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AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
among:
Siebel Systems, Inc.
a Delaware corporation;
OS Acquisition Corp.,
a Delaware corporation;
OpenSite Technologies, Inc.
a Delaware corporation
and
Xxxx Xxxxxx,
as Stockholders' Agent
___________________________
Dated as of April 5, 2000
___________________________
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1. Description of Transaction............................................................................................... 1
1.1 Merger of Merger Sub into the Company........................................................................... 1
1.2 Effect of the Merger............................................................................................ 1
1.3 Closing; Effective Time......................................................................................... 2
1.4 Certificate of Incorporation and Bylaws; Directors and Officers................................................. 2
1.5 Conversion of Shares............................................................................................ 2
1.6 Employee Stock Options.......................................................................................... 3
1.7 Closing of the Company's Transfer Books......................................................................... 4
1.8 Exchange of Certificates; Escrow Shares......................................................................... 4
1.9 Dissenting Shares............................................................................................... 6
1.10 Tax Consequences................................................................................................ 7
1.11 Accounting Treatment............................................................................................ 7
1.12 Further Action.................................................................................................. 7
2. Representations and Warranties of the Company............................................................................ 7
2.1 Due Organization; Subsidiaries; Etc............................................................................. 7
2.2 Certificate of Incorporation and Bylaws; Records................................................................ 8
2.3 Capitalization, Etc............................................................................................. 9
2.4 Financial Statements............................................................................................ 10
2.5 Absence of Changes.............................................................................................. 11
2.6 Title to Assets................................................................................................. 13
2.7 Bank Accounts; Receivables...................................................................................... 13
2.8 Equipment; Leasehold............................................................................................ 14
2.9 Proprietary Assets.............................................................................................. 14
2.10 Contracts....................................................................................................... 17
2.11 Liabilities..................................................................................................... 20
2.12 Compliance with Legal Requirements.............................................................................. 20
2.13 Governmental Authorizations..................................................................................... 20
2.14 Tax Matters..................................................................................................... 21
2.15 Employee and Labor Matters; Benefit Plans....................................................................... 22
2.16 Environmental Matters........................................................................................... 25
2.17 Insurance....................................................................................................... 25
2.18 Related Party Transactions...................................................................................... 25
i.
2.19 Legal Proceedings; Orders....................................................................................... 26
2.20 Authority; Binding Nature of Agreement; Inapplicability of Anti-takeover Statutes............................... 26
2.21 Non-Contravention; Consents..................................................................................... 27
2.22 Vote Required................................................................................................... 28
2.23 Full Disclosure................................................................................................. 28
2.24 Brokers......................................................................................................... 28
3. Certain Covenants of the Company......................................................................................... 28
3.1 Access and Investigation........................................................................................ 28
3.2 Operation of the Company's Business............................................................................. 29
3.3 Notification; Updates to Disclosure Schedule.................................................................... 31
3.4 No Negotiation.................................................................................................. 31
3.5 Release of Security............................................................................................. 32
3.6 Termination of 401(k) Plan...................................................................................... 32
3.7 Termination of Letter of Intent between the Company and Bidder's Edge, Inc...................................... 32
3.8 Termination of Pledge Agreement among the Company, Xxx X. Xxxx and Gross, Shuman, Brizdle & Gilgillan, P.C...... 32
3.9 Termination of Other Agreements................................................................................. 32
4. Representations and Warranties of Parent and Merger Sub.................................................................. 32
4.1 SEC Filings; Financial Statements............................................................................... 33
4.2 Due Organization................................................................................................ 33
4.3 Non-Contravention; Consents..................................................................................... 33
4.4 Authority; Binding Nature of Agreement.......................................................................... 34
4.5 Valid Issuance.................................................................................................. 34
4.6 Absence of Changes.............................................................................................. 34
4.7 Legal Proceedings; Orders....................................................................................... 34
4.8 Brokers......................................................................................................... 35
5. Certain Covenants of the Parties......................................................................................... 35
5.1 Regulatory Approvals............................................................................................ 35
5.2 Stockholders' Consent........................................................................................... 35
5.3 Public Announcements............................................................................................ 36
5.4 Best Efforts.................................................................................................... 36
ii.
5.5 Noncompetition Agreements....................................................................................... 36
5.6 Employee Related Matters........................................................................................ 36
5.7 FIRPTA Matters.................................................................................................. 36
5.8 Release......................................................................................................... 37
5.9 Affiliate Agreements............................................................................................ 37
5.10 Termination of Employee Plans................................................................................... 37
5.11 Pooling of Interests............................................................................................ 37
5.12 Tax-Free Reorganization......................................................................................... 37
5.13 Indemnification of Officers and Directors....................................................................... 37
5.14 Fairness Hearing................................................................................................ 37
6. Conditions Precedent to Obligations of Parent and Merger Sub............................................................. 38
6.1 Accuracy of Representations..................................................................................... 38
6.2 Performance of Covenants........................................................................................ 38
6.3 Stockholder Approval............................................................................................ 38
6.4 Consents........................................................................................................ 39
6.5 Agreements and Documents........................................................................................ 39
6.6 FIRPTA Compliance............................................................................................... 40
6.7 HSR Act......................................................................................................... 40
6.8 No Restraints................................................................................................... 40
6.9 No Legal Proceedings............................................................................................ 40
6.10 Termination of Employee Plans................................................................................... 40
6.11 Termination of Agreements....................................................................................... 40
6.12 No Material Adverse Change...................................................................................... 41
6.13 Listing......................................................................................................... 41
6.14 Release of Security............................................................................................. 41
6.15 Conversion of Preferred Stock................................................................................... 41
6.16 Compliance With (S)3(a)(10) of the Securities Act............................................................... 41
7. Conditions Precedent to Obligations of the Company....................................................................... 41
7.1 Accuracy of Representations..................................................................................... 41
7.2 Performance of Covenants........................................................................................ 42
7.3 Documents....................................................................................................... 42
7.4 No Restraints................................................................................................... 42
iii.
7.5 HSR Act......................................................................................................... 42
7.6 Listing......................................................................................................... 42
7.7 Compliance With (S)3(a)(10) of the Securities Act............................................................... 42
8. Termination.............................................................................................................. 42
8.1 Termination Events.............................................................................................. 42
8.2 Termination Procedures.......................................................................................... 43
8.3 Effect of Termination........................................................................................... 43
9. Indemnification, Etc..................................................................................................... 43
9.1 Survival of Representations, Etc................................................................................ 43
9.2 Indemnification by Stockholders................................................................................. 44
9.3 No Contribution................................................................................................. 46
9.4 Interest........................................................................................................ 46
9.5 Mitigation of Loss.............................................................................................. 46
9.6 Defense of Third Party Claims................................................................................... 46
9.7 Setoff.......................................................................................................... 47
9.8 Exclusive Remedy................................................................................................ 47
9.9 Exercise of Remedies by Indemnitees Other Than Parent........................................................... 47
10. Miscellaneous Provisions................................................................................................. 48
10.1 Stockholders' Agent............................................................................................ 48
10.2 Further Assurances............................................................................................. 48
10.3 Fees and Expenses.............................................................................................. 48
10.4 Attorneys' Fees................................................................................................ 48
10.5 Notices........................................................................................................ 49
10.6 Confidentiality................................................................................................ 49
10.7 Time of the Essence............................................................................................ 49
10.8 Headings....................................................................................................... 49
10.9 Counterparts................................................................................................... 49
10.10 Governing Law.................................................................................................. 50
10.11 Successors and Assigns......................................................................................... 50
10.12 Remedies Cumulative; Specific Performance...................................................................... 50
10.13 Waiver......................................................................................................... 50
10.14 Waiver of Jury Trial........................................................................................... 50
iv.
10.15 Amendments..................................................................................................... 50
10.16 Severability................................................................................................... 51
10.17 Parties in Interest............................................................................................ 51
10.18 Entire Agreement............................................................................................... 51
10.19 Construction................................................................................................... 51
v.
EXHIBIT 2.1
AGREEMENT AND PLAN
OF MERGER AND REORGANIZATION
This Agreement And Plan Of Merger And Reorganization ("Agreement") is made
and entered into as of April 5, 2000, by and among: Siebel Systems, Inc. a
Delaware corporation ("Parent"); OS Acquisition Corp., a Delaware corporation
("Merger Sub"); OpenSite Technologies, Inc. a Delaware corporation (the
"Company"); and Xxxx Xxxxxx, as Stockholders' Agent (as defined below). Certain
other capitalized terms used in this Agreement are defined in Exhibit A.
Recitals
A. Parent, Merger Sub and the Company intend to effect a merger of Merger
Sub into the Company in accordance with this Agreement and the Delaware General
Corporation Law (the "Merger"). Upon consummation of the Merger, Merger Sub will
cease to exist, and the Company will become a wholly owned subsidiary of Parent.
B. It is intended that the Merger qualify as a tax-free reorganization
within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as
amended (the "Code"). For accounting purposes, it is intended that the Merger be
treated as a "pooling of interests."
C. This Agreement has been approved by the respective boards of directors
of Parent, Merger Sub and the Company.
D. Concurrently with the execution of this Agreement, and as a condition
and inducement to Parent's willingness to enter into this Agreement, each of the
Key Stockholders (as defined in Exhibit A) shall enter into a Voting Agreement
and Irrevocable Proxy substantially in the form attached hereto as Exhibit B,
which Voting Agreement and Irrevocable Proxy shall confirm such Key
Stockholder's obligations as an Indemnitor under Section 9 below.
Agreement
The parties to this Agreement agree as follows:
1. Description of Transaction
1.1 Merger of Merger Sub into the Company. Upon the terms and subject to
the conditions set forth in this Agreement, at the Effective Time (as defined in
Section 1.3), Merger Sub shall be merged with and into the Company, and the
separate existence of Merger Sub shall cease. The Company will continue as the
surviving corporation in the Merger (the "Surviving Corporation").
1.2 Effect of the Merger. The Merger shall have the effects set forth in
this Agreement and in the applicable provisions of the Delaware General
Corporation Law (the "DGCL").
1.
1.3 Closing; Effective Time. The consummation of the transactions
contemplated by this Agreement (the "Closing") shall take place at the offices
of Xxxxxx Godward LLP, 0000 Xxxxxxx Xxxxxx, Xxxx Xxxx, Xxxxxxxxxx 00000 at 10:00
a.m. on May 23, 2000 or at such other time and date as the parties may designate
(the "Scheduled Closing Time"); provided, however, that either party may, by
written notice delivered no later than the business day prior to May 23, 2000,
unilaterally reschedule the "Scheduled Closing Time" to be the third business
day after May 23, 2000. The date on which the Closing actually takes place is
referred to in this Agreement as the "Closing Date." Contemporaneously with or
as promptly as practicable after the Closing, a properly executed certificate of
merger conforming to the requirements of the DGCL shall be filed with the
Secretary of State of the State of Delaware. The Merger shall become effective
at the time such certificate of merger is filed with and accepted by the
Secretary of State of the State of Delaware (the "Effective Time").
1.4 Certificate of Incorporation and Bylaws; Directors and Officers.
Unless otherwise determined by Parent prior to the Effective Time:
(a) the certificate of incorporation of the Surviving Corporation
shall be amended and restated as of the Effective Time in a form acceptable to
Parent;
(b) the bylaws of the Surviving Corporation shall be amended and
restated as of the Effective Time to conform to the bylaws of Merger Sub as in
effect immediately prior to the Effective Time; and
(c) the directors and officers of the Surviving Corporation
immediately after the Effective Time shall be the individuals identified on
Exhibit C.
1.5 Conversion of Shares.
(a) Subject to Sections 1.8(c) and 1.9, at the Effective Time, by
virtue of the Merger and without any further action on the part of Parent,
Merger Sub, the Company or any stockholder of the Company:
(i) each share of the common stock (par value $0.01 per share)
of the Company (the "Company Common Stock") outstanding immediately prior to the
Effective Time shall be converted into the right to receive the "Applicable
Fraction" (as defined in Section 1.5(b)) of a share of the common stock (par
value $0.01 per share) of Parent ("Parent Common Stock");
(ii) each share of the common stock (par value $0.001 per
share) of Merger Sub outstanding immediately prior to the Effective Time shall
be converted into one share of common stock of the Surviving Corporation; and
(iii) all calculations under this Section 1.5(a) shall be
rounded to the nearest one millionth (1/1,000,000/th).
2.
(b) For purposes of this Agreement, the "Applicable Fraction" shall
be the fraction having: (A) a numerator equal to 3,935,599 and (B) a denominator
equal to the sum of (i) the aggregate number of shares of Company Common Stock
outstanding immediately prior to the Effective Time (including any such shares
that are subject to a repurchase option or risk of forfeiture under any
restricted stock purchase agreement or other agreement), plus (ii) the aggregate
number of shares of Company Common Stock purchasable under or otherwise subject
to all Company options, warrants or convertible debentures to purchase Company
Common Stock outstanding immediately prior to the Effective Time (including all
shares of Company Common Stock that may ultimately be purchased under Company
Options (as defined in Section 1.6 below), warrants or convertible debentures to
purchase Company Common Stock that are unvested or are otherwise not then
exercisable). Subject only to Section 1.5(c), in no case shall the number of
shares of Parent Common Stock issued under Section 1.5(a), when added to the
shares of Parent Common Stock issuable to the holders of options, warrants and
convertible debentures to purchase Company Common Stock under Section 1.6,
exceed 3,935,599 shares.
(c) In the event Parent at any time or from time to time between the
date of this Agreement and the Effective Time declares or pays any dividend on
Parent Common Stock payable in Parent Common Stock or in any right to acquire
Parent Common Stock, or effects a subdivision of the outstanding shares of
Parent Common Stock into a greater number of shares of Parent Common Stock (by
stock dividends, combinations, splits, recapitalizations and the like), or in
the event the outstanding shares of Parent Common Stock shall be combined or
consolidated, by reclassification or otherwise, into a lesser number of shares
of Parent Common Stock, then the Applicable Fraction shall be appropriately
adjusted.
(d) If any shares of Company Common Stock outstanding immediately
prior to the Effective Time are unvested or are subject to a repurchase option,
risk of forfeiture or other condition under any applicable restricted stock
purchase agreement or other agreement with the Company, then the shares of
Parent Common Stock issued in exchange for such shares of Company Common Stock
will also be unvested and/or subject to the same repurchase option, risk of
forfeiture or other condition, and the certificates representing such shares of
Parent Common Stock may accordingly be marked with appropriate legends.
(e) A portion of the shares of Parent Common Stock issued in the
Merger shall be delivered into escrow and held as specified in Section 1.8
hereof.
1.6 Employee Stock Options. At the Effective Time, each stock option that
is then outstanding under the Company's 1998 Stock Option Plan, whether vested
or unvested (a "Company Option"), shall be assumed by Parent in accordance with
the terms (as in effect as of the date of this Agreement) of the Company's 1998
Stock Option Plan and the stock option agreement by which such Company Option is
evidenced. All rights with respect to Company Common Stock under outstanding
Company Options shall thereupon be converted into rights with respect to Parent
Common Stock. Accordingly, from and after the Effective Time, (a) each Company
Option assumed by Parent may be exercised solely for shares of Parent Common
Stock, (b) the number of shares of Parent Common Stock subject to each such
assumed Company Option shall be equal to the number of shares of Company Common
Stock that were subject to such Company Option immediately prior to the
Effective Time multiplied by the Applicable
3.
Fraction, rounded down to the nearest whole number of shares of Parent Common
Stock, (c) the per share exercise price for the Parent Common Stock issuable
upon exercise of each such assumed Company Option shall be determined by
dividing the exercise price per share of Company Common Stock subject to such
Company Option, as in effect immediately prior to the Effective Time, by the
Applicable Fraction, and rounding the resulting exercise price up to the nearest
whole cent, and (d) each assumed Company Option designated an "incentive stock
option" as defined in Section 422 of the Code ("ISO") immediately prior to the
Effective Time shall remain an ISO; and (e) all restrictions on the exercise of
each such assumed Company Option shall continue in full force and effect, and
the term, exercisability, vesting schedule and other provisions of such Company
Option shall otherwise remain unchanged; provided, however, that each such
assumed Company Option shall, in accordance with its terms, be subject to
further adjustment as appropriate to reflect any stock split, reverse stock
split, stock dividend, recapitalization or other similar transaction effected by
Parent after the Effective Time. The Company and Parent shall take all action
that may be necessary (under the Company's 1998 Stock Option Plan and otherwise)
to effectuate the provisions of this Section 1.6. Each holder of a Company
Option will receive credit for time served as an employee of the Company for the
purposes of the vesting schedule of such Company Option assumed by the Parent.
Following the Closing, Parent will send to each holder of an assumed Company
Option a written notice setting forth (i) the number of shares of Parent Common
Stock subject to such assumed Company Option, and (ii) the exercise price per
share of Parent Common Stock issuable upon exercise of such assumed Company
Option. As soon as reasonably practicable, and in any event within 60 days after
the Closing Date, Parent shall file with the SEC, a registration statement on
Form S-8 registering the shares of Parent Common Stock issuable upon exercise of
the Company Options assumed by Parent pursuant to this Section 1.6.
1.7 Closing of the Company's Transfer Books. At the Effective Time,
holders of certificates representing shares of the Company's capital stock that
were outstanding immediately prior to the Effective Time shall cease to have any
rights as stockholders of the Company, and the stock transfer books of the
Company shall be closed with respect to all shares of such capital stock
outstanding immediately prior to the Effective Time. No further transfer of any
such shares of the Company's capital stock shall be made on such stock transfer
books after the Effective Time. If, after the Effective Time, a valid
certificate previously representing any of such shares of the Company's capital
stock (a "Company Stock Certificate") is presented to the Surviving Corporation
or Parent, such Company Stock Certificate shall be canceled and shall be
exchanged as provided in Section 1.8.
1.8 Exchange of Certificates; Escrow Shares.
(a) (i) On or prior to the Closing Date, Parent shall select a
reputable bank or trust company to act as exchange agent in the Merger (the
"Exchange Agent"). Promptly after the Effective Time, Parent shall deposit with
the Exchange Agent (1) certificates representing the shares of Parent Common
Stock issuable pursuant to this Section 1, and (2) cash sufficient to make
payments in lieu of fractional shares in accordance with Section 1.5(c). The
shares of Parent Common Stock and cash amounts so deposited with the Exchange
Agent, together with any dividends or distributions received by the Exchange
Agent with respect to such shares, are referred to collectively as the "Exchange
Fund."
4.
(ii) As soon as reasonably practicable after the Effective
Time, the Exchange Agent will mail to the Merger Stockholders (x) a letter of
transmittal in customary form and containing such provisions as Parent may
reasonably specify (including a provision confirming that delivery of Company
Stock Certificates shall be effected, and risk of loss and title to Company
Stock Certificates shall pass, only upon delivery of such Company Stock
Certificates to the Exchange Agent), and (y) instructions for use in effecting
the surrender of Company Stock Certificates in exchange for certificates
representing Parent Common Stock. Upon surrender of a Company Stock Certificate
to the Exchange Agent for exchange, together with a duly executed letter of
transmittal and such other documents as may be reasonably required by the
Exchange Agent or Parent, (1) the Merger Stockholder holding such Company Stock
Certificate shall be entitled to receive in exchange therefor a certificate
representing 90% of the number of whole shares of Parent Common Stock that such
Merger Stockholder has the right to receive pursuant to the provisions of
Section 1.5 (and cash in lieu of any fractional share of Parent Common Stock),
and (2) the Company Stock Certificate so surrendered shall be canceled. The
Exchange Agent shall thereupon also deliver to the escrow agent under the Escrow
Agreement in the form of Exhibit H hereto (the "Escrow Agreement") a certificate
representing 10% of the number of whole shares of Parent Common Stock that such
Merger Stockholder has the right to receive pursuant to the provisions of
Section 1.5. Until surrendered as contemplated by this Section 1.8, each Company
Stock Certificate shall be deemed, from and after the Effective Time, to
represent only the right to receive shares of Parent Common Stock (and cash in
lieu of any fractional share of Parent Common Stock) as contemplated by Section
1. If any Company Stock Certificate shall have been lost, stolen or destroyed,
Parent may, in its discretion and as a condition precedent to the issuance of
any certificate representing Parent Common Stock, require the owner of such
lost, stolen or destroyed Company Stock Certificate to provide an appropriate
affidavit and to deliver a bond (in such sum as Parent may reasonably direct) as
indemnity against any claim that may be made against the Exchange Agent, Parent
or the Surviving Corporation with respect to such Company Stock Certificate.
(b) No dividends or other distributions declared or made with respect
to Parent Common Stock with a record date after the Effective Time shall be paid
to the holder of any unsurrendered Company Stock Certificate with respect to the
shares of Parent Common Stock represented thereby, and no cash payment in lieu
of any fractional share shall be paid to any such holder, until such holder
surrenders such Company Stock Certificate in accordance with this Section 1.8
(at which time such holder shall be entitled to receive all such dividends and
distributions and such cash payment).
(c) No fractional shares of Parent Common Stock shall be issued in
connection with the Merger, and no certificates for any such fractional shares
shall be issued. In lieu of such fractional shares, any holder of capital stock
of the Company who would otherwise be entitled to receive a fraction of a share
of Parent Common Stock (after aggregating all fractional shares of Parent Common
Stock issuable to such holder) shall, upon surrender of such holder's Company
Stock Certificate(s), be paid in cash the dollar amount (rounded to the nearest
whole cent), without interest, determined by multiplying such fraction by the
average of the closing sale prices of a share of Parent Common Stock as reported
on the Nasdaq National Market for each of the five consecutive trading days
ending on the trading day immediately preceding the Closing (the "Average Parent
Common Stock Price").
5.
(d) Notwithstanding anything to the contrary contained in this
Agreement, no shares of Parent Common Stock (or certificates therefor) shall be
issued in exchange for any Company Stock Certificate to any Person who may be an
"affiliate" (as that term is used in Rule 145 under the Securities Act) of the
Company until such Person shall have delivered to Parent and the Company a duly
executed Affiliate Agreement as contemplated by Section 5.9.
(e) Any portion of the Exchange Fund that remains undistributed to
holders of Company Stock Certificates as of the date 180 days after the date on
which the Merger becomes effective shall be delivered to Parent upon demand, and
any holders of Company Stock Certificates who have not theretofore surrendered
their Company Stock Certificates in accordance with this Section 1.8 shall
thereafter look only to Parent for satisfaction of their claims for Parent
Common Stock, cash in lieu of fractional shares of Parent Common Stock and any
dividends or distributions with respect to Parent Common Stock.
(f) Each of the Exchange Agent, Parent and the Surviving Corporation
shall be entitled to deduct and withhold from any consideration payable or
otherwise deliverable to any holder or former holder of capital stock of the
Company pursuant to this Agreement such amounts as Parent or the Surviving
Corporation is required to deduct or withhold therefrom under the Code or under
any provision of state, local or foreign tax law. To the extent such amounts are
so deducted or withheld, such amounts shall be treated for all purposes under
this Agreement as having been paid to the Person to whom such amounts would
otherwise have been paid.
(g) Neither Parent nor the Surviving Corporation shall be liable to
any holder or former holder of capital stock of the Company for any shares of
Parent Common Stock (or dividends or distributions with respect thereto), or for
any cash amounts, delivered to any public official pursuant to any applicable
abandoned property, escheat or similar law.
1.9 Dissenting Shares. Notwithstanding anything to the contrary contained
in this Agreement, any shares ("Dissenting Shares") of Company Common Stock that
are outstanding immediately prior to the Effective Time and that are held by any
Person who is entitled to demand and properly demands payment of the fair value
of such Dissenting Shares pursuant to, and who complies in all respects with,
Section 262 of the DGCL ("Section 262") shall not be converted into or be
exchangeable for the right to receive Parent Common Stock in accordance with
Section 1.5 (or cash in lieu of fractional shares in accordance with Section
1.5), but rather the holders of Dissenting Shares shall be entitled to payment
of the fair value of such Dissenting Shares in accordance with Section 262;
provided, however, that if any such holder shall fail to perfect or otherwise
shall waive, withdraw or lose the right to receive payment of the fair value of
such holder's Dissenting Shares under Section 262, then the right of such holder
to be paid the fair value of such holder's Dissenting Shares shall cease and
such Dissenting Shares shall be deemed to have been converted as of the
Effective Time into, and to have become exchangeable solely for the right to
receive Parent Common Stock in accordance with Section 1.5 (and cash in lieu of
fractional shares in accordance with Section 1.5). The Company shall give
prompt notice to Parent and Merger Sub of any demands received by the Company
for payment of fair value of any shares of Company Common Stock (including a
copy of each demand), and Parent and Merger Sub shall have the right to
participate in and direct all negotiations and proceedings with
6.
respect to such demands. Prior to the Effective Time, the Company shall not,
without the prior written consent of Parent, make any payment with respect to,
or settle or offer to settle, any such demands or agree to do any of the
foregoing. From and after the Effective Time, Parent shall be responsible for
all payments with respect to Dissenting Shares, including without limitation,
all expense associated with negotiations and proceedings with respect to demands
for appraisal required under Delaware General Corporation Law.
1.10 Tax Consequences. For federal income tax purposes, the Merger is
intended to constitute a reorganization within the meaning of Section 368 of the
Code. The parties to this Agreement hereby adopt this Agreement as a "plan of
reorganization" within the meaning of Sections 1.368-2(g) and 1.368-3(a) of the
United States Treasury Regulations.
1.11 Accounting Treatment. For accounting purposes, the Merger is intended
to be treated as a "pooling of interests."
1.12 Further Action. If, at any time after the Effective Time, any further
action is determined by Parent to be necessary or desirable to carry out the
purposes of this Agreement or to vest the Surviving Corporation or Parent with
full right, title and possession of and to all rights and property of Merger Sub
and the Company, the officers and directors of the Surviving Corporation and
Parent shall be fully authorized (in the name of Merger Sub, in the name of the
Company and otherwise) to take such action.
2. Representations and Warranties of the Company
The Company represents and warrants, to and for the benefit of the
Indemnitees, as follows:
2.1 Due Organization; Subsidiaries; Etc.
(a) Each of the Acquired Corporations (as defined below) has been
duly organized, and is validly existing and in good standing under the laws of
the jurisdiction of its incorporation, has full power (corporate and other) and
authority: (i) to conduct its business in the manner in which its business is
currently being conducted; (ii) to own and use its assets in the manner in which
its assets are currently owned and used; and (iii) to perform its obligations
under all material Contracts by which it is bound.
(b) Except as set forth in Part 2.1(b) of the Disclosure Schedule,
each of the Acquired Corporations has not conducted any business under or
otherwise used, for any purpose or in any jurisdiction, any fictitious name,
assumed name, trade name or other name.
(c) Each of the Acquired Corporations is qualified to do business as
a foreign corporation, and is in good standing, under the laws of all
jurisdictions where the property owned, leased or operated by it or the nature
of its business requires such qualification and where the failure to be so
qualified would have a Material Adverse Effect on such Acquired Corporation.
Each of the Acquired Corporations is in possession of and operating in
compliance with all Governmental Authorizations that are material to the conduct
of its business, all of which are valid and in full force and effect.
7.
(d) Part 2.1(d) of the Disclosure Schedule accurately sets forth (i)
the names of the members of the Company's board of directors, (ii) the names of
the members of each committee of the Company's board of directors, and (iii) the
names and titles of the Company's officers.
(e) The Company has no subsidiaries (as defined below) other than
OpenSite Europe Limited, a company organized under the law of England and Wales
and OpenSite Merger Subsidiary, Inc., a Delaware corporation (the
"Subsidiaries"). The Company directly owns 100% of the issued and outstanding
stock of the Subsidiaries. Other than the Company's equity ownership in each of
the Subsidiaries as set forth above, none of the Acquired Corporations has any
equity or other interest in any Entity (as defined below). As used in this
Agreement, the word "subsidiary" means any Entity of which the Company directly
or indirectly owns 50% or more of the equity or that the Company directly or
indirectly controls. The Company has not agreed and is not obligated to make any
future investment in or capital contribution to any Entity, including, without
limitation, the Subsidiaries. Except as set forth in Section 2.1(e) of the
Disclosure Schedule, the Company has not guaranteed and is not responsible or
liable for any material obligation of any of the Entities, including, without
limitation, the Subsidiaries, in which it owns or has owned any equity or other
interest.
2.2 Certificate of Incorporation and Bylaws; Records. The Company has
delivered to Parent accurate and complete copies of: (1) each Acquired
Corporation's certificate of incorporation and bylaws or equivalent governing
documents, including all amendments thereto (the "Incorporation Documents"); (2)
the stock records of the Acquired Corporations; and (3) the minutes and other
records of the meetings and other proceedings (including any actions taken by
written consent or otherwise without a meeting) of the stockholders, the board
of directors and all committees of the board of directors of each of the
Acquired Corporations. There have been no formal meetings or other proceedings
of the stockholders, board of directors, or any committee of the board of
directors of each of the Acquired Corporations that are not fully reflected in
such minutes or other records. There has been no violation of any of the
provisions of the Incorporation Documents of each Acquired Corporation, and each
Acquired Corporation has not taken any action that is inconsistent in any
material respect with any resolution adopted by such Acquired Corporation's
stockholders, board of directors or any committee of such Acquired Corporation's
board of directors, except where such violation or action would not have a
Material Adverse Effect on such Acquired Corporation. The books of account,
stock records, minute books and other records of each Acquired Corporation are
complete in all material respects, and have been maintained in accordance with
prudent business practices.
2.3 Capitalization, Etc.
(a) The authorized capital stock of the Company consists of 40,000,000
shares of Common Stock (par value $0.01 per share), of which 7,895,476 shares
have been issued and are outstanding as of the date of this Agreement and of
which 1,863,515 shares have been repurchased by the Company, 4,175,439 shares of
Series A Preferred Stock (par value $0.01 per share), of which 3,243,681 shares
have been issued and are outstanding and of which 931,758 shares have been
repurchased by the Company as of the date of this Agreement, 5,000,000 shares of
Series B Preferred Stock (par value $0.01 per share), all of which have been
issued and are
8.
outstanding as of the date of this Agreement and 12,000,000 shares of Series C
Preferred Stock (par value $0.01 per share), all of which have been issued and
are outstanding as of the date of this Agreement (the Company's Series A
Preferred Stock, Series B Preferred Stock and Series C Preferred Stock shall be
collectively referred to herein as the "Company Preferred Stock" and, together
with the Company Common Stock, shall be referred to as the "Company Stock").
Each outstanding share of Company Preferred Stock is convertible into one share
of Company Common Stock. All of the outstanding shares of Company Stock have
been duly authorized and validly issued, and are fully paid and non-assessable.
As of the date of this Agreement, the outstanding shares of Company Stock and
all of the outstanding shares of capital stock of each of the Subsidiaries are
held by the Persons, with the addresses of record and in the amounts set forth
in Part 2.3(a) of the Disclosure Schedule. Part 2.3(a) of the Disclosure
Schedule also provides an accurate and complete description of the terms of each
repurchase option which is held by the Company and to which any of such shares
is subject.
(b) Except as set forth in Part 2.3(b) of the Disclosure Schedule,
all of the stock of each of the Subsidiaries owned by the Company is owned by
the Company free and clear of any Encumbrance. All of the outstanding stock of
each of the Subsidiaries has been duly authorized and validly issued and is
fully paid and nonassessable, has been issued in compliance with all applicable
Legal Requirements, including securities laws, and was not issued in violation
of or subject to any preemptive rights or other rights to subscribe for or
purchase securities of such respective Subsidiary. There are no options,
warrants or other rights outstanding to subscribe for or purchase any shares of
the capital stock of the Subsidiaries and the Subsidiaries are not subject to
any obligation, commitment, plan, arrangement or court or administrative order
with respect to same. There are no preemptive rights applicable to any shares of
capital of any of the Subsidiaries. None of the Subsidiaries have the right to
vote on or approve the Merger or any of the other transactions contemplated
herein.
(c) The Company has reserved 3,500,000 shares of Company Common Stock
for issuance under its 1998 Stock Option Plan, of which options to purchase
1,919,660 shares are outstanding as of the date of this Agreement. Part 2.3(c)
of the Disclosure Schedule accurately sets forth, with respect to each Company
Option that is outstanding as of the date of this Agreement: (i) the name of the
holder of such Company Option; (ii) the total number of shares of Company Common
Stock that are subject to such Company Option and the number of shares of
Company Common Stock with respect to which such Company Option is immediately
exercisable; (iii) the date on which such Company Option was granted and the
term of such Company Option; (iv) the vesting schedule for such Company Option;
(v) the exercise price per share of Company Common Stock purchasable under such
Company Option; and (vi) whether such Company Option has been designated an
"incentive stock option" as defined in Section 422 of the Code.
(d) (i) Part 2.3(d)(i) of the Disclosure Schedule accurately sets
forth, with respect to each convertible debenture issued to any Person: (A) the
name of the holder of such convertible debenture; (B) the total number of shares
of Company Stock that are subject to such convertible debenture; (C) the number
of shares of Company Stock with respect to which such convertible debenture is
immediately exercisable and (D) the term of such convertible debenture.
9.
(ii) Part 2.3(d)(ii) of the Disclosure Schedule accurately sets
forth, with respect to each warrant issued to any Person: (A) the name of the
holder of such warrant; (B) the total number of shares of Company Stock that are
subject to such warrant; (C) the number of shares of Company Stock with respect
to which such warrant is immediately exercisable; and (D) the term of such
warrant.
(e) Except as set forth in Parts 2.3(c) and 2.3(d) of the Disclosure
Schedule, there is no: (i) outstanding subscription, option, call, warrant or
right (whether or not currently exercisable) to acquire any shares of the
capital stock or other securities of the Company; (ii) except for the Company
Preferred Stock, outstanding security, instrument or obligation that is or may
become convertible into or exchangeable for any shares of the capital stock or
other securities of the Company; (iii) Contract under which the Company is or
may become obligated to sell or otherwise issue any shares of its capital stock
or any other securities; or (iv) to the best of the knowledge of the Company,
condition or circumstance that may give rise to or provide a basis for the
assertion of a claim by any Person to the effect that such Person is entitled to
acquire or receive any shares of capital stock or other securities of the
Company.
(f) All outstanding shares of Company Stock and all outstanding
Company Options, have been issued and granted in compliance with (i) all
applicable securities laws and other applicable Legal Requirements, and (ii) all
requirements set forth in applicable Contracts.
(g) Except as set forth in Part 2.3(g) of the Disclosure Schedule,
the Company has never repurchased, redeemed or otherwise reacquired any shares
of capital stock or other securities of the Company.
2.4 Financial Statements.
(a) Except as set forth in Part 2.4(a) of the Disclosure Schedule,
the Company has delivered to Parent the following financial statements and notes
(collectively, the "Company Financial Statements"):
(i) the audited combined balance sheets of the Company as of
December 31, 1997, 1998 and 1999, and the related audited combined statement of
income, combined statement of shareholders' equity and combined statement of
cash flows for the three (3) years ended December 31, 1999, together with the
notes thereto and the unqualified report and opinion of PricewaterhouseCoopers
LLP relating thereto; and
(ii) the unaudited balance sheet of the Acquired Corporations,
as of February 29, 2000 (the "Unaudited Interim Balance Sheet"), and the related
unaudited income statement of the Acquired Corporations for the two months then
ended.
(b) Except as disclosed in Part 2.4 of the Disclosure Schedule, the
Company Financial Statements are accurate and complete in all material respects
and present fairly the financial position of the Company as of the respective
dates thereof and the results of operations and (in the case of the financial
statements referred to in Section 2.4(a)(i)) cash flows of the Company for the
periods covered thereby. The Company Financial Statements have been
10.
prepared in accordance with generally accepted accounting principles applied on
a consistent basis throughout the periods covered (except that the financial
statements referred to in Section 2.4(a)(ii) do not contain footnotes and are
subject to normal and recurring year-end audit adjustments, which are not
reasonably expected to be, individually or in the aggregate, material in
magnitude).
(c) The books, records and accounts of the Acquired Corporations
accurately and fairly reflect, in reasonable detail, the transactions in and
dispositions of the assets of the Acquired Corporations.
2.5 Absence of Changes. Except as set forth in Part 2.5 of the Disclosure
Schedule, since December 31, 1999:
(a) there has not been any material adverse change in any of the
Acquired Corporations' business, condition (financial or otherwise), assets,
liabilities, operations, financial performance or overall prospects, and, to the
best of the knowledge of the Company, no event has occurred that could
reasonably be expected to, have a Material Adverse Effect on any of the Acquired
Corporations;
(b) there has not been any material loss, damage or destruction to,
or any material interruption in the use of, any of the Acquired Corporations'
material assets (whether or not covered by insurance);
(c) none of the Acquired Corporations has declared, accrued, set
aside or paid any dividend or made any other distribution in respect of any
shares of their respective capital stock, and have not repurchased, redeemed or
otherwise reacquired any shares of their respective capital stock or other
securities;
(d) the Acquired Corporations have not sold, issued or authorized the
issuance of (i) any capital stock or other security (except for, in the case of
the Company, Company Common Stock issued upon the exercise of outstanding
Company Options), (ii) any option or right to acquire any capital stock or any
other security, or (iii) any instrument convertible into or exchangeable for any
capital stock or other security;
(e) the Company has not amended or waived any of its rights under, or
permitted the acceleration of vesting under, (i) any provision of its 1998 Stock
Option Plan, (ii) any provision of any agreement evidencing any outstanding
Company Option, or (iii) any restricted stock purchase agreement;
(f) there has been no amendment to any of the Acquired Corporations'
Incorporation Documents, and none of the Acquired Corporations have effected or
been a party to any Acquisition Transaction, recapitalization, reclassification
of shares, stock split, reverse stock split or similar transaction;
(g) none of the Acquired Corporations has formed any subsidiary or
acquired any equity interest or other interest in any other Entity;
11.
(h) none of the Acquired Corporations has made any capital
expenditure which, when added to all other capital expenditures made on behalf
of such respective Acquired Corporation since December 31, 1999, exceeds
$100,000;
(i) none of the Acquired Corporations has (i) entered into or
permitted any of the assets owned or used by it to become bound by any Contract
that is or would constitute a Material Contract (as defined in Section 2.10(a)),
or (ii) amended or prematurely terminated, or waived any material right or
remedy under, any such Contract;
(j) none of the Acquired Corporations has (i) acquired, leased or
licensed any right or other asset from any other Person, (ii) sold or otherwise
disposed of, or leased or licensed, any right or other asset to any other
Person, or (iii) waived or relinquished any right, except for immaterial rights
or other immaterial assets acquired, leased, licensed or disposed of in the
ordinary course of business and consistent with each Acquired Corporation's past
practices and except for the nonexclusive licenses of software by an Acquired
Corporation to its customers in the ordinary course of business and consistent
with the Acquired Corporation's past practices;
(k) none of the Acquired Corporations has written off as
uncollectible, or established any extraordinary reserve with respect to, any
account receivable or other indebtedness in excess of $10,000 with respect to a
single matter, or in excess of $75,000 in the aggregate;
(l) none of the Acquired Corporations has made any pledge of any of
its assets or otherwise permitted any of its assets to become subject to any
Encumbrance, except for pledges of immaterial assets made in the ordinary course
of business and consistent with such Acquired Corporation's past practices;
(m) none of the Acquired Corporations has (i) lent money to any
Person (other than pursuant to routine travel advances made to employees in the
ordinary course of business), or (ii) incurred or guaranteed any indebtedness
for borrowed money;
(n) none of the Acquired Corporations has (i) established or adopted
any Employee Benefit Plan, (ii) paid any bonus or made any profit-sharing or
similar payment to, or increased the amount of the wages, salary, commissions,
fringe benefits or other compensation or remuneration payable to, any of its
directors, officers or employees, or (iii) other than in the ordinary course of
business and consistent with past practices, hired any new employee;
(o) none of the Acquired Corporations have changed any of their
respective methods of accounting or material accounting practices in any
respect;
(p) none of the Acquired Corporations has made any Tax election;
(q) none of the Acquired Corporations has commenced or settled any
Legal Proceeding;
12.
(r) none of the Acquired Corporations has entered into any material
transaction or taken any other material action outside the ordinary course of
business or inconsistent with its past practices; and
(s) none of the Acquired Corporations has agreed or legally committed
to take any of the actions referred to in clauses "(c)" through "(r)" above".
2.6 Title to Assets.
(a) The Company owns, and has good, valid and marketable title to,
all assets purported to be owned by it, including: (i) all tangible assets
reflected on the Unaudited Interim Balance Sheet; (ii) all tangible assets
referred to in Parts 2.7(b) and 2.9 of the Disclosure Schedule and all of the
Company's rights under the Contracts identified in Part 2.10 of the Disclosure
Schedule; and (iii) all other tangible assets reflected in the Company's books
and records as being owned by the Company. Except as set forth in Part 2.6(a) of
the Disclosure Schedule, all of said assets are owned by the Company free and
clear of any liens or other Encumbrances, except for (x) any lien for current
taxes not yet due and payable, and (y) liens that have arisen in the ordinary
course of business and that do not (in any case or in the aggregate) materially
detract from the value of the assets subject thereto or materially impair the
operations of the Company. Each of the Subsidiaries owns, or has valid rights to
use, all items of real and personal property that are material to their
respective businesses and, except as disclosed in Part 2.6(a), such assets are
owned or used by such Subsidiary free and clear of all Encumbrances.
(b) Part 2.6(b) of the Disclosure Schedule identifies all assets that
are material to the business of the Company and that are being leased or
licensed to the Company for which the annual rental payment for each such asset
exceeds $25,000.
2.7 Bank Accounts; Receivables.
(a) Part 2.7(a) of the Disclosure Schedule describes each account
maintained by or for the benefit of the Company at any bank or other financial
institution.
(b) Part 2.7(b) of the Disclosure Schedule provides an accurate and
complete breakdown and aging of all accounts receivable, notes receivable and
other receivables of the Company as of March 30, 2000. Other than as described
in Part 2.7(b) of the Disclosure Schedule, all existing accounts receivable of
the Company (including those accounts receivable reflected on the Unaudited
Interim Balance Sheet that have not yet been collected and those accounts
receivable that have arisen since February 29, 2000 and have not yet been
collected) (i) represent valid obligations of customers of the Company arising
from bona fide transactions entered into in the ordinary course of business,
(ii) are current and will be collected in full when due, without any
counterclaim or set off (net of an allowance for doubtful accounts not to exceed
$150,000 in the aggregate).
13.
2.8 Equipment; Leasehold.
(a) All material items of equipment and other tangible assets owned
by or leased to each of the Acquired Corporations are reasonably adequate for
the uses to which they are being put, are in good condition and repair (ordinary
wear and tear excepted).
(b) The Acquired Corporations do not own any real property or any
interest in real property, except for the leasehold created under the real
property leases identified in Part 2.10 of the Disclosure Schedule.
2.9 Proprietary Assets.
(a) Part 2.9(a)(i) of the Disclosure Schedule sets forth, with
respect to each Company Proprietary Asset registered with any Governmental Body
or for which an application has been filed with any Governmental Body, (i) a
brief description of such Proprietary Asset, and (ii) the names of the
jurisdictions covered by the applicable registration or application. Other than
unregistered trademarks, trade names and service marks (collectively, the
"Unregistered Trademarks"), Part 2.9(a)(ii) of the Disclosure Schedule
identifies and provides a brief description of all other Company Proprietary
Assets owned by the Acquired Corporations. Part 2.9(a)(ii) of the Disclosure
Schedule also discloses all Unregistered Trademarks that have been and are
currently being used by the Acquired Corporations in the ordinary course of
business. None of the Acquired Corporations have received any notice or other
communication (in writing or otherwise) of any actual, alleged, possible or
potential infringement or unlawful use of any Unregistered Trademark and to the
knowledge of the Company, the Acquired Corporations shall be entitled to use and
will continue to use such Unregistered Trademarks on and after the Closing. Part
2.9(a)(iii) of the Disclosure Schedule identifies and provides a brief
description of each Proprietary Asset licensed to any of the Acquired
Corporations by any Person (except for any Proprietary Asset that is licensed to
such Acquired Corporation under any third party software license generally
available to the public at a cost of less than $5,000), and identifies the
license agreement under which such Proprietary Asset is being licensed to such
Acquired Corporation. Other than the Unregistered Trademarks identified in Part
2.9(a)(ii) of the Disclosure Schedule, each Acquired Corporation has good, valid
and marketable title to all of the Company Proprietary Assets identified in
Parts 2.9(a)(i) and 2.9(a)(ii) of the Disclosure Schedule owned by it, free and
clear of all liens and other Encumbrances, and has a valid right to use all
Proprietary Assets identified in Part 2.9(a)(iii) of the Disclosure Schedule
owned by it. Except as set forth in Part 2.9(a)(iv), none of the Acquired
Corporations are obligated to make any payment to any Person for the use of any
Company Proprietary Asset. Except as set forth in Part 2.9(a)(v) of the
Disclosure Schedule, none of the Acquired Corporations have developed jointly
with any other Person any Company Proprietary Asset with respect to which such
other Person has any rights.
(b) Except as to the absence of registrations referenced in Part
2.9(a)(ii) of the Disclosure Schedule, each Acquired Corporation has taken all
measures and precautions reasonably necessary to protect and maintain the
confidentiality and secrecy of all Company Proprietary Assets (except Company
Proprietary Assets whose value would be unimpaired by public disclosure or
Company Proprietary Assets that are trade secrets) and otherwise to maintain
14.
and protect the value of all Company Proprietary Assets. Each Acquired
Corporation has taken all measures and precautions necessary to protect and
maintain the confidentiality and secrecy of all Company Proprietary Assets that
are trade secrets (the "Trade Secrets") and otherwise to maintain and protect
the value of all Trade Secrets. Except as set forth in Part 2.9(b) of the
Disclosure Schedule, none of the Acquired Corporations have disclosed or
delivered to any Person, or permitted the disclosure or delivery to any Person
of, (i) the source code, or any portion or aspect of the source code, of any
Company Proprietary Asset, or (ii) the object code, or any portion or aspect of
the object code, of any Company Proprietary Asset.
(c) None of the Company Proprietary Assets infringes or conflicts
with any Proprietary Asset owned or used by any other Person. Each Acquired
Corporation is not infringing, misappropriating or making any unlawful use of,
and each Acquired Corporation has not at any time infringed, misappropriated or
made any unlawful use of, or, except as set forth in Part 2.9(c) of the
Disclosure Schedule, received any notice or other communication (in writing or
otherwise) of any actual, alleged, possible or potential infringement,
misappropriation or unlawful use of, any Proprietary Asset owned or used by any
other Person. To the best knowledge of the Company, except as set forth in Part
2.9(c) of the Disclosure Schedule, no other Person is infringing,
misappropriating or making any unlawful use of, and no Proprietary Asset owned
or used by any other Person infringes or conflicts with, any Company Proprietary
Asset.
(d) Each Company Proprietary Asset conforms in all material respects
with any enforceable specification, documentation, performance standard,
representation or statement made or provided with respect thereto by or on
behalf of each Acquired Corporation; and there has not been any claim by any
customer or other Person alleging that any Company Proprietary Asset (including
each version thereof that has ever been licensed or otherwise made available by
any of the Acquired Corporations to any Person) does not conform in all material
respects with any specification, documentation, performance standard,
representation or statement made or provided by or on behalf of any of the
Acquired Corporations, and, to the best of the knowledge of the Company, there
is no basis for any such claim. Subject to Section 2.9(g) (as affected by Part
2.9(g) of the Disclosure Schedule), the Company has established adequate
reserves on the Unaudited Interim Balance Sheet to cover all costs associated
with any obligations that the Company may have with respect to the correction or
repair of programming errors or other defects in the Company Proprietary Assets.
(e) The Company Proprietary Assets constitute all the Proprietary
Assets necessary to enable each of the Acquired Corporations to conduct its
respective business in the manner in which such business has been and is being
conducted. Except as set forth in Part 2.9(e)(i) of the Disclosure Schedule,
none of the Acquired Corporations have licensed any of the Company Proprietary
Assets to any Person on an exclusive basis, and except as set forth in Part
2.9(e)(ii), none of the Acquired Corporations have entered into any covenant not
to compete or Contract limiting its ability to exploit fully any of its
Proprietary Assets or to transact business in any market or geographical area or
with any Person.
(f) Except as set forth in Part 2.9(f) of the Disclosure Schedule,
all current and former employees of each of the Acquired Corporations have
executed and delivered to the
15.
respective Acquired Corporation agreements (containing no exceptions to or
exclusions from the scope of its coverage) that is substantially the same in all
material respects as to the form of the Employee Confidentiality and Proprietary
Rights Agreement previously delivered to Parent, and all current and former
consultants and independent contractors to each of the Acquired Corporations
have executed and delivered to such respective Acquired Corporation an agreement
(containing no exceptions to or exclusions from the scope of its coverage) that
is substantially the same in all material respects as to the form of the Company
Independent Consultant Agreement previously delivered to Parent.
(g) The Company Proprietary Assets and all computer software
programs, including operating systems, application programs, software tools,
firmware and software imbedded in equipment of the Acquired Corporations,
including both object code and source code versions thereof, are Year 2000
Compliant (as defined below) in all material respects and will not cease to be
Year 2000 Compliant in all material respects at any time prior to, during or
after the calendar year 2000 AD; provided, however, that no representation or
warranty is made pursuant to this section with respect to any failure of the
Company Proprietary Assets or such software programs to perform in accordance
with the foregoing arising out of any error, failure, malfunction or incorrect
result due to third party equipment, operating system software, third party
tools, application or database software, or other third party products or
materials (in each case, whether or not sold or licensed by Company). Part
2.9(g) of the Disclosure Schedule describes the steps that the Company has
taken, and plans to take, in the review of its computer equipment and software
applications used in its internal business operations (but not the operations of
any other Person), with respect to the inability of its computerized systems to
recognize and properly perform date-sensitive functions (the "Year 2000
Problem"). The Company has and is continuing to address the impact of the Year
2000 Problem on the Company Proprietary Assets and its internal business
computer systems and software applications.
As used herein, the term "Year 2000 Compliant" means that neither the
performance nor the functionality of any applicable product is or will be
affected by dates prior to, during or after the calendar year 2000 AD and in
particular (but without limitation):
(i) such product accurately receives, provides and processes,
and will accurately receive, provide and process, date/time data (including
calculating, comparing and sequencing) from, into and between the twentieth and
twenty-first centuries and including calendar years 1999 and 2000;
(ii) such product will not malfunction, cease to function,
provide invalid or incorrect results or cause any interruption in the operation
of the business of Target or its Subsidiaries as a result of any date/time data;
(iii) date-based functionality of such product behaves and will
continue to behave consistently for dates prior to, during and after the year
2000;
(iv) in all interfaces and data storage of such product, the
century in any date is and will be specified either explicitly or by unambiguous
algorithms or inferencing rules; and
16.
(v) the year 2000 is and will be recognized as a leap year of
such product.
(h) Except with respect to demonstration or trial copies, no product,
system, program or software module designed, developed, sold, licensed or
otherwise made available by any of the Acquired Corporations to any Person
contains any "back door," "time bomb," "Trojan horse," "worm," "drop dead
device," "virus" or other software routines or hardware components designed to
permit unauthorized access or to disable or erase software, hardware or data
without the consent of the user.
2.10 Contracts.
(a) Part 2.10 of the Disclosure Schedule identifies:
(i) each Acquired Corporation Contract relating to the
employment of, or the performance of services by, any employee, consultant or
independent contractor; any Acquired Corporation Contract pursuant to which any
of the Acquired Corporations is or may become obligated to make any severance,
termination or similar payment to any current or former employee or director;
and any Acquired Corporation Contract pursuant to which any of the Acquired
Corporations is or may become obligated to make any bonus or similar payment
(other than payment in respect of salary) in excess of $2,000 to any current or
former employee or director;
(ii) each Acquired Corporation Contract relating to the voting
and any other rights or obligations of a stockholder of any of the Acquired
Corporations, including, without limitation, the Registration Rights Agreement
dated March 30, 1999 by and among the Company and the parties listed on Schedule
I thereto (the "Prior Registration Rights Agreement");
(iii) each Acquired Corporation Contract relating to the merger,
consolidation, reorganization or any similar transaction with respect to any of
the Acquired Corporations;
(iv) each Acquired Corporation Contract relating to the
acquisition, transfer, use, development, sharing or license of any technology or
any material Proprietary Asset;
(v) each Acquired Corporation Contract creating or relating to
any partnership or joint venture or any sharing of revenues, profits, losses,
costs or liabilities;
(vi) each Acquired Corporation Contract relating to the license
of any patent, copyright, trade secret or other Proprietary Asset to or from any
of the Acquired Corporations other than non-exclusive licenses of software by an
Acquired Corporation to its customers in the ordinary course of business and
consistent with past practices of the Acquired Corporation;
17.
(vii) each Acquired Corporation Contract imposing any
restriction on any of the Acquired Corporations (A) to compete with any other
Person, (B) to acquire any product or other asset or any services from any other
Person, to sell any product or other asset to or perform any services for any
other Person or to transact business or deal in any other manner with any other
Person, or (C) develop or distribute any technology;
(viii) each Acquired Corporation Contract creating or involving
any agency relationship, distribution arrangement or franchise relationship;
(ix) each Acquired Corporation Contract regarding the
acquisition, issuance or transfer of any securities and each Acquired
Corporation Contract affecting or dealing with any securities of any of the
Acquired Corporations including, without limitation, any restricted stock
agreements or escrow agreements;
(x) each Acquired Corporation Contract which provides for
indemnification of any officer, director, employee or agent;
(xi) each Acquired Corporation Contract relating to the
creation of any Encumbrance with respect to any material asset of any of the
Acquired Corporations;
(xii) each Acquired Corporation Contract involving or
incorporating any loan, guaranty, any pledge, any performance or completion
bond, any indemnity or any surety arrangement;
(xiii) each Acquired Corporation Contract related to or
regarding the performance of consulting, advisory or other services or work of
any type to any third party;
(xiv) each Acquired Corporation Contract relating to the
purchase or sale of any product or other asset by or to, or the performance of
any services by or for, any Related Party (as defined in Section 2.18);
(xv) each Acquired Corporation Contract constituting or
relating to a Government Contract or Government Bid;
(xvi) any other Acquired Corporation Contract that was entered
into outside the ordinary course of business or was inconsistent with any
Acquired Corporation's past practices;
(xvii) any other Acquired Corporation Contract that has a term
of more than 60 days and that may not be terminated by the respective Acquired
Corporation (without penalty) within 60 days after the delivery of a termination
notice by such Acquired Corporation; and
(xviii) any other Acquired Corporation Contract that
contemplates or involves (A) the payment or delivery of cash or other
consideration in an amount or having a value in excess of $50,000 in the
aggregate, or (B) the performance of services having a value in excess of
$50,000 in the aggregate.
18.
(Contracts in the respective categories described in clauses "(i)" through
"(xviii)" above are referred to in this Agreement as "Material Contracts.")
(b) The Company has delivered or made available to Parent accurate
and complete copies of all Material Contracts identified in Part 2.10 of the
Disclosure Schedule, including all amendments thereto. Part 2.10 of the
Disclosure Schedule provides an accurate description of the terms of each
Acquired Corporation Contract that is not in written form. Each Contract
identified in Part 2.10 of the Disclosure Schedule is valid and in full force
and effect, and, to the best of the knowledge of the Company, is enforceable by
the respective Acquired Corporation in accordance with its terms, subject to (i)
laws of general application relating to bankruptcy, insolvency and the relief of
debtors, and (ii) rules of law governing specific performance, injunctive relief
and other equitable remedies.
(c) Except as set forth in Part 2.10 of the Disclosure Schedule:
(i) none of the Acquired Corporations has violated or breached
in any material respect, or committed any material default under, any Acquired
Corporation Contract to which it is a party, which remains uncured, and, to the
best of the knowledge of the Company, no other Person has violated or breached,
or committed any default under, any Acquired Corporation Contract which remains
uncured;
(ii) to the best of the knowledge of the Company, no event has
occurred, and no circumstance or condition exists, that (with or without notice
or lapse of time) will, or could reasonably be expected to, (A) result in a
violation or breach of any of the provisions of any Acquired Corporation
Contract, (B) give any Person the right to declare a default or exercise any
remedy under any Acquired Corporation Contract, (C) give any Person the right to
accelerate the maturity or performance of any Acquired Corporation Contract, or
(D) give any Person the right to cancel, terminate or modify any Acquired
Corporation Contract;
(iii) since January 1, 1997, the Company has not received any
notice or other communication regarding any actual or possible violation or
breach of, or default under, any Acquired Corporation Contract; and
(iv) to the knowledge of the Company, none of the Acquired
Corporations has waived any of its respective material rights under any Material
Contract.
(d) No Person is actively renegotiating, or has a contractual right
pursuant to the terms of any Acquired Corporation Contract to renegotiate, any
amount paid or payable in excess of $50,000, to the respective Acquired
Corporation under any Material Contract or any other material term or provision
of any Material Contract.
(e) The Contracts identified in Part 2.10 of the Disclosure Schedule
collectively constitute all of the Contracts necessary to enable each of the
Acquired Corporations to conduct its business in the manner in which its
business is currently being conducted.
19.
2.11 Liabilities. None of the Acquired Corporations has any accrued,
contingent or other liabilities of any nature, either matured or unmatured
(whether or not required to be reflected in financial statements in accordance
with generally accepted accounting principles, and whether due or to become
due), except for: (a) liabilities identified as such in the "liabilities" column
of the Unaudited Interim Balance Sheet; (b) accounts payable or accrued salaries
that have been incurred by each Acquired Corporation since December 31, 1999 in
the ordinary course of business and consistent with such Acquired Corporation's
past practices; (c) liabilities under the Acquired Corporation Contracts
identified in Part 2.10 of the Disclosure Schedule that are expressly set forth
and identifiable by reference to the text of such Acquired Corporation
Contracts; and (d) the liabilities identified in Part 2.11 of the Disclosure
Schedule.
2.12 Compliance with Legal Requirements. Each of the Acquired Corporations
is, and has at all times since January 1, 1997 been, in compliance with all
applicable Legal Requirements, except where the failure to comply with such
Legal Requirements has not had and could not reasonably be expected to have a
Material Adverse Effect on such Acquired Corporation. Since January 1, 1997,
none of the Acquired Corporations has received any written notice or written
communication from any Governmental Body regarding any actual or possible
violation of, or failure to comply with, any Legal Requirement.
2.13 Governmental Authorizations. Part 2.13 of the Disclosure Schedule
identifies each material Governmental Authorization held by the Acquired
Corporations, and the Company has delivered or made available to Parent accurate
and complete copies of all Governmental Authorizations identified in Part 2.13
of the Disclosure Schedule. The Governmental Authorizations identified in Part
2.13 of the Disclosure Schedule are valid and in full force and effect, and
collectively constitute all Governmental Authorizations necessary to enable the
respective Acquired Corporation to conduct its business in the manner in which
its business is currently being conducted. Each Acquired Corporation is, and at
all times since December 31, 1997 has been, in substantial compliance with the
terms and requirements of the respective Governmental Authorizations identified
in Part 2.13 of the Disclosure Schedule. Since December 31, 1997, each Acquired
Corporation has not received any notice or other communication from any
Governmental Body regarding (a) any actual or possible violation of or failure
to comply with any term or requirement of any Governmental Authorization, or (b)
any actual or possible revocation, withdrawal, suspension, cancellation,
termination or modification of any Governmental Authorization.
2.14 Tax Matters.
(a) Except as set forth in Part 2.14(a) of the Disclosure Schedule,
all Tax Returns required to be filed by or on behalf of the Acquired
Corporations with any Governmental Body with respect to any taxable period
ending on or before the Closing Date (the "Company Returns") (i) have been or
will be filed on or before the applicable due date (including any extensions of
such due date), and (ii) have been, or will be when filed, accurately and
completely prepared in compliance with all applicable Legal Requirements. All
amounts shown on the Company Returns to be due on or before the Closing Date
have been or will be paid on or before the Closing Date. The Company has
delivered to Parent accurate and complete copies of all Company Returns filed
since December 31, 1997.
20.
(b) The Company Financial Statements fully accrue all actual and
contingent liabilities for Taxes with respect to all periods through the dates
thereof in accordance with generally accepted accounting principles. The Company
will establish, in the ordinary course of business and consistent with its past
practices, reserves adequate for the payment of all Taxes for the period from
January 1, 2000 through the Closing Date, and the Company will disclose the
dollar amount of such reserves to Parent on or prior to the Closing Date. All
Taxes incurred since the date of the Unaudited Interim Balance Sheet have been
incurred in the ordinary course of business.
(c) Except as set forth in Part 2.14(c) of the Disclosure Schedule,
no Company Return relating to Taxes has ever been examined or audited by any
Governmental Body. There have been no examinations or audits of any Company
Return. No extension or waiver of the limitation period applicable to any of the
Company Returns has been granted (by any of the Acquired Corporation or any
other Person), and no such extension or waiver has been requested from any of
the Acquired Corporations.
(d) No claim or Proceeding is pending or to the best of the knowledge
of the Company, has been threatened against or with respect to any of the
Acquired Corporations in respect of any Tax. There are no unsatisfied
liabilities for Taxes (including liabilities for interest, additions to tax and
penalties thereon and related expenses) with respect to any notice of deficiency
or similar document received by any of the Acquired Corporations with respect to
any Tax (other than liabilities for Taxes asserted under any such notice of
deficiency or similar document which are being contested in good faith by the
respective Acquired Corporations and with respect to which adequate reserves for
payment have been established). There are no liens for Taxes upon any of the
assets of each of the Acquired Corporations except liens for current Taxes not
yet due and payable. None of the Acquired Corporations have entered into or
become bound by any agreement or consent pursuant to Section 341(f) of the Code.
Except as set forth in Part 2.14(d) of the Disclosure Schedule, none of the
Acquired Corporations have been, and none of the Acquired Corporations will be,
required to include any adjustment in taxable income for any tax period (or
portion thereof) pursuant to Section 481 or 263A of the Code or any comparable
provision under state or foreign Tax laws as a result of transactions or events
occurring, or accounting methods employed, prior to the Closing.
(e) There is no agreement, plan, arrangement or other Contract
covering any employee or independent contractor or former employee or
independent contractor of any of the Acquired Corporations that, considered
individually or considered collectively with any other such Contracts, will, or
could reasonably be expected to, give rise directly or indirectly to the payment
of any amount that would not be deductible pursuant to Section 280G or Section
162 of the Code. None of the Acquired Corporations is, or has been, a party to
or bound by any tax indemnity agreement, tax-sharing agreement, tax allocation
agreement or similar Contract.
(f) The Acquired Corporations have no liability for any Tax pursuant
to Treasury Regulations Section 1.1502-6 or any analogous state, local or
foreign law or regulation or by reason of having been a member of any
consolidated, combined or unitary group on or before the Closing Date.
21.
2.15 Employee and Labor Matters; Benefit Plans.
(a) Part 2.15(a) of the Disclosure Schedule identifies each salary,
bonus, deferred compensation, incentive compensation, stock purchase, stock
option, severance pay, termination pay, hospitalization, medical, life or other
insurance, supplemental unemployment benefits, profit-sharing, pension or
retirement plan, program or agreement (collectively, the "Plans") sponsored,
maintained, contributed to or required to be contributed to by each Acquired
Corporation for the benefit of any employee of the respective Acquired
Corporation ("Employee"), except for Plans which would not require the
respective Acquired Corporation to make payments or provide benefits having a
value in excess of $50,000 in the aggregate.
(b) Except as set forth in Part 2.15(b) of the Disclosure Schedule,
each Acquired Corporation does not maintain, sponsor or contribute to, and, to
the best of the knowledge of the Company, has not at any time in the past
maintained, sponsored or contributed to, any employee pension benefit plan (as
defined in Section 3(2) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), whether or not excluded from coverage under specific
Titles or Merger Subtitles of ERISA) for the benefit of Employees or former
Employees (a "Pension Plan").
(c) Each of the Acquired Corporations maintains, sponsors or
contributes only to those employee welfare benefit plans (as defined in Section
3(1) of ERISA, whether or not excluded from coverage under specific Titles or
Merger Subtitles of ERISA) for the benefit of Employees or former Employees
which are described in Part 2.15(c) of the Disclosure Schedule (the "Welfare
Plans"), none of which is a multiemployer plan (within the meaning of Section
3(37) of ERISA).
(d) With respect to each Plan, the Company has delivered or made
available to Parent:
(i) an accurate and complete copy of such Plan (including all
amendments thereto);
(ii) an accurate and complete copy of the annual report, if
required under ERISA, with respect to such Plan for the last two years;
(iii) an accurate and complete copy of the most recent summary
plan description, together with each Summary of Material Modifications, if
required under ERISA, with respect to such Plan, and all material employee
communications relating to such Plan;
(iv) if such Plan is funded through a trust or any third party
funding vehicle, an accurate and complete copy of the trust or other funding
agreement (including all amendments thereto) and accurate and complete copies
the most recent financial statements thereof;
(v) accurate and complete copies of all material Contracts
relating to such Plan, including service provider agreements, insurance
contracts, minimum premium
22.
contracts, stop-loss agreements, investment management agreements, subscription
and participation agreements and recordkeeping agreements; and
(vi) an accurate and complete copy of the most recent
determination letter received from the Internal Revenue Service with respect to
such Plan (if such Plan is intended to be qualified under Section 401(a) of the
Code).
(e) Except as set forth in Part 2.15(e) of the Disclosure Schedule,
(i) none of the Acquired Corporations is required to be, and, to the best of the
knowledge of the Company, has ever been required to be, treated as a single
employer with any other Person under Section 4001(b)(1) of ERISA or Section
414(b), (c), (m) or (o) of the Code, and (ii) none of the Acquired Corporations
has been a member of an "affiliated service group" within the meaning of Section
414(m) of the Code. To the best of the knowledge of the Company, none of the
Acquired Corporations has made a complete or partial withdrawal from a
multiemployer plan, as such term is defined in Section 3(37) of ERISA, resulting
in "withdrawal liability," as such term is defined in Section 4201 of ERISA
(without regard to subsequent reduction or waiver of such liability under either
Section 4207 or 4208 of ERISA).
(f) None of the Acquired Corporations has any plan or commitment to
create any additional Welfare Plan or any Pension Plan, or to modify or change
any existing Welfare Plan or Pension Plan (other than to comply with applicable
law or for administrative changes) in a manner that would materially affect any
Employee.
(g) Except as set forth in Part 2.15(g) of the Disclosure Schedule,
no Welfare Plan provides death, medical or health benefits (whether or not
insured) with respect to any current or former Employee after any such
Employee's termination of service (other than (i) benefit coverage mandated by
applicable law, including coverage provided pursuant to Section 4980B of the
Code, (ii) deferred compensation benefits accrued as liabilities on the
Unaudited Interim Balance Sheet, and (iii) benefits the full cost of which are
borne by current or former Employees (or the Employees' beneficiaries)).
(h) With respect to each of the Welfare Plans constituting a group
health plan within the meaning of Section 4980B(g)(2) of the Code, the
provisions of Section 4980B of the Code ("COBRA") have been complied with in all
material respects.
(i) Each of the Plans has been operated and administered in all
material respects in accordance with applicable Legal Requirements, including
but not limited to ERISA and the Code.
(j) Each of the Plans intended to be qualified under Section 401(a)
of the Code has received a favorable determination from the Internal Revenue
Service, and the Company is not aware of any reason why any such determination
letter should be revoked.
(k) Except as disclosed in Part 2.15(k) of the Disclosure Schedule,
neither the execution, delivery or performance of this Agreement, nor the
consummation of the Merger or any of the other transactions contemplated by this
Agreement, will result in any payment
23.
(including any bonus, golden parachute or severance payment) to any current or
former Employee or director of any of the Acquired Corporations (whether or not
under any Plan), or materially increase the benefits payable under any Plan, or
result in any acceleration of the time of payment or vesting of any such
benefits.
(l) Part 2.15(l) of the Disclosure Schedule contains a list of all
salaried employees of the Company as of the date of this Agreement, and
correctly reflects, in all material respects, their salaries, any other
compensation payable to them (including compensation payable pursuant to bonus,
deferred compensation or commission arrangements), their dates of employment and
their positions. The Company is not a party to any collective bargaining
contract or other Contract with a labor union involving any of its Employees.
Except as set forth in Part 2.15(l) of the Disclosure Schedule, all of the
Company's employees are "at will" employees.
(m) To the best of knowledge of the Company, Part 2.15(m) of the
Disclosure Schedule identifies each Employee who is not fully available to
perform work because of disability or other leave and sets forth the basis of
such leave and the anticipated date of return to full service.
(n) Each Acquired Corporation is in compliance in all material
respects with all applicable Legal Requirements and Contracts relating to
employment, employment practices, wages, bonuses and terms and conditions of
employment, including employee compensation matters.
(o) Each of the Acquired Corporations has satisfactory labor
relations and to the knowledge of the Company: (i) the consummation of the
Merger or any of the other transactions contemplated by this Agreement will not
have a material adverse effect on the labor relations of any of the Acquired
Corporations, and (ii) none of the Company's employees intends to terminate his
or her employment with the Company within 60 days of the Closing.
2.16 Environmental Matters. Each of the Acquired Corporations is in
compliance in all material respects with all applicable Environmental Laws,
which compliance includes the possession by each respective Acquired Corporation
of all permits and other Governmental Authorizations required under applicable
Environmental Laws, and compliance with the terms and conditions thereof. None
of the Acquired Corporations has received any written notice or written
communication, whether from a Governmental Body, citizens group, employee or
otherwise, that alleges that such Acquired Corporation is not in compliance with
any Environmental Law, and, to the best of the knowledge of the Company, there
are no circumstances that could reasonably be expected to prevent or interfere
with such Acquired Corporation's compliance in all material respects with any
Environmental Law in the future. To the best of the knowledge of the Company,
no current or prior owner of any property leased or controlled by each of the
Acquired Corporations has received any written notice or written communication,
whether from a Government Body, citizens group, employee or otherwise, that
alleges that such current or prior owner or such Acquired Corporation is not in
compliance with any Environmental Law. All Governmental Authorizations
currently held by each of the Acquired Corporations pursuant to Environmental
Laws are identified in Part 2.16 of the
24.
Disclosure Schedule. (For purposes of this Section 2.16: (i) "Environmental Law"
means any federal, state, local or foreign Legal Requirement relating to
pollution or protection of human health or the environment (including ambient
air, surface water, ground water, land surface or subsurface strata), including
any law or regulation relating to emissions, discharges, releases or threatened
releases of Materials of Environmental Concern, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Materials of Environmental Concern.); and (ii)
"Materials of Environmental Concern" means chemicals, pollutants, contaminants,
wastes, toxic substances, petroleum and petroleum products and any other
substance that is now or hereafter regulated by any Environmental Law or that is
otherwise a danger to health, reproduction or the environment.)
2.17 Insurance. Part 2.17 of the Disclosure Schedule identifies all
insurance policies maintained by, at the expense of or for the benefit of each
of the Acquired Corporations and identifies any material claims made thereunder,
and the Company has delivered to Parent accurate and complete copies of the
insurance policies identified on Part 2.17 of the Disclosure Schedule. Each of
the insurance policies identified in Part 2.17 of the Disclosure Schedule is in
full force and effect. Since December 31, 1997, none of the Acquired
Corporations has received any notice or other communication regarding any actual
or possible (a) cancellation or invalidation of any insurance policy, (b)
refusal of any coverage or rejection of any claim under any insurance policy, or
(c) material adjustment in the amount of the premiums payable with respect to
any insurance policy.
2.18 Related Party Transactions. Except as set forth in Part 2.18 of the
Disclosure Schedule, since January 1, 1997: (a) No Related Party has, and no
Related Party has had, any direct or indirect interest in any material asset
used in or otherwise relating to the business of any of the Acquired
Corporations; (b) no Related Party is, or has been, indebted to any of the
Acquired Corporations; (c) to the Knowledge of the Company, no Related Party has
entered into, or has had any direct or indirect financial interest in, any
material Contract, transaction or business dealing or involving any of the
Acquired Corporations; (d) to the Knowledge of the Company, no Related Party is
competing, or has at any time competed, directly or indirectly, with any of the
Acquired Corporations; and (e) no Related Party has any claim or right against
any of the Acquired Corporations (other than rights under Company Options and
rights to receive compensation for services performed as an employee of the
respective Acquired Corporation). (For purposes of the Section 2.18 each of the
following shall be deemed to be a "Related Party": (i) each stockholder of each
of the Acquired Corporations; (ii) each individual who is, or who has at any
time since inception been, an officer of any of the Acquired Corporations; (iii)
each member of the immediate family of each of the individuals referred to in
clauses "(i)" and "(ii)" above; and (iv) any trust or other Entity (other than
the Company) in which any one of the individuals referred to in clauses "(i)",
"(ii)" and "(iii)" above holds (or in which more than one of such individuals
collectively hold), beneficially or otherwise, a material voting, proprietary or
equity interest.)
2.19 Legal Proceedings; Orders.
(a) Except as set forth in Part 2.19(a), there is no pending Legal
Proceeding, and (to the best of the knowledge of the Company) no Person has
threatened in writing to
25.
commence any Legal Proceeding: (i) that involves any of the Acquired
Corporations or any of the assets owned or used by any of the Acquired
Corporations or any Person whose liability any of the Acquired Corporations has
or may have retained or assumed, either contractually or by operation of law; or
(ii) that challenges, or that may have the effect of preventing, delaying,
making illegal or otherwise interfering with, the Merger or any of the other
transactions contemplated by this Agreement. To the best of the knowledge of the
Company, no event has occurred, and no claim, dispute or other condition or
circumstance exists, that could reasonably be expected to, give rise to or serve
as a basis for the commencement of any such Legal Proceeding.
(b) Except as set forth in Part 2.19(b) of the Disclosure Schedule,
since January 1, 1997, no Legal Proceeding has been commenced by or has ever
been pending against any of the Acquired Corporations.
(c) There is no order, writ, injunction, judgment or decree to which
any of the Acquired Corporations, or any of the assets owned or used by each
Acquired Corporation, is subject. To the best of the knowledge of the Company,
no officer or other employee of any of the Acquired Corporations is subject to
any order, writ, injunction, judgment or decree that prohibits such officer or
other employee from engaging in or continuing any conduct, activity or practice
relating to the respective Acquired Corporation's business.
2.20 Authority; Binding Nature of Agreement; Inapplicability of Anti-
takeover Statutes.
(a) The Company has the absolute and unrestricted right, power and
authority to enter into and to perform its obligations under this Agreement; and
the execution, delivery and performance by the Company of this Agreement have
been duly authorized by all necessary action on the part of the Company and its
board of directors. This Agreement constitutes the legal, valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms, subject to (i) laws of general application relating to bankruptcy,
insolvency and the relief of debtors, and (ii) rules of law governing specific
performance, injunctive relief and other equitable remedies.
(b) The Company's board of directors has (i) unanimously determined
that the Merger is advisable and fair and in the best interests of the Company
and its stockholders, (ii) unanimously recommended the approval and adoption of
this Agreement by the holders of Company Stock and directed that this Agreement
and the Merger be submitted for consideration by the Company's stockholders in
accordance with Section 5.2, and (iii) to the extent necessary, adopted a
resolution having the effect of causing the Company not to be subject to any
state takeover law or similar Legal Requirement that might otherwise apply to
the Merger or any of the other transactions contemplated by this Agreement.
(c) Prior to the execution of the Voting Agreements and Irrevocable
Proxies with the Key Stockholders, the Company's board of directors approved
such Voting Agreements and Irrevocable Proxies and the transactions contemplated
thereby. No state takeover statute or
26.
similar Legal Requirement applies or purports to apply to the Merger, this
Agreement or any of the transactions contemplated hereby.
2.21 Non-Contravention; Consents. Except as set forth in Part 2.21 of the
Disclosure Schedule, neither (1) the execution, delivery or performance of this
Agreement or any of the other agreements referred to in this Agreement, nor (2)
the consummation of the Merger or any of the other transactions contemplated by
this Agreement, will directly or indirectly (with or without notice or lapse of
time):
(a) contravene, conflict with or result in a violation of (i) any of
the provisions of each Acquired Corporation's respective certificate of
incorporation or bylaws, or (ii) any resolution adopted by such Acquired
Corporation's stockholders, board of directors or any committee of such Acquired
Corporation's board of directors;
(b) contravene, conflict with or result in a violation of, or give
any Governmental Body or other Person the right to challenge any of the
transactions contemplated by this Agreement or to exercise any remedy or obtain
any relief under, any Legal Requirement or any order, writ, injunction, judgment
or decree to which any of the Acquired Corporations, or any of the assets owned
or used by any of the Acquired Corporations, is subject;
(c) contravene, conflict with or result in a violation of any of the
terms or requirements of, or give any Governmental Body the right to revoke,
withdraw, suspend, cancel, terminate or modify, any Governmental Authorization
that is held by any Acquired Corporation or that otherwise relates to such
Acquired Corporation's business or to any of the assets owned or used by such
Acquired Corporation;
(d) contravene, conflict with or result in a violation or breach of,
or result in a default under, any provision of any Acquired Corporation Contract
that is or would constitute a Material Contract, or give any Person the right to
(i) declare a default or exercise any remedy under any such Acquired Corporation
Contract, (ii) accelerate the maturity or performance of any such Acquired
Corporation Contract, or (iii) cancel, terminate or modify any such Acquired
Corporation Contract; or
(e) result in the imposition or creation of any lien or other
Encumbrance upon or with respect to any asset owned or used by each Acquired
Corporation (except for minor liens that will not, in any case or in the
aggregate, materially detract from the value of the assets subject thereto or
materially impair the operations of any of the Acquired Corporations).
Except as may be required by the DGCL or the HSR Act, the Company is not and or
will not be required to make any filing with or give any notice to, or to obtain
any Consent from, any Governmental Body or any industry regulatory body in
connection with (x) the execution, delivery or performance of this Agreement or
any of the other agreements referred to in this Agreement, or (y) the
consummation of the Merger or any of the other transactions contemplated by this
Agreement.
27.
2.22 Vote Required. The affirmative vote of the holders of a majority of
the Company Stock, voting as a single class, outstanding on the record date for
the Company's stockholders' meeting (or the written consent in lieu thereof) is
the only vote of the holders of any class or series of the Company's capital
stock necessary to adopt this Agreement and approve the Merger and the other
transactions contemplated by this Agreement.
2.23 Full Disclosure. This Agreement (including the Disclosure Schedule)
does not, and the Company Closing Certificate will not, (i) contain any
representation, warranty or information that is false or misleading with respect
to any material fact, or (ii) omit to state any material fact necessary in order
to make the representations, warranties and information contained and to be
contained herein and therein (in the light of the circumstances under which such
representations, warranties and information were or will be made or provided)
not false or misleading.
2.24 Brokers. No broker, finder or investment banker (other than Xxxxxxx,
Xxxxx & Co.) is entitled to any brokerage, finder's or other fee or commission
in connection with the Merger or the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of the Company. The Company has
heretofore furnished to Parent a complete and correct copy of all agreements
between the Company and Xxxxxxx, Sachs & Co. pursuant to which such firms would
be entitled to any payment relating to the Merger or the transactions
contemplated by this Agreement.
3. Certain Covenants of the Company
3.1 Access and Investigation. During the period from the date of this
Agreement and continuing until the earlier of the termination of this Agreement
pursuant to Section 8 or the Effective Time (the "Pre-Closing Period"), each of
the Acquired Corporations shall, and shall cause its Representatives to: (a)
provide Parent and Parent's Representatives with reasonable access to the
Acquired Corporations' Representatives, personnel and assets and to all existing
books, records, Tax Returns, work papers and other documents and information
relating to the Acquired Corporations; and (b) provide Parent and Parent's
Representatives with copies of such existing books, records, Tax Returns, work
papers and other documents and information relating to each of the Acquired
Corporations, and with such additional financial, operating and other data and
information regarding each of the Acquired Corporations, as Parent may
reasonably request; provided, however, none of the Acquired Corporations shall
be required to furnish any attorney-client privileged documents or information.
During the Pre-Closing Period, Parent and its Representatives will hold any such
information that is confidential to any of the Acquired Corporations in
accordance with the terms of the letter agreement, dated March 17, 2000, between
the Company and Parent.
3.2 Operation of the Company's Business. Unless the Company obtains the
prior written consent of Parent (which consent shall not be unreasonably
withheld), during the Pre-Closing Period:
28.
(a) each Acquired Corporation shall conduct its business and
operations in the ordinary course and in substantially the same manner as such
business and operations have been conducted prior to the date of this Agreement;
(b) each Acquired Corporation shall use reasonable efforts to
preserve intact its current business organization, keep available the services
of its current officers and employees and maintain its relations and good will
with all suppliers, customers, landlords, creditors, employees and other Persons
having business relationships with such Acquired Corporation;
(c) none of the Acquired Corporations shall cancel any of its
respective insurance policies identified in Part 2.17 of the Disclosure
Schedule;
(d) the Company shall cause its Chief Executive Officer to report
regularly (but in no event less frequently than weekly) to the President of
Parent concerning the status of the Company's business;
(e) except for the distributions set forth in Part 3.2(e) of the
Disclosure Schedule, none of the Acquired Corporations shall declare, accrue,
set aside or pay any dividend or make any other distribution in respect of any
shares of capital stock, nor repurchase, redeem or otherwise reacquire any
shares of capital stock or other securities;
(f) none of the Acquired Corporations shall sell, issue or authorize
the issuance of (i) any capital stock or other security, (ii) any option or
right to acquire any capital stock or other security, or (iii) any instrument
convertible into or exchangeable for any capital stock or other security (except
that the Company shall be permitted to issue Company Common Stock to employees
upon the exercise of outstanding Company Options);
(g) the Company shall not amend or waive any of its rights under, or
permit the acceleration of vesting under, (i) any provision of its 1998 Stock
Option Plan, or (ii) any provision of any agreement evidencing any outstanding
Company Option;
(h) none of the Acquired Corporations shall amend or permit the
adoption of any amendment to such Acquired Corporation's certificate of
incorporation or bylaws, or effect or permit such Acquired Corporation to become
a party to any Acquisition Transaction, recapitalization, reclassification of
shares, stock split, reverse stock split or similar transaction;
(i) none of the Acquired Corporations shall form any subsidiary or
acquire any equity interest or other interest in any other Entity;
(j) none of the Acquired Corporations shall make any capital
expenditure, except for capital expenditures that, when added to all other
capital expenditures made on behalf of such Acquired Corporation during the Pre-
Closing Period, do not exceed $50,000 per month;
(k) none of the Acquired Corporations shall (i) enter into, or permit
any of the assets owned or used by it to become bound by, any Contract that is
or would constitute a Material Contract, or (ii) amend or prematurely terminate,
or waive any material right or remedy under, any such Material Contract;
29.
(l) other than within the ordinary course of business and consistent
with past practices, none of the Acquired Corporations shall (i) acquire, lease
or license any right or other asset from any other Person, (ii) sell or
otherwise dispose of, or lease or license, any right or other asset to any other
Person, or (iii) waive or relinquish any right, except for assets acquired,
leased, licensed or disposed of by such Acquired Corporation pursuant to
Contracts that are not Material Contracts;
(m) none of the Acquired Corporations shall (i) lend money to any
Person (except that each Acquired Corporation may make routine travel advances
to employees in the ordinary course of business), or (ii) incur or guarantee any
indebtedness for borrowed money;
(n) none of the Acquired Corporations shall (i) establish, adopt or
amend any Employee Benefit Plan (other than amendments adopted solely to comply
with applicable tax qualifications requirements under the Code and which do not
materially increase any of the Acquired Corporation's cost of maintaining such
plans), (ii) make any individual payment in excess of $2,000 in order to: (X)
pay any bonus or make any profit-sharing payment, cash incentive payment or
similar payment to, or (Y) increase the amount of the wages, salary,
commissions, fringe benefits or other compensation or remuneration payable to,
any of its directors, officers or employees, or (iii) hire any new employee
whose aggregate annual compensation is expected to exceed $100,000;
(o) none of the Acquired Corporations shall change any of its methods
of accounting or accounting practices in any material respect;
(p) none of the Acquired Corporations shall make any Tax election;
(q) none of the Acquired Corporations shall commence or settle any
material Legal Proceeding;
(r) none of the Acquired Corporation shall agree or commit to take
any of the actions described in clauses "(e)" through "(q)" above.
3.3 Notification; Updates to Disclosure Schedule.
(a) During the Pre-Closing Period, the Company shall promptly notify
Parent in writing of:
(i) the discovery by any of the Acquired Corporations of any
event, condition, fact or circumstance that occurred or existed on or prior to
the date of this Agreement and that caused or constitutes an inaccuracy in or
breach of any representation or warranty made by the Company in this Agreement;
(ii) any event, condition, fact or circumstance that occurs,
arises or exists after the date of this Agreement and that would cause or
constitute an inaccuracy in or breach of any representation or warranty made by
the Company in this Agreement if (A) such representation or warranty had been
made as of the time of the occurrence, existence or discovery
30.
of such event, condition, fact or circumstance, or (B) such event, condition,
fact or circumstance had occurred, arisen or existed on or prior to the date of
this Agreement;
(iii) any material breach of any covenant or obligation of any
of the Acquired Corporations; and
(iv) any event, condition, fact or circumstance that would make
the timely satisfaction of any of the conditions set forth in Section 6 or
Section 7 impossible or unlikely.
(b) If any event, condition, fact or circumstance that is required to
be disclosed pursuant to Section 3.3(a) requires any change in the Disclosure
Schedule, or if any such event, condition, fact or circumstance would require
such a change assuming the Disclosure Schedule were dated as of the date of the
occurrence, existence or discovery of such event, condition, fact or
circumstance, then the Company shall promptly deliver to Parent an update to the
Disclosure Schedule specifying such change. Except as set forth in Sections
9.2(a)(i) and (ii), no such update shall be deemed to supplement or amend the
Disclosure Schedule for the purpose of (i) determining the accuracy of any of
the representations and warranties made by the Company in this Agreement, or
(ii) determining whether any of the conditions set forth in Section 6 has been
satisfied.
3.4 No Negotiation. During the Pre-Closing Period, none of the Acquired
Corporations shall, directly or indirectly:
(a) solicit or encourage the initiation of any inquiry, proposal or
offer from any Person (other than Parent) relating to a possible Acquisition
Transaction;
(b) participate in any discussions or negotiations or enter into any
agreement with, or provide any non-public information to, any Person (other than
Parent) relating to or in connection with a possible Acquisition Transaction; or
(c) consider, entertain or accept any proposal or offer from any
Person (other than Parent) relating to a possible Acquisition Transaction.
The Company shall promptly notify Parent in writing of any material inquiry,
proposal or offer relating to a possible Acquisition Transaction that is
received by any of the Acquired Corporations during the Pre-Closing Period.
3.5 Release of Security. Prior to the Closing Date, the Company shall
take or shall cause to be taken all actions as shall be necessary or advisable
in order to ensure any Encumbrances held by any Person with respect to any
capital stock or securities of any of the Acquired Corporations are fully
discharged. In the event such Encumbrances cannot be discharged without
repayment of any loan or advance made to an Acquired Corporation by any Person,
the Company shall pay or shall cause to be paid in full any loans, advances or
other amounts owing to any Person.
31.
3.6 Termination of 401(k) Plan. To the extent requested by Parent, the
Company shall ensure that its Profit Sharing/401(k) Plan (the "401(k) Plan")
shall be terminated immediately prior to the Effective Time. The parties agree
that a determination letter shall be filed with the Internal Revenue Service
with respect to the termination of the 401(k) Plan after the Closing Date.
3.7 Termination of Letter of Intent between the Company and Bidder's Edge,
Inc. To the extent requested by Parent, the Company shall ensure that the
Letter of Intent between the Company and Bidder's Edge, Inc. dated February 7,
2000 (the "Letter of Intent") shall be terminated immediately prior to the
Effective Time
3.8 Termination of Pledge Agreement among the Company, Xxx X. Xxxx and
Gross, Shuman, Brizdle & Gilgillan, P.C. To the extent requested by Parent, the
Company shall ensure that the Pledge Agreement among the Company, Xxx X. Xxxx
and Gross, Shuman, Brizdle & Gilgillan, P.C., dated as of March 30, 1999 (the
"Pledge Agreement"), shall be terminated immediately prior to the Effective
Time.
3.9 Termination of Other Agreements.
(a) To the extent requested by Parent, the Company shall ensure that
the Prior Registration Rights Agreement shall be terminated immediately prior to
the Effective Time.
(b) To the extent requested by Parent, the Company shall ensure that
the Amended and Restated Stockholders' Agreement, dated as of March 30, 1999, by
and among the Company, the persons listed on Schedule I attached thereto and the
parties listed on Schedule II attached thereto (the "Stockholders' Agreement")
shall be terminated immediately prior to the Effective Time.
4. Representations and Warranties of Parent and Merger Sub
Parent and Merger Sub jointly and severally represent and warrant to the
Company as follows:
4.1 SEC Filings; Financial Statements.
(a) Parent has made available to the Company accurate and complete
copies (excluding copies of exhibits) of each report, registration statement (on
a form other than Form S-8) and definitive proxy statement filed by Parent with
the SEC between May 15, 1996 and the date of this Agreement (the "Parent SEC
Documents"). As of the time it was filed with the SEC (or, if amended or
superseded by a filing prior to the date of this Agreement, then on the date of
such filing): (i) each of the Parent SEC Documents complied in all material
respects with the applicable requirements of the Securities Act or the Exchange
Act (as the case may be); and (ii) none of the Parent SEC Documents contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
32.
(b) The consolidated financial statements contained in the Parent SEC
Documents: (i) complied as to form in all material respects with the published
rules and regulations of the SEC applicable thereto; (ii) were prepared in
accordance with generally accepted accounting principles applied on a consistent
basis throughout the periods covered, except as may be indicated in the notes to
such financial statements and (in the case of unaudited statements) as permitted
by Form 10-Q of the SEC, and except that unaudited financial statements may not
contain footnotes and are subject to year-end audit adjustments (which are not
reasonably expected to be, individually or in the aggregate, material in
amount); and (iii) fairly present the consolidated financial position of Parent
and its subsidiaries as of the respective dates thereof and the consolidated
results of operations of Parent and its subsidiaries for the periods covered
thereby.
4.2 Due Organization.
(a) Each of Parent and Merger Sub is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has full power (corporate and other) and authority to conduct its business
in the manner in which its business is currently being conducted and to own and
use its assets in the manner in which its assets are currently owned and used
and to perform its obligations under any contract filed as an exhibit to any
Parent SEC Documents.
(b) Parent is qualified to do business as a foreign corporation, and
is in good standing, in each jurisdiction in which the nature of its business
and of its properties makes such qualification necessary, except where the
failure to be so qualified would not have a material adverse effect on Parent's
business, condition (financial or otherwise), assets, liabilities or operations.
4.3 Non-Contravention; Consents. Neither (1) the execution, delivery or
performance of this Agreement or any of the other agreements referred to in this
Agreement, nor (2) the consummation of the Merger or any of the other
transactions contemplated by this Agreement, will directly or indirectly (with
or without notice or lapse of time) contravene, conflict with or result in a
violation of (i) any of the provisions of the certificate of incorporation or
bylaws of Parent or Merger Sub, (ii) any resolution adopted by the stockholders,
the board of directors or any committee of the board of directors of Parent or
Merger Sub, or (iii) any provision of any contract filed as an exhibit to any of
the Parent SEC Documents. Neither Parent nor Merger Sub will be required to
make any filing with or give any notice to, or to obtain any Consent from, any
Person in connection with (x) the execution, delivery or performance of this
Agreement or any of the other agreements referred to in this Agreement, or (y)
the consummation of the Merger or any of the other transactions contemplated by
this Agreement, except for (i) the filing of the certificate of merger with the
Secretary of State of the State of Delaware, (ii) the filing of one or more
registration statements on Form S-3 with the SEC and the declaration of
effectiveness of such registration statements by the SEC, and (iii) the filing
of a Notification of Listing of Additional Shares with the Nasdaq National
Market and (iv) the filings required under the HSR Act.
33.
4.4 Authority; Binding Nature of Agreement. Parent and Merger Sub have
the absolute and unrestricted right, power and authority to enter into and
perform their obligations under this Agreement; and the execution, delivery and
performance by Parent and Merger Sub of this Agreement (including the
contemplated issuance of Parent Common Stock in the Merger in accordance with
this Agreement) have been duly authorized by all necessary action on the part of
Parent and Merger Sub and their respective boards of directors. No vote of
Parent's stockholders is needed to approve the Merger. This Agreement
constitutes the legal, valid and binding obligation of Parent and Merger Sub,
enforceable against them in accordance with its terms, subject to (i) laws of
general application relating to bankruptcy, insolvency and the relief of
debtors, and (ii) rules of law governing specific performance, injunctive relief
and other equitable remedies.
4.5 Valid Issuance. Subject to Section 1.5(c), the Parent Common Stock to
be issued in the Merger will, when issued in accordance with the provisions of
this Agreement, be validly issued, fully paid and nonassessable.
4.6 Absence of Changes. From December 31, 1999 to the date of this
Agreement, there has not been any material adverse change in Parent's business,
condition (financial or otherwise), assets, liabilities or operations.
4.7 Legal Proceedings; Orders. There is no pending Legal Proceeding and
to the best knowledge of Parent and Merger Sub, no Person has threatened to
commence any Legal Proceeding: (i) against Parent that could reasonably be
expected to have a material adverse effect on Parent's business, condition
(financial or otherwise), assets, liabilities or operations (other that any
actual or threatened Legal Proceeding that has been previously disclosed in any
of the Parent SEC Documents); or (ii) that challenges, or that may have the
effect of preventing, delaying, making illegal or otherwise interfering with,
the Merger or any of the other transactions contemplated by this Agreement. To
the best of the knowledge of Parent and Merger Sub, no event has occurred, and
no claim, dispute or other condition or circumstance exists, that will, or that
could reasonably be expected to, give rise to or serve as a basis for the
commencement of any such Legal Proceeding.
4.8 Brokers. No broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the Merger or
the transactions contemplated by this Agreement based upon arrangements made by
or on behalf of Parent.
5. Certain Covenants of the Parties
5.1 Regulatory Approvals. The Company and Parent shall use all reasonable
efforts to file, as soon as practicable after the date of this Agreement, all
notices, reports and other documents required to be filed with any Governmental
Body with respect to the Merger and the other transactions contemplated by this
Agreement, and to submit promptly any additional information requested by any
such Governmental Body. Without limiting the generality of the foregoing, the
Company and Parent shall, promptly after the date of this Agreement, prepare and
file the notifications required under the HSR Act in connection with the Merger.
The Company and Parent shall respond as promptly as practicable to (i) any
inquiries or requests received from
34.
the Federal Trade Commission or the Department of Justice for additional
information or documentation and (ii) any inquiries or requests received from
any state attorney general or other Governmental Body in connection with
antitrust or related matters. Each of the Company and Parent shall (1) give the
other party prompt notice of the commencement of any Legal Proceeding by or
before any Governmental Body with respect to the Merger or any of the other
transactions contemplated by this Agreement, (2) keep the other party informed
as to the status of any such Legal Proceeding, and (3) promptly inform the other
party of any communication to or from the Federal Trade Commission, the
Department of Justice or any other Governmental Body regarding the Merger. The
Company and Parent will consult and cooperate with one another, and will
consider in good faith the views of one another, in connection with any
analysis, appearance, presentation, memorandum, brief, argument, opinion or
proposal made or submitted in connection with any Legal Proceeding under or
relating to the HSR Act or any other federal or state antitrust or fair trade
law. In addition, except as may be prohibited by any Governmental Body or by any
Legal Requirement, in connection with any Legal Proceeding under or relating to
the HSR Act or any other federal or state antitrust or fair trade law or any
other similar Legal Proceeding, each of the Company and Parent agrees to permit
authorized Representatives of the other party to be present at each meeting or
conference relating to any such Legal Proceeding and to have access to and be
consulted in connection with any document, opinion or proposal made or submitted
to any Governmental Body in connection with any such Legal Proceeding.
5.2 Stockholders' Consent. The Company shall, in accordance with its
certificate of incorporation and bylaws and the applicable requirements of the
DGCL, solicit the consent, either in writing or by a special meeting, of the
stockholders of the Company as promptly as practicable for the purpose of
permitting them to consider and to vote upon, approve and adopt the Merger and
this Agreement. Without limiting the generality or the effect of anything
contained in the Voting Agreements and Irrevocable Proxies in the form of
Exhibit B being executed and delivered by the Key Stockholders to Parent
contemporaneously with the execution and delivery of this Agreement, the Company
shall use its best efforts to cause each Key Stockholder to vote all shares of
the capital stock of the Company that are owned, beneficially or of record, by
such Key Stockholder on the record date for the solicitation of the consent of
the stockholders of the Company, either in writing or by special meeting, to be
voted in favor of the Merger and this Agreement. For greater certainty, in lieu
of calling and holding a special stockholders' meeting, the Company may solicit
the approval of the stockholders of the Company of the Merger and the other
transactions contemplated by this Agreement by written consent. In any event,
the Company shall solicit by written consent, or hold a special meeting of
stockholders, for the purpose of voting upon the approval and adoption of the
Merger and this Agreement no later than 30 days after the date of this
Agreement.
5.3 Public Announcements. During the Pre-Closing Period, (a) each of the
Acquired Corporations shall not (and shall not permit any of their respective
Representatives to) issue any press release or make any public statement
regarding this Agreement or the Merger, or regarding any of the other
transactions contemplated by this Agreement, without Parent's prior written
consent, and (b) Parent will use reasonable efforts to consult with the Company
prior to issuing any press release or making any public statement regarding this
Agreement or the Merger, or regarding any of the other transactions contemplated
by this Agreement.
35.
5.4 Best Efforts. Prior to Closing, (a) each of the Acquired Corporations
shall use its best efforts to cause the conditions set forth in Section 6 to be
satisfied on a timely basis (including without limitation to cure any inaccuracy
in any representation or warranty that would exist as of the Scheduled Closing
Time), and (b) Parent and Merger Sub shall use their best efforts to cause the
conditions set forth in Section 7 to be satisfied on a timely basis.
5.5 Noncompetition Agreements. At or prior to the Closing, the Company
shall cause each of the individuals identified on Exhibit D(a) to execute and
deliver a Noncompetition Agreement in the form of Exhibit E(a) and each of the
individuals identified on Exhibit D(b) to execute and deliver a Noncompetition
Agreement in the form of Exhibit E(b).
5.6 Employee Related Matters. Parent shall offer to employees of the
Company as of the date of this Agreement who are also employees of the Company
immediately prior to the Effective Time employment by the Parent after the
Effective Time, and each such offer shall be in the form of an individual offer
letter prepared in accordance with Parent's customary form (such letter to
confirm such employee's initial position, compensation, location and reporting
relationship). Those employees of the Company that continue to be employees of
Parent or any of its affiliates, including the Company, following the Closing
shall, subject to any necessary transition period and the terms of such plans,
be immediately eligible to participate in Parent's health, vacation, employee
stock purchase, 401(k) and other plans, to the same extent as comparably
situated employees of Parent and shall receive credit under all Parent's benefit
plans for time served as an employee of the Company (it being agreed that such
credit shall not apply with respect to the vesting schedule of any stock options
granted by Parent to such employees other than Company Options assumed by the
Parent pursuant to Section 1.6).
5.7 FIRPTA Matters. At the Closing, (a) the Company shall deliver to
Parent a statement (in such form as may be reasonably requested by counsel to
Parent) conforming to the requirements of Section 1.897 - 2(h)(1)(i) of the
United States Treasury Regulations, and (b) the Company shall deliver to the
Internal Revenue Service the notification required under Xxxxxxx 0.000 - 0(x)(0)
xx xxx Xxxxxx Xxxxxx Treasury Regulations.
5.8 Release. At the Closing, the Company shall cause each Key Stockholder
shall execute and deliver to the Company and Parent a Release in the form of
Exhibit F.
5.9 Affiliate Agreements. The Company shall cause each Person identified
on Exhibit G (b) (and any other Person that could reasonably be deemed to be an
"affiliate" of any of the Acquired Corporations for purposes of the Securities
Act), to execute and deliver to Parent, as promptly as practicable after the
execution of this Agreement, an Affiliate Agreement in the form of Exhibit G
(a).
5.10 Termination of Employee Plans. At the Closing, each Company Option
shall be assumed by Parent pursuant to Section 1.6 and the Company shall
terminate its 1998 Stock Option Plan, and shall ensure that no employee or
former employee of the Company has any rights under such Plan and that any
liabilities of the Company under such Plan (including any such liabilities
relating to services performed prior to the Closing) are fully extinguished at
no cost to the Company, except as otherwise provided in Section 1.6.
36.
5.11 Pooling of Interests. Each of the Company and Parent agrees (and the
Company agrees to cause each of the Acquired Corporations) (a) not to take any
action during the Pre-Closing Period that would adversely affect the ability of
Parent to account for the Merger as a "pooling of interests," and (b) to use all
reasonable efforts to attempt to ensure that none of its "affiliates" (as that
term is used in Rule 145 under the Securities Act) takes any action that could
adversely affect the ability of Parent to account for the Merger as a "pooling
of interests."
5.12 Tax-Free Reorganization. No party shall take any action either prior
to or after the Effective Time that could reasonably be expected to cause the
Merger to fail to qualify as a "reorganization" under Section 368 of the Code.
5.13 Indemnification of Officers and Directors. For seven years from and
after the Closing Date, Parent agrees to indemnify and hold harmless all past
and present officers and directors of the Company to the same extent such
persons are indemnified as of the date of this Agreement by the Company pursuant
to the Company's Incorporation Documents for acts or omissions which occurred at
or prior to the Effective Time. This indemnification shall not apply to any
claim by an Indemnitee pursuant to the terms of this Agreement or any other
agreement contemplated by this Agreement.
5.14 Fairness Hearing. Promptly after the execution of this Agreement, the
Company and Parent shall prepare and cause to be filed with the North Carolina
Secretary of State an application under Section 78A-30 of the North Carolina
General Statutes and the related regulations (the "Fairness Hearing Law"), and a
related information statement or other disclosure document (the "Information
Statement"), and shall request a hearing on the fairness of the terms and
conditions of the Merger pursuant to the Fairness Hearing Law. The parties to
this Agreement shall use all commercially reasonable efforts to cause the North
Carolina Secretary of State to approve the fairness of the terms and conditions
of the Merger at such a hearing; provided, however, that Parent shall not be
required to modify any of the terms of the Merger in order to cause the North
Carolina Secretary of State to approve the fairness of such terms and
conditions. The Company shall provide and include in the Information Statement
such information relating to the Company as may be required pursuant to the
Fairness Hearing Law. The Information Statement shall include the recommendation
of the board of directors of the Company in favor of the Merger.
6. Conditions Precedent to Obligations of Parent and Merger Sub
The obligations of Parent and Merger Sub to effect the Merger and otherwise
consummate the transactions contemplated by this Agreement are subject to the
satisfaction (or waiver by the Parent), at or prior to the Closing, of each of
the following conditions:
6.1 Accuracy of Representations.
(a) Each of the representations and warranties made by the Company
in this Agreement and in each of the other agreements and instruments delivered
to Parent in connection with the transactions contemplated by this Agreement
shall have been accurate in all material respects as of the date of this
Agreement (except for such representations and warranties that are
37.
qualified by their terms by a reference to any "Material Adverse Effect" or
other materiality qualifications, or any similar qualifications, contained or
incorporated directly or indirectly in such representations and warranties,
which representations and warranties as so qualified shall be true and correct
in all respects).
(b) Each of the representations and warranties made by the Company
in this Agreement and in each of the other agreements and instruments delivered
to Parent in connection with the transactions contemplated by this Agreement
shall be accurate in all material respects as of the Scheduled Closing Time as
if made at the Scheduled Closing Time (without giving effect to any update to
the Disclosure Schedule, and except for such representations and warranties
which are qualified by their terms by a reference to any "Material Adverse
Effect" or other materiality qualifications, or any similar qualifications,
contained or incorporated directly or indirectly in such representations and
warranties, which representations and warranties as so qualified shall be true
and correct in all respects); provided, however, that, in consideration of the
Company's foregoing the printing of red xxxxxxx prospectuses for its proposed
initial public offering, (i) any inaccuracies in such representations and
warranties arising as a result of any Known Information Event will be
disregarded if the circumstances giving rise to all such inaccuracies
(considered collectively) do not constitute, and could not reasonably be
expected to have, a Substantial Adverse Effect on the Acquired Corporations
considered together; and (ii) any inaccuracies in such representations and
warranties arising as a result of any Unknown Information Event will be
disregarded if the circumstances giving rise to all such inaccuracies
(considered collectively) do not constitute, and could not reasonably be
expected to have, a Material Adverse Effect on the Acquired Corporations
considered together.
6.2 Performance of Covenants. All of the covenants and obligations that
the Acquired Corporations are required to comply with or to perform at or prior
to the Closing shall have been complied with and performed in all material
respects.
6.3 Stockholder Approval. The Merger and this Agreement shall have been
duly approved by the affirmative vote of 95% of the shares of Company Stock
entitled to vote with respect thereto. The number of Dissenting Shares shall be
less than 5% of the Company Stock outstanding immediately prior to the Scheduled
Closing Time.
6.4 Consents. All Consents (a) required to be obtained from any
Governmental Entity, and (b) otherwise required to be obtained, in each case, in
connection with the Merger and the other transactions contemplated by this
Agreement (including the Consents identified in Part 2.21 of the Disclosure
Schedule) shall have been obtained and shall be in full force and effect.
6.5 Agreements and Documents. Parent and the Company shall have received
the following agreements and documents, each of which shall be in full force and
effect:
(a) Noncompetition Agreements in the form of Exhibits E(a) and E(b)
executed by the Persons identified in Exhibits D(a) and D(b), respectively;
(b) a Release in the form of Exhibit F, executed by each of the
stockholders of the Company;
38.
(c) an estoppel certificate, dated as of a date not more than five
days prior to the Closing Date and satisfactory in form and content to Parent,
executed by each of Technology Locator Corporation, Shorebreeze Associates, CMD
Properties, Inc. and Ticon, Inc.;
(d) a legal opinion of Xxxxxxxxx & Xxxxx PLLC as of the Closing Date,
in a form acceptable to Parent;
(e) a certificate executed by the Company and containing the
representation and warranty of the Company that each of the representations and
warranties set forth in Section 2 is accurate in all respects as of the Closing
Date as if made as of the Closing Date (subject to such exceptions as are
necessary for accuracy) and that the conditions set forth in Sections 6.1, 6.2,
6.3 and 6.4 have been duly satisfied (the "Company Closing Certificate");
(f) a certificate executed by the Secretary of the Company attaching
and certifying as to the Company's current Certificate of Incorporation and
Bylaws and the resolutions of the Company's Board of Directors and stockholders
approving this Agreement and the transactions relating thereto;
(g) written resignations of all officers and directors of the
Company, effective as of the Effective Time;
(h) the Escrow Agreement in the form of Exhibit H, executed by the
Stockholders' Agent and the other parties thereto, and the Escrow Shares shall
have been deposited thereunder;
(i) Affiliate Agreements in the form of Exhibit G (a), executed by
the Persons identified on Exhibit G (b) and by any other Person who could
reasonably be deemed to be an "affiliate" of the Acquired Corporations for
purposes of the Securities Act;
(j) a letter from PricewaterhouseCoopers LLP, dated as of the Closing
Date and addressed to Parent and the Company, reasonably satisfactory in form
and substance to Parent and KPMG LLP, to the effect that, after reasonable
investigation, PricewaterhouseCoopers LLP, is not aware of any fact concerning
any of the Acquired Corporations or any of such Acquired Corporations'
stockholders or affiliates that could preclude Parent from accounting for the
Merger as a "pooling of interests" in accordance with GAAP, Accounting
Principles Board Opinion No. 16 and all published rules, regulations and
policies of the SEC.
6.6 FIRPTA Compliance. The Company shall have filed with the Internal
Revenue Service the notification referred to in Section 5.7.
6.7 HSR Act. The waiting period applicable to the consummation of the
Merger under the HSR Act shall have expired or been terminated.
6.8 No Restraints. No temporary restraining order, preliminary or
permanent injunction or other order preventing the consummation of the Merger
shall have been issued by any court of competent jurisdiction and remain in
effect, and there shall not be any Legal
39.
Requirement enacted or deemed applicable to the Merger that makes consummation
of the Merger illegal.
6.9 No Legal Proceedings. No Governmental Body or other Person shall have
commenced or threatened to commence any Legal Proceeding (a) challenging or
seeking the recovery of damages in excess of $1,000,000 (when aggregated with
all such Legal Proceedings) in connection with the Merger; (b) seeking to
prohibit or limit the exercise by Parent of any material right pertaining to its
ownership of stock of Merger Sub or any of the Acquired Corporations; or (c)
claiming to own any capital stock of any of the Acquired Corporations, or the
option or other right to the capital stock of any of the Acquired Corporations,
or right to receive consideration as a result of the Merger (with respect to
clause (c) only, excluding any Legal Proceeding where the only remedy sought is
money damages and the amount of damages claimed, when aggregating with all such
Legal Proceedings, is less than $1,000,000); provided, however, that if the only
remedy sought is money damages and the Company and the Stockholders' Agent
acknowledge and agree in a binding written instrument that a Legal Proceeding
and the matters at issue therein are matters in respect of which a claim for
recovery may be properly brought by an Indemnitee pursuant to Section 9.2(e) for
all Damages incurred in connection with such Legal Proceeding (subject to
Sections 9.2(d) and 9.2(e)), and then this Section 6.9 shall be deemed satisfied
with respect to such Legal Proceeding.
6.10 Termination of Employee Plans. The Company shall have provided Parent
with evidence, reasonably satisfactory to Parent, as to the termination of the
benefit plans referred to in Section 5.10.
6.11 Termination of Agreements. Prior to the Closing, the following
agreements and/or provisions of the following agreements shall be terminated and
shall no longer be in effect:
(a) the Prior Registration Rights Agreement (as defined in Section
2.10);
(b) the Letter of Intent (as defined in Section 3.7);
(c) the Pledge Agreement (as defined in Section 3.8); and
(d) the Stockholders' Agreement (as defined in Section 3.9).
6.12 No Material Adverse Change. There shall have been no material
adverse change or decline in value in the business, properties, condition
(financial or otherwise), results of operations, or prospects of the Company (or
in any aspect or portion thereof) since the date of this Agreement.
6.13 Listing. The shares of Parent Common Stock to be issued in the Merger
shall have been approved for listing (subject to notice of issuance) on the
Nasdaq National Market.
6.14 Release of Security. Prior to the Closing Date, the Company shall
have provided to Parent evidence satisfactory to Parent that any and all
Encumbrances held by any Person with respect to any capital stock or securities
of any of the Acquired Corporations have been fully
40.
discharged and that all of the capital stock of each of the Acquired
Corporations is free and clear of all Encumbrances. In the event such
Encumbrances cannot be discharged without repayment of any loan or advance made
to an Acquired Corporation by any Person, on or prior to the Closing Date, the
Company shall have provided to Parent evidence satisfactory to Parent that any
and all loans or other advances made by any Person in favor of any of the
Acquired Corporations has been paid in full and any Encumbrances held by any
Person with respect to any assets of the Acquired Corporations has been fully
discharged.
6.15 Conversion of Preferred Stock. All shares of Company Preferred Stock
shall have converted into shares of Company Common Stock pursuant to their
existing terms and conditions.
6.16 Compliance With (S)3(a)(10) of the Securities Act. The North Carolina
Secretary of State shall have issued an approval under the Fairness Hearing Law
(following a hearing upon the fairness of the terms and conditions of the
Merger, conducted pursuant to the Fairness Hearing Law) for the issuance of the
Parent Common Stock to be issued in the Merger, and all applicable requirements
of Section 3(a)(10) of the Securities Act shall have been satisfied.
7. Conditions Precedent to Obligations of the Company
The obligations of the Company to effect the Merger and otherwise
consummate the transactions contemplated by this Agreement are subject to the
satisfaction (or waiver), at or prior to the Closing, of the following
conditions:
7.1 Accuracy of Representations. Each of the representations and
warranties made by Parent and Merger Sub in this Agreement shall have been
accurate in all material respects as of the date of this Agreement (without
giving effect to any materiality or similar qualifications contained in such
representations and warranties), and shall be accurate in all material respects
as of the Scheduled Closing Time as if made at the Scheduled Closing Time
(without giving effect to any disclosure of exceptions to such representations
and warranties or any materiality or similar qualifications contained in such
representations and warranties); provided, however, that any inaccuracy in a
Section set forth in Article 4 of this Agreement that, when combined with all
such inaccuracies in such Section, would have an adverse affect on Parent of
less than $50,000 shall not constitute a failure to satisfy this Section 7.1.
7.2 Performance of Covenants. All of the covenants and obligations that
Parent and Merger Sub are required to comply with or to perform at or prior to
the Closing shall have been complied with and performed in all material
respects.
7.3 Documents. The Company shall have received the following documents:
(a) a legal opinion of Xxxxxx Godward LLP, dated as of the Closing
Date, in a form acceptable to the Company;
(b) a certificate executed by Parent and containing the
representation and warranty of Parent that each of the representations and
warranties set forth in Section 4
41.
accurate in all respects as of the Closing Date (subject to such exceptions as
are necessary for accuracy) as if made of the Closing Date; and
(c) a certificate executed by the Secretaries of Parent and Merger
Sub attaching and certifying as to the current Certificates of Incorporation and
Bylaws of Parent and Merger Sub and the resolutions of the Boards of Directors
and stockholders of Parent and Merger Sub approving this Agreement and the
transactions relating thereto.
7.4 No Restraints. No temporary restraining order, preliminary or
permanent injunction or other order preventing the consummation of the Merger
shall have been issued by any court of competent jurisdiction and remain in
effect, and there shall not be any Legal Requirement enacted or deemed
applicable to the Merger that makes consummation of the Merger illegal.
7.5 HSR Act. The waiting period applicable to the consummation of the
Merger under the HSR Act shall have expired or been terminated.
7.6 Listing. The shares of Parent Common Stock to be issued in the Merger
shall have been approved for listing (subject to notice of issuance) on the
Nasdaq National Market.
7.7 Compliance With (S)3(a)(10) of the Securities Act. The North Carolina
Secretary of State shall have issued an approval under the Fairness Hearing Law
(following a hearing upon the fairness of the terms and conditions of the
Merger, conducted pursuant to the Fairness Hearing Law) for the issuance of the
Parent Common Stock to be issued in the Merger, and all applicable requirements
of Section 3(a)(10) of the Securities Act shall have been satisfied.
8. Termination
8.1 Termination Events. This Agreement may be terminated prior to the
Closing:
(a) by Parent if Parent reasonably determines that the timely
satisfaction of any condition set forth in Section 6 has become impossible
(other than as a result of any failure on the part of Parent or Merger Sub to
comply with or perform any covenant or obligation of Parent or Merger Sub set
forth in this Agreement);
(b) by the Company if the Company reasonably determines that the
timely satisfaction of any condition set forth in Section 7 has become
impossible (other than as a result of any failure on the part of any of the
Acquired Corporations or any of the stockholders of the Company to comply with
or perform any covenant or obligation set forth in this Agreement or in any
other agreement or instrument delivered to Parent);
(c) by Parent if the Closing has not taken place on or before May 31,
2000 (other than as a result of any failure on the part of Parent to comply with
or perform any covenant or obligation of Parent set forth in this Agreement);
(d) by the Company if the Closing has not taken place on or before
May 31, 2000 (other than as a result of any failure on the part of one of the
Acquired
42.
Corporations to comply with or perform any covenant or obligation of such
Acquired Corporation as set forth in this Agreement); or
(e) by the mutual written consent of Parent and the Company.
8.2 Termination Procedures. If Parent wishes to terminate this Agreement
pursuant to Section 8.1(a) or Section 8.1(c), Parent shall deliver to the
Company a written notice stating that Parent is terminating this Agreement and
setting forth a brief description of the basis on which Parent is terminating
this Agreement. If the Company wishes to terminate this Agreement pursuant to
Section 8.1(b) or Section 8.1(d), the Company shall deliver to Parent a written
notice stating that the Company is terminating this Agreement and setting forth
a brief description of the basis on which the Company is terminating this
Agreement.
8.3 Effect of Termination. If this Agreement is terminated pursuant to
Section 8.1, all further obligations of the parties under this Agreement shall
terminate; provided, however, that: (a) neither any of the Acquired Corporations
nor Parent shall be relieved of any obligation or liability arising from any
prior willful breach by such party of any provision of this Agreement; (b) the
parties shall, in all events, remain bound by and continue to be subject to the
provisions set forth in Section 10; and (c) each of the parties shall, in all
events, remain bound by and continue to be subject to Section 5.3.
9. Indemnification, Etc.
9.1 Survival of Representations, Etc.
(a) The representations and warranties made by the Company (including
the representations and warranties set forth in Section 2 and the
representations and warranties set forth in the Company Closing Certificate)
shall survive the Closing and shall expire on the first anniversary of the
Closing Date; provided, however, that if, at any time prior to the first
anniversary of the Closing Date, any Indemnitee (acting in good faith) delivers
to the Stockholders' Agent a written notice alleging the existence of an
inaccuracy in or a breach of any of the representations and warranties made by
the Company (and setting forth in reasonable detail the basis for such
Indemnitee's belief that such an inaccuracy or breach may exist) and asserting a
claim for recovery under Section 9.2 based on such alleged inaccuracy or breach,
then the claim asserted in such notice shall survive the first anniversary of
the Closing until such time as such claim is fully and finally resolved.
Notwithstanding the foregoing, any such notice asserting an inaccuracy in or
breach of any representation or warranty concerning matters that are subject to
resolution through the audit process must be delivered to the Stockholders'
Agent prior to the earlier of (i) the date the audit of Parent for the fiscal
year ended December 31, 2000 is completed or (ii) the first anniversary of the
Closing Date, in which case the claim asserted in such notice shall survive
until such time as such claim is fully and finally resolved. The representations
and warranties made by Parent and Merger Sub in Sections 4.4 and 4.5 shall
survive the Closing and shall expire on the first anniversary of the Closing
Date. All other representations and warranties made by Parent and Merger Sub in
this Agreement shall terminate and expire as of the Effective Time, and any
liability of Parent or Merger Sub with respect to
43.
such representations and warranties shall thereupon cease; provided, however,
that this provision shall not limit any rights or claims based on fraudulent or
intentional misrepresentation.
(b) Except for information expressly set forth in an update to the
Disclosure Schedule (identified as such), the representations, warranties made
by the Company, and the covenants and obligations of each of the Acquired
Corporations, and the rights and remedies that may be exercised by the
Indemnitees, shall not be limited or otherwise affected by or as a result of any
information furnished to, or any investigation made by or knowledge of, any of
the Indemnitees or any of their Representatives.
(c) For purposes of this Agreement, each statement or other item of
information set forth in the Disclosure Schedule or in any update to the
Disclosure Schedule shall be deemed to be a representation and warranty made by
the Company in this Agreement.
9.2 Indemnification by Stockholders.
(a) From and after the Effective Time (but subject to Sections 9.1(a)
and 9.2(b)), the stockholders of the Company who shall have received, or shall
be entitled to receive, Parent Common Stock pursuant to Section 1.5 (the
"Indemnitors"), severally but not jointly, shall hold harmless and indemnify
each of the Indemnitees from and against, and shall compensate and reimburse
(through the Escrow Shares or otherwise) each of the Indemnitees for, any
Damages which are directly or indirectly suffered or incurred by any of the
Indemnitees or to which any of the Indemnitees may otherwise become subject
(regardless of whether or not such Damages relate to any third-party claim) and
which arise from or as a result of, or are directly or indirectly connected
with: (i) any inaccuracy in or breach of any representation or warranty set
forth in Section 2 made as of the date of this Agreement (without giving effect
to any "Material Adverse Effect" or other materiality qualification or any
similar qualification contained or incorporated directly or indirectly in such
representation or warranty, but with giving effect to any update to the
Disclosure Schedule delivered by the Company to Parent prior to the Closing,
except to the extent such update(s) disclose matters, either individually or in
the aggregate, which relate to the representations and warranties of the Company
set forth in Sections 2.3, 2.4, 2.9, 2.14 or 2.19 and which impact the value of
the Acquired Corporations, taken as a whole, by an amount which equals or
exceeds $250,000); (ii) any inaccuracy in or breach of any representation or
warranty set forth in the Company Closing Certificate (without giving effect to
any "Material Adverse Effect" or other materiality qualification or any similar
qualification contained or incorporated directly or indirectly in such
representation or warranty, but with giving effect to any update to the
Disclosure Schedule delivered by the Company to Parent prior to the Closing);
(iii) any breach of any covenant or obligation of each of Acquired Corporations
(including the covenants set forth in Sections 3 and 5); or (iv) any Legal
Proceeding relating to any inaccuracy or breach of the type referred to in
clause "(i)", "(ii)" or "(iii)" above (including any Legal Proceeding commenced
by any Indemnitee for the purpose of enforcing any of its rights under this
Section 9).
(b) (i) For greater certainty and notwithstanding anything set
forth in Section 9.2(a)(i), the parties hereby agree that to the extent any
update to the Disclosure Schedule delivered by the Company to Parent prior to
the Closing discloses matters, either individually or
44.
in the aggregate, which relate to the representations and warranties of the
Company set forth in Sections 2.3, 2.4, 2.9, 2.14 or 2.19 and which impact the
value of the Acquired Corporations, taken as a whole, by an amount which equals
or exceeds $250,000, such update(s) shall not be given effect in determining
whether any inaccuracy in or breach of any representation or warranty set forth
in Section 2 made as of the date of this Agreement has occurred and Parent shall
be entitled to full indemnification for Damages incurred in accordance with this
Section 9 on such basis.
(ii) Any obligation on the part of an Indemnitor pursuant to
Section 9.2(a) shall be satisfied by the delivery of shares of Parent Common
Stock valued at the Average Parent Common Stock Price (the "Stock Delivery
Obligation"). In satisfying the Stock Delivery Obligation the amount of Damages,
for any claim, shall be divided by the Average Parent Common Stock Price and the
resulting number shall be the number of shares of Parent Common Stock to be
delivered by the Indemnitors. Under the Stock Delivery Obligation, the
Indemnitors shall deliver shares of Parent Common Stock and the Indemnitees
shall be required to accept shares of Parent Common Stock in all cases valued at
the Average Parent Common Stock Price, regardless of the fair market value of
shares of Parent Common Stock at time of such delivery or acceptance, and
regardless of whether any Indemnitor has disposed of any of the shares of Parent
Common Stock received in the Merger.
(c) The Company acknowledges and agrees that, if the Surviving
Corporation suffers, incurs or otherwise becomes subject to any Damages as a
result of or in connection with any inaccuracy in or breach of any
representation, warranty, covenant or obligation, then (without limiting any of
the rights of the Surviving Corporation as an Indemnitee) Parent shall also be
deemed, by virtue of its ownership of the stock of the Surviving Corporation, to
have incurred Damages as a result of and in connection with such inaccuracy or
breach.
(d) Deductible. The Indemnitors shall not be required to make any
indemnification payment pursuant to Section 9.2(a) until such time as the total
amount of all Damages (including the Damages arising from any inaccuracies in or
breaches of any representations or warranties) that have been directly or
indirectly suffered or incurred by any one or more of the Indemnitees, or to
which any one or more of the Indemnitees has or have otherwise become subject,
exceeds $250,000 in the aggregate. (If the total amount of such Damages exceeds
$250,000, then the Indemnitees shall be entitled to be indemnified against and
compensated and reimbursed only for the portion of such Damages exceeding
$250,000.)
(e) Maximum Liability.
(i) Parent may assert a claim for Damages under clauses (i) or
(ii) of Section 9.2(a) exceeding the value of all of the Escrow Shares (such
value being determined pursuant to Section 5 of the Escrow Agreement) only in
respect of any representation or warranty set forth in Section 2.3, 2.6, 2.9,
2.14 or 2.19 (each a "Specified Representation").
(ii) The maximum liability (including under Section 9.2(e)(i))
of each Indemnitor to the Indemnitees for Damages relating to all breaches by
the Company of Specified Representations, covenants or other provisions
contained in this Agreement shall be limited to an
45.
amount equal to the product of (x) such Indemnitor's Pro Rata Allocation, (y)
1,000,000 and (z) the average of the closing sale prices of a share of Parent
Common Stock as reported on the Nasdaq National Market for each of the five
consecutive trading days ending on the trading day immediately preceding the
Closing.
(f) Exclusions from Limitations. The limitations that are set forth
in Sections 9.2(d) and 9.2(e) shall not apply in the case of fraud or
intentional misrepresentation; provided, however, that in no event shall any
Indemnitor's liability exceed the amount equal to the result of the
multiplication of the Average Parent Common Stock Price by the number of shares
of Parent Common Stock received by such Indemnitor in the Merger.
9.3 No Contribution. Each Indemnitor waives, and acknowledges and agrees
that he shall not have and shall not exercise or assert (or attempt to exercise
or assert), any right of contribution, right of indemnity or other right or
remedy against Merger Sub or any of the Acquired Corporations in connection with
any indemnification obligation or any other liability to which he may become
subject under or in connection with this Agreement or the Company Closing
Certificate.
9.4 Interest. Any Indemnitor who is required to hold harmless, indemnify,
compensate or reimburse any Indemnitee pursuant to this Section 9 with respect
to any Damages shall also be liable to such Indemnitee for interest on the
amount of such Damages (for the period commencing as of the date on which such
Indemnitor first received notice of a claim for recovery by such Indemnitee and
ending on the date on which the liability of such Indemnitor to such Indemnitee
is fully satisfied by such Indemnitor) at a floating rate equal to the rate of
interest publicly announced by Bank of America, N.T. & S.A. from time to time as
its prime, base or reference rate.
9.5 Mitigation of Loss. Indemnitees shall use their reasonable efforts to
mitigate any Damages in connection with an indemnity claim made pursuant to
Section 9.2(a) with the scope to be as required by applicable law. If the
amount of Damages, at any time prior to or subsequent to the payment thereof by
an Indemnitor to an Indemnitee pursuant to this Section 9 is reduced pursuant to
any insurance coverage, the amount of such reduction (net of (i) any out-of-
pocket expenses, (ii) increases in premiums or (iii) any deductible incurred in
obtaining such reduction) shall promptly be repaid by the Indemnitee to the
Indemnitor. Notwithstanding any other provision in this Agreement including
this Section 9.5, there shall be no affirmative obligation or duty on the part
of either Parent or Merger Sub to obtain insurance with respect to any aspect of
their respective business, operations or assets.
9.6 Defense of Third Party Claims. In the event of the assertion or
commencement by any Person of any claim or Legal Proceeding (whether against
Merger Sub or any of the Acquired Corporations, against Parent or against any
other Person) with respect to which any Indemnitor may become obligated to hold
harmless, indemnify, compensate or reimburse any Indemnitee pursuant to this
Section 9, Parent shall have the right, at its election, to proceed with the
defense of such claim or Legal Proceeding on its own with counsel reasonably
satisfactory to the Stockholders' Agent. If Parent so proceeds with the defense
of any such claim or Legal Proceeding:
46.
(a) all reasonable expenses relating to the defense of such claim or
Legal Proceeding shall be borne and paid exclusively by the Indemnitors;
(b) each Indemnitor shall make available to Parent any documents and
materials in his possession or control that may be necessary to the defense of
such claim or Legal Proceeding; and
(c) Parent shall have the right to settle, adjust or compromise such
claim or Legal Proceeding with the consent of the Stockholders' Agent (as
defined in Section 10.1); provided, however, that such consent shall not be
unreasonably withheld.
Parent shall give the Stockholders' Agent prompt notice of the commencement of
any such Legal Proceeding against Parent, Merger Sub or any of the Acquired
Corporations and shall keep the Stockholders' Agent informed at all stages
thereof; provided, however, that any failure on the part of Parent to so notify
or inform the Stockholders' Agent shall not limit any of the obligations of the
Indemnitors under this Section 9 (except to the extent such failure materially
prejudices the defense of such Legal Proceeding). If Parent does not elect to
proceed with the defense of any such claim or Legal Proceeding, the
Stockholders' Agent may proceed with the defense of such claim or Legal
Proceeding with counsel reasonably satisfactory to Parent; provided, however,
that the Stockholders' Agent may not settle, adjust or compromise any such claim
or Legal Proceeding without the prior written consent of Parent (which consent
may not be unreasonably withheld).
9.7 Setoff. In addition to any rights of setoff or other similar rights
that Parent or any of the other Indemnitees may have at common law or otherwise,
Parent shall have the right to withhold and deduct any sum that may be owed to
any Indemnitee under this Section 9 or pursuant to any other provision of this
Agreement from any amount otherwise payable by any Indemnitee to the
Stockholders' Agent or any stockholder of the Company; provided, however, that
any such right of Parent shall be subject to the limitations set forth in
Section 9.2(e).
9.8 Exclusive Remedy. Subject to the rights of the Indemnitees set forth
in Section 9.7, the Indemnitors shall not be liable or responsible in any manner
whatsoever to Indemnitees, whether for indemnification or otherwise, except for
indemnity as expressly provided in this Section 9 and this Section 9 provides
the exclusive remedy and cause of action of Indemnitees against any Indemnitor
with respect to any matter arising out of or in connection with this Agreement;
provided, however, no claim against an Indemnitor for fraud or intentional
misrepresentation by such Indemnitor shall be subject to the limitations of this
paragraph or this Section 9, other than as set forth in the proviso set forth in
Section 9.2(f).
9.9 Exercise of Remedies by Indemnitees Other Than Parent. No Indemnitee
(other than Parent or any successor thereto or assign thereof) shall be
permitted to assert any indemnification claim or exercise any other remedy under
this Agreement unless Parent (or any successor thereto or assign thereof) shall
have consented to the assertion of such indemnification claim or the exercise of
such other remedy.
47.
10. Miscellaneous Provisions
10.1 Stockholders' Agent. By virtue of their approval of the Merger,
stockholders of the Company hereby irrevocably appoint Xxxx Xxxxxx as their
agent for purposes of Sections 6 and 9 (the "Stockholders' Agent"), and Xxxx
Xxxxxx hereby accepts his appointment as the Stockholders' Agent. Parent shall
be entitled to deal exclusively with the Stockholders' Agent on all matters
relating to Sections 6 and 9, and shall be entitled to rely conclusively
(without further evidence of any kind whatsoever) on any document executed or
purported to be executed on behalf of any Stockholder by the Stockholders'
Agent, and on any other action taken or purported to be taken on behalf of any
Stockholder by the Stockholders' Agent, as fully binding upon such Stockholder.
10.2 Further Assurances. Each party hereto shall execute and cause to be
delivered to each other party hereto such instruments and other documents, and
shall take such other actions, as such other party may reasonably request (prior
to, at or after the Closing) for the purpose of carrying out or evidencing any
of the transactions contemplated by this Agreement.
10.3 Fees and Expenses. Each party to this Agreement shall bear and pay
all fees, costs and expenses (including legal fees and accounting fees) that
have been incurred or that are incurred by such party in connection with the
transactions contemplated by this Agreement, including all fees, costs and
expenses incurred by such party in connection with or by virtue of (a) the
investigation and review conducted by Parent and its Representatives with
respect to any of the Acquired Corporation's business (and the furnishing of
information to Parent and its Representatives in connection with such
investigation and review), (b) the negotiation, preparation and review of this
Agreement (including the Disclosure Schedule) and all agreements, certificates,
opinions and other instruments and documents delivered or to be delivered in
connection with the transactions contemplated by this Agreement, (c) the
preparation and submission of any filing or notice required to be made or given
in connection with any of the transactions contemplated by this Agreement, and
the obtaining of any Consent required to be obtained in connection with any of
such transactions, (d) the consummation of the Merger; provided, however, that,
to the extent the total amount of all such fees, costs and expenses incurred by
or for the benefit of any of the Acquired Corporations (including all such fees,
costs and expenses incurred prior to the date of this Agreement and including
the amount of all special bonuses and other amounts that may become payable to
any officers of any of the Acquired Corporations or other Persons in connection
with the consummation of the transactions contemplated by this Agreement, but
excluding a $365,000 bonus payable to Xxx X. Xxxx and xxxxxxxxx payments to
employees of the Company payable pursuant to Acquired Corporation Contracts
existing as of the date of this Agreement) exceeds the sum of $150,000 and the
Banker Transaction Fee prior to the Closing, the Company shall ensure that such
fees, costs and expenses shall be borne and paid by the stockholders of the
Company and not by any of the Acquired Corporations, and (e) the filing of the
pre-merger notification and report forms relating to the Merger under the HSR
Act.
10.4 Attorneys' Fees. If any action or proceeding relating to this
Agreement or the enforcement of any provision of this Agreement is brought
against any party hereto, the
48.
prevailing party shall be entitled to recover reasonable attorneys' fees, costs
and disbursements (in addition to any other relief to which the prevailing party
may be entitled).
10.5 Notices. Any notice or other communication required or permitted to
be delivered to any party under this Agreement shall be in writing and shall be
deemed properly delivered, given and received when delivered (by hand, by
registered mail, by courier or express delivery service or by facsimile) to the
address or facsimile telephone number set forth beneath the name of such party
below (or to such other address or facsimile telephone number as such party
shall have specified in a written notice given to the other parties hereto):
If to Parent or Merger Sub:
Siebel Systems, Inc.
0000 Xxxxx Xxxxx Xxxxxx
Xxx Xxxxx, XX 00000
Attention: Vice President, Legal Affairs
Facsimile Number: (000) 000-0000
If to the Company:
OpenSite Technologies, Inc.
0000 Xxxxxxxx Xxxxxxx
Xxxxxx, XX 00000
Attention: President
Facsimile Number: (000) 000-0000
If to the Stockholders' Agent or any of the Indemnitors:
Xxxx Xxxxxx
0000 Xxxxxxxxx Xxxxxxx
Xxxxxxxx 0
Xxxxxxx, XX 00000
Facsimile Number: (000) 000-0000
10.6 Confidentiality. Without limiting the generality of anything
contained in Section 5.3, on and at all times after the Closing Date, the
Company (and the Company shall cause each
49.
of the Subsidiaries) to keep confidential, and not use or disclose to any other
Person, any non-public document or other non-public information in each Acquired
Corporation's possession that relates to the business of such Acquired
Corporation or Parent.
10.7 Time of the Essence. For the purposes of this Agreement and the
transactions contemplated by this Agreement, time is of the essence.
10.8 Headings. The underlined headings contained in this Agreement are
for convenience of reference only, shall not be deemed to be a part of this
Agreement and shall not be referred to in connection with the construction or
interpretation of this Agreement.
10.9 Counterparts. This Agreement may be executed in several
counterparts, each of which shall constitute an original and all of which, when
taken together, shall constitute one agreement.
10.10 Governing Law. This Agreement shall be construed in accordance with,
and governed in all respects by, the internal laws of the State of Delaware
(without giving effect to principles of conflicts of laws).
10.11 Successors and Assigns. This Agreement shall be binding upon: the
Company and its successors and assigns (if any); Parent and its successors and
assigns (if any); and Merger Sub and its successors and assigns (if any). This
Agreement shall inure to the benefit of: the Company; the Company's stockholders
(to the extent set forth in Section 1.5); the holders of assumed Company Options
(to the extent set forth in Section 1.6); Parent; Merger Sub; the other
Indemnitees (subject to Section 9.9); and the respective successors and assigns
(if any) of the foregoing. After the Closing Date, Parent may freely assign any
or all of its rights under this Agreement (including its indemnification rights
(but not its obligations hereunder) under Section 9), in whole or in part, to
any other Person without obtaining the consent or approval of any other party
hereto or of any other Person.
10.12 Remedies Cumulative; Specific Performance. The rights and remedies
of the parties hereto shall be cumulative (and not alternative). The parties to
this Agreement agree that, in the event of any breach or threatened breach by
any party to this Agreement of any covenant, obligation or other provision set
forth in this Agreement for the benefit of any other party to this Agreement,
such other party shall be entitled (in addition to any other remedy that may be
available to it) to (a) a decree or order of specific performance or mandamus to
enforce the observance and performance of such covenant, obligation or other
provision, and (b) an injunction restraining such breach or threatened breach.
50.
10.13 Waiver.
(a) No failure on the part of any Person to exercise any power,
right, privilege or remedy under this Agreement, and no delay on the part of any
Person in exercising any power, right, privilege or remedy under this Agreement,
shall operate as a waiver of such power, right, privilege or remedy; and no
single or partial exercise of any such power, right, privilege or remedy shall
preclude any other or further exercise thereof or of any other power, right,
privilege or remedy.
(b) No Person shall be deemed to have waived any claim arising out
of this Agreement, or any power, right, privilege or remedy under this
Agreement, unless the waiver of such claim, power, right, privilege or remedy is
expressly set forth in a written instrument duly executed and delivered on
behalf of such Person; and any such waiver shall not be applicable or have any
effect except in the specific instance in which it is given.
10.14 Waiver of Jury Trial. Each of the parties hereto hereby irrevocably
waives any and all right to trial by jury in any Legal Proceeding arising out of
or related to this Agreement or the transactions contemplated hereby.
10.15 Amendments. This Agreement may not be amended, modified, altered or
supplemented other than by means of a written instrument duly executed and
delivered: (a) prior to the Closing Date, on behalf of Parent, Merger Sub, the
Company and the Stockholders' Agent (acting exclusively for and on behalf of all
of the Merger Stockholders); and (b) after the Closing Date, on behalf of Parent
and the Stockholders' Agent (acting exclusively for and on behalf of all of the
Merger Stockholders).
10.16 Severability. In the event that any provision of this Agreement, or
the application of any such provision to any Person or set of circumstances,
shall be determined to be invalid, unlawful, void or unenforceable to any
extent, the remainder of this Agreement, and the application of such provision
to Persons or circumstances other than those as to which it is determined to be
invalid, unlawful, void or unenforceable, shall not be impaired or otherwise
affected and shall continue to be valid and enforceable to the fullest extent
permitted by law.
10.17 Parties in Interest. Except for the provisions of Sections 1.5, 1.6,
9, and 10.20, none of the provisions of this Agreement is intended to provide
any rights or remedies to any Person other than the parties hereto and their
respective successors and assigns (if any).
10.18 Entire Agreement. This Agreement and the other agreements referred
to herein set forth the entire understanding of the parties hereto relating to
the subject matter hereof and thereof and supersede all prior agreements and
understandings among or between any of the parties relating to the subject
matter hereof and thereof; provided, however, that the Mutual Non-Disclosure
Agreement executed on behalf of Parent on and the Company on November 3, 1999
shall not be superseded by this Agreement and shall remain in effect in
accordance with its terms until the earlier of (a) the Effective Time, or (b)
the date on which such Mutual Non-Disclosure Agreement is terminated in
accordance with its terms.
51.
10.19 Construction.
(a) For purposes of this Agreement, whenever the context requires:
the singular number shall include the plural, and vice versa; the masculine
gender shall include the feminine and neuter genders; the feminine gender shall
include the masculine and neuter genders; and the neuter gender shall include
the masculine and feminine genders.
(b) The parties hereto agree that any rule of construction to the
effect that ambiguities are to be resolved against the drafting party shall not
be applied in the construction or interpretation of this Agreement.
(c) As used in this Agreement, the words "include" and "including,"
and variations thereof, shall not be deemed to be terms of limitation, but
rather shall be deemed to be followed by the words "without limitation."
(d) Except as otherwise indicated, all references in this Agreement
to "Sections", "Schedules" and "Exhibits" are intended to refer to Sections of
this Agreement and Schedules and Exhibits to this Agreement.
10.20 Rule 144 (c) For the benefit of the Persons identified on Exhibit
G(b) only, the Company will use reasonable efforts to file in a timely manner
any reports required to be filed by it under the Securities Act and the Exchange
Act in order to effect compliance under Rule 144 (c) promulgated under the
Securities Act until the close of business on the first anniversary of the
Effective Time.
52.
The parties hereto have caused this Agreement to be executed and delivered
as of the date first written above.
Siebel Systems, Inc.,
a Delaware corporation
By: /s/ Xxxxxx X. Xxxxxx
Printed Name: Xxxxxx X. Xxxxxx
Title: Senior Vice President, Finance and
Administration, Chief Financial Officer
OS Acquisition Corp.,
a Delaware corporation
By: /s/ Xxxxxx X. Xxxxxx
Printed Name: Xxxxxx X. Xxxxxx
Title: Director
OpenSite Technologies, Inc.,
a Delaware corporation
By: /s/ Xxx Xxxx
Printed Name: Xxx Xxxx
Title: CEO
Stockholders' Agent
By: /s/ Xxxx Xxxxxx
Printed Name: Xxxx Xxxxxx
EXHIBIT A
CERTAIN DEFINITIONS
For purposes of the Agreement (including this Exhibit A):
Acquired Corporations. "Acquired Corporations" shall mean the Company and
all of the Subsidiaries.
Acquired Corporation Contract. "Acquired Corporation Contract" shall mean
any Contract: (a) to which any of the Acquired Corporations is a party; (b) by
which any of the Acquired Corporations or any of its assets is or may become
bound or under which any of the Acquired Corporations has, or may become subject
to, any obligation; or (c) under which any of the Acquired Corporations has or
may acquire any right or interest.
Acquisition Transaction. "Acquisition Transaction" shall mean any
transaction involving:
(a) the sale, license, disposition or acquisition of all or a
material portion of any of the Acquired Corporations' business or assets;
(b) the issuance, disposition or acquisition of (i) any capital stock
or other equity security of any of the Acquired Corporations (other than Company
Common Stock issued to employees of the Company, upon exercise of Company
Options and other than Company Common Stock issued to stockholders of the
Company upon the conversion of Company Preferred Stock), (ii) any option, call,
warrant or right (whether or not immediately exercisable) to acquire any capital
stock or other equity security of any of the Acquired Corporations (other than
stock options granted to employees of the Company in routine transactions in
accordance with the Company's past practices), or (iii) any security, instrument
or obligation that is or may become convertible into or exchangeable for any
capital stock or other equity security of any of the Acquired Corporations; or
(c) any merger, consolidation, business combination, reorganization
or similar transaction involving any of the Acquired Corporations.
Agreement. "Agreement" shall mean the Agreement and Plan of Merger and
Reorganization to which this Exhibit A is attached (including the Disclosure
Schedule), as it may be amended from time to time.
Awareness of the Company. Information shall be deemed to be in the
"Awareness of the Company" if that information is actually known or reasonably
should have been known by any Identified Person.
Banker Transaction Fee. "Banker Transaction Fee" shall mean the
transaction fee and expenses due and payable under the letter agreement dated
January 11, 2000 by and between the Company and Xxxxxxx, Sachs & Co.
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Company Proprietary Asset. "Company Proprietary Asset" shall mean any
Proprietary Asset owned by or licensed to any of the Acquired Corporations or
otherwise used by any of the Acquired Corporations.
Consent. "Consent" shall mean any approval, consent, ratification,
permission, waiver or authorization (including any Governmental Authorization).
Contract. "Contract" shall mean any written, oral or other agreement,
contract, subcontract, lease, understanding, instrument, note, warranty,
insurance policy, benefit plan or legally binding commitment or undertaking of
any nature.
Damages. "Damages" shall include any loss, damage, injury, decline in
value, lost opportunity, liability, claim, demand, settlement, judgment, award,
fine, penalty, Tax, fee (including reasonable attorneys' fees), charge, cost
(including costs of investigation) or expense of any nature.
Disclosure Schedule. "Disclosure Schedule" shall mean the schedule (dated
as of the date of the Agreement) delivered to Parent on behalf of the Company.
Encumbrance. "Encumbrance" shall mean any lien, pledge, hypothecation,
charge, mortgage, security interest, encumbrance, claim, infringement,
interference, option, right of first refusal, preemptive right, community
property interest or restriction of any nature (including any restriction on the
voting of any security, any restriction on the transfer of any security or other
asset, any restriction on the receipt of any income derived from any asset, any
restriction on the use of any asset and any restriction on the possession,
exercise or transfer of any other attribute of ownership of any asset).
Entity. "Entity" shall mean any corporation (including any non-profit
corporation), general partnership, limited partnership, limited liability
partnership, joint venture, estate, trust, company (including any limited
liability company or joint stock company), firm or other enterprise,
association, organization or entity.
Escrow Shares. "Escrow Shares" shall mean the shares of Parent Common
Stock deliverable to the escrow agent under the Escrow Agreement pursuant to
Section 1.8(a).
Exchange Act. "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
Government Bid. "Government Bid" shall mean any quotation, bid or proposal
submitted to any Governmental Body or any proposed prime contractor or higher-
tier subcontractor of any Governmental Body.
Government Contract. "Government Contract" shall mean any prime contract,
subcontract, letter contract, purchase order or delivery order executed or
submitted to or on behalf of any Governmental Body or any prime contractor or
higher-tier subcontractor, or under which any Governmental Body or any such
prime contractor or subcontractor otherwise has or may acquire any right or
interest.
A-2.
Governmental Authorization. "Governmental Authorization" shall mean any:
(a) permit, license, certificate, franchise, permission, clearance,
registration, qualification or authorization issued, granted, given or otherwise
made available by or under the authority of any Governmental Body or pursuant to
any Legal Requirement; or (b) right under any Contract with any Governmental
Body.
Governmental Body. "Governmental Body" shall mean any: (a) nation, state,
commonwealth, province, territory, county, municipality, district or other
jurisdiction of any nature; (b) federal, state, local, municipal, foreign or
other government; or (c) governmental or quasi-governmental authority of any
nature (including any governmental division, department, agency, commission,
instrumentality, official, organization, unit, body or Entity and any court or
other tribunal).
HSR Act. "HSR Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended.
Identified Person. "Identified Person" shall mean any of the following:
(a) any director, officer or employee of the Company;
(b) any attorney or accountant engaged by the Company; or
(c) any stockholder of the Company represented on the Board of Directors
of the Company.
Indemnitees. "Indemnitees" shall mean the following Persons: (a) Parent;
(b) Parent's current and future affiliates (including Merger Sub and, following
the Merger, the Company); (c) the respective Representatives of the Persons
referred to in clauses "(a)" and "(b)" above; and (d) the respective successors
and assigns of the Persons referred to in clauses "(a)", "(b)" and "(c)" above;
provided, however, that the Company's stockholders shall not be deemed to be
"Indemnitees."
Key Stockholders. "Key Stockholders" shall mean the following Persons:
Xxxxxxx Xxxxxx-Xxxxx, Xxxx Xxxxxxx, Xxx X. Xxxx, Xxxxx Xxxxxx, Xxx Xxxxxx, Xxxxx
X. Xxxx, Noro-Xxxxxxx Partners IV, L.P., Noro-Xxxxxx Partners IV-B, L.P.,
Auction Ventures LLC, Societe General Capital Corporation, GE Capital Equity
Investments, Inc., Intersouth Partners IV, L.P., Southeast Interactive
Technology Fund II, Wakefield Group II, LLC, CNET, Inc., and Xxxxxxxxxx
Enterprises LLC and, if he or she becomes a stockholder of the Company prior to
the Closing, Xxxx Xxxxx, Xxx Xxxxxx III, Xxxxx Xxxx Xxxxxxxxx and Xxxx Xxxxx.
knowledge; best of knowledge. Information shall be deemed to be known to
the "best of knowledge" or to the "knowledge" of the Company if that information
is actually known or reasonably should have been known by any officer, director
or employee of the Company, in each case after due inquiry by such persons.
Known Information Event. "Known Information Event" shall mean any event
(i) that occurs between the date of this Agreement and Scheduled Closing Time;
(ii) over which no
A-3.
Acquired Corporation nor Identified Person has or had any control; and (iii)
that primarily relates to or arises from information in the Awareness of the
Company prior to the date of this Agreement.
Legal Proceeding. "Legal Proceeding" shall mean any action, suit,
litigation, arbitration, proceeding (including any civil, criminal,
administrative, investigative or appellate proceeding), hearing, inquiry, audit,
examination or investigation commenced, brought, conducted or heard by or
before, or otherwise involving, any court or other Governmental Body or any
arbitrator or arbitration panel.
Legal Requirement. "Legal Requirement" shall mean any federal, state,
local, municipal, foreign or other law, statute, constitution, principle of
common law, resolution, ordinance, code, edict, decree, rule, regulation, ruling
or requirement issued, enacted, adopted, promulgated, implemented or otherwise
put into effect by or under the authority of any Governmental Body.
Material Adverse Effect. A violation or other matter will be deemed to
have a "Material Adverse Effect" on an Acquired Corporation if such violation or
other matter (considered together with all other matters that would constitute
exceptions to the representations and warranties set forth in the Agreement or
in the Company Closing Certificate but for the presence of "Material Adverse
Effect" or other materiality qualifications, or any similar qualifications, in
such representations and warranties) would have a material adverse effect on
such Acquired Corporation's business, condition, assets, liabilities,
operations, financial performance or overall prospects.
Merger Stockholder. "Merger Stockholder" shall mean each stockholder of
Company that does not perfect its appraisal rights and is otherwise entitled to
receive shares of Parent Common Stock pursuant to Section 1.5.
Person. "Person" shall mean any individual, Entity or Governmental Body.
Proprietary Asset. "Proprietary Asset" shall mean any: (a) patent, patent
application, trademark (whether registered or unregistered), trademark
application, trade name, fictitious business name, service xxxx (whether
registered or unregistered), service xxxx application, copyright (whether
registered or unregistered), copyright application, maskwork, maskwork
application, trade secret, know-how, customer list, franchise, system, computer
software, computer program, invention, design, blueprint, engineering drawing,
proprietary product, technology, proprietary right or other intellectual
property right or intangible asset; or (b) right to use or exploit any of the
foregoing.
Pro Rata Allocation. "Pro Rata Allocation" shall mean, for any Indemnitor,
the fraction resulting from the division of the number of shares of Company
Stock held by such Indemnitor immediately prior to the Effective Time by the
total number of shares of Company Stock outstanding immediately prior to the
Effective Time.
A-4.
Representatives. "Representatives" shall mean officers, directors,
employees, agents, attorneys, accountants, advisors and representatives.
SEC. "SEC" shall mean the United States Securities and Exchange
Commission.
Securities Act. "Securities Act" shall mean the Securities Act of 1933, as
amended.
Subsidiaries. "Subsidiaries" shall have the meaning attributed to that
term in Section 2.1.
Substantial Adverse Effect. An inaccuracy, breach, violation or other
matter will be deemed to have a "Substantial Adverse Effect" on an Acquired
Corporation if such inaccuracy, breach, violation or other matter (considered
together with all other inaccuracies, breaches, violations or other matters that
would constitute exceptions to the representations or warranties set forth in
the Agreement, the Company Closing Certificate or in any other agreement or
instrument delivered to Parent in connection with the transactions contemplated
by this Agreement) constitutes, or could reasonably be expected to have, an
adverse effect on such Acquired Corporation's business, condition, assets,
liabilities, operations, financial performance or overall prospects (or all of
such considered together) exceeding $1,000,000 in value.
Tax. "Tax" shall mean any tax (including any income tax, franchise tax,
capital gains tax, gross receipts tax, value-added tax, surtax, excise tax, ad
valorem tax, transfer tax, stamp tax, sales tax, use tax, property tax, business
tax, withholding tax or payroll tax), levy, assessment, tariff, duty (including
any customs duty), deficiency or fee, and any related charge or amount
(including any fine, penalty or interest), imposed, assessed or collected by or
under the authority of any Governmental Body.
Tax Return. "Tax Return" shall mean any return (including any information
return), report, statement, declaration, estimate, schedule, notice,
notification, form, election, certificate or other document or information filed
with or submitted to, or required to be filed with or submitted to, any
Governmental Body in connection with the determination, assessment, collection
or payment of any Tax or in connection with the administration, implementation
or enforcement of or compliance with any Legal Requirement relating to any Tax.
Unknown Information Event. "Unknown Information Event" shall mean any
event (i) that occurs between the date of this Agreement and Scheduled Closing
Time; (ii) over which no Acquired Corporation nor any Identified Person has or
had any control; and (iii) that primarily relates to or arises from information
not in the Awareness of the Company prior to the date of this Agreement.
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