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AGREEMENT AND PLAN OF MERGER
BY AND AMONG
MANUGISTICS GROUP, INC.,
TALUS SOLUTIONS, INC.
AND
MANU ACQUISITION CORP.
DATED AS OF
SEPTEMBER 21, 2000
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AGREEMENT AND PLAN OF MERGER
by and among
MANUGISTICS GROUP, INC.,
TALUS SOLUTIONS, INC.
AND
MANU ACQUISITION CORP.
Dated As Of
September 21, 2000
THIS AGREEMENT AND PLAN OF MERGER (the "AGREEMENT") is entered into as of
this 21st day of September 2000, by and among MANUGISTICS GROUP, INC., a
Delaware corporation ("PARENT"), MANU ACQUISITION CORP., a Delaware corporation
wholly owned by Parent ("ACQUISITION") and TALUS SOLUTIONS, INC., a Delaware
corporation (the "COMPANY").
RECITALS
A. The Boards of Directors of each of Parent, the Company and
Acquisition believe that it is in the best interests of each company and its
respective stockholders to consummate the reorganization provided for herein,
pursuant to which Parent will directly acquire all of the capital stock of the
Company through a merger of Acquisition with and into the Company, with the
Company being the surviving corporation (as hereinafter defined in Section 1.1,
the "Merger").
B. Pursuant to the written consent of the holders of a majority of
the voting capital stock of the Company made in accordance with Section 228 of
the Delaware General Corporation Law ("DGCL"), the stockholders of the Company
have approved the Merger.
C. For federal income tax purposes, it is intended that the Merger
qualify as a reorganization under the provisions of Sections 368(a)(1)(A) and
368 (a)(2)(E) of the Internal Revenue Code of 1986, as amended (the "CODE").
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D. Concurrently with the execution hereof, in order to induce Parent
to enter into this Agreement, certain stockholders of the Company are entering
into (i) support agreements (the "SUPPORT AGREEMENTS") providing to Parent
certain voting and purchase rights with respect to shares of Company capital
stock held by them, and (ii) share transfer restriction agreements (the "SHARE
TRANSFER RESTRICTION AGREEMENTS") providing for certain restrictions on the
transfer of the shares of Parent Common Stock (as hereinafter defined) received
in connection with the Merger, all upon the terms and conditions specified
therein.
E. The Board of Directors of Parent, Acquisition and the Company deem
it advisable and in the best interests of each corporation and its respective
stockholders that the Company and Parent combine in order to advance the
long-term business strategies, goals and interests of the Company and Parent.
F. The Company, on the one hand, and Parent and Acquisition, on the
other hand, desire to make certain representations, warranties, covenants and
other agreements in connection with the transactions contemplated hereby.
NOW, THEREFORE, in consideration of the covenants, promises,
representations and warranties set forth herein, and for other good and valuable
consideration the receipt of which is hereby acknowledged, the parties agree as
follows:
ARTICLE I
THE MERGER
Section 1.1 The Merger. Upon the terms and subject to the conditions
hereof, at the Effective Time (as defined in Section 1.3 hereof), (a)
Acquisition shall be merged with and into the Company, (b) the separate
corporate existence of Acquisition shall cease, and (c) the Company shall
continue as the surviving corporation (the "SURVIVING CORPORATION") in the
Merger under the laws of the State of Delaware under the name Talus Solutions,
Inc. (the "MERGER").
Section 1.2 Closing and Closing Date. Subject to the terms and conditions
of this Agreement, the closing of the Merger (the "CLOSING") will take place at
the offices of Paul, Hastings, Xxxxxxxx & Xxxxxx LLP, 000 Xxxxxxxxx Xxxxxx,
X.X., Xxxxx 0000, Xxxxxxx, Xxxxxxx 00000 at 10:00 a.m. local time, on (a) the
next business day after the last to be fulfilled or waived of the conditions set
forth in Article VII shall be fulfilled or waived in accordance herewith, or (b)
at such other time, date or place as the Company and Parent may agree in
writing. The date on which the Closing occurs is referred to herein as the
"Closing Date".
Section 1.3 Effective Time of the Merger. On the Closing Date, the
parties hereto shall cause a certificate of merger, or other appropriate
documentation, satisfying the requirements of the DGCL (the "CERTIFICATE OF
MERGER") to be filed with the office of
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the Secretary of State of the State of Delaware in accordance with the
provisions of the DGCL. When used herein, the term "EFFECTIVE TIME" shall mean
the date and time when the Certificate of Merger has been accepted for filing by
the Secretary of State of the State of Delaware or such date and time as
otherwise specified in the Certificate of Merger.
Section 1.4 Effect of the Merger. The Merger shall, from and after the
Effective Time, have the effects provided in Section 259 of the DGCL. If at any
time after the Effective Time, any further action is deemed necessary or
desirable to carry out the purposes of this Agreement, the parties hereto agree
that the Surviving Corporation and its proper officers and directors shall be
authorized to take, and shall take, any and all such action.
ARTICLE II
THE SURVIVING CORPORATION
Section 2.1 Certificate of Incorporation. The Certificate of
Incorporation of the Company shall be the Certificate of Incorporation of the
Surviving Corporation after the Effective Time, until thereafter changed or
amended as provided therein or by applicable law.
Section 2.2 Bylaws. The bylaws of the Company as in effect immediately
prior to the Effective Time shall be the bylaws of the Surviving Corporation,
until thereafter changed or amended as provided therein or by applicable law.
Section 2.3 Board of Directors and Officers. The board of directors and
officers of Acquisition immediately prior to the Effective Time shall be
appointed as the board of directors and officers, respectively, of the Surviving
Corporation, effective as of the Effective Time, and until the earlier of their
respective resignations or the time that their respective successors are duly
elected or appointed and qualified.
ARTICLE III
CONVERSION OF SHARES
Section 3.1 Merger Consideration. As of the Effective Time, by virtue of
the Merger and without any action on the part of Acquisition, the Company, or
Parent:
(a) Each share of the Company's Class A Voting Common Stock, par value
$.0001 per share (the "CLASS A COMMON STOCK"), and Class B Non-Voting Common
Stock, par value $.0001 per share (the "CLASS B COMMON STOCK", and together with
the Class A Common Stock the "COMPANY COMMON STOCK"), issued and outstanding
immediately prior to the Effective Time (other than any Dissenting Shares (as
hereinafter defined)) will be converted, without any action on the part of the
holders
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thereof, into a number of shares of the common stock, par value $0.002 per
share, of Parent ("PARENT COMMON STOCK") equal to the Exchange Ratio (as
hereinafter defined) determined in accordance with Section 3.1(c) below;
provided that, cash shall be paid in lieu of fractional shares of Parent Common
Stock (if any). Each share of the Company's Class A Cumulative Convertible
Redeemable Non-Voting Preferred Stock, par value $.0001 per share (the "SERIES A
PREFERRED STOCK"), Class B Convertible Voting Preferred Stock, par value $.0001
per share (the "SERIES B PREFERRED STOCK"), and Class C Convertible Voting
Preferred Stock, par value $.0001 per share (the "SERIES C PREFERRED Stock", and
together with the Series A Preferred Stock and the Series B Preferred Stock, the
"COMPANY PREFERRED STOCK", and together with the Company Common Stock, the
"COMPANY CAPITAL STOCK"), issued and outstanding immediately prior to the
Effective Time (other than any Dissenting Shares) will be converted, without any
action on the part of the holders thereof, into a number of shares of Parent
Common Stock equal to the Exchange Ratio determined in accordance with Section
3.1(c) below multiplied by the number of shares of Company Common Stock into
which each share of Company Preferred Stock is convertible immediately prior to
the Effective Time pursuant to the Company's Certificate of Incorporation;
provided that, cash shall be paid in lieu of fractional shares of Parent Common
Stock (if any). Such conversions shall be made pursuant to and in accordance
with the procedures set forth in Section 3.5 below.
(b) Except as otherwise provided herein, the capitalized terms set
forth below shall have the following meanings:
"AVERAGE STOCK PRICE" shall mean the average closing price for
Parent Common Stock, as determined by averaging the Parent Common Stock
Price on the Nasdaq National Market System (the "NASDAQ") for the fifteen
(15) trading days immediately preceding the date which is two (2) days
prior to the Closing Date (or, if applicable, depending upon the date of
the Closing, such lesser number of trading days between the date hereof
and the date which is two days prior to the Closing Date).
"EXCHANGE RATIO" shall mean the Company Exchange Ratio, the Series
A Exchange Ratio or the Alternative Exchange Ratio, as applicable.
"PARENT STOCK AMOUNT" shall mean a number of shares of Parent
Common Stock equal to (A) 5,000,000, if the Average Stock Price is equal
to or less than $65.00 per share, or (B) 4,200,000, plus the product of
800,000 multiplied by a factor, the numerator of which is the difference
between $78.00 and the Average Stock Price and the denominator of which
is $13.00, if the Average Stock Price is greater than $65.00 per share
but less than $78.00 per share, or (C) 4,200,000, if the Average Stock
Price is equal to or greater than $78.00 per share.
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"REMAINING STOCK AMOUNT" means a number of shares of Parent Common
Stock equal to the Parent Stock Amount minus the Series A Minimum Amount.
"SERIES A ELECTION NOTICE" shall mean an election, made in writing
and received by Parent not later than two days before the Closing Date
from the holder of the Series A Preferred Stock, which specifies whether
such holder will (i) elect to convert its shares of Series A Preferred
Stock in accordance with Section IV.C.5.(a) of the Company's Certificate
of Incorporation or (ii) treat the Merger as a liquidation in accordance
with Section IV.C.3 of the Company's Certificate of Incorporation.
"SERIES A MINIMUM AMOUNT" shall mean that number of shares
(rounded to the nearest whole number of shares) of Parent Common Stock
equal to the quotient of (i) the amount determined in accordance with the
proviso to Section IV.C.3 of the Company's Certificate of Incorporation,
divided by (ii) the Average Stock Price.
(c) The Exchange Ratio shall be determined as follows:
(i) If the Series A Election Notice specifies that the holder
will convert its shares of Series A Preferred Stock in accordance with
Section IV.C.5.(a) of the Company's Certificate of Incorporation, or if
the holder of the Series A Preferred Stock fails to timely file such
election, then the Exchange Ratio for each class of Company Capital Stock
(the "COMPANY EXCHANGE RATIO") shall be equal to the quotient of: (A) the
Parent Stock Amount; divided by (B) the aggregate number of shares of
Company Common Stock issued and outstanding as of the Closing Date,
computed on a fully-diluted basis (including for these purposes the
number of: (i) shares of Company Common Stock issued upon conversion of
the Company Preferred Stock; and (ii) shares of Company Common Stock
issuable pursuant to the Company Stock Rights (whether or not vested))
(such denominator being, as of the date hereof, a total of 56,688,946).
(ii) If the Series A Election Notice is timely received and
specifies that the holder will treat the Merger as a liquidation in
accordance with Section IV.C.3 of the Company's Certificate of
Incorporation, then
(A) the exchange ratio for the Series A Preferred Stock
(the "SERIES A EXCHANGE RATIO") shall be equal to the quotient of:
(x) the Series A Minimum Amount; divided by (y) the number of
shares of Series A Preferred Stock outstanding immediately prior
to the Effective Time; and
(B) the exchange ratio for the Company Common Stock, the
Series B Preferred Stock and the Series C Preferred Stock (the
"ALTERNATIVE EXCHANGE RATIO") shall be equal to the quotient of:
(A) the
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Remaining Stock Amount, divided by (B) the aggregate number of
shares of Company Common Stock issued and outstanding as of the
Closing Date, computed on a fully-diluted basis (including for
these purposes the number of (i) shares of Company Common Stock
issued upon conversion of the Series B Preferred Stock and the
Series C Preferred Stock; and (ii) shares of Company Common Stock
issuable pursuant to Company Stock Rights (whether or not vested),
but expressly excluding any shares of Series A Preferred Stock or
Company Common Stock issued or issuable upon conversion of the
Series A Preferred Stock).
(d) Each Share of Company Capital Stock held in the Company's treasury
or held by any subsidiary of the Company, immediately prior to the Effective
Time will be cancelled without the payment of any consideration therefor (it
being understood that the shares of Company Common Stock held by the Company's
Employee Stock Ownership Plan shall not be deemed treasury shares and shall be
exchanged for shares of Parent Common Stock in the Merger in accordance with the
provisions of Section 3.1(a) above).
(e) Each share of common stock, par value $.0001 per share, of
Acquisition ("ACQUISITION COMMON STOCK") issued and outstanding immediately
prior to the Effective Time will be converted into and become one share of
common stock, par value $.0001 per share, of the Surviving Corporation.
(f) Each share of the Acquisition Common Stock held in Acquisition's
treasury or by any subsidiary of Acquisition immediately prior to the Effective
Time will be cancelled without the payment of any consideration therefor.
(g) In no event shall Parent be obligated to issue more than 5,000,000
shares of Parent Common Stock (as adjusted for stock splits, stock dividends and
similar transactions.).
Section 3.2 Dissenting Shares. Notwithstanding any provision hereof to
the contrary, any shares of Company Capital Stock held by a Dissenting
Stockholder (as hereinafter defined) shall not be converted as described in
Section 3.1 hereof, but instead shall be converted into the right to receive the
consideration due a Dissenting Stockholder pursuant to Section 262 of the DGCL;
provided, however, that if a Dissenting Stockholder shall fail to perfect his
demand, withdraw his demand or otherwise lose his right for appraisal under the
terms of the DGCL, then the Company Capital Stock held by such Dissenting
Stockholder (the "DISSENTING SHARES") shall be deemed to be converted as of the
Effective Time in accordance with the provisions of Section 3.1 hereof. Except
as required by applicable Law, the Company shall not voluntarily make any
payment with respect to, settle, or offer to settle or otherwise negotiate, any
such demands. All amounts paid to Dissenting Stockholders shall be paid without
interest thereon (to the extent permitted by applicable law). For purposes
hereof, the term "DISSENTING STOCKHOLDER" shall mean a stockholder of the
Company
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who (a) objects to the Merger; and (b) complies with the applicable provisions
of the DGCL concerning dissenter's rights.
Section 3.3 No Further Rights. From and after the Effective Time, holders
of certificates theretofore evidencing Company Capital Stock shall cease to have
any rights as stockholders of the Company, except as provided herein or by
applicable law.
Section 3.4 Stock Transfer Books. All shares of Parent Common Stock
issued upon surrender of Certificates in accordance with this Article III shall
be deemed to be in full satisfaction of all rights pertaining to shares of
Company Capital Stock represented thereby. At the Effective Time, the stock
transfer books of the Company shall be closed and no transfer of Company Capital
Stock shall be made thereafter. If after the Effective Time, certificates for
Company Capital Stock (a "CERTIFICATE") are presented to the Surviving
Corporation or Parent they shall be cancelled and exchanged for such
consideration as set forth in Section 3.1 hereof, subject to applicable law in
the case of Dissenting Stockholders.
Section 3.5 Exchange Procedure.
(a) At the Effective Time, Parent shall issue an aggregate number of
shares of Parent Common Stock equal to fifteen percent (15%) of the total number
of shares of Parent Common Stock issuable pursuant to Section 3.1 hereto (such
shares, subject to adjustment for fractional shares as set forth in Exhibit F,
the "ESCROW SHARES") to be held in escrow pursuant to Article XI and Exhibit F
hereof. The portion of the Escrow Shares issued and contributed on behalf of
each holder of Company Capital Stock shall be in proportion to the aggregate
number of shares of Parent Common Stock which such holder would otherwise be
entitled to receive under Article 3 by virtue of ownership of Company Capital
Stock; provided that, no fractional shares shall be escrowed and the number of
Escrow Shares issued and contributed on behalf of each holder of Company Stock
shall be rounded down to the nearest whole number of shares in the manner set
forth in Exhibit F.
(b) As of the Effective Time, Parent shall deposit, or shall cause to
be deposited, with an exchange agent selected and appointed by Parent, which
exchange agent shall be a reputable institution reasonably satisfactory to the
Company (the "EXCHANGE AGENT"), for the benefit of the holders of Company
Capital Stock, (i) certificates representing the shares of Parent Common Stock
(other than fractional shares and other than the Escrow Shares) issuable in
accordance with Section 3.1 hereof, and (ii) cash in lieu of fractional shares
to be paid pursuant to Section 3.1, in each case in exchange for the outstanding
shares of Company Capital Stock.
(c) Promptly after the Effective Time, Parent shall cause the Exchange
Agent to mail to each holder of record of a Certificate or Certificates (i) a
letter of transmittal which shall specify that delivery shall be effected, and
risk of loss and title to the Certificates shall pass, only upon delivery to the
Exchange Agent of (A) the
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Certificates and (B) such other certifications, affidavits or documents as
Parent may request, in form acceptable to Parent and its counsel and duly
executed by such holder, said letter of transmittal to be in such form and have
such other provisions as Parent may reasonably specify, and (ii) instructions
for use in effecting the surrender of the Certificates in exchange for
certificates representing Parent Common Stock (other than fractional shares),
and cash in lieu of fractional shares. Upon surrender of a Certificate for
cancellation to the Exchange Agent together with the other required
documentation and such letter of transmittal, duly executed and completed in
accordance with the instructions thereto, the holder of such Certificate shall
be entitled to receive in exchange therefor, subject to the provisions of
Article XI hereof, (x) certificates representing the number of whole shares of
the Parent Common Stock and (y) a check representing the amount of cash in lieu
of fractional shares, which such holder has the right to receive in respect of
the Certificate surrendered pursuant to the provisions of this Article III,
after giving effect to any required withholding tax; and, the Certificate so
surrendered shall forthwith be cancelled. No interest will be paid or accrued on
the cash in lieu of fractional shares payable to holders of Certificates. In the
event of a transfer of ownership of Company Capital Stock which is not
registered in the transfer records of the Company, certificates representing the
proper number of shares of Parent Common Stock, together with a check for the
cash to be paid in lieu of fractional shares, may be issued or paid to such a
transferee if the Certificate representing such Company Capital Stock is
presented to the Exchange Agent, accompanied by all documents reasonably
required by the Exchange Agent to evidence and effect such transfer and to
evidence that any applicable stock transfer taxes have been paid.
(d) Notwithstanding any other provisions of this Agreement, no
dividends or other distributions on the Parent Common Stock with a record date
after the Effective Time shall be paid with respect to any shares of Company
Capital Stock represented by a Certificate, nor shall any cash payment in lieu
of fractional shares be paid with respect to such shares, until such Certificate
is surrendered for exchange as provided herein. Subject to the effect of
applicable laws, following surrender of any such Certificate, there shall be
paid to the holder of the certificates representing whole shares of Parent
Common Stock issued in exchange therefor, without interest, (i) at the time of
such surrender, the amount of dividends or other distributions with a record
date after the Effective Time theretofore payable with respect to such whole
shares of Parent Common Stock, less the amount of any withholding taxes which
may be required thereon, and (ii) at the appropriate payment date, the amount of
dividends or other distributions with a record date after the Effective Time but
prior to surrender and a payment date subsequent to surrender payable with
respect to such whole shares of the Parent Common Stock, less the amount of any
withholding taxes which may be required thereon.
(e) No fractional shares of Parent Common Stock shall be issued
pursuant hereto. In lieu of the issuance of any fractional shares of Parent
Common Stock pursuant to the Merger, cash adjustments will be paid to holders in
respect of any
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fractional shares of Parent Common Stock that would otherwise be issuable, and
the amount of such cash adjustment shall be equal to the product of such
fractional amount and the Average Stock Price.
(f) Any portion of the Parent Common Stock held by the Exchange Agent
(together with any cash in lieu of fractional shares and the proceeds of any
investments thereof) that remains unclaimed by the former stockholders of the
Company one year after the Effective Time shall be delivered to Parent. Any
former stockholders of the Company who have not theretofore complied with this
Section 3.5 shall thereafter look only to Parent for payment of their Parent
Common Stock, cash in lieu of fractional shares, and any dividends and other
distributions on the Parent Common Stock, if any, in each case, without any
interest thereon.
(g) None of Parent, Acquisition, the Company, the Exchange Agent or
any other person shall be liable to any former holder of Company Capital Stock
for any amount properly delivered to a public official pursuant to applicable
abandoned property, escheat or similar laws. Any such amounts remaining
unclaimed by any holder of Company Capital Stock immediately prior to such time
when such amounts would otherwise escheat to or become the property of any
Governmental Entity (as hereinafter defined), shall, to the extent permitted by
applicable laws, become the property of Parent, free and clear of all claims, or
interest of any person previously entitled thereto.
(h) In the event any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such Certificate to be lost, stolen or destroyed and, if required by Parent, the
execution of an indemnity agreement reasonably acceptable to Parent by such
person against any claim that may be made against it with respect to such
Certificate, the Exchange Agent or Parent will issue in exchange for such lost,
stolen or destroyed Certificate the shares of Parent Common Stock, and cash in
lieu of fractional shares, and any unpaid dividends and distributions thereon,
deliverable in respect thereof pursuant to this Agreement.
(i) Each of the Surviving Corporation and Parent shall be entitled to
deduct and withhold from the Parent Common Stock, and cash in lieu of fractional
shares thereof (and any dividends or distributions thereon), otherwise payable
hereunder to any person, such amounts as it is required to deduct and withhold
with respect to the making of such payment under any provision of federal,
state, local or foreign income tax law. To the extent that the Surviving
Corporation or Parent so withholds those amounts, such withheld amounts shall be
treated for all purposes of this Agreement as having been paid to the holder of
Company Capital Stock in respect of which such deduction and withholding was
made by the Surviving Corporation or Parent, as the case may be.
(j) Subject to applicable law, Certificates surrendered for exchange
by any person constituting an "affiliate" of the Company for purposes of Rule
145(c) under
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the Securities Act of 1933, as amended, and the rules promulgated thereunder
(the "SECURITIES ACT"), shall not be exchanged until Parent has received from
such person a signed Rule 145 Letter, in the form attached hereto as Exhibit A,
pursuant to which such person will agree to comply with the provisions of Rule
145 under the Securities Act.
Section 3.6 Tax Consequences. It is intended by the parties hereto that
the Merger shall constitute a reorganization within the meaning of Sections
368(a)(1)(A) and 368(a)(2)(E) of the Code. The parties hereto adopt this
Agreement as a "plan of reorganization" within the meaning of Section 1.368-2(g)
and 1.368-3(a) of the Income Tax Regulations.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
With such exceptions as are set forth in a letter (the "Company
Disclosure Letter") delivered by the Company to Parent prior to the execution
hereof, making in the case of each such exception specific reference to the
representation and warranty in this Article IV so excepted, the Company
represents and warrants to Parent and Acquisition as follows:
Section 4.1 Organization and Qualification.
(a) The Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware. The Company has the
requisite corporate power and authority to carry on its business as it is now
being conducted and is duly qualified or licensed to do business, and is in good
standing, in each jurisdiction where the character of its properties owned or
held under lease or the nature of its activities makes such qualification
necessary, except where the failure to be so qualified would not have a Material
Adverse Effect (as hereinafter defined) on the Company. The Company has made
available to Parent complete and correct copies of the Certificate of
Incorporation and bylaws of the Company as in effect on the date hereof. The
minute book of the Company, a true and complete copy of which has been made
available to Parent, (i) accurately reflects all action taken by the directors
and stockholders of the Company at meetings of the Company's board of directors
or stockholders, as the case may be and (ii) contains true and complete copies,
or originals, of the respective minutes of all meetings or consent actions of
the directors or stockholders.
(b) For purposes of this Agreement, the term "Material Adverse Effect"
shall mean an act, omission or a circumstance of any kind whatsoever,
individually or in the aggregate, that has a material and adverse effect on the
assets, business, financial condition or results of operations of any party
hereto and its subsidiaries taken as a whole, as applicable; provided, however,
that (i) any adverse change resulting from conditions affecting the United
States economy that is material to the business of a party hereto, shall not be
taken into account in determining whether there has been or
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would be a "Material Adverse Effect" on or with respect to such party, (ii) any
adverse change that is primarily caused by conditions affecting a party's
industry sector shall not be taken into account in determining whether there has
been or would be a "Material Adverse Effect" on or with respect to such party,
(iii) any adverse change in the stock price or trading volume of a party's
capital stock shall not be taken into account in determining whether there has
been or would be a "Material Adverse Effect" on or with respect to such party,
(iv) any failure by any party to meet the revenue or earnings predictions of
equity analysts or any other revenue or earnings predictions or expectations
(whether internal or external), for any period ending for which earnings are
released on or after the date of this Agreement and prior to the Closing Date,
in and of itself, shall not be taken into account in determining whether there
has been or would be a "Material Adverse Effect" on or with respect to such
party, and (v) any adverse change arising primarily out of, or resulting
primarily from, actions taken by any party in connection with (but not in breach
of) this Agreement and the transactions contemplated hereunder, or which is
primarily attributable to the announcement of this Agreement and the
transactions contemplated hereby (including, without limitation, any litigation,
employee attrition or any loss or postponement of business resulting from
termination or modification of any vendor, customer or other business
relationships, delay of customer order or otherwise and any corresponding change
in the margins, profitability or financial condition of a party) shall not be
taken into account in determining whether there has been or would be a "Material
Adverse Effect" on or with respect to such party.
Section 4.2 Authority. The Company has full power and authority
(including full corporate power and authority) to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. The execution
and delivery hereof and the consummation of the transactions contemplated hereby
by the Company have been duly and validly authorized and approved by the
Company's board of directors and by the stockholders of the Company. This
Agreement has been duly executed and delivered by the Company, and assuming the
due authorization, execution and delivery by Parent and Acquisition, constitutes
the valid and binding obligation of the Company, enforceable against the Company
in accordance with its terms, subject to bankruptcy, insolvency, reorganization,
moratorium and similar laws of general application relating to or affecting
creditors' rights and to general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing.
Section 4.3 Capitalization.
(a) The authorized capital stock of the Company consists of (i)
100,000,000 shares of Class A Voting Common Stock, par value $.0001 per share,
of which 16,603,843 shares are issued and outstanding, and 1,948,630 shares are
held in the treasury of the Company; (ii) 5,000,000 shares of Class B Non-Voting
Common Stock, par value $.0001 per share, of which 398,627 shares are issued and
outstanding, and no shares are held in the treasury of the Company; (iii)
2,000,000 shares of Class A Cumulative Convertible Redeemable Non-Voting
Preferred Stock, par value $.0001 per
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share, of which 831,635 shares are issued and outstanding, and no shares are
held in the treasury of the Company, which will, subject to the consent of the
holders, convert in the Merger into 985,219 shares of Company Class B Non-Voting
Common Stock; (iv) 5,000,000 shares of Class B Convertible Voting Preferred
Stock, par value $.0001 per share, of which 4,716,981 shares are issued and
outstanding, and no shares are held in the treasury of the Company, which will
automatically convert in the Merger into 13,839,872 shares of Company Class A
Voting Common Stock; and (v) 18,000,000 shares of Class C Convertible Voting
Preferred Stock, par value $.0001 per share, of which 17,299,851 shares are
issued and outstanding, and no shares are held in the treasury of the Company,
which will, subject to the consent of the holders, convert in the Merger into
17,299,851 shares of Company Class A Voting Common Stock. Such issued and
outstanding shares, together with 9,510,163 shares of Company Common Stock
reserved for issuance in respect of certain outstanding options, warrants and
rights, constitute all of the Company Capital Stock subject to conversion in
accordance with Article III and Section 6.12 hereof. All outstanding capital
stock of the Company was issued and will be issued in material compliance with
applicable federal and state securities laws.
(b) The Company has outstanding (i) warrants to purchase and acquire,
in the aggregate, 436,525 shares of Company Common Stock, and (ii) options
(vested and non-vested) to purchase and acquire, in the aggregate, 9,073,638
shares of Company Common Stock (collectively, the "Company Stock Rights").
(c) Except for the Company Stock Rights, there are no options,
warrants, calls, convertible notes, agreements, commitments or other rights
presently outstanding that would obligate the Company to issue, deliver or sell
shares of its capital stock, or to grant, extend or enter into any such option,
warrant, call, convertible note, agreement, commitment or other right. In
addition to the foregoing, as of the date hereof, the Company has no bonds,
debentures, notes or other indebtedness issued or outstanding that have voting
rights in the Company. The Company Disclosure Letter sets forth a list of (i)
all holders of Company Stock Rights; (ii) the number of shares, and class of
shares, of capital stock of the Company represented by the Company Stock Rights;
and (iii) the exercise price, date of grant, duration and vesting schedule,
including accelerated vesting upon a change in control, for each Company Stock
Right. There are no outstanding or authorized stock appreciation, phantom stock
profit participation or similar rights with respect to the Company.
(d) All of the issued and outstanding shares of capital stock of the
Company are validly issued, fully paid and nonassessable. Each share of the
capital stock of the Company is free and clear of any lien, charge, security
interest, pledge, option, right of first refusal, voting proxy or other voting
agreement, or encumbrance of any kind or nature imposed by the Company, other
than (i) encumbrances that would not adversely affect the Merger or the
conversion of such shares pursuant to the Merger, and (ii) restrictions on
transfer imposed by federal and state securities laws.
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Except for the dividends accrued on the Company's Class A Cumulative Convertible
Redeemable Non-Voting Preferred Stock in the aggregate amount set forth in the
Company Disclosure Letter, there are no dividends declared or accrued, but not
paid, in respect of any of the shares of the Company Capital Stock.
Section 4.4 Subsidiaries. The Company owns all of the outstanding capital
stock of the wholly owned subsidiary identified on the Company Disclosure Letter
(the "Subsidiary"). The Subsidiary is a private company limited by shares, duly
organized, validly existing and in good standing under the laws of England and
Wales. The Subsidiary has the requisite corporate power and authority to carry
on its business as it is now being conducted and is duly qualified or licensed
to do business, and is in good standing, in each jurisdiction where the
character of its properties owned or held under lease or the nature of its
activities makes such qualification necessary, except where the failure to be so
qualified would not have a Material Adverse Effect on the Company. The Company
has made available to Parent complete and correct copies of the Memorandum and
Articles of Association of the Subsidiary as in effect on the date hereof.
Except for the Subsidiary, the Company has no subsidiaries and does not
otherwise own or control, directly or indirectly, any controlling equity
interest, or any security convertible into a controlling equity interest, in any
corporation, partnership, limited liability company, joint venture, association
or other business entity (any of the foregoing, an "ENTITY").
Section 4.5 No Conflicts, Required Filings and Consents. Subject to any
required filing pursuant to the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended (the "H-S-R ACT"), and the filing of the Certificate of Merger
with the Secretary of State of the State of Delaware, none of (i) the execution
and delivery of this Agreement by the Company, (ii) the consummation by the
Company of the transactions contemplated hereby or (iii) compliance by the
Company with any of the provisions hereof will:
(a) conflict with or violate the Certificate of Incorporation or
bylaws of the Company;
(b) result in a violation of any constitution, statute, ordinance,
rule, regulation, order, injunction, ruling, charge, judgment or decree
applicable to the Company or by which the Company or any of its properties or
assets is bound or affected, except for violations as would not have a Material
Adverse Effect on the Company;
(c) result in a violation or breach of, or constitute a default (or an
event that, with notice or lapse of time or both, would become a default) under,
or give to any other any right of termination, amendment, acceleration or
cancellation of, any (i) Material Contract (as defined in Section 4.9 hereof),
or (ii) any license, permit, or franchise, to which the Company is a party or by
which the Company or any of its
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properties or assets are bound or affected, except for such violations, breaches
and defaults as would not have a Material Adverse Effect on the Company;
(d) result in the creation of any material lien on any material
property or assets of the Company; or
(e) require the consent, waiver, approval, order or authorization of,
or registration, declaration or filing with, or notification to (x) any
government or subdivision thereof (whether domestic or foreign), or any
administrative, governmental or regulatory authority, agency, commission, court,
tribunal or body (whether domestic, foreign or multinational) (any of the
foregoing, a "GOVERNMENTAL ENTITY"), or (y) any individual, partnership, joint
venture, firm, corporation, limited liability company, association, trust or
other enterprise (whether or not incorporated) (all of the foregoing, together
with any Governmental Entity, "PERSON(s)") except for such consents which, if
not obtained or made, would not have a Material Adverse Effect on the Company or
prevent or materially delay the consummation of the transactions contemplated
hereby.
Section 4.6 Financial Statements. The Company has made available to
Parent the following financial statements (collectively the "COMPANY FINANCIAL
STATEMENTS"): (i) the unaudited consolidated balance sheets and consolidated
statements of income and cash flow as of and for the six months ended June 30,
2000 (the "COMPANY INTERIM FINANCIAL STATEMENTS") for the Company and the
Subsidiary; and (ii) the audited consolidated balance sheets and consolidated
statements of income, changes in stockholders' equity, and cash flow as of and
for the twelve months ended December 31, 1999 and December 31, 1998 for the
Company and the Subsidiary. The Company Financial Statements (including the
notes thereto) have been prepared in accordance with generally accepted
accounting principles ("GAAP") applied on a consistent basis throughout the
periods covered thereby, present fairly the financial condition of the Company
and the Subsidiary as of such dates and the results of operations and cash flows
of the Company and the Subsidiary for such periods (subject, in the case of
unaudited financial statements, to normal and recurring year-end adjustments),
and are consistent with the books and records of the Company.
Section 4.7 Absence of Changes. Except as reported in the Company
Interim Financial Statements, since December 31, 1999, the Company has not:
(a) made any change in accounting methods or practices or valuation,
or a material decrease in the book value, of any asset of the Company;
(b) incurred any material liabilities or obligations of any nature,
whether absolute, accrued, contingent or otherwise and whether due or to become
due, (including, but not limited to, any "loss contingency" which is either
"probable" or "reasonably possible" as all such terms are defined in Statement
of Financial Accounting Standards No. 5 of the Financial Accounting Standards
Board (a "FASB
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Loss Contingency"), except for such liabilities or obligations that do not
exceed in the aggregate $500,000;
(c) increased (other than increases resulting from the calculation of
reserves in the ordinary course of business consistent with past practice that
do not exceed in the aggregate $500,000) or experienced any change in any
assumptions underlying or methods of calculating, any reserves for bad debt, any
contingency or other reserves;
(d) paid, discharged or satisfied any claims, encumbrances,
liabilities or obligations (whether absolute, accrued, contingent or otherwise
and whether due or to become due), other than the payment, discharge or
satisfaction in the ordinary course of business consistent with past practice of
(i) liabilities and obligations reflected or reserved against in the Company
Financial Statements or (ii) liabilities and obligations arising in the ordinary
course of business consistent with past practice since the date of the Company
Financial Statements;
(e) determined as collectible any notes or accounts receivable or any
portion thereof which were previously considered uncollectible, or written off
as uncollectible any notes or accounts receivable or any portion thereof, except
for write-downs in the ordinary course of business consistent with past practice
in accordance with GAAP consistently applied;
(f) declared, paid, or committed for the payment, by the Company, of
any bonus (including, year-end bonuses) or other additional salary, compensation
or benefit to any employee of the Company that was not in the ordinary course of
business consistent with past practice;
(g) loaned or advanced any amount to any employee, officer, director
or stockholder of the Company except for amounts advanced to employees,
directors or officers of the Company that do not individually exceed $100,000 or
in the aggregate exceed $500,000, except for out-of-pocket expenses in
connection with travel;
(h) sold, transferred or leased to any officer, director or
stockholder of the Company any of the assets of the Company, or entered into any
agreement or arrangement with, any officer, director or stockholder of the
Company;
(i) made any capital expenditures in excess of $100,000 for any single
item, or $500,000 in the aggregate;
(j) declared or paid a dividend, or any other declaration, payment or
distribution of any type or nature to any stockholder of the Company in respect
of its stock, whether in cash or property;
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(k) transferred or granted any right under any license, patent,
copyright, trademark, trade name, trade secret, invention or similar rights,
other than pursuant to licenses made in the ordinary course of business
consistent with past practice; or entered into any settlement regarding the
breach or infringement of, any license, patent, copyright, trademark, trade
name, trade secret, invention or similar rights, or modified any existing rights
with respect;
(l) made or effected any material amendment, termination or waiver of,
or notice of any material amendment, termination or waiver of, any material
right, duty or obligation of the Company related to any Material Contract,
including any agreement relating to Company Intellectual Property; or
(m) had any resignation of any employee or employees, the loss of
which would be, or has had, a Material Adverse Effect on the Company
Intellectual Property or the conduct of the business of the Company;
(n) issued or sold capital stock of the Company or its subsidiaries or
granted options, warrants or rights to purchase or subscribe for any of the
capital stock of the Company or any of its subsidiaries or altered the terms of
any presently outstanding options or made any changes (by split-up, combination,
reorganization or otherwise) in the capital structure of the Company or the
Subsidiary, except for such issuances of capital stock pursuant to the exercise
of employee stock options, warrants and other convertible securities outstanding
as of December 31, 1999 or the granting of options to purchase capital stock
pursuant to employee stock option plans existing on as of December 31, 1999; or
(o) agreed or committed to do any of the foregoing.
Section 4.8 Intellectual Property.
(a) All patents, trademarks, trade names, service marks, trade dress,
Internet domain names, copyrights and any renewal rights therefor, technology,
supplier lists, trade secrets, know-how, computer software programs or
applications in both source and object code form, technical documentation of
such software programs, registrations and applications for any of the foregoing
and all other tangible or intangible proprietary information or materials that
are or have been used (including without limitation in the development of) the
Company's business and/or in any product, technology or process (i) currently
being or formerly manufactured, published or marketed by the Company, (ii)
previously or currently under development for possible future manufacturing,
publication, marketing, or other use by the Company, or (iii) relating to
services performed by the Company in the conduct of its business, are
hereinafter referred to as the "COMPANY INTELLECTUAL PROPERTY".
(b) The Company Disclosure Letter contains a true and complete
list of the Company's issued patents and patent applications, registered
trademarks and
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trademark applications or trade names, registered service marks and service xxxx
applications, Internet domain names, Internet domain name applications,
copyright registrations and applications and other filings and formal actions
made or taken pursuant to Federal, state, local and foreign laws by the Company
to protect its interests in the Company Intellectual Property ("IP Properties").
The Company is the sole and exclusive owner of, and has all right, title and
interest in and to, all of the IP Properties.
(c) The Company Intellectual Property consists solely of items
and rights which are: (i) owned by the Company; (ii) in the public domain; or
(iii) rightfully used by the Company pursuant to a valid license (the "LICENSED
COMPANY INTELLECTUAL PROPERTY") (sufficient for the conduct of the Company's
business as currently conducted and as proposed to be conducted), the parties,
date, term and subject matter of each such license agreement (each, a "LICENSE
AGREEMENT") being set forth on the Company Disclosure Letter, except for
desk-top office software generally available at retail. The Company has all
rights in the Company Intellectual Property necessary to carry out the Company's
current activities (and had all rights necessary to carry out its former
activities at the time such activities were being conducted), including without
limitation, to the extent required to carry out such activities, rights to make,
use, reproduce, modify, adopt, create derivative works based on, translate,
distribute (directly or indirectly), transmit, display and perform publicly,
license, rent and lease and, other than with respect to the Licensed Company
Intellectual Property, assign and sell, the Company Intellectual Property.
(d) To the knowledge of the Company, the reproduction,
manufacturing, distribution, licensing, sublicensing, sale or any other exercise
of rights in the Company Intellectual Property, as now used or proposed for use,
licensing or sale by the Company does not infringe on any copyright, trade
secret, trademark, service xxxx, trade name, trade dress, firm name, Internet
domain name, logo, trade dress, mask work or of any Person or the patent of any
Person, except where such infringement would not have a Material Adverse Effect
on the Company. No claims (i) challenging the validity, effectiveness or, other
than with respect to the Licensed Company Intellectual Property, ownership by
the Company of any of the Company Intellectual Property, or (ii) to the effect
that the use, distribution, licensing, sublicensing, sale or any other exercise
of rights in any of the Company Intellectual Property as now used or proposed
for use, licensing, sublicensing or sale by the Company infringes or will
infringe on any intellectual property or other proprietary right of any person
have been asserted or, to the knowledge of the Company, are threatened by any
Person, nor are there, to the Company's knowledge, any valid grounds for any
bona fide claim of any such kind. The Company has the right to use all source
code now or previously constituting a portion of the Company's Intellectual
Property which is necessary for use in products being offered, or products under
development, for sale or license to, or use by, the Company or third parties. To
the knowledge of the Company, all registered, granted or issued patents,
trademarks, Internet domain names and copyrights held by the Company are
enforceable and subsisting. To the knowledge of the Company, there
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is no unauthorized use, infringement or misappropriation of any of the Company
Intellectual Property by any third party, employee or former employee.
(e) All personnel, including employees, agents, consultants and
contractors, who have contributed to or participated in the conception and
development of the Company Intellectual Property on behalf of the Company, have
executed nondisclosure agreements in the form made available to Parent and
either (i) have been a party to a "work-for-hire" arrangement or agreements with
the Company in accordance with applicable national and state law that has
accorded the Company full, effective, exclusive and original ownership of all
tangible and intangible property thereby arising, or (ii) have executed
appropriate instruments of assignment in favor of the Company as assignee that
have conveyed to the Company effective and exclusive ownership of all tangible
and intangible property thereby arising.
(f) The Company is not, nor as a result of the execution or delivery
of this Agreement, or performance of the Company's obligations hereunder, will
the Company be, in violation of any material license, sublicense, agreement or
instrument to which the Company is a party or otherwise bound and which relates
to the Company Intellectual Property; nor will execution or delivery of this
Agreement, or performance of the Company's obligations hereunder, cause the
termination or forfeiture, of any of the Company Intellectual Property.
(g) The Company Disclosure Letter contains a true and complete list of
all of the Company's software programs marketed by the Company to its customers
and prospects or currently under development (the "COMPANY SOFTWARE PROGRAMS").
The Company has the rights to license or owns full and unencumbered right and
good, valid and marketable title to the Company Software Programs free and clear
of all mortgages, pledges, liens, security interests, conditional sales
agreements, encumbrances or charges of any kind, except encumbrances or charges
arising from any blanket security interests granted by the Company. All
unexpired representations and warranties made or given by the Company to any of
its customers respecting any of the Company's Software Programs or its Company
Intellectual Property are true and correct in all material respects.
(h) The source code and system documentation relating to the Company
Software Programs (i) have at all times been maintained in strict confidence,
(ii) have been disclosed by the Company only to employees who have a "need to
know" the contents thereof in connection with the performance of their duties to
the Company and who have executed the nondisclosure agreements referred to in
Section 4.8(e) above, and (iii) except as set forth in the Company Disclosure
Letter, have not been disclosed to any third party not under an obligation to
maintain the confidential nature of such information.
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(i) The Company Disclosure Letter contains a true and complete list of
all agreements pursuant to which any of the source code relating to the Company
Software Programs has been placed in escrow and the identity of the escrow
agent.
Section 4.9 Material Contracts.
(a) The Company Disclosure Letter sets forth a true and complete list
of all Material Contracts (as hereinafter defined) which shall include
agreements and commitments (whether written or oral) (other than Employee Plans
(as hereinafter defined) and Benefit Arrangements (as hereinafter defined)) to
which the Company is a party (in its own name or as a successor in interest), or
by which it or any of its properties or assets is otherwise bound, including but
not limited to any leases of real or personal property (whether the Company is
party as lessee or lessor), service agreements, customer agreements, supplier
agreements, agreements to lend or borrow money, stockholder agreements,
employment agreements, and agreements relating to Company Intellectual Property
Rights and the like. For purposes of this Agreement, "Material Contract" shall
mean and include any agreement (i) relating to the Company Intellectual Property
or Licensed Company Intellectual Property, except for desk-top office software
generally available at retail, (ii) requiring in the aggregate, payments in
excess of $100,000, or (iii) requiring the performance of services for more than
one year, which agreement cannot be terminated, without liability to the
Company, on ninety days or less written notice.
(b) True and complete copies of all Material Contracts (or a true and
complete narrative description of any oral Material Contract) have previously
been made available to Parent. Neither the Company nor, to the knowledge of the
Company, any other party to any of the Material Contracts (x) is in default
under (nor does there exist any condition that, with notice or lapse of time or
both, would cause such a default under) any of the Material Contracts, or (y)
has waived any right it may have under any of the Material Contracts, except for
such defaults or waivers which would not have a Material Adverse Effect on the
Company. All of the Material Contracts constitute the valid and binding
obligations of the Company, are enforceable in accordance with their respective
terms, and, to the knowledge of the Company, of the other parties thereto, are
enforceable in accordance with its terms, subject to bankruptcy, insolvency,
reorganization, moratorium and similar laws of general application relating to
or affecting creditors' rights and to general principles of equity, including
principles of commercial reasonableness, good faith and fair dealing.
(c) The Company is not a party to or bound by any agreement that
contains any provision for severance or termination pay liabilities or
obligations (including, without limitation, change of control or "golden
parachute" provisions).
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(d) To the knowledge of the Company, the Company possesses the
requisite Company Intellectual Property, personnel and other resources necessary
to perform fully each Material Contract within the time permitted thereby and
all other material terms thereof, without incurring costs in excess of the
compensation to be received by the Company for such performance; and, to the
knowledge of the Company, the performance by the Company of any and all of its
Material Contracts will not result in or create any FASB Loss contingency.
Section 4.10 Litigation and Proceedings/Assessments. There is no suit,
action, claim, investigation or proceeding pending or, to the knowledge of the
Company, threatened, against or affecting the Company, nor is there any
judgment, decree, injunction or order of any applicable Governmental Entity or
arbitrator outstanding against the Company. Except for the actions, suits,
proceedings, hearings and investigations set forth in the Company Disclosure
Letter, there is no action, suit, proceeding, hearing or investigation which, if
adversely determined, would result in a judgment or damages payable by the
Company in excess of $100,000.
Section 4.11 Employee Benefit Plans/Labor Relations.
(a) "EMPLOYEE PLANS" shall mean each "employee benefit plan", as
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974
("ERISA"), which (i) is subject to any provision of ERISA and (ii) is
maintained, administered or contributed to by the Company and covers any
employee or former employee of the Company or under which the Company or any
affiliate has any liability. The Company Disclosure Letter lists all Employee
Plans. True and complete copies of such Employee Plans (and, if applicable,
related trust agreements) and all amendments thereto, all plan summaries and
annual reports filed since December 31, 1996 (including all applicable
attachments) have been made available to Parent. For purposes of this Section,
"affiliate" of any Person means any other Person which, together with such
Person, would be treated as a single employer under Section 414 of the Code.
(b) No Employee Plan individually or collectively constitutes a
"defined benefit plan" as defined in Section 3(35) of ERISA.
(c) No Employee Plan constitutes a "multi-employer plan", as defined
in Section 3(37) of ERISA, and no Employee Plan is maintained in connection with
any trust described in Section 501(c)(9) of the Code. No Employee Plan is
subject to Title IV of ERISA. Neither the Company nor any affiliate has
incurred, nor has reason to expect to incur, any liability under Title VI of
ERISA, including any liability arising in connection with the termination of, or
complete or partial withdrawal from, any plan previously covered by Title IV of
ERISA.
(d) Nothing done or omitted to be done and no transaction or holding
of any asset under or in connection with any Employee Plan has or will make the
Company or any affiliate subject to any material liability under Part 4 of Title
I of ERISA
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or liable for any material tax pursuant to Subtitle D, Chapter 43 of the Code,
including but not limited to Section 4975 of the Code.
(e) Each Employee Plan which is intended to be qualified under Section
401(a) of the Code is so qualified and has been so qualified during the period
from its adoption to date, and each trust forming a part thereof is exempt from
tax pursuant to Section 501(a) of the Code, and each Employee Plan has been
maintained in material compliance with its terms and with the requirements
prescribed by ERISA and any and all statutes, orders, final rules and applicable
to such Employee Plan. No Employee Plan is currently, or at any time since
December 31, 1996, has been, under audit or, to the knowledge of the Company,
under any investigation by any Governmental Entity.
(f) There is no contract, agreement, plan or arrangement covering any
employee or former employee of the Company that, individually or collectively,
could give rise to the payment of any amount that would not be deductible
pursuant to the terms of Section 162(m) or Section 280G of the Code. Neither the
Company nor any affiliate has any liability or potential liability to the
stockholders of the Company arising from the award or grant or any stock option,
warrant, stock appreciation, phantom stock, profit participation or similar
rights with respect to the Company.
(g) "BENEFIT ARRANGEMENT" shall mean each employment, severance or
other similar contract, arrangement or policy and each plan or arrangement
(written or oral) providing for compensation, bonus, profit-sharing, or other
forms of incentive or deferred compensation, vacation benefits, disability
benefits, workers' compensation, supplemental unemployment benefits, severance
benefits and post-employment or retirement benefits (including compensation,
health or medical insurance or other benefits) which (i) is not an Employee
Plan, (ii) is entered into, maintained or contributed to, as the case may be, by
the Company, and (iii) under which the Company has any material liability.
Copies or descriptions of the Benefit Arrangements have been made available to
Parent. Each Benefit Arrangement has been maintained in material compliance with
its terms and with the requirements prescribed by any and all laws that are
applicable to such Benefit Arrangement.
(h) The transactions contemplated hereby will not result in any
liability for severance pay to any employee or, with respect to any current or
former employee, accelerate the exercisability, vesting or payment of any
options, warrants, stock appreciation rights, phantom stock awards or any
similar instruments, as the case may be, nor will any current or former employee
be entitled to any payment solely by reason of such transactions.
(i) All contributions required to be made to trusts in connection with
any Employee Plan that would constitute a "defined contribution plan" (within
the meaning of Section 3(34) of ERISA) have been made in a timely manner in
compliance with applicable law and regulations.
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(j) Other than claims in the ordinary course for benefits with respect
to the Employee Plans or Benefit Arrangements, there are no actions, suits or
claims (including claims for income taxes, interest, penalties, fines or excise
taxes with respect thereto) pending with respect to any Employee Plan or Benefit
Arrangement, or any circumstances which, to the Company's knowledge, reasonably
might give rise to any such action, suit or claim (including claims for income
taxes, interest, penalties, fines or excise taxes with respect thereto).
(k) All reports, returns and similar documents with respect to the
Employee Plans or Benefit Arrangements required to be filed with any
governmental agency have been so filed by the due date for such filings.
(l) Neither the Company nor any affiliate has any obligation to
provide health or other welfare benefits to former, retired or terminated
employees, except as specifically required under Section 4980B of the Code or
Section 601 of ERISA. The Company and all of its affiliates have complied in all
material respects with the notice and continuation requirements of Section 4980B
of the Code and Section 601 of ERISA and the regulations thereunder.
(m) There has been no amendment to, written interpretation or
announcement (whether or not written) by the Company or its affiliates relating
to, any Employee Plan or Benefit Arrangement which in the aggregate would
increase in any material respect the per employee expense of maintaining such
Employee Plan or Benefit Arrangement above the level of the expense incurred on
a per employee basis in respect thereof for the year ended December 31, 1999.
(n) Neither the Company nor any affiliate is a party to any collective
bargaining agreement; no collective bargaining agent has been certified as a
representative of any of the employees of the Company or any affiliate; no
representation campaign or election is now in progress with respect to any
employee of the Company or any affiliate; and there are no labor disputes,
grievances, controversies, strikes or requests for union representation pending,
or, to the knowledge of the Company, threatened, relating to or affecting the
Company, any affiliate or their respective businesses.
(o) Each Employee Plan that has terminated on or after July 1, 1994
and prior to the date hereof and was intended to qualify under Section 401(a) or
401(k) of the Code upon its termination (each, a "TERMINATED PLAN" and
collectively, the "TERMINATED PLANS") was so qualified upon its termination, and
each trust established in connection with any such Terminated Plan that was
intended to be exempt from federal income taxation under Section 501(a) of the
Code was so exempt, each Terminated Plan has been maintained and terminated in
material compliance with its terms and with the requirements prescribed by ERISA
and any and all statutes, orders and final rules applicable to such Terminated
Plan and no fact or event has occurred since the date of such Terminated Plan's
adoption that adversely affects or could
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reasonably be expected to adversely affect the foregoing or the exempt status of
any such trust upon their termination. There has been no prohibited transaction
(within the meaning of Section 406 of ERISA or Section 4975 of the Code and the
regulations thereunder) or violation of Sections 403 and 404 of ERISA and
applicable regulations with respect to any Terminated Plan, and neither the
Company nor any affiliate nor any fiduciary of any Terminated Plan, has any
liability or potential liability on account of such Employee Plan termination,
including with respect to the purchase of Company Common Stock from the
participants or beneficiaries under such Terminated Plans, and the Company has
performed all obligations required to be performed by it under, is not in any
respect in default under or in violation of, and has no knowledge of, any
default or violation by any party to, applicable law and the terms of the
Terminated Plan (including, without limitation, any and all obligations relating
to determining the eligibility, benefits, and rights of participants in the
Terminated Plan).
Section 4.12 Taxes.
(a) The Company has duly and timely filed all U.S. federal, state and
local income and franchise tax returns, excise filings, real and personal
property tax returns, sales and use tax returns, VAT returns, escheat filings,
payroll reportings and employee benefit returns, and all other tax returns and
reports, whether domestic or foreign, including extensions, required to have
been filed by the Company on or prior to the date hereof (collectively, all of
the foregoing, the "COMPANY TAX RETURNS"). The Company has duly and timely paid
and/or remitted all taxes, including, but not limited to, all income taxes,
franchise taxes, excise taxes, property taxes, sales and use taxes, payroll
taxes, VAT, withholding taxes, ad valorem taxes or assessments, (whether or not
shown on any tax return) and other governmental charges, and all interest and
penalties with respect thereto, required to be paid by the Company (whether by
way of withholding or otherwise) to any U.S. federal, state, local or other
taxing authority or any taxing authority in a foreign jurisdiction (except to
the extent the same are being contested in good faith and adequate reserves
therefor have been provided in the Company Financial Statements). As of the date
hereof, all deficiencies proposed as a result of any audit have been paid or
settled. The Company has no material liability for any taxes to any authority in
any jurisdiction where the Company does not file a tax return, whether domestic
or foreign; and the Company has not received any written claim from any
authority in a jurisdiction where the Company does not file a tax return that it
is or may be subject to taxation by that jurisdiction. There are no liens on any
of the assets of the Company that arose in connection with any failure (or
alleged failure) to pay any tax.
(b) The Company is not a party to, or bound by, or otherwise in any
way obligated under, any tax sharing or similar agreement.
(c) The Company has not consented to have the provisions of Section
341(f)(2) of the Code (or comparable state law provisions) apply to it, and the
Company
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has not agreed or been requested to make any adjustment under Section 481(c) of
the Code by reason of a change in accounting method or otherwise.
(d) There is no dispute or claim concerning any tax liability of the
Company either (i) claimed or raised by any authority in writing or (ii) as to
which the Company has knowledge based upon personal contact with any agent of
such authority. The Company Disclosure Letter lists all Company Tax Returns
filed with respect to the Company for taxable periods ended on or after December
31, 1996 that have been audited or that currently are the subject of audit. The
Company has made available to Parent correct and complete copies of all U.S.
federal income tax returns, examination reports, and statements of deficiencies
assessed against or agreed to by the Company since December 31, 1996.
(e) The Company has not waived any statute of limitations in respect
of taxes or agreed to any extension of time with respect to a tax assessment or
deficiency.The unpaid taxes of the Company (including, but not limited to, all
taxes due and assessments and tax liabilities that have not yet been reported to
or assessed by a taxing authority) (i) did not, as of June 30, 2000, exceed the
reserve for tax liability (other than any reserve for deferred taxes established
to reflect timing differences between book and tax income) set forth on the
Company Interim Financial Statements and (ii) do not exceed that reserve as
adjusted for the passage of time through the date hereof.
Section 4.13 Compliance with Applicable Laws.
(a) The Company is in compliance in all respects with all federal,
state, foreign and local laws (whether statutory or otherwise), ordinances,
rules, regulations, orders, judgments, decrees, writs and injunctions of any
governmental authority (collectively, "Laws") applicable to the Company and its
business, except for such noncompliance which would not have a Material Adverse
Effect on the Company.
(b) The Company has not received written notification from any
governmental or regulatory authority within the past three (3) years of any
asserted present or past failure to so comply with Laws, which failure would
have a Material Adverse Effect on the Company and which has not been
appropriately and completely resolved.
Section 4.14 Section 368 of the Code.
(a) The Initial Tax Certificate (as hereinafter defined in Section
6.14(b)(iii)) delivered by the Company is, and the Closing Tax Certificate to be
delivered by the Company at Closing shall be, true and correct.
(b) The Company has no knowledge of any reason, fact or circumstance
which would cause the Merger to fail to qualify as a tax-free reorganization
under
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Section 368 of the Code; provided, however, that the Company has not considered
for this purpose any information regarding Parent and Acquisition and their
respective subsidiaries, and their respective properties, furnished by or on
behalf of Parent and Acquisition to the Company or its advisors.
Section 4.15 Brokers. Except for fees payable in connection with the
opinion described in Section 4.22, no broker, finder or investment banker is
entitled to any broker's, finder's or investment banking fee or other commission
in connection with the transactions contemplated hereby as a result of
arrangements made by or on behalf of the Company.
Section 4.16 Environmental Matters. The Company and each predecessor for
whose acts and omissions the Company is legally responsible, has complied with
all laws and regulations relating to pollution and environmental control which
are applicable to the Company or its properties or business, except for such
noncompliance as would not have a Material Adverse Effect on the Company. The
Company Disclosure Letter sets forth all litigation and other proceedings, and
all rulings, orders or citations, pending against the Company, its properties or
business, in each case relating to emissions or other proper disposal of
materials.
Section 4.17 Insurance. Company currently maintains, in full force and
effect, all insurance policies that are reasonably required to be maintained for
the conduct of its business or the ownership of its properties (both real and
personal) (collectively, the "INSURANCE POLICIES"). True and complete copies of
all the Company Insurance Policies have been made available to Parent. The
Company (a) is not in default regarding the provisions of any Insurance Policy;
(b) has paid all premiums due thereunder; and (c) has not failed to present any
notice or material claim thereunder in a due and timely fashion. The Insurance
Policies are in effect and enforceable policies, subject to bankruptcy,
insolvency, reorganization, moratorium and similar laws of general application
relating to or affecting creditors' rights and to general principles of equity,
including principles of commercial reasonableness, good faith and fair dealing.
The coverage provided by the Insurance Policies, with respect to any insured act
or event occurring on or prior the Closing Date, will not in any way be affected
by or terminate or lapse by reason of the transactions contemplated hereby. The
Company Disclosure Letter sets forth a listing, by policy, of all outstanding
claims and the amount thereof made by the Company under each such policy.
Section 4.18 Company not a Foreign Person. Company is not a "foreign
person" for purposes of Section 1445 of the Code.
Section 4.19 Bank Accounts. The Company Disclosure Letter sets forth the
names and locations of all banks, trust companies, savings and loan
associations, stock brokerages and other financial institutions at which the
Company maintains accounts of any nature, or safe deposit boxes, and the name of
all persons authorized to draw thereon or make withdrawals therefrom.
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Section 4.20 Title to Properties. The assets owned or leased by the
Company are all of the assets necessary to conduct the business of the Company
as currently being conducted and as proposed to be conducted. The Company has
good and marketable title to all the assets it owns, real and personal, movable
and immovable, tangible and intangible, free and clear of all claims, liens,
charges, mortgages, attachments and other encumbrances of any kind or character,
except for: (a) liens for taxes not yet due and payable, or (b) minor
imperfections of title and encumbrances, if any, which (i) are not substantial
in amount, (ii) do not detract from the value of the property subject thereto,
impair the operations of the business of the Company, or the use or license of
certain of the assets of the Company, and (iii) have arisen in the ordinary
course of business consistent with past practice.
Section 4.21 Related Party Transactions. No contract of the Company is
with or for the benefit of (i) any party owning, or formerly owning,
beneficially or of record, directly or indirectly, in excess of 5.0% of the
outstanding capital stock of the Company, (ii) to the knowledge of the Company,
any natural person related by blood, adoption or marriage to any such party
(iii) any director, officer or similar representative of any the Company, or
(iv) to the knowledge of the Company, any party or entity in which any of the
foregoing parties has, directly or indirectly, at least a five percent
beneficial interest (a "RELATED PARTY"). Without limiting the generality of the
foregoing, no Related Party, directly or indirectly, owns or controls any
material assets or material properties which are used in the Company's business
and to the knowledge of the Company, no Related Party, directly or indirectly,
engages in or has any significant interest in or connection with any business
which is, or has been within the last two years, a competitor, customer or
supplier of the Company or has done business with the Company or which currently
sells or provides products or services which are similar or related to the
products or services sold or provided in connection with the Business.
Section 4.22 Opinion of Financial Advisor. The Company has received the
oral opinion of Xxxxxxx, Xxxxx & Co. (to be confirmed in writing after the date
hereof) to the effect that as of the date hereof, the Exchange Ratio with
respect to the Company Common Stock is fair from a financial point of view to
the stockholders of the Company, in connection with the acquisition of the
Company pursuant to the Merger.
Section 4.23 Disclosure. No representation or warranty of the Company
herein (including the Company Disclosure Letter), and no certificate or
affidavit furnished or to be furnished by or on behalf of the Company to Parent,
Acquisition or their agents pursuant hereto, contains or will contain, at the
time it is made, any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND ACQUISITION
With such exceptions as are set forth in a letter (the "Parent Disclosure
Letter") delivered by Parent to the Company prior to the execution hereof,
making in the case of each such exception specific reference to the
representation and warranty in this Article V so excepted, each of Parent and
Acquisition jointly and severally represents and warrants to the Company as
follows:
Section 5.1 Organization and Qualification. Parent is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Acquisition is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware. Each of Parent and
Acquisition has the requisite corporate power and authority to carry on its
business as it is now being conducted and is duly qualified or licensed to do
business, and is in good standing, in each jurisdiction where the character of
its properties owned or held under lease or the nature of its activities makes
such qualification necessary, except where the failure to be so qualified would
not have a Material Adverse Effect on Parent. Parent has made available to the
Company complete and correct copies of the Certificate of Incorporation and
bylaws of Parent and Acquisition as in effect on the date hereof. The minute
book of Parent, a true and complete copy of which has been made available to the
Company, (a) accurately reflects all action taken by the directors and
stockholders of Parent at meetings of Parent's board of directors or
stockholders, as the case may be and (b) contains true and complete copies, or
originals, of the respective minutes of all meetings or consent actions of the
directors or stockholders.
Section 5.2 Authority. Each of Parent and Acquisition has full power and
authority (including full corporate power and authority) to execute and deliver
this Agreement and to consummate the transactions contemplated hereby. The
execution and delivery hereof and the consummation of the transactions
contemplated hereby by each of Parent and Acquisition have been duly and validly
authorized and approved by their respective boards of directors. No approval is
required by the stockholders of Parent for the execution and delivery of this
Agreement or to consummate the transactions contemplated hereby. Parent, in its
capacity as the sole stockholders of Acquisition, has approved and adopted this
Agreement and the transactions contemplated hereby. This Agreement has been duly
executed and delivered by each of Parent and Acquisition, and assuming the due
authorization, execution and delivery by the Company, constitutes the valid and
binding obligation of each of Parent and Acquisition, enforceable against each
of Parent and Acquisition in accordance with its terms, subject, in each case,
to bankruptcy, insolvency, reorganization, moratorium and similar laws of
general application relating to or affecting creditors' rights and to general
principles of equity, including principles of commercial reasonableness, good
faith and fair dealing.
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Section 5.3 Capitalization.
(a) The authorized capital stock of Parent consists of (i) 100,000,000
shares of Common Stock, par value $.002 per share, of which 28,803,560 shares
are issued and outstanding, and 752,510 shares are held in the treasury of
Parent; and (ii) 4,620,253 shares of Preferred Stock, par value $.01 per share,
of which no shares are issued and outstanding, and no shares are held in the
treasury of Parent. All outstanding capital stock of Parent was issued and will
be issued in material compliance with applicable federal and state securities
laws. Except as disclosed in the SEC Documents (as hereinafter defined),
including the Parent Financial Statements (as hereinafter defined) included
therein: (i) there are no options, warrants, calls, convertible notes,
agreements, commitments or other rights presently outstanding that would
obligate Parent to issue, deliver or sell shares of its capital stock, or to
grant, extend or enter into any such option, warrant, call, convertible note,
agreement, commitment or other right; and (ii) Parent has no bonds, debentures,
notes or other indebtedness issued or outstanding that have voting rights in
Parent.
(b) All of the issued and outstanding shares of capital stock of
Parent are validly issued, fully paid and nonassessable. Parent is not a party
to any registration rights agreement.
(c) There are no outstanding or authorized stock appreciation, phantom
stock profit participation or similar rights with respect to Parent.
Section 5.4 Subsidiaries. Except as disclosed in the SEC Documents filed
on or before the date hereof, Parent owns, directly or indirectly, all of the
outstanding capital stock of the subsidiaries set forth on the Parent Disclosure
Letter. Each such subsidiary is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation.
Each of Parent's subsidiaries has the requisite corporate power and authority to
carry on its business as it is now being conducted and is duly qualified or
licensed to do business, and is in good standing, in each jurisdiction where the
character of its properties owned or held under lease or the nature of its
activities makes such qualification necessary, except where the failure to be so
qualified would not have a Material Adverse Effect on Parent. Parent has made
available to the Company complete and correct copies of the Certificate or
Articles of Incorporation and bylaws (or comparable charter documents with
respect to any foreign jurisdiction) of each of Parent's subsidiaries as in
effect on the date hereof. Except for the subsidiaries identified on the Parent
Disclosure Letter, Parent has no subsidiaries and does not otherwise own or
control, directly or indirectly, any controlling equity interest, or any
security convertible into any controlling equity interest, in any Entity.
Section 5.5 No Conflicts, Required Filings and Consents. Subject to any
required filing pursuant to the H-S-R Act and the filing of the Certificate of
Merger with the Secretary of State of the State of Delaware, (i) none of the
execution and delivery of this Agreement by Parent or Acquisition, (ii) the
consummation by Parent and
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Acquisition of the transactions contemplated hereby, or (iii) compliance by
Parent and Acquisition with any of the provisions hereof, will:
(a) conflict with or violate the Certificate of Incorporation or
bylaws of Parent or Acquisition;
(b) result in a violation of any constitution, statute, ordinance,
rule, regulation, order, injunction, ruling, charge, judgment or decree
applicable to Parent or Acquisition, or by which any of the properties or assets
of Parent or Acquisition are bound of affected, except for such violations as
would not have a Material Adverse Effect on Parent;
(c) result in a violation or breach of, or constitute a default (or an
event that, with notice or lapse of time or both, would become a default) under,
or give to any other any right of termination, amendment, acceleration or
cancellation of, any material contract or any license, permit or franchise to
which Parent or Acquisition is a party or by which any of the properties or
assets of Parent or Acquisition are bound or affected, except for such
violations, breaches and defaults as would not have a Material Adverse Effect on
Parent;
(d) result in the creation of any material lien on any material
property or assets of Parent or Acquisition; or
(e) require the consent, waiver, approval, order or authorization of,
or registration, declaration or filing with, or notification to, any
Governmental Entity or any other Person, except for (i) the filing with the
Commission of the Registration Statement as set forth in Article VI hereof, (ii)
such consents, waivers, approvals, orders or authorizations, registrations,
declarations and filings, as may be required under applicable federal and state
securities laws or by NASDAQ, and (iii) such other consents, approvals, orders,
authorizations, registrations, declarations, which, if not obtained or made,
would not have a Material Adverse Effect on Parent or prevent or materially
delay the consummation of the transactions contemplated hereby.
Section 5.6 Litigation. Except as otherwise disclosed in the SEC
documents filed on or before the date hereof, there is no suit, action, claim,
investigation or proceeding pending or, to the knowledge of Parent, threatened
against or affecting Parent or Acquisition, nor is there any judgment, decree,
injunction or order of any applicable Governmental Entity or arbitrator
outstanding against Parent or Acquisition that, if adversely determined, would
have a Material Adverse Effect on Parent.
Section 5.7 Brokers. Except for fees payable in connection with the
opinion described in Section 5.15, no broker, finder or investment banker is
entitled to any broker's, finder's or investment banking fee in connection with
the transactions contemplated hereby based upon arrangements made by or on
behalf of Parent or Acquisition.
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Section 5.8 SEC Filings. Parent has timely filed with the Securities and
Exchange Commission (the "COMMISSION") all reports, schedules, forms, proxy
statements, registration statements and other documents required to be filed by
Parent under the federal securities laws (collectively, all such reports,
schedules, forms, proxy statements, registration statements and documents, the
"SEC DOCUMENTS"). As of their respective filing dates, the SEC Documents
complied in all material respects with the requirements of the Securities Act or
the Securities Exchange Act of 1934, as amended and the rules promulgated
thereunder (the "EXCHANGE ACT"), as the case may be, and the rules and
regulations of the Commission promulgated thereunder applicable to the SEC
Documents. As of their respective filing dates, none of the 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 light of the circumstances under which they were made, not
misleading, except to the extent such statements have been modified or
superseded by a later SEC Document filed and publicly available prior to the
Effective Time, the circumstances or bases for which modifications or
supersessions have not and will not individually or in the aggregate result in
any material liability or obligation of Parent under the Securities Act or the
Exchange.
Section 5.9 Financial Statements. The following consolidated financial
statements (collectively the "PARENT FINANCIAL STATEMENTS") consisting of: (i)
the unaudited consolidated balance sheets and unaudited consolidated statements
of income, changes in stockholders' equity, and cash flow as of and for the
three months ended May 31, 2000 (the "PARENT INTERIM FINANCIAL STATEMENTS") of
Parent and its subsidiaries, and (ii) the audited consolidated balance sheets as
of February 28, 1999 and February 29, 2000 and the audited consolidated
statements of income, changes in stockholders' equity and cash flow for the
twelve months ended February 28, 1998, February 28, 1999 and February 29, 2000,
which have been included in the SEC Documents (as amended or supplemented by any
SEC Document filed on or before the date hereof) have been prepared in
accordance with GAAP (except as otherwise disclosed in the SEC Documents and
except, in the case of unaudited statements, as permitted by the rules of the
Commission) applied on a consistent basis throughout the periods covered
thereby, present fairly the financial condition of Parent and its subsidiaries
as of such dates and the results of operations and cash flows of Parent and its
subsidiaries for such periods (subject, in the case of unaudited financial
statements, to normal and recurring year-end adjustments), and are consistent
with the books and records of Parent.
Section 5.10 Absence of Changes. Except as reported in the Parent Interim
Financial Statements since February 29, 2000, Parent has not:
(a) made any change in accounting methods or practices or valuation,
or a material decrease in the book value, of any asset of Parent;
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(b) incurred any material liabilities or obligations of any nature,
whether absolute, accrued, contingent or otherwise and whether due or to become
due (including, but not limited to, any FASB Loss Contingency), except for such
liabilities or obligations that do not exceed in the aggregate $500,000;
(c) increased (other than increases resulting from the calculation of
reserves in the ordinary course of business consistent with past practice that
do not exceed in the aggregate $500,000) or experienced any change in any
assumptions underlying or methods of calculating, any reserves for bad debt, any
contingency or other reserves;
(d) paid, discharged or satisfied any claims, encumbrances,
liabilities or obligations (whether absolute, accrued, contingent or otherwise
and whether due or to become due), other than the payment, discharge or
satisfaction in the ordinary course of business consistent with past practice of
(i) liabilities and obligations reflected or reserved against in the Parent
Financial Statements or (ii) liabilities and obligations arising in the ordinary
course of business consistent with past practice since the date of the Parent
Financial Statements;
(e) determined as collectible any notes or accounts receivable or any
portion thereof which were previously considered uncollectible, or written off
as uncollectible any notes or accounts receivable or any portion thereof, except
for write-downs in the ordinary course of business consistent with past practice
in accordance with GAAP consistently applied;
(f) declared or paid a dividend, or any other declaration, payment or
distribution of any type or nature to any stockholder of Parent in respect of
its stock, whether in cash or property;
(g) except as disclosed in the SEC Documents, issued or sold capital
stock of Parent or its subsidiaries or granted options, warrants or rights to
purchase or subscribe for any of the capital stock of Parent or any of its
subsidiaries or altered the terms of any presently outstanding options or made
any changes (by split-up, combination, reorganization or otherwise) in the
respective capital structure of Parent or any of its subsidiaries, except for
such issuances of capital stock pursuant to the exercise of employee stock
options, warrants and other convertible securities outstanding as of February
29, 2000 or the granting of options to purchase capital stock pursuant to
employee stock option plans existing on as of February 29, 2000; or
(h) agreed or committed to do any of the foregoing.
Section 5.11 Intellectual Property.
(a) All patents, trademarks, trade names, service marks, trade dress,
Internet domain names, copyrights and any renewal rights therefor, technology,
supplier
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lists, trade secrets, know-how, computer software programs or applications in
both source and object code form, technical documentation of such software
programs, registrations and applications for any of the foregoing and all other
tangible or intangible proprietary information or materials that are or have
been used (including without limitation in the development of) Parent's business
and/or in any product, technology or process (i) currently being or formerly
manufactured, published or marketed by Parent, (ii) previously or currently
under development for possible future manufacturing, publication, marketing, or
other use by Parent, or (iii) relating to services performed by Parent in the
conduct of its business, are hereinafter referred to as the "PARENT INTELLECTUAL
PROPERTY".
(b) The Parent Intellectual Property consists solely of items and
rights which are: (i) owned by Parent; (ii) in the public domain; or (iii)
rightfully used by Parent pursuant to a valid license (the "LICENSED PARENT
INTELLECTUAL PROPERTY") (sufficient for the conduct of Parent's business as
currently conducted and as proposed to be conducted). Parent has all rights in
the Parent Intellectual Property necessary to carry out Parent's current
activities (and had all rights necessary to carry out its former activities at
the time such activities were being conducted), including without limitation, to
the extent required to carry out such activities, rights to make, use,
reproduce, modify, adopt, create derivative works based on, translate,
distribute (directly or indirectly), transmit, display and perform publicly,
license, rent and lease and, other than with respect to the Licensed Parent
Intellectual Property, assign and sell, the Parent Intellectual Property.
(c) To the knowledge of Parent, the reproduction, manufacturing,
distribution, licensing, sublicensing, sale or any other exercise of rights in
the Parent Intellectual Property, as now used or proposed for use, licensing or
sale by Parent does not infringe on any copyright, trade secret, trademark,
service xxxx, trade name, trade dress, firm name, Internet domain name, logo,
trade dress, mask work or of any Person or the patent of any Person, except
where such infringement would not have a Material Adverse Effect on Parent. No
claims (i) challenging the validity, effectiveness or, other than with respect
to the Licensed Parent Intellectual Property, ownership by Parent of any of the
Parent Intellectual Property, or (ii) to the effect that the use, distribution,
licensing, sublicensing, sale or any other exercise of rights in any of the
Parent Intellectual Property as now used or proposed for use, licensing,
sublicensing or sale by Parent infringes or will infringe on any intellectual
property or other proprietary right of any person have been asserted or, to the
knowledge of Parent, are threatened by any Person, nor are there, to Parent's
knowledge, any valid grounds for any bona fide claim of any such kind. Parent
has the right to use all source code now or previously constituting a portion of
the Parent Intellectual Property which is necessary for use in products being
offered, products under development, for sale or license to, or use by, Parent
or third parties. To the knowledge of Parent, all registered, granted or issued
patents, trademarks, Internet domain names and copyrights held by Parent are
enforceable and subsisting. To the knowledge of Parent, there is no unauthorized
use,
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infringement or misappropriation of any of the Parent Intellectual Property by
any third party, employee or former employee.
(d) All personnel, including employees, agents, consultants and
contractors, who have contributed to or participated in the conception and
development of the Parent Intellectual Property on behalf of Parent, have
executed nondisclosure agreements in the form made available to Parent and
either (i) have been a party to a "work-for-hire" arrangement or agreements with
Parent in accordance with applicable national and state law that has accorded
Parent full, effective, exclusive and original ownership of all tangible and
intangible property thereby arising, or (ii) have executed appropriate
instruments of assignment in favor of Parent as assignee that have conveyed to
Parent effective and exclusive ownership of all tangible and intangible property
thereby arising.
(e) Parent is not, nor as a result of the execution or delivery of
this Agreement, or performance of Parent's obligations hereunder, will Parent
be, in violation of any license, sublicense, agreement or instrument to which
Parent is a party or otherwise bound and which relates to the Parent
Intellectual Property, except as would not have a Material Adverse Effect on
Parent; nor will execution or delivery of this Agreement, or performance of
Parent's obligations hereunder, cause the termination or forfeiture, of any of
the Parent Intellectual Property.
(f) Parent has the rights to license or owns full and unencumbered
right and good, valid and marketable title to all of Parent's software programs
marketed by Parent to its customers and prospects (the "PARENT SOFTWARE
PROGRAMS"), free and clear of all mortgages, pledges, liens, security interests,
conditional sales agreements, encumbrances or charges of any kind, except for
liens, encumbrances and charges arising from any blanket security interests
granted by the Company. All unexpired representations and warranties made or
given by Parent to any of its customers respecting any of the Parent Software
Programs or its Parent Intellectual Property are true and correct in all
material respects.
(g) The source code and system documentation relating to the Parent
Software Programs (i) have at all times been maintained in strict confidence,
(ii) have been disclosed by Parent only to employees who have a "need to know"
the contents thereof in connection with the performance of their duties to
Parent and who have executed the nondisclosure agreements, and (iii) have not
been disclosed to any third party not under an obligation to maintain the
confidential nature of such information.
Section 5.12 Taxes.
(a) Parent has duly and timely filed all U.S. federal, state and local
income, and franchise tax returns, excise filings, real and personal property
tax returns, sales and use tax returns, escheat filings, payroll reporting and
employee benefit returns, and all other tax returns and reports, including
extensions, whether domestic or foreign,
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required to have been filed by Parent on or prior to the date hereof
(collectively, all of the foregoing, the "PARENT TAX RETURNS"). With the
exception of tax returns and potential liabilities to taxing authorities which,
when netted against tax refunds receivable, would not in the aggregate exceed
$500,000: Parent has duly and timely paid all taxes, including, but not limited
to, all income taxes, franchise taxes, excise taxes, property taxes, sales and
use taxes, payroll taxes, ad valorem taxes or assessments (whether or not shown
on any tax return) and other governmental charges, and all interest and
penalties with respect thereto, required to be paid by Parent (whether by way of
withholding or otherwise) to any U.S. federal, state, local or other taxing
authority or any taxing authority in a foreign jurisdiction (except to the
extent the same are being contested in good faith, and adequate reserves
therefor have been provided in Parent Financial Statements); as of the date
hereof, all deficiencies proposed as a result of any audit have been paid or
settled; and, Parent has no material liability for any taxes to any authority in
any jurisdiction where Parent does not file a tax return, whether domestic or
foreign; and Parent has not received any written claim from, any authority in a
jurisdiction where Parent does not file a tax return that it is or may be
subject to taxation by that jurisdiction. There are no liens on any of the
assets of Parent that arose in connection with any failure (or alleged failure)
to pay any tax.
(b) Parent is not a party to, or bound by, or otherwise in any way
obligated under, any tax sharing or similar agreement with parties not included
in Parent's consolidated taxable group.
(c) Parent has not consented to have the provisions of Section
341(f)(2) of the Code (or comparable state law provisions) apply to it, and
Parent has not agreed or been requested to make any adjustment under Section
481(c) of the Code by reason of a change in accounting method or otherwise.
(d) There is no dispute or claim concerning any tax liability of
Parent either (i) claimed or raised by any authority in writing or (ii) as to
which Parent has knowledge based upon personal contact with any agent of such
authority. The Parent Disclosure Letter lists all Parent Tax Returns filed with
respect to Parent for taxable periods ended on or after December 31, 1996 that
have been audited or that currently are the subject of audit. Parent has made
available to the Company correct and complete copies of all U.S. federal income
tax returns, examination reports, and statements of deficiencies assessed
against or agreed to by Parent since December 31, 1996.
(e) Parent has not waived any statute of limitations in respect of
taxes or agreed to any extension of time with respect to a tax assessment or
deficiency.
(f) The unpaid taxes of Parent (including, but not limited to, all
taxes due and assessments and tax liabilities that have not yet been reported to
or assessed by a taxing authority) (i) did not, as of May 31, 2000, exceed the
reserve for tax liability (other than any reserve for deferred taxes established
to reflect timing differences between book and tax income) set forth on Parent
Interim Financial Statements and (ii) do not
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exceed that reserve as adjusted for the passage of time through the date hereof
in accordance with the past custom and practice of Company in filing its tax
returns.
Section 5.13 Trading on NASDAQ. The Parent Common Stock is authorized for
quotation on the NASDAQ, and the trading in the Parent Common Stock on NASDAQ
has not been suspended.
Section 5.14 Section 368 of the Code.
(a) The Initial Tax Certificate delivered by Parent is, and the
Closing Tax Certificate to be delivered by Parent at Closing shall be, true and
correct.
(b) Parent has no knowledge of any reason, fact or circumstance which
would cause the Merger to fail to qualify as a tax-free reorganization under
Section 368 of the Code; provided, however, that Parent has not considered for
this purpose any information regarding the Company and its subsidiaries, and
their respective properties, furnished by or on behalf of the Company to Parent
or its advisors.
Section 5.15 Opinion of Financial Advisor. Parent and Acquisition have
received the written opinion of Deutsche Bank Securities Inc. to the effect that
as of the date hereof, the consideration payable by Parent to the stockholders
of the Company for all of the issued and outstanding capital stock of the
Company is fair from a financial point of view to Parent, in connection with the
acquisition of the Company pursuant to the Merger.
Section 5.16 Disclosure. No representation or warranty of parent or
Acquisition herein (including the Parent Disclosure Letter), and no certificate
or affidavit furnished or to be furnished by or on behalf of Parent or by
Acquisition to the Company or its agents pursuant hereto, contains or will
contain, at the time it is made, any untrue statement of a material fact
required to be stated thereon or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading.
ARTICLE VI
ADDITIONAL AGREEMENTS
Section 6.1 S-3 Registration Statement . The parties contemplate that,
not later than ten (10) days after the date hereof, Xxxxxxxx Xxxxxx LLP shall
prepare and deliver to Parent and its professional advisors, an opinion (the
XXXXXXXX SECURITIES OPINION") to the effect that no registration under the
Securities Act is necessary with respect to the issuance at Closing of the
shares of Parent Common Stock. Provided that the Xxxxxxxx Securities Opinion is
so delivered by such date and is in all respects satisfactory to the Company,
Parent and their respective professional advisors, then in such event:
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(a) By not later than ninety (90) days after Parent has completed an
offering of Parent Common Stock or debt or securities convertible into Parent
Common Stock (but in no event later than March 31, 2001), Parent shall:
(i) Prepare and file a registration statement with the
Commission on Form S-3 under the Securities Act (or in the event that the
Company is ineligible to use such form, such other form as the Company is
eligible to use under the Securities Act) ("REGISTRATION STATEMENT")
covering the resale of the Parent Common Stock including all Escrow
Shares (the "REGISTRABLE SECURITIES"), issued to holders of Company
Capital Stock as of the Effective Time who receive shares of Parent
Common Stock in connection with the Merger, or their successors or
assigns in accordance with Section 6.1(n) (the "HOLDERS"), which
Registration Statement (including any amendments or supplements thereto
and prospectuses contained therein) shall not contain any untrue
statement of a material fact or omit to state a material fact required to
be stated therein, or necessary to make the statements therein not
misleading. Such Registration Statement shall, in addition and without
limitation, register (pursuant to Rule 416 under the Securities Act, or
otherwise) such additional indeterminate number of Registrable Securities
as shall be necessary to prevent dilution resulting from stock splits,
stock dividends or similar transactions. Thereafter, the Company shall
use its reasonable best efforts to cause such Registration Statement and
other filings to be declared effective as soon as practicable. Parent
shall not be obligated to include in such Registration Statement any
shares of Parent Common Stock of the Holders other than shares issued
pursuant to this Agreement.
(ii) Prepare and file with the Commission such amendments and
supplements to such Registration Statement and the prospectus used in
connection with such Registration Statement as may be necessary to keep
the Registration Statement effective and to comply with the provisions of
the Securities Act with respect to the disposition of all securities
covered by such Registration Statement as set forth in the Registration
Statement and then on a continuous basis in accordance with Rule 415
under the Securities Act; and, notify the Holders of the effectiveness of
such Registration Statement and any amendments or supplements thereto.
(iii) Furnish to each Holder such numbers of copies of a current
prospectus conforming with the requirements of the Securities Act, copies
of the Registration Statement, any amendment or supplement thereto and
any documents incorporated by reference therein and such other documents
as such Holder may reasonably require in order to facilitate the
disposition of Registrable Securities owned by such Holder.
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(iv) (A) Register and qualify, or obtain an appropriate
exemption from registration or qualification for, the securities covered
by such Registration Statement under such other securities or "Blue Sky"
laws of each jurisdiction of the United States as the Holders may
reasonably request, (B) prepare and file in those jurisdictions such
supplements (including post-effective amendments) and supplements to such
registrations and qualifications as may be necessary to maintain the
effectiveness thereof, (C) take such other actions as may be necessary to
maintain such registrations and qualifications in effect at all times,
and (D) take all other actions reasonably necessary or advisable to
qualify the Registrable Securities for sale in such jurisdictions;
provided that the Company shall not be required in connection therewith
or as a condition thereto to qualify to do business as a foreign
corporation in any jurisdiction in which it is not now qualified, or to
file a general consent to service of process in any jurisdiction with
respect to matters unrelated to the issuance of Parent Company Stock
pursuant hereto.
(v) Promptly notify each Holder in writing of the happening of
any such event as a result of which the prospectus (including any
supplements thereto or thereof) included in such Registration Statement,
as then in effect, includes an untrue statement of material fact or omits
to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in light of the circumstances
then existing, and use its reasonable best efforts to promptly update
and/or correct such prospectus to correct such untrue statement or
omission, and deliver such number of copies of such supplement or
amendment to each Holder as such Holder may reasonably request.
(vi) Promptly notify each Holder of the issuance by the
Commission or any state securities commission or agency of any stop order
suspending the effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose. Parent shall take all
reasonable actions necessary to prevent the issuance of any stop order
and, if any stop order is issued, to obtain the lifting thereof at the
earliest possible time.
(vii) Permit a single firm of counsel, designated as Holders'
counsel by a majority-in-interest of the Registrable Securities included
in the Registration Statement, and reasonably satisfactory to Parent, to
review (A) the Registration Statement and (B) all amendments and
supplements thereto relating to information concerning the Holders within
a reasonable period of time prior to filing thereof, to the extent
practicable.
(viii) List the Registrable Securities covered by such
Registration Statement with all securities exchange(s) and/or markets on
which the Parent Common Stock is then listed and prepare and file any
required filings with the
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National Association of Securities Dealers, Inc. or any exchange or
market where the shares of Parent Common Stock are traded.
(ix) If applicable, take all steps necessary to enable Holders
to avail themselves of the prospectus delivery mechanism set forth in
Rule 153 (or successor thereto) under the Securities Act.
(x) Provide a CUSIP number and a transfer agent and registrar,
which may be a single entity, for the Registrable Securities not later
than the effective date of the Registration Statement.
(xi) At the reasonable request of the Holders of a
majority-in-interest of the Registrable Securities, prepare and file with
the SEC such amendments (including post-effective amendments) and
supplements to the Registration Statement and the prospectus used in
connection with the Registration Statement as may be necessary in order
to change the plan of distribution set forth in such Registration
Statement.
(xii) Furnish to the Holders a "10b-5 negative assurances letter"
and independent auditor's comfort letter, both similar to such as would
be provided in an underwritten offering.
(xiii) In the event of any underwritten public offering, enter
into and perform its obligations under an underwriting agreement, in
usual and customary form, with the managing underwriter of such
offering.
(b) Upon written notice to the Holders, Parent may suspend the use of
any prospectus used in connection with the Registration Statement if the Board
of Directors of Parent determines in good faith based upon advice of counsel
that the use of the prospectus would be misleading because of material
non-public information known to Parent and disclosure of which is determined by
the Board of Directors to be materially detrimental to Parent and is not
otherwise required by law; provided, however, that Parent may utilize this
provision only once in any twelve (12) month period and any such suspension
shall not exceed forty-five (45) calendar days. Parent will use its reasonable
best efforts to cause any such suspension to terminate at the earliest possible
date.
(c) Parent shall pay the expenses incurred by it in complying with its
obligations under this Section 6.1, including all registration and filing fees,
exchange listing fees, the fees and expenses of counsel for Parent, the
reasonable fees and expenses of one counsel retained by the Holders, which
counsel shall be reasonably satisfactory to Parent, and the fees and expenses of
accountants for Parent, but excluding any brokerage fees, selling commissions or
underwriting discounts incurred by the Holders in connection with sales under
the Registration Statement.
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(d) Parent shall seek to continue to qualify for registration on Form
S-3 or any comparable or successor form or forms, or in the event that the
Company is ineligible to use form, such form as the Company is eligible to use
under the Securities Act.
(e) In the case of the registration effected by Parent pursuant to
this Section 6.1, Parent will use its reasonable best efforts to keep such
registration effective until all the Holders have completed the sales or
distribution described in the Registration Statement relating thereto or, if
earlier, until such Registrable Securities may be sold under Rule 144(k)
(provided that Parent's transfer agent has accepted an instruction from Parent
to such effect).
(f) Parent will indemnify each Holder, each of its directors, officers
and partners, and each person controlling each Holder within the meaning of
Section 15 of the Securities Act and the rules and regulations thereunder,
against all claims, losses, damages and liabilities (or actions in respect
thereof) arising out of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in any registration statement,
prospectus, offering circular or other document incident to any registration,
qualification or compliance effected by Parent pursuant to this Section 6.1, or
based on any omission (or alleged omission) to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, or any violation by Parent of the Securities Act or any state
securities law or in either case, any rule or regulation thereunder applicable
to Parent and relating to action or inaction required of Parent in connection
with any such registration, qualification or compliance, and will reimburse each
Holder, each of its officers, directors and partners, and each person
controlling such Holder, for any legal and any other expenses reasonably
incurred in connection with investigating and defending any such claim, loss,
damage, liability or action, provided that Parent will not be liable in any such
case to a Holder to the extent that any such claim, loss, damage, liability or
expense arises out of or is based on any untrue statement or omission based upon
written information furnished to Parent by or on behalf of such Holder therefor
and stated to be specifically for use therein. The indemnity agreement contained
in this Section 6.1(f) shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability or action if such settlement is effected without
the consent of Parent (which consent will not be unreasonably withheld).
(g) Each Holder will indemnify Parent, each of its directors, officers
and partners, each person who controls Parent within the meaning of Section 15
of the Securities Act and the rules and regulations thereunder, and each other
Holder, and each of their directors, officers and partners, and each person
controlling such other Holder(s), against all claims, losses, damages and
liabilities (or actions in respect thereof) arising out of or based on any
untrue statement (or alleged untrue statement) of a material fact contained in
any such registration statement, prospectus, offering circular or other
document, or any omission (or alleged omission) to state therein a material fact
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required to be stated therein or necessary to make the statement therein not
misleading, and will reimburse Parent and such other Holder(s) and their
directors, officers and partners, or control persons for any legal or any other
expenses reasonably incurred in connection with investigating and defending any
such claim, loss, damage, liability or action, in each case to the extent, but
only to the extent, that such untrue statement (or alleged untrue statement) or
omission (or alleged omission) is made in such registration statement,
prospectus, offering circular or other document in reliance upon and in
conformity with written information furnished to Parent by such Holder and
stated to be specifically for use therein; provided, however, that the
obligations of each of the Holders hereunder shall be limited to an amount equal
to the net proceeds to such Holder of securities sold pursuant to the
Registration Statement. The indemnity agreement contained in this Section 6.1(g)
shall not apply to amounts paid in settlement of any such claims, losses,
damages or liabilities if such settlement is effected without the consent of
such Holder (which consent shall not be unreasonably withheld).
(h) Each party entitled to indemnification under this Section 6.1 (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom; provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or any litigation resulting
therefrom, shall be approved by the Indemnified Party (whose approval shall not
unreasonably be withheld) and the Indemnified Party may participate in such
defense at the Indemnified Party's expense (unless the Indemnified Party shall
have reasonably concluded that there may be a conflict of interest between the
Indemnifying Party and the Indemnified Party in such action, in which case the
fees and expenses of counsel shall be at the expense of the Indemnifying Party),
and provided further that the failure of any Indemnified Party to give notice as
provided herein shall not relieve the Indemnifying Party of its obligations
under this Section 6.1 unless, and only to the extent that, the Indemnifying
Party is materially prejudiced thereby. No Indemnifying Party, in the defense of
any such claim or litigation shall, except with the consent of each Indemnified
Party, consent to entry of any judgment or enter into any settlement which does
not include as an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Party of a release from all liability in respect
to such claim or litigation. Each Indemnified Party shall furnish such
information regarding itself or the claim in question as an Indemnifying Party
may reasonably request in writing and as shall be reasonably required in
connection with the defense of such claim and litigation resulting therefrom.
(i) If the indemnification provided for in this Section 6.1 is held by
a court of competent jurisdiction to be unavailable to an Indemnified Party with
respect to any loss, liability, claim, damage or expense referred to herein,
then the Indemnifying Party, in lieu of indemnifying such Indemnified Party
hereunder, shall contribute to the amount paid or payable by such Indemnified
Party as a result of such loss, liability, claim,
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damage or expense in such proportion as is appropriate to reflect the relative
fault of the Indemnifying Party on the one hand and of the Indemnified Party on
the other in connection with the statements or omissions which resulted in such
loss, liability, claim, damage or expense, as well as any other relevant
equitable considerations. The relative fault of the Indemnifying Party and of
the Indemnified Party shall be determined by reference to, among other things,
whether the untrue (or alleged untrue) statement of a material fact or the
omission (or alleged omission) to state a material fact relates to information
supplied by the Indemnifying Party or by the Indemnified Party and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
(j) Notwithstanding the foregoing, to the extent that the provisions
on indemnification and contribution contained in the underwriting agreement
entered into in connection with any underwritten public offering contemplated by
this Agreement are in conflict with the foregoing provisions, the provisions in
such underwriting agreement shall be controlling.
(k) With a view to making available the benefits of certain rules and
regulations of the SEC which may permit the sale of restricted securities to the
public without registration, Parent agrees to use its reasonable best efforts to
(i) make and keep public information available as those terms are understood and
defined in Rule 144 under the Securities Act, or any successor rule, at all
times after the date hereof, (ii) use its reasonable best efforts to file with
the SEC in a timely manner all reports and other documents required of Parent
under the Securities Act and the Exchange Act at any time, and (iii) so long as
the Holder owns any Registrable Securities, furnish to the Holder upon request,
a written statement by Parent as to its compliance with the reporting
requirements of Rule 144, and of the Securities Act and the Exchange Act, a copy
of the most recent annual or quarterly report of Parent, and such other reports
and documents so filed as the Holder may reasonably request in availing itself
of any rule or regulation of the SEC allowing the Holder to sell any such
securities without registration.
(l) Each Holder shall notify Parent in writing promptly after, and in
no event later than five (5) business days after, the sale or other disposition
by the Holder of any of the Registrable Securities.
(m) Parent shall not include any securities in the Registration
Statement other than securities owned by the Holders.
(n) Any Holder may assign its registration rights under this Section
6.1 in connection with a transfer of the Registrable Securities, prior to the
date of the initial filing of the Registration Statement with the Commission, to
an affiliate of such Holder or a child, spouse or other member of such Holder's
immediate family or a trust for the benefit of any such person, provided each
such transferee agrees in a written instrument delivered to Parent to be bound
by this Section 6.1; provided, however, that any Holder who owns in excess of
50,000 shares of the Registrable Securities may
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assign its registration rights under this Section 6.1 at any time in connection
with a private resale of the Registrable Securities or in connection with a
transfer of the Registrable Securities to an affiliate of such Holder or a
child, spouse or other member of such Holder's immediate family or a trust for
the benefit of any such person, provided each such transferee agrees in a
written instrument delivered to Parent to be bound by this Section 6.1.
(o) Parent agrees not to file any registration statement (other than a
registration statement related to a public offering by Parent of its securities
or a registration statement in connection with an offering by Parent pursuant to
Rule 144(A) under the Securities Act) prior to the effective date of the
Registration Statement.
(p) If the Registration Statement is not declared effective on or
before June 1, 2001, Parent agrees to assume and be bound by the terms and
provisions of that certain Registration Rights Agreement dated September 30,
1998 by and among the Company and the other parties identified therein, as
amended by Amendment No. 1 dated August 27, 1999.
Section 6.2 Registration Statement on Form S-4. If the Xxxxxxxx
Securities Opinion for any reason is not delivered to Parent within ten (10)
days after the date hereof, or if the Xxxxxxxx Securities Opinion is not in all
respects satisfactory to the Company, Parent and their respective professional
advisors, then in such event:
(a) Parent and the Company shall cooperate to prepare and cause to be
filed on or before October 31, 2000 with the Commission a Registration Statement
on Form S-4 with respect to the issuance of parent Common Stock in the Merger
(the "Form S-4"). Each of Parent and the Company shall use reasonable best
efforts to cause the Form S-4 to comply with applicable law and the rules and
regulations promulgated by the Commission, to respond promptly to any comments
of the Commission or its staff and to have the Form S-4 declared effective under
the Securities Act as promptly as practicable after it is filed with the
Commission. Each of the parties hereto shall promptly furnish to the other party
all information concerning itself, its stockholders and its affiliates that may
be required or reasonably requested in connection with any action contemplated
by this Section 6.2. If any event relating to Parent or the Company occurs, or
if Parent or the Company becomes aware of any information, that should be
disclosed in an amendment or supplement to the Form S-4, Parent or the Company,
as applicable, shall inform the other thereof and shall cooperate with each
other in filing such amendment or supplement with the Commission, and if
appropriate, in mailing such amendment or supplement to the stockholders of
Parent and the Company. Each party will notify the other promptly upon the
receipt of any comments from the Commission or its staff or any other government
officials and of any request by the Commission or its staff or any other
government officials for amendments or supplements to the Form S-4 or for
additional information and will supply the other party with copies of all
correspondence between Parent, the Company or any of their
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representatives, on the one hand, and the Commission, or its staff or any other
government officials, on the other hand, with respect to the Form S-4 or the
Merger. Each party shall cooperate as requested by the other party in connection
with responding to any such comments or requests.
In addition, Parent shall file a Form S-3 if required in order to
permit the resale of the Registrable Securities by a Holder which is an
affiliate of Parent.
(b) Prior to the Effective Time, Parent shall use reasonable efforts
to obtain all regulatory or other approvals needed to ensure that the Parent
Common Stock to be issued in the Merger: (i) will be registered or qualified
under the securities law of every jurisdiction of the United States in which any
registered holder of the Company Capital Stock who is receiving shares of
registered Parent Common Stock has an address of record or be exempt from such
registration and (ii) will be approved for quotation at the Effective Time on
the Nasdaq subject to official notice of issuance; provided, however, that
Parent shall not, pursuant to the foregoing, be required (A) to qualify to do
business as a foreign corporation in any jurisdiction in which it is not now
qualified or (B) to file a general consent to service of process in any
jurisdiction with respect to matters unrelated to the issuance of Parent Common
Stock pursuant hereto.
(c) Each of Parent and the Company (in respect of the information
respectively supplied by it) agrees that (i) none of the information to be
supplied by it or its affiliates for inclusion in the Form S-4 will, at the time
the Form S-4 becomes effective under the Securities Act and at the Effective
Time, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made, not
misleading: and (ii) as to matters respecting it, the Form S-4 will comply as to
form in all material respect with the provisions of the Securities Act and the
Exchange Act, as applicable, and the rules and regulations promulgated by the
Commission thereunder, except that no covenant, representation or warranty is
made by the Company with respect to statements made or incorporated by reference
therein based on information supplied by Parent for inclusion or incorporation
by reference therein and no covenant, representation or warranty is made by
Parent with respect to statements made or incorporated by reference therein
based on information supplied by the Company for inclusion or incorporation by
reference therein.
Section 6.3 Notice to Company Stockholders of the Merger. As soon as may
be reasonably practicable, but not later than five (5) days after the date
hereof, the Company shall notify each of the stockholders of the Company who are
entitled to appraisal rights of the approval of the Merger and that appraisal
rights are available for any or all shares of capital stock of the Company held
by such stockholders, in accordance with the provisions of (a) Section 262(d)(2)
of the DGCL, and (b) Section 228(d) of the DGCL. The Company shall permit
counsel for Parent to review such
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notice within a reasonable period of time prior to the date of the making of
such notification. In connection with such notification, Parent shall provide to
the Company and its counsel such SEC Documents and information concerning
Parent, for inclusion in the notification, as the Company and its counsel may
reasonably request.
Section 6.4 Cooperation; Access to Information; Consents..
(a) Upon reasonable prior notice, the Company shall afford Parent and
its accountants, counsel and other representatives, reasonable access during
normal business hours during the period prior to the Effective Time to all of
its properties, books, contracts, commitments and records, all other information
concerning its business, properties and personnel (subject to restrictions
imposed by applicable law) as Parent may reasonably request and all its key
employees. Upon reasonable prior notice, Parent shall afford the Company and its
accountants, counsel and other representatives, reasonable access during normal
business hours during the period prior to the Effective Time to all of its
properties, books, contracts, commitments and records, all other information
concerning its business, properties and personnel (subject to restrictions
imposed by applicable law) as the Company may reasonably request and all its key
employees. No information or knowledge obtained in any investigation pursuant to
this Section 6.3 shall affect or be deemed to modify any representation or
warranty contained herein or the conditions to the obligations of the parties to
consummate the Merger.
(b) The Company and Parent shall use their reasonable best efforts to
obtain the consents, waivers, assignments and approvals under any of their
respective material contracts as may be required in connection with the Merger
so as to preserve all rights of, and benefits to, the Company and Parent
thereunder.
Section 6.5 Expenses. Whether or not the Merger is consummated, all fees
and expenses incurred in connection with the Merger, including, without
limitation, all legal, accounting, financial advisory, consulting and all other
fees and expenses of third parties ("THIRD PARTY EXPENSES") incurred by a party
in connection with the negotiation and effectuation of the terms and conditions
of this Agreement and the transactions contemplated hereby, shall be the
obligation of the respective party incurring such fees and expenses, it being
understood that the fees and expenses associated with printing and distributing
the materials under Section 6.2 are the obligations of the Parent.
Section 6.6 Public Disclosures. Parent and the Company shall consult
with each other before issuing any press release or otherwise making any public
statements with respect to this Agreement or the Merger or the transactions
contemplated hereby or thereby and shall not issue any such press release or
make any such public statement prior to such consultation, except as may be
required by law, the NASDAQ or any listing agreement with a national securities
exchange. The parties have agreed to the text of the joint press release
announcing the signing of this Agreement.
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Section 6.7 Reasonable Best Efforts. Subject to the terms and conditions
provided in this Agreement, each of the parties hereto shall use its reasonable
best efforts to take promptly, or cause to be taken, all actions, and to do
promptly, or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated hereby, to obtain all necessary waivers, consents, tax
opinions and approvals and to effect all necessary registrations and filings and
to remove any injunctions or other impediments or delays, legal or otherwise, in
order to cause the Merger to be effective on or before October 31, 2000 or as
soon as practicable thereafter and otherwise to consummate and make effective
the transactions contemplated by this Agreement for the purpose of securing to
the parties hereto the benefits contemplated by this Agreement. Notwithstanding
the foregoing, (A) none of Parent, the Company or any of their respective
subsidiaries shall be required to agree to any divestiture or hold separate or
similar transactions by it or any of its subsidiaries or affiliates of shares of
capital stock or of any business, assets or property of any of them or any of
their subsidiaries or affiliates, or the imposition of any material limitation
on the ability of any of them to conduct their businesses or to own or exercise
control of such assets, properties and stock and (B) the Company shall not,
without Parent's prior written consent, commit to any divestiture or hold
separate or similar transaction by it or any of its subsidiaries or affiliates
of shares of capital stock or of any business, assets or property of any of them
or any of their subsidiaries or affiliates, or the imposition of any material
limitation on the ability of any of them to conduct their businesses or to on or
exercise control of such assets, properties and stock.
Section 6.8 Notification of Certain Matters. Each of the Company and
Parent shall give prompt notice to the other party of (i) the occurrence or
non-occurrence of any event, the occurrence or non-occurrence of which is likely
to cause any representation or warranty of any party contained in this Agreement
to be untrue and inaccurate at or prior to the Effective Time such that the
conditions set forth in Section 7.2(b) or 7.3(b) would not be satisfied and (ii)
any failure of Parent or the Company, as the case may be, to comply with or
satisfy any covenant, condition or agreement to be complied with or satisfied by
it hereunder which is likely to cause any condition set in Article VII hereof
not to be satisfied; provided, however, that the delivery of any notice pursuant
to this Section 6.8 shall not limit or otherwise affect any remedies available
to the party receiving such notice and no disclosure by Parent or the Company,
pursuant to this Section 6.8 shall be deemed to amend or supplement the Parent
Disclosure Letter or the Company Disclosure Letter, respectively, or prevent or
cure any misrepresentations, breach of warranty or breach of covenant, unless
the recipient party shall agree in writing to accept the disclosures set forth
in any such notice.
Section 6.9 Support Agreements; Share Transfer Restriction Agreements.
Those stockholders of the Company listed on Schedule 6.9 attached hereto have
delivered to Parent, concurrently with the execution of this Agreement, (i)
executed Support Agreements, substantially in the form attached hereto as
Exhibit B, and (ii)
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executed Share Transfer Restriction Agreements, substantially in the form of
Exhibit C attached hereto.
Section 6.10 Regulatory Filings; Reasonable Best Efforts. As soon as may
be reasonably practicable, Parent and the Company each shall file with the
United States Federal Trade Commission (the "FTC") and the Antitrust Division of
the United States Department of Justice (the "DOJ") Notification and Report
Forms relating to the transactions contemplated herein as required by the H-S-R
Act, as well as comparable pre-merger notification forms required by the merger
notification or control laws and regulations of any applicable jurisdiction, as
agreed to by the parties. Parent and the Company each shall promptly (a) supply
the other with any information which may be required in order to effectuate such
filings and (b) supply any additional information which reasonably may be
required by the FTC, the DOJ or the competition or merger control authorities of
any other jurisdiction and which the parties may reasonably deem appropriate.
Section 6.11 Additional Documents and Further Assurances. Each party
hereto, at the request of another party hereto, shall execute and deliver such
other instruments and do and perform such other acts and things as may be
necessary or desirable for effecting completely the consummation of this
Agreement, the Merger and the transactions contemplated hereby.
Section 6.12 Company Stock Rights.
(a) Each Company Stock Right which is vested prior to or as of the
Closing may be exercised by the holder thereof as and if so vested at any time
prior to or at Closing, and shares of Company Common Stock shall be issued to
such holder upon such exercise in accordance with the terms of such Company
Stock Right, provided that such holder pays to the Company the applicable
exercise price or warrant purchase price and otherwise complies with all
conditions to and procedures for the exercise of such options, warrants or
rights.
(b) Each Company Stock Right which (i) is not vested prior to or as of
the Closing or (ii) otherwise is not exercised by the holder thereof prior to or
at the Closing, shall without further action on the part of the holder thereof
be converted into an option to acquire a number of shares of Parent Common Stock
equal to the Exchange Ratio (applicable to the conversion of Company Common
Stock, as determined in accordance with Section 3.1(c)(i) or 3.1(c)(ii)(B), as
applicable, hereof), rounded up to the nearest whole share (except where such
rounding would adversely affect the status of an option to acquire Company
Common Stock as an incentive stock option under Section 422 of the Code), and at
a per share option price equal to the per share option price, if any, under the
related Company Stock Right divided by the Exchange Ratio (applicable to the
conversion of Company Common Stock, as determined in accordance with Section
3.1(c)(i) or 3.1(c)(ii)(B), as applicable, hereof),
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on terms and conditions substantially identical to the terms and conditions
existing under the related Company Stock Right so converted.
(c) Parent shall take all corporate action necessary to reserve for
issuance a sufficient number of shares of Parent Common Stock for delivery upon
exercise of the options assumed in accordance with this Section 6.12. Not later
than ten (10) days after the Effective Time, Parent shall file a Registration
Statement on Form S-8 (or any successor form) under the Securities Act with
respect to all shares of Parent Common Stock subject to options that may be
registered on a Form S-8, and shall use its reasonable best efforts to maintain
the effectiveness of such Registration Statement for so long as such options
remain outstanding.
Section 6.13 Employee Benefits. From the Effective Time and until
December 31, 2000, Parent shall cause the Company to continue (a) to maintain
employee benefits plans and benefit arrangements for the benefit of the
Company's employees which are no less favorable in the aggregate than the
Employee Plans and Benefit Arrangements and (b) to continue to provide base
compensation and incentive compensation opportunities for the Company's
employees which in the aggregate are comparable to the base compensation and
incentive compensation opportunities available to the Company's employees at the
Closing; provided that, nothing herein shall be construed as requiring Parent or
the Company to maintain the employment of any of the Company's employees through
that date.
Section 6.14 Certain Tax Matters.
(a) Return Filing; Information Sharing. Until the Closing Date:
(i) The Company shall prepare and file, or cause to be prepared
and filed, with the appropriate governmental authority all federal tax
returns and all material state, local and foreign tax returns required to
be filed (with extensions) by or with respect to the Company on or prior
to the Closing Date;
(ii) The Company agrees that it will, and will cause its
affiliates to, make available all such information, employees and records
of or relating to the Company as Parent may reasonably require with
respect to matters relating to taxes (including, without limitation, the
right to make copies of such information and records) and will cooperate
with respect to all matters relating to all taxes (including, without
limitation, the filing of tax returns, tax planning matters, the filing
of an amended tax return (if the Company determines that such an
amendment is necessary), audits, and proceedings); and
(iii) If the Company or any affiliate thereof receives any
written notice from any tax authority proposing any audit or adjustment
to any tax relating to the Company, the Company or such affiliate shall
give prompt written
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notice thereof to Parent which notice shall describe in detail each
proposed adjustment.
(b) Certain Tax Opinions.
(i) Parent represents, warrants and covenants that it has
received an opinion of Paul, Hastings, Xxxxxxxx & Xxxxxx LLP ("PHJW"),
counsel to Parent, issued for the sole reliance of Parent, in form and
substance satisfactory to Parent, that the Merger, if consummated in
accordance with this Agreement, and based upon the Initial Tax
Certificates (defined below), will qualify as a reorganization within the
meaning of Section 368(a) of the Code as in effect as of the date hereof
(the "PHJW INITIAL TAX OPINION");
(ii) The Company represents, warrants and covenants that it has
received an opinion of King & Spalding ("K&S"), counsel to the Company,
issued for the sole reliance of the Company, in form and substance
satisfactory to the Company, that the Merger, if consummated in
accordance with this Agreement, and based upon the Initial Tax
Certificates (defined below), will qualify as a reorganization within the
meaning of Section 368(a) of the Code as in effect as of the date hereof
(the "K&S INITIAL TAX OPINION");
(iii) In connection with the rendering of the Initial Tax
Opinions, Parent, Acquisition and the Company have furnished PHJW and K&S
with certificates signed by officers having authority to sign such
certificates (the "INITIAL TAX CERTIFICATES"). Parent, Acquisition and
the Company agree that they will furnish certificates dated as of the
Closing Date in substantially the same form (updated as necessary) as the
Initial Tax Certificates (the "CLOSING TAX CERTIFICATES") in connection
with the issuance by PHJW and K&S of certain legal opinions dated as of
the Closing Date;
(iv) Parent, Acquisition and the Company shall cooperate in
causing the Merger to qualify as a tax-free reorganization under Section
368(a) of the Code and shall treat the Merger as such a reorganization in
which no other property or money (within the meaning of Section 356 of
the Code, but excluding cash received in lieu of fractional shares) is
received by Company stockholders (other than Dissenting Stockholders) for
all tax purposes, including the reporting of the Merger as qualifying as
such a reorganization on all relevant federal, state, local and foreign
tax returns. Parent, Acquisition and the Company covenant and agree that
they each shall not take any position or action inconsistent with the
Initial Tax Certificates or the Closing Tax Certificates. Parent and the
Company covenant and agree to (and to cause any affiliate or successor
to) vigorously and in good faith defend all challenges to the tax-free
status of the Merger; and
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(v) It is understood and agreed that both PHJW and K&S shall
issue to their respective clients substantially identical opinions to the
effect that the Merger will qualify as a reorganization under Section
368(a) of the Code and related matters (A) for description in the
notification to the Stockholders of the Company, described in Section
6.3, and (B) at Closing.
(c) Tax Covenants. Parent and the Company covenant to each other that
none of Parent, the Company or any of their respective subsidiaries has taken
(or will take) any action that would prevent the Merger from qualifying as a
reorganization described in Section 368(a) of the Code, including, without
limitation, any action inconsistent with any representation, warranty, or
covenant made or to be made in connection with opinions to be delivered pursuant
to Sections 7.2(a) or 7.3(a) hereof. In addition, Parent and the Company each
agree that in the event such party becomes aware of any such fact or
circumstance that is reasonably likely to prevent the Merger from qualifying as
a reorganization described in Section 368(a) of the Code, it will promptly
notify the other party in writing.
Section 6.15 No Solicitation. The Company agrees that it shall not,
directly or indirectly, through any officer, director, employee, representative
or agent (i) solicit, initiate, or encourage any inquiries or proposals that
constitute, or could reasonably be expected to lead to, a Competitive Proposal,
or (ii) engage in negotiations or discussions concerning, or provide any
non-public information to any person or entity relating to any Competitive
Proposal, or (iii) enter into any definitive agreement relating to a Competitive
Proposal. For purposes of this Agreement, "COMPETITIVE PROPOSAL" means (i) any
proposal or offer from any Person relating to any direct or indirect acquisition
or purchase of all or a substantial part of the assets of the Company, (ii) any
tender offer or exchange offer that if consummated would result in any Person
beneficially owning twenty percent (20%) or more of any class of existing
securities of the Company, (iii) any merger, consolidation, business
combination, sale of substantially all of the assets, recapitalization,
liquidation, dissolution, or similar transaction involving the Company, other
than the transaction contemplated by the Agreement and other than transactions
in the ordinary course of business consistent with past practice, or (iv) any
other transaction the consummation of which would reasonably be expected to
impede or delay the Merger.
Section 6.16 Parent Board of Directors. Parent shall cause the Parent's
Board of Directors to select and elect (i)one individual selected by Parent's
Board of Directors from General Atlantic Partners 49, L.P., General Atlantic
Partners 57, L.P., GAP Coinvestment Partners, L.P. and GAP Coinvestment Partners
II, L.P., collectively as a group, and (ii) one individual selected by Parent's
Board of Directors from the Company's Board of Directors to serve as members of
Parent's Board of Directors in the respective classes of directors which shall
have the longest unexpired terms at the time of each individual's election, such
elections to be effective as of the Effective Time;
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and, in connection therewith, if necessary to add such persons to its Board of
Directors, Parent shall take all actions necessary to expand the Parent's Board
of Directors.
Section 6.17 Parent Employee Retention Plan. As soon as practicable
following the date of this Agreement and conditioned upon the consummation of
the Merger, Parent's Board of Directors will adopt such resolutions or take
other actions as may be required to create an employee retention plan,
acceptable to Parent's Board of Directors, pursuant to which options to purchase
shares of Parent Common Stock will be granted to employees of the Company, which
shares will be subject to forfeiture in the event such employee voluntarily
resigns or is terminated with cause by the Surviving Corporation, on such plan
terms, provisions and conditions as are acceptable to the Board. The allocation
of options to be awarded under the employee retention plan and all of the other
terms and provisions of the awards thereunder shall be made by the compensation
committee of Parent's Board of Directors, in consultation with the two (2)
outside directors of the Company's Board of Directors.
Section 6.18 NASDAQ Additional Shares Notification. Parent will file an
additional shares notification with NASDAQ (the "Additional Shares
Notification") to approve for listing, subject to official notice of its
issuance, the shares of Parent Common Stock to be issued in connection with the
Merger. Parent shall exercise reasonable good faith efforts to cause the shares
of Parent Common Stock to be issued in the Merger to be approved for listing on
NASDAQ, subject to official notice of issuance, prior to the Effective Time.
Parent will provide to the Company a copy of the Additional Shares Notification
(including the opinion of counsel furnished therewith).
Section 6.19 No Solicitation of Employees. The parties hereto agree that
each such party shall not, directly or indirectly, through any entity, officer,
director, employee, financial advisor, representative or agent of such party for
a period commencing on the date hereof and terminating on the earlier of the
Closing Date or the twelve (12) month anniversary of the termination of this
Agreement, recruit or solicit any employee of the other party hereto or induce
any employee of the other party hereto to terminate their agreement or
relationship with such other party.
Section 6.20 Indemnification of Directors and Officers.
(a) Parent and the Surviving Corporation agree that the
indemnification obligations set forth in the Company's Certificate of
Incorporation and bylaws, in each case as of the Effective Time, shall survive
the Merger and shall not be amended, repealed or otherwise modified for a period
of seven (7) years after the Effective Time in any manner that would adversely
affect the rights thereunder of the individuals who on or prior to the Effective
Time, were directors or officers of the Company or any of its subsidiaries.
(b) After the Effective Time, Parent and the Surviving Corporation
shall, to the fullest extent permitted under applicable law, indemnify and hold
harmless, each
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present and former director or officer of the Company and each of its
subsidiaries and each such person who served at the request of the Company or
any of its subsidiaries as a director, officer, trustee, partner or fiduciary of
another corporation, partnership, joint venture, trust, pension or other
employee benefit plan or enterprise (collectively, the "Indemnified Parties")
against all costs and expenses (including reasonable attorneys' fees),
judgments, fines, losses, claims, damages, liabilities and settlement amounts
paid in connection with any claim, action, suit, proceeding or investigation
(whether arising before or after the Effective Time), whether civil,
administrative or investigative, arising out of or pertaining to any action or
omission in their capacity as an officer, director or other person to whom this
provision applies, in each case occurring before the Effective Time (including
the transactions contemplated by this Agreement).
(c) For a period of seven (7) years after the Effective Time, Parent
shall cause to be maintained in effect the current policies of directors' and
officers' liability insurance maintained by the Company with respect to matters
arising before the Effective Time.
(d) In the event Parent or the Surviving Corporation or any of their
respective successors or assigns (i) consolidates with or merges into any other
person and shall not be the continuing or surviving corporation or entity in
such consolidation or merger, or (ii) transfers all or substantially all of its
properties to any person, then, and in each case, proper provision shall be made
so that the successors and assigns of Parent or the Surviving Corporation, as
the case may be, honor the indemnification obligations set forth in this Section
6.20.
(e) The obligations of Parent and the Surviving Corporation under this
Section 6.20 shall not be terminated or modified in such a manner as to
adversely affect any director, officer or other person without the consent of
such affected director, officer or other person (it being expressly agreed that
each such director, officer or other person to whom this Section 6.20 applies
shall be a third-party beneficiary of this Section 6.20).
Section 6.21 Maintain S-3 Eligibility. Following the Effective Time,
Parent shall use its reasonable best efforts and take all actions necessary to
maintain eligibility to register its securities under the Securities Act on Form
S-3.
Section 6.22 Dividend on Class A Preferred Stock. As of the date hereof,
there are dividends accrued, but unpaid, in respect of the shares of the
Company's Series A Preferred Stock in the amount set forth in the Company
Disclosure Letter(the "SERIES A PREFERRED STOCK DIVIDENDS"). Immediately prior
to the Effective Time, if the holders determine to convert their shares of
Series A Preferred Stock into shares of Class B Common Stock in accordance with
Section IV.C.5.(a) of the Company's Certificate of Incorporation, the Series A
Preferred Stock Dividends will be paid in full in cash.
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Section 6.23 Conduct of Business Pending Closing. Between the date hereof
and the Effective Time, the business of Parent and the Company each shall be
conducted only in the ordinary and usual course and consistent with prior
practice.
Section 6.24 Employment Agreements. The Company shall use its reasonable
best efforts to cause each of the employees of the Company set forth on Schedule
6.24 hereto (the "Key Employees"), to execute and deliver to Parent and the
Company an Employment Agreement by and between the Company and each Key Employee
in form and substance satisfactory to Parent.
Section 6.25 Secondary Offering. If Parent determines to commence a
public offering of its securities, Parent agrees in good faith to proceed with
such offering as promptly as is reasonably practicable.
Section 6.26 No Adverse Actions. Each of the parties hereto agrees not
to, directly or indirectly, knowingly take any action which could materially
delay the consummation of the Merger in accordance with the terms of this
Agreement.
Section 6.27 Securities Laws Compliance. If the Xxxxxxxx Securities
Opinion is issued, the offer, sale and issuance of the Parent Common Stock
pursuant to the terms of this Agreement will constitute transactions exempt from
the registration requirements of Section 5 of the Securities Act, and the
registration or qualification requirements of applicable states securities laws.
ARTICLE VII
CONDITIONS TO THE MERGER
Section 7.1 Conditions to Obligations of Each Party. The respective
obligations of each party to this Agreement to consummate and effect this
Agreement and the transactions contemplated hereby shall be subject to the
satisfaction at or prior to the Effective Time of the following conditions:
(a) No Injunctions or Restraints; Illegality. No temporary restraining
order, preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the Merger shall be in effect, nor shall any proceeding brought
by an administrative agency or commission or other governmental authority or
instrumentality, domestic or foreign, seeking any of the foregoing be pending;
nor shall there by any action taken, or any statue, rule, regulation, injunction
order or decree enacted, entered, enforced, promulgated, issued or deemed
applicable to the Merger which makes the consummation of the Merger illegal.
(b) H-S-R Act. All waiting periods under the H-S-R Act relating to the
transactions hereby will have expired or terminated early.
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(c) Dissenting Stockholders. The period of time permitted under
Section 262 of the DGCL, during which the stockholders of the Company may demand
the appraisal of their shares of Company Capital Stock, shall have expired.
(d) Effectiveness of Form S-4 Registration Statement. If the Form S-4
shall have been filed in accordance with Section 6.2 hereof, such Form S-4 shall
have become effective in accordance with the provisions of the Securities Act,
and no stop order shall have been issued by the Commission with respect thereto.
Section 7.2 Conditions to Obligations of Parent. The obligations of
Parent to consummate and effect this Agreement and the transactions contemplated
hereby shall be subject to the satisfaction at or prior to the Effective Time of
each of the following conditions, any of which may be waived, in writing,
exclusively by Parent:
(a) Legal Opinion. Parent shall have received (i) the opinion of PHJW,
counsel to Parent, in the form attached hereto as Exhibit D , to the effect that
the Merger will be treated as a reorganization described in Section 368(a) of
the Code, and that neither Parent nor any of its subsidiaries will recognize
gain or loss by reasons of the issuance of the Parent Common Stock, in each case
under the laws in effect as of the Closing Date, and (ii) the opinion of K&S,
counsel to the Company, in form reasonably satisfactory to Parent and its
counsel, to the effect that the provisions contained in Article XI and Exhibit F
hereto relating to the indemnification of Parent and the related escrow of
shares are enforceable in accordance with their terms. The parties to this
Agreement agree to make such reasonable representations as requested by such
counsel for the purpose of rendering any such opinion.
(b) Representations and Warranties. The representations and warranties
of the Company in this Agreement shall be true and correct in all respects on
and as of the Effective Time as though such representations and warranties were
made on and as of such time, except for those representations and warranties
which address matters only as of a particular date (which shall be true and
correct only as of such date) and such inaccuracies as individually or in the
aggregate would not have a Material Adverse Effect on the Company.
(c) Covenants. The Company shall have performed and complied in all
material respects with all covenants and obligations of this Agreement required
to be performed and complied with by the Company as of the Effective Time.
(d) Certificate of the Company. Parent shall have been provided with a
certificate executed on behalf of the Company by its President and Chief
Executive Officer, its Chief Operating Officer or its Chief Financial Officer to
the effect that, as of the Effective Time, the conditions set forth in Sections
7.2(b) and 7.2(c) have been met.
(e) Dissenting Stockholders. Appraisal rights shall not have been
properly demanded by Dissenting Stockholders of the Company pursuant to Section
262 of the
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DGCL for shares of the Company Common Stock in a number greater than seven
percent (7%) of the Company Common Stock issued and outstanding immediately
prior to the Effective Time (for these purposes, converting any shares of
Company Preferred Stock held by such Dissenting Stockholders to the equivalent
number of shares of Company Common Stock).
(f) Share Transfer Restriction Agreements. All of the Share Transfer
Restriction Agreements delivered by stockholders of the Company to Parent shall
be in full force and effect in accordance with their terms.
Section 7.3 Conditions to the Obligations of the Company. The
obligations of the Company to consummate and effect this Agreement and the
transactions contemplated hereby shall be subject to the satisfaction at or
prior to the Effective Time of each of the following conditions, any of which
may be waived, in writing, exclusively by the Company:
(a) Legal Opinion. The Company shall have received (i) the opinion of
K&S, counsel to the Company, in the form attached hereto as Exhibit E, to the
effect that the Merger will be treated as a reorganization described in Section
368(a) of the Code under the law in effect as of the Closing Date. The parties
to this Agreement agree to make such reasonable representations as requested by
such counsel for the purpose of rendering any such opinion.
(b) Representations and Warranties. The representations and warranties
of Parent and Acquisition in this Agreement shall be true and correct in all
respects and as of the Effective Time as though such representations and
warranties were made on and as of the Effective Time, except for those
representations and warranties which address matters only as of a particular
date (which shall be true and correct only as of such date) and such
inaccuracies as individually or in the aggregate would not have a Material
Adverse Effect on Parent.
(c) Covenants. Parent and Acquisition shall have performed and
complied in all material respects with all covenants and obligations of this
Agreement required to be performed and complied with by them as of the Effective
Time.
(d) Certificate of Parent. The Company shall have been provided with a
certificate executed on behalf of Parent by officers with titles of Senior Vice
President or above to the effect that, as of the Effective Time, the conditions
set forth in Sections 7.2(b) and 7.2(c) have been met.
ARTICLE VIII
SURVIVAL
Section 8.1 Survival. Except as otherwise provided in the Terms and
Provisions of the Escrow and Indemnification Rights set forth in Exhibit F
attached
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hereto, and subject to the provisions of Section 5.3 of Exhibit F, the
representations and warranties of the Company and Parent set forth in this
Agreement shall terminate immediately upon the Effective Time. The covenants and
agreements of the Company and Parent set forth in this Agreement shall survive
the Effective Time and shall remain in full force and effect until performed or
satisfied by the applicable party responsible for the same in this Agreement.
Section 8.2 Disclaimer of Other Representations and Warranties. No party
hereto makes any representation or warranty other than those representations and
warranties set forth in this Agreement (including Exhibits and Schedules
hereto).
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
Section 9.1 Termination. This Agreement may be terminated and the
Merger abandoned at any time prior to the Effective Time:
(a) by mutual consent of Parent and the Company;
(b) by the Company or Parent if: (i) the Effective Time has not
occurred by (x) December 31, 2000 or (y) in the event the Form S-4 is
filed in accordance with Section 6.2 hereof, then March 31, 2001;
provided, however, that the right to terminate this Agreement under this
Section 9.1(b)(i) shall not be available to any party whose action or
failure to act has been a principal cause of or resulted in the failure
of the Merger to occur on or before such date and such action or failure
to act constitutes a material breach of this Agreement; provided,
further, that any party terminating this Agreement pursuant to this
Section 9.1(b)(i) shall provide the other party with written notice of
such termination, which notice shall set forth those conditions to such
party's obligations hereunder that have not been satisfied as of such
date; or (ii) there shall be a final nonappealable order of a federal or
state court in effect preventing consummation of the Merger; or (iii)
there shall be any statute, rule, regulation, injunction, order or decree
enacted, entered, enforced, promulgated, issued or deemed applicable to
the Merger which makes consummation of the Merger illegal;
(c) by Parent or the Company if there shall be any governmental
action taken, or any statute, rule, regulation or order enacted,
promulgated or issued or deemed applicable to the Merger by any
Governmental Entity, which would (i) prohibit Parent's ownership or
operation of any material portion of the business of the Company or (ii)
compel Parent or the Company to dispose of or hold separate all or a
material portion of the business assets of the Company as a result of the
Merger;
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(d) by the Company if it is not in material breach of its
obligations under this Agreement and there has been a breach of any
representation, warranty or covenant contained in this Agreement on the
part of either Parent or Acquisition, or if any representation or
warranty on the part of Parent shall have become untrue (except for those
representations and warranties which address matters only as of a
particular date, which shall be true and correct only as of such date),
and such inaccuracy in such representation or warranty or breach shall
have a Material Adverse Effect on Parent; or
(e) by Parent if it is not in material breach of its
obligations under this Agreement and there has been a breach of any
representation, warranty or covenant contained in this Agreement on the
part of the Company, or if any representation or warranty of the Company
shall have become untrue (except for those representations and warranties
which address matters only as of a particular date, which shall be true
and correct only as of such date) and such inaccuracy in such
representations and warranties or such breach shall have a Material
Adverse Effect on the Company.
Section 9.2 Effect of Termination. In the event of termination of this
Agreement as provided in Section 9.1 and subject to the payment of any amounts
due under Section 9.3, this Agreement shall forthwith become void and there
shall be no liability or obligation on the part of Parent, Acquisition or the
Company, or their respective officers, directors or stockholders, provided that
each party shall remain liable for any willful breaches of such party's
covenants hereunder or intentional or willful breaches of such party's
representations and warranties hereunder prior to its termination; provided,
further, that the provisions of Sections 6.5, 6.19 and 9.3 of this Agreement
shall remain in full force and effect and survive any termination of this
Agreement.
Section 9.3 Termination Fees and Other Events.
(a) If Parent shall terminate this Agreement pursuant to Section
9.1(e), then the Company shall pay to Parent (by wire transfer or immediately
available funds not later than five (5) days after the date of termination of
this Agreement) an amount equal to $9,148,125, to reimburse and compensate
Parent for its time, expenses and lost opportunity costs of pursuing the Merger.
(b) If the Company shall terminate this Agreement pursuant to Section
9.1(d), then parent shall pay to the Company (by wire transfer of immediately
available funds not later than five (5) days after the date of termination of
this Agreement) an amount equal to $9,148,125, to reimburse and compensate the
Company for its time, expenses and lost opportunity costs of pursuing the
Merger.
(c) The parties acknowledge and agree that the agreements contained in
this Section 9.3 are an integral part of the transactions contemplated by this
Agreement. No termination of this Agreement under this Article IX shall be
effective unless and until all
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fees required to be then paid by the applicable party pursuant to Section 9.3
hereof shall have been received in immediately available funds by the party
entitled thereto. Notwithstanding anything to the contrary contained in this
Section 9.3, if any party fails to pay any fees OR expenses due under this
Section 9.3 within the time required under this Agreement or, if no time period
is specified, within five business days of the event giving rise to the payment
of such fees and expenses, in addition to any other amounts paid or payable
pursuant to this Section, such defaulting party shall pay the out-of-pocket
costs and expenses (including reasonable legal fees and expenses) incurred by
the non-defaulting party in connection with any action, including the filing of
any lawsuit or other legal action, taken to collect payment together with
interest on the amount of any unpaid fees and expenses at the publicly announced
prime rate of Citibank N.A. from the date such fees and expenses were required
to be paid.
ARTICLE X
GENERAL PROVISIONS
Section 10.1 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally or by
commercial messenger or courier service, or mailed by registered or certified
(return receipt requested) or overnight mail or sent via facsimile (with
acknowledgment of complete transmission) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice); provided, however, that notices sent by mail will not be deemed given
until received:
(a) if to the Company:
Talus Solutions, Inc.
Overlook II
0000 Xxxxx Xxxxx Xxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000-0000
Attn: Xxxxxx X. Xxxxxxx
President and Chief Executive Officer
Fax: (000) 000-0000
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with a copy to:
King & Spalding
000 Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxxx
Fax: 000-000-0000
(b) if to Parent or Acquisition:
Manugistics Group, Inc.
0000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000-0000
Attn: Xxxxxxx X. Xxxxx
President and Chief Executive Officer
Fax: (000) 000-0000
with copies to:
Paul, Hastings, Xxxxxxxx & Xxxxxx LLP
000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxx X. Xxxxxxx
Fax: 000-000-0000
and
Xxxxxxxx Xxxxxx LLP
3200 The Mellon Bank Center
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxxxx
Fax: 000-000-0000
Section 10.2 Interpretation. The words "include," "includes" and
"including" when used herein shall be deemed in each case to be followed by the
words "without limitation." The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
Section 10.3 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the
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parties and delivered to the other party, it being understood that all parties
need not sign the same counterpart.
Section 10.4 Entire Agreement. The exhibits and schedules hereto are
incorporated herein by reference. This Agreement and the documents, schedules
and instruments referred to herein and to be delivered pursuant hereto
constitute the entire agreement between the parties pertaining to the subject
matter hereof, and supersede all other prior agreements and understandings, both
written and oral, among the parties, or any of them, with respect to the subject
matter hereof, except for the Mutual Nondisclosure Agreement between Parent and
the Company dated as of January 11, 2000. There are no other representations or
warranties, whether written or oral, between the parties in connection with the
subject matter hereof, except as expressly set forth herein.
Section 10.5 Assignments; Parties in Interest. Neither this Agreement
nor any of the rights, interests or obligations hereunder may be assigned by any
of the parties hereto (whether by operation of law or otherwise) without the
prior written consent of the other parties, except that the rights, interests,
and obligations of the Acquisition hereunder may be assigned to any direct
wholly owned Delaware subsidiary of Parent without such prior consent. Subject
to the preceding sentence, this Agreement shall be binding upon and inure solely
to the benefit of each party hereto, and nothing herein, express or implied, is
intended to or shall confer upon any Person not a party hereto any right,
benefit or remedy of any nature whatsoever under or by reason hereof, except as
otherwise provided herein; provided, however, that, nothing herein shall be
construed as permitting any Holder to transfer to any other Person any of the
registration rights effected pursuant to the Registration Statement described in
Section 6.1 hereof except as otherwise provided therein.
Section 10.6 Severability. In the event that any provision of this
Agreement or the application thereof, becomes or is declared by a court of
competent jurisdiction to be illegal, void or unenforceable, the remainder of
this Agreement will continue in full force and effect and the application of
such provision to other persons or circumstances will be interpreted so as
reasonably to effect the intent of the parties hereto. The parties further agree
to replace such void or unenforceable provision of this Agreement with a valid
and enforceable provision that will achieve, to the extent possible, the
economic, business and other purposes of such void or unenforceable provision.
Section 10.7 Other Remedies. Except as otherwise provided herein, any
and all remedies herein expressly conferred upon a party will be deemed
cumulative with and not exclusive of any other remedy conferred hereby, or by
law or equity upon such party, and the exercise by a party of any one remedy
will not preclude the exercise of any other remedy.
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Section 10.8 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof.
Section 10.9 Rights of Construction. The parties hereto agree that they
have been represented by counsel during the negotiation and execution of this
Agreement, and therefor, waive the application of any law, regulation, holding
or rule of construction providing that ambiguities in an agreement or other
document will be construed against the party drafting such agreement or
document.
Section 10.10 Specific Performance. The parties hereto agree that
irreparable damage could occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties will be
entitled to the remedy of specific performance of the terms hereof, in addition
to any other right or remedy any person hereto may have at law or in equity.
Section 10.11 Knowledge. "To the knowledge of the Company" or any similar
phrase contained in this Agreement shall mean the actual knowledge, after due
and appropriate inquiry, of the Company Executives. For purposes hereof, the
"Company Executives" shall consist of Xxxxxx Xxxxx, Xxxxxx X. Xxxxxxx, Xx.,
Xxxxxxx Xxxx, Xxxxxxx Xxxxxxx, Xxxxxx Xxxxxxxx and Xxxx Xxxxxxxxxx. "To the
knowledge of Parent" or any similar phrase contained in this Agreement shall
mean the actual knowledge, after due and appropriate inquiry, of the Parent
Executives. For purposes hereof, the "Parent Executives" shall consist of
Xxxxxxx Xxxxx, Xxxxxxxx Xxxxxx and Xxxxxxx Xxxxx.
ARTICLE XI
Section 11.1 Indemnification; Escrow Fund. At the Effective Time, the
Escrow Shares will be deposited with an escrow agent that is mutually agreeable
to the Company and Parent, without any act required on the part of the Company's
stockholders. The Escrow Shares will be held in deposit in accordance with the
terms and conditions set forth in Exhibit F attached hereto and will secure the
indemnification obligations of the Company and its stockholders to Parent for
any losses incurred by Parent as a result of any breach of the representations,
warranties, covenants or agreements of the Company which are contained in this
Agreement.
[SIGNATURES ON THE FOLLOWING PAGE]
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IN WITNESS WHEREOF, Parent, Acquisition and the Company have caused this
Agreement to be signed and delivered by their respective duly authorized
officers has signed and delivered this Agreement, all as of the date first
written above.
PARENT:
MANUGISTICS GROUP, INC.
By:
---------------------------------------
Xxxxxxx X. Xxxxx
President and CEO
ACQUISITION:
MANU ACQUISITION CORP.
By:
---------------------------------------
Xxxxxxxx Xxxxxx
President
THE COMPANY:
TALUS SOLUTIONS, INC.
By:
---------------------------------------
Xxxxxx X. Xxxxxxx, Xx.
President and CEO
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EXHIBITS
Exhibit Description
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A Rule 145 Letter
B Support Agreement
C Share Transfer Restriction Agreement
C-1 Madison Share Transfer Restriction Agreement
D Form of PHJW Opinion
E Form of K&S Tax Opinion
F Terms and Provisions of the Escrow and Indemnification Rights
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