a whole with its subsidiaries, except to the extent that any
such change, event, violation, inaccuracy, circumstance or effect directly and
primarily results from (i) changes in general economic conditions or changes
affecting the industry generally in which such entity operates (provided that
such changes do not affect such entity in a substantially disproportionate
manner) or (ii) changes in the trading prices for such entity's capital stock.
(d) For purposes of this Agreement, the term "PERSON" shall mean any
individual, corporation (including any non-profit corporation), general
partnership, limited partnership, limited liability partnership, joint venture,
estate, trust, company (including any limited liability company or joint stock
company), firm or other enterprise, association, organization, entity or
Governmental Entity.
(e) For purposes of this Agreement, "SUBSIDIARY" of a specified entity
will be any corporation, partnership, limited liability company, joint venture
or other legal entity of which the specified entity (either alone or through or
together with any other subsidiary) owns, directly or indirectly, 50% or more of
the stock or other equity or partnership interests the holders of which are
generally entitled to vote for the election of the Board of Directors or other
governing body of such corporation or other legal entity. For the avoidance of
doubt, Healthvision is not a subsidiary of Company.
(f) Disclosure made with regard to a representation or warranty of a
party in a Part of either the Company Disclosure Letter or Parent Disclosure
Letter shall also be deemed to qualify other representations and warranties of
the party making such disclosure if it is readily apparent from the language
contained in such disclosure that such disclosure is applicable to such other
representation or warranty.
8.4 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party, it being understood that all
parties need not sign the same counterpart.
8.5 Entire Agreement; Third Party Beneficiaries. This Agreement, its
Exhibits and the documents and instruments and other agreements among the
parties hereto as contemplated
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by or referred to herein, including the Company Disclosure Letter and the Parent
Disclosure Letter (a) constitute the entire agreement among the parties with
respect to the subject matter hereof and supersede all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof, it being understood that the Confidentiality Agreement
shall continue in full force and effect until the Closing and shall survive any
termination of this Agreement; and (b) are not intended to confer upon any other
person any rights or remedies hereunder, except as specifically provided in
Section 5.11.
8.6 Severability. In the event that any provision of this Agreement or the
application thereof, becomes or is declared by a court of competent jurisdiction
to be illegal, void or unenforceable, the remainder of this Agreement will
continue in full force and effect and the application of such provision to other
persons or circumstances will be interpreted so as reasonably to effect the
intent of the parties hereto. The parties further agree to replace such void or
unenforceable provision of this Agreement with a valid and enforceable provision
that will achieve, to the extent possible, the economic, business and other
purposes of such void or unenforceable provision.
8.7 Other Remedies; Specific Performance. Except as otherwise provided
herein, any and all remedies herein expressly conferred upon a party will be
deemed cumulative with and not exclusive of any other remedy conferred hereby,
or by law or equity upon such party, and the exercise by a party of any one
remedy will not preclude the exercise of any other remedy. The parties hereto
agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to seek an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
hereof in any court of the United States or any state having jurisdiction, this
being in addition to any other remedy to which they are entitled at law or in
equity.
8.8 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, regardless of the laws that
might otherwise govern under applicable principles of conflicts of law thereof.
8.9 Rules of Construction. The parties hereto agree that they have been
represented by counsel during the negotiation and execution of this Agreement
and, therefore, waive the application of any law, regulation, holding or rule of
construction providing that ambiguities in an agreement or other document will
be construed against the party drafting such agreement or document.
8.10 Assignment. No party may assign either this Agreement or any of its
rights, interests, or obligations hereunder without the prior written consent of
the other parties hereto. Subject to the preceding sentence, this Agreement
shall be binding upon and shall inure to the benefit of the parties hereto and
their respective successors and permitted assigns. Any purported assignment in
violation of this Section shall be void.
8.11 Waiver Of Jury Trial. EACH OF PARENT, COMPANY AND MERGER SUB HEREBY
IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
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PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE)
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE ACTIONS OF PARENT, COMPANY
OR MERGER SUB IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT
HEREOF.
* * * * *
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement and Plan
of Merger to be executed by their duly authorized respective officers as of the
date first written above.
XXXXXXXX.XXX, INC.
By: /s/ Xxxxxxxxx Xxxxxxxxxx
------------------------------
Name: Xxxxxxxxx Xxxxxxxxxx
Title: Chief Financial Officer
NEOIII ACQUISITION CORP.
By: /s/ Xxxxxxxxx Xxxxxxxxxx
------------------------------
Name: Xxxxxxxxx Xxxxxxxxxx
Title:
ECLIPSYS CORPORATION
By: /s/ Xxxxxx X. Xxxxxx
------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Chairman of the Board of
Directors and Chief
Executive Officer
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EXHIBIT A
COMPANY VOTING AGREEMENT
This COMPANY VOTING AGREEMENT (the "AGREEMENT") is made and entered into as
of March 30, 2000, between Xxxxxxxx.xxx, Inc., a Delaware corporation
("PARENT"), and the undersigned stockholder ("Stockholder") of Eclipsys
Corporation, a Delaware corporation ("COMPANY").
RECITALS
A. Concurrently with the execution of this Agreement, Parent, Company and
NeoIII Acquisition Corp., a Delaware corporation and a wholly-owned first-tier
subsidiary of Parent ("MERGER SUB"), are entering into an Agreement and Plan of
Merger (the "MERGER AGREEMENT") which provides for the merger of Merger Sub with
and into Company (the "MERGER"). Pursuant to the Merger, shares of capital stock
of Company will be converted into shares of Parent Common Stock on the basis
described in the Merger Agreement. Capitalized terms used but not defined herein
shall have the meanings set forth in the Merger Agreement.
B. Stockholder is the record holder of such number of outstanding shares of
capital stock of Company as is indicated on the final page of this Agreement.
C. As a material inducement to enter into the Merger Agreement, Parent
desires Stockholder to agree, and Stockholder is willing to agree, to vote the
Shares (as defined below), and such other shares of capital stock of Company
over which Stockholder has voting power, so as to facilitate consummation of the
Merger.
In consideration of the foregoing and the representations, warranties,
covenants and agreements set forth in this Agreement, the parties agree as
follows:
1. AGREEMENT TO VOTE SHARES
1.1 Definitions. For purposes of this Agreement:
(a) Shares. The term "SHARES" shall mean all issued and
outstanding shares of Company Common Stock owned of record or beneficially by
Stockholder or over which Stockholder exercises voting power, in each case, as
of the record date for persons entitled (i) to receive notice of, and to vote at
the meeting of the stockholders of Company called for the purpose of voting on
the matters referred to in Section 1.2, or (ii) to take action by written
consent of the stockholders of Company with respect to the matters referred to
in Section 1.2. Stockholder agrees that any shares of capital stock of Company
that Stockholder purchases or with respect to which Stockholder otherwise
acquires beneficial ownership or over which Stockholder exercises voting power
after the execution of this Agreement and prior to the date of
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termination of this Agreement pursuant to Section 3 below shall be subject to
the terms and conditions of this Agreement to the same extent as if they
constituted Shares on the date hereof.
(b) Subject Securities. The term "SUBJECT SECURITIES" shall mean:
(i) all securities of Company (including all shares of Company Common Stock and
all options, warrants and other rights to acquire shares of Company Common Stock
beneficially owned by Stockholder as of the date of this Agreement; and (ii) all
additional securities of Company (including all additional shares of Company
Common Stock and all additional options, warrants and other rights to acquire
shares of Company Common Stock) of which Stockholder acquires ownership during
the period from the date of this Agreement through the earlier of termination of
this Agreement pursuant to Section 3 below or the record date for the meeting at
which stockholders of Company are asked to vote upon approval of the Merger
Agreement and the Merger.
(c) Transfer. Stockholder shall be deemed to have effected a
"TRANSFER" of a security if Stockholder directly or indirectly: (i) sells,
pledges, encumbers, transfers or disposes of, or grants an option with respect
to, such security or any interest in such security; or (ii) enters into an
agreement or commitment providing for the sale, pledge, encumbrance, transfer or
disposition of, or grant of an option with respect to, such security or any
interest therein.
1.2 Agreement to Vote Shares. Stockholder hereby covenants and agrees that,
during the period commencing on the date hereof and continuing until the first
to occur of (i) such date and time as the Merger shall become effective in
accordance with the terms and provisions of the Merger Agreement (THE "EFFECTIVE
TIME") and (ii) termination of this Agreement in accordance with its terms, at
any meeting (whether annual or special and whether or not an adjourned or
postponed meeting) of the stockholders of Company, however called, or in
connection with any written consent of the stockholders of Company, Stockholder
will appear at the meeting or otherwise cause the Shares to be counted as
present thereat for purposes of establishing a quorum and vote or consent (or
cause to be voted or consented) the Shares:
(1) in favor of the approval and adoption of the Merger Agreement in
the form entered into on the date hereof and the approval of the Merger and
the other actions contemplated by the Merger Agreement and any actions
required in furtherance thereof;
(2) against approval of any proposal made in opposition to or in
competition with the consummation of the Merger, including, without
limitation, any Acquisition Proposal or Superior Offer (each as defined in
the Merger Agreement) or any action or agreement that would result in a
breach in any respect of any covenant, representation or warranty or any
other obligation or agreement of Company under the Merger Agreement or of
Stockholder under this Agreement.
Stockholder further agrees not to enter into any agreement or understanding
with any person the effect of which would be inconsistent with or violative of
any provision contained in this Section 1.2.
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1.3 Transfer and Other Restrictions. (a) Prior to the termination of
this Agreement, Stockholder agrees not to, directly or indirectly:
(i) except pursuant to the terms of the Merger Agreement, offer
for sale, Transfer or otherwise dispose of, or enter into any
contract, option or other arrangement or understanding with respect to
or consent to the offer for sale, Transfer or other disposition of any
or all of the Subject Securities or any interest therein except as
provided in Section 1.2 hereof;
(ii) grant any proxy, power of attorney, deposit any of the
Subject Securities into a voting trust or enter into a voting
agreement or arrangement with respect to the Subject Securities except
as provided in this Agreement; or
(iii) take any other action that would make any representation or
warranty of Stockholder contained herein untrue or incorrect or have
the effect of preventing or disabling Stockholder from performing its
obligations under this Agreement.
(b) To the extent Stockholder is, as of the date hereof, party to a
contract or agreement that requires Stockholder to Transfer Subject Securities
to another person or entity (excluding a contract or agreement pledging Subject
Securities to Company), Stockholder will not effect any such Transfer unless and
until the transferee agrees to be bound by and executes an agreement in the form
of this Agreement with respect to the Subject Securities to be Transferred.
Nothing herein shall prohibit Stockholder from exercising (in accordance with
the terms of the option or warrant, as applicable) any option or warrant
Stockholder may hold; provided that the securities acquired upon such exercise
shall be deemed Subject Securities and Shares hereunder.
1.4 Irrevocable Proxy. Concurrently with the execution of this
Agreement, Stockholder agrees to deliver to Parent a proxy in the form attached
hereto as Exhibit I (the "PROXY"), which shall be irrevocable to the extent set
forth therein, with respect to the Shares.
2. REPRESENTATIONS AND WARRANTIES OF STOCKHOLDER
(a) Stockholder is the record and beneficial owner of, or Stockholder
exercises voting power over, the shares of Company capital stock indicated on
the final page of this Agreement, which, on and as of the date hereof, are free
and clear of any Encumbrances that would adversely affect the ability of
Stockholder to carry out the terms of this Agreement. The number of Shares set
forth on the signature pages hereto are the only Shares beneficially owned by
such Stockholder and, except as set forth on such signature pages, the
Stockholder holds no options to purchase or rights to subscribe for or otherwise
acquire any securities of the Company and has no other interest in or voting
rights with respect to any securities of the Company.
(b) Stockholder has the requisite power and authority to enter into
this Agreement and to consummate the transactions contemplated by this
Agreement. The execution and delivery of this Agreement by such Stockholder and
the consummation by such Stockholder of
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77
the transactions contemplated by this Agreement have been duly authorized by all
necessary action (including any consultation, approval or other action by or
with any other person). This Agreement has been duly executed and delivered by
such Stockholder and constitutes a valid and binding obligation of such
Stockholder, enforceable against such Stockholder in accordance with its terms.
The execution and delivery of this Agreement does not, and the consummation of
the transactions contemplated by this Agreement and compliance with the
provisions of this Agreement will not, conflict with, or result in any violation
of, or default (with or without notice or lapse of time, or both) under, or give
rise to a right of termination, cancellation or acceleration of any obligation
which would result in the creation of any Encumbrance upon any of the Shares
owned by such Stockholder under, any provision of Stockholder's charter
documents (if applicable), applicable law or regulation or of any agreement,
judgment, injunction, order, decree, or other instrument binding on such
Stockholder or any Shares owned by such Stockholder. No consent, approval, order
or authorization of, or registration, declaration or filing with or exemption by
any Governmental Entity is required by or with respect to such Stockholder in
connection with the execution and delivery of this Agreement by such Stockholder
or the consummation by such Stockholder of the transactions contemplated by this
Agreement, except for applicable requirements, if any, of Sections 13 and 16 of
the Securities Exchange Act of 1934, as amended, and the rules and regulations
thereunder. If this Agreement is being executed in a representative or fiduciary
capacity, the person signing this Agreement has full power and authority to
enter into and perform such Agreement.
3. TERMINATION
This Agreement shall terminate and shall have no further force or effect as
of the first to occur of (i) the Effective Time and (ii) such date and time as
the Merger Agreement shall have been validly terminated pursuant to Article VII
thereof. Notwithstanding any other provision hereof, this Agreement shall
terminate in the event that the Merger Agreement is modified in a manner that is
materially adverse to Stockholder without Stockholder's consent.
4. MISCELLANEOUS
4.1 Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid, void
or unenforceable, then the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.
4.2 Binding Effect and Assignment. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns, but, except as
otherwise specifically provided herein, neither this Agreement nor any of the
rights, interests or obligations of the parties hereto may be assigned by either
of the parties without prior written consent of the other. Any purported
assignment in violation of this Section shall be void.
4.3 Amendments and Modification. This Agreement may not be modified,
amended, altered or supplemented except upon the execution and delivery of a
written agreement executed by the parties hereto.
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4.4 Specific Performance; Injunctive Relief. The parties hereto
acknowledge that Parent will be irreparably harmed and that there will be no
adequate remedy at law for a violation of any of the covenants or agreements of
Stockholder set forth herein. Therefore, it is agreed that, in addition to any
other remedies that may be available to Parent upon any such violation, Parent
shall have the right to enforce such covenants and agreements by specific
performance, injunctive relief or by any other means available to Parent at law
or in equity.
4.5 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed duly given upon delivery either by commercial
delivery service, or sent via facsimile (receipt confirmed) to the parties at
the following address or facsimile numbers (or at such other address or
facsimile numbers for a party as shall be specified by like notice):
If to Parent:
Xxxxxxxx.xxx, Inc.
0000-0 Xxxxx Xxxxxxxxx
Xxxxx Xxxxx, Xxxxxxxxxx 00000
Attn: Chief Financial Officer
Facsimile: (000) 000-0000
with a copy to:
Fenwick & West LLP
Xxx Xxxx Xxxx Xxxxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxxxx
Xxxxxxx X. Xxxxx
Facsimile: (000) 000-0000
If to Stockholder, to the address for notice set forth on the last page
hereof.
Any party hereto may by notice so given provide and change its address for
future notices hereunder. Notice shall conclusively be deemed to have been given
when personally delivered or when deposited in the mail in the manner set forth
above.
4.6 Governing Law. This Agreement shall be governed by and construed
exclusively in accordance with the laws of the State of Delaware, excluding that
body of law relating to conflict of laws.
4.7 Entire Agreement. This Agreement and the Merger Agreement
constitute and contains the entire agreement and understanding of the parties
with respect to the subject matter hereof and supersede any and all prior
negotiations, correspondence, agreements, understandings, duties or obligations
between the parties respecting the subject matter hereof.
4.8 Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same
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79
instrument.
4.9 Captions. The captions to sections of this Agreement have
been inserted for identification and reference purposes only and shall not be
used to construe or interpret this Agreement.
* * * * *
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80
IN WITNESS WHEREOF, the parties hereto have caused this Company Voting
Agreement to be executed by their duly authorized respective officers as of the
date first above written.
XXXXXXXX.XXX, INC.
By: _______________________________
Name:
Title:
STOCKHOLDER:
___________________________________
By: _______________________________
Name:
Title:
Stockholder's Address for Notice:
___________________________________
___________________________________
___________________________________
Outstanding shares
of Company capital
stock beneficially
owned by
Stockholder:
_______________________
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EXHIBIT I
IRREVOCABLE PROXY
The undersigned stockholder (the "STOCKHOLDER") of Eclipsys Corporation, a
Delaware corporation (the "COMPANY"), hereby irrevocably appoints and
constitutes the members of the Board of Directors of Xxxxxxxx.xxx, Inc., a
Delaware corporation ("PARENT"), and each such Board member (collectively the
"PROXYHOLDERS"), the agents, attorneys and proxies of the undersigned, with full
power of substitution and resubstitution, to the full extent of the
undersigned's rights with respect to the shares of capital stock of Company
which are listed below (the "SHARES"), and any and all other shares or
securities issued or issuable in respect thereof on or after the date hereof and
prior to the date this proxy terminates, to vote the Shares as follows: the
agents and proxies named above are empowered at any time prior to termination of
this proxy to exercise all voting and other rights (including, without
limitation, the power to execute and deliver written consents with respect to
the Shares) of the undersigned at every annual, special or adjourned meeting of
Company stockholders, and in every written consent in lieu of such a meeting, or
otherwise, (i) in favor of adoption of the Agreement and Plan of Merger (the
"MERGER AGREEMENT") among Parent, NeoIII Acquisition Corp. ("MERGER SUB") and
Company in the form entered into on the date hereof, and the approval of the
merger of Merger Sub with and into Company (the "MERGER"), and (ii) against
approval of any proposal made in opposition to or in competition with
consummation of the Merger, including, without limitation, any Acquisition
Proposal or Superior Offer (each as defined in the Merger Agreement) or any
action or agreement that would result in a breach in any respect of any
covenant, representation or warranty or any other obligation or agreement of
Company under the Merger Agreement or of the Stockholder under the Company
Voting Agreement between Parent and Stockholder (the "VOTING AGREEMENT").
The Proxyholders may not exercise this proxy on any other matter. The
Stockholder may vote the Shares on all such other matters. The proxy granted by
the Stockholder to the Proxyholders hereby is granted as of the date of this
Irrevocable Proxy in order to secure the obligations of the Stockholder set
forth in Section 1 of the Voting Agreement, and is irrevocable and coupled with
an interest in such obligations and in the interests in Company to be purchased
and sold pursuant to the Merger Agreement.
This proxy will terminate upon the termination of the Voting Agreement in
accordance with its terms. Upon the execution hereof, all prior proxies given by
the undersigned with respect to the Shares and any and all other shares or
securities issued or issuable in respect thereof on or after the date hereof are
hereby revoked and no subsequent proxies will be given until such time as this
proxy shall be terminated in accordance with its terms. Any obligation of the
undersigned hereunder shall be binding upon the successors and assigns of the
undersigned. The undersigned stockholder authorizes the Proxyholders to file
this proxy and any substitution or revocation of substitution with the Secretary
of the Company and with any Inspector of Elections at any meeting of the
stockholders of the Company.
This proxy is irrevocable and shall survive the insolvency, incapacity,
death or liquidation of the undersigned. Dated: March 30, 2000.
Stockholder: ___________________________________
By: __________________________________________
______________________________________________
Name and Title
Shares of Company capital stock beneficially owned: ______________
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EXHIBIT B
PARENT VOTING AGREEMENT
This PARENT VOTING AGREEMENT (the "AGREEMENT") is made and entered into as
of March 30, 2000, among Eclipsys Corporation, a Delaware corporation
("ECLIPSYS"), HEALTHvision, a Delaware corporation ("HEALTHVISION"), and the
undersigned stockholder ("STOCKHOLDER") of Xxxxxxxx.xxx, Inc., a Delaware
corporation ("PARENT").
RECITALS
A. Concurrently with the execution of this Agreement, Parent, Eclipsys and
NeoIII Acquisition Corp., a Delaware corporation and a wholly-owned first-tier
subsidiary of Parent ("MERGER SUB"), are entering into an Agreement and Plan of
Merger (the "ECLIPSYS MERGER AGREEMENT") which provides for the merger of Merger
Sub with and into Eclipsys (the "ECLIPSYS MERGER"). Pursuant to the Eclipsys
Merger, shares of capital stock of Eclipsys will be converted into shares of
Parent Common Stock on the basis described in the Eclipsys Merger Agreement.
Capitalized terms used but not defined herein shall have the meanings set forth
in the Eclipsys Merger Agreement.
B. Concurrently with the execution of this Agreement, Parent and
Healthvision are entering into an Agreement and Plan of Merger (the
"HEALTHVISION MERGER AGREEMENT") which provides for the merger of Healthvision
with and into Eclipsys (the "HEALTHVISION MERGER"). Pursuant to the Healthvision
Merger, shares of capital stock of Healthvision will be converted into shares of
Parent Common Stock on the basis described in the Healthvision Merger Agreement.
C. Concurrently with the execution of this Agreement, Parent and VHA Inc.,
a Delaware corporation ("VHA"), and Parent and University HealthSystem
Consortium, an Illinois not-for-profit corporation ("UHC") are entering into
respective Common Stock and Warrant Agreements pursuant to which Parent will
issue to VHA and UHC, respectively, shares of Parent Stock and Warrants to
purchase Parent Common Stock (the "STOCK AND WARRANT AGREEMENT"), in partial
consideration for such parties entry into and continued performance under
certain commercial arrangements among such parties, Parent and others. The
Eclipsys Merger, the Healthvision Merger and the security issuances contemplated
by the Stock and Warrant Agreement, collectively, the "TRANSACTIONS").
D. Stockholder is the record holder of such number of outstanding shares of
capital stock of Parent as is indicated on the final page of this Agreement.
E. As a material inducement for Eclipsys to enter into the Eclipsys Merger
Agreement, Eclipsys desires Stockholder to agree, and as a material inducement
for Healthvision to enter into the Healthvision Merger Agreement, Healthvision
desires Stockholder to agree and Stockholder is willing to agree, to vote the
Shares (as defined below), and such other shares of capital stock of Parent over
which Stockholder has voting power, so as to facilitate consummation of the
Transactions.
83
In consideration of the foregoing and the representations, warranties,
covenants and agreements set forth in this Agreement, the parties agree as
follows:
1. AGREEMENT TO VOTE SHARES
1.1 Definitions. For purposes of this Agreement:
(a) Shares. The term "SHARES" shall mean all issued and
outstanding shares of Parent Common Stock owned of record or beneficially by
Stockholder or over which Stockholder exercises voting power, in each case, as
of the record date for persons entitled (i) to receive notice of, and to vote at
the meeting of the stockholders of Parent called for the purpose of voting on
the matters referred to in Section 1.2, or (ii) to take action by written
consent of the stockholders of Parent with respect to the matters referred to in
Section 1.2. Stockholder agrees that any shares of capital stock of Parent that
Stockholder purchases or with respect to which Stockholder otherwise acquires
beneficial ownership or over which Stockholder exercises voting power after the
execution of this Agreement and prior to the date of termination of this
Agreement pursuant to Section 3 below shall be subject to the terms and
conditions of this Agreement to the same extent as if they constituted Shares on
the date hereof.
(b) Subject Securities. The term "SUBJECT SECURITIES" shall mean:
(i) all securities of Parent (including all shares of Parent Common Stock and
all options, warrants and other rights to acquire shares of Parent Common Stock
beneficially owned by Stockholder as of the date of this Agreement; and (ii) all
additional securities of Parent (including all additional shares of Parent
Common Stock and all additional options, warrants and other rights to acquire
shares of Parent Common Stock) of which Stockholder acquires ownership during
the period from the date of this Agreement through the earlier of termination of
this Agreement pursuant to Section 3 below or the record date for the meeting at
which stockholders of Parent are asked to vote upon the issuance of shares of
Parent Common Stock in the Transactions.
(c) Transfer. Stockholder shall be deemed to have effected a
"TRANSFER" of a security if Stockholder directly or indirectly: (i) sells,
pledges, encumbers, transfers or disposes of, or grants an option with respect
to, such security or any interest in such security; or (ii) enters into an
agreement or commitment providing for the sale, pledge, encumbrance, transfer or
disposition of, or grant of an option with respect to, such security or any
interest therein.
1.2 Agreement to Vote Shares. Stockholder hereby covenants and agrees
that, during the period commencing on the date hereof and continuing until the
first to occur of (i) such date and time as the Healthvision Merger shall become
effective in accordance with the terms and provisions of the Healthvision Merger
Agreement (the "EFFECTIVE TIME") and (ii) termination of this Agreement in
accordance with its terms, at any meeting (whether annual or special and whether
or not an adjourned or postponed meeting) of the stockholders of Parent, however
called, or in connection with any written consent of the stockholders of Parent,
Stockholder will appear at the meeting or otherwise cause the Shares to be
counted as present thereat for purposes of establishing a quorum and vote or
consent (or cause to be voted or
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84
consented) the Shares:
(1) in favor of the issuance of shares of Parent Common Stock in
the Eclipsys Merger and in the Healthvision Merger, and in favor of
the issuance of shares of Parent Common Stock and Warrants to purchase
Parent Common Stock, and the shares of Parent Common Stock issuable
pursuant to the terms of such Warrants pursuant to the Stock and
Warrant Agreements, and the other actions contemplated by the Eclipsys
Merger Agreement, Healthvision Merger Agreement and Stock and Warrant
Agreements and any actions required in furtherance thereof; and
(2) against approval of any action or agreement that would result
in a breach in any respect of any covenant, representation or warranty
or any other obligation or agreement of Parent under the Eclipsys
Merger Agreement, Healthvision Merger Agreement or Stock and Warrant
Agreements, or of Stockholder under this Agreement.
Stockholder further agrees not to enter into any agreement or
understanding with any person the effect of which would be inconsistent with or
violative of any provision contained in this Section 1.2.
1.3. Transfer and Other Restrictions. (a) Prior to the termination of
this Agreement, Stockholder agrees not to, directly or indirectly:
(i) offer for sale, Transfer or otherwise dispose of, or enter
into any contract, option or other arrangement or understanding with
respect to or consent to the offer for sale, Transfer or other
disposition of any or all of the Subject Securities or any interest
therein except as provided in Section 1.2 hereof;
(ii) grant any proxy, power of attorney, deposit any of the
Subject Securities into a voting trust or enter into a voting
agreement or arrangement with respect to the Subject Securities except
as provided in this Agreement; or
(iii) take any other action that would make any representation or
warranty of Stockholder contained herein untrue or incorrect or have
the effect of preventing or disabling Stockholder from performing its
obligations under this Agreement.
(b) To the extent Stockholder is, as of the date hereof, party to a
contract or agreement that requires Stockholder to Transfer Subject Securities
to another person or entity (excluding a contract or agreement pledging Subject
Securities to Parent), Stockholder will not effect any such Transfer unless and
until the transferee agrees to be bound by and executes an agreement in the form
of this Agreement with respect to the Subject Securities to be Transferred.
Nothing herein shall prohibit Stockholder from exercising (in accordance with
the terms of the option or warrant, as applicable) any option or warrant
Stockholder may hold; provided that the securities acquired upon such exercise
shall be deemed Subject Securities and Shares hereunder.
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85
(c) Until July 24, 2000, Stockholder will not, directly or indirectly,
(i) offer, pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option, right or
warrant for the sale of, or otherwise dispose of or transfer any shares of the
Parent Common Stock or any securities convertible into or exchangeable or
exercisable for Parent Common Stock, or (ii) enter into any swap or any other
agreement or any transaction that transfers, in whole or in part, directly or
indirectly, the economic consequence of ownership of the Parent Common Stock,
whether any such swap or transaction is to be settled by delivery of Parent
Common Stock or other securities, in cash or otherwise. The foregoing sentence
shall not apply to (a) transactions relating to Parent Common Stock acquired by
Stockholder in open market transactions, (b) the transfer, if the undersigned is
an individual, to a member or members of his or her immediate family or to a
trust, the beneficiaries of which are exclusively the undersigned and/or a
member or members of his or her immediate family, either during his or her
lifetime or on death by will or intestacy, provided that the transferee or
transferees thereof agree in writing to be bound by the provisions of this
Agreement, or (c) the transfer, if the undersigned is a partnership, corporation
or trust, to partners (or retired partners who retire after the date hereof),
shareholders, or beneficiaries, as the case may be, of the undersigned as a
distribution, provided that the distributees thereof agree in writing to be
bound by the provisions of this Agreement. For the purposes of this paragraph,
"immediate family" shall mean spouse, lineal descendant, father, mother, brother
or sister of the transferor.
2. REPRESENTATIONS AND WARRANTIES OF STOCKHOLDER
(a) Stockholder is the record and beneficial owner of, or Stockholder
exercises voting power over, the shares of Parent capital stock indicated on the
final page of this Agreement, which, on and as of the date hereof, are free and
clear of any Encumbrances that would adversely affect the ability of Stockholder
to carry out the terms of this Agreement. The number of Shares set forth on the
signature pages hereto are the only Shares beneficially owned by such
Stockholder and, except as set forth on such signature pages, the Stockholder
holds no options to purchase or rights to subscribe for or otherwise acquire any
securities of the Parent and has no other interest in or voting rights with
respect to any securities of Parent.
(b) Stockholder has the requisite power and authority to enter into
this Agreement and to consummate the transactions contemplated by this
Agreement. The execution and delivery of this Agreement by such Stockholder and
the consummation by such Stockholder of the transactions contemplated by this
Agreement have been duly authorized by all necessary action (including any
consultation, approval or other action by or with any other person). This
Agreement has been duly executed and delivered by such Stockholder and
constitutes a valid and binding obligation of such Stockholder, enforceable
against such Stockholder in accordance with its terms. The execution and
delivery of this Agreement does not, and the consummation of the transactions
contemplated by this Agreement and compliance with the provisions of this
Agreement will not, conflict with, or result in any violation of, or default
(with or without notice or lapse of time, or both) under, or give rise to a
right of termination, cancellation or acceleration of any obligation which would
result in the creation of any Encumbrance upon any of the Shares owned by such
Stockholder under, any provision of Stockholder's charter documents (if
applicable), applicable law or regulation or of any agreement, judgment,
injunction, order, decree, or other instrument binding on such Stockholder or
any Shares owned by such
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86
Stockholder. No consent, approval, order or authorization of, or registration,
declaration or filing with or exemption by any Governmental Entity is required
by or with respect to such Stockholder in connection with the execution and
delivery of this Agreement by such Stockholder or the consummation by such
Stockholder of the transactions contemplated by this Agreement, except for
applicable requirements, if any, of Sections 13 and 16 of the Securities
Exchange Act of 1934, as amended, and the rules and regulations thereunder. If
this Agreement is being executed in a representative or fiduciary capacity, the
person signing this Agreement has full power and authority to enter into and
perform such Agreement.
3. TERMINATION
This Agreement shall terminate and shall have no further force or effect as
of the first to occur of (i) the Effective Time and (ii) such date and time as
the Eclipsys Merger Agreement, Healthvision Merger Agreement or the Stock and
Warrant Agreements shall have been validly terminated pursuant to the terms
thereof. Notwithstanding any other provision hereof, this Agreement shall
terminate in the event that either the Eclipsys Merger Agreement or the
Healthvision Merger Agreement is modified in a manner that is materially adverse
to Stockholder without Stockholder's consent.
4. MISCELLANEOUS
4.1 Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid, void
or unenforceable, then the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.
4.2 Binding Effect and Assignment. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns, but, except as
otherwise specifically provided herein, neither this Agreement nor any of the
rights, interests or obligations of the parties hereto may be assigned by either
of the parties without prior written consent of the other. Any purported
assignment in violation of this Section shall be void.
4.3 Amendments and Modification. This Agreement may not be modified,
amended, altered or supplemented except upon the execution and delivery of a
written agreement executed by the parties hereto.
4.4 Specific Performance; Injunctive Relief. The parties hereto
acknowledge that Eclipsys and/or Healthvision will be irreparably harmed and
that there will be no adequate remedy at law for a violation of any of the
covenants or agreements of Stockholder set forth herein. Therefore, it is agreed
that, in addition to any other remedies that may be available to Eclipsys and/or
Healthvision upon any such violation, Eclipsys and/or Healthvision shall have
the right to enforce such covenants and agreements by specific performance,
injunctive relief or by any other means available to Eclipsys and/or
Healthvision at law or in equity.
4.5 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed duly given upon delivery either by commercial
delivery service, or
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87
sent via facsimile (receipt confirmed) to the parties at the following address
or facsimile numbers (or at such other address or facsimile numbers for a party
as shall be specified by like notice):
If to Eclipsys:
Eclipsys Corporation
000 Xxxx Xxxxxxxx Xxxxxx
Xxxxxx Xxxxx, Xxxxxxx 00000
Attn: Chief Financial Officer
Facsimile: (000) 000-0000
with a copy to:
Xxxx and Xxxx LLP
00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000-0000
Attn: Xxxx Xxxxxxx
Xxxxxx X. Xxxxx
Facsimile: (000) 000-0000
If to Healthvision:
HEALTHvision, Inc.
0000 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Attn: Chief Financial Officer
Facsimile: (000) 000-0000
with a copy to:
Xxxxx & Xxxxxxx, L.L.P.
000 Xxxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, XX 00000
Attn: Xxxxxxxxxxx X. Xxxxx
Facsimile: (000) 000-0000
If to Stockholder, to the address for notice set forth on the last page
hereof.
with a copy to:
Fenwick & West LLP
Xxx Xxxx Xxxx Xxxxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxxxx
Xxxxxxx X. Xxxxx
Facsimile: (000) 000-0000
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88
Any party hereto may by notice so given provide and change its address for
future notices hereunder. Notice shall conclusively be deemed to have been given
when personally delivered or when deposited in the mail in the manner set forth
above.
4.6 Governing Law. This Agreement shall be governed by and construed
exclusively in accordance with the laws of the State of Delaware, excluding that
body of law relating to conflict of laws.
4.7 Entire Agreement. This Agreement constitutes and contains the
entire agreement and understanding of the parties with respect to the subject
matter hereof and supersedes any and all prior negotiations, correspondence,
agreements, understandings, duties or obligations between the parties respecting
the subject matter hereof.
4.8 Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
4.9 Captions. The captions to sections of this Agreement have been
inserted for identification and reference purposes only and shall not be used to
construe or interpret this Agreement.
* * * * *
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89
IN WITNESS WHEREOF, the parties hereto have caused this Parent Voting
Agreement to be executed by their duly authorized respective officers as of the
date first above written.
ECLIPSYS CORPORATION
By: ________________________________
Name:
Title:
HEALTHVISION, INC.
By: ________________________________
Name:
Title:
STOCKHOLDER:
____________________________________
By: ________________________________
Name:
Title:
Stockholder's Address for Notice:
____________________________________
____________________________________
____________________________________
Outstanding shares
of Parent capital
stock beneficially
owned by
Stockholder:
____________________________________
8
