EXHIBIT 2
AGREEMENT AND PLAN OF MERGER
Among
APPLE COMPUTER, INC.,
BLACKBIRD ACQUISITION CORPORATION
and
NEXT SOFTWARE, INC.
Dated as of December 20, 1996
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TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
SECTION 1.01. Certain Defined Terms
ARTICLE II
THE MERGER
SECTION 2.01. The Merger
SECTION 2.02. Effective Time
SECTION 2.03. Effect of the Merger
SECTION 2.04. Articles of Incorporation; Bylaws
SECTION 2.05. Directors and Officers
SECTION 2.06. Effect on Capital Stock
SECTION 2.07. Dissenting Shares
SECTION 2.08. Surrender of Certificates
SECTION 2.09. No Further Ownership Rights in Company
Common Stock or Company Preferred Stock
SECTION 2.10. Lost, Stolen or Destroyed Certificates
SECTION 2.11. Taking of Necessary Action; Further Action
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 3.01. Organization, Authority and Qualification of
the Company
SECTION 3.02. Capital Stock of the Company; Ownership of
the Shares
SECTION 3.03. Subsidiaries
SECTION 3.04. Corporate Books and Records
SECTION 3.05. No Conflict
SECTION 3.06. Governmental Consents and Approvals
SECTION 3.07. Financial Information/Books and Records
SECTION 3.08. No Undisclosed Liabilities
SECTION 3.09. Receivables; Inventory
SECTION 3.10. Conduct in the Ordinary Course; Absence of
Certain Changes, Events and Conditions
SECTION 3.11. Litigation
SECTION 3.12. Certain Interests
SECTION 3.13. Compliance with Laws
SECTION 3.14. Environmental and Other Permits and
Licenses; Related Matters
SECTION 3.15. Material Contracts
SECTION 3.16. Intellectual Property
SECTION 3.17. Real Property
SECTION 3.18. Assets
SECTION 3.19. Customers
SECTION 3.20. Employee Benefit Plans; Employment
Agreements
SECTION 3.21. Labor Matters
SECTION 3.22. Key Employees
SECTION 3.23. Taxes
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SECTION 3.24. Insurance
SECTION 3.25. Brokers
SECTION 3.26. Approval Requirements
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND
MERGER SUB
SECTION 4.01. Organization and Authority
SECTION 4.02. No Conflict
SECTION 4.03. Governmental Consents and Approvals
SECTION 4.04. Brokers
SECTION 4.05. SEC Documents: Undisclosed Liabilities
SECTION 4.06. Absence of Certain Changes or Events
SECTION 4.07. Litigation
SECTION 4.08. Voting Requirements
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.01. Conduct of Business Prior to the Closing
SECTION 5.02. Access to Information
SECTION 5.03. Regulatory and Other Authorizations; Notices
and Consents
SECTION 5.04. Notice of Developments
SECTION 5.05. No Solicitation or Negotiation
SECTION 5.06. Further Action
SECTION 5.07. Conduct of Business by Parent
ARTICLE VI
STOCK OPTIONS
SECTION 6.01. Stock Options
SECTION 6.02. Certain Employee Benefit Matters.
ARTICLE VII
ADDITIONAL AGREEMENTS
SECTION 7.01. Securities Filings
SECTION 7.02. Company Shareholder Approval.
SECTION 7.03. NNM Listing
SECTION 7.04. Shelf Registration
SECTION 7.05. Form S-8
SECTION 7.06. Guaranteed Debt
SECTION 7.07. Directors' and Officers' Indemnification and
Insurance
ARTICLE VIII
CONDITIONS TO CLOSING
SECTION 8.01. Conditions to Obligations of Each of the
Company and Parent
SECTION 8.02. Conditions to Obligations of the Company
SECTION 8.03. Conditions to Obligations of Parent
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ARTICLE IX
SURVIVAL; INDEMNIFICATION
SECTION 9.01. Survival of Representations and Warranties
ARTICLE X
TERMINATION AND WAIVER
SECTION 10.01. Termination
SECTION 10.02. Effect of Termination
SECTION 10.03. Waiver
ARTICLE XI
GENERAL PROVISIONS
SECTION 11.01. Expenses
SECTION 11.02. Notices
SECTION 11.03. Public Announcements
SECTION 11.04. Headings
SECTION 11.05. Severability
SECTION 11.06. Entire Agreement
SECTION 11.07. Assignment
SECTION 11.08. No Third Party Beneficiaries
SECTION 11.09. Amendment
SECTION 11.10. Governing Law
SECTION 11.11. Counterparts
ANNEXES
Annex A Form of Agreement of Merger
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of
December 20, 1996 (the "Agreement"), among APPLE COMPUTER,
INC., a California corporation ("Parent"), BLACKBIRD
ACQUISITION CORPORATION, a California corporation and a
wholly owned subsidiary of Parent ("Merger Sub"), and NEXT
SOFTWARE, INC., a California corporation (the "Company").
W I T N E S S E T H:
WHEREAS, the Boards of Directors of Parent, Merger Sub
and the Company have each determined that it is in the best interests of
their respective shareholders for Parent to acquire the Company upon
the terms and subject to the conditions set forth herein;
WHEREAS, in furtherance of such acquisition, the Boards of
Directors of Parent, Merger Sub and the Company have each approved
the merger (the "Merger") of Merger Sub with and into the Company in
accordance with the General Corporation Law of the State of California
("California Law") and upon the terms and subject to the conditions set
forth herein;
WHEREAS, concurrently with the execution of this
Agreement and as an inducement to Parent to enter into this Agreement,
the Principal Shareholder has entered into a voting agreement (the
"Voting Agreement") pursuant to which the Principal Shareholder has
agreed to sign a written consent with regard to all of his shares of
Company Common Stock and Company Preferred Stock in favor of the
approval of this Agreement and the Merger;
WHEREAS, the Principal Shareholder will become an at will,
part-time employee of Parent reporting to Parent's Chief Executive
Officer and Chairman to work on new products, software development,
product software strategy and the integration of the Company into
Parent;
NOW, THEREFORE, in consideration of the foregoing and
the mutual covenants and agreements herein contained, and intending to
be legally bound hereby, Parent, Merger Sub and the Company hereby
agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Certain Defined Terms. As used in this
Agreement, the following terms shall have the following meanings:
"Action" means any claim, action, suit, arbitration, inquiry,
proceeding or investigation by or before any Governmental Authority.
"Affiliate" means, with respect to any specified Person, any
other Person that directly, or indirectly through one or more
intermediaries, controls, is controlled by, or is under common control
with, such specified Person.
"Agreement" or "this Agreement" means this Agreement and
Plan of Merger, dated as of December 20, 1996, among the Company,
Parent and Merger Sub (including the Exhibits hereto and the
Disclosure Schedule) and all amendments hereto made in accordance
with the provisions of Section 11.09.
"Assets" has the meaning specified in Section 3.18.
"Business" means the business of developing, marketing and
supporting software and all other business which is conducted by the
Company and the Subsidiaries.
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"California Law" has the meaning specified in the recitals to
this Agreement.
Termination for "Cause" shall mean termination of an
Optionee's employment with Parent because of (A) his refusal or failure
(other than by reason of the incapacity of an Optionee due to physical
or mental illness) to perform his duties hereunder or to comply with the
reasonable directions received or policies established by Parent, the
CEO, the Board or any other person to whom an Optionee reports, (B)
the commission by an Optionee of a felony, or the perpetration by an
Optionee of a dishonest act or a crime involving fraud or moral
turpitude or common law fraud against Parent or any affiliate or
subsidiary thereof, or (C) any act or omission by an Optionee which is
the result of such Optionee's willful misconduct or gross negligence and
which, in the good faith opinion of Parent, is injurious in any material
respect to the financial condition, business or reputation of Parent or
any of its affiliates or subsidiaries.
"CERCLA" means the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended
through the date hereof.
"CERCLIS" means the Comprehensive Environmental
Response, Compensation and Liability Information System, as updated
through the date hereof.
"Code" means the Internal Revenue Code of 1986, as amended.
"Common Merger Consideration" means $10.00, as adjusted
pursuant to Section 2.06(h).
"Company" has the meaning specified in the recitals to this
Agreement.
"Company's Accountants" means KPMG Peat Marwick LLP,
independent accountants of the Company.
"Company Common Stock" means the common stock of the
Company.
"Company Preferred Stock" means the Company Series A
Preferred Stock, the Company Series B Preferred Stock, the Company
Series C Preferred Stock and the Company Series D Preferred Stock,
collectively.
"Company Series A Preferred Stock" means the Series A
Preferred Stock of the Company.
"Company Series B Preferred Stock" means the Series B
Preferred Stock of the Company.
"Company Series C Preferred Stock" means the Series C
Preferred Stock of the Company.
"Company Series D Preferred Stock" means the Series D
Preferred Stock of the Company.
"Company Stock Options" means the "Options" referred to in
the Stock Option Plan.
"Confidentiality Agreement" means the letter agreement
effective November 25, 1996 between the Company and Parent.
"Consent" has the meaning specified in Section 6.01(c).
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"Control" (including the terms "controlled by" and "under
common control with"), with respect to the relationship between or
among two or more Persons, means the possession, directly or
indirectly or as trustee or executor, of the power to direct or cause
thedirection of the affairs or management of a Person, whether through
the ownership of voting securities, as trustee or executor, by contract or
otherwise, including, without limitation, the ownership, directly or
indirectly, of securities having the power to elect a majority of the
board of directors or similar body governing the affairs of such Person.
"Conversion Ratio" means the quotient determined by dividing
the Common Merger Consideration by the Effective Time Parent Price.
"Disclosure Schedule" means the Disclosure Schedule attached
hereto, dated as of the date hereof, and forming a part of this Agreement.
"Effective Time" has the meaning specified in Section 2.02.
"Effective Time Parent Price" means the average of the closing
prices of Parent Common Stock on the NNM over the last 10 full
trading days prior to the Effective Time.
"Encumbrance" means any security interest, pledge, mortgage,
lien (including, without limitation, environmental and tax liens),
charge, encumbrance, adverse claim, preferential arrangement or
restriction of any kind, including, without limitation, any restriction on
the use, voting, transfer, receipt of income or other exercise of any
attributes of ownership.
"Environment" means surface waters, groundwaters, soil,
subsurface strata and air.
"Environmental Claims" means any and all administrative,
regulatory or judicial actions, suits, demands, demand letters, claims,
liens, notices of non-compliance or violation, notice of liability or
potential liability, investigations, proceedings, consent orders or
consent agreements relating in any way to any Environmental Law, any
Environmental Permit or Hazardous Materials or arising from alleged
injury or threat of injury to health, safety or the Environment,
including, without limitation, (a) by Governmental Authorities for
enforcement, cleanup, removal, response, remedial or other actions or
damages and (b) by any Governmental Authority or any Person for
damages, contribution, indemnification, cost recovery, compensation or
injunctive relief.
"Environmental Laws" means any Law, now or hereafter in
effect and as amended, and any judicial, administrative or otherwise
binding interpretation thereof, including any judicial or administrative
order, consent decree or judgment, relating to the environment, health,
safety or Hazardous Materials, including, without limitation, the
CERCLA; the Resource Conservation and Recovery Act, 42 U.S.C. SS
6901 et seq.; the Hazardous Materials Transportation Act, 49 U.S.C. SS
6901 et seq.; the Clean Water Act,33 U.S.C. SS 1251 et seq.; the Toxic
Substances Control Act, 15 U.S.C. SS 2601 et seq.; the Clean Air Act,
42 U.S.C. SS 7401 et seq.; the Safe Drinking Water Act, 42 U.S.C. SS
300f et seq.; the Atomic Energy Act, 42 U.S.C. SS 2011 et seq; the
Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. SS 136 et
seq.; and the Federal Food, Drug and Cosmetic Act, 21 U.S.C. SS 301
et seq.
"Environmental Permits" means all permits, approvals,
identification numbers, licenses and other authorizations required under
any applicable Environmental Law.
"ERISA" has the meaning specified in Section 3.21(a).
"Financial Statements" has the meaning specified in Section
3.07(a).
"Funded Debt" means the sum of all Indebtedness, including
accrued interest, pursuant to the Loan Agreement between the Company
and Canon, Inc. dated as of July 27, 1992, as amended.
33
"Good Reason" shall mean, with regard to a Transferred Senior
Executive, any of the following:
(i) a substantial diminution in such Transferred Senior Executive's
position or duties as of the Effective Time, or an adverse change to the
title of such Transferred Senior Executive specified as of the Effective
Time; or
(ii) the failure of Parent or any of its subsidiaries to pay when due
such Transferred Senior Executive any salary or established bonus target
in accordance with the terms specified as of the Effective Time or the
reduction by Parent or any of its subsidiaries of such Transferred Senior
Executive's salary; or
(iii) the relocation of the office of Parent or any of its subsidiaries
at which such Transferred Senior Executive is employed as specified as
of the Effective Date (the "Employment Location") to a location more
than seventy-five (75) miles away from the Employment Location, or
Parent or any of its subsidiaries requiring such Transferred Senior
Executive to be based more than seventy-five (75) miles away from the
Employment Location (except for required travel on Parent's or any of
its subsidiaries' business to an extent substantially consistent with such
Transferred Senior Executive's business travel obligations);
which, in any such case, is not remedied within thirty (30) days after
receipt of written notice from such Transferred Senior Executive
specifically delineating each such act and setting forth such Transferred
Senior Executive's intentions to resign if such breach is not duly
remedied, provided that if the specified breach cannot reasonably be
remedied withinsaid thirty (30) day period and Parent commences
reasonable steps within said thirty (30) day period to remedy such
breach and diligently continues such steps thereafter until a remedy is
effected, such breach shall not constitute "Good Reason".
"Governmental Authority" means any United States federal,
state or local or any foreign government, governmental, regulatory or
administrative authority, agency or commission or any court, tribunal,
or judicial or arbitral body.
"Governmental Order" means any order, writ, judgment,
injunction, decree, stipulation, determination or award entered by or
with any Governmental Authority.
"Guaranteed Debt" means all Indebtedness of the Company that
is personally guaranteed by the Principal Shareholder.
"Hazardous Materials" means (a) petroleum and petroleum
products, radioactive materials, asbestos-containing materials, urea
formaldehyde foam insulation, transformers or other equipment that
contain polychlorinated biphenyls, and radon gas, and (b) any other
chemicals, materials or substances defined or regulated as "hazardous" or
"toxic" or words of similar import, under any applicable Environmental
Law.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended, and the rules and regulations
promulgated thereunder.
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"Indebtedness" means, without duplication with respect to any
Person, (a) all indebtedness of such Person for borrowed money, (b) all
obligations of such Person for the deferred purchase price of property or
services (other than trade payables created in the ordinary course of
business), (c) all indebtedness created or arising under any conditional
sale or other title retention agreement with respect to property acquired
by such Person (even though the rights and remedies of the seller or
lender under such agreement in the event of default are limited to
repossession or sale of such property), (d) all obligations of such
Person as lessee under leases that have been or should be, in accordance
with U.S. GAAP, recorded as capital leases, (e) all obligations,
contingent or otherwise, of such Person under acceptance, letter of credit
or similar facilities, (f) all obligations of such Person to purchase,
redeem, retire, defease or otherwise acquire for value any capital stock of
such Person or any warrants, rights or options to acquire such capital
stock, valued, in the case of redeemable preferred stock, at the greater of
its voluntary or involuntary liquidation preference plus accrued and
unpaid dividends, (g) all Indebtedness of others referred to in clauses (a)
through (e) above guaranteed directly or indirectly in any manner by
such Person, or in effect guaranteed directly or indirectly by such Person
through an agreement (i) to pay or purchase such Indebtedness or to
advance or supply funds for the payment or purchase of such
Indebtedness, (ii) to purchase, sell or lease (as lessee or lessor) property,
or to purchase or sell services, primarily for the purpose of enabling the
debtor to make payment of suchIndebtedness or to assure the holder of
such Indebtedness against loss, (iii) to supply funds to or in any other
manner invest in the debtor (including any agreement to pay for
property or services irrespective of whether such property is received or
such services are rendered), and (h) all Indebtedness referred to in clauses
(a) through (e) above secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be
secured by) any Encumbrance on property (including, without
limitation, accounts and contract rights) owned by such Person, even
though such Person has not assumed or become liable for the payment
of such Indebtedness.
"Intellectual Property" means all of the following: (i) U.S.
and foreign registered and unregistered trademarks, trade dress, service
marks, logos, trade names, corporate names and all registrations and
applications to register the same (the "Trademarks"); (ii) issued U.S.
and foreign patents and pending patent applications, patent disclosures,
and any and all divisions, continuations, continuations-in-part, reissues,
reexaminations, and extension thereof, any counterparts claiming
priority therefrom, utility models, patents of importation/confirmation,
certificates of invention and like statutory rights (the "Patents"); (iii)
U.S. and foreign registered and unregistered copyrights (including, but
not limited to, those in computer software and databases) rights of
publicity and all registrations and applications to register the same (the
"Copyrights"); (iv) U.S. and foreign rights in any semiconductor chip
product works or "mask works" as such term is defined in 17 U.S.C.
901, et seq. and any registrations or applications therefor ("Mask
Works"); (v) all categories of trade secrets as defined in the Uniform
Trade Secrets Act including, but not limited to, business information;
(vi) all License and agreements pursuant to which the Company has
acquired rights in or to any Trademarks, Patents, Copyrights or Mask
Works, or Licenses and agreements pursuant to which the Company has
Licensed or transferred the right to use any of the foregoing
("Licenses").
"IRS" means the Internal Revenue Service of the United
States.
"Law" means any federal, state, local or foreign statute, law,
ordinance, regulation, rule, code, order, other requirement or rule of law.
"Liabilities" means any and all debts, liabilities and
obligations, whether accrued or fixed, absolute or contingent, matured
or unmatured or determined or determinable, including, without
limitation, those arising under any Law (including, without limitation,
any Environmental Law), Action or Governmental Order and those
arising under any contract, agreement, arrangement, commitment or
undertaking.
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"Material Adverse Effect" means any circumstance, change in,
or effect on the Business that, individually or in the aggregate with any
other circumstances, changes in, or effects on, the Business is, or could
reasonably be expected to be, materially adverse to the business,
operations, assets or Liabilities, results of operations or the financial
condition of the Company and the Subsidiaries, taken as a whole;
provided, however, that a Material Adverse Effect will not exist as a
result of circumstances that are demonstrated to haveresulted directly
from the public announcement of the Merger or the performance by the
Company of its obligations hereunder.
"Material Contracts" has the meaning specified in Section
3.15(a).
"Merger Consideration" means the Common Merger
Consideration, the Series A Merger Consideration, the Series B Merger
Consideration, the Series C Merger Consideration and the Series D
Merger Consideration, collectively.
"Multiemployer Plan" has the meaning specified in Section
3.21(b).
"Multiple Employer Plan" has the meaning specified in
Section 3.21(b).
"NNM" means the Nasdaq National Market.
"Parent" has the meaning specified in the recitals to this
Agreement.
"Parent Common Stock" means the common stock of Parent.
"Permits" has the meaning specified in Section 3.14(a).
"Permitted Encumbrances" means such of the following as to
which no enforcement, collection, execution, levy or foreclosure
proceeding shall have been commenced: (a) liens for taxes, assessments
and governmental charges or levies not yet due and payable or for taxes,
assessments and governmental charges or levies that are being contested
in good faith; (b) Encumbrances imposed by law, such as
materialmen's, mechanics', carriers', workmen's and repairmen's liens
and other similar liens arising in the ordinary course of business
securing obligations that (i) are not overdue for a period of more than
30 days and (ii) are not in excess of $100,000 in the aggregate at any
time; (c) pledges or deposits to secure obligations under workers'
compensation laws or similar legislation or to secure public or
statutory obligations; and (d) minor survey exceptions, reciprocal
easement agreements and other customary encumbrances on and
imperfections to title to real property and other Encumbrances that (i)
do not render title to the property encumbered thereby uninsurable and
(ii) do not, individually or in the aggregate, materially adversely affect
the value or use of such property for its current purposes; and (e)
Encumbrances related to Funded Debt and purchase money mortgages
and conditional sales contracts entered into in the ordinary course of
business.
"Person" means any individual, partnership, firm, corporation,
association, trust, unincorporated organization or other entity, as well
as any syndicate or group that would be deemed to be a person under
Section 13(d)(3) of the Securities Exchange Act of 1934, as amended.
"Plans" has the meaning specified in Section 3.21(a).
"Principal Shareholder" means Xxxxxx X. Jobs.
"RCRA" means the Resource Conservation and Recovery Act,
42 U.S.C. SS 6901 et seq., as amended through the date hereof.
"Receivables" means any and all accounts receivable, notes and
other amounts receivable by the Company or any Subsidiary from third
parties, including, without limitation, customers, arising before the
Effective Time, whether or not in the ordinary course, together with all
unpaid financing charges accrued thereon.
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"Regulations" means the Treasury Regulations (including
Temporary Regulations) promulgated by the United States Department
of Treasury with respect to the Code or other federal tax statutes.
"Release" means disposing, discharging, injecting, spilling,
leaking, leaching, dumping, emitting, escaping, emptying, seeping,
placing and the like into or upon any land or water or air or otherwise
entering into the Environment.
"Series A Merger Consideration" means (i) an amount of cash
equal to the amount by which the unadjusted Common Merger
Consideration exceeds the product of (A) the Share Number and (B) the
Effective Time Parent Price and (ii) that number (the "Share Number")
of shares of Parent Common Stock equal to the quotient of 1,500,000
and the number of outstanding shares of Company Series A Preferred
Stock immediately prior to the Effective Time, as adjusted pursuant to
Section 2.06(h).
"Series B Merger Consideration" means $10.00, as adjusted
pursuant to Section 2.06(h).
"Series C Merger Consideration" means $10.03009027, as
adjusted pursuant to Section 2.06(h).
"Series D Merger Consideration" means the $10.00, as
adjusted pursuant to Section 2.06(h).
"Stock Option Plan" means the NeXT Software, Inc. 1990
Stock Option Plan.
"Subsidiaries" means all corporations, partnerships, joint
ventures, associations and other entities controlled by the Company
directly or indirectly through one or more intermediaries.
"Tax" or "Taxes" means any and all taxes, levies, duties,
tariffs, imposts, and other similar fees or charges of any kind, foreign or
domestic, (together with any and all interest, penalties, additions to tax
and additional amounts imposed with respect thereto), imposed by any
government or taxing authority, including, without limitation: taxes
on or with respect to income, franchises, windfall or other profits, gross
receipts, property, sales, use, capital stock, payroll, employment, social
security, workers' compensation, unemployment compensation, or net
worth; taxes or other charges in the nature of excise, withholding, ad
valorem, stamp, transfer, value added, or gains taxes; license,
registration and documentation fees; and customs duties and tariffs.
"Unvested Company Stock Options" means Company Stock
Options that are not exercisable immediately prior to the Effective
Time.
"U.S. GAAP" means United States generally accepted
accounting principles and practices as in effect from time to time and
applied consistently throughout the periods involved.
"Vested Company Stock Options" means Company Stock
Options that are exercisable immediately prior to the Effective Time.
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ARTICLE II
THE MERGER
SECTION 2.01. The Merger. At the Effective Time (as
defined in Section 2.02) and subject to and upon the terms and
conditions of this Agreement and California Law, Merger Sub will be
merged with and into the Company, the separate corporate existence of
Merger Sub shall cease, and the Company shall continue as the
surviving corporation. The Company as the surviving corporation after
the Merger is hereinafter sometimes referred to as the "Surviving
Corporation".
SECTION 2.02. Effective Time. As promptly as practicable
after the satisfaction or waiver of the conditions set forth in Article
VIII, the parties hereto shall cause the Merger to be consummated by
filing an agreement of merger in the form attached hereto as Annex A
(the "Agreement of Merger") with the Secretary of State of the State of
California, in such form as required by, and executed in accordance with
the relevant provisions of, California Law (the time of such filing or
such later mutually agreed upon time as may be set forth in the
Agreement of Merger being the "Effective Time").
SECTION 2.03. Effect of the Merger. At the Effective Time,
the effect of the Merger shall be as provided in the applicable provisions
of California Law. Withoutlimiting the generality of the foregoing,
and subject thereto, at the Effective Time all the property, rights,
privileges, powers and franchises of the Company and Merger Sub shall
vest in the Surviving Corporation, and all debts, liabilities and duties of
the Company and Merger Sub shall become the debts, liabilities and
duties of the Surviving Corporation.
SECTION 2.04. Articles of Incorporation; Bylaws. (a)
Articles of Incorporation. Unless otherwise determined by Parent prior
to the Effective Time, at the Effective Time the Articles of
Incorporation of Merger Sub, as in effect immediately prior to the
Effective Time, shall be the Articles of Incorporation of the Surviving
Corporation until thereafter amended as provided by law and such
Articles of Incorporation; provided, however, that Article I of the
Articles of Incorporation of the Surviving Corporation shall be amended
to read as follows: "The name of the corporation is NeXT Software,
Inc.".
(b) Bylaws. The Bylaws of Merger Sub, as in effect
immediately prior to the Effective Time, shall be the Bylaws of the
Surviving Corporation until thereafter amended as provided by
California Law, the Articles of Incorporation of the Surviving
Corporation and such Bylaws.
SECTION 2.05. Directors and Officers. The directors of
Merger Sub immediately prior to the Effective Time shall be the initial
directors of the Surviving Corporation, each to hold office in accordance
with the Articles of Incorporation and Bylaws of the Surviving
Corporation, and the officers of Merger Sub immediately prior to the
Effective Time shall be the initial officers of the Surviving
Corporation, in each case until their respective successors are duly
elected or appointed and qualified.
SECTION 2.06. Effect on Capital Stock. At the Effective
Time, by virtue of the Merger and without any action on the part of
Parent, Merger Sub and the Company or the holders of any of the
following securities:
(a) Conversion of Company Common Stock. Each share of
Company Common Stock issued and outstanding immediately prior to
the Effective Time (other than any such shares to be canceled pursuant
to Section 2.06(f) or constituting Dissenting Shares (as defined and to
the extent provided in Section 2.07(a)) will be cancelled and
extinguished and be converted automatically into the right to receive the
Common Merger Consideration in the manner provided in Section
2.08, upon surrender of the certificate representing such share of
Company Common Stock.
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(b) Conversion of Company Series A Preferred Stock. Each share
of Company Series A Preferred Stock issued and outstanding
immediately prior to the Effective Time (excluding any such shares to
be cancelled pursuant to Section 2.06(f) or constituting Dissenting
Shares) shall, by virtue of the Merger and without any action on the
part of the holder thereof, be converted into the right to receive
theSeries A Merger Consideration in the manner provided in Section
2.08, upon surrender of the certificate representing such share of
Company Series A Preferred Stock.
(c) Conversion of Company Series B Preferred Stock. Each share
of Company Series B Preferred Stock issued and outstanding
immediately prior to the Effective Time (excluding any such shares to
be cancelled pursuant to Section 2.06(f) or constituting Dissenting
Shares) shall, by virtue of the Merger and without any action on the
part of the holder thereof, be converted into the right to receive the
Series B Merger Consideration in the manner provided in Section 2.08,
upon surrender of the certificate representing such share of Company
Series B Preferred Stock.
(d) Conversion of Company Series C Preferred Stock. Each share
of Company Series C Preferred Stock issued and outstanding
immediately prior to the Effective Time (excluding any such shares to
be cancelled pursuant to Section 2.06(f) or constituting Dissenting
Shares) shall, by virtue of the Merger and without any action on the
part of the holder thereof, be converted into the right to receive the
Series C Merger Consideration in the manner provided in Section 2.08,
upon surrender of the certificate representing such share of Company
Series C Preferred Stock.
(e) Conversion of Company Series D Preferred Stock. Each share
of Company Series D Preferred Stock issued and outstanding
immediately prior to the Effective Time (excluding any such shares to
be cancelled pursuant to Section 2.06(f) or constituting Dissenting
Shares) shall, by virtue of the Merger and without any action on the
part of the holder thereof, be converted into the right to receive the
Series D Merger Consideration in the manner provided in Section 2.08,
upon surrender of the certificate representing such share of Company
Series D Preferred Stock.
(f) Cancellation of Treasury Stock and Parent-Owned Stock. Each
share of Company Common Stock and Company Preferred Stock held
in the treasury of the Company and each share of Company Common
Stock and Company Preferred Stock owned by Parent or any direct or
indirect wholly owned subsidiary of Parent or of the Company
immediately prior to the Effective Time shall be cancelled and
extinguished without any conversion thereof.
(g) Assumption of Stock Option Plan. The Stock Option Plan
and all Company Stock Options then outstanding under the Stock
Option Plan shall be assumed by Parent subject to the provisions of
Article VI.
(h) Adjustments to Merger Consideration. The applicable Merger
Consideration per share of Company Common Stock, Company Series
A Preferred Stock, Company Series B Preferred Stock, Company Series
C Preferred Stock and Company Series D Preferred Stock shall be
adjusted to reflect fully the effect of any stock split, reverse split, stock
dividend (including any dividend or distribution of securities convertible
into Company Common Stock or Company Preferred Stock),
reorganization, recapitalization or other like change with respect to
Company Common Stock or Company Preferred Stock occurring after
the date hereof and prior to the Effective Time.
(i) Fractional Shares. No fraction of a share of Parent Common
Stock will be issued, but in lieu thereof each holder of shares of
Company Series A Preferred Stock who would otherwise be entitled to
a fraction of a share of Parent Common Stock (after aggregating all
fractional shares of Parent Common Stock to be received by such
holder) shall receive from Parent an amount of cash (rounded to the
nearest whole cent) equal to the product of (i) such fraction, multiplied
by (ii) the Effective Time Parent Price.
39
(j) Capital Stock of Merger Sub. Each share of common stock of
Merger Sub issued and outstanding immediately prior to the Effective
Time will be cancelled and extinguished and be converted automatically
into the right to receive one newly and validly issued, fully paid and
nonassessable share of common stock of the Surviving Corporation.
Each stock certificate of Merger Sub evidencing ownership of any such
shares shall continue to evidence ownership of such shares of capital
stock of the Surviving Corporation.
SECTION 2.07. Dissenting Shares. (a) Notwithstanding any
provision of this Agreement to the contrary, any shares of capital stock
of the Company held by a holder who has exercised dissenters' rights for
such shares in accordance with California Law and who, as of the
Effective Time, has not effectively withdrawn or lost such dissenters'
rights ("Dissenting Shares"), shall not be converted into or represent a
right to receive Merger Consideration pursuant to Section 2.06, but the
holder thereof shall only be entitled to such rights as are granted by
California Law.
(b) Notwithstanding the provisions of subsection (a), if
any holder of Dissenting Shares shall effectively withdraw or lose
(through failure to perfect or otherwise) his dissenters' rights, then, as
of the later of Effective Time or the occurrence of such event, such
holder's shares shall automatically be converted into and represent only
the right to receive the applicable Merger Consideration, without
interest thereon, upon surrender of the certificate or certificates
representing such Dissenting Shares.
(c) The Company shall give Parent (i) prompt notice of
any written demands received by the Company to require the Company
to purchase shares of capital stock of the Company, withdrawals of
such demands, and any other instruments served pursuant to California
Law and received by the Company and (ii) the opportunity to participate
in all negotiations and proceedings with respect to such demands. The
Company shall not, except with the prior written consent of Parent,
voluntarily make any payment with respect to any such demands or
offer to settle or settle any such demands.
SECTION 2.08. Surrender of Certificates. (a) Exchange
Agent. Parent shall supply, or shall cause to be supplied, to or for the
account of a bank or trust company designated by Parent (the "Exchange
Agent"), in trust for the benefit of the holders of Company Common
Stock and Company Preferred Stock (other than Dissenting Shares), for
exchange in accordance with this Section 2.08, through the Exchange
Agent, (i) cash payable pursuant to Section 2.06 and (ii) certificates
evidencing the shares of Parent Common Stock issuable pursuant to
Section 2.06, in each case in exchange for outstanding shares of
Company Common Stock and Company Preferred Stock.
(b) Parent to Provide Parent Common Stock. At or prior
to the Effective Time, Parent shall make available to the Exchange
Agent for exchange and payment in accordance with this Article II,
through the procedures set forth in the Exchange Agent Agreement, the
shares of Parent Common Stock issuable pursuant to, and the cash
payable pursuant to, Section 2.06 and in accordance with the Exchange
Agent Agreement.
(c) Exchange Procedures. The Surviving Corporation
shall, in accordance with the Exchange Agent Agreement, cause to be
delivered or mailed to each holder of record of a certificate or certificates
(the "Certificates") which immediately prior to the Effective Time
represented outstanding shares of Company Common Stock or
Company Preferred Stock whose shares were converted into the right to
receive Merger Consideration pursuant to Section 2.06, (i) a letter of
transmittal (which shall specify that delivery shall be effected, and risk
of loss and title to the Certificates or shall pass, only upon delivery of
the Certificates to the Exchange Agent and shall be in such form and
have such other provisions as Parent may reasonably specify) and (ii)
instructions for use in effecting the surrender of the Certificates in
exchange for the cash payable to such holder pursuant to Section 2.06
and certificates representing shares of Parent Common Stock payable to
such holder pursuant to Section 2.06, if any. Upon surrender of a
Certificate for cancellation to the Exchange Agent or to such other
agent or agents as may be appointed by
40
Parent, together with such letter of transmittal, duly completed and
validly executed in accordance with the instructions thereto, the holder
of such Certificate shall be entitled to receive in exchange therefor the
cash payable to such holder pursuant to Section 2.06 and a certificate
representing the number of whole shares of Parent Common Stock and
payment in lieu of fractional shares, if any, which such holder has the
right to receive pursuant to Section 2.06, and the Certificate so
surrendered shall forthwith be cancelled. Until so surrendered, each
outstanding Certificatethat, prior to the Effective Time, represented
shares of Company Common Stock or Company Preferred Stock will
be deemed from and after the Effective Time, for all corporate purposes,
other than the payment of dividends, to evidence the ownership of the
number of full shares of Parent Common Stock, if any, into which
such shares of Company Common Stock or Company Preferred Stock
shall have been so converted, the right to receive an amount in cash in
lieu of the issuance of any fractional shares in accordance with Section
2.06(i), and the right to receive cash in the manner provided by Section
2.06 hereof.
(d) Distributions With Respect to Unexchanged Shares.
No dividends or other distributions declared or made after the Effective
Time with respect to Parent Common Stock with a record date after the
Effective Time will be paid to the holder of any unsurrendered
Certificate with respect to the shares of Parent Common Stock
represented thereby until the holder of record of such Certificate shall
surrender such Certificate. Subject to applicable law, following
surrender of any such Certificate, there shall be paid to the record holder
of the certificates representing whole shares of Parent Common Stock
issued in exchange therefor, without interest, (i) at the time of such
surrender, the amount of dividends or other distributions with a record
date after the Effective Time theretofore paid with respect to such whole
shares of Parent Common Stock and (ii) at the appropriate payment
date, the amount of dividends or other distributions with a record date
after the Effective Time but prior to such surrender and a payment date
subsequent to such surrender payable with respect to such shares of
Parent Common Stock.
(e) Transfers of Ownership. If any certificate for shares
of Parent Common Stock is to be issued in a name other than that in
which the certificate surrendered in exchange therefor is registered, it
will be a condition of the issuance thereof that the certificate so
surrendered will be properly endorsed and otherwise in proper form for
transfer and that the person requesting such exchange will have paid to
Parent or any agent designated by it any transfer or other taxes required
by reason of the issuance of a certificate for shares of Parent Common
Stock in any name other than that of the registered holder of the
certificate surrendered, or established to the satisfaction of Parent or any
agent designated by it that such tax has been paid or is not payable.
(f) No Liability. Notwithstanding anything to the
contrary in this Section 2.08, none of the Exchange Agent, the
Surviving Corporation or any party hereto shall be liable to a holder of
Company Common Stock or Company Preferred Stock for any amount
properly paid to a public official pursuant to any applicable abandoned
property, escheat or similar law.
SECTION 2.09. No Further Ownership Rights in Company
Common Stock or Company Preferred Stock. All cash paid or payable
in respect of shares of Company Common Stock and Company
Preferred Stock in accordance with the terms hereof (together with all
shares of Parent Common Stock issued upon the surrender for exchange
of shares ofCompany Series A Preferred Stock in accordance with the
terms hereof) shall be deemed to have been issued in full satisfaction of
all rights pertaining to such shares of Company Common Stock and
Company Preferred Stock, and there shall be no further registration of
transfers on the records of the Surviving Corporation of shares of
Company Common Stock or Company Preferred Stock which were
outstanding immediately prior to the Effective Time. If, after the
Effective Time, Certificates are presented to the Surviving Corporation
for any reason, they shall be cancelled and exchanged as provided in this
Article II.
41
SECTION 2.10. Lost, Stolen or Destroyed Certificates. In
the event any certificates evidencing shares of Company Common
Stock or Company Preferred Stock shall have been lost, stolen or
destroyed, the Exchange Agent shall issue in exchange for such lost,
stolen or destroyed certificates, upon the making of an affidavit of that
fact by the holder thereof, such shares of Parent Common Stock, cash
for fractional shares, if any, as may be required pursuant to Section
2.06(i) and the cash payable in the manner specified in Section 2.06
hereof; provided, however, that Parent may, in its discretion and as a
condition precedent to the issuance and payment thereof, require the
owner of such lost, stolen or destroyed certificates to deliver a bond in
such sum as it may reasonably direct as indemnity against any claim
that may be made against Parent or the Exchange Agent with respect to
the certificates alleged to have been lost, stolen or destroyed.
SECTION 2.11. Taking of Necessary Action; Further Action.
If, at any time after the Effective Time, any such further action is
necessary or desirable to carry out the purposes of this Agreement and
to vest the Surviving Corporation with full right, title and possession
to all assets, property, rights, privileges, powers and franchises of the
Company and Parent, the officers and directors of the Company and
Parent are fully authorized in the name of their respective corporations
or otherwise to take, and will take, all such lawful and necessary action.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
As an inducement to Parent to enter into this Agreement, the
Company hereby represents and warrants to Parent as follows:
SECTION 3.01. Organization, Authority and Qualification of
the Company. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of California
and has all necessary corporate power and authority to own, operate or
lease the properties and assets now owned, operated or leased by it and
to carry on the Business as it has been and is currently conducted.
Except as set forth inSection 3.01 of the Disclosure Schedule, the
Company is duly licensed or qualified to do business and is in good
standing in each jurisdiction in which the failure to be licensed or
qualified would have a Material Adverse Effect. The Company has not
taken any action that in any respect conflicts with, constitutes a default
under or results in a violation of any provision of its Articles of
Incorporation or Bylaws. True and correct copies of the Articles of
Incorporation and Bylaws of the Company, each as in effect on the date
hereof, have been made available or delivered by the Company to
Parent. This Agreement has been duly executed and delivered by the
Company, and (assuming due authorization, execution and delivery by
Parent and Merger Sub) this Agreement constitutes a legal, valid and
binding obligation of the Company enforceable against the Company in
accordance with its terms except as such enforceability may be limited
by principles of public policy and subject to the laws of general
application relating to bankruptcy, insolvency and the relief of debtors
and rules of law governing specific performance, injunctive relief or
other equitable remedies.
42
SECTION 3.02. Capital Stock of the Company; Ownership
of the Shares. (a) The authorized capital stock of the Company
consists of 100,000,000 shares of Company Common Stock,
14,000,000 shares of Company Series A Preferred Stock, 5,000,000
shares of Company Series B Preferred Stock, 9,412,500 shares of
Company Series C Preferred Stock and 232,000 shares of Company
Series D Preferred Stock. As of the date hereof, (i) 4,028,930 shares of
Company Common Stock are issued and outstanding, all of which are
validly issued, fully paid and nonassessable, (ii) 10,050,000 shares of
Company Common Stock are reserved for issuance pursuant to
employee stock options granted pursuant to the Stock Option Plan, (iii)
7,626,901 Company Stock Options are outstanding thereunder, (iv)
12,200,000 shares of Company Series A Preferred Stock are issued and
outstanding, all of which are validly issued, fully paid and
nonassessable, (v) 5,000,000 shares of Company Series B Preferred
Stock are issued and outstanding, all of which are validly issued, fully
paid and nonassessable, (vi) 9,012,500 shares of Company Series C
Preferred Stock are issued and outstanding, all of which are validly
issued, fully paid and nonassessable, and (vii) 232,000 shares of
Company Series D Preferred Stock are issued and outstanding, all of
which are validly issued, fully paid and nonassessable. None of the
issued and outstanding shares of Company Common Stock or
Company Preferred Stock was issued in violation of any preemptive
rights. Except for the Stock Option Plan and except as disclosed in
Section 3.02(a)(i) of the Disclosure Schedule, there are no options,
warrants, convertible securities or other rights, agreements,
arrangements or commitments of any character relating to the capital
stock of the Company to which the Company is a party or obligating
the Company to issue or sell any shares of capital stock of, or any
other interest in, the Company. There are no outstanding contractual
obligations of the Company to repurchase, redeem or otherwise acquire
any shares of Company Common Stock or Company Preferred Stock or
to provide funds to, or make any investment (in the form of a loan,
capital contribution or otherwise) in, any other Person. Except as
disclosed in Section 3.02(a)(ii) of the Disclosure Schedule, there are no
voting trusts, stockholder agreements, proxies or other agreements
orunderstandings in effect with respect to the voting or transfer of any
of the Company Common Stock or Company Preferred Stock.
(b) Except as set forth in Section 3.02(b) of the
Disclosure Schedule, the stock register of the Company accurately
records: (i) the name and last known address of each owner of record of
shares of capital stock of the Company and (ii) the certificate number of
each certificate evidencing shares of capital stock issued by the
Company, the number of shares evidenced by each such certificate, the
date of issuance thereof and, in the case of cancellation, the date of
cancellation.
SECTION 3.03. Subsidiaries. (a) Section 3.03(a) of the
Disclosure Schedule sets forth a true and complete list of all
Subsidiaries, listing for each Subsidiary its name, type of entity, the
jurisdiction and date of its incorporation or organization, its authorized
capital stock, partnership capital or equivalent, the number and type of
its issued and outstanding shares of capital stock, partnership interests
or similar ownership interests and the current ownership of such shares,
partnership interests or similar ownership interests by the Company and
its Subsidiaries.
(b) There are no other corporations, partnerships, joint
ventures, associations or other similar entities in which the Company
owns, of record or beneficially, any direct or indirect equity or other
interest or any right (contingent or otherwise) to acquire the same.
(c) Except as set forth in Section 3.03(c) of the
Disclosure Schedule, each Subsidiary that is a corporation: (i) is a
corporation duly organized and validly existing under the laws of its
jurisdiction of incorporation, (ii) has all necessary corporate power and
authority to own, operate or lease the properties and assets owned,
operated or leased by such Subsidiary and to carry on its business as it
has been and is currently conducted by such Subsidiary and (iii) is duly
licensed or qualified to do business and is in good standing in each
jurisdiction in which the properties owned or leased by it or the
operation of its business makes such licensing or qualification
necessary, except for, in each of clauses (i), (ii) and (iii), such failures
which, when taken together with all other such failures, would not have
a Material Adverse Effect. Each Subsidiary that is not a corporation:
(i) is duly organized and validly existing under the laws of its
43
jurisdiction of organization, (ii) has all necessary power and authority to
own, operate or lease the material properties and material assets owned,
operated or leased by such Subsidiary and to carry on its business as it
has been and is currently conducted by such Subsidiary and (iii) is duly
licensed or qualified to do business and is in good standing in each
jurisdiction in which the properties owned or leased by it or the
operation of its business makes such licensing or qualification
necessary, except for, in each of clauses (i), (ii) and (iii), such failures
which, when taken together with all other such failures, would not have
a Material Adverse Effect.
(d) Other than directors' qualifying shares in foreign
jurisdictions, all the outstanding shares of capital stock of each
Subsidiary that is a corporation are validly issued, fully paid,
nonassessable and free of preemptive rights and are owned by the
Company, whether directly or indirectly, free and clear of all
Encumbrances.
(e) There are no options, warrants, convertible securities,
or other rights, agreements, arrangements or commitments of any
character to which Company or any Subsidiary is a party obligating the
Company or any Subsidiary to issue or sell any shares of capital stock
of, or any other interest in, any Subsidiary.
(f) No Subsidiary has taken any action that in any
respect conflicts with, constitutes a default under or results in a
violation of any provision of its charter or by-laws (or similar
organizational documents) except for such actions which, when taken
together with all other such actions, would not have a Material Adverse
Effect. True and complete copies of the charter and by-laws (or similar
organizational documents), in each case as in effect on the date hereof,
of each Subsidiary have been made available or delivered by the
Company to Parent.
(g) There are no voting trusts, stockholder agreements,
proxies or other agreements or understandings in effect with respect to
the voting or transfer of any shares of capital stock of or any other
interests in any Subsidiary.
(h) The stock register of each Subsidiary that is a
corporation accurately records: (i) the record owners of capital stock of
such Subsidiary and (ii) the certificate number of each certificate
evidencing shares of capital stock issued by such Subsidiary, the
number of shares evidenced each such certificate, the date of issuance
thereof and, in the case of cancellation, the date of cancellation.
SECTION 3.04. Corporate Books and Records. Complete
and accurate copies of all the minute books and of the stock register of
the Company and each Subsidiary have been provided or made available
by the Company to Parent.
SECTION 3.05. No Conflict. Subject to approval of the
Merger and this Agreement by the Company's shareholders (which at a
minimum shall be provided by the written consent of the Principal
Shareholder), assuming that all consents, approvals, authorizations and
other actions described in Section 3.06 have been obtained and all
filings and notifications listed in Section 3.06 of the Disclosure
Schedule have been made, the execution, delivery and performance of
this Agreement by the Company do not and will not (a) violate,
conflict with or result in the breach of any provision of the charter or
by-laws (or similar organizational documents) of the Company or any
Subsidiary, (b) conflict with or violate any Law or Governmental Order
applicable to the Company or any Subsidiary (other than conflicts and
violations which could not reasonably be expected to have a
MaterialAdverse Effect or as would occur solely as a result of the
identity or the legal or regulatory status of Parent or any of its
Affiliates), or (c) except as set forth in Section 3.05(c) of the Disclosure
Schedule, conflict with, result in any breach of, constitute a default (or
event which with the giving of notice or lapse of time, or both, would
become a default) under, require any consent under, or give to others any
rights of termination, amendment, acceleration, suspension, revocation
or cancellation of, or result in the creation of any Encumbrance (other
than a Permitted Encumbrance) on any of the assets or properties of the
Company or any Subsidiary
44
pursuant to, any note, bond, mortgage or indenture, contract,
agreement, lease, sublease, license, permit, franchise or other
instrument or arrangement to which the Company or any Subsidiary is
a party or by which any of such assets or properties is bound or
affected.
SECTION 3.06. Governmental Consents and Approvals. The
execution, delivery and performance of this Agreement by the Company
do not and will not require any consent, approval, authorization or other
order of, action by, filing with or notification to any Governmental
Authority, except (a) as described in Section 3.06 of the Disclosure
Schedule, (b) the notification requirements of the HSR Act, (c) the
filing of the Agreement of Merger and (d) such other consents, the
absence of which could not reasonably be expected to result in a
Material Adverse Effect.
SECTION 3.07. Financial Information/Books and Records.
(a) True and complete copies of (i) the audited consolidated balance sheet
of the Company for each of the three fiscal years ended as of December
31, 1995, December 31, 1994 and December 31, 1993, and the related
audited consolidated statements of income, retained earnings,
stockholders' equity and cash flows of the Company, together with all
related notes and schedules thereto, accompanied by the reports thereon
of the Company's Accountants (collectively referred to herein as the
"Financial Statements") and (ii) the unaudited consolidated balance sheet
of the Company as of September 30, 1996 (the "Interim Balance
Sheet"), and the related consolidated statements of income, retained
earnings, stockholders' equity and cash flows of the Company, together
with all related notes and schedules thereto (collectively referred to
herein as the "Interim Financial Statement") have been made available
or delivered by the Company to Parent. The Financial Statements and
the Interim Financial Statement (i) were prepared in accordance with the
books of account and other financial records of the Company, (ii)
present fairly the consolidated financial condition and results of
operations of the Company and the Subsidiaries as of the dates thereof
or for the periods covered thereby, (iii) have been prepared in accordance
with U.S. GAAP applied on a basis consistent with the past practices
of the Company and (iv) include all material adjustments (consisting
only of normal recurring accruals) that are necessary for a fair
presentation of the consolidated financial condition of the Company and
the Subsidiaries and the results of the operations of the Company and
the Subsidiaries as of the dates thereof or for the periods covered
thereby, except that the unaudited Interim Financial Statement wasand
is subject to normal and recurring year-end adjustments which were or
were not expected to be material in amount.
(b) The books of account and other financial records of
the Company and the Subsidiaries: (i) reflect all items of income and
expense and all assets and Liabilities required to be reflected therein in
accordance with U.S. GAAP applied on a basis consistent with the past
practices of the Company and the Subsidiaries, respectively, (ii) are in
all material respects complete and correct, and do not contain or reflect
any material inaccuracies or discrepancies and (iii) have been maintained
in accordance with good business and accounting practices.
SECTION 3.08. No Undisclosed Liabilities. There are no
Liabilities of the Company or any Subsidiary required by U.S. GAAP
to be recognized or disclosed on a consolidated balance sheet of the
Company and the Subsidiaries in the notes thereto, other than
Liabilities (i) reflected or reserved against on the Interim Balance Sheet,
(ii) disclosed in Section 3.08 of the Disclosure Schedule or (iii) incurred
since the date of the Interim Balance Sheet in the ordinary course of
business, consistent with the past practice, of the Company and the
Subsidiaries and which do not and could not reasonably be expected to
have a Material Adverse Effect. Reserves are reflected on the Interim
Balance Sheet against all material Liabilities of the Company and the
Subsidiaries in amounts that have been established on a basis consistent
with the past practices of the Company and the Subsidiaries and in
accordance with U.S. GAAP.
45
SECTION 3.09. Receivables; Inventory. (a) Except to the
extent, if any, reserved for on the Interim Balance Sheet, all Receivables
reflected on the Interim Balance Sheet arose from the sale of inventory
or services and in the ordinary course of business consistent with past
practice and, except as reserved against on the Interim Balance Sheet,
constitute, to the Company's knowledge, only valid, undisputed claims
of the Company or a Subsidiary not subject to material and valid claims
of set-off or other defenses or counterclaims other than normal cash
discounts accrued in the ordinary course of business consistent with past
practice. All Receivables reflected on the Interim Balance Sheet
(subject to the reserve for bad debts, if any, reflected on the Interim
Balance Sheet) have been collected or are or could reasonably be
expected to be collectible in the normal course, without resort to
litigation or extraordinary collection activity.
(b) All of the inventories of the Company reflected on
the Interim Balance Sheet and the Company's books and records on the
date hereof were purchased, acquired or produced in the ordinary and
regular course of business and in a manner consistent with the
Company's regular inventory practices and are set forth on the
Company's books and records in accordance with the practices and
principals of the Company consistent with the method of treating said
items in prior periods. The presentation of inventory on the Interim
BalanceSheet conforms to U.S. GAAP and such inventory is stated at
the lower of cost (determined using the first-in, first-out method) or net
realizable value.
SECTION 3.10. Conduct in the Ordinary Course; Absence of
Certain Changes, Events and Conditions. Since the date of the Interim
Balance Sheet, except as disclosed in Section 3.10 of the Disclosure
Schedule, the business of the Company and the Subsidiaries has been
conducted in the ordinary course and consistent with past practice. As
amplification and not limitation of the foregoing, except as disclosed in
Section 3.10 of the Disclosure Schedule, since the date of the Interim
Balance Sheet, neither the Company nor any Subsidiary has:
(i) permitted or allowed any of the material assets or material
properties (whether tangible or intangible) of the Company or any
Subsidiary to be subjected to any Encumbrance, other than Permitted
Encumbrances and Encumbrances that will be released at or prior to the
Effective Time;
(ii) except in the ordinary course of business consistent with past
practice, discharged or otherwise obtained the release of any
Encumbrance or paid or otherwise discharged any Liability, other than
current liabilities reflected on the Interim Balance Sheet and current
liabilities incurred in the ordinary course of business consistent with
past practice since the date of the Interim Balance Sheet;
(iii) except in the ordinary course of business consistent with past
practice, made any loan to, guaranteed any Indebtedness of or otherwise
incurred any Indebtedness on behalf of any Person;
(iv) redeemed any of the capital stock or declared, made or paid any
dividends or distributions (whether in cash, securities or other property)
to the holders of capital stock of the Company or any Subsidiary or
otherwise, other than dividends, distributions and redemptions declared,
made or paid by any Subsidiary solely to the Company;
(v) made any material changes in the customary methods of
operations of the Company or any Subsidiary, including, without
limitation, practices and policies relating to manufacturing, purchasing,
inventories, marketing, selling and pricing;
(vi) merged with, entered into a consolidation with or acquired an
interest of 5% or more in any Person or acquired a substantial portion
of the assets or business of any Person or any division or line of
business thereof, or otherwise acquired any assets material to the
Company and the Subsidiaries taken as a whole, other than in the
ordinary course of business consistent with past practice;
(vii) made any capital expenditure or commitment for any capital
expenditure in excess of $200,000 individually or $2,000,000 in the
aggregate;
46
(viii) sold, transferred, leased, subleased, licensed or otherwise
disposed of any material properties or material assets, real, personal or
mixed material to the Company and the Subsidiaries taken as a whole
but excluding the sale of inventories in the ordinary course of business
consistent with past practice;
(ix) except for exercises and conversions of securities outstanding
on the date of this Agreement and customary stock option grants
(covering no greater than 150,000 or, in the event that the Effective
Time has not occurred by March 31, 1997, 300,000 shares of Company
Common Stock) for new hires and existing employees consistent with
past practice and issued or sold any capital stock, notes, bonds or other
securities, or any option, warrant or other right to acquire the same, of,
or any other interest in, the Company or any Subsidiary;
(x) entered into any material agreement, arrangement or transaction
with any of its directors, officers, employees or shareholders (or with
any relative, beneficiary, spouse or Affiliate of such Person);
(xi) (A) other than as contemplated by this Agreement, granted any
material increase, or announced any material increase, in the wages,
salaries, compensation, bonuses, incentives, pension or other benefits
payable by the Company or any Subsidiary to any of its employees,
including, without limitation, any increase or change pursuant to any
Plan or (B) established or increased or promised to increase any benefits
under any Plan, in either case except as required by Law or any existing
agreement and/or involving ordinary increases consistent with the past
practices of the Company or such Subsidiary;
(xii) materially written down or materially written up (or failed to
write down or write up in accordance with U.S. GAAP consistent with
past practice) the value of any inventories or Receivables or revalued
any assets of the Company or any Subsidiary other than in the ordinary
course of business consistent with past practice and in accordance with
U.S. GAAP;
(xiii) amended, terminated, cancelled or compromised any material
claims of the Company or any Subsidiary or waived any other rights of
substantial value to the Company or any Subsidiary;
(xiv) made any change in any method of accounting or accounting
practice or policy used by the Company or any Subsidiary, other than
such changes required by U.S. GAAP;
(xv) allowed any Permit or Environmental Permit that was
issued or relates to the Company or any Subsidiary or otherwise relates
to any asset to lapse or terminate or failed to renew any such Permit or
Environmental Permit or any insurance policy that is scheduled to
terminate or expire within 45 calendar days of the Effective Time,
except for such lapses, terminations or failures which could not
reasonably be expected to have a Material Adverse Effect;
(xvi) materially amended, modified or consented to the termination
of, any Material Contract or the Company's or any Subsidiary's rights
thereunder;
(xvii) amended or restated the Articles of Incorporation or the
Bylaws (or other organizational documents) of the Company or any
Subsidiary;
(xviii) terminated, discontinued, closed or disposed of any plant,
facility or other business operation, or laid off any employees (other
than layoffs of less than twenty (20) employees in any six-month
period in the ordinary course of business consistent with past practice)
or implemented any early retirement, separation or program providing
early retirement window benefits within the meaning of Section
1.401(a)-4 of the Regulations or announced or planned any such action
or program for the future;
47
(xix) made any express or deemed election (other than an election
pursuant to Section 341(f) of the Code) or settled or compromised any
liability, with respect to Taxes of the Company or any Subsidiary;
(xx) suffered any casualty loss or damage with respect to any asset
which individually has a replacement cost of more than $500,000,
whether or not such loss or damage shall have been covered by
insurance;
(xxi) received notice of any claim of ownership by a third party of
the Owned Intellectual Property or of infringement by the Company of
any third party's Intellectual Property rights;
(xxii) materially changed the pricing or royalties set or charged by
the Company to its customers or licensees or been the subject of a
material change in pricing or royalties set or charged with regard to the
Licensed Intellectual Property; or
(xxiii) agreed, whether in writing or otherwise, to take any of the
actions specified in this Section 3.10 except as is expressly
contemplated by this Agreement.
SECTION 3.11. Litigation. Except as set forth in Section
3.11 of the Disclosure Schedule (which, with respect to each Action
disclosed therein, sets forth: the parties, nature of the proceeding, date
and method commenced, amount of damages or other relief sought and,
if applicable, paid or granted), there are no Actions by or against the
Company or any Subsidiary (or by or against the Company or any
Affiliate thereof and relating to the Company or any Subsidiary), or
affecting any of the Assets, pending before any Governmental Authority
(or, to the knowledge of the Company, threatened to be brought by or
before any Governmental Authority) that could reasonably be expected
to have a Material Adverse Effect. None of the matters disclosed in
Section 3.11 of the Disclosure Schedule has or has had a Material
Adverse Effect or could reasonably be expected to materially adversely
affect the legality, validity or enforceability of this Agreement or the
consummation of the transactions contemplated hereby. Except as set
forth in Section 3.11 of the Disclosure Schedule, none of the
Company, the Subsidiaries nor any of the Assets nor the Company is
subject to any Governmental Order (nor, to the knowledge of the
Company are there any such Governmental Orders threatened to be
imposed by any Governmental Authority) which has or has had a
Material Adverse Effect since the date of the Interim Balance Sheet.
SECTION 3.12. Certain Interests. (a) Except as disclosed in
Section 3.12(a) of the Disclosure Schedule, no officer or director of the
Company or any Subsidiary and no relative or spouse (or relative of
such spouse) who resides with, any such officer or director:
(i) has any material direct or indirect financial interest in any
competitor, supplier or customer of the Company or any Subsidiary,
provided, however, that the ownership of debt securities or the
ownership of equity securities representing no more than ten percent of
the outstanding voting power of any competitor, supplier or customer,
shall not be deemed to be a "financial interest" so long as the Person
owning such securities has no other material connection or relationship
with such competitor, supplier or customer;
(ii) owns, directly or indirectly, in whole or in part, or has any
other material interest in any material tangible or intangible property
which the Company or any Subsidiary uses or has used in the conduct
of its business or otherwise; or
(iii) has outstanding any material Indebtedness to the Company or
any Subsidiary.
48
(b) Except as disclosed in Section 3.12(b) of the
Disclosure Schedule, neither the Company nor any Subsidiary has any
material Liability or any other obligation of any nature whatsoever to
any officer, director or shareholder of the Company or any Subsidiary or
to any relative or spouse (or relative of such spouse) who resides with,
or is a dependent of, any such officer, director or shareholder.
SECTION 3.13. Compliance with Laws. (a) Except as set
forth in Section 3.13(a) of the Disclosure Schedule, the Company and
the Subsidiaries have each conducted and continue to conduct the
Business in substantial compliance with all Laws and Governmental
Orders applicable to the Company or any Subsidiary or any of the
Assets, and neither the Company nor any Subsidiary is in material
violation of any such Law or Governmental Order. To the knowledge
of executive officers of the Company, none of the Company, any
Subsidiary nor any officer, director, employee, agent or representative of
the Company or any Subsidiary has, on behalf of the Company,
furthered or supported any foreign boycott in violation of the Anti-
Boycott laws and regulations promulgated pursuant to the Export
Administration Act of 1979 (50 U.S.C.A. Appx S 2407, and
regulations promulgated thereunder).
(b) Section 3.13(b) of the Disclosure Schedule sets forth
a brief description of each material Governmental Order applicable to
the Company or any Subsidiary or any of the Assets, and no such
Governmental Order has or has had a Material Adverse Effect.
SECTION 3.14. Environmental and Other Permits and
Licenses; Related Matters. (a) Except as disclosed in Section 3.14(a)(i)
of the Disclosure Schedule, the Company and the Subsidiaries currently
hold and at all times have possessed all the health and safety and other
permits, licenses, authorizations, certificates, exemptions and approvals
of Governmental Authorities (collectively, "Permits"), including,
without limitation, Environmental Permits, necessary or proper for the
current use, occupancy and operation of each Asset of the Company and
the Subsidiaries, and all such Permits are in full force and effect.
Section 3.14(a)(ii) of the Disclosure Schedule sets forth those Permits
the absence of which would have a Material Adverse Effect. Except as
disclosed in Section 3.14(a)(iii) of the Disclosure Schedule, to the
Company's knowledge, there is no existing practice, action or activity
of the Company or any Subsidiary and, to the Company's knowledge,
no existing condition of the Assets of the Company or any Subsidiary
which will give rise to any civil or criminal Liability under, or violate
or prevent compliance with, any health or occupational safety or other
applicable Law. None of the Company or any Subsidiary has received
any notice from any Governmental Authority revoking, cancelling,
rescinding, materially modifying or refusing to renew any Permit or
providing written notice of violations under any Law. Except as
disclosed in Section 3.14(a)(iv) of the Disclosure Schedule, the
Company and each Subsidiary is in all material respects in compliance
with the Permits and the requirements of the Permits. Section
3.14(a)(v) of the Disclosure Schedule identifies all Permits that are
nontransferable or which will require the consent of any Governmental
Authority in the event of the consummation of the transactions
contemplated by this Agreement.
(b) Except as disclosed in Section 3.14(b) of the
Disclosure Schedule, (i) to the knowledge of the Company, Hazardous
Materials have not been treated, stored, disposed of or transported to or
from, or Released on any real property owned or leased by theCompany
or any Subsidiary (the "Real Property") or, to the knowledge of the
Company, any property adjoining any such real property; (ii) the
Company and the Subsidiaries have disposed of all wastes, including
those wastes containing Hazardous Materials, in compliance with all
applicable Environmental Laws and Environmental Permits; (iii) there
are no past, pending or, to the Company's knowledge, threatened
Environmental Claims against the Company, any Subsidiary, or any
Real Property; (iv) no Real Property or, to the knowledge of the
Company, any property adjoining any Real Property, is listed or
proposed for listing on the National Priorities List under CERCLA or
on the CERCLIS or any analogous state list of sites requiring
investigation or cleanup; and (v) to the Company's knowledge, neither
the Company nor any Subsidiary has transported or arranged for the
49
transportation of any Hazardous Materials to any location that is listed
or proposed for listing on the National Priorities List under CERCLA
or on the CERCLIS or any analogous state list or which is the subject
of any Environmental Claim.
(c) Except as disclosed in Section 3.14(c) of the
Disclosure Schedule, to the Company's knowledge, there are no
circumstances with respect to any Real Property or other Asset or the
operation of the Company's business which could reasonably be
anticipated (i) to form the basis of an Environmental Claim against the
Company, any Subsidiary or any Real Property or Asset or (ii) to cause
such Real Property or Asset to be subject to any restrictions on
ownership, occupancy, use or transferability under any applicable
Environmental Law.
SECTION 3.15. Material Contracts. (a) Section 3.15(a) of
the Disclosure Schedule lists each of the following material contracts
and material agreements (including, without limitation, oral and
informal arrangements) of the Company and the Subsidiaries (such
contracts and agreements, together with all material contracts,
agreements, leases and subleases concerning the management or
operation of any Real Property (including, without limitation, material
brokerage contracts) listed or otherwise disclosed in Section 3.17(a) or
3.17(b) of the Disclosure Schedule to which the Company or any
Subsidiary is a party and all material agreements relating to Intellectual
Property set forth in Section 3.18(a) of the Disclosure Schedule, being
"Material Contracts"):
(i) each contract or agreement for the purchase of inventory, spare
parts, other materials or personal property with any supplier or for the
furnishing of services to the Company or any Subsidiary under the
terms of which the Company or any Subsidiary: (A) is likely to pay or
otherwise give consideration of more than $250,000 in the aggregate
during the calendar year ended December 31, 1996 or (B) is likely to pay
or otherwise give consideration of more than $500,000 in the aggregate
over the remaining term of such contract;
(ii) each contract and agreement for the sale of Inventory or other
personal property or for the furnishing of services by the Company or
any Subsidiary which: (A) is likely to involve consideration of more
than $500,000 in the aggregate during the calendar year ended December
31, 1996 or (B) is likely to involve consideration of more than
$2,000,000 in the aggregate over the remaining term of the contract;
(iii) all material broker, distributor, dealer, manufacturer's
representative, franchise, agency, sales promotion, market research,
marketing consulting and advertising contracts and agreements to which
the Company or any Subsidiary is a party;
(iv) all management contracts and contracts with independent
contractors or consultants (or similar arrangements) to which the
Company or any Subsidiary is a party and which are not cancelable
without penalty or further payment and without more than 30 days'
notice;
(v) all contracts and agreements relating to Indebtedness in excess
of $100,000 of the Company or any Subsidiary;
(vi) all contracts and agreements with any Governmental Authority
to which the Company or any Subsidiary is a party;
(vii) all contracts and agreements to which the Company or any
Subsidiary is a party that limit or purport to limit the ability of the
Company or any Subsidiary to compete in any line of business or with
any Person or in any geographic area or during any period of time;
(viii) all contracts and agreements between or among the Company
and any Affiliate of the Company that will survive (in whole or in part)
the Effective Time;
(ix) all contracts and agreements providing for benefits under any
Plan;
50
(x) any distribution, joint marketing or development agreement;
(xi) all contracts and agreements under which the Company has
obtained or will obtain Intellectual Property that is a component of any
of the Company's products or services or that is necessary to develop,
test, support, modify, maintain, reproduce, distribute, license or sell the
Company's products or provide the Company's services;
(xii) all contracts and agreements that in any way substantially
limit or restrict or would substantially limit and restrict the Company's
or, immediately after the Effective Time, Parent's or its subsidiaries'
ability to use, modify, display,reproduce, distribute, license or sell the
Company's products or provide the Company's services; and
(xiii) all other contracts and agreements whether or not made in the
ordinary course of business, which are material to the Company, any
Subsidiary or the conduct of the Business or the absence of which
would have a Material Adverse Effect.
For purposes of this Section 3.15 and Sections 3.16, 3.17 and
3.18, the term "lease" shall include any and all leases, subleases,
sale/leaseback agreements or similar arrangements.
(b) Except as disclosed in Section 3.15(b) of the
Disclosure Schedule, each Material Contract: (i) is valid and binding on
the Company or any Subsidiary which is a party thereto and, to the
knowledge of the Company, the other parties thereto and is in full force
and effect and (ii) upon consummation of the transactions contemplated
by this Agreement, except to the extent that any consents set forth in
Section 3.06 of the Disclosure Schedule are not obtained, shall be in
full force and effect without material penalty or other material adverse
consequence. Neither the Company nor any Subsidiary is in material
breach of, or default under, any Material Contract.
(c) Except as disclosed in Section 3.15(c) of the
Disclosure Schedule, to the Company's knowledge, no other party to
any Material Contract is in material breach thereof or default hereunder.
(d) Except as disclosed in Section 3.15(d) of the
Disclosure Schedule, there is no contract, agreement or other
arrangement granting any Person any preferential right to purchase,
other than in the ordinary course of business consistent with past
practice, any of the properties or assets of the Company or any
Subsidiary which are material to the Company and its Subsidiaries.
SECTION 3.16. Intellectual Property. (a) Section 3.16(a) of
the Disclosure Schedule contains an accurate and complete listing
setting forth (x) all registered Trademarks, Patents, Copyrights and
registered Mask Works (as each such term is hereinafter defined) which
are owned by the Company or any of its Subsidiaries and (y) all
Licenses to which the Company or any of its Subsidiaries is a party
(other than shrink-wrap software and databases licensed to the Company
or to any of its Subsidiaries under nonexclusive software Licenses
granted to end-user customers by third parties in the ordinary course of
business of such third parties' businesses), such schedule indicating, as
to each such License, whether the Company or any of its Subsidiaries
is the licensee or licensor.
(b) Except as set forth in Section 3.16(b)(i) of the
Disclosure Schedule, neither the Company nor any of its Subsidiaries is
under any obligation to pay any royalty orother compensation to any
third party or to obtain any approval or consent for the use of any
Intellectual Property used in or necessary for its business as currently
conducted or as currently proposed to be conducted. None of the
Intellectual Property owned by the Company or by any of its
Subsidiaries, or to the Company's knowledge, licensed to the Company
or to any of its Subsidiaries, is subject to any outstanding judgment,
order, decree, stipulation, injunction or charge. Except as set forth in
Section 3.16(b)(ii) of the Disclosure Schedule, there is no complaint,
action, suit, proceeding, hearing, investigation or demand pending or, to
the Company's knowledge, threatened, which challenges the legality,
validity, enforceability, or the Company's or any of its Subsidiaries' use
or
51
ownership of any of the Intellectual Property owned by the Company or
any of its Subsidiaries or, to the Company's knowledge, licensed to the
Company or to any of its Subsidiaries. Neither the Company nor any
of its Subsidiaries has agreed to indemnify any person for or against any
interference, infringement, misappropriation, or other conflict with
respect to any Intellectual Property, except as may be contained within
agreements for the sale of the Company's products in the ordinary
course or the Licenses set forth in Section 3.16(a) of the Company
Disclosure Schedule.
(c) No material breach or material default (or event which
with notice or lapse of time or both would result in a material event of
default) by the Company or any of its Subsidiaries exists or has
occurred under any License or other agreement pursuant to which the
Company or any of its Subsidiaries uses any Intellectual Property
owned by a third party or has granted any third party the right to use its
Intellectual Property, and the consummation of the transactions
contemplated by this Agreement will not violate or conflict with or
constitute a material default (or an event which, with notice or lapse of
time or both, would constitute a material default), result in a forfeiture
under, or constitute a basis for termination of any such License or other
agreement.
(d) The Company and its Subsidiaries own or have the
right to use all items of Intellectual Property set forth in Section
3.16(a) of the Disclosure Schedule and own or have the right to use all
items of Intellectual Property necessary to provide, produce, use, sell
and License the services and products currently provided, produced, used,
sold and licensed by the Company and its Subsidiaries and to conduct
the business of the Company and its Subsidiaries as presently
conducted, free and clear of all Encumbrances, provided that the
Company makes no warranty with respect to infringement of
intellectual property rights of third parties except as expressly provided
in Section 3.16(e) .
(e) To the Company's knowledge, except as set forth in
Section 3.16(e) of the Disclosure Schedule, the conduct of the
Company's and its Subsidiaries' business, the Intellectual Property
owned or used by the Company and its Subsidiaries, and the products or
services produced, sold or licensed by or under development by the
Company and its Subsidiaries do not infringe any Intellectual Property
rights or any other proprietary right of any Person or give rise to any
obligations to any Person as a result of co-authorship, coinventorship,
or an express or implied contract for any use or transfer. Except as set
forth in Section 3.16(e) of the Disclosure Schedule, the Company and
its Subsidiaries have received no notice or have any knowledge of any
allegations or threats that the Company's and its Subsidiaries' use of
any of the Intellectual Property infringes upon or is in conflict with any
Intellectual Property or proprietary rights of any third party, and to the
Company's knowledge, no basis exists for any such allegations or
threats.
(f) Except as set forth on Section 3.16(f) of the
Disclosure Schedule, neither the Company nor any of its Subsidiaries
has sent or otherwise communicated to any other person any notice,
charge, claim or assertion of any present, impending or threatened
infringement by any other Person of any Intellectual Property of the
Company and its Subsidiaries or any Intellectual Property that the
Company has the right to use.
(g) None of the Company's and its Subsidiaries' products
or services incorporate, are based upon or are derived or adapted from,
any Intellectual Property of any other person in violation of any
statutory or other legal obligation or any agreement to which the
Company and its Subsidiaries is a party or by which it is bound.
(h) All of the Company's and its Subsidiaries' Patents,
Trademarks and Copyrights that are material to the conduct of the
Business issued by, registered with or filed with the United States
Patent and Trademark Office or Register of Copyrights or the
corresponding offices of other countries have been so duly registered,
filed in or issued, as the case may be, have been properly maintained
and renewed in all material respects in accordance with all applicable
provisions of law and administrative regulations, and the Company and
its Subsidiaries, as the case may be, are the
52
record owners thereof. The Company and its Subsidiaries have taken
reasonable steps in accordance with normal industry practice to maintain
the confidentiality of its trade secrets and other confidential Intellectual
Property, and, to the Company's knowledge, there have been no acts or
omissions by the Company or its Subsidiaries, the result of which
would be to compromise the rights of the Company or its Subsidiaries
to apply for or enforce appropriate legal protection of such Intellectual
Property.
(i) Except as described in Section 3.16(i) of the
Disclosure Schedule, substantially all of the Company's and its
Subsidiaries' employees and agents and independent contractors retained
by the Company or any of its Subsidiaries and each of the Company's
and its Subsidiaries' officers and directors has entered into a written
agreement with the Company or any of its Subsidiaries (x) providing
that all of the Company's and its Subsidiaries' Intellectual Property is
confidential and proprietary to the Company or any of its Subsidiaries,
and (y) obligating to the fullest extent allowed by law the disclosure and
transfer to the Company or any of its Subsidiaries, in consideration for
no more than normal salary and continued employment or consultant
fees, as the case may be, of all inventions, developments and work
product which during the period of his or her employment
orconsultancy with the Company or any of its Subsidiaries, as the case
may be, such employee, officer, director or independent contractor made
or makes that related or relate to any subject matter with which such
employee's, officer's, director's or independent contractor's work for the
Company or any of its Subsidiaries was concerned, or, in the case of
employees, officers, agents and directors, are made during such person's
period of employment (or contractual relationship) or in connection
therewith. No former employees, officers, directors or independent
contractors of the Company or any of its Subsidiaries have asserted any
claim, or, to the Company's knowledge, have any, valid claim or valid
right to any of the Company's or any of its Subsidiaries' Intellectual
Property used in or necessary for the conduct of the Company's or its
Subsidiaries' business as now conducted. To the Company's
knowledge, no employee, officer, agent or director of the Company or
any of its Subsidiaries is a party to or otherwise bound by any
agreement with or obligated to any other Person (including, any former
employer) which conflicts with any obligation or commitment of such
employee to the Company or any of its Subsidiaries under any
agreement to which he or she is a party or otherwise.
(j) Section 3.16(j) of the Disclosure Schedule identifies
each person to whom the Company or any of its Subsidiaries has sold
or otherwise transferred any interest or rights to any Intellectual
Property (other than end user licenses for computer software and related
documentation transferred in the ordinary course of business) or
purchased rights in any Intellectual Property, and the date, if applicable,
of each such sale, transfer or purchase.
(k) The Company and each of its Subsidiaries have taken
reasonable steps in accordance with normal industry practice to preserve
and maintain, reasonably complete notes and records (including, without
limitation, drawings, flow-charts and prototypes) relating to its know-
how, inventions, processes, procedures, drawings, specifications,
designs, plans, written proposals, technical data, works of authorship
and other proprietary technical information, sufficient to cause such
proprietary information to be readily identified, understood and
available.
SECTION 3.17. Real Property. (a) The Company owns no
real property, nor has it ever owned any real property. Section 3.17(a)
of the Disclosure Schedule sets forth a list of all real property currently
leased by the Company, the name of the lessor, the date of the lease and
each amendment thereto and, with respect to any current lease, the
aggregate annual rental and/or other fees payable under any such lease.
To the Company's knowledge, all such current leases are in full force
and effect, are valid and effective in accordance with their respective
terms, and to the Company's knowledge, 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).
(b) The Company has good and valid title to, or, in the
case of material leased properties and assets, valid leasehold interests in,
all of its material tangible propertiesand assets, real, personal and
mixed, used or held for use in its business, free and clear of any
Encumbrances,
53
except as reflected in the Interim Financial Statements or in Section
3.17(b) of the Disclosure Schedule and except for Permitted
Encumbrances.
SECTION 3.18. Assets. (a) Except as disclosed in Section
3.18 of the Disclosure Schedule, either the Company or a Subsidiary,
as the case may be, owns, leases or has the legal right to use all the
properties and assets, including, without limitation, the Owned
Intellectual Property, the Licensed Intellectual Property, the Real
Property and the Equipment, material to the conduct of the Company's
business or otherwise owned, leased or used by the Company or any
Subsidiary and, with respect to contract rights, is a party to and enjoys
the right to the benefits of all material contracts, agreements and other
arrangements used or intended to be used by the Company or any
Subsidiary or in or relating to the conduct of the Company's business
(all such properties, assets and contract rights being the "Assets").
Either the Company or a Subsidiary, as the case may be, has good title
to, or, in the case of leased or subleased Assets, valid and subsisting
leasehold interests in, all the Assets, free and clear of all Encumbrances,
except (i) as disclosed in Section 3.16, 3.17(a), 3.17(b) or 3.18 of the
Disclosure Schedule and (ii) Permitted Encumbrances.
(b) The Assets constitute all the properties, assets and
rights, used or intended to be used in the conduct of, the Company's
business. At all times since the date of the Interim Balance Sheet, the
Company has caused the Assets to be maintained in accordance with
good business practice.
(c) Immediately following the Effective Time, either the
Company or a Subsidiary, as the case may be, will continue to own,
pursuant to good and marketable title, or lease, under valid and
subsisting leases, or otherwise retain its respective interest in the
Assets without incurring any penalty or other adverse consequence,
including, without limitation, any material increase in rentals,
royalties, or licenses or other fees imposed as a result of, or arising
from, the consummation of the transactions contemplated by this
Agreement. Immediately following the Closing, either the Company
or a Subsidiary, as the case may be, shall own and possess all material
documents, books, records, agreements and financial data of any sort
used by the Company or such Subsidiary in the conduct of the
Company's business or otherwise.
SECTION 3.19. Customers. Listed in Section 3.19 of the
Disclosure Schedule are the names and addresses of the 20 most
significant customers (by revenue) of the Company and the Subsidiaries
for the twelve-month period ended December 31, 1995 and the amount
for which each such customer was invoiced during such period. Except
as disclosed in Section 3.19 of the Disclosure Schedule, none of the
Company or any Subsidiary has received any notice that any customer
listed in Section 3.19 of the Disclosure Schedule of the Company has
ceased, or will cease, to use the products, equipment, goods or
servicesof the Company or any Subsidiary, or has substantially reduced,
or will substantially reduce, the use of such products, equipment, goods
or services at any time.
SECTION 3.20. Employee Benefit Plans; Employment
Agreements. (a) Section 3.20(a) of the Disclosure Schedule lists all
employee benefit plans (as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")),
regardless of whether ERISA is applicable thereto, all other bonus,
stock option, restricted stock, stock purchase, incentive, deferred
compensation, supplemental retirement, severance or termination pay,
medical or life insurance, supplemental unemployment benefits, change
in control, non-competition, profit-sharing, pension or retirement
plans, programs, agreements or arrangements, including any employee
plans or arrangements that is not subject to United States law, and any
current or former employment, consulting or executive compensation or
severance agreements, written or otherwise, for the benefit of, or
relating to, any employee of the Company, any trade or business
(whether or not incorporated) which is a member of the controlled group
including the Company or which is under common control with
Company (an "ERISA Affiliate") within the meaning of Section 414 of
the Code, or any Subsidiary, to which the Company, an ERISA
Affiliate, or any Subsidiary is a party, with respect to which the
Company, an ERISA Affiliate, or
54
any Subsidiary could have a material obligation, as well as each plan
with respect to which the Company or an ERISA Affiliate could incur
material liability if such plan has been or were terminated (together, the
"Employee Plans'), and a copy of each such written Employee Plan and
any related trust or other funding arrangement, summary, plan
description and actuarial report has been made available to Parent.
(b) Except as set forth in Section 3.20(b) of the
Disclosure Schedule, (i) none of the Employee Plans promises or
provides retiree medical or other retiree welfare benefits to any person
and none of the Employee Plans is a "multiemployer plan" as such
term is defined in Section 3(37) of ERISA; (ii) there has been no
transaction or failure to act with respect to any Employee Plan, which
would result in any material liability of the Company or any of its
subsidiaries; (iii) all Employee Plans are in compliance in all material
respects with the requirements prescribed by any and all statutes, orders,
or governmental rules and regulations currently in effect with respect
thereto, and the Company and each of its subsidiaries have performed all
material obligations required to be performed by them under, are not in
any material respect in default under or violations of, and have no
knowledge of any default or violation by any other party to, any of the
Employee Plans except as to which non-compliance, non-performance
or default would not result in a Material Adverse Effect; (iv) each
Employee Plan intended to qualify under Section 401(a) of the Code is
the subject of a favorable determination letter from the IRS, and
nothing has occurred which may reasonably be expected to impair such
determination; (v) all contributions (including premiums) required to be
made to any Employee Plan have been made on or before their due dates
and a reasonable amount has been accrued for contributions to each
Employee Plan for the current plans years, and except as disclosed
inSection 3.20(b) of the Disclosure Schedule, without limiting the
foregoing, there are no material unfunded liabilities under any Employee
Plan; (vi) with respect to each Employee Plan, no "reportable event"
within the meaning of Section 4043 of ERISA (excluding any such
event for which the thirty (30) day notice requirement has been waived
under the regulations of Section 4043 of ERISA) nor has any event
described in Section 4062, 4063 or 4041 of ERISA has occurred; and
(vii) neither the Company nor any ERISA Affiliate has incurred, nor
reasonably expects to incur, any liability under Title IV of ERISA
(other than liability for premium payments to the Pension Benefit
Guaranty Corporation arising in the ordinary course).
(c) There are no pending or, to the knowledge of the
Company, threatened litigation, suits, claims or enforcement actions
against the Company with respect to any of the Employee Plans.
(d) Section 3.20(d) of the Disclosure Schedule sets forth
a true and complete list of each current or former employee, officer,
director of the Company or any Subsidiary or consultants, advisors or
other independent contractors to the Company or any of its subsidiaries
who holds any option to purchase the Company Common Stock as of
the date hereof, together with the number of shares of the Company
Common Stock subject to such option, the date of grant of such
option, the extent to which such option is vested, the option price of
such option (to the extent determined as of the date hereof), whether
such option is intended to qualify as an incentive stock option within
the meaning of Section 422 of the Code (an "ISO"), and the expiration
date of such option. All of the Company's options are nonqualified
options.
SECTION 3.21. Labor Matters. There are no disputes
pending or, to the knowledge of the Company or any of its subsidiaries,
threatened, between the Company or any of its subsidiaries and any of
their respective employees, which disputes have or may have a Material
Adverse Effect; neither the Company nor any of its subsidiaries is a
party to a collective bargaining agreement or other labor contract
applicable to persons employed by the Company or its subsidiaries nor
does the Company know of any activities or proceedings of any labor
union to organize any such employees; and neither the Company nor
any of its subsidiaries has any knowledge of any strikes, slowdowns,
work stoppages, lockouts, or threats thereof, by or with respect to any
employees of the Company or any of its subsidiaries.
55
SECTION 3.22. Key Employees. Section 3.22 of the
Disclosure Schedule lists the name, place of employment, the current
annual salary rates, bonuses, deferred or contingent compensation,
pension, accrued vacation, "golden parachute" and other like benefits
paid or payable (in cash or otherwise) in 1995, the date of employment
and a description of position and job function of each current salaried
employee, officer, director,consultant or agent of the Company or any
Subsidiary whose annual compensation exceeded (or, in 1996, is
expected to exceed) $175,000.
SECTION 3.23. Taxes. (a) Except as disclosed in Section
3.23 of the Disclosure Schedule, (i) all returns and reports in respect of
material Taxes required to be filed with respect to the Company and
each Subsidiary (including the consolidated federal income tax return of
the Company and any state Tax returns that includes the Company or
any Subsidiary on a consolidated or combined basis) have been timely
filed or are under a valid extension of time to file; (ii) all Taxes required
to be shown on such returns and reports or otherwise due have been
timely paid or adequate reserves for their payment have been made; (iii)
no adjustment relating to such returns has been proposed formally or
informally by any Tax authority to the Company or any Subsidiary or
representative thereof and, to the knowledge of the Company, no basis
exists for any such adjustment; (iv) there are no pending or, to the
knowledge of the Company, threatened actions or proceedings for the
assessment or collection of a material amount of Taxes against the
Company or any Subsidiary or any corporation that was included in the
filing of a return with the Company on a consolidated or combined
basis; (v) there are no Tax liens on any assets of the Company or any
Subsidiary other than liens for Taxes not yet due and payable; (vi) other
than as set forth in Section 3.23(a) of the Disclosure Schedule and other
than as provided in Section 6.02, neither the Company nor any
Subsidiary nor, to the knowledge of the Company, any Affiliate of the
Company, is a party to any agreement or arrangement that would result,
separately or in the aggregate, in the payment of any "excess parachute
payments" within the meaning of Section 280G of the Code
(disregarding Section 280G(b)(4) of the Code); (vii) other than as
provided in Section 6.02, no acceleration of the vesting schedule for any
property that is substantially unvested within the meaning of the
regulations under Section 83 of the Code will occur in connection with
the transactions contemplated by this Agreement; (viii) from and after
December 31, 1992, the Company and each Subsidiary has been and
continues to be a member of the affiliated group (within the meaning of
Section 1504(a)(1) of the Code) for which the Company files a
consolidated return as the common parent, and has not been includible
in any other consolidated return for any taxable period for which the
statute of limitations has not expired; (ix) neither the Company nor any
Subsidiary has been at any time a member of any partnership or joint
venture or the holder of a beneficial interest in any trust for any period
for which the statute of limitations for any Tax has not expired; (x)
neither the Company nor any Subsidiary has been a United States real
property holding corporation within the meaning of Section 897(c)(2)
of the Code during the applicable period specified in Section
897(c)(1)(A)(ii) of the Code; and (xi) neither the Company nor any
Subsidiary is subject to any accumulated earnings tax or personal
holding company tax.
(b) Except as disclosed with reasonable specificity in
Section 3.23(b) of the Disclosure Schedule: (i) there are no outstanding
waivers or agreements extending the statute of limitations for any
period with respect to any Tax to which the Company or anySubsidiary
may be subject; (ii) neither the Company nor any Subsidiary (A) has
been or is a passive foreign investment company within the meaning of
Section 1296 of the Code, (B) has an unrecaptured overall foreign loss
within the meaning of Section 904(f) of the Code or (C) has
participated in or cooperated with an international boycott within the
meaning of Section 999 of the Code; (iii) neither the Company nor any
Subsidiary has any (A) income reportable for a period ending after the
Effective Time but attributable to a transaction (e.g., an installment
sale) occurring in or a change in accounting method made for a period
ending on or prior to the Effective Time which resulted in a deferred
reporting of income from such transaction or from such change in
accounting method (other than a deferred intercompany transaction), (B)
deferred gain or loss arising out of any deferred intercompany transaction
or (C) any excess loss account; (iv) there are no proposed reassessments
of any property owned by the Company or any Subsidiary or other
proposals that could materially increase the amount of any Tax to
which the Company or any Subsidiary would be subject which could
reasonably be expected to have a material Adverse Effect; (v) neither the
56
Company nor any Subsidiary is obligated under any agreement with
respect to industrial development bonds or similar obligations, with
respect to which the excludibility from gross income of the holder for
federal income tax purposes could be affected by the transactions
contemplated hereunder; and (vi) no power of attorney that is currently
in force has been granted with respect to any matter relating to Taxes
that could affect the Company or a Subsidiary.
(c) (i) Section 3.23 of the Disclosure Schedule lists all
income, franchise and similar tax returns (federal, state, local and
foreign) filed with respect to each of the Company and the Subsidiaries
for taxable periods ended on or after December 31, 1992, indicates for
which jurisdictions Returns have been filed on the basis of a unitary
group, indicates the most recent income, franchise or similar tax return
for each relevant jurisdiction for which an audit has been completed or
the statute of limitations has lapsed and indicates all tax returns that
currently are the subject of audit; (ii) the Company has made available
to Parent correct and complete copies of all federal, state and foreign
income, franchise and similar tax returns, examination reports, and
statements of deficiencies assessed against or agreed to by the Company
or any Subsidiary since December 31, 1992; and (iii) the Company has
made available to Parent a true and complete copy of any tax-sharing or
allocation agreement or arrangement involving the Company or any
Subsidiary.
SECTION 3.24. Insurance. Section 3.24 of the Disclosure
Schedule lists all insurance policies and fidelity bonds covering the
assets, business, equipment, properties, operations, employees, officers
and directors of the Company. There is no material claim by the
Company pending under any of such policies or bonds as to which
coverage has been questioned, denied or disputed by the underwriters of
such policies and bonds. All premiums due and payable under all such
policies and bonds have been paid and the Company is otherwise in
material compliance with the terms of such policies and bonds (or other
policies and bonds providing substantially similar insurance coverage).
The Company has noknowledge of any threatened termination of, or
material premium increase with respect to, any of such policies.
SECTION 3.25. Brokers. No broker, finder or investment
banker is entitled to any brokerage, finder's or other fee or commission
in connection with the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of the Company.
SECTION 3.26. Approval Requirements. The only actions
by the shareholders of the Company necessary to approve this
Agreement and the transactions contemplated by this Agreement are (a)
the approval of a majority of the outstanding shares of the Company
Common Stock and (b) the approval of a majority of the outstanding
shares of the Company Preferred Stock, voting together (on an as
converted basis) as a single class. The approval of this Agreement and
the transactions contemplated hereby by all of the shares of Company
Common Stock and Company Preferred Stock owned by the Principal
Shareholder (the "Principal Shareholder Approval") will be sufficient to
satisfy the required actions described in clauses (a) and (b) of the
immediately preceding sentence. The Principal Shareholder has
provided, or will prior to the Effective Time provide, the Principal
Shareholder Approval by written consent pursuant to the Articles of
Incorporation and Bylaws of the Company and to California Law.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND
MERGER SUB
As an inducement to the Company to enter into this
Agreement, Parent and Merger Sub hereby, jointly and severally,
represent and warrant to the Company as follows:
SECTION 4.01. Organization and Authority. Each of Parent
and Merger Sub is a corporation duly organized, validly existing and in
good standing under the laws of the State of California and has all
necessary corporate power and authority to enter into this Agreement, to
57
carry out its obligations hereunder and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by
each of Parent and Merger Sub, the performance by each of its
obligations hereunder and the consummation by each of the transactions
contemplated hereby have been duly authorized by all requisite action on
the part of Parent and Merger Sub. This Agreement has been duly
executed and delivered by Parent and Merger Sub, and (assuming due
authorization, execution and delivery by the Company) this Agreement
constitutes a legal, valid and binding obligation of Parent and Merger
Sub enforceable against each in accordance with its terms except as such
enforceability may be limited by principles of public policy and subject
to the laws of generalapplication relating to bankruptcy, insolvency and
the relief of debtors and rules of law governing specific performance,
injunctive relief or other equitable remedies.
SECTION 4.02. No Conflict. Assuming compliance with
the notification requirements of the HSR Act and the making and
obtaining of all filings, notifications, consents, approvals,
authorizations and other actions referred to in Section 4.03, except as
may result from any facts or circumstances relating solely to the
Company, the execution, delivery and performance of this Agreement
by each of Parent and Merger Sub do not and will not (a) violate,
conflict with or result in the breach of any provision of the Articles of
Incorporation or Bylaws of either, (b) conflict with or violate any Law
or Governmental Order applicable to either or (c) conflict with, or result
in any breach of, constitute a default (or event which with the giving of
notice or lapse or time, or both, would become a default) under, require
any consent under, or give to others any rights of termination,
amendment, acceleration, suspension, revocation, or cancellation of, or
result in the creation of any Encumbrance on any of the assets or
properties of Parent or Merger Sub pursuant to, any note, bond,
mortgage or indenture, contract, agreement, lease, sublease, license,
permit, franchise or other instrument or arrangement to which Parent or
Merger Sub is a party or by which any of such assets or properties are
bound or affected which would have a material adverse effect on the
business, operations, assets, results of operations or the condition
(financial or otherwise) of Parent or the ability of Parent or Merger Sub
to consummate the transactions contemplated by this Agreement.
SECTION 4.03. Governmental Consents and Approvals. The
execution, delivery and performance of this Agreement by Parent do not
and Merger Sub will not require any consent, approval, authorization or
other order of, action by, filing with, or notification to, any
Governmental Authority, except (a) as described in a writing given to
the Company by Parent on the date of this Agreement and (b) the
notification requirements of the HSR Act and for applicable
requirements, if any, of the Securities Act of 1933, as amended, the
Securities Exchange Act of 1934, as amended, state securities laws, and
the filing of appropriate merger documents under California Law.
SECTION 4.04. Brokers. No broker, finder or investment
banker other than DMG Technology Group is entitled to any brokerage,
finder's or other fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or
on behalf of Parent or Merger Sub.
SECTION 4.05. SEC Documents: Undisclosed Liabilities.
Parent has filed all required reports, schedules, forms, statements and
other documents with the SEC since December 31, 1994 (the "Parent
SEC Documents"). As of their respective dates, the Parent SEC
Documents complied in all material respects with the requirements of
the Securities Act or the Exchange Act, as the case may be, and the
rules and regulations of the SEC promulgated thereunder applicable to
such Parent SEC Documents, and none of the ParentSEC 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 light of the circumstances under which they
were made, not misleading. Except to the extent that information
contained in any Parent SEC Document has been revised or superseded
by a later Filed Parent SEC Document (as defined below), none of the
Parent SEC Documents contains any untrue statement of a material fact
or omits to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The
financial statements
58
of Parent included in the Parent SEC Documents comply as to form in
all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto, have
been prepared in accordance with U.S. GAAP (except, in the case of
unaudited statements, as permitted by Form 10-Q of the SEC) applied
on a consistent basis during the periods involved (except as may be
indicated in the notes thereto) and fairly present the consolidated
financial position of Parent and its consolidated subsidiaries as of the
dates thereof and the consolidated results of their operations and cash
flows (or changes in financial position prior to the approval of
Financial Accounting Standards Board Statement of Financial
Accounting Standards No. 95) for the periods then ended (subject, in the
case of unaudited statements, to normal year-end audit adjustments).
Except as set forth in the Filed Parent SEC Documents, neither Parent
nor any of its subsidiaries has any liabilities or obligations of any
nature (whether accrued, absolute, contingent or otherwise) required by
U.S. GAAP to be set forth on a consolidated balance sheet of Parent
and its consolidated subsidiaries or in the notes thereto and reasonably
be expected to have a material adverse effect on Parent and its
subsidiaries taken as a whole.
SECTION 4.06. Absence of Certain Changes or Events.
Except as disclosed in the Parent SEC Documents filed and publicly
available prior to the date of this Agreement (the "Filed Parent SEC
Documents"), since the date of the most recent audited financial
statements included in the filed Parent SEC Documents, Parent has
conducted its business only in the ordinary course, and there has not
been (i) any declaration, setting aside or payment of any dividend or
distribution (whether in cash, stock or property) with respect to any of
Parent's capital stock except for regular quarterly dividends on Parent's
outstanding preferred stock, (ii) any split, combination or
reclassification of any of its capital stock or any issuance or the
authorization of any issuance of any other securities in respect of, in
lieu of or in substitution for shares of its capital stock, (iii) any
damage, destruction or loss, whether or not covered by insurance, that
has or is likely to have a material adverse effect on Parent and its
subsidiaries taken a whole, or (iv) any change in accounting methods,
principles or practices by Parent materially affecting its assets,
liabilities, or business, except insofar as may have been required by a
change in U.S. GAAP.
SECTION 4.07. Litigation. Except as disclosed in the filed
Parent SEC Documents, there is no suit, action or proceeding pending
or, to the knowledge of Parent, threatened against or affecting Parent or
any of its subsidiaries (and Parent is not aware ofany basis for any such
suit, action or proceeding) that, individually or in the aggregate, could
reasonably be expected to (i) have a material adverse effect on Parent and
its subsidiaries taken as a whole, (ii) impair the ability of Parent to
perform its obligations under this Agreement or (iii) prevent the
consummation of any of the transactions contemplated by this
Agreement, nor is there any judgment, decree, injunction, rule or order
of any Governmental Entity or arbitrator outstanding against Parent or
any of its subsidiaries having, or which, insofar as reasonably can be
foreseen, in the future would have, any such effect.
SECTION 4.08. Voting Requirements. No action by the
shareholders of Parent is required to approve this Agreement and the
transaction contemplated by this Agreement.
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.01. Conduct of Business Prior to the Closing.
(a) The Company covenants and agrees that, except as described in
Section 5.01(a) of the Disclosure Schedule or as otherwise permitted by
this Agreement (and subject to the limitations on conduct set forth in
this Section 5.01), between the date hereof and the Effective Time, none
of the Company or any Subsidiary shall conduct its business other than
in the ordinary course and consistent with the Company's and such
Subsidiary's prior practice. Without limiting the generality of the
foregoing, except as described in Section 5.01(a) of the Disclosure
Schedule, the Company shall, and shall cause each Subsidiary to, (i)
continue its advertising and promotional activities, and pricing and
59
purchasing policies, in accordance with past practice; (ii) not shorten or
lengthen the customary payment cycles for any of its payables or
receivables; (iii) use its reasonable efforts to (A) preserve intact its
business organizations and the business organization of the Business,
(B) keep available to Parent and Merger Sub the services of the
employees of the Company and each Subsidiary, (C) continue in full
force and effect without material modification all existing policies or
binders of insurance currently maintained in respect of the Company,
each Subsidiary and the Business and (D) preserve its current
relationships with its customers, suppliers and other persons with
which it has significant business relationships; (iv) exercise, but only
after notice to Parent and receipt of Parent's prior written approval, any
rights of renewal pursuant to the terms of any of the leases or subleases
set forth in Section 3.17(a) of the Disclosure Schedule which by their
terms would otherwise expire; (v) not make an offer of employment to
any Person without the approval of Parent and (vi) not engage in any
practice, take any action, fail to take any action or enter into any
transaction with knowledge that it would or could reasonably be
expected to cause any representation or warranty of the Company to be
untrue in any material respect or result in a material breach of any
covenant made by the Company in this Agreement.
(b) Except as described in Section 5.01(b) of the
Disclosure Schedule, the Company covenants and agrees that, prior to
the Effective Time, without the prior written consent of Parent, neither
the Company nor any Subsidiary will do any of the things enumerated
in the second sentence of Section 3.10 (including, without limitation,
clauses (i) through (xxiii) thereof).
SECTION 5.02. Access to Information. (a) From the date
hereof until the Effective Time, upon reasonable notice, the Company
shall, and shall cause the Subsidiaries and each of the Company's and
the Subsidiaries' officers, directors, employees, agents, representatives,
accountants and counsel to: (i) afford the officers, employees and
authorized agents, accountants, counsel, and representatives of Parent
reasonable access, during normal business hours, to the offices,
properties, plants, other facilities, books and records of the Company
and each Subsidiary and to those officers, directors, employees, agents,
accountants and counsel of the Company and of each Subsidiary who
have any knowledge relating to the Company, any Subsidiary or the
Company's business and (ii) furnish to the officers, employees and
authorized agents, accountants, counsel, and representatives of Parent
such additional financial and operating data and other information
regarding the assets, properties and goodwill of the Company, the
Subsidiaries and the Company's business (or legible copies thereof) as
Parent may from time to time reasonably request.
(b) Parent shall keep such information confidential in
accordance with the terms of the Confidentiality Agreement.
SECTION 5.03. Regulatory and Other Authorizations;
Notices and Consents. (a) Each of Parent and the Company shall use
its best reasonable efforts to obtain (or cause Merger Sub or the
Subsidiaries, as the case may be, to obtain) all authorizations, consents,
orders and approvals of all Governmental Authorities and officials that
may be or become necessary for execution and delivery of, and the
performance of obligations pursuant to, this Agreement and will
cooperate fully with each other in promptly seeking to obtain all such
authorizations, consents, orders and approvals. Each party hereto agrees
to make an appropriate filing, if necessary, pursuant to the HSR Act
with respect to the transactions contemplated by this Agreement as
promptly as reasonably practicable and to supply, as promptly as
practicable to the appropriate Governmental Authorities any additional
information and documentary material that may be requested pursuant to
the HSR Act.
(b) Each of Parent and the Company shall, and shall
cause Merger Sub and the Subsidiaries, as the case may be, to, give
promptly such notices to third parties and use its or their reasonable
efforts to obtain such third party consents and estoppel certificates as
may be reasonably necessary in connection with the transactions
contemplated by this Agreement.
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(c) Each of Parent and the Company shall use their
reasonable best efforts to obtain an assignment to Parent on reasonable
terms of the license and distribution agreement dated as of August 12,
1996 between Microsoft Corporation ("Microsoft") and the Company,
or the Company shall provide reasonable assurances as to a way of
achieving equivalent functionality without the need for a license from
Microsoft.
(d) The Company shall (i) use its reasonable best efforts
to obtain from Hewlett Packard a confirmation of the termination or
expiration of Section 2.5(a) of the software porting and marketing
agreement between Hewlett Packard and the Company or (ii) have
provided Parent, prior to the Effective Time, evidence reasonably
satisfactory to Parent that such termination or expiration has occurred.
SECTION 5.04. Notice of Developments. Prior to the
Effective Time, each of Parent and the Company shall promptly notify
the other in writing of (i) all events, circumstances, facts and
occurrences arising subsequent to the date of this Agreement which
could reasonably be expected to result in any material breach of a
representation or warranty or covenant of Parent or the Company, as the
case may be, in this Agreement or which could have the effect of
making any representation or warranty of Parent or the Company in
this Agreement or which could have the effect of making any
representation or warranty of Parent or the Company, as the case may
be, in this Agreement untrue or incorrect in any material respect.
SECTION 5.05. No Solicitation or Negotiation. The
Company agrees that between the date of this Agreement and the earlier
of (i) the Effective Time and (ii) the termination of this Agreement,
none of the Company, and its Subsidiaries nor any of their respective
Affiliates, officers, directors, representatives or agents will (a) solicit,
initiate, consider, encourage or accept any other proposals or offers from
any Person (i) relating to any acquisition or purchase of all or any
portion of the capital stock of the Company or any Subsidiary (other
than the exercise or conversion of outstanding options) or assets of the
Company or any Subsidiary (other than inventory to be sold in the
ordinary course of business consistent with past practice), (ii) to enter
into any business combination with the Company or any Subsidiary or
(iii) to enter into any other extraordinary business transaction involving
or otherwise relating to the Company or any Subsidiary, or (b)
participate in any discussions, conversations, negotiations and other
communications regarding, or furnish to any other Person any
information with respect to, or otherwise cooperate in any way, assist
or participate in, facilitate or encourage any effort or attempt by any
other Person to seek to do any of the foregoing. The Company
immediately shall cease and cause to be terminated all existing
discussions, conversations, negotiations and other communications
with any Persons conducted heretofore with respect to any of the
foregoing. The Company shall notify Parent promptly if any such
proposal or offer, or any inquiry or other contact with any Person with
respect thereto, is made and shall, in any such notice to Parent, indicate
in reasonable detail the identity of the Person making such proposal,
offer, inquiry or contactand the terms and conditions of such proposal,
offer, inquiry or other contact. The Company agrees not to, and to
cause each Subsidiary not to, without the prior written consent of
Parent, release any Person from, or waive any provision of, any
confidentiality or standstill agreement to which the Company or any
Subsidiary is a party.
SECTION 5.06. Further Action. Each of the parties hereto
shall use all reasonable best efforts to take, or cause to be taken, all
appropriate action, do or cause to be done all things necessary, proper or
advisable under applicable Law, and execute and deliver such documents
and other papers, as may be required to carry out the provisions of this
Agreement and consummate and make effective the transactions
contemplated by this Agreement.
SECTION 5.07. Conduct of Business by Parent. During the
period from the date of this Agreement to the Effective Time of the
Merger, Parent shall not, and shall not permit any of its subsidiaries to:
61
(a) (i) declare, set aside or pay any dividends on, or make any
other distributions in respect of, any capital stock of Parent or (ii) split,
combine or reclassify any of its capital stock or issue or authorize the
issuance of any other securities in resect of, in lieu of or in substitution
for shares of Parent's capital stock; or
(b) authorize any of, or commit or agree to take any of, the
foregoing actions.
ARTICLE VI
STOCK OPTIONS
SECTION 6.01. Stock Options. (a) At or prior to the
Effective Time, the Company shall take all actions necessary to cause
each outstanding Vested Company Stock Option, including obtaining
the written consent of holders of Vested Company Stock Options, to be
converted, at the Effective Time, into the right to receive as of the
Effective Time in cancellation of such Vested Company Stock Option
an amount in cash equal to the amount, if any, by which (i) the product
determined by multiplying the number of shares of Company Common
Stock subject to such Vested Company Stock Option by the Common
Merger Consideration exceeds (ii) the aggregate exercise price for the
shares of Company Common Stock subject to such Vested Company
Stock Option.
(b) Subject to the provisions of this Section 6.01, at the
Effective Time the Company's obligations under the Stock Option Plan
and with respect to each outstandingUnvested Company Stock Option
will be assumed by Parent. Each Unvested Company Stock Option so
assumed shall continue to have, and be subject to, the same terms and
conditions set forth in the applicable option agreement and the Stock
Option Plan pursuant to which such Unvested Common Stock Option
was issued as in effect on the date hereof, except that at or prior to the
Effective Time the Company shall take all actions necessary to cause
each outstanding Unvested Company Stock Option to be converted, at
the Effective Time, into an option to acquire, on the same terms and
conditions as were applicable under the relevant option agreement and
the Stock Option Plan (as modified by this Section 6.01(b)), that
number of shares of Parent Common Stock which is equal to the
product of the Conversion Ratio and the number of shares of Company
Common Stock underlying such Company Stock Option immediately
prior to the Effective Time, rounded, if necessary, down to the nearest
whole share, at a price per share equal to (x) the aggregate exercise price
for the Company Common Stock subject to such Company Stock
Option divided by (y) the number of shares of Parent Common Stock
deemed to be subject to such Company Stock Option.
(c) In the event that holders of Vested Common Stock
Options do not exercise such options or consent to the amendment of
such options as set forth in Section 6.01(a) as of the Effective Time,
such remaining Vested Company Stock Options shall terminate as of
the Effective Time in accordance with the provisions of the Stock
Option Plan.
SECTION 6.02. Certain Employee Benefit Matters. (a) As
of the Effective Time, Parent and the Company shall take all actions
necessary to cause all option agreements which are in effect under the
Stock Option Plan following the Effective Time in accordance with the
provisions of Section 6.01 (the "Option Agreements") to provide that,
in the event a recipient of options under such Option Agreement who is
employed by Parent or its subsidiaries in accordance with this
Agreement (each, an "Optionee") is terminated from employment
without Cause during the period from the Effective Time until the
second anniversary of the Effective Time (the "Covered Period"), all
options granted to such Optionee under such Option Agreements which
are not exercisable under the terms of such agreements on the date that
the Optionee's employment is terminated shall accelerate, and that all
options subject to such Option Agreements shall be exercisable for a
period of thirty (30) days beginning on the date that the Optionee's
employment is terminated, after which period all such options shall be
cancelled and such Option Agreements
62
shall terminate. In the event an Optionee voluntarily resigns from
employment with Parent or its subsidiaries without Good Reason (as
defined below), is terminated from employment with Parent or its
subsidiaries for Cause, or refuses an offer of employment in a similar
position and at a comparable salary with Parent or its subsidiaries, all
options which are not exercisable or have not been exercised on the date
the Optionee's employment terminates shall be cancelled and the Option
Agreements to which such Optionee is a party shall terminate. Except
as otherwise provided, all other terms of the Option Agreements shall
remain unchanged. Further, with respect to executives of the Company
who are employed at the level of vicepresident or above as identified in
the document titled "Current NeXT Software Employment Data",
effective December 17, 1996, who are employed by Parent or the
Company immediately after the Effective Time ("Transferred Senior
Executives"), Parent and the Company shall take all actions necessary
to amend the Option Agreements which are in effect with respect to
such Transferred Senior Executives to provide that in the event such
Transferred Senior Executive resigns from employment with Parent or
its subsidiaries for Good Reason during the Covered Period, all options
subject to such Option Agreements which are not exercisable under the
terms of such agreements as of the date that the Transferred Senior
Executive resigns shall accelerate, and that all options subject to such
Option Agreements shall be exercisable for a period of thirty (30) days
beginning on the date of such Transferred Senior Executive's
resignation, after which time all such options shall be cancelled and
such Option Agreements shall terminate.
(b) It is the express understanding and intention of the
Company and Parent that no employee of the Company or Parent or
any of their subsidiaries or other person shall be deemed to be a third
party beneficiary, or have or acquire any right to enforce the provisions
of this Section, and that nothing in this Agreement shall be deemed to
constitute an employee benefit plan or arrangement of the Company,
Parent or any of their respective subsidiaries.
ARTICLE VII
ADDITIONAL AGREEMENTS
SECTION 7.01. Securities Filings. Parent and the Company
shall make all necessary filings with respect to the Merger under the
Securities Act and the Exchange Act and the rules and regulations
thereunder, under applicable Blue Sky or similar securities laws, rules
and regulations and shall use all reasonable efforts to obtain required
approvals and clearances with respect thereto.
SECTION 7.02. Company Shareholder Approval. The
Company shall use its best efforts to obtain the written consent of the
Principal Shareholder in favor of the Merger, to notify all other
shareholders of the Company of such consent and to take all other
action necessary or advisable to secure the vote or consent of
shareholders required by California Law to effect the Merger.
SECTION 7.03. NNM Listing. Parent shall use reasonable
efforts to cause the shares of Parent Common Stock issuable to the
Company's stockholders pursuant to this Agreement to be authorized
for listing on the NNM.
SECTION 7.04. Shelf Registration. Parent shall be required
to make available an effective shelf registration statement for the
purpose of permitting resale of theshares of Parent Common Stock
received pursuant hereto by the Principal Shareholder within 180 days
of the date hereof.
SECTION 7.05. Form S-8. With respect to the Stock
Option Plan, Parent shall take all corporate action necessary or
appropriate to as soon as practicable after the Effective Time, file a
registration statement on Form S-3 or Form S-8, as appropriate (or any
successor or other appropriate forms), with respect to the shares of
Parent Common Stock subject to such plan to the extent such
registration statement is required under applicable law in order for such
shares of Parent
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Common Stock to be sold without restriction, and Parent shall use its
best efforts to maintain the effectiveness of such registration statements
(and maintain the current status of the prospectuses contained therein)
for so long as such benefits and grants remain payable and such options
remain outstanding.
SECTION 7.06. Guaranteed Debt. Parent shall cause the
Guaranteed Debt to be paid at the Effective Time.
SECTION 7.07. Directors' and Officers' Indemnification and
Insurance. (a) For a period of three years after the Effective Time,
Parent shall cause the Surviving Corporation to use its best efforts to
maintain in effect, if available, directors' and officers' liability insurance
covering those persons who are currently covered by the Company's
directors' and officers' liability insurance policy (a copy of which has
been heretofore delivered to Parent) on terms comparable to those
applicable to the then current directors and officers of Parent, or (ii)
those now applicable to directors and officers of the Company,
whichever is more favorable to such directors and officers; provided,
however, that in no event shall Parent or the Surviving Corporation be
required to expend in excess of 150% of the annual premium currently
paid by the Company for such coverage, and provided further, that if the
premium for such coverage exceeds such amount, Parent or the
Surviving Corporation shall purchase a policy with the greatest
coverage available for such 150% of the annual premium.
(b) The Articles of Incorporation and Bylaws of the
Surviving Corporation shall contain the provisions that are set forth, as
of the date of this Agreement, in the Articles of Incorporation and
Bylaws of the Company, which provisions shall not be amended,
repealed or otherwise modified for a period of five years from the
Effective Time in any manner that would affect adversely the rights
thereunder of individuals who at or at any time prior to the Effective
Time were directors, officers, employees, fiduciaries or agents of the
Company.
ARTICLE VIII
CONDITIONS TO CLOSING
SECTION 8.01. Conditions to Obligations of Each of the
Company and Parent. The respective obligations of the Company and
Parent to consummate the transactions contemplated by this Agreement
shall each be subject to the fulfillment, at or prior to the Effective
Time, of each of the following conditions:
(a) HSR Act. Any waiting period (and any extension thereof)
under the HSR Act applicable to the Merger shall have expired or shall
have been terminated;
(b) Consents and Approvals. Parent and the Company shall have
received, each in form and substance reasonably satisfactory to the
parties, all authorizations, consents, orders and approvals of all
Governmental Authorities and officials and all third party consents
required in order to consummate the Merger; and
(c) Court Order. No court of competent jurisdiction shall have
issued or entered any order, writ, injunction or decree, and no other
Governmental Entity shall have issued any order, which is then in effect
and has the effect of making the Merger illegal or otherwise prohibiting
its consummation.
SECTION 8.02. Conditions to Obligations of the Company.
The obligations of the Company to consummate the transactions
contemplated by this Agreement shall be subject to the fulfillment, at
or prior to the Effective Time, of each of the following conditions:
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(a) Representations, Warranties and Covenants. The
representations and warranties of Parent contained in this Agreement
shall have been true and correct in all material respects when made and
shall be true and correct in all material respects as of the Effective
Time, with the same force and effect as if made as of the Effective
Time, other than such representations and warranties as are made as of
another date, the covenants and agreements contained in this Agreement
to be complied with by Parent and Merger Sub on or before the
Effective Time shall have been complied with in all material respects,
and the Company shall have received a certificate from Parent and
Merger Sub to such effect signed by a duly authorized officer thereof;
(b) No Proceeding or Litigation. No Action shall have been
commenced by or before any Governmental Authority against either the
Company, Merger Sub or Parent, seeking to restrain or materially and
adversely alter the transactions contemplated by this Agreement which,
in the reasonable, good faith determination of the Company, is likely to
render it impossible or unlawful to consummate such transactions;
provided, however, that the provisions of this Section 8.02(b) shall not
apply if the Company or an affiliate thereof has directly or indirectly
solicited or encouraged any such Action;
(c) Legal Opinion. The Company shall have received an opinion,
dated as of the Effective Time, from Shearman & Sterling, counsel to
Parent, in form and substance reasonably satisfactory to the Company;
(d) NNM Listing. The shares of Parent Common Stock issuable
to the Company's shareholders pursuant to this Agreement shall have
been authorized for listing on the NNM, upon official notice of
issuance; and
(e) Resolutions. The Company shall have received a true and
complete copy, certified by the Secretary or an Assistant Secretary of
Parent, of the resolutions duly and validly adopted by the Board of
Directors of Parent and Merger Sub evidencing their authorization of the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby.
SECTION 8.03. Conditions to Obligations of Parent. The
obligations of Parent and Merger Sub to consummate the transactions
contemplated by this Agreement shall be subject to the fulfillment, at
or prior to the Effective Time, of each of the following conditions:
(a) Representations, Warranties and Covenants. The
representations and warranties of the Company contained in this
Agreement shall have been true and correct in all material respects
(without regard to any knowledge qualification) when made and shall be
true and correct in all material respects (without regard to any
knowledge qualification) as of the Effective Time with the same force
and effect as if made as of the Effective Time, other than such
representations and warranties as are made as of another date, except in
all cases for such breaches of, inaccuracies in or omissions from such
representations and warranties as do not have a Material Adverse Effect,
the covenants and agreements contained in this Agreement to be
complied with in all material respects by the Company on or before the
Effective Time shall have been complied with in all material respects,
and Parent shall have received a certificate of the Company to such
effect signed by a duly authorized officer thereof;
(b) No Proceeding or Litigation. No Action shall have been
commenced or threatened by or before any Governmental Authority
against either the Company or Parent, seeking to restrain or materially
and adversely alter the transactions contemplated hereby which in the
reasonable, good faith determination of the Parent, is likely to render it
impossible or unlawful to consummate such transactions; provided,
however, that the provisions of this Section 8.03(b) shall not apply if
Parent or an affiliate thereof has solicited or encouraged any such
Action;
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(c) Resolutions of the Company. Parent shall have received a true
and complete copy, certified by the Secretary or an Assistant Secretary
of the Company, of the resolutions duly and validly adopted by the
Board of Directors of the Companyevidencing its authorization of the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby;
(d) Certificate of Non-Foreign Status. Parent shall have received a
certificate from the Company that complies with Sections 1.1445-
2(c)(3) and 1.8972(a) of the Regulations certifying that the Company is
not a United States Real Property Holding Corporation for purposes of
Section 897 of the Code;
(e) Canon Approvals. The waiver letter dated December 19, 1996
from Canon, Inc. to the Company shall not have been withdrawn and
shall be in full force and effect;
(f) Shareholder Approval. Each of this Agreement and the Merger
shall have been duly approved by the requisite vote of shareholders of
the Company;
(g) June 30 Audited Financials. True and complete copies of an
audited consolidated balance sheet as of June 30, 1996 and the related
audited consolidated statements of income, retained earnings,
stockholders' equity and cash flows of the Company, together with all
related notes and schedules thereto, accompanied by the reports thereon
of the Company's accountants (the "June 30 Financials") shall have
been made available or delivered to Parent, and the June 30 Financials
shall satisfy the requirements of the second sentence of Section 3.07(a);
and
(h) Legal Opinion. Parent shall have received an opinion, dated as
of the Effective Time, from Wilson, Sonsini, Xxxxxxxx & Xxxxxx,
counsel to the Company, in form and substance reasonably satisfactory
to Parent and its counsel.
ARTICLE IX
SURVIVAL; INDEMNIFICATION
SECTION 9.01. Survival of Representations and Warranties.
The representations and warranties of the Company and Parent contained
in this Agreement shall not survive the Effective Time.
ARTICLE X
TERMINATION AND WAIVER
SECTION 10.01. Termination. This Agreement may be
terminated at any time prior to the Closing:
(a) by Parent if, between the date hereof and the Effective Time:
(i) any representation or warranty of the Company contained in this
Agreement shall have been breached such that the conditions set forth in
Section 8.03(a) would or could not be satisfied by June 30, 1997, (ii)
the Company shall not have complied in any material respect with any
covenant or agreement to be complied with by it and contained in this
Agreement within 15 days after receipt of notice of non-compliance
from Parent; or (iii) the Company or any Subsidiary makes a general
assignment for the benefit of creditors, or any proceeding shall be
instituted by or against the Company or any Subsidiary seeking to
adjudicate any of them a bankrupt or insolvent, or seeking liquidation,
winding up or reorganization, arrangement, adjustment, protection,
relief or composition of its debts under any Law relating to bankruptcy,
insolvency or reorganization; or
66
(b) by either the Company or Parent if the Effective Time shall
not have occurred by June 30, 1997; provided, however, that the right
to terminate this Agreement under this Section 10.01(b) shall not be
available to any party whose failure to fulfill any obligation under this
Agreement shall have been the cause of, or shall have resulted in, the
failure of the Effective Time to occur on or prior to such date; or
(c) by either Parent or the Company in the event that any
Governmental Authority shall have issued a final, non-applicable order,
decree or ruling or taken any other action permanently, enjoining or
otherwise prohibiting the transactions contemplated by this Agreement
and such order, decree, ruling or other action shall have become final
and nonappealable; or
(d) by the Company if, between the date hereof and the Effective
Time any representation, warranty or covenant of Parent contained in
this Agreement shall have been breached such that the conditions set
forth in Section 8.02(a) would or could not be satisfied by June 30,
1997, or Parent makes a general assignment for the benefit of creditors,
or any proceeding shall be instituted by or against Parent seeking to
adjudicate it bankrupt or insolvent, or seeking liquidation, winding up
or reorganization, arrangement, adjustment, protection, relief or
composition of its debts under any Law relating to bankruptcy,
insolvency or reorganization; or
(e) by the mutual written consent of the Company and Parent.
SECTION 10.02. Effect of Termination. In the event of
termination of this Agreement as provided in Section 10.01, this
Agreement shall forthwith become void and there shall be no liability
on the part of either party hereto except (a) as set forth in 11.01 and (b)
that nothing herein shall relieve either party from liability for any
willful breach of this Agreement.
SECTION 10.03. Waiver. Either party to this Agreement
may (a) extend the time for the performance of any of the obligations or
other acts of the other party, (b) waive any inaccuracies in the
representations and warranties of the other party contained herein or in
any document delivered by the other party pursuant hereto or (c) waive
compliance with any of the agreements or conditions of the other party
contained herein. Any such extension or waiver shall be valid only if
set forth in an instrument in writing signed by the party to be bound
thereby. Any waiver of any term or condition shall not be construed as
a waiver of any subsequent breach or a subsequent waiver of the same
term or condition, or a waiver of any other term or condition, of this
Agreement. The failure of any party to assert any of its rights
hereunder shall not constitute a waiver of any of such rights.
ARTICLE XI
GENERAL PROVISIONS
SECTION 11.01. Expenses. Except as otherwise specified in
this Agreement, all costs and expenses, including, without limitation,
fees and disbursements of counsel, financial advisors and accountants,
incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such costs and
expenses, whether or not the Effective Time shall have occurred.
SECTION 11.02. Notices. All notices, requests, claims,
demands and other communications hereunder shall be in writing and
shall be given or made (and shall be deemed to have been duly given or
made upon receipt) by delivery in person, by courier service, by cable,
by telecopy, by telegram, by telex or by registered or certified mail
(postage prepaid, return receipt requested) to the respective parties at the
following addresses (or at such other address for a party as shall be
specified in a notice given in accordance with this Section 11.02):
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(a) if to the Company:
NeXT Software, Inc.
000 Xxxxxxxxxx Xxxxx
Xxxxxxx Xxxx, Xxxxxxxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxx Xxxxxx, Esq.with a copy to:
Wilson, Sonsini, Xxxxxxxx & Xxxxxx
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxx 00000-0000
Telecopy: (000) 000-0000
Attention: Xxxxx Xxxxxxx, Esq.
and
(b) if to Parent or Merger Sub:
Apple Computer, Inc.
0 Xxxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Telecopy: (000) 000-0000
Attention: Xx. Xxxx X. Xxxxxxxx
with a copy to:
Shearman & Sterling
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Telecopy: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx, Esq.
SECTION 11.03. Public Announcements. No party to this
Agreement shall make, or cause to be made, any press release or public
announcement in respect of this Agreement or the transactions
contemplated hereby or otherwise communicate with any news media
without prior consent of the other parties, subject, in the case of Parent,
to Parent's obligations to comply with applicable securities laws and
NNM listing requirements, and the parties shall cooperate as to the
timing and contents of any such press release or public announcement.
SECTION 11.04. Headings. The descriptive headings
contained in this Agreement are for convenience of reference only and
shall not affect in any way the meaning or interpretation of this
Agreement.
SECTION 11.05. Severability. If any term or other
provision of this Agreement is invalid, illegal or incapable of being
enforced by any Law or public policy, all other terms and provisions of
this Agreement shall nevertheless remain in full force andeffect so long
as the economic or legal substance of the transactions contemplated
hereby is not affected in any manner materially adverse to any party.
Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate
in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner in
order that the transactions contemplated hereby are consummated as
originally contemplated to the greatest extent possible.
SECTION 11.06. Entire Agreement. This Agreement
constitutes the entire agreement of the parties hereto with respect to the
subject matter hereof and thereof and supersedes all prior
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agreements and undertakings, both written and oral, between the
Company and Parent with respect to the subject matter hereof and
thereof.
SECTION 11.07. Assignment. This Agreement may not be
assigned by operation of law or otherwise without the express written
consent of the Company, Merger Sub and Parent (which consent may
be granted or withheld in the sole discretion of the Company, Merger
Sub or Parent).
SECTION 11.08. No Third Party Beneficiaries. This
Agreement shall be binding upon and inure solely to the benefit of the
parties hereto and their permitted assigns and nothing herein, express or
implied, is intended to or shall confer upon any other Person any legal
or equitable right, benefit or remedy of any nature whatsoever under or
by reason of this Agreement.
SECTION 11.09. Amendment. This Agreement may not be
amended or modified except (a) by an instrument in writing signed by,
or on behalf of, the Company, Merger Sub and Parent or (b) by a
waiver in accordance with Section 10.03.
SECTION 11.10. Governing Law. This Agreement shall be
governed by, and construed in accordance with, the laws of the State of
California applicable to contracts executed in and to be performed
entirely within that state.
SECTION 11.11. Counterparts. This Agreement may be
executed in one or more counterparts, and by the different parties hereto
in separate counterparts, each of which when executed shall be deemed
to be an original but all of which taken together shall constitute one
and the same agreement.
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IN WITNESS WHEREOF, the Company, Parent and Merger Sub have
caused this Agreement to be executed as of the date first written above
by their respective officers thereunto duly authorized.
NEXT SOFTWARE, INC.
By: /s/ XXXXXX X. JOBS
Name: Xxxxxx X. Jobs
Title: Chairman of the Board and
Chief Executive Officer
APPLE COMPUTER, INC.
By: /s/ XXXXXXX X. XXXXXX
Name: Xxxxxxx X. Xxxxxx
Title: Chairman of the Board and
Chief Executive Officer
BLACKBIRD ACQUISITION CORPORATION
By: /s/ XXXXXXX X. XXXXXX
Name: Xxxxxxx X. Xxxxxx
Title: President
CONFORMED COPY
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