Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
CORILLIAN CORPORATION
WIZARD ACQUISITION CORPORATION
AND
INTELIDATA TECHNOLOGIES CORPORATION
dated as of March 31, 2005
TABLE OF CONTENTS PAGE
Article 1. THE MERGER..........................................................1
1.1. The Merger..........................................................1
1.2. Closing of the Merger...............................................2
1.3. Effective Time......................................................2
1.4. Effects of the Merger...............................................2
1.5. Certificate of Incorporation and Bylaws of the Surviving
Corporation.......................................................2
1.6. Directors and Officers of the Surviving Corporation.................2
Article 2. CONVERSION OF SECURITIES............................................3
2.1. Conversion of Capital Stock.........................................3
2.2. Appraisal Rights....................................................3
2.3. Exchange of Certificates............................................4
2.4. Stock Options.......................................................7
2.5. Warrants............................................................7
Article 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.......................7
3.1. Organization and Qualification......................................8
3.2. Charter and Bylaws..................................................8
3.3. Capitalization......................................................8
3.4. Company SEC Reports; Financial Statements..........................10
3.5. Controls...........................................................12
3.6. Information Supplied...............................................12
3.7. Authorization and Enforceability...................................13
3.8. Absence of Certain Changes or Events...............................13
3.9. Consents and Approvals.............................................15
3.10. Permits............................................................15
3.11. Compliance with Laws...............................................16
3.12. Litigation.........................................................16
3.13. Employee Benefit Matters...........................................16
3.14. No Excess Parachute Payments.......................................20
3.15. Employees..........................................................20
3.16. Property and Leases................................................21
3.17. Intellectual Property Rights.......................................21
3.18. Taxes..............................................................23
3.19. Material Contracts.................................................26
3.20. Relations with Customers...........................................27
3.21. Environmental Matters..............................................27
3.22. Interested Party Transactions......................................28
3.23. Change in Control..................................................28
3.24. Fairness Opinion...................................................28
3.25. No Finders.........................................................28
3.26. Disclosure.........................................................28
3.27. Tax Treatment......................................................29
3.28. Rights Plan........................................................29
Article 4. REPRESENTATIONS AND WARRANTIES OF THE PARENT AND MERGER SUB........29
4.1. Organization and Qualification.....................................29
4.2. Capitalization.....................................................29
4.3. Parent SEC Reports; Financial Statements...........................30
4.4. Compliance with Laws...............................................31
4.5. Registration Statement.............................................31
4.6. Authorization and Enforceability...................................32
4.7. Absence of Certain Changes or Events...............................32
4.8. Consents and Approvals.............................................32
4.9. Ownership and Interim Operations of Merger Sub.....................32
4.10. Litigation.........................................................33
4.11. No Finders.........................................................33
4.12. Tax Treatment......................................................33
4.13. Capital Resources..................................................33
Article 5. COVENANTS AND AGREEMENTS...........................................33
5.1. Conduct of Business of the Company.................................33
5.2. No Solicitation....................................................36
5.3. Proxy Statement; Registration Statement; Stockholders Meeting......38
5.4. State Takeover Statutes............................................40
5.5. Affiliates.........................................................40
5.6. Nasdaq Listing Application.........................................40
5.7. Confidentiality....................................................40
5.8. Access to Information..............................................41
5.9. Approvals and Consents; Cooperation................................41
5.10. Commercially Reasonable Efforts; Further Actions...................42
5.11. Officers' and Directors' Indemnification...........................42
5.12. Notification of Certain Matters....................................42
5.13. Public Announcements...............................................43
5.14. Voting of Shares...................................................43
5.15. Expenses...........................................................43
5.16. Section 368 Qualification..........................................43
5.17. Employee Benefit Plans.............................................43
5.18. Company Options and Company Stock Plans............................44
5.19. Company Warrants...................................................44
5.20. Rights Plan........................................................44
5.21. Director and Officer Resignations..................................45
Article 6. CONDITIONS PRECEDENT...............................................45
6.1. Conditions to Obligations of the Parent, Merger Sub,
and the Company.................................................45
6.2. Conditions to Obligations of the Parent and Merger Sub.............45
6.3. Conditions to Obligations of the Company...........................47
Article 7. TERMINATION AND ABANDONMENT........................................48
7.1. Termination........................................................48
7.2. Effect of Termination..............................................50
Article 8. DEFINED TERMS......................................................51
8.1. Definitions of Certain Terms.......................................51
8.2. Location of Other Defined Terms....................................57
Article 9. GENERAL PROVISIONS.................................................58
9.1. Amendment and Modification........................................58
9.2. Waiver of Compliance; Consents....................................58
9.3. Investigation; Survival of Representations and Warranties.........58
9.4. Notices...........................................................58
9.5. Specific Performance..............................................59
9.6. Assignment........................................................59
9.7. Governing Law.....................................................60
9.8. Interpretation....................................................60
9.9. Entire Agreement..................................................60
9.10. Parties in Interest...............................................60
9.11. Severability......................................................60
9.12. Counterparts......................................................61
EXHIBIT LIST
5.14......................................Form of Agreement to Facilitate Merger
6.2(n)(A)...................................................FIRPTA Notice to IRS
6.2(n)(B).............................................FIRPTA Notification Letter
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is dated as of
March 31, 2005, by and among Corillian Corporation, an Oregon corporation (the
"Parent"), Wizard Acquisition Corporation, a Delaware corporation and
wholly-owned subsidiary of the Parent ("Merger Sub"), and InteliData
Technologies Corporation, a Delaware corporation (the "Company").
WHEREAS, the respective Boards of Directors of the Parent, Merger
Sub and the Company have each determined that an acquisition of the Company
by the Parent is advisable and in the best interests of their respective
stockholders;
WHEREAS, in furtherance of the acquisition of the Company by the
Parent, the Boards of Directors of the Parent, Merger Sub and the Company
have approved the merger of the Company with and into Merger Sub (the
"Merger") upon the terms and subject to the conditions set forth herein,
whereby each share of common stock, par value $0.001 per share, of the
Company (the "Company Common Stock") issued and outstanding immediately
prior to the effective time of the Merger (other than Cancelled Shares, as
defined below), shall be converted into the right to receive shares of
common stock, no par value, of the Parent (the "Parent Common Stock"), and
certain cash consideration as described in Article 2 below;
WHEREAS, for federal income tax purposes, it is intended that the
Merger shall qualify as a reorganization within the meaning of Section 368
of the Internal Revenue Code of 1986, as amended (the "Code");
WHEREAS, officers and directors of the Company have, to induce the
Parent to execute this Agreement, executed and delivered to the Parent the
Agreements to Facilitate Merger described in Section 5.14;
WHEREAS, the parties hereto desire to make certain
representations, warranties, and agreements in connection with the Merger
and also to prescribe various conditions to the Merger; and
WHEREAS, capitalized terms shall have the meaning set forth in
this Agreement, including the meanings set forth in Article 8.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual representations, warranties, covenants and agreements contained herein
and intending to be legally bound hereby, the Parent, Merger Sub and the Company
hereby agree as follows:
Article 1.
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THE MERGER
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1.1. The Merger.
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Subject to the terms and conditions of this Agreement, at the Effective
Time (as defined in Section 1.3 hereof), the Company shall be merged with and
into Merger Sub in accordance
with t
he provisions of Delaware Law, whereupon the separate corporate existence of the
Company shall cease, and Merger Sub shall continue as the surviving corporation
(the "Surviving Corporation").
1.2. Closing of the Merger.
----------------------
The closing of the Merger (the "Closing") shall take place at 10:00
a.m., local time, on a date to be specified by the parties (the "Closing Date"),
which shall be no later than the second business day after the satisfaction or
waiver of the conditions set forth in Article 6 (other than those conditions
that by their terms are to be satisfied at the Closing, but subject to the
satisfaction or waiver of those conditions), at the offices of Xxxxxxx Coie LLP,
0000 XX Xxxxx Xxxxxx, Xxxxxxxx, Xxxxxx, or at such other place as the parties
hereto may agree.
1.3. Effective Time.
---------------
At the time of the Closing, the Company and Merger Sub shall file, or
cause to be filed, with the Secretary of State of the State of Delaware a
Certificate of Merger for the Merger, which Certificate shall be in the form
required by and executed in accordance with the applicable provisions of
Delaware Law and in form and substance acceptable to the Parent (the
"Certificate of Merger"). The Merger shall become effective at the time such
filing is made or, if agreed to by the Parent and the Company, at such later
time or date set forth in the Certificate of Merger (the "Effective Time").
1.4. Effects of the Merger.
----------------------
The Merger shall have the effects set forth under Delaware Law. From
and after the Effective Time, the Surviving Corporation shall possess all the
rights, privileges, powers, and franchises, and be subject to all the
restrictions, disabilities, and duties, of the Company and Merger Sub, all as
more fully described under Delaware Law.
1.5. Certificate of Incorporation and Bylaws of the Surviving
--------------------------------------------------------
Corporation.
------------
The Certificate of Incorporation of Merger Sub shall, by virtue of the
Merger, become and thereafter be the Certificate of Incorporation of the
Surviving Corporation until amended in accordance with such Certificate of
Incorporation and Delaware Law. The Bylaws of Merger Sub in effect immediately
prior to the Effective Time shall be the Bylaws of the Surviving Corporation,
until amended in accordance with such Bylaws, the Certificate of Incorporation
and Delaware Law.
1.6. Directors and Officers of the Surviving Corporation.
----------------------------------------------------
The directors of Merger Sub and the officers of the Company immediately
prior to the Effective Time shall be the directors and officers of the Surviving
Corporation until their respective successors shall be duly elected and
qualified or appointed.
Article 2.
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CONVERSION OF SECURITIES
------------------------
2.1. Conversion of Capital Stock.
----------------------------
At the Effective Time, by virtue of the Merger and without any action
on the part of any holder of any share of capital stock of the Company or Merger
Sub:
(a) Common Stock of Merger Sub. Each share of common stock of Merger
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Sub, par value $0.001 per share ("Merger Sub Common Stock"), issued and
outstanding immediately prior to the Effective Time shall continue to
remain issued and outstanding.
(b) Cancellation of Parent Owned Stock and Treasury Shares. Each share
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of Company Common Stock issued and outstanding immediately prior to the
Effective Time that is then held by the Parent, the Company or their
direct or indirect wholly-owned subsidiaries (collectively, the
"Cancelled Shares") shall be canceled without payment of any
consideration therefor and without any conversion thereof.
(c) Conversion of Shares. Each share of Company Common Stock issued
--------------------
and outstanding immediately prior to the Effective Time, other than the
Cancelled Shares and any Dissenting Shares (as defined and to the extent
provided in Section 2.2(a) hereof), shall be converted into the right to
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receive (i) the fraction - of a share (subject to adjustment as provided
below) of Parent Common Stock equal to the Exchange Ratio, and (ii) the Per
Share Cash Consideration, without interest (the "Cash Consideration"),
together with any cash in lieu of fractional shares of Parent Common Stock
to be paid pursuant to Section 2.3(g) hereof (such shares and cash, as
--------------
adjusted pursuant to the following paragraph, the "Merger Consideration").
--------------------
Each share of Company Common Stock shall thereafter cease to be outstanding
and cease to exist, and each holder of Company Common Stock outstanding
immediately prior to the Effective Time will cease to have any rights with
respect to the Company Common Stock and each certificate formerly
representing shares of Company Common Stock (other than the Cancelled
Shares) shall thereafter represent only the right to receive the Merger
Consideration.
(d) Adjustments to Exchange Ratio. An appropriate adjustment shall be
-----------------------------
made to the Exchange Ratio in the event that, prior to the Effective Time,
the outstanding shares of Parent Common Stock, without new consideration,
are changed into or exchanged for a different kind of shares or securities
through a reorganization, reclassification, stock dividend, stock
combination, or other like change in the Parent's capitalization.
2.2. Appraisal Rights.
----------------
(a) Notwithstanding any provision of this Agreement to the contrary
other than Section 2.2(b), any shares of Company Common Stock held by a
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holder who is entitled to and has demanded and perfected appraisal rights
for such shares in accordance with Section 262 of the Delaware General
Corporation Law (the "DGCL") and ---- who, as of the Effective Time, has
-----------
not effectively withdrawn or lost such appraisal rights ("Dissenting
-----------
Shares"), shall not be converted into or represent a right to receive
------
Merger
Consideration pursuant to Section 2.1(c), but instead shall be converted
---------------
into the right to receive only such consideration as may be determined to
be due with respect to such Dissenting Shares under the DGCL. From and
after the Effective Time, a holder of Dissenting Shares shall not be
entitled to exercise any of the voting rights or other rights of a
stockholder of the Surviving Corporation.
(b) Notwithstanding the provisions of Section 2.2(a), if any holder of
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shares of Company Common Stock who demands appraisal of such shares under
the DGCL shall effectively withdraw or lose (through failure to perfect or
otherwise) the right to appraisal, then, as of the later of the Effective
Time and the occurrence of such event, such holder's shares shall no longer
be Dissenting Shares and shall automatically be converted into and
represent only the right to receive Merger Consideration as provided in
Section 2.1(c) without interest thereon, upon surrender of the certificate
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representing such shares pursuant to Section 2.3.
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(c) The Company shall give Parent (i) prompt notice of any written
demands for appraisal of any shares of Company Common Stock, withdrawals of
such demands, and any other instruments served pursuant to the DGCL and
received by the Company which relate to any such demand for appraisal and
(ii) the opportunity to participate in all negotiations and proceedings
which take place prior to the Effective Time with respect to demands for
appraisal under the DGCL. The Company shall not, except with the prior
written consent of Parent, voluntarily make any payment with respect to any
demands for appraisal of Company Common Stock or offer to settle or settle
any such demands.
2.3. Exchange of Certificates.
-------------------------
(a) Prior to the Effective Time, the Parent shall appoint the Parent's
stock transfer agent or such other person as the Parent may select to act
as exchange agent for the exchange of Parent Common Stock upon surrender of
Certificates (the "Exchange Agent"). Promptly following the Effective Time,
---------------------
Parent shall deposit, or cause to be deposited, with the Exchange Agent,
for the benefit of the holders of Company Common Stock, for exchange in
accordance with this Article 2 through the Exchange Agent, (i) certificates
--------
representing the number of shares of Parent Common Stock issuable pursuant
to Section 2.1(c)(i), and (ii) the amount of cash payable pursuant to
---------
Section 2.1(c)(ii) as of the Effective Time and, thereafter, cash from time
-----------------
to time as required to make payments in lieu of fractional shares pursuant
to Section 2.3(g) (such cash and certificates for Parent Common Stock,
------
together with any dividends or distributions with respect thereto, being
hereinafter referred to as the "Exchange Fund"). The Exchange Agent shall,
---------------
pursuant to irrevocable instructions, deliver (x) the Parent Common Stock
and cash contemplated to be issued pursuant to Section 2.1(c) hereto, and
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(y) such cash as may be required to make payments in lieu of any fractional
shares out of the Exchange Fund. Except as contemplated by Section 2.3(h),
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the Exchange Fund shall not be used for any other purpose.
(b) As promptly as reasonably practicable after the Effective Time,
but in no event later than ten business days thereafter, the Parent will
cause the Exchange Agent to mail to each holder of record of a certificate
or certificates (to the extent such certificates
have not already been submitted to the Exchange Agent) which immediately
prior to the Effective Time represented outstanding shares (other than
Cancelled Shares) of Company Common Stock (each, a "Certificate" and
------------
collectively, the "Certificates") (i) a letter of transmittal (which shall
--------------
be in customary form and shall specify that delivery shall be effected, and
risk of loss and title to the Certificates shall pass, only upon proper
delivery of the Certificates to the Exchange Agent and shall be in such
form and have such other provisions as the Parent and the Exchange Agent
shall reasonably specify), (ii) instructions for use in effecting the
surrender of the Certificates in exchange for the Merger Consideration, and
(iii) such notification as may be required under the DGCL to be given to
the holders of Dissenting Shares.
(c) Upon surrender to the Exchange Agent of a Certificate for
cancellation, together with such letter of transmittal, duly executed and
completed in accordance with the instructions thereto, and such other
documents as may be reasonably required by the Exchange Agent pursuant to
such instructions, the holder of such Certificate shall be entitled to
receive in exchange therefor, (i) the Cash Consideration, (ii) one or more
of the Parent certificates representing the number of whole shares of
Parent Common Stock into which the shares represented by the Certificate(s)
shall have been converted pursuant to Section 2.1(c), and (iii) if
---------------
applicable, a bank check for fractional shares pursuant to Section 2.3(g),
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to be distributed as soon as practicable after the Effective Time, and the
Certificate so surrendered shall immediately be cancelled. In the event of
a transfer of ownership of shares of Company Common Stock which is not
registered in the transfer records of the Company, Parent Common Stock (and
any Cash Consideration and any cash paid for fractional shares pursuant to
Section 2.3(g)) may be issued or paid to a transferee if the Certificate
----------------
representing such shares of Company Common Stock is presented to the
Exchange Agent, accompanied by all documents required to evidence and
effect such transfer and by evidence that any applicable stock transfer
taxes have been paid.
(d) Whenever a dividend or other distribution is declared by the
Parent in respect of the Parent Common Stock, the record date for which is
after the Effective Time, that declaration shall include dividends or other
distribution in respect of all shares issuable pursuant to this Agreement.
No dividends or other distributions pertaining to Parent Common Stock with
a record date on the same date as or after the Effective Time shall be paid
to any holder of shares of Company Common Stock who have not surrendered
their Certificates for exchange, until the holder of such Certificates
shall have exchanged such Certificates in accordance with Section 2.3(c)
--------------
hereof. Subject to the effect, if any, of applicable Law, the Exchange
Agent shall receive, hold, and remit any such dividends or other
distributions to each such record holder entitled thereto, without
interest, at the time that such Certificates are surrendered to the
Exchange Agent for exchange. Holders of Company Common Stock will not be
entitled, however, to dividends or other distributions that are payable to
persons who were holders of record of Parent Common Stock as of a record
date that is prior to the date of the Effective Time.
(e) All shares of Parent Common Stock issued upon the surrender for
exchange of the Certificates in accordance with the terms hereof (including
any cash paid for fractional shares pursuant to Section 2.3(g) hereof) and
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the Cash Consideration shall
be deemed to have been issued in full satisfaction of all rights pertaining
to the shares of Company Common Stock represented by the Certificates.
(f) After the Effective Time, there shall be no further registration
of transfers on the stock transfer books of the Surviving Corporation of
the shares of Company Common Stock that were outstanding immediately prior
to the Effective Time. If, after the Effective Time, Certificates
representing such shares are presented to the Surviving Corporation, they
shall be cancelled and exchanged as provided in this Article 2.
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(g) No fractional shares of Parent Common Stock and no certificates or
scrip therefor, or other evidence of ownership thereof, shall be issued
upon the surrender for exchange of Certificates, no dividend or other
distribution of the Parent shall relate to any fractional share, and such
fractional share interests shall not entitle the owner thereof to vote or
to any rights of a stockholder of the Parent. All fractional shares of
Parent Common Stock to which a holder of Company Common Stock immediately
prior to the Effective Time would otherwise be entitled, at the Effective
Time, shall be aggregated if and to the extent multiple Certificates of
such holder are submitted together to the Exchange Agent. If a fractional
share results from such aggregation, then (in lieu of such fractional
share) the Exchange Agent shall pay to each holder of shares of Company
Common Stock who otherwise would be entitled to receive such fractional
share of Parent Common Stock an amount of cash (without interest)
determined by multiplying (i) the fractional share of Parent Common Stock
to which such holder would otherwise be entitled, by (ii) the Parent
Average Stock Price. The Parent will make available to the Exchange Agent
any cash necessary for this purpose.
(h) Any portion of the Exchange Fund that remains undistributed to the
holders of shares of Company Common Stock six (6) months after the
Effective Time shall be delivered to Parent, upon demand by Parent. Any
holder of Certificates who have not theretofore complied with Section
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2.2(a) shall thereafter look only to Parent for the portion of the Merger
-----
Consideration represented by the Certificates to which such holder is
entitled pursuant to Section 2.1(c) hereof. Any portion of the Exchange
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Fund remaining unclaimed by holders of shares of Company Common Stock as of
the date that is immediately prior to such time as such amounts would
otherwise escheat to or become property of any Governmental Entity shall,
to the extent permitted by applicable Law, become the property of Parent,
free and clear of any claims or interest or any person previously entitled
thereto.
(i) To the fullest extent permitted by Law, neither Parent nor the
Surviving Corporation shall be liable to any holder of shares of Company
Common Stock for any Parent Common Stock (or dividends or distributions
with respect thereto) or cash delivered to a public official pursuant to
any applicable abandoned property, escheat or similar Law.
(j) Each of the Surviving Corporation, Parent and the Exchange Agent
shall be entitled to deduct and withhold from the consideration otherwise
payable pursuant to this Agreement to any holder of shares of Company
Common Stock such amounts as it is required to deduct and withhold with
respect to the making of such payments under the
Code, or any provision of state, local or foreign tax Law. To the extent
that amounts are so withheld by the Surviving Corporation, Parent or
Exchange Agent, as the case may be, such withheld amounts shall be treated
for all purposes of this Agreement as having been paid to the holder of
shares of Company Common Stock in respect of which such deduction and
withholding was made by the Surviving Corporation, Parent or Exchange
Agent, as the case may be.
(k) If any Certificate shall have been lost, stolen or destroyed, upon
the delivery to the Exchange Agent of an affidavit of that fact by the
person claiming such Certificate to be lost, stolen or destroyed and, if
required by the Surviving Corporation, the posting by such person of a
bond, in such reasonable amount as the Parent or Surviving Corporation may
direct, as indemnity against any claim that may be made against it with
respect to such Certificate, the Exchange Agent shall issue or pay in
exchange for such lost, stolen or destroyed Certificate the Merger
Consideration and the cash value of any fraction of a share of Parent
Common Stock as provided in Section 2.3(g) hereof.
2.4. Stock Options
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As soon as practicable following the Closing, but effective as of the
Effective Time, each Company Option that is outstanding immediately prior to the
Effective Time (including, specifically and without limitation, every option
outstanding under any Company Stock Plan) and that has not been exercised prior
to the Effective Time, shall be terminated. No options or Company Stock Plan
will continue after the Effective Time or be assumed or continued by Parent or
the Surviving Corporation. Prior to the Closing Date, the Company shall take all
action necessary to effect the termination of all Company Options, as
contemplated by this Section 2.4.
2.5. Warrants
--------
Each warrant to purchase shares of Company Common Stock (a "Company
---------
Warrant") that is outstanding immediately prior to the Effective Time shall, at
--------
the Effective Time, cease to represent a right to purchase shares of Company
Common Stock and shall be converted, at the Effective Time, into a warrant to
purchase shares of Parent Common Stock (a "Parent Warrant") on substantially the
----------------
same terms and conditions as were applicable under such Company Warrant. The
number of shares of Parent Common Stock subject to each such Parent Warrant
shall be the number of shares of Company Common Stock subject to each such
Company Warrant immediately prior to the Effective Time multiplied by the
Exchange Ratio, rounded, if necessary, to the nearest whole share of Parent
Common Stock, and such Parent Warrant shall have an exercise price per share
(rounded to the nearest cent) equal to the per share exercise price specified in
such Company Warrant divided by the Exchange Ratio.
Article 3.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
---------------------------------------------
As a material inducement to the Parent and Merger Sub to enter into
this Agreement, with the understanding that the Parent and Merger Sub shall be
relying thereon in consummating the transactions contemplated hereunder, the
Company hereby represents and warrants to the Parent
and Merger Sub, except as set forth in the Company Disclosure Schedule delivered
by the Company to the Parent and Merger Sub on the date hereof (the "Company
Disclosure Schedule"), which Company Disclosure Schedule identifies the section
and subsection numbers of this Article 3 to which the disclosures pertain and
which disclosures relate only to the representations and warranties set forth in
the section or subsection of this Agreement to which such section of the Company
Disclosure Schedule expressly relates and not to any other representation and
warranty contained in this Agreement (except to the extent that one section of
the Company Disclosure Schedule specifically refers to another section thereof),
as follows:
3.1. Organization and Qualification.
(a) The Company and each Company Subsidiary is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation and has all power and authority to own, lease
and operate its properties and to carry on its business as now being
conducted. The Company and each Company Subsidiary is duly qualified and in
good standing to do business in each jurisdiction in which the property
owned, leased, or operated by it or the nature of the business conducted by
it (i) makes such qualification necessary and (ii) where the failure to
qualify could reasonably be expected to have a Company Material Adverse
Effect.
(b) Section 3.1(b) of the Company Disclosure Schedule lists each
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Company Subsidiary and its jurisdiction of incorporation. Except for the
capital stock of the Company Subsidiaries owned by the Company, neither the
Company nor any Company Subsidiary owns, directly or indirectly, any
capital stock or other interest in any person. The Company wholly owns each
Company Subsidiary.
3.2. Charter and Bylaws.
-------------------
The Company has furnished or made available to the Parent a complete
and correct copy of the Certificate of Incorporation and the Bylaws of the
Company and the Certificate of Incorporation, Bylaws or equivalent
organizational documents of each Company Subsidiary, each as in full force and
effect as of the date hereof. Neither the Company nor any Company Subsidiary is
in violation of any of the provisions of its Certificate of Incorporation,
Bylaws or equivalent organizational documents.
3.3. Capitalization.
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(a) The authorized capital stock of the Company consists of
100,000,000 shares of Company Common Stock and 5,000 shares of Preferred
Stock of the Company, par value $0.001 per share (the "Company Preferred
-------------------
Stock"). As of the date hereof, there are (i) 51,133,492 shares of Company
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Common Stock issued and outstanding; (ii) no shares of Preferred Stock
issued and outstanding; (iii) 1,034,784 shares of Company Common Stock and
no shares of Company Preferred Stock held in the treasury of the Company;
(iv) no shares of Company Common Stock or Company Preferred Stock owned by
the Company Subsidiaries; and (v) 3,964,015 shares of Company Common Stock
reserved for future issuance pursuant to Company Stock Plans (including
3,034,397 shares subject to outstanding Company Options, which includes
45,000
restricted stock awards that will vest immediately prior to the Effective
Time). Except (1) as set forth in this Section 3.3(a), (2) as set forth in
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Section 3.3(a) of the Company's Disclosure Schedule, including the Employee
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Stock Purchase Plan set forth therein ("ESPP") and (3) as provided in the
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Rights Plans (as defined in Section 3.28 hereof), there are no outstanding
------------
(x) securities of the Company convertible into or exchangeable for shares
of capital stock or voting securities or ownership interests in the
Company, (y) options, warrants, rights or other agreements or commitments
to acquire from the Company, or obligations of the Company to issue, any
capital stock, voting securities or other ownership interests in (or
securities convertible into or exchangeable for capital stock or voting
securities or other ownership interests in) the Company, (z) obligations of
the Company to grant, extend or enter into any subscription, warrant,
right, convertible or exchangeable security or other similar agreement or
commitment relating to any capital stock, voting securities or other
ownership interests in the Company (the items in clauses (x), (y) and (z),
together with the capital stock of the Company, being referred to
collectively as "Company Securities") or (iv) obligations by the Company or
--------------------
any of the Company Subsidiaries to make any payments based on the price or
value of shares of the Company's capital stock. All outstanding shares of
Company Common Stock have been duly authorized and validly issued, are
fully paid and nonassessable and were issued in compliance with all
applicable federal and state securities laws (or applicable exemptions
thereunder).
(b) Section 3.3(b) of the Company Disclosure Schedule accurately sets
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forth (A) a list of all Company Stock Plans and information regarding the
exercise price, the date of grant or issuance and the number of underlying
securities issuable in respect of each Company Option, and (B) a list of
all Warrants outstanding and information regarding the holder, the exercise
price, the expiration date and the number and type of securities into which
the warrants are exercisable. All securities of the Company subject to
issuance upon exercise of Company Options, upon issuance on the terms and
conditions specified in the instruments pursuant to which they are
issuable, shall be duly authorized, validly issued, fully paid and
nonassessable. Except as set forth in Section 3.3(b) of the Company
---------------
Disclosure Schedule, no consent of holders of any Company Options is
required to carry out the Merger and the other transactions contemplated by
this Agreement, including, without limitation, the matters contemplated by
Section 2.4 and Article 1. All actions, if any, required on the part of the
-----------
Company under the Company Options to allow for the treatment of Company
Options as is provided in Section 2.4 and Article 1, have been, or prior to
----------- ---------
the Closing shall be, validly taken by the Company. The Company has
delivered or made available to the Parent complete and correct copies of
the Company Stock Plans and all forms of Company Options and agreements
under any such plans.
(c) Except as contemplated by this Agreement, the Company is not under
any obligation to repurchase, redeem or otherwise acquire any securities of
the Company or of any Company Subsidiary or to provide funds to, or make
any investment (in the form of a loan, capital contribution or otherwise)
in, any Company Subsidiary or any other Person. As of the date of this
Agreement and except as contemplated by this Agreement, there are no voting
trusts or other agreements or understandings to which the Company is a
party, or, to the Knowledge of the Company, to which persons other than the
Company
are parties, that relate to the voting or control of any outstanding shares
of the Company's capital stock.
(d) Each outstanding share of capital stock of each Company Subsidiary
is duly authorized, validly issued, fully paid and nonassessable, and each
such share is owned by the Company or another Company Subsidiary, free and
clear of all Encumbrances. There are no outstanding (i) securities of the
Company or any Company Subsidiary convertible into or exchangeable for
shares of capital stock or other voting securities or ownership interests
in any Company Subsidiary, (ii) options, warrants, rights or other
agreements or commitments to acquire from the Company or any Company
Subsidiary (or obligations of the Company or any Company Subsidiary to
issue) any capital stock, voting securities or other ownership interests
in, or any securities convertible into or exchangeable for any capital
stock, voting securities or ownership interests in, any Company Subsidiary,
(iii) obligations of the Company or any Company Subsidiary to grant, extend
or enter into any subscription, warrant, right, convertible or exchangeable
security or other similar agreement or commitment relating to any capital
stock, voting securities or other ownership interests in any Company
Subsidiary (the items in clauses (i), (ii) and (iii), together with the
capital stock of such Company Subsidiaries, being referred to collectively
as "Subsidiary Securities") or (iv) obligations of the Company or any
-------------------------
Company Subsidiary to make any payment based on the value of any shares of
any Company Subsidiary. There are no outstanding obligations of the Company
or any of Company Subsidiary to purchase, redeem or otherwise acquire any
outstanding Subsidiary Securities.
3.4. Company SEC Reports; Financial Statements.
(a) The Company has filed with the SEC, at or prior to the time due
(including by proper extension pursuant to Rule 12b-25), and has heretofore
made available to the Parent true and complete copies of, all forms,
reports, schedules, registration statements, definitive proxy statements
and other documents (together with all information incorporated therein by
reference, the "Company SEC Reports") it filed or was required to file with
----------------------
the SEC since January 1, 2002. As of their respective dates, the Company
SEC Reports complied in all material respects with all applicable
requirements of the Exchange Act or the Securities Act, as the case may be,
and the rules and regulations of the SEC thereunder applicable to the
Company SEC Reports. As of their respective dates and as of the date any
information from such Company SEC Reports has been incorporated by
reference, the Company SEC Reports did not contain any untrue statement of
a material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. Section
-------
3.4(a) of the Company Disclosure Schedule lists all comment letters or
-----
other correspondence received by the Company from the Staff of the SEC
since January 1, 2002 with respect to any Company SEC Report or otherwise
and all responses to such comment letters or correspondence by or on behalf
of the Company, copies of all of which have been provided to the Parent.
(b) To the extent required in connection with the Company SEC Reports,
the Company's Chief Executive Officer and Chief Financial Officer have
signed, and the Company has furnished to the SEC, all necessary
certifications required by Sections 302 and 906 of the Xxxxxxxx-Xxxxx Act
of 2002. Such certifications contain no qualifications or exceptions to the
matters certified therein and have not been modified or withdrawn, and
neither the Company nor any of its officers has received notice from any
Governmental Entity questioning or challenging the accuracy, completeness,
form or manner of filing or submission of such certifications nor to the
Company's Knowledge is any such notice or action threatened.
(c) Each of the financial statements of the Company (including the
related notes) included or incorporated by reference in the Company SEC
Reports (including any similar documents filed after the date of this
Agreement) comply as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC
with respect thereto, have been prepared in accordance with GAAP (except,
in the case of unaudited statements, as permitted by Form 10-Q or
Regulation S-X of the SEC) applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto) and fairly
present the consolidated financial position of the Company and its
consolidated Company Subsidiaries as of the dates thereof and the
consolidated results of their operations and cash flows for the periods
then ended (subject to normal year-end adjustments in the case of any
unaudited interim financial statements). Neither the Company nor any
Company Subsidiary has, nor does the Company or any Company Subsidiary have
any Knowledge of any basis for, any material liabilities or obligations
individually or in the aggregate (whether absolute, accrued, contingent, or
otherwise) of any nature, other than liabilities or obligations (i) accrued
or reserved against in the most recent consolidated balance sheet of the
Company included in the Company SEC Reports, (ii) specifically disclosed in
this Agreement, or (iii) incurred in the ordinary course of business
consistent with past practice since the date of the balance sheet included
in the most recent Company SEC Report (none of which could, individually or
in the aggregate, reasonably be expected to have a Company Material Adverse
Effect or are in such amounts as to be materially greater than the
liabilities or obligations set forth in the balance sheet most recently
filed with the SEC prior to the date of this Agreement).
(d) Except as set forth in Section 3.4(d) of the Company Disclosure
--------------
Schedule, the Company has not been notified by its independent auditors or
by the staff of the SEC that such auditors or staff of the SEC, as the case
may be, are of the view that any financial statements included in any
registration statement filed by the Company under the Securities Act or any
periodic or current report filed under the Exchange Act should be restated,
or that the Company should modify its accounting in future periods in a
manner that would be materially adverse to the Company. As of the date
hereof, the Company has complied in all material respects with the listing
and other standards of Nasdaq applicable to it (other than failing to meet
the minimum per share price qualification of the Nasdaq SmallCap Market).
(e) Prior to the execution of this Agreement, the Company has
delivered to the Parent its Annual Report on Form 10-K for the fiscal year
ended December 31, 2004
(the "2004 Form 10-K") in its final form, and no changes or modifications
to the 2004 Form 10-K will be required or made prior to filing with the
SEC. The 2004 Form 10K complies in all material respects with all
applicable requirements of the Exchange Act, and the rules and regulations
of the SEC thereunder applicable to the 2004 Form 10-K.
3.5. Controls.
--------
Except as set forth in Section 3.5 of the Company Disclosure
----------
Schedule:
(a) Each of the Company and the Company Subsidiaries has internal
control over financial reporting as defined in Rule 13a-15(f) under the
Exchange Act and such internal control over financial reporting is
effective. Since January 1, 2002, there has been no material change in the
internal control over financial reporting of the Company and the Company
Subsidiaries that has materially affected, or is reasonably likely to
materially affect, the internal control over financial reporting of the
Company and the Company Subsidiaries. Without limiting the generality of
the foregoing, each of the Company and the Company Subsidiaries maintains
accurate books and records reflecting its assets and liabilities and
maintains proper and adequate internal accounting controls which provide
reasonable assurance that (i) transactions are executed with management's
authorization; (ii) transactions are recorded as necessary to permit
preparation of the consolidated financial statements of the Company and to
maintain accountability for the Company's consolidated assets; (iii) access
to the Company's consolidated assets is permitted only in accordance with
management's authorization; (iv) the reporting of the Company's
consolidated assets is compared with existing assets at regular intervals;
and (v) accounts, notes and other receivables and inventory are recorded
accurately, and proper and adequate procedures are implemented to effect
the collection thereof on a current and timely basis. The Company has not
been notified by its independent auditor that there is any significant
deficiency or material weakness in the Company's internal control over
financial reporting. The Company has delivered to Parent complete and
accurate copies of any management letter or similar correspondence from any
independent auditor since January 1, 2002, of the Company or any of the
Company Subsidiaries.
(b) The Company maintains disclosure controls and procedures required
under the Exchange Act effective to ensure that all material information
concerning the Company and the Company Subsidiaries is made known on a
timely basis to the individuals responsible for the preparation of the
Company's filings with the SEC and other public disclosure documents.
Section 3.5(b) of the Company Disclosure Schedule lists, and the Company
-------
has delivered to the Parent copies of, all written descriptions of, and all
policies, manuals and other documents promulgating, such disclosure
controls and procedures and internal controls over financial reporting.
3.6. Information Supplied.
--------------------
The proxy statement/prospectus included as part of the Registration
Statement (such proxy statement/prospectus, together with notice of meeting,
form of proxy, and any letter or other materials to the Company's stockholders
included therein are referred to in this Agreement
as the "Proxy Statement/Prospectus") shall not, at the time the Proxy Statement/
----------------------------
Prospectus is first mailed and at the time of the Company Stockholders Meeting,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they are made, not misleading, or omit
to state any material fact necessary to correct any statement made in any
earlier communication with respect to the solicitation of any proxy or approval
for the Merger in connection with which the Proxy Statement/Prospectus shall be
mailed, which has become false or misleading, except that no representation or
warranty is made by the Company with respect to any information regarding and
supplied in writing by the Parent, Merger Sub or any Affiliate of the Parent or
Merger Sub which is contained or incorporated by reference in the Proxy
Statement/Prospectus. The Proxy Statement/Prospectus shall comply as to form in
all material respects with the provisions of the Exchange Act and the rules and
regulations of the SEC promulgated thereunder.
3.7. Authorization and Enforceability.
---------------------------------
The Company has the corporate power and authority to execute and
deliver this Agreement and, subject to obtaining the Company Stockholder
Approval and the approvals set forth in Section 3.7 of the Company Disclosure
-----------
Schedule, the corporate power and authority to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by the Company
and the consummation of the transactions contemplated hereby have been duly and
validly authorized and unanimously approved by the Company's Board of Directors
and no other corporate proceedings on the part of the Company (other than
Company Stockholder Approval) or any Company Subsidiary are necessary to
authorize this Agreement, and, subject to obtaining the Company Stockholder
Approval, no other corporate action on the part of the Company or any Company
Subsidiary is necessary to consummate the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by the Company and
constitutes the valid and binding obligation of the Company, enforceable against
the Company in accordance with its terms, subject to rules of Law governing
bankruptcy, specific performance, injunctive relief, or other equitable
remedies. Under applicable Law, the Company's Certificate of Incorporation and
Nasdaq rules, the affirmative vote of the holders of a majority of the
outstanding shares of Company Common Stock is the only vote required for the
stockholders of the Company to approve the Merger and, except as set forth in
Section 3.7 of the Company Disclosure Schedule no holders of any other Company
-----------
Securities are entitled to any vote or consent regarding the Merger, this
Agreement or any of the transactions contemplated hereby.
3.8. Absence of Certain Changes or Events.
Except as contemplated hereby or as disclosed in the Company SEC
Reports or Section 3.8 of the Company Disclosure Schedule, since January 1,
-----------
2005, the Company and the Company Subsidiaries have conducted their business in
the ordinary course of business and consistent with past practice and there has
not been:
(a) any change, effect, event, occurrence, state of facts or
development that, individually or in the aggregate, has had or could
reasonably be expected to have a Company Material Adverse Effect;
(b) any declaration, setting aside or payment of any dividend or other
distribution with respect to any shares of capital stock of the Company, or
any repurchase, redemption or other acquisition by the Company or any
Company Subsidiary (other than any wholly owned subsidiary) of any
outstanding shares of capital stock or other equity or debt securities of,
or other ownership interests in, the Company;
(c) any split, combination or reclassification of any of its capital
stock;
(d) any amendment of any provision of the Certificate of
Incorporation, Bylaws or other governing documents of, or of any material
term of any outstanding security issued by, the Company or any Company
Subsidiary (other than any wholly owned subsidiary);
(e) any incurrence, assumption or guarantee by the Company or any
Company Subsidiary of any indebtedness for borrowed money, other than trade
payables incurred in the ordinary course of business and consistent with
past practice;
(f) any change in any method of accounting or accounting practice by
the Company or any Company Subsidiary, except for any such change required
by reason of a change in GAAP and concurred with by the Company's
independent public accountants;
(g) any election or change in any election concerning Taxes, any
adoption or change in any Tax accounting method or practice, or any change
in any Tax accounting period;
(h) any issuance of any equity or debt securities of the Company other
than pursuant to the Company Stock Plans and the Company Options in the
ordinary course of business and consistent with past practice;
(i) any acquisition or disposition of assets material to the Company
and the Company Subsidiaries (except for sales of inventory in the ordinary
course of business consistent with past practice), any acquisition or
disposition of capital stock of any third party (other than acquisitions or
dispositions of non-controlling equity interests of third parties in the
ordinary course of business), or any merger or consolidation with any third
party, by the Company or any Company Subsidiary;
(j) any creation or assumption by the Company or any Company
Subsidiary of any Encumbrance on any asset other than in the ordinary
course of business and consistent with past practice;
(k) any capital expenditure or expenditures in excess of $15,000
individually or $50,000 in the aggregate, other than capital expenditures
made in the ordinary course of business;
(l) any material damage, destruction or loss (whether or not covered
by insurance) from fire or other casualty to its material tangible
property;
(m) any increase in the base salary of any officer or employee of the
Company, other than increases in the base salary of non-officer employees
in the ordinary course of business and consistent with past practice;
(n) any adoption, amendment, modification, or termination of any
bonus, profit-sharing, incentive, severance or other similar plan or any
outstanding option, award, or benefit thereunder for the benefit of any of
its directors, officers or employees;
(o) entry by the Company into any joint venture, partnership or
similar agreement with any person other than a Company Subsidiary; or
(p) any authorization of, or commitment or agreement to take any of,
the foregoing actions except as otherwise permitted by this Agreement.
3.9. Consents and Approvals.
-----------------------
Except as set forth in Section 3.9 of the Company Disclosure Schedule,
-----------
the execution and delivery of this Agreement by the Company and the consummation
of the transactions contemplated hereby does not: (a) violate any provision of
the Certificate of Incorporation, Bylaws, or other governing document of the
Company or any Company Subsidiary; (b) violate any Law or Order by which the
Company or any Company Subsidiary or any of their respective properties or
assets may be bound; or (c) result in any violation or breach of, or constitute
(with or without due notice or lapse of time or both) a default under, result in
the loss of any material benefit under, or give rise to any right of
termination, cancellation, increased payments, or acceleration under, or result
in the creation of any Encumbrance on any of the properties or assets of the
Company or any Company Subsidiary under any of the terms, conditions, or
provisions of any note, bond, mortgage, indenture, or of any material license,
franchise, permit, authorization, agreement, or other instrument or obligation
to which the Company or any Company Subsidiary is a party, or by which it or any
of its material properties or assets may be bound. Except as set forth in
Section 3.9 of the Company Disclosure Schedule, no filing with or permit,
consent, or approval of any Governmental Entity or any other Person is required
by the Company or any Company Subsidiary in connection with the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby, except for (i) any applicable requirements of the Securities Act, the
Exchange Act and state securities laws; (ii) the Company Stockholder Approval;
(iii) the filing and recordation of the Certificate of Merger as required by
Delaware Law; and (iv) applicable notices to Nasdaq.
3.10. Permits.
--------
Each of the Company and the Company Subsidiaries is in possession of
all Permits, except where the failure to have, or the suspension or cancellation
of, any of the Permits could not reasonably be expected to have a Company
Material Adverse Effect. As of the date hereof, no suspension or cancellation of
any of the Permits is pending or, to the Knowledge of the Company, threatened,
except where the failure to have, or the suspension or cancellation of, any of
such Permits could not reasonably be expected to have a Company Material Adverse
Effect. Section 3.10 of the Company Disclosure Schedule lists all material
------------
Permits of the Company and
the Company Subsidiaries, and the Company has made available to the Parent all
other Permits of the Company and the Company Subsidiaries.
3.11. Compliance with Laws.
--------------------
Except as set forth in Section 3.11 of the Company Disclosure Schedule,
------------
all activities of the Company and each Company Subsidiary have been, and are
currently being, conducted in all material respects in compliance with all
applicable Laws and Orders. To the Knowledge of the Company, (a) no
investigation or review by any Governmental Entity with respect to the Company
is pending or threatened or has been undertaken within the past five (5) years
and (b) no Governmental Entity has indicated an intention to conduct the same.
3.12. Litigation.
-----------
Except as set forth in Section 3.12 of the Company Disclosure Schedule,
------------
there are no material suits, actions or proceedings pending or, to the Knowledge
of the Company, threatened (in any manner) against or affecting the Company or
any of the Company Subsidiaries. Neither the Company nor any of the Company
Subsidiaries is subject to any outstanding Order that contains ongoing material
obligations, restricts the activities of the Company or any Company Subsidiary
going forward or could reasonably be expected to prevent, hinder or delay the
timely completion of the transactions contemplated by this Agreement.
3.13. Employee Benefit Matters.
(a) Section 3.13(a) of the Company Disclosure Schedule contains a
complete and accurate list of all Employee Benefit Plans. Neither the
Company nor any Company Subsidiary has any agreement, arrangement,
commitment or obligation, whether formal or informal, whether written or
unwritten and whether legally binding or not, to create, enter into or
contribute to any additional Employee Benefit Plan, or to modify or amend
any existing Employee Benefit Plan. There has been no amendment,
interpretation or other announcement (written or oral) by the Company, any
Company Subsidiary or any other Person relating to, or change in
participation or coverage under, any Employee Benefit Plan that, either
alone or together with other such items or events, could materially
increase the expense of maintaining such Employee Benefit Plan (or the
Employee Benefit Plans taken as a whole) above the level of expense
incurred with respect thereto for the fiscal year ended December 31, 2004.
The terms of each Employee Benefit Plan permit the Company or relevant
Company Subsidiary, as applicable, to amend and terminate such Employee
Benefit Plan at any time and for any reason without penalty and without
material liability or expense other than for the ordinary accrual of
benefits as of the date of termination. None of the rights of the Company
or any Company Subsidiary under any Employee Benefit Plan will be impaired
in any way by this Agreement or the consummation of the transactions
contemplated by this Agreement.
(b) The Company has delivered to Parent true, correct and complete
copies (or, in the case of unwritten Employee Benefit Plans, descriptions)
of all Employee Benefit Plans (and all amendments thereto since the
inception of the particular Employee
Benefit Plan), along with, to the extent applicable to the particular
Employee Benefit Plan, copies of the following: (i) the last three annual
reports (Form 5500 series), filed with respect to such Employee Benefit
Plan, together with all schedules and audit reports required with respect
thereto; (ii) the most recent summary plan description, and all summaries
of material modifications related thereto, distributed with respect to such
Employee Benefit Plan; (iii) all contracts and agreements (and any
amendments thereto since the inception of such Employee Benefit Plan)
relating to such Employee Benefit Plan, including, without limitation, all
trust agreements, investment management agreements, annuity contracts,
insurance contracts, bonds, indemnification agreements and service provider
agreements; (iv) the most recent determination letter issued by the IRS
with respect to such Employee Benefit Plan; (v) the most recent annual
actuarial valuation prepared for such Employee Benefit Plan; (vi) all
written communications during the last three years relating to the
amendment, creation or termination of such Employee Benefit Plan, or an
increase or decrease in benefits, acceleration of payments or vesting or
other events that could result in material liability to the Company or any
Company Subsidiary; (vii) all material correspondence to or from any
Governmental Entity relating to such Employee Benefit Plan; (viii) samples
of all administrative forms currently in use with respect to such Employee
Benefit Plan, including, without limitation, all COBRA and HIPAA forms and
notices; (ix) all coverage, nondiscrimination, top heavy and Code Section
415 tests performed with respect to such Employee Benefit Plan for the last
three years; and (x) the most recent registration statement, annual report
(Form 11-K) and prospectus prepared in connection with such Employee
Benefit Plan.
(c) With respect to each Employee Benefit Plan, except as set forth in
Section 3.13(c) of the Company Disclosure Schedule: (i) such Employee
Benefit Plan was properly and legally established; (ii) such Employee
Benefit Plan is, and at all times since inception has been, maintained,
administered, operated and funded in all material respects in accordance
with its terms and in compliance with all applicable requirements of all
applicable Laws, including, without limitation, ERISA and the Code; (iii)
the Company, each Company Subsidiary, each of their respective directors,
officers, employees, representatives and agents, and, to the Knowledge of
the Company, all other Persons (including, without limitation, all other
fiduciaries) have, at all times and in all material respects, properly
performed all of their duties and obligations (whether arising by operation
of law or by contract) under or with respect to such Employee Benefit Plan,
including, without limitation, all reporting, disclosure and notification
obligations; (iv) all returns, reports (including, without limitation, all
Form 5500 series annual reports, together with all schedules and audit
reports required with respect thereto), notices, statements and other
disclosures relating to such Employee Benefit Plan required to be filed
with any Governmental Entity or distributed to any Employee Benefit Plan
participant have been properly prepared and duly filed or distributed in a
timely manner; (v) none of the Company, any Company Subsidiary, any of
their respective directors, officers, employees, representatives or agents,
or, to the Knowledge of the Company, any other fiduciary of such Employee
Benefit Plan has engaged in any transaction or acted or failed to act in a
manner that violates the fiduciary requirements of ERISA or any other
applicable Law; (vi) no transaction or event has occurred or is threatened
or about to occur (including any of the transactions contemplated in or by
this Agreement) that
constitutes or could constitute a prohibited transaction under Section 406
or 407 of ERISA or under Section 4975 of the Code for which an exemption is
not available; and (vii) neither the Company nor any Company Subsidiary has
incurred, and there exists no condition or set of circumstances in
connection with which the Company, any Company Subsidiary, the Surviving
Corporation or Parent could incur, directly or indirectly, any material
liability or expense (except for routine contributions and benefit
payments) under ERISA, the Code or any other applicable Law, or pursuant to
any indemnification or similar agreement, with respect to such Employee
Benefit Plan.
(d) Except as set forth in Section 3.13(d) of the Company Disclosure
Schedule, each Employee Benefit Plan that is intended to be qualified under
Section 401(a) of the Code is so qualified and its related trust and/or
group annuity contract is exempt from taxation under Section 501(a) of the
Code. Each such Employee Benefit Plan (i) is the subject of an unrevoked
favorable determination letter from the IRS with respect to such Employee
Benefit Plan's qualified status under the Code, as amended by that
legislation commonly referred to as "GUST" and "EGTRRA," and all subsequent
legislation, or (ii) has remaining a period of time under the Code or
applicable Treasury regulations or IRS pronouncements in which to request,
and make any amendments necessary to obtain, such a letter from the IRS.
Except as set forth in Section 3.13(d) of the Company Disclosure Schedule,
nothing has occurred, or is reasonably expected by the Company or any
Company Subsidiary to occur, that could adversely affect the qualification
or exemption of any such Employee Benefit Plan or its related trust or
group annuity contract. No such Employee Benefit Plan is a "top-heavy
plan," as defined in Section 416 of the Code.
(e) Except as set forth in Section 3.13(e) of the Company Disclosure
Schedule, all contributions, premiums and other payments due or required to
be paid to (or with respect to) each Employee Benefit Plan have been timely
paid, or, if not yet due, have been accrued as a liability on the balance
sheet most recently filed with the SEC prior to the date of this Agreement.
All income taxes and wage taxes that are required by law to be withheld
from benefits derived under the Employee Benefit Plans have been properly
withheld and remitted to the proper depository.
(f) Except with respect to one another, neither the Company nor any
Company Subsidiary is, or has ever been, a member of (i) a controlled group
of corporations, within the meaning of Section 414(b) of the Code, (ii) a
group of trades or businesses under common control, within the meaning of
Section 414(c) of the Code, (iii) an affiliated service group, within the
meaning of Section 414(m) of the Code, or (iv) any other group of Persons
treated as a single employer under Section 414(o) of the Code.
(g) Neither the Company nor any Company Subsidiary sponsors, maintains
or contributes to, or has ever sponsored, maintained or contributed to (or
been obligated to sponsor, maintain or contribute to), (i) a multiemployer
plan, as defined in Section 3(37) or 4001(a)(3) of ERISA, (ii) a multiple
employer plan within the meaning of Section 4063 or 4064 of ERISA or
Section 413 of the Code, (iii) an employee benefit plan that is subject to
Section 302 of ERISA, Title IV of ERISA or Section 412 of the
Code, or (iv) a "multiple employer welfare arrangement," as defined in
Section 3(40) of ERISA.
(h) None of the Company, any Company Subsidiary or any Employee
Benefit Plan provides or has any obligation to provide (or contribute
toward the cost of) post-employment or post-termination benefits of any
kind, including, without limitation, death and medical benefits, with
respect to any current or former officer, employee, agent, director or
independent contractor of the Company or any Company Subsidiary, other than
(i) continuation coverage mandated by Sections 601 through 608 of ERISA and
Section 4980B(f) of the Code or other applicable Law that is paid for
solely by the relevant individual, (ii) retirement benefits under any
Employee Benefit Plan that is qualified under Section 401(a) of the Code,
and (iii) deferred compensation that is accrued as a current liability on
the balance sheet most recently filed with the SEC prior to the date of
this Agreement.
(i) Except as set forth in Section 3.13(i) of the Company Disclosure
Schedule, there are no actions, suits or claims (other than routine claims
for benefits) pending or, to the Knowledge of the Company, threatened with
respect to (or against the assets of) any Employee Benefit Plan, nor, to
the Knowledge of the Company, is there a basis for any such action, suit or
claim. Except as set forth in Section 3.13(i) of the Company Disclosure
Schedule, no Employee Benefit Plan is currently under investigation, audit
or review, directly or indirectly, by any Governmental Entity, and, to the
Knowledge of the Company, no such action is contemplated or under
consideration by any Governmental Entity.
(j) Except as set forth in Section 3.13(j) of the Company Disclosure
Schedule, neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated by this Agreement (either
alone or upon the occurrence of any additional or subsequent event(s)) will
(i) entitle any individual to severance pay, unemployment compensation or
any other payment from the Company, any Company Subsidiary, the Surviving
Corporation, Parent or any Employee Benefit Plan, (ii) otherwise increase
the amount of compensation due to any individual or forgive indebtedness
owed by any individual, (iii) result in any benefit or right becoming
established or increased, or accelerate the time of payment or vesting of
any benefit, under any Employee Benefit Plan, or (iv) require the Company,
any Company Subsidiary, the Surviving Corporation or Parent to transfer or
set aside any assets to fund or otherwise provide for any benefits for any
individual. Section 3.13(j) of the Company Disclosure Schedule sets forth
all payments, benefits, acceleration provisions and other rights to which
an employee, director, consultant, or former employer, director or
consultant may become entitled upon his or her termination in connection
with or subsequent to the consummation of the transactions contemplated by
this Agreement.
(k) No "leased employee," as defined in Section 414(n) of the Code,
performs, or has ever performed, services for the Company or any Company
Subsidiary.
3.14. No Excess Parachute Payments.
-----------------------------
No amount required to be paid (whether in cash or property or the
vesting of property) in connection with any of the transactions contemplated by
this Agreement to any employee, officer or director of the Company or any of its
affiliates who is a "disqualified individual" (as such term is defined in
proposed Treasury Regulation Section 1.280G-1) under any employment, severance
or termination agreement, other compensation arrangement or Employee Benefit
Plan currently in effect or in effect as of the Closing Date is reasonably
expected to be characterized as an "excess parachute payment" (as such term is
defined in Section 280G(b)(1) of the Code).
3.15. Employees.
----------
(a) Section 3.15(a) of the Company Disclosure Schedule sets forth (i)
all Company and Company Subsidiary employees, as well as independent
contractors and leased employees, as of the date hereof, including their
respective name, job title or function, and location, as well as a true,
correct and complete listing of the current salary or wage, incentive pay
and bonuses, accrued vacation, and the current status (as to leave or
disability pay status, leave eligibility status, full time or part time,
exempt or nonexempt, temporary or permanent status) of all Company and
Company Subsidiary employees; (ii) the names of all former officers of the
Company or of any Company Subsidiary whose employment with the Company or
such Company Subsidiary has terminated either voluntarily or involuntarily
during the preceding 12-month period; and (iii) the names of the current
officers (with all positions and titles indicated) and directors of the
Company and of each Company Subsidiary. All current and former employees,
independent contractors and leased employees have been properly classified
as such by the Company or the Company Subsidiaries.
(b) The Company and the Company Subsidiaries have complied in all
material respects with all Laws relating to the employment of labor,
including provisions thereof relating to wages, hours, equal opportunity,
workers' compensation, unemployment compensation, collective bargaining and
the payment of social security and other taxes.
(c) Except as set forth in Section 3.15(c) of the Company Disclosure
Schedule, neither the Company nor any of the Company Subsidiaries has labor
relations problems or employment-related complaints or charges pending or,
to the Knowledge of the Company, threatened or reasonably expected to arise
against the Company or the Subsidiaries with the Equal Employment
Opportunity Commission, Department of Labor, or any other comparable state
or local agency and the Company's and Subsidiaries' labor relations are
satisfactory.
(d) There are no strikes, concerted slowdowns, concerted work
stoppages, lockouts or, to the Knowledge of the Company, any threats
thereof, by or with respect to any employees of the Company or the Company
Subsidiaries.
(e) There are no workers' compensation claims pending against the
Company or the Company Subsidiaries nor, to the Knowledge of the Company,
are there any facts
that would give rise to such a claim or claims not covered by workers'
compensation insurance.
(f) To the Knowledge of the Company, no employee, independent
contractor or leased employee of the Company or the Company Subsidiaries is
subject to any secrecy or noncompetition agreement or any other agreement
or restriction of any kind that would impede the ability of such employee
to carry out fully the activities currently performed by such employee in
furtherance of the business of the Company or the Company Subsidiaries.
3.16. Property and Leases.
--------------------
(a) The Company and the Company Subsidiaries have sufficient title or
leasehold interests to all their tangible properties and assets to conduct
their respective businesses as currently conducted. Neither the Company nor
any Company Subsidiary owns any real property.
(b) Section 3.16(b) of the Company Disclosure Schedule lists all
leases for real or material personal property to which the Company or any
Company Subsidiary is a party and includes the termination date for such
leases and the amount of annual payments under the leases. All leases of
real property leased for the use or benefit of the Company or any Company
Subsidiary to which the Company or any Company Subsidiary is a party, and
all amendments and modifications thereto are in full force and effect, and
there exists no material default under any such lease by the Company or any
Company Subsidiary, nor any event which with notice or lapse of time or
both would constitute a default thereunder by the Company or any Company
Subsidiary, which would permit any such lease to be terminated by the other
party thereto. No consent, waiver, approval or authorization is required
under any lease for real or material personal property to which the Company
or any Company subsidiary is a party as a result of the execution of this
Agreement or the consummation of the transactions contemplated hereby.
3.17. Intellectual Property Rights.
-----------------------------
(a) Section 3.17(a) of the Company Disclosure Schedule lists all
Company Intellectual Property that is registered with U.S. Patent and
Trademark Office or a corresponding foreign governmental or public
authority and that: (i) is owned by, licensed to or otherwise controlled by
the Company and the Company Subsidiaries; or (ii) is used in, developed for
use in, or necessary to the conduct of the business of the Company and the
Company Subsidiaries as it is currently conducted or as it is contemplated
to be conducted. Section 3.17(a) of the Company Disclosure Schedule also
lists all Company Intellectual Property that has been licensed to or from
third parties or the public (in the case of open source software). The
Company has delivered or made available to the Parent complete and accurate
copies of correspondence, litigation documents, legal opinions, agreements,
file histories and office actions relating to the patents and patent
application listed on Section 3.17(a) of the Company Disclosure Schedule.
Each item of Company Intellectual Property owned or used or contemplated to
be used by the Company or the Company Subsidiaries immediately prior to the
Effective Time hereunder shall be owned or available for use by the Parent
or its subsidiaries on identical terms and conditions immediately after the
Effective Time.
(b) The Company and the Company Subsidiaries own, free and clear of
any Encumbrance, other than pursuant to the license agreements or other
contracts to which the Company is a party, and possess all right, title and
interest, or hold a valid license, in and to all Company Intellectual
Property, and have taken all reasonable action to protect the Company
Intellectual Property. To the Knowledge of the Company, all patents
included in the Company Intellectual Property are valid and enforceable. To
the Knowledge of the Company, the Company Intellectual Property owned or
licensed by the Company is sufficient for the conduct of the business of
the Company and the Company Subsidiaries as it is currently conducted and
as it is currently contemplated to be conducted. There are no royalties,
fees, honoraria or other payments payable by the Company or any of the
Company Subsidiaries to any Person by reason of the ownership, development,
modification, use, license, sublicense, sale, distribution or other
disposition of the Company Intellectual Property other than as set forth in
Section 3.17(b) of the Company Disclosure Schedule. The Company and the
Company Subsidiaries have taken all reasonable security measures to protect
the secrecy, confidentiality and value of the Company Intellectual
Property.
(c) Section 3.17(c) of the Company Disclosure Schedule lists the
Internet domain names included in the Company Intellectual Property. The
Company or one of the Company Subsidiaries is the registrant and sole legal
and beneficial owner of the Internet domain names included in the Company
Intellectual Property, free and clear of any Encumbrance. The Company or
one of the Company Subsidiaries is the registered owner of the trademarks
underlying each of the domain names included in the Company Intellectual
Property. The Company is not aware of any pending or threatened actions,
suits, claims, litigation or proceedings relating to the domain names
included in the Company Intellectual Property. The Company has operated the
websites identified in Section 3.17(c) of the Company Disclosure Schedule.
(d) Except as set forth in Section 3.17(d) of the Company Disclosure
Schedule, all personnel, including employees, agents, consultants and
contractors, who have contributed to or participated in the conception or
development, or both, of the Company Intellectual Property on behalf of the
Company or any of the Company Subsidiaries and all officers and technical
employees of the Company or the Company Subsidiaries either (i) have been a
party to "work-for-hire" arrangements or agreements with the Company or one
or more of the Company Subsidiaries in accordance with applicable Law that
has accorded the Company or the Company Subsidiaries effective and
exclusive ownership of all Intellectual Property thereby arising, or (ii)
have executed appropriate instruments of assignment in favor of the Company
or one or more the Company Subsidiaries as assignee that have conveyed to
the Company or one or more of the Company Subsidiaries effective and
exclusive ownership of all Intellectual Property arising thereby.
(e) To the Knowledge of the Company, the use of the Company
Intellectual Property in the conduct of the Company's and the Company
Subsidiaries' businesses has not infringed, misappropriated or conflicted
with and does not and will not infringe, misappropriate or conflict with
any Intellectual Property right of any other Person, nor has the Company or
any Company Subsidiary received any notice (written or oral) of any
infringement, misappropriation or violation by the Company or any Company
Subsidiary of any Intellectual Property right of any third party. Except in
connection with litigation initiated by the Company to enforce its rights
in the Company Intellectual Property disclosed in Section 3.17(e) of the
Company Disclosure Schedule, no claim (written or oral) by any Person
contesting the validity of any Company Intellectual Property has been made,
is currently outstanding or, to the Knowledge of the Company, is
threatened. To the Knowledge of the Company, no Person is infringing any
Intellectual Property right of the Company or any Company Subsidiary.
(f) For purposes of this Section 3.17, the term "Knowledge" shall not
include knowledge that could have been possessed by the Company if it had
performed a right to use, clearance or freedom to operate search concerning
the Intellectual Property rights of the Company, any Company Subsidiary or
any other Person, unless the Company otherwise possesses such Knowledge.
3.18. Taxes. ------ (a) The Company and each Company Subsidiary (i)
have properly prepared and timely filed all income and similar Tax Returns
and all other material Tax Returns required to be filed by or with respect
to the Company and each Company Subsidiary (taking into account any
extension of time to file); (ii) paid or accrued to the extent required by
GAAP in the financial statement included in the Company SEC Reports (other
than a reserve for deferred taxes established to reflect timing differences
between book and taxable income pursuant to Statement of Financial
Accounting Standards No. 109) all Taxes (whether or not shown to be due on
such Tax Returns); and (iii) paid or accrued in the financial statement
included in the Company SEC Reports all Taxes for which a notice of
assessment or collection has been received by the Company or any Company
Subsidiary (other than those being contested or which the Company intends
to contest in good faith by appropriate proceedings). All such Tax Returns
are true, correct and complete in all material respects and have been
prepared in accordance with applicable Law in all material respects. There
are no Encumbrances for Taxes (other than Taxes not yet due and payable) on
any of the assets of the Company or any of its subsidiaries.
(b) The Company and each Company Subsidiary have withheld or collected
and paid over to appropriate Governmental Entities (or are properly holding
for such payment) all Taxes required by Law to be withheld or collected by
them in connection with amounts paid or owing to any Person.
(c) Except as set forth in Section 3.18(c) of the Company Disclosure
Schedule, no dispute or claim concerning any Tax liability of the Company
or any Company Subsidiary has been proposed or claimed in writing or, to
the Knowledge of the
Company, threatened by any authority, including a claim that the Company or
any Company Subsidiary is subject to Tax in a jurisdiction where it does
not currently file a Tax Return. The Company has made available to the
Parent correct and complete copies of all income Tax Returns and material
non-income Tax Returns for Taxable years for which the applicable statute
of limitations has not expired, and all examination reports, and statements
of deficiencies, if any, assessed against or agreed to by the Company and
any Company Subsidiary.
(d) Neither the Company nor any of the Company Subsidiaries has waived
any statute of limitations in respect of Taxes or agreed to any extension
of time with respect to a Tax assessment or deficiency, which is currently
effective. No power of attorney that currently is in effect has been
granted by the Company or any of the Company Subsidiaries with respect to
any Tax matter.
(e) Neither the Company nor any of the Company Subsidiaries has ever
been a United States real property holding corporation within the meaning
of Section 897(c)(1)(A)(ii) of the Code. Neither the Company nor any of the
Company Subsidiaries is a party to any Tax allocation, indemnity, sharing
or similar agreement (excluding any lease or similar agreement to the
extent it provides for the payment of property taxes by the lessee or
similar user of property) that will survive the Closing. Neither the
Company nor any of the Company Subsidiaries (i) has been a member of any
affiliated, consolidated, combined, unitary or similar group (other than
the group, the common parent of which is the Company) that filed or was
required to file a consolidated, combined, unitary or similar Tax Return,
or (ii) has or will have any liability for the Taxes (excluding any
contractual obligation to pay property taxes as a lessee or similar user of
property) of any Person (other than the Company and any of the Company
Subsidiaries that is currently a member of the Company's affiliated group
filing a consolidated federal income Tax Return) under Treas. Reg. Section
1.1502-6 (or any similar provision of any other Law), as a transferee or
successor, by Contract, assumption, transferee liability, operation of Law
or otherwise.
(f) As of the date of the most recent financial statements included in
the Company SEC Documents, the unpaid Taxes of the Company and the Company
Subsidiaries did not exceed the liability for Taxes (other than any
allowance for deferred Taxes established to reflect timing differences
between book and taxable income pursuant to Statement of Financial
Accounting Standards No. 109) set forth on the face of such financial
statements, and neither the Company nor any of the Company Subsidiaries has
any liability for unpaid Taxes accruing after the date of such financial
statements, except for Taxes arising in the ordinary course of business
subsequent thereto.
(g) The Company and each of the Company Subsidiaries has disclosed on
its Tax Returns any Tax reporting position taken in any Tax Return which
reasonably could result in the imposition of penalties under Section 6662
of the Code or any comparable provisions of state, local or foreign Law.
(h) Neither the Company nor any of the Company Subsidiaries has
consummated, has participated in, or is currently participating in any
transaction which
was or is a "Tax shelter" transaction as defined in Sections 6662, 6011 or
6111 (before amendment by the American Jobs Creation Act of 2004) of the
Code or the treasury regulations promulgated thereunder or which was or is
a "Listed Transaction" or a "Reportable Transaction" as those terms are
defined in the Code and the treasury regulations thereunder.
(i) Neither the Company nor any of the Company Subsidiaries is
required to include in income, or exclude any item of deduction from,
Taxable income for any Taxable period ending after the Closing Date by
reason of any (i) change in accounting method for a Taxable period ending
on or prior to the Closing Date (nor does the Company or any of the Company
Subsidiaries have any Knowledge that the Internal Revenue Service (or other
Governmental Entity) has proposed or is considering proposing, any such
change), (ii) "closing agreement" described in Section 7121 of the Code (or
any similar provision of any other Law), (iii) installment sale or open
transaction disposition made on or prior to the Closing, or (iv) prepaid
amount received on or prior to the Closing .
(j) Neither the Company nor any of the Company Subsidiaries has made
any payment or payments, is obligated to make any payment or payments, or
is a party to any Contract (or participating employer in any Company Plans)
that, individually or collectively, could give rise to the payment of any
amount (whether in cash or property, including Company Common Stock) as a
result of the Merger that may not be deductible pursuant to the terms of
Section 162(m) or 280G of the Code.
(k) Except as set forth in Section 3.18(k) of the Company Disclosure
Schedule, neither the Company nor any of the Company Subsidiaries is
involved in, subject to, or a party to any joint venture, partnership,
limited liability company agreement or other arrangement that is treated as
a "partnership" for federal, state, local or foreign income Tax purposes.
Neither the Company nor any Company Subsidiary owns an entity that is
treated as "disregarded as an entity separate from its owner" pursuant to
Section 301.7701-3 of the treasury regulations.
(l) Neither the Company nor any of the Company Subsidiaries has been
either a "distributing corporation" or a "controlled corporation" (within
the meaning of Section 355(a)(1)(A) of the Code) in a distribution of stock
qualifying for tax-free treatment under Section 355 of the Code (i) in the
two years prior to the date of this Agreement or (ii) in a distribution
that could otherwise constitute part of a "plan" or "series of related
transactions" (within the meaning of Section 355(e) of the Code) in
conjunction with the Merger.
(m) Except as set forth in Section 3.18(m) of the Company Disclosure
Schedule, there is currently no limitation on the utilization of the net
operating losses, built-in losses, capital losses, Tax credits or other
similar items of the Company under (i) Section 382 of the Code, (ii)
Section 383 of the Code, (iii) Section 384 of the Code, and (iv) Section
1502 of the Code and treasury regulations promulgated thereunder. Neither
the Company nor any of the Company Subsidiaries is or has been a party to
any
transaction where a deferred intercompany gain was generated under Section
1502 of the Code and the treasury regulations promulgated thereunder.
3.19. Material Contracts.
-------------------
(a) Except as otherwise disclosed in Sections 3.13(a), 3.16 or 3.19(a)
of the Company Disclosure Schedule, neither the Company nor any of its
subsidiaries is a party to or subject to:
(i) any Contract pursuant to which the Company or any Company
Subsidiary has granted to, or obtained from, a third party a license
to any Company Intellectual Property;
(ii) any Contract pursuant to which any agent, sales
representative, distributor or other third party markets, licenses or
sells any Company Product or any Contract that provides for an
exclusive relationship with respect to any Company Product;
(iii) any union Contract, or any employment, consulting,
severance, termination, or indemnification Contract providing for
future payments, written or oral, with any current or former officer
or director or any other Contract with an officer or director;
(iv) any joint venture Contract or similar arrangement or any
other agreement not in the ordinary course of business;
(v) any Contract with a stockholder or other Contract relating to
any equity ownership or profit interest with the Company, the Company
Subsidiaries or otherwise;
(vi) any Contract involving or reasonably expected to involve
revenues or costs (including capital expenditures) to the Company or
otherwise involve payments or investment by the Company in excess of
$100,000 which has not been terminated or performed in its entirety by
the Company or any Company Subsidiary and not renewed;
(vii) any Contract for the disposition or acquisition of any
property or assets in excess of $10,000 and not made in the ordinary
course of business;
(viii) any Contract of the Company or any Company Subsidiary
relating to the borrowing of money or an extension of credit;
(ix) any Contract that provides for an express non-competition
covenant with any person or in any geographic area and which limits
the ability of the Company to compete in its current business lines or
otherwise restricts the Company or the Company Subsidiaries from
engaging in any line of business or to market or sell any products or
services; or
(x) any other Contract that is material to the Company or any
Company Subsidiary.
(b) The agreements listed in Sections 3.13(a), 3.16 and 3.19(a) of the
Company Disclosure Schedule are referred to as the "Company Material
Agreements." All Company Material Agreements are valid and binding
agreements of the Company or a Company Subsidiary and are in full force and
effect and shall remain in full force and effect immediately following
consummation of the transactions contemplated by this Agreement, subject to
rules of Law governing bankruptcy, specific performance, injunctive relief
or other equitable remedies. Neither the Company nor any Company Subsidiary
nor, to the Knowledge of the Company, any other party thereto, is in
default in any material respect under the terms of any Company Material
Agreement.
3.20. Relations with Customers.
-------------------------
Except as set forth in Section 3.20 of the Company Disclosure Schedule,
neither the Company nor any Company Subsidiary has received any information from
any customer that accounted for more than 5% of the revenues of the Company and
its Subsidiaries during the last full fiscal year to the effect that such
customer intends to materially decrease the amount of business it does with the
businesses of the Company or any Company Subsidiary either prior to or following
the Merger. Section 3.20 of the Company Disclosure Schedule lists the top twenty
(20) customers of Company Products as measured by consolidated sales revenue
earned by the Company for the twelve month period ended December 31, 2004.
3.21. Environmental Matters.
----------------------
Except as set forth in Section 3.21 of the Company Disclosure Schedule, the
Company and the Company Subsidiaries: (a) are in compliance in all material
respects with all applicable Environmental Laws (which compliance includes, but
is not limited to, the possession by the Company and the Company Subsidiaries of
all Permits required under applicable Environmental Laws, and compliance with
the terms and conditions thereof); (b) have not received any communication
(written or, to the Knowledge of the Company, oral) from a Governmental Entity
or third party alleging that the Company is not in compliance with, or has any
liability under, any Environmental Law; (c) have not owned or operated any
property that is contaminated with any Hazardous Material which may be expected
to require remediation under any Environmental Law; (d) are not subject to
liability for any Environmental Release, disposal or contamination (whether
on-site or, to the Knowledge of the Company, off-site) of any Hazardous
Material; (e) have not received any claims (written or, to the Knowledge of the
Company, oral), and has no Knowledge of any potential claims, that the Company
or any Company Subsidiary may be liable under any Environmental Law; and (f) are
not subject to any other circumstances in connection with any Environmental Law
that could reasonably be expected to have a Company Material Adverse Effect. The
Company's accrual in the financial statements included in the Company SEC
Reports plus insurance proceeds payable for such matter under insurance coverage
currently in effect are reasonably sufficient to pay all costs and expenses
arising out of or related to the matters disclosed in Section 3.21 of the
Company Disclosure Schedule.
3.22. Interested Party Transactions.
------------------------------
Since January 1, 2002, except as described in the Company SEC Reports
or as set forth in Section 3.22 of the Company Disclosure Schedule: (a) no event
has occurred that would be required to be reported by the Company pursuant to
Item 404 of Regulation S-K promulgated by the SEC; and (b) there are no existing
contracts, agreements, business dealings, arrangements or other understandings
between the Company or any Company Subsidiary and any Related Party. There are
no assets of any Related Party that are used in or necessary to the conduct of
the business of the Company or any Company Subsidiary.
3.23. Change in Control.
------------------
Except as set forth in Section 3.23 of the Company Disclosure Schedule,
the execution and delivery of this Agreement and the Agreements to Facilitate
Merger and the consummation of the transactions contemplated hereby and thereby
do not and shall not, either alone or in combination with some other event (such
as termination of employment) (a) result in any payment (including severance,
unemployment compensation, Tax gross-up, bonus or otherwise) becoming due to any
current or former director, employee or independent contractor of the Company or
any of its subsidiaries, from the Company or any of its subsidiaries under any
Company Stock Plan, any Employee Benefit Plan, agreement or otherwise, (b)
materially increase any benefits otherwise payable under any Company Stock Plan,
any Employee Benefit Plan, agreement or otherwise or (c) result in the
acceleration of the time of payment, exercise or vesting of any such benefits.
3.24. Fairness Opinion.
-----------------
The Company has received an opinion from Wachovia Securities, financial
advisor to the Company (such opinion to be promptly confirmed in writing and
dated as of the date hereof), to the effect that, subject to the qualifications
and limitations stated therein, the merger consideration to be received by the
holders of shares of Company Common Stock pursuant to this Agreement is fair to
such holders from a financial point of view. A copy of such written opinion
shall be delivered to the Parent promptly following receipt of such written
opinion from Wachovia Securities. As of the time of execution of this Agreement,
such opinion has not been withdrawn, revoked or modified.
3.25. No Finders.
-----------
Except for the fees payable to Wachovia Securities as set forth in
Section 3.25 of the Company Disclosure Schedule, the Company has not incurred
any brokers', finders' or any similar fee in connection with the transactions
contemplated by this Agreement.
3.26. Disclosure.
-----------
No representation or warranty by the Company in this Agreement and no
statement contained in the Company Disclosure Schedule, contains any untrue
statement of a material fact or omits any material fact necessary to make the
statements herein or therein not misleading when taken together in light of the
circumstances in which they were made.
3.27. Tax Treatment.
--------------
Neither the Company nor any of its Affiliates has taken or agreed to
take any action, or is aware of any fact or circumstances, that would prevent
the Merger from qualifying as a reorganization within the meaning of Section 368
of the Code.
3.28. Rights Plan.
------------
That certain Stockholder Rights Plan, dated January 21, 1998, by and
between the Company and American Stock Transfer & Trust Company, as Rights Agent
(the "Rights Plan") has been amended (a copy of which amendment has been
provided to Parent prior to the date hereof), such that the execution of this
Agreement and the Agreement to Facilitate Merger and the consummation of the
transactions contemplated hereby and thereby, do not and will not on the date
hereof or as a result of the passage of time (i) result in any Person being
deemed to have become an Acquiring Person (as defined in the Rights Plan), (ii)
result in the ability of any Person to exercise any Rights (as defined in the
Rights Plan) under the Rights Plan, (iii) enable or require the Rights to
separate from the shares of Company Common Stock to which they are attached or
to be triggered or become exercisable, or (iv) enable the Company to exchange
any Rights for shares of Company Common Stock pursuant to the Rights Plan. No
Distribution Date or Triggering Event (as such terms are defined in the Rights
Plan) or similar event has occurred or will occur by reason of (a) the adoption,
approval, execution or delivery of this Agreement and the Agreements to
Facilitate Merger, (b) the public announcement of such adoption, approval,
execution or delivery, or (c) the consummation of the Merger or any of the other
transactions contemplated by this Agreement.
Article 4.
REPRESENTATIONS AND WARRANTIES OF
THE PARENT AND MERGER SUB
As a material inducement to the Company to enter into this Agreement,
with the understanding that the Company shall be relying thereon in consummating
the transactions contemplated hereunder, the Parent and Merger Sub hereby
represent and warrant to the Company that:
4.1. Organization and Qualification.
-------------------------------
Each of the Parent and Merger Sub is a corporation duly organized and
validly existing under the laws of the state of its incorporation and has all
requisite corporate power and authority to own, lease, and operate its
properties and to carry on its business as now being conducted. Each of the
Parent and Merger Sub is duly qualified and in good standing to do business in
each jurisdiction in which the property owned, leased, or operated by it or the
nature of the business conducted by it (a) makes such qualification necessary
and (b) where the failure to qualify could reasonably be expected to have a
Parent Material Adverse Effect.
4.2. Capitalization.
---------------
As of February 28, 2005, the authorized capital stock of the Parent
consists of (a) 150,000,000 shares of Parent Common Stock, of which there were
38,900,538 shares issued and
outstanding, and (b) 40,000,000 shares of preferred stock, no par value, of
which there were no shares issued and outstanding. The authorized capital stock
of Merger Sub consists of 1,000 shares of Merger Sub Common Stock, 100 of which
are issued and outstanding and owned by the Parent. All issued and outstanding
shares of Parent Common Stock and Merger Sub Common Stock are, and the shares of
Parent Common Stock to be issued and delivered in the Merger pursuant to Article
2 shall be, at the time of issuance and delivery, duly authorized, validly
issued, fully paid, nonassessable and free of preemptive rights. As of February
28, 2005, the Parent has no more than 7,800,000 shares of the Parent Common
Stock reserved for future issuance pursuant to employee or director benefit
plans (including those subject to outstanding options). Except as set forth
above or in the Parent SEC Reports, there are no preemptive or other outstanding
rights, options, warrants, conversion rights, stock appreciation rights,
redemption rights, repurchase rights, agreements, arrangements, calls,
commitments or rights of any kind that obligate the Parent to issue or sell any
shares of capital stock or other securities of the Parent or any securities or
obligations convertible or exchangeable into or exercisable for or giving any
Person a right to subscribe for or acquire, any securities of the Parent, and no
securities or obligations evidencing such rights are authorized, issued or
outstanding. The Parent does not have outstanding any bonds, debentures, notes
or other obligations the holders of which have the right to vote (or convertible
into or exercisable for securities having the right to vote) with the
stockholders of the Parent on any matter.
4.3. Parent SEC Reports; Financial Statements.
(a) The Parent has filed with the SEC, at or prior to the time due,
and has heretofore made available to the Company true and complete copies
of, all forms, reports, schedules, registration statements, definitive
proxy statements and other documents (together with all information
incorporated therein by reference, the "Parent SEC Reports") it filed or
was required to file with the SEC since January 1, 2002. As of their
respective dates, the Parent SEC Reports complied in all material respects
with all applicable requirements of the Exchange Act or the Securities Act,
as the case may be, and the rules and regulations of the SEC thereunder
applicable to the Parent SEC Reports. As of their respective dates and as
of the date any information from the Parent SEC Reports has been
incorporated by reference, the Parent SEC Reports did not contain any
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The Parent has provided to the Company copies of all comment
letters or other correspondence received by the Parent from the Staff of
the SEC since January 1, 2002 with respect to any Parent SEC Report or
otherwise and all responses to such comment letters or correspondence by or
on behalf of the Parent.
(b) To the extent required in connection with the Parent SEC Reports,
the Parent's Chief Executive Officer and Chief Financial Officer have
signed, and the Parent has furnished to the SEC, all necessary
certifications required by Sections 302 and 906 of the Xxxxxxxx-Xxxxx Act
of 2002. Such certifications contain no qualifications or exceptions to the
matters certified therein and have not been modified or withdrawn, and
neither the Parent nor any of its officers has received notice from any
Governmental Entity questioning or challenging the accuracy, completeness,
form or manner of filing or
submission of such certifications nor to the Parent's Knowledge is any such
notice or action threatened.
(c) Each of the financial statements of the Parent (including the
related notes) included or incorporated by reference in the Parent SEC
Reports (including any similar documents filed after the date of this
Agreement) comply as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC
with respect thereto, have been prepared in accordance with GAAP (except,
in the case of unaudited statements, as permitted by Form 10-Q or
Regulation S-X of the SEC) applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto) and fairly
present the consolidated financial position of the Parent and its
consolidated subsidiaries as of the dates thereof and the consolidated
results of their operations and cash flows for the periods then ended
(subject to normal year-end adjustments in the case of any unaudited
interim financial statements).
(d) The Parent has not been notified by its independent auditors or by
the staff of the SEC that such auditors or staff of the SEC, as the case
may be, are of the view that any financial statements included in any
registration statement filed by the Parent under the Securities Act or any
periodic or current report filed under the Exchange Act should be restated,
or that the Parent should modify its accounting in future periods in a
manner that could reasonably be expected to have a Parent Material Adverse
Effect.
4.4. Compliance with Laws.
All activities of the Parent and each subsidiary of the Parent have
been, and are currently being, conducted in all material respects in compliance
with all applicable Laws and Orders. To the Knowledge of the Parent, (a) no
investigation or review by any Governmental Entity with respect to the Parent is
pending or threatened or has been undertaken within the past five (5) years and
(b) no Governmental Entity has indicated an intention to conduct the same, in
each case that could reasonably be expected to have a Parent Material Adverse
Effect.
4.5. Registration Statement.
The Registration Statement and any amendments or supplements thereto
will comply in all material respects with the Securities Act, and none of the
information relating to the Parent or its Affiliates included or incorporated
therein or in any amendments or supplements thereto, or any schedules required
to be filed with the SEC in connection therewith, will, at the time the
Registration Statement becomes effective, at the time of the Company
Stockholders Meeting or at the Effective Time, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, or omit to state any
material fact required necessary to correct any statement made in any earlier
communication with respect to any proxy or approval for the Merger in connection
with which the Proxy Statement/Prospectus shall be mailed, which has become
false or misleading; provided, however, that no representation or warranty is
made by the Parent with respect to information supplied by the Company or any
Affiliate of the Company specifically for inclusion in the Registration
Statement.
4.6. Authorization and Enforceability.
Each of the Parent and Merger Sub has the requisite corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by the Parent and Merger Sub and the consummation of the transactions
contemplated hereby have been duly and validly authorized and approved by the
Boards of Directors of the Parent and Merger Sub and by the Parent as the sole
stockholder of Merger Sub, and no other corporate proceedings on the part of the
Parent and Merger Sub are necessary to authorize this Agreement or to consummate
the transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by each of the Parent and Merger Sub and constitutes the
valid and binding obligation of the Parent and Merger Sub, enforceable against
each of them in accordance with its terms, subject to rules of Law governing
bankruptcy, specific performance, injunctive relief, or other equitable
remedies.
4.7. Absence of Certain Changes or Events.
Except as contemplated hereby or as disclosed in the Parent SEC
Reports, since January 1, 2005, the Parent and its subsidiaries have conducted
their business in the ordinary course of business and consistent with past
practice and there has not been any change, effect, event, occurrence, state of
facts or development that, individually or in the aggregate, has had or could
reasonably be expected to have a Parent Material Adverse Effect.
4.8. Consents and Approvals.
The execution and delivery of this Agreement by the Parent and Merger
Sub and the consummation of the transactions contemplated hereby will not: (a)
violate any provision of the Certificate of Incorporation, Bylaws or other
governing document of the Parent and Merger Sub; (b) violate any Law or Order by
which the Parent or Merger Sub or any of their respective properties or assets
may be bound; or (c) result in any violation or breach of, or constitute (with
or without due notice or lapse of time or both) a default under, result in the
loss of any material benefit under, or give rise to any right of termination,
cancellation, increased payments, or acceleration under, or result in the
creation of any Encumbrance on any of the properties or assets of the Parent or
Merger Sub under, any of the terms, conditions, or provisions of any note, bond,
mortgage, indenture, license, franchise, permit, authorization, agreement, or
other instrument or obligation to which the Parent or Merger Sub is a party, or
by which it or any of its properties or assets may be bound, except where such
violation could not reasonably be expected to have, individually or in the
aggregate, a Parent Material Adverse Effect. No filing with or permit, consent,
or approval of any Governmental Entity is required by the Parent or Merger Sub
in connection with the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby, except for (i) any
applicable requirements of the Securities Act or the Exchange Act, (ii) the
filing and recordation of the Certificate of Merger as required by Delaware Law;
and (iii) applicable notices to Nasdaq.
4.9. Ownership and Interim Operations of Merger Sub.
Merger Sub is a direct, wholly owned subsidiary of the Parent. Merger
Sub was formed solely for the purpose of engaging in the transactions
contemplated by this Agreement and has
not engaged in any business activities or conducted any operations other than in
connection with the performance of its obligations hereunder.
4.10. Litigation.
There are no suits, actions or proceedings pending or, to the Knowledge
of the Parent or Merger Sub, threatened against or affecting the Parent or any
of its subsidiaries that could reasonably be expected to prevent, hinder or
delay the timely completion of the transaction contemplated by this Agreement or
that could be reasonably expected to have a Parent Material Adverse Effect.
Neither the Parent nor any of its subsidiaries is subject to any outstanding
Order that could reasonably be expected to prevent, hinder or delay the timely
completion of the transaction contemplated by this Agreement.
4.11. No Finders.
The Parent has not incurred any brokers', finders' or any similar fee
in connection with the transactions contemplated by this Agreement.
4.12. Tax Treatment.
Neither the Parent nor any of its Affiliates has taken or agreed to
take any action, or is aware of any fact or circumstances, that would prevent
the Merger from qualifying as a reorganization within the meaning of Section 368
of the Code.
4.13. Capital Resources.
The Parent has, and will have, sufficient cash or access to cash to pay
the aggregate Per Share Cash Consideration and cash in lieu of fractional shares
at such time and in such manner as contemplated by this Agreement.
Article 5.
COVENANTS AND AGREEMENTS
5.1. Conduct of Business of the Company.
Except as contemplated by this Agreement or to the extent that the
Parent otherwise consents in writing, which consent shall not be unreasonably
withheld, during the period from the date of this Agreement to the Effective
Time, the Company and each Company Subsidiary shall conduct their respective
operations according to their ordinary and usual course of business and
consistent with past practice, and the Company and each Company Subsidiary shall
use commercially reasonable efforts to preserve intact in all material respects
their respective business organizations, to maintain in all material respects
their present and planned business, to keep available in all material respects
the services of their respective officers and employees and to maintain in all
material respects satisfactory relationships with licensors, licensees,
suppliers, contractors, distributors, consultants, customers, and others having
business relationships with them. Without limiting the generality of the
foregoing, and except as otherwise expressly provided in or contemplated by this
Agreement or as set forth in Section 5.1 of the Company
Disclosure Schedule, prior to the Effective Time, neither the Company nor any
Company Subsidiary shall, without the prior written consent of the Parent:
(a) amend or otherwise change their Certificate of Incorporation or
Bylaws or other organizational documents;
(b) issue, sell, pledge, dispose of, grant or encumber, or authorize
the issuance, sale, pledge, disposition, grant or encumbrance of, (i) any
shares of capital stock of any class of the Company or any Company
Subsidiary, or any options, warrants, convertible securities or other
rights of any kind to acquire any shares of such capital stock, or any
other ownership interest (including, without limitation, any phantom
interest), of the Company or any Company Subsidiary (except for the
issuance of shares of Company Common Stock pursuant to the exercise of
presently outstanding Company Options) or (ii) any assets of the Company or
any Company Subsidiary, except for sales of inventory in the ordinary
course of business and in a manner consistent with past practice;
(c) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with respect
to any of its capital stock;
(d) reclassify, combine, split, subdivide or redeem, purchase or
otherwise acquire, directly or indirectly, any of its capital stock;
(e) acquire or agree to acquire (including, without limitation, by
merger, consolidation or acquisition of stock or assets) (i) any
corporation, partnership, limited liability company or other business
organization or any division thereof or, (ii) any material amount of assets
forming part of any such business organization or division;
(f) except for trade payables incurred in the ordinary course of
business and consistent with past practice, create, incur or assume any
indebtedness for borrowed money or issue any debt securities or assume,
guarantee or endorse, or otherwise as an accommodation become responsible
for, the obligations of any Person, or make any loans, advances or capital
contributions to, or investments in, any other Person, or create, incur or
assume any Encumbrance on any asset;
(g) authorize, make or agree to make any capital expenditure or
expenditures in excess of $15,000 individually or $50,000 in the aggregate;
(h) except as otherwise provided in this Agreement, (i) increase in
any manner the compensation of any of its directors, officers, employees,
or consultants, or accelerate the payment of any such compensation; (ii)
pay or accelerate or otherwise modify the payment, vesting, exercisability,
or other feature or requirement of any bonus, pension, retirement
allowance, severance, change of control, stock option, or other employee
benefit to any such director, officer, employee or consultant other than
pursuant to its current terms without any action by the Company; or (iii)
except as required by or applicable Law, commit itself to any additional or
increased pension, profit-sharing, bonus, incentive, deferred compensation,
group insurance, severance, change of control, retirement or other benefit
plan, agreement, or arrangement, or any employment or
consulting agreement, with or for the benefit of any person, or amend any
of such plans or any of such agreements in existence on the date hereof
(except any amendment required by Law or that would not materially increase
benefits under the relevant plan);
(i) alter or revise its accounting principles, procedures, methods or
practices in any material respect (including, without limitation,
procedures with respect to the payment of accounts payable and collection
of accounts receivable) except as required by applicable Law or regulation
or by a change in GAAP and concurred with by the Company's and the Parent's
independent public accountants;
(j) pay, discharge or satisfy any claim, liability or obligation
(absolute, accrued, asserted or unasserted, contingent or otherwise) in an
amount in excess of $50,000 in the aggregate, other than the payment,
discharge or satisfaction, in the ordinary course of business and
consistent with past practice, of liabilities reported in the Company's
latest balance sheet filed with the SEC prior to the date of this
Agreement, or subsequently incurred in the ordinary course of business and
consistent in all material respects with past practice;
(k) transfer or license to any person or entity or otherwise extend,
amend or modify in any material respect any rights to Company Intellectual
Property;
(l) modify, amend or terminate any Company Material Agreement or
waive, release or assign any material rights or claims thereunder;
(m) enter into any development services, licensing, distribution,
sales, sales representation or similar agreement or obligation with respect
to any material Company Intellectual Property or enter into any contract of
a character required to be disclosed by Section 3.18(a) other than such
agreements entered into in the ordinary course of business consistent with
past practices;
(n) remove or permit to be removed from any building, facility, or
real property any material equipment, fixture, vehicle, or other personal
property or parts thereof, except in the ordinary course of business
consistent with past practice;
(o) institute, settle, or compromise any claim, action, suit, or
proceeding pending or threatened by or against it, at law or in equity or
before any Governmental Entity or any nongovernmental self-regulatory
agency;
(p) file an amended Tax Return, enter into any closing agreement,
settle any Tax claim or assessment relating to the Company or any Company
Subsidiary, surrender any right to claim a refund or credit of Taxes,
consent to any extension or waiver of the limitation period applicable to
any Tax claim or assessment relating to the Company or any Company
Subsidiary, or take any other similar action, including making any election
with respect to any Taxes, relating to the filing or any Tax Return or the
payment of any Tax, if such amendment, agreement, settlement, surrender,
consent, election or other action would have the effect of materially
increasing the Tax liability of the Company or any Company Subsidiary or
materially decreasing any Tax attribute of the Company or any Company
Subsidiary at or after the Effective Time;
(q) take, or agree to commit to take, or fail to take any action that
would make any representation, warranty, covenant or agreement of the
Company contained herein inaccurate or breached such that the conditions in
Section 6.2(a) shall not be satisfied at, or as of any time prior to, the
Effective Time; or
(r) enter into, or publicly announce an intention to enter into, any
agreement or consent to do any of the foregoing actions set forth in this
Section 5.1.
5.2. No Solicitation.
(a) From and after the date hereof until the Effective Time or the
termination of this Agreement pursuant to Article 7, the Company shall not,
and shall not authorize or permit its Company Subsidiaries and their
respective officers, directors, employees, financial advisors, counsel,
representatives and agents (collectively, "Representatives") to, directly
or indirectly, (i) solicit, initiate, encourage or otherwise facilitate any
inquiry, offer, proposal or announcement that constitutes, or could be
reasonably expected to lead to, an Acquisition Proposal; (ii) enter into
any agreement or letter of intent regarding, approve, endorse or recommend,
an Acquisition Proposal (except for any confidentiality agreement, to the
extent provided below); or (iii) participate or engage in or encourage in
any way negotiations or discussions concerning, or provide any non-public
information to, any Person relating to, an Acquisition Proposal, or which
may reasonably be expected to lead to an Acquisition Proposal.
(b) Upon execution of this Agreement, the Company and its
Representatives shall, and shall cause all Company Subsidiaries and their
respective Representatives to, immediately terminate all discussions with
any Person (other than the Parent) concerning any Acquisition Proposal, and
shall request that such Persons promptly return any confidential
information furnished by the Company in connection with any Acquisition
Proposal. Other than as contemplated in this Agreement, the Company shall
not waive any provision of its Rights Plan or of any confidentiality,
standstill or similar agreement entered into with any Person regarding any
Acquisition Proposal, and prior to the Closing shall enforce all such
agreements in accordance with their terms.
(c) Notwithstanding the provisions of Section 5.2(a) and subject to
compliance with Section 5.2(b), this Agreement shall not prohibit the
Company's Board of Directors from, prior to obtaining the Company
Stockholder Approval, furnishing nonpublic information to or entering into
discussions or negotiations with, any Person that makes an unsolicited,
bona fide written Acquisition Proposal that the Company's Board of
Directors reasonably determines is likely to result in a Superior Proposal,
if, and only to the extent that:
(i) neither the Company nor its Representatives violated any of
the restrictions set forth in this Section 5.2;
(ii) the Company's Board of Directors, after consultation with
outside legal counsel and a financial advisor of nationally recognized
reputation, determines in good faith, by resolution duly adopted, that
such action is required
in order for the Company's Board of Directors to comply with its
fiduciary duties under applicable Law;
(iii) prior to first furnishing nonpublic information to, or
first entering into discussions and negotiations with, such Person
after the date hereof, the Company (A) provides written notice of at
least three (3) business days to the Parent to the effect that it
intends to furnish information to, or enter into discussions or
negotiations with, such Person, and naming and identifying the Person
making the Acquisition Proposal, and (B) receives from such Person an
executed confidentiality agreement with terms no less favorable to the
Company than the Confidentiality Agreement; and
(iv) the Company concurrently provides the Parent with all
non-public information to be provided to such Person that the Parent
has not previously received from the Company, the Company keeps the
Parent reasonably informed of the status and the material terms and
conditions and all other material developments with respect to any
such discussions or negotiations, and the Company provides the Parent
with copies of all material documents regarding such discussions and
negotiations.
(d) The Company shall notify the Parent, telephonically and in
writing, as promptly as practicable (and in any event, within 24 hours) if
it or any of its Representatives receives an Acquisition Proposal or any
inquiry reasonably likely to lead to an Acquisition Proposal or if any
discussions or negotiations are sought to be initiated or continued with
the Company or its Representatives concerning an Acquisition Proposal, and
such notification shall contain, in writing, the name of the Person
involved and the material terms and conditions of such an Acquisition
Proposal.
(e) Subject to Section 5.2(f), unless and until this Agreement has
been terminated in accordance with Article 7, the Company shall not
withdraw or modify, or propose publicly to withdraw or modify, in a manner
adverse to the Parent or Merger Sub, the approval or recommendation of the
Merger as set forth in Section 5.3(a); or approve or recommend, or propose
publicly to approve or recommend, any Acquisition Proposal.
(f) Notwithstanding the foregoing, in the event that, prior to
obtaining the Company Stockholder Approval, the Company's Board of
Directors receives a Superior Proposal that has not been withdrawn, the
Company's Board of Directors may, if it determines in good faith, by
resolution duly adopted after consultation with outside legal counsel and a
financial advisor of nationally recognized reputation, that such action is
required in order for the Company's Board of Directors to comply with its
fiduciary duties under applicable Law, withdraw or modify the approval or
recommendation of the Merger, approve or recommend such Superior Proposal
and terminate this Agreement as permitted pursuant to the terms of this
Section 7.1(f) (and, concurrently with or immediately after such
termination, cause the Company to enter into a definitive agreement with
respect to such Superior Proposal); provided that:
(i) the Company notifies the Parent in writing that it intends to
take such action, which notice must identify the party making such
proposal, set forth the material terms and conditions of such
proposal, and have attached to it the most current version of any such
written agreement;
(ii) Parent shall not have proposed, within three (3) business
days after receipt of such notice from the Company, to amend this
Agreement to provide for terms as favorable as or superior to those of
the Superior Proposal;
(iii) provided the Parent has submitted a proposal to amend this
Agreement as contemplated by subparagraph (ii) above, (A) for a period
of three (3) business days after receipt of such proposal, the Company
shall have reasonably considered and discussed in good faith all
proposals submitted by the Parent and, without limiting the foregoing,
met with, and caused its financial advisors and legal advisors to meet
with, the Parent and its advisors from time to time as reasonably
requested by the Parent to reasonably consider and discuss in good
faith the Parent's proposals; and (B) the Company's Board of Directors
in good faith determines, after consultation with its financial and
legal advisors, that after taking into account any amendments to this
Agreement proposed by the Parent as of the end of such three (3)
business day negotiation, the Parent's proposal is not at least as
favorable to the stockholders of the Company as the Superior Proposal;
and
(iv) the Company did not violate the restrictions of this Section
5.2.
Without limiting any other rights of the Parent and Merger Sub
under this Agreement in respect of any such action, any withdrawal or
modification by the Company of the approval or recommendations of the
Merger or any termination of this Agreement shall not have any effect
on the approvals of, and other actions referred to herein for the
purpose of causing Section 203 of Delaware Law and any other takeover
statute to be inapplicable to, this Agreement and the transactions
contemplated hereby, which approvals and actions are irrevocable.
(g) Nothing contained in this Section 5.2 shall prohibit the Company
or its Board of Directors from taking and disclosing to the Company's
stockholders a position with respect to a tender offer by a third party
pursuant to Rules 14d-9 and 14e-2(a) promulgated under the Exchange Act or
from taking any action or making any disclosure required by applicable Law;
provided that the content of the disclosure complies with this Section 5.2.
(h) Any violation of the restrictions in this Section 5.2 by a
Representative shall be deemed a breach of this Section 5.2 by the Company.
5.3. Proxy Statement; Registration Statement; Stockholders Meeting.
(a) The Company shall take all lawful action necessary to (i) cause a
special meeting of its stockholders (such meeting or any adjournment
thereof, the "Company Stockholders Meeting") to be duly called and held as
soon as practicable (and in any
event within 45 days) following the date on which the Registration
Statement becomes effective for the purpose of voting on the approval and
adoption of the agreement of merger (within the meaning of Section 251 of
Delaware Law) contained in this Agreement and the Merger (the "Company
Stockholder Approval"), and (ii) solicit proxies from its stockholders to
obtain the Company Stockholder Approval for such approval and adoption.
Except as permitted by Section 5.2(f), the Company's Board of Directors
shall unanimously recommend approval and adoption of the agreement of
merger (within the meaning of Section 251 of Delaware Law) contained in
this Agreement and the Merger by the Company's stockholders and state such
recommendation in the Proxy/Prospectus. Unless this Agreement is previously
terminated in accordance with Article 7, the Company shall submit this
Agreement to its stockholders at the Company Stockholders Meeting even if
the Company's Board of Directors determines at any time after the date
hereof that it is no longer advisable or recommends that the Company
stockholders reject it (and not postpone or adjourn such meeting or the
vote by the Company's stockholders upon this Agreement and the Merger to
another date without the Parent's approval). In accordance therewith, the
Company shall, with the cooperation of the Parent, prepare and file, as
soon as reasonably practicable, a Proxy Statement/Prospectus. The Company
shall use all reasonable efforts to cause the definitive Proxy
Statement/Prospectus to be mailed to the stockholders of the Company, as
soon as reasonably practicable following its effectiveness, with the date
of mailing as mutually determined by the Company and the Parent.
(b) The Parent shall, with the cooperation of the Company, prepare and
file, as soon as reasonably practicable, a registration statement under the
Securities Act registering the shares of Parent Common Stock to be issued
in the Merger (the "Registration Statement"), which Registration Statement
shall include the Proxy Statement/Prospectus. The Parent will use all
reasonable efforts to have the Registration Statement declared effective by
the SEC as promptly thereafter as practicable. The Parent shall also take
any action required to be taken under state blue sky or securities laws in
connection with the issuance of Parent Common Stock pursuant to the Merger.
The Company shall furnish to the Parent all information concerning the
Company and the Company Subsidiaries and the holders of its capital stock,
and shall take such other action and otherwise cooperate, as the Parent may
reasonably request in connection with any such action.
(c) The Parent shall notify the Company promptly of the receipt of the
comments of the SEC with respect to the transactions contemplated hereby
and of any request by the SEC for amendments or supplements to the
Registration Statement and shall supply the Company with copies of all
material correspondence with the SEC with respect to the transactions
contemplated hereby.
(d) If at any time prior to the Effective Time, any event should occur
relating to the Company, any Company Subsidiary, or the Company's officers
or directors that is required to be described in an amendment or supplement
to the definitive Proxy Statement/Prospectus or the Registration Statement,
the Company shall promptly inform the Parent. If at any time prior to the
Effective Time, any event shall occur relating to the Parent or Merger Sub
or their respective officers or directors that is required to be
described in an amendment or supplement to the definitive Proxy
Statement/Prospectus or the Registration Statement, the Parent shall
promptly inform the Company. Whenever any event occurs that should be
described in an amendment of, or supplement to, the definitive Proxy
Statement/Prospectus or the Registration Statement, the Company or the
Parent, as the case may be, shall, upon learning of such event, promptly
notify the other and consult and cooperate with the other in connection
with the preparation of a mutually acceptable amendment or supplement. The
parties shall promptly file such amendment or supplement with the SEC and
mail such amendment or supplement as soon as practicable after it is
cleared by the SEC.
5.4. State Takeover Statutes.
The Company and its Board of Directors shall (a) take all reasonable
actions necessary to ensure that no "fair price", "control share acquisition",
"moratorium" or other anti-takeover statute, or similar statute or regulation,
is or becomes applicable to this Agreement, the Merger or any of the other
transactions contemplated hereby or thereby and (b) if any "fair price",
"control share acquisition", "moratorium" or other anti-takeover statute, or
similar statute or regulation, becomes applicable to this Agreement or the
Merger or any other transaction contemplated hereby or thereby, take all action
necessary to ensure that the Merger and the other transactions contemplated
hereby and thereby, may be consummated as promptly as practicable on the terms
contemplated hereby and otherwise to minimize the effect of such statute or
regulation on the Merger and the other transactions contemplated hereby and
thereby.
5.5. Affiliates.
Within ten (10) days after the date of this Agreement, the Company
shall deliver to the Parent a letter identifying all persons who are to the
Company's Knowledge "affiliates" of the Company for purposes of Rule 145 under
the Securities Act. The Company shall use reasonable efforts to cause each such
person to deliver to the Parent at least five (5) business days prior to the
Effective Time, a written agreement covering Rule 145 matters in customary form
and reasonably acceptable to the Parent and the Company from each such person.
5.6. Nasdaq Listing Application.
The Parent shall prepare and submit to Nasdaq a listing application for
Parent Common Stock to be issued in the Merger pursuant to Article 2 of this
Agreement and shall use its reasonable efforts to obtain, prior to the Effective
Time, approval for the listing on the Nasdaq National Market of such Parent
Common Stock, subject to official Notice to Nasdaq of issuance. The Company
shall cooperate with the Parent in such listing application.
5.7. Confidentiality.
The Parent and the Company shall comply with, and shall cause their
respective representatives to comply with, in all respects, all of their
respective obligations under the Confidentiality Agreement, and in no event
shall the negotiation, entering into or termination of this Agreement be deemed
to waive or otherwise adversely affect the rights and obligations of the parties
under the Confidentiality Agreement, which rights and obligations shall continue
in full force and effect in accordance with their terms.
5.8. Access to Information.
(a) The Company shall afford to the Parent and Merger Sub, and to their
respective accountants, officers, directors, employees, counsel, and other
representatives reasonable access, during normal business hours, upon reasonable
prior notice, from the date hereof through the Effective Time, to all of its
properties, books, data, contracts, commitments, and records. During such
period, the Company shall additionally furnish promptly to the Parent and Merger
Sub all information concerning the Company's and all Company Subsidiaries'
businesses, prospects, properties, liabilities, results of operations, financial
condition, product evaluations and testing, officers, employees, consultants,
customers, and others having dealings with the Company and all Company
Subsidiaries as the Parent and Merger Sub may reasonably request and reasonable
opportunity to contact and obtain information from such officers, employees,
consultants, customers, and others having dealings with the Company and all
Company Subsidiaries as the Parent and Merger Sub may reasonably request. No
investigation pursuant to this Section 5.8 shall affect any representation or
warranty of the Company contained herein or any condition to the obligations of
the Parent and Merger Sub hereto.
(b) Parent and Merger Sub shall reasonably afford to the Company, and to
its accountants, officers, directors, employees, counsel, and other
representatives reasonable access, during normal business hours, upon reasonable
prior notice, from the date hereof through the Effective Time, to its books,
data, contracts, commitments and records. During such period, the Parent and
Merger Sub shall additionally furnish promptly to the Company all information
concerning the Parent's and all Parent Subsidiaries' businesses, prospects,
properties, liabilities, results of operations, financial condition, as the
Company may reasonably request and reasonable opportunity to contact and obtain
information from the officers of the Parent as the Company may reasonably
request. No investigation pursuant to this Section 5.8 shall affect any
representation or warranty of the Parent or Merger Sub contained herein or any
condition to the obligations of the Company hereto.
5.9. Approvals and Consents; Cooperation. Upon the terms and subject to the
conditions set forth in this Agreement, each of the parties agrees to cooperate
with each other and to use all commercially reasonable efforts to promptly take,
or cause to be taken, all actions, and to do, or cause to be done, and to assist
and cooperate with the other parties in doing, all things necessary, proper or
advisable to consummate and make effective, in the most expeditious manner
practicable, the Merger and the other transactions contemplated by this
Agreement, including, without limitation, (i) the obtaining of all necessary
actions or nonactions, waivers, consents and approvals from Governmental
Entities and the making of all necessary registrations, submissions of
information, applications and filings (including filings with Governmental
Entities) and the taking of all reasonable steps as may be necessary to obtain
an approval or waiver from, or to avoid an action or proceeding by, any
Governmental Entity; (ii) the obtaining and maintenance of all necessary
consents, approvals, permits, authorizations and other confirmations or waivers
from third parties; and (iii) the execution and delivery of any additional
instruments necessary to consummate the transactions contemplated by this
Agreement.
5.10. Commercially Reasonable Efforts; Further Actions.
Subject to the terms and conditions herein provided and without being
required to waive any conditions herein (whether absolute, discretionary, or
otherwise), each of the parties hereto agrees to use commercially reasonable
efforts to take, or cause to be taken, all action, and to do, or cause to be
done, all things necessary, proper, or advisable to consummate and make
effective the transactions contemplated by this Agreement, in the most
expeditious manner possible. In case at any time after the Effective Time any
further action is necessary or desirable to carry out the purposes of this
Agreement, the proper officers and directors of each party to this Agreement
shall take all such necessary action.
5.11. Officers' and Directors' Indemnification.
(a) The Parent and the Surviving Corporation agree that the Surviving
Corporation shall provide to the directors and officers of the Company
indemnification at least as favorable to the Company's officers and
directors as provided by the Company's Certificate of Incorporation and
Bylaws with respect to matters occurring prior to the Effective Time,
including without limitation the authorization of this Agreement and the
transactions contemplated hereby until the six year anniversary date of the
Effective Time (or, in case of matters occurring prior to the Effective
Time giving rise to claims that are made prior to but which have not been
resolved by the sixth (6th) anniversary of the Effective Time, until such
matters are finally resolved).
(b) Prior to the Effective Time the Parent shall cause to be
purchased, or at its election allow the Company to purchase, a "tail" or
extended reporting period endorsement directors' and officers' liability
insurance policy (covering a period of six (6) years after the Effective
Time and of at least the same coverage and amounts and containing terms and
conditions which are, in the aggregate, no less advantageous to the insured
than the Company's existing directors' and officers' liability insurance
policy), with respect to claims arising from facts or events that occurred
at or prior to the Effective Time for those persons who are currently
covered by such policy; provided, however, that the aggregate premium for
insurance under this Section 5.11(b) shall not be in excess of $500,000 net
of any refund or credit for the remaining term of the existing policy and
if such premium for such insurance exceeds that amount, then the Parent
shall cause to be purchased insurance policies that provide the maximum
coverage available at that amount.
5.12. Notification of Certain Matters.
The Company shall give prompt written notice to the Parent, and the Parent
shall give prompt written notice to the Company, of (a) the occurrence, or
nonoccurrence, of any event the occurrence or nonoccurrence of which would be
likely to cause any representation or warranty of such party contained herein to
be untrue or inaccurate in any material respect at or prior to the Effective
Date and (b) any material failure of the Company or the Parent, as the case may
be, to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it hereunder; provided, however, that the delivery
of any notice pursuant to this Section 5.12
shall not limit or otherwise affect the remedies available hereunder to the
party receiving such notice.
5.13. Public Announcements.
The Parent and Merger Sub, on the one hand, and the Company, on the
other hand, shall consult with each other before issuing, and provide each other
the opportunity to review and comment upon, any press release or other public
statements with respect to the transactions contemplated by this Agreement,
including the Merger, and shall not issue any such press release or make any
such public statement prior to such consultation, except as may be required by
applicable Law, court process or by applicable Nasdaq rules. The parties agree
that the initial press release to be issued with respect to the transactions
contemplated by this Agreement shall be in the form previously agreed to by the
parties.
5.14. Voting of Shares.
To induce the Parent to execute this Agreement, all of the officers and
directors of the Company have executed and delivered as of the date hereof
Agreements to Facilitate Merger in the form attached hereto as Exhibit 5.14 (the
"Agreements to Facilitate Merger") pursuant to which, as and to the extent set
forth therein, each such person has agreed to vote his, her or its shares of
Company Common Stock in favor of the Merger at the Company Stockholders Meeting.
5.15. Expenses.
Except as set forth in Section 7.2 and as otherwise provided in this
Section 5.15, all fees and expenses incurred in connection with the Merger, this
Agreement and the transactions contemplated by this Agreement shall be paid by
the party incurring such fees or expenses, whether or not the Merger is
consummated; provided, however, that the Company and the Parent shall share
equally the cost of printing and filing with the SEC the Proxy
Statement/Prospectus and the Registration Statement.
5.16. Section 368 Qualification.
The Parent, Merger Sub and the Company will each use commercially
reasonable efforts to cause the Merger to qualify as a reorganization within the
meaning of Section 368 of the Code, will report the Merger in such manner and
will not take any action reasonably likely to cause the Merger to not so
qualify.
5.17. Employee Benefit Plans.
Parent shall either maintain, or cause the Surviving Corporation to
maintain, the Employee Benefit Plans of the Company or to provide the employees
of the Surviving Corporation with all Employee Benefit Plans as are provided by
Parent and its subsidiaries to their own employees who are similarly situated
(such similar situation to be determined after the Surviving Corporation
determines which position and title the employee is to retain following the
Merger). The foregoing shall not constitute any commitment, contract,
understanding, undertaking, guarantee (express or implied) on the part of the
Surviving Corporation or Parent to
continue the employment of any employee of the Company for any period of time or
on any terms except as determined by the Surviving Corporation. The Company
agrees that, at the request of Parent, it and the Company Subsidiaries shall
terminate their respective 401(k) plans and any other Employee Benefit Plans,
severance, separation, retention and salary continuation plans, programs or
arrangements, in each case, prior to the Effective Time and, upon the reasonable
request of the Parent, timely take reasonable corrective or remedial action for
any noncompliance of the Employee Benefit Pans with applicable Law.
5.18. Company Options and Company Stock Plans.
Prior to the Effective Time, the Company shall, if and to the extent
necessary or required by the terms of any Company Stock Plan (including the
ESPP) or any Company Option, (i) provide notice to holders of Company Options
under the Company Stock Plans regarding the non-assumption and termination of
such Company Options and Company Stock Plans, (ii) obtain any consents from
holders of Company Options, and (iii) amend the terms of any equity incentive
plans or arrangements, to give effect to the provisions of Section 2.4 and this
Section 5.18.
5.19. Company Warrants.
The Company shall provide the notifications required by the Company
Warrant in the time frames set forth in the Company Warrant and take all
actions, if any, necessary to make the Company Warrant a Parent Warrant in
accordance with Section 2.5, effective as of the Effective Time.
5.20. Rights Plan.
Prior to the earlier of the termination of this Agreement pursuant to
Section 7.1 hereof or the Effective Time, the Company and its Board of Directors
shall not amend or modify or take any other action with regard to the Rights
Plan in any manner or take any other action so as to (a) render the Rights Plan
inapplicable to any transaction(s) other than the Merger and other transactions
contemplated by this Agreement and the Agreements to Facilitate Merger, (b)
permit any person or group who would otherwise be an Acquiring Person (as
defined in the Rights Plan) not to be an Acquiring Person, (c) provide that a
Distribution Date or Triggering Event (as such terms are defined in the Rights
Plan) or similar event does not occur as promptly as practicable by reason of
the execution of any agreement or transaction other than this Agreement and the
Agreements to Facilitate Merger and the Merger and the agreements and
transactions contemplated hereby and thereby, or (d) except as specifically
contemplated by this Agreement, otherwise affect the rights of holders of Rights
(as defined in the Rights Plan). The Company and its Board of Directors shall
take all action to ensure that the Rights Plan is and, through the Effective
Time, will be inapplicable to Parent and Merger Sub, this Agreement, the Merger,
the Agreements to Facilitate Merger and the transactions contemplated hereby and
thereby. Pursuant to the amendment of the Rights Plan contemplated in Section
3.28 hereof, the rights under the Rights Plan shall expire immediately prior to
the Effective Time.
5.21. Director and Officer Resignations.
On the Closing Date, the Company shall cause to be delivered to Parent
duly executed resignations, effective as of the Effective Time, of each member
of the Board of Directors of the Company and each Company Subsidiary and, to the
extent requested by the Parent, each officer of the Company and each Company
Subsidiary, and shall take such other action as is necessary to accomplish the
foregoing.
Article 6.
CONDITIONS PRECEDENT
6.1. Conditions to Obligations of the Parent, Merger Sub, and the
Company.
The respective obligations of each Party to consummate the Merger shall
be subject to the fulfillment at or prior to the Closing of the following
conditions:
(a) No Injunction. None of the Parent, Merger Sub, or the Company
shall be subject to any final Order of a court of competent jurisdiction
within the United States that (i) prevents or materially delays the
consummation of the Merger, or (ii) would impose any material limitation on
the ability of the Parent effectively to exercise full rights of ownership
of the Company or the assets or business of the Company.
(b) Stockholder Approval. The Company Stockholder Approval shall have
been obtained.
(c) Registration Statement. The Registration Statement (as amended or
supplemented) shall have become effective under the 1933 Act and shall not
be subject to any "stop order," and no action, suit, proceeding, or
investigation by the SEC to suspend the effectiveness or qualification
thereof shall have been initiated and be continuing or have been threatened
and be unresolved. The Parent shall also have received all state securities
Law or blue sky authorizations necessary to carry out the transactions
contemplated hereby.
(d) Nasdaq Listing. The shares of Parent Common Stock to be delivered
pursuant to the Merger shall have been duly listed on the Nasdaq National
Market, subject to official notice of issuance.
6.2. Conditions to Obligations of the Parent and Merger Sub.
The respective obligations of the Parent and Merger Sub to consummate
the Merger shall be subject to the fulfillment at or prior to the Closing of the
following additional conditions:
(a) Each representation and warranty of the Company contained in this
Agreement, to the extent qualified by materiality (including a Company
Material Adverse Effect qualification), shall have been true and correct in
all respects and, to the extent not so qualified, shall have been true and
correct in all material respects, in each case on and as of the date hereof
and on the Closing Date as though made on and as of such date (except for
representations and warranties made as of a specified date, which, to the
extent qualified by materiality (including a Company Material Adverse
Effect qualification), shall have been true and correct in all respects
and, to the extent not so qualified, shall have been true and correct in
all material respects, as the case may be, only as of the specified date),
and the Parent shall have received a certificate to such effect signed by
the Company's Chief Executive Officer.
(b) The Company shall have performed and complied in all material
respects with all agreements, obligations, and conditions required by this
Agreement to be performed or complied with by it on or prior to the
Closing, and the Parent shall have received a certificate to such effect
signed by the Company's Chief Executive Officer.
(c) The Company shall have obtained all permits, authorizations,
consents, and approvals required on its part to perform its obligations
under, and consummate the transactions contemplated by, this Agreement, in
form and substance reasonably satisfactory to the Parent, and the Parent
and Merger Sub shall have received evidence reasonably satisfactory to them
of the receipt of such permits, authorizations, consents, and approvals.
(d) There shall not be pending any suit, action or proceeding related
directly or indirectly to the Merger, including without limitation any
suit, action or process that seeks to restrain or prohibit the consummation
of the Merger or to unwind the Merger after it has been consummated or
seeks damages or other relief with respect to the Merger.
(e) Parent shall have received from Xxxxxxx Coie LLP, counsel to
Parent, a written opinion dated the Closing Date to the effect that for
U.S. federal income tax purposes the Merger will constitute a
"reorganization" within the meaning of Section 368(a) of the Code. In
rendering such opinion, counsel to Parent shall be entitled to rely upon
customary assumptions and representations reasonably satisfactory to such
counsel, including representations set forth in certificates of officers of
Parent, Merger Sub and the Company.
(f) The Parent shall have received a letter from each of the
Affiliates pursuant to Section 5.5 hereof.
(g) The directors and officers (as identified by Parent) of the
Company and of each Company Subsidiary shall have tendered their
resignations as of the Effective Time.
(h) Since the date of this Agreement, there shall not have occurred or
come into existence any change, event, occurrence, state of facts or
development that has had, or could reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect, and
the Parent shall have received a certificate to such effect from the
Company's Chief Executive Officer.
(i) All actions necessary to cause all Company Options and Company
Stock Plans to terminate effective as of the Effective Time shall have been
taken.
(j) All actions necessary to cause all outstanding Rights (as defined
in the Rights Plan) under the Rights Plan to expire immediately prior to
the Effective Time and to render such Rights inapplicable to Parent, Merger
Sub, this Agreement, the Merger, the Agreements to Facilitate Merger and
the other transactions contemplated by this Agreement and the Agreements to
Facilitate Merger shall have been taken.
(k) Holders of no more than five percent (5%) of the outstanding
Company Common Stock shall have delivered a notice or notices of intent to
demand payment in accordance with Section 262 of the DGCL.
(l) Company shall have filed the 2004 Form 10-K within the time period
allowed by Rule 12b-25, and such 2004 Form 10-K is identical to the form of
2004 Form 10-K provided to the Parent pursuant to Section 3.4(e), except as
otherwise consented to in writing by Parent.
(m) The Company shall have filed a report of the Company's management
report on its internal controls and the attestation given by the Company's
independent auditors in connection with such report with the 2004 Form 10-K
or an amendment thereto within the time period allowed by the SEC's rules,
and any deficiencies in internal controls described in such report or
attestation shall not be materially different from the deficiencies
described in Section 3.5 of the Company Disclosure Schedule or otherwise
disclosed in writing to, and acknowledged in writing as applicable to this
condition by, the Parent prior to the execution of this Agreement, except
for such differences as would not (i) have a Company Material Adverse
Effect, (ii) have a material adverse impact on Parent or Parent's ability
to prepare its consolidated financial statements or comply with applicable
legal or Nasdaq requirements or (iii) reasonably be expected to materially
adversely affect Parent's quantitative valuation of the Company.
(n) FIRPTA documentation, including (A) a notice to the Internal
Revenue Service, in accordance with the requirements of Treas. Reg. Section
1.897-2(h)(2), in substantially the form attached hereto as Exhibit
6.2(n)(A), dated as of the Closing Date and executed by the Company,
together with written authorization for Parent to deliver such notice form
to the Internal Revenue Service on behalf of the Company after the Closing,
and (B) a FIRPTA Notification Letter, in substantially the form attached
hereto as Exhibit 6.2(n)(B), dated as of the Closing Date and executed by
the Company.
6.3. Conditions to Obligations of the Company.
The obligation of the Company to consummate the Merger shall be subject to
the fulfillment at or prior to the Closing of the following additional
conditions:
(a) Each representation and warranty of the Parent contained in this
Agreement, to the extent qualified by materiality (including a Parent
Material Adverse Effect qualification), shall have been true and correct in
all respects and, to the extent not so qualified, shall have been true and
correct in all material respects, in each case on and as of the date hereof
and on the Closing Date as though made on and as of such date (except for
representations and warranties made as of a specified date, which, to the
extent qualified by materiality (including a Parent Material Adverse Effect
qualification), shall have been true and correct in all respects and, to
the extent not so qualified, shall have been true and correct in all
material respects, as the case may be, only as of the specified date), and
the Company shall have received a certificate to such effect from a senior
executive officer of the Parent.
(b) The Parent and Merger Sub shall have performed and complied in all
material respects with all agreements, obligations, and conditions required
by this Agreement to be performed or complied with by them on or prior to
the Closing, and the Company shall have received a certificate to such
effect from a senior executive officer of the Parent.
(c) The Parent and Merger Sub shall have obtained all permits,
authorizations, consents, and approvals required on their part to perform
their obligations under, and consummate the transactions contemplated by,
this Agreement, in form and substance satisfactory to the Company, and the
Company shall have received evidence satisfactory to it of the receipt of
such permits, authorizations, consents, and approvals.
(d) Since the date of this Agreement, there shall not have occurred or
come into existence any change, event, occurrence, state of facts or
development that has had, or could reasonably be expected to have,
individually or in the aggregate, a Parent Material Adverse Effect, and the
Company shall have received a certificate to such effect from a senior
executive officer of the Parent.
(e) The Company shall have received from Hunton & Xxxxxxxx, LLP,
counsel to the Company, a written opinion dated the Closing Date to the
effect that for U.S. federal income tax purposes the Merger will constitute
a "reorganization" within the meaning of Section 368(a) of the Code,
provided that if Hunton & Xxxxxxxx LLP does not render such opinion, this
condition shall nonetheless be satisfied if Xxxxxxx Coie LLP delivers such
opinion to the Company. In rendering such opinion, counsel to the Company
shall be entitled to rely upon customary assumptions and representations
reasonably satisfactory to such counsel, including representations set
forth in certificates of officers of Parent, Merger Sub and the Company.
Article 7.
TERMINATION AND ABANDONMENT
7.1. Termination.
This Agreement may be terminated at any time prior to the Effective
Time, whether before or after approval by the stockholders of the Company, only:
(a) by mutual written consent duly authorized by the Board of
Directors of the Parent and the Company;
(b) by either the Parent or the Company if the Merger shall not have
been consummated on or before the date that is six (6) months after the
date hereof; provided, however, that the terminating party shall not have
breached in any material respect its
obligations under this Agreement in any manner that shall have been the
proximate cause of, or resulted in, the failure to consummate the Merger by
such date;
(c) by either the Parent or the Company if a Governmental Entity has
issued a final nonappealable Order, or taken any other action, having the
effect of permanently restraining, enjoining, or otherwise prohibiting the
Merger;
(d) by either the Parent or the Company if, at the Company
Stockholders Meeting, the Company Stockholder Approval is not obtained,
except that the right to terminate this Agreement under this Section 7.1(d)
shall not be available to any party whose failure to perform any material
obligation under this Agreement has been the proximate cause of, or
resulted in, the failure to obtain the Company Stockholder Approval;
(e) by the Parent if either (i) the Company has breached its
obligations under Sections 5.2 or 5.3 in any material respect, (ii) the
Company's Board of Directors has recommended, approved, accepted, or
entered into an agreement regarding, an Acquisition Proposal or has not
rejected an Acquisition Proposal within ten (10) business days following
the receipt by the Company of a written Acquisition Proposal, (iii) the
Company's Board of Directors has withdrawn or modified in a manner adverse
to the Parent its unanimous recommendation of the Merger or has failed to
recommend the Merger in the Proxy/Prospectus, or (iv) a tender offer or
exchange offer for 15% or more of the outstanding shares of Company Common
Stock is commenced, and the Company's Board of Directors, within ten (10)
business days after such tender offer or exchange offer is so commenced,
either fails to recommend against acceptance of such tender offer or
exchange offer by its stockholders or takes no position with respect to the
acceptance of such tender offer or exchange offer by its stockholders;
(f) by the Company if, prior to obtaining the Company Stockholder
Approval, (i) it has complied with its obligations under Section 5.2
(including subsections (f)(i)-(iii) thereof); (ii) the Company's Board of
Directors has authorized acceptance of a Superior Proposal thereunder, and
(iii) the Company has paid to the Parent the fee required by Section 7.2 to
be paid to the Parent in the manner therein provided;
(g) by the Parent if (i) the Parent is not in material breach of its
obligations under this Agreement and (ii) there has been a breach (A) by
the Company of any of its representations, warranties, or obligations under
this Agreement (other than breaches covered by subsection (e)(e) above), or
(B) by an officer or director of the Company under such person's Agreement
to Facilitate Merger described in Section 5.14, in each case such that the
conditions in Section 6.2 shall not be satisfied, and the breach is not
curable or, if curable, is not cured by the Company by within thirty (30)
calendar days after receipt by the Company of written notice from the
Parent of such breach; or
(h) by the Company if (i) the Company is not in material breach of its
obligations under this Agreement and (ii) there has been a breach by the
Parent of any of its representations, warranties, or obligations under this
Agreement such that the conditions in Section 6.3 shall not be satisfied,
and the breach is not curable or, if curable,
is not cured by the Parent within thirty (30) calendar days after receipt
by the Parent of written notice from the Company of such breach.
7.2. Effect of Termination.
(a) In recognition of the time, efforts, and expenses expended and
incurred by the Parent with respect to the Company and the opportunity that
the acquisition of the Company presents to the Parent, if:
(i) (A) this Agreement is terminated by the Parent or the Company
pursuant to Section 7.1(d), (B) at or prior to the Company
Stockholders Meeting there shall have been publicly disclosed one or
more Acquisition Proposals other than the proposal contemplated by
this Agreement, and (C) within 12 months of the date of such
termination, the Company shall have entered into an agreement
providing for an Acquisition Proposal with a person (or their
Affiliate) that made an Acquisition Proposal described in clause (B)
of this subsection, then the Company shall pay the Parent a fee in the
amount of $1,400,000 (the "Termination Fee"), payable upon the same
date the Company enters into an agreement providing for an Acquisition
Proposal;
(ii) this Agreement is terminated by the Parent pursuant to
Section 7.1(e), then the Company shall pay the Parent the Termination
Fee, payable within one business day after termination by the Parent;
and
(iii) this Agreement is terminated by the Company pursuant to
Section 7.1(f), then the Company shall pay the Parent the Termination
Fee, payable on or prior to the date of termination.
(b) Any amounts payable pursuant to Section 7.2(a) shall be paid by
wire transfer of immediately available funds to an account designated by
the receiving party for such purpose. The parties acknowledge that the
agreements contained in this Section 7.2 are an integral part of the
transactions contemplated by this Agreement and are not a penalty, and
that, without these agreements, the parties would not enter into this
Agreement. If the Parent or the Company fails to pay promptly any amounts
due pursuant to this Section 7.2, such party shall also pay to the other
party such other party's costs and expenses (including legal fees and
expenses) in connection with any action to the extent such other party is
the prevailing party in such action, including the filing of any lawsuit or
other legal action, taken to collect payment, together with interest on the
unpaid amounts under this section, accruing from its due date, at an
interest rate per annum equal to two percentage points in excess of the
prime commercial lending rate quoted by Xxxxx Fargo Bank N.A. Any change in
the interest rate hereunder resulting from a change in such prime rate
shall be effective at the beginning of the day of such change in such prime
rate.
(c) Except as provided in the next sentence of this paragraph, in the
event of the termination of this Agreement pursuant to any paragraph of
Section 7.1, the obligations of the parties to consummate the Merger shall
expire, and none of the parties
shall have any further obligations under this Agreement except pursuant to
Sections 5.7, 5.15, 7.2 and Article 9, which shall survive termination of
this Agreement. In the event this Agreement is terminated pursuant to any
paragraph of Section 7.1 due to a breach by the Company, the Company shall
not be relieved from any liability for such breach or its obligations
pursuant to Section 7.2, and the Parent shall have no further obligations
under this Agreement except as provided in Sections 5.7, 5.15, and Article
9. Notwithstanding the preceding sentence, the parties agree that the
amounts payable upon the occurrence of the events specified in Section
7.2(a) shall be the sole and exclusive remedy of the parties upon
termination of the Agreement arising from the occurrence of such events;
provided, however, that nothing herein shall relieve the Company or the
Parent from liability for the willful breach of any of its representations,
warranties, covenants or agreements set forth in this Agreement.
Article 8.
DEFINED TERMS
8.1. Definitions of Certain Terms.
When used in this Agreement, and in addition to the other terms defined
herein, the following terms shall have the meanings specified in this Article 8.
(a) "Acquisition Proposal" shall mean any inquiry, offer or proposal,
or any indication of interest in making any offer or proposal, relating to
(i) a possible transaction or series of related transactions pursuant to
which any Person or "group" (as used in Section 13(d) of the Exchange Act)
acquires 15% or more of the outstanding shares of the Company's capital
stock, including without limitation by a tender offer or an exchange offer
which, if consummated, would result in any Person acquiring 15% or more of
the outstanding shares of the Company's capital stock, (ii) a possible
merger or other business combination involving the Company or Company
Subsidiaries, or (iii) any other transaction pursuant to which any Person
might acquire control ( by way of sale, lease, license, liquidation,
dissolution or otherwise) of assets (including for this purpose the
outstanding equity securities of any Company Subsidiary) of the Company (x)
having a fair market value equal to 10% or more of the fair value of all of
the consolidated assets of the Company immediately prior to such a
transaction, (y) constituting the credit card business of the Company, or
(z) otherwise material to the Company; provided, however, that the term
"Acquisition Proposal" shall not include the Merger and the other
transactions contemplated by this Agreement.
(b) "Affiliate" shall mean, in relation to any party hereto, any
entity directly or indirectly controlling, controlled by or under common
control with such party.
(c) "COBRA" shall mean the health care continuation provisions of the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, and the
regulations, rulings and other pronouncements issued thereunder.
(d) "Company Intellectual Property" shall mean all Intellectual
Property used in, developed for use in, or necessary to the conduct of the
business of the Company and
the Company Subsidiaries as it is currently conducted or as it is
contemplated to be conducted.
(e) "Company Material Adverse Effect" shall mean any effect, change,
event, circumstance or condition that, individually or in the aggregate
with all similar effects, changes, events, circumstances or conditions, is
or would reasonably be expected to: (i) have a material adverse effect on
the business, operations, assets, properties, results of operations or
financial condition of the Company and the Company Subsidiaries taken as a
whole; (ii) prevent or materially delay the consummation of the Merger or
otherwise have a material adverse effect on the ability of the Company to
perform its obligations under this Agreement; or (iii) have a material
adverse effect on the ability of the Surviving Corporation or the Parent to
conduct such business following the Effective Time or the ability of the
Parent to exercise full rights of ownership of the Company or its assets or
business. Notwithstanding anything to the contrary contained in the
foregoing, none of the following shall be deemed, individually or in the
aggregate, to constitute a Company Material Adverse Effect: (A) a decrease
in the market price of the Company Common Stock or its removal of listing
from Nasdaq SmallCap Market, in each case, in and of itself or (B) any
change, event, violation or inaccuracy directly attributable to any of the
following: (1) any actions taken by the Company at the written request or
direction, following the date of this Agreement, of the Parent, or (2) a
general decline in the financial markets in the United States.
(f) "Company Option" shall mean any option to purchase shares of
Company Common Stock or other equity securities of the Company, including,
without limitation, any option granted under the Company Stock Plans and
any option granted under the ESPP.
(g) "Company Products" shall mean all software and other products
produced, manufactured, marketed or distributed at any time by the Company
or any Company Subsidiary.
(h) "Company Stock Plans" shall mean any stock option plan, restricted
stock plan, or other similar program or agreement, including, without
limitation, the Company's 1996 Incentive Plan, Merger Stock Incentive Plan,
Non-Employee Directors' Stock Option Plan, 1998 Chief Executive Officer's
Plan and ESPP, to which the Company or any Company Subsidiary is a party or
which is maintained by the Company or any Company Subsidiary and pursuant
to which the Company has granted options to purchase shares of Company
Common Stock or awards of Company Common Stock.
(i) "Company Subsidiary" shall mean each individual subsidiary of the
Company.
(j) "Confidentiality Agreement" shall mean the Mutual Confidentiality
Agreement, dated February 25, 2005, between the Company and the Parent.
(k) "Contract" shall mean any contract, agreement, consensual
obligation, promise or undertaking, whether written or oral and whether
express or implied.
(l) "Delaware Law" shall mean the General Corporation Law of the State
of Delaware and the Delaware Constitution.
(m) "Employee Benefit Plans" shall mean any retirement, pension,
profit sharing, deferred compensation, stock bonus, savings, bonus,
incentive, cafeteria, medical, dental, vision, hospitalization, life
insurance, accidental death and dismemberment, medical expense
reimbursement, dependent care assistance, tuition reimbursement,
disability, sick pay, holiday, vacation, severance, change of control,
stock purchase, stock option, restricted stock, phantom stock, stock
appreciation rights, fringe benefit or other employee benefit plan, fund,
policy, program, contract, arrangement or payroll practice of any kind
(including any "employee benefit plan," as defined in Section 3(3) of
ERISA) or any employment, consulting or personal services contract, whether
written or oral, qualified or nonqualified, funded or unfunded, or domestic
or foreign, (i) sponsored, maintained or contributed to by the Company or
any Company Subsidiary or to which the Company or any Company Subsidiary is
a party, (ii) covering or benefiting any current or former officer,
employee, agent, director or independent contractor of the Company or any
Company Subsidiary (or any dependent or beneficiary of any such
individual), or (iii) with respect to which the Company or any Company
Subsidiary has (or could have) any obligation or liability.
(n) "Encumbrance" shall mean any charge, claim, condition, equitable
interest, lien, option, pledge, security interest, mortgage, right of way,
easement, encroachment, servitude, right of first option, right of first
refusal or similar restriction, including any restriction on use, voting
(in the case of any security or equity interest), transfer, receipt of
income or exercise of any other attribute of ownership.
(o) "Environmental Laws" shall mean any Law relating to pollution or
protection of human or worker health or safety or the environment
(including ambient air, surface water, ground water, land surface or
subsurface strata), including Laws relating to Environmental Releases or
threatened Environmental Releases of Hazardous Materials, or otherwise
relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Hazardous Materials, as in
effect on the date hereof.
(p) "Environmental Release" shall mean any release, spill, emission,
leaking, injection, deposit, disposal, discharge, dispersal, leaching or
migration into the atmosphere, soil, surface water or groundwater.
(q) "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended, and the regulations, rulings and other pronouncements
issued thereunder.
(r) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations thereunder.
(s) "Exchange Ratio" shall mean the quotient obtained by dividing (x)
4,918,032.78689 by (y) the total of the number of shares of Company Common
Stock outstanding immediately prior to the Closing plus the number of
shares of Company
Common Stock that would have been issuable upon exercise of any Company
Option that may be, by virtue of any amendment to the Company Option,
exercisable for Parent Common Stock after the Effective Time, rounded to
the nearest one-hundred thousandth (0.00001) (with amounts of 0.000005 and
above rounded up).
(t) "GAAP" shall mean accounting principles generally accepted in the
United States, applied on a consistent basis.
(u) "Governmental Entity" shall mean any United States or non-United
States federal, national, state or local governmental or
quasi-governmental, administrative, regulatory or judicial court,
department, commission, agency, board, bureau, instrumentality or other
authority.
(v) "Hazardous Materials" shall mean: (i) any petroleum or petroleum
products, radioactive materials, asbestos in any form that is or could
become friable, urea formaldehyde foam insulation, and transformers or
other equipment that contain dielectric fluid containing polychlorinated
biphenyls above regulated levels and radon gas; (ii) any chemicals,
materials or substances which are now defined as or included in the
definition of "hazardous substances," "hazardous wastes," "hazardous
materials," "extremely hazardous wastes," "restricted hazardous wastes,"
"toxic substances," "toxic pollutants," or words of similar import, under
any Environmental Law; and (iii) any other chemical, material, substance or
waste, exposure to which as of the date hereof is prohibited, limited or
regulated by any Governmental Entity.
(w) "HIPAA" shall mean the means the Health Insurance Portability and
Accountability Act of 1997, as amended, and the regulations, rulings and
other pronouncements issued thereunder.
(x) "Intellectual Property" shall mean all rights in patents, patent
applications, trademarks (whether registered or not), trademark
applications, service xxxx registrations and service xxxx applications,
trade names, trade dress, logos, slogans, tag lines, uniform resource
locators, Internet domain names, Internet domain name applications,
corporate names, copyright applications, registered copyrighted works and
commercially significant unregistered copyrightable works (including
proprietary software, books, written materials, prerecorded video or audio
tapes, and other copyrightable works), technology, software, trade secrets,
know-how, technical documentation, specifications, data, designs and other
intellectual property and proprietary rights, other than off-the-shelf
computer programs.
(y) "IRS" shall mean the United States Internal Revenue Service.
(z) "Knowledge" shall mean with respect to the Company, the Parent or
Merger Sub the knowledge actually possessed, or which, upon the exercise of
reasonable due diligence, could be possessed, by any current director or
officer of the Company, the Parent or Merger Sub, as the case may be.
(aa) "Law" shall mean any constitution, law, ordinance, principle of
common law, code, regulation, statute or treaty of any Governmental Entity.
(bb) "Nasdaq" shall mean the Nasdaq National Market or the Nasdaq
SmallCap Market, as applicable.
(cc) "Order" shall mean any order, injunction, judgment, decree,
ruling, assessment or arbitration award of any Governmental Entity or
arbitrator.
(dd) "Parent Average Stock Price" shall mean the average closing sale
price of one share of Parent Common Stock as reported on Nasdaq for the
twenty (20) consecutive trading days ending on and including the third
Nasdaq trading day preceding the Closing Date.
(ee) "Parent Material Adverse Effect" shall mean any effect, change,
event, circumstance or condition that, individually or in the aggregate
with all similar effects, changes, events, circumstances or conditions, is
or would reasonably be expected to: (i) have a material adverse effect on
the business, operations, assets, properties, results of operations, or
financial condition of the Parent and its subsidiaries, considered as a
whole, or (ii) prevent or materially delay the consummation of the Merger
or otherwise have a material adverse effect on the ability of the Parent to
perform its obligations under this Agreement. Notwithstanding anything to
the contrary contained in the foregoing, none of the following shall be
deemed, individually or in the aggregate, to constitute a Parent Material
Adverse Effect: (A) a change in the market price of the Parent Common
Stock, in and of itself or (B) any change, event, violation or inaccuracy
directly attributable to any of the following (1) any actions taken by the
Parent at the written request or direction, following the date of this
Agreement, of the Company, or (2) a general decline in the financial
markets in the United States.
(ff) "Per Share Cash Consideration" shall mean the quotient obtained
by dividing (x) the sum of (1) $4,500,000, plus (2) any cash received upon
the exercise of the outstanding Company Options or Company Warrants prior
to the Effective Time, less (3) any other amounts necessary to terminate
Company Options in accordance with this Agreement and less (4) an amount
mutually determined by the Parent and the Company with respect to
contingencies of the Company, such amount to not exceed $275,000 by (y) the
total number of shares of Company Common Stock outstanding immediately
prior to the Closing, rounded to the nearest one-hundred thousandth
(0.00001) (with amounts of 0.000005 and above rounded up).
(gg) "Permits" shall mean registrations, franchises, grants,
authorizations (including marketing authorizations), licenses, permits,
easements, variances, exceptions, consents, certificates, approvals and
orders of any Governmental Entity necessary for each of the Company or the
Company Subsidiaries to manufacture, market, sell or distribute the
Company's products or to own, lease and operate its properties or to carry
on its business as it is now being conducted.
(hh) "Person" shall mean a natural person, corporation, limited
liability company, association, joint stock company, trust, partnership,
governmental entity, agency or branch or department thereof, or any other
legal entity.
(ii) "Related Party" shall mean any officer, director or beneficial
owner of more than 5% of the outstanding voting securities of the Company
or any Company Subsidiary (or any entity of which such person is an
officer, director or beneficial owner of more than 5% of such entity's
outstanding voting securities).
(jj) "SEC" shall mean the Securities and Exchange Commission.
(kk) "Securities Act" shall mean the Securities Act of 1933, as
amended.
(ll) "Superior Proposal" shall mean an unsolicited, bona fide written
Acquisition Proposal by a third party for all of the outstanding shares of
the capital stock or all of the voting power of the Company (x) which each
member of the Company's Board of Directors reasonably determines in good
faith, by resolution duly adopted, to be more favorable to the Company's
stockholders than the Merger, after consultation with outside legal counsel
and a financial advisor of nationally recognized reputation, from a
financial point of view and, in addition, taking into account all the terms
and conditions of the Acquisition Proposal and this Agreement, and all
legal, financial, regulatory and other aspects of such Acquisition Proposal
deemed relevant by the Company's Board of Directors, including the
Termination Fee, (y) for which financing, to the extent required, is then
committed and (z) which is reasonably likely to be consummated, within a
period of time not materially longer in duration that the period of time
reasonably believed to be necessary to consummate the Merger, on the terms
set forth.
(mm) "Tax" (and, with correlative meaning, "Taxes" and "Taxable")
shall mean (i) any net income, alternative or add-on minimum tax, gross
income, estimated, gross receipts, sales, use, ad valorem, value added,
transfer, franchise, capital stock, profits, license, registration,
withholding, payroll, social security (or equivalent), employment,
unemployment, disability, excise, severance, stamp, occupation, premium,
property (real, tangible or intangible), environmental or windfall profit
tax, custom duty or other tax, governmental fee or other like assessment or
charge of any kind whatsoever, together with any interest or any penalty,
addition to tax or additional amount (whether disputed or not) imposed by
any Governmental Entity responsible for the imposition of any such tax
(domestic or foreign), (ii) any liability for the payment of any amounts of
the type described in clause (i) of this sentence as a result of being a
member of an affiliated, consolidated, combined, unitary or aggregate group
for any Taxable period, and (iii) any liability for the payment of any
amounts of the type described in clause (i) or (ii) of this sentence as a
result of being a transferee of or successor to any Person or as a result
of any express or implied obligation to assume such Taxes or to indemnify
any other Person.
(nn) "Tax Return" shall mean any return, statement, report or form
(including estimated Tax returns and reports, withholding Tax returns and
reports, any schedule or attachment, and information returns and reports)
required to be filed with respect to Taxes.
8.2. Location of Other Defined Terms.
The following additional terms are defined elsewhere in this agreement,
as indicated below:
Defined Term Section
2004 Form 10-K 3.4(e)
Agreement First Paragraph
Agreements to Facilitate Merger 5.14
Cancelled Shares 2.1(b)
Cash Consideration 2.1(c)
Certificate of Merger 1.3
Certificate(s) 2.3(b)
Closing 1.2
Closing Date 1.2
Code Third Recital
Company First Paragraph
Company Common Stock Second Recital
Company Disclosure Schedule Article 3
Company Material Agreements 3.19(b)
Company Preferred Stock 3.3(a)
Company SEC Reports 3.4(a)
Company Securities 3.3(a)
Company Stockholder Approval 5.3(a)
Company Stockholders Meeting 5.3(a)
Company Warrant 2.5
DGCL 2.2(a)
Dissenting Shares 2.2(a)
Effective Time 1.3
ESPP 3.3(a)
Exchange Agent 2.3(a)
Exchange Fund 2.3(a)
Merger Second Recital
Merger Consideration 2.1(c)
Merger Sub First Paragraph
Merger Sub Common Stock 2.1(a)
Option Consideration 2.4
Parent First Paragraph
Parent Common Stock Second Recital
Parent SEC Reports 4.3(a)
Parent Warrant 2.5
Proxy Statement/Prospectus 3.6
Registration Statement 5.3(b)
Representatives 5.2(a)
Subsidiary Securities 3.3(d)
Surviving Corporation 1.1
Defined Term Section
Tax 3.18
Termination Fee 7.2(a)(i)
Article 9.
GENERAL PROVISIONS
9.1. Amendment and Modification.
Subject to applicable Law, this Agreement may be amended, modified, or
supplemented only by written agreement of the Parent, Merger Sub and the Company
at any time prior to the Effective Time with respect to any of the terms
contained herein. This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties hereto.
9.2. Waiver of Compliance; Consents.
Any failure of the Parent or Merger Sub on the one hand, or the Company
on the other hand, to comply with any obligation, covenant, agreement, or
condition herein may be waived by the Company or the Parent, respectively, only
by a written instrument signed by an officer of the party granting such waiver,
but such waiver or failure to insist upon strict compliance with such
obligation, covenant, agreement, or condition shall not operate as a waiver of,
or estoppel with respect to, any subsequent or other failure. Whenever this
Agreement requires or permits consent by or on behalf of any party hereto, such
consent shall be given in writing. Merger Sub agrees that any consent or waiver
of compliance given by the Parent hereunder shall be conclusively binding upon
Merger Sub, whether or not given expressly on its behalf.
9.3. Investigation; Survival of Representations and Warranties.
The respective representations and warranties of the Parent and the
Company contained herein or in any certificates or other documents delivered
prior to or at the Closing shall not be deemed waived or otherwise affected by
any investigation made by any party hereto. Each and every representation and
warranty contained herein shall be deemed to be conditions to the Merger and
shall not survive the Merger. This Section 9.3 shall have no effect upon any
other obligation of the parties hereto, whether to be performed before or after
the Closing.
9.4. Notices.
All notices and other communications hereunder shall be in writing and
shall be deemed given (a) on the date of delivery if delivered personally, or by
telecopy or facsimile, upon electronic confirmation of receipt, (b) on the first
business day following the date of dispatch if delivered by a recognized
next-day courier service, or (c) on the fifth business day following the date of
mailing if delivered by registered or certified mail, return receipt requested,
postage prepaid. All notices hereunder must be delivered as set forth below, or
pursuant to instructions as may be designated in writing by the party to receive
such notice:
(a) if to the Parent or Merger Sub, to it at:
CORILLIAN CORPORATION
0000 X.X. Xxxx Xxxxx Xxxxx
Xxxxxxxxx, XX 00000-0000
Fax: (000) 000-0000
Attention: Xxxx Xxxx
with a copy (which shall not constitute notice) to:
Xxxxxxx Coie LLP
0000 XX Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxx, Xxxxxx 00000
Fax: (000) 000-0000
Attention: Xxx Xxxxxx
(b) If to the Company, to it at:
INTELIDATA TECHNOLOGIES CORPORATION
00000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxx, XX 00000
Fax: (000) 000-0000
Attention: Xx Xxxxxxxx
with a copy (which shall not constitute notice) to:
Hunton & Xxxxxxxx, XXX
Xxxx xx Xxxxxxx Xxxxx, Xxxxx 0000
000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxx, Xxxxxxx 00000-0000
Fax: (000) 000-0000
Attention: Xxxxx Xxxxxx
9.5. Specific Performance.
The parties hereto agree that irreparable damage would occur in the
event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. Accordingly,
the parties further agree that each party shall be entitled to an injunction or
restraining order to prevent breaches of this Agreement and to enforce
specifically the terms and provisions hereof in any court of the United States
or any state having jurisdiction, this being in addition to any other right or
remedy to which such party may be entitled under this Agreement, at law or in
equity.
9.6. Assignment.
Neither this Agreement nor any of the rights, interests or obligations
under this Agreement shall be assigned, in whole or in part, by operation of Law
or otherwise by any of the parties without the prior written consent of the
other parties; any instrument purporting to make
such assignment shall be void. Subject to the preceding sentence, this Agreement
shall be binding upon, inure to the benefit of, and be enforceable by, the
parties and their respective successors and assigns.
9.7. Governing Law.
This Agreement shall be construed in accordance with and governed by
the Law of the State of Delaware (without giving effect to choice of Law
principles thereof).
9.8. Interpretation.
The words "hereof," "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and Section references are to
this Agreement unless otherwise specified. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation." The table of contents, article and
section headings contained in this Agreement are inserted for reference purposes
only and shall not affect the meaning or interpretation of this Agreement. This
Agreement shall be construed without regard to any presumption or other rule
requiring the resolution of any ambiguity regarding the interpretation or
construction hereof against the party causing this Agreement to be drafted.
9.9. Entire Agreement.
This Agreement, including the annexes, exhibits and schedules hereto,
the Company Disclosure Schedule, and the Confidentiality Agreement referred to
herein, embodies the entire agreement and understanding of the parties hereto in
respect of the subject matter contained herein and supersede all prior
agreements and the understandings between the parties with respect to such
subject matter, including that certain letter agreement between the Parent and
the Company, dated March 22, 2005. No discussions regarding or exchange of
drafts or comments in connection with the transactions contemplated herein shall
constitute an agreement among the parties hereto. Any agreement among the
parties shall exist only when the parties have fully executed and delivered this
Agreement.
9.10. Parties in Interest.
This Agreement shall be binding upon and inure solely to the benefit of
each party hereto and its successors and permitted assigns, and, except for the
provisions of Section 5.11, nothing in this Agreement, express or implied, is
intended to or shall confer upon any other person any rights, benefits or
remedies of any nature whatsoever under or by reason of this Agreement.
9.11. Severability.
If any term or other provision of this Agreement is invalid, illegal or
incapable of being enforced by any rule of Law or public policy, all other terms
and provisions of this Agreement shall nevertheless remain in full force and
effect so long as the economics or legal substance of the transactions
contemplated hereby are not affected in any manner materially adverse to any
party. Upon determination that any term or other provision hereof is invalid,
illegal or incapable
of being enforced, the parties hereto shall negotiate in good faith to modify
this Agreement so as to effect the original intent of the parties as closely as
possible to the fullest extent permitted by applicable Law in an acceptable
manner to the end that the transactions contemplated hereby are fulfilled to the
extent possible.
9.12. Counterparts.
This Agreement may be executed by facsimile and in two or more
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument.
[Remainder of page intentionally left blank]
SIGNATURE PAGE TO AGREEMENT AND PLAN OF MERGER
IN WITNESS WHEREOF, the parties hereto have executed this Agreement and
Plan of Merger as of the date first above written.
CORILLIAN CORPORATION
By: /s/ Xxxx Xxxx
---------------------------------
Name: Xxxx Xxxx
Title: President
WIZARD ACQUISITION CORPORATION
By: /s/ Xxxx Xxxx
---------------------------------
Name: Xxxx Xxxx
Title: President
INTELIDATA TECHNOLOGIES CORPORATION
By: /s/ Xxxxxx X. Xxxxxxxx, Xx.
-----------------------------------
Name: Xxxxxx X. Xxxxxxxx, Xx.
Title: Chairman and Chief Executive Officer
