Exhibit 1
EXECUTION COPY
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AGREEMENT AND PLAN OF MERGER
AMONG
PROGRESS SOFTWARE CORPORATION,
CHOPIN MERGER SUB, INC.
AND
EXCELON CORPORATION
Dated as of October 18, 2002
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TABLE OF CONTENTS
PAGE
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ARTICLE I THE MERGER...................................................................... 2
1.1 The Merger..................................................................... 2
1.2 Closing........................................................................ 2
1.3 Effective Time................................................................. 2
1.4 Effect of the Merger........................................................... 3
1.5 Certificate of Incorporation and Bylaws of the Surviving Corporation........... 3
1.6 Directors and Officers of the Surviving Corporation............................ 3
1.7 Conversion of Company Common Stock, Etc........................................ 3
1.8 Cancellation of Shares......................................................... 4
1.9 Company Stock Options and Employee Stock Purchase Plan......................... 4
1.10 Capital Stock of Merger Sub.................................................... 6
1.11 Adjustments to Merger Consideration............................................ 6
1.12 Exchange of Certificates....................................................... 7
1.13 Taking of Necessary Action; Further Action..................................... 9
1.14 Dissenting Shares.............................................................. 9
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE COMPANY.................................. 10
2.1 Organization and Qualification................................................. 12
2.2 Subsidiaries................................................................... 12
2.3 Capital Structure.............................................................. 14
2.4 Authority; No Conflict; Required Filings....................................... 16
2.5 Board Approval; Section 203.................................................... 17
2.6 SEC Filings; Financial Statements.............................................. 18
2.7 Absence of Undisclosed Liabilities............................................. 19
2.8 Absence of Certain Changes or Events........................................... 19
2.9 Agreements, Contracts and Commitments.......................................... 20
2.10 Compliance with Laws........................................................... 24
2.11 Material Permits............................................................... 24
2.12 Litigation..................................................................... 24
2.13 Restrictions on Business Activities............................................ 25
2.14 Employee and Labor Matters; Benefit Plans...................................... 25
2.15 Proxy Statement................................................................ 30
2.16 Properties and Assets.......................................................... 31
2.17 Insurance...................................................................... 32
2.18 Tax Matters.................................................................... 33
2.19 Environmental Matters.......................................................... 34
2.20 Intellectual Property.......................................................... 36
2.21 Opinion of Financial Advisor................................................... 39
2.22 Brokers........................................................................ 39
2.23 Certain Business Practices..................................................... 39
2.24 Government Contracts........................................................... 39
2.25 Interested Party Transactions.................................................. 40
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB....................... 41
3.1 Organization and Qualification................................................. 41
3.2 Authority; Required Filings.................................................... 42
3.3 Proxy Statement................................................................ 42
3.4 Interim Operations of Merger Sub............................................... 43
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3.5 Financing...................................................................... 43
3.6 Non-Contravention.............................................................. 43
3.7 Brokers........................................................................ 44
3.8 Section 203.................................................................... 44
ARTICLE IV CONDUCT OF BUSINESS PENDING THE MERGER......................................... 44
4.1 Conduct of Business Pending the Merger......................................... 44
4.2 No Solicitation of Other Proposals............................................. 49
ARTICLE V ADDITIONAL AGREEMENTS........................................................... 51
5.1 Special Meeting; Proxy Statement; Other Filings................................ 51
5.2 Tender Offer................................................................... 53
5.3 Access to Information; Confidentiality......................................... 59
5.4 Reasonable Efforts; Further Assurances......................................... 59
5.5 Employee Benefit Matters....................................................... 60
5.6 Notification of Certain Matters................................................ 61
5.7 Public Announcements........................................................... 62
5.8 Indemnification of Directors and Officers...................................... 62
5.9 Option Agreement............................................................... 63
ARTICLE VI CONDITIONS OF MERGER........................................................... 64
6.1 Conditions to Obligation of Each Party to Effect the Merger.................... 64
6.2 Additional Conditions to Obligations of Parent................................. 64
6.3 Additional Conditions to Obligations of the Company............................ 66
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER............................................. 67
7.1 Termination.................................................................... 67
7.2 Effect of Termination.......................................................... 69
7.3 Fees and Expenses.............................................................. 69
7.4 Amendment...................................................................... 70
7.5 Waiver......................................................................... 70
ARTICLE VIII GENERAL PROVISIONS........................................................... 71
8.1 Survival of Representations and Warranties..................................... 71
8.2 Notices........................................................................ 71
8.3 Interpretation................................................................. 73
8.4 Severability................................................................... 73
8.5 Entire Agreement............................................................... 73
8.6 Assignment..................................................................... 74
8.7 Parties in Interest............................................................ 74
8.8 Failure or Indulgence Not Waiver; Remedies Cumulative.......................... 74
8.9 Governing Law; Enforcement..................................................... 74
8.10 Counterparts................................................................... 75
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ANNEXES
ANNEX I: Conditions to Offer
ANNEX II: Index to Defined Terms
EXHIBITS
EXHIBIT A: Form of Stockholder's Agreement
EXHIBIT B: Form of Option Agreement
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AGREEMENT AND PLAN OF MERGER (this "Agreement"), made and entered into as
of October 18, 2002 by and among Progress Software Corporation, a Massachusetts
corporation ("Parent"), Chopin Merger Sub, Inc., a Delaware corporation and
wholly owned Subsidiary of Parent ("Merger Sub"), and eXcelon Corporation, a
Delaware corporation (the "Company"). Parent, Merger Sub and the Company are
sometimes referred to herein each individually as a "Party" and, collectively,
as the "Parties."
WHEREAS, the Boards of Directors of Parent, Merger Sub and the Company
have each declared it to be advisable and in the best interests of each
corporation and their respective stockholders that Parent and the Company
combine in order to advance their long-term business interests;
WHEREAS, the Boards of Directors of Parent, Merger Sub and the Company
have each approved this Agreement and the merger of Merger Sub with and into the
Company (the "Merger"), in accordance with the General Corporation Law of the
State of Delaware (the "DGCL") and the terms and conditions set forth herein,
which Merger will result in, among other things, the Company becoming a wholly
owned subsidiary of Parent; and
WHEREAS, as a condition to the willingness of, and an inducement to Parent
and Merger Sub to enter into this Agreement, contemporaneously with the
execution and delivery of this Agreement certain holders of shares of the
Company's common stock are entering into stockholder's agreements in
substantially the form of Exhibit A attached hereto (the "Stockholder's
Agreements"), and the Company is entering into a stock option agreement in
substantially the form of Exhibit B attached hereto (the "Option Agreement").
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements herein contained, and
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the Parties hereby agree as follows:
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ARTICLE I
THE MERGER
1.1 The Merger. At the Effective Time (as defined in Section 1.3), in
accordance with the DGCL and the terms and conditions of this Agreement, the
Merger Sub shall be merged with and into the Company. From and after the
Effective Time, the separate corporate existence of Merger Sub shall cease and
the Company, as the surviving corporation in the Merger, shall continue its
existence under the laws of the State of Delaware as a wholly owned subsidiary
of Parent. The Company as the surviving corporation after the Merger is
hereinafter sometimes referred to as the "Surviving Corporation."
1.2 Closing. Unless this Agreement shall have been terminated and the
transactions contemplated by this Agreement abandoned pursuant to the provisions
of Article VII, and subject to the satisfaction or waiver, as the case may be,
of the conditions set forth in Article VI, the closing of the Merger and other
transactions contemplated by this Agreement (the "Closing") shall take place at
10:00 a.m. (eastern standard time) on a date to be mutually agreed upon by the
Parties (the "Closing Date"), which date shall be no later than the second
Business Day (as defined below) after all the conditions set forth in Article VI
(excluding conditions that, by their nature, cannot be satisfied until the
Closing) shall have been satisfied or waived in accordance with Section 7.5,
unless another time and/or date is agreed to in writing by the Parties. The
Closing shall take place at the offices of Mintz, Levin, Cohn, Ferris, Glovsky
and Popeo, P.C., Xxx Xxxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000. For purposes
of this Agreement, "Business Day" shall mean any day on which banks are
permitted to be open in New York, New York.
1.3 Effective Time. Subject to the provisions of this Agreement, on the
Closing Date or as soon thereafter as is practicable the Parties shall cause the
Merger to become effective by executing and filing in accordance with the DGCL a
certificate of merger with the Secretary of State of the State of Delaware (the
"Certificate of Merger"), the date and time of such filing, or such later date
and time as may be agreed upon by the Parties and specified therein, being
hereinafter referred to as the "Effective Time."
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1.4 Effect of the Merger. At the Effective Time, the Merger shall have the
effects set forth in this Agreement and in Section 259 of the DGCL. Without
limiting the generality of the foregoing, and subject thereto, at the Effective
Time all the assets, properties, rights, privileges, immunities, powers and
franchises of the Company and Merger Sub shall vest in the Surviving
Corporation, and all debts, liabilities and duties of the Company and Merger Sub
shall become the debts, liabilities and duties of the Surviving Corporation.
1.5 Certificate of Incorporation and Bylaws of the Surviving Corporation.
From and after the Effective Time and without further action on the part of the
Parties, the Certificate of Incorporation and Bylaws of the Merger Sub
immediately prior to the Effective Time shall be the Certificate of
Incorporation and Bylaws of the Surviving Corporation until amended in
accordance with the respective terms thereof; provided, however, that,
notwithstanding the foregoing, Article I of the Certificate of Incorporation of
the Surviving Corporation shall be amended to read as follows: "The name of the
Corporation is eXcelon Corporation."
1.6 Directors and Officers of the Surviving Corporation.
(a) The directors of Merger Sub immediately prior to the Effective
Time shall be the initial directors of the Surviving Corporation until their
respective successors are duly elected or appointed and qualified or until their
earlier death, resignation or removal in accordance with the Surviving
Corporation's Certificate of Incorporation and Bylaws.
(b) The officers of the Company immediately prior to the Effective
Time shall be the initial officers of the Surviving Corporation, each to hold
office in accordance with the Certificate of Incorporation and the Bylaws of the
Surviving Corporation, in each case until their respective successors are duly
elected or appointed and qualified or until their earlier death, resignation or
removal in accordance with the Surviving Corporation's Certificate of
Incorporation and Bylaws.
1.7 Conversion of Company Common Stock, Etc. At the Effective Time, by
virtue of the Merger and without any action on the part of the Parties or the
holders of the following securities:
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(a) Each share of the Company's common stock, par value $0.001 per
share ("Company Common Stock") issued and outstanding immediately prior to the
Effective Time (other than any shares of Company Common Stock to be canceled and
retired pursuant to Section 1.8 and Dissenting Shares (as defined in Section
1.14)) shall be converted automatically into the right to receive $3.19 in cash,
without interest, subject to adjustment as set forth in Section 1.11 (the
"Merger Consideration").
(b) From and after the Effective Time, all shares of Company Common
Stock (other than any shares of Company Common Stock to be canceled and retired
pursuant to Section 1.8 and Dissenting Shares) shall automatically be redeemed
and canceled and shall cease to exist, and each holder of a certificate which
previously represented any such share of Company Common Stock (each, a "Company
Certificate" and, collectively, the "Company Certificates") shall cease to have
any rights with respect thereto other than the right to receive the Merger
Consideration such holder is entitled to receive pursuant to this Section 1.7
upon surrender of such certificate in accordance with Section 1.12 hereof, in
each case without interest.
1.8 Cancellation of Shares. Immediately prior to the Effective Time each
share of Company Common Stock either held in the Company's treasury or owned by
Parent or any direct or indirect wholly owned Subsidiary (as defined in Section
2.2(e)) of Parent or the Company immediately prior to the Effective Time, shall
be canceled and extinguished without any conversion thereof or payment therefor.
1.9 Company Stock Options and Employee Stock Purchase Plan. Prior to the
Closing Date, the Board of Directors of the Company (or, if appropriate, any
committee administering the Company Stock Plans (as defined below)) shall adopt
such resolutions or take such other actions as may be required to effect the
following:
(a) Adjust the terms of all outstanding stock options to purchase
shares of Company Common Stock ("Company Stock Options") granted under the
Object Design, Inc. 1989 Incentive and Nonqualified Stock Option Plan, the
Object Design, Inc. 1995 Nonqualified Stock Option Plan, the eXcelon Corporation
1996 Incentive and Nonqualified Stock Option Plan, the eXcelon Corporation 1997
Nonqualified Stock Option Plan, the C-bridge Internet Solutions,
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Inc. 1997 Stock Incentive Plan, as amended, the C-bridge Internet Solutions,
Inc. 1999 Stock Incentive Plan, the C-bridge Internet Solutions, Inc. 1999
Director Stock Option Plan and the C-bridge Internet Solutions, Inc. 2000 Stock
Option Plan (the "Company Option Plans") or otherwise, to provide that each
Company Stock Option outstanding immediately prior to the Effective Time with an
exercise price of less than the Merger Consideration, shall be canceled at the
Effective Time in exchange for a payment from the Surviving Corporation (subject
to any applicable withholding taxes) equal to the product of (1) the total
number of shares of Company Common Stock subject to such Company Stock Option
and (2) the excess of the Merger Consideration over the exercise price per share
of Company Common Stock subject to such Company Stock Option, payable in cash
immediately following the Effective Time. Section 1.9(a) of the Company
Disclosure Schedule (as defined in Article II) sets forth a complete list of all
Company Stock Options that have an exercise price less than the Merger
Consideration, including (i) the grantee and the date of grant; (ii) the
exercise price; (iii) the expiration date; and (iv) any other material terms,
including, without limitation, any terms regarding the acceleration of vesting.
(b) Cause any dispositions of Company Common Stock (including
derivative securities with respect to the Company Common Stock) resulting from
the transactions contemplated hereby by each officer or director of the Company
who is subject to the reporting requirements of Section 16(a) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), with respect to shares of
Company Common Stock to be exempt under Rule 16b- 3 promulgated under the
Exchange Act. By adopting or approving this Agreement, the Company's Board of
Directors shall be deemed to have approved and authorized, and the stockholders
of the Company shall be deemed to have approved and ratified, each and every
amendment to (and such other actions in respect of) the Company Option Plans
(and any other plan) and the agreements evidencing awards under the Company
Option Plans (and any other plan) as the offices of the Company may deem
necessary or appropriate to give effect to the provisions of this Section 1.9.
(c) The Company shall amend the Company's 1996 Employee Stock
Purchase Plan (the "Company ESPP" and collectively with the Company Option
Plans, the "Company Stock Plans") prior to October 31, 2002, or take such other
actions with respect to the
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Company ESPP as are necessary, (i) to terminate the ongoing Offering (as such
term is used in the Company ESPP) effective immediately following the October
31, 2002 Offering Termination Date (as such term is used in the Company ESPP)
after the purchase scheduled to occur on such date, (ii) except as permitted by
subparagraph (i), to ensure that no Offering commences or continues after the
date of this Agreement (unless this Agreement is otherwise terminated pursuant
to ARTICLE VII), (iii) to ensure that on and after November 1, 2002, there are
no rights outstanding under the Company ESPP to acquire Company Common Stock,
and (iv) to terminate, contingent upon consummation of the Merger, the Company
ESPP.
(d) Except as provided in Sections 1.9(a) and (c) above, the Company
Stock Options, the Company Stock Plans and any other plan, program or
arrangement providing for the issuance or grant of any interest in respect of
the capital stock of the Company or any subsidiary shall terminate as of the
Effective Time, and following the Effective Time no holder of a Company Stock
Option nor any participant in any such plan, program or arrangement shall have
any right thereunder to acquire capital securities of the Surviving Corporation
or of Parent.
1.10 Capital Stock of Merger Sub. Each share of common stock of Merger
Sub, $0.01 par value per share ("Merger Sub Common Stock") issued and
outstanding immediately prior to the Effective Time shall be converted
automatically into one fully paid and non-assessable share of common stock of
the Surviving Corporation, $0.001 par value per share. From and after the
Effective Time, each stock certificate of Merger Sub which previously
represented shares of Merger Sub Common Stock shall evidence ownership of an
equal number of shares of common stock of the Surviving Corporation.
1.11 Adjustments to Merger Consideration. Without limiting any other
provision of this Agreement, the Merger Consideration shall be adjusted, at any
time and from time to time, to fully reflect the effect of any stock split,
reverse split, stock dividend (including, without limitation, any dividend or
distribution of securities convertible into Company Common Stock),
reorganization, recapitalization or other like change, if permitted by the terms
of Section 4.1, with respect to Company Common Stock occurring during the
Interim Period (as defined in Section 4.1).
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1.12 Exchange of Certificates.
(a) Paying Agent. Prior to the Effective Time, Parent shall
designate a bank or trust company (the "Paying Agent") reasonably acceptable to
the Company to make the payments of the funds to which holders of shares of
Company Common Stock shall become entitled pursuant to Section 1.7 hereof. When
and as needed, Parent shall deposit with the Paying Agent such funds in trust
for the benefit of holders of shares of Company Common Stock for exchange in
accordance with this Section 1.12, for timely payment hereunder. Such funds
shall be held by Paying Agent in a separate account established for the benefit
of holders of Company Common Stock and may be invested by the Paying Agent in
obligations of or guaranteed by the United States government or in other
investment-grade debt instruments pending payment thereof by the Paying Agent to
the holders of Company Common Stock. Earnings on such funds shall be the sole
and exclusive property of Parent and the Surviving Corporation, and no part of
any such earnings shall accrue to the benefit of holders of Company Common
Stock.
(b) Exchange Procedures. As promptly as practicable after the
Effective Time, Parent shall cause the Paying Agent to mail to each holder of
record of a Company Certificate, whose shares were converted pursuant to Section
1.7 into the right to receive the Merger Consideration, (i) a letter of
transmittal (which shall specify that delivery shall be effective, and risk of
loss and title to the Company Certificates shall pass, only upon delivery of the
Company Certificates to the Paying Agent and shall be in such form and have such
other provisions as Parent and the Surviving Corporation may reasonably specify)
and (ii) instructions for use in effecting the surrender of the Company
Certificates in exchange for payment of the Merger Consideration. Upon surrender
of a Company Certificate for cancellation to the Paying Agent, together with
such letter of transmittal, duly executed, the holder of such Company
Certificate shall be entitled to receive in exchange therefor the Merger
Consideration (subject to subsection 1.12(f) below) multiplied by the number of
shares of Company Common Stock formerly represented by such Company Certificate
and the Company Certificate so surrendered shall forthwith be canceled. If
payment of the Merger Consideration is to be made to a person other than the
person in whose name the surrendered Company Certificate is registered, it shall
be a condition of payment that the Certificate so surrendered shall be properly
endorsed or shall
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be otherwise in proper form for transfer and that the person requesting such
payment shall have paid any transfer and other taxes required by reason of the
payment of the Merger Consideration to a person other than the registered holder
of the Company Certificate surrendered or shall have established to the
satisfaction of the Surviving Corporation that such tax either has been paid or
is not applicable. Until surrendered as contemplated by this Section 1.12, each
Certificate shall be deemed at any time after the Effective Time to represent
only the right to receive the Merger Consideration in cash as contemplated by
this Section 1.12.
(c) Transfer Books; No Further Ownership Rights in Company Common
Stock. At the Effective Time, the stock transfer books of the Company shall be
closed and thereafter there shall be no further registration of transfers of
shares of Company Common Stock on the records of the Company. From and after the
Effective Time, the holders of Company Certificates evidencing ownership of
shares of Company Common Stock outstanding immediately prior to the Effective
Time shall cease to have any rights with respect to such Shares, except as
otherwise provided for herein or by applicable law. If, after the Effective
Time, Company Certificates are presented to the Surviving Corporation for any
reason, they shall be canceled and exchanged for Merger Consideration as
provided in this Section 1.12.
(d) Return of Funds; No Liability. At any time following 270
calendar days after the Effective Time, Parent or the Surviving Corporation
shall be entitled to require the Paying Agent to deliver to it any funds
(including any interest received with respect thereto) which had been deposited
with the Paying Agent and which have not been disbursed to holders of Company
Certificates, and thereafter such holders shall be entitled to look only to
Parent or the Surviving Corporation (subject to abandoned property, escheat or
other similar laws) as general creditors thereof with respect to the payment of
any Merger Consideration that may be payable upon surrender of any Company
Certificates such stockholder holds, as determined pursuant to this Agreement,
without any interest thereon. Notwithstanding the foregoing, none of Parent, the
Surviving Corporation nor the Paying Agent shall be liable to any holder of a
Company Certificate for Merger Consideration delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law.
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(e) Lost Certificates. If any Company Certificate shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by the
Person claiming such Company Certificate to be lost, stolen or destroyed and, if
required by the Surviving Corporation, the posting by such Person of a bond in
such reasonable amount as the Surviving Corporation may direct as indemnity
against any claim that may be made against it with respect to such Company
Certificate, the Paying Agent shall pay in respect of such lost, stolen or
destroyed Company Certificate the Merger Consideration.
(f) Withholding Rights. Parent, the Surviving Corporation or the
Paying Agent shall be entitled to deduct and withhold from the Merger
Consideration otherwise payable pursuant to this Agreement to any holder of
shares of Company Common Stock such amounts as Parent, the Surviving Corporation
or the Paying Agent is required to deduct and withhold with respect to the
making of such payment under the Internal Revenue Code of 1986, as amended (the
"Code"), or any provision of state, local or foreign tax law. To the extent that
amounts are so withheld and paid over to the appropriate taxing authority by
Parent, the Surviving Corporation or the Paying Agent, such withheld amounts
shall be treated for all purposes of this Agreement as having been paid to the
holder of the shares of Company Common Stock in respect of which such deduction
and withholding was made by Parent, the Surviving Corporation or the Paying
Agent.
1.13 Taking of Necessary Action; Further Action. If, at any time and from
time to time after the Effective Time, any further action is necessary or
desirable to carry out the purposes of this Agreement and to vest in the
Surviving Corporation full right, title and possession of all properties,
assets, rights, privileges, powers and franchises of the Company and Merger Sub,
the officers and directors of the Company and the Surviving Corporation shall be
and are fully authorized and directed, in the name of and on behalf of their
respective corporations, to take, or cause to be taken, all such lawful and
necessary action as is not inconsistent with this Agreement.
1.14 Dissenting Shares.
Each outstanding share of Company Common Stock held by a Company
stockholder who has demanded and perfected his or her right to an appraisal of
his or her shares of Company
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Common Stock in accordance with Section 262 of the DGCL and who has not
effectively withdrawn or lost his or her right to such appraisal ("Dissenting
Shares") shall not be converted into or represent the right to receive Merger
Consideration in accordance with Section 1.7, but the holder thereof shall be
entitled only to such rights as are granted by Section 262 of the DGCL.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the disclosure schedule provided by the Company to
Parent on the date hereof and accepted in writing by Parent (the "Company
Disclosure Schedule"), the Company, on behalf of itself and its Subsidiaries,
represents and warrants to Parent that the statements contained in this Article
II are true, complete and correct. The Company Disclosure Schedule shall be
arranged in paragraphs corresponding to the numbered and lettered paragraphs
contained in this Article II, and the disclosure in any paragraph shall be
deemed to qualify only the corresponding paragraph of this Article II, unless a
reasonable person would determine that the disclosure contained in such
paragraph contains enough information to qualify or otherwise apply to other
paragraphs of this Article II. As used in this Agreement, a "Company Material
Adverse Effect" means any change, event or effect that is materially adverse to
the business, assets (including, without limitation, intangible assets),
financial condition, results of operations or reasonably foreseeable prospects
of the Company and its Subsidiaries, taken as a whole, including without
limitation: (i) litigation not otherwise disclosed on the Company Disclosure
Schedule (or if disclosed on the Company Disclosure Schedule, modified by
amendment or otherwise to include additional claims against the Company) that is
reasonably likely to be determined adversely to the Company, and if determined
adversely to the Company, (A) if money damages are sought, would, in the
aggregate, result in liability to the Company or its Subsidiaries in excess of
$1,000,000 (exclusive of any such amount that would be covered and payable, net
of all deductible amounts, under any Insurance Policy (as defined in Section
2.17(a))) or (B) if equitable relief is sought, which would prohibit or
otherwise materially impair the Company and its Subsidiaries from conducting
their business as a whole in the manner presently conducted; (ii) failure of the
Company to disclose to Parent obligations, whether written or oral, due third
parties, including customers, including liabilities pursuant to
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maintenance, consulting, and other service agreements with customers and other
third parties, in excess, in the aggregate, of $500,000; (iii) failure of the
Company to disclose to Parent proprietary rights of third parties which may
materially impair any Company Intellectual Property Rights (as defined in
Section 2.20(a)) material to the Company or its Subsidiaries or may result in
the Company being required to pay fees or other damages to third parties in
excess, in the aggregate, of $500,000, including without limitation, the
undisclosed incorporation of third party software proprietary rights, directly
or indirectly, as components of the Company's software products and services;
(iv) failure of the Company to disclose to Parent payments or loans, in cash or
in kind, made, or to be made, to any officer or director of the Company in
excess of $50,000, other than in accordance with the Company's customary
compensation and cost reimbursement practices; (v) failure of the Company to
achieve total revenues, in accordance with GAAP (as defined in Section 2.6(b)),
for the third quarter ended September 30, 2002 as reported in the Company's Form
10-Q for such quarter of at least $7,850,000; and (vi) the determination, in
accordance with GAAP, that accounts receivable reflected on the Company's
Financial Statements (as defined in Section 2.6(b)), net of established
reserves, are not collectible, in the aggregate, in an amount in excess of
$500,000; and excluding (1) any other changes, events or effects that are
attributable to conditions resulting from the announcement of this Agreement and
the pendency of the Merger and other transactions contemplated hereby, (2) any
such effect to the extent resulting from or arising in connection with (A)
changes or conditions generally affecting the industries or segments in which
the Company operates or (B) changes in general economic, market or political
conditions which, in the case of (A) or (B), is not specifically related to, or
does not have a materially disproportionate effect (relative to other industry
participants) on, the Company; provided, that any reduction in the market price
or trading volume of the Company's publicly traded common stock shall not be
deemed to constitute a Company Material Adverse Effect (it being understood that
the foregoing shall not prevent Parent from asserting that any underlying cause
of such reduction independently constitutes such a Company Material Adverse
Effect), (3) the delisting of the Company Common Stock from the Nasdaq National
Market or (4) the initiation or threat of initiation of litigation that seeks to
enjoin or prevent, or that seeks damages in respect of, the consummation of the
Merger. The Company shall be required to sustain the burden of demonstrating
that any such
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change, event or effect is directly attributable to the Merger and other
transactions contemplated by this Agreement.
2.1 Organization and Qualification. The Company is a corporation duly
organized, validly existing and in corporate and tax good standing, where
applicable, under the laws of the State of Delaware. The Company is duly
qualified or licensed as a foreign corporation to conduct business, and is in
corporate and tax good standing, under the laws of each jurisdiction where the
character of the properties owned, leased or operated by it, or the nature of
its activities, makes such qualification or licensing necessary, except where
the failure to be so qualified, licensed or in good standing, individually or in
the aggregate, has not had and would not have a Company Material Adverse Effect.
Each such jurisdiction is listed in Section 2.1 of the Company Disclosure
Schedule. The Company has provided Parent true, complete and correct copies of
its Certificate of Incorporation and Bylaws, each as amended to date. The
Company is not in default under or in violation of any provision of its
Certificate of Incorporation or Bylaws.
2.2 Subsidiaries.
(a) Exhibit 21 to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 2001 sets forth a true, complete and correct list
of each Subsidiary (as defined in Section 2.2(e) below) of the Company that is a
Significant Subsidiary (as defined in Rule 1-02 of Regulation S-X promulgated by
the U.S. Securities and Exchange Commission (the "SEC")). Section 2.2(a) of the
Company Disclosure Schedule lists each Subsidiary of the Company.
(b) Each Subsidiary of the Company is a corporation duly organized,
validly existing and in corporate and tax good standing under the laws of the
jurisdiction of its incorporation, and is duly qualified or licensed as a
foreign corporation to conduct business, and is in corporate and tax good
standing, where applicable, under the laws of each jurisdiction where the
character of the properties and other assets owned, leased or operated by it, or
the nature of its activities, makes such qualification or licensing necessary,
except where the failure to be so qualified, licensed or in good standing,
individually or in the aggregate, has not had and would not reasonably be
expected to have a Company Material Adverse Effect. Each such
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jurisdiction is listed in Section 2.2(b) of the Company Disclosure Schedule. The
Company has provided Parent true, complete and correct copies of the Certificate
of Incorporation and Bylaws or similar organizational documents of each
Subsidiary, each as amended to date. No Subsidiary is in default under or in
violation of any provision of its Certificate of Incorporation or Bylaws or
similar organizational documents.
(c) All of the issued and outstanding shares of capital stock of, or
other equity interests in, each Subsidiary of the Company are: (i) duly
authorized, validly issued, fully paid, non-assessable; (ii) owned, directly or
indirectly, by the Company (other than director's qualifying shares in the case
of foreign Subsidiaries) free and clear of all liens, claims, security
interests, pledges and encumbrances of any kind or nature whatsoever
(collectively, "Liens"); and (iii) other than as contemplated by this Agreement,
free of any restriction, including, without limitation, any restriction which
prevents the payment of dividends to the Company or any other Subsidiary of the
Company, or which otherwise restricts the right to vote, sell or otherwise
dispose of such capital stock or other ownership interest, other than
restrictions under the Securities Act of 1933, as amended (the "Securities Act")
and state securities laws.
(d) None of the Company's Subsidiaries is required to file any
forms, reports or other documents with the SEC.
(e) For purposes of this Agreement, the term "Subsidiary" means,
with respect to any party, any corporation or other organization, whether
incorporated or unincorporated, of which (i) such party (or any other Subsidiary
of such party) is a general partner (excluding partnerships, the general
partnerships of which held by such party or Subsidiary of such party do not have
a majority of the voting interest of such partnership) or (ii) at least a
majority of the securities or other equity interests having by their terms
ordinary voting power to elect a majority of the Board of Directors or others
performing similar functions with respect to such corporation or other
organization, is directly or indirectly owned or controlled by such party or by
any one or more of its Subsidiaries, or by such party and one or more of its
Subsidiaries.
13
2.3 Capital Structure.
(a) The authorized capital stock of the Company consists of (i)
200,000,000 shares of Company Common Stock and (ii) 5,000,000 shares of
preferred stock, $0.01 par value per share ("Company Preferred Stock").
(b) As of the date hereof: (i) 7,412,572 shares of Company Common
Stock are issued and outstanding; (ii) no shares of Company Preferred Stock are
issued or outstanding; (iii) no shares of Company Common Stock are held in the
treasury of the Company; (iv) 1,051,570 shares of Company Common Stock are duly
reserved for future issuance pursuant to outstanding Company Stock Options
granted pursuant to the Company Option Plans (the "Outstanding Company Stock
Options"); (v) 123,243 shares of Company Common Stock are duly reserved for
future issuance pursuant to the Company ESPP; and (vi) 1,475,000 shares of
Company Common Stock are duly reserved for issuance pursuant to the Option
Agreement. Except as described above, as of the date hereof, there are no shares
of voting or non-voting capital stock, equity interests or other securities of
the Company authorized, issued, reserved for issuance or otherwise outstanding.
(c) All outstanding shares of Company Common Stock are, and all
shares which may be issued pursuant to the Company Stock Plans and the Option
Agreement, will be, when issued against payment therefore in accordance with the
terms thereof, duly authorized, validly issued, fully paid and non-assessable,
and not subject to, or issued in violation of, any kind of preemptive,
subscription or any kind of similar rights.
(d) There are no bonds, debentures, notes or other indebtedness of
the Company having the right to vote (or convertible into securities having the
right to vote) on any matters on which stockholders of the Company may vote.
Except as described in subsection (b) above, there are no outstanding
securities, options, warrants, calls, rights, commitments, agreements,
arrangements or undertakings of any kind (contingent or otherwise) to which the
Company is a party or bound obligating the Company to issue, deliver or sell, or
cause to be issued, delivered or sold, additional shares of capital stock or
other voting securities of the Company or obligating the Company to issue,
grant, extend or enter into any agreement to issue, grant or extend any
security, option, warrant, call, right, commitment, agreement, arrangement or
14
undertaking. Except as disclosed in Section 2.3(d) of the Company Disclosure
Schedule, neither the Company nor any Subsidiary of the Company is subject to
any obligation or requirement to provide funds for or to make any investment (in
the form of a loan or capital contribution) to or in any Person (as defined in
Section 13(a)(9) of the Exchange Act).
(e) Section 2.3(e) of the Company Disclosure Schedule sets forth a
complete and correct list of the holders of all Outstanding Company Stock
Options, including: (i) the date of grant; (ii) the exercise price; (iii) the
expiration date; and (iv) any other material terms, including, without
limitation, any terms regarding the acceleration of vesting.
(f) All of the issued and outstanding shares of Company Common Stock
were issued in compliance in all material respects with all applicable federal
and state securities laws.
(g) Except as disclosed in Section 2.3(g)(i) of the Company
Disclosure Schedule, there are no outstanding contractual obligations of the
Company to repurchase, redeem or otherwise acquire any shares of capital stock
(or options to acquire any such shares) or other security or equity interest of
the Company. Except as described in this Section 2.3 or in Section 2.3(g)(ii) of
the Company Disclosure Schedule, there are no stock-appreciation rights,
security-based performance units, phantom stock or other security rights or
other agreements, arrangements or commitments of any character (contingent or
otherwise) pursuant to which any Person is or may be entitled to receive any
payment or other value based on the revenues, earnings or financial performance,
stock price performance or other attribute of the Company or any of its
Subsidiaries or assets or calculated in accordance therewith (other than
ordinary course payments or commissions to sales representatives of the Company
or any of its Subsidiaries based upon revenues generated by them without
augmentation as a result of the Merger or other transactions contemplated
hereby) or to cause the Company or any of its Subsidiaries to file a
registration statement under the Securities Act, or which otherwise relate to
the registration of any securities of the Company or any of its Subsidiaries.
(h) Except for the Stockholder's Agreements, there are no voting
trusts, proxies or other agreements, commitments or understandings of any
character to which the Company or any of its Subsidiaries or, to the knowledge
of the Company, any of the stockholders of the Company, is a party or by which
any of them is bound with respect to the
15
issuance, holding, acquisition, voting or disposition of any shares of capital
stock or other security or equity interest of the Company or any of its
Subsidiaries.
2.4 Authority; No Conflict; Required Filings.
(a) The Company has all requisite corporate power and authority to
execute and deliver this Agreement, to perform its obligations hereunder and to
consummate the Merger and other transactions contemplated hereby. The execution
and delivery of this Agreement, the performance of its obligations hereunder and
the consummation of the Merger and other transactions contemplated hereby, have
been duly authorized by all corporate action on the part of the Company and no
other corporate proceedings are necessary other than, with respect to the
Merger, the approval and adoption of this Agreement by the affirmative vote of
the holders of a majority of the outstanding shares of Company Common Stock in
accordance with the DGCL and the Company's Certificate of Incorporation (the
"Requisite Stockholder Vote").
(b) This Agreement has been duly executed and delivered by the
Company and constitutes a valid and binding obligation of the Company,
enforceable against it in accordance with its terms, subject only to: (i) the
effects of bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting the enforcement of
creditors' rights generally; (ii) general equitable principles (whether
considered in a proceeding in equity or at law); and (iii) an implied covenant
of good faith and fair dealing (collectively, the "Equitable Exceptions").
(c) Except as set forth in Section 2.4(c) of the Company Disclosure
Schedule, the execution and delivery of this Agreement do not, and the
performance by the Company of its obligations hereunder and the consummation of
the Merger and other transactions contemplated hereby will not, conflict with or
result in any violation of, or default (with or without notice or lapse of time,
or both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or to a loss of any benefit, or require the
consent of any party to, or result in the creation of any Liens in or upon any
of the properties or other assets of the Company or any of its Subsidiaries
under any provision of: (i) the Certificate of Incorporation, Bylaws of the
Company or other equivalent organizational documents of any of its Subsidiaries;
(ii) subject to the governmental filings and other matters referred to in
paragraph (d) below, any (A) permit,
16
license, franchise, statute, law, ordinance or regulation or (B) judgment,
decree or order, in each case applicable to the Company or any of its
Subsidiaries, or by which any of their respective properties or assets may be
bound or affected; or (iii) any loan or credit agreement, note, bond, mortgage,
indenture, contract, agreement, lease or other instrument or obligation to which
the Company or any of its Subsidiaries is a party or by which any of their
respective properties may be bound or affected, except, in the case of clauses
(ii) or (iii) above, for any such conflicts, violations, defaults or other
occurrences, if any, that could not, individually or in the aggregate,
reasonably be expected to result in a Company Material Adverse Effect or impair
in any material respect the ability of the Parties to consummate the Merger and
the other transactions contemplated hereby on a timely basis.
(d) No consent, approval, order or authorization of, or
registration, declaration or filing with, any government, governmental,
statutory, regulatory or administrative authority, agency, body or commission or
any court, tribunal or judicial body, whether federal, state, local or foreign
(each, a "Governmental Authority") is required by or with respect to the Company
or any of its Subsidiaries in connection with the execution and delivery of this
Agreement or the consummation of the Merger and other transactions contemplated
hereby except for: (i) the filing of the Certificate of Merger with the
Secretary of State of the State of Delaware in accordance with the DGCL; (ii)
compliance with any applicable requirements under the Securities Act; (iii)
compliance with any applicable requirements under the Exchange Act; (iv)
compliance with any applicable state securities, takeover or so-called "Blue
Sky" Laws, the laws and regulations of any foreign country; and (v) compliance
with the applicable rules and regulations of the NASD; and (vi) such consents,
approvals, orders or authorizations, or registrations, declarations or filings
which if not obtained or made, could not reasonably be expected to result in a
Company Material Adverse Effect.
2.5 Board Approval; Section 203.
(a) The Board of Directors of the Company has, at a meeting duly
called and held, by a unanimous vote of all directors: (i) approved and declared
advisable this Agreement; (ii) determined that the Merger and other transactions
contemplated by this Agreement are advisable, fair to and in the best interests
of the Company and its stockholders; (iii) resolved to
17
recommend to the stockholders of the Company (A) the approval of the Merger and
the other transactions contemplated hereby and (B) the approval and adoption of
this Agreement; and (iv) directed that this Agreement be submitted to the
stockholders of the Company for their approval and adoption.
(b) The Board of Directors of the Company has taken all actions so
that the restrictions contained in Section 203 of the DGCL applicable to a
"business combination" (as defined therein) will not apply to the execution,
delivery or performance of this Agreement or the consummation of the Merger or
other transactions contemplated by this Agreement.
2.6 SEC Filings; Financial Statements.
(a) Except as disclosed in Section 2.6(a) of the Company Disclosure
Schedule, the Company has timely filed all forms, reports and documents required
to be filed by the Company with the SEC since January 1, 1999, including,
without limitation, all exhibits required to be filed therewith, and has
provided Parent true, complete and correct copies of all of the same so filed
that are not available in complete and unredacted form on the SEC's Electronic
Data Gathering and Retrieval system ("XXXXX") (including any forms, reports and
documents filed after the date hereof, the "Company SEC Reports"). The Company
SEC Reports: (i) at the time filed complied (or will comply when filed, as the
case may be) in all material respects with the applicable requirements of the
Securities Act and/or the Exchange Act; (ii) did not at the time they were filed
(or, if later filed, amended or superseded, then on the date of such later
filing) contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements contained therein, in the light of the circumstances under which they
were made, not misleading and (iii) filed after July 30, 2002, at the time filed
complied (or will comply when filed, as the case may be) in all material
respects with the applicable requirements of the Xxxxxxxx-Xxxxx Act of 2002
("Xxxxxxxx-Xxxxx"), including, without limitation, that each periodic report was
(or will be when filed, as the case may be) accompanied by the certification of
the Company's Chief Executive Officer and Chief Financial Officer as required by
Section 906 of Xxxxxxxx-Xxxxx and that each Annual Report on Form 10-K and
Quarterly Report on Form 10-Q included (or will include when filed, as the case
may be) the certification of the Company's Chief Executive Officer and Chief
Financial Officer
18
as required by Section 302 of Xxxxxxxx-Xxxxx and the disclosure required by Item
307 of Regulation S-K promulgated by the SEC ("Regulation S-K").
(b) Each of the consolidated financial statements (including, in
each case, any related notes thereto) contained in the Company SEC Reports
(collectively, the "Company Financial Statements"), complied or will comply, as
the case may be, as to form in all material respects with the applicable
published rules and regulations of the SEC with respect thereto, was or will be
prepared in accordance with U.S. generally accepted accounting principles
("GAAP") applied on a consistent basis throughout the periods involved except as
may otherwise be indicated in the notes thereto or, in the case of unaudited
interim financial statements, as permitted by Form 10-Q promulgated by the SEC,
and fairly presented or will fairly present, as the case may be, in all material
respects, the consolidated financial position of the Company and its
Subsidiaries as at the respective dates and the consolidated results of
operations and cash flows for the periods therein indicated, except, in the case
of the unaudited interim financial statements for the absence of footnotes and
normal year-end adjustments which were not and will not be expected to be
material in amount.
2.7 Absence of Undisclosed Liabilities. Except as disclosed in Section 2.7
of the Company Disclosure Schedule, the Company and its Subsidiaries do not have
any liabilities or obligations, whether fixed, contingent, accrued or otherwise,
liquidated or unliquidated and whether due or to become due, that are
individually or in the aggregate material other than: (i) liabilities reflected
or reserved against on the balance sheet (the "Most Recent Balance Sheet")
contained in the Company's Form 10-Q filed with the SEC on August 13, 2002 for
the quarter ended June 30, 2002 (the "Most Recent Balance Sheet Date"); (ii)
obligations under any Company Material Contract (as defined in Section 2.9); and
(iii) liabilities or obligations incurred since the Most Recent Balance Sheet
Date in the ordinary course of business, consistent with past practice in both
type and amount.
2.8 Absence of Certain Changes or Events. Except as disclosed in Section
2.8 of the Company Disclosure Schedule, other than in connection with this
Agreement and the transactions contemplated hereby, since the Most Recent
Balance Sheet Date, the Company and its Subsidiaries have conducted their
respective businesses only in the ordinary course of
19
business consistent with past practice, and there has not been: (i) any action,
event or occurrence which has had, or could reasonably be expected to result in,
a Company Material Adverse Effect; or (ii) any other action, event or occurrence
that would have required the consent of Parent pursuant to Section 4.1 had such
action, event or occurrence taken place after the execution and delivery of this
Agreement.
2.9 Agreements, Contracts and Commitments.
(a) Section 2.9(a) of the Company Disclosure Schedule identifies,
and the Company has provided Parent true, complete and correct copies of, each
of the following to the extent not available in complete and unredacted form on
XXXXX (each, a "Company Material Contract" and, collectively, the "Company
Material Contracts"):
(i) any agreement, contract or commitment currently in effect
(or if not currently in effect, pursuant to which the Company or any of its
Subsidiaries has material and continuing obligations or rights with respect
thereto) that (i) is required to be filed as an exhibit to, or otherwise
incorporated by reference in, the Company SEC Reports pursuant to Regulation
S-K, or (ii) which has been entered into by the Company or any of its
Subsidiaries since its quarter ended June 30, 2002 and will be required to be
filed by the Company with the SEC pursuant to Item 601(a)(1) of Regulation S-K;
(ii) any agreement, contract or commitment currently in effect
(or if not currently in effect, pursuant to which the Company or any of its
Subsidiaries has material and continuing obligations or rights with respect
thereto) relating to the employment of, or the performance of services by, any
employee of or consultant to, the Company or its Subsidiaries that is in excess
of $100,000 for any single individual, other than offer letters for "at will"
employment that do not contain any severance obligations, and any agreement,
contract or commitment pursuant to which the Company or its Subsidiaries is or
may become obligated to make any severance, termination or similar payment to
any current or former employee, executive officer or director of or consultant
to any of the Company or its Subsidiaries; and any agreement, contract or
commitment pursuant to which the Company or its Subsidiaries is or may become
obligated to make any bonus or similar payment or series of payments (other than
20
payments constituting base salary) in excess of $25,000 to any current or former
employee, executive officer or director of the Company or its Subsidiaries;
(iii) any agreement, contract or commitment currently in
effect (or if not currently in effect, pursuant to which the Company or any of
its Subsidiaries has material and continuing obligations or rights with respect
thereto) that provides the Company or its Subsidiaries to indemnify any current
or former officer, director, employee, agent, consultant or independent
contractor of the Company or its Subsidiaries in an amount, in each instance in
excess of $100,000;
(iv) any agreement, contract or commitment currently in effect
(or if not currently in effect, pursuant to which the Company or any of its
Subsidiaries has material and continuing obligations or rights with respect
thereto) imposing any restriction on the right or ability of the Company or its
Subsidiaries (A) to compete with any other Person, (B) to acquire any product or
other asset or any services from any other Person, (C) to solicit, hire or
retain any Person as an employee, consultant or independent contractor, (D) to
develop, sell, supply, distribute, offer, support or service any product or any
technology or other asset to or for any other Person, (E) to perform services
for any other Person, or (F) to transact business or deal in any other manner
with any other Person;
(v) any agreement, contract or commitment (other than Company
Stock Options) currently in effect (or if not currently in effect, pursuant to
which the Company or any of its Subsidiaries has material and continuing
obligations or rights with respect thereto) (A) relating to the acquisition,
issuance, voting, registration, sale or transfer of any securities of any of the
Company or its Subsidiaries, (B) providing any Person with any preemptive right,
right of participation, right of maintenance or any similar right with respect
to any securities of any of the Company or its Subsidiaries, or (C) providing
the Company or its Subsidiaries with any right of first refusal with respect to,
or right to repurchase or redeem, any securities of the Company or its
Subsidiaries;
(vi) any agreement, contract or commitment currently in effect
(or if not currently in effect, pursuant to which the Company or any of its
Subsidiaries has material and continuing obligations or rights with respect
thereto) incorporating or relating to any guaranty,
21
pledge, warranty or indemnity or similar obligation by the Company or its
Subsidiaries for the benefit of any other Person, excluding any such guaranty,
warranty or indemnity or similar obligation by the Company or its Subsidiaries
granted to any customer in the ordinary course of business consistent with past
practices;
(vii) any agreement, contract or commitment currently in
effect relating to any currency hedging;
(viii) any agreement, contract or commitment containing
"standstill" or similar provisions currently in effect;
(ix) any agreement, contract or commitment currently in effect
(or if not currently in effect, pursuant to which the Company or any of its
Subsidiaries has material and continuing obligations or rights with respect
thereto) creating or involving any agency relationship, distribution arrangement
or franchise relationship;
(x) any agreement, contract or commitment currently in effect
(or if not currently in effect, pursuant to which the Company or any of its
Subsidiaries has material and continuing obligations or rights with respect
thereto) (A) to which any Governmental Authority is a party or under which any
Governmental Authority has any rights or obligations, or (B) directly benefiting
any Governmental Authority (including any subcontract or other agreement,
contract or commitment between the Company or its Subsidiaries and any
contractor or subcontractor to any Governmental Authority);
(xi) any agreement, contract or commitment currently in effect
(or if not currently in effect, pursuant to which the Company or any of its
Subsidiaries has material and continuing obligations or rights with respect
thereto) requiring that the Company or its Subsidiaries give any notice or
provide any information to any Person prior to considering or accepting any
Acquisition Proposal (as defined in Section 4.2) or similar proposal, or prior
to entering into any discussions, agreement, arrangement or understanding
relating to any Acquisition Proposal or similar transaction;
(xii) any agreement, contract or commitment currently in
effect (or if not currently in effect, pursuant to which the Company or any of
its Subsidiaries has material and
22
continuing obligations or rights with respect thereto) that has a remaining term
of more than one year and that may not be terminated (without penalty) within 90
days after the delivery of a termination notice and that would require payment
by the Company or its Subsidiaries of, or involves the performance of services
by the Company or its Subsidiaries having a value, in excess of $100,000 over
the remaining term;
(xiii) any agreement, contract or commitment that contemplates
or involves the payment or delivery of cash or other consideration by the
Company or its Subsidiaries in an amount or having a value in excess of $250,000
in the aggregate, or contemplates or involves the performance of services by the
Company or its Subsidiaries having a value in excess of $250,000 in the
aggregate; and
(xiv) any agreement, contract or commitment currently in
effect (or if not currently in effect, pursuant to which the Company or any of
its Subsidiaries has material and continuing obligations or rights with respect
thereto) not otherwise identified in clauses "(i)" through "(xiii)", a breach of
which would reasonably be expected to have a Company Material Adverse Effect.
(b) Except as disclosed in Section 2.12 of the Company Disclosure
Schedule, neither the Company nor any of its Subsidiaries has breached, or
received in writing any claim or threat that it has breached, any of the terms
or conditions of any Company Material Contract in such a manner as would permit
any other party thereto to cancel or terminate the same or to collect material
damages from the Company or any of its Subsidiaries.
(c) Each Company Material Contract that has not expired or otherwise
been terminated in accordance with its terms is in full force and effect and, to
the knowledge of the Company, no other party to such contract is in default in
any material respect.
23
2.10 Compliance with Laws. Each of the Company and its Subsidiaries has at
all times complied with all federal, state, local and foreign statutes, laws and
regulations, and is not in violation of, and has not received any written claim
or notice of violation of, any such statutes, laws and regulations with respect
to the conduct of its business or the ownership and operation of its properties
and other assets, except for such instances of non-compliance or violation, if
any, which could not reasonably be expected to result in a Company Material
Adverse Effect.
2.11 Material Permits.
(a) Each of the Company and its Subsidiaries holds all federal,
state, local and foreign governmental licenses, permits, franchises and
authorizations necessary for conduct of its business as presently conducted and
the ownership and operation of its properties and other assets, including,
without limitation those that are required under all Environmental Laws (as
defined in Section 2.19), except for such instances, if any, where the failure
to hold such licenses, permits, franchises or authorizations, individually or in
the aggregate, could not reasonably be expected to result in a Company Material
Adverse Effect (collectively, the "Material Permits").
(b) Each of the Company and its Subsidiaries is in compliance in all
material respects with the terms and conditions of the Material Permits.
(c) Each Material Permit is in full force and effect and no action,
proceeding, revocation proceeding, amendment procedure, writ, injunction or
claim is pending or, to the knowledge of the Company, threatened, which seeks to
revoke or limit any Material Permit.
(d) The rights and benefits of each Material Permit will be
available to the Surviving Corporation immediately after the Effective Time on
terms substantially identical to those enjoyed by the Company and its
Subsidiaries immediately prior to the Effective Time.
2.12 Litigation. Except as disclosed in Section 2.12 of the Company
Disclosure Schedule, as of the date of this Agreement, there is no suit, action,
arbitration, claim, governmental or other proceeding before any Governmental
Authority pending or, to the knowledge of the Company, threatened, against the
Company or any of its Subsidiaries which, if decided adversely could (a) be
considered reasonably likely to result in (i) a Company Material
24
Adverse Effect or (ii) damages payable by the Company of any of its Subsidiaries
in excess of $50,000 in the aggregate, (b) impair or prevent the Company and its
Subsidiaries from conducting in any material respect the business and operations
of the Company and its Subsidiaries as currently conducted or (c) otherwise
impair in any material respect the ability of the Parties to consummate the
Merger and other transactions contemplated by this Agreement on a timely basis.
2.13 Restrictions on Business Activities. There is no agreement, judgment,
injunction, order or decree binding upon or otherwise applicable to the Company
or any of its Subsidiaries which has the effect of prohibiting or materially
impairing (a) any current or future business practice of the Company or any of
its Subsidiaries or (b) any acquisition of any Person or property by the Company
or any of its Subsidiaries.
2.14 Employee and Labor Matters; Benefit Plans.
(a) Section 2.14(a) of the Company Disclosure Schedule identifies
each salary, bonus, vacation, deferred compensation, incentive compensation,
stock purchase, stock option, severance pay, termination pay, death and
disability benefits, hospitalization, medical, life or other insurance, flexible
benefits, supplemental unemployment benefits, profit-sharing, pension or
retirement plan, program or agreement and each other employee benefit plan or
arrangement sponsored, maintained, contributed to or required to be contributed
to by the Company and its Subsidiaries for the benefit of any current or former
employee of the Company and its Subsidiaries (collectively, the "Plans"). The
Company is in compliance with, in all material respects, each law or regulation
pursuant to which the Company and its Subsidiaries are required to establish any
reserve or make any contribution for the benefit of any current or former
employee located in any foreign jurisdiction. Section 2.14(a) of the Company
Disclosure Schedule also identifies any agreement or arrangement between an
employee, director or consultant of the Company and its Subsidiaries that
contains a change of control provision. Except as disclosed in Section 2.14(a)
of the Company Disclosure Schedule, neither the Company nor any of its
Subsidiaries has any outstanding payment or other obligation pursuant to any
severance agreement, separation agreement, or other agreement to settle or
compromise any
25
legal claim or right, regardless of whether any legal proceeding to enforce any
such claim or right has been threatened or commenced.
(b) Except as set forth in Section 2.14(b) of the Company Disclosure
Schedule, neither the Company nor any of its Subsidiaries maintains, sponsors or
contributes to, and neither the Company nor any of its Subsidiaries has at any
time in the past maintained, sponsored or contributed to, any employee pension
benefit plan (as defined in Section 3(2) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")), or any similar pension benefit plan
under the laws of any foreign jurisdiction, whether or not excluded from
coverage under specific Titles or Subtitles of ERISA for the benefit of
employees or former employees of the Company or any of its Subsidiaries (a
"Pension Plan").
(c) Except as set forth in Section 2.14(c) of the Company Disclosure
Schedule, neither the Company nor any of its Subsidiaries maintains, sponsors or
contributes to any employee welfare benefit plan (as defined in Section 3(1) of
ERISA or any similar welfare benefit plan under the laws of any foreign
jurisdiction, whether or not excluded from coverage under specific Titles or
Subtitles of ERISA), for the benefit of any current or former employees or
directors of the Company or any of its Subsidiaries (a "Welfare Plan"). No
Welfare Plan is a self-insured Welfare Plan or a "multiple employer welfare
arrangement" as such term is defined in Section 3(40) of ERISA.
(d) With respect to each Plan, the Company has provided Parent: (i)
a true and complete copy of such Plan documents and copies of prior plan
documents(including all amendments thereto); (ii) a true and complete copy of
the Form 5500 annual report (along with all schedules and attachments), if
required under ERISA, with respect to such Plan for the last three (3) years;
(iii) a true and complete copy of the most recent summary plan description,
together with each summary of material modifications, if required under ERISA,
with respect to such Plan, (iv) if such Plan is funded through a trust or any
third party funding vehicle, a true and complete copy of the trust or other
funding agreement (including all amendments thereto) and accurate and complete
copies of the most recent financial statements thereof; (v) true and complete
copies of all contracts or agreements relating to such Plan, including service
provider agreements, insurance contracts, minimum premium contracts, stop-loss
agreements, investment
26
management agreements, subscription and participation agreements and record
keeping agreements; (vi) a true and complete copy of the most recent
determination letter received from the Internal Revenue Service (the "IRS") with
respect to such Plan (if such Plan is intended to be qualified under Section
401(a) of the Code), along with all filing materials related to the submission
for such letter; (vii) all corporate resolutions or similar corporate or
committee authorizing documents with respect to any such Plan; and (viii) a copy
of all Plan testing (including nondiscrimination testing) completed with respect
to each Plan for the last three (3) years, if applicable.
(e) Neither the Company nor any of its Subsidiaries has ever
participated in any multiemployer plan, as such term is defined in Section 3(37)
of ERISA, or could have any material liability under Title IV of ERISA with
respect to any multiemployer plan. Neither the Company nor any of its
Subsidiaries has ever sponsored, maintained or contributed to, or has had any
liability (direct or indirect) with respect to, an employee pension benefit plan
as defined in Section 3(2) of ERISA or which is subject to Title IV of ERISA or
Section 412 of the Code.
(f) Neither the Company nor any of its Subsidiaries has any plan or
commitment to create any Welfare Plan or any Pension Plan, or to modify or
change any existing Welfare Plan or Pension Plan (other than to comply with
existing applicable laws and regulations).
(g) No Plan provides death, medical or health benefits (whether or
not insured) with respect to any current or former employee or director of the
Company or any of its Subsidiaries after any termination of service of such
employee or director (other than benefit coverage mandated by applicable laws
and regulations, including without limitation coverage provided pursuant to
Section 4980B of the Code).
(h) With respect to any Plan constituting a group health plan within
the meaning of Section 4980B(g)(2) of the Code, the provisions of Section 4980B
of the Code ("COBRA") have been complied with in all material respects. Any such
Plan is in compliance in all material respects with the requirements of the
Health Insurance Portability and Accountability Act of 1996. Section 2.14(h) of
the Company Disclosure Schedule describes all obligations of
27
the Company and its Subsidiaries as of the date of this Agreement under any of
the provisions of COBRA.
(i) Each of the Plans has been operated and administered in all
material respects in accordance with its terms and with applicable laws and
regulations, including ERISA, the Code and applicable foreign legal
requirements, and all required governmental filings and participant reports or
disclosures have been made on a timely basis.
(j) Each of the Plans intended to be qualified under Section 401(a)
of the Code has received a favorable determination letter from the Internal
Revenue Service, covering changes mandated by TRA '86. Each trust maintained
with respect to each Plan is exempt from taxation under Section 501(a) of the
Code. No act or omission has occurred that would adversely affect such qualified
or tax exempt status. There have been no "prohibited transactions" within the
meaning of Section 406 of ERISA or Section 4975 of the Code involving any of the
Plans that could result in any liability to the Company or any Subsidiary. There
are no pending, or to the knowledge of the Company threatened or anticipated
claims, litigation, administrative actions or proceedings against or otherwise
involving any of the Plans or related trusts, or any fiduciary thereof, by any
governmental agency, or by any employee, former employee, retiree, participant
or beneficiary covered under any of the Plans, or otherwise involving the Plans
(other than routine claims for benefits). There is no lien, judgment, decree,
injunction, rule or order of any court, governmental body, commission, agency or
arbitrator outstanding against or in favor of any Plan or any fiduciary thereof
in that capacity.
(k) Section 2.14(k) of the Company Disclosure Schedule sets forth
all bonus, golden parachute, severance or other payments or obligations to any
current or former employee or director of the Company or any of its Subsidiaries
(whether or not under any Plan, written or oral) which will become payable or
will be materially increased, or which such payment or vesting of such benefit
will be accelerated, as a direct or indirect result of the execution, delivery
or performance of this Agreement, or the consummation of the Merger or any of
the other transactions contemplated by this Agreement, irrespective of whether
such material increase or acceleration of vesting or time of payment is directly
or indirectly related to a "change in control" (as defined in any applicable
Plan, arrangement or agreement) or a voluntary or
28
involuntary termination of employment within a certain period of time either
before or after such "change in control" (as defined in the applicable Plan,
arrangement or agreement).
(l) Section 2.14(l)(i) of the Company Disclosure Schedule contains a
list of all salaried employees of the Company and its Subsidiaries as of the
date of this Agreement, and correctly reflects, in all material respects, their
salaries, any other compensation payable to them (including compensation payable
pursuant to bonus, deferred compensation or commission arrangements), their
dates and terms of employment, their positions and any notice, payment, bonus,
accelerated vesting of Company Stock Options, or other form of remuneration
(exclusive of accrued vacation pay) to which each such employee may be entitled
upon termination of his or her employment. Neither the Company nor any of its
Subsidiaries is a party to any collective bargaining contract or other Contract
with a labor union involving any of its employees. Except as set forth on
Section 2.14(l)(ii) of the Company Disclosure Schedule, all employees of the
Company and its Subsidiaries are "at will" employees.
(m) Section 2.14(m) of the Company Disclosure Schedule identifies
each employee of the Company and its Subsidiaries who is not fully available to
perform work because of disability or other leave and sets forth the basis of
such disability or leave and the anticipated date of return to full service.
(n) The Company has no knowledge of any facts indicating that any of
the officers or management personnel of the Company or any of its Subsidiaries
intends to terminate his or her employment.
(o) Neither the Company nor any of its Subsidiaries has entered into
any contracts with any labor union or employee association or made any
commitments, to or conducted negotiations with, any labor union or employee
association with respect to future agreements. The Company is not aware of any
current attempts to organize or establish a labor union or employee association
with respect to any employees of the Company or any of its Subsidiaries.
(p) During the last five (5) years, there has not occurred nor been
threatened any labor strike, dispute, slowdown, work stoppage, picketing,
concerted refusal to work regular
29
or overtime hours or similar labor activity with respect to any employees of the
Company or any of its Subsidiaries.
(q) With respect to termination of employees, the Company and its
Subsidiaries have at all times complied in all material respects with all
federal, state, local and foreign statutes, laws and regulations, including but
not limited to the federal Worker Adjustment and Retraining Notification (WARN)
Act of 1988 (and similar state laws), and is not in material violation of, and
has not received any written claim or notice of violation of, any such statutes,
laws and regulations.
2.15 Proxy Statement.
(a) The Proxy Statement (as defined in Section 5.1(a)) to be sent to
the stockholders of the Company in connection with the Special Meeting (as
defined in Section 5.1(a)) will comply in all material respects with the
provisions of the applicable federal securities laws and shall not, on the date
the Proxy Statement is first mailed to the stockholders of the Company, at the
time of the Special Meeting and at the Effective Time, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements contained therein,
in light of the circumstances under which they were made, not misleading, or
omit to state any material fact necessary to correct any statement in any
earlier communication with respect to the solicitation of proxies by the Company
for the Special Meeting which has in the interim become false or misleading in
any material respect; provided, however, that the Company makes no
representation or warranty with respect to information furnished by Parent or
Merger Sub in writing for inclusion in the Proxy Statement.
(b) If at any time prior to the Effective Time any event should
occur involving the Company, its officers, directors or any other Affiliate of
the Company (as defined in Rule 13e-3(a)(i) of the Exchange Act), which is
required under the Securities Act or the Exchange Act to be set forth in the
Proxy Statement, the Company shall immediately inform Parent of such event and
promptly prepare an amendment or supplement to the Proxy Statement in which such
event shall be fully and accurately described. Such amendment or supplement
shall first be
30
provided to Parent for its review and then promptly filed with the SEC and, as
required under the Securities Act or the Exchange Act, disseminated to the
stockholders of the Company.
2.16 Properties and Assets.
(a) The Company and its Subsidiaries have good and valid title to
all of their respective properties, interests in properties and assets, real and
personal, reflected on the Most Recent Balance Sheet or acquired since the Most
Recent Balance Sheet Date, or, in the case of leased properties and assets,
valid leasehold interests in such properties and assets, in each case free and
clear of all Liens except for: (i) Liens reflected in the Company Financial
Statements, (ii) Liens consisting of zoning or planning restrictions, easements,
permits and other restrictions or limitations on the use of real property or
irregularities in title thereto which do not materially detract from the value
of, or materially impair the use of, such property as it is presently used,
(iii) Liens for current Taxes, assessments or governmental charges or levies on
property not yet due or which are being contested in good faith and for which
appropriate reserves in accordance with GAAP have been created, (iv) mechanic's,
materialmen's and similar Liens arising in the ordinary course of business or by
operation of law and (v) any conditions that are shown on the surveys previously
delivered to Parent of such real property (collectively, "Permitted Liens").
(b) Section 2.16(b) of the Company Disclosure Schedule sets forth a
true, complete and correct list of all real property owned or leased by the
Company or any of its Subsidiaries. Each of the Company and its Subsidiaries is
in compliance in all material respects with the terms of all leases for real
property to which it is a party. Neither the Company nor any of its Subsidiaries
is a party to any lease, assignment or similar arrangement under which the
Company or any Subsidiary is a lessor, assignor or otherwise makes available for
use by any third party any portion of the owned or leased real property.
(c) The facilities, property and equipment owned, leased or
otherwise used by the Company or any of its Subsidiaries are in a good state of
maintenance and repair, free from material defects and in good operating
condition (subject to normal wear and tear), and suitable for the purposes for
which they are presently used.
31
(d) All tangible assets which are leased by the Company or any of
its Subsidiaries have been maintained with the manufacturers' standards and
specifications required by each such lease such that at each such termination of
the lease such assets can be returned to their owner without any further
material obligation on the part of the Company or any of its Subsidiaries with
respect thereto.
(e) From and after the Effective Time, except for the Company
employees, with respect to which the Company makes no representation, the
tangible assets owned or leased by the Surviving Corporation, together with its
intangible assets will constitute those assets reasonably required to operate
the business and operations of the Company and its Subsidiaries as currently
conducted in all material respects.
(f) Section 2.16(f) of the Company Disclosure Schedule sets forth a
list of all leased real property that is as of the date of this Agreement, or is
expected to be by the Effective Time, vacant or Substantially Vacant (as defined
below). Section 2.16(f) of the Company Disclosure Schedule includes: (i) the
total number of square feet leased pursuant to each such lease; (ii) the number
of square feet so leased that is vacant or otherwise not utilized pursuant to
each such lease; and (iii) the aggregate lease payments due from the date hereof
through the expected termination of each such lease. For purposes of this
Section 2.16(f), "Substantially Vacant" shall mean that more than 25% of the
square footage subject to such lease is or is expected to be vacant or
unutilized.
2.17 Insurance.
(a) The Company and its Subsidiaries maintain policies of insurance
and bonds against loss relating to their business, operations and properties and
such other risks as companies engaged in similar business would, in accordance
with good business practice, customarily insure (the "Insurance Policies"). All
premiums due and payable under the Insurance Policies have been paid on a timely
basis and the Company and its Subsidiaries are in compliance in all material
respects with all other terms thereof. Section 2.17(a) of the Company Disclosure
Schedule sets forth a list of all Insurance Policies.
32
(b) The Insurance Policies are in full force and effect and there
are no material claims pending as to which coverage has been questioned, denied
or disputed. All material claims thereunder have been filed in a due and timely
fashion and except as set forth on Section 2.17(b) of the Company Disclosure
Schedule, neither the Company nor any of its Subsidiaries has been refused
insurance for which it has applied or had any policy of insurance terminated
(other than at its request), nor has the Company or any of its Subsidiaries
received notice from any insurance carrier that: (i) such insurance will be
canceled or that coverage thereunder will be reduced or eliminated; or (ii)
premium costs with respect to such insurance will be increased, other than
premium increases in the ordinary course of business applicable on their terms
to all holders of similar policies.
2.18 Tax Matters.
(a) For purposes of this Agreement, a "Tax" means any and all
federal, state, local and foreign taxes, assessments and other governmental
charges, duties, impositions and liabilities, including, without limitation,
taxes based upon or measured by gross receipts, income, profits, sales, use and
occupation, value added, ad valorem, transfer, franchise, withholding, payroll,
recapture, employment, excise and property taxes, together with all interest,
penalties and additions imposed with respect to such amounts and any obligations
under any agreements or arrangements with any other Person with respect to such
amounts and including any liability for Taxes of a predecessor entity.
(b) Each of the Company and its Subsidiaries has accurately prepared
and timely filed all federal, state, local and foreign returns, estimates,
information statements and reports required to be filed by it (collectively,
"Returns") relating to any and all Taxes concerning or attributable to the
Company or any of its Subsidiaries or to their operations, and all such Returns
are true, complete and correct in all material respects.
(c) Each of the Company and its Subsidiaries: (i) has paid all Taxes
it is obligated to pay as reflected on the Returns or otherwise or is contesting
them in good faith (a list of such Taxes being contested is set forth in Section
2.18(c) of the Company Disclosure Schedule); and (ii) has withheld all federal,
state, local and foreign Taxes required to be withheld with respect to its
employees or otherwise.
33
(d) Except as disclosed in Section 2.18(d) of the Company Disclosure
Schedule, there is no material Tax deficiency outstanding, proposed or assessed
against the Company or any of its Subsidiaries that is not accurately reflected
as a liability on the Most Recent Balance Sheet, nor has the Company or any of
its Subsidiaries executed any waiver of any statute of limitations on or
extending the period for the assessment or collection of any Tax.
(e) Except as disclosed in Section 2.18(e) of the Company Disclosure
Schedule, neither the Company nor any of its Subsidiaries has any material
liability for unpaid Taxes that has not been properly accrued for under GAAP and
reserved for on the Most Recent Balance Sheet, whether asserted or unasserted,
contingent or otherwise.
(f) Except as set forth in Section 2.18(f) of the Company Disclosure
Schedule, neither the Company nor any of its Subsidiaries is a party to any
agreement, plan, arrangement or other contract covering any employee or
independent contractor or former employee or independent contractor that,
considered individually or considered collectively with any other such
contracts, would reasonably be expected to, give rise directly or indirectly to
the payment of any amount that would not be deductible pursuant to Section 280G
or Section 162(m) the Code (or any comparable provision of state or foreign tax
laws). Neither the Company nor any of its Subsidiaries is, or has ever been, a
party to or bound by any tax indemnity agreement, tax sharing agreement, tax
allocation agreement or similar contract or agreement.
2.19 Environmental Matters.
(a) The Company is in compliance in all material respects with all
Environmental Laws (as defined below), which compliance includes, without
limitation, the possession by the Company and its Subsidiaries of all Material
Permits required under all applicable Environmental Laws, and compliance in all
material respects with the terms and conditions thereof.
(b) Except as would not reasonably be expected to have a Company
Material Adverse Effect, the Company has not received any written communication,
whether from a Governmental Authority or other Person, that alleges that either
the Company or any of its
34
Subsidiaries is not in compliance with any Environmental Laws or any Material
Permit required under any applicable Environmental Law, or that it is
responsible (or potentially responsible) for the cleanup of any Materials of
Environmental Concern (as defined below) at, on or beneath its facilities or at,
on or beneath any land adjacent thereto, and to the Company's knowledge, there
are no conditions existing at such facilities that could reasonably be expected
to prevent or interfere with such full compliance in the future.
(c) To the Company's knowledge, there are no past or present facts,
circumstances or conditions, including, without limitation, the release of any
Materials of Environmental Concern, that could reasonably be expected to result
in a claim against the Company or any of its Subsidiaries under any
Environmental Law that would reasonably be expected to have a Company Material
Adverse Effect.
(d) The Company has provided Parent true, complete and correct
copies of all of the environmental audits, assessments and documentation
regarding environmental matters pertaining to, or the environmental condition
of, the Company's facilities or the compliance (or non-compliance) by the
Company and its Subsidiaries with any Environmental Laws, known to the Company.
(e) To the Company's knowledge, none of the facilities ever used by
the Company or any of its Subsidiaries has ever been a site for the use,
generation, manufacture, discharge, assembly, processing, storage, release,
disposal or transportation to or from of any Materials of Environmental Concern,
except for chemicals used in the ordinary course of business of the Company and
its Subsidiaries, all of which chemicals have been stored and used in strict
compliance in all material respects with all applicable Material Permits and
Environmental Laws.
(f) Neither the Company nor any of its Subsidiaries is the subject
of any federal, state, local or private litigation or proceedings involving a
demand for damages or other potential liability with respect to any alleged
violations of Environmental Laws.
(g) For purposes of this Agreement, the terms "release" and
"environment" shall have the meaning set forth in the Comprehensive
Environmental Response, Compensation
35
and Liability Act of 1980, as amended, "Environmental Law" shall mean any
federal, state, local or foreign law or statute, or any rule or regulation
implementing such law or statute and any applicable case law or administrative
decision, in each case existing and in effect on the date hereof relating to
pollution or protection of the environment, including, without limitation, any
statute or regulation pertaining to: (i) treatment, storage, disposal,
generation or transportation of Materials of Environmental Concern; (ii) air,
water and noise pollution; (iii) groundwater and soil contamination; (iv) the
release or threatened release into the environment of hazardous substances, or
solid or hazardous waste, including, without limitation, emissions, discharges,
injections, spills, escapes or dumping of Materials of Environmental Concern;
(v) the protection of wildlife, marine sanctuaries and wetlands, including,
without limitation, all endangered and threatened species; (vi) aboveground or
underground storage tanks, vessels and containers; (vii) abandoned, disposed or
discarded barrels, tanks, vessels, containers and other closed receptacles; and
(viii) the manufacture, processing, use, distribution, treatment, storage,
disposal, transportation or handling of Materials of Environmental Concern, and
"Materials of Environmental Concern" shall mean all substances defined as
Hazardous Substances, Oils, Pollutants or Contaminants in the National Oil and
Hazardous Substances Pollution Contingency Plan, 40 C.F.R. Section 300.5, or
defined as such by, or regulated as such under, any Environmental Law.
2.20 Intellectual Property.
(a) The Company and each of its Subsidiaries, directly or
indirectly, owns, or is licensed or otherwise possesses legally enforceable
rights to use, all patents, trademarks, trade names, service marks, copyrights,
and any applications therefor, maskworks, net lists, schematics, technology,
know-how, computer software programs or applications (in both source code and
object code form), and tangible or intangible proprietary information or
material (excluding Commercial Software (as defined in Subsection (g) below))
that are used in or necessary to conduct the business of the Company and its
Subsidiaries as currently conducted or as proposed to be conducted (the "Company
Intellectual Property Rights").
(b) Section 2.20(b)(i) of the Company Disclosure Schedule sets forth
a complete list of all (i) patents, (ii) trademarks, (iii) registered
copyrights, trademarks, trade
36
names and service marks and (iv) any applications therefor, included in the
Company Intellectual Property Rights, and specify, where applicable, the
jurisdictions in which each such Company Intellectual Property Right has been
issued or registered or in which an application for such issuance and
registration has been filed, including the respective registration or
application numbers, the date of such registration or application, and the names
of all registered owners. Section 2.20(b) of the Company Disclosure Schedule
also sets forth a complete list of all material licenses, sublicenses and other
agreements as to which the Company is a party and pursuant to which the Company
or any other person is authorized to use any Company Intellectual Property Right
(excluding end-user, VAR and OEM licenses granted to customers in the ordinary
course of business ("End-User Licenses")) or other trade secret material to the
Company, and includes the identity of all parties thereto, a description of the
nature and subject matter thereof, the applicable royalty and the term thereof.
The Company is not in violation of any license, sublicense or agreement
described on such list except such violations as do not materially impair the
Company's rights under such license, sublicense or agreement. Except as
disclosed in Section 2.20(b)(iv) of the Company Disclosure Schedule, the
execution and delivery of this Agreement by the Company, and the consummation of
the Merger contemplated hereby, will neither cause the Company to be in
violation or default under any such license, sublicense or agreement, nor
entitle any other party to any such license, sublicense or agreement to
terminate or modify such license, sublicense or agreement.
(c) Except as disclosed in Section 2.20(b) of the Company Disclosure
Schedule, the Company is the sole and exclusive owner of, or is a licensee of
(whether sole and exclusive or not), with all right, title and interest in and
to (free and clear of any liens or encumbrances), the Company Intellectual
Property Rights, and has rights (and is not contractually obligated to pay any
compensation to any third party in respect thereof) to the use thereof or the
material covered thereby in connection with the services or products in respect
of which the Company Intellectual Property Rights are being used. Except as
disclosed in Section 2.20(c) of the Company Disclosure Schedule, no claims with
respect to the Company Intellectual Property Rights have been asserted or, to
the knowledge of the Company, are threatened by any person nor, to the knowledge
of the Company, are there any valid grounds, for any bona fide claims (i) to the
effect that the manufacture, sale, licensing or use of any of the products of
the Company or any of its Subsidiaries as now manufactured, sold, licensed or
used or proposed for
37
manufacture, sale, licensing or use by the Company infringes on any copyright,
patent, trademark, service xxxx or trade secret, (ii) against the use by the
Company or any of its Subsidiaries of any trademarks, service marks, trade
names, trade secrets, copyrights, patents, technology, know-how or computer
software programs and applications used in the Company's business as currently
conducted or as proposed to be conducted by the Company, or (iii) challenging
the ownership by the Company or any of its Subsidiaries or the validity or
effectiveness of any of the Company Intellectual Property Rights. All registered
trademarks, registered service marks and registered copyrights held by the
Company and its Subsidiaries are valid and subsisting.
(d) To the knowledge of the Company, there is no material
unauthorized use, infringement or misappropriation of any of the Company
Intellectual Property Rights by any third party, including any employee or
former employee of the Company.
(e) No Company Intellectual Property Right or product of the Company
or any of its Subsidiaries is subject to any outstanding decree, order,
judgment, or stipulation restricting in any manner the licensing thereof by the
Company or any of its Subsidiaries. Neither the Company nor any of its
Subsidiaries has entered into any agreement (other than exclusive distribution
agreements as set forth in Section 2.20(e) of the Company Disclosure Schedule)
under which the Company or its Subsidiaries is restricted from selling,
licensing or otherwise distributing any of its products to any class of
customers, in any geographic area, during any period of time or in any segment
of the market.
(f) The Company and its Subsidiaries have a practice to secure, and
have secured, from all consultants and contractors who contribute or have
contributed to the creation or development of Company Intellectual Property
Rights valid written assignments by such persons to the Company and its
Subsidiaries of the rights to such contributions. The Company and its
Subsidiaries have taken reasonable and appropriate steps to protect and preserve
the confidentiality of their trade secrets. The Company has required each
employee to execute a proprietary information and confidentiality agreement
substantially in the Company's standard form, a true and correct copy of which
has been provided to Parent.
38
(g) "Commercial Software" means packaged commercially available
software programs generally available to the public through retail dealers in
computer software which have been licensed to the Company or any of its
Subsidiaries pursuant to end-user licenses and which are used in the business of
the Company or its Subsidiaries but are in no way a component of or incorporated
in or specifically required to develop any of the products and related
trademarks, technology and know-how of the Company and its Subsidiaries.
2.21 Opinion of Financial Advisor. The Board of Directors of the Company
has received the written opinion, dated October 18, 2002, of XX Xxxxx Securities
Corporation, financial advisor to the Company (the "Financial Advisor"), to the
effect that, as of such date, the Merger Consideration to be received in the
Merger by the stockholders of the Company is fair to such stockholders from a
financial point of view, and a copy of such opinion shall be delivered to Parent
promptly after the date hereof. The Company has been authorized by the Financial
Advisor to include such opinion in its entirety in the Proxy Statement.
2.22 Brokers. No broker, financial advisor, investment banker or other
Person, other than the Financial Advisor which is entitled to a fee not to
exceed $150,000 upon delivery of the opinion described in Section 2.21, is
entitled to any fee, commission or expense reimbursement in connection with the
Merger or other transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Company and no such Person, including
the Financial Advisor, is entitled to any fee or commission based on the
successful consummation of the Merger.
2.23 Certain Business Practices. Neither the Company, its Subsidiaries or,
to the knowledge of the Company, any director, officer, employee or agent of the
Company has: (a) used any funds for unlawful contributions, gifts, entertainment
or other unlawful payments relating to political activity; (b) made any unlawful
payment to any foreign or domestic government official or employee or to any
foreign or domestic political party or campaign or violated any provision of the
Foreign Corrupt Practices Act of 1977, as amended; or (c) made any other
unlawful payment.
2.24 Government Contracts. Neither the Company nor any of its Subsidiaries
has been suspended or debarred from bidding on contracts with any Governmental
Authority, and no such
39
suspension or debarment has been initiated or threatened. The consummation of
the Merger and other transactions contemplated by this Agreement will not result
in any such suspension or debarment of the Company, any of its Subsidiaries or
the Parent (assuming that no such suspension or debarment will result solely
from the identity of Parent).
2.25 Interested Party Transactions. Except as set forth in Section 2.25 of
the Company Disclosure Statement, since April 30, 2002, no event has occurred
that would be required to be reported by the Company as a Certain Relationship
or Related Transaction pursuant to Item 404 of Regulation S-K.
40
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent, on behalf of itself and its Subsidiaries, represents and
warrants to the Company that the statements contained in this Article III are
true, complete and correct. As used in this Agreement, a "Parent Material
Adverse Effect" means any change, event or effect that is materially adverse to
the business, assets (including, without limitation, intangible assets),
financial condition, results of operations or reasonably foreseeable prospects
of Parent and its Subsidiaries, taken as a whole; and excluding (i) any other
changes, events or effects that are attributable to conditions resulting from
the announcement of this Agreement and the pendency of the Merger and other
transactions contemplated hereby, (ii) any such effect to the extent resulting
from or arising in connection with (A) changes or conditions generally affecting
the industries or segments in which Parent operates or (B) changes in general
economic, market or political conditions which, in the case of (A) or (B), is
not specifically related to, or does not have a materially disproportionate
effect (relative to other industry participants) on, Parent; provided, that any
reduction in the market price or trading volume of Parent's publicly traded
common stock shall not be deemed to constitute a Parent Material Adverse Effect
(it being understood that the foregoing shall not prevent the Company from
asserting that any underlying cause of such reduction independently constitutes
such a Parent Material Adverse Effect), or (iii) the initiation or threat of
initiation of litigation that seeks to enjoin or prevent, or that seeks damages
in respect of, the consummation of the Merger.
3.1 Organization and Qualification. Parent is a corporation duly
organized, validly existing and in corporate and tax good standing under the
laws of the Commonwealth of Massachusetts. Parent is duly qualified or licensed
as a foreign corporation to conduct business, and is in corporate and tax good
standing, under the laws of each jurisdiction where the character of the
properties owned, leased or operated by it, or the nature of its activities,
makes such qualification or licensing necessary, except where the failure to be
so qualified, licensed or in good standing, individually or in the aggregate,
has not had and would not have a Parent Material Adverse Effect. Parent is not
in default under or in violation of any provision of its Articles of
Organization or Bylaws.
41
3.2 Authority; Required Filings.
(a) Each of Parent and Merger Sub has all requisite corporate power
and authority to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the Merger and other transactions contemplated
hereby. The execution and delivery of this Agreement, the performance of its
obligations hereunder and the consummation of the Merger and other transactions
contemplated hereby, have been duly authorized by all corporate action on the
part of Parent and Merger Sub and no other corporate proceedings are necessary.
(b) This Agreement has been duly executed and delivered by Parent
and the Merger Sub and constitutes a valid and binding obligation of Parent and
Merger Sub, enforceable against each of them in accordance with its terms,
subject only to the Equitable Exceptions.
(c) No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Authority is required
by or with respect to Parent or any of its Subsidiaries in connection with the
execution and delivery of this Agreement or the consummation of the Merger or
other transactions contemplated hereby except for: (i) the filing of the
Certificate of Merger with the Secretary of State of the State of Delaware in
accordance with the DGCL; (ii) compliance with any applicable requirements under
the Securities Act; (iii) compliance with any applicable requirements under the
Exchange Act; (iv) compliance with any applicable state securities, takeover or
so-called "Blue Sky" Laws, the laws and regulations of any foreign country; and
(v) such consents, approvals, orders or authorizations, or registrations,
declarations or filings which if not obtained or made, could not reasonably be
expected to result in a Parent Material Adverse Effect.
3.3 Proxy Statement.
(a) The information supplied or to be supplied by Parent for the
inclusion (or incorporation by reference, as the case may be) in the Proxy
Statement shall not on the date the Proxy Statement is first mailed to the
stockholders of the Company, at the time of the Special Meeting and at the
Effective Time, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or otherwise necessary in order
to make the
42
statements contained therein, in light of the circumstances under which they
were made, not misleading, or omit to state any material fact necessary to
correct any statement in any earlier communication with respect to the
solicitation of proxies by the Company for the Special Meeting which has in the
interim become false or misleading in any material respect.
(b) If at any time prior to the Effective Time any event should
occur involving Parent, its officers, directors or any other Affiliate of
Parent, which is required under the Securities Act or the Exchange Act to be set
forth in the Proxy Statement, Parent shall immediately inform the Company of
such event and the Company shall promptly prepare an amendment or supplement to
the Proxy Statement in which such event shall be fully and accurately described.
Such amendment or supplement shall first be provided to Parent for its review
and then promptly filed with the SEC and, as required under the Securities Act
or the Exchange Act, disseminated to the stockholders of the Company.
3.4 Interim Operations of Merger Sub. Merger Sub was formed solely for the
purpose of engaging in the transactions contemplated by this Agreement, has
engaged in no other business activities and has conducted its operations only as
contemplated in this Agreement.
3.5 Financing. Parent and Merger Sub collectively have and will have at
the Effective Time sufficient funds in immediately available U.S. dollars to pay
the Merger Consideration in cash for all outstanding shares of Company Common
Stock converted into cash pursuant to the Merger, to perform Parent's and Merger
Sub's obligations under this Agreement and to pay all fees and expenses related
to the transactions contemplated by this Agreement and payable by them. Parent
will make such funds available to Merger Sub when required for the performance
of its obligations hereunder.
3.6 Non-Contravention. The execution, delivery and performance by Parent
and Merger Sub of this Agreement does not and will not (a) contravene or
conflict with the respective certificates of incorporation and bylaws of Parent
and Merger Sub; or (b) contravene or conflict with or constitute a violation of
any law applicable to Parent or Merger Sub, except, in the case of clauses (a)
or (b) above, for any such conflicts, violations, other occurrences, if any,
that could not, individually or in the aggregate, reasonably be expected to
result in a Parent
43
Material Adverse Effect or impair in any material respect the ability of the
Parties to consummate the Merger and the other transactions contemplated hereby
on a timely basis.
3.7 Brokers. No broker, financial advisor, investment banker or other
Person is entitled to any fee, commission or expense reimbursement in connection
with the Merger or other transactions contemplated by this Agreement based upon
arrangements made by or on behalf of Parent and /or Merger Sub and no such
Person is entitled to any fee or commission based on the successful consummation
of the Merger.
3.8 Section 203. As of the time immediately prior to the effective time of
this Agreement, and without giving effect to the transactions contemplated by
this Agreement, the Stockholder's Agreements and the Option Agreement, neither
Parent nor Merger Sub is an "interested stockholder" as defined in Section 203
of the DGCL.
ARTICLE IV
CONDUCT OF BUSINESS PENDING THE MERGER
4.1 Conduct of Business Pending the Merger.
(a) The Company covenants and agrees that, between the date hereof
and the earlier to occur of the Effective Time or such earlier time as this
Agreement is terminated in accordance with Article VII (such period being
hereinafter referred to as the "Interim Period"), except as expressly required
by this Agreement or unless Parent shall otherwise consent in writing, each of
the Company and its Subsidiaries: (i) shall conduct its business only in the
ordinary course of business, consistent with past practice and according to the
plans and budgets previously provided to Parent; (ii) shall not take any action,
or fail to take any action, except in the ordinary course of business,
consistent with past practice; and (iii) shall use their reasonable best efforts
to preserve intact their business organization, properties and assets, keep
available the services of their officers, employees and consultants, maintain in
effect all Company Material Contracts and preserve their relationships,
customers, licensees, suppliers and other Persons with which they have business
relations. By way of amplification and not limitation, except as expressly
permitted by this Agreement or as set forth in the Company Disclosure Schedule,
44
neither the Company nor any of its Subsidiaries shall, during the Interim
Period, directly or indirectly, do any of the following without the prior
written consent of Parent:
(i) amend their Certificate of Incorporation, Bylaws or other
equivalent organizational documents, or otherwise alter their corporate
structure through merger, liquidation, reorganization, restructuring or
otherwise;
(ii) issue, sell, transfer, pledge, dispose of or encumber any
shares of capital stock of any class, or any options, warrants, convertible
securities or other rights of any kind to acquire any shares of capital stock,
or any other ownership interest of the Company or any of its Subsidiaries,
except for the issuance of shares of Company Common Stock issuable (a) upon the
exercise of Outstanding Company Stock Options or (b) under the Company ESPP
pursuant to Section 1.9(c);
(iii) redeem, repurchase or otherwise acquire, directly or
indirectly, any shares of capital stock of the Company or interest in or
securities of any of its Subsidiaries;
(iv) sell, transfer, pledge, dispose of or encumber any
properties, facilities, equipment or other assets, except for sales of inventory
and equipment in the ordinary course of business and not material in amount,
either individually or in the aggregate;
(v) declare, set aside or pay any dividend or other
distribution (whether in cash, stock or other securities or property, or any
combination thereof) in respect of any of its capital stock or other equity
interests (except that a wholly owned Subsidiary of the Company may declare and
pay a cash dividend to the Company);
(vi) split, combine or reclassify any shares of its capital
stock or other securities or equity interests, or issue any other securities in
respect of, in lieu of or in substitution for shares of its capital stock or
equity interests;
(vii) sell, transfer, lease, license, sublicense, mortgage,
pledge, dispose of, encumber, grant or otherwise dispose of any Company
Intellectual Property Rights, or amend or modify in any material respect any
existing agreements with respect to any Company Intellectual Property Rights,
except for licenses of Company Intellectual Property Rights to end-
45
user customers for their internal use or solely as necessary for such customers
to use the Company's products and services, in each case in the ordinary course
of business consistent with past practice;
(viii) acquire (by merger, consolidation, acquisition of stock
or assets or otherwise) any corporation, limited liability company, partnership,
joint venture or other business organization or division thereof;
(ix) incur any indebtedness for borrowed money or issue any
debt securities or assume, guarantee (other than guarantees of bank debt of the
Company's Subsidiaries entered into in the ordinary course of business) or
endorse or otherwise as an accommodation become responsible for the obligations
of any Person, or make any loans, advances or enter into any financial
commitments, except in the ordinary course of business and as otherwise
permitted under any loan or credit agreement to which the Company or any of its
Subsidiaries is a party as of the date of this Agreement;
(x) authorize or make any new capital expenditure or
expenditures, or incur any obligations or liabilities in connection therewith,
which individually is in excess of $25,000 or, in the aggregate, are in excess
of $100,000;
(xi) except as required to comply with any applicable law or
any contract agreement or Plan in effect on the date of this Agreement, and only
after ten (10) days prior written notice to Parent, take or permit to be taken
any action to: (A) increase the compensation payable to its officers or
employees; (B) grant any additional severance or termination pay to, or enter
into any employment or severance agreements with, its officers; (C) grant any
severance or termination pay to, or enter into any employment or severance
agreement with, any employee except in accordance with agreements entered into
before the date of this Agreement or otherwise in the ordinary course of
business consistent with past practice; (D) enter into any collective bargaining
agreement; (E) hire or terminate any employees, independent contractors or
consultants, having a total salary or severance package that is individually in
excess of $75,000, or that collectively is in excess of $300,000 or (F)
establish, adopt, enter into or amend in any material respect any bonus, profit
sharing, thrift, compensation, stock option, restricted stock, pension,
retirement, deferred compensation, employment, termination, severance
46
or other plan, trust, fund, policy or other Plan or arrangement for the benefit
of any of its directors, officers or employees, except in accordance with the
provisions of Section 1.9 and 5.5 of this Agreement;
(xii) change any accounting policies or procedures (including,
without limitation, procedures with respect to reserves, revenue recognition,
payments of accounts payable and collection of accounts receivable), unless
required by statutory accounting principles or GAAP;
(xiii) create, incur, suffer to exist or assume any Lien,
other than Permitted Liens, on any of its material properties, facilities or
other assets;
(xiv) other than in the ordinary course of business: (A) enter
into any Company Material Contract; (B) modify, amend or transfer in any
material respect or terminate any Company Material Contract or waive, release or
assign any material rights or claims thereto or thereunder; or (C) enter into,
extend, amend or modify any lease with respect to real property;
(xv) enter into any contract or agreement containing any
restriction on the ability of the Company or its Subsidiaries to assign its
rights, interests and obligations thereunder, unless such restriction expressly
excludes any assignment to Parent in connection with or following consummation
of the Merger and the other transactions contemplated hereby;
(xvi) enter into any contract or agreement, or amend the terms
of any existing contract or agreement, which grants to any Person exclusive
supply, manufacturing, production, marketing or distribution rights with respect
to any of its products or technologies;
(xvii) enter into any contract or agreement with a term of
greater than one year or which can reasonably be expected to result in payment
obligations by the Company in excess of $25,000;
(xviii) make any Tax election or settle or compromise any
material federal, state, local or foreign Tax liability, or agree to an
extension of a statute of limitations with respect thereto;
47
(xix) pay, discharge, satisfy or settle any material
litigation or waive, assign or release any rights or claims with respect
thereto, other than settlements in the ordinary course of business that involve
only the payment of amounts not in excess of $20,000 individually or $100,000 in
the aggregate, do not impose any restrictions on the conduct of the business of
the Company or its Subsidiaries and include no admission being made with respect
to (A) any criminal wrongdoing or (B) the invalidity or unenforceability of, or
any infringement with respect to, any Company Intellectual Property Rights;
(xx) accelerate or otherwise amend the terms of any
outstanding options under the Company Stock Plans, except in accordance with the
provisions of Section 1.9 of this Agreement or as required under the terms of
such Company Stock Plans;
(xxi) fail to maintain in full force and effect all insurance
policies currently in effect, or permit any of the coverage thereunder to lapse,
in each case without simultaneously securing replacement insurance policies
which will be in full force and effect and provide coverage substantially
similar to or greater than under the prior insurance policies;
(xxii) subject to Section 4.1(a)(x), fail to make any
expenditures that are necessary and sufficient to maintain or, to the extent
budgeted or consistent with the past practice of the Company and its
Subsidiaries, improve the conditions of the properties, facilities and equipment
of the Company and its Subsidiaries, including, without limitation, budgeted
expenditures relating to maintenance, repair and replacement;
(xxiii) take any action or fail to take any reasonable action
permitted by this Agreement if such action or failure to take action could
reasonably be expected to result in either (A) any of the representations and
warranties of the Company set forth in Article II of this Agreement becoming
untrue in any material respect or (B) any of the conditions to the Closing set
forth in Article VI of this Agreement not being satisfied as of the Closing
Date; or
(xxiv) authorize, recommend, propose, announce or enter into
any agreement, contract, commitment or arrangement to do any of the foregoing.
(b) During the Interim Period, the Company shall, and shall cause
each of its Subsidiaries to: (i) solicit and accept customer orders in the
ordinary course of business; and (ii)
48
cooperate with Parent in communicating with suppliers and customers to
accomplish the orderly transfer of the business and operations of the Company
and its Subsidiaries to the control of the Parent on the Closing Date.
4.2 No Solicitation of Other Proposals.
(a) During the Interim Period, the Company shall not, directly or
indirectly, through any officer, director, employee, investment banker,
attorney, accountant or other advisor, representative or agent (each a "Company
Representative"): (i) solicit, initiate or encourage any inquiries or proposals
that constitute, or could reasonably be expected to lead to, a proposal or offer
for a merger, consolidation, share exchange, business combination, sale of
substantial assets, sale of shares of capital stock consisting of at least 20%
of the then currently outstanding shares (including, without limitation,
pursuant to a tender offer) or similar transaction or series of transactions
involving the Company and its Subsidiaries, other than the transactions
contemplated by this Agreement (any of the foregoing inquiries or proposals
being referred to in this Agreement as an "Acquisition Proposal"); or (ii)
engage in negotiations or discussions concerning, or provide any non-public
information to any Person relating to, any Acquisition Proposal; or (iii) agree
to, approve or recommend any Acquisition Proposal; provided, however, that
nothing contained in this Agreement shall prevent the Company or its Board of
Directors from: (A) furnishing non-public information to, or entering into
discussions or negotiations with, any Person in connection with an unsolicited
bona fide written Acquisition Proposal by such Person or recommending such an
unsolicited bona fide written Acquisition Proposal to the stockholders of the
Company, if and only to the extent that (y) the Board of Directors of the
Company determines in good faith (after consultation with, and based upon the
advice of, its financial advisor) that such Acquisition Proposal would, if
consummated, result in a transaction more favorable, from a financial point of
view, to the Company's stockholders than the Merger and other transactions
contemplated by this Agreement (any such more favorable Acquisition Proposal
being referred to in this Agreement as a "Superior Proposal") and the Board of
Directors of the Company determines in good faith after consultation with, and
based upon the advice of, its outside legal counsel that such action is
necessary for the Company to comply with its fiduciary duties to its
stockholders under applicable law and (z) prior to furnishing such non-public
information to, or entering into discussions or negotiations with, such
49
Person, the Company's Board of Directors receives from such Person an executed
non-disclosure agreement with terms no less favorable to such party than those
terms contained in the confidentiality agreement, dated as of August 6, 2002,
between Parent and the Company (the "Confidentiality Agreement"); or (B)
complying with Rule 14e-2 promulgated under the Exchange Act with regards to an
Acquisition Proposal. Notwithstanding the foregoing, if the Company's Board of
Directors shall receive a bona fide, unsolicited Acquisition Proposal as to
which financing is not committed and if the Company's Board of Directors shall
determine in good faith that such Acquisition Proposal would, but for the
question of the financial capability of the proposed acquiror, constitute a
Superior Proposal, then in such event the Company's Board of Directors and its
financial advisor may, for the purpose of determining whether such proposal
constitutes a Superior Proposal, conduct such limited inquiries of the proponent
of such Acquisition Proposal as are necessary for the sole purpose of
ascertaining whether the proposed transaction is reasonably capable of being
consummated by such proponent so as to constitute a Superior Proposal. Without
limiting the generality of the foregoing, the Company acknowledges and agrees
that any violation of or the taking of any action inconsistent with any of the
restrictions set forth in the preceding sentence by anyone acting on behalf of
any of the Company, shall be deemed to constitute a breach of this Section 4.2
by the Company for all purposes of this Agreement.
(b) Upon compliance with the foregoing, following the Company's
receipt of a Superior Proposal, the Company shall be entitled to: (i) withdraw,
modify or refrain from making its recommendation referred to in Section
5.1(a)(v) and 5.2(d) and approve and recommend to the stockholders of the
Company such Superior Proposal; and (ii) enter into an agreement with such
Person concerning such Superior Proposal.
(c) The Company shall notify Parent as soon as practicable (and in
any event within 24 hours) after receipt by the Company (or after the Company
learns of receipt by its advisors) of any Acquisition Proposal or any request
for non-public information in connection with an Acquisition Proposal or for
access to the properties, books or records of the Company by any Person that
informs the Company that it is considering making, or has made, an Acquisition
Proposal. Notwithstanding Section 8.2, such notice shall be made both orally and
in writing and shall indicate in reasonable detail the identity of the offeror
and the terms and conditions of such
50
proposal, inquiry or contact. The Company shall notify Parent of any discussions
with any such offeror within 24 hours of such discussions and shall disclose to
Parent within such 24-hour period the substance of such discussions in
reasonable detail.
(d) The Company shall be entitled to provide copies of this Section
4.2 to third parties who, on an unsolicited basis after the date of this
Agreement, contact the Company regarding an Acquisition Proposal, provided that
Parent shall concurrently be notified of such contact and delivery of such copy.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 Special Meeting; Proxy Statement; Other Filings.
(a) The Company shall in accordance with applicable law:
(i) as promptly as practicable after the execution of this
Agreement, in accordance with the DGCL and its Certificate of Incorporation and
Bylaws duly call, give notice of, convene and hold a special meeting of its
stockholders for the purpose of considering and taking action upon this
Agreement (the "Special Meeting");
(ii) prepare and use reasonable best efforts to file with the
SEC within twelve (12) Business Days after execution of this Agreement a
preliminary proxy statement relating to the Merger and this Agreement in form
and substance reasonably satisfactory to Parent;
(iii) after consultation with Parent, respond promptly to any
and all comments made by the SEC with respect to the preliminary proxy statement
and, as soon as practicable thereafter to cause a definitive proxy statement
(the "Proxy Statement") to be mailed to the stockholders of the Company in
accordance with Regulation 14A under the Exchange Act, the Company's Certificate
of Incorporation and Bylaws and the DGCL;
(iv) provide Parent with a reasonable opportunity to review
and comment on the preliminary proxy statement and all amendments thereto and
the Proxy Statement and all amendments or supplements thereto prior to the
filing of the same with the
51
SEC, and will provide Parent with a true and complete copy of all such filings
made with the SEC;
(v) include in the Proxy Statement (A) the opinion of the
Financial Advisor referred to in Section 2.21 and (B) subject to Section 4.2,
the recommendation of the Board of Directors that stockholders of the Company
vote in favor of the adoption of this Agreement (the "Company Recommendation");
provided, however, that the Company shall submit this Agreement to the
stockholders of the Company, whether or not the Company's Board of Directors at
any time changes, withdraws or modifies its recommendation pursuant to Section
4.2;
(vi) subject to Section 4.2, use all reasonable efforts to
solicit from stockholders proxies in favor of the Merger and adoption of this
Agreement and take all actions reasonably necessary or, in the reasonable
opinion of Parent, advisable to secure the approval of the stockholders
required;
(vii) not, once the Special Meeting has been called and
noticed, postpone or adjourn the Special Meeting (other than for the absence of
a quorum and then only to such future date as is reasonably acceptable to
Parent) without the prior written consent of Parent;
(b) The Company agrees that its obligation to duly call, give notice
of, convene and hold the Special Meeting as required by Section 5.1(a) shall not
be affected by the withdrawal, amendment or modification of the Company
Recommendation; and (ii) the Company agrees that its obligations under Section
5.1(a) shall not be affected by the commencement, public proposal, public
disclosure or communication to the Company of any Acquisition Proposal.
(c) Parent shall:
(i) promptly furnish all information concerning Parent and
Merger Sub required to be included in the Proxy Statement; and
52
(ii) vote any shares of the Company beneficially owned by it,
or with respect to which it has the power (by agreement, proxy or otherwise) to
vote or cause to be voted, in favor of the adoption of this Agreement and
approval of the Merger at the Special Meeting.
(d) As promptly as practicable after the date of this Agreement, the
Parties shall prepare and file any other filings required under the Exchange
Act, the Securities Act or any other federal or state securities laws relating
to the Merger and other transactions contemplated by this Agreement
(collectively, the "Other Filings").
5.2 Tender Offer.
(a) Parent shall have the option (the "Tender Offer Option") at any
time prior to the date the Proxy Statement is first mailed to the stockholders
of the Company to cause Merger Sub to (A) commence (within the meaning of Rule
14d-2 under the Exchange Act) an offer (the "Offer") to purchase any and all of
the Company Common Stock at a price per share equal to the Merger Consideration,
net to the selling stockholder in cash and (B) after affording the Company a
reasonable opportunity to review and comment thereon, file a Tender Offer
Statement on Schedule TO (the "Schedule TO") and all other necessary documents
with the SEC (collectively, the "Offer Documents"), make all deliveries,
mailings and telephonic notices required by Rule 14d-3 under the Exchange Act,
and publish, send or give the disclosure required by Rule 14d-6 under the
Exchange Act by complying with the dissemination requirements of Rule 14d-4
under the Exchange Act in each case in connection with the Offer Documents. The
Offer shall be subject only to the condition that there shall be validly
tendered in accordance with the terms of the Offer, prior to the expiration date
of the Offer and not withdrawn, a number of shares of Company Common Stock that,
together with the shares of Company Common Stock then owned by Parent and/or
Merger Sub or any other Subsidiary of Parent, represents at least a majority of
the shares of Company Common Stock outstanding on a fully-diluted basis (the
"Minimum Condition") and to the other conditions set forth in Annex I hereto.
Merger Sub expressly reserves the right to waive any of the conditions to the
Offer and to make any change in the terms of or conditions to the Offer,
provided that without the prior written consent of the Company, (i) the Minimum
Condition may not be waived, (ii) no change
53
may be made that changes the form of consideration to be paid, decreases the
price per share of Company Common Stock or the number of shares of Company
Common Stock sought in the Offer or imposes conditions to the Offer in addition
to those set forth in Annex I and (iii) no other change may be made to any term
of the Offer in any manner adverse to the holders of the shares of Company
Common Stock. Notwithstanding the foregoing, without the consent of the Company,
Merger Sub shall have the right to extend the Offer (i) from time to time if, at
the scheduled or extended expiration date of the Offer, any of the conditions to
the Offer shall not have been satisfied or waived, until such conditions are
satisfied or waived or (ii) for any period required by any rule, regulation,
interpretation or position of the SEC or the staff thereof applicable to the
Offer or any period required by applicable law. The Offer shall remain open
until the date that is twenty (20) Business Days after the commencement of the
Offer (the "Expiration Date"), unless Parent shall have extended the period of
time for which the Offer is open pursuant to, and in accordance with, the terms
of this Agreement or as may be required by applicable law, in which event, the
term Expiration Date shall mean the latest time and date as the Offer, as so
extended, may expire. If, at any Expiration Date, any of the conditions to the
Offer are not satisfied or waived by Parent, Parent may, but shall not be
required to, extend the Offer. Notwithstanding the foregoing, Parent and Merger
Sub agree that Merger Sub shall from time to time extend the Offer, if requested
by the Company, if at the Expiration Date (or any extended expiration date of
the Offer, if applicable), any of the conditions of the Offer other than (or in
addition to) the Minimum Condition or those set forth in Sections (c), (d), (e),
(f) or (g) of Annex I shall not have been waived or satisfied, until (taking
into account all such extension(s)) January 31, 2003. If at the expiration of
the Offer all of the conditions to the Offer have been satisfied or waived,
Merger Sub may extend the Offer pursuant to an amendment to the Offer providing
for a "subsequent offering period" not to exceed twenty (20) Business Days to
the extent permitted under, and in compliance with, Rule 14d-11 under the
Exchange Act. Subject to the foregoing and upon the terms and subject to the
conditions of the Offer, Merger Sub shall, and Parent shall cause it to, accept
for payment and pay for, as promptly as practicable after the expiration of the
Offer, all shares of Company Common Stock validly tendered and not withdrawn
pursuant to the Offer.
(b) Parent, Merger Sub and the Company agree that the Offer
Documents shall comply in all material respects with the requirements of
applicable U.S. federal securities
54
laws and, on the date first filed with the SEC and on the date first published,
sent or given to the Company's stockholders, shall not 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, except that in
complying with the foregoing commitments, Parent or Merger Sub may rely on the
accuracy of any information supplied by the Company or any of its stockholders
for inclusion or incorporation by reference in the Offer Documents, and the
Company may rely on the accuracy of any information supplied by Parent or Merger
Sub for inclusion or incorporation by reference in the Offer Documents. Parent,
Merger Sub and the Company each agrees promptly to correct any information
provided by it for use in the Offer Documents if and to the extent that such
information shall have become false or misleading in any material respect.
Parent and Merger Sub agree to take all steps necessary to cause the Schedule TO
as so corrected to be filed with the SEC and the other Offer Documents as so
corrected to be disseminated to holders of shares of Company Common Stock, 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 the Offer Documents and any amendments thereto prior to their
being filed with the SEC or disseminated to the holders of shares of Company
Common Stock. Parent and Merger Sub shall provide the Company and its counsel
with a copy of any written comments or telephonic notification of any oral
comments Parent, Merger Sub or their counsel may receive from the SEC or its
staff with respect to the Offer promptly after the receipt thereof, shall
consult with the Company and its counsel prior to responding to any such
comments, and shall provide the Company and its counsel with a copy of any
written responses thereto and telephonic notification of any oral responses
thereto of Parent or Merger Sub or their counsel.
(c) Parent shall provide or cause to be provided to Merger Sub on a
timely basis the funds necessary to purchase any and all shares of Company
Common Stock that Merger Sub becomes obligated to purchase pursuant to the
Offer.
(d) The Company hereby consents to the Offer and represents that its
Board of Directors, at a meeting duly called and held has (i) unanimously
determined that this Agreement and the transactions contemplated hereby,
including the Offer and the Merger, are fair to and in the best interests of all
holders of Company Common Stock, (ii) unanimously approved this
55
Agreement and the transactions contemplated hereby, including the Offer, (iii)
if Parent elects to exercise the Tender Offer Option, subject to Section 4.2,
unanimously resolved to recommend to the holders of Company Common Stock that
they tender their shares in the Offer and vote to adopt this Agreement and (iv)
taken all action necessary to render the limitations on business combinations
contained in Section 203 of Delaware Law inapplicable to this Agreement and the
transactions contemplated hereby and thereby.
(e) If Parent elects to exercise the Tender Offer Option, the
Company will promptly furnish Parent with a list of its stockholders, mailing
labels and any available listing or computer file containing the names and
addresses of all record holders of shares of Company Common Stock and lists of
securities positions of shares of Company Common Stock held in stock
depositories, in each case true and correct as of the most recent practicable
date, and will provide to Parent such additional information (including updated
lists of stockholders, mailing labels and lists of securities positions) and
such other assistance as Parent may reasonably request in connection with the
Offer. From and after the date of this Agreement, all such information
concerning the Company's record holders and, to the extent known, beneficial
holders, shall be made available to Merger Sub upon request. Subject to the
requirements of applicable laws and except for such steps as are necessary to
disseminate the Offer Documents and any other documents necessary to consummate
the Offer, the Merger and the other transactions contemplated by this Agreement,
Parent and Merger Sub shall, until consummation of the Offer, hold in confidence
the information contained in any of such labels and lists, shall use such
information only in connection with the Offer, the Merger and the other
transactions contemplated by this Agreement and, if this Agreement shall be
terminated in accordance with Article VII, shall deliver to the Company all
copies of such information then in their possession or under their control.
(f) As soon as practicable on the day that the Offer is commenced,
the Company shall file with the SEC and disseminate to holders of shares of
Company Common Stock, in each case as and to the extent required by applicable
federal securities laws, a Solicitation/Recommendation Statement on Schedule
14D-9 (together with any amendments or supplements thereto, the "Schedule
14D-9") that, subject to Section 4.2, shall reflect the recommendations of the
Company's Board of Directors referred to above. The Company, Parent
56
and Merger Sub each agrees promptly to correct any information provided by it
for use in the Schedule 14D-9 if and to the extent that such information shall
have become false or misleading in any material respect. The Company agrees to
take all steps necessary to cause the Schedule 14D-9 as so corrected to be filed
with the SEC and to be disseminated to holders of shares of Company Common
Stock, in each case as and 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 and each amendment thereto prior to
its being filed with the SEC or disseminated to the holders of shares of Company
Common Stock.
(g) Effective upon the acceptance for payment of, and payment for,
any shares of Company Common Stock pursuant to the Offer, Parent shall be
entitled to designate the number of directors, rounded up to the next whole
number, on the Company's Board of Directors that equals the product of (i) the
total number of directors on the Company's Board of Directors (giving effect to
the election of any additional directors pursuant to this Section 5.2(g)) and
(ii) the percentage that the number of shares of Company Common Stock
beneficially owned by Parent and/or Merger Sub (including shares of Company
Common Stock accepted for payment) bears to the total number of shares of
Company Common Stock outstanding, and the Company shall take all action
necessary to cause Parent's designees to be elected or appointed to the
Company's Board of Directors, including increasing the number of directors, and
seeking and accepting resignations of incumbent directors. At such time, the
Company will also use its reasonable best efforts to cause individuals
designated by Parent to constitute the number of members, rounded up to the next
whole number, on (i) each committee of the Board (subject to any relevant
independence requirements) and (ii) each board of directors of each Subsidiary
of the Company (and each committee thereof) that represents the same percentage
as such individuals represent on the Board of Directors of the Company.
(h) The Company's obligations to appoint Parent's designees to the
Board of Directors shall be subject to Section 14(f) of the Exchange Act and
Rule 14f-1 promulgated thereunder. The Company shall promptly take all actions,
and shall include in the Schedule 14D-9 such information with respect to the
Company and its officers and directors, as Section 14(f) and Rule 14f-1 require
in order to fulfill its obligations under this Section. Parent shall supply to
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the Company in writing and be solely responsible for any information with
respect to itself and its nominees, officers, directors and affiliates required
by Section 14(f) and Rule 14f-1.
(i) Following the election or appointment of Parent's designees
pursuant to Section 5.2(g) and until the Effective Time, there shall be in
office at least one Continuing Director (as defined below) and the approval of
not less than a majority of the directors of the Company then in office, which
majority shall include the concurrence of a majority of the directors neither
designated by Parent nor employed by the Company (the "Continuing Directors"),
shall be required to authorize any amendment or modification to the Certificate
of Incorporation or Bylaws of the Company (except as otherwise provided herein),
any termination of this Agreement by the Company, any amendment of this
Agreement requiring action by the Board of Directors, any extension of time for
performance of any obligation or action hereunder by Parent or Merger Sub and
any waiver of compliance with any of the agreements or conditions contained
herein for the benefit of the Company or other action by the Company hereunder
which materially adversely affects the rights of the Company hereunder or of the
holders of shares of Company Common Stock (other than Parent and Merger Sub);
provided, however, if the foregoing provisions of this subsection are invalid or
incapable of being enforced under applicable law, then neither Parent nor Merger
Sub shall approve (either in its capacity as a stockholder or as a party to this
Agreement, as applicable), and Parent and Merger Sub shall use their
commercially reasonable efforts to prevent the occurrence of, such action unless
such action shall have received the unanimous approval of the Board of Directors
of the Company. Following the election or appointment of Parent's designees
pursuant to Section 5.2(g) and until the Effective Time, the Company shall use
its reasonable best efforts to ensure that at least two (2) Continuing Directors
shall remain members of the Board of Directors; provided that, if there shall be
in office fewer than two (2) Continuing Directors for any reason, the parties
shall use their commercially reasonable efforts to cause the Board of Directors
of the Company to cause the person designated by the remaining Continuing
Director to be elected to fill such vacancy, which person shall be deemed to be
a Continuing Director for all purposes of this Agreement. If no Continuing
Directors then remain, the other directors of the Company then in office shall
designate two (2) persons to fill such vacancies who will not be directors,
Officers, employees or Affiliates of Parent, Merger Sub or the Company, and such
persons shall be deemed to be Continuing Directors for all purposes of this
Agreement. The Board of Directors of the Company
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shall not delegate any matter covered by this Sections 5.2(g)-(i) to any
committee of the Board of Directors of the Company unless such committee
consists only of Continuing Directors.
5.3 Access to Information; Confidentiality.
(a) Upon reasonable notice, the Company shall (and shall cause each
of its Subsidiaries to) afford to the officers, employees, accountants, counsel
and other representatives of Parent reasonable access, during the Interim
Period, to all its properties, books, contracts, commitments and records and,
during such period, furnish promptly to Parent all information concerning its
business, properties and personnel as Parent may reasonably request. The Company
shall make available to Parent the appropriate individuals for discussion of its
business, properties and personnel as Parent may reasonably request.
(b) No investigation by Parent or its representatives shall affect
any representations, warranties, covenants or agreements of the Company set
forth herein or the conditions to the obligations of the Company hereto.
(c) All information obtained by Parent pursuant to Section 5.3 (a)
shall be kept confidential in accordance with the Confidentiality Agreement.
5.4 Reasonable Efforts; Further Assurances.
(a) Parent and the Company shall use their reasonable best efforts
to satisfy or cause to be satisfied all of the conditions precedent that are set
forth in Article VI, as applicable to each of them. Each Party, at the
reasonable request of the other, shall execute and deliver such other
instruments and do and perform such other acts and things as may be necessary or
desirable for effecting completely the consummation of the Merger and other
transactions contemplated by this Agreement.
(b) Subject to the terms and conditions hereof, the Company and
Parent agree to use their respective reasonable best efforts to take, or cause
to be taken, all actions and to do, or cause to be done, all things necessary,
proper or advisable to consummate and make effective, in the most expeditious
manner practicable, the Merger and other transactions contemplated by this
Agreement including, without limitation, using their respective reasonable best
efforts: (i)
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to obtain prior to the Closing Date all licenses, certificates, permits,
consents, approvals, authorizations, qualifications and orders of Governmental
Authorities and parties to agreements and contracts with the Company or its
Subsidiaries as are necessary for the consummation of the transactions
contemplated hereby; (ii) to effect all necessary registrations and filings
required by any Governmental Authority (in connection with which Parent and the
Company shall cooperate with each other in connection with the making of all
such registrations and filings, including, without limitation, providing copies
of all such documents to the non-filing party and its advisors prior to the time
of such filing and, if requested, will accept all reasonable additions,
deletions or changes suggested in connection therewith); (iii) to furnish to
each other such information and assistance as reasonably may be requested in
connection with the foregoing; and (iv) to lift, rescind or mitigate the effects
of any injunction, restraining order or other ruling by a Governmental Authority
adversely affecting the ability of any Party to consummate the Merger or other
transactions contemplated hereby and to prevent, with respect to any threatened
or such injunction, restraining order or other such ruling, the issuance or
entry thereof.
5.5 Employee Benefit Matters.
(a) Parent agrees that individuals who are employed by the Company
or any Subsidiary of the Company immediately prior to the Effective Time shall
remain employees of the Surviving Corporation or one of its Subsidiaries upon
the Effective Time (each such employee, a "New Parent Employee").
(b) After the Effective Time the New Parent Employees shall be
eligible to participate in the employee benefit plans of Parent (the "Parent
Benefit Plans") to the same extent as any similarly situated and geographically
located employee of Parent.
(c) With respect to each Parent Benefit Plan in which New Parent
Employees subsequently participate, for purposes of determining vesting and
entitlement to benefits, including for severance benefits and vacation
entitlement (but not for accrual of pension benefits), service with the Company
and its Subsidiaries (or predecessor employers thereof to the extent the plans
of the Company or its Subsidiaries provides past service credit) shall be
treated as service with Parent; provided, that such service shall not be
recognized to the extent that such recognition would result in a duplication of
benefits or to the extent that such service was not
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recognized under the applicable Plan of the Company or Subsidiary. Such service
also shall apply for purposes of satisfying any waiting periods, evidence of
insurability requirements, or the application of any pre-existing condition
limitations. Each Parent Benefit Plan shall waive pre-existing condition
limitations to the same extent waived under the applicable Plan of the Company
or Subsidiary. New Parent Employees shall be given credit for amounts paid under
a corresponding benefit plan of the Company or a Subsidiary during the same
period for purposes of applying deductibles, co-payments and out-of-pocket
maximums as though such amounts had been paid in accordance with the terms and
conditions of the Parent Benefit Plan for the plan year in which the Effective
Time occurs.
(d) Nothing contained in this Section 5.5 shall be deemed to be a
commitment of the Surviving Corporation, Parent or any of its Subsidiaries to
employ any New Parent Employee for any period of time after the Effective Time,
and this Section 5.5 shall not be construed to limit the ability of the
Surviving Corporation, Parent or any of its Subsidiaries to terminate the
employment of any New Parent Employee at any time after the Effective Time. In
addition, nothing contained in this Section 5.5 shall be deemed to prevent
Parent from amending or terminating any Parent Benefit Plan in accordance with
its terms.
(e) The provisions of this Section 5.5 are not intended to create
rights of third party beneficiaries.
5.6 Notification of Certain Matters.
(a) The Company shall give prompt notice to Parent, and Parent shall
give prompt notice to the Company, of the occurrence or non-occurrence of (i)
any event the occurrence, or non-occurrence of which could reasonably be
expected to result in any representation or warranty contained in this Agreement
to be untrue or inaccurate in any material respect (or, in the case of any
representation or warranty qualified by its terms by materiality, then untrue or
inaccurate in any respect) and (ii) any failure of the Company, Parent or Merger
Sub, 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 5.6(a) shall not limit or otherwise affect the remedies available
hereunder to the Party receiving such notice.
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(b) Each of the Company and Parent shall give prompt notice to the
other of (i) any notice or other communication from any Person alleging that the
consent of such Person is or may be required in connection with the Merger or
other transactions contemplated by this Agreement; (ii) any notice or other
communication from any Governmental Authority in connection with the Merger or
other transactions contemplated by this Agreement; (iii) any litigation,
relating to or involving or otherwise affecting the Company or any of its
Subsidiaries or Parent that relates to the Merger or other transactions
contemplated by this Agreement; (iv) the occurrence of a default or event that,
with notice or lapse of time or both, will become a default under a Company
Material Contract; and (v) any change that would be considered reasonably likely
to result in a Company or Parent Material Adverse Effect, as the case may be, or
is likely to impair in any material respect the ability of either Parent or the
Company to consummate the transactions contemplated by this Agreement.
5.7 Public Announcements. Except as otherwise required by applicable law,
court process, or as provided elsewhere herein, prior to the Closing or the
earlier termination of this Agreement pursuant to Article VII, the Company shall
not, nor shall it permit any of its Subsidiaries to, issue or cause the
publication of any press release or other public announcement with respect to
the Merger or other transactions contemplated by this Agreement without the
consent of Parent, which consent shall not be unreasonably withheld, conditioned
or delayed.
5.8 Indemnification of Directors and Officers.
(a) Parent and the Surviving Corporation agree that all rights to
indemnification and exculpation from liabilities for acts or omissions occurring
at or prior to the Effective Time (and rights for advancement of expenses) now
existing in favor of the current or former directors or officers of the Company
and its Subsidiaries (the "Indemnified Parties") as provided in their respective
Certificates of Incorporation or Bylaws (or comparable organizational documents)
and any indemnification or other agreements of the Company and its Subsidiaries
as in effect on the date of this Agreement shall be assumed by the Surviving
Corporation in the Merger, without further action, at the Effective Time and
shall survive the Merger and shall continue in full force and effect in
accordance with their terms, and Parent shall ensure that the Surviving
Corporation complies with and honors the foregoing obligations.
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(b) In the event that the Surviving Corporation or any of its
successors or assigns (i) consolidates with or merges into any other Person and
is not the continuing or surviving corporation or entity of such consolidation
or merger or (ii) transfers or conveys all or substantially all its properties
and assets to any Person, or if Parent dissolves the Surviving Corporation,
then, and in each such case, Parent shall cause proper provision to be made so
that the successors and assigns of the Surviving Corporation assume the
obligations set forth in this Section 5.8, and Parent shall ensure that such
successors and assigns of the Surviving Corporation comply with and honor the
foregoing obligations.
(c) Parent shall, or the Company may with the prior written consent
of Parent, purchase a five (5) year extended reporting period endorsement
("reporting tail coverage") under the Company's existing directors' and
officers' liability insurance policy, or with the Company's prior consent, which
shall not be unreasonably withheld or conditioned, a substantially similar
policy, with respect to claims arising from facts or events that occurred on or
prior to the Effective Time. Notwithstanding the foregoing, in no event shall
Parent or the Surviving Corporation be obligated to expend in excess of
$1,000,000 in the aggregate for payment of the premiums (the "D&O Premium Cap")
for such directors' and officers' liability insurance in order to maintain or
procure insurance coverage pursuant to this paragraph (c). If Parent or the
Surviving Corporation is unable to obtain the insurance coverage required by
this Section 5.8(c) for an aggregate amount less than or equal to the D&O
Premium Cap, Parent or the Surviving Corporation, after consultation with the
Company, shall obtain as much insurance as can be obtained for the D&O Premium
Cap.
(d) The provisions of this Section 5.8 are intended to be for the
benefit of, and will be enforceable by each Indemnified Party, his or her
respective heirs and representatives and may not be amended or repealed in any
manner adverse to such Indemnified Party without the written consent of such
Indemnified Party.
5.9 Option Agreement. Contemporaneously with the execution and delivery of
this Agreement, the Company shall execute and deliver to Parent the Option
Agreement. The Company agrees to fully perform to the fullest extent permitted
under applicable law its obligations under the Option Agreement.
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ARTICLE VI
CONDITIONS OF MERGER
6.1 Conditions to Obligation of Each Party to Effect the Merger. The
obligations of each Party to effect the Merger and consummate the other
transactions contemplated hereby shall be subject to the satisfaction at or
prior to the Closing of the following conditions, any of which may be waived in
writing by the Party entitled to the benefit thereof, in whole or in part, to
the extent permitted by the applicable law:
(a) Stockholder Approval. This Agreement and the Merger shall have
been approved and adopted by the Requisite Stockholder Vote in accordance with
the DGCL and the Certificate of Incorporation and Bylaws of the Company at the
Special Meeting.
(b) No Injunctions or Restraints; Illegality. No temporary
restraining order, preliminary or permanent injunction or other order (whether
temporary, preliminary or permanent) issued by any court of competent
jurisdiction, or other legal restraint or prohibition shall be in effect which
prevents the consummation of the Merger on substantially identical terms and
conferring upon Parent substantially all the rights and benefits as contemplated
herein, nor shall any proceeding brought by any Governmental Authority, domestic
or foreign, seeking any of the foregoing be pending, and there shall not be any
action taken, or any law, regulation or order enacted, entered, enforced or
deemed applicable to the Merger, which makes the consummation of the Merger on
substantially identical terms and conferring upon Parent substantially all the
rights and benefits as contemplated herein illegal.
6.2 Additional Conditions to Obligations of Parent. The obligations of
Parent to effect the Merger are also subject to the following conditions, any
and all of which may be waived in writing by the Parent, in whole or in part, to
the extent permitted by the applicable law:
(a) Representations and Warranties. The representations and
warranties of the Company contained herein that are qualified as to materiality
shall be true and correct, and the representations and warranties of the Company
contained herein that are not so qualified shall be true and correct in all
material respects, except, in all such cases, for such breaches, inaccuracies
64
or omissions of such representations and warranties which, considered in the
aggregate, have neither had nor reasonably would be expected to have a Company
Material Adverse Effect, in each case as of the date of this Agreement and as of
the Closing Date with the same effect as though made as of the Closing Date
except that the accuracy of representations and warranties that by their terms
speak as of a specified date will be determined as of such date. Parent shall
have received a certificate signed on behalf of the Company by the Chief
Executive Officer and Chief Financial Officer of the Company to such effect.
(b) Agreements and Covenants. The Company shall have performed or
complied in all material respects with all agreements and covenants required by
this Agreement to be performed or complied with by it on or prior to the
Effective Time. Parent shall have received a certificate to such effect signed
by the Chief Executive Officer and Chief Financial Officer of the Company.
(c) Approvals of Governmental Authorities; Third Party Consents.
Parent shall have received evidence, in form and substance reasonably
satisfactory to it, that (i) those approvals of Governmental Authorities and
other third parties described in Section 2.4(d) (or not described in Section 2.4
(d) but required to be so described) have been obtained and (ii) the consents of
such Persons set forth in Section 2.4(c) of the Company Disclosure Schedule have
been obtained, except where the failure to have been obtained, either
individually or in the aggregate, has not had and could not reasonably be
expected to result in a Company Material Adverse Effect.
(d) No Material Adverse Effect. From and after the date hereof,
there shall not have occurred any event or occurrence and no circumstance shall
exist which, alone or together with any one or more other events, occurrences or
circumstances has had, is having or could reasonably be expected to result in a
Company Material Adverse Effect.
(e) Resignations of Directors. Parent shall have received written
resignations from all of the directors of the Company and its Subsidiaries
effective as of the Effective Time.
(f) Dissenters' Rights. The holders of less than five percent (5%)
of the
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Company Common Stock shall have demanded and perfected their right to an
appraisal of the Company Common Stock in accordance with the DGCL.
6.3 Additional Conditions to Obligations of the Company. The obligation of
the Company to effect the Merger is also subject to the following conditions,
any and all of which may be waived in writing by the Company, in whole or in
part, to the extent permitted by the applicable law:
(a) Representations and Warranties. The representations and
warranties of Parent and Merger Sub contained herein that are qualified as to
materiality shall be true and correct, and the representations and warranties of
Parent and Merger Sub contained herein that are not so qualified shall be true
and correct in all material respects, except, in all such cases, for such
breaches, inaccuracies or omissions of such representations and warranties
which, considered in the aggregate, have neither had nor reasonably would be
expected to have a Parent Material Adverse Effect, in each case as of the date
of this Agreement and as of the Closing Date with the same effect as though made
as of the Closing Date except that the accuracy of representations and
warranties that by their terms speak as of a specified date will be determined
as of such date. The Company shall have received a certificate signed on behalf
of Parent by the Chief Executive Officer and Chief Financial Officer of Parent
to such effect.
(b) Agreements and Covenants. Parent and Merger Sub shall have
performed or complied in all material respects with all agreements and covenants
required by this Agreement to be performed or complied with by them on or prior
to the Effective Time, except for any failure to perform or comply with such
agreements and covenants which would not, individually or in the aggregate,
reasonably be expected to have a Parent Material Adverse Effect, and the Company
shall have received a certificate to such effect signed by the Chief Executive
Office and Chief Financial Officer of Parent.
(c) Approvals of Governmental Authorities. The Company shall have
received evidence, in form and substance reasonably satisfactory to it, that
those approvals of Governmental Authorities and other third parties described in
Section 3.2(c) (or not described in Section 3.2(c) but required to be so
described) have been obtained, except where the failure to
66
have been so obtained, either individually or in the aggregate, could not
reasonably be expected to result in a Parent Material Adverse Effect.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
7.1 Termination. This Agreement may be terminated and the Merger and other
transactions contemplated hereby may be abandoned at any time prior to the
Effective Time, notwithstanding approval thereof by the stockholders of the
Company:
(a) by mutual written consent of the Parties duly authorized by each
of the Boards of Directors of Parent and the Company;
(b) by either Parent or the Company if the Merger shall not have
been consummated on or before January 31, 2003; provided, however, that the
right to terminate this Agreement under this Section 7.1(b) shall not be
available to a Party whose failure to fulfill any material obligation under this
Agreement has been the cause of, or resulted in, the failure of the Merger to
have been consummated on or before such date;
(c) by either Parent or the Company, if a Governmental Authority
shall have issued an order or taken any other action, in each case, which has
become final and non-appealable and which restrains, enjoins or otherwise
prohibits the Merger;
(d) by either Parent or the Company, if, at the Special Meeting
(including any adjournment or postponement thereof), the Requisite Stockholder
Vote shall not have been obtained;
(e) by Parent, if the Board of Directors of the Company, or any
authorized committee thereof, shall have: (i) approved or recommended, or
proposed to approve or recommend, any Acquisition Proposal other than the
Merger; (ii) failed to present and recommend the approval and adoption of this
Agreement and the Merger to the stockholders of the Company, or withdrawn or
modified, or proposed to withdraw or modify, in a manner adverse to Parent or
Merger Sub, its recommendation or approval of the Merger and this Agreement;
(iii) failed to mail the Proxy Statement to the stockholders of the Company
within a
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reasonable period of time after the Proxy Statement becomes available for
mailing or failed to include therein such approval and recommendation (including
the recommendation that the stockholders of the Company vote in favor of the
Merger and approve and adopt this Agreement); (iv) upon a request by Parent to
publicly reaffirm the approval and recommendation of the Merger, failed to do so
within two (2) Business Days after such request is made; (v) entered, or caused
the Company or any of its Subsidiaries to enter, into any letter of intent,
agreement in principle, acquisition agreement or other similar agreement related
to any Acquisition Proposal; (vi) breached Section 4.2(a), Section 4.2(c) or
Section 4.2(d) (for purposes of this Section 7.1(e) not considering the
exceptions set forth in Section 4.2(b)); (vii) breached the Option Agreement; or
(viii) resolved or announced its intention to do any of the foregoing;
(f) by Parent, if neither Parent nor Merger Sub is in material
breach of its obligations under this Agreement, and if (i) at any time any of
the representations and warranties of the Company herein are or become untrue or
inaccurate such that Section 6.2(a) would not be satisfied (treating such time
as if it were the Effective Time for purposes of this Section 7.1(f)) or (ii)
there has been a breach on the part of the Company of any of its covenants or
agreements contained in this Agreement such that Section 6.2(b) will not be
satisfied (treating such time as if it were the Effective Time for purposes of
this Section 7.1(f)), and, in both case (i) and case (ii), such breach (if
curable) has not been cured within twenty (20) days after notice thereof to the
Company;
(g) By Parent, if after Parent exercises the Tender Offer Option,
the Board of Directors of the Company, or any authorized committee thereof,
shall have: (i) failed to file with the SEC and disseminate to its holders of
shares of Company Common Stock the Schedule 14D-9; (ii) failed to include in the
Schedule 14D-9 the recommendation to the holders of Company Common Stock that
they tender their shares in the Offer; (iii) withdrawn or modified, or proposed
to withdraw or modify, in a manner adverse to Parent or Merger Sub, its
recommendation to the holders of Company Common Stock that they tender their
shares in the Offer; (iv) upon a request by Parent to publicly reaffirm the
recommendation to the holders of Company Common Stock that they tender their
shares in the Offer, failed to do so within two (2) Business Days after such
request is made; (v) otherwise breached Section 5.2; or (vi) resolved or
announced its intention to do any of the foregoing; or
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(h) by the Company, if it is not in material breach of its
obligations under this Agreement, and if (i) at any time the representations and
warranties of Parent or Merger Sub herein become untrue or inaccurate such that
Section 6.3(a) would not be satisfied (treating such time as if it were the
Effective Time for purposes of this Section 7.1(h)), or (ii) there has been a
breach on the part of Parent or Merger Sub of any of their respective covenants
or agreements contained in this Agreement such that Section 6.3(b) would not be
satisfied (treating such time as if it were the Effective Time for purposes of
this Section 7.1(h)), and, in both case (i) and case (ii), such breach (if
curable) has not been cured within twenty (20) days after notice thereof to
Parent.
7.2 Effect of Termination. Except as provided in this Section 7.2, in the
event of the termination of this Agreement pursuant to Section 7.1, this
Agreement (other than this Section 7.2 and Sections 5.3(c), 7.3 and Article
VIII, each of which shall survive such termination) will forthwith become void,
and there will be no liability on the part of Parent, Merger Sub or the Company
or any of their respective officers or directors to the other and all rights and
obligations of any Party will cease, except that nothing herein will relieve any
Party from liability for any breach, prior to termination of this Agreement in
accordance with its terms, of any representation, warranty, covenant or
agreement contained in this Agreement.
7.3 Fees and Expenses.
(a) Except as set forth in this Section 7.3, all fees and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby shall be paid by the Party incurring such fees and expenses, whether or
not the Merger is consummated.
(b) In the event that Parent terminates this Agreement pursuant to
Section 7.1(e) or Section 7.1(g), then the Company shall pay to Parent,
simultaneously with such termination of this Agreement, a fee in cash equal to
$1,200,000 (the "Termination Fee"), payable by wire transfer of immediately
available funds to an account specified by Parent. In addition, in the event
that an Acquisition Proposal shall have been made known to the Company or shall
have been made directly to its stockholders generally or any person shall have
announced an intention (whether or not conditional) to make an Acquisition
Proposal and thereafter this Agreement is terminated pursuant to Section 7.1(d)
and such Acquisition Proposal
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is consummated within one (1) year of such termination, the Company shall pay to
Parent, simultaneously with the consummation of such Acquisition Proposal, the
Termination Fee, payable by wire transfer of immediately available funds to an
account specified by Parent. Furthermore, in the event that Parent terminates
this Agreement pursuant to Section 7.1(f) due to (i) an intentional breach,
omission or other act by or on behalf of the Company which causes the
representations and warranties of the Company contained herein to become untrue
or inaccurate or (ii) an intentional breach of any of its covenants or
agreements contained in this Agreement, then the Company shall pay to Parent,
simultaneously with such termination of this Agreement, the Termination Fee,
payable by wire transfer of immediately available funds to an account specified
by Parent.
(c) If this Agreement is terminated pursuant to Section 7.1(h), then
Parent shall reimburse the Company for all Company Stipulated Expenses not later
than two Business Days after the date of such termination. As used in this
Agreement, the term "Company Stipulated Expenses" shall mean those fees and
expenses actually incurred by the Company in connection with this Agreement, the
Merger and other transactions contemplated hereby, including fees and expenses
of counsel, investment bankers, accountants, experts, consultants and other
Company Representatives; provided, however, that in no event shall such amount
exceed $500,000.
(d) Nothing in this Section 7.3 shall be deemed to be exclusive of
any other rights or remedies either Party may have hereunder or at law or in
equity for any breach of this Agreement.
7.4 Amendment. This Agreement may be amended by the Parties by action
taken by or on behalf of their respective Boards of Directors at any time prior
to the Effective Time; provided, however, that, after approval of the Merger by
the stockholders of the Company, no amendment may be made which would reduce the
Merger Consideration. This Agreement may not be amended except by an instrument
in writing signed by all of the Parties.
7.5 Waiver. At any time prior to the Effective Time, any Party may extend
the time for the performance of any of the obligations or other acts required
hereunder, waive any inaccuracies in the representations and warranties
contained herein or in any document delivered
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pursuant hereto and waive compliance with any of the agreements or conditions
contained herein. Any such extension or waiver shall be valid only if set forth
in an instrument signed by the Party to be bound thereby.
ARTICLE VIII
GENERAL PROVISIONS
8.1 Survival of Representations and Warranties.
(a) Except as set forth in Section 8.1(b) below, the
representations, warranties and agreements of each Party shall remain operative
and in full force and effect regardless of any investigation made by or on
behalf of any other Party, any Person controlling any such Party or any of their
officers, directors, representatives or agents, whether prior to or after the
execution of this Agreement.
(b) The representations and warranties in this Agreement shall
terminate at the Effective Time; provided, however, this Section 8.1(b) shall in
no way limit any covenant or agreement of the Parties which by its terms
contemplates performance after the Effective Time.
8.2 Notices. All notices or other communications which are required or
permitted hereunder shall be in writing and sufficient if delivered personally
or sent by nationally-recognized overnight courier or by registered or certified
mail, postage prepaid, return receipt requested, or by electronic mail, with a
copy thereof to be delivered by mail (as aforesaid) within 24 hours of such
electronic mail, or by telecopier, with confirmation as provided above addressed
as follows:
(a) If to Parent or Merger Sub:
Progress Software Corporation
00 Xxx Xxxx
Xxxxxxx, XX 00000
Telecopier: (000) 000-0000
Attention: Xxxxxx X. Xxxxx, Chief Executive Officer
E-Mail: xxx@xxxxxxxx.xxx
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With copies to:
Progress Software Corporation
00 Xxx Xxxx
Xxxxxxx, XX 00000
Telecopier: (000) 000-0000
Attention: Xxxxx X. Xxxxxxxx, Vice President and General Counsel
E-Mail: xxxxxxxx@xxxxxxxx.xxx
and
Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
Xxx Xxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Telecopier: (000) 000-0000
Attention: Stanford X. Xxxxxxx, Xx., Esq.
E-Mail: xxxxxxxxx@xxxxx.xxx
(b) If to the Company:
eXcelon Corporation
00 Xxxx Xxxx
Xxxxxxxxxx, XX 00000
Telecopier: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxx, Chief Executive Officer
E-Mail: xxxxxxxx@xxxx.xxx
With copies to:
eXcelon Corporation
00 Xxxx Xxxx
Xxxxxxxxxx, XX 00000
Telecopier: (000) 000-0000
Attention: Xxxxxxxx X. Xxxxxxxx, General Counsel and Secretary
E-Mail: XXxxxxxxx@xxxx.xxx
and
Xxxxxx, Xxxx & Xxxxxxxx LLP
0000 Xxxxxxxxxxx Xxx., XX
Xxxxxxxxxx, XX 00000
Telecopier: (000) 000-0000
Attention: Xxxxxxxxx Xxxxxxxxx
E-Mail: xxxxxxxxxx@xxxxxxxxxx.xxx
72
or to such other address as the party to whom notice is to be given may have
furnished to the other party in writing in accordance herewith. All such notices
or communications shall be deemed to be received (a) in the case of personal
delivery, on the date of such delivery, (b) in the case of nationally-recognized
overnight courier, on the next Business Day after the date when sent (c) in the
case of facsimile transmission or telecopier or electronic mail, upon confirmed
receipt, and (d) in the case of mailing, on the third Business Day following the
date on which the piece of mail containing such communication was posted.
8.3 Interpretation. When a reference is made in this Agreement to
Sections, subsections, Schedules or Exhibits, such reference shall be to a
Section, subsection, Schedule or Exhibit to this Agreement unless otherwise
indicated. The words "include," "includes" and "including" when used herein
shall be deemed in each case to be followed by the words "without limitation."
The word "herein" and similar references mean, except where a specific Section
or Article reference is expressly indicated, the entire Agreement rather than
any specific Section or Article. The table of contents and the headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement.
8.4 Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law, or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner adverse to
any party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the Parties shall negotiate in good
faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner to the end that
transactions contemplated hereby are fulfilled to the extent possible.
8.5 Entire Agreement. This Agreement, the Option Agreement and the
Stockholder's Agreements (including all exhibits and schedules hereto and
thereto), and other documents and instruments delivered in connection herewith
constitute the entire agreement and supersede all prior agreements and
undertakings (other than the Confidentiality Agreement), both written and oral,
among the Parties with respect to the subject matter hereof.
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8.6 Assignment. This Agreement shall not be assigned by operation of law
or otherwise, except that Parent and Merger Sub may assign all or any of their
rights hereunder to any Affiliate, provided that no such assignment shall
relieve the assigning Party of its obligations hereunder.
8.7 Parties in Interest. Except as set forth in Section 5.8, this
Agreement shall be binding upon and inure solely to the benefit of each Party
hereto, and nothing in this Agreement, express or implied, is intended to or
shall confer upon any other Person any right, benefit or remedy of any nature
whatsoever under or by reason of this Agreement.
8.8 Failure or Indulgence Not Waiver; Remedies Cumulative. No failure or
delay on the part of any Party in the exercise of any right hereunder will
impair such right or be construed to be a waiver of, or acquiescence in, any
breach of any representation, warranty or agreement herein, nor will any single
or partial exercise of any such right preclude other or further exercise thereof
or of any other right. All rights and remedies existing under this Agreement are
cumulative to, and not exclusive to, and not exclusive of, any rights or
remedies otherwise available.
8.9 Governing Law; Enforcement. This Agreement and the rights and duties
of the Parties hereunder shall be governed by, and construed in accordance with,
the law of the State of Delaware. The Parties agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the Parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in the state courts in the State of
Delaware, this being in addition to any other remedy to which they are entitled
at law or in equity. In addition, each of the Parties: (a) consents to submit
itself to the personal jurisdiction of the state courts of the State of Delaware
in the event any dispute arises out of this Agreement or any transaction
contemplated hereby; (b) agrees that it will not attempt to deny or defeat such
personal jurisdiction by motion or other request for leave from any such court;
(c) waives any right to trial by jury with respect to any action related to or
arising out of this Agreement or any transaction contemplated hereby; and (d)
consents to service of process by delivery pursuant to Section 8.2 hereof.
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8.10 Counterparts. This Agreement may be executed in one or more
counterparts, and by the different Parties in separate counterparts, each of
which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
[INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, Parent, Merger Sub and the Company have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
PROGRESS SOFTWARE CORPORATION
By /s/ Xxxxxx X. Xxxxx
--------------------------
Name: Xxxxxx X. Xxxxx
Title: Chief Executive Officer
CHOPIN MERGER SUB, INC.
By /s/ Xxxxxx X. Xxxxx
--------------------------
Name: Xxxxxx X. Xxxxx
Title: President
EXCELON CORPORATION
By /s/ Xxxxxx X. Xxxxxxx
--------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Chief Executive Officer
76
ANNEX I
CONDITIONS TO OFFER
Notwithstanding any other provision of the Offer, Merger Sub shall not be
required to accept for payment or, subject to applicable law, pay for any shares
of Company Common Stock, and may terminate the Offer, if (i) immediately prior
to the expiration date of the Offer, the Minimum Condition (as defined in the
Merger Agreement) shall not have been satisfied, or (ii) at any time on or after
the date of this Agreement and prior to the expiration date of the Offer, any of
the following conditions exists and shall not have resulted from the breach by
Parent or Merger Sub of any of their respective obligations under the Merger
Agreement:
(a) there shall be instituted or pending any action or proceeding
which, in the reasonable judgment of Parent, has a reasonable likelihood of
success, by any Governmental Authority, (i) challenging or seeking to make
illegal, to delay materially or otherwise directly or indirectly to restrain or
prohibit the making of the Offer, the acceptance for payment of or payment for
some or all of the shares of Company Common Stock by Parent or Merger Sub or the
consummation of the Merger, (ii) seeking to obtain material damages or otherwise
directly or indirectly relating to the transactions contemplated by the Offer or
the Merger, (iii) seeking to restrain or prohibit Parent's ownership or
operation (or that of its affiliates) of all or any material portion of the
business or assets of the Company and its Subsidiaries, taken as a whole, or of
Parent and its Subsidiaries, taken as a whole, or to compel Parent or any of its
affiliates to dispose of or hold separate all or any material portion of the
business or assets of the Company and its Subsidiaries, taken as a whole, or of
Parent and its Subsidiaries, taken as a whole, (iv) seeking to impose or confirm
material limitations on the ability of Parent, Merger Sub or any of Parent's
other Affiliates effectively to exercise full rights of ownership of the shares
of Company Common Stock, including the right to vote any shares of Company
Common Stock acquired or owned by Parent, Merger Sub or any of Parent's other
Affiliates on all matters properly presented to the Company's stockholders, or
(v) seeking to require divestiture by Parent, Merger Sub or any of Parent's
other Affiliates of any shares of Company Common Stock or (vi) that otherwise,
in the reasonable judgment of Parent, is likely to have a Company Material
Adverse Effect; or
(b) there shall have been any action taken, or any statute, rule,
regulation, injunction, order or decree enacted, enforced, promulgated, issued
or deemed applicable to the Offer or the Merger, by any Governmental Authority,
that, in the reasonable judgment of Parent, is likely, directly or indirectly,
to result in any of the consequences referred to in clauses (i) through (vi) of
paragraph (a) above; provided, however, that the parties shall use reasonable
efforts to cause any such decree, judgment or other order to be vacated or
lifted prior to January 31, 2003; or
(c) any change shall have occurred or been threatened (or any
development shall have occurred or been threatened involving a prospective
change) in the business, assets, liabilities, financial condition,
capitalization, operations or results of operations of the Company or any of its
Subsidiaries that, in the reasonable judgment of Parent, is or is likely to have
a Company Material Adverse Effect; or
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(d) it shall have been publicly disclosed or Parent shall have
otherwise learned that (i) any Person shall have acquired beneficial ownership
of more than 20% of any class or series of capital stock of the Company
(including the Company Common Stock), through the acquisition of stock, the
formation of a group or otherwise, or shall have been granted any option, right
or warrant, conditional or otherwise, to acquire beneficial ownership of more
than 20% of any class or series of capital stock of the Company (including the
Company Common Stock), other than acquisitions for bona fide arbitrage purposes
only and other than as disclosed in a Schedule 13D or 13G on file with the SEC
on October 18, 2002, or (ii) any such Person that, prior to October 18, 2002,
had filed such a Schedule with the Commission shall have acquired beneficial
ownership of additional shares of any class or series of capital stock of the
Company (including Company Common Stock), through the acquisition of stock, the
formation of a group or otherwise, constituting 20% or more of any such class or
series, or shall have been granted any option, right or warrant, conditional or
otherwise, to acquire beneficial ownership of additional shares of any class or
series of capital stock of the Company (including the Company Common Stock)
constituting 20% or more of any such class or series; or
(e) the Company shall have breached or failed to perform in any
material respect any of its obligations under the Agreement, or any of its
representations and warranties contained in the Agreement, disregarding all such
qualifications and exceptions contained therein using the terms "material" or
"Company Material Adverse Effect," shall not be true when made or at any time
prior to the consummation of the Offer as if made at and as of such time with
only such exceptions as would not reasonably be expected to have, individually
or in the aggregate, a Company Material Adverse Effect; or
(f) the Agreement shall have been terminated in accordance with its
terms; or
(g) there shall have occurred (i) any general suspension of trading
in, or limitation on prices for, securities on any national securities exchange
or in the over-the-counter market for a period in excess of 18 hours, (ii) any
declaration of a banking moratorium or general suspension of payments in respect
of lenders that regularly participate in the U.S. market in loans to large
corporations, (iii) any material limitation by any Governmental Authority in the
United States that materially affects the extension of credit generally by
lenders that regularly participate in the U.S. market in loans to large
corporations, (iv) any commencement of a war involving the United States or any
commencement of armed hostilities or other national or international calamity
involving the United States that has a material adverse effect on bank
syndication or financial markets in the United States or, in the case of any of
the foregoing occurrences existing on or at the time of the commencement of the
Offer, a material acceleration or worsening thereof; which, in the reasonable
judgment of Parent in any such case, and regardless of the circumstances
(including any action or omission by Parent) giving rise to any such condition,
could reasonably be expected to have a Company Material Adverse Effect or a
Parent Material Adverse Effect or a material adverse effect on the Offer.
The foregoing conditions are for the sole benefit of Parent and may be
asserted by Parent regardless of the circumstances giving rise to any such
conditions and except with respect to the Minimum Condition may be waived by
Parent in whole or in part at any time and from time to time prior to the
expiration of the Offer, in each case, in the exercise of the good faith
judgment
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of Parent and subject to the terms of this Agreement. The failure by
Parent 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 prior to the expiration
of the Offer.
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ANNEX II
INDEX TO DEFINED TERMS
"Acquisition Proposal" has the meaning set forth in Section 4.2(a).
"Agreement" has the meaning set forth in the preamble.
"Business Day" has the meaning set forth in Section 1.2.
"Certificate of Merger" has the meaning set forth in Section 1.3.
"Closing Date" has the meaning set forth in Section 1.2.
"Closing" has the meaning set forth in Section 1.2.
"COBRA" has the meaning set forth in Section 2.14(h).
"Code" has the meaning set forth in Section 1.12(f).
"Commercial Software" has the meaning set forth in Section 2.20(g).
"Company Certificate" has the meaning set forth in Section 1.7(b).
"Company Common Stock" has the meaning set forth in Section 1.7(a).
"Company Disclosure Schedule" has the meaning set forth in the first paragraph
of Article II.
"Company ESPP" has the meaning set forth in Section 1.9(c).
"Company Financial Statements" has the meaning set forth in Section 2.6(b).
"Company Intellectual Property Rights" has the meaning set forth in Section
2.20(a).
"Company Material Adverse Effect" has the meaning set forth in the first
paragraph of Article II.
"Company Material Contract" has the meaning set forth in Section 2.9(a).
"Company Option Plans" has the meaning set forth in Section 1.9(a).
"Company Preferred Stock" has the meaning set forth in Section 2.3(a).
"Company Recommendation" has the meaning set forth in Section 5.1(a)(v).
"Company Representative" has the meaning set forth in Section 4.2(a).
"Company SEC Reports" has the meaning set forth in Section 2.6(a).
"Company Stipulated Expenses" has the meaning set forth in Section 7.3(c).
"Company Stock Options" has the meaning set forth in Section 1.9(a).
"Company Stock Plans" has the meaning set forth in Section 1.9(c).
"Company" has the meaning set forth in the preamble
"Confidentiality Agreement" has the meaning set forth in Section 4.2(a).
"Continuing Director" has the meaning set forth in Section 5.2(i).
"D&O Premium Cap" has the meaning set forth in Section 5.8(c).
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"DGCL" has the meaning set forth in the preamble.
"Dissenting Shares" has the meaning set forth in Section 1.14.
"XXXXX" has the meaning set forth in Section 2.6(a).
"Effective Time" has the meaning set forth in Section 1.3.
"End-User Licenses" has the meaning set forth in Section 2.20(b).
"Environment Law" has the meaning set forth in Section 2.19(g).
"Equitable Exceptions" has the meaning set forth in Section 2.4(b).
"ERISA" has the meaning set forth in Section 2.14(b).
"Exchange Act" has the meaning set forth in Section 1.9(b).
"Expiration Date" has the meaning set forth in Section 5.2(a).
"Financial Advisor" has the meaning set forth in Section 2.21.
"GAAP" has the meaning set forth in Section 2.6(b).
"Governmental Authority" has the meaning set forth in Section 2.4(d).
"Indemnified Parties" has the meaning set forth in Section 5.8(a).
"Insurance Policies" has the meaning set forth in Section 2.17(a).
"Interim Period" has the meaning set forth in Section 4.1(a).
"IRS" has the meaning set forth in Section 2.14(d).
"Liens" has the meaning set forth in Section 2.2(c).
"Material Permit" has the meaning set forth in Section 2.11(a).
"Materials of Environmental Concern" has the meaning set forth in Section
2.19(g).
"Merger Consideration" has the meaning set forth in Section 1.7(a).
"Merger Sub Common Stock" has the meaning set forth in Section 1.10.
"Merger Sub" has the meaning set forth in the preamble.
"Merger" has the meaning set forth in the preamble.
"Minimum Condition" has the meaning set forth in Section 5.2 (a).
"Most Recent Balance Sheet" has the meaning set forth in Section 2.7.
"Most Recent Balance Sheet Date" has the meaning set forth in Section 2.7.
"Multiple Employer Welfare Arrangement" has the meaning set forth in Section
2.14 (c).
"New Parent Employee" has the meaning set forth in Section 5.5(a).
"Offer Documents" has the meaning set forth in Section 5.2(a).
"Offer" has the meaning set forth in Section 5.2(a).
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"Option Agreement" has the meaning set forth in the preamble.
"Other Filings" has the meaning set forth in Section 5.1(d).
"Outstanding Company Stock Options" has the meaning set forth in Section 2.3(b).
"Parent Benefit Plans" has the meaning set forth in Section 5.5(b).
"Parent Material Adverse Effect" has the meaning set forth in the first
paragraph of Article III.
"Parent" has the meaning set forth in the preamble.
"Party" or "Parties" has the meaning set forth in the preamble.
"Paying Agent" has the meaning set forth in Section 1.12(a).
"Pension Plan" has the meaning set forth in Section 2.14(b).
"Permitted Liens" has the meaning set forth in Section 2.16(a).
"Plan" or "Plans" has the meaning set forth in Section 2.14(a).
"Proxy Statement" has the meaning set forth in Section 5.1(a)(iii).
"Regulation S-K" has the meaning set forth in Section 2.6(a).
"Requisite Stockholder Vote" has the meaning set forth in Section 2.4(a).
"Returns" has the meaning set forth in Section 2.18(b).
"Xxxxxxxx-Xxxxx has the meaning set forth in Section 2.6(a)
"Schedule 14D-9" has the meaning set forth in Section 5.2(f).
"Schedule TO" has the meaning set forth in Section 5.2(a).
"SEC" has the meaning set forth in Section 2.2.
"Securities Act" has the meaning set forth in Section 2.2(c).
"Special Meeting" has the meaning set forth in Section 5.1(a)(i).
"Stockholder's Agreements" has the meaning set forth in the preamble.
"Subsequent Offering Period" has the meaning set forth in Section 5.2(a).
"Subsidiary" has the meaning set forth in Section 2.2(e).
"Substantially Vacant" has the meaning set forth in Section 2.16(f).
"Superior Proposal" has the meaning set forth in Section 4.2(a).
"Surviving Corporation" has the meaning set forth in Section 1.1.
"Tax" has the meaning set forth in Section 2.18(a).
"Tender Offer Option" has the meaning set forth in Section 5.2(a).
"Termination Fee" has the meaning set forth in Section 7.3(b).
"Welfare Plan" has the meaning set forth in Section 2.14(c).
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