ANNEX A
LIONBRIDGE TECHNOLOGIES, INC.,
LTI ACQUISITION CORP.
AND
INT'X.XXX, INC.
AMENDED AND RESTATED
AGREEMENT AND PLAN OF REORGANIZATION
Dated as of March 30, 2000
TABLE OF CONTENTS
ARTICLE I. THE MERGER............................................... 1
1.1 The Merger.................................................. 1
1.2 Effects of the Merger....................................... 1
1.3 Closing..................................................... 1
1.4 Approval by the Stockholders of INT'X.xxx................... 1
1.5 Approval by the Stockholders of Parent...................... 2
ARTICLE II. CONVERSION AND EXCHANGE OF SHARES; DISSENTING SHARES.... 2
2.1 Conversion of Shares of INT'X.xxx Stock..................... 2
2.2 Escrow Shares............................................... 4
2.3 Dissenting Shares........................................... 5
2.4 Delivery of Evidence of Ownership........................... 5
2.5 No Further Ownership Rights in INT'X.xxx Stock.............. 6
2.6 No Fractional Shares........................................ 6
2.7 Assumption of Stock Options................................. 6
2.8 Notes....................................................... 6
2.9 Bridge Notes................................................ 6
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF INT'X.XXX............ 7
3.1 Organization, Standing and Power; Subsidiaries.............. 7
3.2 Capital Structure........................................... 8
3.3 Authority................................................... 9
Compliance with Laws and Other Instruments;
3.4 Non-Contravention........................................... 9
3.5 Technology and Intellectual Property Rights................. 10
3.6 Financial Statements; Business Information.................. 12
3.7 Taxes....................................................... 13
3.8 Absence of Certain Changes and Events....................... 14
3.9 Leases in Effect............................................ 15
3.10 Personal Property; Real Estate.............................. 16
3.11 Certain Transactions........................................ 16
3.12 Litigation and Other Proceedings............................ 17
3.13 No Defaults................................................. 17
3.14 Major Contracts............................................. 17
3.15 Material Reductions......................................... 18
3.16 Insurance and Banking Facilities............................ 18
3.17 Employees................................................... 18
3.18 Employee Benefit Plans...................................... 19
3.19 Certain Agreements.......................................... 20
3.20 Guarantees and Suretyships.................................. 20
3.21 Brokers and Finders......................................... 20
3.22 Certain Payments............................................ 20
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3.23 Environmental Matters....................................... 20
3.24 Enforceability of Contracts, etc............................ 21
3.25 Accounting Matters.......................................... 21
3.26 Year 2000................................................... 21
3.27 Disclosure.................................................. 21
3.28 Reliance.................................................... 22
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER
SUB................................................................. 22
4.1 Organization and Qualification.............................. 22
4.2 Capitalization.............................................. 22
4.3 Authority Relative to this Agreement........................ 23
4.4 Non-Contravention........................................... 23
4.5 Reports and Financial Statements............................ 23
4.6 Validity of Parent Merger Shares............................ 24
4.7 Consents and Approvals of Governmental Authorities.......... 24
4.8 Absence of Certain Changes or Events........................ 24
4.9 Litigation and Other Proceedings............................ 24
4.10 Disclosure.................................................. 24
4.11 Reliance.................................................... 24
4.12 Brokers and Finders......................................... 24
4.13 Accounting Matters.......................................... 24
ARTICLE V. COVENANTS OF INT'X.XXX................................... 25
5.1 Conduct of Business in Ordinary Course...................... 25
5.2 Dividends, Issuance of, or Changes in Securities............ 25
5.3 Governing Documents......................................... 26
5.4 No Acquisitions............................................. 26
5.5 No Dispositions............................................. 26
5.6 Indebtedness................................................ 26
5.7 Compensation................................................ 26
5.8 Claims...................................................... 26
5.9 Access to Properties and Records............................ 26
5.10 Breach of Representations and Warranties.................... 26
5.11 Consents.................................................... 27
5.12 Tax Returns................................................. 27
5.13 Exclusivity; Acquisition Proposals.......................... 27
5.14 Notice of Events............................................ 27
5.15 Reasonable Best Efforts..................................... 27
5.16 Insurance................................................... 28
5.17 Financial Statements........................................ 28
5.18 Confidentiality and Assignment of Inventions Agreements..... 28
ARTICLE VI. COVENANTS OF PARENT..................................... 28
6.1 Breach of Representations and Warranties.................... 28
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6.2 Additional Information; Access.............................. 28
6.3 Consents.................................................... 28
6.4 Reasonable Best Efforts..................................... 28
6.5 Officers and Directors...................................... 29
6.6 Nasdaq National Market Listing.............................. 29
6.7 Notice of Events............................................ 29
6.8 Third Party Beneficiaries................................... 29
6.9 Directors of Parent......................................... 29
ARTICLE VII. ADDITIONAL AGREEMENTS.................................. 29
Preparation of the Form S-4 and the Proxy Statement;
7.1 Stockholders Meeting........................................ 29
7.2 Legal Conditions to the Merger.............................. 31
7.3 Employee Benefits........................................... 31
7.4 Expenses.................................................... 32
7.5 Additional Agreements....................................... 32
7.6 Public Announcements........................................ 32
7.7 Confidentiality............................................. 32
7.8 Pooling..................................................... 32
7.9 INT'X.xxx Voting Agreement.................................. 33
7.10 Parent Voting Agreement..................................... 33
7.11 Xxxx-Xxxxx-Xxxxxx Filing.................................... 33
7.12 Board of Directors Meetings................................. 33
7.13 Employment and Noncompetition Agreements.................... 34
7.14 INT'X.xxx Conversion........................................ 34
7.15 Debt Adjustments............................................ 34
ARTICLE VIII. CONDITIONS PRECEDENT.................................. 34
Conditions to Each Party's Obligation to Effect the
8.1 Merger...................................................... 34
8.2 Conditions of Obligations of Parent and Merger Sub.......... 35
8.3 Conditions of Obligation of INT'X.xxx....................... 37
ARTICLE IX. INDEMNIFICATION......................................... 38
9.1 Indemnification Relating to Agreement....................... 38
9.2 Third Party Claims.......................................... 38
9.3 Limitations................................................. 39
9.4 Binding Effect.............................................. 39
9.5 Time Limit.................................................. 39
9.6 Sole Remedy................................................. 39
ARTICLE X. TERMINATION.............................................. 40
10.1 Mutual Agreement............................................ 40
10.2 Termination by Parent....................................... 40
10.3 Termination by INT'X.xxx.................................... 40
10.4 Outside Date................................................ 40
10.5 Effect of Termination....................................... 40
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ARTICLE XI. MISCELLANEOUS........................................... 40
11.1 Entire Agreement............................................ 40
11.2 Governing Law; Consent to Jurisdiction...................... 41
11.3 Notices..................................................... 41
11.4 Severability................................................ 42
11.5 Survival of Representations and Warranties.................. 42
11.6 Assignment.................................................. 42
11.7 Counterparts................................................ 42
11.8 Amendment................................................... 42
11.9 Extension, Waiver........................................... 42
11.10 Interpretation.............................................. 43
11.11 Knowledge................................................... 43
Transfer, Sales, Documentary, Stamp and Other Similar
11.12 Taxes....................................................... 43
11.13 Acknowledgement............................................. 43
EXHIBITS
EXHIBIT 1.1 -- Merger Documents
EXHIBIT 2.2 -- Escrow Agreement
EXHIBIT 2.4 -- Letter of Transmittal
EXHIBIT 7.1 -- Registration Rights Agreement
EXHIBIT 7.8(b) -- INT'X.xxx Affiliate Agreement
EXHIBIT 7.8(c) -- Parent Affiliate Agreement
EXHIBIT 7.9 -- INT'X.xxx Voting Agreement
EXHIBIT 7.10 -- Parent Voting Agreement
EXHIBIT 7.14 -- Conversion Notice
EXHIBIT 8.2 -- Opinion of Xxxx, Gerber & Xxxxxxxxx
EXHIBIT 8.3 -- Opinion of Xxxxx, Xxxxxxx & Xxxxxxxxx, LLP
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AMENDED AND RESTATED
AGREEMENT AND PLAN OF REORGANIZATION
AMENDED AND RESTATED AGREEMENT AND PLAN OF REORGANIZATION, dated as of
March 30, 2000 (this "AGREEMENT"), by and among Lionbridge Technologies, Inc., a
Delaware corporation ("PARENT"); LTI Acquisition Corp., a Delaware corporation
and a wholly-owned subsidiary of Parent ("MERGER SUB"); and INT'X.xxx, Inc., a
Delaware corporation ("INT'X.XXX"). This Agreement amends and restates in its
entirety the Agreement and Plan of Reorganization dated as of January 19, 2000
(the "PRIOR AGREEMENT") by and among Parent, Merger Sub and INT'X.xxx. All
Exhibits and Schedules delivered with or attached to the Prior Agreement shall
be deemed to be delivered herewith or attached hereto, as the case may be.
Intending to be legally bound, and in consideration of the mutual
representations, warranties, covenants and agreements contained herein, Parent,
Merger Sub and INT'X.xxx agree as follows:
ARTICLE I
THE MERGER
1.1 THE MERGER. Subject to the terms and conditions hereof, and in
accordance with the Delaware General Corporation Law (the "DGCL"), Merger Sub
will be merged with and into INT'X.xxx (the "MERGER"). A Certificate of Merger
and any other required documents (collectively, the "MERGER DOCUMENTS"),
substantially in the form attached as EXHIBIT 1.1, will be duly prepared,
executed and acknowledged by INT'X.xxx and Merger Sub and thereafter delivered
to the Secretary of State of Delaware for filing in accordance with the DGCL
contemporaneously with the Closing (as defined in Section 1.3). The Merger will
become effective at such time as the Merger Documents have been filed with the
Secretary of State of Delaware (the "EFFECTIVE TIME"). Following the Merger,
INT'X.xxx will continue as the surviving corporation of the Merger (the
"SURVIVING CORPORATION") under the laws of the State of Delaware, and the
separate corporate existence of Merger Sub will cease.
1.2 EFFECTS OF THE MERGER. At and after the Effective Time, (i) the Merger
will have all of the effects provided by the Certificate of Merger and
applicable law, (ii) the Certificate of Incorporation of INT'X.xxx will be
amended in the form attached as APPENDIX A to EXHIBIT 1.1 until duly further
amended, (iii) the bylaws of Merger Sub will be the bylaws of the Surviving
Corporation until duly amended, (iv) the directors of Merger Sub will be the
directors of the Surviving Corporation, to hold office in accordance with the
bylaws of the Surviving Corporation, (v) the officers of INT'X.xxx will be the
officers of the Surviving Corporation, to hold office in accordance with the
bylaws of the Surviving Corporation and (vi) the issued and outstanding
certificates for the capital stock of Merger Sub will be the issued and
outstanding certificates initially representing all of the issued capital stock
of the Surviving Corporation. The Merger is intended to be a reorganization
within the meaning of Section 368(a)(2)(E) of the Internal Revenue Code of 1986,
as amended (the "CODE"), and this Agreement is intended to constitute a "plan of
reorganization" within the meaning of the regulations promulgated under
Section 368 of the Code.
1.3 CLOSING. The closing of the transactions contemplated by this
Agreement (the "CLOSING") will take place as soon as practicable (but no more
than three (3) business days) after satisfaction or waiver of the last to be
fulfilled of the conditions set forth in Article VIII that by their terms are
not to occur at the Closing (the "CLOSING DATE"), but in no event later than
June 30, 2000, at the offices of Xxxxx, Xxxxxxx & Xxxxxxxxx, LLP in Boston,
Massachusetts, unless another date or place is agreed to in writing by Parent
and INT'X.xxx. If all of the conditions set forth in Article VIII hereof are
determined to be satisfied (or duly waived) at the Closing, concurrently with
the Closing the parties hereto will cause the Merger to be consummated by the
filing of the Merger Documents with the Secretary of State of Delaware. The
Closing will be deemed to have concluded at the Effective Time.
1.4 APPROVAL BY THE STOCKHOLDERS OF INT'X.XXX. INT'X.xxx will take all
action necessary in accordance with the DGCL, its Charter Documents (as defined
below) and any agreements to which it is a party to solicit the approval of this
Agreement, the Merger and all of the transactions contemplated hereby by all
stockholders of INT'X.xxx by means of a duly convened meeting of
stockholders. INT'X.xxx will use its reasonable best efforts to obtain such
stockholder approval. INT'X.xxx represents and warrants that its Board of
Directors has duly (i) approved the Merger in accordance with the DGCL and
(ii) resolved to recommend to the stockholders of INT'X.xxx that they approve
this Agreement, the Merger and all of the transactions contemplated hereby.
1.5 APPROVAL BY THE STOCKHOLDERS OF PARENT. Parent will take all action
necessary to obtain the approval of the issuance of its shares in connection
with the Merger by the stockholders of Parent by means of a duly convened
meeting of the stockholders of Parent, as required by the rules of the Nasdaq
Stock Market, in accordance with the applicable requirements of the DGCL, its
Charter Documents and any agreements to which it is a party. Parent will use its
reasonable best efforts to obtain such stockholder approval. Parent represents
and warrants that its Board of Directors has duly (i) approved the Merger in
accordance with the DGCL and (ii) resolved to recommend to the stockholders of
Parent that they approve the issuance of its shares in connection with the
Merger.
ARTICLE II
CONVERSION AND EXCHANGE OF SHARES; DISSENTING SHARES
2.1 CONVERSION OF SHARES OF INT'X.XXX STOCK. (a) Subject, without
limitation, to the provisions of Section 2.3 hereof, at the Effective Time, all
of (i) the shares of Series A common stock, $0.01 par value per share, of
INT'X.xxx ("INT'X.XXX SERIES A COMMON STOCK"), Series B common stock, $0.01 par
value per share, of INT'X.xxx ("INT'X.XXX SERIES B COMMON STOCK" and along with
the Int'l Series A Common Stock, the "INT'X.XXX COMMON STOCK"), Series A
preferred stock, $0.01 par value per share, of INT'X.xxx ("INT'X.XXX SERIES A
PREFERRED STOCK"), and Series B preferred stock, $0.01 par value per share, of
INT'X.xxx ("INT'X.XXX SERIES B PREFERRED STOCK" and along with the INT'X.xxx
Series A Common Stock, the INT'X.xxx Series B Common Stock and the INT'X.xxx
Series A Preferred Stock, "INT'X.XXX CAPITAL STOCK") issued and outstanding
immediately prior to the Effective Time excluding any INT'X.xxx Capital Stock
held by Parent or Merger Sub or any other subsidiary of Parent, or by INT'X.xxx
or any subsidiary of INT'X.xxx, which shares ("EXCLUDED SHARES") will be
automatically canceled in the Merger without payment of any consideration
therefor, and excluding Dissenting Shares (as defined in Section 2.3 hereof))
will automatically, by virtue of the Merger and without any action on the part
of the holder thereof, be converted into shares of common stock, $0.01 par value
per share, of Parent ("PARENT COMMON STOCK") in accordance with Section 2.1(e),
and cash (rounded down to the nearest whole cent) in lieu of fractional shares,
if any, pursuant to Section 2.6 below. Shares of INT'X.xxx Capital Stock that
are actually issued and outstanding immediately prior to the Effective Time
(excluding the Excluded Shares) are sometimes referred to herein as the
"OUTSTANDING INT'X.XXX CAPITAL STOCK SHARES." All rights, warrants or options to
acquire INT'X.xxx Common Stock and securities convertible into INT'X.xxx Common
Stock (except for the INT'X.xxx Series A Preferred Stock, the INT'X.xxx
Series B Preferred Stock, the Series C preferred stock, $0.01 par value per
share, of INT'X.xxx ("INT'X.XXX SERIES C PREFERRED STOCK") and the Series D
preferred stock, $0.01 par value per share, of INT'X.xxx ("INT'X.XXX SERIES D
PREFERRED STOCK") and the INT'X.xxx Notes (as defined in Section 2.8 below))
that are outstanding immediately prior to the Effective Time and do not expire
pursuant to their terms on or before the Closing (each of which is specifically
identified in Section 3.2 of the INT'X.xxx Disclosure Schedule (as defined
below)) are sometimes referred to herein as the "OUTSTANDING INT'X.XXX OPTIONS."
(b) The aggregate number of shares of Parent Common Stock to be issued
in exchange for the acquisition of all Outstanding INT'X.xxx Capital Stock
Shares and the assumption of all Outstanding INT'X.xxx Options will be equal
to the Modified Share Amount (as defined in (d) below). Such shares are
herein referred to as the "PARENT STOCK MERGER SHARES".
(c) Subject, without limitation, to the provisions of Section 2.3
hereof, at the Effective Time, all of the shares of INT'X.xxx Series C
Preferred Stock issued and outstanding immediately prior to the Effective
Time (excluding any INT'X.xxx Series C Preferred Stock held by Parent or
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Merger Sub or any other subsidiary of Parent, or by INT'X.xxx or any
subsidiary of INT'X.xxx, which shares ("EXCLUDED SERIES C SHARES") will be
automatically canceled in the Merger without payment of any consideration
therefor, and excluding Dissenting Shares (as defined in Section 2.3
hereof)), will automatically, by virtue of the Merger and without any action
on the part of the holder thereof, be converted into shares of Parent Common
Stock in accordance with Section 2.1(f), and cash (rounded down to the
nearest whole cent) in lieu of fractional shares, if any, pursuant to
Section 2.6 below. Shares of INT'X.xxx Series C Preferred Stock that are
actually issued and outstanding immediately prior to the Effective Time,
excluding the Excluded Series C Shares, are sometimes referred to herein as
the "OUTSTANDING INT'X.XXX SERIES C SHARES." Subject, without limitation, to
the provisions of Section 2.3 hereof, at the Effective Time, all of the
shares of INT'X.xxx Series D Preferred Stock issued and outstanding
immediately prior to the Effective Time (excluding any INT'X.xxx Series D
Preferred Stock held by Parent or Merger Sub or any other subsidiary of
Parent, or by INT'X.xxx or any subsidiary of INT'X.xxx, which shares
("EXCLUDED SERIES D SHARES") will be automatically canceled in the Merger
without payment of any consideration therefor, and excluding Dissenting
Shares (as defined in Section 2.3 hereof)), will automatically, by virtue of
the Merger and without any action on the part of the holder thereof, be
converted into shares of Parent Common Stock in accordance with
Section 2.1(g), and cash (rounded down to the nearest whole cent) in lieu of
fractional shares, if any, pursuant to Section 2.6 below. Shares of
INT'X.xxx Series D Preferred Stock that are actually issued and outstanding
immediately prior to the Effective Time, excluding the Excluded Series D
Shares, are sometimes referred to herein as the "OUTSTANDING INT'X.XXX
SERIES D SHARES" and along with the Outstanding INT'X.xxx Capital Stock
Shares and the Outstanding INT'X.xxx Series C Shares, collectively the
"OUTSTANDING INT'X.XXX SHARES."
(d) The aggregate number of shares of Parent Common Stock to be issued
in exchange for the acquisition of all Outstanding INT'X.xxx Series C Shares
will be equal to the INT'X.xxx Series C Base Amount divided by the Parent
Average Closing Price. Such shares are herein referred to as the "PARENT
SERIES C MERGER SHARES". The aggregate number of shares of Parent Common
Stock to be issued in exchange for the acquisition of all Outstanding
INT'X.xxx Series D Shares will be equal to the INT'X.xxx Series D Base
Amount divided by the Parent Average Closing Price. Such shares are herein
referred to as the "PARENT SERIES D MERGER SHARES" and along with the Parent
Stock Merger Shares, the Note Payment Shares (as defined in Section 2.9
below) and the Parent Series C Merger Shares, collectively the "PARENT
MERGER SHARES".
The following definitions will be used in making the foregoing
calculations and for all other purposes of this Agreement:
"INT'X.XXX SERIES C BASE AMOUNT" will mean the aggregate accrued
liquidation preference of INT'X.xxx Series C Preferred Stock calculated as
of the Closing Date in accordance with the terms of the Charter Documents of
INT'X.xxx.
"INT'X.XXX SERIES D BASE AMOUNT" will mean the aggregate accrued
liquidation preference of INT'X.xxx Series D Preferred Stock calculated as
of the Closing Date in accordance with the terms of the Charter Documents of
INT'X.xxx.
"PARENT AVERAGE CLOSING PRICE" will be equal to the weighted average
closing price of the Parent Common Stock as publicly reported by the Wall
Street Journal over the twenty Trading Days ending two Trading Days prior to
the Prior Agreement Date (as defined below).
"MODIFIED SHARE AMOUNT" will mean the Share Amount LESS (i) the number
of Convertible Note Payment Shares (as defined in Section 2.8 below) (ii)
the number of Debt Payment Shares (as defined in Section 7.15 below) and
(iii) such number of shares of Parent Common Stock having a value (as
determined using the Parent Average Closing Price) equal to any expenses to
be borne by the stockholders of INT'X.xxx pursuant to Section 7.4.
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"SHARE AMOUNT" will mean 8,150,000 shares of Parent Common Stock
(appropriately adjusted for any stock split, stock dividend,
recapitalization or similar event).
"TRADING DAY" will mean days on which closing prices for purchases and
sales of Parent Common Stock are reported by the Nasdaq National Market.
(e) The ratio at which one Outstanding INT'X.xxx Capital Stock Share
will be converted into shares of Parent Common Stock at the Effective Time
is herein called the "CONVERSION RATIO" and will be calculated as set forth
in this Section 2.1(e). Subject to Section 2.3, at the Effective Time, each
Outstanding INT'X.xxx Capital Stock Share will be converted into the right
to receive that number (which may be a fraction) of shares of Parent Common
Stock that equals the quotient obtained by DIVIDING the number of Parent
Stock Merger Shares by the sum of the number of Outstanding INT'X.xxx
Capital Stock Shares PLUS the number of shares of INT'X.xxx Common Stock
issuable upon the exercise or conversion of all Outstanding INT'X.xxx
Options. Each holder of Outstanding INT'X.xxx Capital Stock Shares will be
entitled to receive that aggregate number of shares of Parent Common Stock
equal to the Conversion Ratio multiplied by the number of Outstanding
INT'X.xxx Capital Stock Shares held by such holder immediately prior to the
Effective Time, subject to Section 2.3 herein.
(f) The ratio at which one Outstanding INT'X.xxx Series C Share will be
converted into shares of Parent Common Stock at the Effective Time is herein
called the "SERIES C CONVERSION RATIO" and will be calculated as set forth
in this Section 2.1(f). Subject to Section 2.3, at the Effective Time, each
Outstanding INT'X.xxx Series C Share will be converted into the right to
receive that number (which may be a fraction) of shares of Parent Common
Stock that equals the quotient obtained by DIVIDING the number of Parent
Series C Merger Shares by the number of Outstanding INT'X.xxx Series C
Shares. Each holder of Outstanding INT'X.xxx Series C Shares will be
entitled to receive that aggregate number of shares of Parent Common Stock
equal to the Series C Conversion Ratio multiplied by the number of
Outstanding INT'X.xxx Series C Shares held by such holder immediately prior
to the Effective Time, subject to Section 2.3 herein.
(g) The ratio at which one Outstanding INT'X.xxx Series D Share will be
converted into shares of Parent Common Stock at the Effective Time is herein
called the "SERIES D CONVERSION RATIO" and will be calculated as set forth
in this Section 2.1(g). Subject to Section 2.3, at the Effective Time, each
Outstanding INT'X.xxx Series D Share will be converted into the right to
receive that number (which may be a fraction) of shares of Parent Common
Stock that equals the quotient obtained by DIVIDING the number of Parent
Series D Merger Shares by the number of Outstanding INT'X.xxx Series D
Shares. Each holder of Outstanding INT'X.xxx Series D Shares will be
entitled to receive that aggregate number of shares of Parent Common Stock
equal to the Series D Conversion Ratio multiplied by the number of
Outstanding INT'X.xxx Series D Shares held by such holder immediately prior
to the Effective Time, subject to Section 2.3 herein.
(h) At the Effective Time, each share of common stock, $0.01 par value,
of Merger Sub issued and outstanding immediately prior to the Effective Time
will, by virtue of the Merger and without any action on the part of the
holder hereof, be converted into one share of common stock, $0.01 par value
per share, of the Surviving Corporation.
2.2 ESCROW SHARES. Ten percent (10%) of the Parent Merger Shares issuable
at Closing (excluding any Parent Merger Shares issuable after the Closing with
respect to Outstanding INT'X.xxx Options, the Excluded Shares, the Series C
Excluded Shares and the Series D Excluded Shares), rounded up to the nearest
whole share (the "ESCROW SHARES") will be deposited and held in escrow in
accordance with the Escrow Agreement attached as EXHIBIT 2.2 (the "ESCROW
AGREEMENT") as the sole source of indemnification payments that may become due
to Parent pursuant to Article IX or otherwise prior to the release of the Escrow
Shares pursuant to Section 3.1 of the Escrow Agreement; provided that the
aggregate liability of any single stockholder for indemnification obligations
pursuant to
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Article IX of this Agreement shall be equal to a dollar amount equal to the
Parent Average Closing Price multiplied by the aggregate number of Escrow Shares
deposited in escrow by or on behalf of such stockholder; and provided, further,
that each INT'X.xxx stockholder shall be severally (and not jointly) liable
beyond such holder's allocable portion of the Escrow Shares solely in respect of
any breach by such stockholder of any representation or warranty contained in a
Letter of Transmittal (as defined in Section 2.4 below) delivered by such
stockholder. The Escrow Shares will be withheld on a pro rata basis among the
holders of the Outstanding INT'X.xxx Shares based on the number of Parent Merger
Shares issuable at the closing to such holders. The exact number of Escrow
Shares held for the account of each INT'X.xxx stockholder will be determined at
the Closing by the agreement in writing of Parent and INT'X.xxx. The delivery of
the Escrow Shares will be made on behalf of the holders of the Outstanding
INT'X.xxx Shares in accordance with the provisions hereof, with the same force
and effect as if such shares had been delivered by Parent directly to such
holders and subsequently delivered by such holders to the Escrow Agent. The
adoption of this Agreement by stockholders of INT'X.xxx will also constitute
their approval of the terms and provisions of the Escrow Agreement, including,
without limitation, the appointment of Xxxxxx Xxxxxxxxxx as the Indemnification
Representative (as defined in the Escrow Agreement), which is an integral term
of the Merger.
2.3 DISSENTING SHARES. Any holder of shares of INT'X.xxx Capital Stock,
INT'X.xxx Series C Preferred Stock and INT'X.xxx Series D Preferred Stock
(collectively, the "INT'X.XXX STOCK") that are outstanding on the record date
for the determination of which holders will be entitled to vote for or against
the Merger who objects to the Merger and complies with all of the provisions of
the DGCL concerning the rights of holders to dissent from the Merger and require
appraisal (such shares are referred to as "DISSENTING SHARES") will be entitled
to exercise appraisal rights pursuant to Section 262 of the DGCL with respect to
such Dissenting Shares PROVIDED THAT such holder meets all of the requirements
of the DGCL with respect to such Dissenting Shares, and will not be entitled to
receive Parent Merger Shares, unless otherwise provided by the DGCL or agreed in
writing by Parent. INT'X.xxx will, after consultation with Parent, give such
notices with respect to appraisal rights as may be required by the DGCL as soon
as practicable.
2.4 DELIVERY OF EVIDENCE OF OWNERSHIP. Prior to the Closing, Parent shall
send a notice and transmittal form in substantially the form of EXHIBIT 2.4
hereto (individually, a "LETTER OF TRANSMITTAL" and collectively, the "LETTERS
OF TRANSMITTAL") to each holder of a certificate or other documentation
representing Outstanding INT'X.xxx Shares, other than Dissenting Shares, each
holder of a certificate or other documentation representing Outstanding
INT'X.xxx Shares, other than Dissenting Shares, will surrender such certificates
or other documentation to Parent or its designee, and, if not previously
delivered, (i) a duly executed counterpart of the Escrow Agreement, (ii) a duly
executed Letter of Transmittal and (iii) such other duly executed documentation
as may be reasonably required by Parent to effect a transfer of such shares, and
upon such surrender and after the Effective Time each such holder will be
entitled to receive promptly from Parent or its transfer agent certificates
registered in the name of such holder representing the applicable number of
Parent Merger Shares, and the cash (calculated pursuant to Section 2.6, which
will be paid by check), to which such holder is entitled pursuant to the
provisions of this Agreement, with a portion of such shares to be deposited in
escrow pursuant to the Escrow Agreement, as provided in Section 2.2. The
adoption of this Agreement by stockholders of INT'X.xxx will also constitute
their approval of the terms and provisions of the Letter of Transmittal. In the
event any certificates or instruments representing Outstanding INT'X.xxx Shares
or Outstanding INT'X.xxx Options shall have been lost, stolen or destroyed, upon
the making and delivery of an affidavit of that fact by the person claiming same
to have been lost, stolen or destroyed and the posting by such person of a
bonding such reasonable amount as Parent may direct as indemnity against any
claim that would be made against Parent with respect to such certificate or
instrument, Parent will issue in exchange for such lost, stolen or destroyed
certificate or instrument the Parent Merger Shares and cash deliverable in
respect thereof pursuant to this Agreement.
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2.5 NO FURTHER OWNERSHIP RIGHTS IN INT'X.XXX STOCK. The Merger and its
approval by the stockholders of INT'X.xxx and the execution of this Agreement
will be deemed, at the Effective Time, to constitute full satisfaction and
termination of all rights and agreements pertaining to INT'X.xxx Stock pursuant
to the DGCL, by contract or otherwise, except for any rights pertaining to this
Agreement. After the Effective Time, there will be no transfers on the stock
transfer books of INT'X.xxx of INT'X.xxx Stock or exercises of any options,
warrants or other rights to acquire INT'X.xxx Stock. Prior to or upon Closing,
INT'X.xxx will cause rights to purchase or acquire INT'X.xxx Stock other than
the Outstanding INT'X.xxx Options assumed pursuant to Section 2.7 below to
either be exercised or canceled. Until surrendered to Parent, each certificate
for INT'X.xxx Stock will, after the Effective Time, represent only the right to
receive the right to receive cash and Parent Merger Shares into which the shares
of INT'X.xxx Stock formerly represented thereby will have been converted
pursuant to this Agreement. Any dividends or other distribution declared after
the Effective Time with respect to Parent Common Stock will be paid to the
holder of any certificate for shares of INT'X.xxx Stock when the holder thereof
is entitled to receive a certificate for such holder's Parent Merger Shares in
accordance with this Agreement.
2.6 NO FRACTIONAL SHARES. No certificates or scrip for fractional shares
of Parent Common Stock will be issued, no Parent stock split or dividend will be
paid in respect of any fractional share interest, and no such fractional share
interest will entitle the owner thereof to vote or to any rights of or as a
stockholder of Parent. In lieu of such fractional shares, any holder of
Outstanding INT'X.xxx Shares who would otherwise be entitled to a fraction of a
share of Parent Common Stock (after aggregating all fractional shares of Parent
Common Stock to be received by such holder) will be paid the cash value of such
fraction (rounded down to the nearest whole cent), which will be equal to such
fraction MULTIPLIED BY the Parent Average Closing Price.
2.7 ASSUMPTION OF STOCK OPTIONS. At the Effective Time, Parent shall
assume each Outstanding INT'X.xxx Option and each holder thereof (each an
"OPTION HOLDER") shall thereby be entitled to acquire, by virtue of the Merger
and without any action on the part of the Option Holder, on substantially the
same terms (including the dates and extent of exercisability) and subject to the
same conditions, including vesting, as such Outstanding INT'X.xxx Option, the
number of shares of Parent Common Stock determined by MULTIPLYING the number of
shares of INT'X.xxx Common Stock for which such Outstanding INT'X.xxx Option is
then exercisable in accordance with its terms immediately prior to the Effective
Time by the Conversion Ratio (rounded down to the nearest whole share), at an
exercise or conversion price per share of Parent Common Stock (rounded up to the
nearest whole cent) determined by dividing the exercise price per share of
INT'X.xxx Common Stock of such Outstanding INT'X.xxx Option immediately prior to
the Effective Time by the Conversion Ratio.
2.8 NOTES. The $2,000,000 in convertible promissory notes dated
August 20, 1999 of INT'X.xxx and any interest accrued thereon (the "INT'X.XXX
NOTES") shall be paid in full and cancelled by delivery of the Convertible Note
Payment Shares to the holders thereof in proportion to their respective
interests in the INT'X.xxx Notes. "CONVERTIBLE NOTE PAYMENT SHARES" shall mean a
number of shares of Parent Common Stock determined by dividing the aggregate
principal amount payable under the INT'X.xxx Notes plus any interest accrued on
the INT'X.xxx Notes as of the Closing by the Parent Average Closing Price. In
lieu of any fractional shares, any holder of an INT'X.xxx Note who would
otherwise be entitled to a fraction of a share of Parent Common Stock (after
aggregating all fractional shares of Parent Common Stock to be received by such
holder) will be paid the cash value of such fraction (rounded down to the
nearest whole cent), which will be equal to such fraction MULTIPLIED BY the
Parent Average Closing Price.
2.9 BRIDGE NOTES. The (i) $2,000,000 in subordinated promissory notes of
INT'X.xxx dated January 14, 2000, (ii) $1,000,000 in subordinated promissory
notes of INT'X.xxx dated March 8, 2000 and (iii) up to an additional $2,000,000
in subordinated promissory notes of INT'X.xxx issued to existing investors of
INT'X.xxx on terms identical to the promissory notes described in clause (ii)
and
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any interest accrued thereon (collectively, the "INT'X.XXX BRIDGE NOTES") shall
be paid in full and cancelled by delivery of the Bridge Note Payment Shares to
the holders thereof in proportion to their respective interests in the INT'X.xxx
Bridge Notes. "BRIDGE NOTE PAYMENT SHARES" shall mean a number of shares of
Parent Common Stock determined by dividing the aggregate principal amount
payable under the INT'X.xxx Bridge Notes plus any interest accrued on the
INT'X.xxx Bridge Notes as of the Closing by the Parent Average Closing Price.
The Bridge Note Payment Shares along with the Convertible Note Payment Shares
herein referred to as the "NOTE PAYMENT SHARES." In lieu of any fractional
shares, any holder of an INT'X.xxx Bridge Note who would otherwise be entitled
to a fraction of a share of Parent Common Stock (after aggregating all
fractional shares of Parent Common Stock to be received by such holder) will be
paid the cash value of such fraction (rounded down to the nearest whole cent),
which will be equal to such fraction MULTIPLIED BY the Parent Average Closing
Price.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF INT'X.XXX
Except as set forth in the disclosure schedule of INT'X.xxx dated as of
January 19, 2000 (the "PRIOR AGREEMENT DATE") and delivered herewith to Parent
(the "INT'X.XXX DISCLOSURE SCHEDULE") which identifies the section and
subsection to which each disclosure therein relates (PROVIDED, HOWEVER, that
INT'X.xxx will be deemed to have adequately disclosed with respect to any
section or subsection any matters that are clearly described elsewhere in such
document if the applicability of such disclosure to such non-referenced sections
or subsections is apparent), and whether or not the INT'X.xxx Disclosure
Schedule is referred to in a specific section or subsection, INT'X.xxx
represents and warrants to Parent and Merger Sub as follows:
3.1 ORGANIZATION, STANDING AND POWER; SUBSIDIARIES.
(a) INT'X.xxx is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware, has all requisite
corporate power and authority to own, lease and operate its properties and
to carry on its businesses as now being conducted, and is duly qualified and
in good standing to do business in each jurisdiction in which a failure to
so qualify would have a material adverse effect on the Business Condition
(as hereinafter defined) of INT'X.xxx.
As used in this Agreement, "BUSINESS CONDITION" with respect to any
Person (as defined below) means the business, financial condition, results
of operations, assets or prospects (as defined below) (without giving effect
to the consequences of the transactions contemplated by this Agreement and
the announcement thereof, and other than any changes arising out of
conditions affecting the economy or industry of the Person in general which
does not affect the Person in a materially disproportionate manner relative
to other participants in the economy or such industry, respectively) of such
Person or Persons including its Subsidiaries taken as a whole. In this
Agreement, a "SUBSIDIARY" of any Person means a corporation, partnership,
limited liability company, joint venture or other entity of which such
Person directly or indirectly owns or controls a majority of the equity
interests or voting securities or other interests that are sufficient to
elect a majority of the Board of Directors or other managers of such
corporation, partnership, limited liability company, joint venture or other
entity. In this Agreement, the "MATERIAL INT'X.XXX SUBSIDIARIES" shall mean
the following Subsidiaries of INT'X.xxx: International Communications Europe
GmbH; International Language Engineering Corporation; International
Communications Asia; and ILE Netherlands BV. In this Agreement, "PROSPECTS"
means events, conditions, facts or developments that are known to INT'X.xxx
or any Subsidiary and that in the reasonable course of events are expected
to have an effect on future operations of the business as presently
conducted by INT'X.xxx and its Subsidiaries, but will exclude the results of
any changes that are made at the specific written direction of Parent, that
are specifically contemplated herein, or that directly result from this
transaction or the announcement hereof. In this Agreement, "PERSON" means
any natural person, corporation, partnership, limited liability company,
joint venture or other entity. In this
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Agreement, "ordinary course of business" means in the ordinary course of
business and consistent with past practices.
All Subsidiaries of INT'X.xxx and their jurisdiction of incorporation
are completely and correctly listed in Section 3.1 of the INT'X.xxx
Disclosure Schedule. Each Subsidiary is a corporation duly organized and
validly existing under the laws of the jurisdiction of its incorporation.
INT'X.xxx has delivered to Parent complete and correct copies of the
articles or certificate of incorporation, bylaws and/or other primary
charter and organizational documents ("CHARTER DOCUMENTS") of INT'X.xxx and
the Material INT'X.xxx Subsidiaries, in each case, as amended to the Prior
Agreement Date. The minute books and stock records of INT'X.xxx and its
Subsidiaries are complete. Section 3.1 of the INT'X.xxx Disclosure Schedule
contains a complete and correct list of the officers and directors of
INT'X.xxx and any stockholders who beneficially own (as defined in Rule 13d
of the Securities Act) 5% or more of the outstanding capital stock of
INT'X.xxx.
(b) INT'X.xxx does not currently own, and has not owned since
January 1, 1998, directly or indirectly, any capital stock or other equity
securities of any corporation or have direct or indirect equity or ownership
interest in any partnership, limited liability company, joint venture or
other entity. All of the outstanding shares of capital stock of each
Subsidiary of INT'X.xxx are owned beneficially and of record by INT'X.xxx,
one of its other Subsidiaries, or any combination thereof, in each case free
and clear of any security interests, liens, charges, restrictions, claims,
encumbrances or assessments of any nature whatsoever ("LIENS"); and there
are no outstanding subscriptions, warrants, options, convertible securities,
or other rights (contingent or other) pursuant to which any of the
Subsidiaries is or may become obligated to issue any shares of its capital
stock to any Person other than INT'X.xxx or one of the other Subsidiaries.
3.2 CAPITAL STRUCTURE.
(a) As of January 17, 2000, the authorized capital stock of INT'X.xxx
consisted of (i) 5,472,047 shares of preferred stock, $0.01 par value per
share ("INT'X.XXX PREFERRED STOCK"), of which 867,047 shares had been
designated INT'X.xxx Series A Preferred Stock, 867,047 of which were issued
and outstanding, of which 3,500,000 shares had been designated INT'X.xxx
Series B Preferred Stock, 2,621,477 of which were issued and outstanding, of
which 5,000 had been designated INT'X.xxx Series C Preferred Stock, 5,000 of
which were issued and outstanding, and of which 1,100,000 shares had been
designated INT'X.xxx Series D Preferred Stock, 936,991 of which were issued
and outstanding; and (ii) 14,527,953 shares of INT'X.xxx Common Stock, $0.01
par value per share, of which 11,077,953 shares had been designated
INT'X.xxx Series A Common Stock, and 3,450,000 shares had been designated
INT'X.xxx Series B Common Stock, and 5,879,271 shares of Common Stock were
issued and outstanding and no shares of INT'X.xxx Common Stock were issued
and held as treasury shares by INT'X.xxx. The INT'X.xxx Disclosure Schedule
sets forth all holders of INT'X.xxx Common Stock and INT'X.xxx Preferred
Stock and the number of shares owned. The INT'X.xxx Disclosure Schedule also
sets forth any options, warrants, calls, conversion rights, commitments,
agreements, contracts, understandings, restrictions, arrangements or rights
of any character (each, an "INT'X.XXX OPTION") to which INT'X.xxx is a party
or by which INT'X.xxx may be bound obligating INT'X.xxx to issue, deliver or
sell, or cause to be issued, delivered or sold, additional shares of
INT'X.xxx Common Stock, or obligating INT'X.xxx to grant, extend, or enter
into any such option, warrant, call, conversion right, conversion payment,
commitment, agreement, contract, understanding, restriction, arrangement or
right. INT'X.xxx does not have any outstanding options, warrants, calls,
conversion rights, commitments, agreements, contracts, understandings,
restrictions, arrangements or rights of any character to which INT'X.xxx is
a party or by which INT'X.xxx may be bound obligating INT'X.xxx to issue,
deliver or sell, or cause to be issued, delivered or sold, additional shares
of INT'X.xxx Preferred Stock.
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(b) All outstanding shares of INT'X.xxx Common Stock and INT'X.xxx
Preferred Stock are, and any shares of INT'X.xxx Common Stock issued upon
exercise of any Outstanding INT'X.xxx Options will be, validly issued, fully
paid, nonassessable and not subject to any preemptive rights (other than
those which have been duly waived), or to any agreement to which INT'X.xxx
is a party or by which INT'X.xxx may be bound. Except for the INT'X.xxx
Notes, INT'X.xxx does not have outstanding any bonds, debentures, notes or
other indebtedness the holders of which (i) have the right to vote (or
convertible or exercisable into securities having the right to vote) with
holders of shares of INT'X.xxx Common Stock on any matter ("INT'X.XXX VOTING
DEBT") or (ii) are or will become entitled to receive any payment as a
result of the execution of this Agreement or the completion of the
transactions contemplated hereby.
3.3 AUTHORITY. The execution, delivery and performance of this Agreement,
the Prior Agreement and all other agreements contemplated hereby by INT'X.xxx
have been duly authorized by all necessary action of the Board of Directors of
INT'X.xxx, and if the Closing shall occur, shall have been duly authorized by
all necessary action of the stockholders of INT'X.xxx (the "INT'X.XXX REQUISITE
STOCKHOLDER APPROVAL"). Certified copies of the resolutions adopted by the Board
of Directors of INT'X.xxx and its stockholders approving this Agreement, the
Prior Agreement, all other agreements contemplated hereby and the Merger have
been or will be provided to Parent prior to the Closing. INT'X.xxx has duly and
validly executed and delivered this Agreement and has, or prior to Closing, will
have duly and validly executed and delivered all other agreements contemplated
hereby to be executed by INT'X.xxx, and each of this Agreement and such other
agreements constitutes or upon execution and delivery at or prior to the Closing
will constitute a valid, binding and enforceable obligation of INT'X.xxx in
accordance with its terms.
3.4 COMPLIANCE WITH LAWS AND OTHER INSTRUMENTS;
NON-CONTRAVENTION. INT'X.xxx and its Subsidiaries hold, and at all times have
held or subsequently obtained, all licenses, permits and authorizations from all
Governmental Entities (as defined below) necessary for the lawful conduct of
their respective businesses pursuant to all applicable statutes, laws,
ordinances, rules and regulations of all such Governmental Entities having
jurisdiction over them or any part of their operations. There are no material
violations or claimed violations known by INT'X.xxx or any Subsidiary of any
such license, permit or authorization or any such statute, law, ordinance, rule
or regulation. Assuming the receipt of all Consents (as defined below), neither
the execution, delivery or performance of this Agreement and all other
agreements contemplated hereby by INT'X.xxx, nor the consummation of the Merger
or any other transaction described herein, does or will, after the giving of
notice, or the lapse of time, or otherwise, conflict with, result in a breach
of, or constitute a default under, the Charter Documents of INT'X.xxx or any
Material INT'X.xxx Subsidiary or any federal, foreign, state or local court or
administrative order or process, statute, law, ordinance, rule or regulation, or
any contract, agreement or commitment to which INT'X.xxx or any Material
INT'X.xxx Subsidiary is a party, or under which INT'X.xxx or any Material
INT'X.xxx Subsidiary is obligated, or by which INT'X.xxx or any Material
INT'X.xxx Subsidiary or any of the rights, properties or assets of INT'X.xxx are
subject or bound; result in the creation of any Lien upon, or otherwise
adversely affect, any of the rights, properties or assets of INT'X.xxx or any
Material INT'X.xxx Subsidiary; terminate, amend or modify, or give any party the
right to terminate, amend, modify, abandon or refuse to perform or comply with,
any contract, agreement or commitment to which INT'X.xxx or any Material
INT'X.xxx Subsidiary is a party, or under which INT'X.xxx or any Material
INT'X.xxx Subsidiary is obligated, or by which INT'X.xxx or any of the rights,
properties or assets of INT'X.xxx or any Material INT'X.xxx Subsidiary are
subject or bound; or accelerate, postpone or modify, or give any party the right
to accelerate, postpone or modify, the time within which, or the terms and
conditions under which, any liabilities, duties or obligations are to be
satisfied or performed, or any rights or benefits are to be received, under any
contract, agreement or commitment to which INT'X.xxx or any Material INT'X.xxx
Subsidiary is a party, or under which INT'X.xxx or any Material INT'X.xxx
Subsidiary may be obligated, or by which INT'X.xxx or any Material INT'X.xxx
Subsidiary or any of the rights,
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properties or assets of INT'X.xxx or any Material INT'X.xxx Subsidiary are
subject or bound. Section 3.4 of the INT'X.xxx Disclosure Schedule sets forth
each agreement, contract or other instrument binding upon INT'X.xxx requiring a
notice or consent (by its terms or as a result of any conflict or other
contravention required to be disclosed in the INT'X.xxx Disclosure Schedule
pursuant to the preceding provisions of this Section 3.4) as a result of the
execution, delivery or performance of this Agreement and all other agreements
contemplated hereby by INT'X.xxx or the consummation of the Merger or any other
transaction described herein (each such notice or consent, a "CONSENT"). No
consent, approval, order, or authorization of or registration, declaration, or
filing with or exemption (also a "CONSENT") by, any court, administrative agency
or commission or other governmental authority or instrumentality, whether
domestic or foreign (each a "GOVERNMENTAL ENTITY") is required by or on behalf
of INT'X.xxx or any Material INT'X.xxx Subsidiary in connection with the
execution, delivery or performance of this Agreement and all other agreements
contemplated hereby by INT'X.xxx or the consummation of the Merger or any other
transaction described herein, except for the filing by INT'X.xxx and Merger Sub
of the appropriate Merger Documents with the Secretary of State of Delaware.
3.5 TECHNOLOGY AND INTELLECTUAL PROPERTY RIGHTS.
(a) For the purposes of this Agreement, "INT'X.XXX INTELLECTUAL
PROPERTY" consists of the following intellectual property:
(i) all patents, trademarks, trade names, service marks, trade dress,
copyrights and any renewal rights therefor, mask works, schematics,
software, firmware, technology, manufacturing processes, supplier lists,
customer lists, trade secrets, know-how, moral rights and applications and
registrations for any of the foregoing;
(ii) all documents, records and files relating to design, end user
documentation, manufacturing, quality control, sales, marketing or customer
support for all intellectual property described herein;
(iii) all other tangible or intangible proprietary information and
materials; and
(iv) all license and other rights in any third party product or any
third party intellectual property described in (i) through (iii) above;
that are owned or held by or on behalf of INT'X.xxx or any Material INT'X.xxx
Subsidiary or that are being used, and/or have been used since January 1, 1999,
or are currently under development by or for INT'X.xxx or any Material INT'X.xxx
Subsidiary for use, in the business of INT'X.xxx or any Material INT'X.xxx
subsidiary as it has been, is currently or is currently planned to be conducted
in 2000; PROVIDED, HOWEVER, that the term INT'X.xxx Intellectual Property does
not include any commercially available third party software or related
intellectual property.
(b) Section 3.5 of the INT'X.xxx Disclosure Schedule lists: (i) all
patents, copyright registrations, mask works, registered trademarks,
registered service marks, trade dress, any renewal rights for any of the
foregoing, and any applications and registrations for any of the foregoing,
that are included in INT'X.xxx Intellectual Property and owned by or on
behalf of INT'X.xxx or any Material INT'X.xxx Subsidiary; (ii) all hardware
products and tools, software products and tools and services that are
currently published, offered, or under development by INT'X.xxx or any
Material INT'X.xxx Subsidiary; and (iii) all licenses, sublicenses and other
agreements to which INT'X.xxx is a party and pursuant to which INT'X.xxx or
any Material INT'X.xxx Subsidiary or any other person is authorized to use
any INT'X.xxx Intellectual Property or exercise any other right with regard
thereto.
(c) INT'X.xxx Intellectual Property consists solely of items and rights
that are either: (i) owned solely by INT'X.xxx; (ii) in the public domain;
or (iii) rightfully used and authorized for
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use by INT'X.xxx pursuant to a valid license. All INT'X.xxx Intellectual
Property that consists of license or other rights to third party property is
separately set forth in Section 3.5 of the INT'X.xxx Disclosure Schedule.
INT'X.xxx has all rights in INT'X.xxx Intellectual Property necessary to
carry out INT'X.xxx's, and each of its Subsidiaries', current activities,
their activities conducted by them since January 1, 1999 and their future
activities planned for 2000, including without limitation rights to make,
use, exclude others from using, reproduce, modify, adapt, create derivative
works based on, translate, distribute (directly and indirectly), transmit,
display and perform publicly, license, rent, lease, assign and sell
INT'X.xxx Intellectual Property in all geographic locations and fields of
use, and to sublicense any or all such rights to third parties, including
the right to grant further sublicenses.
(d) Assuming the receipt of all Consents, INT'X.xxx is not, nor as a
result of the execution or delivery of this Agreement and all other
agreements contemplated hereby, or performance of INT'X.xxx's obligations
hereunder or the consummation of the Merger, will INT'X.xxx be, in violation
of any license, sublicense or other agreement relating to any INT'X.xxx
Intellectual Property to which INT'X.xxx is a party or otherwise bound.
INT'X.xxx is not obligated to provide any consideration (whether financial
or otherwise) to any third party, nor is any third party otherwise entitled
to any consideration, with respect to any exercise of rights by INT'X.xxx or
the Surviving Corporation, as successor to INT'X.xxx, in INT'X.xxx
Intellectual Property.
(e) To the knowledge of INT'X.xxx or any of the Material INT'X.xxx
Subsidiaries, the use, reproduction, modification, distribution, licensing,
sublicensing, sale, or any other exercise of rights in any product, work,
technology, service or process as used, provided, or offered at any time, or
as proposed for use, reproduction, modification, distribution, licensing,
sublicensing, sale, or any other exercise of rights, by INT'X.xxx or any
Material INT'X.xxx Subsidiary does not infringe any copyright, patent, trade
secret, trademark, service xxxx, trade name, firm name, logo, trade dress,
mask work, moral right, other intellectual property right, right of privacy,
or right in personal data of any Person. No claims (i) challenging the
validity, effectiveness, or ownership by INT'X.xxx or any Material INT'X.xxx
Subsidiary of any INT'X.xxx Intellectual Property, or (ii) to the effect
that the use, reproduction, modification, manufacturing, distribution,
licensing, sublicensing, sale, or any other exercise of rights in any
product, work, technology, service, or process as used, provided or offered
at any time, or as proposed for use, reproduction, modification,
distribution, licensing, sublicensing, sale, or any other exercise of
rights, by INT'X.xxx or any Material INT'X.xxx Subsidiary infringes or will
infringe on any intellectual property or other proprietary or personal right
of any Person have been asserted to INT'X.xxx or any Material INT'X.xxx
Subsidiary in writing by any Person. Neither INT'X.xxx nor any Subsidiary
has received notice of any legal or governmental proceedings, including
interference, re-examination, reissue, opposition, nullity, or cancellation
proceedings pending that relate to any INT'X.xxx Intellectual Property,
other than any review of pending applications for patent. Neither INT'X.xxx
nor any Subsidiary is aware of any information indicating that any such
proceedings are threatened or contemplated by any Governmental Entity or any
other Person. All granted or issued patents and mask works and all
registered trademarks and copyright registrations owned by INT'X.xxx are
valid, enforceable and subsisting. To the knowledge of INT'X.xxx, there is
no unauthorized use, infringement, or misappropriation of any INT'X.xxx
Intellectual Property by any third party, employee or former employee.
(f) INT'X.xxx and its Subsidiaries has secured from all parties who have
created any portion of, or otherwise have any rights in or to, INT'X.xxx
Intellectual Property, valid and enforceable written assignments of any such
work or other rights to INT'X.xxx.
(g) Each consultant and subcontractor of INT'X.xxx and its Subsidiaries
has entered into a confidentiality and assignment of inventions agreement
substantially in the form attached to Section 3.5 of the INT'X.xxx
Disclosure Schedule.
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3.6 FINANCIAL STATEMENTS; BUSINESS INFORMATION.
(a) INT'X.xxx has delivered to Parent audited consolidated balance
sheets (the "BALANCE SHEETS") as of December 31, 1999 (the "BALANCE SHEET
DATE") and December 31, 1998, and audited consolidated statements of income
and cash flows for the years ended December 31, 1999, December 31, 1998 and
December 31, 1997 (all of such balance sheets and statements of income and
cash flows are collectively referred to as the "FINANCIAL STATEMENTS"). The
Financial Statements: (i) are in accordance with the books and records of
INT'X.xxx; (ii) present fairly, in all material respects, the financial
position of INT'X.xxx as of the date indicated and the results of its
operations and cash flows for such periods; and (iii) have been prepared in
accordance with generally accepted accounting principles consistently
applied (subject, in the case of unaudited statements, to the absence of
footnote disclosure and in the case of unaudited interim statements to
year-end adjustments, which will not be material either individually or in
the aggregate and except as described in the Section 3.6 of the INT'X.xxx
Disclosure Schedule). As of the Balance Sheet Date, there were no material
liabilities, claims or obligations of any nature, whether accrued, absolute,
contingent, anticipated or otherwise, whether due or to become due, that are
not shown or provided for either in the Balance Sheets or Section 3.6 of the
INT'X.xxx Disclosure Schedule, and since the Balance Sheet Date, INT'X.xxx
has incurred no liabilities, claims or obligations of any nature, whether
accrued, absolute, contingent, anticipated or otherwise other than in the
ordinary course of business and except for liabilities incurred by INT'X.xxx
in connection with the preparation and execution of this Agreement and the
consummation of the transactions contemplated herein.
(b) All of the accounts, notes and other receivables which are reflected
in the Balance Sheets were acquired in the ordinary course of business; and,
except to the extent reserved against in the Balance Sheets, all of the
accounts, notes and other receivables which are reflected therein have been
collected in full, or, to the knowledge of INT'X.xxx or any Subsidiary, are
valid, binding and enforceable in accordance with their terms in the
ordinary course of business, and arise from bona fide transactions, and
neither INT'X.xxx nor any Subsidiary has received notice that the same are
subject to counterclaims, refusals to pay or other rights of setoff. All of
the accounts, notes and other receivables which have been acquired by
INT'X.xxx or any Subsidiary since the Balance Sheet Date were acquired in
the ordinary course of business and have been collected in full, or to the
knowledge of INT'X.xxx or any Subsidiary, are valid, binding and enforceable
in accordance with their terms in the ordinary course of business, and arise
from bona fide transactions, and neither INT'X.xxx nor any Subsidiary has
received notice that the same are subject to counterclaims, refusals to pay
or other rights of setoff, subject to an appropriate reserve. No accounts,
notes or other receivables are contingent upon the performance by INT'X.xxx
or any Subsidiary of any obligation or contract. No Person has any Lien on
any of such receivables and no agreement for deduction or discount has been
made with respect thereto.
(c) The business information previously prepared by INT'X.xxx and
delivered to Parent was prepared in good faith, based on assumptions
INT'X.xxx deemed, as of the date such information was delivered to Parent,
to be reasonable, and was prepared for planning purposes, although no
assurances are given that INT'X.xxx can or will engage in the activities
described therein or achieve the results projected therein.
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3.7 TAXES.
(a) The term "TAXEs" as used herein means all federal, state, local and
foreign income tax, alternative or add-on minimum tax, estimated, gross
income, gross receipts, sales, use, ad valorem, value added, transfer,
franchise, capital profits, lease, service, license, withholding, payroll,
employment, excise, severance, stamp, occupation, premium, property,
environmental or windfall profit taxes, customs, duties and other taxes,
governmental fees and other like assessments and charges of any kind
whatsoever, together with all interest, penalties, additions to tax and
additional amounts with respect thereto, and the term "TAX" means any one of
the foregoing Taxes. The term "TAX RETURNS" as used herein means all
returns, declarations, reports, claims for refund, information statements
and other documents relating to Taxes, including all schedules and
attachments thereto, and including all amendments thereof, and the term "TAX
RETURN" means any one of the foregoing Tax Returns.
(b) INT'X.xxx and each of its Subsidiaries has timely filed all Tax
Returns required to be filed and has paid all Taxes owed (whether or not
shown as due on such Tax Returns), including, without limitation, all Taxes
which INT'X.xxx or such Subsidiary is obligated to withhold for amounts
owing to employees, creditors and third parties. All Tax Returns filed by
INT'X.xxx and each of its Subsidiaries were complete and correct in all
respects, and such Tax Returns correctly reflected the facts regarding the
income, business, assets, operations, activities, status and other matters
of INT'X.xxx and each of its Subsidiaries and any other information required
to be shown thereon. None of the Tax Returns filed by INT'X.xxx or any of
its Subsidiaries or Taxes payable by INT'X.xxx or any of its Subsidiaries
have been the subject of an audit, action, suit, proceeding, claim,
examination, deficiency or assessment by any Governmental Entity, and no
such audit, action, suit, proceeding, claim, examination, deficiency or
assessment is currently pending or, to the knowledge of INT'X.xxx or any of
its Subsidiaries, threatened. Neither INT'X.xxx nor any Subsidiary is
currently the beneficiary of any extension of time within which to file any
Tax Return, and neither INT'X.xxx nor any Subsidiary has waived any statute
of limitation with respect to any Tax or agreed to any extension of time
with respect to a Tax assessment or deficiency. All material elections with
respect to Taxes affecting INT'X.xxx or any Subsidiary, as of the Prior
Agreement Date, are set forth in the Financial Statements or in Section 3.7
of the INT'X.xxx Disclosure Schedule. None of the Tax Returns filed by
INT'X.xxx or any Subsidiary contain a disclosure statement under former
Section 6661 of the Code or Section 6662 of the Code (or any similar
provision of state, local or foreign Tax law). Neither INT'X.xxx nor any
Subsidiary is a party to any Tax sharing agreement or similar arrangement.
Neither INT'X.xxx nor any Subsidiary has ever been a member of a group
filing a consolidated federal income Tax Return (other than a group the
common parent of which was INT'X.xxx), and neither INT'X.xxx nor any
Subsidiary has any liability for the Taxes of any Person (other than
INT'X.xxx) under Treasury Regulation Section 1.1502-6 (or any corresponding
provision of state, local or foreign Tax law), as a transferee or successor,
by contract, or otherwise.
(c) Neither INT'X.xxx nor any Subsidiary is a party to any agreement,
contract, arrangement or plan that has resulted or would result, separately
or in the aggregate, in the payment of (i) any "excess parachute payments"
within the meaning of Section 280G of the Code (without regard to the
exceptions set forth in Sections 280G(b)(4) and 280G(b)(5) of the Code) or
(ii) any amount for which a deduction would be disallowed or deferred under
Section 162 or Section 404 of the Code. Neither INT'X.xxx nor any Subsidiary
has agreed to make any adjustment under Section 481(a) of the Code (or any
corresponding provision of state, local or foreign law) by reason of a
change in accounting method or otherwise, and INT'X.xxx will not be required
to make any such adjustment as a result of the transactions set forth in
this Agreement. Neither INT'X.xxx nor any Subsidiary has or has had a
permanent establishment in any foreign country, as defined in any applicable
Tax treaty or convention between the United States and such foreign country.
No portion of the Parent Merger Shares is subject to the Tax withholding
provisions of
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Section 3406 of the Code, or of Subchapter A of Chapter 3 of the Code or of
any other provision of law. None of the assets of INT'X.xxx or any
Subsidiary is property which is required to be treated as being owned by any
other Person pursuant to the so-called "safe harbor lease" provisions of
former Section 168(f)(8) of the Code. None of the assets of INT'X.xxx or any
Subsidiary directly or indirectly secures any debt, the interest on which is
tax exempt under Section 103(a) of the Code. None of the assets of INT'X.xxx
or any Subsidiary is "tax-exempt use property" within the meaning of
Section 168(h) of the Code. No claim has ever been made by any Governmental
Entity in a jurisdiction where INT'X.xxx or any Subsidiary does not file Tax
Returns that it is or may be subject to Tax in that jurisdiction. Neither
INT'X.xxx nor any Subsidiary has participated in an international boycott as
defined in Section 999 of the Code. None of the shares of outstanding
capital stock of INT'X.xxx or any Subsidiary are subject to a "substantial
risk of forfeiture" within the meaning of Section 83 of the Code.
(d) There are no liens for Taxes (other than for ad valorem Taxes not
yet due and payable) upon the assets of INT'X.xxx or any Subsidiary. The
unpaid Taxes of INT'X.xxx and its Subsidiaries did not, as of the Balance
Sheet Date, exceed the reserve for actual Taxes (as opposed to any reserve
for deferred Taxes established to reflect timing differences between book
and Tax income) as shown on the Balance Sheets, and will not exceed such
reserve as adjusted for the passage of time through the Closing Date in
accordance with the past custom and practice of INT'X.xxx and its
Subsidiaries in filing their Tax Returns (taking into account any Taxes
incurred as a result of the transactions contemplated by this Agreement).
Section 3.7 of the INT'X.xxx Disclosure Schedule sets forth INT'X.xxx's and
each Subsidiary's Tax basis in each of their respective assets. Neither
INT'X.xxx nor any Subsidiary is a party to any joint venture, partnership,
limited liability company or other arrangement or contract which could be
treated as a partnership for federal income tax purposes.
3.8 ABSENCE OF CERTAIN CHANGES AND EVENTS. Except for liabilities incurred
in connection with this Agreement and the transactions contemplated hereby, from
the Balance Sheet Date, there has not been:
(a) Any transaction involving more than $50,000 entered into by
INT'X.xxx or any Subsidiary other than in the ordinary course of business;
any change (or any development or combination of developments of which
INT'X.xxx or any Subsidiary has knowledge which is reasonably likely to
result in such a change) in INT'X.xxx's Business Condition, other than
changes in the ordinary course of business which in the aggregate have not
been and are not expected to be materially adverse to INT'X.xxx's Business
Condition; or, without limiting the foregoing, any loss of or damage to any
of the properties of INT'X.xxx or any Subsidiary due to fire or other
casualty or other loss, whether or not insured, amounting to more than
$50,000 in the aggregate;
(b) Any declaration, setting aside or payment of any dividend or other
distribution with respect to any shares of capital stock of INT'X.xxx or any
Subsidiary, or any repurchase, redemption, retirement or other acquisition
by INT'X.xxx or any Subsidiary of any outstanding shares of capital stock,
any INT'X.xxx Option, or other securities of, or other equity or ownership
interests in, INT'X.xxx or any Subsidiary;
(c) Any discharge or satisfaction of any Lien or payment or satisfaction
of any obligation or liability (whether absolute, accrued, contingent or
otherwise and whether due or to become due) other than current liabilities
shown on the Balance Sheets and current liabilities incurred since the
Balance Sheet Date in the ordinary course of business;
(d) Any amendment of any term of any outstanding security of INT'X.xxx;
(e) Any incurrence, assumption or guarantee by INT'X.xxx or any
Subsidiary of any indebtedness for borrowed money other than in the ordinary
course of business and in an aggregate amount exceeding $50,000;
A-14
(f) Any creation or assumption by INT'X.xxx or any Subsidiary of any
Lien on any asset in an aggregate amount exceeding $20,000;
(g) Any making of any loan, advance or capital contributions to, or
investment in, any Person by INT'X.xxx or any Subsidiary;
(h) Any sale, lease, pledge, transfer or other disposition of any
material capital asset;
(i) Any material transaction or commitment made, or any material
contract or agreement entered into, by INT'X.xxx or any Subsidiary relating
to its assets or business (including the acquisition or disposition of any
assets) with a value of $100,000 or more or any relinquishment by INT'X.xxx
or any Subsidiary of any contract or other right with a value of $100,000 or
more;
(j) Any (A) grant of any severance or termination pay to any director,
officer or employee of INT'X.xxx or any Subsidiary, (B) entering into of any
employment, severance, management, consulting, deferred compensation or
other similar agreement (or any amendment to any such existing agreement)
with any director, officer or employee of INT'X.xxx or any Subsidiary,
(C) change in benefits payable under existing severance or termination pay
policies or employment, severance, management, consulting or other similar
agreements, (D) change in compensation, bonus or other benefits payable to
directors, officers or employees of INT'X.xxx or any Subsidiary in excess of
7% or (E) change in the payment or accrual policy with respect to any of the
foregoing;
(k) Any labor dispute or any activity or proceeding by a labor union or
representative thereof to organize any employees of INT'X.xxx or any
Material INT'X.xxx Subsidiary, or any lockouts, strikes, slowdowns, work
stoppages or threats thereof by or with respect to any employees of
INT'X.xxx or any Material INT'X.xxx Subsidiary;
(l) Any issuance or sale of any stock, bonds, phantom stock interest or
other securities of which INT'X.xxx or any Subsidiary is the issuer, or the
grant, issuance or change of any stock options, warrants, or other rights to
purchase securities of INT'X.xxx or any Subsidiary or phantom stock interest
in INT'X.xxx or any Subsidiary other than issuances of common stock in
connection with exercises of employee stock options;
(m) Any cancellation of any debts or claims or waiver of any rights in
an aggregate amount exceeding reserves in the Financial Statements by
$50,000 or more;
(n) Any sale, assignment or transfer of any INT'X.xxx Intellectual
Property, including licenses therefor;
(o) Any capital expenditures, or commitment to make any capital
expenditures, for additions to property, plant or equipment in an aggregate
amount exceeding $50,000; or
(p) Any agreement undertaking or commitment to do any of the foregoing.
3.9 LEASES IN EFFECT. All real property leases and subleases as to which
INT'X.xxx or any Subsidiary is a party and any amendments or modifications
thereof are listed in Section 3.9 of the INT'X.xxx Disclosure Schedule (each a
"LEASE" and collectively, the "LEASES") and are valid, in full force and effect
and enforceable, and there are no existing defaults on the part of INT'X.xxx or
any Subsidiary, and neither INT'X.xxx nor any Subsidiary has received or given
notice of default or claimed default with respect to any Lease, nor is there any
event that with notice or lapse of time, or both, would constitute a default on
the part of INT'X.xxx or any Subsidiary, or, to the knowledge of INT'X.xxx and
its Subsidiaries, any other party thereunder.
3.10 PERSONAL PROPERTY; REAL ESTATE. (a) INT'X.xxx has good and marketable
title, free and clear of all title defects and Liens (including, without
limitation, leases, chattel mortgages, conditional sale contracts, purchase
money security interests, collateral security arrangements and other title or
interest-retaining agreements) to all inventory, receivables, furniture,
machinery, equipment and other personal
A-15
property, tangible or otherwise, reflected on the Balance Sheets or used in
INT'X.xxx's business, except for acquisitions and dispositions since the Balance
Sheet Date in the ordinary course of business. The INT'X.xxx Disclosure Schedule
lists (i) all computer equipment and (ii) all other personal property, in each
case having a depreciated book value of $10,000 or more, which are used by
INT'X.xxx or any Subsidiary in the conduct of its business, and all such
equipment and property, in the aggregate, is in good operating condition and
repair, reasonable wear and tear excepted. There is no asset used or required by
INT'X.xxx in the conduct of its business as presently operated which is not
either owned by it or licensed or leased to it.
(b) Section 3.10 of the INT'X.xxx Disclosure Schedule contains a
schedule setting forth all real property which is owned or leased by
INT'X.xxx or any Subsidiary, or in which INT'X.xxx or any Subsidiary has any
other right, title or interest. Neither INT'X.xxx nor any Subsidiary owns
any real property. True and complete copies of each lease have been provided
to Parent, and such leases constitute the entire understanding relating to
INT'X.xxx's or any Subsidiary's use and occupancy of the leased premises.
(c) INT'X.xxx and each Subsidiary has obtained consents for all
alterations made as of the Prior Agreement Date to each leased premise
described in Section 3.10 of the INT'L Disclosure Schedule and, upon the
expiration or earlier termination of the lease or sublease with respect
thereto, shall not be obligated to remove any such alterations or restore
the premises to the condition they were in prior to the time such
alterations were undertaken, except for removal or restoration obligations
which individually or in the aggregate do not exceed $25,000. To the
knowledge of INT'X.xxx and its Subsidiaries, the improvements located on the
real property described in Section 3.10 of the INT'X.xxx Disclosure Schedule
are not the subject of and neither INT'X.xxx nor any Subsidiary has received
written notice of any official complaint or of a violation of any applicable
zoning ordinance or building code. There is no condemnation proceeding
pending or, to the knowledge of INT'X.xxx and its Subsidiaries, threatened
against INT'X.xxx or any Subsidiary and to the knowledge of INT'X.xxx and
its Subsidiaries there are no use or occupancy restrictions on the real
property described in Section 3.10 of the INT'X.xxx Disclosure Schedule.
3.11 CERTAIN TRANSACTIONS. Except for (a) relationships with INT'X.xxx or
any Subsidiary as an officer, director, or employee thereof (and compensation by
INT'X.xxx or any Subsidiary in consideration of such services) and
(b) relationships with INT'X.xxx as security holders therein, none of the
directors, officers, or stockholders of INT'X.xxx, or any member of any of their
families, is presently a party to, or was a party to during the year preceding
the Prior Agreement Date, any transaction, or series of similar transactions,
with INT'X.xxx or any Subsidiary, in which the amount involved exceeds $60,000,
including, without limitation, any contract, agreement, or other arrangement
(i) providing for the furnishing of services to or by, (ii) providing for rental
of real or personal property to or from, or (iii) otherwise requiring payments
to or from, any such Person or any other Person in which any such Person has or
had a 5%-or-more interest (as a stockholder, partner, beneficiary, or otherwise)
or is or was a director, officer, employee, or trustee, but excluding any
transaction pursuant to existing employee benefit plans. None of INT'X.xxx's
officers or directors has any interest in any property, real or personal,
tangible or intangible, including inventions, copyrights, trademarks, or trade
names, used in or pertaining to the business of INT'X.xxx or the Material
INT'X.xxx Subsidiaries, or, to the knowledge of INT'X.xxx, any material
supplier, distributor, or customer of INT'X.xxx or the Material INT'X.xxx
Subsidiaries, except for the normal rights of a securityholder, and except for
rights under existing employee benefit plans.
3.12 LITIGATION AND OTHER PROCEEDINGS. There is no action, suit, claim,
proceeding, or to the knowledge of INT'X.xxx or any Subsidiary, investigation
pending against or, to the knowledge of INT'X.xxx or any Subsidiary, threatened
against INT'X.xxx or any Subsidiary or any of their
A-16
respective properties and assets before any court or arbitrator or any
Governmental Entity. Neither INT'X.xxx nor any Subsidiary is subject to any
order, writ, judgment, decree, or injunction.
3.13 NO DEFAULTS. INT'X.xxx and the Material INT'X.xxx Subsidiaries are
not, nor has INT'X.xxx or any Material INT'X.xxx Subsidiary received notice that
it would be with the passage of time, in default or violation of any term,
condition, or provision of (i) its Charter Documents; (ii) any judgment, decree,
or order applicable to INT'X.xxx or any Material INT'X.xxx Subsidiary; or
(iii) any loan or credit agreement, note, bond, mortgage, indenture, contract,
agreement, lease, license, or other instrument to which INT'X.xxx or any
Material INT'X.xxx Subsidiary is now a party or by which it or any of its
properties or assets may be bound, except for defaults and violations which have
been validly waived, or which, individually or in the aggregate, would not have
a material adverse effect on the Business Condition of INT'X.xxx.
3.14 MAJOR CONTRACTS. Neither INT'X.xxx nor any Material INT'X.xxx
Subsidiary is a party to or subject to:
(a) Any union contract, or any employment contract or arrangement in
effect (other than "at-will" employment arrangements) providing for future
compensation, written or oral, with any officer, consultant, director, or
employee;
(b) Any plan or contract or arrangement, written or oral, providing for
non-standard bonuses, pensions, deferred compensation, retirement payments,
profit-sharing or the like;
(c) Any joint venture contract or arrangement or any other agreement
which has involved or is expected to involve a sharing of profits;
(d) Any OEM agreement, reseller or distribution agreement, volume
purchase agreement, corporate end user sales or service agreement,
reproduction or replication agreement or manufacturing agreement in which
the amount involved exceeds annually, or is expected to exceed in the
aggregate over the life of the contract, $50,000 or pursuant to which
INT'X.xxx has granted or received manufacturing rights, most favored nation
pricing provisions, or exclusive marketing, production, publishing or
distribution rights related to any product, group of products or territory;
(e) Any agreement, license, franchise, permit, indenture, or
authorization which has not been terminated or performed in its entirety and
not renewed which may be, by its terms, terminated, impaired, or adversely
affected by reason of the execution of this Agreement and all other
agreements contemplated hereby, the consummation of the Merger, or the
consummation of the transactions contemplated hereby or thereby;
(f) Except for trade indebtedness incurred in the ordinary course of
business, any instrument evidencing or related in any way to indebtedness
incurred in the acquisition of companies or other entities or indebtedness
for borrowed money by way of direct loan, sale of debt securities, purchase
money obligation, conditional sale, guarantee, or otherwise which
individually is in the amount of $50,000 or more;
(g) Any license agreement in effect, either as licensor or licensee
(excluding nonexclusive hardware and software licenses granted to
distributors or end-users and commercially available in-licensed software
applications);
(h) Any contract or agreement containing covenants purporting to limit
INT'X.xxx's or the Material INT'X.xxx Subsidiaries' freedom to compete in
any line of business in any geographic area; or
(i) Any contract or agreement not elsewhere specifically disclosed
pursuant to this Agreement, involving the payment or receipt by INT'X.xxx of
more than $250,000 in the aggregate.
A-17
For purposes of this Section 3.14, a contract, agreement or arrangement
shall be considered "in effect" if INT'X.xxx or any Material Subsidiary shall
have any obligations or liabilities pursuant to such contract, agreement or
arrangement.
All contracts, arrangements, plans, agreements, leases, licenses,
franchises, permits, indentures, authorizations, instruments and other
commitments which are listed in the INT'X.xxx Disclosure Schedule pursuant to
this Section 3.14 are valid and in full force and effect and neither INT'X.xxx
nor any Material INT'X.xxx Subsidiary has, nor, to the knowledge of INT'X.xxx
and the Material INT'X.xxx Subsidiaries, has any other party thereto, breached
any material provisions of, or entered into default in any material respect
under the terms thereof. INT'X.xxx has delivered to Parent copies of the
contracts or agreements, and descriptions of any verbal agreements or
arrangements, referred to in this Section 3.14 as in effect on the Prior
Agreement Date.
3.15 MATERIAL REDUCTIONS. None of the parties to any of the contracts
identified in the INT'X.xxx Disclosure Schedule pursuant to Section 3.14 have
terminated, or in any way expressed in writing to INT'X.xxx or any Subsidiary an
intent to reduce or terminate the amount of its business with INT'X.xxx or any
Subsidiary in the future.
3.16 INSURANCE AND BANKING FACILITIES. Section 3.16 of the INT'X.xxx
Disclosure Schedule contains a complete and correct list of (i) all contracts of
insurance or indemnity of INT'X.xxx in force at the Prior Agreement Date
(including name of insurer or indemnitor, agent, annual premium, coverage,
deductible amounts and expiration date) and (ii) the names and locations of all
banks in which INT'X.xxx has accounts or safe deposit boxes, the designation of
each such account and safe deposit box, and the names of all persons authorized
to draw on or have access to each such account and safe deposit box. All
premiums and other payments due from INT'X.xxx with respect to any such
contracts of insurance or indemnity have been paid, and neither INT'X.xxx nor
any Material INT'X.xxx Subsidiary knows of any fact, act, or failure to act
which has or could reasonably be expected to cause any such contract to be
canceled or terminated. All known claims for insurance or indemnity have been
presented or are described in Section 3.16 of the INT'X.xxx Disclosure Schedule.
3.17 EMPLOYEES. The INT'X.xxx Disclosure Schedule sets forth a list as of
January 12, 2000 of (a) the names, titles, annual salaries and all bonuses of
all salaried employees of INT'X.xxx and its Subsidiaries (such term meaning
permanent and temporary, full-time and part-time employees) and (b) the wage
rates for non-salaried employees of INT'X.xxx and its Subsidiaries. Any persons
engaged by INT'X.xxx as independent contractors, rather than employees, have
been properly classified as such and have been so engaged in accordance with all
applicable federal, foreign, state or local laws. No employee that INT'X.xxx or
any Material INT'X.xxx Subsidiary wishes to retain has stated to INT'X.xxx or
any Material INT'X.xxx Subsidiary that such employee intends to resign or retire
as a result of the transactions contemplated by this Agreement or otherwise
within six months after the Closing Date. Hours worked by and payments made to
employees of INT'X.xxx and its Subsidiaries have not been in violation of the
Fair Labor Standards Act or any other applicable federal, foreign, state or
local laws dealing with such matters. Neither INT'X.xxx nor any Subsidiary is
engaged in any dispute or litigation with an employee or former employee
regarding matters pertaining to intellectual property or assignment of
inventions. Neither INT'X.xxx nor any Subsidiary, to the knowledge of INT'X.xxx
and its Subsidiaries, is subject to a union organizing effort. Neither INT'X.xxx
nor any Subsidiary has any written contract of employment or other employment,
severance or similar agreement with any of its employees or any established
policy or practice relating thereto, and all of its employees are
employees-at-will. Neither INT'X.xxx nor any Subsidiary is a party to any
pending, or to the knowledge of INT'X.xxx and its Subsidiaries, threatened,
labor dispute. INT'X.xxx and its Subsidiaries have complied in all material
respects with all applicable foreign, federal, state and local laws, ordinances,
rules and regulations and requirements relating to the employment of labor,
including but not limited to the provisions thereof relating to wages, hours,
collective bargaining and ensuring equality of opportunity for employment. There
are no claims pending, or, to the knowledge of
A-18
INT'X.xxx and its Subsidiaries, threatened to be brought, in any court or
administrative agency by any former or current employees of INT'X.xxx and its
Subsidiaries for compensation, pending severance benefits, vacation time,
vacation pay or pension benefits, or any other claim pending, or, to the
knowledge of INT'X.xxx and its Subsidiaries, threatened in any court or
administrative agency from any current or former employee or any other Person
arising out of INT'X.xxx's or its Subsidiary's status as employer, whether in
the form of claims for employment discrimination, harassment, unfair labor
practices, grievances, wrongful discharge, or otherwise.
3.18 EMPLOYEE BENEFIT PLANS. Each Plan (as defined below) covering active,
former, or retired employees of INT'X.xxx or any Subsidiary is listed in
Section 3.18 of the INT'X.xxx Disclosure Schedule. "PLAN" means any employee
benefit plan as defined in ERISA (as defined below), maintained or contributed
to by INT'X.xxx or any of its Subsidiaries within the past six years, and also
includes any employment, severance or similar contract, arrangement or policy
and each plan or arrangement providing for insurance coverage (including any
self-insured arrangements), workers' compensation, disability benefits,
supplemental unemployment benefits, vacation benefits, pension or retirement
benefits or for deferred compensation, profit-sharing, bonuses, phantom stock,
stock options, stock appreciation rights or other forms of incentive
compensation or post-retirement insurance, compensation or benefits in existence
within the past three years or for which there is an unsatisfied liability.
INT'X.xxx has made available to Parent a copy (or description if no document
exists) of each Plan, and where applicable, any related trust agreement,
annuity, or insurance contract. All annual reports (Form 5500) required to be
filed with the Internal Revenue Service have been properly filed on a timely
basis, and INT'X.xxx has provided copies of the three most recently filed Forms
5500 for each applicable Plan. Any Plan intended to be qualified under
Section 401(a) of the Code has been determined by the Internal Revenue Service
to be so qualified or, if no such determination letter has been received, the
form of such Plan complies with the Code's requirements for qualification,
except those requirements for which the remedial amendment period has not
expired, and no event has occurred which is reasonably likely to threaten the
tax-exempt status of such Plan or any trust for such Plan. No Plan is covered by
Title IV of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), or Section 412 of the Code. No "prohibited transaction," as defined
in ERISA Section 406 or Code Section 4975 has occurred with respect to any Plan,
unless such a transaction was exempt from such rules or would not give rise to a
material tax or penalty. Each Plan has been maintained and administered in
material compliance with its terms and with the requirements prescribed by any
and all statutes, including but not limited to ERISA and the Code, which are
applicable to such Plans. There are no pending or, to the knowledge of INT'X.xxx
and its Subsidiaries, anticipated claims against or otherwise involving any of
the Plans and no suit, action, or other litigation (excluding claims for
benefits incurred in the ordinary course of Plan activities) is currently
pending against or with respect to any Plan for which there is an unsatisfied
liability. All contributions, reserves, or premium payments to the Plan accrued
to the Prior Agreement Date have been made or provided for in accordance with
prior funding and accrual practices. Within the six year period preceding the
Closing Date, neither INT'X.xxx nor any Subsidiary, nor any entity which is
considered one employer with INT'X.xxx or any Subsidiary under Section 414 of
the Code or Section 4001 of ERISA has ever maintained or contributed to or
incurred liability with respect to any Plan subject to Title IV of ERISA or any
"multi-employer plan" within the meaning of Section 4001(a)(3) of ERISA, and
neither INT'X.xxx nor any Subsidiary expects to incur any such liability. There
are no restrictions on the rights of INT'X.xxx or any Subsidiary to amend or
terminate any Plan, subject to any applicable notice requirements without
incurring any liability thereunder other than for benefits accrued prior to the
date of termination or amendment. Neither INT'X.xxx nor any Subsidiary has
engaged in and, to the knowledge of INT'X.xxx and its Subsidiaries, it is not a
successor or parent corporation to an entity that has engaged in a transaction
described in ERISA Section 4069. There have been no written interpretations of,
or announcements (whether or not written) by INT'X.xxx or any Subsidiary
relating to, or change in employee participation or coverage under, any Plan
that would increase the expense of maintaining such Plan above the level of the
expense incurred in respect thereof for the fiscal year
A-19
ended prior to the Prior Agreement Date. Neither INT'X.xxx nor any of its ERISA
affiliates has any liability in respect of post-employment or post-retirement
welfare benefits for retired employees of INT'X.xxx or any Subsidiary. Neither
INT'X.xxx nor any Material INT'X.xxx Subsidiary nor any of their ERISA
Affiliates has any liability with respect to welfare benefits for former
employees other than health care continuation benefits required to be provided
under applicable law or which do not exceed three months in duration. No tax
under Section 4980B or 4980D of the Code has been incurred in respect of any
Plan that is a group health plan, as defined in Section 5000(b)(1) of the Code.
3.19 CERTAIN AGREEMENTS. Except as contemplated by this Agreement, neither
the execution and delivery of this Agreement and all other agreements
contemplated hereby, nor the consummation of the transactions contemplated
hereby will: (i) result in any payment by INT'X.xxx or any Subsidiary
(including, without limitation, severance, unemployment compensation, parachute
payment, bonus or otherwise) becoming due to any director, employee, or
independent contractor of INT'X.xxx or any Subsidiary under any Plan, agreement,
or otherwise, (ii) increase any benefits otherwise payable under any Plan or
agreement or (iii) result in the acceleration of the time of payment or vesting
of any such benefits.
3.20 GUARANTEES AND SURETYSHIPS. INT'X.xxx and its Subsidiaries have no
powers of attorney outstanding (other than those issued in the ordinary course
of business with respect to Tax matters), and INT'X.xxx and its Subsidiaries
have no material obligations or liabilities (absolute or contingent) as
guarantor, surety, cosigner, endorser, co-maker, indemnitor, or otherwise
respecting the obligations or liabilities of any Person.
3.21 BROKERS AND FINDERS. INT'X.xxx has not retained any broker, finder,
or investment banker in connection with this Agreement or any of the
transactions contemplated by this Agreement, nor does or will INT'X.xxx or any
Subsidiary owe any fee or other amount to any broker, finder, or investment
banker in connection with this Agreement or the transactions contemplated by
this Agreement.
3.22 CERTAIN PAYMENTS. Neither INT'X.xxx nor any Subsidiary, nor to the
knowledge of INT'X.xxx and its Subsidiaries, any Person acting on behalf of
INT'X.xxx or any Subsidiary has, directly or indirectly, on behalf of or with
respect to INT'X.xxx or any Subsidiary: (i) made an unreported political
contribution, (ii) made or received any payment which was not legal to make or
receive, (iii) engaged in any material transaction or made or received any
material payment which was not properly recorded on the books of INT'X.xxx and
its Subsidiaries, (iv) created or used any "off-book" bank or cash account or
"slush fund," or (v) engaged in any conduct constituting a violation of the
Foreign Corrupt Practices Act of 1977.
3.23 ENVIRONMENTAL MATTERS. INT'X.xxx and its Subsidiaries have complied
in all material respects with all applicable federal, state and local laws
(including, without limitation, case law, rules, regulations, orders, judgments,
decrees, permits, licenses and governmental approvals) which are intended to
protect the environment and/or human health or safety (collectively,
"ENVIRONMENTAL LAWS"); neither INT'X.xxx nor any Subsidiary has handled,
generated, used, stored, transported or disposed of any material, substance or
waste which is regulated by Environmental Laws ("HAZARDOUS MATERIALS"), except
for ordinary office and/or office-cleaning supplies, products, equipment, fluids
and wastes customarily found, and in quantities customarily found, in a
commercial office setting, which have been used in compliance with Environmental
Laws; (iii) to the knowledge of INT'X.xxx and its Subsidiaries there is not now,
nor has there ever been, any underground storage tank or asbestos on any real
property owned, operated or leased by INT'X.xxx; (iv) INT'X.xxx has not
conducted, nor is it aware of, any environmental investigations, studies,
audits, tests, reviews or analyses, the purpose of which was to discover,
identify, or otherwise characterize the condition of the soil, groundwater, air
or the presence of Hazardous Materials at any real property owned, operated or
leased by INT'X.xxx; and (v) to the knowledge of INT'X.xxx and its Subsidiaries
there are no "Environmental Liabilities". For purposes of this Agreement,
"ENVIRONMENTAL LIABILITIES" are any claims, demands, or liabilities
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under Environmental Laws which (i) arise out of or in any way relate to
INT'X.xxx's or its Subsidiary's operations or activities, or any real property
at any time owned, operated or leased by INT'X.xxx or a Subsidiary, or any
stockholder's use or ownership thereof, whether vested or unvested, contingent
or fixed, actual or potential, and (ii) arise from or relate to actions
occurring (including any failure to act) or conditions existing on or before the
Closing Date.
3.24 ENFORCEABILITY OF CONTRACTS, ETC.
(a) No Person that is a party to any contract, agreement, commitment or plan
to which INT'X.xxx or a Subsidiary is a party has a valid defense, on account of
non-performance or malfeasance by INT'X.xxx or a Subsidiary, which would make
any such contracts, agreement, commitment or plan not valid and binding upon or
enforceable against such parties in accordance with their terms, except to the
extent such enforceability may be subject to or limited by bankruptcy,
insolvency, reorganization, arrangement or similar laws affecting the rights of
creditors generally and usual equity principles.
(b) Neither INT'X.xxx, nor any Subsidiary, nor to the knowledge of INT'X.xxx
and its Subsidiaries, any other Person, is in breach or violation of, or default
under, any material contract, agreement, arrangement, commitment or plan to
which INT'X.xxx or a Subsidiary is a party, and no event or action has occurred,
is pending, or, to the knowledge of INT'X.xxx and its Subsidiaries, is
threatened, which, after the giving of notice, or the lapse of time, or
otherwise, would constitute a breach or a default by INT'X.xxx or a Subsidiary
or, to the knowledge of INT'X.xxx and its Subsidiaries, any other Person, under
any material contract, agreement, arrangement, commitment or plan to which
INT'X.xxx or a Subsidiary is a party.
3.25 ACCOUNTING MATTERS. To the knowledge of INT'X.xxx and its
Subsidiaries, neither INT'X.xxx nor any of its Subsidiaries or affiliates has
taken or agreed to, or plans to, take any action that would prevent Parent from
accounting for the Merger as a "pooling of interests" in accordance with
generally accepted accounting principles, Accounting Principles Board Opinion
No. 16 and all published rules, regulations and policies of the Securities and
Exchange Commission (the "Commission").
3.26 YEAR 2000. All computer and other systems, software (whether embedded
or otherwise), hardware and other products owned or licensed by INT'X.xxx or its
Subsidiaries and used in connection with the services provided by INT'X.xxx or
its Subsidiaries and, to the knowledge of INT'X.xxx and its Subsidiaries, all
computer and other systems, software (whether embedded or otherwise), hardware
and other products produced by any third party that are licensed by INT'X.xxx,
in each case, have been written, manufactured and tested to be Year 2000 Ready.
For purposes of this Agreement, "Year 2000 Ready" shall mean, with respect to
any systems, software (whether embedded or otherwise), product, equipment or
facility, that such system, product, equipment or facility is capable of
correctly processing, providing, receiving and manufacturing the date data
within and between the twentieth and twenty-first centuries, and its operations
and functionality has not been adversely affected and will not be adversely
affected in any material respect as a result of the advent of the Year 2000.
3.27 DISCLOSURE. Neither the representations or warranties made by
INT'X.xxx in this Agreement, nor the INT'X.xxx Disclosure Schedule or any other
certificate executed and delivered by INT'X.xxx pursuant to this Agreement, when
taken together, contains any untrue statement of a material fact, or omits to
state a material fact necessary to make the statements or facts contained herein
or therein not misleading in light of the circumstances under which they were
furnished.
3.28 RELIANCE. The foregoing representations and warranties are made by
INT'X.xxx with the knowledge and expectation that Parent and Merger Sub are
placing reliance thereon.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Except as set forth in either the documents delivered pursuant to
Section 4.5 or in the disclosure schedule of Parent dated as of the Prior
Agreement Date and delivered herewith to INT'X.xxx (the "PARENT DISCLOSURE
SCHEDULE") which identifies the section and subsection to which each disclosure
therein relates (PROVIDED, HOWEVER, that Parent will be deemed to have
adequately disclosed with respect to any section or subsection any matters that
are clearly described elsewhere in such document if the applicability of such
disclosure to such non-referenced sections or subsections is apparent, and
whether or not the Parent Disclosure Schedule is) referred to in a specific
section or subsection, Parent and Merger Sub jointly and severally represent and
warrant to INT'X.xxx as follows:
4.1 ORGANIZATION AND QUALIFICATION. Parent is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, has all requisite corporate power and authority to own, lease and
operate its properties and to carry on its businesses as now being conducted,
and is duly qualified and in good standing to do business in each jurisdiction
in which a failure to so qualify would have a material adverse effect on the
Business Condition of Parent. Each Subsidiary of Parent is a corporation duly
organized and validly existing under the laws of the jurisdiction of its
incorporation, and Merger Sub is recently organized, is in good standing, and
has conducted no business activities, other than as contemplated by this
Agreement. In this Agreement, "Material Parent Subsidiaries" shall mean the
following: Lionbridge Technologies California, Inc., Lionbridge Technologies
(Ireland), Inc., Lionbridge Technologies, B.V. and Lionbridge Technologies
(France).
4.2 CAPITALIZATION. (a) The authorized capital stock of Parent consists of
5,000,000 shares of preferred stock, $0.01 par value per share, of which no
shares are issued or outstanding or held in Parent's treasury, and 100,000,000
shares of Parent Common Stock, of which, as of November 10, 1999:
(a) 16,287,827 shares were validly issued and outstanding, fully paid and
nonassessable and (b) 5,221,201 shares were reserved for issuance pursuant to
Parent's stock option and stock purchase plans for its employees and directors.
Except for options and rights relating to shares described in clause (b) of the
preceding sentence and except as set forth in Section 4.2 of the Parent
Disclosure Schedule or the Reports (as defined in Section 4.5), there are no
options, warrants or other rights, agreements or commitments or understandings
or rights of any character (contingent or otherwise) obligating Parent to issue,
deliver or sell or cause to be issued, delivered or sold shares of its capital
stock or any other securities convertible into or evidencing the right to
subscribe to shares of its capital stock. All of the outstanding shares of
capital stock of each Subsidiary of Parent are owned beneficially and of record
by Parent, one of its other Subsidiaries, or any combination thereof, in each
case, free and clear of any Liens; and there are no outstanding subscriptions,
warrants, options, convertible securities or other rights (contingent or other)
pursuant to which any of the Subsidiaries is or may become obligated to issue
any shares of its capital stock to any Person other than Parent or one of the
other Subsidiaries.
(b) The authorized capital stock of Merger Sub consists of 1,000 shares
of common stock, par value $0.01 per share, of which 1,000 shares are issued
and outstanding, all of which shares are owned beneficially and of record by
Parent.
4.3 AUTHORITY RELATIVE TO THIS AGREEMENT. The execution, delivery and
performance of this Agreement and all other agreements contemplated hereby by
Parent and Merger Sub have been duly authorized by all necessary action of the
Boards of Directors and stockholders of Parent and Merger Sub. Certified copies
of the resolutions adopted by the Boards of Directors of Parent and Merger Sub
and Parent as sole stockholder of Merger Sub approving this Agreement, all other
agreements contemplated hereby and the Merger have been or will be provided to
INT'X.xxx. Each of Parent and Merger Sub has duly and validly executed and
delivered this Agreement and has, or prior to Closing, will have duly and
validly executed and delivered all other agreements contemplated hereby to be
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executed by it, and each of this Agreement and such other agreements constitutes
a valid, binding and enforceable obligation of each of Parent and Merger Sub in
accordance with its terms.
4.4 NON-CONTRAVENTION. Neither the execution, delivery or performance of
this Agreement and all other agreements contemplated hereby by Parent and Merger
Sub, nor the consummation of the Merger or any other transaction described
herein, does or will, after the giving of notice, or the lapse of time, or
otherwise, conflict with, result in a breach of, or constitute a default under,
the Charter Documents of Parent or Merger Sub or any federal, foreign, state or
local court or administrative order or process, statute, law, ordinance, rule or
regulation, or any contract, agreement or commitment to which Parent is a party,
or under which Parent or any Material Parent Subsidiary is obligated, or by
which Parent or any Material Parent Subsidiary or any of the rights, properties
or assets of Parent or any Material Parent Subsidiary are subject or bound;
result in the creation of any Lien upon, or otherwise adversely affect, any of
the rights, properties or assets of Parent or any Material Parent Subsidiary;
terminate, amend or modify, or give any party the right to terminate, amend,
modify, abandon or refuse to perform or comply with, any contract, agreement or
commitment to which Parent or any Material Parent Subsidiary is a party, or
under which Parent or any Material Parent Subsidiary is obligated, or by which
Parent or any Material Parent Subsidiary or any of the rights, properties or
assets of Parent or any Material Parent Subsidiary are subject or bound; or
accelerate, postpone or modify, or give any party the right to accelerate,
postpone or modify, the time within which, or the terms and conditions under
which, any liabilities, duties or obligations are to be satisfied or performed,
or any rights or benefits are to be received, under any contract, agreement or
commitment to which Parent or any Material Parent Subsidiary is a party, or
under which Parent or any Material Parent Subsidiary may be obligated, or by
which Parent or any of the rights, properties or assets of Parent or any
Material Parent Subsidiary are, subject or bound.
4.5 REPORTS AND FINANCIAL STATEMENTS. (a) Parent has previously furnished
to INT'X.xxx true and correct copies of its (i) Prospectus dated as of
August 20, 1999 contained in Parent's Registration Statement on Form S-1,
(ii) Quarterly Report on Form 10-Q for the period ended September 30, 1999 (the
"RECENT 10-Q") and (iii) all other reports filed by it with the Commission under
the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT") since
August 20, 1999.
(b) Parent hereby agrees to furnish to INT'X.xxx true and correct copies
of all reports filed by it with the Commission after the Prior Agreement
Date prior to the Closing all in the form (including exhibits) so filed
(collectively, the "REPORTS"). As of their respective dates, the Reports
complied or will comply in all material respects with the then applicable
published rules and regulations of the Commission with respect thereto at
the date of their issuance and did not or will not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. As of the Prior
Agreement Date, no additional filings or amendments to previously filed
Reports are required pursuant to such rules and regulations. Each of the
audited consolidated financial statements and unaudited interim financial
statements included in Parent's Reports has been prepared in accordance with
generally accepted accounting principles applied on a consistent basis
(except as may be indicated therein or in the notes thereto) and fairly
presents the financial position of the entity or entities to which it
relates as at its date or the results of operations, stockholders' equity or
cash flows of such entity or entities (subject, in the case of unaudited
statements, to the absence of footnote disclosure and in the case of
unaudited interim statements to year-end adjustments, which will not be
material either individually or in the aggregate, and except as described in
Section 4.5 of the Parent Disclosure Schedule). As of the date of the Recent
10-Q, there were no material liabilities, claims or obligations of any
nature, whether accrued, absolute, contingent, anticipated or otherwise,
whether due or to become due, that are not shown or provided for either in
the Recent 10-Q or Section 4.5 of the Parent Disclosure Schedule, and since
the date of the Recent 10-Q, Parent has incurred no
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liabilities, claims or obligations of any nature, whether accrued, absolute,
contingent, anticipated or otherwise other than in the ordinary course of
business and except for liabilities incurred by Parent in connection with
the preparation and execution of this Agreement and the consummation of the
transactions contemplated herein.
4.6 VALIDITY OF PARENT MERGER SHARES. The Parent Merger Shares to be
issued in the Merger will, when issued, be, validly issued, fully paid and
nonassessable.
4.7 CONSENTS AND APPROVALS OF GOVERNMENTAL AUTHORITIES. Except for
(a) the requirements of state securities (or "Blue Sky") laws, (b) the filing
and recording of the Merger Documents as provided by the DGCL, (c) the filing of
appropriate documents with the Nasdaq Stock Market, (d) the filing of the Proxy
Statement, the Form S-4 and a Form 8-K with the Commission, if applicable, and
(e) such other consents, approvals, orders, authorizations, registrations,
declarations and filings the failure of which to be obtained or made,
individually or in the aggregate, could not reasonably be expected to impair in
any material respect the ability of Parent or Merger Sub to perform its
obligations under this Agreement or prevent or materially delay the consummation
of any of the transactions contemplated by this Agreement, no consent, approval
or authorization of, or declaration, filing or registration with, any
Governmental Entity is required to be made or obtained by Parent or Merger Sub
in connection with the execution, delivery and performance of this Agreement or
the consummation of the transactions contemplated hereby.
4.8 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except for liabilities incurred
in connection with this Agreement or the transactions contemplated hereby, since
September 30, 1999, there has not been any material adverse change in the
Business Condition of Parent.
4.9 LITIGATION AND OTHER PROCEEDINGS. There is no action, suit, claim,
proceeding, or to the knowledge of Parent or any Subsidiary investigation
pending against or, to the knowledge of Parent or any Subsidiary, threatened
against Parent or any Subsidiary or any of their respective properties and
assets before any court or arbitrator or any Governmental Entity.
4.10 DISCLOSURE. Neither the representations or warranties made by Parent
in this Agreement, nor the Parent Disclosure Schedule or any other certificate
executed and delivered by Parent pursuant to this Agreement, when taken together
and with knowledge of the contents of the Reports, contains any untrue statement
of a material fact, or omits to state a material fact necessary to make the
statements or facts contained herein or therein not misleading in light of the
circumstances under which they were furnished. Prior to the Prior Agreement
Date, Parent has disclosed to INT'X.xxx all material strategic and financing
transactions which Parent has taken action in furtherance of and involving
Parent or any Parent Subsidiary.
4.11 RELIANCE. The foregoing representations and warranties are made by
Parent with the knowledge and expectation that INT'X.xxx are placing reliance
thereon.
4.12 BROKERS AND FINDERS. Except for Prudential Securities, Inc., Parent
has not retained any broker, finder, or investment banker in connection with
this Agreement or any of the transactions contemplated by this Agreement.
4.13 ACCOUNTING MATTERS. To the knowledge of Parent, neither Parent nor
any of its affiliates has taken or agreed to, or plans to, take any action that
would prevent Parent from accounting for the Merger as a "pooling of interest"
in accordance with generally accepted accounting principles, Accounting
Principles board Opinion No. 16 and all published rules, regulations and
policies of the Commission.
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ARTICLE V
COVENANTS OF INT'X.XXX
References in this Article V to INT'X.xxx shall be deemed to include all
Subsidiaries of INT'X.xxx. During the period from the Prior Agreement Date
(except as otherwise indicated) and continuing until the earlier of the
termination of this Agreement or the Effective Time, INT'X.xxx agrees (except as
expressly set forth in Section 5 of the Parent Disclosure Schedule contemplated
by this Agreement or otherwise permitted with Parent's prior written consent):
5.1 CONDUCT OF BUSINESS IN ORDINARY COURSE. INT'X.xxx will carry on its
business in the ordinary course in substantially the same manner as heretofore
conducted and, to the extent consistent with such business, use all reasonable
best efforts consistent with past practice and policies to preserve intact its
present business organization, keep available the services of its present
officers, consultants and employees and preserve its relationships with
customers, suppliers and distributors and others having business dealings with
it. INT'X.xxx will confer on a regular and frequent basis with representatives
of Parent to report operational matters of a material nature and to report the
general status of the ongoing operations of the business of INT'X.xxx. The
foregoing notwithstanding, INT'X.xxx will not:
(a) other than in the ordinary course of business consistent with prior
practice, enter into any material commitment or transaction, including but
not limited to any purchase of assets (other than raw materials, supplies or
cash equivalents) for a purchase price in excess of $50,000;
(b) grant any bonus, severance or termination pay to any officer,
director, independent contractor or employee of INT'X.xxx;
(c) enter into or amend any agreements pursuant to which any other party
is granted support, service, marketing or publishing rights, other than in
the ordinary course of business consistent with prior practice, or is
granted distribution rights of any type or scope with respect to any
products of INT'X.xxx;
(d) other than in the ordinary course of business consistent with prior
practice, enter into or terminate any contracts, arrangements, plans,
agreements, leases, licenses, franchises, permits, indentures,
authorizations, instruments, or commitments, or amend or otherwise change in
any material respect the terms thereof in a manner adverse to INT'X.xxx;
(e) commence a lawsuit other than: (i) for the routine collection of
bills, (ii) in such cases where INT'X.xxx in good faith determines that
failure to commence suit would result in a material impairment of a valuable
aspect of INT'X.xxx's business PROVIDED THAT INT'X.xxx consults with Parent
prior to filing such suit, or (iii) for a breach of this Agreement or any
agreement related hereto;
(f) modify in any material respect existing discounts or other terms and
conditions with dealers, distributors and other resellers of INT'X.xxx's
products or services in a manner adverse to INT'X.xxx;
(g) accelerate the vesting or otherwise modify any INT'X.xxx Option,
restricted stock or other outstanding rights or other securities other than
any acceleration or modification that results from the execution and
performance of this Agreement or any of the transactions contemplated
hereby;
(h) take any action which would make any representation or warranty in
this Agreement untrue or incorrect, as if made as of such time; or
(i) agree in writing or otherwise to take any of the foregoing actions.
5.2 DIVIDENDS, ISSUANCE OF, OR CHANGES IN SECURITIES. INT'X.xxx will not:
(i) declare or pay any dividends on or make other distributions to its
stockholders (whether in cash, shares or property),
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(ii) issue, deliver, sell, or authorize, propose, or agree to, or commit to the
issuance, delivery, or sale of any shares of its capital stock of any class, any
INT'X.xxx Voting Debt or any securities convertible into its capital stock, any
options, warrants, calls, conversion rights, commitments, agreements, contracts,
understandings, restrictions, arrangements or rights of any character obligating
INT'X.xxx to issue any such shares, INT'X.xxx Voting Debt or other convertible
securities except as any of the foregoing is required by Outstanding INT'X.xxx
Options; (iii) split, combine or reclassify any of its capital stock or issue or
authorize the issuance of any other securities in respect of, in lieu of or in
substitution for shares of capital stock of INT'X.xxx, (iv) repurchase or
otherwise acquire, directly or indirectly, any shares of its capital stock or
options or warrants related thereto, or (v) take any action in furtherance of
any of the foregoing.
5.3 GOVERNING DOCUMENTS. INT'X.xxx will not amend its Charter Documents.
5.4 NO ACQUISITIONS. INT'X.xxx will not authorize, recommend, propose or
announce an intention to authorize, recommend or propose, or enter into a letter
of intent (whether or not binding), an agreement in principle or an agreement
with respect to any merger, consolidation or business combination (other than
the Merger), or achieve a comparable effect through any acquisition of assets or
securities.
5.5 NO DISPOSITIONS. INT'X.xxx will not sell, lease, license, transfer,
mortgage, encumber or otherwise dispose of any of its material assets or cancel,
release, or assign any material indebtedness or claim, except in the ordinary
course of business.
5.6 INDEBTEDNESS. Except as contemplated in Section 2.9(iii), INT'X.xxx
will not incur any indebtedness for borrowed money by way of direct loan, sale
of debt securities, purchase money obligation, conditional sale, guarantee or
otherwise.
5.7 COMPENSATION. Except for the actions, adoptions, amendments,
modifications, and payments described in Section 5.1(b) of the Parent Disclosure
Schedule, INT'X.xxx will not adopt or amend, or modify in any material respect,
any Plan or pay any pension or retirement allowance not required by any existing
Plan. INT'X.xxx will not enter into or modify any employment or severance
contracts, increase the salaries, wage rates or fringe benefits of its officers,
directors or employees or pay bonuses or other remuneration except for current
salaries, severance and other remuneration for which INT'X.xxx is obligated
under arrangements existing prior to the Balance Sheet Date to which INT'X.xxx
is a party and which have been disclosed in the INT'X.xxx Disclosure Schedule.
5.8 CLAIMS. INT'X.xxx will not settle any claim, action or proceeding,
except in the ordinary course of business consistent with prior practice.
5.9 ACCESS TO PROPERTIES AND RECORDS. Subject to contractual and other
obligations, INT'X.xxx will give Parent and its representatives full access, at
a place reasonably acceptable to INT'X.xxx, during reasonable business hours and
following reasonable notice but in such a manner as not unduly to disrupt the
business of INT'X.xxx, to its senior management, senior technical personnel,
premises, properties, contracts, commitments, books, records and affairs, and
will provide Parent with such financial, technical and operating data and other
information pertaining to its business as Parent may request. With INT'X.xxx's
prior consent, which will not be unreasonably withheld, Parent will be entitled
in conjunction with INT'X.xxx personnel to make appropriate inquiries of third
parties in the course of its investigation.
5.10 BREACH OF REPRESENTATIONS AND WARRANTIES. INT'X.xxx will not take any
action that would cause or constitute a breach of any of the representations and
warranties set forth in Article III or that would cause any of such
representations and warranties to be inaccurate in any material respect or that
would constitute a breach of any of its other obligations under this Agreement.
In the event of, and promptly after becoming aware of, the occurrence of or the
pending or threatened occurrence of any event that would cause or constitute
such a breach or inaccuracy, INT'X.xxx will give detailed notice
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thereof to Parent and will use its reasonable best efforts to prevent or remedy
promptly such breach or inaccuracy.
5.11 CONSENTS. INT'X.xxx will promptly apply for or otherwise seek and use
reasonable best efforts to obtain, all Consents, and make all filings with
Governmental Entities, required with respect to the consummation of the Merger.
5.12 TAX RETURNS. INT'X.xxx will promptly provide or make available to
Parent copies of all tax returns, reports and information statements that have
been filed or are filed prior to the Closing Date.
5.13 EXCLUSIVITY; ACQUISITION PROPOSALS. Unless and until this Agreement
will have been terminated by either party pursuant to Article X hereof and
thereafter subject to Section 10.5, INT'X.xxx will not (and will use its
reasonable best efforts to ensure that none of its officers, directors,
stockholders, agents, representatives or affiliates) take or cause or permit any
Person to take, directly or indirectly, any of the following actions with any
party other than Parent and its designees: (i) solicit, encourage, initiate or
participate in any negotiations, inquiries, or discussions with respect to any
offer or proposal to acquire all or any significant part of INT'X.xxx's
business, assets or capital stock, whether by merger, consolidation, other
business combination, purchase of assets, tender or exchange offer or otherwise
(each of the foregoing, an "ACQUISITION TRANSACTION"), (ii) disclose, in
connection with an Acquisition Transaction, any information not customarily
disclosed to any Person other than Parent or its representatives concerning
INT'X.xxx's business or properties or afford to any Person other than Parent or
its representatives access to its properties, books, or records, except in the
ordinary course of business and as required by law or pursuant to a governmental
request for information, (iii) enter into or execute any agreement relating to
an Acquisition Transaction, or (iv) make or authorize any public statement,
recommendation or solicitation in support of any Acquisition Transaction or any
offer or proposal relating to an Acquisition Transaction other than with respect
to the Merger PROVIDED, HOWEVER, that (a) INT'X.xxx may furnish or cause to be
furnished information concerning INT'X.xxx and its businesses, properties or
assets to a Person, (b) the Company may engage in discussions or negotiations
with such Person, (c) following receipt of a proposal or offer for an
Acquisition Transaction, may make disclosure to its stockholders and may
recommend such proposal or offer to its stockholders and (d) following receipt
of a proposal or offer for an Acquisition Transaction the Board of Directors of
INT'X.xxx may enter into an agreement in principle or a definitive agreement
with respect to such Acquisition Transaction, but in each case referred to in
the foregoing clauses (a) through (d) only to the extent that the Board of
Directors of INT'X.xxx shall conclude in good faith after consultation with
outside legal counsel that such action is necessary or appropriate because
failure to take such action would be inconsistent with the fiduciary duties owed
by the Board of Directors to the stockholders of INT'X.xxx under applicable law;
and PROVIDED, FURTHER, that the Board of Directors of INT'X.xxx shall not take
any of the foregoing actions referred to in clauses (a) through (d) without
prior written notice to Parent with respect to such action. In the event that
INT'X.xxx is contacted by any third party expressing an interest in discussing
an Acquisition Transaction, INT'X.xxx will promptly notify Parent of such
contact and the identity of the party so contacting INT'X.xxx.
5.14 NOTICE OF EVENTS. Throughout the period between the Prior Agreement
Date and the Closing, INT'X.xxx will promptly advise and consult with Parent
regarding any and all material events and developments concerning its financial
position, results of operations, assets, liabilities or business or any of the
items or matters concerning INT'X.xxx covered by the representations, warranties
and covenants of INT'X.xxx contained in this Agreement.
5.15 REASONABLE BEST EFFORTS. INT'X.xxx will use its reasonable best
efforts to effectuate the transactions contemplated hereby and to fulfill and
cause to be fulfilled the conditions to Closing under this Agreement.
5.16 INSURANCE. INT'X.xxx will use its reasonable best efforts to maintain
in force at the Effective Time policies of insurance of the same character and
coverage as those described in the
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INT'X.xxx Disclosure Schedule, and INT'X.xxx will promptly notify Parent in
writing of any changes in such insurance coverage occurring prior to the
Effective Time.
5.17 FINANCIAL STATEMENTS. INT'X.xxx will use its reasonable best efforts
to deliver to Parent audited consolidated balance sheets as of December 31,
1997, December 31, 1998 and December 31, 1999 and audited consolidated
statements of income and consolidated cash flows for the twelve months ended
December 31, 1997, December 31, 1998 and December 31, 1999 no later than
February 28, 2000.
5.18 CONFIDENTIALITY AND ASSIGNMENT OF INVENTIONS AGREEMENTS. INT'X.xxx
shall use its reasonable best efforts to cause each officer and employee of
INT'X.xxx and its Subsidiaries to enter into a confidentiality and assignment of
inventions agreement substantially in the form of such agreement used by Parent
and its Subsidiaries in the country in which such officer or employee performs
services for INT'X.xxx. Any officer or employee of INT'X.xxx or any Subsidiary
who has not entered into such agreement shall have been terminated by INT'X.xxx
or such Subsidiary prior to the Closing.
ARTICLE VI
COVENANTS OF PARENT
During the period from the Prior Agreement Date and continuing until the
earlier of the termination of this Agreement or the Effective Time (or later
where so indicated), Parent and Merger Sub agree (except as expressly
contemplated by this Agreement or with INT'X.xxx's prior written consent):
6.1 BREACH OF REPRESENTATIONS AND WARRANTIES. Neither Parent nor Merger
Sub will take any action which would cause or constitute a breach of any of the
representations and warranties set forth in Article IV or which would cause any
of such representations and warranties to be inaccurate in any material respect.
In the event of, and promptly after becoming aware of, the occurrence of or the
pending or threatened occurrence of any event which would cause or constitute
such a breach or inaccuracy, Parent will give detailed notice thereof to
INT'X.xxx and will use its reasonable best efforts to prevent or remedy promptly
such breach or inaccuracy.
6.2 ADDITIONAL INFORMATION; ACCESS. Parent will provide INT'X.xxx and its
stockholders with the information relating to Parent referred to in Section 4.5
and the information relating to Parent to be included in the Form S-4. In
addition, Parent will afford to INT'X.xxx and to its counsel and to the persons
expected to become stockholders of Parent pursuant to the Merger access
throughout the period prior to the Effective Time to its senior management and
all other information concerning Parent as INT'X.xxx or such stockholder may
reasonably request. Such stockholders will also be afforded the opportunity to
ask questions and to receive accurate and complete answers from Parent
concerning the terms and conditions of the Merger and the issuance of the Parent
Merger Shares pursuant thereto.
6.3 CONSENTS. Parent will promptly apply for or otherwise seek, and use
its reasonable best efforts to obtain, all consents and approvals, and make all
filings, required with respect to the consummation of the Merger.
6.4 REASONABLE BEST EFFORTS. Each of Parent and Merger Sub will use its
reasonable best efforts to effectuate the transactions contemplated hereby and
to fulfill and cause to be fulfilled the conditions to Closing under this
Agreement.
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6.5 OFFICERS AND DIRECTORS. Parent agrees that all rights to
indemnification and all limitations on liability existing on the Prior Agreement
Date in favor of, or for the benefit of, the present or former officers and
directors of INT'X.xxx and its Subsidiaries with respect to actions taken in
their capacities as directors or officers of INT'X.xxx or such INT'X.xxx
Subsidiary prior to the Effective Time as provided in the Charter Documents of
INT'X.xxx will survive the Merger and continue in full force and effect
following the Effective Time and will not be modified by Parent. Notwithstanding
the foregoing, the provisions of such Charter Documents will have no effect on
the obligations of any stockholders of INT'X.xxx pursuant to Article IX of this
Agreement or the Escrow Agreement.
6.6 NASDAQ NATIONAL MARKET LISTING. Parent will promptly prepare and
submit a NASDAQ listing application and will use its reasonable best efforts to
cause the Parent Merger Shares to be authorized for trading on the Nasdaq
National Market as soon as practicable.
6.7 NOTICE OF EVENTS. Throughout the period between the Prior Agreement
Date and the Closing, Parent will promptly advise and consult with INT'X.xxx
regarding any and all material adverse change to the representations, warranties
and covenants of Parent and Merger Sub contained in this Agreement and will
disclose to INT'X.xxx all material strategic and financing transactions which
Parent takes action in furtherance of which involve Parent or any Parent
Subsidiary.
6.8 THIRD PARTY BENEFICIARIES. Section 6.5 will survive the consummation
of the Merger, is intended to benefit the stockholders of INT'X.xxx that receive
Parent Merger Shares (the "NEW PARENT STOCKHOLDERS") and the present and former
officers and directors of INT'X.xxx and its Subsidiaries, will be binding on
Parent and its successors and assigns, and will be enforceable by the officers
and directors of INT'X.xxx and the New Parent Stockholders.
6.9 DIRECTORS OF PARENT. Prior to the date of the mailing of the Proxy
Statement, Parent shall nominate Xxxxx Xxxxxx to serve as a director of Parent
in accordance with the policies for directors of Parent, and Parent shall take
such action as is necessary to cause such person to become a director of Parent
effective as of the Effective Time.
ARTICLE VII
ADDITIONAL AGREEMENTS
In addition to the foregoing, Parent, Merger Sub, and INT'X.xxx each agree
to take the following actions after the execution of this Agreement.
7.1 PREPARATION OF THE FORM S-4 AND THE PROXY STATEMENT; STOCKHOLDERS
MEETING. (a) INT'X.xxx shall use its reasonable best efforts to hold one or
more special meetings of stockholders in accordance with the applicable
requirements of the DGCL and to obtain the INT'X.xxx Requisite Stockholder
Approval to enable the Merger to be effective on the Closing Date (determined
without regard to the condition to closing in Section 8.2(h)). Parent shall use
its reasonable best efforts to hold one or more special meetings of stockholders
to obtain the approval of the issuance of its shares in connection with the
Merger by the stockholders of Parent as required by the rules of the Nasdaq
Stock Market and in accordance with the applicable requirements of the DCGL. In
connection with obtaining the approval of its stockholders, Parent shall
prepare, with the assistance and cooperation of INT'X.xxx, a Registration
Statement on Form S-4 (the "FORM S-4"). The Form S-4 shall constitute a joint
proxy and a prospectus and shall be used for purposes of offering the Parent
Merger Shares to the stockholders of INT'X.xxx, soliciting proxies from such
stockholders for the purpose of obtaining the INT'X.xxx Requisite Stockholder
Approval and soliciting proxies from stockholders of Parent for the purposes of
obtaining approval of the issuance of its shares in connection with the Merger
by the stockholders of Parent (such proxy/ prospectus statement, together with
the accompanying letter to stockholders, notice of meeting and form of proxy
shall be referred to herein as the "Proxy Statement"). INT'X.xxx agrees to fully
cooperate with Parent in the preparation of the Form S-4, and shall, upon
request, furnish
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Parent with all information concerning it and its affiliates, directors,
officers and stockholders as Parent may reasonably request in connection with
the preparation of the Form S-4. INT'X.xxx shall prepare the portions of the
Form S-4, relating to INT'X.xxx and its subsidiaries including but not limited
to financial information, management of INT'X.xxx, description of INT'X.xxx's
business, executive compensation of the INT'X.xxx, the recommendation of
INT'X.xxx's Board of Directors, appraisal rights, risk factors relating to
INT'X.xxx, and INT'X.xxx portions of background of the Merger, reasons for the
Merger, interests of certain persons in the Merger and security ownership of
certain beneficial owners and management. INT'X.xxx shall also prepare the
disclosure concerning all payments which in the absence of stockholder approval
would be "Parachute Payments" as defined in Code Section 280G(b)(2), which shall
be in form and substance satisfactory to Parent and its counsel, to satisfy all
requirements applicable to INT'X.xxx of applicable state and federal securities
laws, the DGCL and Code Section 280G(b)(5)(B) and the regulations thereunder. No
filing of, or amendment or supplement to, the Form S-4 will be made by Parent
and no amendment or supplement to the Proxy Statement will be made by Parent or
INT'X.xxx without providing the other party the opportunity to review and
comment thereon. Parent will advise INT'X.xxx, promptly after it receives notice
thereof, of the time when the Form S-4 has become effective or any supplement or
amendment has been filed, the issuance of any stop order, the suspension of the
qualification of the Parent Merger Shares for offering or sale in any
jurisdiction, or any request by the Commission for amendment of the Proxy
Statement or the Form S-4 or comments thereon and responses thereto or requests
by the Commission for additional information. If at any time prior to the
Effective Time any information relating to Parent or INT'X.xxx or any of their
respective affiliates, officers or directors, should be discovered by the Parent
or INT'X.xxx which should be set forth in an amendment or supplement to any of
the Form S-4 or the Proxy Statement, so that any of such documents would not
include any misstatement of a material fact or omit to state any material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, the party which discovers such information
shall promptly notify the other party hereto and an appropriate amendment or
supplement describing such information shall be promptly filed with the
Commission, and to the extent required by law, disseminated to the stockholders
of Parent and INT'X.xxx. If the Commission requires a Tax opinion in connection
with the filing of the Form S-4, INT'X.xxx shall cause Xxxx, Gerber & Xxxxxxxxx,
counsel to INT'X.xxx, to provide such opinion in the form required by the
Commission. The issuance of such opinion shall be conditioned upon the receipt
by Xxxx, Gerber & Xxxxxxxxx of customary representation letters from each of
INT'X.xxx and Parent in a form reasonably agreed to by the parties.
(b) Parent shall file the Form S-4 with the Commission and shall, with
the assistance of INT'X.xxx, promptly respond to any comments from the
Commission on the Form S-4 and shall otherwise use its best efforts to have
the Form S-4 declared effective under the Securities Act as promptly
practicable. Promptly following such time as the Form S-4 is declared
effective, INT'X.xxx shall distribute the Proxy Statement to its
stockholders and Parent shall distribute the Proxy Statement to its
stockholders. Parent shall comply with all applicable provisions of and
rules under the Securities Act and the Exchange Act and state securities
laws in the preparation and filing of the S-4 Registration Statement, the
offering and issuance of the Parent Merger Shares, the filing and
distribution of the Proxy Statement, the solicitation of proxies thereunder,
and the calling and holding of the special meeting of stockholders of
Parent. Parent shall also ensure that any Form S-4 filed by Parent does not
contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading (provided that Parent shall not be responsible for
the accuracy and completeness of information relating to INT'X.xxx or any of
its subsidiaries or any other information furnished by INT'X.xxx
specifically for inclusion in the S-4 Registration Statement).
(c) INT'X.xxx shall ensure that the Proxy Statement does not contain an
untrue statement of material fact or omit to state a material fact required
to be stated therein or necessary in order to
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make the statement made, under the circumstances under which it is made, not
misleading (provided that INT'X.xxx shall not be responsible for the
accuracy or completeness of any information relating to Parent or any of its
Subsidiaries or furnished by Parent specifically for inclusion in the Proxy
Statement).
(d) INT'X.xxx, acting through its Board of Directors, shall include in
the Proxy Statement the unanimous recommendation of its Board of Directors
eligible to vote on such matters that its stockholders vote in favor of the
adoption of this Agreement and the approval of the Merger. Notwithstanding
the foregoing, the obligation set forth in the foregoing sentence shall not
apply (and the Board of Directors shall be permitted to modify or withdraw
any such recommendation previously made) if the Board of Directors of
INT'X.xxx concludes in good faith, after consultation with its outside legal
counsel, that fulfilling the obligations in the foregoing sentence would
violate the fiduciary duties of the Board of Directors under applicable law;
PROVIDED, HOWEVER, that nothing shall limit the obligation of INT'X.xxx to
otherwise use its reasonable best efforts to fulfill all of its obligations
under this Agreement, including without limitation, INT'X.xxx's obligations
under Section 7.1(a) and (c).
(e) Parent, acting through its Board of Directors, shall include in the
Proxy Statement the unanimous recommendation of its Board of Directors
eligible to vote on such matters that the stockholders of Parent vote in
favor of the issuance of its shares in connection with the Merger.
Notwithstanding the foregoing, the obligation set forth in the foregoing
sentence shall not apply (and the Board of Directors shall be permitted to
modify or withdraw any such recommendation previously made) if the Board of
Directors of Parent concludes in good faith, after consultation with its
outside legal counsel, that fulfilling the obligations in the foregoing
sentence would violate the fiduciary duties of the Board of Directors under
applicable law; PROVIDED, HOWEVER, that nothing shall limit the obligation
of the Parent to otherwise use its reasonable best efforts to fulfill all of
its obligations under this Agreement, including without limitation, Parent's
obligations under Section 7.1 (a) and (b).
(f) All resales of shares of Parent Common Stock by each INT'X.xxx
Affiliate (as defined in Section 7.8(b)) will be subject to the restrictions
imposed by the third restated registration rights agreement of Parent (the
"REGISTRATION RIGHTS AGREEMENT") in the form attached as Exhibit 7.1, which
will be entered into by the INT'X.xxx Affiliates. Parent will be entitled to
place the legends as referred to in the Registration Rights Agreement on
each certificate evidencing any shares of Parent Common Stock to be received
by the INT'L Affiliates pursuant to the terms of this Agreement and to issue
appropriate stop transfer instructions to the transfer agent for shares of
Parent Common Stock consistent with the terms of the Registration Rights
Agreement.
7.2 LEGAL CONDITIONS TO THE MERGER. Each of Parent, Merger Sub, and
INT'X.xxx will use all reasonable best efforts to take actions necessary to
comply promptly with all legal requirements which may be imposed on it with
respect to the Merger. Each of Parent, Merger Sub and INT'X.xxx will use all
reasonable best efforts to take all actions to obtain (and to cooperate with the
other parties in obtaining) any consent required to be obtained or made by
INT'X.xxx, Merger Sub, or Parent in connection with the Merger, or the taking of
any action contemplated thereby or by this Agreement.
7.3 EMPLOYEE BENEFITS. Nothing contained herein will, subject to
Section 6.5, be considered as requiring INT'X.xxx or Parent to continue any
specific plan or benefit, or to confer upon any employee, beneficiary,
dependent, legal representative or collective bargaining agent of such employee
any right or remedy of any nature or kind whatsoever under or by reason of this
Agreement, including without limitation any right to employment or to continued
employment for any specified period, at any specified location or under any
specified job category, except as specifically provided for in an offer letter
or other agreement of employment. It is specifically understood that continued
employment with INT'X.xxx or employment with Parent is not offered or implied
for any other employees of INT'X.xxx
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and any continuation of employment with INT'X.xxx after the Closing will be at
will except as specifically provided otherwise in an offer letter or other
agreement of employment. Parent agrees that it will cause Merger Sub to comply
with the WARN Act, to the extent applicable to INT'x.xxx and its Subsidiaries in
connection with actions taken at and after the Effective Time.
7.4 EXPENSES. Whether or not the Merger is consummated, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby and thereby, including investment banking, legal and
accounting expenses, will be paid by the party incurring such expense; PROVIDED,
HOWEVER, that any such expenses incurred by INT'X.xxx in excess of $400,000
shall be borne by the stockholders of INT'X.xxx (without regard to Section 9.4)
through the determination of the Modified Share Amount as set forth in
Section 2.1(d); PROVIDED, FURTHER, that INT'X.xxx will itemize any such
investment banking, legal and accounting expenses of INT'X.xxx prior to Closing
and provide Parent with an invoice and certification from all organizations
providing such services at the Closing in a form reasonably acceptable to
Parent; and PROVIDED, FURTHER, that the provisions of this Section 7.4 shall not
be construed to relieve a party from liability resulting from such party's
breach of this Agreement.
7.5 ADDITIONAL AGREEMENTS. In case at any time after the Effective Time
any further action is reasonably necessary or desirable to carry out the
purposes of this Agreement or to vest the Surviving Corporation with full title
to all properties, assets, rights, approvals, immunities and franchises of
INT'X.xxx, the proper officers and directors of each corporation which is a
party to this Agreement will take all such necessary action. Without limiting
the foregoing, on or prior to the Closing Date, INT'X.xxx will deliver to Parent
a properly executed statement satisfying the requirements of Treasury Regulation
Sections 1.897-2(h) and 1.1445-2(c)(3) in a form reasonably acceptable to
Parent.
7.6 PUBLIC ANNOUNCEMENTS. Neither Parent nor INT'X.xxx will directly or
indirectly disseminate any press release or other announcement concerning this
Agreement or the transactions contemplated herein to any third party (except to
the directors, officers and employees of the parties to this Agreement whose
direct involvement is necessary for the consummation of the transactions
contemplated under this Agreement, to the attorneys, advisors and accountants of
the parties hereto, or except as Parent determines in good faith to be required
by applicable law after consultation with INT'X.xxx) without the prior written
agreement of the other parties.
7.7 CONFIDENTIALITY. INT'X.xxx and Parent have entered into a Mutual
Nondisclosure Agreement dated October 7, 1999 concerning each party's
obligations to protect the confidential information of the other party.
INT'X.xxx and Parent each hereby affirm each of their obligations under such
agreement. If this Agreement is terminated in accordance with Article X hereof,
Parent will, and will cause its accountants, counsel and other representatives
to deliver to INT'X.xxx all documents and other material, and all copies
thereof, obtained by Parent or on its behalf from INT'X.xxx in connection with
this Agreement, whether so obtained before or after the execution hereof, and
will not disclose any such information or documents to any third parties or make
any use of such. If this Agreement is terminated in accordance with Article X
hereof, INT'X.xxx will, and will cause its accountants, counsel and other
representatives to, deliver to Parent all documents and other material, and all
copies thereof, obtained by INT'X.xxx or by an officer, director or
representative of INT'X.xxx from Parent in connection with this Agreement,
whether so obtained before or after the execution hereof, and will not disclose
any such information or documents to any third parties or make any use of such.
7.8 POOLING.
(a) Parent, the Merger Sub and INT'X.xxx will use all reasonable best
efforts, will cooperate fully and will take all actions as are reasonably
necessary to allow the Merger and other transactions contemplated by this
Agreement to be accounted for as a "pooling of interests" in accordance with
United States generally accepted accounting principles and applicable rules
and regulations of the Commission.
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(b) INT'X.xxx has delivered to Parent prior to the Prior Agreement Date
a letter from INT'X.xxx, prepared after consultation with its counsel, that
identifies all persons it believes may be "affiliates" of INT'X.xxx, as such
term is used in Rule 145 under the Securities Act and applicable accounting
pronouncements of the Commission (each such Person, an "INT'X.XXX
AFFILIATE"). Each such INT'X.xxx Affiliate has executed and delivered to
Parent a written agreement (an "INT'X.XXX AFFILIATE AGREEMENT") in the form
of EXHIBIT 7.8(B) hereto to the effect that such INT'X.xxx Affiliate
(i) has not made and will not make any disposition of any shares of
INT'X.xxx Common Stock or INT'X.xxx Preferred Stock or other securities of
INT'X.xxx in the 30-day period prior to the Effective Time, and (ii) will
not make any disposition of any of the Parent Merger Shares to be received
by such Person after the Effective Time until Parent shall have publicly
released a report including the combined financial results of Parent and
INT'X.xxx for a period of at least 30 days of combined operations of Parent
and INT'X.xxx.
(c) Section 7.8(c) of the Parent Disclosure Schedule identifies each
executive officer and director of Parent (each such Person, a "PARENT
AFFILIATE"). Each such Parent Affiliate has executed and delivered to
INT'X.xxx a written agreement (a "PARENT AFFILIATE AGREEMENT") in the form
of EXHIBIT 7.8(C) hereto to the effect that such Parent Affiliate (i) has
not made and will not make any disposition of any shares of Parent Common
Stock in the 30-day period prior to the Effective Time, and (ii) will not
make any disposition of any shares of Parent Common Stock owned by such
person until Parent shall have publicly released a report including the
combined financial results of Parent and INT'X.xxx for a period of at least
30 days of combined operations of Parent and INT'X.xxx.
7.9 INT'X.XXX VOTING AGREEMENT. Simultaneous with the execution of the
Prior Agreement, INT'X.xxx caused the voting agreement in the form attached as
EXHIBIT 7.9 (the "INT'X.XXX VOTING AGREEMENT") to be executed by all directors,
officers, affiliates and holders of 5% of the capital stock of INT'X.xxx and
their affiliates holding in the aggregate at least 60% of the Outstanding
INT'X.xxx Shares and at least 80% of each of the Outstanding INT'X.xxx Series C
Shares and the Outstanding INT'X.xxx Series D Shares, and to be delivered to
Parent.
7.10 PARENT VOTING AGREEMENT. Simultaneous with the execution of the Prior
Agreement, Parent caused the voting agreement in the form attached as
EXHIBIT 7.10 (the "PARENT VOTING AGREEMENT") to be executed by all directors and
officers of Parent and their affiliates holding in the aggregate at least 60% of
the Parent shares of Parent Common Stock outstanding on the Prior Agreement
Date, and to be delivered to INT'X.xxx.
7.11 XXXX-XXXXX-XXXXXX FILING. If and to the extent applicable, Parent and
INT'X.xxx agree to file, and to cause any other Person obligated to do so as a
result of such person's stock holdings in Parent or INT'X.xxx, a Notification
and Report Form in accordance with the notification requirements of the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976 and the rules and
regulations thereunder (collectively, the "HSR ACT") with the Antitrust Division
of the United States Department of Justice and the Federal Trade Commission and
to use its and their reasonable best efforts to achieve the prompt termination
or expiration of the waiting period or any extension thereof provided for under
the HSR Act as a prerequisite to the consummation of the transactions provided
for herein.
7.12 BOARD OF DIRECTORS MEETINGS. After the Closing of the Merger, for as
long as Cornerstone Equity Investors IV, L.P. holds at least one-half of the
Parent Merger Shares issued to them in connection with the Merger, Parent shall
permit one (1) representative of Cornerstone Equity Investors IV, L.P. (the
"CORNERSTONE OBSERVER") to attend, in a non-voting observer capacity, each
meeting of the Board of Directors of Parent and each meeting of any committee
thereof and to participate in all discussions during each such meeting. Parent
shall send to the Cornerstone Observer notice of the time and place of any such
meeting, in the same manner and at the same time as notice is sent to its
directors. Parent shall also provide to the Cornerstone Observer copies of all
notices, reports, minutes,
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contracts and other documents, at the time and in the same manner as such
documents are provided to the Board of Directors of Parent, unless the Board of
Directors or management of Parent shall determine that delivery of such notice
and/or materials to the Cornerstone Observer may be detrimental to Parent. Upon
the request of the Board of Directors of the Company, the Cornerstone Observer
will excuse himself from any portion of Board or committee meetings if the Board
of Directors shall determine that the Cornerstone Observer's presence may
violate the attorney-client privilege or may create a conflict of interest or
may be otherwise detrimental to Parent. Any materials furnished to the
Cornerstone Observer and the discussions and presentations in connection with or
at any meeting shall be considered confidential information and the Cornerstone
Observer will keep such materials and discussions confidential and will not
disclose or divulge such materials and discussions to any third party.
7.13 EMPLOYMENT, CONSULTING AND NONCOMPETITION AGREEMENTS. Simultaneous
with the execution of the Prior Agreement, INT'X.xxx will cause each of Xxxxx
Xxxxxx, [Xxxxxx Xxxxxxxxxx] and Xxxxxxxx Xxxxx to execute employment or
consulting and/or non-competition agreements with Parent to become effective at
the Effective Time in the form provided by Parent to INT'X.xxx.
7.14 INT'X.XXX CONVERSION. Simultaneous with the execution of the Prior
Agreement, INT'X.xxx caused the conversion notice in the form attached as
EXHIBIT 7.14 to be executed by the holders of INT'X.xxx Series A Preferred Stock
who, together with the parties executing an INT'X.xxx Voting Agreement, hold at
least 51% of the outstanding shares of INT'X.xxx Series A Preferred Stock and by
the holders of INT'X.xxx Series B Preferred Stock who, together with the parties
executing an INT'X.xxx Voting Agreement, hold at least 51% of the outstanding
shares of INT'X.xxx Series B Preferred Stock, INT'X.xxx shall cause such notices
to be delivered to Parent. INT'X.xxx hereby elects that all outstanding shares
of INT'X.xxx Series A Preferred Stock and all of the outstanding shares of
INT'X.xxx Series B Preferred Stock be converted to shares of INT'X.xxx Series A
Common Stock immediately prior to the Effective Time.
7.15 DEBT ADJUSTMENTS. In the event INT'X.xxx or its Subsidiaries shall
breach the covenants in Section 5.6 hereof, the aggregate amount of all breaches
of such Section 5.6 shall be deemed to be the "Debt Adjustment Amount" for
purposes of this Agreement. "Debt Payment Shares" shall mean a number of shares
of Parent Common Stock determined by dividing the Debt Adjustment Amount plus
any accrued interest on such amount as of the Closing by the Parent Average
Closing Price.
ARTICLE VIII
CONDITIONS PRECEDENT
8.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
respective obligations of each party to effect the Merger will be subject to the
satisfaction prior to the Closing Date of the following conditions unless
waived:
(a) GOVERNMENTAL APPROVALS. Other than the filing of the Merger
Documents with the Secretary of State of Delaware, all statutory
requirements and all Consents of Governmental Entities legally required for
the consummation of the Merger and the transactions contemplated by this
Agreement will have been filed, occurred, or been obtained, other than such
Consents for which the failure to obtain would not have a material adverse
effect on the consummation of the Merger or the other transactions
contemplated hereby or on the Business Condition of Parent or INT'X.xxx. If
and to the extent applicable, the filing and waiting period requirements
under the HSR Act will have been complied with and will have expired or
terminated.
(b) NO RESTRAINTS. No statute, rule or regulation, and no final and
nonappealable order, decree or injunction will have been enacted, entered,
promulgated or enforced by any court or
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Governmental Entity of competent jurisdiction which enjoins or prohibits the
consummation of the Merger.
(c) PARENT STOCKHOLDER APPROVAL. The issuances of the shares of Parent
Common Stock in connection with the Merger will have been approved by the
requisite vote of the stockholders of Parent.
(d) QUOTATION. The shares of Parent Common Stock issuable to
INT'X.xxx's stockholders as contemplated by this Agreement shall have been
approved for quotation on the Nasdaq National Market, subject to official
notice of issuance.
(e) FORM S-4. The Form S-4 shall have become effective under the
Securities Act and shall not be the subject of any stop order or proceedings
seeking a stop order.
(f) PARENT POOLING LETTER. Parent will have received a letter dated
immediately prior to the Closing Date from PricewaterhouseCoopers LLP,
Parent's independent accountants, to the effect that such firm concurs with
Parent's management that no conditions exist that would preclude Parent from
accounting for the Merger as a "pooling of interests" in accordance with
United States generally accepted accounting principles and applicable rules
and regulations of the Commission and Parent shall have delivered a copy of
such letter to INT'X.xxx.
(g) INT'X.XXX POOLING LETTER. Xxxxxx Xxxxxxxx LLP shall have delivered
to INT'X.xxx a letter dated immediately prior to the Closing Date to the
effect that INT'X.xxx is "poolable" for accounting purposes under Accounting
Principles Board Opinion No. 16, United States generally accepted accounting
principles and applicable rules and regulations of the Commission and
INT'X.xxx shall have delivered a copy of such letter to Parent.
8.2 CONDITIONS OF OBLIGATIONS OF PARENT AND MERGER SUB. The obligations of
Parent and Merger Sub to effect the Merger are subject to the satisfaction of
the following conditions unless waived by Parent and Merger Sub:
(a) REPRESENTATIONS AND WARRANTIES OF INT'X.XXX. The representations
and warranties of INT'X.xxx set forth in this Agreement will be true and
correct in all material respects as of the Prior Agreement Date and as of
the Closing Date as though made on and as of the Closing Date, except
(i) as otherwise contemplated by this Agreement, (ii) as a result of actions
taken or not taken pursuant to this Agreement or at the direction of or
after consultation with and written concurrence of Parent, (iii) for
representations and warranties specifically limited to an earlier date(s)
and (iv) for breaches which, individually or in the aggregate, would not
have a material adverse effect on the Business Condition of INT'X.xxx.
Parent will have received a certificate signed by the chief executive
officer and the chief financial officer of INT'X.xxx to such effect on the
Closing Date.
(b) PERFORMANCE OF OBLIGATIONS OF INT'X.XXX. INT'X.xxx will have
performed all agreements and covenants required to be performed by it under
this Agreement prior to the Closing Date except (i) as otherwise
contemplated or permitted by this Agreement, (ii) as a result of actions
taken or not taken at the direction of or after consultation with and
written concurrence of Parent and (iii) for such failures to perform which,
individually or in the aggregate, would not have a material adverse effect
on the Business Condition of INT'X.xxx; provided, that INT'X.xxx hereby
acknowledges and agrees that any breaches of the covenants set forth in
Section 5.6 hereof which individually or in the aggregate exceed $1,000,000
will be deemed for purposes of this Section 8.2(b) to have a material
adverse effect on the Business Condition of INT'X.xxx. Parent will have
received a certificate signed by the chief executive officer and the chief
financial officer of INT'X.xxx to such effect on the Closing Date.
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(c) ESCROW AGREEMENTS. Parent will have received from INT'X.xxx and
the Indemnification Representative a duly executed Escrow Agreement.
(d) LEGAL ACTION. There will not be pending or threatened in writing
any action, proceeding or other application before any court or Governmental
Entity brought by any Person or Governmental Entity: (i) challenging or
seeking to prohibit the consummation of the transactions contemplated by
this Agreement; or (ii) seeking to prohibit or impose any limitations on
Parent's ownership or operation of all or any portion of INT'X.xxx's
business or assets, or to compel Parent to dispose of or hold separate all
or any portion of its or INT'X.xxx's business or assets as a result of the
transactions contemplated by the Agreement which, in any such case described
in this clause (ii), if successful would have a material adverse effect on
the Business Condition of INT'X.xxx.
(e) OPINION OF COUNSEL. Parent will have received an opinion dated as
of the Closing Date of Xxxx, Gerber & Xxxxxxxxx, counsel to INT'X.xxx,
covering the matters set forth in EXHIBIT 8.2.
(f) CONSENTS. Parent will have received duly executed copies of all
Consents specified in Section 3.4 of the INT'X.xxx Disclosure Schedule
except where the failure to receive any such Consent either individually or
together with all other failures to receive a Consent would not have a
material adverse effect on the Business Condition of INT'X.xxx, and there
will not be any Consents which are required to be disclosed in INT'X.xxx
Disclosure Schedule which have not been so disclosed, and have not been
received, if the failure to receive such Consents would have a material
adverse effect on the Business Condition of INT'X.xxx, in each case except
for such thereof as Parent and INT'X.xxx will have agreed in writing will
not be obtained.
(g) TERMINATION OF RIGHTS AND CERTAIN SECURITIES. Any registration
rights, rights of refusal, voting rights, rights to any liquidation
preference or redemption rights relating to any security of INT'X.xxx will
have been terminated or waived or satisfied as of the Closing.
(h) STOCKHOLDER APPROVALS. This Agreement and the Merger will have
been approved by stockholders of INT'X.xxx holding at least ninety percent
(90%) of the voting power of the Outstanding INT'X.xxx Shares.
(i) TERMINATION OF 401K PLAN. The INT'X.xxx Board of Directors will
have passed and not rescinded resolutions satisfactory to Parent's counsel
effectively terminating INT'X.xxx's 401(k) Plan immediately prior to the
Closing.
(j) CORPORATE PROCEEDINGS SATISFACTORY. All corporate and other
proceedings to be taken by INT'X.xxx in connection with the transactions
contemplated hereby and all documents incident thereto will be satisfactory
in form and substance to Parent and its counsel, and Parent and its counsel
will have received all such counterpart originals or certified or other
copies of such documents as they reasonably may request.
(k) LETTER FROM XXXXXX XXXXXXXX. The Parent shall have received a
letter dated as of a date not more than two days prior to the date that the
Form S-4 is declared effective and shall have received a subsequent similar
letter dated as of a date not more than two days prior to the Effective
Time, from Xxxxxx Xxxxxxxx LLP, auditors for INT'X.xxx, addressed to Parent
in a customary form reasonably satisfactory to Parent, containing statements
and information of the type ordinarily included in an accountants' "comfort
letters" with respect to the financial statements and financial information
of INT'X.xxx included in the Form S-4.
(l) INT'X.XXX NOTES AND INT'X.XXX BRIDGE NOTES. The INT'X.xxx Notes
and INT'X.xxx Bridge Notes will have been cancelled and be of no further
force and effect.
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(m) REGISTRATION RIGHTS AGREEMENT. Parent will have received an
executed Registration Rights Agreement from the INT'X.xxx Affiliates.
(n) TERMINATION OF CERTAIN AGREEMENT AND ARRANGEMENTS. The agreements
and arrangements described in Section 8.2(n) of the INT'X.xxx Disclosure
Schedule will have been terminated with no liability to INT'X.xxx and
evidence of such termination will have been delivered to Parent.
8.3 CONDITIONS OF OBLIGATION OF INT'X.XXX. The obligation of INT'X.xxx to
effect the Merger is subject to the satisfaction of the following conditions
unless waived by INT'X.xxx:
(a) REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB. The
representations and warranties of Parent and Merger Sub set forth in this
Agreement will be true and correct in all material respects as of the Prior
Agreement Date and as of the Closing Date as though made on and as of the
Closing Date, except (i) as otherwise contemplated by this Agreement,
(ii) as a result of actions taken or not taken pursuant to this Agreement,
(iii) for representations and warranties specifically limited to an earlier
date(s) and (iv) for breaches which, individually or in the aggregate, would
not have a material adverse effect on the Business Condition of Parent.
INT'X.xxx will have received a certificate signed on behalf of Parent by a
duly authorized officer of Parent to such effect on the Closing Date.
(b) PERFORMANCE OF OBLIGATIONS OF PARENT AND MERGER SUB. Parent and
Merger Sub will have performed all agreements and covenants required to be
performed by them under this Agreement prior to the Closing Date except
(i) as otherwise contemplated or permitted by this Agreement, and (ii) for
such failures to perform which, individually or in the aggregate, would not
have a material adverse effect on the Business Condition of Parent.
INT'X.xxx will have received a certificate signed on behalf of Parent by
officers of Parent to such effect on the Closing Date.
(c) OPINION OF PARENT'S COUNSEL. INT'X.xxx have received an opinion
dated the Closing Date of Xxxxx, Xxxxxxx & Xxxxxxxxx, LLP, substantially in
the form attached as EXHIBIT 8.3.
(d) STOCKHOLDER APPROVAL. This Agreement and the Merger will have been
approved and adopted by the requisite vote of the stockholders of Merger
Sub, as required by the DGCL and Merger Sub's Certificate of Incorporation
(the "REQUISITE STOCKHOLDER APPROVAL").
(e) ESCROW AGREEMENT. Parent shall have duly executed and delivered
the Escrow Agreement.
(f) TAX-FREE REORGANIZATION. INT'X.xxx shall have received a written
opinion from Xxxx, Gerber & Xxxxxxxxx to the effect that the Merger should
constitute a reorganization within the meaning of Section 368 of the Code.
In preparing such tax opinion, counsel may rely on reasonable assumptions
and reasonable written representations from Parent and INT'X.xxx and their
respective officers relating thereto.
(g) LEGAL ACTION. There will not be pending or threatened in writing
any action, proceeding or other application before any court or Governmental
Entity brought by any Person or Governmental Entity: (i) challenging or
seeking to prohibit the consummation of the transactions contemplated by
this Agreement or (ii) restricting in any way the receipt, ownership, or
ability to dispose of the consideration to be received by any stockholder of
INT'X.xxx in the transactions contemplated by this Agreement; PROVIDED,
HOWEVER, that INT'X.xxx will automatically be deemed to waive this condition
if Parent agrees to indemnify, defend and hold any such named party harmless
against any such action.
(h) BOARD OF DIRECTORS. Xxxxx Xxxxxx shall have been elected as a
member of the Board of Directors of Parent.
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(i) REGISTRATION RIGHTS AGREEMENT. Parent and any other party required
to execute the Registration Rights Agreement shall have duly executed and
delivered the Registration Rights Agreement to Cornerstone and Dakota.
ARTICLE IX
INDEMNIFICATION
9.1 INDEMNIFICATION RELATING TO AGREEMENT. Subject to Sections 9.3
and 9.5, as an integral term of the Merger, all stockholders of INT'X.xxx who
accept the Parent Merger Shares and execute the Escrow Agreement (which is a
condition to receiving such consideration), severally and not jointly, hereby
agree to defend, indemnify and hold Parent harmless from and against, and to
reimburse Parent with respect to, any and all losses, damages, liabilities,
claims, judgments, settlements, fines, costs and expenses (including reasonable
attorneys' fees), determined as provided in Section 9.3 ("INDEMNIFIABLE
AMOUNTS"), of every nature whatsoever incurred by Parent (which will be deemed
to include any of the foregoing incurred by the Surviving Corporation) by reason
of or arising out of or in connection with (i) any breach, or any claim
(including claims by parties other than Parent) that constitutes a breach, by
INT'X.xxx of any representation or warranty of INT'X.xxx contained in this
Agreement or in any certificate or other document delivered to Parent pursuant
to this Agreement, other than any breach or related claim in respect of actions
taken or not taken pursuant to this Agreement or at the written direction of or
after consultation with and written concurrence of Parent and (ii) the failure,
partial or total, of INT'X.xxx or any Subsidiary to perform any agreement or
covenant required by this Agreement to be performed by it or them other than any
breach or related claim in respect of actions taken or not taken pursuant to
this Agreement or at the written direction of or after consultation with and
written concurrence of Parent. The foregoing obligations to indemnify Parent
will be determined without regard to any right to indemnification to which any
Person may have in his or her capacity as an officer, director, employee, agent
or any other capacity of INT'X.xxx or any Subsidiary, and no stockholder of
INT'X.xxx will be entitled to any indemnification from INT'X.xxx or the
Surviving Corporation for amounts paid hereunder. There will be no right of
contribution or subrogation from Parent or the Surviving Corporation for
indemnification payments made by or for the account of the stockholders of
INT'X.xxx. Notwithstanding any provision in this Agreement to the contrary,
Indemnifiable Amounts shall not include (i) any lost profits, lost revenues or
lost business opportunities, or (ii) any amounts which shall have been recovered
by Parent under any insurance policies.
9.2 THIRD PARTY CLAIMS. With respect to any claims or demands by third
parties as to which Parent may seek indemnification hereunder whenever Parent
will have received a written notice that such a claim or demand has been
asserted or threatened, Parent will promptly notify the "Indemnification
Representative" (as designated in the Escrow Agreement) of such claim or demand
and of the facts within Parent's knowledge that relate thereto. The
Indemnification Representative will then have the right to defend, contest,
negotiate or settle any such claim or demand through counsel of his own
selection, reasonably satisfactory to Parent, and solely at the Indemnification
Representative's own cost and expense, which costs and expenses will be
reimbursed pursuant to the Escrow Agreement. Notwithstanding the preceding
sentence, the Indemnification Representative will not settle, compromise, or
offer to settle or compromise any such claim or demand without the prior written
consent of Parent, which consent will not be unreasonably withheld. Without
limiting Parent's rights to object for other reasons, Parent may object to a
settlement or compromise which includes any provision which in its reasonable
judgment may have an adverse impact on or establish an adverse precedent for the
Business Condition of Parent or any of its Subsidiaries. If the Indemnification
Representative gives notice to Parent within thirty (30) calendar days after
Parent has notified the Indemnification Representative that any such claim or
demand has been made in writing, that the Indemnification Representative elects
to have Parent defend, contest, negotiate, or settle any such claim or demand,
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then Parent will have the right to contest and/or settle any such claim or
demand and seek indemnification pursuant to this Article IX as to any
Indemnifiable Amounts; PROVIDED, HOWEVER, that Parent will not settle,
compromise, or offer to settle or compromise any such claim or demand without
the prior written consent (which may include a general or limited consent) of
the Indemnification Representative, which consent will not be unreasonably
withheld. If the Indemnification Representative fails to give written notice to
Parent of his intention to contest or settle any such claim or demand within
thirty (30) calendar days after Parent has notified the Indemnification
Representative that any such claim or demand has been made in writing, or if any
such notice is given but any such claim or demand is not contested by the
Indemnification Representative within a reasonable time thereafter, Parent will
have the right to contest and/or settle any such claim or demand in its sole
discretion and seek indemnification pursuant to this Article IX as to any
Indemnifiable Amounts. The adoption of this Agreement by the stockholders of
INT'X.xxx will also constitute their approval of the Indemnification
Representative.
9.3 LIMITATIONS. Notwithstanding any other provision in this Article IX,
Parent will be entitled to indemnification pursuant to this Article IX only to
the extent that the aggregate Indemnifiable Amounts (which shall be determined
for all purposes of this Article IX disregarding any qualification in any
representation or warranty as to "materially" or "material" or "material adverse
effect") exceed Five Hundred Thousand Dollars ($500,000) (the "THRESHOLD
AMOUNT") PROVIDED THAT at such time as the amount to which Parent is entitled to
be indemnified exceeds the Threshold Amount, Parent shall be entitled to be
indemnified up to the full Indemnifiable Amounts including the Threshold Amount.
For purposes of indemnification under this Agreement, each Parent Merger Share
shall at all times be valued at the Parent Average Closing Price. The aggregate
amount to which Parent will be entitled to be indemnified pursuant to this
Article IX will not exceed a dollar amount equal to the value of the aggregate
number of Escrow Shares held in escrow pursuant to the terms of the Escrow
Agreement valued at the Parent Average Closing Price per share, and the
liability of any single stockholder for indemnification obligations pursuant to
this Article IX shall be limited to such stockholder's PRO RATA share of any
Indemnifiable Amounts based on the number of Escrow Shares deposited in escrow
by such stockholder relative to the aggregate number of Escrow Shares and the
aggregate liability of any single stockholder for indemnification obligations
pursuant to this Article IX shall be equal to a dollar amount equal to the
Parent Average Closing Price multiplied by the aggregate number of Escrow Shares
deposited in escrow by such stockholder; PROVIDED, HOWEVER, that there will be
no limitation on the obligations of any person for Indemnifiable Amounts arising
out of criminal activity or fraud by such person, including, without limitation,
any actions in such person's capacity as an employee, officer or director of
INT'X.xxx or its Subsidiaries, or for any stockholder of INT'X.xxx for breaches
of any representation or warranty contained in the Letter of Transmittal
delivered by such stockholder.
9.4 BINDING EFFECT. The indemnification obligations contained in this
Article IX are an integral part of this Agreement and the Merger in the absence
of which Parent would not have entered into this Agreement.
9.5 TIME LIMIT. The representations, warranties, covenants and agreements
of INT'X.xxx set forth in this Agreement and the certificates and schedules
executed or delivered pursuant to this Agreement will survive the Closing for
one year; PROVIDED, HOWEVER, that claims relating to the representations and
warranties in Sections 3.6(a) and (b) may be made only on or before the date
that Parent publishes audited financial results for the year ended December 31,
2000 covering combined operations of Parent and INT'X.xxx.
9.6 SOLE REMEDY. Notwithstanding any other provision in this Agreement to
the contrary, the provisions of this Article IX and the provisions of the Escrow
Agreement will be the sole and exclusive remedy of (and corresponding liability
of any stockholder of INT'X.xxx, in such stockholder's capacity as such, to)
Parent, Merger Sub and the Surviving Corporation for any damage, claim, cause of
action or right of any nature arising out of or relating to any breach of
representations, warranties, covenants
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and agreements of INT'X.xxx set forth in this Agreement and the certificates and
schedules executed or delivered by it pursuant to this Agreement.
ARTICLE X
TERMINATION
10.1 MUTUAL AGREEMENT. THIS AGREEMENT MAY BE TERMINATED AT ANY TIME PRIOR
TO THE EFFECTIVE TIME BY THE WRITTEN CONSENT OF PARENT AND INT'X.XXX.
10.2 TERMINATION BY PARENT. This Agreement may be terminated by Parent
(PROVIDED THAT it is not then in material breach of any representation,
warranty, covenant or agreement contained in this Agreement) alone, by means of
written notice to INT'X.xxx, if there has been a material breach by INT'X.xxx or
any Subsidiary of any representation, warranty, covenant or agreement set forth
in this Agreement or other ancillary agreements, which breach would in Parent's
reasonable opinion render it impossible for INT'X.xxx to satisfy the closing
conditions contained in Section 8.2 and has not been cured within twenty
(20) business days following receipt by INT'X.xxx of notice of such breach.
10.3 TERMINATION BY INT'X.XXX. (a) This Agreement may be terminated by
INT'X.xxx by means of written notice to Parent and payment of the Termination
Fee (as defined below) if it has fulfilled its obligations under Section 7.1(a)
and (c) hereof but has failed to obtain the INT'X.xxx Requisite Stockholder
Approval. The Termination Fee shall be paid by wire transfer of immediately
available funds to an account designated by Parent and any termination pursuant
to this Section 10.3(a) shall only be effective upon receipt of the Termination
Fee in such account. The "Termination Fee" shall be a dollar amount equal to 5%
of the result of multiplying (i) the Parent Average Closing Price by (ii) the
number of Parent Merger Shares that would have been issuable by Parent if the
Closing had occurred on the date of such termination, assuming that there were
no Excluded Shares, no Series C Excluded Shares and no Series D Excluded Shares
and that all Outstanding INT'X.xxx Options were exercised immediately prior to
such date.
(b) This Agreement may also be terminated by INT'X.xxx (PROVIDED THAT it is
not then in material breach of any representation, warranty, covenant or
agreement contained in this Agreement) alone, by means of written notice to
Parent, if there has been a material breach by Parent or any Subsidiary of any
representation, warranty, covenant or agreement set forth in the Agreement or
other ancillary agreements, which breach would in INT'X.xxx's reasonable opinion
render it impossible for INT'X.xxx to satisfy the closing conditions contained
in Section 8.3 and has not been cured within twenty (20) business days following
receipt by Parent of notice of such breach,
10.4 OUTSIDE DATE. This Agreement may be terminated by Parent alone or by
INT'X.xxx alone by means of written notice if the Effective Time does not occur
on or prior to June 30, 2000; PROVIDED, HOWEVER, that the right to terminate
this Agreement pursuant to the preceding clause will not be available to any
party whose failure to fulfill any obligation under this Agreement has been a
significant cause of, or resulted in, the failure of the Effective Time to occur
on or before such date.
10.5 EFFECT OF TERMINATION. In the event of termination of this Agreement
by either INT'X.xxx or Parent as provided in this Article, this Agreement will
forthwith become void and have no effect, and there will be no liability or
obligation on the part of Parent, INT'X.xxx, Merger Sub or their respective
officers or directors, except that (i) the provisions of Sections 7.4, 7.6, 7.7
and 11.2 will survive any such termination and abandonment, and (ii) no party
will be released or relieved from any liability arising from the willful breach
by such party prior to termination of any of its representations, warranties,
covenants or agreements as set forth in this Agreement.
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ARTICLE XI
MISCELLANEOUS
11.1 ENTIRE AGREEMENT. This Agreement, including the exhibits, schedules
and other agreements delivered pursuant to this Agreement contain all of the
terms and conditions agreed upon by the parties relating to the subject matter
of this Agreement and supersede all prior agreements, negotiations,
correspondence, undertakings and communications of the parties, whether oral or
written, respecting that subject matter.
11.2 GOVERNING LAW; CONSENT TO JURISDICTION. The Merger and this Agreement
will be governed by the internal laws of the State of Delaware. Legal
proceedings relating to this Agreement, the agreements executed in connection
with this Agreement or the transactions contemplated hereby or thereby may be
commenced only in the state or federal courts in the State of Delaware. Each of
the parties hereby consents to the exclusive jurisdiction of such courts (and of
the appropriate appellate courts) in any such action or proceeding and waives
any objection to venue laid therein. The foregoing provisions will not be
construed to preclude any party from bringing a counter-claim in any action or
proceeding properly commenced in accordance with the foregoing provisions.
Process in any such action or proceeding may be served on any party anywhere in
the world. Notwithstanding the foregoing, any dispute relating to a claim under
the Escrow Agreement will be resolved in accordance with the arbitration
provisions of the Escrow Agreement.
11.3 NOTICES. All notices, requests, demands or other communications which
are required or may be given pursuant to the terms of this Agreement will be in
writing and will be deemed to have been duly given: (i) on the date of delivery
if personally delivered by hand, (ii) upon the third day after such notice is
deposited in the United States mail, if mailed by registered or certified mail,
postage prepaid, return receipt requested, (iii) upon the date scheduled for
delivery after such notice is sent by a nationally recognized overnight express
courier or (iv) by fax upon written confirmation (including the automatic
confirmation that is received from the recipient's fax machine) of receipt by
the recipient of such notice:
IF TO PARENT OR MERGER SUB: Lionbridge Technologies, Inc.
000 Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxx X. Xxxxx
Telephone No.: (000) 000-0000
Fax No.: (000) 000-0000
WITH COPIES TO:
Xxxxx, Xxxxxxx & Xxxxxxxxx, LLP
000 Xxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxx, Esq. &
Xxxxx X. Xxxxxx, Esq.
Telephone No.: (000) 000-0000
Fax No.: (000) 000-0000
IF TO INT'X.XXX: INT'X.xxx, Inc.
000 Xxx Xxxxxxxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxxxxxxx 00000
Attention: Chief Executive Officer
Telephone No.: (000) 000-0000
Fax No.: (000) 000-0000
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WITH COPIES TO:
INT'X.xxx, Inc.
000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxxxx
Telephone No.: (000) 000-0000
Fax No.: (000) 000-0000
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Cornerstone Equity IV, L.P.
000 Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, XX 00000
Attention: Xxxxxxx Xxxxxx
Telephone: (000) 000-0000
Fax No.: (000) 000-0000
Dakota/EGI, LLC
c/o Equity Group Investments
Two X. Xxxxxxxxx Xxxxx
Xxxxx 000
Xxxxxxx, XX 00000
Attn: Xxxxx Xxxxxx, Esq.
Telephone: (000) 000-0000
Fax No: (000) 000-0000
Xxxx, Xxxxxx & Xxxxxxxxx
Two Xxxxx XxXxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Attn: Xxx Xxxxxxxxx
Telephone No.: (000) 000-0000
Fax No.: (000) 000-0000
Such addresses may be changed, from time to time, by means of a notice given
in the manner provided in this Section 11.3.
11.4 SEVERABILITY. If any provision of this Agreement is held to be
unenforceable for any reason, it will be modified rather than voided, if
possible, in order to achieve the intent of the parties to this Agreement to the
extent possible. In any event, all other provisions of this Agreement will be
deemed valid and enforceable to the full extent.
11.5 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and
warranties of Parent contained in this Agreement and schedules and certificates
executed or delivered pursuant to this Agreement, will survive the Effective
Time, but any claims for breach thereof may only be made on or before the first
yearly anniversary of the Closing.
11.6 ASSIGNMENT. No party to this Agreement may assign, by operation of
law or otherwise, all or any portion of its rights, obligations, or liabilities
under this Agreement without the prior written consent of INT'X.xxx, Merger Sub
and Parent, which consent may be withheld in the absolute discretion of the
party asked to grant such consent. Any attempted assignment by Merger Sub or
Parent, on the one hand, or by INT'X.xxx, on the other hand, in violation of
this Section 11.6 will be voidable and will entitle INT'X.xxx or Parent,
respectively, to terminate this Agreement at its option.
11.7 COUNTERPARTS. This Agreement may be executed in two or more partially
or fully executed counterparts each of which will be deemed an original and will
bind the signatory, but all of which together will constitute but one and the
same instrument. The execution and delivery of a Signature Page to this
Agreement and Plan of Reorganization in the form annexed to this Agreement,
including a facsimile copy of the actual signature, by any party hereto who will
have been furnished the final form of this Agreement will constitute the
execution and delivery of this Agreement by such party.
11.8 AMENDMENT. This Agreement may not be amended except by an instrument
in writing executed by INT'X.xxx, Merger Sub and Parent.
11.9 EXTENSION, WAIVER. At any time prior to the Effective Time, any party
hereto may, to the extent legally allowed and without prejudice to the rights of
any other party: (i) extend the time for the
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performance of any of the obligations or other acts of any other party hereto to
the party extending such time, (ii) waive any inaccuracies in the
representations and warranties made to such party contained herein or in any
document delivered pursuant hereto, and (iii) waive compliance with any of the
agreements, covenants or conditions for the benefit of such party contained
herein. Any agreement on the part of a party hereto to any such extension or
waiver will be valid only if set forth in an instrument in writing signed on
behalf of such party.
11.10 INTERPRETATION. When a reference is made in this Agreement to
Sections, Exhibits or Schedules, such reference will be to a Section, Exhibit or
Schedule to this Agreement unless otherwise indicated. The words "include,"
"includes," and "including" when used therein will be deemed in each case to be
followed by the words "without limitation." The table of contents, index to
defined terms, and headings contained in this Agreement are for reference
purposes only and will not affect in any way the meaning or interpretation of
this Agreement.
11.11 KNOWLEDGE. For purposes of this Agreement, the term "KNOWLEDGE"
(including any derivation thereof such as "know" or "knowing", and similar such
as "aware" and regardless of whether such word starts with an initial capital)
in reference to INT'X.xxx or any Subsidiary will mean the knowledge of the
directors and executive officers of INT'X.xxx or such Subsidiary as the case may
be, and in reference to Parent or any Subsidiary will mean the knowledge of the
directors and executive officers of Parent or such Subsidiary as the case may
be.
11.12 TRANSFER, SALES, DOCUMENTARY, STAMP AND OTHER SIMILAR TAXES. Any and
all transfer, sales, documentary, stamp and other similar Taxes imposed in
connection with the transactions contemplated by this Agreement will be paid by
the stockholder of INT'X.xxx with respect to which such Tax relates. At Parent's
discretion, the amount paid to any Person pursuant to this Agreement will be
reduced by the amount of Taxes payable by such Person pursuant to this
Section 11.12. Any amounts so withheld will be promptly remitted to the
appropriate taxing authority.
11.13 ACKNOWLEDGEMENT. Parent and INT'X.xxx hereby acknowledge and agree
that: (i) the promissory notes described in Section 2.9(ii) were issued pursuant
to Section 5.6 of the Parent Disclosure Schedule and Section 3.8(a) of the
INT'X.xxx Disclosure Schedule, (ii) Parent has received the INT'X.xxx financial
projections dated as of March 25, 2000 and (iii) the promissory notes described
in Section 2.9(iii) will count as $2 million of the $3 million of additional
indebtedness permitted to be incurred by INT'X.xxx pursuant to Section 5.6 of
the Parent Disclosure Schedule without resulting in a material adverse effect on
the Business Condition of INT'X.xxx. Parent hereby acknowledges that pursuant to
Section 8.2(b) INT'X.xxx may incur additional indebtedness of up to $1 million
and, in accordance with Section 5.6 of the Parent Disclosure Schedule, such
$1 million of additional indebtedness shall not result in a material adverse
effect on the Business Condition of INT'X.xxx if such additional indebtedness is
treated as a Debt Adjustment Amount.
(THE REMAINDER OF THIS PAGE HAS BEEN LEFT BLANK INTENTIONALLY.)
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SIGNATURE PAGE TO
AGREEMENT AND PLAN OF REORGANIZATION
IN WITNESS WHEREOF, Parent, Merger Sub and, INT'X.xxx have executed this
Agreement as of the date first written above.
LIONBRIDGE TECHNOLOGIES, INC. INT'X.XXX, INC.
By: /s/ XXXX X. XXXXX By: /s/ XXXXX X. XXXXXX
---------------------------------------- ----------------------------------------
Xxxx X. Xxxxx Xxxxx X. Xxxxxx
CHIEF EXECUTIVE OFFICER & PRESIDENT CHIEF EXECUTIVE OFFICER
LTI ACQUISITION CORP.
By: /s/ XXXX X. XXXXX
----------------------------------------
Xxxx X. Xxxxx
CHIEF EXECUTIVE OFFICER & PRESIDENT
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