EXHIBIT 2.6
EXECUTION VERSION
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
COMPUWARE CORPORATION,
COMPUWARE ACQUISITION CORP.,
ADLEX, INC.,
AND WITH RESPECT TO ARTICLE VIII,
XXX XXXXXXXXX,
AS SHAREHOLDER REPRESENTATIVE
DATED AS OF MAY 6, 2005
PAGE
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ARTICLE I THE MERGER....................................................................... 1
1.1 The Merger................................................................ 1
1.2 Effective Time............................................................ 1
1.3 Effect of the Merger...................................................... 2
1.4 Certificate of Incorporation and Bylaws................................... 2
1.5 Directors and Officers of Surviving Corporation........................... 2
1.6 Effect of the Merger on the Capital Stock of the Constituent Corporations;
Deposit of Cash into Escrow Fund.......................................... 2
1.7 Surrender of Certificates; Deposit into Escrow............................ 5
1.8 No Further Ownership Rights in Company Capital Stock...................... 6
1.9 Lost, Stolen or Destroyed Certificates.................................... 6
1.10 Additional Consideration.................................................. 7
1.11 Taking of Necessary Action; Further Action................................ 7
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE COMPANY................................... 7
2.1 Organization of the Company............................................... 7
2.2 Company Capital Structure................................................. 7
2.3 Anti-takeover Statutes.................................................... 9
2.4 Subsidiaries.............................................................. 9
2.5 Authority................................................................. 10
2.6 No Conflict............................................................... 10
2.7 Consents.................................................................. 11
2.8 Company Financial Statements.............................................. 11
2.9 Internal Controls......................................................... 12
2.10 No Undisclosed Liabilities................................................ 12
2.11 No Changes................................................................ 12
2.12 Accounts Receivable....................................................... 15
2.13 Tax Matters............................................................... 16
2.14 Restrictions on Business Activities....................................... 18
2.15 Real Property; Condition of Equipment; Customer Information............... 18
2.16 Intellectual Property..................................................... 20
2.17 Agreements, Contracts and Commitments..................................... 25
2.18 Interested Party Transactions............................................. 27
2.19 Governmental Authorization................................................ 28
2.20 Litigation................................................................ 28
2.21 Minute Books.............................................................. 28
2.22 Environmental Matters..................................................... 28
2.23 Brokers' and Finders' Fees; Third Party Expenses.......................... 30
2.24 Employee Benefit Plan and Compensation.................................... 30
2.25 Insurance................................................................. 35
2.26 Compliance with Laws...................................................... 36
2.27 Foreign Corrupt Practices Act............................................. 36
2.28 Warranties; Indemnities................................................... 36
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2.29 Spreadsheet............................................................... 36
2.30 Complete Copies of Materials.............................................. 36
2.31 Representations Complete.................................................. 36
ARTICLE III FURTHER REPRESENTATIONS AND WARRANTIES RELATING TO THE SHAREHOLDERS............ 36
3.1 Ownership of Company Capital Stock........................................ 37
3.2 Authority................................................................. 37
3.3 No Conflict............................................................... 37
3.4 Brokers' and Finders' Fees................................................ 37
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB......................... 37
4.1 Organization, Standing and Power.......................................... 38
4.2 Authority................................................................. 38
4.3 Conflicts................................................................. 38
4.4 Consents.................................................................. 38
4.5 Brokers' and Finders' Fees................................................ 38
4.6 Litigation................................................................ 38
ARTICLE V ADDITIONAL AGREEMENTS............................................................ 39
5.1 Public Disclosure......................................................... 39
5.2 Shareholder Approval...................................................... 39
5.3 Acquisition Proposals..................................................... 39
5.4 Shareholder, Optionholders and Director Releases.......................... 40
5.5 Consents.................................................................. 40
5.6 Conduct of the Business................................................... 40
5.7 New Employment Benefits................................................... 40
5.8 Closing Date Cash Balance Statement....................................... 40
5.9 Statement of Expenses..................................................... 41
5.10 Spreadsheet............................................................... 41
5.11 Preservation of Books and Records; Post-Closing Access.................... 41
5.12 Additional Documents and Further Assurances............................... 42
5.13 Source Code Escrow........................................................ 42
5.14 Certain Tax Matters....................................................... 42
5.15 Supplements to Disclosure Schedule........................................ 43
ARTICLE VI CONDITIONS TO CLOSING........................................................... 44
6.1 Conditions to Each Party's Obligation to Effect the Merger................ 44
6.2 Conditions to Obligation of Parent and Merger Sub......................... 44
6.3 Conditions to Obligation of Company....................................... 45
ARTICLE VII CLOSING DELIVERIES OF THE PARTIES.............................................. 45
7.1 Closing Deliveries of the Company and the Shareholders.................... 45
7.2 Closing Deliveries of Parent.............................................. 47
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ARTICLE VIII SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION; ESCROW........... 48
8.1 Survival of Representations and Warranties................................ 48
8.2 Indemnification........................................................... 48
8.3 Third Party Claims........................................................ 49
8.4 Escrow Fund; Escrow Period; Remedy........................................ 50
8.5 Indemnification Limitations............................................... 51
8.6 Shareholder Representative................................................ 51
ARTICLE IX TERMINATION..................................................................... 52
9.1 Termination............................................................... 52
9.2 Effect of Termination..................................................... 53
9.3 Fees and Expenses......................................................... 54
ARTICLE X GENERAL PROVISIONS............................................................... 54
10.1 Definitions............................................................... 54
10.2 Notices................................................................... 61
10.3 Interpretation............................................................ 62
10.4 Counterparts.............................................................. 63
10.5 Entire Agreement; Assignment; Amendment................................... 63
10.6 No Third Party Beneficiaries.............................................. 63
10.7 Severability.............................................................. 63
10.8 Governing Law............................................................. 63
10.9 Rules of Construction..................................................... 64
10.10 Waiver of Jury Trial...................................................... 64
INDEX OF EXHIBITS
EXHIBIT DESCRIPTION
Exhibit A Certificate of Merger
Exhibit B-1 Shareholders/Optionholders Release
Exhibit B-2 Director Release
Exhibit C Non-Competition and Non-Solicitation Agreement
Exhibit D Company Counsel Legal Opinion
Exhibit E Escrow Agreement
Exhibit F Parent Counsel Legal Opinion
Exhibit G Form of Redemption Agreement
SCHEDULE DESCRIPTION
1.10 Additional Consideration
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DISCLOSURE SCHEDULE
Section 1.6(b)(ii) Option Payments
Section 2.1 Organization of the Company
Section 2.2(a) Company Capital Stock
Section 2.2(b) List of Option Holders
Section 2.2(c) Company Capital Stock Agreements
Section 2.4(b) Directors and Officers of Polish Subsidiary
Section 2.4(c) Capital Stock of Polish Subsidiary
Section 2.6 Consents, Waivers and Approvals of Third Parties
Section 2.8 Company Financial Statements
Section 2.10 Company Liabilities
Section 2.11 No Changes
Section 2.12(a) Accounts Receivable of Company
Section 2.13(b) Tax Returns and Audits
Section 2.14 Restrictions on Business Activities
Section 2.15(a) Leased Real Property
Section 2.15(e) Equipment
Section 2.15(f) Customer Information
Section 2.16(b) Company Owned Intellectual Property
Section 2.16(c) Company Products
Section 2.16(e) Company Actions re: Intellectual Property
Section 2.16(l) License Agreements
Section 2.16(m) Agreements Affecting Intellectual Property
Section 2.16(n) Non-Disclosure Agreements
Section 2.16(q) Third-Party Software
Section 2.16(r) Intellectual Property Contracts
Section 2.16(t) Software
Section 2.17 Agreements, Contracts and Commitments
Section 2.17(b) Major Customers/Resellers
Section 2.18 Interested Parties
Section 2.23 Brokers' and Finders' Fees; Third Party Expenses
Section 2.24(b) Company Employee Plans and Employee Agreements
Section 2.24(f) Self-Insured Plan
Section 2.24(k) Disqualified Individuals
Section 2.24(l) Employment Matters
Section 2.24(o) International Employee Plan
Section 2.25 Insurance
Section 2.26 Compliance with Laws
Section 2.28 Warranties; Indemnities
Section 3.4 Brokers' and Finders' Fees
Section 5.10 Spreadsheet
Section 6.1 Shareholder Approvals
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EXECUTION VERSION
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement") is made and entered
into as of May 6, 2005 by and among Compuware Corporation, a Michigan
corporation ("Parent"), Compuware Acquisition Corp., a Delaware corporation and
a wholly owned subsidiary of Parent ("Merger Sub"), and Adlex, Inc., a Delaware
corporation (the "Company"), and with respect to Article VIII hereof, Xxx
Xxxxxxxxx as shareholder representative (the "Shareholder Representative").
RECITALS
A. The Boards of Directors of each of Parent, Merger Sub and the Company
believe it is in the best interests of its corporation and its respective
shareholders that Parent acquire the Company through the statutory merger of
Merger Sub with and into the Company (the "Merger") and, in furtherance thereof,
have approved the Merger.
B. Pursuant to the Merger, among other things, and subject to the terms
and conditions of this Agreement, all of the issued and outstanding capital
stock of the Company shall be converted into the right to receive the
consideration set forth herein.
C. A portion of the consideration otherwise payable by Parent in
connection with the Merger shall be placed in escrow by Parent as security for
the indemnification obligations set forth in this Agreement.
D. The Company, on the one hand, and Parent and Sub, on the other hand,
desire to make certain representations, warranties, covenants and other
agreements in connection with the Merger.
NOW, THEREFORE, in consideration of the mutual agreements, covenants and
other premises set forth herein, the mutual benefits to be gained by the
performance thereof, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged and accepted, the parties
hereby agree as follows:
ARTICLE I
THE MERGER
1.1 The Merger. At the Effective Time and subject to and upon the terms
and conditions of this Agreement and the applicable provisions of the Delaware
General Corporation Law ("Delaware Law"), Merger Sub shall be merged with and
into the Company, the separate corporate existence of Merger Sub shall cease,
and the Company shall continue as the surviving corporation and as a wholly
owned subsidiary of Parent. The surviving corporation after the Merger is
sometimes referred to hereinafter as the "Surviving Corporation."
1.2 Effective Time. Unless another time and place is mutually agreed upon
in writing by Parent and the Company, the closing of the Merger (the "Closing")
will take place at the offices of Xxxxxx Xxxxxxx PLLC, 000 Xxxxxxxxxxx Xxxxxx,
Xxxxxxx, Xxxxxxxx, within five (5)
EXECUTION VERSION
Business Days after the satisfaction or waiver of the conditions precedent set
forth in Article VI. The date upon which the Closing occurs shall be referred to
herein as the "Closing Date." On the Closing Date, the parties hereto shall
cause the Merger to be consummated by filing the Certificate of Merger in
substantially the form attached hereto as Exhibit A, with the Delaware Secretary
of State (the "Certificate of Merger"), in accordance with the applicable
provisions of Delaware Law (the time of such filing with the Delaware Secretary
of State shall be referred to herein as the "Effective Time").
1.3 Effect of the Merger. At the Effective Time, the effect of the Merger
shall be as provided in the applicable provisions of Delaware Law. Without
limiting the generality of the foregoing, and subject thereto, at the Effective
Time, except as otherwise agreed to pursuant to the terms of this Agreement, all
of the property, rights, privileges, powers and franchises of the Company and
Merger Sub shall vest in the Surviving Corporation, and all debts, liabilities
and duties of the Company and Merger Sub shall become the debts, liabilities and
duties of the Surviving Corporation.
1.4 Certificate of Incorporation and Bylaws.
(a) Unless otherwise determined by Parent prior to the Effective
Time, the certificate of incorporation of Merger Sub, as in effect immediately
prior to the Effective Time, shall be the certificate of incorporation of the
Surviving Corporation at the Effective Time until thereafter amended in
accordance with Delaware Law and as provided in such certificate of
incorporation; provided, however, that at the Effective Time, Article I of the
certificate of incorporation of the Surviving Corporation shall be amended and
restated in its entirety to read substantially as follows (or such other name as
determined by Parent in its sole discretion): "The name of the corporation is
Adlex, Inc."
(b) Unless otherwise determined by Parent prior to 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 at the Effective Time
until thereafter amended in accordance with Delaware Law and as provided in the
certificate of incorporation of the Surviving Corporation and such bylaws.
1.5 Directors and Officers of Surviving Corporation. Unless otherwise
determined by Parent prior to the Effective Time, the directors and officers of
Merger Sub immediately prior to the Effective Time shall be the directors and
officers of the Surviving Corporation immediately after the Effective Time, each
to hold the office of a director or officer of the Surviving Corporation, as the
case may be, in accordance with the provisions of Delaware Law and the
certificate of incorporation and bylaws of the Surviving Corporation until their
respective successors are duly elected and qualified, as applicable.
1.6 Effect of the Merger on the Capital Stock of the Constituent
Corporations; Deposit of Cash into Escrow Fund.
(a) Effect on Capital Stock. The aggregate purchase price for the
transactions contemplated by this Agreement shall be $35,900,000, plus
Additional Consideration (as defined below), less all Deal Expenses (as defined
below) paid by the Company prior to the Effective
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EXECUTION VERSION
Time (the "Total Consideration"). The Total Consideration amount is comprised of
the Merger Consideration, the Redemption Amount, and the amount, if any, of
Additional Consideration, plus all Deal Expenses paid by Parent pursuant to
Section 1.6(h). At the Effective Time, by virtue of the Merger and without any
action on the part of Merger Sub, the Company or the Shareholders, each share of
Company Capital Stock issued and outstanding immediately prior to the Effective
Time, which for purposes of this Section 1.6 shall include all Company Capital
Stock issuable upon exercise of Company Options, upon the terms and subject to
the conditions set forth in this Section 1.6 and throughout this Agreement, will
be converted automatically into the right to receive upon (i) surrender of the
certificate representing such shares of Company Capital Stock in the manner
provided in Section 1.7 hereof, and/or (ii) presentment of the option agreement
related to the Company Options in the manner provided in Section 1.7 hereof,
that portion of Twenty-Two Million Eight Hundred Seventy-Two Thousand Five
Hundred Dollars ($22,872,500) (the "Merger Consideration"), as set forth below:
(i) each outstanding share of Company Capital Stock will be
converted automatically into the right to receive such amount of cash (without
interest) equal to the Merger Consideration divided by the total number of
shares of Company Capital Stock issued and outstanding immediately prior to the
Effective Time, which shall include the Net Option Shares (collectively, the
"Net Diluted Outstanding Shares");
(ii) for purposes of calculating the amount of cash to be paid
to each Shareholder pursuant to this Section 1.6(a), all shares of Company
Capital Stock held by each Shareholder shall be aggregated on a
certificate-by-certificate basis. The amount of cash to be paid to each
Shareholder for each share certificate held shall be rounded down to the nearest
whole cent;
(iii) each Outstanding Company Option will be converted
automatically into the right to receive such amount of cash (without interest)
equal to the Option Payment, which shall be included in the Merger
Consideration.
(b) At Closing and for the benefit of the Shareholders,
Optionholders and Redemption Shareholders, Parent shall deposit out of the
Merger Consideration and the Redemption Amount into the Parent Escrow Fund (as
defined in Section 8.4(a) hereof) an amount of cash equal to an aggregate of
$8,000,000 (the "Parent Escrow Amount"), of which $5,228,000 shall come from the
Merger Consideration and $2,772,000 shall come from the Redemption Amount. In
addition, at Closing and for the benefit of the Shareholders, Optionholders and
Redemption Shareholders, Parent shall deposit from the Merger Consideration and
the Redemption Amount into the Company Escrow Fund an amount of cash equal to an
aggregate of $750,000 (the "Company Escrow Amount"), of which $490,125 shall
come from the Merger Consideration and $259,875 shall come from the Redemption
Amount, as set forth and with the instructions set forth on Section 1.6(b)(ii)
of the Disclosure Schedule. At Closing, Parent shall pay the Initial
Consideration set forth in the Spreadsheet in accordance with and subject to the
conditions set forth in Section 1.7 hereof. The term "Initial Consideration"
shall mean the Merger Consideration less the Parent Escrow Amount and less the
Company Escrow Amount.
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EXECUTION VERSION
(c) Cash-Out of Company Options; Termination of Plan. Prior to the
Closing, the Board of Directors of the Company shall adopt such resolutions and
take all such other actions as may be necessary to provide that, conditioned
upon an applicable Optionholder's execution of the Optionholder Release, the
vesting of each Company Option outstanding immediately prior to the Effective
Time be fully accelerated, and that all outstanding Company Options shall be
canceled and terminated as of the Effective Time in exchange for an amount of
cash equal to (i) the excess of (A) the Per Share Merger Consideration over (B)
the exercise price per share of each Company Option multiplied by (ii) the
number of shares of Company Common Stock that may be purchased at such time
under such Company Options (the "Option Payment"); provided, that of the Option
Payment, the Optionholder Escrow Contribution shall be delivered to the Escrow
Agent and Company Escrow Agent in accordance with Section 1.6(b)(ii) of the
Disclosure Schedule. The "Per Share Merger Consideration" shall be equal to the
Merger Consideration divided by the Net Diluted Outstanding Shares. The Option
Payment, less the Optionholder Escrow Contribution, shall be made at the
Effective Time and the Company shall give written notice to each holder of a
Company Option in form and substance reasonably acceptable to Parent, and prior
to receipt of the Option Payment, each holder of a Company Option shall execute
the Optionholder Release. The Option Payment shall be made from the Merger
Consideration. Prior to the Closing, the Board of Directors of the Company shall
adopt such resolutions and take all such other actions as may be necessary to
terminate the Plan.
(d) Withholding Taxes. The Company, and on its behalf, 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 of Company Options such amounts as may be required to be deducted or
withheld therefrom under any provision of federal, local or foreign tax law or
under any applicable legal requirement. 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.
(e) Shareholder Loans. At Closing, the Surviving Corporation shall
pay in full the loan(s) made by Xxx Xxxxxxxxx to the Company as set forth in
Section 2.18 of the Disclosure Schedule (the "Shareholder Loan").
(f) Capital Stock of Merger Sub. Each share of Common Stock of
Merger Sub issued and outstanding immediately prior to the Effective Time shall
be converted into and exchanged for one validly issued, fully paid and
nonassessable share of Common Stock of the Surviving Corporation. Each stock
certificate of Merger Sub evidencing ownership of any such shares shall continue
to evidence ownership of such shares of capital stock of the Surviving
Corporation.
(g) Redemption Funding. Immediately prior to the Closing and in
addition to the Merger Consideration, Parent shall deliver to the Company an
amount of cash equal in the aggregate to Twelve Million One Hundred Twenty-Seven
Thousand Five Hundred Dollars ($12,127,500) (the "Redemption Amount") in
connection with the redemption by the Company prior to Closing of an aggregate
of 8,250,000 shares of Company Common Stock (the "Redemption"), less the amounts
to be delivered into the Parent Escrow Fund and Company Escrow Fund attributable
to the Redemption Amount in accordance with Section 1.6(b)(ii) of the
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EXECUTION VERSION
Disclosure Schedule. The term "Redemption Shareholders" shall mean those
shareholders of the Company whose shares will be redeemed by the Redemption.
(h) Expenses. At Closing and from the Total Consideration, Parent
shall pay up to Nine Hundred Thousand Dollars ($900,000) of the Company's
expenses (the "Deal Expenses") incurred in connection with the Merger, this
Agreement and the transactions contemplated hereby, including, without
limitation, all Third Party Expenses and certain retention bonuses set forth on
the Disclosure Schedule; provided, however, the maximum amount of Deal Expenses
payable by Parent pursuant to this Section 1.6(h) shall be $900,000 less all
Deal Expenses paid by the Company prior to the Effective Time.
1.7 Surrender of Certificates; Deposit into Escrow.
(a) Exchange Agent. The Secretary of Parent, or an individual or
institution selected by Parent, shall serve as the exchange agent (the "Exchange
Agent") for the Merger.
(b) Parent to Provide Initial Consideration. At the Effective Time,
Parent shall make available to the Exchange Agent for exchange in accordance
with this Article I the Initial Consideration payable pursuant to Section 1.6
hereof in exchange for outstanding shares of Company Capital Stock (including
Company Options); provided, however, that, on behalf of the Shareholders and the
Optionholders, Parent shall deposit into the Parent Escrow Fund and the Company
Escrow Fund an amount of cash equal to that portion of the Parent Escrow Amount
and Company Escrow Amount attributable to the Merger Consideration as set forth
in Section 1.6(b). Each Shareholder and Optionholder shall be deemed to have
contributed his or her Pro Rata Portion of the Parent Escrow Amount attributable
to the Merger Consideration to the Parent Escrow Fund and the Company Escrow
Amount attributable to the Merger Consideration to the Company Escrow Fund,
rounded to the nearest cent (with amounts greater than or equal to $0.005
rounded up). If the sum of the Pro Rata Portions (each rounded to the nearest
cent) for all Shareholders and Optionholders does not equal that portion of the
Parent Escrow Amount attributable to the Merger Consideration or the Company
Escrow Amount attributable to the Merger Consideration, respectively, then the
appropriate amount will be added to or subtracted from the Pro Rata Portion of
one or more Shareholder(s) such that the sum of the rounded Pro Rata Portions
does equal the applicable portions of the Parent Escrow Amount or the Company
Escrow Amount, respectively.
(c) Exchange Procedures. At the Closing, the Shareholders will
surrender the certificates representing their shares of Company Capital Stock
(the "Company Stock Certificates"), and the Optionholders will present the
option agreements representing their Company Options (the "Company Option
Agreements") to the Exchange Agent for cancellation together with duly completed
and validly executed exchange documents (including such cancellation documents
with respect to Optionholders as Parent may reasonably request) in exchange for
that portion of the Initial Consideration to which such holder is entitled
pursuant to Section 1.6 hereof, and the Company Stock Certificate and Company
Option Agreement so surrendered shall be cancelled. Until so surrendered and
duly completed and validly executed exchange documents are delivered, each
Company Stock Certificate outstanding and each Company Option Agreement existing
after the Effective Time will be deemed, for all corporate purposes thereafter,
to evidence only the right to receive the portion of the Merger Consideration
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EXECUTION VERSION
such holder is entitled pursuant to Section 1.6 hereof. No portion of the Merger
Consideration will be paid to the holder of any unsurrendered Company Stock
Certificate with respect to shares of Company Capital Stock formerly represented
thereby until the holder of record of such Company Stock Certificate shall
surrender such Company Stock Certificate and deliver duly completed and validly
executed exchange documents. No portion of the Merger Consideration will be paid
to the holder of any unsurrendered Company Option Agreement with respect to
Company Options until the holder of such Company Option Agreement shall present
such agreement to the Exchange Agent for cancellation with duly completed and
validly executed exchange documents.
(d) Transfers of Ownership. If any portion of the Merger
Consideration is to be disbursed pursuant to Section 1.6 hereof to any Person
other than the Person whose name is reflected on the Company Stock Certificate
surrendered in exchange therefor, it will be a condition of the issuance or
delivery thereof that the certificate so surrendered will be properly endorsed
and otherwise in proper form for transfer and that the Person requesting such
exchange will have paid to Parent or any agent designated by it any transfer or
other taxes required by payment of any portion of the Merger Consideration in
any name other than that of the registered holder of the certificate
surrendered, or established to the satisfaction of Parent or any agent
designated by it that such tax has been paid or is not payable.
(e) No Liability. Notwithstanding anything to the contrary in this
Section 1.7, neither the Exchange Agent, the Surviving Corporation, nor any
party hereto shall be liable to a holder of shares of Company Capital Stock for
any amount properly paid to a public official pursuant to any applicable
abandoned property, escheat or similar law.
1.8 No Further Ownership Rights in Company Capital Stock. The portion of
the Merger Consideration paid in respect of the surrender for exchange of shares
of Company Capital Stock and surrender of the Company Option Agreements, and the
deposit of the Parent Escrow Amount into the Parent Escrow Fund, and the Company
Escrow Amount in the Company Escrow Fund as instructed in Section 1.6(b)(ii) of
the Disclosure Schedule in accordance with the terms hereof shall be deemed to
be full satisfaction of all rights pertaining to such shares of Company Capital
Stock and Company Options, and there shall be no further registration of
transfers on the records of the Surviving Corporation of shares of Company
Capital Stock which were outstanding immediately prior to the Effective Time.
If, after the Effective Time, Company Stock Certificates or Company Option
Agreements are presented to the Surviving Corporation for any reason, they shall
be canceled and exchanged as provided in this Article I.
1.9 Lost, Stolen or Destroyed Certificates. In the event any Company Stock
Certificates or Company Option Agreements shall have been lost, stolen or
destroyed, the Exchange Agent shall issue in exchange for such lost, stolen or
destroyed certificates, upon the making of an affidavit of that fact by the
holder thereof, such amount, if any, as may be required pursuant to Section 1.6
hereof; provided, however, that Parent may, in its discretion and as a condition
precedent to the issuance thereof, require the Shareholder or Optionholder who
is the owner of such lost, stolen or destroyed certificates or agreements to
provide an indemnification agreement in form and substance reasonably acceptable
to Parent, against any claim that may be
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EXECUTION VERSION
made against Parent or the Exchange Agent with respect to the certificates or
agreements alleged to have been lost, stolen or destroyed.
1.10 Additional Consideration. In addition to the Merger Consideration,
the Shareholders, Optionholders and Redemption Shareholders shall have the right
to receive the additional consideration ("Additional Consideration") set forth
in Schedule 1.10, subject to the conditions set forth therein.
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 the Company, Parent, Merger Sub, and the officers and
directors of the Company, Parent and Merger Sub are fully authorized in the name
of their respective corporations or otherwise to take, and will take, all such
lawful and necessary action, so long as such action is not inconsistent with
this Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the Disclosure Schedule furnished to Parent
specifically identifying the corresponding numbered section of this Agreement,
the Company hereby represents and warrants to Parent and Merger Sub, as follows:
2.1 Organization of the Company. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. The Company has all corporate power, governmental licenses,
authorizations, permits, consents and approvals to own its properties and assets
and to carry on its business as currently conducted and as currently
contemplated to be conducted. The Company is duly qualified or licensed to do
business and in good standing as a foreign corporation in each jurisdiction in
which the character or location of its assets or properties (whether owned,
leased or licensed) or the nature of its business make such qualifications
necessary. The Company has delivered a true and correct copy of its certificate
of incorporation, as amended to date (the "Certificate of Incorporation") and
bylaws, as amended to date, each in full force and effect on the date hereof
(collectively, the "Charter Documents"), to Parent. Section 2.1 of the
Disclosure Schedule lists the directors and officers of the Company as of the
date hereof. Except as set forth in Section 2.1 of the Disclosure Schedule, the
operations now being conducted by the Company are not now and have never been
conducted by the Company under any other name. Section 2.1 of the Disclosure
Schedule also lists every state or foreign jurisdiction in which the Company has
employees or facilities.
2.2 Company Capital Structure.
(a) Except as set forth in Section 2.2(a) of the Disclosure
Schedule, the authorized capital stock of the Company consists of 50,000,000
shares of Company Common Stock, of which 38,901,142 shares are issued and
outstanding. The Company Capital Stock is held by the Shareholders in the
amounts set forth in Section 2.2(a) of the Disclosure Schedule. All outstanding
shares of Company Capital Stock are duly authorized, validly issued, fully paid
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EXECUTION VERSION
and nonassessable and not subject to preemptive rights created by statute, the
Charter Documents, or any agreement to which the Company is a party or by which
it is bound. No shares of the Company Capital Stock are subject to any Lien
suffered or permitted by the Company. Other than as contemplated herein, the
Company has not, and will not have, suffered or incurred any liability
(contingent or otherwise) or claim, loss, liability, damage, deficiency, cost or
expense which has not been paid or satisfied prior to the date hereof relating
to or arising out of the issuance or repurchase of any Company Capital Stock or
options or warrants to purchase Company Capital Stock, or out of any agreements
or arrangements relating thereto (including any amendment of the terms of any
such agreement or arrangement). Except as contemplated pursuant to this
Agreement, no Shareholder has exercised any right of redemption, if any, and the
Company has not received notice that any Shareholder intends to exercise such
rights. There are no declared or accrued but unpaid dividends with respect to
any shares of Company Capital Stock. The Company has no other capital stock
authorized, issued or outstanding. Except as set forth in Section 2.2(a) of the
Disclosure Schedule, there are no shares of Company Unvested Capital Stock. None
of the outstanding Company Capital Stock or other securities of the Company was
issued in violation of any applicable state, federal or foreign securities laws.
All Shareholders who received Company Capital Stock subject to repurchase or
divestiture subject to Section 83 of the Code made a timely election with the
Internal Revenue Service under Section 83(b) of the Code and any analogous
provisions of applicable state tax laws with respect to such unvested Company
Capital Stock.
(b) Except for the Adlex, Inc. 1999 Stock Option Plan, as amended
(the "Plan"), the Company has never adopted, sponsored or maintained any stock
option plan or any other plan or agreement providing for the issuance of equity
(including as compensation) to any Person. The Company has reserved 7,500,000
shares of Company Common Stock for issuance to employees and directors of, and
consultants to, the Company upon the issuance of stock or the exercise of
options granted under the Plan or any other plan, agreement or arrangement
(whether written or oral, formal or informal). Section 2.2(b) of the Disclosure
Schedule sets forth as of the date of this Agreement, for each outstanding
Company Option, the name of the holder of such option, the type of entity of
such holder, if not an individual, the domicile address of such holder, the
number of shares of Company Capital Stock issuable upon the exercise of such
option, the exercise price of such option, and whether such option is a
nonstatutory option or intended to qualify as an incentive stock option as
defined in Section 422 of the Code. Each outstanding Company Option has been
issued in accordance with applicable state, federal and foreign securities laws.
(c) Except for the Company Options (which shall terminate pursuant
to Section 1.6(c)) and except as set forth in Section 2.2(c) of the Disclosure
Schedule, there are no options, warrants, calls, rights (including any stock
appreciation, phantom stock, profit participation or other similar rights),
convertible securities, commitments or agreements of any character, written or
oral, to which the Company is a party or by which the Company is bound
obligating the Company to issue, deliver, sell, repurchase or redeem, or cause
to be issued, delivered, sold, repurchased or redeemed, any shares of Company
Capital Stock or obligating the Company to grant, extend, accelerate the vesting
of, change the price of, otherwise amend or enter into any such option, warrant,
call, right, commitment or agreement. There are no outstanding debt securities
of the Company. There are no securities or instruments containing anti-dilution
or similar provisions by which the Company is or may become bound. Except as
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EXECUTION VERSION
contemplated hereby or as set forth in Section 2.2(c) of the Disclosure
Schedule, there are no voting trusts, proxies, or other agreements or
understandings with respect to the voting stock of the Company or voting by a
director of the Company. Except as set forth in Section 2.2(c) of the Disclosure
Schedule, there are no agreements to which the Company is a party relating to
the registration, sale or transfer (including agreements relating to rights of
first refusal, co-sale rights or "drag-along" rights) of any Company Capital
Stock.
(d) The allocation of the Initial Consideration set forth in Section
1.6 hereof is consistent with the Certificate of Incorporation.
2.3 Anti-takeover Statutes. No anti-takeover or similar statute or
regulation under Delaware Law applies to any of the transactions contemplated by
this Agreement. No other "control share acquisition," "fair price," "moratorium"
or other similar anti-takeover laws or regulations enacted under Delaware Law
apply to this Agreement or any of the transactions contemplated hereby.
2.4 Subsidiaries.
(a) Except for Adlex Polska Sp. Z o.o. (the "Polish Subsidiary"),
the Company does not have and has never had any Subsidiaries or affiliated
companies and does not otherwise own or control and has never otherwise owned or
controlled any shares of capital stock or any interest in, directly or
indirectly, any other corporation, limited liability company, partnership,
association, joint venture or other business entity.
(b) The Polish Subsidiary is a corporation duly organized, validly
existing and in good standing under the laws of Poland. The Polish Subsidiary
has all corporate power, governmental licenses, authorizations, permits,
consents and approvals to own its properties and assets and to carry on its
business as currently conducted and as currently contemplated to be conducted.
The Polish Subsidiary is duly qualified or licensed to do business and in good
standing as a foreign corporation in each jurisdiction in which the character or
location of its assets or properties (whether owned, leased or licensed) or the
nature of its business make such qualifications necessary. The Polish Subsidiary
has delivered a true and correct copy of its charter documents, as amended to
date (the "Subsidiary Certificate of Incorporation") and bylaws, as amended to
date, each in full force and effect on the date hereof (collectively, the
"Subsidiary Charter Documents"), to Parent. Section 2.4(b) of the Disclosure
Schedule lists the directors and officers of the Polish Subsidiary as of the
date hereof. The operations now being conducted by the Polish Subsidiary are not
now and have never been conducted by the Polish Subsidiary under any other name.
Section 2.4(b) of the Disclosure Schedule also lists every foreign jurisdiction
in which the Polish Subsidiary has employees or facilities.
(c) The authorized capital stock of the Polish Subsidiary consists
of 2,280 shares of common stock, of which the Company owns all but two of the
issued and outstanding shares of the Polish Subsidiary as set forth in Section
2.4(c) of the Disclosure Schedule. All outstanding shares of the Polish
Subsidiary common stock are duly authorized, validly issued, fully paid and
nonassessable and not subject to preemptive rights created by statute, the
Subsidiary Charter Documents, or any agreement to which the Polish Subsidiary is
a party or by which it is bound. No shares of the Polish Subsidiary common stock
are subject to any Lien
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EXECUTION VERSION
suffered or permitted by the Polish Subsidiary. The Polish Subsidiary has no
other capital stock authorized, issued or outstanding. None of the outstanding
Polish Subsidiary common stock or other securities of the Polish Subsidiary was
issued in violation of any applicable securities laws.
2.5 Authority. The Company has all corporate power and authority to enter
into this Agreement and any Related Agreements to which it is a party and to
consummate the transactions contemplated hereby and thereby. The execution,
delivery and performance of this Agreement and any Related Agreements to which
the Company is a party and the consummation of the transactions contemplated
hereby and thereby have been duly authorized by all necessary corporate action
on the part of the Company and no further corporate action is required on the
part of the Company to authorize the Agreement and any Related Agreements to
which it is a party and the transactions contemplated hereby and thereby. The
Company's board of directors has (i) unanimously approved and declared the
advisability of this Agreement and the Related Agreements, and the transactions
contemplated hereby and thereby, and (ii) unanimously resolved to recommend
approval and adoption of this Agreement and the Related Agreements and the
approval of the Merger by the Shareholders. Prior to the Closing, by valid
action by shareholder written consent, in accordance with Delaware Law, the
Shareholders, after such disclosure required by Delaware law, will approve and
adopt this Agreement and the Related Agreements, and the transactions
contemplated hereby and thereby, such consent constituting all required
approvals of Shareholders of any class or series thereof. This Agreement and
each of the Related Agreements to which the Company is a party have been duly
executed and delivered by the Company and constitute the valid and binding
obligations of the Company enforceable against it in accordance with their
respective terms, except as such enforceability may be limited by principles of
public policy and subject to the laws of general application relating to
bankruptcy, insolvency and the relief of debtors and rules of law governing
specific performance, injunctive relief or other equitable remedies.
2.6 No Conflict. Except for the necessary consents, waivers or approvals
of third parties set forth in Section 2.6 of the Disclosure Schedule, the
execution, delivery and performance by the Company of this Agreement and any
Related Agreement to which the Company is a party, and the consummation of the
transactions contemplated hereby and thereby, will not contravene, conflict with
or result in any violation of or default under (with or without notice or lapse
of time, or both) or give rise to a right of termination, cancellation,
modification or acceleration of any obligation or loss of any benefit or result
in the creation or imposition of any Lien under (any such event, a "Conflict")
(i) any provision of the Charter Documents, (ii) any provision of the Subsidiary
Charter Documents, (iii) any resolution adopted by the board of directors of the
Company or its Subsidiaries, (iv) any Material Contract, or (v) any judgment,
injunction, order, decree, statute, law, ordinance, rule or regulation
applicable to the Company or any of its properties (whether tangible or
intangible) or assets. Section 2.6 of the Disclosure Schedule sets forth all
necessary consents, waivers and approvals of parties to any Material Contracts
as are required thereunder in connection with the Merger, or for any such
Material Contract to remain in full force and effect without limitation,
modification or alteration after the Effective Time so as to preserve all rights
of, and benefits to, the Company and its Subsidiaries, under such Material
Contract from and after the Effective Time. Following the Effective Time, the
Surviving Corporation will be permitted to exercise all of its rights under the
Material Contract without the payment of any additional amounts or consideration
other than ongoing obligations, fees, royalties or payments which the Company
would otherwise be required to
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EXECUTION VERSION
satisfy, perform or pay pursuant to the terms of such Contracts had the
transactions contemplated by this Agreement not occurred. Except with respect to
this Agreement, neither the Company nor any of its Subsidiaries is in violation
of any term of or in default under (A) the Charter Documents or the Subsidiary
Charter Documents or (B) any Material Contract.
2.7 Consents. No consent, notice, waiver, approval, order or authorization
of, or registration, declaration or filing with any court, administrative agency
or commission or other federal, state, county, local or other foreign
governmental authority, instrumentality, agency or commission (each, a
"Governmental Entity") is required by, or with respect to, the Company or the
Shareholders in connection with the execution and delivery of this Agreement and
any Related Agreement to which the Company or a Shareholder is a party or the
consummation of the transactions contemplated hereby and thereby, except for (i)
such consents, notices, waivers, approvals, orders, authorizations,
registrations, declarations and filings as may be required under the HSR Act and
any other antitrust or other competition laws of other jurisdictions, and (ii)
the filing of the Certificate of Merger with the Delaware Secretary of State.
2.8 Company Financial Statements.
(a) Section 2.8 of the Disclosure Schedule sets forth the Company's
and the Polish Subsidiary's (i) audited consolidated balance sheet as of
December 31, 2003, and the related consolidated statements of income, cash flow
and stockholders' equity for the 12-month period ending December 31, 2003, with
the corresponding accountants' report from Deloitte and Touche, the Company's
independent auditors (the "Company's Auditors") (the "Year-End Financials"),
(ii) unaudited consolidated balance sheet as of December 31, 2004, and the
related unaudited consolidated statement of income, cash flow and stockholders'
equity for the 12 months then ended (the "Interim Financials"), and (iii)
unaudited consolidated balance sheet as of March 31, 2005 (the "Balance Sheet
Date"), and the related unaudited consolidated statement of income, cash flow
and stockholders' equity for the three (3) months then ended (the "Stub Period
Financials"). The Year-End Financials, the Interim Financials and the Stub
Period Financials (collectively, the "Financials") are true, correct and
complete in all material respects and have been prepared in accordance with GAAP
applied on a consistent basis throughout the periods indicated and consistent
with each other (except that the Interim Financials and the Stub Period
Financials do not contain footnotes and other presentation items that may be
required by GAAP). The Financials present fairly the Company's consolidated
financial condition, operating results and cash flows as of the dates and during
the periods indicated therein, subject in the case of the Interim Financials and
the Stub Period Financials to normal year-end adjustments, which are not
material in amount or significance in any individual case or in the aggregate.
The Company's unaudited consolidated balance sheet as of the Balance Sheet Date
is referred to hereinafter as the "Current Balance Sheet."
(b) There are no "off balance sheet arrangements (as defined in Item
303(c) of Regulation S-K of the SEC) effected by the Company or its
Subsidiaries. The Company's Auditors which has expressed its opinion with
respect to the Year-End Financials (including the related notes), is and has
been throughout the periods covered by such financial statements (y) a
registered public accounting firm (as defined in Section 2(a)(12) of the
Xxxxxxxx-Xxxxx Act of 2002) and (z) "independent" with respect to the Company
within the meaning of Regulation S-X.
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EXECUTION VERSION
(c) Since December 31, 2003, neither the Company, any of its
Subsidiaries, nor any director, officer, employee, auditor, accountant or
representative of the Company or its Subsidiaries, has received or otherwise had
or obtained knowledge of any complaint, allegation, assertion or claim, whether
written or oral, regarding the accounting or auditing practices, procedures,
methodologies or methods of either of the Company, its Subsidiaries or its
internal accounting controls, including any material complaint, allegation,
assertion or claim that the Company or its Subsidiaries has engaged in
questionable accounting or auditing practices, and (ii) no attorney representing
the Company or its Subsidiaries, whether or not employed by the Company or its
Subsidiaries, has reported evidence of a violation of securities laws, breach of
fiduciary duty or similar violation by the Company or its Subsidiaries or any of
their officers, directors, employees or agents to the Board of Directors the
Company or its Subsidiaries or any committee thereof or to any director or
officer of the Company or its Subsidiaries.
2.9 Internal Controls. Each of the Company and its Subsidiaries maintains
accurate books and records reflecting its assets and liabilities and maintains
proper and adequate internal accounting controls which provide assurance that
(i) transactions are executed with management's authorization; (ii) transactions
are recorded as necessary to permit preparation of the consolidated financial
statements of the Company and to maintain accountability for the Company's
consolidated assets; (iii) access to the Company's assets is permitted only in
accordance with management's authorization; (iv) the reporting of the Company's
consolidated assets is compared with existing assets at regular intervals; and
(v) accounts, notices and other receivables and inventory are recorded
accurately, and proper adequate procedures are implemented to effect the
collection thereof on a current and timely basis.
2.10 No Undisclosed Liabilities. Except as set forth in Section 2.10 of
the Disclosure Schedule, (i) neither the Company nor any of its Subsidiaries has
any liability, indebtedness, obligation, expense, claim, deficiency, guaranty or
endorsement of any type or kind whatsoever, whether accrued, absolute,
contingent, determined, determinable, matured, unmatured or otherwise (whether
or not required to be reflected in financial statements in accordance with
GAAP), and (ii) to the Knowledge of the Company, there is no existing condition,
situation or set of circumstances which could reasonably be expected to result
in such liability, which, individually or in the aggregate, in the case of
clause (i) or (ii) of this Section 2.10 (x) has not been reflected in the
Current Balance Sheet (if required by GAAP to be so reflected), or (y) has not
arisen in the ordinary course of business consistent with past practices since
the Balance Sheet Date and prior to the date hereof.
2.11 No Changes. Except as expressly contemplated by this Agreement, or
other than as set forth in Section 2.11 of the Disclosure Schedule, since the
Balance Sheet Date, each of the Company and its Subsidiaries has operated the
Business only in the ordinary course and there has not been, occurred or arisen
any:
(a) transaction by the Company or its Subsidiaries except in the
ordinary course of business as conducted on that date and consistent with past
practices;
(b) amendment or change to the Charter Documents or the Subsidiary
Charter Documents;
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EXECUTION VERSION
(c) amendment of any term of any outstanding security of the Company
or its Subsidiaries;
(d) expenditure, transaction or commitment by the Company or its
Subsidiaries exceeding $75,000 individually or $75,000 in the aggregate with
respect to any single Person;
(e) payment, discharge, waiver or satisfaction of any claim,
liability or obligation (absolute, accrued, asserted or unasserted, contingent
or otherwise of the Company or its Subsidiaries), other than payments,
discharges, waivers or satisfactions in the ordinary course of business of
liabilities reflected or reserved against in the Current Balance Sheet;
(f) destruction of, damage to, or loss of any material assets
(whether tangible or intangible), material business or material customer of the
Company or its Subsidiaries (whether or not covered by insurance);
(g) material employment dispute, including but not limited to,
claims or matters raised by any individuals or any workers' representative
organization, bargaining unit or union regarding labor trouble or claim of
wrongful discharge or other unlawful employment or labor practice or action with
respect to the Company or its Subsidiaries;
(h) change in accounting methods or practices (including any change
in depreciation or amortization policies or rates) by the Company or its
Subsidiaries other than as required by GAAP;
(i) change in any material election in respect of Taxes (as defined
in Section 2.13(a) hereof), adoption or change in any accounting method in
respect of Taxes, agreement or settlement of any claim or assessment in respect
of Taxes, or extension or waiver of the limitation period applicable to any
claim or assessment in respect of Taxes;
(j) revaluation by the Company or its Subsidiaries of any of their
material assets (whether tangible or intangible), including without limitation,
writing down the value of inventory or writing off notes or accounts receivable;
(k) declaration, setting aside or payment of a dividend or other
distribution (whether in cash, stock or property) in respect of any Company
Capital Stock, or any split, combination or reclassification in respect of any
shares of Company Capital Stock, or any issuance or authorization of any
issuance of any other securities in respect of, in lieu of or in substitution
for shares of Company Capital Stock, or any direct or indirect repurchase,
redemption, or other acquisition by the Company or its Subsidiaries of any
shares of Company Capital Stock (or options, warrants or other rights
convertible into, exercisable or exchangeable therefor);
(l) increase in or other change to the salary or other compensation
payable or to become payable by the Company or its Subsidiaries to any of its
officers, directors, employees or advisors, or the declaration, payment or
commitment or obligation of any kind for the payment (whether in cash or equity)
by the Company or its Subsidiaries of a severance payment, termination payment,
bonus or other additional salary or compensation to any such person;
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EXECUTION VERSION
(m) agreement, contract, covenant, instrument, lease, license or
commitment to which the Company or its Subsidiaries is a party or by which they
or any of their assets (whether tangible or intangible) are bound or any
termination, extension, amendment or modification of the terms of any agreement,
contract, covenant, instrument, lease, license or commitment to which the
Company or its Subsidiaries is a party or by which they or any of their assets
are bound, other than in the ordinary course of business;
(n) sale, lease, license or other disposition of any of the assets
(whether tangible or intangible) or properties of the Company or its
Subsidiaries, including, but not limited to, the sale of any accounts receivable
of the Company or its Subsidiaries, or any creation of any security interest in
such assets or properties, other than non-exclusive licenses of the Company
Products by the Company or its Subsidiaries in the ordinary course of business;
(o) loan by the Company or its Subsidiaries to any Person, purchase
by the Company or its Subsidiaries of any debt securities of any Person, or
capital contributions to investment in any Person;
(p) creation or other incurrence by the Company or its Subsidiaries
of any Lien on any of its asset, except for Liens for Taxes not yet due and
payable;
(q) incurring by the Company or its Subsidiaries of any
indebtedness, amendment of the terms of any outstanding loan agreement,
guaranteeing by the Company or its Subsidiaries of any indebtedness, issuance or
sale of any debt securities of the Company or its Subsidiaries or guaranteeing
of any debt securities of others;
(r) waiver or release of any right or claim of the Company or its
Subsidiaries, including any write-off or other compromise of any account
receivable of the Company or its Subsidiaries, other than in the ordinary course
of business;
(s) commencement or settlement of any lawsuit by the Company, the
commencement, settlement, notice or written threat of any lawsuit or proceeding
or other investigation against the Company or its Subsidiaries or their affairs;
(t) notice of any claim or potential claim of ownership, interest or
right by any person other than the Company in or to the Intellectual Property
(as defined below) owned by the Company or of infringement by the Company of any
other Person's Intellectual Property (as defined below);
(u) issuance, grant, delivery or sale by the Company of any shares
of Company Capital Stock or securities convertible into, or exercisable or
exchangeable for, shares of Company Capital Stock, or any securities, warrants,
options or rights to purchase any of the foregoing;
(v) (i) sale or license of any Intellectual Property owned by the
Company or execution of any agreement with respect to Intellectual Property
owned or exclusively licensed by the Company with any Person, (ii) purchase or
license of any Intellectual Property or execution of any agreement with respect
to the Intellectual Property of any Person, (iii) agreement with respect to the
development of any Intellectual Property with a third party, or
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EXECUTION VERSION
(iv) material change in pricing or royalties set or charged by the Company or
any of its Subsidiaries to its customers or licensees or in pricing or royalties
set or charged by persons who have licensed Intellectual Property to the Company
or any of its Subsidiaries, except in the case of clause (i) or (ii), pursuant
to the Company's End User Agreement, substantially on standard terms and
conditions;
(w) agreement or modification to any Contract pursuant to which any
other party was granted marketing, distribution, development, manufacturing or
similar rights of any type or scope with respect to any Company Products or
Company Intellectual Property;
(x) event, occurrence, development, state of circumstances, facts,
or condition of any character that has had or would reasonably be expected to
have, individually or in the aggregate, a Company Material Adverse Effect;
(y) any agreement to purchase or sell any interest in real property,
grant any security interest in any real property, enter into any lease,
sublease, license or other occupancy agreement with respect to any real property
or alter, amend, modify or terminate any of the terms of any Lease Agreement (as
defined in Section 2.15(b));
(z) acquisition or agreement to acquire by merging or consolidating
with, or by purchasing any assets or equity securities of, or by any other
manner, any business or corporation, partnership, association or other business
organization or division thereof, or other acquisition or agreement to acquire
any assets or any equity securities that are material, individually or in the
aggregate, to the Business;
(aa) cancellation, amendment or renewal of any insurance policy;
(bb) agreement by the Company, its Subsidiaries, or any officer or
employee on behalf of the Company or its Subsidiaries, to do any of the things
described in the preceding clauses (a) through (cc) of this Section 2.11 (other
than negotiations with Parent and its representatives regarding the transactions
contemplated by this Agreement and any Related Agreement).
2.12 Accounts Receivable.
(a) Section 2.12(a) of the Disclosure Schedule lists all accounts
receivable of the Company and its Subsidiaries as of the Balance Sheet Date,
together with an aging schedule indicating a range of days elapsed since
invoice.
(b) Subject to any reserves set forth in the Current Balance Sheet
or, for receivables arising subsequent to the Balance Sheet Date, as reflected
on the books and records of the Company (which are prepared in accordance with
GAAP consistently applied), all of the accounts receivable of the Company and
its Subsidiaries are (i) valid and genuine and have arisen solely out of bona
fide sales, licenses, performances of services and other business transactions
in the ordinary course of business consistent with past practices in each case
with Persons other than Affiliates, (ii) are not subject to any Lien, and (iii)
are not subject to valid defenses, set-offs or counter-claims. No request or
agreement for a deduction or discount has been made with respect to any accounts
receivable of the Company or its Subsidiaries.
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EXECUTION VERSION
2.13 Tax Matters.
(a) Definition of Taxes. For the purposes of this Agreement, the
term "Tax" or, collectively, "Taxes" shall mean (i) any and all federal, state,
local and foreign taxes, assessments and other governmental charges, duties,
impositions and liabilities, 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 as well as public imposts, fees and social security
charges (including but not limited to health, unemployment, workers'
compensation and pension insurance), together with all interest, penalties and
additions imposed with respect to such amounts, (ii) any liability for the
payment of any amounts of the type described in clause (i) of this Section
2.13(a) as a result of being a member of an affiliated, consolidated, combined
or unitary group for any period, and (iii) any liability for the payment of any
amounts of the type described in clauses (i) or (ii) of this Section 2.13(a) as
a result of any express or implied obligation to indemnify any other person or
as a result of any obligation under any agreement or arrangement with any other
person with respect to such amounts and including any liability for taxes of a
predecessor entity.
(b) Tax Returns and Audits. Except as set forth in Section 2.13(b)
in the Disclosure Schedule:
(i) The Company and the Polish Subsidiary have (a) prepared
and timely filed all federal, state, local and foreign returns, estimates,
information statements and reports required to be filed on or before the Closing
Date ("Returns") relating to any and all Taxes concerning or attributable to the
Company or the Polish Subsidiary or their operations occurring before the
Closing Date and such Returns are true and correct and have been or will be
completed in accordance with applicable law and (b) timely paid in full all
Taxes due and payable by the Company and its Polish Subsidiary.
(ii) The Company and its Polish Subsidiary have withheld or
paid to the appropriate authorities or depositories, with respect to their
Employees and other third parties, all federal, state and foreign income taxes
and social security charges and similar fees, Federal Insurance Contribution
Act, Federal Unemployment Tax Act and other Taxes required to be so withheld or
paid.
(iii) Neither the Company nor its Polish Subsidiary is now
delinquent in the payment of any Tax, nor is there any Tax deficiency
outstanding, assessed or proposed against the Company or its Polish Subsidiary.
Neither the Company nor its Polish Subsidiary has executed any waiver of any
statute of limitations that has not expired on or extending the period for the
assessment or collection of any Tax.
(iv) No audit or other examination of any Return of the
Company or its Polish Subsidiary is presently in progress, nor has the Company
or its Polish Subsidiary been notified in writing of any request for such an
audit or other examination.
(v) Neither the Company nor its Polish Subsidiary has any
liability for unpaid Taxes as of the Balance Sheet Date which has not been
accrued or reserved on the Current Balance Sheet, whether asserted or
unasserted, contingent or otherwise, and the
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EXECUTION VERSION
Company and its Polish Subsidiary have not incurred any liability for Taxes
since the Balance Sheet Date other than in the ordinary course of business.
(vi) The Company and its Polish Subsidiary have provided to
Parent or its legal counsel copies of all their Returns filed for all periods
since their inception.
(vii) There are (and immediately following the Effective Time
there will be) no Liens on the assets of the Company or its Polish Subsidiary
relating to or attributable to Taxes other than Liens for Taxes not yet due and
payable. The Company has no Knowledge of any basis for the assertion of any
claim relating or attributable to Taxes, which, if adversely determined, would
result in any Lien on the assets of the Company.
(viii) None of the Company's assets is treated as "tax-exempt
use property," within the meaning of Section 168(h) of the Code.
(ix) Neither the Company nor its Polish Subsidiary has (a)
ever been a member of an affiliated group (within the meaning of Code
Section 1504(a)) filing a consolidated federal income Tax Return, (b) ever been
a party to any Tax sharing, indemnification or allocation agreement, (c) no
liability for the Taxes of any Person (other than Company or its Polish
Subsidiary), under Treasury Regulation Section 1.1502-6 (or any similar
provision of state, local or foreign law), as a transferee or successor, by
contract or agreement, or otherwise and (d) never been a party to any joint
venture, partnership, limited liability company or other arrangement that could
be treated as a partnership for Tax purposes.
(x) The Company's and its Polish Subsidiary's Tax basis in
their assets for purposes of determining their future amortization, depreciation
and other income Tax deductions is accurately reflected on their Tax Books and
Records.
(xi) The Company is not and has not been, at any time, a
"United States Real Property Holding Corporation" within the meaning of Section
897(c)(2) of the Code.
(xii) No adjustment relating to any Return that has been filed
by the Company or its Polish Subsidiary and for which the period for the making
of such adjustment has not expired by the application of a statute of
limitation, has been proposed in writing to the Company by any tax authority.
(xiii) Neither the Company nor its Polish Subsidiary has
constituted either a "distributing corporation" or a "controlled corporation" in
a distribution of stock intended to qualify for tax-free treatment under Section
355 of the Code (x) in the two (2) years prior to the date of this Agreement or
(y) in a distribution which could otherwise constitute part of a "plan" or
"series of related transactions" (within the meaning of Section 355(e) of the
Code) in conjunction with the Merger.
(xiv) Neither the Company nor its Polish Subsidiary has
engaged in a transaction that is the same or substantially similar to one of the
types of transactions that the Internal Revenue Service has determined to be a
tax avoidance transaction and identified by notice, regulation, or other form of
published guidance as a listed transaction, as set forth in Treasury Regulation
Section 1.6011-4(b)(2).
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EXECUTION VERSION
(xv) Neither the Company nor its Polish Subsidiary has ever
received written notice of a claim made by a Tax authority in a jurisdiction
where it does not file Returns that it is or may be subject to taxation by that
jurisdiction.
(xvi) Neither the Company nor its Polish Subsidiary has ever
granted a power of attorney (or similar authority) as to any matters regarding
Taxes that will have effect as of the Effective Time.
(xvii) Neither the Company nor its Polish Subsidiary will be
required to include any item of income in, or exclude any item of deduction
from, taxable income for any taxable period (or portion thereof) ending after
the Closing Date as a result of (A) a change in method of accounting for a
taxable period (or portion thereof) ending on or prior to the Closing Date, (B)
any "closing agreement" as described in Section 7121 of the Code (or any
corresponding provision of state, local or foreign Tax law), (C) any
intercompany transaction or any excess loss account as described in Treasury
Regulation Section 1.1502-19 (or any corresponding or similar provision or
administrative rule of federal, state, local or foreign Tax law), (D) any
installment sale or open transaction made on or prior to the Closing Date or (E)
as a result of any prepaid amount received on or prior to the Closing Date.
(xviii) Section 2.13(b) of the Disclosure Schedule sets forth,
by the Tax years in which they arose, the amounts of any unused net operating
loss or net capital loss allocable to each the Company and its Polish Subsidiary
as of December 31, 2003. Prior to the Effective Time of the Merger, the Company
will not have undergone an "ownership change" under Section 382(g) of the Code.
2.14 Restrictions on Business Activities. Except as set forth in Section
2.14 of the Disclosure Schedule, there is no agreement (non-competition or
otherwise), commitment, judgment, injunction, order or decree to which the
Company or its Subsidiaries is a party or which is otherwise binding upon the
Company or its Subsidiaries which has or may reasonably be expected to have the
effect of prohibiting or impairing any business practice of the Company or its
Subsidiaries, any acquisition of property (tangible or intangible) by the
Company or its Subsidiaries, the conduct of business by the Company or its
Subsidiaries, or otherwise limiting the freedom of the Company or its
Subsidiaries to engage in any line of business or to compete with any Person.
Without limiting the generality of the foregoing, neither the Company nor any of
its Subsidiaries has entered into any agreement under which the Company or its
Subsidiaries is restricted from selling, licensing, or otherwise distributing
any of their technology or products or from providing services to customers or
potential customers or any class of customers, in any geographic area, during
any period of time, or in any segment of the market.
2.15 Real Property; Condition of Equipment; Customer Information.
(a) Neither the Company nor any of its Subsidiaries owns any real
property, nor has the Company or its Subsidiaries ever owned any real property.
Section 2.15(a) of the Disclosure Schedule sets forth a list of all real
property currently leased, subleased or licensed by or from the Company or its
Subsidiaries or otherwise used or occupied by the Company or its Subsidiaries
for the operation of the Business (the "Leased Real Property"), the name of the
lessor, licensor, sublessor, master lessor or lessee, the date and term of the
lease, license,
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sublease or other occupancy right and each amendment thereto and, with respect
to any current lease, license, sublease or other occupancy right the aggregate
annual rental payable thereunder.
(b) The Company has provided Parent true, correct and complete
copies of all leases, lease guaranties, subleases, agreements for the leasing,
use or occupancy of, or otherwise granting a right in or relating to each Leased
Real Property, including all amendments, terminations and modifications thereof
("Lease Agreements"). All such Lease Agreements are valid and effective in
accordance with their respective terms, and, with respect to the Company and its
Subsidiaries, there is not, under any of such leases, any existing default on
the part of the Company or its Subsidiaries, no rentals are past due, or event
of default (or event which with notice or lapse of time, or both, would
constitute a default), and, to the Knowledge of the Company, no other party to
any such leases is in default under any such leases. Neither the Company nor any
of its Subsidiaries has received any notice of a default, alleged failure to
perform, or any offset or counterclaim with respect to any such Lease Agreement,
which has not been fully remedied and withdrawn. The Closing will not affect the
Company's and its Subsidiaries' continued use and possession of the Leased Real
Property for the conduct of business as presently conducted. The Company and its
Subsidiaries currently occupy each Leased Real Property for the operation of the
Business. There are no other parties occupying, or with a right to occupy, each
Leased Real Property. Neither the Company nor any of its subsidiaries owes any
brokerage commissions or finders fees with respect to any such Leased Real
Property or would owe any such fees if any existing Lease Agreement were renewed
pursuant to any renewal options contained in such Lease Agreements.
(c) Each Leased Real Property is in good operating condition and
repair, free from structural, physical and mechanical defects, ordinary wear and
tear excepted, is maintained in a manner consistent with standards generally
followed with respect to similar properties, and is otherwise suitable for the
conduct of the business as presently conducted. To the Knowledge of the Company,
neither the operation of the Company and its Subsidiaries on each Leased Real
Property nor such Leased Real Property, including the improvements thereon,
violate in any material respect any applicable building code, zoning requirement
or statute relating to such property or operations thereon, and any such
non-violation is not dependent on so-called non-conforming use exceptions.
(d) Each of the Company and its Subsidiaries 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 (tangible or
intangible), real, personal and mixed, used or held for use in its business,
free and clear of any Liens, except (i) as reflected in the Current Balance
Sheet, (ii) Liens for Taxes not yet due and payable, and (iii) the Company's End
User Agreements, substantially on standard terms and conditions.
(e) Section 2.15(e) of the Disclosure Schedule lists all material
items of equipment (the "Equipment") owned or leased by the Company or its
Subsidiaries, and such Equipment is (i) adequate for the conduct of the business
of the Company and its Subsidiaries as currently conducted and as currently
contemplated to be conducted, and (ii) in good operating condition, regularly
and properly maintained, subject to normal wear and tear.
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EXECUTION VERSION
(f) Except for customer lists lawfully and properly purchased or
rented in the ordinary course of business and except as set forth on Section
2.15(f) of the Disclosure Schedule, the Company or its Subsidiaries has sole and
exclusive ownership, free and clear of any Liens, of all customer lists,
customer contact information, customer correspondence and customer licensing and
purchasing histories relating to its current and former customers (the "Customer
Information"). The Company has not granted any rights with respect to use of the
Customer Information.
2.16 Intellectual Property.
(a) "Intellectual Property" means:
(i) any know-how, invention (whether patentable or
unpatentable and whether or not reduced to practice), any improvements to any
invention, and any patent, utility model, patent application, statutory
invention registration or patent disclosure for the foregoing, together with any
reissuance, division, continuation, continuation-in-part, revision, extension,
or reexamination of any patent;
(ii) any trademark, service xxxx, trade dress, logo, trade
name, corporate name, domain name, Uniform Resource Locator (URL) or other
internet address, telephone or fax number, whether or not registered, together
with any translation, adaptation, derivation, or combination and including any
associated goodwill, and any application for registration, registration, or
renewal of the foregoing;
(iii) any copyrightable work (including, but not limited to,
advertising and promotional materials, catalogs, logo designs, software,
compilations of data, and website content) and any copyright therefor, and any
application for registration, registration, or renewal of the copyright;
(iv) any trade secret or confidential or proprietary business
information (including, but not limited to, any idea, research and development,
know-how, formula, composition, manufacturing and production process or
technique, technical data, design, drawing, specification, customer or supplier
list, pricing and cost information, and business and marketing plan or
proposal);
(v) any industrial designs and any registrations and
applications therefor;
(vi) any mask works and any registrations and applications
therefor;
(vii) any computer software (whether in general release or
under development), including, without limitation, source code, object code,
files, records and databases and all related data and related documentation;
(viii) any other proprietary right including moral rights and
waivers of such rights by others and the right to xxx and recover damages,
attorneys' fees and costs for past infringement of any patent, trademark,
copyright; and
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EXECUTION VERSION
(ix) any copies or tangible embodiment of any of the foregoing
and all files relating thereto.
(b) The Company owns or is licensed for, and in any event possesses
sufficient and legally enforceable rights with respect to, all Intellectual
Property that are or have been used or exploited in, or that are necessary to
conduct the business as is presently conducted and to commercially exploit any
products or service offerings currently under development. Section 2.16(b) of
the Disclosure Schedule sets forth, for the Intellectual Property owned by
Company, a complete and accurate list of all (1) patents and patent
applications, (2) trademark and service xxxx registrations and applications
therefor, (3) unregistered trademarks and service marks, (4) domain names, (5)
copyright registrations and applications therefor, (6) trade secrets, and (7)
material unregistered copyrights, indicating for each, where applicable, (i) the
jurisdiction, (ii) the patent, registration, or application number, (iii) the
date issued, and (iv) the date filed. Section 2.16(b) of the Disclosure Schedule
also sets forth a complete and accurate list of all license agreements granting
any right to use or practice any rights under any Intellectual Property, whether
the Company is the licensee or licensor thereunder, and any written consent to
use, settlement or other agreements relating to any Intellectual Property to
which the Company is a party or otherwise bound (collectively, the "License
Agreements"), indicating for each the title, the parties, the date executed and
the Intellectual Property covered thereby.
(c) Section 2.16(c) of the Disclosure Schedule contains a complete
and accurate list (by name and version number) of all products, software or
service offerings of the Company and its Subsidiaries that have been sold,
distributed or otherwise disposed of by the Company or its Subsidiaries since
January 1, 2004 or which the Company intends to sell, distribute or otherwise
dispose of in the future, including any products or service offerings under
development (collectively, the "Company Products").
(d) The Company has all right, title, and interest in and to the
Intellectual Property owned by the Company free and clear of any attachments,
liens or encumbrances and is listed in the records of the appropriate United
States, state or foreign agency as the sole owner of record for each patent,
registration, or application listed on Section 2.16(b) of the Disclosure
Schedule. In each case in which the Company has acquired, other than through a
license, any Intellectual Property from any Person, the Company has obtained a
valid and enforceable assignment sufficient to irrevocably transfer all rights
in and to such Intellectual Property to the Company.
(e) The Intellectual Property owned by the Company and, to the
Knowledge of the Company, any Intellectual Property licensed, used or exploited
by the Company, are valid and subsisting, in full force and effect, and have not
been cancelled, expired, or abandoned. No claim has been made, asserted, or to
the Knowledge of the Company threatened, or is pending against the Company based
upon, challenging or seeking to deny or restrict the use or exploitation by the
Company of any of the Intellectual Property owned or licensed by the Company.
Other than ex parte prosecution of patent, trademark, service xxxx or copyright
applications, there are no proceedings or actions pending before any court or
government agency (including the United States Patent and Trademark Office or
similar foreign government agencies) related to any of the Intellectual Property
owned by Company. Except as set forth on Section 2.16(e) of the Disclosure
Schedule, there are no actions that must be taken within 180
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EXECUTION VERSION
days of the date of this Agreement, including the payment of any registration,
maintenance or renewal fees or the filing of any response to an official action
of a court or government agency (including the United States Patent and
Trademark Office or similar foreign government agencies) or the filing of any
application for the purpose of obtaining, maintaining, perfecting, preserving or
renewing any of the Intellectual Property owned by the Company.
(f) The Company has, or has caused to be, delivered to the Parent
correct, complete, and fully executed copies of all License Agreements
identified in Section 2.16(b) of the Disclosure Schedule and any and all
ancillary documents pertaining thereto (including, without limitation, all
amendments, consents and evidence of commencement dates and expiration dates).
With respect to each of the License Agreements, the Company represents and
warrants that:
(i) the license agreement, together with any and all ancillary
documents pertaining thereto, is legal, valid, binding, and enforceable and in
full force and effect and represents the entire agreement with respect to the
subject matter of such license agreement;
(ii) the license agreement, together with any and all
ancillary documents pertaining thereto, will continue to be legal, valid,
binding, and enforceable and in full force and effect on terms identical to
those currently in effect upon consummation of the transactions contemplated by
this Agreement and the consummation of such transactions will not constitute a
breach or default under such license agreement or otherwise give any party to
the license agreement other than the Company a right to terminate such license;
(iii) The Company has not received any notice of termination
or cancellation under such license agreement, nor any notice of a breach or
default under such license agreement which has not been cured and the Company
has not itself sublicensed or granted any of the licensed rights to another
party in violation of the license agreement; and
(iv) Neither the Company nor to the Knowledge of the Company
any other party to such license is in breach or default in any material respect
and no event has occurred that, with notice or lapse of time would constitute
such a breach or default or permit termination, modification, or acceleration
under such license agreement.
(g) The consummation of the transactions contemplated by this
Agreement will not result in the termination or impairment of any of the
Intellectual Property owned by Company and will not require the consent of any
governmental authority or third party in respect of such Intellectual Property.
As a result of the transactions contemplated by this Agreement, upon the Closing
the Company will continue to possess, or own or possess adequate and enforceable
licenses, sublicenses, or other rights to use and or exploit, without payment of
any additional fee, all the Intellectual Property owned or licensed by the
Company.
(h) There are no settlements, forbearances to xxx, consents,
judgments, or orders or similar obligations which (1) restrict the Company's
rights to use any Intellectual Property, (2) restrict the Company's business in
order to accommodate a third party's Intellectual Property or (3) permit third
parties to use any Intellectual Property owned by the Company. The Company has
not licensed or sublicensed its rights in any Intellectual Property other than
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EXECUTION VERSION
pursuant to the License Agreements and no royalties, honoraria or other fees are
payable by the Company for the use of or right to use any Intellectual Property
except pursuant to the License Agreements.
(i) To the extent indicated in Section 2.16(b) of the Disclosure
Schedule, such Intellectual Property have been duly registered in, filed in, or
issued by, the offices indicated in Section 2.16(b) of the Disclosure Schedule.
In each case where a registration or patent or application for registration or
patent listed in Section 2.16(b) of the Disclosure Schedule is held by
assignment, the assignment has been duly recorded with the governmental office
from which the original registration or patent issued or before which the
application for registration or patent is pending.
(j) To the Knowledge of the Company, no third party is infringing,
misappropriating, diluting, or violating any Intellectual Property owned or
exclusively licensed by the Company.
(k) (1) The products or services provided by the Company, (2) the
conduct of the Business by the Company, and (3) the use or exploitation of the
Intellectual Property owned or licensed by the Company do not conflict with or
otherwise infringe or misappropriate the rights or property of any third party.
No claim has been made, asserted or to the Knowledge of the Company threatened,
or is pending against the Company alleging that any of (1), (2) or (3) conflict
with or otherwise infringe or misappropriate the rights or property of any third
party.
(l) Section 2.16(l) of the Disclosure Schedule lists all licenses or
other agreements between the Company and any other Person wherein the Company
has agreed to, or assumed, any obligation or duty to warrant, defend, indemnify
or otherwise incur any obligation or liability or provide a right of rescission
with respect to the infringement or misappropriation by the Person of the
Intellectual Property of any other Person.
(m) Except as set forth in Section 2.16(m) of the Disclosure
Schedule, the Company has not (i) entered into any agreement under which it has,
or may have, the obligation to transfer any ownership of, or granted any
exclusive license to use or distribute (or entered into any agreement under
which it has, or may have, the obligation to grant any exclusive license to use
or distribute), or authorized the retention of any exclusive rights to use or
joint ownership of, any Intellectual Property owned by the Company, to any other
Person, (ii) entered into any agreement under which it has granted any covenant
not to xxx, assert or exploit any Intellectual Property owned by the Company, or
(iii) entered into any Agreement under which the Company has granted any Person
the right to bring a lawsuit for infringement or misappropriation of any
Intellectual Property owned by the Company.
(n) All disclosures of confidential Intellectual Property by the
Company or its designees to third parties have been made pursuant to
non-disclosure agreements that protect the confidentiality of such Intellectual
Property and restrict the use of such Intellectual Property to an identified
purpose. Except as set forth in Section 2.16(n) of the Disclosure Schedule, all
former and current employees of the Company have executed non-disclosure
agreements that protect the confidentiality of such Intellectual Property and
restrict the use of such Intellectual Property to an identified purpose.
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EXECUTION VERSION
(o) The Company has taken all reasonable precautions to protect the
secrecy, confidentiality and value of all trade secrets (including the
enforcement by the Company of a policy requiring each employee or contractor to
execute proprietary information and confidentiality agreements substantially in
the Company's standard form, and all current and former employees and
contractors of the Company have executed such an agreement). The trade secrets
are not part of the public knowledge or literature and, to the Knowledge of the
Company, have not been used, divulged or appropriate either for the benefit of
any Person (other than the Company) or to the detriment of the Company.
(p) The software products currently licensed by the Company to
customers are in substantial conformance with all applicable contractual
commitments, express and implied warranties, specifications and the current
documentation, whether electronically embedded, written or otherwise, shipped
with such software products, except for errors and bugs of the type, scope and
nature generally acceptable in the software industry for similar types of
software products. The Company has taken all actions customary in the software
industry to document the software products and their operation, such that the
software, including its source code and documentation, may be understood,
modified, and maintained by reasonably competent programmers.
(q) Except as set forth in Section 2.16(q) of the Disclosure
Schedule, the Company has the right to use, pursuant to valid licenses, all
software development tools, library functions, compilers and all other
third-party software that are used or necessary to create, modify, compile,
operate or support any software comprising Intellectual Property owned or
exclusively licensed by the Company or incorporated into a product or service
offering of the Company.
(r) Neither this Agreement nor the transactions contemplated by this
Agreement will result in any third party being granted rights or access to, or
the placement in or release from escrow, any Intellectual Property owned by the
Company including, but not limited to, source code for any software. Except as
set forth in Section 2.16(r) of the Disclosure Schedule, neither the Company nor
any other Person acting on its behalf has disclosed, delivered or licensed to
any Person, agreed to disclose, deliver or license to any Person, or permitted
the disclosure or delivery to any escrow agent or other Person of, any
Intellectual Property owned by the Company including, but not limited to, source
code for any software of the Company. To the Knowledge of the Company, no event
has occurred, and no circumstance or condition exists, that (with or without
notice or lapse of time, or both) will, or would reasonably be expected to,
result in the disclosure, delivery or license by the Company or any Person
acting on their behalf to any Person of any Intellectual Property owned by the
Company including, but not limited to, source code for any software of the
Company. Section 2.16(r) of the Disclosure Schedule of the Disclosure Schedule
identifies each Contract pursuant to which the Company has deposited, or is or
may be required to deposit, with an escrow-holder or any other Person, any
Intellectual Property owned by the Company including, but not limited to, source
code for any software of the Company, and describes whether the execution of
this Agreement or any of the other transactions contemplated by this Agreement,
in and of itself, would reasonably be expected to result in the release from
escrow of any Intellectual Property owned by the Company including, but not
limited to, source code for any software of the Company.
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EXECUTION VERSION
(s) Software products of the Company are free of any disabling codes
or instructions (a "Disabling Code"), and any virus or other intentionally
created, undocumented contaminant (a "Contaminant"), that may, or may be used
to, provide unauthorized access, or unauthorized modifications or deletions, or
otherwise damage or disable the products (or systems which they interact or
interoperate with the products) or that may result in damage to any of the
foregoing. To the Knowledge of the Company, the components used in or with
software products of the Company obtained from third person suppliers are free
of any Disabling Codes or Contaminants that may, or may be used to, access,
modify, delete, damage or disable any of the products (or systems which they
interact or interoperate with such products) or that might result in damage
thereto. The Company has taken reasonable steps and implemented reasonable
procedures (based on standard industry practices) to ensure that its information
technology systems utilized by the Company in the operation of its business are
free from Disabling Codes and Contaminants. The Company has in place appropriate
disaster recovery plans, procedures and facilities and has taken all reasonable
steps to safeguard its information technology systems utilized by the Company in
the operation of its business and restrict unauthorized access thereto.
(t) Section 2.16(t) of the Disclosure Schedule lists all software or
other material that is distributed as "free software," "open source software" or
under a similar licensing or distribution model (including but not limited to
the GNU General Public License, GNU Lesser General Public License, Sun Community
Source License (SCSL) or the Sun Industry Standards License (SISL)) ("Open
Source Materials") that is used by the Company in any way and describes the
manner in which the Open Source Materials were used and, if appropriate,
modified and distributed by the Company. Except as set forth on Section 2.16(t)
of the Disclosure Schedule, the Company has not (a) incorporated Open Source
Materials into, or combined Open Source Materials with, the Company's
Intellectual Property or products or services, (b) distributed Open Source
Materials in conjunction with the Company's Intellectual Property or products or
services, or (c) used Open Source Materials that create, or purport to create,
obligations for the Company with respect to the Company's Intellectual Property
or products or grant, or purport to grant, to any third party, any rights or
immunities under the Company's Intellectual Property (including, but not limited
to, using any Open Source Materials that require, as a condition of use,
modification or distribution of such Open Source materials that other software
incorporated into, derived from or distributed with such Open Source Materials
be (i) disclosed or distributed in source code form, (ii) be licensed for the
purpose of making derivative works, or (iii) be redistributable at no charge).
No Intellectual Property or products of the Company are subject to the terms of
license of any such Open Source Materials.
2.17 Agreements, Contracts and Commitments. Except as set forth in Section
2.17 of the Disclosure Schedule (specifying the appropriate paragraph), neither
the Company nor any of its Subsidiaries is a party to, or bound by:
(a) (i) any employment or consulting agreement, contract or
commitment with an employee or individual consultant or salesperson (other than
"at will" employment agreements entered into in the ordinary course of
business), any agreement, contract or commitment to grant any severance or
termination pay (in cash or otherwise) to any employee, or any consulting or
sales agreement, contract, or commitment with a firm or other organization;
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EXECUTION VERSION
(ii) any agreement or plan, including, without limitation, any
stock option plan, stock appreciation rights plan or stock purchase plan, any of
the benefits of which will be increased, or the vesting of benefits of which
will be accelerated, by the occurrence of any of the transactions contemplated
by this Agreement or the value of any of the benefits of which will be
calculated on the basis of any of the transactions contemplated by this
Agreement;
(iii) any fidelity or surety bond or completion bond;
(iv) any lease of personal property;
(v) any lease of real property;
(vi) except as provided in Section 2.17(a)(vii) below, any
agreement of indemnification or guaranty;
(vii) any agreement of indemnification under any End User
Agreement that (A) does not eliminate the Company's or its Subsidiaries'
potential liability for consequential or incidental damages or (B) place a cap
on the potential liability of the Company or its Subsidiaries under such
agreement;
(viii) any agreement, contract or commitment relating to
capital expenditures and involving future payments in excess of $10,000
individually or $10,000 in the aggregate;
(ix) any agreement, contract or commitment relating to the
disposition or acquisition of assets or any interest in any business enterprise
outside the ordinary course of the Company's or its Subsidiaries' business;
(x) any mortgages, indentures, guarantees, loans or credit
agreements, security agreements or other agreements or instruments relating to
the borrowing of money or extension of credit;
(xi) any purchase order or contract for the purchase of
materials involving in excess of $10,000 individually;
(xii) any construction contracts;
(xiii) any partnership, dealer, distribution, joint marketing,
joint venture, strategic alliance, affiliate, development agreement or similar
agreement;
(xiv) any agreement, contract or commitment to alter the
Company's interest in any corporation, association, joint venture, partnership
or business entity in which the Company directly or indirectly holds any
interest;
(xv) any sales representative, original equipment
manufacturer, manufacturing, value added, remarketer, reseller, or independent
software vendor, or other agreement for use or distribution of the products,
technology or services of the Company or its Subsidiaries; or
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EXECUTION VERSION
(xvi) other than customer purchase orders, any other
agreement, contract or commitment that involves $10,000 individually or $10,000
in the aggregate or more with respect to any Person and is not cancelable
without penalty within 30 days.
(b) Except as set forth in Section 2.17(b) of the Disclosure
Schedule, there are no end-user customers that account for greater than five
percent (5%) of the Company's net sales. Section 2.17(b) of the Disclosure
Schedule contains a list of the Company's 10 largest resellers for each of the
audited fiscal year ended December 31, 2003 and the 12 months ended December 31,
2004 and sets forth opposite the name of each such reseller the percentage of
net sales attributable to such reseller. During the last 12 months, the Company
has not received any written notices or threats of termination from any of such
resellers that any such reseller intends or otherwise anticipates a termination
or material reduction in the level of business with the Company. True and
complete copies of each Contract disclosed in the Disclosure Schedule or
required to be disclosed pursuant to this Section 2.17 (each a "Material
Contract" and collectively, the "Material Contracts") have been delivered to
Parent. Each Material Contract to which the Company is a party or any of its
properties or assets (whether tangible or intangible) is subject is a valid and
binding agreement of the Company enforceable against each of the parties thereto
in accordance with its terms, and is in full force and effect with respect to
the Company. Each of the Company and its Subsidiaries, as applicable, is in
compliance with and has not breached, violated or defaulted under, or received
written notice that it has breached, violated or defaulted under, any of the
terms or conditions of any such Material Contract. No party obligated to the
Company pursuant to any such Material Contract has breached, violated or
defaulted under such Material Contract, or taken any action or failed to act,
such that, with the lapse of time, giving of notice or both, such action or
failure to act would constitute such a breach, violation or default under such
Material Contract by any such other party.
(c) All outstanding indebtedness of the Company or its Subsidiaries
may be prepaid without penalty.
2.18 Interested Party Transactions. Except as set forth in Section 2.18 of
the Disclosure Schedule, no employee, officer, Shareholder or director of the
Company or its Subsidiaries (nor any ancestor, sibling, descendant or spouse of
any of such persons, or any trust, partnership or corporation in which any of
such persons has or has had an interest) is indebted to the Company or its
Subsidiaries, and neither the Company nor its Subsidiaries is indebted to any
employee, officer, Shareholder or director of the Company or its Subsidiaries
(nor any ancestor, sibling, descendant or spouse of any of such persons, or any
trust, partnership or corporation in which any of such persons has or has had an
interest). Except as set forth in Section 2.18 of the Disclosure Schedule, since
January 1, 2003, no officer, director, Shareholder or, to the Knowledge of the
Company, other employee of the Company or its Subsidiaries (nor, to the
Knowledge of the Company, any ancestor, sibling, descendant or spouse of any of
such persons, or any trust, partnership or corporation in which any of such
persons has or has had an interest), has or has had, directly or indirectly, (i)
an interest in any entity which furnished or sold, or furnishes or sells,
services, products, technology or Intellectual Property that the Company or its
Subsidiaries furnishes or sells, or proposes to furnish or sell, or (ii) any
interest in any entity that purchases from or sells or furnishes to the Company
any goods or services, or (iii) a beneficial interest in any Contract to which
the Company or any of its Subsidiaries is a party; provided, however, that
ownership of no more than one percent (1%) of the outstanding voting stock of a
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EXECUTION VERSION
publicly traded corporation shall not be deemed to be an "interest in any
entity" for purposes of this Section 2.18. Except as set forth in Section 2.18
of the Disclosure Schedule, there are no agreements, contracts, or commitments
with regard to contribution or indemnification between or among any of the
Shareholders.
2.19 Governmental Authorization. Each material consent, license, permit,
grant or other authorization (i) pursuant to which the Company or its
Subsidiaries currently operates or holds any interest in any of its properties
or (ii) which is required for the operation of the Company's or Subsidiaries'
business as currently conducted or currently contemplated to be conducted or the
holding of any such interest (collectively, "Company Authorizations") has been
issued or granted to the Company or its Subsidiaries. The Company Authorizations
are in full force and effect and constitute all Company Authorizations required
to permit the Company and its Subsidiaries to operate or conduct their business
as currently conducted or hold any interest in their properties or assets.
Neither the Company nor any of its Subsidiaries is in default under, and no
condition exists that with notice or lapse of time or both would constitute a
default under the Company Authorizations. None of the Company Authorizations
will be terminated or impaired or become terminable, in whole or in part, as a
result of the transactions contemplated hereby.
2.20 Litigation. There is no action, suit, claim or proceeding of any
nature pending or, to the Knowledge of the Company, threatened against the
Company, its Subsidiaries, their properties (tangible or intangible) or any of
their officers or directors in their capacities as such, nor, to the Knowledge
of the Company, is there any reasonable basis therefor. There is no
investigation pending or, to the Knowledge of the Company, threatened against
the Company, its Subsidiaries or any of their assets (tangible or intangible) or
any of its officers or directors by or before any Governmental Entity, nor, to
the Knowledge of the Company, is there any reasonable basis therefor. No
Governmental Entity has at any time challenged or questioned the legal right of
the Company or its Subsidiaries to conduct its operations as presently or
previously conducted or as presently contemplated to be conducted.
2.21 Minute Books. The minutes of the Company and its Subsidiaries
delivered to counsel for Parent contain complete and accurate records of all
actions taken, and summaries of all meetings held, by the Shareholders, the
Company's and its Subsidiaries' board of directors (and any committees thereof)
since the time of incorporation of the Company and its Subsidiaries, as
applicable. At the Closing, the minute books of the Company and its Subsidiaries
will be in the possession of the Company and its Subsidiaries, as applicable.
2.22 Environmental Matters.
(a) Neither the Company nor any of its Subsidiaries has generated,
used, treated, stored, released, discharged or disposed of any Hazardous
Materials on any leased real property nor on any other property on which the
Company or any of its Subsidiaries has conducted its business and, to the
Knowledge of the Company, no Hazardous Materials have been generated, used,
treated or stored on, released, discharged or disposed of onto, from or under
any Leased Real Property or on any other property on which the Company or any of
its Subsidiaries have conducted the Business, in each case, except (i) in
compliance with
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EXECUTION VERSION
Environmental Laws, and (ii) in a manner that would not give rise to any
Environmental Claim or to any other liability or obligations under Environmental
Laws.
(b) The Company and its Subsidiaries currently hold and at all times
have held all permits and other approvals required under Environmental Laws for
the conduct of the Business as it is now and has been conducted.
(c) The Company and its Subsidiaries are and have been in compliance
with Environmental Laws with respect to the conduct of the Business.
(d) There are no pending or, to the Knowledge of the Company,
threatened Environmental Claims against the Company or its Subsidiaries.
(e) Neither the Company nor its Subsidiaries has used any
underground storage tanks in connection with the conduct of the Business and, to
the Knowledge of the Company, no underground storage tanks, above ground storage
tanks, polychlorinated biphenyls, or friable asbestos containing materials now
exist nor have existed on the leased real property or on any other property on
which the Company or its Subsidiaries have conducted the Business.
(f) The Company has provided Parent and Merger Sub with true and
complete copies of any environmental reports and other documents in its
possession or control that relate to Environmental Claims, the Company's
compliance with Environmental Law, or to the environmental condition of the
Leased Real Property and any other property on which the Company or its
Subsidiaries have conducted the Business.
(g) As used in this Section 2.22:
(i) "Environmental Laws" means all federal, state, regional or
local statutes, laws, rules, regulations, codes, ordinances, orders, plans,
injunctions, decrees, rulings, licenses or judicial or administrative
interpretations thereof, or similar laws, all as are currently in existence,
issued, or promulgated, any of which govern, or relate to pollution, protection
of the environment, public health and safety, air emissions, water discharges,
waste disposal, hazardous or toxic substances, solid or hazardous waste, as any
of these terms are or may be defined in such statutes, laws, rules, regulations,
codes, orders, ordinances, injunctions, decrees, rulings, licenses, or judicial
or administrative interpretations thereof, including without limitation: the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended by the Superfund Amendments and Reauthorization Act of 1986, 42 USC
Section 9601 et seq. (herein collectively "CERCLA"); the Resource Conservation
and Recovery Act of 1976 and subsequent Hazardous and Solid Waste Amendments of
1984, 42 U.S.C. Section 6901 et seq. (herein, collectively, RCRA"), the
Hazardous Materials Transportation Act, as amended, 49 U.S.C. Section 1801, et
seq. (the "Hazardous Materials Transportation Act"); the Clean Water Act, as
amended, 33 U.S.C. Section 1311, et seq. (the "Clean Water Act"); the Clean Air
Act, as amended, 42 U.S.C. Section 7401-7642, (the "Clean Air Act"); the Toxic
Substances Control Act, as amended, 15 U.S.C. Section 2601 et seq. (the "Toxic
Substances Control Act"), the Federal Insecticide, Fungicide, and Rodenticide
Act as amended, 7 U.S.C. Section 136-136y ("FIFRA"), the Emergency Planning and
Community Right-to-Know Act of 1986 as amended 42 U.S.C Section 11001, et seq.
(Title III of XXXX) ("EPCRA") and similar or related state and local laws.
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EXECUTION VERSION
(ii) "Hazardous Materials" shall be construed to include any
toxic or hazardous substance, material or waste or constituent thereof, and any
other contaminant, pollutant, waste or by-product material whether liquid,
solid, semisolid, sludge and/or gaseous, including without limitation,
chemicals, compounds, pesticides, asbestos containing materials, petroleum or
petroleum products, and polychlorinated biphenyls, the presence of which
requires or may require investigation or remediation under any Environmental
Laws or which are regulated, listed or controlled by, under or pursuant to any
Environmental Laws, or which has been determined or interpreted by any
Governmental Entity to be a hazardous or toxic substance regulated under any
Environmental Laws.
(iii) "Environmental Claims" shall mean all administrative,
regulatory or judicial actions, suits, demands, demand letters, notice letters,
claims, liens, notices of non-compliance or violation, investigations, actions
or proceedings relating to Hazardous Materials, Environmental Laws or
Environmental Permits by (a) governmental or regulatory authorities for
enforcement, cleanup, cost recovery, removal, response, remedial or other
actions or damages (including, but not limited to, natural resource damages)
pursuant to any applicable Environmental Laws, and (b) any third party seeking
damages, contribution, indemnification, cost recovery, compensation or
injunctive relief resulting from Hazardous Materials or arising from alleged
injury or threat of injury to health, safety or the environment.
2.23 Brokers' and Finders' Fees; Third Party Expenses. Except as set forth
in Section 2.23 of the Disclosure Schedule, neither the Company nor its
Subsidiaries has incurred, nor will either incur, directly or indirectly, any
liability for brokerage or finders' fees or agents' commissions, fees related to
investment banking or similar advisory services or any similar charges in
connection with the Agreement or any transaction contemplated hereby. Section
2.23 of the Disclosure Schedule sets forth the Company's current reasonable
estimate of all Third Party Expenses (as defined below) expected to be incurred
by the Company in connection with the negotiation and effectuation of the terms
and conditions of this Agreement and the transactions contemplated hereby.
2.24 Employee Benefit Plan and Compensation.
(a) Definitions. For all purposes of this Agreement, the following
terms shall have the following respective meanings:
(i) "Affiliate" as used in this Section 2.24 shall mean each
Subsidiary of the Company and any other person or entity under common control
with the Company or any of its Subsidiaries within the meaning of Section
414(b), (c), (m) or (o) of the Code, and the regulations issued thereunder.
(ii) "COBRA" shall mean the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended.
(iii) "Company Employee Plan" shall mean any plan, program,
policy, practice, contract, agreement or other arrangement providing for
compensation, severance, termination pay, deferred compensation, performance
awards, stock or stock-related awards, fringe benefits or other employee
benefits or remuneration of any kind, whether written,
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EXECUTION VERSION
unwritten or otherwise, funded or unfunded, including without limitation, each
"employee benefit plan," within the meaning of Section 3(3) of ERISA which is or
has been maintained, contributed to, or required to be contributed to, by the
Company or any Affiliate, or with respect to which the Company, or any Affiliate
has or may have any liability or obligation, for the benefit of any Employee,
including any International Employee Plan.
(iv) "DOL" shall mean the United States Department of Labor.
(v) "Employee" shall mean any current or former employee,
consultant or director of the Company or any Affiliate.
(vi) "Employee Agreement" shall mean each management,
employment, severance, consulting, relocation, repatriation, expatriation, loan,
visa, work permit or other agreement, contract, or understanding (including,
without limitation, any offer letter or any agreement providing for compensation
or benefits) between the Company or any Affiliate and any Employee.
(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) "HIPAA" shall mean the Health Insurance Portability and
Accountability Act of 1996, as amended.
(x) "International Employee Plan" shall mean each Company
Employee Plan or Employee Agreement that has been adopted or maintained by the
Company or any Affiliate, whether formally or informally, or with respect to
which the Company or any Affiliate will or may have any liability with respect
to Employees who perform services outside the United States.
(xi) "IRS" shall mean the United States Internal Revenue
Service.
(xii) "Multiemployer Plan" shall mean any Pension Plan, which
is a "multiemployer plan," as defined in Section 3(37) of ERISA.
(xiii) "Pension Plan" shall mean each Company Employee Plan
that is an "employee pension benefit plan," within the meaning of Section 3(2)
of ERISA.
(b) Schedule. Section 2.24(b) of the Disclosure Schedule contains an
accurate and complete list of each Company Employee Plan and each Employee
Agreement. Neither the Company nor any Affiliate has made any plan or commitment
to establish any new Company Employee Plan or Employee Agreement (other than "at
will" employment agreements entered into in the ordinary course of business), 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, in each case as previously
disclosed to Parent in writing, or as required by this Agreement). Section
2.24(b) of the Disclosure Schedule sets forth a table setting forth the name and
salary of each employee of the Company and each Affiliate as of the date hereof.
To the Knowledge of the Company, no employee listed on Section 2.24(b) of
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EXECUTION VERSION
the Disclosure Schedule intends to terminate his or her employment for any
reason, other than in accordance with the employment arrangements provided for
in this Agreement.
(c) Documents. The Company and each Affiliate has provided to Parent
(i) correct and complete copies of all documents embodying each Company Employee
Plan and each Employee Agreement including, without limitation, all amendments
thereto and all related trust documents, (ii) the most recent annual actuarial
valuations, if any , prepared for each Company Employee Plan, (iii) the three
(3) 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, (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(ies) of material modifications thereto, if any, required under ERISA
with respect to each Company Employee Plan, (vi) all material written agreements
and contracts relating to each Company Employee Plan, including, without
limitation, administrative service agreements and group insurance contracts,
(vii) all communications material to any Employee or Employees relating to any
Company Employee Plan and any proposed Company Employee Plan, 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 liability to the Company, (viii) all correspondence to or
from any governmental agency relating to any Company Employee Plan, (ix) all
COBRA forms and related notices (or such forms and notices as required under
comparable law), (x) all policies pertaining to fiduciary liability insurance
covering the fiduciaries for each Company Employee Plan, (xi) all discrimination
tests for each Company Employee Plan for the three (3) most recent plan years,
(xii) all registration statements, annual reports (Form 11-K and all attachments
thereto) and prospectuses prepared in connection with each Company Employee
Plan, (xiii) all "HIPAA Privacy Notices" and all "Business Associate Agreements"
to the extent required under HIPAA and (xiv) all IRS determination opinion,
notifications and advisory letters issued with respect to each Company Employee
Plan and all applications and correspondence to or from the IRS or the DOL with
respect to any such application or letter.
(d) Employee Plan Compliance. The Company and each of its Affiliates
have performed all obligations required to be performed by them under, are not
in default or violation of, and the Company has no Knowledge of any default or
violation by any other party to any Company Employee Plan, and each Company
Employee Plan has been established and maintained in accordance with its terms
and in material compliance with all applicable laws, statutes, orders, rules and
regulations, including but not limited to ERISA or the Code. Any Company
Employee Plan intended to be qualified under Section 401(a) of the Code and each
trust intended to qualify under Section 501(a) of the Code has obtained a
favorable determination letter (or notification, advisory, or opinion letter, as
applicable) as to its qualified status under the Code. 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. There are no actions, suits or claims
pending or, to the Knowledge of the Company, threatened or reasonably
anticipated (other than
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EXECUTION VERSION
routine claims for benefits) against any Company Employee Plan or against the
assets of any Company Employee Plan. Each Company Employee Plan can be amended,
terminated or otherwise discontinued after the Effective Time in accordance with
its terms, without liability to Parent, the Company or any Affiliate (other than
ordinary administration expenses). There are no audits, inquiries or proceedings
pending or to the Knowledge of the Company, threatened by the IRS, DOL, or any
other Governmental Entity with respect to any Company Employee Plan. Neither the
Company nor any Affiliate is subject to any penalty or tax with respect to any
Company Employee Plan under Section 502(i) of ERISA or Sections 4975 through
4980 of the Code. The Company and each Affiliate have timely made all
contributions and other payments required by and due under the terms of each
Company Employee Plan.
(e) No Pension or Welfare Plans. Neither the Company nor any
Affiliate has ever maintained, established, sponsored, participated in, or
contributed to, any Pension Plan subject to Title IV of ERISA, Section 412 of
the Code or a "funded welfare plan" within the meaning of Section 419 of the
Code.
(f) No Self-Insured Plan. Except as set forth in Section 2.24(f) of
the Disclosure Schedule, neither the Company nor any Affiliate has ever
maintained, established, sponsored, participated in or contributed to any
self-insured plan that provides benefits to employees (including, without
limitation, any such plan pursuant to which a stop-loss policy or contract
applies).
(g) Collectively Bargained, Multiemployer and Multiple-Employer
Plan. At no time has the Company or any Affiliate contributed to or been
obligated to contribute to any Multiemployer Plan. Neither the Company nor any
Affiliate has at any time ever maintained, established, sponsored, participated
in or contributed to any multiple employer plan or to any plan described in
Section 413 of the Code.
(h) No Post-Employment Obligations. No Company Employee Plan or
Employee Agreement provides, or reflects or represents 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 neither the Company nor any Affiliate has ever
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 benefits, except to
the extent required by statute.
(i) COBRA; FMLA; HIPAA. The Company and each Affiliate has, prior to
the Effective Time, complied with COBRA, FMLA, HIPAA, the Women's Health and
Cancer Rights Act of 1998, the Newborns' and Mothers' Health Protection Act of
1996, and any similar provisions of state law applicable to its Employees. To
the extent required under HIPAA and the regulations issued thereunder, Company
and each Affiliate has, prior to the Effective Time, performed all obligations
under the medical privacy rules of HIPAA (45 C.F.R. Parts 160 and 164), the
electronic data interchange requirements of HIPAA (45 C.F.R. Parts 160 and 162),
and the security requirements of HIPAA (45 C.F.R. Part 142). Neither the Company
nor any of its Affiliates has unsatisfied obligations to any Employees or
qualified beneficiaries pursuant to COBRA, HIPAA or any state law governing
health care coverage or extension.
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EXECUTION VERSION
(j) Effect of Transaction. Except as contemplated by this Agreement,
neither the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby of will (either alone or upon the occurrence of
any additional or subsequent events) (i) result in any payment (including
severance, golden parachute, bonus or otherwise) becoming due to any Employee,
(ii) result in any forgiveness of indebtedness, (iii) materially increase any
benefits otherwise payable by the Company or any Affiliate or (iv) result in the
acceleration of the time of payment or vesting of any such benefits except as
required under Section 411(d)(3) of the Code.
(k) Parachute Payments. There is no agreement, plan, arrangement or
other contract covering any Employee that, considered individually or considered
collectively with any other such agreements, plans, arrangements or other
contracts, will, or could reasonably be expected to, give rise directly or
indirectly to the payment of any amount that would be characterized as an
"excess parachute payment" within the meaning of Section 280G(b)(1) of the Code.
There is no agreement, plan, arrangement or other contract by which the Company
or any of its Affiliates is bound to compensate any Employee for excise taxes
paid pursuant to Section 4999 of the Code. Section 2.24(k) of the Disclosure
Schedule lists all persons who the Company reasonably believes are "disqualified
individuals" (within the meaning of Section 280G of the Code and the regulations
promulgated thereunder) as determined as of the date hereof.
(l) Employment Matters. The Company and each Affiliate is in
material compliance with all applicable foreign, federal, state and local laws,
rules and regulations respecting employment, employment practices, terms and
conditions of employment, employee safety and wages and hours, and in each case,
with respect to Employees: (i) has withheld and reported all amounts required by
law or by agreement to be withheld and reported with respect to wages, salaries
and other payments to Employees, (ii) is not liable for any arrears of wages,
severance pay or any taxes or any penalty for failure to comply with any of the
foregoing, and (iii) is not liable for any payment to any trust or other fund
governed by or maintained by or on behalf of any governmental 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
action, suits, claims or administrative matters pending, or, to the Knowledge of
the Company, threatened or reasonably anticipated against the Company, any
Affiliate, or any of their Employees relating to any Employee, Employee
Agreement or Company Employee Plan (other than claims for benefits). There are
no pending or threatened or reasonably anticipated claims or actions against
Company, any Affiliate, any Company trustee or any trustee of any Affiliate
under any worker's compensation policy or long-term disability policy. The
services provided by each of the Company's, and each Affiliates' Employees is
terminable at the will of the Company and its Affiliates. Section 2.24(l) of the
Disclosure Schedule lists all liabilities of the Company to any Employee that
result or would result as a result of the consummation of the transactions set
forth herein and lists any severance or change of control agreements between the
Company and any employee. Neither the Company nor any Affiliate has direct or
indirect liability with respect to any misclassification of any person as an
independent contractor rather than as an employee, or with respect to any
employee leased from another employer.
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EXECUTION VERSION
(m) Labor. No work stoppage or labor strike against the Company or
any Affiliate is pending, or, to the Knowledge of the Company, threatened or
reasonably anticipated. The Company has no Knowledge 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 threatened or reasonably
anticipated relating to any labor matters involving any Employee, including,
without limitation, charges of unfair labor practices or discrimination
complaints. Neither the Company nor any Affiliate has engaged in any unfair
labor practices within the meaning of the National Labor Relations Act. Neither
the Company nor any Affiliate does 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 the Company or any of its Subsidiaries. Neither the Company nor
any Affiliate has incurred any liability or obligation under the Worker
Adjustment and Retraining Notification Act or any similar state or local law
that remains unsatisfied.
(n) No Interference or Conflict. No Shareholder, director, officer,
Employee or consultant of the Company or any of its Affiliates is obligated
under any contract or agreement, subject to any judgment, decree, or order of
any court or administrative agency that would interfere with such person's
efforts to promote the interests of the Company or any of its Affiliates or that
would interfere with the Company's business. To the Knowledge of the Company,
neither the execution nor delivery of this Agreement, nor the carrying on of the
Company's business as presently conducted or proposed to be conducted nor any
activity of such officers, directors, Employees or consultants in connection
with the carrying on of the Company's business as presently conducted or
currently proposed to be conducted will conflict with or result in a breach of
the terms, conditions, or provisions of, or constitute a default under, any
contract or agreement under which any of such officers, directors, Employees, or
consultants is now bound.
(o) International Employee Plan. Each International Employee Plan
has been established, maintained and administered in 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 or as set forth in Section 2.24(o) of the Disclosure Schedule,
no condition exists that would prevent the Company or Parent from terminating or
amending any International Employee Plan at any time for any reason without
liability to the Company or its ERISA Affiliates (other than ordinary
administration expenses or routine claims for benefits).
2.25 Insurance. Section 2.25 of the Disclosure Schedule lists all
insurance policies and fidelity bonds covering the assets, business, equipment,
properties, operations, employees, officers and directors of the Company and its
Subsidiaries since January 1, 2004, including the type of coverage, the carrier,
the amount of coverage, the term and the annual premiums of such policies. There
is no claim by the Company or its Subsidiaries pending under any of such
policies or bonds as to which coverage has been questioned, denied or disputed
or that the Company or its Subsidiaries has a reason to believe will be denied
or disputed by the underwriters of such policies or bonds. In addition, there is
no pending claim of which its total value (inclusive of defense expenses) will
exceed the policy limits. All premiums due and payable under all such policies
and bonds have been paid, and each of the Company and its
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EXECUTION VERSION
Subsidiaries is otherwise in material compliance with the terms of such policies
and bonds (or other policies and bonds providing substantially similar insurance
coverage). Except as set forth in Section 2.25 of the Disclosure Schedule, the
Company has no Knowledge or reasonable belief of threatened termination of, or
premium increase with respect to, any of such policies. Except as set forth in
Section 2.25 of the Disclosure Schedule, neither the Company nor any of its
Subsidiaries has ever maintained, established, sponsored, participated in or
contributed to any self-insurance plan.
2.26 Compliance with Laws. Each of the Company and its Subsidiaries has
complied with, is not in violation of, and, except as set forth in Section 2.26
of the Disclosure Schedule, has not received any written notices of violation
with respect to, any foreign, federal, state or local statute, law or
regulation, including any applicable licenses and permits for the export of the
Company Products.
2.27 Foreign Corrupt Practices Act. The Company (including any of its
officers, directors, employees and others acting on behalf of the Company) has
not taken any action which would cause it to be in violation of the Foreign
Corrupt Practices Act of 1977, as amended, or any rules or regulations
thereunder.
2.28 Warranties; Indemnities. Except for the warranties and indemnities
contained in those Contracts set forth in Section 2.28 of the Disclosure
Schedule and warranties implied by law, the Company has not given any warranties
or indemnities relating to Company Products or Intellectual Property licensed or
sold or services rendered by the Company or its Subsidiaries.
2.29 Spreadsheet. The information contained in the Spreadsheet shall be
complete and correct as of the Closing Date.
2.30 Complete Copies of Materials. The Company has delivered to Parent or
made available to Parent true and complete copies of each document identified in
the Disclosure Schedule.
2.31 Representations Complete. To the Knowledge of the Company, none of
the representations or warranties made by the Company or the Shareholders (as
modified by the Disclosure Schedule) in this Agreement, and none of the
statements made in any exhibit, schedule or certificate furnished by the Company
or the Shareholders pursuant to this Agreement, taken together as a whole,
contains any untrue statement of a material fact, or omits to state any material
fact necessary in order to make the statements contained herein or therein, in
the light of the circumstances under which made, not misleading.
ARTICLE III
FURTHER REPRESENTATIONS AND WARRANTIES RELATING TO THE
SHAREHOLDERS
Except as set forth in the Disclosure Schedule furnished to Parent
specifically identifying the corresponding numbered section of this Agreement,
the Company hereby represents and warrants to Parent and Merger Sub, as follows:
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EXECUTION VERSION
3.1 Ownership of Company Capital Stock. Each Shareholder is the sole
record and beneficial owner of the Company Capital Stock designated as being
owned by such Shareholder opposite such Shareholder's name in Section 2.2(a) of
the Disclosure Schedule, except as otherwise noted in Section 2.2(a) of the
Disclosure Schedule. Such Company Capital Stock constitutes all of the Company
Capital Stock owned, beneficially or of record, by such Shareholder, and such
Shareholder has no options, warrants or other rights to acquire Company Capital
Stock.
3.2 Authority. Each Shareholder that is an entity has all requisite power
and authority and each Shareholder that is an individual has capacity to enter
into any Related Agreements to which it, he or she, as the case may be, is a
party and to consummate the transactions contemplated hereby and thereby. The
execution, delivery and performance of any Related Agreements to which such
Shareholder is a party and the consummation of the transactions contemplated
hereby and thereby have been duly authorized by all necessary corporate action,
if any, on the part of such Shareholder and no further action is required on the
part of such Shareholder to authorize any Related Agreements to which it is a
party and the transactions contemplated hereby and thereby. Each of the Related
Agreements to which such Shareholder is a party have been duly executed and
delivered by such Shareholder, and constitute the valid and binding obligations
of such Shareholder, enforceable against each such party in accordance with
their respective terms, except as such enforceability may be limited by
principles of public policy and subject to the laws of general application
relating to bankruptcy, insolvency and the relief of debtors and rules of law
governing specific performance, injunctive relief or other equitable remedies.
3.3 No Conflict. The execution and delivery by each Shareholder of any
Related Agreement to which it is a party and the consummation of the
transactions contemplated hereby and thereby will not, (A) Conflict with (i) any
provision of the charter documents of such Shareholder if such Shareholder is an
entity, (ii) any material mortgage, indenture, lease, contract or other
agreement or instrument, permit, concession, franchise or license to which such
Shareholder or any of its properties or assets is subject, or (iii) any
judgment, order, decree, statute, law, ordinance, rule or regulation applicable
to such Shareholder or its properties or assets or (B) result in the creation or
imposition of any Lien on any asset of the Company.
3.4 Brokers' and Finders' Fees. Except as set forth in Section 3.4 of the
Disclosure Schedule, there is no investment banker, broker, finder or other
intermediary which has been retained by or is authorized to act on behalf of
such Shareholder who is entitled to any fee or commission in connection with the
transactions contemplated by this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Each of Parent and Merger Sub hereby represents and warrants to the
Company as follows:
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EXECUTION VERSION
4.1 Organization, Standing and Power. Each of Parent and Merger Sub is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Michigan and the State of Delaware, respectively.
4.2 Authority. Each of Parent and Merger Sub has all requisite corporate
power and authority to enter into this Agreement and any Related Agreements to
which it is a party and to consummate the transactions contemplated hereby and
thereby. The execution and delivery of this Agreement and any Related Agreements
to which it is a party 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. This Agreement and any Related Agreements
to which Parent and Merger Sub are parties have been duly executed and delivered
by Parent and Merger Sub and constitute the valid and binding obligations of
Parent and Sub, enforceable against each of Parent and Merger Sub in accordance
with their terms, except as such enforceability may be limited by principles of
public policy and subject to the laws of general application relating to
bankruptcy, insolvency and the relief of debtors and rules of law governing
specific performance, injunctive relief or other equitable remedies.
4.3 Conflicts. The execution and delivery of this Agreement and any
Related Agreement to which Parent or Merger Sub is a party do not, and the
consummation of the transactions contemplated hereby will not result in any
Conflict with (i) any provision of the articles of incorporation or bylaws of
Parent or certificate of incorporation or bylaws of Merger Sub, as amended, (ii)
any resolution adopted by the board of directors of Parent or its Subsidiaries,
(iii) any material Contract of Parent or its Subsidiaries, or (iv) any judgment,
injunction, order, decree, statute, law, ordinance, rule or regulation
applicable to Parent or its subsidiaries or any of their respective properties
(whether tangible or intangible) or assets.
4.4 Consents. No consent, waiver, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity, or any third
party is required by or with respect to Parent or Merger Sub in connection with
the execution and delivery of this Agreement and any Related Agreements to which
Parent or Merger Sub is a party or the consummation of the transactions
contemplated hereby and thereby, except for (i) such consents, notices, waivers,
approvals, orders, authorizations, registrations, declarations and filings as
may be required under the HSR Act and any other antitrust or other competition
laws of other jurisdictions, and (ii) the filing of the Certificate of Merger
with the Delaware Secretary of State.
4.5 Brokers' and Finders' Fees. There is no investment banker, broker,
finder or other intermediary which has been retained by or its authorized to act
on behalf of such Parent or Merger Sub who is entitled to any fee or commission
in connection with the transactions contemplated by this Agreement.
4.6 Litigation. There is no action, suit, claim or proceeding of any
nature pending or, to the knowledge of Parent, threatened against Parent, its
Subsidiaries, their properties (tangible or intangible) or any of their officers
or directors in their capacities as such that is reasonably likely to prevent or
delay Parent or Merger Sub in any material respect from performing its
obligations under, or consummating the transactions contemplated by, this
Agreement.
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ARTICLE V
ADDITIONAL AGREEMENTS
5.1 Public Disclosure. No party shall issue any statement or communication
to any third party (other than their respective agents that are bound by
confidentiality restrictions) regarding the subject matter of this Agreement or
the transactions contemplated hereby, including, if applicable, the termination
of this Agreement and the reasons therefor, without the prior consent of the
other party; provided, however, that Parent may make any public disclosure it
believes in good faith is required by applicable law or any requirement of The
Nasdaq National Market and the Company may make any disclosures permitted under
Section 5.3 hereof.
5.2 Shareholder Approval. The Company will use commercially reasonable
efforts to obtain and deliver the shareholder written consent setting forth the
unanimous approval of the Merger, this Agreement and the transactions
contemplated hereby by the Shareholders, which shall also include and constitute
the approval by the Shareholders of: (i) the escrow and indemnification
obligations set forth in Article VIII hereof and the deposit of the Parent
Escrow Amount and the Company Escrow Amounts, and (ii) the appointment of Xxx
Xxxxxxxxx as the Shareholder Representative.
5.3 Acquisition Proposals.
(a) From the date hereof until the Effective Time, the Company shall
not, nor shall it permit any of its Subsidiaries to, nor shall it authorize or
permit any officer, director, employee, representative or agent of the Company
or any of its Subsidiaries (including, without limitation, any investment
banker, financial advisor, attorney or accountant retained by the Company or any
of its Subsidiaries) to, directly or indirectly, (i) solicit, initiate,
encourage or take any other action to in any way facilitate any inquiries or the
making of any proposal that constitutes or could reasonably be expected to lead
to (including by way of furnishing information or assistance) an Acquisition
Proposal, (ii) engage in or otherwise participate in any negotiations or
discussions concerning, or provide any information to any Person relating to,
any Acquisition Proposal, or (iii) agree to, approve or recommend any
Acquisition Proposal. The Company and its Subsidiaries shall immediately cease
and cause to be terminated any existing activities, discussions or negotiations
with any parties conducted heretofore with respect to any of the foregoing and
enforce any confidentiality agreements to which it or any Company Subsidiary is
a party. The Company will immediately notify Parent orally and in writing if any
Acquisition Proposal is made, or any information is requested by any Person with
respect to any Acquisition Proposal or which could lead to an Acquisition
Proposal, which notice shall include the material terms of the Acquisition
Proposal and the identity of the party making such proposal.
(b) Notwithstanding the first sentence of Section 5.3(a), the
Company may negotiate or otherwise engage in discussions with, and furnish
nonpublic information to, any Person in response to an unsolicited Acquisition
Proposal by such Person if (i) the Company Board determines in good faith after
consultation with and advice from the Company's attorneys and financial advisors
that such Acquisition Proposal constitutes a Superior Proposal and (ii) such
Person executes a confidentiality agreement no less favorable to the Company
than the
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EXECUTION VERSION
Confidentiality Agreement executed by Parent and the Company; and following
receipt of a Superior Proposal, the Company Board may withdraw or modify any
recommendation relating to this Agreement or the Merger, if the Company Board
determines in good faith after consultation with and advice from the Company's
attorneys and financial advisors that failure to take such action would be
inconsistent with its fiduciary duties to shareholders under applicable law.
5.4 Shareholder, Optionholders and Director Releases. The Company shall
use commercially reasonable efforts to cause each of the Shareholders and
Optionholders to execute the Release of the Shareholders and Optionholders in
the form attached hereto as Exhibit B-1 (the "Shareholders/Optionholders
Release"), and each member of the Board of Directors of the Company to execute
the Release of the Directors in the form attached hereto as Exhibit B-2 (the
"Director Release").
5.5 Consents. The Company shall use its commercially reasonable efforts to
obtain prior to the date of this Agreement, all necessary consents, waivers and
approvals of any parties to any Material Contract as are required thereunder and
under this Agreement in connection with the Merger or for any such Material
Contracts to remain in full force and effect, all of which are listed in Section
2.6 of the Disclosure Schedule, so as to preserve all rights of, and benefits
to, the Company under such Contract from and after the Effective Time. Such
consents, waivers and approvals shall be in a form reasonably acceptable to
Parent.
5.6 Conduct of the Business. From the period from the date of this
Agreement and continuing until the Closing, except as expressly contemplated or
permitted by this Agreement, or with the prior consent of Parent, the Company
shall carry on its business in the ordinary course consistent with past
practice. During such period, the Company will use its commercially reasonable
efforts to (x) preserve the business intact; (y) keep available to the Company
the present services of the employees of the Company and its Subsidiaries, and
(z) preserve for itself and Parent the goodwill of the customers of the Company
and its Subsidiaries and others with whom the Company and its Subsidiaries has
business relationships. Without limiting the generality of the foregoing, except
(i) with the prior written consent of Parent, or (ii) as contemplated in this
Agreement, the Company shall not engage in any activity listed in Section 2.11
of this Agreement, except as set forth on Section 5.6 of the Disclosure
Schedule.
5.7 New Employment Benefits. Parent agrees to provide each employee of the
Company or its Subsidiaries who receives and accepts an offer of full-time
employment from Parent, the Company or the Company's Subsidiaries prior to the
Effective Time and is an employee of Parent, the Surviving Corporation or the
Surviving Corporation's Subsidiaries immediately following the Effective Time
(collectively, the "Transferred Company Employees") with the types and levels of
employee benefits maintained by Parent for similarly situated employees of
Parent. Parent shall give Transferred Company Employees full credit for all
"years of service," as that term is defined in Section 411(a)(5) of the Code,
with the Company and its Subsidiaries (to the extent the Company gave effect) as
if such service was with Parent, for purposes of eligibility, vesting and
calculation of benefits under vacation plans or policies maintained by Parent or
the Company.
5.8 Closing Date Cash Balance Statement. At the Closing, the Company shall
prepare and deliver to Parent a cash balance statement from the Company's bank,
which shall set
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EXECUTION VERSION
forth the Company's cash balance as of the Closing and shall be accompanied by a
certificate from the Company in a form acceptable to Parent (the "Closing Date
Cash Balance Statement").
5.9 Statement of Expenses. At the Closing, the Company shall provide
Parent with a statement of Third Party Expenses incurred by the Company prior to
the Closing Date (the "Statement of Expenses").
5.10 Spreadsheet. The Company shall deliver to Parent and the Exchange
Agent on the Closing Date a spreadsheet (the "Spreadsheet") substantially in the
form attached hereto on Section 5.10 to the Disclosure Schedule, which
spreadsheet shall be certified as complete and correct by the Chief Executive
Officer and Chief Financial Officer of the Company as of the Closing and which
shall include as of the Closing, (i) all Shareholders and their respective
addresses, the number of shares of Company Capital Stock held by such persons
(including the respective certificate numbers), whether such shares constitute
Company Unvested Common Stock (including, for each certificate, the number of
shares that are vested as of the Closing), the date of acquisition of such
shares, the per share Initial Consideration applicable to each holder, the
amount of cash to be deposited into the Escrow Fund on behalf of each holder,
and such other information relevant thereto, and (ii) all holders of Company
Options, the number of shares of Company Capital Stock underlying each such
Company Option, the grant dates of such Company Options and the vesting
arrangement with respect to such Company Options and indicating whether such
Company Options are incentive stock options or non-qualified stock options, and
such other information relevant thereto or which Parent may reasonably request.
5.11 Preservation of Books and Records; Post-Closing Access. From and
after the Effective Time, Parent and the Surviving Corporation agree to preserve
and keep the books and records relating to the Company and its Subsidiaries (the
"Books and Records") for a period of five (5) years in accordance with Parent's
document retention Policies and procedures and shall make the Books and Records
available to the Shareholder Representative as may be reasonably required in
connection with any legal proceedings against or governmental investigations of
the Shareholders or government reporting obligation of the Represented Parties
or for any other reasonable business purpose arising from or relating to this
Agreement, during regular business hours and upon the prior written request
thereto by the Shareholder Representative; provided, however, that the
Shareholder Representative shall not be entitled to such access for purposes
adverse or potentially adverse to Parent or the Surviving Corporation, as
reasonably determined by Parent except as required by law or Governmental
Entity. In the event that Parent or the Surviving Corporation wishes to move or
destroy any such books or records, such party shall first give 10 days prior
written notice to the Shareholder Representative, including the address of the
location to which such books or records shall be moved. Notwithstanding the
foregoing, Parent or the Surviving Corporation, as the case may be, may restrict
the Shareholder Representative's access to the Books and Records to the extent
that any law, treaty, rule or regulation of any Governmental Entity applicable
to Parent or the Surviving Corporation may reasonably require Parent or the
Surviving Corporation to restrict or prohibit access to any such information.
Such access shall also be subject to the granting party's reasonable security
measures and insurance requirements. Additionally, all access by the Shareholder
Representative to the Books and Records shall be conditioned upon entering into
a confidentiality agreement in a form reasonably satisfactory to Parent which
shall prohibit the use of information obtained by such access to the Books and
Records in any manner adverse to
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EXECUTION VERSION
Parent or the Surviving Corporation, including, but not limited to, competing or
preparing to compete with the Parent or the Surviving Corporation.
5.12 Additional Documents and Further Assurances. Each party hereto, at
the reasonable request of the other party hereto, shall execute and deliver such
other instruments and do and perform such other acts and things as may be
reasonably necessary or desirable for effecting completely the consummation of
this Agreement and the transactions contemplated hereby.
5.13 Source Code Escrow. On or before the Closing Date, Parent shall make
the Shareholder Representative a beneficiary to Parent's general source code
escrow agreement (a copy of which has been previously delivered to the Company)
and within 30 days after the Closing Date, Parent shall deposit into such source
code escrow all source code of the Company and its subsidiaries as of the
Closing Date and all documentation related thereto (collectively, "Company
Source Code/Documentation"), and provide a notice to the escrow agent to
Parent's general source code agreement that expressly notifies such escrow agent
that (i) the Shareholder Representative is a beneficiary to the Parent's general
source code agreement with respect to the Company Source Code/Documentation by
designating the Shareholder Representative as a "Licensee" and (ii) the Company
Source Code/Documentation would be released to the Shareholder Representative
under the conditions set forth in this Section 5.13. Parent agrees that in the
event that Parent submits a claim for indemnification pursuant to Article VIII
(including a Third Party Claim) related to Company Intellectual Property or such
other indemnification claim that it is necessary or desirable for the
Shareholder Representative to have Company Source Code/Documentation to
investigate and/or defend such claim, then such Company Source
Code/Documentation shall be immediately released to the Shareholder
Representative for such purpose. Once such indemnification claim has been
resolved, or if the Shareholder Representative no longer needs or desires such
Company Source Code/Documentation to investigate and/or defend such claim, the
Shareholder Representative shall return such Company Source Code/Documentation,
and all copies, notes or other information derived therefrom.
5.14 Certain Tax Matters.
(a) Tax Sharing Agreements. All Tax sharing agreements or similar
agreements with respect to or involving the Company or its Polish Subsidiary and
a Person (other than the Company or its Polish Subsidiary) shall be terminated
as of the Closing Date and, after the Closing Date, neither the Company nor its
Polish Subsidiary shall be bound thereby or have any liability thereunder.
(b) Preparation of Tax Returns; Payment of Taxes. The Company shall
prepare and file, or cause to be prepared and filed, all Tax returns of or which
include the Company and its Subsidiaries that are required to be filed (after
giving effect to any valid extension of time in which to make such filing) on or
prior to the Closing Date. The Company shall pay (or cause to be paid) all Taxes
shown due with respect to such Tax returns.
(c) Tax Proceedings.
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EXECUTION VERSION
(i) Parent shall notify the Shareholder Representative in
reasonable detail of the receipt from a taxing authority of any notice of the
commencement of any Tax audit, examination or judicial or administrative
proceeding or receipt from a taxing authority of any proposed adjustment, demand
or notice of deficiency which if determined adversely to the relevant taxpayer
or after the lapse of time could be grounds for indemnification by the
Shareholders under Article VIII (each, a "Tax Proceeding").
(ii) Notwithstanding anything in this Section 5.13 to the
contrary, with respect to any Tax Proceeding, (A) Parent shall (x) control and
direct such Tax Proceeding through representatives of its own choosing and (y)
keep the Shareholder Representative reasonably informed of any significant
developments in such Tax Proceeding; (B) to the extent required, the Shareholder
Representative shall promptly execute or cause to be executed by the relevant
taxpayer reasonable powers of attorney or other documents authorizing such
representatives of the party controlling such Tax Proceeding to act in
connection with such Tax Proceeding; and (C) Parent shall not pay or compromise
any Tax liability asserted in such Tax Proceeding for which indemnification is
available hereunder without the Shareholder Representative's prior written
consent, which consent shall not be unreasonably withheld or delayed.
(iii) Parent and the Shareholder Representative shall
cooperate fully in connection with any Tax Proceeding. Such cooperation shall
include the retention and (upon the other party's request) the provision of
records and information which are reasonably relevant to any such Tax Proceeding
and making the Shareholder Representative or his representatives available on a
mutually convenient basis to provide additional information and explanation of
any material provided hereunder. Parent and the Shareholder Representative
further agree, upon request, to use their best efforts to obtain any certificate
or other document from any taxing authority or any other Person as may be
necessary to mitigate, reduce or eliminate any Tax that could be imposed
(including, but not limited to, with respect to the transactions contemplated
hereby).
5.15 Supplements to Disclosure Schedule. The Company shall supplement or
amend the Disclosure Schedule with respect to any matter arising after the date
of this Agreement which, if existing, occurring, or known as of the date of this
Agreement, would have caused any representation or warranty made by the Company
in this Agreement to not be true and accurate or which is necessary to correct
any information in such materials which has been rendered materially inaccurate
thereby. No such supplement or amendment to such materials shall be deemed to
have modified the representations, warranties and covenants of the Company for
the purpose of determining whether the conditions precedent of this Agreement
have been satisfied (including whether the condition in Section 6.2(a));
provided, however, that such supplement shall be deemed to have modified the
representations, warranties and covenants of the Company for purposes of
determining whether any representation or warranty is inaccurate or has been
breached or whether there has been any failure to perform or breach of any
covenant contained herein for which an Indemnified Party would be entitled to
indemnification hereunder.
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EXECUTION VERSION
ARTICLE VI
CONDITIONS TO CLOSING
6.1 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligation of each party hereto to consummate the Merger is subject
to the fulfillment or written waiver by Parent and the Company prior to the
Effective Time of each of the following conditions:
(a) Shareholder Approvals. This Agreement and the Merger shall have
been duly adopted by the consent of the stockholders of the Company, with the
sole exception of those stockholders set forth in Section 6.1 of the Disclosure
Schedule.
(b) No Injunction. No Governmental Entity of competent jurisdiction
shall have enacted, issued, promulgated, enforced or entered any statute, rule,
regulation, judgment, decree, injunction or other order (whether temporary,
preliminary or permanent) which is in effect and prohibits consummation of the
transactions contemplated by this Agreement.
(c) Regulatory Approvals. All regulatory approvals required to
consummate the transactions contemplated hereby shall have been obtained and
shall remain in full force and effect and all statutory waiting periods in
respect thereof shall have expired.
6.2 Conditions to Obligation of Parent and Merger Sub. The obligation of
Parent and Merger Sub to consummate the Merger is also subject to the
fulfillment or written waiver by Parent prior to the Effective Time of each of
the following conditions:
(a) Representations and Warranties. The representations and
warranties of the Company set forth in this Agreement shall be true and correct
in all material respects as of the date of this Agreement and as of the
Effective Date as though made on and as of the Effective Date (except that
representations and warranties that by their terms speak as of the date of this
Agreement or some other date shall be true and correct as of such date);
provided, however, that Parent shall have received a certificate, dated the
Effective Date, signed on behalf of the Company by the Chief Executive Officer
and the Chief Financial Officer of the Company to such effect.
(b) Performance of Obligations of the Company. The Company shall
have performed in all material respects all obligations required to be performed
by it under this Agreement at or prior to the Effective Time, and Parent shall
have received a certificate, dated the Effective Date, signed on behalf of the
Company by the Chief Executive Officer and the Chief Financial Officer of the
Company to such effect.
(c) Closing Deliveries. Parent shall have received the closing
deliveries listed in Section 7.1 of this Agreement.
(d) Termination of Plan. The obligations set forth in Section 1.6(c)
with respect to the Termination of the Plan shall have occurred.
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EXECUTION VERSION
(e) Redemption. The Redemption transactions with each of the
Redemption Shareholders shall be completed.
(f) Material Adverse Effect. From the date of this Agreement and the
Closing Date, there shall not have occurred any event, development, state of
circumstances, facts, or condition of any character that has had or would
reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect.
6.3 Conditions to Obligation of Company. The obligation of the Company to
consummate the Merger is also subject to the fulfillment or written waiver by
the Company prior to the Effective Time of each of the following conditions:
(a) Representations and Warranties. The representations and
warranties of the Parent and Merger Sub set forth in this Agreement shall be
true and correct in all material respects as of the date of this Agreement and
as of the Effective Date as though made on and as of the Effective Date (except
that representations and warranties that by their terms speak as of the date of
this Agreement or some other date shall be true and correct as of such date);
provided, however, that the Company shall have received a certificate, dated the
Effective Date, signed on behalf of the Company by the Chief Executive Officer
and the Chief Financial Officer of the Company to such effect.
(b) Performance of Obligations of Parent and Merger Sub. The Parent
and Merger Sub shall have performed in all material respects all obligations
required to be performed by them under this Agreement at or prior to the
Effective Time, and Parent shall have received a certificate, dated the
Effective Date, signed on behalf of the Parent and Merger Sub by the appropriate
officers of the Parent and Merger Sub to such effect.
(c) Closing Deliveries. The Company shall have received the closing
deliveries listed in Section 7.2 of this Agreement.
ARTICLE VII
CLOSING DELIVERIES OF THE PARTIES
7.1 Closing Deliveries of the Company and the Shareholders. At the
Closing, the Company shall deliver the following documents to Parent and/or
Merger Sub.
(a) Merger Certificate. The Company shall deliver to Parent for
filing with the Secretary of State of the State of Delaware a properly completed
and fully executed Certificate of Merger.
(b) Shareholder, Optionholders and Director Releases. Each of the
Shareholders (other than those Shareholders set forth in Section 6.1 of the
Disclosure Schedule) shall execute and deliver the Shareholders Release.
Optionholders representing 90% of the shares of Company Capital Stock into which
the Company Options outstanding immediately prior to the Effective Time may be
exercised shall execute and deliver the Shareholders Release. Each member of the
Board of Directors of the Company shall execute and deliver the Director
Release.
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EXECUTION VERSION
(c) Governmental and Third Party Consents. The Company shall deliver
to Parent all necessary consents, waivers and approvals of parties to any
Contract (including Lease Agreements or any insurance policies) set forth on
Section 2.6 to the Disclosure Schedule and any necessary consents, waivers and
approvals of Governmental Entities.
(d) Non-Competition and Non-Solicitation Agreements. The Company
shall provide evidence satisfactory to Parent that each Key Employee (i) has
executed and delivered a Non-Competition and Non-Solicitation Agreement in the
form attached hereto as Exhibit C and (ii) such Non-Competition and
Non-Solicitation Agreement shall be in effect as of the Effective Time.
(e) Resignation of Officers and Directors. The Company shall provide
evidence satisfactory to Parent that (effective as of the Effective Time) each
of the officers and directors of the Company and each of its Subsidiaries in
their capacities as such officers and directors has resigned and each such
resignation shall be in effect as of the Effective Time. Such resignations shall
include full releases of the Company and its Subsidiaries in form satisfactory
to Parent.
(f) Closing Date Cash Balance Statement. The Company shall deliver
the Closing Date Cash Balance Statement pursuant to Section 5.6 hereof.
(g) Statement of Expenses. The Company shall deliver the Statement
of Expenses pursuant to Section 5.9.
(h) Spreadsheet. The Company shall deliver to Parent the
Spreadsheet, which shall be certified as complete and correct by the Chief
Executive Officer and the Chief Financial Officer of the Company.
(i) Legal Opinion. Parent shall have received a legal opinion from
legal counsel to the Company, substantially in the form attached hereto as
Exhibit D.
(j) Certificate of Secretary of Company. The Company shall deliver a
certificate, validly executed by the Secretary of the Company, certifying as to
(i) the terms and effectiveness of the Charter Documents, (ii) the valid
adoption of resolutions of the Board of Directors of the Company (whereby the
Merger and the transactions contemplated hereunder were unanimously approved by
the Board of Directors), and (iii) that the Shareholders have adopted and
approved the Merger, this Agreement and the transactions contemplated hereby.
(k) Certificate of Good Standing. The Company shall deliver a
long-form certificate of good standing from the Secretary of State of the State
of Delaware or, in the case of the Company's Subsidiaries, the applicable
Governmental Entities in their respective jurisdictions of organization or
incorporation, all of which are dated within 5 days prior to Closing with
respect to the Company and each of its Subsidiaries.
(l) Certificate of Status of Foreign Corporation. The Company shall
deliver a Certificate of Status of Foreign Corporation of each of the Company
and each of its Subsidiaries from the applicable Governmental Entity in each
jurisdiction where it is required to be qualified to do business, all of which
are dated within 5 days prior to the Closing.
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EXECUTION VERSION
(m) FIRPTA Certificate. Parent shall have received a copy of a
properly executed statement in a form reasonably acceptable to Parent for
purposes of satisfying Parent's obligation under Treasury Regulation Section
1.1445-2(c)(3), validly executed by a duly authorized officer of the Company.
(n) Escrow Agreement. The Company and the Shareholder Representative
shall execute and deliver an escrow agreement, the form of which is attached as
Exhibit E (the "Escrow Agreement").
(o) Redemption. Each of the Redemption Shareholders shall have
executed and delivered a redemption agreement substantially in the form attached
hereto as Exhibit G.
7.2 Closing Deliveries of Parent. At the Closing, Parent shall deliver the
following to the Company and/or the Shareholders, as appropriate.
(a) Merger Consideration. Parent shall deliver the Initial
Consideration and deposit the Parent Escrow Amount and the Company Escrow
Amount, as provided in Article I.
(b) Escrow Agreement. Parent shall execute and deliver the Escrow
Agreement.
(c) Merger Certificate. Parent shall deliver to the Shareholder
Representative a copy of the fully-executed Certificate of Merger, and, after
receipt of the filed Certificate of Merger from the Secretary of State of the
State of Delaware, a copy of such filed certificate.
(d) Certificate of Secretary of Parent. The Parent shall deliver a
certificate, validly executed by the Secretary of the Parent, certifying as to
(i) the terms and effectiveness of the Charter Documents for Parent and Merger
Sub, (ii) to the extent required by Law, the valid adoption of resolutions of
the Board of Directors of the Parent and Merger Sub (whereby the Merger and the
transactions contemplated hereunder were approved by the Board of Directors),
and (iii) that the shareholders of Parent and Merger Sub, to the extent required
by Law or the Charter Documents, have adopted and approved the Merger, this
Agreement and the transactions contemplated hereby.
(e) Certificate of Good Standing. The Parent shall deliver a
long-form certificate of good standing from the Secretary of State of the State
of Michigan or, in the case of Merger Sub, the applicable Governmental Entities
in their respective jurisdictions of organization or incorporation, all of which
are dated within 5 days prior to Closing with respect to the Parent and Merger
Sub.
(f) Legal Opinion. Company shall have received a legal opinion from
legal counsel to the Parent, substantially in the form attached hereto as
Exhibit F.
(g) Third Party Consents. The Parent shall deliver to the Company
all material consents, waivers and approvals of parties to any Contract and any
necessary consents, waivers and approvals of Governmental Entities.
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EXECUTION VERSION
(h) Company Source Code/Documentation. The Parent shall deliver to
the Company a copy of the notice described in Section 5.13.
ARTICLE VIII
SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION; ESCROW
8.1 Survival of Representations and Warranties. The representations and
warranties of the Company and Parent contained in Article II, Article III and
Article IV of this Agreement, respectively, or in any certificate or other
instruments delivered at the Closing pursuant to this Agreement, shall survive
for a period of twenty-four months following the Closing Date.
8.2 Indemnification. Upon the Closing, Parent and its officers, directors,
Affiliates (including the Surviving Corporation), employees, agents and
representatives (each an "Indemnified Party," collectively, the "Indemnified
Parties"), shall be entitled to be indemnified from the Parent Escrow Amount
held in the Parent Escrow Fund against all claims (including without limitation
Third Party Claims), losses, liabilities, damages, diminutions in value,
deficiencies, costs, interest, awards, amounts paid in settlement, judgments,
penalties, and expenses, including reasonable attorneys' and consultants' fees
and expenses and including any such expenses incurred in connection with
investigating, defending against or settling any of the foregoing (hereinafter
individually a "Loss" and collectively "Losses"), incurred or sustained by the
Indemnified Parties, or any of them, directly or indirectly, arising out of or
related to (i) any breach or inaccuracy of a representation or warranty of the
Company, the Shareholders or Optionholders, as applicable, contained in this
Agreement, any Related Agreement or in any certificate or other instruments
delivered at the Closing pursuant to this Agreement, (ii) any failure by the
Company or the Shareholders, as applicable, to perform or comply with any
covenant applicable to any of them contained in this Agreement, any Related
Agreement or in any certificate or other instruments delivered at the Closing
pursuant to this Agreement or any Related Agreement, (iii) any claim involving
or related to the Redemption, and the per share price difference of such
Redemption, on the one hand, and the Merger Consideration and Additional
Consideration, on the other hand, paid hereunder, including appraisal rights,
dissenters' rights, breach of fiduciary duty or the effectiveness of the
Shareholders/Optionholders Release and Directors Release, (iv) any Excess Third
Party Expenses, (v) any claim against an Indemnified Party by a Shareholder,
Optionholder, or Redemption Shareholder with respect to any action taken or not
taken by the Shareholder Representative, (vi) any Losses (including any loss of
deductions by the Surviving Corporation) resulting from any payment to any
Employee that is determined to constitute an "excess parachute payment within
the meaning of Section 280G(b)(1) of the Code, (vii) any liability of the
Surviving Corporation under that certain engagement letter, dated January 7,
2005, by and between the Company and X X Xxxxxxxxx & Co., or (viii) any
liability for Taxes of the Company or its Polish Subsidiary incurred with
respect to or arising out of the sale, license or transfer of Intellectual
Property by or from the Polish Subsidiary to the Company. No Shareholder,
director or officer of the Company shall have any right of contribution,
indemnification or right of advancement from the Surviving Corporation or Parent
with respect to any Loss claimed by an Indemnified Party.
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EXECUTION VERSION
8.3 Third Party Claims.
(a) Promptly after receipt by any Indemnified Party of notice of the
commencement of any action by a third party in respect of which, if successful,
the Indemnified Party would be entitled to indemnification hereunder (a "Third
Party Claim"), the Indemnified Party shall notify each person that is obligated
to provide such indemnification (an "Indemnifying Party") thereof in writing,
but any failure to so notify the Indemnifying Party shall not relieve the
Indemnifying Party from any liability that it may have to the Indemnified Party
other than to the extent the Indemnifying Party is actually prejudiced thereby.
(b) The Indemnifying Party may assume control of the defense of the
Indemnified Party against the Third Party Claim with counsel reasonably
satisfactory to such Indemnified Party:
(i) within 30 days after receipt of such written notice, the
Indemnifying Party confirms in writing that the Indemnifying Party will defend
the Indemnified Party from and against the Losses the Indemnified Party may
incur as a result of or arising out of the Third Party Claim; provided that such
confirmation shall not obligate the Indemnifying Party to indemnify the
Indemnified Party;
(ii) the Third Party Claim does not seek an order, injunction,
non-monetary or other equitable relief against the Indemnified Party which the
Indemnified Party (in the case of Parent, acting reasonably through its board of
directors) determines reasonably and in good faith could, if successful,
materially interfere with or adversely affect in any material respect the
business, operations, assets, condition (financial or otherwise) or prospects of
the Indemnified Party;
(iii) the Indemnifying Party conducts the defense of the Third
Party Claim actively and diligently, keeps the Indemnified Party informed of
material developments with respect to the Third Party Claim and consults with
the Indemnified Party prior to making material strategic decisions with respect
to the defense of the Third Party Claim.
(c) So long as the Indemnifying Party is conducting the defense of
the Third Party Claim and the conditions set forth in Section 8.3(b) hereof are
being met:
(i) the Indemnified Party shall be entitled to participate in
the defense of such claim and to employ counsel at its own expense to assist in
the handling of such claim; provided, however, that the employment of such
counsel shall be at the expense of the Indemnifying Party if the Indemnified
Party determines in good faith that such participation is appropriate in light
of defenses not available to the Indemnifying Party, conflicts of interest or
other similar circumstances or if the Parent Escrow Fund has been depleted;
(ii) the Indemnifying Party shall obtain the prior written
approval of the Indemnified Party before entering into any settlement of such
claim or ceasing to defend against such claim (with such approval not to be
unreasonably withheld, conditioned or delayed);
(iii) no Indemnifying Party shall consent to the entry of any
judgment or enter into any settlement (without the prior written approval of the
Indemnified Party) that
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EXECUTION VERSION
does not include as an unconditional term thereof the giving by each claimant or
plaintiff to each Indemnified Party of a release from all liability in respect
of such claim (with such approval not to be unreasonably withheld, conditioned
or delayed); and
(iv) the Indemnifying Party shall not be liable to such
Indemnified Party hereunder for any legal expenses subsequently incurred by such
Indemnified Party in connection with the defense thereof other than reasonable
costs of investigation and of liaison counsel for the Indemnified Party;
provided, however, that the Indemnifying Party shall be liable for such legal
expenses if the Indemnified Party determines in good faith that the incurrence
of the same is appropriate in light of defenses not available to the
Indemnifying Party, conflicts of interest or other similar circumstances or if
the Parent Escrow Amount has been depleted.
(d) If any of the conditions set forth in Section 8.3(b) above
becomes unsatisfied, the Indemnified Party shall, after reasonable written
notice to the Indemnifying Party, have the right to defend such claim in such
manner as it may deem appropriate at the cost and expense of the Indemnifying
Party, and the Indemnifying Party will promptly reimburse the Indemnified Party
therefor out of the Parent Escrow Amount. The reimbursement of fees, costs and
expenses required by this Section 8.3 shall be made from the Parent Escrow Fund
by periodic payments during the course of the investigations or defense, as and
when bills are received or expenses incurred.
8.4 Escrow Fund; Escrow Period; Remedy.
(a) By virtue of this Agreement and to satisfy the indemnity
obligations provided for in Section 8.2 hereof, at the Effective Time, Parent
will deposit with the Escrow Agent the Parent Escrow Amount, such deposit of the
Parent Escrow Amount to constitute an escrow fund (the "Parent Escrow Fund") to
be governed by the terms set forth in the Parent Escrow Agreement. The
Indemnification Escrow Amount shall be available to compensate the Indemnified
Parties for any claims by such parties for any Losses suffered or incurred by
them and for which they are entitled to recovery under this Article VIII for a
period of two years after the date hereof (the "Escrow Period"). The right of
the Indemnified Parties to seek indemnification shall be limited solely and
exclusively to the Parent Escrow Amount. Subject to Section 8.4(b) below, after
the Escrow Period, any remaining portion of the Parent Escrow Fund shall be
distributed to the Represented Parties in accordance with the Parent Escrow
Agreement (less any amounts to cover any outstanding indemnification claims),
and no Person shall then have any further liability to the Indemnified Parties
for claims related to this Agreement, except with respect to fraud as set forth
in Section 8.4(b) below.
(b) If any claims for indemnification have been made pursuant to
this Article VIII and the same are still pending or unresolved at the expiration
of the Escrow Period, such claims will continue to be subject to the
indemnification provisions of this Agreement. Notwithstanding anything to the
contrary set forth in this Agreement, nothing in this Agreement shall limit the
liability of any Person (and the Parent Escrow Amount shall not be the exclusive
remedy) in respect of Losses arising out of any fraud related to this Agreement,
any Related Agreements or any certificates or other instruments delivered
pursuant to this Agreement on the part of such Person.
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EXECUTION VERSION
8.5 Indemnification Limitations.
(a) The Indemnified Parties shall have no recourse against the
Parent Escrow Amount to the extent that the aggregate Losses are less than
$150,000 (the "Basket"), such Basket only including individual Losses of
$2,000.00 or greater. Thereafter, liability shall be for the full amount of such
Losses without regard to the Basket or to the minimum individual Losses
described above. Notwithstanding anything herein to the contrary, the Basket and
minimum individual Losses set forth herein shall not apply to Losses related to
Sections 8.2(iii), 8.2(iv), 8.2(v), 8.2(vi), 8.2(vii) or 8.2(viii), or any
inaccuracy in the Closing Date Cash Balance Statement. After the Closing, the
provisions of this Article VIII shall be the sole and exclusive remedy for
Parent and Merger Sub and any other Indemnified Party with regard to any Loss
arising out of or related to this Agreement, the Related Agreements and the
transactions contemplated hereby and thereby.
(b) The amounts for which the Indemnifying Party shall be liable
hereunder shall be net of any insurance proceeds received by the Indemnified
Party in connection with the circumstances giving rise to the right of
indemnification.
(c) No Indemnified Party shall be entitled to recover consequential
or incidental Losses with respect to any breach of any representation or
warranty or non-performance of any obligation under this Agreement (or otherwise
relating to the transactions contemplated hereby), and under no circumstances
shall such damages be considered "Losses" under this Agreement; provided,
however, Losses shall include such consequential and incidental Losses in the
event that the Indemnified Party is liable for such Losses pursuant to a Third
Party Claim.
(d) Notwithstanding anything to the contrary contained herein, with
respect to indemnification claims (other than Third Party Claims) pursuant to
this Article VIII, in the event it is determined either by mutual agreement or
by a court of competent jurisdiction that the Indemnified Party is not entitled
to indemnification hereunder, Parent shall promptly reimburse all reasonable
fees and expenses incurred by the Shareholder Representative in defense of such
claim.
8.6 Shareholder Representative.
(a) Each of the Shareholders, Optionholders and Redemption
Shareholders (the "Represented Parties") shall have agreed to appoint Xxx
Xxxxxxxxx as its agent and attorney-in-fact, as the Shareholder Representative
for and on behalf of the Represented Parties to give and receive notices and
communications, to authorize payment to any Indemnified Party from the Parent
Escrow Fund in satisfaction of claims by any Indemnified Party, to object to
such payments, to agree to, negotiate, enter into settlements and compromises
of, and demand arbitration and comply with orders of courts and awards of
arbitrators with respect to such claims, to assert, negotiate, enter into
settlements and compromises of, and demand arbitration and comply with orders of
courts and awards of arbitrators with respect to, any other claim by any
Indemnified Party against the Parent Escrow Fund and to take all other actions
that are either (i) necessary or appropriate in the judgment of the Shareholder
Representative for the accomplishment of the foregoing or (ii) specifically
mandated by the terms of this Agreement.
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EXECUTION VERSION
Such agency may be changed by the Represented Parties from time to time upon not
less than 30 days prior written notice to Parent; provided, however, that the
Shareholder Representative may not be removed unless Represented Parties with at
least a two-thirds (2/3rds) interest of the Parent Escrow Fund agree to such
removal and to the identity of the substituted agent. A vacancy in the position
of Shareholder Representative may be filled by the Represented Parties of at
least a majority in interest of the Parent Escrow Fund. No bond shall be
required of the Shareholder Representative, and the Shareholder Representative
shall not receive any compensation for its services. Notices or communications
to or from the Shareholder Representative shall constitute notice to or from the
Represented Parties as it sent or received from all Represented Parties.
(b) The Shareholder Representative shall not be liable for any act
done or omitted hereunder as Shareholder Representative while acting in good
faith and in the exercise of reasonable judgment. The Represented Parties on
whose behalf the Parent Escrow Amount was contributed to the Parent Escrow Fund
shall indemnify the Shareholder Representative and hold the Shareholder
Representative harmless against any loss, liability or expense incurred without
gross negligence or bad faith on the part of the Shareholder Representative and
arising out of or in connection with the acceptance or administration of the
Shareholder Representative's duties hereunder, including the reasonable fees and
expenses of any legal counsel retained by the Shareholder Representative. A
decision, act, consent or instruction of the Shareholder Representative shall
constitute a decision of the Represented Parties and shall be final, binding and
conclusive upon the Represented Parties; and the Escrow Agent and Parent may
rely upon any such decision, act, consent or instruction of the Shareholder
Representative as being the decision, act, consent or instruction of the
Represented Parties. The Escrow Agent and Parent are hereby relieved from any
liability to any person for any acts done by them in accordance with such
decision, act, consent or instruction of the Shareholder Representative.
(c) The Company Escrow Fund shall be available solely to the
Shareholder Representative for purposes of funding any fees and expenses
incurred in connection with defending any indemnification claim under this
Article VIII or the Shareholder Representative's fulfillment of any of its
obligations as Shareholder Representative under this Agreement or any Related
Agreement. The Shareholder Representative may choose the Company Escrow Agent in
his sole discretion. The Company Escrow Agreement shall be executed by the
Shareholder Representative and the Company Escrow Agent and shall be in such
form as the Shareholder Representative determines in its sole discretion. The
Company Escrow Fund shall be drawn upon in the sole discretion of the
Shareholder Representative for the purposes set forth in the first sentence of
this Section 8.6(c). Any amounts remaining in the Company Escrow Fund at the end
of the Escrow Period shall be distributed in the same manner and upon the same
timing as any remaining funds would be distributed from the Parent Escrow Fund
following the Escrow Period.
ARTICLE IX
TERMINATION
9.1 Termination. This Agreement may be terminated, and the Merger may be
abandoned, at any time prior the Effective Time as follows:
(a) Mutual Consent. By the mutual consent of Parent and the Company.
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EXECUTION VERSION
(b) Breach. By Parent or the Company, in the event of either: (i) a
breach by the other party of any representation or warranty contained herein; or
(ii) a breach by the other party of any of the covenants or agreements contained
herein, provided that such breach (whether under (i) or (ii)) would be
reasonably likely, individually or in the aggregate with other breaches, to
result in a Material Adverse Effect on the breaching party (either (i) or (ii)
above being a "Terminating Breach"); provided, however, that, if such
Terminating Breach is curable by the Company or Parent, as the case may be,
through the exercise of its reasonable best efforts and for so long as the
Company or Parent, as the case may be, continues to exercise such reasonable
best efforts (such period not to exceed thirty (30) days), neither Parent nor
the Company, respectively, may terminate this Agreement under this Section
9.1(b), and provided, further, that the right to terminate this Agreement
pursuant to this Section 9.1(b) shall not be available to any party whose breach
of or failure to fulfill its obligations under this Agreement resulted in the
failure of any such condition.
(c) Delay. By Parent or the Company, in the event that the Merger is
not consummated by May 31, 2005, except to the extent that the failure of the
Merger then to be consummated arises out of or results from a breach of this
Agreement by the party seeking to terminate pursuant to this Section 9.1(c).
(d) Governmental Entity. By either Parent or the Company if a court
of competent jurisdiction or Governmental Entity shall have issued a
nonappealable final order, decree or ruling or taken any other action having the
effect of permanently restraining, enjoining or otherwise prohibiting the
Merger.
(e) Shareholder Approval. By Parent or the Company if this Agreement
and the Merger shall fail to receive the necessary approval of the Company's
shareholders by the Closing Date, as required under the Company's Certificate of
Incorporation, by-laws and Delaware Law; provided, however that the party
seeking to terminate this Agreement pursuant to this Section 9.1(e) shall not be
in breach of any of its obligations hereunder.
(f) Superior Proposal. By the Company following the receipt by the
Company after the date hereof, under circumstances not involving any breach of
the provisions of Section 5.3, of a Superior Proposal; provided that at such
time (i) the Company is not in breach of its obligations under Section 5.3
hereof and (ii) on or after the fifth Business Day following delivery of a
notice from the Company to the Parent (as described in Section 5.3), the Company
Board determines in good faith, after consultation with and advice from the
Company's attorneys and financial advisors, and following any proposal made by
Parent in writing supplementing the terms hereof during such five Business Day
period, that the failure to terminate this Agreement would be inconsistent with
its fiduciary duties under applicable law.
9.2 Effect of Termination. Except as otherwise set forth herein, in the
event of the termination of this Agreement pursuant to Section 9.1, there shall
be no liability on the part of any party hereto or any of its affiliates,
directors, officers, employees or shareholders and this Agreement shall
otherwise forthwith become void. Notwithstanding the first sentence of this
Section 9.2, nothing herein shall prevent any party from seeking all remedies
available at law or equity for a breach of this Agreement prior to Closing,
including specific performance.
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EXECUTION VERSION
9.3 Fees and Expenses.
(a) If the Company terminates this Agreement pursuant to Section
9.1(f), then the Company shall pay to Parent, at the time of and conditioned
upon the consummation of a transaction constituting the Superior Proposal, a
termination fee in the amount of $1,400,000, provided that a definitive
acquisition agreement with respect to such transaction is executed within nine
months following the termination hereof.
(b) If Parent or the Company terminates this Agreement pursuant to
Section 9.1(e), the Company shall pay Parent at the time of such termination an
amount equal to Parent's actual and reasonably documented out-of-pocket expenses
incurred by Parent in connection with the Merger, this Agreement, the Related
Agreements and the consummation of the Transactions; provided, however, that the
maximum amount payable pursuant to this Section 9.3(b) shall in no event exceed
$150,000.
(c) Any payments required to be made pursuant to this Section 9.3
shall be made within five (5) business days by wire transfer of same day funds
to an account designated by Parent.
ARTICLE X
GENERAL PROVISIONS
10.1 Definitions. For all purposes of this Agreement, the following terms
shall have the following respective meanings:
"Additional Consideration" is defined in Section 1.10.
"Affiliate" as used in Section 2.24 is defined in Section 2.24(a),
otherwise "Affiliate" shall mean with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under common control with
such Person.
"Agreement" is defined in the Preamble of this Agreement.
"Acquisition Proposal" means either (i) a transaction pursuant to which
any person (or group of persons) other than the Parent or its affiliates (a
"Third Party") acquires 50% or more of the outstanding shares of Company Common
Stock pursuant to a tender offer or exchange offer or otherwise, (ii) a merger
or other business combination involving the Company pursuant to which any Third
Party acquires 50% or more of the outstanding shares of the Company Common Stock
or of the entity surviving such merger or business combination, (iii) any other
transaction pursuant to which any Third Party acquires control of assets
(including for this purpose the outstanding equity securities of Subsidiaries of
the Company, and the entity surviving any merger or business combination
including any of them) of the Company having a fair market value equal to 50% or
more of the fair market value of all the assets of the Company immediately prior
to such transaction, (iv) any public announcement by a Third Party of a
proposal, plan or intention to do any of the foregoing or any agreement to
engage in any of the foregoing, or (v) a self tender offer.
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EXECUTION VERSION
"Balance Sheet Date" is defined in Section 2.8(a).
"Basket" is defined in Section 8.5(a).
"Books and Records" is defined in Section 5.11.
"Business" shall mean the business of developing, creating, licensing or
selling the Company Products.
"Business Day[s]" shall mean each day that is not a Saturday, Sunday or
holiday on which banking institutions located in Detroit, Michigan are
authorized or obligated by law or executive order to close.
"CERCLA" is defined in Section 2.22(g)(i).
"Certificate of Incorporation" is defined in Section 2.1.
"Certificate of Merger" is defined in Section 1.2.
"Charter Documents" is defined in Section 2.1.
"Clean Air Act" is defined in Section 2.22(g)(i).
"Clean Water Act" is defined in Section 2.22(g)(i).
"Closing" is defined Section 1.2.
"Closing Date" is defined in Section 1.2.
"Closing Date Cash Balance Statement" is defined in Section 5.8.
"COBRA" is defined in Section 2.24(a).
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Company" is defined in the Preamble of this Agreement.
"Company Authorizations" is defined in Section 2.19.
"Company Capital Stock" shall mean the Company Common Stock and any other
shares of capital stock, if any, of the Company, taken together.
"Company Common Stock" shall mean shares of common stock, without par
value per share, of the Company.
"Company Employee Plan" is defined in Section 2.24(a).
"Company Escrow Agent" any institution acceptable to the Shareholder
Representative in its sole discretion.
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EXECUTION VERSION
"Company Escrow Amount" is defined in Section 1.6(b)(ii).
"Company Escrow Fund" means that amount held in the account into which the
Company Escrow Amount has been deposited with the Company Escrow Agent.
"Company Material Adverse Effect" shall mean a Material Adverse Effect
with respect to the Company.
"Company Option Agreement" is defined in Section 1.7(c).
"Company Options" shall mean all issued and outstanding options, warrants
and other rights (including commitments to grant options, warrants or other
rights) to purchase or otherwise acquire Company Common Stock (whether or not
vested) held by any person or entity.
"Company Products" is defined in Section 2.16(c).
"Company Source Code/Documentation" is defined in Section 5.13.
"Company Stock Certificates" is defined in Section 1.7(c).
"Company Unvested Capital Stock" shall mean any shares of Company Capital
Stock issued and outstanding immediately prior to the Effective Time that are
unvested or are subject to a repurchase option, risk of forfeiture or other
condition under any applicable stock restriction agreement or other agreement
with the Company.
"Company's Auditors" is defined in Section 2.8(a).
"Conflict" is defined in Section 2.6.
"Contaminant" is defined in Section 2.16(s).
"Contract" is any mortgage, indenture, lease, contract, covenant or other
agreement, instrument, commitment, permit, concession, franchise or license.
"Current Balance Sheet" is defined in Section 2.8(a).
"Customer Information" is defined in Section 2.15(f).
"Deal Expenses" is defined in Section 1.6(h).
"Delaware Law" is defined in Section 1.1.
"Disabling Code" is defined in Section 2.16(s).
"Disclosure Schedule" shall mean that certain schedule, dated the date
hereof, supplied by the Company to Parent disclosing certain matters to Parent.
"DOL" is defined in Section 2.24(a).
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EXECUTION VERSION
"Effective Time" is defined in Section 1.2.
"Employee" is defined in Section 2.24(a).
"Employee Agreement" is defined in Section 2.24(a).
"End User Agreement" shall mean shall mean customer agreements (including
the Company's standard end user license agreement that is presented to an end
user during installation of the Company's Products) entered into in the ordinary
course of business that provide users the non-exclusive right to use a Company
Product (in the case of Company Products that include software, such agreement
providing only an object code license to such software) or non-exclusive right
to receive services of the Company, but provides no rights to distribute Company
Products or make any modifications thereto.
"Environmental Claims" is defined in Section 2.22(g)(iii).
"Environmental Laws" is defined in Section 2.22(g)(i).
"Environmental Permits" means all environmental approvals, permits,
licenses, clearances and consents
"EPCRA" is defined in Section 2.22(g)(i).
"Equipment" is defined in Section 2.15(e).
"ERISA" is defined in Section 2.24(a).
"Escrow Agent" shall mean X.X. Xxxxxx Xxxxx & Co., or another institution
acceptable to Parent and the Shareholder Representative.
"Escrow Period" is defined in Section 8.4(a).
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
"Exchange Agent" is defined in Section 1.7(a).
"Excess Third Party Expenses" shall mean the amount of Third Party
Expenses paid or payable by the Company as of the Closing Date in excess of the
sum of $900,000.
"Financials" is defined in Section 2.8(a).
"FIFRA" is defined in Section 2.22(g)(i).
"FMLA" is defined in Section 2.24(a).
"GAAP" shall mean United States generally accepted accounting principles
consistently applied.
"Governmental Entity" is defined in Section 2.7.
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EXECUTION VERSION
"Hazardous Material" is defined in Section 2.22(g)(ii).
"Hazardous Materials Transportation Act" is defined in Section 2.22(g)(i).
"HIPAA" is defined in Section 2.24(a).
"HSR Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended.
"Indemnified Party" or "Indemnified Parties" is defined in Section 8.2(a).
"Indemnifying Party" is defined in Section 8.3(a).
"Initial Consideration" is defined in Section 1.6(b).
"Intellectual Property" is defined in Section 2.16(a).
"Interim Financials" is defined in Section 2.8(a).
"International Employee Plan" is defined in Section 2.24(a).
"IRS" is defined in Section 2.24(a).
"Key Employees" shall mean the following individuals: Xxx Xxxxxxxxx, Xxxxx
Xxxxxx, and Xxxxx Xxxxxx.
"Knowledge" or "Known" shall mean, with respect to the Company, as
concerns any matter in question, the actual knowledge of Xxx Xxxxxxxxx, Xxxxx
Xxxxxx, Xxxxx Xxxxxx, Xxx Xxxxxxxx and Xxxxxxx Xxxxxxxx (the "Named Officers")
with respect to such matter after making reasonable inquiry of the officers of
the Company and its Subsidiary; provided, that if upon such inquiry, a Named
Officer learns of a fact or circumstance relating to the matter in question that
a reasonably prudent person would investigate further, such Named Officer shall
make reasonable inquiry of the underlying fact or circumstance.
"Lease Agreements" is defined in Section 2.15(b).
"Leased Real Property" is defined in Section 2.15(a).
"License Agreement" is defined in Section 2.16(b).
"Lien" shall mean any lien, pledge, charge, claim, mortgage, liability,
security interest, right of first refusal, title retention agreement, third
party right or other encumbrance of any sort.
"Loss" or "Losses" is defined in Section 8.2(a).
"Material Adverse Effect" means, with respect to Parent or the Company,
any effect that (i) is material and adverse to the financial position, results
of operations or business of Parent and its Subsidiaries taken as a whole or the
Company and its Subsidiaries taken as a whole, respectively, or (ii) would
materially impair the ability of either Parent or the Company to
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EXECUTION VERSION
perform its obligations under this Agreement or otherwise materially threaten or
materially impede the consummation of the Merger and the other transactions
contemplated by this Agreement; provided, however, that Material Adverse Effect
shall not be deemed to include the impact of (a) any change in laws and
regulations or interpretations thereof by courts or governmental authorities
generally applicable to businesses of the kind and nature conducted by Parent
and the Company, (b) any change in GAAP or regulatory accounting principles
generally applicable to businesses of the kind and nature conducted by Parent
and the Company, (c) any change arising or resulting from general industry,
economic or capital market conditions that affects Parent or the Company, as
applicable (or the markets in which Parent or the Company, as applicable,
competes) in a manner not disproportionate to the manner in which such
conditions affect comparable companies in the industries or markets in which the
Company or Parent, as applicable, competes, (d) any act or omission of the
Company (or any of its Subsidiaries) taken with the prior written consent of
Parent, (e) any failure by the Company to meet its internal projections or
forecasts, or (f) the expenses reasonably incurred by the Company in entering
into this Agreement and consummating the transactions contemplated by this
Agreement and the expenses associated with the termination of any compensation
and benefit plan as and to the extent contemplated herein or requested by
Parent.
"Material Contract" or "Material Contracts" is defined in Section 2.17(b).
"Merger" is defined in the Recitals.
"Merger Consideration" is defined in Section 1.6(a).
"Merger Sub" is defined in the Preamble of this Agreement.
"Multiemployer Plan" is defined in Section 2.24(a).
"Net Diluted Outstanding Shares" is defined in Section 1.6(a)(i).
"Net Option Shares" means that number of shares of Company Capital Stock
issuance upon the exercise of Company Options outstanding immediately prior to
the cash-out of such Company Options as provided in Section 1.6(b) hereof, less
such number of shares of Capital Stock equal to (x) the aggregate exercise price
of all such outstanding Company Options divided by (y) the Per Share Merger
Consideration.
"Open Source Materials" is defined in Section 2.16(t).
"Optionholders" shall mean the individuals who hold Company Options.
"Optionholder Escrow Contribution" shall mean the Option Payment for an
Optionholder multiplied by a fraction, the numerator of which shall be the total
of the aggregate Option Payments pursuant to Section 1.6(c) and the denominator
of which shall be the Merger Consideration.
"Parent" is defined in the Preamble of this Agreement.
"Parent Escrow Amount" is defined in Section 1.6(b).
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EXECUTION VERSION
"Parent Escrow Fund" is defined in Section 8.4(a).
"Parent Material Adverse Effect" shall mean a Material Adverse Effect with
respect to Parent.
"Pension Plan" is defined in Section 2.24(a).
"Person" shall mean an individual or entity, including a partnership,
limited liability company, a corporation, an association, a joint stock company,
a trust, a joint venture, an unincorporated organization, or a governmental
entity (or any department, agency, or political subdivision thereof).
"Plan" shall mean the Company's 1999 Stock Option Plan, as amended.
"Polish Subsidiary" is defined in Section 2.4(a).
"Pro Rata Portion" shall mean, with respect to each Shareholder and/or
Optionholder, a percentage obtained by dividing (x) the number shares of Company
Capital Stock or Net Option Shares under Company Options owned or held by such
individual immediately prior to the Effective Time by (y) the Net Diluted
Outstanding Shares.
"Redemption" is defined in Section 1.6(g).
"Redemption Amount" is defined in Section 1.6(g).
"Redemption Shareholders" is defined in Section 1.6(g).
"Related Agreements" shall mean the Escrow Agreement, the Employment
Agreements, the Non-Competition Agreements, the Shareholder Non-Competition
Agreements, and all other agreements and certificates entered into by the
Company and the Shareholders in connection with the transactions contemplated
hereby.
"Represented Parties" is defined in Section 8.6(a).
"Returns" is defined in Section 2.13(b)(i).
"SEC" shall mean the United States Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Shareholder" is a holder of shares of Company Capital Stock after the
Redemption and immediately prior to the Effective Time.
"Shareholder Loan" is defined in Section 1.6(e).
"Shareholder Representative" is defined in the Preamble of this Agreement.
"Shareholder Written Consent" is defined in the Recitals.
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"Shareholders/Optionholders Release" is defined in Section 5.4.
"Spreadsheet" is defined in Section 5.10.
"Statement of Expenses" is defined in Section 5.9.
"Stub Period Financials" is defined in Section 2.8(a).
"Subsidiary" or "Subsidiaries" means, individually or collectively, with
respect to any Person, any entity of which securities or other ownership
interests having ordinary voting power to elect a majority of the board of
directors or other persons performing similar functions are at any time directly
or indirectly owned by such Person.
"Subsidiary Certificate of Incorporation" is defined in Section 2.4(b).
"Subsidiary Charter Documents" is defined in Section 2.4(b).
"Superior Proposal" means any bona fide Acquisition Proposal not solicited
by the Company or by any Affiliate or agent of the Company, which contains no
financing contingency, that the Company Board determines in good faith, after
consultation with and advice from the Company's attorneys and financial
advisors, based upon such matters as it deems relevant, that the Acquisition
Proposal would, if consummated, result in a transaction more favorable to the
Shareholders from a financial point of view than the Merger.
"Surviving Corporation" is defined in Section 1.1.
"Tax" or "Taxes" are defined in Section 2.13(a).
"Third Party Claim" is defined in Section 83(a).
"Third Party Expenses" shall mean all fees and expenses incurred in
connection with the Merger including, without limitation, all legal, accounting,
financial advisory, consulting and all other fees and expenses of third parties
incurred by a party in connection with the negotiation and effectuation of the
terms and conditions of this Agreement and the transactions contemplated hereby.
"Total Consideration" is defined in Section 1.6(a).
"Toxic Substances Control Act" is defined in Section 2.22(g)(i).
"Year-End Financials" is defined in Section 2.8(a)
10.2 Notices. Any notices or other communications required or permitted
under this Agreement shall be sufficiently given if in writing and (a) hand
delivered, including delivery by courier services, or (b) sent by certified
mail, return receipt requested, postage prepaid addressed to the recipient at
the address stated below, or to such other address as the party concerned may
substitute by written notice to the other. All notices hand delivered shall be
deemed received on the day of delivery. All notices forwarded by mail shall be
deemed received on the date two (2)
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days (excluding Saturdays, Sundays and legal holidays when the U.S. mail is not
delivered) immediately following date of deposit in the U.S. mail; provided,
however, the return receipt indicating the date upon which the notice is
received shall be prima facie evidence that such notice was received on the date
of the return receipt. Addresses may be changed by giving notice of such change
in the manner provided herein. Unless and until such written notice is received,
the last address given shall be deemed to continue in effect for all purposes.
(a) If to Parent or Sub, to:
Compuware Corporation
Xxx Xxxxxx Xxxxxxx
Xxxxxxx, Xxxxxxxx 00000
Facsimile No.: (000) 000-0000
Attention: General Counsel
with a copy to (which copy shall not constitute notice):
Xxxxxx Xxxxxxx PLLC
000 Xxxxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Facsimile No.: (000) 000-0000
Attention: Xxxx X. Xxxx
(b) If to the Shareholders Representative:
Xxx Xxxxxxxxx
00 Xxxxxxxx Xx.
Xxxx Xxxxxxxx, XX 00000
with a copy to (which copy shall not constitute notice):
Xxxxxx, XxXxxxxxx & Fish, LLP
000 Xxxxxxx Xxxxxxxxx
Xxxxxx, XX 00000-0000
Facsimile No.: (000) 000-0000
Attention: Xxxxxxxxx X. Xxxxxxx
10.3 Interpretation. The terms of this Agreement are contractual and not
mere recitals. Any pronouns in this Agreement that refer to a particular gender
mean and refer to the appropriate gender or neuter when applied to a particular
party, person or entity. Unless otherwise stated, all references in this
Agreement to paragraph, subparagraph, section, subsection, clause and subclause
are intended to refer to paragraphs, subparagraphs, sections, subsections,
clauses and subclauses, respectively, of this Agreement. The parties acknowledge
and agree that titles and headings for particular paragraphs, sections and
subsections of this Agreement have been inserted solely for reference purposes.
As a result, Section and paragraph headings, titles or captions should not be
used to interpret or construe the terms of this Agreement. Except as to words or
phrases specifically defined in this Agreement, the parties
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agree that all words and phrases selected to state the terms of this Agreement
are to be interpreted in accordance with their plain and generally prevailing
meaning and not with regard to any different meaning that any of the parties
might otherwise attach to a particular word or phrase. The parties further
acknowledge that, as a result of either drafting or negotiating specific terms,
or as a result of approving language selected by others to state specific terms,
they are each and all equally responsible for the wording of the terms of this
Agreement. As a result, the parties agree and acknowledge that in interpreting
this Agreement, the rule of contractual interpretation and construction that
provides that an ambiguity in the terms of an agreement shall be construed
against the party drafting such term does not apply to the interpretation or
construction of the terms of this Agreement.
10.4 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement. This
Agreement shall become effective when one or more counterparts have been signed
by each of the parties and delivered to the other parties, it being understood
that all parties need not sign the same counterpart.
10.5 Entire Agreement; Assignment; Amendment. This Agreement, the Exhibits
hereto, the Disclosure Schedule, the Confidentiality Agreement, and the Related
Agreements (i) contain the entire agreement and understanding between the
parties with respect to the subject matter herein identified and merges and
integrates any and all previous and contemporaneous implied agreements (in fact
or law), between or among the parties concerning such matters, and (ii) shall
not be assigned by operation of law or otherwise, except that Parent may assign
its rights and delegate its obligations hereunder to its Affiliates as long as
Parent remains ultimately liable for all of Parent's obligations hereunder. This
Agreement may be amended by the parties hereto only by execution of an
instrument in writing signed on behalf of the party against whom enforcement is
sought.
10.6 No Third Party Beneficiaries. The terms of this Agreement are
intended solely for the benefit of the parties and are not intended to inure,
and will not inure, to the benefit of any other Person.
10.7 Severability. If any provision of this Agreement or portion of this
Agreement is found to be wholly or partially invalid, illegal or unenforceable
in any judicial proceeding, then such provision shall be deemed to be modified
or restricted to the extent and in the manner necessary to render the same valid
and enforceable, or shall be deemed excised from this Agreement, as the case may
require, and this Agreement shall be construed and enforced to the maximum
extend permitted by law, as if such provision had been originally incorporated
in this Agreement as so modified or restricted, or as if such provision had not
been originally incorporated in this Agreement, as the case may be.
10.8 Governing Law. This Agreement and the respective rights and
obligations of the parties under this Agreement shall be governed by, and shall
be determined under, the internal laws of the State of Delaware applicable to
contracts between residents of the State of Delaware to be performed solely in
the State of Delaware, i.e., without regard to choice of law principles. Any
action involving this Agreement shall be brought and maintained solely in the
Court of Chancery of the State of Delaware. Each of the parties hereto
irrevocably consents to the exclusive jurisdiction and venue of the Court of
Chancery in the State of Delaware, in connection
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with any matter based upon or arising out of this Agreement or the matters
contemplated herein, agrees that process may be served upon them in any manner
authorized by the laws of the State of Delaware for such persons and waives and
covenants not to assert or plead any objection which they might otherwise have
to such jurisdiction, venue and such process.
10.9 Rules of Construction. The parties hereto agree that they have been
represented by counsel during the negotiation, preparation 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.
10.10 Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
WAIVES ALL RIGHT TO TRIAL BY JURY AND ANY ACTION, PROCEEDING OR COUNTERCLAIM
(WHETHER BASED ON CONTRACT, TORT, OR OTHERWISE) ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR THE ACTIONS OF ANY PARTY HERETO IN NEGOTIATION,
ADMINISTRATION, PERFORMANCE OR ENFORCEMENT HEREOF.
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IN WITNESS WHEREOF, Parent, Merger Sub, the Company, and the Shareholder
Representative have caused this Agreement to be signed, all as of the date first
written above.
ADLEX, INC.
By: /s/ Xxx Xxxxxxxxx
---------------------------------------
Name: Xxx Xxxxxxxxx
Title: CEO
COMPUWARE CORPORATION
By: /s/ Xxxxx Xxxxxxxx
---------------------------------------
Name: Xxxxx Xxxxxxxx
Title: Sr. VP & CFO
COMPUWARE ACQUISITION CORP.
By: /s/ Xxxxx Xxxxxxxx
---------------------------------------
Name: Xxxxx Xxxxxxxx
Title: Sr. VP & CFO
EXECUTION VERSION
SHAREHOLDERS' REPRESENTATIVE
/s/ Xxx Xxxxxxxxx
---------------------------------------------------
Xxx Xxxxxxxxx, as Shareholders' Representative
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