--------------------------------------------------------------------------------
AGREEMENT AND PLAN OF MERGER
DATED AS OF JUNE 14, 1999
AMONG
CADENCE DESIGN SYSTEMS, INC.,
ORCAD, INC.
AND
CDSI ACQUISITION CORPORATION
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TABLE OF CONTENTS
Page
----
ARTICLE 1. THE TENDER OFFER.....................................................................2
Section 1.1. The Offer..................................................................2
Section 1.2. Company Action.............................................................4
Section 1.3. Directors..................................................................5
ARTICLE 2 THE MERGER...........................................................................6
Section 2.1. The Merger.................................................................6
Section 2.2. Effective Time.............................................................6
Section 2.3. Closing of the Merger......................................................7
Section 2.4. Effects of the Merger......................................................7
Section 2.5. Certificate of Incorporation and Bylaws....................................7
Section 2.6. Directors..................................................................7
Section 2.7. Officers...................................................................7
Section 2.8. Conversion of Shares.......................................................7
Section 2.9. Dissent and Appraisal Rights...............................................8
Section 2.10. Exchange of Certificates...................................................9
Section 2.11. Stock Options.............................................................10
Section 2.12. The Stock Purchase Plan...................................................11
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE COMPANY.......................................11
Section 3.1. Organization and Qualification; Subsidiaries; Investments.................12
Section 3.2. Capitalization of the Company and its Subsidiaries........................13
Section 3.3. Authority Relative to this Agreement; Recommendation......................14
Section 3.4. SEC Reports; Financial Statements.........................................14
Section 3.5. Offer Documents; Proxy Statement..........................................15
Section 3.6. Consents and Approvals; No Violations.....................................15
Section 3.7. No Default................................................................16
Section 3.8. No Undisclosed Liabilities; Absence of Changes............................16
Section 3.9. Litigation................................................................18
Section 3.10. Compliance with Applicable Law............................................18
Section 3.11. Employee Benefit Plans; Labor Matters.....................................19
Section 3.12. Environmental Laws and Regulations........................................20
Section 3.13. Taxes.....................................................................21
Section 3.14. Intellectual Property.....................................................23
Section 3.15. Certain Contract Matters..................................................28
Section 3.16. Insurance.................................................................28
Section 3.17. Certain Business Practices................................................28
Section 3.18. Product Warranties........................................................29
Section 3.19. Suppliers and Customers...................................................29
Section 3.20. Vote Required.............................................................29
Section 3.21. Opinion of Financial Adviser..............................................29
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Section 3.22. Brokers...................................................................29
Section 3.23. Disclosure................................................................29
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER..............................30
Section 4.1. Organization..............................................................30
Section 4.2. Authority Relative to this Agreement......................................30
Section 4.3. SEC Reports; Financial Statements.........................................31
Section 4.4. Offer Documents; Proxy Statement..........................................31
Section 4.5. Consents and Approvals; No Violations.....................................32
Section 4.6. Brokers...................................................................32
Section 4.7. No Prior Activities.......................................................32
ARTICLE 5 COVENANTS...........................................................................33
Section 5.1. Conduct of Business of the Company........................................33
Section 5.2. Preparation of the Proxy Statement........................................35
Section 5.3. Other Potential Acquirers.................................................35
Section 5.4. Meeting of Stockholders...................................................37
Section 5.5. Access to Information.....................................................37
Section 5.6. Certain Filings; Reasonable Efforts.......................................38
Section 5.7. Public Announcements......................................................39
Section 5.8. Indemnification and Directors' and Officers' Insurance....................39
Section 5.9. Notification of Certain Matters...........................................40
Section 5.10. Additions to and Modification of Company Disclosure Schedule..............40
Section 5.11. Officers..................................................................40
ARTICLE 6 CONDITIONS TO CONSUMMATION OF THE MERGER............................................41
Section 6.1. Conditions to Each Party's Obligations to Effect the Merger...............41
Section 6.2. Conditions to the Obligations of Parent and Purchaser.....................41
Section 6.3. Conditions to the Obligations of the Company..............................41
ARTICLE 7 TERMINATION; AMENDMENT; WAIVER......................................................42
Section 7.1. Termination...............................................................42
Section 7.2. Effect of Termination.....................................................43
Section 7.3. Fees and Expenses.........................................................43
Section 7.4. Amendment.................................................................44
Section 7.5. Extension; Waiver.........................................................44
ARTICLE 8 MISCELLANEOUS.......................................................................45
Section 8.1. Nonsurvival of Representations and Warranties.............................45
Section 8.2. Entire Agreement; Assignment..............................................45
Section 8.3. Validity..................................................................45
Section 8.4. Notices...................................................................45
Section 8.5. Governing Law.............................................................46
Section 8.6. Descriptive Headings......................................................46
Section 8.7. Parties in Interest.......................................................46
ii
Section 8.8. Certain Definitions.......................................................46
Section 8.9. Personal Liability........................................................47
Section 8.10. Specific Performance......................................................47
Section 8.11. Counterparts..............................................................47
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TABLE OF EXHIBITS
Exhibit A..................Form of Certificate of Merger
iv
TABLE OF DEFINED TERMS
Cross Reference
Term in Agreement Page
---- ---------------- ----
affiliate.........................................................Section 8.8(a)......................46
Agreement ........................................................Preamble.............................1
business day......................................................Section 8.8(b)......................46
Business System...................................................Section 3.14(o)(i)..................27
capital stock.....................................................Section 8.8(c)......................47
Certificate of Merger.............................................Section 2.2..........................6
Certificates......................................................Section 2.10(b)......................9
Closing Date......................................................Section 2.3..........................7
Closing...........................................................Section 2.3..........................7
Company Disclosure Schedule.......................................Section 3...........................12
Company Permits...................................................Section 3.10........................18
Company...........................................................Preamble.............................1
Company SEC Reports...............................................Section 3.4(a)......................14
Company Securities................................................Section 3.2(a)......................13
Company Stock Option Agreement....................................Preamble.............................1
Company Stockholders'Meeting......................................Section 3.5.........................15
Copyrights........................................................Section 3.14(a).....................23
Delaware Law......................................................Preamble.............................1
Dissenting Shares.................................................Section 2.9(a).......................8
Effective Time....................................................Section 2.2..........................7
Employee Plans....................................................Section 3.11(a).....................19
Employment Agreements.............................................Preamble.............................2
Environmental Claim...............................................Section 3.12(a).....................20
Environmental Laws................................................Section 3.12(a).....................20
ERISA Affiliate...................................................Section 3.11(a).....................19
ERISA.............................................................Section 3.11(a).....................19
excess parachute payments.........................................Section 3.13(l).....................22
Exchange Act......................................................Section 1.1(a).......................2
Exchange Agent....................................................Section 2.10(a)......................9
Final Date........................................................Section 7.1.........................42
Financial Advisor.................................................Section 1.2(a).......................4
Governmental Entity...............................................Section 3.6.........................16
HSR Act...........................................................Section 3.6.........................16
Inbound License Agreements........................................Section 3.14(e).....................24
incentive stock options...........................................Section 2.11(a).....................10
include...........................................................Section 8.8(e)......................47
Indemnified Liabilities...........................................Section 5.8(a)......................39
Indemnified Persons...............................................Section 5.8(a)......................39
Independent Directors.............................................Section 1.3..........................6
Insurance Policies................................................Section 3.16........................28
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Cross Reference
Term in Agreement Page
---- ---------------- ----
Insured Parties...................................................Section 5.8(b)......................40
Intellectual Property.............................................Section 3.14(a).....................23
IRS...............................................................Section 3.11(a).....................19
ISO...............................................................Section 2.11(a).....................10
knowledge or known................................................Section 8.8(d)......................47
Lien..............................................................Section 3.2(b)......................13
Material Adverse Effect on Parent.................................Section 4.1(b)......................30
Material Adverse Effect on the Company............................Section 3.1(b)......................12
Merger............................................................Preamble.............................1
Merger............................................................Section 2.1..........................6
Notice of Superior Proposal.......................................Section 5.3(b)......................36
Offer Documents...................................................Section 1.1(c).......................3
Offer.............................................................Preamble.............................1
Offer to Purchase.................................................Section 1.1(c).......................2
Option Plan.......................................................Section 2.11(a).....................10
Options...........................................................Section 2.11(a).....................10
Other Interests...................................................Section 3.1(c)......................12
Outbound License Agreements.......................................Section 3.14(e).....................25
Parent Common Stock...............................................Preamble.............................1
Parent............................................................Preamble.............................1
Parent SEC Reports................................................Section 4.3(a)......................31
Patents...........................................................Section 3.14(a).....................23
Per Share Amount..................................................Preamble.............................1
person............................................................Section 8.8(f)......................47
Proxy Statement...................................................Section 3.5.........................15
Purchaser.........................................................Preamble.............................1
Schedule 14D-1....................................................Section 1.1(c).......................3
Schedule 14D-9....................................................Section 1.2(a).......................4
SEC...............................................................Section 1.1(c).......................3
Securities Act....................................................Section 3.4(a)......................14
Shares............................................................Preamble.............................1
Software..........................................................Section 3.14(l).....................26
Stockholders Agreement............................................Preamble.............................1
subsidiary or subsidiaries........................................Section 8.8(g)......................47
Superior Proposal.................................................Section 5.3(c)......................37
Surviving Corporation.............................................Section 2.1..........................6
Tax or Taxes......................................................Section 3.13(a)(i)..................21
Tax Return........................................................Section 3.13(a)(ii).................21
Third Party Acquisition...........................................Section 5.3(c)......................36
Third Party.......................................................Section 5.3(c)......................37
Trade Secrets.....................................................Section 3.14(a).....................23
Trademarks........................................................Section 3.14(a).....................23
Year 2000 Compliant...............................................Section 3.14(o)(i)..................27
vi
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") dated as
of June 14, 1999, is by and among OrCAD, Inc., a Delaware corporation (the
"Company"), Cadence Design Systems, Inc., a Delaware corporation ("Parent"), and
CDSI Acquisition Corporation, a Delaware corporation and a wholly owned
subsidiary of Parent ("Purchaser").
WHEREAS, the Boards of Directors of the Company, Parent and
Purchaser have each determined that it is in the best interests of their
respective stockholders for Purchaser to acquire the Company upon the terms and
subject to the conditions set forth herein; and
WHEREAS, in furtherance thereof, it is proposed that Purchaser
will make a cash tender offer (the "Offer") to acquire all shares of the issued
and outstanding common stock, $.01 par value, of the Company (the "Shares"), for
Thirteen Dollars ($13.00) per Share or such higher price as may be paid in the
Offer (the "Per Share Amount"), net to the seller in cash; and
WHEREAS, also in furtherance of such acquisition, the Boards
of Directors of the Company, Purchaser and Parent have each approved the merger
(the "Merger") of Purchaser with and into the Company following the Offer in
accordance with the General Corporation Law of the State of Delaware ("Delaware
Law") and upon the terms and subject to the conditions set forth herein; and
WHEREAS, it is also proposed in connection with such
acquisition that, upon the terms and subject to the conditions set forth herein,
upon consummation of the Merger, each then outstanding Option (as defined below)
to purchase one share of common stock, $.01 par value, of the Company, unless
otherwise provided herein, shall be converted into an option to purchase that
number of shares, or fraction of a share, of the common stock, $.01 per share,
of Parent ("Parent Common Stock") having a value (determined as provided herein)
equal to the Per Share Amount; and
WHEREAS, as an inducement and a condition to Parent's and
Purchaser's entering into this Agreement, contemporaneously with the execution
and delivery of this Agreement, (i) the Company has entered into a stock option
agreement with Parent and Purchaser (the "Company Stock Option"), pursuant to
which the Company has granted to Parent or Purchaser, as Parent may designate,
an option to purchase Shares upon the terms and subject to conditions set forth
in the Company Stock Option and (ii) certain stockholders of the Company have
entered into a Stockholders Agreement with Parent and Purchaser (the
"Stockholders Agreement"), pursuant to which each such stockholder has, among
other things, agreed to tender its Shares in the Offer, granted to Parent a
proxy with respect to the voting of such Shares and granted to Parent or
Purchaser, as Parent may designate, an option to purchase such Shares, in each
case upon the terms and subject to the conditions set forth in the Stockholders
Agreement; and
WHEREAS, as an inducement to Parent's and Purchaser's entering
into this Agreement, contemporaneously with the execution and delivery of this
Agreement the Company and Parent have entered into employment agreements with
certain senior executive officers of the Company (the "Employment Agreements");
and
NOW, THEREFORE, in consideration of the foregoing premises and
the representations, warranties, covenants and agreements herein contained, and
intending to be legally bound hereby, the Company, Parent and Purchaser hereby
agree as follows:
ARTICLE 1.
THE TENDER OFFER
Section 1.1. THE OFFER.
(a) Provided that this Agreement shall not have been
terminated in accordance with Section 7.1 hereof and none of the events set
forth in Annex I hereto shall have occurred and be existing, Parent shall cause
Purchaser to commence and Purchaser shall commence (within the meaning of Rule
14d-2 under the Securities Exchange Act of 1934 (the "Exchange Act") the Offer
as promptly as practicable, but in no event later than five business days
following the execution of this Agreement. Upon the satisfaction of the
conditions set forth in Annex I hereto, subject to any extension of the Offer
permitted by Section 1.1(d) hereof, Parent and Purchaser will be obligated to
accept for payment any Shares validly tendered and not withdrawn. Parent
expressly reserves the right from time to time, subject to Sections 1.1 (b) and
1.1(d) hereof, to waive any such condition, to increase the Per Share Amount, or
to make any other changes in the terms and conditions of the Offer. The Per
Share Amount shall be net to the seller in cash, subject to reduction only for
any applicable Federal back-up withholding or stock transfer taxes payable by
the seller. The Company agrees that no Shares held by the Company or any of its
Subsidiaries (as hereinafter defined) will be tendered pursuant to the Offer.
(b) Without the prior written consent of the Company,
Parent shall not (i) decrease the Per Share Amount or change the form of
consideration payable in the Offer, (ii) decrease the number of Shares sought,
(iii) amend or waive satisfaction of the Minimum Condition (as defined in Annex
I) to permit the purchase of Shares constituting less than a majority of the
number of Shares outstanding, (iv) impose additional conditions to the Offer,
(v) amend any one or more of the conditions set forth in Annex I to broaden the
scope of such condition or conditions or (vi) amend any other term of the Offer
in any manner adverse to the holders of Shares. Upon the terms and subject to
the conditions of the Offer, Purchaser will accept for payment and purchase, as
soon as permitted under the terms of the Offer, all Shares validly tendered and
not withdrawn prior to the expiration of the Offer.
(c) The Offer shall be made by means of an offer to
purchase (the "Offer to Purchase") having only the conditions set forth in Annex
I hereto. As soon as practicable on the date the Offer is commenced, Parent and
Purchaser shall file with the Securities and
2
Exchange Commission (the "SEC") a Tender Offer Statement on Schedule 14D-1
(together with all amendments and supplements thereto, the "Schedule 14D-1")
with respect to the Offer that will comply in all material respects with the
provisions of such Schedule 14D-1 and all applicable Federal securities laws,
and will include or incorporate by reference the Offer to Purchase and forms
of the related letter of transmittal and summary advertisement (which
documents, together with any supplements or amendments thereto, and any other
SEC schedule or form which is filed in connection with the Offer and related
transactions, are referred to collectively herein as the "Offer Documents").
Parent and Purchaser agree promptly to correct the Schedule 14D-1 or the
Offer Documents if and to the extent that any of them shall have become false
or misleading in any material respect (and the Company, with respect to
written information supplied by it specifically for use in the Schedule 14D-1
or the Offer Documents, shall promptly notify Parent of any required
corrections of such information and shall cooperate with Parent and Purchaser
with respect to correcting such information) and to supplement the
information provided by it specifically for use in the Schedule 14D-1 or the
Offer Documents to include any information that shall become necessary in
order to make the statements therein, in light of the circumstances under
which they were made, not misleading, and Parent and Purchaser further agree
to take all steps necessary to cause the Schedule 14D-1, as so corrected or
supplemented, to be filed with the SEC and the Offer Documents, as so
corrected or supplemented, to be disseminated to holders of Shares, in each
case as and to the extent required by applicable Federal securities laws. The
Company and its counsel shall be given a reasonable opportunity to review and
comment on any Offer Documents before they are filed with the SEC. Parent and
Purchaser shall provide the Company in writing with any comments Parent,
Purchaser or their counsel may receive from the SEC or its staff with respect
to the Offer Documents promptly after receipt of such comments.
(d) The Offer to Purchase shall provide for an initial
expiration date of 20 business days (as defined in Rule 14d-1 under the Exchange
Act) from the date of commencement. Purchaser agrees that it shall not terminate
or withdraw the Offer or extend the expiration date of the Offer unless at the
expiration date of the Offer the conditions to the Offer described in Annex I
hereto shall not have been satisfied or earlier waived. If at the expiration
date of the Offer, the conditions to the Offer described in Annex I hereto shall
not have been satisfied or earlier waived, Parent may, from time to time extend
the expiration date of the Offer until the date such conditions are satisfied or
earlier waived and Parent becomes obligated to accept for payment and pay for
Shares tendered pursuant to the Offer; provided, however, that the expiration
date of the Offer may not be extended beyond September 30, 1999 without the
consent of the Company. Notwithstanding the foregoing, Purchaser may, without
the consent of the Company, (i) extend the expiration date of the Offer (as it
may be extended) for any period required by applicable rules and regulations of
the SEC in connection with an increase in the consideration to be paid pursuant
to the Offer or any other material development affecting the Offer and (ii)
extend the expiration date of the Offer (as it may be extended) for up to ten
business days, if on such expiration date the conditions for the Offer described
on Annex I hereto shall have been satisfied or earlier waived, but the number of
Shares that have been validly tendered and not withdrawn represents less than 90
percent of the then issued and outstanding Shares on a fully diluted basis;
provided, however, that the
3
expiration date of the Offer may not be extended beyond September 30, 1999
without the consent of the Company. Parent and Purchaser agree that if all of
the conditions to the Offer set forth on Annex A are not satisfied on any
scheduled expiration date, then if all such conditions are reasonably capable
of being satisfied prior to September 30, 1999, Purchaser shall extend the
Offer from time to time (each such individual extension not to exceed 10
Business Days after the previously scheduled expiration date) until such
conditions are satisfied or waived; provided, however, that Purchaser shall
not be required to extend the Offer beyond August 30, 1999 if, as of such
date, the Minimum Condition shall not have been satisfied.
Section 1.2. COMPANY ACTION.
(a) The Company hereby approves of and consents to the
Offer and represents and warrants that the Board of Directors of the Company
(the "Company Board"), at a meeting duly called and held on June 14, 1999, at
which all of the Directors were present, duly and unanimously: (i) approved and
adopted this Agreement and the Company Stock Option and the transactions
contemplated hereby and thereby, including the Offer, the Merger, the Employment
Agreements and Parent's acquisition of Shares pursuant to the Stockholders
Agreement; (ii) recommended that the stockholders of the Company accept the
Offer, tender their Shares pursuant to the Offer and approve this Agreement and
the transactions contemplated hereby, including the Merger; (iii) determined
that this Agreement and the transactions contemplated hereby, including the
Offer and the Merger, are fair to and in the best interests of the stockholders
of the Company; and (iv) took all action necessary to render the limitations on
business combinations contained in Section 203 of Delaware Law inapplicable to
this Agreement, the Company Stock Option, the Stockholders Agreement and the
transactions contemplated hereby and thereby. The Company further represents and
warrants that (x) Alliant Partners (the "Financial Advisor") has rendered to the
Company Board a written opinion, dated as of June 14, 1999, to the effect that,
subject to the assumptions and limitations set forth therein, $13.00 in cash per
Share to be received by the stockholders of the Company pursuant to the Offer
and the Merger is fair to such stockholders from a financial point of view and
(y) a true and correct copy of such opinion has been delivered to Parent.
(b) The Company hereby agrees to file with the SEC, as
promptly as practicable after the filing by Parent and Purchaser of the Schedule
14D-1 with respect to the Offer, a Tender Offer Solicitation/Recommendation
Statement on Schedule 14D-9 (together with any amendments or supplements
thereto, the "Schedule 14D-9") that (i) will comply in all material respects
with the provisions of all applicable Federal securities laws and (ii) will
include the opinion of the Financial Advisor referred to in Section 1.2(a)
hereof. The Company agrees to mail such Schedule 14D-9 to the stockholders of
the Company along with the Offer Documents promptly after the commencement of
the Offer. The Schedule 14D-9 and the Offer Documents shall contain the
recommendations of the Company Board described in Section 1.2(a) hereof. The
Company agrees promptly to correct the Schedule 14D-9 if and to the extent that
it shall become false or misleading in any material respect (and each of Parent
and Purchaser, with respect to written information supplied by it specifically
for use in
4
the Schedule 14D-9, shall promptly notify the Company of any required
corrections of such information and cooperate with the Company with respect
to correcting such information) and to supplement the information contained
in the Schedule 14D-9 to include any information that shall become necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading, and the Company shall take all steps
necessary to cause the Schedule 14D-9 as so corrected to be filed with the
SEC and disseminated to the Company's stockholders to the extent required by
applicable Federal securities laws. Parent and its counsel shall be given a
reasonable opportunity to review and comment on the Schedule 14D-9 before it
is filed with the SEC. The Company shall provide Parent and Purchaser in
writing with any comments the Company or its counsel may receive from the SEC
or its staff with respect to the Schedule 14D-9 promptly after receipt of
such comments.
(c) In connection with the Offer, the Company shall
promptly upon execution of this Agreement furnish Parent with mailing labels
containing the names and addresses of all record holders of Shares,
non-objecting beneficial owners list and security position listings of Shares
held in stock depositories, each as of a recent date, and shall promptly furnish
Parent with such additional information, including updated lists of
stockholders, mailing labels and security position listings, and such other
information and assistance as Parent or its agents may reasonably request for
the purpose of communicating the Offer to the record and beneficial holders of
Shares.
Section 1.3. DIRECTORS. Promptly upon the purchase by
Purchaser of any Shares pursuant to the Offer, and from time to time thereafter
as Shares are acquired by Purchaser, Parent shall be entitled to designate such
number of directors, rounded up to the next whole number, on the Company Board
as will give Parent, subject to compliance with Section 14(f) of the Exchange
Act, representation on the Company Board equal to at least that number of
directors which equals the product of the total number of directors on the
Company Board (giving effect to the directors appointed or elected pursuant to
this sentence) multiplied by the percentage that the aggregate number of Shares
beneficially owned by Parent or any affiliate of Parent (including for purposes
of this Section 1.3 such Shares as are accepted for payment pursuant to the
Offer, but excluding Shares held by the Company or any of its Subsidiaries)
bears to the number of Shares outstanding. At each such time, the Company will
also cause (i) each committee of the Company Board, (ii) if requested by Parent,
the Company Board of each of the Subsidiaries and (iii) if requested by Parent,
each committee of such board to include persons designated by Parent
constituting the same percentage of each such committee or board as Parent's
designees constitute on the Company Board. The Company shall, upon request by
Parent, promptly increase the size of the Company Board or exercise its best
efforts to secure the resignations of such number of directors as is necessary
to enable Parent's designees to be elected to the Company Board in accordance
with the terms of this Section 1.3 and shall cause Parent's designees to be so
elected. Notwithstanding the foregoing, until the Effective Time (as defined in
Section 2.2 hereof) the Company Board shall have at least two directors who are
directors on the date hereof and who are neither officers of the Company nor
designees, stockholders, affiliates or associates (within the meaning of the
Federal securities laws) of Parent (such directors, the "Independent
5
Directors"); provided further, that if at any time or from time to time fewer
than two Independent Directors remain, the other directors shall elect to the
Company Board such number of persons who shall be neither officers of the
Company nor designees, shareholders, affiliates or associates of Parent so that
the total of such persons and remaining Independent Directors serving on the
Company Board is at least two. Any such person elected to the Company Board
pursuant to the second proviso of the preceding sentence shall be deemed to be
an Independent Director for purposes of this Agreement. Subject to applicable
law, the Company shall promptly take all action necessary pursuant to Section
14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder in order to
fulfill its obligations under this Section 1.3 and shall include in the Schedule
14D-9 mailed to stockholders promptly after the commencement of the Offer (or an
amendment thereof or an information statement pursuant to Rule 14f-1 if Parent
has not theretofore designated directors) such information with respect to the
Company and its officers and directors as is required under Section 14(f) and
Rule 14f-1 in order to fulfill its obligations under this Section 1.3. Parent
will supply the Company any information with respect to itself and its nominees,
officers, directors and affiliates required by Section 14(f) and Rule 14f-1.
Notwithstanding anything in this Agreement to the contrary, following the time
directors designated by Parent constitute a majority of the Company Board and
prior to the Effective Time, the affirmative vote of the Independent Directors
shall be required to (i) amend or terminate on behalf of the Company this
Agreement or the Company Stock Option Agreement, (ii) exercise or waive any of
the Company's rights or remedies hereunder or thereunder, (iii) extend the time
for performance of Parent's or Purchaser's obligations hereunder or thereunder
or (iv) take any other action required to be taken by the Company Board
hereunder or thereunder.
ARTICLE 2
THE MERGER
Section 2.1. THE MERGER. At the Effective Time (as defined
below) and upon the terms and subject to the conditions of this Agreement and in
accordance with the Delaware Law, Purchaser shall be merged with and into the
Company (the "Merger"). Following the Merger, the Company shall continue as the
surviving corporation (the "Surviving Corporation") and the separate corporate
existence of Purchaser shall cease. At the election of the parties, the Merger
may be structured so that the Company shall be merged with and into Purchaser or
Parent with the result that Purchaser or Parent shall become the "Surviving
Corporation." Parent, as the sole stockholder of Purchaser, hereby approves the
Merger and this Agreement.
Section 2.2 EFFECTIVE TIME. Subject to the terms and
conditions set forth in this Agreement, on the Closing Date (as defined in
Section 2.3), a Certificate of Merger substantially in the form of EXHIBIT A
(the "Certificate of Merger") shall be duly executed and acknowledged by
Purchaser and the Company and thereafter delivered to the Secretary of State of
the State of Delaware for filing pursuant to Section 251 of the Delaware Law.
6
The Merger shall become effective at such time as a properly executed copy of
the Certificate of Merger is duly filed with the Secretary of State of the State
of Delaware in accordance with Section 251 of the Delaware Law or such later
time as Parent and the Company may agree upon and as set forth in the
Certificate of Merger (the time the Merger becomes effective being referred to
herein as the "Effective Time").
Section 2.3. CLOSING OF THE MERGER. The closing of the Merger
(the "Closing") will take place at a time and on a date (the "Closing Date") to
be specified by the parties, which shall be no later than the second business
day after satisfaction of the latest to occur of the conditions set forth in
Article 6, at the offices of Xxxxxx, Xxxx & Xxxxxxxx LLP, 0000 Xxxx Xxxx Xxxx,
Xxxx Xxxx, Xxxxxxxxxx, unless another time, date or place is agreed to in
writing by the parties hereto.
Section 2.4. EFFECTS OF THE MERGER. The Merger shall have the
effects set forth in the Delaware Law. Without limiting the generality of the
foregoing and subject thereto, at the Effective Time, all the properties,
rights, privileges, powers and franchises of the Company and Purchaser shall
vest in the Surviving Corporation and all debts, liabilities and duties of the
Company and Purchaser shall become the debts, liabilities and duties of the
Surviving Corporation.
Section 2.5. CERTIFICATE OF INCORPORATION AND BYLAWS. The
Certificate of Incorporation of Purchaser in effect at the Effective Time shall
be the Certificate of Incorporation of the Surviving Corporation until amended
in accordance with applicable law, except that Article 1 shall be amended to
read in full as follows:
"The name of the Corporation is OrCAD, Inc."
The bylaws of Purchaser in effect at the Effective Time shall
be the bylaws of the Surviving Corporation until amended in accordance with
applicable law.
Section 2.6. DIRECTORS. The directors of Purchaser at the
Effective Time shall be the initial directors of the Surviving Corporation, each
to hold office in accordance with the Certificate of Incorporation and bylaws of
the Surviving Corporation until such director's successor is duly elected or
appointed and qualified.
Section 2.7. OFFICERS. The officers of Purchaser at the
Effective Time shall be the initial officers of the Surviving Corporation, each
to hold office in accordance with the Certificate of Incorporation and bylaws of
the Surviving Corporation until such officer's successor is duly elected or
appointed and qualified.
Section 2.8. CONVERSION OF SHARES.
(a) At the Effective Time, each Share issued and
outstanding immediately prior to the Effective Time (other than (i) Shares held
in the Company's treasury or by any of the Company's subsidiaries and (ii)
Shares held by Parent, Purchaser or any other subsidiary of Parent) shall, by
virtue of the Merger and without any action on the part of Purchaser, the
7
Company or the holder thereof, be canceled and extinguished and be converted
into the right to receive the Per Share Amount in cash payable to the holder
thereof, without interest, upon surrender of the certificate representing such
Share. Each holder of a certificate representing any such Shares shall cease to
have any rights with respect thereto, except the right to receive the Per Share
Amount, without interest, upon the surrender of such certificate in accordance
with Section 2.10 hereof.
(b) At the Effective Time, each outstanding share of the
common stock, $0.01 par value per share, of Purchaser shall be converted into
one share of common stock, $0.01 par value per share, of the Surviving
Corporation.
(c) At the Effective Time, each Share held in the
treasury of the Company and each Share held by Parent, Purchaser or any
subsidiary of Parent, Purchaser or the Company immediately prior to the
Effective Time shall, by virtue of the Merger and without any action on the part
of Purchaser, the Company or the holder thereof, be canceled, retired and cease
to exist and no shares of Parent Common Stock shall be delivered with respect
thereto.
Section 2.9. DISSENTERS AND APPRAISAL RIGHTS.
(a) Notwithstanding any provision of this Agreement to
the contrary, any Shares held by a holder who has demanded and perfected such
holder's demand for appraisal of such holder's Shares in accordance with
Delaware Law (including but not limited to Section 262 thereof) and as of the
Effective Time has neither effectively withdrawn nor lost his right to such
appraisal ("Dissenting Shares"), shall not be converted into or represent a
right to receive cash pursuant to Section 2.8(a), but the holder thereof shall
be entitled to only such rights as are granted by Delaware Law.
(b) Notwithstanding the provisions of subsection (a) of
this Section, if any holder of Shares who demands appraisal of such holder's
Shares under Delaware Law shall effectively withdraw or lose (through failure to
perfect or otherwise) his right to appraisal, then as of the Effective Time or
the occurrence of such event, whichever later occurs, such holder's Shares shall
automatically be converted into and represent only the right to receive cash as
provided in Section 2.8(a), without interest thereon, upon surrender of the
certificate or certificates representing such Shares.
(c) The Company shall give Parent (i) prompt notice of
any written demands for appraisal or payment of the fair value of any Shares,
withdrawals of such demands, and any other instruments served pursuant to
Delaware Law received by the Company and (ii) the opportunity to direct all
negotiations and proceedings with respect to demands for appraisal under
Delaware Law. The Company shall not voluntarily make any payment with respect to
any demands for appraisal and shall not, except with the prior written consent
of Parent, settle or offer to settle any such demands.
8
Section 2.10. EXCHANGE OF CERTIFICATES.
(a) From time to time following the Effective Time, as
required by subsections (b) and (c) below, Parent shall deliver to a depository
or trust institution of recognized standing selected by Parent and Purchaser
(the "Exchange Agent"), for the benefit of holders of Shares funds in amounts
and at times necessary for the payments under Section 2.8(a) to which such
holders shall be entitled. Such funds shall be invested by the Exchange Agent as
directed by Parent. Any net profits resulting from, or interest or income
produced by, such investments shall be payable to, or as directed by, Parent.
(b) As soon as reasonably practicable after the Effective
Time, the Exchange Agent shall mail to each holder of record of a certificate or
certificates that immediately prior to the Effective Time represented
outstanding Shares (the "Certificates") and whose shares were converted into the
right to receive cash pursuant to Section 2.8(a): (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 of the Certificates to the
Exchange Agent and shall be in such form and have such other provisions as
Parent and the Company may reasonably specify) and (ii) instructions for use in
effecting the surrender of the Certificates pursuant hereto. Upon surrender of a
Certificate for cancellation to the Exchange Agent together with such letter of
transmittal duly executed, the holder of such Certificate shall be entitled to
receive in exchange therefor the Per Share Amount multiplied by the number of
Shares evidenced thereby, and the Certificate so surrendered shall forthwith be
canceled. In the event of a transfer of ownership of Shares that is not
registered in the transfer records of the Company, the Per Share Amount payable
in respect thereof may be paid to a transferee if the Certificate representing
such Shares is presented to the Exchange Agent accompanied by all documents
required to evidence and effect such transfer and by evidence that any
applicable stock transfer taxes have been paid. Until surrendered as
contemplated by this Section 2.10, each Certificate shall be deemed at any time
after the Effective Time to represent only the right to receive upon such
surrender the Per Share Amount in accordance herewith.
(c) In the event that any Certificate for Shares shall
have been lost, stolen or destroyed, the Per Share Amount shall be paid in
respect of the Shares evidenced thereby upon the making of an affidavit of that
fact by the holder thereof and delivery of a suitable bond or indemnity.
(d) There shall be no further registration of transfers
on the stock transfer books of the Surviving Corporation of the Shares that were
outstanding immediately prior to the Effective Time. If, after the Effective
Time, Certificates are presented to the Surviving Corporation for any reason,
they shall be canceled and exchanged as provided in this Article 2.
(e) Any portion of the Exchange Fund that remains
undistributed to the stockholders of the Company upon the expiration of six (6)
months after the Effective Time shall be delivered to Parent upon demand and any
stockholders of the Company who have not
9
theretofore complied with this Article 2 shall thereafter look only to Parent
for payment of their claim for the Per Share Amount payable in respect of the
Shares so held.
(f) Neither Parent, Purchaser nor the Company shall be
liable to any holder of Shares for cash delivered to a public official pursuant
to any applicable abandoned property, escheat or similar law.
Section 2.11. STOCK OPTIONS.
(a) The Company shall take all actions necessary to
provide that, except as provided in Sections 2.11(b) and (c) below with respect
to options granted under the Company's 1995 Stock Option Plan for Nonemployee
Directors (the "Director Option Plan") and the Company's 1991 Non-Qualified
Option Plan (the "1991 Option Plan"), upon consummation of the Merger, each then
outstanding option to purchase shares of Company common stock (the "General
Options") granted under any of the Company's other stock option plans referred
to in Section 3.11(a), each as amended (collectively, the "General Option
Plans,"" and, together with the Director Option Plan and the 1991 Option Plan,
the "Option Plans"), and any and all other outstanding options, stock warrants
and stock rights granted pursuant to such stock option plans or otherwise, and
in each case, whether or not then exercisable or vested, shall be deemed to
constitute an option to acquire, on the same terms and conditions as were
applicable under such Company Stock Option, a number of shares of Parent Common
Stock, with fractions rounded off to the nearest whole number, equal to the
number of Shares subject thereto multiplied by that number of shares, or the
fraction of a share, of Parent Common Stock having a fair market value,
determined as set forth below, equal to the Per Share Amount; provided, however,
that in the case of any option to which Section 421 of the Code applies by
reason of its qualification under Section 422 of the Code ("incentive stock
options" or "ISOs") the option price, the number of shares purchasable pursuant
to such option and the terms and conditions of exercise of such option shall be
determined in order to comply with Section 424(a) of the Code.
(b) The Company shall take all actions necessary to
provide that, upon consummation of the Merger, each then outstanding option (the
"Director Options") to purchase shares of Company common stock granted under the
Director Option Plan, whether or not then exercisable or vested, shall, by
virtue of the Merger and without any action on the part of Purchaser, the
Company or the holder thereof, be canceled and be extinguished and be converted
into the right to receive, in cash, the product of (i) the number of shares of
Company common stock subject to such Director Option and (ii) the excess of the
Per Share Amount over the per share exercise price applicable to such Director
Option.
(c) The Company shall take all actions necessary to
provide that, upon consummation of the Merger, each then outstanding option (the
"1991 Options") to purchase shares of Company common stock granted under the
1991 Option Plan, whether or not then exercisable or vested, shall be deemed to
constitute an option to acquire, on the same terms and conditions as were
applicable under such 1991 Option, a number of shares of Parent Common Stock,
with fractions rounded off to the nearest whole number, equal to the number
10
of Shares subject thereto multiplied by that number of shares, or the
fraction of a share, of Parent Common Stock having a fair market value,
determined as set forth below, equal to the Per Share Amount; provided,
however, that if the holder of any 1991 Option does not consent in writing,
prior to the Effective Time, to the foregoing treatment, then each 1991
Option held by such holder, whether or not then exercisable or vested, shall,
by virtue of the Merger and without any action on the part of Purchaser, the
Company or the holder thereof, be canceled and be extinguished and be
converted into the right to receive in cash, the product of (i) the number of
shares of Company common stock subject to such 1991 Option and (ii) the
excess of the Per Share Amount over the per share exercise price applicable
to such 1991 Option.
(d) For purposes of this Section 2.11, the fair market
value of the Parent Common Stock shall be the average closing price of one share
of Parent Common Stock (as reported in the Wall Street Journal) during the five
trading days immediately preceding the Closing of the Merger.
(e) The Company represents and warrants that all the
Option Plans provide that the Company can take the actions contemplated in this
Agreement, including, without limitation, those contemplated in Sections
2.11(a), (b) or (c) without obtaining the consent of any holders of Options or
Company common stock and without resulting in the acceleration of the
exercisability or vesting provisions in effect with respect to such Options.
Section 2.12. THE STOCK PURCHASE PLAN.
(a) The Company shall take all actions necessary,
including without limitation, the satisfaction of any notice requirements, to
provide that each outstanding and valid option or right to purchase shares of
Company common stock (the "Rights") granted or provided under the Company's 1996
Employee Stock Purchase Plan (the "Stock Purchase Plan") shall be exercised
automatically on the day that is five (5) days prior to the date scheduled for
the Closing of the Merger which shall constitute the New Purchase Date for
purposes of the Stock Purchase Plan. The Company shall also take all actions
necessary to terminate the Stock Purchase Plan effective immediately after such
New Purchase Date.
(b) The Company represents and warrants that the Stock
Purchase Plan provides that the Company can take the actions contemplated in
this Agreement, including, without limitation, those contemplated in Section
2.12(a), without obtaining the consent of any holders of Rights or Company
common stock and without resulting in the acceleration of the exercisability
provisions in effect with respect to such Rights.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to each of Parent
and Purchaser, subject to the exceptions set forth in the Disclosure Schedule
(the "Company Disclosure
11
Schedule") delivered by the Company to Parent (which exceptions shall
specifically identify a Section, Subsection or clause of a single Section or
Subsection hereof, as applicable, to which such exception relates) that:
Section 3.1. ORGANIZATION AND QUALIFICATION; SUBSIDIARIES;
INVESTMENTS.
(a) Section 3.1(a) of the Company Disclosure Schedule
sets forth, as of the date of this Agreement, a true and complete list of all
the Company's directly or indirectly owned subsidiaries, together with the
jurisdiction of incorporation of each subsidiary and the percentage of each
subsidiary's outstanding capital stock or other equity interests owned by the
Company or another subsidiary of the Company. Each of the Company and its
subsidiaries is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation or organization and has all
requisite power and authority to own, lease and operate its properties and to
carry on its businesses as now being conducted. The Company has heretofore
delivered to Purchaser or Parent accurate and complete copies of the Certificate
of Incorporation and bylaws (or similar governing documents), as currently in
full force and effect, of the Company and its subsidiaries. Section 3.1(a) of
the Company Disclosure Schedule identifies all the material subsidiaries of the
Company. The Company has no operating subsidiaries other than those incorporated
in a state of the United States. The Company does not directly or indirectly own
any equity or similar interest in, or any interest convertible or exchangeable
or exercisable for, any equity or similar interest in, any partnership, joint
venture, limited liability company or other business association.
(b) Each of the Company and its subsidiaries is duly
qualified or licensed and in good standing to do business in each jurisdiction
in which the property owned, leased or operated by it or the nature of the
business conducted by it makes such qualification or licensing necessary, except
in such jurisdictions where the failure to be so duly qualified or licensed and
in good standing would not, individually or in the aggregate, have a Material
Adverse Effect (as defined below) on the Company. Section 3.1(b) of the Company
Disclosure Schedule sets forth each jurisdiction in which the Company and each
of its subsidiaries is so qualified. When used in connection with the Company or
its subsidiaries, the term "Material Adverse Effect on the Company" means any
circumstance, change in, or effect on (or circumstance, change in, or effect
involving a prospective change on) the Company and its subsidiaries, taken as a
whole, (a) that is, or is reasonably likely in the future to be, materially
adverse to the operations, assets or liabilities (including contingent
liabilities), earnings or results of operations, or the business (financial or
otherwise) of the Company and its subsidiaries, taken as a whole, or (b) that
would reasonably be expected to prevent or materially delay or impair the
ability of the Company to consummate the transactions contemplated by this
Agreement.
(c) Other than the Company's subsidiaries, the Company
does not own any equity investment that represents a five percent (5%) or
greater ownership interest in the subject of such investment made by the Company
or any of its subsidiaries.
12
Section 3.2. CAPITALIZATION OF THE COMPANY AND ITS
SUBSIDIARIES.
(a) The authorized capital stock of the Company consists
of 16,000,000 shares of common stock, $.01 par value per share, of which, as of
June 14, 1999, 9,321,315 Shares were issued and outstanding and 2,000,000 shares
of preferred stock, $.01 par value per share, no shares of which are
outstanding. All of the outstanding Shares have been validly issued and are
fully paid, nonassessable and free of preemptive rights. As of June 14, 1999,
3,973,937 shares of common stock were reserved for issuance upon the exercise of
outstanding Options issued pursuant to the Option Plans. Between June 5, 1999
and the date hereof, no shares of the Company's capital stock have been issued
other than pursuant to Options already in existence on such date, and between
June 5, 1999 and the date hereof no Options have been granted. Except as set
forth above, as of the date hereof, there are outstanding (i) no shares of
capital stock or other voting securities of the Company, (ii) no securities of
the Company or any of its subsidiaries convertible into or exchangeable or
exercisable for shares of capital stock or voting securities of the Company,
(iii) no options or other rights to acquire from the Company or any of its
subsidiaries, and, except as described in the Company SEC Reports (as defined
below), no obligations of the Company or any of its subsidiaries to issue any
capital stock, voting securities or securities convertible into or exchangeable
or exercisable for capital stock or voting securities of the Company and (iv) no
equity equivalent interests in the ownership or earnings of the Company or its
subsidiaries or other similar rights (collectively "Company Securities"). As of
the date hereof, there are no outstanding rights or obligations of the Company
or any of its subsidiaries to repurchase, redeem or otherwise acquire any
Company Securities. There are no stockholder agreements, voting trusts or other
agreements or understandings to which the Company is a party or by which it is
bound, or, to the knowledge of the Company, to which any stockholder of the
Company is a party or is bound, in either case relating to the voting or
registration of any shares of capital stock of the Company.
(b) All of the outstanding capital stock of the Company's
subsidiaries is owned by the Company, directly or indirectly, free and clear of
any Lien or any other limitation or restriction (including any restriction on
the right to vote or sell the same except as may be provided as a matter of
law). There are no (i) securities of the Company or any of its subsidiaries
convertible into or exchangeable or exercisable for, (ii) options or (iii)
except for the Rights, other rights to acquire from the Company or any of its
subsidiaries any capital stock or other ownership interests in or any other
securities of any subsidiary of the Company, and there exists no other contract,
understanding, arrangement or obligation (whether or not contingent) providing
for the issuance or sale, directly or indirectly, of any such capital stock.
There are no outstanding contractual obligations of the Company or its
subsidiaries to repurchase, redeem or otherwise acquire any outstanding shares
of capital stock or other ownership interests in any subsidiary of the Company.
For purposes of this Agreement, "Lien" means, with respect to any asset
(including any security), any mortgage, lien, pledge, charge, security interest
or encumbrance of any kind in respect of such asset; PROVIDED, HOWEVER, that the
term "Lien" shall not include (i) statutory liens for Taxes, which are not yet
due and payable or are being contested in good faith by appropriate proceedings
and disclosed in Section 3.13(d) of the Company Disclosure Schedule or that are
otherwise not material,
13
(ii) statutory or common law liens to secure landlords, lessors or renters
under leases or rental agreements confined to the premises rented, (iii)
deposits or pledges made in connection with, or to secure payment of,
workers' compensation, unemployment insurance, old age pension or other
social security programs mandated under applicable laws, (iv) statutory or
common law liens in favor of carriers, warehousemen, mechanics and
materialmen, to secure claims for labor, materials or supplies and other like
liens, and (v) restrictions on transfer of securities imposed by applicable
state and federal securities laws.
(c) The Company's common stock, $.01 par value per share,
constitutes the only class of equity securities of the Company or its
subsidiaries registered or required to be registered under the Exchange Act.
Section 3.3. AUTHORITY RELATIVE TO THIS AGREEMENT;
RECOMMENDATION.
(a) The Company has all necessary corporate power and
authority to execute and deliver this Agreement and the Company Stock Option, to
perform its obligations under this Agreement and the Company Stock Option and to
consummate the transactions contemplated thereby. The execution and delivery of
this Agreement and the Company Stock Option and the consummation of the
transactions contemplated thereby have been duly and validly authorized by the
Company Board, and no other corporate proceedings on the part of the Company are
necessary to authorize this Agreement and the Company Stock Option or to
consummate the transactions contemplated thereby except the approval and
adoption of this Agreement by the holders of at least 67% of the outstanding
Shares. This Agreement and the Company Stock Option has been duly and validly
executed and delivered by the Company and constitute, assuming the due
authorization, execution and delivery hereof and thereof by Parent and
Purchaser, valid, legal and binding agreements of the Company, enforceable
against the Company in accordance with its terms, subject to any applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws now or
hereafter in effect relating to creditors' rights generally or to general
principles of equity.
Section 3.4. SEC REPORTS; FINANCIAL STATEMENTs.
(a) The Company has filed all required forms, reports and
documents ("Company SEC Reports") with the SEC since January 1, 1997, each of
which complied at the time of filing in all material respects with all
applicable requirements of the Securities Act of 1933, as amended (the
"Securities Act"), and the Exchange Act, each law as in effect on the dates such
forms, reports and documents were filed. None of such Company SEC Reports,
including, any financial statements or schedules included or incorporated by
reference therein, contained when filed any untrue statement of a material fact
or omitted to state a material fact required to be stated or incorporated by
reference 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 superseded by a Company SEC Report filed subsequently and prior to the
date hereof. The audited consolidated financial statements of the Company
included in the Company SEC Reports fairly present, in conformity in all
material respects with generally accepted accounting principles applied on a
consistent basis (except as may be indicated in the
14
notes thereto), the consolidated financial position of the Company and its
consolidated subsidiaries as of the dates thereof and their consolidated
results of operations and changes in financial position for the periods then
ended.
(b) All documents required to be filed as exhibits to the
Company SEC Reports have been so filed, and all material contracts so filed as
exhibits are in full force and effect, except those that have expired in
accordance with their terms, and neither the Company nor any of its subsidiaries
is in default thereunder, except where any such default has not resulted in and
is not reasonably expected to result in any Material Adverse Effect on the
Company.
(c) The Company has heretofore made available or promptly
will make available to Purchaser or Parent a complete and correct copy of any
amendments or modifications that are required to be filed with the SEC but have
not yet been filed with the SEC to agreements, documents or other instruments
that previously had been filed by the Company with the SEC pursuant to the
Exchange Act.
Section 3.5. OFFER DOCUMENTS; PROXY STATEMENT. The Schedule
14D-9 will comply in all material respects with the Exchange Act and the rules
and regulations thereunder. Neither the Schedule 14D-9 nor any of the
information relating to the Company or its affiliates provided by or on behalf
of the Company specifically for inclusion in the Schedule 14D-1 or the Offer
Documents will, at the respective times the Schedule 14D-9, the Schedule 14D-1
and the Offer Documents or any amendments or supplements thereto are filed with
the SEC and are first published, sent or given to stockholders of the Company,
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
made therein, in light of the circumstances under which they were made, not
misleading. The proxy statement to be sent to the stockholders of the Company in
connection with the meeting of the Company's stockholders to consider the Merger
(the "Company Stockholders' Meeting") or the information statement to be sent to
such stockholders, as appropriate (such proxy statement or information
statement, as amended or supplemented, is herein referred to as the "Proxy
Statement"), will comply in all material respects with the applicable
requirements of the Exchange Act and the rules and regulations thereunder. The
Proxy Statement will not, at the time the Proxy Statement (or any amendment or
supplement thereto) is filed with the SEC or first sent to stockholders, at the
time of the Company Stockholders Meeting or 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 were made, not misleading.
Notwithstanding the foregoing, the Company makes no representation, warranty or
covenant with respect to any information supplied or required to be supplied by
Parent or Purchaser which is contained in or omitted from any of the foregoing
documents.
Section 3.6. CONSENTS AND APPROVALS; NO VIOLATIONS. Except for
filings, permits, authorizations, consents and approvals as may be required
under applicable requirements of the Securities Act, the Exchange Act, state
securities or blue sky laws, and the
15
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), any filings under similar merger notification laws or regulations of
foreign Governmental Entities and the filing and recordation of the
Certificate of Merger as required by the Delaware Law, no filing with or
notice to and no permit, authorization, consent or approval of any United
States or foreign court or tribunal, or administrative, governmental or
regulatory body, agency or authority (a "Governmental Entity") is necessary
for the execution and delivery by the Company of this Agreement, the purchase
of Shares by Purchaser pursuant to the Offer, the Company Stock Option or the
Stockholders Agreement or the consummation by the Company of the transactions
contemplated hereby, except where the failure to obtain such permits,
authorizations, consents or approvals or to make such filings or give such
notice would not, individually or in the aggregate, materially and adversely
affect the business operations of the Company or its ability to consummate
the Merger. Neither the execution, delivery and performance of this Agreement
by the Company, the purchase of Shares by Purchaser pursuant to the Offer,
the Company Stock Option or the Stockholders Agreement nor the consummation
by the Company of the transactions contemplated hereby will (i) conflict with
or result in any breach of any provision of the respective Certificate of
Incorporation or bylaws (or similar governing documents) of the Company or
any of its subsidiaries, (ii) except as set forth in Section 3.6 of the
Company Disclosure Schedule, result in a violation or breach of or constitute
(with or without due notice or lapse of time or both) a default (or give rise
to any right of termination, amendment, cancellation or acceleration or Lien)
under any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, lease, license, contract, agreement or other instrument or
obligation to which the Company or any of its subsidiaries is a party or by
which any of them or any of their respective properties or assets may be
bound or (iii) except as set forth in Section 3.6 of the Company Disclosure
Schedule, violate any order, writ, injunction, decree, law, statute, rule or
regulation applicable to the Company or any of its subsidiaries or any of
their respective properties or assets except, in the case of clause (ii) or
(iii), for violations, breaches or defaults that would not, individually,
result in cost, loss or damage to the Company in excess of Two Hundred and
Fifty Thousand Dollars ($250,000), in any individual case, or have a Material
Adverse Effect on the Company in the aggregate.
Section 3.7. NO DEFAULT. Except as set forth in Section 3.7 of
the Company Disclosure Schedule, neither the Company nor any of its subsidiaries
is in breach, default or violation (and no event has occurred that with notice
or the lapse of time or both would constitute a breach, default or violation) of
any term, condition or provision of (i) its Certificate of Incorporation or
bylaws (or similar governing documents), (ii) any note, bond, mortgage,
indenture, lease, license, contract, agreement or other instrument or obligation
to which the Company or any of its subsidiaries is now a party or by which it or
any of its properties or assets may be bound or (iii) any order, writ,
injunction, decree, law, statute, rule or regulation applicable to the Company
or any of its subsidiaries or any of its properties or assets, except, in the
case of clause (ii) or (iii), for violations, breaches or defaults that would
not, individually or in the aggregate, have a Material Adverse Effect on the
Company.
Section 3.8. NO UNDISCLOSED LIABILITIES; ABSENCE OF CHANGES.
Except as and to the extent publicly disclosed by the Company in the Company SEC
Reports or as set forth
16
in Section 3.8 of the Company Disclosure Schedule, neither the Company nor
any of its subsidiaries has any liabilities or obligations of any nature,
whether or not accrued, contingent or otherwise, that would be required by
generally accepted accounting principles to be reflected on a consolidated
balance sheet of the Company (including the notes thereto), other than
liabilities and obligations which, individually or in the aggregate, will not
have a Material Adverse Effect on the Company. Except as publicly disclosed
by the Company in the Company SEC Reports or as set forth in Section 3.8 of
the Company Disclosure Schedule, since December 31, 1998, there have been no
events, changes or effects with respect to the Company or its subsidiaries
that have had or reasonably would be expected to have a Material Adverse
Effect on the Company. Without limiting the generality of the foregoing,
except as and to the extent publicly disclosed by the Company in the Company
SEC Reports or as set forth in Section 3.8 of the Company Disclosure
Schedule, since December 31, 1998, the Company and its subsidiaries have
conducted their respective businesses in all material respects only in, and
have not engaged in any material transaction other than according to, the
ordinary and usual course of such businesses consistent with past practices,
and there has not been any (i) change in the financial condition, properties,
business or results of operations of the Company and its subsidiaries, except
for those changes that, individually or in the aggregate, have not had and
are not reasonably likely to have a Material Adverse Effect on the Company;
(ii) material damage, destruction or other casualty loss with respect to any
material asset or property owned, leased or otherwise used by the Company or
any of its subsidiaries, not covered by insurance; (iii) declaration, setting
aside or payment of any dividend or other distribution in respect of the
capital stock of the Company or any of its subsidiaries (other than
wholly-owned subsidiaries) or any repurchase, redemption or other purchase by
the Company or any of its subsidiaries of any outstanding shares of capital
stock or other securities of, or other ownership interests in, the Company or
any of its subsidiaries; (iv) amendment of any material term of any
outstanding security of the Company or any of its subsidiaries; (v)
incurrence, assumption or guarantee by the Company or any of its subsidiaries
of any indebtedness for borrowed money other than in the ordinary course of
business and in amounts and on terms consistent with past practices; (vi)
creation or assumption by the Company or any of its subsidiaries of any Lien
on any material asset other than in the ordinary course of business
consistent with past practices; (vii) loan, advance or capital contributions
made by the Company or any of its subsidiaries to, or investment in, any
person other than (x) loans or advances to employees in connection with
business-related travel, (y) loans made to employees consistent with past
practices that are not in the aggregate in excess of Fifty Thousand Dollars
($50,000), and (z) loans, advances or capital contributions to or investments
in wholly-owned subsidiaries, and in each case made in the ordinary course of
business consistent with past practices; (viii) transaction or commitment
made, or any contract or agreement entered into, by the Company or any of its
subsidiaries relating to its assets or business (including the Purchaser or
disposition of any assets) or any relinquishment by the Company or any of its
subsidiaries of any contract, agreement or other right, in either case,
material to the Company and its subsidiaries, taken as a whole, other than
transactions and commitments in the ordinary course of business consistent
with past practices and those contemplated by this Agreement; (ix) labor
dispute, other than routine individual grievances, or any activity or
proceeding by a labor union or representative thereof to organize any
employees of the Company or any of its subsidiaries, or any lockouts,
strikes, slowdowns,
17
work stoppages or threats thereof by or with respect to such employees; or
(x) change by the Company or any of its subsidiaries in its accounting
principles, practices or methods. Since December 31, 1998, except as
disclosed in the Company SEC Reports filed prior to the date hereof or
increases in the ordinary course of business consistent with past practices,
there has not been any increase in the compensation payable or that could
become payable by the Company or any of its subsidiaries, or any grant of
stock options, to (a) officers of the Company or any of its subsidiaries or
(b) any employee of the Company or any of its Subsidiaries whose annual cash
compensation is Fifty Thousand Dollars ($50,000) or more.
Section 3.9. LITIGATION. Except as publicly disclosed by the
Company in the Company SEC Reports or as set forth in Section 3.9 of the Company
Disclosure Schedule, there is no private or government suit, claim, action,
proceeding or investigation pending or, to the knowledge of the Company,
threatened against the Company, any of its subsidiaries or any of their
respective directors or officers, in their capacities as such, or any of their
respective properties or assets before any Governmental Entity that,
individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect on the Company or would reasonably be expected to
prevent or delay the consummation of the transactions contemplated by this
Agreement. Except as publicly disclosed by the Company in the Company SEC
Reports, neither the Company nor any of its subsidiaries is subject to any
outstanding order, writ, injunction or decree that, insofar as can be reasonably
foreseen in the future, would reasonably be expected to have a Material Adverse
Effect on the Company or could reasonably be expected to prevent or delay the
consummation of the transactions contemplated hereby.
Section 3.10. COMPLIANCE WITH APPLICABLE LAW. Except as
publicly disclosed by the Company in the Company SEC Reports, the Company and
its subsidiaries hold all permits, licenses, variances, exemptions, orders and
approvals of all Governmental Entities necessary for the lawful conduct of their
respective businesses (the "Company Permits"), except for failures to hold such
permits, licenses, variances, exemptions, orders and approvals that would not,
individually or in the aggregate, have a Material Adverse Effect on the Company.
Except as publicly disclosed by the Company in the Company SEC Reports, the
Company and its subsidiaries are in compliance with the terms of the Company
Permits, except where the failure so to comply would not, individually or in the
aggregate, have a Material Adverse Effect on the Company. Except as publicly
disclosed by the Company in the Company SEC Reports, the businesses of the
Company and its subsidiaries are not being conducted in violation of any law,
ordinance or regulation of the United States or any foreign country or any
political subdivision thereof or of any Governmental Entity, except (i) that no
representation or warranty is made in this Section 3.10 with respect to
Environmental Laws (as defined in Section 3.12) and (ii) for violations or
possible violations of any United States or foreign laws, ordinances or
regulations that do not and, insofar as reasonably can be foreseen in the
future, will not result in any charges, assessments, levies, fines or other
liabilities being imposed upon or incurred by the Company that will equal or
exceed One Hundred Thousand Dollars ($100,000) for any single violation or Two
Hundred Fifty Thousand Dollars ($250,000) in the aggregate. Except as publicly
disclosed by the Company in the Company SEC Reports, no investigation or review
by any Governmental Entity with
18
respect to the Company or any of its subsidiaries is pending or, to the
knowledge of the Company, threatened, nor, to the knowledge of the Company,
has any Governmental Entity indicated an intention to conduct the same, other
than such investigations or reviews as would not, individually or in the
aggregate, have a Material Adverse Effect on the Company.
Section 3.11. EMPLOYEE BENEFIT PLANS; LABOR MATTERS.
(a) Section 3.11(a) of the Company Disclosure Schedule
lists as of the date hereof all employee benefit plans (as defined in Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")), and all bonus, stock option, stock purchase, incentive, deferred
compensation, supplemental retirement, health, life, or disability insurance,
dependent care, severance and other similar fringe or employee benefit plans,
programs or arrangements and any current or former employment or executive
compensation or severance agreements written or otherwise maintained or
contributed to for the benefit of or relating to any employee or former employee
of the Company, any trade or business (whether or not incorporated) that is a
member of a controlled group including the Company or that is under common
control with the Company within the meaning of Section 414 of the Code (an
"ERISA Affiliate"), as well as each plan with respect to which the Company or an
ERISA Affiliate could incur liability under Section 4069 (if such plan has been
or were terminated) or Section 4212(c) of ERISA (together the "Employee Plans"),
excluding Employee Plans under which the Company has no remaining obligations
and any of the foregoing that are required to be maintained by the Company under
the laws of any foreign jurisdiction. The Company has made available to Parent a
copy of (i) the most recent annual report on Form 5500 filed with the Internal
Revenue Service (the "IRS") for each disclosed Employee Plan where such report
is required and (ii) the documents and instruments governing each such Employee
Plan (other than those referred to in Section 4(b)(4) of ERISA). No event has
occurred and, to the knowledge of the Company, there currently exists no
condition or set of circumstances in connection with which the Company or any of
its subsidiaries could be subject to any liability under the terms of any
Employee Plans, ERISA, the Code or any other applicable law, including any
liability under Title IV of ERISA, that would have a Material Adverse Effect on
the Company.
(b) Section 3.11(b) of the Company Disclosure Schedule
sets forth a list as of the date hereof of (i) all employment agreements with
officers of the Company; (ii) all agreements with consultants who are
individuals obligating the Company to make annual cash payments in an amount
exceeding Fifty Thousand Dollars ($50,000); (iii) all Options held by
consultants; (iv) all severance agreements, programs and policies of the Company
with or relating to its employees except such programs and policies required to
be maintained by law; and (v) all plans, programs, agreements and other
arrangements of the Company with or relating to its employees that contain
change in control provisions whether or not listed in other parts of the Company
Disclosure Schedule. The Company has made available to Parent copies (or
descriptions in detail reasonably satisfactory to Parent) of all such
agreements, plans, programs and other arrangements.
19
(c) Except as disclosed in Section 3.11(c) of the Company
Disclosure Schedule, there will be no payment, accrual of additional benefits,
acceleration of payments or vesting of any benefit under any Employee Plan or
any agreement or arrangement disclosed under this Section 3.11 solely by reason
of entering into or in connection with the transactions contemplated by this
Agreement.
(d) No Employee Plan that is a welfare benefit plan
within the meaning of Section 3(1) of ERISA provides benefits to former
employees of the Company or its ERISA Affiliates other than pursuant to Section
4980B of the Code or similar state laws.
(e) There are no controversies relating to any Employee
Plan or other labor matters pending or, to the knowledge of the Company,
threatened between the Company or any of its subsidiaries and any of their
respective employees, which controversies, individually or in the aggregate,
have or would reasonably be expected to have a Material Adverse Effect of the
Company. Neither the Company nor any of its subsidiaries is a party to any
collective bargaining agreement or other labor union contract applicable to
persons employed by the Company or any of its subsidiaries except as disclosed
in Section 3.11(e) of the Company Disclosure Schedule, nor does the Company know
of any activities or proceedings of any labor union to organize any such
employees. The Company has no knowledge of any strikes, slowdowns, work
stoppages, lockouts or threats thereof by or with respect to any employees of
the Company or any of its subsidiaries.
Section 3.12. ENVIRONMENTAL LAWS AND REGULATIONS.
(a) Except as publicly disclosed by the Company in the
Company SEC Reports, (i) each of the Company and its subsidiaries is in material
compliance with all applicable federal, state, local and foreign laws and
regulations relating to pollution or protection of human health or the
environment (including ambient air, surface water, ground water, land surface or
subsurface strata) (collectively "Environmental Laws") except for
non-compliances that, individually or in the aggregate, would not have a
Material Adverse Effect on the Company, which compliance includes, but is not
limited to, the possession by the Company and its subsidiaries of all material
permits and other governmental authorizations required under applicable
Environmental Laws and compliance with the terms and conditions thereof; (ii)
neither the Company nor any of its subsidiaries has received written notice of
or, to the knowledge of the Company, is the subject of any action, cause of
action, claim, investigation, demand or notice by any person alleging liability
under or non-compliance with any Environmental Law (an "Environmental Claim");
and (iii) to the knowledge of the Company, there are no existing facts that are
reasonably likely to prevent or interfere with such material compliance in the
future.
(b) Except as disclosed in the Company SEC Reports, there
are no Environmental Claims that, individually or in the aggregate, would
reasonably be expected to have a Material Adverse Effect on the Company that are
pending or, to the knowledge of the Company, threatened against the Company or
any of its subsidiaries or, to the knowledge of the Company, against any person
whose liability for any Environmental Claim the Company
20
or any of its subsidiaries has or may have retained or assumed either
contractually or by operation of law.
Section 3.13. TAXES.
(a) DEFINITIONS. For purposes of this Agreement:
(i) the term "Tax" (including "Taxes") means (A)
all federal, state, local, foreign and other net income, gross income, gross
receipts, sales, use, ad valorem, transfer, franchise, profits, license, lease,
service, service use, withholding, payroll, employment, excise, severance,
stamp, occupation, premium, property, windfall profits, customs, duties or other
taxes, fees, assessments or charges of any kind whatsoever, together with any
interest and any penalties, additions to tax or additional amounts with respect
thereto, (B) any liability for payment of amounts described in clause (A)
whether as a result of transferee liability, of being a member of an affiliated,
consolidated, combined or unitary group for any period, or otherwise through
operation of law, and (C) any liability for the payment of amounts described in
clauses (A) or (B) as a result of any tax sharing, tax indemnity or tax
allocation agreement or any other express or implied agreement to indemnify any
other person; and
(ii) the term "Tax Return" means any return,
declaration, report, statement, information statement and other document
required to be filed with respect to Taxes.
(b) Except as set forth in Section 3.13(b) of the Company
Disclosure Schedule, the Company and its subsidiaries have timely filed all
material Tax Returns they are required to have filed; and such Tax Returns are
accurate and correct in all material respects and do not contain a disclosure
statement under Section 6662 of the Code (or any predecessor provision or
comparable provision of state, local or foreign law).
(c) The Company and its subsidiaries have paid or
adequately provided in the financial statements included in the SEC Reports
for all Taxes (whether or not shown on any Tax Return) they are required to
have paid or to pay, which amounts are not material either individually or in
the aggregate.
(d) Except as set forth in Section 3.13(d) of the Company
Disclosure Schedule, no material claim for assessment or collection of Taxes is
presently being asserted against the Company or its subsidiaries and neither the
Company nor any of its subsidiaries is a party to any pending action,
proceeding, or investigation by any governmental taxing authority nor does the
Company have knowledge of any such threatened action, proceeding or
investigation.
(e) All amounts that were required to be collected or
withheld by or in respect of the Company or any of its subsidiaries in
connection with amounts paid or owing to any employee, independent contractor,
creditor, stockholder or other third party have been
21
duly collected or withheld, and all amounts that were required to be remitted
to any Tax authority by or in respect of the Company or its subsidiaries have
been duly remitted.
(f) Neither the Company nor any of its subsidiaries has
requested an extension of time to file any Return not yet filed, nor granted any
waiver of any statute of limitations with respect to, or any extension of a
period for the assessment of, any Tax.
(g) Neither the Company nor any of its subsidiaries has
taken any action not in accordance with past practice that would have the effect
of deferring any material Tax liability of the Company or its subsidiaries from
any taxable period or portion thereof ending on or before or including the
Closing Date to any subsequent taxable period.
(h) Neither the Company nor any of its subsidiaries has
agreed with any Tax authority or filed an election with any Tax authority to pay
or be liable for Taxes of another Person, other than by reason of being a member
of an affiliated group (as defined in Section 1504 of the Code) with the Company
as the common parent corporation.
(i) Neither the Company nor any of its subsidiaries is a
party to or bound by any Tax sharing agreement, and has no current or contingent
contractual obligation to indemnify any other person with respect to Taxes,
other than obligations to indemnify a lessor for property Taxes, sales/use Taxes
or gross receipts Taxes (but not income or franchise Taxes) imposed on lease
payments arising from terms that are customary for leases of similar property.
(j) The Company has provided to representatives of the
Parent copies of all federal and state income and franchise Returns, and other
written correspondence (including requests for extension of time to file
Returns), filed or submitted by the Company or any of its subsidiaries with or
to the relevant taxing authorities with respect to all periods for which the
applicable statutes of limitations remain open, and has produced for Parent's
inspection all sales tax, use tax, property tax, and other tax and information
returns filed by the Company and any of its subsidiaries.
(k) There are no excess loss accounts, deferred
inter-company gains or losses, or inter-company items, as such terms are defined
in the Treasury Regulations, or other similar amounts that will be required to
be recognized or otherwise taken into account as a result of the acquisition of
the Shares pursuant to this Agreement.
(l) Except as set forth in Section 3.13(l) of the Company
Disclosure Schedule, neither the Company nor any of its subsidiaries is a party
to any agreement, contract, arrangement or plan that has resulted or would
result, individually or in the aggregate, in connection with this Agreement or
any change of control of the Company or any of its subsidiaries, in the payment
of any "excess parachute payments" within the meaning of Section 28OG of the
Code.
22
Section 3.14. INTELLECTUAL PROPERTY.
(a) Section 3.14(a) of the Company Disclosure Schedule
sets forth, for the Intellectual Property owned, in whole or in part, including
jointly with others, by the Company or any of its subsidiaries, a complete and
accurate list of all United States and foreign (a) patents and patent
applications; (b) Trademark registrations and applications and material
unregistered Trademarks; and (c) copyright registrations and applications,
indicating for each, the applicable jurisdiction, registration number (or
application number), and date issued (or date filed). For purposes of this
Agreement, "Intellectual Property" means: trademarks and service marks (whether
register or unregistered), trade names, designs and general intangibles of like
nature, together with all goodwill related to the foregoing (collectively,
"Trademarks"); patents (including any continuations, continuations in part,
renewals and applications for any of the foregoing)(collectively "Patents");
copyrights (including any registrations and applications therefor and whether
registered or unregistered)(collectively "Copyrights"); computer software;
databases; works of authorship; mask works; technology; trade secrets and other
confidential information, know-how, proprietary processes, formulae, algorithms,
models, user interfaces, customer lists, inventions, discoveries, concepts,
ideas, techniques, methods, source codes, object codes, methodologies and, with
respect to all of the foregoing, related confidential data or information
(collectively, "Trade Secrets").
(b) TRADEMARKS.
(i) All Trademark registrations are currently
in compliance in all material respects with all legal requirements (including
the timely post-registration filing of affidavits of use and incontestability
and renewal applications) other than any requirement that, if not satisfied,
would not result in a cancellation of any such registration or otherwise
materially affect the priority and enforceability of the Trademark in question.
(ii) No registered Trademark has been within the
last three (3) years or is now involved in any opposition or cancellation
proceeding in the United States Patent and Trademark Office. To the Company's
knowledge, no such action has been threatened in writing within the one (1)-year
period prior to the date of this Agreement.
(iii) To the knowledge of the Company and its
subsidiaries, there has been no prior use of any material Trademark by any
third party which would confer upon said third party superior rights in any
such Trademark.
(iv) All material Trademarks registered in the
United States have been in continuous use by the Company or its subsidiaries.
(v) The Company and its subsidiaries have
adequately policed the Trademarks against third party infringement; and the
material Trademarks registered in the United States have been continuously used
in the form appearing in, and in connection with the goods and services listed
in, their respective registration certificates.
23
(c) Patents.
(i) All Patents are currently in compliance
with legal requirements (including payment of filing, examination, and
maintenance fees and proofs of working or use) other than any requirement that,
if not satisfied, would not result in a revocation or otherwise materially
affect the enforceability of the Patent in question.
(ii) No Patent has been or is now involved in
any interference, reissue, reexamination or opposing proceeding in the
United States Patent and Trademark Office. To the Company's knowledge, no such
action has been threatened in writing within the one (1)-year period prior to
the date of this Agreement.
(iii) To the Company's knowledge, there is no
patent or patent application of any person that conflicts in any material
respect with any Patent.
(d) Trade Secrets.
(i) The Company has taken reasonable steps in
accordance with normal industry practice to protect the Company's rights in
confidential information and Trade Secrets of the Company.
(ii) Without limiting the generality of Section
3.14(d)(i) and except as would not be materially adverse to the Company or its
business, the Company enforces a policy of requiring each relevant employee,
consultant and contractor to execute proprietary information, confidentiality
and assignment agreements substantially in the Company's standard forms that
assign to the Company all rights to any Intellectual Property rights relating to
the Company's business and that otherwise appropriately protect the Intellectual
Property of the Company, and, except under confidentiality obligations, there
has been no disclosure by the Company or any subsidiary of material confidential
information or Trade Secrets.
(e) LICENSE AGREEMENTS.
Section 3.14(e)(1) of the Company Disclosure
Schedule sets forth a complete and accurate list of all license agreements
granting to the Company or any of its subsidiaries any material right to use or
practice any rights under any Intellectual Property other than office automation
software used generally in the Company's or any of its subsidiaries' operations
and other software that is not used in connection with the design, development,
use, maintenance and support, testing, assembly and manufacture of the Company's
or any such subsidiary's products and is commercially available on reasonable
terms to any person for a license fee of no more than Five Thousand Dollars
($5,000) (collectively, the "Inbound License Agreements"), indicating for each
the title and the parties thereto and the amount of any future royalty or
license fee payable thereunder. Section 3.14(e)(2) of the Company Disclosure
Schedule sets forth a complete and accurate list of all license agreements under
which the Company or any of its subsidiaries licenses software or grants other
rights in to use or practice any rights under any Intellectual Property,
24
excluding licenses with customers that in the twelve-month period prior to the
date hereof have purchased or licensed products for which the total payments to
the Company and its subsidiaries did not exceed Seventy-Five Thousand Dollars
($75,000) (collectively, the "Outbound License Agreements"), indicating for each
the title and the parties thereto. There is no material outstanding or, to the
Company's knowledge, threatened dispute or disagreement with respect to any
Inbound License Agreement or any Outbound License Agreement.
(f) OWNERSHIP; SUFFICIENCY OF IP ASSETS. The Company or
one of its subsidiaries owns or possesses adequate licenses or other rights to
use, free and clear of Liens, orders and arbitration awards, all of its
Intellectual Property used in its business. The Intellectual Property identified
in Section 3.14(a) of the Company Disclosure Schedule, together with the
Company's and its subsidiaries' unregistered copyrights and the Company's and
such subsidiaries' rights under the licenses granted to the Company or any of
its subsidiaries under the Inbound License Agreements, constitute all the
material Intellectual Property rights used in the operation of the Company's and
its subsidiaries' businesses as they are currently conducted and are all the
Intellectual Property rights necessary to operate such businesses after the
Effective Time in substantially the same manner as such businesses have been
operated by the Company prior thereto.
(g) PROTECTION OF IP. The Company has taken reasonable
steps to protect the Intellectual Property of the Company and its subsidiaries.
The Company has a policy to secure valid written assignments from all
consultants and employees who contribute or have contributed to the creation or
development of Intellectual Property of the rights to such contributions that
the Company does not already own by operation of law. All use, disclosure, or
appropriation of Intellectual Property owned by the Company by or to a third
party has been pursuant to the terms of a written agreement between the Company
and such third party. All use, disclosure or appropriation of Intellectual
Property not owned by the Company has been pursuant to the terms of a written
agreement between the Company and the owner of such Confidential Information, or
is otherwise lawful.
(h) NO INFRINGEMENT BY THE COMPANY. The products used,
manufactured, marketed, sold or licensed by the Company, and all Intellectual
Property used in the conduct of the Company's and its subsidiaries' businesses
as currently conducted, do not infringe upon, violate or constitute the
unauthorized use of any rights owned or controlled by any third party, including
without limitation, any Intellectual Property of any third party.
(i) NO PENDING OR THREATENED INFRINGEMENT CLAIMS OR
RESTRICTIONS ON USE. Except and to the extent publicly disclosed in the Company
SEC Reports, no litigation is now or, within the three (3) years prior to the
date of this Agreement, was pending and, to the Company's knowledge, no notice
or other claim in writing has been received by the Company within the one (1)
year prior to the date of this Agreement, (A) alleging that the Company or any
of its subsidiaries has engaged in any activity or conduct that infringes upon,
violates, or constitutes the unauthorized use of the Intellectual Property
rights of any third party or (B) challenging the ownership, use, validity or
enforceability of any Intellectual Property
25
owned or exclusively licensed by the Company. Except as specifically
disclosed in one or more Sections of the Company Disclosure Schedules
pursuant to this Section 3.14, no Intellectual Property owned or licensed by
the Company or any of its subsidiaries is subject to any outstanding order,
judgment, decree, stipulation or agreement restricting the use thereof by the
Company or any such subsidiary or, in the case of any Intellectual Property
licensed to others, restricting the sale, transfer, assignment or licensing
thereof by the Company or any of its subsidiaries to any person. Neither the
Company nor any of its subsidiaries has entered into any agreement to
indemnify any other person against any charge of infringement of any
Intellectual Property, other than indemnification provisions contained in
purchase orders or customer agreements arising in the ordinary course of
business.
(j) NO INFRINGEMENT BY THIRD PARTIES. Except as and to
the extent publicly disclosed in the Company SEC Reports or as set forth in
Section 3.14(j) of the Company Disclosure Schedule, no third party is
misappropriating, infringing, diluting, or violating any Intellectual Property
owned or exclusively licensed by the Company or any of its subsidiaries, and no
such claims have been brought against any third party by the Company or any of
its subsidiaries.
(k) ASSIGNMENT; CHANGE OF CONTROL. The execution,
delivery and performance by the Company of this Agreement, and the consummation
of the transactions contemplated hereby, will not result in the loss or
impairment of, or give rise to any right of any third party to terminate, any of
the Company's or any of its subsidiaries' rights to own any of its Intellectual
Property or their respective rights under the License Agreements, nor require
the consent of any Governmental Authority or third party in respect of any such
Intellectual Property.
(l) SOFTWARE. The Software (as defined below) owned or
purported to be owned by the Company or any of its subsidiaries, was either (i)
developed by employees of Company or any of its subsidiaries within the scope of
their employment; (ii) developed by independent contractors who have assigned
their rights to the Company or any of its subsidiaries pursuant to written
agreements; or (iii) otherwise acquired by the Company or a subsidiary from a
third party. Except as set forth in Section 3.14(l) of the Company Disclosure
Schedule, the Software does not contain any programming code, documentation or
other materials or development environments that embody Intellectual Property
rights of any person other than the Company or any of its subsidiaries, except
for such materials or development environments obtained by the Company or any of
its subsidiaries from other persons who make such materials or development
environments generally available to all interested purchasers or end-users on
standard commercial terms. For purposes of this Section 3.14(l), "Software"
means any and all (i) computer programs, including any and all software
implementations of algorithms, models and methodologies, whether in source code
or object code, (ii) databases and compilations, including any and all data and
collections of data, whether machine readable or otherwise, (iii) descriptions,
flow-charts and other work product used to design, plan, organize and develop
any of the foregoing, and (iv) all documentation, including user manuals and
training materials, relating to any of the foregoing.
26
(m) PERFORMANCE OF EXISTING SOFTWARE PRODUCTS. The
Company's and its subsidiaries' existing and currently manufactured and marketed
Software products listed and described on Section 3.14(m) of the Company
Disclosure Schedule perform in all material respects, free of significant bugs
or programming errors, the functions described in any agreed specifications or
end user documentation or other information provided to customers of the Company
on which such customers relied when licensing or otherwise acquiring such
products.
(n) DOCUMENTATION. The Company and its subsidiaries have
taken all actions customary in the software industry to document the Software
and its operation, such that the materials comprising the Software, including
the source code and documentation, have been written in a clear and professional
manner so that they may be understood, modified and maintained in an efficient
manner by reasonably competent programmers.
(o) YEAR 2000 COMPLIANCE.
(i) Except as set forth in Section 3.14(o) of
the Company Disclosure Schedule, all of the Company's and its subsidiaries'
material products (including products currently under development) will record,
store, process and calculate and present calendar dates falling on and after
December 31, 1998, and will calculate any information dependent on or relating
to such dates in the same manner and with the same functionality, data integrity
and performance as the products record, store, process, calculate and present
calendar dates on or before December 31, 1998, or calculate any information
dependent on or relating to such dates (collectively "Year 2000 Compliant").
Except as set forth in Section 3.14(o) of the Company Disclosure Schedule, (A)
all of the Company's and its subsidiaries' material products will lose no
significant functionality with respect to the introduction of records containing
dates falling on or after December 31, 1998; (B) all of the Company's and its
subsidiaries' internal computer systems comprised of software, hardware,
databases or embedded control systems (microprocessor controlled, robotic or
other device) related to the Company's and its subsidiaries' businesses
(collectively, a "Business System"), that constitutes any material part of, or
is used in connection with the use, operation or enjoyment of, any material
tangible or intangible asset or real property of the Company and its
subsidiaries, including its accounting systems, are Year 2000 Compliant. Except
as set forth on Section 3.14(o) of the Company Disclosure Schedule, the current
versions of the Company's and its subsidiaries' software and all other
Intellectual Property may be used prior to, during and after December 31, 1998,
such that such Software and Intellectual Property will operate prior to, during
and after such time period without error caused by date data that represents or
references different centuries or more than one century.
(ii) To the knowledge of the Company, none of
the Company's products and the conduct of the Company's business with customers
and suppliers will be materially adversely affected by the advent of the year
2000, the advent of the twenty-first century or the transition from the
twentieth century through the year 2000 and into the twenty-first century. To
the knowledge of the Company and except as set forth on Section 3.14(o) of the
Company Disclosure Schedule, neither the Company nor any of its
27
subsidiaries is reasonably likely to incur material expenses arising from or
relating to the failure of any of its Business Systems or any products
(including all products sold on or prior to the date hereof) as a result of
the advent of the year 2000, the advent of the twenty-first century or the
transition from the twentieth century through the year 2000.
Section 3.15. CERTAIN CONTRACT MATTERS.
(a) Section 3.15 (a) of the Company Disclosure Schedule
sets forth each oral or written (i) distributor, VAR (value added reseller),
sales representative or similar agreement to which the Company is a party, other
than any such agreement which is subject to termination by the Company, without
penalty or cost (other than the cost of return of unsold products) in excess of
$10,000, upon notice of 90 days or less; (ii) OEM agreement to which the Company
is a party, and which has a remaining term in excess of 90 days, other than any
such agreement referred to in clause (ii) pursuant to which total sales by the
Company in the year ended December 31, 1998 were less than $100,000 and
anticipated sales during calendar year 1999 are less than such amount; (iii)
other contract or commitment in which the Company or any of its subsidiaries has
granted or received manufacturing rights, most favored customer pricing
provisions or exclusive marketing rights relating to any product or service, any
group of products or services or any territory; and (iv) joint venture or
partnership contract or agreement or other agreement which has involved or is
reasonably expected to involve a sharing of profits or losses with any other
party.
(b) Except as set forth in Section 3.15(b) of the Company
Disclosure Schedule, the Company is not a party to, or bound by, any agreement
which restricts its ability to engage in business, or compete with any person,
in any product line or line of business in any place in the world.
Section 3.16. INSURANCE. Each of the Company and its
subsidiaries maintains insurance policies (the "Insurance Policies") against all
risks of a character and in such amounts as are usually insured against by
similarly situated companies in the same or similar businesses. Each Insurance
Policy is in full force and effect and is valid, outstanding and enforceable,
and all premiums due thereon have been paid in full. None of the Insurance
Policies will terminate or lapse (or be affected in any other materially adverse
manner) by reason of the transactions contemplated by this Agreement. Each of
the Company and its subsidiaries has complied in all material respects with the
provisions of each Insurance Policy under which it is the insured party. No
insurer under any Insurance Policy has canceled or generally disclaimed
liability under any such policy or, to the Company's knowledge, indicated any
intent to do so or not to renew any such policy. All material claims under the
Insurance Policies have been filed in a timely fashion.
Section 3.17. CERTAIN BUSINESS PRACTICES. None of the Company,
any of its subsidiaries or any directors, officers, agents or employees of the
Company or any of its subsidiaries has (i) used any funds for unlawful
contributions, gifts, entertainment or other unlawful expenses related to
political activity, (ii) made any unlawful payment to foreign or domestic
government officials or employees or to foreign or domestic political parties or
28
campaigns or violated any provision of the Foreign Corrupt Practices Act of
1977, as amended, or (iii) made any other unlawful payment.
Section 3.18. PRODUCT WARRANTIES. Section 3.18 of the Company
Disclosure Schedule sets forth complete and accurate copies of the written
warranties and guaranties by the Company or any of its subsidiaries currently in
effect with respect to its products. There have not been any material deviations
from such warranties and guaranties, and neither the Company, any of its
subsidiaries nor any of their respective salesmen, employees, distributors and
agents is authorized to undertake obligations to any customer or to other third
parties in excess of such warranties or guaranties. Neither the Company nor any
of its subsidiaries has made any oral warranty or guaranty with respect to its
products.
Section 3.19. SUPPLIERS AND CUSTOMERS. The documents and
information supplied by the Company to Parent or any of its representatives in
connection with this Agreement with respect to relationships and volumes of
business done with its significant suppliers and customers are accurate in all
material respects. During the last twelve (12) months, the Company has received
no notices of termination or written threats of termination from any of the five
(5) largest suppliers or the five (5) largest customers of the Company and its
subsidiaries.
Section 3.20. VOTE REQUIRED. The affirmative vote of the
holders of sixty seven percent (67%) of the outstanding Shares is the only vote
of the holders of any class or series of the Company's capital stock necessary
to approve and adopt this Agreement.
Section 3.21. OPINION OF FINANCIAL ADVISER. The Financial
Advisor has delivered to the Company Board its written opinion dated the date of
this Agreement to the effect that as of such date the Per Share Amount is fair,
from a financial point of view, to the holders of Shares.
Section 3.22. BROKERS. No broker, finder or investment banker
(other than the Financial Adviser, a true and correct copy of whose engagement
agreement has been provided to Purchaser or Parent) is entitled to any brokerage
finder's or other fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
the Company.
Section 3.23. DISCLOSURE. None of the representatives or
warranties made by the Company herein or in any schedule hereto, including the
Company Disclosure Schedule, or in any certificate furnished by the Company
pursuant to this Agreement, or in the Company SEC Reports, when all such
documents are read together in their entirety, contains or will contain at the
Effective Time any untrue statement of a material fact, or omits or will omit at
the Effective Time to state any material fact necessary in order to make the
statements contained herein or therein, in light of the circumstances under
which made, not misleading.
29
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF
PARENT AND PURCHASER
Parent and Purchaser hereby represent and warrant to the
Company as follows:
Section 4.1. ORGANIZATION.
(a) Each of Parent and Purchaser is duly organized,
validly existing and in good standing under the laws of the State of Delaware,
respectively, and has all requisite power and authority to own, lease and
operate its properties and to carry on its businesses as now being conducted.
Parent has heretofore made available to the Company accurate and complete copies
of the Certificate of Incorporation and bylaws as currently in full force and
effect, of Parent and Purchaser.
(b) Each of Parent and Purchaser is duly qualified or
licensed and in good standing to do business in each jurisdiction in which the
property owned, leased or operated by it or the nature of the business conducted
by it makes such qualification or licensing necessary, except in such
jurisdictions where the failure to be so duly qualified or licensed and in good
standing would not have a Material Adverse Effect on Parent. When used in
connection with Parent or Purchaser the term "Material Adverse Effect on Parent"
means any circumstance, change in, or effect on (or circumstance, change in, or
effect involving a prospective change on) Parent and its subsidiaries, taken as
a whole, (a) that is, or is reasonably likely in the future to be, materially
adverse to the operations, assets or liabilities (including contingent
liabilities), earnings or results of operations, or the business (financial or
otherwise) of Parent and its subsidiaries, taken as a whole, excluding from the
foregoing the effect, if any, of (i) changes in general economic conditions or
changes affecting the industry in which Parent operates, (ii) stockholder class
action litigation arising from allegations of a breach of fiduciary duty
relating to this Agreement, (iii) the public announcement or pendency of the
transactions contemplated hereby on current or prospective customers or revenues
of the Parent (provided that such effect is direct and that Parent shall have
the burden of proving such direct effect), or (iv) any action or inaction
required of Parent by the Company under this Agreement, or (b) that would
reasonably be expected to prevent or materially delay or impair the ability of
Parent and Purchaser to consummate the transactions contemplated by this
Agreement.
Section 4.2. AUTHORITY RELATIVE TO THIS AGREEMENT. Each of
Parent and Purchaser has all necessary corporate power and authority to execute
and deliver this Agreement and the Company Stock Option, to perform its
obligations under this Agreement and the Company Stock Option and to consummate
the transactions contemplated thereby. The execution and delivery of this
Agreement and the Company Stock Option and the consummation of the transactions
contemplated thereby have been duly and validly authorized
30
by the boards of directors of Parent and Purchaser and by Parent as the sole
stockholder of Purchaser and no other corporate proceedings on the part of
Parent or Purchaser are necessary to authorize this Agreement and the Company
Stock Option or to consummate the transactions contemplated hereby. This
Agreement and the Company Stock Option have been duly and validly executed
and delivered by each of Parent and Purchaser and constitute, assuming the
due authorization, execution and delivery hereof and thereof by the Company,
valid, legal and binding agreements of each of Parent and Purchaser
enforceable against each of Parent and Purchaser in accordance with their
terms, subject to any applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws now or hereafter in effect relating to creditors'
rights generally or to general principles of equity.
Section 4.3. SEC REPORTS; FINANCIAL STATEMENTS.
(a) Parent has filed all required forms, reports and
documents ("Parent SEC Reports") with the SEC since December 31, 1997, each of
which, complied at the time of filing in all material respects with all
applicable requirements of the Securities Act and the Exchange Act, each law as
in effect on the dates such forms reports and documents were filed. None of such
Parent SEC Reports, including any financial statements or schedules included or
incorporated by reference therein, contained when filed any untrue statement of
a material fact or omitted to state a material fact required to be stated or
incorporated by reference 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 superseded by a Parent SEC Report filed subsequently and
prior to the date hereof. The audited consolidated financial statements of
Parent included in the Parent SEC Reports fairly present in conformity in all
material respects with generally accepted accounting principles applied on a
consistent basis (except as may be indicated in the notes thereto) the
consolidated financial position of Parent and its consolidated subsidiaries as
of the dates thereof and their consolidated results of operations and changes in
financial position for the periods then ended.
(b) Parent has heretofore made available or promptly will
make available to the Company a complete and correct copy of any amendments or
modifications that are required to be filed with the SEC but have not yet been
filed with the SEC to agreements documents or other instruments that previously
had been filed by Parent with the SEC pursuant to the Exchange Act.
Section 4.4. OFFER DOCUMENTS; PROXY STATEMENT. None of the
information supplied by Parent or Purchaser, its officers, directors,
representatives, agents or employees, for inclusion in the Proxy Statement, or
in any amendments thereof or supplements thereto, will, on the date the Proxy
Statement is first mailed to stockholders, at the time of the Company
Stockholders' Meeting or at the Effective Time, contain any statement which, at
such time and in light of the circumstances under which it will be made, will be
false or misleading with respect to any material fact, or will omit to state any
material fact necessary order to make the statements therein not false or
misleading or necessary to correct any statement in any earlier communication
with respect to the solicitation of proxies for the Company Stockholders'
Meeting which has become false or misleading. Neither the Offer
31
Documents nor any amendments thereof or supplements thereto will, at any time
the Offer Documents or any such amendments or supplements are filed with the
SEC or first published, sent or given to the Company's stockholders, contain
any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. Notwithstanding the
foregoing, Parent and Purchaser do not make any representation or warranty
with respect to any information that has been supplied by the Company or its
accountants, counsel or other authorized representatives for use in any of
the foregoing documents. The Offer Documents and any amendments or
supplements thereto will comply as to form in all material respects with the
provisions of the Exchange Act and the rules and regulations thereunder.
Section 4.5. CONSENTS AND APPROVALS; NO VIOLATIONS. Except for
filings, permits, authorizations, consents, and approvals as may be required
under and other applicable requirements of the Securities Act, the Exchange Act,
state securities or blue sky laws, the HSR Act, and any filings under similar
merger notification laws or regulations of foreign Governmental Entities and the
filing and recordation of the Certificate of Merger as required by the Delaware
Law, no filing with or notice to, and no permit authorization consent or
approval of any Governmental Entity is necessary for the execution and delivery
by Parent or Purchaser of this Agreement or the Company Stock Option or the
consummation by Parent or Purchaser of the transactions contemplated hereby or
thereby, except where the failure to obtain such permits, authorizations,
consents or approvals or to make such filings or give such notice would not,
individually or in the aggregate, have a Material Adverse Effect on Parent.
Neither the execution, delivery and performance of this Agreement or the Company
Stock Option by Parent or Purchaser nor the consummation by Parent or Purchaser
of the transactions contemplated hereby or thereby will (i) conflict with or
result in any breach of any provision of the respective Certificate of
Incorporation or bylaws of Parent or Purchaser, (ii) result in a violation or
breach of or constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, amendment, cancellation or
acceleration or Lien) under any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, lease, license, contract, agreement or other
instrument or obligation to which Parent or Purchaser or any of Parent's other
subsidiaries is a party or by which any of them or any of their respective
properties or assets may be bound or (iii) violate any order, writ, injunction,
decree, law, statute, rule or regulation applicable to Parent or Purchaser or
any of Parent's other subsidiaries or any of their respective properties or
assets except, in the case of (ii) or (iii), for violations, breaches or
defaults that would not, individually or in the aggregate, have a Material
Adverse Effect on Parent.
Section 4.6. BROKERS. No broker finder or investment banker is
entitled to any brokerage finder's or other fee or commission in connection with
the transactions contemplated by this Agreement based upon arrangements made by
or on behalf of Parent or Purchaser.
Section 4.7. NO PRIOR ACTIVITIES. Except for obligations
incurred in connection with its incorporation or organization or the negotiation
and consummation of this Agreement and the transactions contemplated hereby,
Purchaser has neither incurred any obligation or
32
liability nor engaged in any business or activity of any type or kind
whatsoever or entered into any agreement or arrangement with any person.
ARTICLE 5
COVENANTS
Section 5.1. CONDUCT OF BUSINESS OF THE COMPANY. Except as
contemplated by this Agreement or as described in Section 5.1 of the Company
Disclosure Schedule, during the period from the date hereof to the Effective
Time, the Company will and will cause each of its subsidiaries to conduct its
operations in the ordinary course of business consistent with past practice
and, to the extent consistent therewith, with no less diligence and effort
than would be applied in the absence of this Agreement seek, to preserve
intact its current business organizations, keep available the service of its
current officers and employees and preserve its relationships with customers,
suppliers and others having business dealings with it with the intention that
its goodwill and ongoing businesses shall be unimpaired at the Effective
Time. Without limiting the generality of the foregoing, except as otherwise
expressly provided in this Agreement or as described in Section 5.1 of the
Company Disclosure Schedule, prior to the Effective Time, neither the Company
nor any of its subsidiaries will, without the prior written consent of Parent
and Purchaser:
(a) amend its Certificate or Articles of Incorporation
or bylaws (or other similar governing instrument);
(b) authorize for issuance, issue, sell, deliver or
agree or commit to issue sell or deliver (whether through the issuance or
granting of options, warrants, commitments, subscriptions, rights to purchase
or otherwise) any stock of any class or any other securities (except bank
loans) or equity equivalents (including any stock options or stock
appreciation rights) except for the issuance and sale of Shares pursuant to
options granted under the Option Plans prior to the date hereof and Rights
that are vested in the Stock Purchase Plan on or prior to the New Purchase
Date (as set forth in Section 2.12);
(c) split, combine or reclassify any shares of its
capital stock, declare, set aside or pay any dividend or other distribution
(whether in cash, stock or property or any combination thereof) in respect of
its capital stock, make any other actual, constructive or deemed distribution
in respect of its capital stock or otherwise make any payments to
stockholders in their capacity as such, or redeem or otherwise acquire any of
its securities or any securities of any of its subsidiaries;
(d) adopt a plan of complete or partial liquidation,
dissolution, merger, consolidation, restructuring, recapitalization or other
reorganization of the Company or any of its subsidiaries (other than the
Merger);
33
(e) alter through merger, liquidation, reorganization,
restructuring or any other fashion the corporate structure of ownership of
any subsidiary;
(f) (i) incur or assume any long-term or short-term debt
or issue any debt securities except for borrowings under existing lines of
credit in the ordinary course of business; (ii) assume, guarantee, endorse or
otherwise become liable or responsible (whether directly, contingently or
otherwise) for the obligations of any other person except for obligations of
subsidiaries of the Company incurred in the ordinary course of business; (iii)
make any loans, advances or capital contributions to or investments in any other
person (other than to subsidiaries of the Company or customary loans or advances
to employees in each case in the ordinary course of business consistent with
past practice); (iv) pledge or otherwise encumber shares of capital stock of the
Company or any of its subsidiaries; or (v) mortgage or pledge any of its
material assets, tangible or intangible, or create or suffer to exist any
material Lien thereupon;
(g) except as may be required by law, (i) enter into,
adopt or amend or terminate any bonus, profit sharing, compensation, severance,
termination, stock option, stock appreciation right, restricted stock,
performance unit, stock equivalent, stock purchase agreement, pension,
retirement, deferred compensation, employment, health, life, or disability
insurance, dependent care, severance or other employee benefit plan agreement,
trust, fund or other arrangement for the benefit or welfare of any director,
officer or employee in any manner, (ii) except for increases for employees other
than officers of the Company, in the ordinary course of business consistent with
past practice, and after having delivered five days prior notice thereof to
Parent, increase in any manner the compensation or fringe benefits of any
director, officer or employee or pay any benefit not required by any plan and
arrangement as in effect as of the date hereof (including the granting of stock
appreciation rights or performance units), or (iii) hire or retain any new
officer or director level employee;
(h) acquire, sell, license, lease or dispose of any
assets in any single transaction or series of related transactions, other than
sales of its products in the ordinary course of business consistent with past
practices;
(i) except as may be required as a result of a change in
law or in generally accepted accounting principles, change any of the accounting
principles, practices or methods used by it;
(j) revalue in any material respect any of its assets,
including writing down the value of inventory or writing-off notes or accounts
receivable, other than in the ordinary course of business;
(k)(i) acquire (by merger, consolidation or purchaser of
stock or assets) any corporation, partnership or other business organization or
division thereof or any equity interest therein; (ii) enter into any contract or
agreement other than in the ordinary course of business consistent with past
practice that would be material to the Company and its subsidiaries, taken as a
whole; (iii) amend, modify or waive any right under any material contract of the
Company or any of its subsidiaries; (iv) modify its standard warranty terms for
34
its products or amend or modify any product warranties in effect as of the date
hereof in any material manner that is adverse to the Company or any of its
subsidiaries; (v) enter into or amend any agreements pursuant to which any other
party is granted exclusive marketing or distribution rights with respect to any
of the products or technology of the Company or any of its subsidiaries; or (vi)
authorize any new capital expenditure or expenditures that individually is in
excess of Twenty-Five Thousand Dollars ($25,000) or in the aggregate are in
excess of Two Hundred Fifty Thousand Dollars ($250,000); PROVIDED that nothing
in the foregoing clause (vi) shall limit any capital expenditure required
pursuant to existing customer contracts;
(l) make any tax election or settle or compromise any
income tax liability material to the Company and its subsidiaries taken as a
whole;
(m) commence a lawsuit other than (i) for the routine
collection of bills, (ii) in such cases where the Company in good faith, after
consultation with Parent prior to such commencement, determines that failure to
commence suit would have a Material Adverse Effect on the Company, or (iii) for
a breach of this Agreement;
(n) settle or compromise any pending or threatened
suit, action or claim that (i) relates to the transactions contemplated hereby
or (ii) the settlement or compromise of which would have a Material Adverse
Effect on the Company;
(o) commence any material software development project or
terminate any material software development project that is currently ongoing,
in either case except pursuant to the terms of existing contracts with customers
or except as contemplated by the Company's project development budget previously
provided to Parent; or
(p) take or agree in writing or otherwise to take any of
the actions described in Sections 5.1(a) through 5.1(o) (and it shall use all
reasonable efforts not to take any action that would make any of the
representations or warranties of the Company contained in this Agreement untrue
or incorrect).
Section 5.2. PREPARATION OF PROXY STATEMENT. As promptly as
practicable after the consummation of the Offer, and if required by the Exchange
Act or Delaware Law, the Company shall prepare and file with the SEC, and shall
use all reasonable efforts to have cleared by the SEC, and promptly thereafter
shall mail to stockholders, the Proxy Statement. The Proxy Statement shall
contain the recommendation of the Company Board that the Company's stockholders
approve this Agreement and the Merger.
Section 5.3. OTHER POTENTIAL ACQUIRERS.
(a) The Company, its affiliates (as reasonably determined
by the Company) and their respective officers and other employees with
managerial responsibilities, directors, representatives and agents shall
immediately cease any discussions or negotiations with any parties with respect
to any Third Party Acquisition (as defined below). Neither the Company nor any
of its affiliates (as reasonably determined by the Company) shall, nor shall the
Company authorize or permit any of its or their respective officers, directors,
employees
35
representatives or agents to, directly or indirectly, encourage,
solicit, participate in or initiate discussions or negotiations with or provide
any non-public information to any person or group (other than Parent and
Purchaser or any designees of Parent and Purchaser) concerning any Third Party
Acquisition; PROVIDED, HOWEVER, that nothing herein shall prevent the Company
Board from (i) taking and disclosing to the Company's stockholders a position
contemplated by Rules 14d-9 and 14e-2 promulgated under the Exchange Act with
regard to any tender or exchange offer; and (ii) conducting such "due diligence"
inquiries (which shall be in writing to the extent possible) in response to any
Third Party Acquisition proposal as the Company Board determines in its good
faith judgment, after consultation with and based upon the advice of legal
counsel, may be required in order to comply with its fiduciary duties. The
Company shall promptly notify the Parent in the event it receives any proposal
or inquiry concerning a Third Party Acquisition, including the terms and
conditions thereof and the identity of the party submitting such proposal, and
shall advise Parent from time to time of the status and any material
developments concerning the same, including the nature and content of any "due
diligence" inquiries made by it concerning any such proposal and furnishing
copies of any such written inquiries.
(b) Except as set forth in this Section 5.3(b), the
Company Board shall not withdraw its recommendation of the transactions
contemplated hereby or approve or recommend, or cause the Company to enter into
any agreement with respect to, any Third Party Acquisition. Notwithstanding the
foregoing, if the Company Board by a majority vote determines in its good faith
judgment, after consultation with and based upon the advice of legal counsel,
that it is required to do so in order to comply with its fiduciary duties, the
Company Board may withdraw its recommendation of the transactions contemplated
hereby or approve or recommend a Superior Proposal (as defined in subsection (c)
below), but in each case only (i) after providing written notice to Parent (a
"Notice of Superior Proposal") advising Parent that the Company Board has
received a Superior Proposal, specifying the material terms and conditions of
such Superior Proposal and identifying the person making such Superior Proposal
and (ii) if Parent does not, within five (5) business days of Parent's receipt
of the Notice of Superior Proposal, make an offer that the Company Board by a
majority vote determines in its good faith judgment (based on the written advice
of a financial adviser of nationally recognized reputation) to be at least as
favorable to the Company's stockholders as such Superior Proposal; PROVIDED,
HOWEVER, that the Company shall not be entitled to enter into any agreement with
respect to a Superior Proposal unless and until this Agreement is terminated by
its terms pursuant to Section 7.1 and the Company has paid all amounts due to
Parent pursuant to Section 7.3. Any disclosure that the Company Board may be
compelled to make with respect to the receipt of a proposal for a Third Party
Acquisition or otherwise in order to comply with its fiduciary duties or Rule
14d-9 or 14e-2 will not constitute a violation of this Agreement, PROVIDED that
such disclosure states that no action will be taken by the Company Board in
violation of this Section 5.3(b).
(c) For the purposes of this Agreement, "Third Party
Acquisition" means the occurrence of any of the following events: (i) the
acquisition of the Company by merger or otherwise by any person (which includes
a "person" as such term is defined in Section 13(d)(3) of the Exchange Act)
other than Parent, Purchaser or any affiliate thereof (a
36
"Third Party"); (ii) the acquisition by a Third Party of any material portion
of the assets of the Company and its subsidiaries taken as a whole, other
than the sale of its products in the ordinary course of business consistent
with past practices; (iii) the acquisition by a Third Party of twenty percent
(20%) or more of the outstanding Shares; (iv) the adoption by the Company of
a plan of liquidation or the declaration or payment of an extraordinary
dividend; (v) the repurchase by the Company or any of its subsidiaries of
more than ten percent (10%) of the outstanding Shares; or (vi) the
acquisition by the Company or any of its subsidiaries by merger, purchase of
stock or assets, joint venture or otherwise of a direct or indirect ownership
interest or investment in any business whose annual revenues, net income or
assets is equal or greater than ten percent (10%) of the annual revenues, net
income or assets of the Company. For purposes of this Agreement, a "Superior
Proposal" means any bona fide proposal to acquire directly or indirectly for
consideration consisting of cash and/or securities more than 20% of the
Shares then outstanding or all or substantially all the assets of the Company
and otherwise for a consideration higher than the Per Share Amount and on
terms that the Company Board by a majority vote determines in its good faith
judgment (based on the written advice of the Financial Advisor or another
financial advisor of nationally recognized reputation) to be more favorable
to the Company's stockholders than the Merger.
Section 5.4. MEETING OF STOCKHOLDERS. Following the
consummation of the Offer, the Company shall promptly take all action necessary
in accordance with Delaware Law and the Restated Certificate and By-Laws to
convene a meeting of the stockholders of the Company, if such meeting is
required in order to accomplish the Merger. The stockholder vote required for
approval of the Merger will be sixty seven percent (67%) of the outstanding
shares of common stock of the Company. The Company shall use its commercially
reasonable best efforts to solicit from stockholders of the Company proxies in
favor of the Merger and shall take all other action necessary or, in the
reasonable opinion of Parent, advisable to secure any vote of stockholders
required by Delaware Law to effect the Merger. Notwithstanding the foregoing, if
Purchaser or any other subsidiary of Parent shall acquire at least 90 percent of
the outstanding common stock of the Company, and provided that the conditions
set forth in Article 6 shall have been satisfied or waived, the Company shall,
at the request of Parent, take all necessary and appropriate action to cause the
Merger to become effective as soon as practicable after such acquisition,
without the approval of the stockholders of the Company, in accordance with
Section 253 of Delaware Law.
Section 5.5. ACCESS TO INFORMATION.
(a) Between the date hereof and the Effective Time, the
Company will give Parent and its authorized representatives reasonable access to
all employees, plants, offices, warehouses and other facilities and to all books
and records of the Company and its subsidiaries as Parent may reasonably
require, and will cause its officers and those of its subsidiaries to furnish
Parent with such financial and operating data and other information with respect
to the business and properties of the Company and its subsidiaries as Parent may
from time to time reasonably request.
37
(b) Between the date hereof and the Effective Time, the
Company shall furnish to Parent (1) within two (2) business days following
preparation thereof (and in any event within twenty (20) business days after the
end of each calendar month, commencing with June 1999), an unaudited balance
sheet as of the end of such month and the related statements of earnings,
stockholders' equity (deficit) and cash flows, and (2) within two (2) business
days following preparation thereof (and in any event within twenty (20) business
days after the end of each fiscal quarter) an unaudited balance sheet as of the
end of such quarter and the related statements of earnings, stockholders' equity
(deficit) and cash flows for the quarter then ended, all of such financial
statements referred to in clauses (1) and (2) to prepared in accordance with
generally accepted accounting principles in conformity with the practices
consistently applied by the Company with respect to such financial statements.
All the foregoing shall be in accordance with the books and records of the
Company and shall fairly present its financial position (taking into account the
differences between the monthly, quarterly and annual financial statements
prepared by the Company in conformity with its past practices) as of the last
day of the period then ended.
(c) Each of the parties hereto will hold, and will cause
its consultants and advisers to hold, in confidence all documents and
information furnished to it by or on behalf of another party to this Agreement
in connection with the transactions contemplated by this Agreement pursuant to
the terms of that certain Confidentiality Agreement entered into between the
Company and Parent dated April 21, 1999.
Section 5.6. CERTAIN FILINGS; REASONABLE EFFORTS.
(a) Subject to the terms and conditions herein provided,
each of the parties hereto agrees to use all reasonable efforts to take or cause
to be taken all action and to do or cause to be done all things reasonably
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement,
including using all reasonable efforts to do the following, (i) cooperate in the
preparation and filing of any filings that may be required under the HSR Act and
any filings under similar merger notification laws or regulations of foreign
Governmental Entities; (ii) obtain consents of all third parties (including
those consents identified on Schedule 3.6 of the Company Disclosure Schedule)
and Governmental Entities necessary, proper or advisable for the consummation of
the transactions contemplated by this Agreement; (iii) contest any legal
proceeding relating to the Merger; and (iv) execute any additional instruments
necessary to consummate the transactions contemplated hereby. If at any time
after the Effective Time any further action is necessary to carry out the
purposes of this Agreement the proper officers and directors of each party
hereto shall take all such necessary action.
(b) Parent and the Company will consult and cooperate
with one another, and consider in good faith the views of one another, in
connection with any analyses, appearances, presentations, letters, white papers,
memoranda, briefs, arguments, opinions or proposals made or submitted by or on
behalf of any party hereto in connection with proceedings under or relating to
the HSR Act or any other foreign, federal, or state antitrust, competition, or
fair trade law. In this regard but without limitation, each party hereto shall
38
promptly inform the other of any material communication between such party and
the Federal Trade Commission, the Antitrust Division of the United States
Department of Justice, or any other federal, foreign or state antitrust or
competition Governmental Entity regarding the transactions contemplated herein.
Section 5.7. PUBLIC ANNOUNCEMENTS. Parent, Purchaser and the
Company, as the case may be, will consult with one another before issuing any
press release or otherwise making any public statements with respect to the
transactions contemplated by this Agreement, including the Merger, and shall not
issue any such press release or make any such public statement prior to such
consultation except (i) as may be required by applicable law, or by the rules
and regulations of, or pursuant to any listing agreement with, the NYSE or the
Nasdaq National Market, as determined by Parent, Purchaser or the Company, as
the case may be, or (ii) following a change, if any, of the Company Board's
recommendation of the Merger (in accordance with Section 5.3(b)), after which
event no such consultation shall be required. Notwithstanding the preceding
sentence, the first public announcement of this Agreement and the Merger shall
be a joint press release agreed upon by Parent and the Company.
Section 5.8. INDEMNIFICATION AND DIRECTORS' AND OFFICERS'
INSURANCE.
(a) After the Effective Time, the Surviving Corporation
shall indemnify and hold harmless (and shall also advance expenses as incurred
in accordance with the terms and provisions of the bylaws, restated certificate
of incorporation and any applicable indemnification agreement, all as in effect
on the date hereof), to the extent not covered by insurance, each person who is
now or has been prior to the date hereof or who becomes prior to the Effective
Time an officer or director of the Company or any of the Company's subsidiaries
(the "Indemnified Persons") against (i) all losses, claims, damages, costs,
expenses (including counsel fees and expenses), settlement, payments or
liabilities arising out of or in connection with any claim, demand, action,
suit, proceeding or investigation based in whole or in part on or arising in
whole or in part out of the fact that such person is or was an officer or
director of the Company or any of its subsidiaries, whether or not pertaining to
any matter existing or occurring at or prior to the Effective Time and whether
or not asserted or claimed prior to or at or after the Effective Time
("Indemnified Liabilities"); and (ii) all Indemnified Liabilities based in whole
or in part on or arising in whole or in part out of or pertaining to this
Agreement or the transactions contemplated hereby, in each case to the fullest
extent required or permitted under applicable law. Nothing contained herein
shall make Parent, Purchaser, the Company or the Surviving Corporation, an
insurer, a co-insurer or an excess insurer in respect of any insurance policies
which may provide coverage for Indemnified Liabilities, nor shall this Section
5.8 relieve the obligations of any insurer in respect thereto. The parties
hereto intend, to the extent not prohibited by applicable law, that the
indemnification provided for in this Section 5.8 shall apply without limitation
to negligent acts or omissions by an Indemnified Person. Each Indemnified Person
is intended to be a third party beneficiary of this Section 5.8 and may
specifically enforce its terms. This Section 5.8 shall not limit or otherwise
adversely affect any rights any Indemnified Person may have under any agreement
with the Company or under the Company's Certificate of Incorporation or bylaws
as presently in effect.
39
(b) For a period of three years after the Effective Time,
Parent will maintain or cause the Surviving Corporation to maintain in effect,
if available, directors' and officers' liability insurance covering those
persons who, as of immediately prior to the Effective Time, are covered by the
Company's directors' and officers' liability insurance policy (the "Insured
Parties") on terms no less favorable to the Insured Parties than those of the
Company's present directors' and officers' liability insurance policy; PROVIDED,
HOWEVER, that in no event will Parent or the Surviving Corporation be required
to expend in excess of 150% of the annual premium currently paid by the Company
for such coverage (or such coverage as is available for 150% of such annual
premium); PROVIDED FURTHER, that, in lieu of maintaining such existing insurance
as provided above, Parent may cause coverage to be provided under any policy
maintained for the benefit of Parent or any of its subsidiaries, so long as the
terms are not materially less advantageous to the intended beneficiaries thereof
than such existing insurance.
(c) The provisions of this Section 5.8 are intended to be
for the benefit of, and will be enforceable by, each person entitled to
indemnification hereunder and the heirs and representatives of such person.
Parent will not permit the Surviving Corporation to merge or consolidate with
any other Person unless the Surviving Corporation will ensure that the surviving
or resulting entity assumes the obligations imposed by this Section 5.8.
Section 5.9. NOTIFICATION OF CERTAIN MATTERS. The Company
shall give prompt notice to Parent and Purchaser, and Parent and Purchaser shall
give prompt notice to the Company, of (i) the occurrence or nonoccurrence of any
event the occurrence or nonoccurrence of which has caused or would be likely to
cause any representation or warranty contained in this Agreement to be untrue or
inaccurate in any material respect at or prior to the Effective Time and (ii)
any material failure of the Company, Parent or Purchaser, as the case may be, to
comply with or satisfy in any material respect any covenant condition or
agreement to be complied with or satisfied by it hereunder; PROVIDED, HOWEVER,
that the delivery of any notice pursuant to this Section 5.9 shall not cure such
breach or non-compliance or limit or otherwise affect the remedies available
hereunder to the party receiving such notice.
Section 5.10. ADDITIONS TO AND MODIFICATION OF COMPANY
DISCLOSURE SCHEDULE. Concurrently with the execution and delivery of this
Agreement, the Company has delivered a Company Disclosure Schedule that includes
all of the information required by the relevant provisions of this Agreement. In
addition, the Company shall deliver to Parent and Purchaser such additions to or
modifications of any Sections of the Company Disclosure Schedule necessary to
make the information set forth therein true, accurate and complete in all
material respects as soon as practicable after such information is available to
the Company after the date of execution and delivery of this Agreement;
PROVIDED, HOWEVER, that such disclosure shall not be deemed to constitute an
exception to its representations and warranties under Article 3, nor limit the
rights and remedies of Parent and Purchaser under this Agreement for any breach
by the Company of such representation and warranties.
5.11 OFFICERS. Promptly upon the purchase by Purchaser of
Shares pursuant to the Offer representing at least a majority of the outstanding
Shares, the Company shall
40
make, or cause to be made, such changes in the officers of the subsidiaries
of the Company as may be requested by the Parent.
ARTICLE 6
CONDITIONS TO CONSUMMATION OF THE MERGER
Section 6.1. CONDITIONS TO EACH PARTY'S OBLIGATIONS TO EFFECT
THE MERGER. The respective obligations of each party hereto to effect the Merger
are subject to the satisfaction at or prior to the Effective Time of the
following conditions:
(a) Purchaser shall have made, or caused to be made, the
Offer and shall have purchased, or caused to be purchased, the Shares pursuant
to the Offer;
(b) The Merger and this Agreement shall have been
approved and adopted by the requisite vote of the stockholders of the Company,
if required by Delaware Law; and
(c) No statute, rule, regulation, judgment, writ, decree,
order or injunction shall have been promulgated, enacted, entered or enforced,
and no other action shall have been taken, by any Governmental Entity that in
any of the foregoing cases has the effect of making illegal or directly or
indirectly restraining, prohibiting or restricting the consummation of the
Merger.
(d) Any waiting period applicable to the Merger under the
HSR Act shall have expired or have been terminated and all approvals of and
consents to the Merger required under applicable foreign antitrust or
competition laws shall have been obtained and be in full force and effect.
Section 6.2. CONDITIONS TO THE OBLIGATIONS OF PARENT AND
PURCHASER. The respective obligations of Parent and Purchaser to effect the
Merger are subject to the satisfaction at or prior to the Effective Time of the
following conditions:
(a) The representations and warranties of the Company set
forth herein shall be true and correct in all material respects, in each case as
if such representations and warranties were made at the Effective Time; and
(b) The Company shall have performed in all material
respects all obligations and complied in all material respects with all
agreements and covenants of the Company to be performed or complied with by it
under this Agreement at or prior to the Effective Time.
Section 6.3. CONDITIONS TO THE OBLIGATIONS OF THE COMPANY. The
obligations of the Company to effect the Merger are subject to the satisfaction
at or prior to the Effective Time of the following conditions:
41
(a) The representations and warranties of Parent and
Purchaser set forth herein shall be true and correct in all material respects,
in each case as if such representations and warranties were made at the
Effective Time; and
(b) Parent and Purchaser shall have performed in all
material respects all of their respective obligations and complied in all
material respects with all of their respective agreements and covenants to be
performed or complied with by them under this Agreement at or prior to the
Effective Time.
ARTICLE 7
TERMINATION; AMENDMENT; WAIVER
Section 7.1. TERMINATION. This Agreement may be terminated
and the Merger may be abandoned at any time prior to the Effective Time whether
before or after approval and adoption of this Agreement by the Company's
stockholders:
(a) by mutual written consent of Parent, Purchaser and
the Company;
(b) by Parent and Purchaser or the Company if (i) any
court of competent jurisdiction in the United States or other United States
federal or state Governmental Entity shall have issued a final order, decree or
ruling, or taken any other final action, restraining, enjoining or otherwise
prohibiting the Merger and such order, decree, ruling or other action is or
shall have become nonappealable or (ii) the Merger has not been consummated by
October 31, 1999 (the "Final Date"); PROVIDED that no party may terminate this
Agreement pursuant to this clause (ii) if such party's failure to fulfill any of
its obligations under this Agreement shall have been the reason that the
Effective Time shall not have occurred on or before said date;
(c) by the Company (i) if the Company has approved a
Superior Proposal in accordance with Section 5.3(b), provided the Company has
complied with all provisions thereof, including the notice provisions therein,
and that it makes simultaneous payment of the Expenses and the Termination Fee
(as defined below); or (ii) if Parent or Purchaser shall have terminated the
Offer or the Offer expires without Parent or Purchaser, as the case may be,
purchasing any Shares pursuant thereto; or (iii) if Parent or Purchaser shall
have breached in any material respect any of its representations, warranties,
covenants or other agreements contained in this Agreement which breach or
failure to perform is incapable of being cured or has not been cured by the
earlier of (x) ten business days following written notice thereof to Parent from
the Company and (y) the scheduled expiration of the Offer; or (iv) if the Offer
shall not have expired or been terminated on or before August 30, 1999; provided
that the Company may not terminate this Agreement pursuant to this Section
7.1(c) if the Company is in material breach of this Agreement.
(d) by Parent and Purchaser: (i) if prior to the purchase
of the Shares pursuant to the Offer, the Company Board shall have withdrawn, or
modified or changed in a
42
manner adverse to Parent or Purchaser its approval or recommendation of the
Offer, this Agreement, the Merger, the Company Stock Option or the
Stockholders Agreement or shall have approved a Third Party Acquisition;
provided, that neither Parent nor Purchaser shall be entitled to terminate
this Agreement pursuant to this Section 7.1(d) solely as a result of the
Company or the Company Board making such disclosure to the Company's
stockholders as, in good faith judgment of the Company Board, after receiving
advice from outside counsel, is required under applicable law; or (ii) if
Parent or Purchaser shall have terminated the Offer without Parent or
Purchaser purchasing any Shares thereunder, or (iii) if, due to an occurrence
that if occurring after the commencement of the Offer would result in a
failure to satisfy any of the conditions set forth in Annex I hereto, Parent,
Purchaser, or any of their affiliates shall have failed to commence the Offer
on or prior to five business days following the date of the initial public
announcement of the Offer; or (iv) if there shall have occurred a Third Party
Acquisition; or (v) if the Company, or any of the Company's officers,
directors, employees, representatives or agents, shall take any of the
actions described in the second sentence of Section 5.3(a) hereof, other than
the proviso thereto; or (vi) if the Company shall have breached any of its
representations, warranties, covenants or other agreements contained in this
Agreement which breach or failure to perform is incapable of being cured or
has not been cured by the earlier of (x) ten business days following written
notice thereof to the Company from Parent and (y) the scheduled termination
of the Merger Agreement (except to the extent that the aggregate of all
breaches thereof do not constitute a Material Adverse Effect on the Company
and do not otherwise materially and adversely affect the consideration to be
paid by Purchaser in the Offer or the benefits expected to be received by
Parent under this Agreement); or (vii) if the Offer shall not have expired or
been terminated on or before August 30, 1999; provided that Parent or
Purchaser may not terminate this Agreement pursuant to clause (ii) or (vii)
of this Section 7.1(d) if the Parent or Purchaser is in material breach of
this Agreement.
Section 7.2. EFFECT OF TERMINATION. In the event of the
termination and abandonment of this Agreement pursuant to Section 7.1, this
Agreement shall forthwith become void and have no effect without any liability
on the part of any party hereto or its affiliates, directors, officers or
stockholders other than the provisions of this Section 7.2 and Sections 5.5(c)
and 7.3 hereof. Nothing contained in this Section 7.2 shall relieve any party
from liability for any breach of this Agreement prior to such termination.
Section 7.3. FEES AND EXPENSES.
(a) In the event that this Agreement shall be terminated
pursuant to:
(i) Section 7.1(c)(i) or 7.1(d)(i), (iv), (v)
or (vi);
(ii) Section 7.1(c)(ii) or (iv) or 7.1(d)(ii) or
(vii) and each of the following shall exist or occur,
as the case may be, (y) at the time of termination of
the Offer or (in the case of Section 7.1(d)(vii))
August 30, 1999 there shall be outstanding an offer
by a Third Party to consummate, or a third party
shall have publicly announced (and not
43
withdrawn) a plan or proposal with respect to, a
Third Party Acquisition and (z) within nine (9)
months from the date of such termination, a Third
Party Acquisition (provided, however, that for
purposes of this Section 7.3(a)(ii)(z) only,
clause (vi) of the definition of the term Third
Party Acquisition shall not apply to a transaction
in which the composition of a majority of the
Company Board remains unchanged) shall occur or
the Company shall have entered into a definitive
agreement with respect to such a Third Party
Acquisition;
Parent and Purchaser would suffer direct and substantial damages, which damages
cannot be determined with reasonable certainty. To compensate Parent and
Purchaser for such damages the Company shall pay to Parent the amount of Four
Million Dollars ($4,000,000) as liquidated damages immediately upon the
occurrence of the event described in this Section 7.3(a) giving rise to such
damages (the "Termination Fee"). It is specifically agreed that the amount to be
paid pursuant to this Section 7.3(a) represents liquidated damages and not a
penalty. The Company hereby waives any right to set-off or counterclaim against
such amount.
(b) Upon the termination of this Agreement under
circumstances in which the Termination Fee is payable to Purchaser pursuant to
Section 7.3(a), in addition to any other remedies that Parent, Purchaser or
their affiliates may have as a result of such termination, the Company shall
reimburse (up to an aggregate maximum of One Million Dollars ($1,000,000)
Purchaser and Parent, upon submission of one or more statements therefor,
accompanied by reasonable supporting documentation, for the amount of all
documented costs, fees and expenses reasonably incurred by any of them or on
their behalf in connection with this Agreement, the Merger and the consummation
of all transactions contemplated by this Agreement (including filing fees, and
fees payable to printers, counsel and accountants) (the "Expenses").
(c) Except as specifically provided in this Section
7.3, each party shall bear its own expenses in connection with this Agreement
and the transactions contemplated hereby.
Section 7.4. AMENDMENT. This Agreement may be amended by
action taken by the Company, Parent and Purchaser at any time before or after
approval of the Merger by the stockholders of the Company but after any such
approval no amendment shall be made that requires the approval of such
stockholders under applicable law without such approval. This Agreement may be
amended only by an instrument in writing signed on behalf of the parties hereto.
Section 7.5. EXTENSION; WAIVER. At any time prior to the
Effective Time, each party hereto may (i) extend the time for the performance of
any of the obligations or other acts of the other party, (ii) waive any
inaccuracies in the representations and warranties of the other party contained
herein or in any document certificate or writing delivered pursuant hereto or
(iii) waive compliance by the other party with any of the agreements or
conditions
44
contained herein. Any agreement on the part of any party hereto to any such
extension or waiver shall be valid only if set forth in an instrument, in
writing, signed on behalf of such party. The failure of any party hereto to
assert any of its rights hereunder shall not constitute a waiver of such
rights.
ARTICLE 8
MISCELLANEOUS
Section 8.1. NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES.
The representations and warranties made herein shall not survive beyond the
Effective Time or a termination of this Agreement. This Section 8.1 shall not
limit any covenant or agreement of the parties hereto that by its terms requires
performance after the Effective Time.
Section 8.2. ENTIRE AGREEMENT; ASSIGNMENT. This Agreement
(including the Company Disclosure Schedule and the Letter), (a) constitutes the
entire agreement between the parties hereto with respect to the subject matter
hereof and supersedes all other prior agreements and understandings both written
and oral between the parties with respect to the subject matter hereof and (b)
shall not be assigned by operation of law or otherwise; PROVIDED, HOWEVER, that
Purchaser may assign any or all of its rights and obligations under this
Agreement to any wholly owned subsidiary of Parent, but no such assignment shall
relieve Purchaser of its obligations hereunder if such assignee does not perform
such obligations.
Section 8.3. VALIDITY. If any provision of this Agreement or
the application thereof to any person or circumstance is held invalid or
unenforceable, the remainder of this Agreement and the application of such
provision to other persons or circumstances shall not be affected thereby and to
such end the provisions of this Agreement are agreed to be severable.
Section 8.4. NOTICES. All notices, requests, claims, demands
and other communications hereunder shall be in writing and shall be given (and
shall be deemed to have been duly given upon receipt) by delivery in person, by
facsimile or by registered or certified mail (postage prepaid, return receipt
requested) to each other party as follows:
if to Parent or Purchaser: Cadence Design Systems, Inc.
0000 Xxxxx Xxxx, Xxxx. 0
Xxx Xxxx, XX 00000
Telecopier: 000-000-0000
Attention: General Counsel
45
with a copy to: Xxxxxx, Xxxx & Xxxxxxxx LLP
000 Xxxxx Xxxxx Xxxxxx
Xxx Xxxxxxx, XX 00000
Telecopier: 000-000-0000
Attention: Xxxxxx X. Xxxxx
if to the Company to: OrCAD, Inc.
0000 XX Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Telecopier: 000-000-0000
Attention: President
with a copy to: Xxxx Xxxxx LLP
000 X.X. Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxx, XX 00000
Telecopier: 503-226-0079
Attention: Xxxxxxx X. Xxxxxxxx
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
Section 8.5. GOVERNING LAW. This Agreement shall be
governed by and construed in accordance with the laws of the State of Delaware
without regard to the principles of conflicts of law thereof.
Section 8.6. DESCRIPTIVE HEADINGS. The descriptive headings
herein are inserted for convenience of reference only and are not intended to be
part of or to affect the meaning or interpretation of this Agreement.
Section 8.7. PARTIES IN INTEREST. This Agreement shall be
binding upon and inure solely to the benefit of each party hereto and its
successors and permitted assigns and, except as expressly provided herein,
including in Sections 5.8 and 7.2, nothing in this Agreement is intended to or
shall confer upon any other person any rights, benefits or remedies of any
nature whatsoever under or by reason of this Agreement.
Section 8.8. CERTAIN DEFINITIONS. For the purposes of this
Agreement the term:
(a) "affiliate" means (except as otherwise provided
herein) a person that, directly or indirectly, through one or more
intermediaries controls, is controlled by or is under common control with the
first-mentioned person;
(b) "business day" means any day other than a day on
which the NYSE is closed;
46
(c) "capital stock" means common stock, preferred stock,
partnership interests, limited liability company interests or other ownership
interests entitling the holder thereof to vote with respect to matters involving
the issuer thereof;
(d) "knowledge" or "known" means, with respect to any
matter in question, the actual knowledge of such matter of any executive
officer of the Company or Parent, as the case may be;
(e) "include" or "including" means "include, without
limitation" or "including, without limitation," as the case may be, and the
language following "include" or "including" shall not be deemed to set forth an
exhaustive list.
(f) "person" means an individual, corporation,
partnership, limited liability company, association, trust, unincorporated
organization or other legal entity including any Governmental Entity; and
(g) "subsidiary" or "subsidiaries" of the Company,
Parent, the Surviving Corporation or any other person means any corporation,
partnership, limited liability company, association, trust, unincorporated
association or other legal entity of which the Company, Parent, the Surviving
Corporation or any such other person, as the case may be (either alone or
through or together with any other subsidiary), owns, directly or indirectly,
50% or more of the capital stock the holders of which are generally entitled to
vote for the election of the Company Board or other governing body of such
corporation or other legal entity.
Section 8.9. PERSONAL LIABILITY. This Agreement shall not
create or be deemed to create or permit any personal liability or obligation on
the part of any direct or indirect stockholder of the Company or Parent or
Purchaser or any officer, director, employee, agent, representative or investor
of any party hereto.
Section 8.10. SPECIFIC PERFORMANCE. The parties hereby
acknowledge and agree that the failure of any party to perform its agreements
and covenants hereunder, including its failure to take all actions as are
necessary on its part to the consummation of the Merger, will cause irreparable
injury to the other parties, for which damages, even if available, will not be
an adequate remedy. Accordingly, each party hereby consents to the issuance of
injunctive relief by any court of competent jurisdiction to compel performance
of such party's obligations and to the granting by any court of the remedy of
specific performance of its obligations hereunder; PROVIDED, HOWEVER, that if a
party hereto is entitled to receive any payment or reimbursement of expenses
pursuant to Section 7.3(a), (b) or (c) it shall not be entitled to specific
performance to compel the consummation of the Merger.
Section 8.11. COUNTERPARTS. This Agreement may be executed
in one or more counterparts, each of which shall be deemed to be an original but
all of which shall constitute one and the same agreement.
47
IN WITNESS WHEREOF, each of the parties has caused this
Agreement to be duly executed on its behalf as of the day and year first above
written.
CADENCE DESIGN SYSTEMS, INC.
By: /s/ H. Xxxxxxx Xxxxxxx
--------------------------------
Name: H. Xxxxxxx Xxxxxxx
Title: President & CEO
ORCAD, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
--------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: President & CEO
CDSI ACQUISITION CORPORATION
By: /s/ H. Xxxxxxx Xxxxxxx
--------------------------------
Name: H. Xxxxxxx Xxxxxxx
Title: President & CEO
ANNEX I
Conditions to the Offer.
Notwithstanding any other provision of the Offer, Purchaser
shall not be required to accept for payment or, subject to any applicable rules
and regulations of the SEC, including Rule 14e-1(c) promulgated under the
Exchange Act (relating to Parent's obligation to pay for or return tendered
Shares promptly after termination or withdrawal of the Offer), pay for, and
(subject to any such rules or regulations) may delay the acceptance for payment
of any tendered Shares and (except as provided in this Agreement) amend or
terminate the Offer as to any Shares not then paid for if (i) there shall not
have been validly tendered and not withdrawn prior to the expiration of the
Offer a number of shares of Company common stock which represents at least sixty
seven percent (67%) of the aggregate of (i) the number of shares of Company
common stock then outstanding and (ii) the number of shares of Company common
stock that are, or will, prior to the scheduled closing of the Merger, become,
subject to issuance upon the exercise of options (the "Minimum Condition") or
(ii) any applicable waiting period under the HSR Act shall not have expired or
been terminated prior to the expiration of the Offer or all approvals of and
consents to this Agreement, the Company Stock Option Agreement and the
Stockholders Agreement and the transactions contemplated hereby and thereby that
are required under applicable foreign antitrust or competition laws shall not
have been obtained prior to the expiration of the Offer or be in full force and
effect at such expiration or (iii) at any time after the date of this Agreement
and before the time of payment for any such Shares (whether or not any Shares
have theretofore been accepted for payment or paid for pursuant to the Offer),
any of the following events shall occur and be continuing or conditions exists:
(a) there shall be an injunction or other order, decree,
judgment or ruling issued by a Governmental Entity of competent jurisdiction or
a statute, rule, regulation, executive order or other action shall have been
enacted, promulgated or taken by a Governmental Entity of competent jurisdiction
which in any such case (i) restrains or prohibits the making or consummation of
the Offer or the consummation of the Merger or the performance of the other
transactions contemplated by this Agreement, the Company Stock Option or the
Stockholders Agreement, (ii) prohibits or restricts the ownership or operation
by Parent (or any of its affiliates or subsidiaries) of any portion of its or
the Company's business or assets which is material to the business of all such
entities taken as a whole, or compels Parent (or any of its affiliates or
subsidiaries) to dispose of or hold separate any portion of its or the Company's
business or assets which is material to the business of all such entities taken
as a whole, (iii) imposes material limitations on the ability of Parent
effectively to acquire or to hold or to exercise full rights of ownership of the
Shares, including, without limitation, the right to vote the Shares purchased by
Parent on all matters properly presented to the stockholders of the Company or
(iv) imposes any material limitations on the ability of Parent or any of their
respective affiliates or subsidiaries effectively to control in any material
respect the business and operations of the Company and its subsidiaries; or
2
(b) this Agreement shall have been terminated by the
Company or Parent in accordance with its terms or any event shall have occurred
which gives Parent or Purchaser the right to terminate this Agreement or not
consummate the Merger; or
(c) there shall have occurred any event that,
individually or when considered together with any other matter, has or has had a
Material Adverse Effect on the Company; or
(d) the representations and warranties of the Company set
forth in this Agreement shall not be true and correct (except to the extent that
the aggregate of all breaches thereof do not constitute a Material Adverse
Effect on the Company and do not otherwise materially and adversely affect the
consideration to be paid by Purchaser in the Offer or the benefits expected to
be received by Parent under this Agreement) in each case as if such
representations and warranties were made at the time of such determination; or
(e) the Company shall have failed to perform in any
material respect any obligation or to comply (except to the extent that the
aggregate of all breaches thereof do not constitute a Material Adverse Effect on
the Company and do not otherwise materially and adversely affect the
consideration to be paid by Purchaser in the Offer or the benefits expected to
be received by Parent under this Agreement) with any agreement or covenant of
the Company to be performed or complied with by it under this Agreement; or
(f) there shall have occurred (i) any general suspension
of, or limitation on prices for, trading in securities on any national
securities exchange or the over-the-counter market (other than a shortening of
trading hours or any coordinated trading halt for less than 24 hours triggered
solely as a result of a specified increase or decrease in a market index), (ii)
a declaration of a banking moratorium or any suspension of payments in respect
of banks in the United States, (iii) any material limitation (whether or not
mandatory) by an government or Governmental Entity, on the extension of credit
by banks or other lending institutions, (iv) a commencement, or a material
acceleration or worsening, of a war or armed hostilities or other national
calamity directly involving the United States and resulting in a significant
disruption of world commerce, or (v) the average of the closing prices of the
Standard & Poor's 500 Index for any twenty (20) consecutive trading days shall
be twenty (20%) percent or more below the closing price of such index as of the
last trading day immediately preceding the date of this Agreement; or
(g) the Company Board (i) shall have withdrawn, or
modified or changed in a manner adverse to Parent or Purchaser (including by
amendment of the Schedule 14D-9) its approval or recommendation of this
Agreement, the Company Stock Option Agreement or the Stockholders Agreement or
the transactions contemplated hereby or thereby, including the Offer or the
Merger, (ii) recommended a Third Party Acquisition or (iii) shall have adopted
any resolution to effect any of the foregoing; provided, that the foregoing
shall not apply solely as a result of the Company or the Company Board making
such disclosure to the Company's stockholders as, in good faith judgment of the
Company Board, after receiving advice from outside counsel, is required under
applicable law; or
3
(h) any Person or Group (as defined in Section 13(d)(3)
of the Exchange Act), other than Parent, Purchaser or their affiliates or any
group of which any of them is a member, shall have acquired beneficial ownership
of twenty percent (20%) or more of the outstanding Company common stock; or
(i) any party to the Stockholders Agreement other than
the Purchaser and Parent shall have breached or failed to perform any of its
agreements under such agreement or breached any of its representations and
warranties in such agreement or any such agreement shall not be valid, binding
and enforceable, except for such breaches or failures or failures to be valid,
binding and enforceable that do not materially and adversely affect the benefits
expected to be received by Parent and Purchaser under this Agreement or the
Stockholders Agreement; which, in the reasonable judgment of Parent with respect
to each and every matter referred to above and regardless of the circumstances
giving rise to any such condition, makes it inadvisable to proceed with the
Offer or with such acceptance for payment of or payment for Shares or to proceed
with the Merger; or
(j) there shall not have occurred or been threatened the
loss of one or more of the employee(s) who, substantially concurrently herewith,
are entering into Employment Agreements that would result in a Material Adverse
Effect on the Company, whether pursuant to a breach or anticipated breach, of
any such Employment Agreement, or otherwise.
The foregoing conditions are for the sole benefit of Parent
and may be asserted by Purchaser regardless of the circumstances giving rise to
any such conditions and, subject to the terms of the Merger Agreement, may be
waived by Purchaser in whole or in part at any time and from time to time, in
each case, in the exercise of the good faith judgment of Purchaser and subject
to the terms of this Agreement. The failure by Purchaser at any time to exercise
any of the foregoing rights shall not be deemed a waiver of any such right and
each such right shall be deemed an ongoing right which may be asserted at any
time and from time to time.
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