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AGREEMENT AND PLAN OF MERGER
AND
REORGANIZATION
among
FIRST CONSULTING GROUP, INC.,
A DELAWARE CORPORATION;
FOXTROT ACQUISITION SUB, INC.,
A DELAWARE CORPORATION;
and
INTEGRATED SYSTEMS CONSULTING GROUP, INC.,
A PENNSYLVANIA CORPORATION
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DATED AS OF SEPTEMBER 9, 1998
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TABLE OF CONTENTS
Page
SECTION 1.DESCRIPTION OF TRANSACTION.....................................2
1.1 Merger of Merger Sub into the Company..................2
1.2 Effect of the Merger...................................2
1.3 Closing; Effective Time................................2
1.4 Certificate of Incorporation and Bylaws;
Directors and Officers............................2
1.5 Conversion of Shares...................................3
1.6 Stock Options and Warrants.............................4
1.7 Closing of the Company's Transfer Books................4
1.8 Exchange of Certificates...............................4
1.9 Dissenting Shares......................................5
1.10 Tax Consequences.......................................6
1.11 Accounting Consequences................................6
1.12 Further Action.........................................6
SECTION 2.REPRESENTATIONS AND WARRANTIES OF THE COMPANY..................6
2.1 Due Organization; Subsidiaries; Etc....................6
2.2 Articles of Incorporation and Bylaws...................7
2.3 Capitalization, Etc....................................7
2.4 SEC Filings; Financial Statements......................9
2.5 Absence of Changes....................................10
2.6 Leasehold; Equipment..................................12
2.7 Title to Assets.......................................12
2.8 Receivables; Significant Customers....................12
2.9 Proprietary Assets....................................13
2.10 Contracts.............................................15
2.11 Year 2000 Liabilities.................................17
2.12 Compliance with Legal Requirements....................18
2.13 Certain Business Practices............................18
2.14 Governmental Authorizations...........................18
2.15 Tax Matters...........................................18
TABLE OF CONTENTS
(Continued)
Page
2.16 Employee and Labor Matters; Benefit Plans.............19
2.17 Environmental Matters.................................22
2.18 Insurance.............................................22
2.19 Transactions with Affiliates..........................23
2.20 Legal Proceedings; Orders.............................23
2.21 Authority; Inapplicability of Anti-takeover Statutes;
Binding Nature of Agreement...................23
2.22 No Existing Discussions...............................24
2.23 Accounting Matters....................................24
2.24 Vote Required.........................................24
2.25 Non-Contravention; Consents...........................24
2.26 Fairness Opinion......................................25
2.27 Financial Advisor.....................................25
2.28 Full Disclosure.......................................25
SECTION 3.REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB.......26
3.1 Organization, Standing and Power......................26
3.2 Capitalization, Etc...................................26
3.3 SEC Filings; Financial Statements.....................27
3.4 Disclosure............................................27
3.5 Absence of Certain Changes or Events..................28
3.6 Authority; Binding Nature of Agreement................28
3.7 Non-Contravention; Consents...........................28
3.8 Vote Required.........................................29
3.9 Valid Issuance........................................29
3.10 Accounting Matters....................................29
3.11 Fairness Opinion......................................29
3.12 Tax Matters...........................................29
3.13 Environmental Matters.................................30
3.14 Significant Customers.................................30
3.15 Year 2000 Liabilities.................................31
TABLE OF CONTENTS
(Continued)
Page
SECTION 4.CERTAIN COVENANTS OF THE COMPANY..............................31
4.1 Access and Investigation..............................31
4.2 Operation of the Company's Business...................32
4.3 No Solicitation.......................................35
SECTION 5.ADDITIONAL COVENANTS OF THE PARTIES...........................36
5.1 Registration Statement; Joint Proxy
Statement/Prospectus...........................36
5.2 Company Shareholders' Meeting.........................37
5.3 Parent Stockholders' Meeting..........................38
5.4 Regulatory Approvals..................................39
5.5 Stock Options.........................................39
5.6 Form S-8..............................................40
5.7 Warrants..............................................40
5.8 Indemnification of Officers and Directors.............40
5.9 Pooling of Interests; Tax Free Reorganization.........41
5.10 Additional Agreements.................................41
5.11 Confidentiality.......................................42
5.12 Disclosure............................................42
5.13 Tax Matters...........................................42
5.14 Resignation of Officers and Directors.................42
5.15 Nasdaq Listing........................................42
5.16 FIRPTA Matters........................................43
5.17 Parent Board of Directors.............................43
5.18 Access to Information.................................43
SECTION 6. CONDITIONS PRECEDENT TO OBLIGATIONS
OF PARENT AND MERGER SUB..............................43
6.1 Accuracy of Representations...........................43
6.2 Performance of Covenants..............................43
6.3 Effectiveness of Registration Statement...............44
TABLE OF CONTENTS
(Continued)
Page
6.4 Stockholder Approval..................................44
6.5 Consents..............................................44
6.6 Agreements and Documents..............................44
6.7 No Material Adverse Change............................45
6.8 FIRPTA Compliance.....................................45
6.9 Listing...............................................45
6.10 No Restraints.........................................45
6.11 No Governmental Litigation............................45
6.12 No Other Litigation...................................45
SECTION 7.CONDITIONS PRECEDENT TO OBLIGATION OF THE COMPANY.............45
7.1 Accuracy of Representations...........................46
7.2 Performance of Covenants..............................46
7.3 Effectiveness of Registration Statement...............46
7.4 Stockholder Approval..................................46
7.5 Documents.............................................46
7.6 No Material Adverse Change............................47
7.7 Listing...............................................47
7.8 No Restraints.........................................47
SECTION 8.TERMINATION...................................................47
8.1 Termination...........................................47
8.2 Notice of Termination; Effect of Termination..........48
8.3 Expenses; Termination Fees............................48
SECTION 9.MISCELLANEOUS PROVISIONS......................................49
9.1 Amendment.............................................49
9.2 Waiver................................................49
9.3 No Survival of Representations and Warranties.........49
9.4 Entire Agreement; Counterparts........................49
9.5 Applicable Law; Jurisdiction..........................50
9.6 Disclosure Schedule...................................50
TABLE OF CONTENTS
(Continued)
Page
9.7 Attorneys' Fees.......................................50
9.8 Assignability.........................................50
9.9 Notices...............................................50
9.10 Cooperation...........................................51
9.11 Construction..........................................51
AGREEMENT AND PLAN
OF
MERGER AND REORGANIZATION
THIS AGREEMENT AND PLAN OF MERGER AND REORGANIZATION ("Agreement") is
made and entered into as of September 9, 1998, by and among: FIRST CONSULTING
GROUP, INC., a Delaware corporation ("Parent"); FOXTROT ACQUISITION SUB, INC., a
Delaware corporation and a wholly owned subsidiary of Parent ("Merger Sub"); and
Integrated Systems Consulting Group, Inc., a Pennsylvania corporation (the
"Company"). Certain capitalized terms used in this Agreement are defined in
Exhibit A.
RECITALS
A. Parent, Merger Sub and the Company intend to effect a merger (the
"Merger") of Merger Sub with and into the Company in accordance with this
Agreement and the Pennsylvania Business Corporation Law of 1988, as amended (the
"PBCL"), and the Delaware General Corporation Law, as amended (the "DGCL"). Upon
consummation of the Merger, Merger Sub will cease to exist, and the Company will
become a wholly-owned subsidiary of Parent.
B. It is intended that the Merger qualify as a tax-free reorganization
within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as
amended (the "Code"). For accounting purposes, it is intended that the Merger be
treated as a "pooling of interests."
C. The Board of Directors of the Company has (i) determined that the
Merger is consistent with and in furtherance of the long-term strategy of the
Company and fair to, and in the best interests of, the Company and its
shareholders, (ii) approved this Agreement, the Merger and the other
transactions contemplated by this Agreement and (iii) determined to recommend
that the shareholders of the Company adopt and approve this Agreement and
approve the Merger.
D. The respective Boards of Directors of Parent and Merger Sub have
approved this Agreement and the Merger.
E. Concurrently with the execution of this Agreement, and as a
condition and inducement to Parent's willingness to enter into this Agreement,
each of the affiliate shareholders of the Company listed on Exhibit B-1 hereto
is entering into a Voting Agreement substantially in the form attached hereto as
Exhibit C-1; and as a condition and inducement to the Company's willingness to
enter into this Agreement, each of the affiliate stockholders of Parent listed
on Exhibit B-2 hereto is entering into a Voting Agreement substantially in the
form attached hereto as Exhibit C-2.
F. Concurrently with the execution of this Agreement, and as a
condition and inducement to Parent's willingness to enter into this Agreement,
each of the Persons identified on Exhibit D-1 hereto is entering into an
Affiliate Agreement substantially in the form attached hereto as Exhibit E-1.
Concurrently with the execution of this Agreement, and as a condition and
inducement to the Company's willingness to enter into this Agreement, each of
the Persons identified on Exhibit D-2 hereto is entering into an Affiliate
Agreement substantially in the form attached hereto as Exhibit E-2.
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AGREEMENT
The parties to this Agreement, intending to be legally bound, agree as
follows:
Section 1. DESCRIPTION OF TRANSACTION.
1.1 Merger of Merger Sub into the Company. Upon the terms and subject
to the conditions set forth in this Agreement, at the Effective Time (as defined
in Section 1.3), Merger Sub shall be merged with and into the Company, and the
separate existence of Merger Sub shall cease. The Company will continue as the
surviving corporation in the Merger (the "Surviving Corporation").
1.2 Effect of the Merger. The Merger shall have the effects set forth
in this Agreement and in the applicable provisions of the PBCL and the DGCL.
1.3 Closing; Effective Time. The consummation of the transactions
contemplated by this Agreement (the "Closing") shall take place at the offices
of Xxxxxx Godward LLP, Five Palo Alto Square, 0000 Xx Xxxxxx Xxxx, Xxxx Xxxx,
Xxxxxxxxxx, at 10:00 a.m. on a date to be designated by Parent (the "Closing
Date"), which shall be no later than the second business day after satisfaction
or waiver of the conditions set forth in Sections 6 and 7. Contemporaneously
with or as promptly as practicable after the Closing, properly executed articles
of merger conforming to the requirements of the PBCL (the "Articles of Merger")
shall be filed with the Department of State of the Commonwealth of Pennsylvania
and a properly executed certificate of merger conforming to the requirements of
the DGCL shall be filed with the Secretary of State of the State of Delaware.
The Merger shall take effect at the later of (a) the time the Articles of Merger
is accepted for filing by the Department of State of the Commonwealth of
Pennsylvania, (b) the time the certificate of merger is accepted for filing by
the Secretary of State of the State of Delaware and (c) at such later time as
may be specified in the Articles of Merger (the "Effective Time").
1.4 Certificate of Incorporation and Bylaws; Directors and Officers.
Unless otherwise determined by Parent prior to the Effective Time:
(a) the Articles of Incorporation and Bylaws of the Surviving
Corporation shall be amended and restated as of the Effective Time to conform to
the Amended and Restated Articles of Incorporation and Amended and Restated
Bylaws substantially in the form attached hereto as Exhibits F-1 and F-2,
respectively; provided, however, that at the Effective Time the Articles of
Incorporation of the Surviving Corporation shall be amended so that the name of
the Surviving Corporation shall be Integrated Systems Consulting Group, Inc.;
and
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(b) the directors and officers of the Surviving Corporation
immediately after the Effective Time shall be the directors and officers of
Merger Sub immediately prior to the Effective Time, until their respective
successors are elected and qualified or duly appointed, as the case may be.
1.5 Conversion of Shares.
(a) Subject to Section 1.5(d), at the Effective Time, by
virtue of the Merger and without any further action on the part of Parent,
Merger Sub, the Company or any shareholder of the Company:
(i) any shares of Company Common Stock then held by
the Company or any subsidiary of the Company (or held in the Company's treasury)
shall be canceled;
(ii) any shares of Company Common Stock then held by
Parent, Merger Sub or any other subsidiary of Parent shall be canceled;
(iii) except as provided in clauses "(i)" and "(ii)"
above and subject to Sections 1.5(b) and (d) and Section 1.9, each share of
Company Common Stock then outstanding shall be converted into the right to
receive 0.77 of a share of Parent Common Stock; and
(iv) each share of the common stock, no par value
per share, of Merger Sub then outstanding shall be converted into one share of
common stock of the Surviving Corporation.
(b) The fraction of a share of Parent Common Stock into which
each outstanding share of Company Common Stock is to be converted pursuant to
Section 1.5(a)(iii) (as such fraction may be adjusted in accordance with this
Section 1.5(b)) is referred to as the "Exchange Ratio." If, between the date of
this Agreement and the Effective Time, the outstanding shares of Company Common
Stock or Parent Common Stock are changed into a different number or class of
shares by reason of any stock split, stock dividend, reverse stock split,
reclassification, recapitalization or other similar transaction, then the
Exchange Ratio shall be appropriately adjusted.
(c) If any shares of Company Common Stock outstanding
immediately prior to the Effective Time are unvested or are subject to a
repurchase option, risk of forfeiture or other condition under any applicable
restricted stock purchase agreement or other agreement with the Company, then
the shares of Parent Common Stock issued in exchange for such shares of Company
Common Stock will also be unvested and subject to the same repurchase option,
risk of forfeiture or other condition, and the certificates representing such
shares of Parent Common Stock may accordingly be marked with appropriate
legends. The Company shall take all action that may be necessary to ensure that,
from and after the Effective Time, Parent is entitled to exercise any such
repurchase option or other right set forth in any such restricted stock purchase
agreement or other agreement.
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(d) No fractional shares of Parent Common Stock shall be
issued in connection with the Merger, and no certificates for any such
fractional shares shall be issued. In lieu of such fractional shares, any holder
of Company Common Stock who would otherwise be entitled to receive a fraction of
a share of Parent Common Stock (after aggregating all fractional shares of
Parent Common Stock issuable to such holder) shall, upon surrender of such
holder's Company Stock Certificate(s) (as defined in Section 1.7), be paid in
cash the dollar amount (rounded to the nearest whole cent), without interest,
determined by multiplying such fraction by the closing price of a share of
Parent Common Stock on Nasdaq on the Effective Date.
1.6 Stock Options and Warrants. At the Effective Time, all Company Options
(as defined in Section 2.3(b)) shall be assumed by Parent in accordance with
Section 5.5, and all Company Warrants (as defined in Section 2.3(c)) shall be
assumed by Parent in accordance with Section 5.7.
1.7 Closing of the Company's Transfer Books. At the Effective Time: (a) all
shares of Company Common Stock outstanding immediately prior to the Effective
Time shall automatically be canceled and retired and shall cease to exist, and
all holders of certificates representing shares of Company Common Stock that
were outstanding immediately prior to the Effective Time shall cease to have any
rights as shareholders of the Company; and (b) the stock transfer books of the
Company shall be closed with respect to all shares of Company Common Stock
outstanding immediately prior to the Effective Time. No further transfer of any
such shares of Company Common Stock shall be made on such stock transfer books
after the Effective Time. If, after the Effective Time, a valid certificate
previously representing any of such shares of Company Common Stock (a "Company
Stock Certificate") is presented to the Exchange Agent (as defined in Section
1.8) or to the Surviving Corporation or Parent, such Company Stock Certificate
shall be canceled and shall be exchanged as provided in Section 1.8.
1.8 Exchange of Certificates.
(a) Prior to the Closing Date, Parent shall select a reputable
bank or trust company to act as exchange agent in the Merger (the "Exchange
Agent"). Promptly after the Effective Time, Parent shall deposit with the
Exchange Agent (i) certificates representing the shares of Parent Common Stock
issuable pursuant to this Section 1 and (ii) cash sufficient to make payments in
lieu of fractional shares in accordance with Section 1.5(d). The shares of
Parent Common Stock and cash amounts so deposited with the Exchange Agent,
together with any dividends or distributions received by the Exchange Agent with
respect to such shares, are referred to collectively as the "Exchange Fund."
(b) As soon as practicable after the Effective Time, the
Exchange Agent will mail to the registered holders of Company Stock Certificates
(i) a letter of transmittal in customary form and containing such provisions as
Parent may reasonably specify (including a provision confirming that delivery of
Company Stock Certificates shall be effected, and risk of loss and title to
Company Stock Certificates shall pass, only upon delivery of such Company Stock
Certificates to the Exchange Agent), and (ii) instructions for use in effecting
the surrender of Company Stock Certificates in exchange for certificates
representing Parent Common Stock. Subject to Section 1.5(d), upon surrender of a
Company Stock Certificate to the Exchange Agent for exchange, together with a
duly executed letter of transmittal and such other documents as may be
reasonably required by the Exchange Agent or Parent, (A) the holder of such
Company Stock Certificate shall be entitled to receive in exchange therefor a
certificate representing the number of shares of Parent Common Stock that such
holder has the right to receive pursuant to the provisions of Section
1.5(a)(iii) together with any cash in lieu of fractional share(s) pursuant to
the provisions of Section 1.5(d), and (B) the Company Stock Certificate so
surrendered shall be canceled. Until surrendered as contemplated by this Section
1.8(b), each Company Stock Certificate shall be deemed, from and after the
Effective Time, to represent only the right to receive shares of Parent Common
Stock (and cash in lieu of any fractional share of Parent Common Stock) as
contemplated by Section 1.5. If any Company Stock Certificate shall have been
lost, stolen or destroyed, Parent may, in its discretion and as a condition
precedent to the issuance of any certificate representing Parent Common Stock,
require the owner of such lost, stolen or destroyed Company Stock Certificate to
provide an appropriate affidavit and to deliver a bond (in such sum as Parent
may reasonably direct) as indemnity against any claim that may be made against
the Exchange Agent, Parent or the Surviving Corporation with respect to such
Company Stock Certificate.
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(c) No dividends or other distributions declared or made with
respect to Parent Common Stock with a record date after the Effective Time shall
be paid to the holder of any unsurrendered Company Stock Certificate with
respect to the shares of Parent Common Stock represented thereby, until such
holder surrenders such Company Stock Certificate in accordance with this Section
1.8 (at which time such holder shall be entitled to receive all such dividends
and distributions, without interest).
(d) Any portion of the Exchange Fund that remains
undistributed to holders of Company Stock Certificates as of the date 180 days
after the date on which the Merger becomes effective shall be delivered to
Parent upon demand, and any holders of Company Stock Certificates who have not
theretofore surrendered their Company Stock Certificates in accordance with this
Section 1.8 shall thereafter look only to Parent for satisfaction of their
claims for Parent Common Stock, cash in lieu of fractional shares of Parent
Common Stock and any dividends or distributions with respect to Parent Common
Stock.
(e) Each of the Exchange Agent, Parent and the Surviving
Corporation shall be entitled to deduct and withhold from any consideration
payable or otherwise deliverable pursuant to this Agreement to any holder or
former holder of Company Common Stock such amounts as may be required to be
deducted or withheld therefrom under the Code or under any provision of state,
local or foreign tax law or under any other applicable Legal Requirement. 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.
(f) Neither Parent nor the Surviving Corporation shall be
liable to any holder or former holder of Company Common Stock with respect to
any shares of Parent Common Stock (or dividends or distributions with respect
thereto), or for any cash amounts, delivered to any public official pursuant to
any applicable abandoned property, escheat or similar Legal Requirement.
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1.9 Dissenting Shares. Notwithstanding anything in this Agreement to the
contrary, shares, if any, of Company Common Stock that are issued and
outstanding immediately prior to the Effective Time that are held by any
shareholder who has not voted such shares in favor of the Merger and who shall
have delivered a written notice of intention to demand payment of fair value of
such shares in the manner provided in Section 1574 of the PBCL ("Dissenting
Shares") shall not be converted into or be exchangeable for the right to receive
the consideration provided in Section 1.5(a)(iii) (or cash in lieu of fractional
shares in accordance with Section 1.5(d)) unless and until such holder shall
have failed to perfect or shall have effectively withdrawn or lost his right to
be paid fair value under the PBCL. If such holder shall have failed to perfect
or have effectively withdrawn or lost such right, his shares of Company Common
Stock shall thereupon be deemed to have been converted into and to have become
exchangeable for, at the Effective Time, the right to receive the consideration
provided in Section 1.5(a)(iii) (or cash in lieu of fractional shares in
accordance with Section 1.5(d)) without any interest thereon.
1.10 Tax Consequences. For federal income tax purposes, the Merger is
intended to constitute a reorganization within the meaning of Section 368 of the
Code. The parties to this Agreement hereby adopt this Agreement as a "plan of
reorganization" within the meaning of Sections 1.368-2(g) and 1.368-3(a) of the
United States Treasury Regulations.
1.11 Accounting Consequences. For accounting purposes, the Merger is
intended to be treated as a "pooling of interests."
1.12 Further Action. If, at any time after the Effective Time, any further
action is determined by Parent to be necessary or desirable to carry out the
purposes of this Agreement or to vest the Surviving Corporation with full right,
title and possession of and to all rights and property of Merger Sub and the
Company, the officers and directors of the Surviving Corporation and Parent
shall be fully authorized (in the name of Merger Sub, in the name of the Company
and otherwise) to take such action.
Section 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to Parent and Merger Sub that,
except as set forth in the disclosure schedule that has been prepared by the
Company in accordance with the requirements of Section 9.6 and that has been
delivered by the Company to Parent on the date of this Agreement and signed by
the President of the Company (the "Company Disclosure Schedule"):
2.1 Due Organization; Subsidiaries; Etc.
(a) The Company has no Subsidiaries, except for the
corporations identified in Part 2.1(a)(i) of the Company Disclosure Schedule;
and neither the Company nor any of the other corporations identified in Part
2.1(a)(i) of the Company Disclosure Schedule owns any capital stock of, or any
equity interest of any nature in, any other Entity. (The Company and each of its
Subsidiaries are referred to collectively in this Agreement as the "Acquired
Corporations".) None of the Acquired Corporations has agreed or is obligated to
make, or is bound by any Contract under which it may become obligated to make,
any future investment in or capital contribution to any other Entity. None of
the Acquired Corporations has, at any time, been a general partner of any
general partnership, limited partnership or other Entity.
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(b) Each of the Acquired Corporations is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has all corporate power and authority: (i)
to conduct its business in the manner in which its business is currently being
conducted; (ii) to own and use its assets in the manner in which its assets are
currently owned and used; and (iii) to perform its obligations under all
Contracts by which it is bound.
(c) None of the Acquired Corporations is or has been required
to be qualified, authorized, registered or licensed to do business as a foreign
corporation in any jurisdiction other than the jurisdictions identified in Part
2.1(c) of the Company Disclosure Schedule, except where the failure to be so
qualified, authorized, registered or licensed has not had and will not have a
Material Adverse Effect on the Acquired Corporations. Each of the Acquired
Corporations is in good standing as a foreign corporation in each of the
respective jurisdictions identified in Part 2.1(c) of the Company Disclosure
Schedule.
2.2 Articles of Incorporation and Bylaws. The Company has delivered to
Parent accurate and complete copies of the articles of incorporation, bylaws and
other charter and organizational documents of the respective Acquired
Corporations, including all amendments thereto. None of the Acquired
Corporations is in violation of any of the provisions of its articles of
incorporation or bylaws or equivalent governing instruments.
2.3 Capitalization, Etc.
(a) The authorized capital stock of the Company consists of:
(i) twenty-five million (25,000,000) shares of Company Common Stock, $.005 par
value per share, of which, as of August 31, 1998, 8,076,404 shares (which amount
does not materially differ from the amount issued and outstanding as of the date
of this Agreement) have been issued and are outstanding; and (ii) five hundred
thousand (500,000) shares of preferred stock, $1.00 par value per share, of
which no shares are outstanding as of the date of this Agreement. All of the
outstanding shares of Company Common Stock have been duly authorized and validly
issued, and are fully paid and nonassessable. As of the date of this Agreement,
there are 1,151,109 shares of Company Common Stock held in treasury by the
Company and no shares of stock held in treasury by any of the other Acquired
Corporations. (i) None of the outstanding shares of Company Common Stock is
entitled or subject to any preemptive right, right of participation, right of
maintenance or any similar right; (ii) none of the outstanding shares of Company
Common Stock is subject to any right of first refusal in favor of the Company;
and (iii) there is no Acquired Corporation Contract relating to the voting or
registration of, or restricting any Person from purchasing, selling, pledging or
otherwise disposing of (or granting any option or similar right with respect
to), any shares of Company Common Stock. Upon consummation of the Merger, (A)
the shares of Parent Common Stock issued in exchange for any shares of Company
Common Stock that are subject to a Contract pursuant to which the Company has
the right to repurchase, redeem or otherwise reacquire any shares of Company
Common Stock will, without any further act of Parent, the Company or any other
Person, become subject to the restrictions, conditions and other provisions
contained in such Contract, and (B) Parent will automatically succeed to and
become entitled to exercise the Company's rights and remedies under any such
Contract. None of the Acquired Corporations is under any obligation to
repurchase, redeem or otherwise acquire any outstanding shares of Company Common
Stock.
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(b) As of August 31, 1998, 957,725 shares (which amount does
not materially differ from the amount subject to options outstanding as of the
date of this Agreement) of Company Common Stock are subject to issuance pursuant
to outstanding options to purchase Company Common Stock. (Stock options granted
by the Company pursuant to the Company's stock option plans are referred to in
this Agreement as "Company Options.") Part 2.3(b)(i) of the Company Disclosure
Schedule sets forth the following information with respect to each Company
Option outstanding as of August 31, 1998: (i) the particular plan pursuant to
which such Company Option was granted; (ii) the name of the optionee; (iii) the
number of shares of Company Common Stock subject to such Company Option; (iv)
the exercise price of such Company Option; (v) the date on which such Company
Option was granted; (vi) the applicable vesting schedule and the extent to which
such Company Option is vested and exercisable as of the date of this Agreement;
and (vii) the date on which such Company Option expires. The Company has
delivered to Parent accurate and complete copies of all stock option plans
pursuant to which the Company has ever granted stock options and the form of all
stock option agreements evidencing such options. There are no commitments or
agreements of any character to which the Company is bound obligating the Company
to accelerate the vesting of any Company Option.
(c) As of the date of this Agreement, six hundred seventy-nine
thousand, seven hundred twenty-three (679,723) shares of Company Common Stock
are subject to issuance pursuant to outstanding warrants to purchase Company
Common Stock ("Company Warrants"). Part 2.3(c) of the Company Disclosure
Schedule sets forth the following information with respect to each Company
Warrant outstanding as of the date of this Agreement: (i) the name of the
warrant holder; (ii) the number of shares of Company Common Stock subject to
such Company Warrant; (iii) the exercise price of such Company Warrant; (iv) the
date on which such Company Warrant was granted; (v) the applicable vesting
schedule and the extent to which such Company Warrant is vested and exercisable
as of the date of this Agreement; and (vii) the date on which such Company
Warrant expires. The Company has delivered to Parent accurate and complete
copies of all agreements, certificates and other documents evidencing all
warrants which the Company has ever granted.
(d) Except as set forth in Parts 2.3(b), 2.3(c) or 2.3(d) of
the Company Disclosure Schedule there is no: (i) outstanding subscription,
option, call, warrant or right (whether or not currently exercisable) to acquire
any shares of the capital stock or other securities of the Company; (ii)
outstanding security, instrument or obligation that is or may become convertible
into or exchangeable for any shares of the capital stock or other securities of
the Company; (iii) shareholder rights plan (or similar plan commonly referred to
as a "poison pill") or Contract under which the Company is or may become
obligated to sell or otherwise issue any shares of its capital stock or any
other securities; or (iv) condition or circumstance that may give rise to or
provide a basis for the assertion of a claim by any Person to the effect that
such Person is entitled to acquire or receive any shares of capital stock or
other securities of the Company.
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(e) All outstanding shares of Company Common Stock, all
outstanding Company Options, all outstanding Company Warrants and all
outstanding shares of capital stock of each Subsidiary of the Company have been
issued and granted in compliance with (i) all applicable securities laws and
other applicable Legal Requirements, and (ii) all requirements set forth in
applicable Contracts.
(f) All of the outstanding shares of capital stock of each of
the Entities identified in Part 2.1(a)(i) of the Company Disclosure Schedule are
validly issued, fully paid and nonassessable and are owned beneficially and of
record by the Company, free and clear of any Encumbrances.
2.4 SEC Filings; Financial Statements.
(a) The Company has delivered to Parent accurate and complete
copies of all registration statements, proxy statements and other statements,
reports, schedules, forms and other documents filed by the Company with the SEC
and will deliver to Parent accurate and complete copies of all such registration
statements, proxy statements and other statements, reports, schedules, forms and
other documents filed after the date of this Agreement and prior to the
Effective Time (collectively, the "Company SEC Documents"). All statements,
reports, schedules, forms and other documents required to have been filed by the
Company with the SEC have been so filed. As of the time it was filed with the
SEC (or, if amended or superseded by a later filing, then on the date of such
filing): (i) each of the Company SEC Documents filed with the SEC complied in
all material respects with the applicable requirements of the Securities Act or
the Exchange Act (as the case may be) as of the date of such filing and any
Company SEC Documents filed after the date hereof will so comply; and (ii) none
of the Company SEC Documents contained any untrue statement of material fact or
omitted to state a material fact required to be state therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading.
(b) The consolidated financial statements (including any
related notes) contained in the Company SEC Documents filed with the SEC (the
"Company Financial Statements"): (i) complied as to form in all material
respects with the published rules and regulations of the SEC applicable thereto;
(ii) were prepared in accordance with generally accepted accounting principles
("GAAP") applied on a consistent basis throughout the periods covered (except as
may be indicated in the notes to such financial statements or, in the case of
unaudited statements, as permitted by Form 10-Q of the SEC, and except that the
unaudited financial statements may not contain footnotes and other information
required for complete financial statements), and (iii) fairly present the
consolidated financial position of the Company and its subsidiaries as of the
respective dates thereof and the consolidated results of operations of the
Company and its subsidiaries for the periods covered thereby. All adjustments
(consisting of recurring accruals) considered necessary for a fair presentation
of the financial statements have been included. The audited consolidated balance
sheet of the Company and its subsidiaries included in the Company's Annual
Report on Form 10-K for the year ended December 31, 1997 is sometimes referred
to herein as the "Company Balance Sheet" and the unaudited consolidated balance
sheet of the Company and its subsidiaries as of June 30, 1998 included in the
Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 1998 is
sometimes referred to herein as the "Company Unaudited Interim Balance Sheet."
All financial statements (including any related notes) contained in Company SEC
Documents filed after the date hereof shall meet the conditions set forth in
(i), (ii) and (iii) of this Section 2.4(b).
9
2.5 Absence of Changes. Since the date of the Company Unaudited Interim
Balance Sheet:
(a) there has not been any material adverse change in the
business, condition, assets, liabilities, operations, financial performance or
prospects of the Acquired Corporations taken as a whole, and no event has
occurred that could reasonably be expected to have a Material Adverse Effect on
the Acquired Corporations;
(b) there has not been any material loss, damage or
destruction to, or any material interruption in the use of, any of the assets of
any of the Acquired Corporations (whether or not covered by insurance);
(c) none of the Acquired Corporations has (i) declared,
accrued, set aside or paid any dividend or made any other distribution in
respect of any shares of capital stock, or (ii) repurchased, redeemed or
otherwise reacquired any shares of capital stock or other securities;
(d) none of the Acquired Corporations has sold, issued,
granted or authorized the issuance or grant of (i) any capital stock or other
security (except for Company Common Stock issued upon the exercise of
outstanding Company Options or Company Warrants), (ii) any option, call, warrant
or right to acquire any capital stock or any other security (except for Company
Options described in Part 2.3(b)(i) of the Company Disclosure Schedule), or
(iii) any instrument convertible into or exchangeable for any capital stock or
other security;
(e) the Company has not amended or waived any of its rights
under, or permitted the acceleration of vesting under, (i) any provision of any
of the Company's stock option plans, (ii) any provision of any agreement
evidencing any outstanding Company Option or Company Warrant, or (iii) any
restricted stock purchase agreement;
(f) except as provided in Part 2.5(f) of the Company
Disclosure Schedule, there has been no amendment to the articles of
incorporation, bylaws or other charter or organizational documents of any of the
Acquired Corporations, and none of the Acquired Corporations has effected or
been a party to any merger, consolidation, share exchange, business combination,
recapitalization, reclassification of shares, stock split, reverse stock split
or similar transaction;
10
(g) except as provided in Part 2.5(g) of the Company
Disclosure Schedule, none of the Acquired Corporations has (i) received any
Acquisition Proposal, or (ii) solicited, initiated, encouraged or induced, or
provided any nonpublic information to or entered into any discussions with any
Person for the purpose of soliciting, initiating, encouraging or inducing, the
making or submission of any Acquisition Proposal;
(h) none of the Acquired Corporations has formed any
subsidiary or acquired any equity interest or other interest in any other
Entity;
(i) none of the Acquired Corporations has made any capital
expenditures which exceed $800,000 in the aggregate;
(j) except in the ordinary course of business and consistent
with past practices, none of the Acquired Corporations has (i) entered into or
permitted any of the assets owned or used by it to become bound by any Material
Contract (as defined in Section 2.10), or (ii) amended or prematurely
terminated, or waived any material right or remedy under, any Material Contract;
(k) none of the Acquired Corporations has (i) acquired, leased
or licensed any material right or other material asset from any other Person,
(ii) sold or otherwise disposed of, or leased or licensed, any material right or
other material asset to any other Person, or (iii) waived or relinquished any
right, except for rights or other assets acquired, leased, licensed or disposed
of in the ordinary course of business and consistent with past practices;
(l) none of the Acquired Corporations has written off as
uncollectible, or established any extraordinary reserve with respect to, any
account receivable or other indebtedness in excess of $25,000 with respect to
any single matter, or in excess of $50,000 in the aggregate;
(m) except as set forth on Part 2.5 (m) of the Company
Disclosure Schedule, none of the Acquired Corporations has made any pledge of
any of its assets or otherwise permitted any of its assets to become subject to
any Encumbrance, except for pledges of immaterial assets made in the ordinary
course of business and consistent with past practices;
(n) except as set forth in Part 2.5(n) of the Company
Disclosure Schedule and except for intercompany indebtedness among the Acquired
Corporations and relocation and travel advances referred to in Section 2.8(b),
none of the Acquired Corporations has (i) lent money to any Person, or (ii)
incurred or guaranteed any indebtedness for borrowed money;
(o) except as provided in Part 2.5(o) of the Company
Disclosure Schedule, none of the Acquired Corporations has (i) established or
adopted any Plan (as defined in Section 2.16(a)), (ii) caused or permitted any
Plan to be amended in any material respect, or (iii) paid any bonus or made any
profit-sharing or similar payment to, or materially increased the amount of the
wages, salary, commissions, fringe benefits or other compensation or
remuneration payable to, any of its directors, officers or employees;
11
(p) none of the Acquired Corporations has changed any of its
methods of accounting or accounting practices in any respect;
(q) none of the Acquired Corporations has made any material
election with respect to Taxes;
(r) except as set forth in Part 2.5(r) of the Company
Disclosure Schedule, none of the Acquired Corporations has commenced or settled
any Legal Proceeding;
(s) none of the Acquired Corporations has entered into any
material transaction or taken any other material action that has had, or could
reasonably be expected to have, a Material Adverse Effect on the Acquired
Corporations; and
(t) except as set forth in Part 2.5(t) of the Company
Disclosure Schedule, none of the Acquired Corporations has agreed or committed
to take any of the actions referred to in clauses "(c)" through "(s)" above.
2.6 Leasehold; Equipment. None of the Acquired Corporations own any real
property or any interest in real property, except for the leaseholds created
under the real property leases identified in Part 2.6 of the Company Disclosure
Schedule. All such real property is being leased pursuant to lease agreements
that are in full force and effect, are valid and effective in accordance with
their respective terms, and there is not, under any of such leases, any existing
default or event of default (or event which with notice or lapse of time, or
both, would constitute a default) that would result in a Material Adverse Effect
on the Acquired Corporations. Part 2.6 of the Company Disclosure Schedule
accurately identifies all material items of equipment leased by the Acquired
Corporations. All material items of equipment and other tangible assets owned by
or leased to the Acquired Corporations are adequate for the uses to which they
are being put, are in good condition and repair (ordinary wear and tear
excepted) and are adequate for the conduct of the business of the Acquired
Corporations in the manner in which such business is currently being conducted.
2.7 Title to Assets. The Acquired Corporations own, and have good, valid
and marketable title to, or in the case of leased properties and assets, valid
leasehold interests in, all of their respective tangible properties and assets,
real, personal and mixed, used or held for use in their business, including: (i)
all assets reflected on the Company Unaudited Interim Balance Sheet; and (ii)
all other assets reflected in the books and records of the Acquired Corporations
as being owned or leased by the Acquired Corporations. Except as set forth in
Part 2.7 of the Company Disclosure Schedule, all of said assets are owned or
leased by the Acquired Corporations free and clear of any Encumbrances, except
for (x) any lien for current taxes not yet due and payable, and (y) minor liens
that have arisen in the ordinary course of business and that do not (in any case
or in the aggregate) materially detract from the value of the assets subject
thereto or materially impair the operations of any of the Acquired Corporations.
12
2.8 Receivables; Significant Customers.
(a) Part 2.8 of the Company Disclosure Schedule provides an
accurate and complete breakdown and aging of all accounts receivable of the
Acquired Corporations as of the date of the Company Unaudited Interim Balance
Sheet. All existing accounts receivable of the Acquired Corporations (including
those accounts receivable reflected on the Company Unaudited Interim Balance
Sheet that have not yet been collected and those accounts receivable that have
arisen since the date of the Company Unaudited Interim Balance Sheet and have
not yet been collected) (i) represent valid obligations of customers of the
Acquired Corporations arising from bona fide transactions entered into in the
ordinary course of business, (ii) are current and will be collected in full when
due, without any counterclaim or set off and are not subject to any dispute or
threat of nonpayment (net of the allowance for doubtful accounts set forth on
the Company Unaudited Interim Balance Sheet and an additional amount not to
exceed $250,000 in the aggregate) and (iii) represent revenues that have been
recognized in accordance with GAAP.
(b) Part 2.8(b) of the Company Disclosure Schedule contains an
accurate and complete list as of August 31, 1998 of all loans and advances made
by any of the Acquired Corporations to any employee, director, consultant or
independent contract of such Acquired Corporation, other than routine travel or
relocation advances made to employees in the ordinary course of business, which
loan and advances do not materially differ from the loans and advances as of the
date of this Agreement.
(c) Part 2.8(c) of the Company Disclosure Schedule sets forth
a complete and accurate list of all Significant Customers. For purposes of this
Agreement, "Significant Customers" are the twenty (20) customers of the Company
that have effected the most purchases, in dollar terms, and accounted for the
most revenues, in dollar terms, during the four (4) fiscal quarter period ended
June 30, 1998. None of the Company's Significant Customers has canceled,
returned or substantially reduced or, to the knowledge of the Company, is
currently attempting or threatening to cancel, return or substantially reduce,
any purchases from, orders to or services provided by the Company. The Company
has not received any material customer complaints concerning its products and/or
services.
2.9 Proprietary Assets.
(a) Part 2.9(a)(i) of the Company Disclosure Schedule sets
forth, with respect to each Company Proprietary Asset registered with any
Governmental Body or for which an application has been filed with any
Governmental Body, (i) a brief description of such Proprietary Asset, and (ii)
the names of the jurisdictions covered by the applicable registration or
application. The Company owns no Proprietary Assets other than the Company
Proprietary Assets set forth in Part 2.9(a)(i) of the Company Disclosure
Schedule. Part 2.9(a)(iii) of the Disclosure Schedule identifies and provides a
brief description of each Proprietary Asset licensed to the Company by any
Person (except for any Proprietary Asset that is licensed to the Company under
any third party software license generally available to the public at a cost of
less than $10,000), and identifies the license agreement under which such
Proprietary Asset is being licensed to the Company. To the best of the knowledge
of the Company, the Company has good, valid and marketable title to all of the
Company Proprietary Assets identified in Parts 2.9(a)(i) and 2.9(a)(ii) of the
Disclosure Schedule, free and clear of all liens and other Encumbrances, and has
a valid right to use all Proprietary Assets identified in Part 2.9(a)(iii) of
the Disclosure Schedule. Except as set forth in Part 2.9(a)(v) of the Disclosure
Schedule, to the best of the knowledge of the Company, the Company is not
obligated to make any payment to any Person for the use of any Company
Proprietary Asset. The Company has not developed jointly with any other Person
any Company Proprietary Asset with respect to which such other Person has any
rights.
13
(b) The Company has taken all commercially reasonable measures
and precautions necessary to protect and maintain the confidentiality and
secrecy of all Company Proprietary Assets (except Company Proprietary Assets
whose value would be unimpaired by public disclosure) and otherwise to maintain
and protect the value of all Company Proprietary Assets.
(c) To the best of the knowledge of the Company, none of the
Company Proprietary Assets infringes or conflicts with any Proprietary Asset
owned or used by any other Person. Except as set forth in Part 2.9(c) of the
Company Disclosure Schedule, to the best of the knowledge of the Company, the
Company is not infringing, misappropriating or making any unlawful use of, and
the Company has not at any time infringed, misappropriated or made any unlawful
use of, or received any notice or other communication (in writing or otherwise)
of any actual, alleged, possible or potential infringement, misappropriation or
unlawful use of, any Proprietary Asset owned or used by any other Person. To the
best of the knowledge of the Company, no other Person is infringing,
misappropriating or making any unlawful use of, and no Proprietary Asset owned
or used by any other Person infringes or conflicts with, any Company Proprietary
Asset.
(d) (i) Each Company Proprietary Asset conforms in all
material respects with any specification, documentation, performance standard,
representation or statement made or provided with respect thereto by or on
behalf of the Company; and (ii) there has not been any claim by any customer or
other Person alleging that any Company Proprietary Asset (including each version
thereof that has ever been licensed or otherwise made available by the Company
to any Person) does not conform in all material respects with any specification,
documentation, performance standard, representation or statement made or
provided by or on behalf of the Company, and, to the best of the knowledge of
the Company, there is no basis for any such claim. To the best of the knowledge
of the Company, the Company has established adequate reserves on the Company
Unaudited Interim Balance Sheet to cover all costs associated with any
obligations that the Company may have with respect to the correction or repair
of programming errors or other defects in the Company Proprietary Assets.
(e) The Company Proprietary Assets constitute all the
Proprietary Assets necessary to enable the Company to conduct its business in
the manner in which such business has been and is being conducted. Except as set
forth in Part 2.9(e) of the Company Disclosure Schedule, (i) the Company has not
licensed any of the Company Proprietary Assets to any Person on an exclusive
basis, and (ii) the Company has not entered into any covenant not to compete or
Contract limiting its ability to exploit fully any of its Proprietary Assets or
to transact business in any market or geographical area or with any Person.
(f) All employees set forth in Part 2.9(f) of the Company
Disclosure Schedule have executed and delivered an agreement to the Company
(containing no exceptions to or exclusions from the scope of its coverage) that
is substantially identical to the form of Employment Agreement or Employee
Agreement previously delivered to Parent by the Company. Substantially all other
current and substantially all former employees of the Company have executed and
delivered to the Company an agreement (containing no exceptions to or exclusions
from the scope of its coverage) that is substantially identical to the form of
confidential information and invention assignment agreement previously delivered
to Parent. Substantially all current and former consultants and independent
contractors to the Company have executed and delivered to the Company an
agreement (containing no exceptions to or exclusions from the scope of its
coverage) that is substantially identical to the form of consultant confidential
information and invention assignment agreement previously delivered to Parent.
14
(g) Except as set forth in Part 2.9(g) of the Company
Disclosure Schedule, to the best of the knowledge of the Company, each of the
Acquired Corporations has taken adequate steps to ensure that all software (and
related Proprietary Assets) used in its operations are Year 2000 Compliant (as
defined below). For purposes of this Agreement, "Year 2000 Compliant" shall mean
that software that can individually, and in combination and in conjunction with
all other systems, products or processes with which they are required or
designed to interface, continue to be used normally and to operate successfully
(both in functionality and performance in all material respects) over the
transition into the twenty first century when used in accordance with the
documentation relating to all software (and related Acquired Corporation
Proprietary Assets) that is sold, licensed or transferred by any Acquired
Corporation to any Person, including being able to, before, on and after January
1, 2000 substantially conform to the following: (i) use logic pertaining to
dates which allow users to identify and/or use the century portion of any date
fields without special processing; and (ii) respond to all date elements and
date input so as to resolve any ambiguity as to century in a disclosed, defined
and pre-determined manner and provide date information in ways which are
unambiguous as to century, either by permitting or requiring the century to be
specified or where the data element is represented without a century, the
correct century is unambiguous for all manipulations involving that element.
2.10 Contracts.
(a) Part 2.10 of the Company Disclosure Schedule identifies
each Acquired Corporation Contract that constitutes a "Material Contract." For
purposes of this Agreement, each of the following shall be deemed to constitute
a "Material Contract":
(i) (A) any Contract or outstanding offer relating
to the employment of, or the performance of services by, any employee, (B) any
Contract pursuant to which any of the Acquired Corporations is required to make
any severance, termination or similar payment, bonus or relocation payment or
any other payment (other than payments in respect of salary) to any current or
former employee or director of any of the Acquired Corporations and (C) any
Contract or Plan (including, without limitation, any stock option plan, stock
appreciation plan or stock purchase plan), any of the benefits of which may be
increased, or the vesting of benefits of which may be accelerated;
15
(ii) any Contract (A) relating to the acquisition,
transfer, development, sharing, license (to or by any of the Acquired
Corporations), use or other exploitation of any Proprietary Asset (except for
any Contract pursuant to which any Proprietary Asset is licensed to the Acquired
Corporations under any third party software license generally available to the
public); or (B) with respect to the distribution or marketing of any products of
the Acquired Corporations;
(iii) any Contract which provides for
indemnification of any officer, director, employee or agent of any of the
Acquired Corporations;
(iv) any Contract imposing any restriction on the
right or ability of any Acquired Corporation (A) to compete in any market or
geographic area with any other Person, (B) to acquire any product or other asset
or any services from any other Person, to sell any product or other asset to or
perform any services for any other Person or to transact business or deal in any
other manner with any other Person, or (C) to develop or distribute any
technology;
(v) any Contract (A) relating to the acquisition,
issuance, voting, registration, sale or transfer of any securities (other than
the issuance of Company Common Stock upon the valid exercise of Company Options
or Company Warrants outstanding as of the date of this Agreement), (B) providing
any Person with any preemptive right, right of participation, right of
maintenance or any similar right with respect to any securities, or (C)
providing the Company with any right of first
refusal with respect to, or right to repurchase or redeem, any securities;
(vi) any Contract requiring that the Company give
any notice or provide any information to any Person prior to accepting any
Acquisition Proposal;
(vii) any Contract that (A) contemplates or involves
payment or delivery of cash or other consideration in an amount or having a
value in excess of $7,500 per month and (B) has a term of more than 90 days and
that may not be terminated by such Acquired Corporation within 90 days after the
delivery of a termination notice by such Acquired Corporation;
(viii) any Contract that contemplates or involves
payment or delivery of cash or other consideration by any of the Acquired
Corporations in an amount or having a value in excess of $100,000 in the
aggregate;
(ix) except as set forth in Part 2.10(a)(ix) of the
Company Disclosure Schedule, any Contract or Plan (including, without
limitation, any stock option plan, stock appreciation 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 execution of this Agreement or the
consummation 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;
16
(x) any joint marketing or development Contract
currently in force under which an Acquired Corporation has continuing material
obligations to jointly market any product, technology or service and which may
not be canceled without penalty upon notice of 30 days or less, or any material
Contract pursuant to which an Acquired Corporation has continuing material
obligations to jointly develop any Proprietary Asset that will not be owned, in
whole or in part, by an Acquired Corporation and which may not be canceled
without penalty upon notice of 90 days or less;
(xi) any Contract currently in force to disclose or
deliver to any Person, or permit the disclosure or delivery to any escrow agent
or other Person, of the source code, or any portion or aspect of the source
code, or any proprietary information or algorithm contained in or relating to
any source code, of any Acquired Corporation Proprietary Asset that is material
to the Acquired Corporations taken as a whole;
(xii) any Contract (not otherwise identified in
clauses "(i)" through "(xi)" of this sentence) that is or would be material to
any of the Acquired Corporations, to the business, condition, capitalization or
operations of any of the Acquired Corporations or to any of the transactions
contemplated by this Agreement; and
(xiii) any other Contract, if a breach of such
Contract could reasonably be expected to have a Material Adverse Effect on the
Acquired Corporations.
(b) Each Material Contract is valid and in full force and
effect, and is enforceable by an Acquired Corporation in accordance with its
terms, subject to (i) laws of general application relating to bankruptcy,
insolvency and the relief of debtors, and (ii) rules of law governing specific
performance, injunctive relief and other equitable remedies. To the best of the
knowledge of the Company, no Person has violated or breached, or committed any
default under, any Material Contract.
(c) (i) None of the Acquired Corporations has violated or
breached, or committed any default under, any Acquired Corporation Contract,
and, to the best of the knowledge of the Company, no other Person has violated
or breached, or committed any default under, any Acquired Corporation Contract
that will have a Material Adverse Effect on the Acquired Corporations; (ii) to
the best of the knowledge of the Company, no event has occurred, and no
circumstance or condition exists, that (with or without notice or lapse of time)
will, or could reasonably be expected to, (A) result in a violation or breach of
any of the provisions of any Acquired Corporation Contract, (B) give any Person
the right to declare a default or exercise any remedy under any Acquired
Corporation Contract, (C) give any Person the right to a rebate, chargeback,
penalty or change in delivery schedule under any Acquired Corporation Contract,
(D) give any Person the right to accelerate the maturity or performance of any
Acquired Corporation Contract, or (E) give any Person the right to cancel,
terminate or modify any Acquired Corporation Contract that will have a Material
Adverse Effect on the Acquired Corporations; (iii) none of the Acquired
Corporations or any of their Representatives has received any notice or other
communication regarding any actual or possible violation or breach of, or
default under, any Acquired Corporation Contract that will have a Material
Adverse Effect on the Acquired Corporation; and (iv) each of the Acquired
Corporations has obtained all necessary export licenses related to the export of
its products.
17
(d) Except as set forth in Part 2.10(d) of the Company
Disclosure Schedule, there is no Acquired Corporation Contract to which any
Governmental Body is a party or under which any Governmental Body has any rights
or obligations, or directly or indirectly benefiting any Governmental Body
(including any subcontract or other Contract between any Acquired Corporation
and any contractor or subcontractor to any Governmental Body).
(e) No Person is renegotiating, or has a right pursuant to the
terms of any Material Contract to renegotiate, any amount paid or payable to any
Acquired Corporation under any Material Contract or any other material term or
provision of any Material Contract, except for Acquired Corporation Contracts,
which are being renegotiated or provide for renegotiation pursuant to their
terms in the ordinary course of the Company's business.
2.11 Year 2000 Liabilities. None of the Acquired Corporations has any
accrued, contingent or other liabilities of any nature, either matured or
unmatured, including, without limitation, any liabilities relating to costs
associated with insuring that all software (and related Acquired Corporation
Proprietary Assets) that is sold, licensed or transferred by any Acquired
Corporation to any Person, computer systems, any software utilized by the
Acquired Corporations or other components of the Acquired Corporations'
information technology infrastructure are Year 2000 Compliant (whether or not
required to be reflected in financial statements in accordance with GAAP, and
whether due or to become due), except for: (a) liabilities identified as such in
the "liabilities" column of the Company Unaudited Interim Balance Sheet; and (b)
normal and recurring liabilities that have been incurred by the Acquired
Corporations since the date of the Company Unaudited Interim Balance Sheet in
the ordinary course of business and consistent with past practices.
2.12 Compliance with Legal Requirements. Each of the Acquired Corporations
is, and has at all times since June 3, 1996 been, in compliance with all
applicable Legal Requirements, except where the failure to comply with such
Legal Requirements has not had and will not have a Material Adverse Effect on
the Acquired Corporations. Since June 3, 1996, none of the Acquired Corporations
has received any notice or other communication from any Governmental Body
regarding any actual or possible violation of, or failure to comply with, any
Legal Requirement.
2.13 Certain Business Practices. None of the Acquired Corporations nor any
director, officer, agent or employee of any of the Acquired Corporations has, on
behalf of any of the Acquired Corporations, (i) used any funds for unlawful
contributions, gifts, entertainment or other unlawful expenses relating to
political activity, (ii) made any unlawful payment to foreign or domestic
government officials or employees or to foreign or domestic political parties or
campaigns or violated any provision of the Foreign Corrupt Practices Act of
1977, as amended, or (iii) made any other unlawful payment.
18
2.14 Governmental Authorizations. The Acquired Corporations hold all
Governmental Authorizations necessary to enable the Acquired Corporations to
conduct their respective businesses in the manner in which such businesses are
currently being conducted. All such Governmental Authorizations are valid and in
full force and effect. Each Acquired Corporation is, and at all times since June
3, 1996 has been, in substantial compliance with the terms and requirements of
such Governmental Authorizations. Since June 3, 1996, none of the Acquired
Corporations has received any notice or other communication from any
Governmental Body regarding (a) any actual or possible violation of or failure
to comply with any term or requirement of any Governmental Authorization, or (b)
any actual or possible revocation, withdrawal, suspension, cancellation,
termination or modification of any Governmental Authorization.
2.15 Tax Matters.
(a) Except as set forth in Part 2.15(a) of the Company
Disclosure Schedule, all Tax Returns required to be filed by or on behalf of the
respective Acquired Corporations with any Governmental Body with respect to any
taxable period ending on or before the Closing Date (the "Acquired Corporation
Returns") (i) have been or will be filed on or before the applicable due date
(including any extensions of such due date if properly obtained), and (ii) have
been, or will be when filed, prepared in all material respects in compliance
with all applicable Legal Requirements. All amounts shown on the Acquired
Corporation Returns to be due on or before the Closing Date have been or will be
paid on or before the Closing Date.
(b) The Company Financial Statements fully accrue all actual
and contingent liabilities for Taxes with respect to all periods through the
dates thereof in accordance with GAAP. Each Acquired Corporation will establish,
in the ordinary course of business and consistent with its past practices,
reserves adequate for the payment of all Taxes for the period from the date of
this Agreement through the Closing Date.
(c) Except as set forth in Part 2.15(c) of the Company
Disclosure Schedule, since the Acquired Corporation Return for the taxable
period ended December 31, 1994, no Acquired Corporation Return has ever been
examined or audited by any Governmental Body. No extension or waiver of the
limitation period applicable to any of the Acquired Corporation Returns has been
granted (by the Company or any other Person), and no such extension or waiver
has been requested from any Acquired Corporation.
(d) No claim or Legal Proceeding is pending or, to the best of
the knowledge of the Company, has been threatened against or with respect to any
Acquired Corporation in respect of any material Tax. There are no unsatisfied
liabilities for material Taxes (including liabilities for interest, additions to
tax and penalties thereon and related expenses) with respect to any notice of
deficiency or similar document received by any Acquired Corporation with respect
to any material Tax (other than liabilities for Taxes asserted under any such
notice of deficiency or similar document which are being contested in good faith
by the Acquired Corporations and with respect to which adequate reserves for
payment have been established). There are no liens for material Taxes upon any
of the assets of any of the Acquired Corporations except liens for current Taxes
not yet due and payable. None of the Acquired Corporations has entered into or
become bound by any agreement or consent pursuant to Section 341(f) of the Code.
None of the Acquired Corporations has been, and none of the Acquired
Corporations will be, required to include any adjustment in taxable income for
any tax period (or portion thereof) pursuant to Section 481 of the Code or any
comparable provision under state or foreign Tax laws as a result of transactions
or events occurring, or accounting methods employed, prior to the Closing.
19
(e) Except as set forth in Part 2.15(e) of the Company
Disclosure Schedule, there is no agreement, plan, arrangement or other Contract
covering any employee or independent contractor or former employee or
independent contractor of any of the Acquired Corporations that, considered
individually or considered collectively with any other such Contracts, will, or
could reasonably be expected to, give rise directly or indirectly to the payment
of any amount that would not be deductible pursuant to Section 280G or Section
162 of the Code. None of the Acquired Corporations is, or has ever been, a party
to or bound by any tax indemnity agreement, tax sharing agreement, tax
allocation agreement or similar Contract.
2.16 Employee and Labor Matters; Benefit Plans.
(a) Part 2.16(a) of the Company Disclosure Schedule identifies
each salary, bonus, deferred compensation, incentive compensation, stock
purchase, stock option, severance pay, termination pay, hospitalization,
medical, life or other insurance, supplemental unemployment benefits,
profit-sharing, pension or retirement plan, program or agreement (collectively,
the "Plans") sponsored, maintained, contributed to or required to be contributed
to by any of the Acquired Corporations for the benefit of any current or former
employee of any of the Acquired Corporations.
(b) Except as set forth in Part 2.16(a) of the Company
Disclosure Schedule, none of the Acquired Corporations maintains, sponsors or
contributes to, and none of the Acquired Corporations has at any time in the
past maintained, sponsored or contributed to, any employee pension benefit plan
(as defined in Section 3(2) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), whether or not excluded from coverage under specific
Titles or Merger Subtitles of ERISA) for the benefit of employees or former
employees of any of the Acquired Corporations (a "Pension Plan"). None of the
Plans identified in Part 2.16(a) of the Company Disclosure Schedule is subject
to Title IV of ERISA or Section 412 of the Code.
(c) Except as set forth in Part 2.16(a) or Part 2.16(c) of the
Company Disclosure Schedule, none of the Acquired Corporations maintains,
sponsors or contributes to any: (i) employee welfare benefit plan (as defined in
Section 3(1) of ERISA, whether or not excluded from coverage under specific
Titles or Merger Subtitles of ERISA) for the benefit of any employees or former
employees of any of the Acquired Corporations (a "Welfare Plan"), or (ii)
self-funded medical, dental or other similar Plan. None of the Plans identified
in Part 2.16(a) of the Company Disclosure Schedule is a multi-employer plan
(within the meaning of Section 3(37) of ERISA).
20
(d) With respect to each Plan, the Company has delivered to
Parent: (i) an accurate and complete copy of such Plan (including all amendments
thereto); (ii) an accurate and complete copy of the annual report, if required
under ERISA, with respect to such Plan for the last two years; (iii) an accurate
and complete copy of the most recent summary plan description, together with
each Summary of Material Modifications, if required under ERISA, with respect to
such Plan, (iv) if such Plan is funded through a trust or any third party
funding vehicle, an accurate and complete copy of the trust or other funding
agreement (including all amendments thereto) and accurate and complete copies
the most recent financial statements thereof; (v) accurate and complete copies
of all Contracts relating to such Plan, including service provider agreements,
insurance contracts, minimum premium contracts, stop-loss agreements, investment
management agreements, subscription and participation agreements and
recordkeeping agreements; and (vi) an accurate and complete copy of the most
recent determination letter received from the Internal Revenue Service with
respect to such Plan (if such Plan is intended to be qualified under Section
401(a) of the Code).
(e) None of the Acquired Corporations is or has ever been
required to be treated as a single employer with any other Person under Section
4001(b)(1) of ERISA or Section 414(b), (c), (m) or (o) of the Code. None of the
Acquired Corporations has ever been a member of an "affiliated service group"
within the meaning of Section 414(m) of the Code. None of the Acquired
Corporations has ever made a complete or partial withdrawal from a
multi-employer plan, as such term is defined in Section 3(37) of ERISA,
resulting in "withdrawal liability," as such term is defined in Section 4201 of
ERISA (without regard to subsequent reduction or waiver of such liability under
either Section 4207 or 4208 of ERISA).
(f) None of the Acquired Corporations has any plan or
commitment to create any Welfare Plan or any additional Pension Plan, or to
modify or change any existing Pension Plan (other than to comply with applicable
law) in a manner that would affect any employee of any of the Acquired
Corporations.
(g) Except as set forth in Part 2.16(g) of the Company
Disclosure Schedule, no Plan provides death, medical or health benefits (whether
or not insured) with respect to any current or former employee of any of the
Acquired Corporations after any such employee's termination of service (other
than (i) benefit coverage mandated by applicable law, including coverage
provided pursuant to Section 4980B of the Code, (ii) deferred compensation
benefits accrued as liabilities on the Company Balance Sheet, and (iii) benefits
the full cost of which are borne by current or former employees of any of the
Acquired Corporations (or the employees' beneficiaries)).
(h) With respect to any Plan constituting a group health plan
within the meaning of Section 4980B(g)(2) of the Code, the provisions of Section
4980B of the Code ("COBRA") have been complied with in all material respects.
Part 2.16(h) of the Company Disclosure Schedule describes all obligations of the
Acquired Corporations as of the date of this Agreement under any of the
provisions of COBRA.
21
(i) Each of the Plans has been operated and administered in
all material respects in accordance with applicable Legal Requirements,
including but not limited to ERISA and the Code.
(j) Each of the Plans intended to be qualified under Section
401(a) of the Code has received a favorable determination from the Internal
Revenue Service, and the Company is not aware of any reason why any such
determination letter should be revoked.
(k) Except as set forth in Part 2.16(k) of the Company
Disclosure Schedule, neither the execution, delivery or performance of this
Agreement, nor the consummation of the Merger or any of the other transactions
contemplated by this Agreement, will result in any payment (including any bonus,
golden parachute or severance payment) to any current or former employee or
director of any of the Acquired Corporations (whether or not under any Plan), or
materially increase the benefits payable under any Plan, or result in any
acceleration of the time of payment or vesting of any such benefits.
(l) Part 2.16(l) of the Company Disclosure Schedule contains a
list of all salaried employees of each of the Acquired Corporations as of the
date of this Agreement, and correctly reflects, in all material respects, their
base salaries, their targeted annual bonus amounts, their dates of employment
and their positions. None of the Acquired Corporations is a party to any
collective bargaining contract or other Contract with a labor union involving
any of its employees. All of the employees of the Acquired Corporations are "at
will" employees.
(m) Part 2.16(m) of the Company Disclosure Schedule identifies
each Employee who is not fully available to perform work because of disability
or other leave and sets forth the basis of such leave and the anticipated date
of return to full service.
(n) Each Plan complies in all material respects with all
applicable Legal Requirements. Each of the Acquired Corporations is in
compliance in all material respects with all Contracts relating to employment,
employment practices, wages, bonuses and terms and conditions of employment,
including employee compensation matters.
(o) Except as set forth in Part 2.16(o) of the Company
Disclosure Schedule, each of the Acquired Corporations has good labor relations,
and none of the Acquired Corporations has any knowledge of any facts indicating
that (i) the consummation of the Merger or any of the other transactions
contemplated by this Agreement will have a material adverse effect on the labor
relations of any of the Acquired Corporations, or (ii) any of the employees of
the Acquired Corporations intends to terminate his or her employment with the
Acquired Corporation with which such employee is employed.
2.17 Environmental Matters. Each of the Acquired Corporations is in
compliance in all material respects with all applicable Environmental Laws,
which compliance includes the possession by each of the Acquired Corporations of
all permits and other Governmental Authorizations required under applicable
Environmental Laws, and compliance with the terms and conditions thereof. None
of the Acquired Corporations has received any notice or other communication (in
writing or otherwise), whether from a Governmental Body, citizens group,
employee or otherwise, that alleges that any of the Acquired Corporations is not
in compliance with any Environmental Law, and, to the best of the knowledge of
the Company, there are no circumstances that may prevent or interfere with the
compliance by any of the Acquired Corporations with any Environmental Law in the
future. To the best of the knowledge of the Company, no current or prior owner
of any property leased or controlled by any of the Acquired Corporations has
received any notice or other communication (in writing or otherwise), whether
from a Government Body, citizens group, employee or otherwise, that alleges that
such current or prior owner or any of the Acquired Corporations is not in
compliance with any Environmental Law. To the best of the knowledge of the
Company, all property that is leased to, controlled by or used by the Company,
and all surface water, groundwater and soil associated with or adjacent to such
property is in clean and healthful condition and is free of any material
environmental contamination of any nature. (For purposes of this Section 2.17
and Section 3.13: (i) "Environmental Law" means any federal, state, local or
foreign Legal Requirement relating to pollution or protection of human health or
the environment (including ambient air, surface water, ground water, land
surface or subsurface strata), including any law or regulation relating to
emissions, discharges, releases or threatened releases of Materials of
Environmental Concern, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Materials of Environmental Concern; and (ii) "Materials of Environmental
Concern" include chemicals, pollutants, contaminants, wastes, toxic substances,
petroleum and petroleum products and any other substance that is now or
hereafter regulated by any Environmental Law or that is otherwise a danger to
health, reproduction or the environment.)
22
2.18 Insurance. The Company has delivered to Parent a copy of each
insurance policy and each self insurance program relating to the business,
assets or operations of any of the Acquired Corporations. Each such insurance
policy is in full force and effect. Since June 3, 1996, none of the Acquired
Corporations has received any notice or other communication regarding any actual
or possible (a) cancellation or invalidation of any insurance policy, (b)
refusal of any coverage or rejection of any material claim under any insurance
policy, or (c) material adjustment in the amount of the premiums payable with
respect to any insurance policy. Except as set forth in Part 2.18 of the Company
Disclosure Schedule, there is no pending claim (including any workers'
compensation claim) under or based upon any insurance policy of any of the
Acquired Corporations; and, to the best of the knowledge of the Company, no
event has occurred, and no condition or circumstance exists, that might (with or
without notice or lapse of time) directly or indirectly give rise to or serve as
a basis for any such claim.
2.19 Transactions with Affiliates. Except as set forth in the Company SEC
Documents, since the date of the Company's last proxy statement filed with the
SEC, no event has occurred that would be required to be reported by the Company
pursuant to Item 404 of Regulation S-K promulgated by the SEC. Part 2.19 of the
Company Disclosure Schedule identifies each person who is an "affiliate" (as
that term is used in Rule 145 promulgated under the Securities Act) of the
Company as of the date of this Agreement.
23
2.20 Legal Proceedings; Orders.
(a) Except as set forth in Part 2.20(a) of the Company
Disclosure Schedule, there is no pending Legal Proceeding (including, to the
best knowledge of the Company, any investigation), and no Person has overtly
threatened to commence any Legal Proceeding: (i) that involves any of the
Acquired Corporations or any of the assets owned or used by any of the Acquired
Corporations, including, without limitation, any Acquired Company Proprietary
Asset; or (ii) that challenges, or that may have the effect of preventing,
delaying, making illegal or otherwise interfering with, the Merger or any of the
other transactions contemplated by this Agreement. To the best of the knowledge
of the Company, no event has occurred, and no claim, dispute or other condition
or circumstance exists, that will, or that could reasonably be expected to, give
rise to or serve as a basis for the commencement of any such Legal Proceeding.
To the best of the knowledge of the Company, no event has occurred, and no
claim, dispute or other condition or circumstance exists, that will, or that
could reasonably be expected to, cause or provide a basis for a director,
officer or other Representative of any of the Acquired Corporations to seek
indemnification from, or commence a Legal Proceeding against or involving, any
of the Acquired Corporations.
(b) There is no order, writ, injunction, judgment or decree to
which any of the Acquired Corporations, or any of the assets owned or used by
any of the Acquired Corporations, is subject. To the best of the knowledge of
the Company, no officer or other employee of any of the Acquired Corporations is
subject to any order, writ, injunction, judgment or decree that prohibits such
officer or other employee from engaging in or continuing any conduct, activity
or practice relating to the business of any of the Acquired Corporations.
2.21 Authority; Inapplicability of Anti-takeover Statutes; Binding Nature
of Agreement. The Company has the absolute and unrestricted right, corporate
power and authority to enter into and to perform its obligations under this
Agreement. The Board of Directors of the Company (at a meeting duly called and
held) has (a) unanimously determined that the Merger is advisable and fair and
in the best interests of the Company and its shareholders, (b) unanimously
approved the execution, delivery and performance of this Agreement by the
Company and has unanimously approved the Merger, (c) unanimously recommended the
adoption and approval of this Agreement and the Merger by the holders of Company
Common Stock and directed that this Agreement and the Merger be submitted for
consideration by the Company's shareholders at the Company Shareholders' Meeting
(as defined in Section 5.2), and (d) approved, and the stockholders of the
Company have adopted, an amendment to the Company's Articles of Incorporation
having the effect of causing the Company not to be subject to any state takeover
law or similar Legal Requirement that might otherwise apply to the Merger or any
of the other transactions contemplated by this Agreement except as set forth in
Part 2.21 of the Company Disclosure Schedule. This Agreement constitutes the
legal, valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms, subject to (i) laws of general application
relating to bankruptcy, insolvency and the relief of debtors, and (ii) rules of
law governing specific performance, injunctive relief and other equitable
remedies.
24
2.22 No Existing Discussions. None of the Acquired Corporations, and no
Representative of any of the Acquired Corporations, is engaged, directly or
indirectly, in any discussions or negotiations with any other Person relating to
any Acquisition Proposal.
2.23 Accounting Matters. To the best of the knowledge of the Company,
neither the Company nor any of its affiliates has taken or agreed to, or plans
to, take any action that would prevent Parent from accounting for the Merger as
a "pooling of interests."
2.24 Vote Required. The affirmative vote of the holders of a majority of
the shares of Company Common Stock outstanding on the record date for the
Company Shareholder Meeting (the "Required Company Shareholder Vote") is the
only vote of the holders of any class or series of the Company's capital stock
necessary to adopt and approve this Agreement, the Merger and the other
transactions contemplated by this Agreement.
2.25 Non-Contravention; Consents. Neither (i) the execution, delivery or
performance of this Agreement or any of the other agreements referred to in this
Agreement, nor (ii) the consummation of the Merger or any of the other
transactions contemplated by this Agreement, will directly or indirectly (with
or without notice or lapse of time):
(a) contravene, conflict with or result in a violation of (i)
any of the provisions of the articles of incorporation, bylaws or other charter
or organizational documents of any of the Acquired Corporations, or (ii) any
resolution adopted by the shareholders, the board of directors or any committee
of the board of directors of any of the Acquired Corporations;
(b) contravene, conflict with or result in a violation of, or
give any Governmental Body or other Person the right to challenge the Merger or
any of the other transactions contemplated by this Agreement or to exercise any
remedy or obtain any relief under, any Legal Requirement or any order, writ,
injunction, judgment or decree to which any of the Acquired Corporations, or any
of the assets owned or used by any of the Acquired Corporations, is subject;
(c) contravene, conflict with or result in a violation of any
of the terms or requirements of, or give any Governmental Body the right to
revoke, withdraw, suspend, cancel, terminate or modify, any Governmental
Authorization that is held by any of the Acquired Corporations or that otherwise
relates to the business of any of the Acquired Corporations or to any of the
assets owned or used by any of the Acquired Corporations;
(d) except as set forth in Part 2.25(d) of the Company
Disclosure Schedule, contravene, conflict with or result in a violation or
breach of, or result in a default under, any provision of any Acquired
Corporation Contract that is or would constitute a Material Contract, or give
any Person the right to (i) declare a default or exercise any remedy under any
such Acquired Corporation Contract, (ii) a rebate, chargeback, penalty or change
in delivery schedule under any such Acquired Corporation Contract, (iii)
accelerate the maturity or performance of any such Acquired Corporation
Contract, or (iv) cancel, terminate or modify any term of such Acquired
Corporation Contract; or
25
(e) result in the imposition or creation of any Encumbrance
upon or with respect to any asset owned or used by any of the Acquired
Corporations (except for minor liens that will not, in any case or in the
aggregate, materially detract from the value of the assets subject thereto or
materially impair the operations of any of the Acquired Corporations).
Except as may be required by the Exchange Act, the PBCL, the DGCL and the rules
of the National Association of Securities Dealers, Inc. ("NASD") (as they relate
to the S-4 Registration Statement and the Joint Proxy Statement/Prospectus, as
defined in Section 2.28(b)), none of the Acquired Corporations was, is or will
be required to make any filing with or give any notice to, or to obtain any
Consent from, any Person in connection with (x) the execution, delivery or
performance of this Agreement or any of the other agreements referred to in this
Agreement, or (y) the consummation of the Merger or any of the other
transactions contemplated by this Agreement.
2.26 Fairness Opinion. The Company's Board of Directors has received the
written opinion of Xxxxxx X. Xxxxx & Co. Incorporated, financial advisor to the
Company, dated the date of this Agreement, to the effect that the Exchange Ratio
is fair to the shareholders of the Company from a financial point of view. The
Company has furnished an accurate and complete copy of said written opinion to
Parent.
2.27 Financial Advisor. Except for Xxxxxx X. Xxxxx & Co. Incorporated, no
broker, finder or investment banker is entitled to any brokerage, finder's or
other fee or commission in connection with the Merger or any of the other
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of any of the Acquired Corporations. The Company has communicated to
Parent the fee formula pursuant to which fees, commissions and other amounts
will be paid by the Company to Xxxxxx X. Xxxxx & Co. Incorporated if the Merger
is consummated. The Company has furnished to Parent accurate and complete copies
of all agreements under which any such fees, commissions or other amounts have
been paid or may become payable and all indemnification and other agreements
relating to the engagement of Xxxxxx X. Xxxxx & Co. Incorporated.
2.28 Full Disclosure.
(a) This Agreement (including the Company Disclosure Schedule)
does not, and the certificate referred to in Section 6.6(e) will not, (i)
contain any representation, warranty or information that is false or misleading
with respect to any material fact, or (ii) omit to state any material fact
necessary in order to make the representations, warranties and information
contained and to be contained herein and therein (in the light of the
circumstances under which such representations, warranties and information were
or will be made or provided) not false or misleading.
26
(b) None of the information supplied or to be supplied by or
on behalf of the Company for inclusion or incorporation by reference in the
registration statement on Form S-4 to be filed with the SEC by Parent in
connection with the issuance of Parent Common Stock in the Merger (the "S-4
Registration Statement") will, at the time the S-4 Registration Statement is
filed with the SEC or at the time it becomes effective under the Securities Act,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they are made, not
misleading. None of the information supplied or to be supplied by or on behalf
of the Company for inclusion or incorporation by reference in the Joint Proxy
Statement/Prospectus to be filed with the SEC as part of the S-4 Registration
Statement (the "Joint Proxy Statement/Prospectus"), will, at the time the Joint
Proxy Statement/Prospectus is mailed to the shareholders of the Company, at the
time of the Company Shareholders' Meeting or as of the Effective Time, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they are made, not
misleading. The Joint Proxy Statement/Prospectus will comply as to form in all
material respects with the provisions of the Exchange Act and the rules and
regulations promulgated by the SEC thereunder.
Section 3. REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB.
Parent and Merger Sub, jointly and severally, represent and warrant to
the Company that, except as set forth in the disclosure schedule delivered to
the Company on the date of this Agreement and signed by an executive officer of
Parent (the "Parent Disclosure Schedule"):
3.1 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 Delaware. Each of Parent and Merger Sub has all corporate power
and authority to own its properties and to carry on its business as now being
conducted and is duly qualified to do business and is in good standing in each
jurisdiction in which the failure to be so qualified would have a Material
Adverse Effect on Parent and Merger Sub.
3.2 Capitalization, Etc. The authorized capital stock of Parent consists
of: (i) fifty million (50,000,000) shares of Parent Common Stock, $.001 par
value per share, of which, as of August 31, 1998, 15,925,602 shares (which
amount does not materially differ from the amount issued and outstanding as of
the date of this Agreement) were issued and outstanding; and (ii) ten million
(10,000,000) shares of preferred stock, $.001 par value per share, of which no
shares are outstanding as of the date of this Agreement. As of the date of this
Agreement, there are no outstanding subscriptions, options, calls, warrants or
rights to acquire shares of Parent Common Stock other than pursuant to stock
issuance or stock option plans or other arrangements disclosed in the Parent SEC
Documents. The authorized capital stock of Merger Sub consists of one hundred
(100) shares of Common Stock ("Merger Sub Common Stock"), $.001 par value per
share, all of which have been issued and are outstanding as of the date of this
Agreement and are held by Parent. As of the date of this Agreement, there are no
shares of Parent Common Stock held in treasury by Parent. None of the
outstanding shares of Parent Common Stock is entitled or subject to any
preemptive right, right of participation, right of maintenance or any similar
right.
27
3.3 SEC Filings; Financial Statements.
(a) Parent has delivered to the Company accurate and complete
copies (excluding copies of exhibits) of each report, registration statement (on
a form other than Form S-8) and definitive proxy statement filed by Parent with
the SEC between November 26, 1997 and the date of this Agreement and will
deliver to the Company accurate and complete copies of all such registration
statements, proxy statements and other statements, reports, schedules, forms and
other documents filed after the date of this Agreement and prior to the
Effective Date (the "Parent SEC Documents"), which are all of the forms, reports
and documents required to be filed by Parent with the SEC since November 26,
1997. As of the time it was filed with the SEC (or, if amended or superseded by
a later filing, then on the date of such filing): (i) each of the Parent SEC
Documents filed with the SEC was timely filed and complied in all material
respects with the applicable requirements of the Securities Act or the Exchange
Act (as the case may be) as of the date of such filing and any Parent SEC
Documents filed after the date hereof and prior to the Effective Time will so
comply; and (ii) none of the Parent SEC Documents contained any untrue statement
of a material fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading.
(b) The consolidated financial statements contained in the
Parent SEC Documents: (i) complied as to form in all material respects with the
published rules and regulations of the SEC applicable thereto; (ii) were
prepared in accordance with GAAP applied on a consistent basis throughout the
periods covered (except as may be indicated in the notes to such financial
statements and, in the case of unaudited statements, as permitted by Form 10-Q
of the SEC, and except that unaudited financial statements may not contain
footnotes and other information required to complete financial statements); and
(iii) fairly present the consolidated financial position of Parent and its
subsidiaries as of the respective dates thereof and the consolidated results of
operations of Parent and its subsidiaries for the periods covered thereby. All
adjustments (consisting of recurring accruals) considered necessary for a fair
presentation of the financial statements have been included. The audited
consolidated balance sheet of Parent and its subsidiaries for the year ended
December 31, 1997 included in the Company's final Prospectus dated February 13,
1998 is sometimes referred to herein as the "Parent Balance Sheet" and the
unaudited consolidated balance sheet of Parent and its subsidiaries as of June
30, 1998 included in Parent's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1998 is sometimes referred to herein as the "Parent Unaudited
Interim Balance Sheet." All financial statements (including any related notes)
contained in Company SEC Documents filed after the date hereof shall meet the
conditions set forth in (i), (ii) and (iii) of this Section 3.3(b).
3.4 Disclosure.
(a) This Agreement (including the Parent Disclosure Schedule)
does not, and the certificate referred to in Section 7.5(e) will not, (i)
contain any representation, warranty or information that is false or misleading
with respect to any material fact, or (ii) omit to state any material fact
necessary in order to make the representations, warranties and information
contained and to be contained herein and therein (in the light of the
circumstances under which such representations, warranties and information were
or will be made or provided) not false or misleading.
28
(b) None of the information to be supplied by or on behalf of
Parent for inclusion in the S-4 Registration Statement will, at the time the S-4
Registration Statement becomes effective under the Securities Act, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
the light of the circumstances under which they are made, not misleading. None
of the information to be supplied by or on behalf of Parent for inclusion in the
Joint Proxy Statement/Prospectus will, at the time the Joint Proxy
Statement/Prospectus is mailed to the shareholders of Parent, at the time of the
Parent Shareholders' Meeting or as of the Effective Time, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they are made, not misleading. The S-4
Registration Statement will comply as to form in all material respects with the
provisions of the Securities Act and the rules and regulations promulgated by
the SEC thereunder, except that no representation or warranty is made by Parent
with respect to statements made or incorporated by reference therein based on
information supplied by the Company for inclusion or incorporation by reference
in the Joint Proxy Statement/Prospectus. The Joint Proxy Statement/Prospectus
will comply as to form in all material respects with the provisions of the
Exchange Act and the rules and regulations promulgated by the SEC thereunder.
3.5 Absence of Certain Changes or Events. Except as set forth in Part 3.5
of the Parent Disclosure Schedule between the date of the Parent Unaudited
Interim Balance Sheet and the date of this Agreement: (i) there has not been any
event that has had a Material Adverse Effect on Parent; (ii) Parent has not
declared, accrued, set aside or paid any dividend; and (iii) Parent has not
incurred any liabilities other than in the ordinary course of business and
consistent with past practices.
3.6 Authority; Binding Nature of Agreement. Parent and Merger Sub have the
absolute and unrestricted right, power and authority to perform their
obligations under this Agreement; and the execution, delivery and performance by
Parent and Merger Sub of this Agreement have been duly authorized by all
necessary action on the part of Parent and Merger Sub and their respective
boards of directors. This Agreement constitutes the legal, valid and binding
obligation of Parent and Merger Sub, enforceable against them in accordance with
its terms, subject to (i) laws of general application relating to bankruptcy,
insolvency and the relief of debtors, and (ii) rules of law governing specific
performance, injunctive relief and other equitable remedies.
29
3.7 Non-Contravention; Consents. Neither the execution and delivery of this
Agreement by Parent and Merger Sub nor the consummation by Parent and Merger Sub
of the Merger will (a) conflict with or result in any breach of any provision of
the certificate of incorporation or bylaws of Parent or the articles of
incorporation or bylaws of Merger Sub, or (b) result in a default by Parent or
Merger Sub under any Contract to which Parent or Merger Sub is a party, except
for any default which has not had and will not have a Material Adverse Effect on
Parent, or (c) result in a violation by Parent or Merger Sub of any law,
statute, rule, regulation, order, writ, injunction, judgment or decree to which
Parent or Merger Sub is subject, except for any violation which has not had and
will not have a Material Adverse Effect on Parent. Except as may be required by
the Securities Act, the Exchange Act, state securities or "blue sky" laws, the
PBCL, the DGCL and the rules of the NASD (as they relate to the S-4 Registration
Statement and the Joint Proxy Statement/Prospectus), Parent is not and will not
be required to make any filing with or give any notice to, or to obtain any
Consent from, any Person in connection with the execution and delivery of this
Agreement, or the consummation of the Merger.
3.8 Vote Required. The only vote of Parent's stockholders required to
approve the issuance of Parent Common Stock in the Merger is the vote of a
majority of votes cast in person or by proxy as prescribed by rules of the NASD
(the "Required Parent Stockholder Vote").
3.9 Valid Issuance. The Parent Common Stock to be issued in the Merger
will, when issued in accordance with the provisions of this Agreement, be duly
authorized, validly issued, fully paid and nonassessable.
3.10 Accounting Matters. To the best of the knowledge of Parent, Parent has
not taken and has not agreed, and does not plan, to take any action that would
prevent Parent from accounting for the Merger as a "pooling of interests."
3.11 Fairness Opinion. Parent's Board of Directors has received the written
opinion of Xxxxxxxxx & Xxxxx LLC, financial advisor to Parent, dated as of the
date of this Agreement, to the effect that the Exchange Ratio is fair to Parent
from a financial point of view. Parent has furnished an accurate and complete
copy of said written opinion to the Company.
3.12 Tax Matters.
(a) All Tax Returns required to be filed by or on behalf of
the Parent and its Subsidiaries with any Governmental Body with respect to any
taxable period ending on or before the Closing Date (the "Parent Returns") (i)
have been or will be filed on or before the applicable due date (including any
extensions of such due date if properly obtained), and (ii) have been, or will
be when filed, prepared in all material respects in compliance with all
applicable Legal Requirements. All amounts shown on the Parent Returns to be due
on or before the Closing Date have been or will be paid on or before the Closing
Date.
(b) The Parent financial statements in the Parent SEC
Documents fully accrue all actual and contingent liabilities for Taxes with
respect to all periods through the dates thereof in accordance with GAAP. Parent
will establish, in the ordinary course of business and consistent with its past
practices, reserves adequate for the payment of all Taxes for the period from
the date of this Agreement through the Closing Date.
(c) Since the Parent Return for the taxable period ended
December 31, 1992, no Parent Return has ever been examined or audited by any
Governmental Body. No extension or waiver of the limitation period applicable to
any of the Parent Returns has been granted (by Parent or any other Person), and
no such extension or waiver has been requested from Parent or any of its
Subsidiaries.
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(d) No claim or Legal Proceeding is pending or, to the best of
the knowledge of the Parent, has been threatened against or with respect to
Parent or any of its Subsidiaries in respect of any material Tax. There are no
unsatisfied liabilities for material Taxes (including liabilities for interest,
additions to tax and penalties thereon and related expenses) with respect to any
notice of deficiency or similar document received by Parent or any of its
Subsidiaries with respect to any material Tax (other than liabilities for Taxes
asserted under any such notice of deficiency or similar document which are being
contested in good faith by Parent or any of its Subsidiaries and with respect to
which adequate reserves for payment have been established). There are no liens
for material Taxes upon any of the assets of any of Parent or any of its
Subsidiaries except liens for current Taxes not yet due and payable. Neither
Parent nor any of its Subsidiaries has entered into or become bound by any
agreement or consent pursuant to Section 341(f) of the Code. Neither Parent nor
any of its Subsidiaries has been, and neither Parent nor any of its Subsidiaries
will be, required to include any adjustment in taxable income for any tax period
(or portion thereof) pursuant to Section 481 or 263A of the Code or any
comparable provision under state or foreign Tax laws as a result of transactions
or events occurring, or accounting methods employed, prior to the Closing.
(e) There is no agreement, plan, arrangement or other Contract
covering any employee or independent contractor or former employee or
independent contractor of Parent or any of its Subsidiaries that, considered
individually or considered collectively with any other such Contracts, will, or
could reasonably be expected to, give rise directly or indirectly to the payment
of any amount that would not be deductible pursuant to Section 280G or Section
162 of the Code. Neither Parent nor any of its Subsidiaries is, or has ever
been, a party to or bound by any tax indemnity agreement, tax sharing agreement,
tax allocation agreement or similar Contract.
3.13 Environmental Matters. Except as set forth in Part 3.13 of the Parent
Disclosure Schedule, each of Parent and its Subsidiaries is in compliance in all
material respects with all applicable Environmental Laws, which compliance
includes the possession by each of Parent and its Subsidiaries of all permits
and other Governmental Authorizations required under applicable Environmental
Laws, and compliance with the terms and conditions thereof. Neither Parent nor
any of its Subsidiaries has received any notice or other communication (in
writing or otherwise), whether from a Governmental Body, citizens group,
employee or otherwise, that alleges that any of Parent or its Subsidiaries is
not in compliance with any Environmental Law, and, to the knowledge of Parent,
there are no circumstances that may prevent or interfere with the compliance by
Parent or any of its Subsidiaries with any Environmental Law in the future. To
the knowledge of the Parent, no current or prior owner of any property leased or
controlled by Parent or any of its Subsidiaries has received any notice or other
communication (in writing or otherwise), whether from a Government Body,
citizens group, employee or otherwise, that alleges that such current or prior
owner or Parent or any of its Subsidiaries is not in compliance with any
Environmental Law. To the knowledge of Parent, all property that is leased to,
controlled by or used by Parent, and all surface water, groundwater and soil
associated with or adjacent to such property is in clean and healthful condition
and is free of any material environmental contamination of any nature.
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3.14 Significant Customers. Part 3.14 of the Parent Disclosure Schedule
sets forth a complete and accurate list of all Parent's Significant Customers.
For purposes of this Agreement, "Parent's Significant Customers" are the twenty
(20) customers of the Parent that have effected the most purchases, in dollar
terms, and accounted for the most revenues, in dollar terms, during the fiscal
year ended December 31, 1997. None of the Parent's Significant Customers has
canceled, returned or substantially reduced or, to the knowledge of the Parent,
is currently attempting or threatening to cancel, return or substantially
reduce, any purchases from, orders to or services provided by the Parent. Parent
has not received any material customer complaints concerning its products and/or
services.
3.15 Year 2000 Liabilities. Neither Parent nor any of its Subsidiaries has
any accrued, contingent or other liabilities of any nature, either matured or
unmatured, including, without limitation, any liabilities relating to costs
associated with insuring that all software (and related Parent Proprietary
Assets) that is sold, licensed or transferred by Parent or any of its
Subsidiaries to any Person, computer systems, any software utilized by the
Parent or other components of the Parent's information technology infrastructure
are Year 2000 Compliant (whether or not required to be reflected in financial
statements in accordance with GAAP, and whether due or to become due), except
for: (a) liabilities identified as such in the "liabilities" column of the
Parent Unaudited Interim Balance Sheet as of June 30, 1998 included in the
Parent's Quarterly Report on Form 10-Q for the quarter ended June 30, 1998; and
(b) normal and recurring liabilities that have been incurred by Parent since the
date of the Parent Unaudited Interim Balance Sheet in the ordinary course of
business and consistent with past practices.
Section 4. CERTAIN COVENANTS OF THE COMPANY.
4.1 Access and Investigation. During the period from the date of this
Agreement through the Effective Time (the "Pre-Closing Period"), the Company
shall, and shall cause the respective Representatives of the Acquired
Corporations to: (a) provide Parent and Parent's Representatives with reasonable
access to the Acquired Corporations' Representatives, personnel and assets and
to all existing books, records, Tax Returns, work papers and other documents and
information relating to the Acquired Corporations; and (b) provide Parent and
Parent's Representatives with such copies of the existing books, records, Tax
Returns, work papers and other documents and information relating to the
Acquired Corporations, and with such additional financial, operating and other
data and information regarding the Acquired Corporations, as Parent may
reasonably request. Without limiting the generality of the foregoing, during the
Pre-Closing Period, the Company shall promptly provide Parent with copies of:
(a) any written materials or communications sent by or on
behalf of the Company to its shareholders;
(b) any material notice, document or other communication sent
by or on behalf of any of the Acquired Corporations to any party to any Material
Contract or sent to any of the Acquired Corporations by any party to any
Material Contract (other than any communication that relates solely to
commercial transactions between the Company and the other party to any such
Material Contract and that is of the type sent in the ordinary course of
business and consistent with past practices);
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(c) any notice, report or other document filed with or sent to
any Governmental Body in connection with the Merger or any of the other
transactions contemplated by this Agreement; and
(d) any material notice, report or other document received by
any of the Acquired Corporations from any Governmental Body.
4.2 Operation of the Company's Business.
(a) During the Pre-Closing Period: (i) the Company shall
ensure that each of the Acquired Corporations conducts its business and
operations (A) in the ordinary course and in accordance with past practices and
(B) in compliance with all applicable Legal Requirements and the requirements of
all Acquired Company Contracts that constitute Material Contracts; (ii) the
Company shall use all reasonable efforts to ensure that each of the Acquired
Corporations preserves intact its current business organization, keeps available
the services of its current officers and employees and maintains its relations
and goodwill with all suppliers, customers, landlords, creditors, licensors,
licensees, employees and other Persons having business relationships with the
respective Acquired Corporations; (iii) the Company shall keep in full force all
insurance policies referred to in Section 2.18; (iv) the Company shall provide
all notices, assurances and support required by any Acquired Corporation
Contract relating to any Proprietary Asset in order to ensure that no condition
under such Acquired Corporation Contract occurs which could result in, or could
increase the likelihood of, (A) any transfer or disclosure by any Acquired
Corporation of any source code materials or other Proprietary Asset, or (B) a
release from any escrow of any source code materials or other Proprietary Asset
which have been deposited or are required to be deposited in escrow under the
terms of such Acquired Corporation Contract; and (v) the Company shall (to the
extent requested by Parent) cause its officers to report regularly to Parent
concerning the status of the Company's business.
(b) During the Pre-Closing Period, the Company shall not
(without the prior written consent of Parent), and shall not permit any of the
other Acquired Corporations to:
(i) declare, accrue, set aside or pay any dividend
or make any other distribution in respect of any shares of capital stock, or
repurchase, redeem or otherwise reacquire any shares of capital stock or other
securities;
(ii) sell, issue, grant or authorize the issuance or
grant of (i) any capital stock or other security, (ii) any option, call, warrant
or right to acquire any capital stock or other security, or (iii) any instrument
convertible into or exchangeable for any capital stock or other security (except
that the Company may (A) issue Company Common Stock upon the valid exercise of
Company Options or Company Warrants outstanding as of the date of this Agreement
and (B) in the ordinary course of business and consistent with past practices,
grant options exercisable into not more than two hundred fifty (250) shares of
Company Common Stock per newly-hired employee);
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(iii) amend or waive any of its rights under, or
accelerate the vesting under, any provision of any of the Company's stock option
plans, any provision of any agreement evidencing any outstanding stock option or
any restricted stock purchase agreement, or otherwise modify any of the terms of
any outstanding option, warrant or other security or any related Contract;
(iv) amend or permit the adoption of any amendment
to its articles of incorporation or bylaws or other charter or organizational
documents, or effect or become a party to any merger, consolidation, share
exchange, business combination, recapitalization, reclassification of shares,
stock split, reverse stock split or similar transaction;
(v) form any subsidiary or acquire any equity
interest or other interest in any other Entity;
(vi) make any capital expenditure (except that the
Acquired Corporations may make capital expenditures that, when added to all
other capital expenditures made on behalf of the Acquired Corporations during
the Pre-Closing Period, do not exceed $50,000 with respect to any single capital
expenditure or $100,000 in the aggregate);
(vii) enter into or become bound by, or permit any
of the assets owned or used by it to become bound by, any Material Contract
(other than Contracts identified pursuant to Section 2.10(a)(viii) hereunder),
or amend or prematurely terminate, or waive or exercise any material right or
remedy (including any right to repurchase shares of Company Common Stock) under,
any Material Contract (other than Contracts identified pursuant to Section
2.10(a)(viii) hereunder);
(viii) acquire, lease or license any right or other
asset from any other Person or sell or otherwise dispose of, or lease or
license, any right or other asset to any other Person (except in each case for
immaterial assets acquired, leased, licensed or disposed of by the Company in
the ordinary course of business and consistent with past practices), or waive or
relinquish any material right;
(ix) incur any indebtedness for borrowed money
(other than (i) in connection with the financing of ordinary trade payables;
(ii) pursuant to existing credit facilities; (iii) in connection with leasing
activities in the ordinary course of business; or (iv) for tax planning purposes
in the ordinary course of business) or guarantee any indebtedness of any person
for borrowed money, or issue or sell any debt securities or warrants or right to
acquire debt securities of any of the Acquired Corporations or guarantee any
debt securities of others.
(x) except in the ordinary course of business and
consistent with past practices, establish, adopt or amend any employee benefit
plan, pay any bonus except in accordance with the terms of existing Plans or
pursuant to commitments made prior to the date of this Agreement, or make any
profit-sharing or similar payment to, or increase the amount of the wages,
salary, commissions, fringe benefits or other compensation or remuneration
payable to, any of its directors, officers or employees;
34
(xi) grant any severance or termination pay to any
officer or employee except payments in amounts consistent with policies and past
practices or pursuant to written agreements outstanding, or policies existing,
on the date hereof and as previously disclosed in writing or made available to
Parent, or adopt any new severance plan;
(xii) hire any new employee having an annual salary
in excess of $100,000 or as an officer of the Company or engage any consultant
or independent contractor for a period exceeding sixty (60) days;
(xiii) change the status, title or responsibilities,
including without limitation, termination or promotion, of any officer of the
Company or promote any employee to an officer position in the Company;
(xiv) transfer or license to any Person or otherwise
extend the term of any agreement with respect to, amend or modify in any
material respect any rights (including without limitation distribution rights)
to the Proprietary Assets of the Acquired Corporations, or enter into
assignments of future patent rights, other than non-exclusive licenses and
distribution rights in the ordinary course of business and consistent with past
practice;
(xv) sell, lease, license, encumber or otherwise
dispose of any properties or assets which are material, individually or in the
aggregate, to the business of the Company, except in the ordinary course of
business consistent with past practice or lend funds to any third party (other
than intracompany loans and travel advances in the ordinary course of business);
(xvi) change any of its methods of accounting or
accounting practices in any respect;
(xvii) make any election with respect to Taxes;
(xviii) commence or settle any Legal Proceeding;
(xix) enter into any material transaction or take
any other material action outside the ordinary course of business or
inconsistent with past practices;
(xx) enter into any agreement requiring the consent
or approval of any third party with respect to the Merger; or
(xxi) agree or commit to take any of the actions
described in clauses "(i)" through "(xx)" of this Section 4.2(b).
35
(c) During the Pre-Closing Period, the Company shall promptly
notify Parent in writing of: (i) the discovery by the Company of any event,
condition, fact or circumstance that occurred or existed on or prior to the date
of this Agreement and that caused or constitutes a material inaccuracy in any
representation or warranty made by the Company in this Agreement; (ii) any
event, condition, fact or circumstance that occurs, arises or exists after the
date of this Agreement and that would cause or constitute a material inaccuracy
in any representation or warranty made by the Company in this Agreement if (A)
such representation or warranty had been made as of the time of the occurrence,
existence or discovery of such event, condition, fact or circumstance, or (B)
such event, condition, fact or circumstance had occurred, arisen or existed on
or prior to the date of this Agreement; (iii) any event, condition, fact or
circumstance hereafter arising which, if existing or occurring at the date of
this Agreement, would have been required to be set forth or described in the
Company Disclosure Schedule; (iv) any material breach of any covenant or
obligation of the Company; and (v) any event, condition, fact or circumstance
that would make the timely satisfaction of any of the conditions set forth in
Section 6 or Section 7 impossible or unlikely or that has had or could
reasonably be expected to have a Material Adverse Effect on the Acquired
Corporations. No notification given to Parent pursuant to this Section 4.2(c)
shall limit or otherwise affect any representations, warranties, covenants or
obligations of the Company contained in this Agreement.
(d) If any event, condition, fact or circumstance that is
required to be disclosed pursuant to Section 4.2(c) requires any change in the
Company Disclosure Schedule, or if any such event, condition, fact or
circumstance would require such a change assuming Company Disclosure Schedule
were dated as of the date of the occurrence, existence or discovery of such
event, condition, fact or circumstance, then the Company shall promptly deliver
to Parent an update to the Company Disclosure Schedule specifying such change.
No such update shall be deemed to supplement or amend the Company Disclosure
Schedule for the purpose of (i) determining the accuracy of any of the
representations and warranties made by the Company in this Agreement, or (ii)
determining whether any of the conditions set forth in Section 6 has been
satisfied.
4.3 No Solicitation.
(a) From the date of this Agreement until the earlier of the
Effective Time or termination of this Agreement pursuant to Section 8, the
Company shall not directly or indirectly, and shall not authorize or permit any
subsidiary of the Company or any Representative of any of the Acquired
Corporations directly or indirectly to, (i) solicit, initiate, encourage or
induce the making, submission or announcement of any Acquisition Proposal or
take any action that could reasonably be expected to lead to an Acquisition
Proposal, (ii) furnish any information regarding any of the Acquired
Corporations to any Person in connection with or in response to an Acquisition
Proposal, (iii) engage in discussions with any Person with respect to any
Acquisition Proposal, (iv) approve, endorse or recommend any Acquisition
Proposal or (v) enter into any letter of intent or similar document or any
Contract contemplating or otherwise relating to any Acquisition Transaction;
provided, however, that prior to the approval of this Agreement by the Required
Company Shareholder Vote, this Section 4.3(a) shall not prohibit the Company
from furnishing nonpublic information regarding the Acquired Corporations to, or
entering into discussions with, any Person in response to a Superior Offer
submitted by such Person (and not withdrawn) if (1) neither the Company nor any
Representative of any of the Acquired Corporations shall have violated any of
the restrictions set forth in this Section 4.3, (2) the Board of Directors of
the Company concludes in good faith, based upon the advice of its outside legal
counsel, that such action is required in order for the Board of Directors of the
Company to comply with its fiduciary obligations to the Company's shareholders
under applicable law, (3) prior to furnishing any such nonpublic information to,
or entering into discussions with, such Person, the Company gives Parent written
notice of the identity of such Person and of the Company's intention to furnish
nonpublic information to, or enter into discussions with, such Person, and the
Company receives from such Person an executed confidentiality agreement
containing customary limitations on the use and disclosure of all nonpublic
written and oral information furnished to such Person by or on behalf of the
Company, and (4) prior to furnishing any such nonpublic information to such
Person, the Company furnishes such nonpublic information to Parent (to the
extent such nonpublic information has not been previously furnished by the
Company to Parent). Without limiting the generality of the foregoing, the
Company acknowledges and agrees that any violation of any of the restrictions
set forth in the preceding sentence by any Representative of any of the Acquired
Corporations, whether or not such Representative is purporting to act on behalf
of any of the Acquired Corporations, shall be deemed to constitute a breach of
this Section 4.3 by the Company. In addition to the foregoing, the Company shall
(i) provide Parent with at least twenty-four (24) hours prior notice of any
meeting of the Company's Board of Directors at which the Company's Board of
Directors is reasonably expected to consider a Superior Offer and (ii) not
recommend a Superior Offer to its shareholders for a period of not less than the
greater of two (2) business days or forty-eight (48) hours after Parent's
receipt of a copy of such Superior Offer (pursuant to Section 4.3(b) below).
36
(b) The Company shall promptly advise Parent orally and in
writing of any Acquisition Proposal (including the identity of the Person making
or submitting such Acquisition Proposal and the terms thereof) that is made or
submitted by any Person during the Pre-Closing Period. The Company shall keep
Parent fully informed with respect to the status of any such Acquisition
Proposal and any modification or proposed modification thereto.
(c) The Company shall immediately cease and cause to be
terminated any existing discussions with any Person that relate to any
Acquisition Proposal.
Section 5. ADDITIONAL COVENANTS OF THE PARTIES.
5.1 Registration Statement; Joint Proxy Statement/Prospectus.
(a) As promptly as practicable after the date of this
Agreement, the Company and Parent shall prepare and cause to be filed with the
SEC the S-4 Registration Statement, together with the Joint Proxy
Statement/Prospectus and any other documents required by the Securities Act, the
Exchange Act or any other Federal, foreign or Blue Sky or related laws in
connection with the Merger and the transactions contemplated by this Agreement
("Other Filings"). Each of Parent and the Company will notify the other promptly
upon the receipt of any comments from the SEC or its staff or any other
government officials and of any request by the SEC or its staff or any other
government officials for amendments or supplements to the S-4 Registration
Statement, the Joint Proxy Statement/Prospectus or any Other Filings or for
additional information and will supply the other with copies of all
correspondence between such party or any of its representatives, on the one
hand, and the SEC, or its staff or any other government officials, on the other
hand, with respect to the S-4 Registration Statement, the Joint Proxy
Statement/Prospectus, any Other Filings or the Merger. Each of Parent and the
Company shall use all reasonable efforts to cause the S-4 Registration Statement
(including the Joint Proxy Statement/Prospectus) and any Other Filings to comply
with the rules and regulations promulgated by the SEC, to respond promptly to
any comments of the SEC or its staff and to have the S-4 Registration Statement
declared effective under the Securities Act as promptly as practicable after it
is filed with the SEC. Parent will use all reasonable efforts to cause the Joint
Proxy Statement/Prospectus to be mailed to Parent's stockholders and the Company
will use all reasonable efforts to cause the Joint Proxy Statement/Prospectus to
be mailed to the Company's shareholders, as promptly as practicable after the
Form S-4 Registration Statement is declared effective under the Securities Act.
The Company shall promptly furnish to Parent all information concerning the
Acquired Corporations and the Company's shareholders that may be required or
reasonably requested in connection with any action contemplated by this Section
5.1. If any event relating to any of the Acquired Corporations occurs, or if the
Company becomes aware of any information, that should be set forth in an
amendment or supplement to the S-4 Registration Statement or the Joint Proxy
Statement/Prospectus, then the Company shall promptly inform Parent thereof and
shall cooperate with Parent in filing such amendment or supplement with the SEC
and, if appropriate, in mailing such amendment or supplement to the shareholders
of the Company and the stockholders of Parent.
(b) Prior to the Effective Time, Parent shall use reasonable
efforts to obtain all regulatory approvals needed to ensure that the Parent
Common Stock to be issued in the Merger will be registered or qualified under
the securities law of every jurisdiction of the United States in which any
registered holder of Company Common Stock has an address of record on the record
date for determining the shareholders entitled to notice of and to vote at the
Company Shareholders' Meeting; provided, however, that Parent shall not be
required (i) to qualify to do business as a foreign corporation in any
jurisdiction in which it is not now qualified or (ii) to file a general consent
to service of process in any jurisdiction.
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5.2 Company Shareholders' Meeting.
(a) The Company shall take all action necessary under all
applicable Legal Requirements to call, give notice of, convene and hold a
meeting of the holders of Company Common Stock (the "Company Shareholders'
Meeting") to consider, act upon and vote upon the adoption of this Agreement and
approval of the Merger. The Company Shareholders' Meeting will be held as
promptly as practicable and in any event within forty-five (45) days after the
S-4 Registration Statement is declared effective under the Securities Act;
provided, however, that notwithstanding anything to the contrary contained in
this Agreement, the Company may adjourn or postpone the Company Shareholders'
Meeting to the extent necessary to ensure that any necessary supplement or
amendment to the Joint Proxy Statement/Prospectus is provided to the Company's
shareholders in advance of a vote on the Merger and this Agreement or, if as of
the time for which Company Shareholders' Meeting is originally scheduled (as set
forth in the Joint Proxy Statement/Prospectus) there are insufficient shares of
Company Common Stock represented (either in person or by proxy) to constitute a
quorum necessary to conduct the business of the Company's Shareholders' Meeting.
The Company shall ensure that the Company Shareholders' Meeting is called,
noticed, convened, held and conducted, and that all proxies solicited in
connection with the Company Shareholders' Meeting are solicited, in compliance
with all applicable Legal Requirements. The Company's obligation to call, give
notice of, convene and hold the Company Shareholders' Meeting in accordance with
this Section 5.2(a) shall not be limited or otherwise affected by the
commencement, disclosure, announcement or submission to the Company of any
Acquisition Proposal, or by any withdrawal, amendment or modification of the
recommendation of the Board of Directors of the Company with respect to the
Merger.
(b) Subject to Section 5.2(c): (i) the Board of Directors of
the Company shall unanimously recommend that the Company's shareholders vote in
favor of and adopt and approve this Agreement and the Merger at the Company
Shareholders' Meeting; (ii) the Joint Proxy Statement/Prospectus shall include a
statement to the effect that the Board of Directors of the Company has
unanimously recommended that the Company's shareholders vote in favor of and
adopt and approve this Agreement and the Merger at the Company Shareholders'
Meeting; and (iii) neither the Board of Directors of the Company nor any
committee thereof shall withdraw, amend or modify, or propose or resolve to
withdraw, amend or modify, in a manner adverse to Parent, the unanimous
recommendation of the Board of Directors of the Company that the Company's
shareholders vote in favor of and adopt and approve this Agreement and the
Merger. For purposes of this Agreement, said recommendation of the Board of
Directors shall be deemed to have been modified in a manner adverse to Parent if
said recommendation shall no longer be unanimous.
(c) Nothing in Section 5.2(b) shall prevent the Board of
Directors of the Company from withdrawing, amending or modifying its unanimous
recommendation in favor of the Merger if (i) a Superior Offer is made to the
Company and is not withdrawn, (ii) neither the Company nor any of its
Representatives shall have violated any of the restrictions set forth in Section
4.3, and (iii) the Board of Directors of the Company concludes in good faith,
based upon the advice of its outside counsel, that, in light of such Superior
Offer, the withdrawal, amendment or modification of such recommendation is
required in order for the Board of Directors of the Company to comply with its
fiduciary obligations to the Company's shareholders under applicable law.
Nothing contained in this Section 5.2 shall limit the Company's obligation to
hold and convene the Company Shareholders' Meeting (regardless of whether the
unanimous recommendation of the Board of Directors of the Company shall have
been withdrawn, amended or modified).
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5.3 Parent Stockholders' Meeting.
(a) Parent shall take all action necessary to call, give
notice of, convene and hold a meeting of the holders of Parent Common Stock to
consider and vote upon the issuance of Parent Common Stock in the Merger (the
"Parent Stockholders' Meeting"). The Parent Stockholders' Meeting will be held
as promptly as practicable and in any event within forty-five (45) days after
the S-4 Registration Statement is declared effective under the Securities Act;
provided, however, that notwithstanding anything to the contrary contained in
this Agreement, Parent may adjourn or postpone the Parent Stockholders' Meeting
to the extent necessary to ensure that any necessary supplement or amendment to
the Joint Proxy Statement/Prospectus is provided to Parent's stockholders in
advance of a vote on the issuance of Parent Common Stock in the Merger or, if as
of the time for which the Parent Stockholders' Meeting is originally scheduled
(as set forth in the Joint Proxy Statement/Prospectus) there are insufficient
shares of Parent Common Stock represented (either in person or by proxy) to
constitute a quorum necessary to conduct the business of the Parent's
Stockholders' Meeting.
(b) (i) The board of directors of Parent shall unanimously
recommend that Parent's stockholders vote in favor of the issuance of Parent
Common Stock in the Merger; (ii) the Joint Proxy Statement/Prospectus shall
include a statement to the effect that the board of directors of Parent has
unanimously recommended that Parent's stockholders vote in favor of the issuance
of Parent Common Stock in the Merger; and (iii) neither the board of directors
of Parent nor any committee thereof shall withdraw, amend or modify, or propose
or resolve to withdraw, amend or modify, in a manner adverse to the Company, the
unanimous recommendation of the board of directors of Parent that Parent's
stockholders vote in favor of the issuance of Parent Common Stock in the Merger.
For purposes of this Agreement, said recommendation of Parent's board of
directors shall be deemed to have been modified in a manner adverse to the
Company if said recommendation shall no longer be unanimous.
5.4 Regulatory Approvals. The Company and Parent shall use all reasonable
efforts to file, as soon as practicable after the date of this Agreement, all
notices, reports and other documents required to be filed with any Governmental
Body with respect to the Merger and the other transactions contemplated by this
Agreement, and to submit promptly any additional information requested by any
such Governmental Body. The Company and Parent shall respond as promptly as
practicable to any inquiries or requests received from any state attorney
general or other Governmental Body in connection with antitrust or related
matters. Each of the Company and Parent shall (1) give the other party prompt
notice of the commencement of any Legal Proceeding by or before any Governmental
Body with respect to the Merger or any of the other transactions contemplated by
this Agreement, (2) keep the other party informed as to the status of any such
Legal Proceeding, and (3) promptly inform the other party of any communication
to or from the Federal Trade Commission, the Department of Justice or any other
Governmental Body regarding the Merger. The Company and Parent will consult and
cooperate with one another, and will consider in good faith the views of one
another, in connection with any analysis, appearance, presentation, memorandum,
brief, argument, opinion or proposal made or submitted in connection with any
Legal Proceeding under or any other federal or state antitrust or fair trade
law. In addition, except as may be prohibited by any Governmental Body or by any
Legal Requirement, in connection with any Legal Proceeding under or any other
federal or state antitrust or fair trade law or any other similar Legal
Proceeding, each of the Company and Parent agrees to permit authorized
Representatives of the other party to be present at each meeting or conference
relating to any such Legal Proceeding and to have access to and be consulted in
connection with any document, opinion or proposal made or submitted to any
Governmental Body in connection with any such Legal Proceeding.
39
5.5 Stock Options.
(a) Subject to Section 5.5(b), at the Effective Time, all
rights with respect to Company Common Stock under each Company Option then
outstanding shall be converted into and become rights with respect to Parent
Common Stock, and Parent shall assume each such Company Option in accordance
with the requirements of Section 424(a) of the Code (as in effect as of the date
of this Agreement) and the terms of the stock option plan under which it was
issued and the stock option agreement by which it is evidenced. From and after
the Effective Time, (i) each Company Option assumed by Parent may be exercised
solely for shares of Parent Common Stock, (ii) the number of shares of Parent
Common Stock subject to each such Company Option shall be equal to the number of
shares of Company Common Stock subject to such Company Option immediately prior
to the Effective Time multiplied by the Exchange Ratio, rounding down to the
nearest whole share (with cash, less the applicable exercise price, being
payable for any fraction of a share), (iii) the per share exercise price under
each such Company Option shall be adjusted by dividing the per share exercise
price under such Company Option by the Exchange Ratio and rounding up to the
nearest cent and (iv) any restriction on the exercise of any such Company Option
shall continue in full force and effect and the term, exercisability, vesting
schedule and other provisions of such Company Option shall otherwise remain
unchanged; provided, however, that each Company Option assumed by Parent in
accordance with this Section 5.5(a) shall, in accordance with its terms, be
subject to further adjustment as appropriate to reflect any stock split, stock
dividend, reverse stock split, reclassification, recapitalization or other
similar transaction subsequent to the Effective Time.
(b) Notwithstanding anything to the contrary contained in this
Section 5.5, in lieu of assuming outstanding Company Options in accordance with
Section 5.5(a), Parent may, at its election, cause such outstanding Company
Options to be replaced by issuing equivalent replacement stock options in
substitution therefor that are substantially the same.
(c) The Company shall take all action that may be necessary
(under the plans pursuant to which Company Options are outstanding and
otherwise) to effectuate the provisions of this Section 5.5 and to ensure that,
from and after the Effective Time, holders of Company Options have no rights
with respect thereto other than those specifically provided in this Section 5.5.
5.6 Form S-8. Parent agrees to file a registration statement on Form S-8
for the shares of Parent Common Stock issuable with respect to assumed Company
Options as soon as reasonably practical (and in any event within sixty (60)
days) after the Effective Time.
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5.7 Warrants. At the Effective Time, all rights with respect to Company
Common Stock under Company Warrants that are then outstanding shall be converted
into and become rights with respect to Parent Common Stock, and Parent shall
assume each Company Warrant in accordance with the terms (as in effect as of the
date hereof) of such Company Warrants. From and after the Effective Time, (a)
each Company Warrant assumed by Parent may be exercised solely for shares of
Parent Common Stock, (b) the number of shares of Parent Common Stock subject to
each Company Warrant shall be equal to the number of shares of Company Common
Stock subject to such Company Warrant immediately prior to the Effective Time
multiplied by the Exchange Ratio, rounding down to the nearest whole share (with
cash, less the applicable exercise price, being payable for any fraction of a
share), (c) the per share exercise price under each such Company Warrant shall
be adjusted by dividing the per share exercise price under such Company Warrant
by the Exchange Ratio and rounding up to the nearest cent and (d) any
restriction on the exercise of any Company Warrant shall continue in full force
and effect and the term, exercisability, schedule and other provisions of such
Company Warrant shall otherwise remain unchanged; provided, however, that such
Company Warrant shall, in accordance with its terms, be subject to further
adjustment as appropriate to reflect any stock split, stock dividend,
recapitalization or other similar transaction subsequent to the Effective Time.
The Company shall take all action that may be necessary (under the Company
Warrants and otherwise) to effectuate the provisions of this Section 5.7 and to
ensure that, from and after the Effective Time, holders of Company Warrants have
no rights with respect thereto other than those specifically provided herein.
5.8 Indemnification of Officers and Directors.
(a) All rights to indemnification existing in favor of the
current directors and officers of the Company for acts and omissions occurring
prior to the Effective Time, as provided in the Company's Bylaws (as in effect
as of the date of this Agreement) and as provided in any indemnification
agreements between the Company and said officers and directors (as in effect as
of the date of this Agreement), shall survive the Merger and shall be observed
by Parent and the Surviving Corporation for a period of not less than six (6)
years from the Effective Time.
(b) From the Effective Time until the third anniversary of the
date on which the Merger becomes effective, the Surviving Corporation shall
maintain in effect, for the benefit of the current directors and officers of the
Company with respect to acts or omissions occurring prior to the Effective Time,
the lesser of (i) the existing amount of coverage of the existing policy of
directors' and officers' liability insurance maintained by the Company as of the
date of this Agreement (the " Existing Policy") and (ii) the amount of coverage
purchased by 150% of the amount of the last annual premium paid by the Company
prior to the date of this Agreement for the Existing Policy; provided, however,
that the Surviving Corporation may substitute for the Existing Policy a policy
or policies of comparable coverage.
5.9 Pooling of Interests; Tax Free Reorganization. Each of the Company and
Parent agrees (a) not to take any action during the Pre-Closing Period that
would adversely affect the ability of Parent to account for the Merger as a
"pooling of interests," (b) to use all reasonable efforts to attempt to ensure
that none of its "affiliates" (as that term is used in Rule 145 promulgated
under the Securities Act) takes any action that could adversely affect the
ability of Parent to account for the Merger as a "pooling of interests" and (c)
not to take any action either prior to or after the Effective Time that could
reasonably be expected to cause the Merger to fail to qualify as a
"reorganization" under Section 368(a) of the Code. The Company agrees to provide
KPMG Peat Marwick LLP and Xxxxx Xxxxxxxx LLP such letters as may be reasonably
requested by either of them with respect to the letters referred to in Sections
6.6(b) and 6.6(c).
41
5.10 Additional Agreements.
(a) Subject to Section 5.10(b), Parent and the Company shall
use all reasonable efforts to take, or cause to be taken, all actions necessary
to consummate the Merger and make effective the other transactions contemplated
by this Agreement. Without limiting the generality of the foregoing, but subject
to Section 5.10(b), each party to this Agreement (i) shall make all filings (if
any) and give all notices (if any) required to be made and given by such party
in connection with the Merger and the other transactions contemplated by this
Agreement, (ii) shall use all reasonable efforts to obtain each Consent (if any)
required to be obtained (pursuant to any applicable Legal Requirement or
Contract, or otherwise) by such party in connection with the Merger or any of
the other transactions contemplated by this Agreement, and (iii) shall use all
reasonable efforts to lift any restraint, injunction or other legal bar to the
Merger. The Company shall promptly deliver to Parent a copy of each such filing
made, each such notice given and each such Consent obtained by the Company
during the Pre-Closing Period.
(b) Notwithstanding anything to the contrary contained in this
Agreement, Parent shall not have any obligation under this Agreement: (i) to
dispose or cause any of its subsidiaries to dispose of any assets, or to commit
to cause any of the Acquired Corporations to dispose of any assets; (ii) to
discontinue or cause any of its subsidiaries to discontinue offering any
product, or to commit to cause any of the Acquired Corporations to discontinue
offering any product; (iii) to license or otherwise make available, or cause any
of its subsidiaries to license or otherwise make available, to any Person, any
technology, software or other Proprietary Asset, or to commit to cause any of
the Acquired Corporations to license or otherwise make available to any Person
any technology, software or other Proprietary Asset; (iv) to hold separate or
cause any of its subsidiaries to hold separate any assets or operations (either
before or after the Closing Date), or to commit to cause any of the Acquired
Corporations to hold separate any assets or operations; or (v) to make or cause
any of its Subsidiaries to make any commitment (to any Governmental Body or
otherwise) regarding its future operations or the future operations of any of
the Acquired Corporations.
5.11 Confidentiality. The parties acknowledge that the Company and Parent
have previously executed a Mutual Non-Disclosure Agreement, dated as of June 16,
1998 (the "Confidentiality Agreement"), which Confidentiality Agreement will
continue in full force and effect in accordance with its terms.
5.12 Disclosure. Parent and the Company have agreed to the text of a joint
press release announcing the signing of this Agreement and shall consult with
each other before issuing any other press release or otherwise making any public
statement with respect to the Merger or any of the other transactions
contemplated by this Agreement. Without limiting the generality of the
foregoing, the Company shall not, and shall not permit any of its
Representatives to, make any disclosure regarding the Merger or any of the other
transactions contemplated by this Agreement unless (a) Parent shall have
approved such disclosure or (b) the Company shall have been advised in writing
by its outside legal counsel that such disclosure is required by applicable law.
42
5.13 Tax Matters.
(a) At or prior to the filing of the S-4 Registration
Statement, Parent and Merger Sub and the Company shall execute and deliver to
Xxxxxx Godward LLP and to Saul, Ewing, Xxxxxx & Xxxx LLP tax representation
letters in the forms attached as Exhibit G-1 and G-2, as applicable;
(b) Parent, Merger Sub and the Company shall each confirm to
Xxxxxx Godward LLP and to Saul, Ewing, Xxxxxx & Xxxx LLP the accuracy and
completeness as of the Effective Time of the tax representation letters
delivered pursuant to Section 5.13(a);
(c) Parent, Merger Sub and the Company shall use all
reasonable efforts to cause the Merger to qualify as a tax free reorganization
under Section 368(a)(1) of the Code; and
(d) Following delivery of the tax representation letters
pursuant to Section 5.13(a), each of Parent and the Company shall use its
reasonable efforts to cause Xxxxxx Godward LLP and Saul, Ewing, Xxxxxx & Xxxx
LLP, respectively, to deliver promptly to it a legal opinion satisfying the
requirements of Item 601 of Regulation S-K promulgated under the Securities Act.
In rendering such opinions, each of such counsel shall be entitled to rely on
the tax representation letters delivered pursuant to Section 5.13(a).
5.14 Resignation of Officers and Directors. The Company shall use all
reasonable efforts to obtain and deliver to Parent prior to the Closing the
resignation of each officer and director of the Company.
5.15 Nasdaq Listing. Parent shall use all reasonable efforts to have the
shares of Parent Common Stock issuable to the shareholders of the Company
pursuant to the Agreement and such other shares required to be reserved for
issuance in connection with the Merger authorized for listing on Nasdaq upon
official notice of issuance.
5.16 FIRPTA Matters. At the Closing, (a) the Company shall deliver to
Parent a statement (in such form as may be reasonably requested by counsel to
Parent) conforming to the requirements of Section 1.897 - 2(h)(1)(i) of the
United States Treasury Regulations, and (b) the Company shall deliver to the
Internal Revenue Service the notification required under Xxxxxxx 0.000 - 0(x)(0)
xx xxx Xxxxxx Xxxxxx Treasury Regulations.
5.17 Parent Board of Directors. As soon as practicable after the Effective
Time, Parent shall use reasonable efforts to nominate and appoint (i) Xxxxxx X.
Xxxxxx, or such other nominee designated by the Company, to Class I of its Board
of Directors to serve until the annual meeting of stockholders to be held in
1999 and (ii) Xxxxx X. Xxxxxx, or such other nominee designated by the Company,
to Class II of its Board of Directors to serve until the annual meeting of
stockholders to be held in 2000.
5.18 Access to Information. During the Pre-Closing Period, Parent shall,
and shall cause its Representatives, to: (a) provide the Company and its
Representatives with reasonable access to Parent's Representatives, personnel
and assets and to all existing books, records, Tax Returns, work papers and
other documents and information relating to Parent and its Subsidiaries; and (b)
provide the Company and its Representatives with such copies of the existing
books, records, Tax Returns, work papers and other documents and information
relating to Parent and its Subsidiaries, and with such additional financial,
operating and other data and information regarding Parent and its Subsidiaries,
as the Company may reasonably request. Without limiting the generality of the
foregoing, during the Pre-Closing Period, Parent shall promptly provide the
Company with copies of any notice, report or other document filed with or sent
to any Governmental Body in connection with the Merger or any of the other
transactions contemplated by this Agreement.
43
Section 6. CONDITIONS PRECEDENT TO OBLIGATIONS OF PARENT AND MERGER SUB.
The obligations of Parent and Merger Sub to effect the Merger and
otherwise consummate the transactions contemplated by this Agreement are subject
to the satisfaction, at or prior to the Closing, of each of the following
conditions, and upon consummation of the Closing, all conditions herein shall be
deemed satisfied and any liability for failure to satisfy any condition herein
shall be precluded:
6.1 Accuracy of Representations. The representations and warranties of the
Company contained in this Agreement shall have been accurate in all material
respects as of the date of this Agreement and shall be accurate in all material
respects as of the Closing Date as if made on and as of the Closing Date;
provided, however, that any representations and warranties qualified by
"Material Adverse Effect" or other materiality qualifications are accurate in
all respects as of the date of this Agreement and shall be accurate in all
respects as of the Closing Date as if made on and as of the Closing Date.
6.2 Performance of Covenants. Each covenant or obligation that the Company
is required to comply with or to perform at or prior to the Closing shall have
been complied with and performed in all material respects.
6.3 Effectiveness of Registration Statement. The S-4 Registration Statement
shall have become effective in accordance with the provisions of the Securities
Act, and no stop order shall have been issued by the SEC with respect to the S-4
Registration Statement.
6.4 Stockholder Approval. This Agreement and the Merger shall have been
duly approved by the Required Company Shareholder Vote, and the issuance of
Parent Common Stock in the Merger shall have been duly approved by the Required
Parent Stockholder Vote. Fewer than 10% of the outstanding shares of Company
Common Stock shall be Dissenting Shares.
6.5 Consents. All material Consents required to be obtained in connection
with the Merger and the other transactions contemplated by this Agreement
(including the Consents identified in Part 2.25 of the Company Disclosure
Schedule) shall have been obtained and shall be in full force and effect.
44
6.6 Agreements and Documents. Parent and Merger Sub shall have received the
following agreements and documents, each of which shall be in full force and
effect:
(a) the statement referred to in Section 5.16(b), executed by
the Company;
(b) a letter from KPMG Peat Marwick LLP, dated as of the
Closing Date and addressed to Parent and the Company, reasonably satisfactory in
form and substance to Parent and Xxxxx Xxxxxxxx LLP, to the effect that, after
reasonable investigation, KPMG Peat Marwick LLP is not aware of any fact
concerning the Company or any of the Company's shareholders or affiliates that
could preclude Parent from accounting for the Merger as a "pooling of interests"
in accordance with GAAP, Accounting Principles Board Opinion No. 16 and all
published rules, regulations and policies of the SEC;
(c) a letter from Xxxxx Xxxxxxxx LLP, dated as of the Closing
Date and addressed to Parent, reasonably satisfactory in form and substance to
Parent, to the effect that, after reasonable investigation, Xxxxx Xxxxxxxx LLP
is not aware of any fact concerning Parent or any of Parent's stockholders or
affiliates that could preclude Parent from accounting for the Merger as a
"pooling of interests" in accordance with GAAP, Accounting Principles Board
Opinion No. 16 and all published rules, regulations and policies of the SEC;
(d) a legal opinion of Xxxxxx Godward LLP, dated as of the
Closing Date and addressed to Parent, to the effect that the Merger will
constitute a reorganization within the meaning of Section 368 of the Code (it
being understood that, in rendering such opinion, Xxxxxx Godward LLP may rely
upon the tax representation letters referred to in Section 5.13);
(e) a certificate executed on behalf of the Company by its
Chief Executive Officer confirming that the conditions set forth in Sections
6.1, 6.2, 6.4, 6.5, 6.7 and 6.8 have been duly satisfied; and
(f) the written resignations of all officers and directors of
the Company, effective as of the Effective Time.
6.7 No Material Adverse Change. There shall have been no material adverse
change in the business, condition, assets, liabilities, operations or financial
performance of the Acquired Corporations since the date of this Agreement.
6.8 FIRPTA Compliance. The Company shall have filed with the Internal
Revenue Service the notification referred to in Section 5.16.
6.9 Listing. The shares of Parent Common Stock to be issued in the Merger
shall have been authorized for listing on Nasdaq, subject to notice of issuance.
6.10 No Restraints. No temporary restraining order, preliminary or
permanent injunction or other order preventing the consummation of the Merger
shall have been issued by any court of competent jurisdiction and remain in
effect, and there shall not be any Legal Requirement enacted or deemed
applicable to the Merger that makes consummation of the Merger illegal.
45
6.11 No Governmental Litigation. There shall not be pending or threatened
any Legal Proceeding in which a Governmental Body is or is threatened to become
a party or is otherwise involved: (a) challenging or seeking to restrain or
prohibit the consummation of the Merger or any of the other transactions
contemplated by this Agreement; (b) relating to the Merger and seeking to obtain
from Parent or any of its subsidiaries any damages that may be material to
Parent; (c) seeking to prohibit or limit in any material respect Parent's
ability to vote, receive dividends with respect to or otherwise exercise
ownership rights with respect to the stock of the Surviving Corporation; or (d)
which would materially and adversely affect the right of Parent, the Surviving
Corporation or any subsidiary of Parent to own the assets or operate the
business of the Company.
6.12 No Other Litigation. There shall not be pending any Legal Proceeding
in which there is a reasonable possibility of an outcome that would have a
Material Adverse Effect on the Acquired Corporations or on Parent: (a)
challenging or seeking to restrain or prohibit the consummation of the Merger or
any of the other transactions contemplated by this Agreement; (b) relating to
the Merger and seeking to obtain from Parent or any of its subsidiaries any
damages that may be material to Parent, (c) seeking to prohibit or limit in any
material respect Parent's ability to vote, receive dividends with respect to or
otherwise exercise ownership rights with respect to the stock of the Surviving
Corporation; or (d) which would affect adversely the right of Parent, the
Surviving Corporation or any subsidiary of Parent to own the assets or operate
the business of the Company.
Section 7. CONDITIONS PRECEDENT TO OBLIGATION OF THE COMPANY.
The obligation of the Company to effect the Merger and otherwise
consummate the transactions contemplated by this Agreement are subject to the
satisfaction, at or prior to the Closing, of the following conditions, and upon
consummation of the Closing, all conditions herein shall be deemed satisfied and
any liability for failure to satisfy any condition herein shall be precluded:
7.1 Accuracy of Representations. The representations and warranties of
Parent and Merger Sub contained in this Agreement shall have been accurate in
all material respects as of the date of this Agreement and shall be accurate in
all material respects as of the Closing Date as if made on and as of the Closing
Date; provided, however, that any representations and warranties qualified by
"Material Adverse Effect" or other materiality qualifications are accurate in
all respects as of the date of this Agreement and shall be accurate in all
respects as of the Closing Date as if made on and as of the Closing Date.
7.2 Performance of Covenants. All of the covenants and obligations that
Parent and Merger Sub are required to comply with or to perform at or prior to
the Closing shall have been complied with and performed in all material
respects.
46
7.3 Effectiveness of Registration Statement. The S-4 Registration Statement
shall have become effective in accordance with the provisions of the Securities
Act, and no stop order shall have been issued by the SEC with respect to the S-4
Registration Statement.
7.4 Stockholder Approval. This Agreement and the Merger shall have been
duly approved by the Required Company Shareholder Vote, and the issuance of
Parent Common Stock in the Merger shall have been duly approved by the Required
Parent Stockholder Vote.
7.5 Documents. The Company shall have received the following documents:
(a) a Registration Rights Agreement in the form of Exhibit H,
executed by Parent and each person identified on Exhibit I.
(b) a legal opinion of Saul, Ewing, Xxxxxx & Xxxx LLP, dated
as of the Closing Date and addressed to the Company, to the effect that the
Merger will constitute a reorganization within the meaning of Section 368 of the
Code (it being understood that, in rendering such opinion, Saul, Ewing, Xxxxxx &
Xxxx LLP may rely upon tax representation letters including those referred to in
Section 5.13);
(c) a letter from KPMG Peat Marwick LLP, dated as of a date no
earlier than three (3) days prior to the Closing Date and addressed to the
Company, reasonably satisfactory in form and substance to Parent and Xxxxx
Xxxxxxxx LLP, to the effect that, after reasonable investigation, KPMG Peat
Marwick LLP is not aware of any fact concerning the Company or any of the
Company's shareholders or affiliates that could preclude Parent from accounting
for the Merger as a "pooling of interests" in accordance with GAAP, Accounting
Principles Board Opinion No. 16 and all published rules, regulations and
policies of the SEC;
(d) a letter from Xxxxx Xxxxxxxx LLP, dated as of a date no
earlier than three (3) days prior to the Closing Date and addressed to Parent,
reasonably satisfactory in form and substance to Parent, to the effect that,
after reasonable investigation, Xxxxx Xxxxxxxx LLP is not aware of any fact
concerning Parent or any of Parent's stockholders or affiliates that would
preclude Parent from accounting for the Merger as a "pooling of interests" in
accordance with GAAP, Accounting Principles Board Opinion No. 16 and all
published rules, regulations and policies of the SEC; and
(e) a certificate executed on behalf of Parent by an executive
officer of Parent, confirming that conditions set forth in Sections 7.1, 7.2,
7.3 and 7.6 have been duly satisfied.
7.6 No Material Adverse Change. There shall have been no material adverse
change in Parent's business, condition, assets, liabilities, operations or
financial performance since the date of this Agreement.
7.7 Listing. The shares of Parent Common Stock to be issued in the Merger
shall have been authorized for listing on Nasdaq, subject to notice of issuance.
47
7.8 No Restraints. No temporary restraining order, preliminary or permanent
injunction or other order preventing the consummation of the Merger by the
Company shall have been issued by any court of competent jurisdiction and remain
in effect, and there shall not be any Legal Requirement enacted or deemed
applicable to the Merger that makes consummation of the Merger by the Company
illegal.
Section 8. TERMINATION.
8.1 Termination. This Agreement may be terminated prior to the Effective
Time, whether before or after approval of the Merger by the shareholders of the
Company:
(a) by mutual written consent of the Boards of Directors of
the Parent and the Company;
(b) by either Parent or the Company if the Merger shall not
have been consummated by January 31, 1999 (unless the failure to consummate the
Merger is attributable to a failure on the part of the party seeking to
terminate this Agreement to perform any material obligation required to be
performed by such party at or prior to the Effective Time);
(c) by either Parent or the Company if a court of competent
jurisdiction or other Governmental Body shall have issued a final and
non-appealable order, decree or ruling, or shall have taken any other action,
having the effect of permanently restraining, enjoining or otherwise prohibiting
the Merger;
(d) by either Parent or the Company if (i) the Company
Shareholders' Meeting shall have been held (either on the date for which such
Meeting was originally scheduled or pursuant to any permissible adjournment or
postponement) and (ii) this Agreement and the Merger shall not have been adopted
and approved at such meeting by the Company Required Shareholder Vote (provided
that the right to terminate this Agreement under this Section 8.1(d) shall not
be available to the Company where the failure to obtain Company shareholder
approval shall have been caused by the action or failure to act of the Company
and such action or failure to act constitutes a material breach by the Company
of this Agreement);
(e) by Parent (at any time prior to the adoption and approval
of this Agreement and the Merger by the Company Required Shareholder Vote) if a
Triggering Event shall have occurred;
(f) by either Parent or Company if (i) the Parent
Stockholders' Meeting shall have been held (either on the date for which such
Meeting was originally scheduled or pursuant to any permissible adjournment or
postponement) and (ii) issuance of the Parent Common Stock in the Merger shall
not have been approved at such meeting by the Parent Required Stockholder Vote;
48
(g) by Parent if any of the Company's representations and
warranties contained in this Agreement shall be or shall have become materially
inaccurate, or if any of the Company's covenants contained in this Agreement
shall have been breached in any material respect; provided, however, that if an
inaccuracy in the Company's representations and warranties or a breach of a
covenant by the Company is curable by the Company and the Company is continuing
to exercise all reasonable efforts to cure such inaccuracy or breach, then
Parent may not terminate this Agreement under this Section 8.1(g) on account of
such inaccuracy or breach; or
(h) by the Company if any of Parent's representations and
warranties contained in this Agreement shall be or shall have become materially
inaccurate, or if any of Parent's covenants contained in this Agreement shall
have been breached in any material respect; provided, however, that if an
inaccuracy in Parent's representations and warranties or a breach of a covenant
by Parent is curable by Parent and Parent is continuing to exercise all
reasonable efforts to cure such inaccuracy or breach, then the Company may not
terminate this Agreement under this Section 8.1(h) on account of such inaccuracy
or breach.
8.2 Notice of Termination; Effect of Termination. Any termination under
Section 8.1 above will be effective immediately upon the delivery of written
notice of the terminating party to the other parties hereto. In the event of the
termination of this Agreement as provided in Section 8.1, this Agreement shall
be of no further force or effect; provided, however, that (i) this Section 8.2,
Section 8.3 and Section 9 shall survive the termination of this Agreement and
shall remain in full force and effect, (ii) the termination of this Agreement
shall not relieve any party from any liability for any breach of this Agreement
and (iii) no termination of this Agreement shall affect the obligations of the
parties contained in the Confidentiality Agreement, all of which obligations
shall survive termination of this Agreement in accordance with their terms.
8.3 Expenses; Termination Fees.
(a) Except as set forth in this Section 8.3, all fees and
expenses incurred in connection with this Agreement and the transactions
contemplated by this Agreement shall be paid by the party incurring such
expenses, whether or not the Merger is consummated; provided, however, that
Parent and the Company shall share equally all fees and expenses, other than
attorneys' fees, incurred in connection with the printing and filing of the S-4
Registration Statement and the Joint Proxy Statement/Prospectus and any
amendments or supplements thereto.
(b) If this Agreement is terminated by Parent pursuant to
Section 8.1(e), then the Company shall pay to Parent (at the time specified in
Section 8.3(c)), a nonrefundable fee equal to five million dollars ($5,000,000)
(the "Termination Fee") in cash within three (3) days of such termination.
49
(c) If this Agreement is terminated by Company or Parent
pursuant to Section 8.1(d) and an Acquisition Transaction is consummated or a
proposed Acquisition Transaction is publicly announced at anytime prior to the
first anniversary of the date of this Agreement, Company shall pay to Parent the
Termination Fee contemporaneously with the earlier of the consummation of such
Acquisition Transaction or such announcement regarding a proposed Acquisition
Agreement.
Section 9. MISCELLANEOUS PROVISIONS.
9.1 Amendment. This Agreement may be amended with the approval of the
respective boards of directors of the Company and Parent at any time (whether
before or after approval of this Agreement and the Merger by the shareholders of
the Company; and whether before or after approval of the issuance of Parent
Common Stock in the Merger by Parent's stockholders); provided, however, that
(i) after any such approval of this Agreement and the Merger by the Company's
shareholders, no amendment shall be made which by law or NASD regulation
requires further approval of the shareholders of the Company without the further
approval of such shareholders, and (ii) after any such approval of the issuance
of Parent Company Stock in the Merger by Parent's stockholders, no amendment
shall be made which by law or NASD regulation requires further approval of
Parent's stockholders without the further approval of such stockholders. This
Agreement may not be amended except by an instrument in writing signed on behalf
of each of the parties hereto.
9.2 Waiver.
(a) No failure on the part of any party to exercise any power,
right, privilege or remedy under this Agreement, and no delay on the part of any
party in exercising any power, right, privilege or remedy under this Agreement,
shall operate as a waiver of such power, right, privilege or remedy; and no
single or partial exercise of any such power, right, privilege or remedy shall
preclude any other or further exercise thereof or of any other power, right,
privilege or remedy.
(b) No party shall be deemed to have waived any claim arising
out of this Agreement, or any power, right, privilege or remedy under this
Agreement, unless the waiver of such claim, power, right, privilege or remedy is
expressly set forth in a written instrument duly executed and delivered on
behalf of such party; and any such waiver shall not be applicable or have any
effect except in the specific instance in which it is given.
9.3 No Survival of Representations and Warranties. None of the
representations and warranties contained in this Agreement or in any certificate
delivered pursuant to this Agreement shall survive the Merger.
9.4 Entire Agreement; Counterparts. This Agreement and the other agreements
referred to herein constitute the entire agreement and supersede all prior
agreements and understandings, both written and oral, among or between any of
the parties with respect to the subject matter hereof and thereof. This
Agreement may be executed in several counterparts, each of which shall be deemed
an original and all of which shall constitute one and the same instrument.
50
9.5 Applicable Law; Jurisdiction. THIS AGREEMENT IS MADE UNDER, AND SHALL
BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
CALIFORNIA APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED SOLELY THEREIN,
WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAW. In any action between
or among any of the parties, whether arising out of this Agreement or otherwise,
(a) each of the parties irrevocably and unconditionally consent in the State of
California; (b) if any such action is commenced in a state court, then, subject
to applicable law, no party shall object to the removal of such action to any
federal court located in the law, no party shall object to the removal of such
action to any federal court located in the State of California; (c) each of the
parties irrevocably waivers the right to trial by jury; and (d) each of the
parties irrevocably consents to service of process by first class certified
mail, return receipt requested, postage prepaid, to the address at which such
party is to receive notice in accordance with Section 9.9.
9.6 Disclosure Schedule. Each of the Company Disclosure Schedule and the
Parent Disclosure Schedule shall be arranged in separate parts corresponding to
the numbered and lettered sections contained in Sections 2 and 3, respectively,
and the information disclosed in any numbered or lettered part shall be deemed
to relate to and to qualify only the particular representation or warranty set
forth in the corresponding numbered or lettered section in Section 2 or 3,
respectively, and shall not be deemed to relate to or to qualify any other
representation or warranty unless such relationship or qualification is
reasonably apparent.
9.7 Attorneys' Fees. In any action at law or suit in equity to enforce this
Agreement or the rights of any of the parties hereunder, the prevailing party in
such action or suit shall be entitled to receive a reasonable sum for its
attorneys' fees and all other reasonable costs and expenses incurred in such
action or suit.
9.8 Assignability. This Agreement shall be binding upon, and shall be
enforceable by and inure solely to the benefit of, the parties hereto and their
respective successors and assigns; provided, however, that neither this
Agreement nor any of the Company's rights hereunder may be assigned by the
Company without the prior written consent of Parent, and any attempted
assignment of this Agreement or any of such rights by the Company without such
consent shall be void and of no effect. Except as set forth in Section 5.8 with
respect to the current directors and officers of the Company, nothing in this
Agreement, express or implied, is intended to or shall confer upon any Person
any right, benefit or remedy of any nature whatsoever under or by reason of this
Agreement.
51
9.9 Notices. Any notice or other communication required or permitted to be
delivered to any party under this Agreement shall be in writing and shall be
deemed properly delivered, given and received when delivered (by hand, by
registered mail, by courier or express delivery service or by facsimile) to the
address or facsimile telephone number set forth beneath the name of such party
below (or to such other address or facsimile telephone number as such party
shall have specified in a written notice given to the other parties hereto):
if to Parent: First Consulting Group, Inc.
000 X. Xxxxx Xxxxxxxxx, 0xx Xxxxx
Xxxx Xxxxx, XX 00000
Facsimile: (000) 000-0000
if to Merger Sub: Foxtrot Acquisition Sub, Inc.
000 X. Xxxxx Xxxxxxxxx, 0xx Xxxxx
Xxxx Xxxxx, XX 00000
Facsimile: (000) 000-0000
if to the Company: Integrated Systems Consulting Group, Inc.
000 Xxxx Xxxxxxxxxx Xxxx
Xxxxx, XX 00000
Facsimile: (000) 000-0000
52
9.10 Cooperation. The Company agrees to cooperate fully with Parent and to
execute and deliver such further documents, certificates, agreements and
instruments and to take such other actions as may be reasonably requested by
Parent to evidence or reflect the transactions contemplated by this Agreement
and to carry out the intent and purposes of this Agreement.
9.11 Construction.
(a) For purposes of this Agreement, whenever the context
requires: the singular number shall include the plural, and vice versa; the
masculine gender shall include the feminine and neuter genders; the feminine
gender shall include the masculine and neuter genders; and the neuter gender
shall include masculine and feminine genders.
(b) The parties hereto agree that any rule of construction to
the effect that ambiguities are to be resolved against the drafting party shall
not be applied in the construction or interpretation of this Agreement.
(c) As used in this Agreement, the words "include" and
"including," and variations thereof, shall not be deemed to be terms of
limitation, but rather shall be deemed to be followed by the words "without
limitation."
(d) Except as otherwise indicated, all references in this
Agreement to "Sections" and "Exhibits" are intended to refer to Sections of this
Agreement and Exhibits to this Agreement.
53
IN WITNESS WHEREOF, the parties have caused this AGREEMENT AND PLAN OF
MERGER AND REORGANIZATION to be executed as of the date first above written.
FIRST CONSULTING GROUP, INC.
By:
------------------------------------
Printed Name:
------------------------------------
Title:
------------------------------------
FOXTROT ACQUISITION SUB, INC.
By:
------------------------------------
Printed Name:
------------------------------------
Title:
------------------------------------
INTEGRATED SYSTEMS CONSULTING GROUP, INC.
By:
------------------------------------
Printed Name:
------------------------------------
Title:
------------------------------------
Exhibit A.............Certain Definitions
Exhibit B-1...........Company Shareholders who have executed Voting Agreements
Exhibit B-2...........Parent Stockholders who have executed a Voting Agreement
Exhibit C-1...........Form of Voting Agreement for Company Shareholders
Exhibit C-2...........Form of Voting Agreement for Parent Stockholders
Exhibit D-1...........Individuals executing Company Affiliate
Agreement in Form of Exhibit E-1
Exhibit D-2...........Individuals executing Parent Affiliate Agreement in
Form of Exhibit E-2
Exhibit E-1...........Form of Affiliate Agreement for Company Affiliates
Exhibit E-2...........Form of Affiliate Agreement for Parent Affiliates
Exhibit F-1...........Form of Surviving Corporation Articles of Incorporation
Exhibit F-2...........Form of Surviving Corporation Bylaws
Exhibit G-1...........Form of Tax Representation Letter to be delivered by
Parent and Merger Sub
Exhibit G-2...........Form of Tax Representation Letter to be delivered by
Company
Exhibit H.............Form of Registration Rights Agreement
Exhibit I.............Individuals to execute Registration Rights Agreement in
Form of Exhibit H
EXHIBIT A
CERTAIN DEFINITIONS
For purposes of the Agreement (including this Exhibit A):
Acquired Corporation Contract. "Acquired Corporation Contract" shall
mean any Contract: (a) to which any of the Acquired Corporations is a party; (b)
by which any of the Acquired Corporations or any asset of any of the Acquired
Corporations is or may become bound or under which any of the Acquired
Corporations has, or may become subject to, any obligation; or (c) under which
any of the Acquired Corporations has or may acquire any right or interest.
Acquired Corporation Proprietary Asset. "Acquired Corporation
Proprietary Asset" shall mean any Proprietary Asset owned by or licensed to any
of the Acquired Corporations or otherwise used by any of the Acquired
Corporations.
Acquisition Proposal. "Acquisition Proposal" shall mean any offer or
proposal (other than an offer or proposal by Parent) contemplating or otherwise
relating to any Acquisition Transaction.
Acquisition Transaction. "Acquisition Transaction" shall mean any
transaction or series of related transactions involving:
(e) any merger, consolidation, share exchange, business
combination, issuance of securities, acquisition of securities, tender offer,
exchange offer or other similar transaction (i) in which any of the Acquired
Corporations is a constituent corporation, (ii) in which a Person or "group" (as
defined in the Exchange Act and the rules promulgated thereunder) of Persons
directly or indirectly acquires the Company or more than fifty percent (50%) of
the Company's business or directly or indirectly acquires beneficial or record
ownership of securities representing more than twenty percent (20%) of the
outstanding securities of any class of voting securities of any of the Acquired
Corporations, or (iii) in which any of the Acquired Corporations issues
securities representing more than twenty percent (20%) of the outstanding
securities of any class of voting securities of the Company;
(f) any sale, lease (other than in the ordinary course of
business), exchange, transfer, license (other than in the ordinary course of
business), acquisition or disposition of more than 50% of the assets of the
Company; or
(g) any liquidation or dissolution of the Company.
Agreement. "Agreement" shall mean the Agreement and Plan of Merger and
Reorganization to which this Exhibit A is attached, as it may be amended from
time to time.
Company Common Stock. "Company Common Stock" shall mean the Common
Stock, $.005 par value per share, of the Company.
Consent. "Consent" shall mean any approval, consent, ratification,
permission, waiver or authorization (including any Governmental Authorization).
Contract. "Contract" shall mean any written, oral or other agreement,
contract, subcontract, lease, understanding, instrument, note, option, warranty,
purchase order, license, sublicense, insurance policy, benefit plan or legally
binding commitment or undertaking of any nature.
Encumbrance. "Encumbrance" shall mean any lien, pledge, hypothecation,
charge, mortgage, security interest, encumbrance, claim, infringement,
interference, option, right of first refusal, preemptive right, community
property interest or restriction of any nature (including any restriction on the
voting of any security, any restriction on the transfer of any security or other
asset, any restriction on the receipt of any income derived from any asset, any
restriction on the use of any asset and any restriction on the possession,
exercise or transfer of any other attribute of ownership of any asset).
Entity. "Entity" shall mean any corporation (including any non-profit
corporation), general partnership, limited partnership, limited liability
partnership, joint venture, estate, trust, company (including any limited
liability company or joint stock company), firm or other enterprise,
association, organization or entity.
Exchange Act. "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
Governmental Authorization. "Governmental Authorization" shall mean
any: (a) permit, license, certificate, franchise, permission, clearance,
registration, qualification or authorization issued, granted, given or otherwise
made available by or under the authority of any Governmental Body or pursuant to
any Legal Requirement; or (b) right under any Contract with any Governmental
Body.
Governmental Body. "Governmental Body" shall mean any: (a) nation,
state, commonwealth, province, territory, county, municipality, district or
other jurisdiction of any nature; (b) federal, state, local, municipal, foreign
or other government; or (c) governmental or quasi-governmental authority of any
nature (including any governmental division, department, agency, commission,
instrumentality, official, organization, unit, body or Entity and any court or
other tribunal).
Legal Proceeding. "Legal Proceeding" shall mean any action, suit,
litigation, arbitration, proceeding (including any civil, criminal,
administrative, investigative or appellate proceeding), hearing, inquiry, audit,
examination or investigation commenced, brought, conducted or heard by or
before, or otherwise involving, any court or other Governmental Body or any
arbitrator or arbitration panel.
Legal Requirement. "Legal Requirement" shall mean any federal, state,
local, municipal, foreign or other law, statute, constitution, principle of
common law, resolution, ordinance, code, edict, decree, rule, regulation, ruling
or requirement issued, enacted, adopted, promulgated, implemented or otherwise
put into effect by or under the authority of any Governmental Body.
Material Adverse Effect. An event, violation, inaccuracy, circumstances
or other matter will be deemed to have a "Material Adverse Effect" on the
Acquired Corporations if such event, violation, inaccuracy, circumstance or
other matter would have a material adverse effect on (i) the business,
condition, capitalization, assets, liabilities, operations or financial
performance of the Acquired Corporations taken as a whole, (ii) the ability of
the Company to consummate the Merger or any of the other transactions
contemplated by the Agreement or to perform any of its obligations under the
Agreement, or (iii) Parent's ability to vote, receive dividends with respect to
or otherwise exercise ownership rights with respect to the stock of the
Surviving Corporation. An event, violation, inaccuracy, circumstance or other
matter will be deemed to have a "Material Adverse Effect" on Parent if such
event, violation, inaccuracy, circumstance or other matter would have a material
adverse effect on the business, condition, assets, liabilities, operations or
financial performance of Parent and its subsidiaries taken as a whole.
Nasdaq. "Nasdaq" shall mean the Nasdaq National Market.
Parent Common Stock. "Parent Common Stock" shall mean the Common Stock,
$.001 par value per share, of Parent.
Person. "Person" shall mean any individual, Entity or Governmental
Body.
Proprietary Asset. "Proprietary Asset" shall mean any: (a) patent,
patent application, trademark (whether registered or unregistered), trademark
application, trade name, fictitious business name, service xxxx (whether
registered or unregistered), service xxxx application, copyright (whether
registered or unregistered), copyright application, maskwork, maskwork
application, trade secret, know-how, customer list, franchise, system, computer
software, computer program (in source and executable form), algorithm,
invention, design, blueprint, engineering drawing, proprietary product,
technology, proprietary right or other intellectual property right or intangible
asset in any jurisdiction in the world; or (b) right to use or exploit any of
the foregoing in any jurisdiction in the world.
Representatives. "Representatives" shall mean officers, directors,
employees, agents, attorneys, accountants, advisors and representatives.
SEC. "SEC" shall mean the United States Securities and Exchange
Commission.
Securities Act. "Securities Act" shall mean the Securities Act of 1933,
as amended.
Subsidiary. An entity shall be deemed to be a "Subsidiary" of another
Person if such Person directly or indirectly owns, beneficially or of record, an
amount of voting securities of other interests in such Entity that is sufficient
to enable such Person to elect at leased a majority of the members of such
Entity's board of directors or other governing body.
Superior Offer. "Superior Offer" shall mean an unsolicited, bona fide
written offer made by a third party to purchase more than 50% of the outstanding
shares of Company Common Stock on terms that the board of directors of the
Company determines, in its reasonable judgment, based upon the written advice of
its financial advisor, to be more favorable to the Company's shareholders than
the terms of the Merger; provided, however, that any such offer shall not be
deemed to be a "Superior Offer" if any financing required to consummate the
transaction contemplated by such offer is not committed and is not likely to be
obtained by such third party on a timely basis.
Tax. "Tax" shall mean any tax (including any income tax, franchise tax,
capital gains tax, gross receipts tax, value-added tax, surtax, excise tax, ad
valorem tax, transfer tax, stamp tax, sales tax, use tax, property tax, business
tax, withholding tax or payroll tax), levy, assessment, tariff, duty (including
any customs duty), deficiency or fee, and any related charge or amount
(including any fine, penalty or interest), imposed, assessed or collected by or
under the authority of any Governmental Body.
Tax Return. "Tax Return" shall mean any return (including any
information return), report, statement, declaration, estimate, schedule, notice,
notification, form, election, certificate or other document or information filed
with or submitted to, or required to be filed with or submitted to, any
Governmental Body in connection with the determination, assessment, collection
or payment of any Tax or in connection with the administration, implementation
or enforcement of or compliance with any Legal Requirement relating to any Tax.
Triggering Event. A "Triggering Event" shall be deemed to have occurred
if: (i) the Board of Directors of the Company shall have failed to recommend, or
shall for any reason have withdrawn or shall have amended or modified in a
manner adverse to Parent its unanimous recommendation in favor of, the adoption
and approval of the Agreement or the approval of the Merger; (ii) the Company
shall have failed to include in the Joint Proxy Statement/Prospectus the
unanimous recommendation of the board of directors of the Company in favor of
the adoption and approval of the Agreement and the approval of the Merger; (iii)
the board of directors of the Company fails to reaffirm its unanimous
recommendation in favor of the adoption and approval of the Agreement and the
approval of the Merger within five (5) business days after the Parent request in
writing that such recommendation be reaffirmed; (iv) the board of directors of
the Company shall have approved, endorsed or recommended any Acquisition
Proposal; (v) the Company shall have entered into any letter of intent of
similar document or any Contract relating to any Acquisition Proposal; (vi) the
Company shall have failed to hold the Company Shareholders' Meeting as promptly
as practicable and in any event within 45 days after the Form S-4 Registration
Statement is declared effective under the Securities Act; (vii) a tender or
exchange offer relating to securities of the Company shall have been commenced
and the Company shall not have sent to its securityholders, within ten (10)
business days after the commencement of such tender or exchange offer, a
statement disclosing that the Company recommends rejection of such tender or
exchange offer; (viii) an Acquisition Proposal is publicly announced, and the
Company (A) fails to issue a press release announcing its opposition to such
Acquisition Proposal within five business days after such Acquisition Proposal
is announced or (B) otherwise fails to actively oppose such Acquisition
Proposal; or (ix) the Company breaches or is deemed to have breached any of its
obligations under Section 4.3 of the Agreement.
EXHIBIT B-1
COMPANY SHAREHOLDERS WHO HAVE EXECUTED VOTING AGREEMENTS
1. Xxxxx X. Xxxxxx
2. Technology Leaders II
3. Safeguard Scientifics, Inc.
4. Warrant and Stock Trust
EXHIBIT B-2
PARENT STOCKHOLDERS WHO HAVE EXECUTED VOTING AGREEMENTS
1. Xxxxx X. Xxxx
2. Xxxxxx X. Xxxx
3. Xxxxx X. Xxxxxx
EXHIBIT C-1
FORM OF VOTING AGREEMENT FOR COMPANY SHAREHOLDERS
EXHIBIT C-2
FORM OF VOTING AGREEMENT FOR PARENT STOCKHOLDERS
EXHIBIT D-1
INDIVIDUALS EXECUTING COMPANY AFFILIATE AGREEMENT IN FORM OF EXHIBIT E-1
1. Xxxxx X. Xxxxxx
2. Technology Leaders II
3. Safeguard Scientifics, Inc.
4. Warrant and Stock Trust
5. Xxxxxxx X. Xxxxxxx
6. Xxxxx X. Xxxxxxxx
7. Xxxxx X. Xxxxxxx
8. Xxxxxx X. Xxxxxxxxx
9. Xxx X. Xxxx
10. Xxxxxx X. Xxxxxxxxx
00. Xxxxx Xxxxxxx, Xx., Ph.D.
12. Xxxxxx X. Xxxxxxxxx
13. Xxxxxx X. Xxxxxxxx
14. Xxxx X. XxXxxx
15. Xxxxx X. Xxxx
16. Xxxxx X. Xxxx
17. Xxxxx X. Xxxxxxx
18. Xxxxxxx X. Xxxxx
19. Xxxxxx X.X. Tomeszko, Ph.D.
EXHIBIT D-2
INDIVIDUALS EXECUTING PARENT AFFILIATE AGREEMENT IN FORM OF EXHIBIT E-2
20. Xxxxx X. Xxxx
21. Xxxxx X. Xxxxxx
22. Xxxxxx X. Xxxx
23. Xxxxx X. Xxxxxxx
24. Xxx X. Xxxxxxx
25. Xxxxxx Xxxx
26. Xxxxxxx X. Xxxxxx
27. Xxxxxx X. Xxxxxxxx
28. Xxxxxxx X. Xxxxxx
29. Xxxxxx Xxxxxxx
30. Xxxxxxx X. Xxxxx
31. Xxxx X. Xxxxx
32. Xxxxx X. Xxxxxx
33. Xxxxxx X. Xxxxxxxx
34. Xxxxxxx X. Xxxxxxx
35. Xxxxx X. Xxxxxx
36. Xxx X. Xxxxxxx
37. Xxxxx X. Xxxxx
38. Associate 401(k) and Stock Ownership Plan
(Union Bank of California, Trustee)
EXHIBIT E-1
FORM OF AFFILIATE AGREEMENT FOR COMPANY AFFILIATES
EXHIBIT E-2
FORM OF AFFILIATE AGREEMENT FOR PARENT AFFILIATES
EXHIBIT F-1
FORM OF SURVIVING CORPORATION ARTICLES OF INCORPORATION
EXHIBIT F-2
FORM OF SURVIVING CORPORATION BYLAWS
EXHIBIT G-1
FORM OF TAX REPRESENTATION LETTER TO BE DELIVERED BY PARENT AND MERGER SUB
EXHIBIT G-2
FORM OF TAX REPRESENTATION LETTER TO BE DELIVERED BY COMPANY
EXHIBIT H
FORM OF REGISTRATION RIGHTS AGREEMENT
EXHIBIT I
INDIVIDUALS TO EXECUTE REGISTRATION RIGHTS AGREEMENT IN FORM OF EXHIBIT H
1. Xxxxx X. Xxxxxx
2. Technology Leaders II
3. Safeguard Scientifics, Inc.
4. Warrant and Stock Trust
