EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
DIVINE, INC.
DI2 ACQUISITION COMPANY
AND
EPRISE CORPORATION
SEPTEMBER 17, 2001
TABLE OF CONTENTS
Page
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ARTICLE I The Merger; Effective Time; Closing.............................................................1
1.1 The Merger......................................................................................1
1.2 Effective Time..................................................................................1
1.3 Closing.........................................................................................2
1.4 Effect of the Merger............................................................................2
1.5 Appraisal Rights................................................................................2
ARTICLE II The Surviving Corporation.......................................................................2
2.1 Certificate of Incorporation; Name..............................................................2
2.2 Bylaws..........................................................................................2
2.3 Additional Actions..............................................................................2
ARTICLE III Directors and Officers of the Surviving Corporation.............................................3
3.1 Directors.......................................................................................3
3.2 Officers........................................................................................3
ARTICLE IV Merger Consideration; Conversion or Cancellation of Shares in the Merger........................3
4.1 Share Consideration for the Merger; Conversion or Cancellation of Shares in the Merger..........3
4.2 Payment for Shares in the Merger................................................................6
4.3 Cash For Fractional Parent Shares...............................................................7
4.4 Transfer of Company Shares after the Effective Time.............................................7
4.5 Lost, Stolen or Destroyed Certificates..........................................................8
4.6 Withholding Rights..............................................................................8
ARTICLE V Representations and Warranties..................................................................8
5.1 Representations and Warranties of Parent and Merger Sub.........................................8
5.2 Representations and Warranties of the Company..................................................18
ARTICLE VI Additional Covenants and Agreements............................................................38
6.1A Conduct of Business of the Company.............................................................38
6.1B Conduct by Parent..............................................................................42
6.2 No Solicitation................................................................................42
6.3 Meeting of Stockholders........................................................................44
6.4 Registration Statement.........................................................................45
6.5 Reasonable Efforts.............................................................................45
6.6 Access to Information..........................................................................46
6.7 Publicity......................................................................................47
6.8 Affiliates of the Company and Parent...........................................................47
6.9 Maintenance of Insurance.......................................................................47
6.10 Representations and Warranties.................................................................47
6.11 Filings; Other Action..........................................................................47
6.12 Tax-Free Reorganization Treatment..............................................................48
6.13 Nasdaq Listing.................................................................................48
6.14 Indemnification................................................................................48
6.15 Sale of Company Software Products..............................................................49
6.16 Registration on Form S-8.......................................................................49
6.17 Section 16(b)..................................................................................49
6.18 Takeover Statutes..............................................................................49
6.19 Further Amendments to Rights Plan..............................................................50
ARTICLE VII Conditions.....................................................................................50
7.1 Conditions to Each Party's Obligations.........................................................50
7.2 Conditions to the Obligations of the Company...................................................51
7.3 Conditions to the Obligations of Parent........................................................52
ARTICLE VIII Termination....................................................................................53
8.1 Termination by Mutual Consent..................................................................53
8.2 Termination by either the Company or Parent....................................................53
8.3 Termination by the Company.....................................................................54
8.4 Termination by Parent..........................................................................54
8.5 Effect of Termination; Termination Fee.........................................................55
ARTICLE IX Miscellaneous and General......................................................................57
9.1 Payment of Expenses............................................................................57
9.2 Non-Survival of Representations and Warranties.................................................57
9.3 Modification or Amendment......................................................................57
9.4 Waiver of Conditions...........................................................................57
9.5 Counterparts...................................................................................58
9.6 Governing Law; Jurisdiction....................................................................58
9.7 Notices........................................................................................58
9.8 Entire Agreement; Assignment...................................................................59
9.9 Parties in Interest............................................................................59
9.10 Certain Definitions............................................................................59
9.11 Severability...................................................................................62
9.12 Specific Performance...........................................................................62
9.13 Recovery of Attorney's Fees....................................................................62
9.14 Captions.......................................................................................62
9.15 No Strict Construction.........................................................................62
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TABLE OF DEFINED TERMS
Alternate Transaction..........................................................................Section 9.10(a)
Agreement.........................................................................................Introduction
Authorized Representatives.........................................................................Section 6.6
Certificate of Merger..............................................................................Section 1.2
Certificates....................................................................................Section 4.2(b)
Closing............................................................................................Section 1.3
Closing Date.......................................................................................Section 1.3
Code..................................................................................................Recitals
Commercial Software....................................................Section 5.1(o)(v) and Section 5.2(o)(x)
Company...........................................................................................Introduction
Company Acquisition Proposal....................................................................Section 6.2(a)
Company Affiliate..................................................................................Section 6.8
Company Affiliate Letter...........................................................................Section 6.8
Company Common Stock..................................................................................Recitals
Company Contract................................................................................Section 5.2(p)
Company Disclosure Schedule........................................................................Section 5.2
Company Embedded Products....................................................................Section 5.2(o)(x)
Company Financial Statements................................................................Section 5.2(h)(ii)
Company Insurance Policies......................................................................Section 5.2(u)
Company Key Employees.......................................................................Section 5.2(p)(ii)
Company Option...............................................................................Section 4.1(c)(i)
Company Option Plans............................................................................Section 5.2(b)
Company Plan Affiliate.......................................................................Section 5.2(n)(i)
Company Proprietary Rights...................................................................Section 5.2(o)(i)
Company Restricted Shares.......................................................................Section 4.1(a)
Company Rights..................................................................................Section 5.2(y)
Company Rights Agreement........................................................................Section 5.2(y)
Company Scheduled Plans......................................................................Section 5.2(n)(i)
Company SEC Reports..........................................................................Section 5.2(h)(i)
Company Software...........................................................................Section 5.2(o)(vii)
Company Software Authors...................................................................Section 5.2(o)(vii)
Company Stock.........................................................................................Recitals
Company Stockholders Meeting....................................................................Section 6.3(a)
Company Superior Proposal.......................................................................Section 6.2(a)
Company Warrant............................................................................Section 4.1(c)(iii)
Confidentiality Agreement..........................................................................Section 6.6
Covered Parties................................................................................Section 6.14(a)
DGCL...............................................................................................Section 1.1
XXXXX........................................................................................Section 5.1(i)(i)
Effective Time.....................................................................................Section 1.2
Encumbrance....................................................................................Section 9.10(b)
Environmental Costs and Liabilities.............................................................Section 5.2(s)
Environmental Laws..............................................................................Section 5.2(s)
ERISA..........................................................................................Section 9.10(c)
ESPP........................................................................................Section 4.1(c)(vi)
Exchange Act....................................................................................Section 5.1(g)
Exchange Agent..................................................................................Section 4.2(a)
Exchange Ratio..................................................................................Section 4.1(a)
Final Delisting Date...........................................................................Section 9.10(d)
GAAP........................................................................................Section 5.1(i)(ii)
Governmental Entity............................................................................Section 9.10(e)
Hazardous Material..............................................................................Section 5.2(s)
HSR Act.........................................................................................Section 5.1(g)
IRS.........................................................................................Section 5.2(n)(ii)
Knowledge......................................................................................Section 9.10(f)
Material Adverse Effect........................................................................Section 9.10(g)
Material Subsidiary............................................................................Section 9.10(h)
Merger................................................................................................Recitals
Merger Sub........................................................................................Introduction
NNM................................................................................................Section 4.3
Other Proxy Statements..........................................................................Section 5.1(l)
Other Registration Statements...................................................................Section 5.1(l)
Parent............................................................................................Introduction
Parent Common Stock...................................................................................Recitals
Parent Disclosure Schedule.........................................................................Section 5.1
Parent Embedded Products.....................................................................Section 5.1(o)(v)
Parent Financial Statements.................................................................Section 5.1(i)(ii)
Parent Option Plans.............................................................................Section 5.1(c)
Parent Proprietary Rights....................................................................Section 5.1(o)(i)
Parent Rights...................................................................................Section 5.1(c)
Parent Rights Agreement.........................................................................Section 5.1(c)
Parent SEC Reports...........................................................................Section 5.1(i)(i)
Parent Shares...................................................................................Section 4.1(a)
Parent Stockholders Meeting.....................................................................Section 6.3(b)
Parties...........................................................................................Introduction
Person.........................................................................................Section 9.10(i)
Post-Merger Exercise Price...................................................................Section 4.1(c)(i)
Proprietary Rights.....................................................Section 5.1(o)(v) and Section 5.2(o)(x)
Proxy Statement....................................................................................Section 6.4
Restraints......................................................................................Section 7.1(c)
Returns........................................................................................Section 9.10(j)
S-4 Registration Statement.........................................................................Section 6.4
SEC..........................................................................................Section 5.1(i)(i)
Securities Act..................................................................................Section 5.1(g)
Share Consideration.............................................................................Section 4.2(a)
Significant Tax Agreement......................................................................Section 9.10(k)
Software Distribution Agreement...................................................................Section 6.15
Stock Merger Exchange Fund......................................................................Section 4.2(a)
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Subsidiary.....................................................................................Section 9.10(l)
Substitute Option............................................................................Section 4.1(c)(i)
Substitute Warrant.........................................................................Section 4.1(c)(iii)
Surviving Corporation..............................................................................Section 1.1
Tax............................................................................................Section 9.10(m)
Taxes..........................................................................................Section 9.10(m)
Termination Date................................................................................Section 8.2(a)
Termination Fee.................................................................................Section 8.5(b)
Transaction Expenses...............................................................................Section 9.1
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EXHIBITS
Form of Certificate of Incorporation of Surviving Corporation...............................Exhibit A
Form of Company Affiliate Letter............................................................Exhibit B
Form of Software Distribution Agreement.....................................................Exhibit C
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AGREEMENT AND PLAN OF MERGER
THIS
AGREEMENT AND PLAN OF MERGER (this "AGREEMENT") is made and
entered into as of September 17, 2001, by and among divine, inc., a
Delaware
corporation ("PARENT"), DI2 Acquisition Company , a
Delaware corporation and a
direct wholly-owned Subsidiary of Parent ("MERGER SUB"), and Eprise Corporation,
a
Delaware corporation (the "COMPANY"). Parent, Merger Sub and the Company are
referred to collectively herein as the "PARTIES". Capitalized terms used herein
are defined as referenced in the Table of Defined Terms contained herein.
RECITALS
WHEREAS, the Board of Directors of each of Parent, Merger Sub and the
Company has determined that it is in the best interests of each corporation and
its respective stockholders that the Company and Parent enter into a business
combination through the merger of the Merger Sub with and into the Company (the
"MERGER") and, in furtherance thereof, has approved the Merger and the
transactions contemplated hereby and declared this Agreement to be advisable to
its respective stockholders;
WHEREAS, pursuant to the Merger, the outstanding shares of the common
stock, par value $0.001 per share, of the Company ("COMPANY COMMON STOCK", and,
together with all other capital stock of the Company, "COMPANY Stock") shall be
converted into the right to receive shares of the Class A common stock, par
value $0.001 per share, of the Parent ("PARENT COMMON STOCK") as set forth
herein; and
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").
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants and agreements set forth herein, the Parties hereby agree
as follows:
ARTICLE I
THE MERGER; EFFECTIVE TIME; CLOSING
1.1 THE MERGER. Upon the terms and subject to the conditions set forth
in this Agreement, and in accordance with the
Delaware General Corporation Law
(the "DGCL"), at the Effective Time, the Merger Sub shall be merged with and
into the Company, the separate corporate existence of the Merger Sub shall
thereupon cease, and the Company shall be the successor or surviving corporation
and shall continue its existence under the laws of the State of
Delaware. The
Company, as the surviving corporation after the consummation of the Merger, is
sometimes hereinafter referred to as the "SURVIVING CORPORATION".
1.2 EFFECTIVE TIME. Subject to the provisions of this Agreement, the
Parties shall cause the Merger to be consummated by filing a duly executed
certificate of merger of the
Company (the "CERTIFICATE OF MERGER") with the Office of the Secretary of State
of the State of
Delaware in such form as required by, and executed in accordance
with, the provisions of Section 251 of the DGCL, as soon as practicable, and
shall take all other action required by law to effect the Merger. The Merger
shall become effective upon such filing or at such later time as is agreed to in
writing by the parties and provided in the Certificate of Merger (the "EFFECTIVE
TIME").
1.3 CLOSING. Unless this Agreement shall have been terminated and the
transactions herein contemplated shall have been abandoned pursuant to ARTICLE
VIII, the closing of the Merger (the "CLOSING") shall take place at 10:00 a.m.,
local time, at the offices of Xxxx, Xxxx & Xxxxx LLC, 00 Xxxx Xxxxxxx Xxxxxx,
Xxxxx 0000, Xxxxxxx, Xxxxxxxx 00000, on the business day all of the conditions
to the obligations of the Parties to consummate the Merger as set forth in
ARTICLE VII have been satisfied or waived, or such other date, time or place as
is agreed to in writing by the Parties (the "CLOSING DATE").
1.4 EFFECT OF THE MERGER. At the Effective Time, the effect of the
Merger shall be as provided in this Agreement and the applicable provisions of
the DGCL. Without limiting the generality of the foregoing, and subject thereto,
at the Effective Time, all property, rights, privileges, powers and franchises
of the Company and Merger Sub shall vest in the Surviving Corporation, and all
debts, liabilities and duties of the Company and Merger Sub shall become the
debts, liabilities and duties of the Surviving Corporation.
1.5 APPRAISAL RIGHTS. In accordance with Section 262 of the DGCL, no
appraisal rights shall be available to the holders of shares of Company Common
Stock in connection with the Merger.
ARTICLE II
THE SURVIVING CORPORATION
2.1 CERTIFICATE OF INCORPORATION; NAME. At the Effective Time, the
certificate of incorporation of the Company shall be amended in its entirety to
read as set forth on EXHIBIT A hereto, and, as so amended, shall be the
certificate of incorporation of the Surviving Corporation, until thereafter
amended as provided therein and by applicable law.
2.2 BYLAWS. At the Effective Time, the by-laws of Merger Sub in effect
immediately prior to the Effective Time shall be the by-laws of the Surviving
Corporation, until thereafter amended as provided therein and by applicable law.
2.3 ADDITIONAL ACTIONS. If, at any time after the Effective Time, the
Surviving Corporation shall consider or be advised that any further deeds,
assignments or assurances in law or any other acts are necessary or desirable to
(a) vest, perfect or confirm, of record or otherwise, in the Surviving
Corporation its right, title or interest in, to or under any of the rights,
properties or assets of the Company, or (b) otherwise carry out the provisions
of this Agreement, the officers and directors of the Surviving Corporation are
authorized to take, and will take, any and all such lawful actions.
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ARTICLE III
DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION
3.1 DIRECTORS. The directors of Merger Sub shall be the initial
directors of the Surviving Corporation, until their respective successors have
been duly elected or appointed and qualified or until their earlier death,
resignation or removal in accordance with the Surviving Corporation's
certificate of incorporation and by-laws.
3.2 OFFICERS. The officers of Merger Sub shall be the initial officers
of the Surviving Corporation, until their successors have been duly elected or
appointed and qualified or until their earlier death, resignation or removal in
accordance with the Surviving Corporation's certificate of incorporation and
by-laws.
ARTICLE IV
MERGER CONSIDERATION; CONVERSION OR CANCELLATION OF SHARES IN THE MERGER
4.1 SHARE CONSIDERATION FOR THE MERGER; CONVERSION OR CANCELLATION OF
SHARES IN THE MERGER. At the Effective Time, the manner of converting or
canceling shares of capital stock of the Company and Merger Sub shall be as
follows:
(a) CONVERSION OF COMPANY STOCK. Subject to adjustment, if
applicable, pursuant to SECTIONS 4.1(e) hereof, and subject to the
provisions of SECTION 4.3 hereof, each share of Company Common Stock
issued and outstanding immediately prior to the Effective Time
(excluding any shares of Company Common Stock described in SECTION
4.1(d) but including any shares of Company Common Stock that are
restricted under the applicable Company Option Plans (the "COMPANY
RESTRICTED SHARES")), shall, by virtue of the Merger and without any
action on the part of the holder thereof, be converted automatically
into the right to receive 2.4233 shares of Parent Common Stock. The
shares of Parent Common Stock issuable in connection with the Merger
and the transactions contemplated thereby are referred to herein as the
"PARENT SHARES". At the Effective Time, all shares of Company Common
Stock converted into the right to receive Parent Shares pursuant to
this SECTION 4.1(a) shall, by virtue of the Merger and without any
action on the part of the holders thereof, cease to be outstanding, be
canceled and cease to exist, and each holder of a certificate
theretofore representing any such shares of Company Common Stock shall
thereafter cease to have any rights with respect to such shares of
Company Stock, except the right to receive, upon the surrender of such
certificate (or other appropriate action) in accordance with SECTION
4.2, the number of Parent Shares specified above and cash in lieu of
fractional shares. The ratio of shares of Parent Common Stock issuable
per share of Company Common Stock, as adjusted from time to time
pursuant to SECTION 4.1(e), is sometimes hereinafter referred to as the
"EXCHANGE RATIO". All Parent Shares issued in exchange for Company
Restricted Shares shall become vested upon the same terms and
conditions as were applicable to such Company Restricted Shares
immediately prior to the Effective
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Time, after giving effect to any provision contained in the Company
Option Plans providing for accelerated vesting as a result of this
Agreement.
(b) STOCK OF MERGER SUB. Each share of common stock, par value
$0.001 per share, of the Merger Sub issued and outstanding immediately
prior to the Effective Time shall be converted into, and shall become,
one share of common stock, par value $0.001 per share, of the Surviving
Corporation.
(c) OUTSTANDING OPTIONS, WARRANTS AND PURCHASE RIGHTS.
(i) Each option to purchase shares of Company Common
Stock that is outstanding and unexercised pursuant to the
Company Option Plans in effect on the date hereof (each, a
"COMPANY OPTION"), and for which the result of dividing (A)
the exercise price of such Company Option by (B) the Exchange
Ratio and rounding the result to the nearest tenth of one cent
(hereinafter, the "POST-MERGER EXERCISE PRICE") is greater
than the closing sale price of the Parent Shares on the
trading day immediately preceding the Effective Time, shall,
at the Effective Time, become and represent an option (a
"SUBSTITUTE OPTION") to purchase a number of Parent Shares
equal to the number of shares of Company Stock for which such
Company Option was exercisable, at an exercise price per share
equal to the closing sale price of the Parent Shares on the
trading day immediately preceding the Effective Time.
(ii) Each Company Option for which the Post-Merger
Exercise Price is less than or equal to the closing sale price
of the Parent Shares on the trading day immediately preceding
the Effective Time shall, at the Effective Time, become and
represent a Substitute Option to purchase the number of Parent
Shares (rounded to the nearest full share) determined by
multiplying (X) the number of Company Shares subject to such
Company Option immediately prior to the Effective Time by (Y)
the Exchange Ratio, at an exercise price per share of Parent
Shares equal to the Post-Merger Exercise Price.
(iii) At the Effective Time, each Company Promise to
Grant Stock Options dated June 11, 2001 shall be assumed by
Parent, and Parent shall grant to each such promisee a
Substitute Option to purchase the number of Parent Shares
(rounded to the nearest full share) determined by multiplying
(X) the number of Company Shares subject to such Promise
immediately prior to the Effective Time by (Y) the Exchange
Ratio, at an exercise price per share of Parent Shares equal
to the closing sale price of the Parent Shares on the trading
day immediately preceding the Effective Time.
(iv) It is the intent of the Parties that the
Substitute Options shall qualify following the Effective Time
as "incentive stock options" as defined in Section 422 of the
Code to the extent that the related Company
4
Options qualified as incentive stock options immediately prior
to the Effective Time, and the provisions of this SECTION
4.1(c) shall be applied consistent with such intent.
(v) Upon the Effective Time, each warrant to purchase
shares of Company Common Stock that is outstanding and
unexercised (each, a "COMPANY WARRANT") shall become and
represent a warrant to purchase (a "SUBSTITUTE WARRANT") a
number of Parent Shares at an exercise price as determined in
accordance with the terms of such Company Warrant.
(vi) After the Effective Time, except as provided
above in this SECTION 4.1(c), each Substitute Option and
Substitute Warrant shall be exercisable upon the same terms
and conditions as were applicable under the related Company
Option or Company Warrant or Promise to Grant Stock Options,
as the case may be, immediately prior to the Effective Time
after giving effect to any provision contained in such Company
Option, Company Warrant or related agreement, as the case may
be, providing for accelerated vesting as a result of this
Agreement.
(vii) The Company agrees that, after the date of this
Agreement, it will not grant any stock appreciation rights or
limited stock appreciation rights and will not permit cash
payments to holders of Company Options or Company Warrants in
lieu of the substitution therefor of Substitute Options, as
described in this SECTION 4.1(c). Parent will reserve a
sufficient number of Parent Shares for issuance under this
SECTION 4.1(c) and SECTION 6.16 hereof.
(viii) Upon the Effective Time, each right to
purchase shares of Company Common Stock that is outstanding
and unexercised under the Company's 2000 Employee Stock
Purchase Plan shall be converted into a right to purchase
shares of Parent Common Stock under Parent's 2000 Employee
Stock Purchase Plan (the "ESPP") in accordance with the terms
thereof.
(d) CANCELLATION OF OTHER CAPITAL STOCK, AND TREASURY STOCK.
All of the shares of Company Stock that are owned by the Company as
treasury stock and all of the capital stock of the Company other than
the Company Common Stock, shall automatically cease to be outstanding,
shall be canceled and shall cease to exist and no Parent Shares shall
be delivered in exchange therefor.
(e) ADJUSTMENT TO EXCHANGE RATIO FOR ORGANIC CHANGES. The
Exchange Ratio shall be adjusted to reflect appropriately the effect of
any stock split, reverse stock split, stock dividend (including any
dividend or distribution of securities convertible into or exercisable
or exchangeable for shares of Parent Common Stock), extraordinary cash
dividend, reorganization, recapitalization, reclassification,
combination, exchange of shares or other like change with respect
5
to shares of Parent Common Stock occurring or having a record date on
or after the date hereof and prior to the Effective Time.
4.2 PAYMENT FOR PARENT SHARES IN THE MERGER. The manner of exchanging
certificates formerly representing shares of Company Common Stock for
certificates representing shares of Parent Common Stock in the Merger shall be
as follows:
(a) EXCHANGE AGENT. On or prior to the Closing Date, Parent
shall make available to Computershare Investor Services, LLC, or other
entity mutually agreed upon by the Parties (the "EXCHANGE AGENT"), for
the benefit of the holders of shares of Company Common Stock, a
sufficient number of certificates representing the Parent Shares
required to effect the delivery of the aggregate consideration in
Parent Shares required to be issued pursuant to the terms hereof
(collectively, the "SHARE CONSIDERATION" and the certificates
representing the shares of Parent Common Stock comprising such
aggregate Share Consideration being referred to hereinafter as the
"STOCK MERGER EXCHANGE FUND"). The Exchange Agent shall, pursuant to
irrevocable instructions, deliver the Share Consideration out of the
Stock Merger Exchange Fund. The Stock Merger Exchange Fund shall not be
used for any purpose other than as set forth in this Agreement.
(b) EXCHANGE PROCEDURES. Promptly after the Effective Time,
the Exchange Agent shall mail to each holder of record of a certificate
or certificates that immediately prior to the Effective Time
represented outstanding shares of Company Common Stock (the
"CERTIFICATES") (i) a form of letter of transmittal, in a form
reasonably satisfactory to the Parties (which 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 (ii) instructions for use in effecting the
surrender of the Certificates for payment therefor. Subject to SECTION
4.5, upon surrender of Certificates for cancellation to the Exchange
Agent, together with such letter of transmittal duly executed and any
other required documents, the holder of such Certificates shall be
entitled to receive for each of the shares of Company Common Stock
represented by such Certificates the Share Consideration, without
interest, allocable to such Certificates and the Certificates so
surrendered shall forthwith be canceled. Until so surrendered, such
Certificates shall represent solely the right to receive the Share
Consideration allocable to such Certificates.
(c) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES. No
dividends or other distributions on Parent Shares, having a record date
after the Effective Time and payable to the holders of record thereof
after the Effective Time will be paid to Persons entitled by reason of
the Merger to receive Parent Shares until such Persons surrender their
Certificates as provided in SECTION 4.2(b) above. Upon such surrender,
there shall be paid to the Person in whose name the Parent Shares are
issued any dividends or other distributions having a record date after
the Effective Time and payable with respect to such Parent Shares
between the Effective Time and the time of such surrender. After such
surrender, at the
6
appropriate payment date, there shall be paid to the Person in whose
name the Parent Shares are issued any dividends or other distributions
on such Parent Shares with a payment date after such surrender which
shall have a record date after the Effective Time. In no event shall
the Persons entitled to receive such dividends or other distributions
be entitled to receive interest on such dividends or other
distributions.
(d) TRANSFERS OF OWNERSHIP. If any certificate representing
Parent Shares is to be issued in a name other than that in which the
Certificate surrendered in exchange therefor is registered, it shall be
a condition of such exchange that the Certificate so surrendered shall
be properly endorsed and otherwise in proper form for transfer and that
the Person requesting such exchange shall pay to the Exchange Agent any
transfer or other taxes required by reason of the issuance of
certificates for such Parent Shares, or shall establish to the
satisfaction of the Exchange Agent that such tax has been paid or is
not applicable.
(e) NO LIABILITY. Neither the Exchange Agent nor any of the
Parties shall be liable to a holder of shares of Company Stock for any
Parent Shares, cash in lieu of fractional Parent Shares or any dividend
to which the holders thereof are entitled, that are delivered to a
public official pursuant to applicable escheat law. The Exchange Agent
shall not be entitled to vote or exercise any rights of ownership with
respect to the Parent Shares held by it from time to time hereunder,
except that it shall receive and hold all dividends or other
distributions paid or distributed with respect to such Parent Shares
for the account of the Persons entitled thereto.
(f) TERMINATION OF FUNDS. Subject to applicable law, any
portion of the Stock Merger Exchange Fund that remains unclaimed by the
former stockholders of the Company for one (1) year after the Effective
Time shall be delivered to Parent, upon demand of Parent, and any
former stockholder of the Company shall thereafter look only to Parent
for payment of such stockholder's applicable claim for the Share
Consideration for such stockholder's shares of Company Common Stock.
4.3 CASH FOR FRACTIONAL PARENT SHARES. No fractional Parent Shares
shall be issued in connection with the Merger. If a holder of shares of Company
Common Stock is entitled to receive any fractional Parent Shares based on
application of the Exchange Ratio to the total number of shares of Company
Common Stock held by such holder immediately prior to the Effective Time, such
fractional Parent Shares shall be rounded up or down to the nearest whole number
(with fractions equal to or greater than 0.5 being rounded up).
4.4 TRANSFER OF COMPANY SHARES AFTER THE EFFECTIVE TIME. After the
Effective Time, there shall be no further registration of transfers of shares of
Company Stock. All Share Consideration issued upon the surrender for exchange of
shares of Company Common Stock in accordance with the terms hereof shall be
deemed to have been issued in full satisfaction of all rights pertaining to such
shares of Company Common Stock. If, after the Effective Time,
7
Certificates are presented to the Exchange Agent, the Surviving Corporation or
the Parent for any reason, they shall be canceled and exchanged as provided in
this ARTICLE IV.
4.5 LOST, STOLEN OR DESTROYED CERTIFICATES. In the event any
Certificate shall have been lost, stolen or destroyed, the Exchange Agent shall
issue in exchange for such lost, stolen or destroyed Certificate, upon the
making and delivery of an affidavit of that fact by the holder thereof, such
Parent Shares, cash for fractional shares, if any, and any dividends or other
distributions to which the owner thereof is entitled; PROVIDED, HOWEVER, that
Parent may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed Certificate to
deliver a customary bond in such sum as it may reasonably direct as indemnity
against any claim that may be made against Parent, the Surviving Corporation or
the Exchange Agent with respect to the Certificate alleged to have been lost,
stolen or destroyed.
4.6 WITHHOLDING RIGHTS. Each of the Surviving Corporation and Parent
shall be entitled to deduct and withhold from the consideration otherwise
payable to any Person pursuant to this ARTICLE IV such amounts as it is required
to deduct and withhold with respect to the making of such payment under any
provision of federal, state, local or foreign tax law. If the Surviving
Corporation or Parent, as the case may be, so withholds amounts, such amounts
shall be treated for all purposes of this Agreement as having been paid to the
holder of the shares of Company Common Stock, Company Option or Company Warrant,
as the case may be, in respect of which the Surviving Corporation or Parent, as
the case may be, made such deduction and withholding.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.1 REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB. Parent and
Merger Sub hereby represent and warrant to the Company that the statements
contained in this SECTION 5.1 are true and correct, except to the extent
specifically set forth on the disclosure schedule delivered contemporaneously
with this Agreement by Parent to the Company (the "PARENT DISCLOSURE SCHEDULE").
The Parent Disclosure Schedule shall be arranged in sections and paragraphs
corresponding to the lettered and numbered paragraphs contained in this SECTION
5.1, and the disclosure in any paragraph shall qualify only the corresponding
paragraph in this SECTION 5.1 (provided that the listing of an item in one
paragraph of the Parent Disclosure Schedule shall be deemed to be a listing in
each paragraph of the Parent Disclosure Schedule and to apply to any other
representation and warranty of the Parent in this Agreement to the extent that
it is reasonably apparent from a reading of such disclosure item that it would
also qualify or apply to such other paragraph or representation and warranty).
(a) CORPORATE ORGANIZATION AND QUALIFICATION. Each of Parent,
its Material Subsidiaries and the Merger Sub is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation and is qualified and in good standing as
a foreign corporation in each jurisdiction where the properties owned,
leased or operated, or the business conducted, by it require such
qualification, except where failure to be so qualified would not,
8
individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect on Parent. Each of Parent, its Material
Subsidiaries and the Merger Sub has all requisite power and authority
(corporate or otherwise) to own its properties and to carry on its
business as it is now being conducted. Each of Parent and Merger Sub
has heretofore delivered or made available to the Company complete and
correct copies of its certificate of incorporation and by-laws, each as
amended to date.
(b) OPERATIONS OF MERGER SUB. Merger Sub is a direct,
wholly-owned Subsidiary of Parent, was formed solely for the purpose of
engaging in the transactions contemplated hereby, has engaged in no
other business activities and has conducted its operations only as
contemplated hereby.
(c) CAPITALIZATION. The authorized capital stock of Parent
consists of (i) 2,500,000,000 shares of Parent Common Stock, of which
164,124,076 shares were issued and outstanding on September 14, 2001,
and 61,000,000 of which are validly reserved for issuance in connection
with the Merger, (ii) 100,000,000 shares of Class C common stock,
$0.001 par value per share, of which none were issued and outstanding
on the date hereof, and (iii) 50,000,000 shares of preferred stock,
$0.001 par value per share, 500,000 shares of which have been
designated Series A Junior Participating Preferred Stock. No shares of
Series A Junior Participating Preferred Stock are issued and
outstanding as of the date hereof. All of the outstanding shares of
capital stock of Parent have been duly authorized and validly issued
and are fully paid and nonassessable. Except as set forth on SECTION
5.1(c) of the Parent Disclosure Schedule, the Parent has no outstanding
stock appreciation rights, phantom stock or similar rights, except, as
of September 14, 2001, options to purchase 21,653,545 shares of Parent
Common Stock were outstanding under Parent's 1999 Stock Incentive Plan
and 893,689 shares are reserved for future grant under such Plan,
1,096,786 shares of Parent Common Stock had been issued pursuant to
Parent's 2000 Employee Stock Purchase Plan and 3,069,880 shares are
reserved for issuance under such Plan, and 19,112,287 options to
purchase shares of Parent Common Stock were outstanding under Parent's
2001 Stock Incentive Plan and 9,887,713 shares are reserved for future
grants under such Plan (the 1999 Stock Incentive Plan, 2000 Employee
Stock Purchase Plan and 2001 Stock Incentive Plan collectively, the
"PARENT OPTION PLANS"). As of September 14, 2001, except as set forth
on SECTION 5.1(c) of the Parent Disclosure Schedule, other than options
and shares issued or outstanding under the Parent Option Plans and the
Rights (the "PARENT RIGHTS") under the Rights Agreement, dated as of
February 12, 2001, between Parent and Computershare Investor Services,
LLC, as amended (the "PARENT RIGHTS AGREEMENT"), there are 2,100,007
outstanding or authorized options, warrants, calls, rights (including
preemptive rights), commitments or any other agreements of any
character to which the Parent is a party, or by which it may be bound,
requiring it to issue, transfer, grant, sell, purchase, redeem or
acquire any shares of capital stock or any of its securities or rights
convertible into, exchangeable for, or evidencing the right to
subscribe for, any shares of capital stock of Parent. Except as set
forth on SECTION 5.1(c) of the Parent Disclosure Schedule, there are
9
no stockholder agreements, voting trusts or other agreements or
understandings to which the Parent is a party or by which it is bound
relating to the voting of any shares of the capital stock of the
Parent. The authorized capital stock of Merger Sub consists of 1,000
shares of common stock, $0.001 par value per share, 1,000 shares of
which are issued and outstanding and held by Parent.
(d) LISTINGS. Parent's securities are not listed, or quoted,
for trading on any U.S. domestic or foreign securities exchange, other
than the NNM. When issued, each Parent Share will be duly listed and
admitted for trading on the NNM.
(e) AUTHORITY RELATIVE TO THIS AGREEMENT. The board of
directors of Merger Sub has approved this Agreement and declared it and
the Merger to be advisable, and Merger Sub has the requisite corporate
power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The board of directors
of Parent has declared the Merger and the related issuance of Parent
Shares advisable, has duly and validly authorized this Agreement and
the consummation by Parent of the transactions contemplated hereby and
has recommended that the stockholders of Parent approve the Merger and
the related issuance of shares of Parent Common Stock and Parent has
the requisite corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. No
other corporate proceedings on the part of Parent are necessary to
authorize this Agreement or to consummate the transactions contemplated
hereby, other than the approval of the issuance of the Parent Shares
pursuant to this Agreement by the stockholders of Parent in accordance
with the rules and regulations of the NNM. The affirmative vote of the
holders of a majority in interest of the stock present or represented
by proxy at the Parent Stockholders Meeting, provided a quorum is
present, is sufficient for Parent's stockholders to approve the
issuance of shares of Parent Common Stock in connection with the
Merger, and no other approval of any holder of any securities of Parent
is required in connection with the consummation of the transactions
contemplated hereby. This Agreement and the consummation by Parent and
Merger Sub of the transactions contemplated hereby have been duly and
validly authorized by the boards of directors of Parent and Merger Sub
and by Parent as the sole stockholder of Merger Sub. This Agreement has
been duly and validly executed and delivered by Parent and Merger Sub
and, assuming this Agreement constitutes the valid and binding
agreement of the Company, constitutes the valid and binding agreement
of Parent and Merger Sub, enforceable against Parent and Merger Sub in
accordance with its terms, subject, as to enforceability, to
bankruptcy, insolvency, reorganization and other laws of general
applicability relating to or affecting creditors' rights and to general
principles of equity.
(f) PRESENT COMPLIANCE WITH OBLIGATIONS AND LAWS. Neither
Parent nor any of its Material Subsidiaries is: (i) in violation of its
certificate of incorporation, by-laws or similar documents; (ii) in
default in the performance of any obligation, agreement or condition of
any debt instrument which (with or
10
without the passage of time or the giving of notice, or both) affords
to any Person the right to accelerate any indebtedness or terminate any
right; (iii) in default under or breach of (with or without the passage
of time or the giving of notice) any other contract to which it is a
party or by which it or its assets are bound; or (iv) in violation of
any law, regulation, administrative order or judicial order, decree or
judgment (domestic or foreign) applicable to it or its business or
assets, except where any violation, default or breach under items (ii),
(iii), or (iv) would not reasonably be expected to, individually or in
the aggregate, have a Material Adverse Effect on Parent.
(g) CONSENTS AND APPROVALS; NO VIOLATION. Neither the
execution and delivery of this Agreement nor the consummation by Parent
of the transactions contemplated hereby will (i) conflict with or
result in any breach of any provision of the certificate of
incorporation (or other similar documents) or by-laws (or other similar
documents) of Parent; (ii) require any consent, approval, authorization
or permit of, or registration or filing with or notification to, any
governmental or regulatory authority, in each case, by or on behalf of
Parent, except (A) in connection with the applicable requirements, if
any, of the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as
amended (the "HSR ACT"), (B) pursuant to the applicable requirements of
the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder (the "SECURITIES ACT") and the Securities
Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder (the "EXCHANGE ACT") (including a Schedule 13D
with regard to the Parent Stockholders Agreement in accordance with the
Exchange Act), and the NNM, (C) the filing of the Certificate of Merger
pursuant to the DGCL and appropriate documents with the relevant
authorities of other states in which Parent is authorized to do
business, (D) as may be required by any applicable state securities
laws, (E) the consents, approvals, orders, authorizations,
registrations, declarations and filings required under the antitrust or
competition laws of foreign countries identified in the Parent
Disclosure Schedule, or (F) where the failure to obtain such consent,
approval, authorization or permit, or to make such registration, filing
or notification, would not reasonably be expected to, individually or
in the aggregate, have a Material Adverse Effect on Parent or adversely
affect the ability of Parent to consummate the transactions
contemplated hereby; (iii) result in a violation or breach of, or
constitute (with or without notice or lapse of time or both) a default
(or give rise to any right of termination, cancellation or acceleration
or lien or other charge or encumbrance) under any of the terms,
conditions or provisions of any indenture, note, license, lease,
agreement or other instrument or obligation to which Parent or any of
its Material Subsidiaries is a party or by which any of their assets
may be bound, except for such violations, breaches and defaults (or
rights of termination, cancellation or acceleration or lien or other
charge or encumbrance) as to which requisite waivers or consents have
been obtained or which, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect on Parent or
adversely affect the ability of Parent to consummate the transactions
contemplated hereby; (iv) cause the suspension or revocation of any
authorizations, consents, approvals or licenses currently in
11
effect which, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect on Parent; or (v) assuming
the consents, approvals, authorizations or permits and registrations,
filings or notifications referred to in this SECTION 5.1(g) are duly
and timely obtained or made, violate any order, writ, injunction,
decree, statute, rule or regulation applicable to Parent or any of its
Material Subsidiaries or to any of their respective assets, except for
violations which, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect on Parent or
adversely affect the ability of Parent to consummate the transactions
contemplated hereby. Without limiting the foregoing, on or prior to the
date of this Agreement, Parent has obtained the written consent of
Computer Associates International, Inc. to this transaction under those
certain Non-Competition Agreements, dated as of March 29, 1999, among
PLATINUM TECHNOLOGIES International, INC. and certain principal
officers of Parent.
(h) LITIGATION. Except as set forth in the Parent SEC Reports
filed prior to the date hereof or in SECTION 5.1(h) of the Parent
Disclosure Schedule, there are no actions, suits, claims,
investigations or proceedings pending or, to the Knowledge of Parent,
threatened against Parent or any of its Subsidiaries that, individually
or in the aggregate, could reasonably be expected to result in
obligations or liabilities of Parent or any of its Subsidiaries that,
individually or in the aggregate, could reasonably be expected to have
a Material Adverse Effect on Parent or adversely affect the ability of
the Parties to consummate the transactions contemplated by this
Agreement. Neither Parent nor any of its Material Subsidiaries is
subject to any outstanding judgment, order, writ, injunction or decree
which (i) has or may have the effect of prohibiting or impairing any
business practice of Parent or any of its Subsidiaries, any acquisition
of property (tangible or intangible) by Parent or any of its
Subsidiaries, the conduct of the business by Parent or any of its
Subsidiaries, or Parent's ability to perform its obligations under this
Agreement or (ii) individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect on Parent.
(i) SEC REPORTS; FINANCIAL STATEMENTS.
(i) Parent has filed all forms, reports and documents
with the Securities and Exchange Commission (the "SEC")
required to be filed by it pursuant to the federal securities
laws and the SEC rules and regulations thereunder, all of
which complied in all material respects with all applicable
requirements of the Securities Act and the Exchange Act
(collectively, the "PARENT SEC REPORTS") and all of which are
available through the SEC's Electronic Data Gathering and
Retrieval System ("XXXXX"). None of the Parent SEC Reports,
including, without limitation, any financial statements or
schedules included therein, at the time filed (or if amended
or superseded by a filing prior to the date of this Agreement,
then on the date of such filing) contained any untrue
statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to
make the statements therein, in light of the
12
circumstances under which they were made, not misleading. None
of Parent's Subsidiaries is required to file any forms,
reports or other documents with the SEC.
(ii) The consolidated balance sheets and the related
consolidated statements of income, stockholders' equity
(deficit) and cash flows (including the related notes thereto)
of Parent included in the Parent SEC Reports (collectively,
"PARENT FINANCIAL STATEMENTS") 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 generally
accepted accounting principles applied on a basis consistent
throughout the periods involved ("GAAP") (except as otherwise
noted therein or, in the case of unaudited interim financial
statements, as may be permitted by the SEC on Form 10-Q under
the Exchange Act), and present fairly the consolidated
financial position of Parent and its consolidated Subsidiaries
as of their respective dates, and the consolidated results of
their operations and their cash flows for the periods
presented therein, except that the unaudited interim financial
statements do not include footnote disclosure of the type
associated with audited financial statements and were or are
subject to normal and recurring year-end adjustments which
were not or are not expected to be material in amount.
(iii) Since June 30, 2001, there has not been any
material change, by Parent or any of its Subsidiaries, in
accounting principles, methods or policies for financial
accounting purposes, except as required by concurrent changes
in generally accepted accounting principles, or as disclosed
in the Parent SEC Reports. There are no material amendments or
modifications to agreements, documents or other instruments
which previously had been filed by Parent with the SEC
pursuant to the Securities Act or the Exchange Act, which have
not been filed with the SEC but which are required to be
filed.
(j) NO LIABILITIES. Neither Parent nor any of its Subsidiaries
has any material indebtedness, obligations or liabilities of any kind
(whether accrued, absolute, contingent or otherwise, and whether due or
to become due or asserted or unasserted), and, to the Knowledge of
Parent, there is no reasonable basis for the assertion of any claim
with respect to any indebtedness, obligation or liability of any nature
against Parent or any of its Subsidiaries, except for indebtedness,
obligations and liabilities (i) that are fully reflected in, reserved
against or otherwise described in the most recent Parent Financial
Statements, (ii) that have been incurred after the date of the most
recent Parent Financial Statements in the ordinary course of business,
consistent with past practice, (iii) that are obligations to perform
under executory contracts in the ordinary course of business (none of
which is a liability resulting from a breach of contract or warranty,
tort, infringement or legal action), or (v) that would not reasonably
be expected to have, individually or in the aggregate, a Material
Adverse Effect on Parent.
13
(k) ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as described
in the Parent SEC Reports or as otherwise set forth in the Parent
Disclosure Schedule, since June 30, 2001, except with respect to the
actions contemplated by this Agreement, there has not been (i) any
Material Adverse Effect on Parent (or the occurrence or failure to
occur of any event that would reasonably be expected to result in a
Material Adverse Effect on Parent); (ii) any damage, destruction or
loss of any assets of Parent or any of its Material Subsidiaries
(whether or not covered by insurance) that has had or would reasonably
be expected to have, individually or in the aggregate, a Material
Adverse Effect on Parent; (iii) any material change by Parent in its
accounting methods, principles or practices; (iv) any revaluation by
the Parent or any of its Subsidiaries of any of its or their assets
that would reasonably be expected to result in a Material Adverse
Effect on Parent; (v) any labor dispute or charge of unfair labor
practice (other than routine individual grievances), which,
individually or in the aggregate, has had or would reasonably be
expected to have a Material Adverse Effect on Parent, any activity or
proceeding by a labor union or representative thereof to organize any
employee of Parent or any of its Subsidiaries or any campaign being
conducted to solicit authorization from employees to be represented by
such labor union in each case which, individually or in the aggregate,
has had or could reasonably be expected to have a Material Adverse
Effect on Parent; or (vi) any waiver by Parent or any of its
Subsidiaries of any rights that would reasonably be expected to result
in a Material Adverse Effect on Parent.
(l) S-4 REGISTRATION STATEMENT AND PROXY STATEMENT/PROSPECTUS.
None of the information supplied or to be supplied by Parent for
inclusion or incorporation by reference in the S-4 Registration
Statement or the Proxy Statement will (i) in the case of the S-4
Registration Statement, at the time it becomes effective 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 not misleading, or (ii) in the
case of the Proxy Statement, at the time of the mailing of the Proxy
Statement and at the time of the Company Stockholders Meeting and
Parent Stockholders Meeting (if necessary) and at the Effective Time,
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which
they are made, not misleading. If at any time prior to the Effective
Time any event with respect to Parent, Merger Sub or any of their
respective officers and directors or any of its Subsidiaries should
occur which is required to be described in an amendment of, or a
supplement to, the Proxy Statement or the S-4 Registration Statement,
Parent shall promptly inform the Company so that such event may be so
described, and such amendment or supplement shall be promptly filed
with the SEC and, as required by law, disseminated to the stockholders
of the Company. The S-4 Registration Statement will (with respect to
Parent and Merger Sub) comply as to form in all material respects with
the requirements of the Securities Act. The Proxy Statement will (with
respect to Parent and Merger Sub) comply as to form in all material
respects with the requirements of the Exchange Act. Notwithstanding the
foregoing, Parent and
14
Merger Sub make no representation or warranty with respect to any
information supplied by the Company or any of its affiliates or
advisors which is contained in any of the foregoing documents. Any
registration statement(s) filed with the SEC by Parent between the date
hereof and the Effective Time (other than the S-4 Registration
Statement) are referred to collectively herein as the "OTHER
REGISTRATION STATEMENTS". Any proxy statement(s) filed with the SEC by
Parent between the date hereof and the Effective Time (other than the
Proxy Statement) are referred to collectively herein as the "OTHER
PROXY STATEMENTS". None of the information supplied or to be supplied
by Parent for inclusion or incorporation by reference in (or, to
Parent's Knowledge, any other information included or incorporated by
reference into) the Other Registration Statements or the Other Proxy
Statements will (i) in the case of the Other Registration Statements,
at the time they become effective 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 contained therein not misleading, or (ii) in the case of the
Other Proxy Statements, at the time of the mailing of such Other Proxy
Statement and at the time of any stockholder action related thereto and
at the Effective Time, contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(m) TAXES.
(i) Parent and each of its Material Subsidiaries has
timely filed (after taking into account any extensions to
file) all federal, state, local and foreign Returns required
by applicable Tax law to be filed by Parent and each of its
Material Subsidiaries. All Taxes owed by Parent or any of its
Material Subsidiaries to a taxing authority, or for which
Parent or any of its Material Subsidiaries is liable, whether
to a taxing authority or to other Persons or entities under a
Significant Tax Agreement, as of the date hereof, have been
paid and, as of the Effective Time, will have been paid. All
Returns were true and correct in all material respects when
filed. Other than any reserve for deferred Taxes established
to reflect timing differences between book and Tax treatment,
Parent has made accruals for Taxes on the Parent Financial
Statements which are adequate to cover any Tax liability of
Parent and each of its Subsidiaries determined in accordance
with generally accepted accounting principles through the date
of the Parent Financial Statements.
(ii) Parent and each of its Material Subsidiaries
have withheld with respect to its employees, creditors,
independent contractors, stockholders or other parties all
federal and state income taxes, FICA, FUTA and other Taxes
required to be withheld.
(iii) Except as set forth in SECTION 5.1(m) of the
Parent Disclosure Schedule, there is no Tax deficiency
outstanding, assessed, or
15
to Parent's Knowledge, proposed against Parent or any of its
Material Subsidiaries. Neither Parent nor any of its Material
Subsidiaries have executed or requested any waiver of any
statute of limitations on or extending the period for the
assessment or collection of any federal or material state Tax
that is still in effect. There are no liens for Taxes on the
assets of Parent or of any of its Material Subsidiaries other
than with respect to Taxes not yet due and payable.
(iv) Except as set forth in SECTION 5.1(m) of the
Parent Disclosure Schedule, to Parent's Knowledge, no federal
or state Tax audit or other examination of Parent or any of
its Material Subsidiaries is presently in progress, nor has
Parent or any of its Material Subsidiaries been notified
either in writing or orally of any request for such federal or
state Tax audit or other examination.
(v) Neither Parent nor any of its Material
Subsidiaries has filed any consent agreement under Section
341(f) of the Code or agreed to have Section 341(f)(2) of the
Code apply to any disposition of a subsection (f) asset (as
defined in Section 341(f)(4) of the Code) owned by Parent.
(n) UNLAWFUL PAYMENTS AND CONTRIBUTIONS. To the Knowledge of
Parent, neither Parent, any Subsidiary of Parent nor any of their
respective directors, officers, employees or agents has, with respect
to the businesses of Parent or its Subsidiaries, (i) used any funds for
any unlawful contribution, endorsement, gift, entertainment or other
unlawful expense relating to political activity; (ii) made any direct
or indirect unlawful payment to any foreign or domestic government
official or employee; (iii) violated or is in violation of any
provision of the Foreign Corrupt Practices Act of 1977, as amended; or
(iv) made any bribe, rebate, payoff, influence payment, kickback or
other unlawful payment to any Person or entity.
(o) PARENT INTANGIBLE PROPERTY.
(i) Except as set forth in SECTION 5.1(o) of the
Parent Disclosure Schedule, Parent owns, or is licensed, or
otherwise possesses legally enforceable rights, to use, sell
or license, as applicable, all Proprietary Rights (excluding
in each case Commercial Software) used, sold, distributed or
licensed in or as a part of the business of Parent and its
Material Subsidiaries as currently conducted ("PARENT
PROPRIETARY RIGHTS").
(ii) Except as set forth in SECTION 5.1(o) of the
Parent Disclosure Schedule, or except for Commercial Software
and Parent Embedded Products for which Parent has valid
non-exclusive licenses that are adequate for the conduct of
Parent's business, Parent is the sole and exclusive owner of
the Parent Proprietary Rights (free and clear of any
Encumbrances), and except for non-exclusive licenses entered
into in the
16
ordinary course of business, has sole and exclusive rights to
the use and distribution therefor or the material covered
thereby in connection with the services or products in respect
of which such Parent Proprietary Rights are currently being
used, sold, licensed or distributed in the course of or as
part of the business of Parent as currently conducted.
(iii) Except as disclosed in SECTION 5.1(o) of the
Parent Disclosure Schedule, to the Knowledge of Parent (A)
Parent has not materially infringed on any intellectual
property rights of any third Persons and (B) none of the
Parent Proprietary Rights materially infringes on any
intellectual property rights of any third Persons, except as
would not, individually or in the aggregate, be reasonably
expected to result in a Material Adverse Effect on Parent.
(iv) Except as disclosed in SECTION 5.1(o) of the
Parent Disclosure Schedule, no actions, suits, claims,
investigations or proceedings with respect to the Parent
Proprietary Rights (other than Parent Embedded Products) are
pending or, to the Knowledge of Parent, threatened by any
Person, (A) alleging that the manufacture, sale, license,
distribution or use of any Parent Proprietary Rights as now
manufactured, sold, licensed, distributed or used by Parent or
any third party infringes on any intellectual property rights
of any third party, (B) against the use or distribution by
Parent or any third party of any Parent Propriety Rights or
(C) challenging the ownership by Parent or validity of any
Parent Proprietary Rights.
(v) For the purpose of this SECTION 5.1(o), the
following terms have the following definitions: (A) the term
"COMMERCIAL SOFTWARE" means packaged commercially available
software programs generally available to the public which have
been licensed to Parent pursuant to end-user licenses that
permit the use of such programs without a right to modify,
distribute or sublicense the same; (B) the term "PARENT
EMBEDDED PRODUCTS" means third party software that is
incorporated in any existing product or service of Parent; and
(C) the term "PROPRIETARY RIGHTS" means (1) patents, patent
applications and inventions, (2) trademarks, service marks,
trade dress, trade names, Internet domain names and corporate
names (in Parent's state of incorporation) and registrations
and applications for registration thereof, (3) copyrights and
registrations and applications for registration thereof, (4)
mask works and registrations and applications for registration
thereof, (5) computer software, data and documentation (in
both source code and object code form), (6) trade secrets,
know-how and copyrightable works, and (7) all renewals,
extensions, revivals and resuscitations thereof, but does not
include Commercial Software or Company Embedded Products.
(p) TAKEOVER STATUTE. No "fair price", "moratorium", "control
share acquisition" or other similar antitakeover statute or regulation
enacted under state
17
or federal laws in the United States (with the exception of Section 203
of the DGCL) applicable to Parent is applicable to the Merger or the
other transactions contemplated hereby. Assuming the accuracy of the
representation and warranty set forth in SECTION 5.2(aa), the action of
the board of directors of Parent in approving this Agreement (and the
transactions provided for herein) is sufficient to render inapplicable
to this Agreement (and the transactions provided for herein) the
restrictions on "business combinations" (as defined in Section 203 of
the DGCL) as set forth in Section 203 of the DGCL.
(q) COMPANY STOCK. Neither Parent nor, to the Knowledge of
Parent, any of its Subsidiaries (including Merger Sub) is, nor at any
time during the last three years has any of such been, an "interested
stockholder" of the Company as defined in Section 203 of the DGCL.
Neither Parent nor, to the Knowledge of Parent, any of its Subsidiaries
(including Merger Sub) owns (directly or indirectly, beneficially or of
record) and is not a party to any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or
disposing of, in each case, any shares of capital stock of the Company
(other than as contemplated by this Agreement).
(r) NOT AN INVESTMENT COMPANY. Parent is not an "investment
company" within the meaning of that term as used in the Investment
Company Act of 1940, as amended.
(s) BROKERS AND FINDERS. Neither Parent nor any of its
Subsidiaries has employed any investment banker, broker, finder,
consultant or intermediary in connection with the transactions
contemplated by this Agreement which would be entitled to any
investment banking, brokerage, finder's or similar fee or commission in
connection with this Agreement or the transactions contemplated hereby.
(t) AMENDMENT TO PARENT RIGHTS PLAN. The board of directors of
the Parent has authorized an amendment to, the Parent Rights Agreement
so that (i) neither the Company nor any of it affiliates, will become
an "Acquiring Person" (as defined in the Parent Rights Agreement) as a
result of the Company's execution of this Agreement, and (ii) no "Stock
Acquisition Date" or "Distribution Date" (as such terms are defined in
the Parent Rights Agreement) will occur as a result of the Company's
execution of this Agreement.
5.2 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to Parent and Merger Sub that the statements contained
in this SECTION 5.2 are true and correct, except to the extent specifically set
forth on the disclosure schedule delivered contemporaneously with this Agreement
by the Company to Parent and Merger Sub (the "COMPANY DISCLOSURE SCHEDULE"). The
Company Disclosure Schedule shall be arranged in sections and paragraphs
corresponding to the lettered and numbered paragraphs contained in this SECTION
5.2, and the disclosure in any paragraph shall qualify only the corresponding
paragraph in this SECTION 5.2 (provided that the listing of an item in one
paragraph of the Company Disclosure Schedule shall be deemed to be a listing in
each paragraph of the
18
Company Disclosure Schedule and to apply to any other representation and
warranty of the Company in this Agreement to the extent that it is reasonably
apparent from a reading of such disclosure item that it would also qualify or
apply to such other paragraph or representation and warranty).
(a) CORPORATE ORGANIZATION AND QUALIFICATION. Each of the
Company and its Subsidiaries is duly organized, validly existing and in
good standing under the laws of its jurisdiction of organization and is
qualified and in good standing as a foreign entity in each jurisdiction
where the properties owned, leased or operated, or the business
conducted, by it require such qualification, except where failure to be
so qualified would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on the Company. Each of the
Company and its Subsidiaries has all requisite power and authority
(corporate or otherwise) to own its properties and to carry on its
business as it is now being conducted. All of the Subsidiaries of the
Company are set forth in SECTION 5.2(a) of the Company Disclosure
Schedule. The Company has heretofore delivered or made available to
Parent complete and correct copies of its certificate of incorporation
and by-laws and the charter documents of its material Subsidiaries,
each as amended.
(b) CAPITALIZATION. The authorized capital stock of the
Company consists of 90,000,000 shares of Company Common Stock, of which
22,283,977 shares were issued and outstanding as of September, 17,
2001, and 10,000,000 shares of preferred stock, of which 1,000,000
shares have been designated as Series A Junior Participating Preferred,
none of which are issued or outstanding. All of the outstanding shares
of capital stock of the Company and its Subsidiaries have been duly
authorized and validly issued and are fully paid and nonassessable. The
Company has no outstanding stock appreciation rights, phantom stock or
similar rights. All outstanding shares of capital stock or other equity
interests of the Subsidiaries of the Company are owned by the Company
or a direct or indirect wholly-owned Subsidiary of the Company, free
and clear of all liens, pledges, charges, encumbrances, claims and
options of any nature. Except for (i) options to purchase an aggregate
of 1,798,800 shares of Company Common Stock outstanding as of August
30, 2001 pursuant to the Company's 1994 Stock Option Plan, 1997 Amended
and Restated Stock Option Plan and 2000 Non-Employee Director Stock
Option Plan (collectively, the "COMPANY OPTION PLANS"), (ii) options
outstanding for the current Offering Period under the Company's 2000
Employee Stock Purchase Plan, and (iii) the Company Warrants and the
Company Rights (as hereinafter defined), there are no outstanding or
authorized options, warrants, calls, rights (including preemptive
rights), commitments or any other agreements of any character to which
the Company or any of its Subsidiaries is a party, or by which any of
them may be bound, requiring them to issue, transfer, grant, sell,
purchase, redeem or acquire any shares of capital stock or any of their
securities or rights convertible into, exchangeable for, or evidencing
the right to subscribe for, any shares of capital stock of the Company
or any of its Subsidiaries. There are no stockholder agreements, voting
trusts or other agreements or understandings to which the
19
Company is a party or by which it is bound relating to the voting of
any shares of the capital stock of the Company. No existing rights with
respect to the registration of shares of Company Common Stock under the
Securities Act, including, but not limited to, demand rights or
piggy-back registration rights, shall apply with respect to any Parent
Shares issuable in connection with the Merger or upon exercise of
Substitute Options or Substitute Warrants. SECTION 5.2(b) of the
Company Disclosure Schedule sets forth a list, as of the date hereof,
of the outstanding options and warrants to acquire shares of Company
Stock, the name of the holder of such option or warrant, the exercise
price of such option or warrant, the number of shares as to which such
option or warrant will have vested at such date and whether the
exercisability of such option or warrant will be accelerated in any way
by the transactions contemplated by this Agreement and the extent of
acceleration, if any, and any adjustments to such options or warrants
resulting from the consummation of the transactions contemplated by
this Agreement. Except as set forth in the Company Disclosure Schedule,
since July 24, 2001, no Company Options or other options or warrants
convertible or exchangeable for shares of Company Stock have been
issued or accelerated or had their terms modified.
(c) FAIRNESS OPINION. The board of directors of the Company
has received in writing an opinion from Broadview International LLC, to
the effect that, as of the date hereof and based upon and subject to
the matters stated therein, the consideration to be received by the
holders of shares of Company Common Stock in connection with the Merger
is fair to such holders from a financial point of view and a copy of
such opinion has been or, promptly upon becoming available, will be
provided to Parent, and such opinion has not been withdrawn, revoked or
modified; it being understood and acknowledged by Parent that such
opinion has been rendered for the benefit of the board of directors of
the Company and is not intended to be, and may not be, relied upon by
Parent or Merger Sub, or any of their respective affiliates or
stockholders.
(d) AUTHORITY RELATIVE TO THIS AGREEMENT. The board of
directors of the Company has declared this Agreement and the Merger to
be advisable and has unanimously recommended that the stockholders of
the Company adopt this Agreement and approve the Merger, and the
Company has the requisite corporate power and authority to execute and
deliver this Agreement and, upon adoption of this Agreement by the
stockholders of the Company, to consummate the transactions
contemplated hereby. This Agreement and the consummation by the Company
of the transactions contemplated hereby have been duly and validly
authorized by the board of directors of the Company, and no other
corporate proceedings on the part of the Company are necessary to
authorize this Agreement or to consummate the transactions contemplated
hereby (other than the adoption of this Agreement and the approval of
the Merger by the stockholders of the Company in accordance with the
DGCL). This Agreement has been duly and validly executed and delivered
by the Company and, assuming this Agreement constitutes the valid and
binding agreement of Parent and Merger Sub, constitutes the valid and
binding agreement of the Company, enforceable
20
against the Company in accordance with its terms, subject, as to
enforceability, to bankruptcy, insolvency, reorganization and other
laws of general applicability relating to or affecting creditors'
rights and to general principles of equity.
(e) PRESENT COMPLIANCE WITH OBLIGATIONS AND LAWS. Neither the
Company nor any of its Subsidiaries is: (i) in violation of its
certificate of incorporation or by-laws or similar documents; (ii) in
default in the performance of any obligation, agreement or condition of
any debt instrument which (with or without the passage of time or the
giving of notice, or both) affords to any Person the right to
accelerate any indebtedness or terminate any right; (iii) in default
under or breach of (with or without the passage of time or the giving
of notice) any other contract to which it is a party or by which it or
its assets are bound; or (iv) in violation of any law, regulation,
administrative order or judicial order, decree or judgment (domestic or
foreign) applicable to it or its business or assets, except where any
violation, default or breach under items (ii), (iii), or (iv) would not
reasonably be expected to, individually or in the aggregate, have a
Material Adverse Effect on the Company.
(f) CONSENTS AND APPROVALS; NO VIOLATION. Neither the
execution and delivery of this Agreement by the Company nor the
consummation by the Company of the transactions contemplated hereby
will (i) conflict with or result in any breach of any provision of the
respective certificate of incorporation (or other similar document) or
by-laws (or other similar document) of the Company or any of its
Subsidiaries; (ii) require any consent, approval, authorization or
permit of, or registration or filing with or notification to, any
governmental or regulatory authority, in each case, by or on behalf of
the Company or any of its Subsidiaries, except (A) in connection with
the applicable requirements, if any, of the HSR Act, (B) pursuant to
the applicable requirements of the Securities Act and the Exchange Act
and the NNM, (C) the filing of the Certificate of Merger pursuant to
the DGCL and appropriate documents with the relevant authorities of
other states in which the Company is authorized to do business, (D) as
may be required by any applicable state securities laws, (E) such
consents, approvals, orders, authorizations, registrations,
declarations and filings as may be required under the antitrust or
competition laws of any foreign country or (F) where the failure to
obtain such consent, approval, authorization or permit, or to make such
registration, filing or notification, would not reasonably be expected
to, individually or in the aggregate, have a Material Adverse Effect on
the Company or adversely affect the ability of the Company to
consummate the transactions contemplated hereby; (iii) except as set
forth in the Company Disclosure Schedule, result in a violation or
breach of, or constitute (with or without notice or lapse of time or
both) a default (or give rise to any right of termination, cancellation
or acceleration or lien or other charge or encumbrance) under any of
the terms, conditions or provisions of any indenture, note, license,
lease, agreement or other instrument or obligation to which the Company
or any of its Subsidiaries is a party or by which any of their assets
may be bound, except for such violations, breaches and defaults (or
rights of termination, cancellation, or acceleration or lien or other
charge or encumbrance) as to which requisite waivers
21
or consents have been obtained or which, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse
Effect on the Company or adversely affect the ability of the Company to
consummate the transactions contemplated hereby; (iv) cause the
suspension or revocation of any authorizations, consents, approvals or
licenses currently in effect which, individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect on the
Company; or (v) assuming the consents, approvals, authorizations or
permits and registrations, filings or notifications referred to in this
SECTION 5.2(f) are duly and timely obtained or made, violate any order,
writ, injunction, decree, statute, rule or regulation applicable to the
Company or any of its Subsidiaries or to any of their respective
assets, except for violations which would not reasonably be expected
to, individually or in the aggregate, have a Material Adverse Effect on
the Company or adversely affect the ability of the Company to
consummate the transactions contemplated hereby.
(g) LITIGATION. Except as disclosed in Company SEC Reports
filed prior to the date hereof, or as set forth in SECTION 5.2(g) of
the Company Disclosure Schedule, there are no actions, suits, claims,
investigations or proceedings pending or, to the Knowledge of the
Company, threatened against the Company or any of its Subsidiaries
that, individually or in the aggregate, could reasonably be expected to
result in obligations or liabilities of the Company or any of its
Subsidiaries that, individually or in the aggregate, could reasonably
be expected to have a Material Adverse Effect on the Company or
adversely affect the ability of the Parties to consummate the
transactions contemplated by this Agreement. Neither the Company nor
any of its Subsidiaries is subject to any outstanding judgment, order,
writ, injunction or decree which (i) has or may have the effect of
prohibiting or impairing any business practice of the Company or any of
its Subsidiaries, any acquisition of property (tangible or intangible)
by the Company or any of its Subsidiaries, the conduct of the business
by the Company or any of its Subsidiaries, or Company's ability to
perform its obligations under this Agreement or (ii) individually or in
the aggregate, could reasonably be expected to have a Material Adverse
Effect on the Company.
(h) SEC REPORTS; FINANCIAL STATEMENTS.
(i) Except as set forth in the Company Disclosure
Schedule, the Company has filed all forms, reports and
documents with the SEC required to be filed by it pursuant to
the federal securities laws and the SEC rules and regulations
thereunder, all of which complied in all material respects
with all applicable requirements of the Securities Act and the
Exchange Act (the "COMPANY SEC REPORTS") all of which are
available through XXXXX. None of the Company SEC Reports,
including, without limitation, any financial statements or
schedules included therein, at the time filed (or if amended
or superseded by a filing prior to the date of this Agreement,
then on the date of such filing) contained any untrue
statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to
make the statements therein, in light of the
22
circumstances under which they were made, not misleading. None
of the Company's Subsidiaries is required to file any forms,
reports or other documents with the SEC.
(ii) The consolidated balance sheets and the related
statements of income, stockholders' equity or deficit and cash
flow (including the related notes thereto) of the Company
included in the Company SEC Reports (collectively, the
"COMPANY FINANCIAL STATEMENTS") 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 generally
accepted accounting principles applied on a basis consistent
throughout the periods involved (except as otherwise noted
therein or, in the case of unaudited interim financial
statements, as may be permitted by the SEC on Form 10-Q under
the Exchange Act), and present fairly the consolidated
financial position of the Company and its consolidated
Subsidiaries as of their respective dates, and the results of
its operations and its cash flow for the periods presented
therein, except that the unaudited interim financial
statements do not include footnote disclosure of the type
associated with audited financial statements and were or are
subject to normal and recurring year-end adjustments which
were not or are not expected to be material in amount.
(iii) Since June 30, 2001, there has not been any
material change by the Company or any of its Subsidiaries in
accounting principles, methods or policies for financial
accounting purposes, except as required by concurrent changes
in generally accepted accounting principles, or as disclosed
in the Company SEC Reports. Except as set forth in the Company
Disclosure Schedule, there are no material amendments or
modifications to agreements, documents or other instruments
which previously had been filed by the Company with the SEC
pursuant to the Securities Act or the Exchange Act, which have
not been filed with the SEC but which are required to be
filed.
(iv) As of June 30, 2001, the Company had
approximately $54,000,000 in cash plus net current assets and
liabilities of approximately $1,200,000 (excluding deferred
revenue).
(i) NO LIABILITIES. Neither the Company nor any of its
Subsidiaries has any material indebtedness, obligations or liabilities
of any kind (whether accrued, absolute, contingent or otherwise, and
whether due or to become due or asserted or unasserted), and, to the
Knowledge of the Company, there is no reasonable basis for the
assertion of any claim with respect to any indebtedness, obligation or
liability of any nature against the Company or any of its Subsidiaries,
except for indebtedness, obligations and liabilities (i) that are fully
reflected in, reserved against or otherwise described in the most
recent Company Financial Statements, (ii) that have been incurred after
the most recent Company Financial Statements in the ordinary course of
business, consistent with past
23
practice, (iii) that are obligations to perform under executory
contracts in the ordinary course of business (none of which is a
liability resulting from a breach of contract or warranty, tort,
infringement or legal action) or (iv) that, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse
Effect on the Company.
(j) ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as described
in the Company SEC Reports or set forth in the Company Disclosure
Schedule, since June 30, 2001, except with respect to the actions
contemplated by this Agreement, and the Software Distribution
Agreement, the Company has conducted its business only in the ordinary
course and in a manner consistent with past practice and, since such
date, there has not been (i) any Material Adverse Effect on the Company
(or the occurrence or failure to occur of any event that would
reasonably be expected to result in a Material Adverse Effect on the
Company), (ii) any damage, destruction or loss of assets of the Company
or any of its Subsidiaries (whether or not covered by insurance) that
has had or would reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on the Company, (iii) any material
change by the Company in its accounting methods, principles or
practices; (iv) any material revaluation by the Company or any of its
Subsidiaries of any of its assets, including, without limitation,
writing down the value of capitalized software or inventory or deferred
tax assets or writing off notes or accounts receivable other than in
the ordinary course of business; (v) any labor dispute or charge of
unfair labor practice (other than routine individual grievances),
which, individually or in the aggregate, has had or would reasonably be
expected to have a Material Adverse Effect on the Company, any activity
or proceeding by a labor union or representative thereof to organize
any employee of the Company or any of its Subsidiaries or any campaign
being conducted to solicit authorization from employees to be
represented by such labor union in each case which, individually or in
the aggregate, has had or would reasonably be expected to have a
Material Adverse Effect on the Company; (vi) any waiver by the Company
or any of its Subsidiaries of any rights of material value or (vii) any
other action or event that would have required the consent of Parent
pursuant to SECTION 6.1A had such action or event occurred after the
date of this Agreement.
(k) BROKERS AND FINDERS. Except for the fees and expenses
payable to Broadview International LLC, which fees and expenses are
determined pursuant to its agreement with the Company, a true and
complete copy of which (including all amendments) has been furnished to
Parent, neither the Company nor any of its Subsidiaries has employed
any investment banker, broker, finder, consultant or intermediary in
connection with the transactions contemplated by this Agreement which
would be entitled to any investment banking, brokerage, finder's or
similar fee or commission in connection with this Agreement or the
transactions contemplated hereby.
(l) S-4 REGISTRATION STATEMENT AND PROXY STATEMENT/PROSPECTUS.
None of the information supplied or to be supplied by the Company for
inclusion or
24
incorporation by reference in the S-4 Registration Statement or the
Proxy Statement will (i) in the case of the S-4 Registration Statement,
at the time it becomes effective 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 not misleading, or (ii) in the case of the Proxy
Statement, at the time of the mailing of the Proxy Statement, at the
time of the Company Stockholders Meeting and Parent Stockholders
Meeting (if necessary), and at the Effective Time, contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are
made, not misleading. If at any time prior to the Effective Time any
event with respect to the Company, its officers and directors or any of
its Subsidiaries should occur which is required to be described in an
amendment of, or a supplement to, the Proxy Statement or the S-4
Registration Statement, the Company shall promptly inform Parent so
that such event may be so described and such amendment or supplement
promptly filed with the SEC and, as required by law, disseminated to
the stockholders of the Company. The S-4 Registration Statement will
(with respect to the Company) comply as to form in all material
respects with the requirements of the Securities Act. The Proxy
Statement will (with respect to the Company) comply as to form in all
material respects with the requirements of the Exchange Act.
Notwithstanding the foregoing, the Company makes no representation or
warranty with respect to any information supplied by, or related to,
Parent, Merger Sub, or any other entity with which Parent or any
Subsidiary of Parent has entered into an agreement relating to the
acquisition of such entity by Parent or any Subsidiary of Parent, or
any of their respective affiliates or advisors which is contained in
any of the foregoing documents.
(m) TAXES.
(i) The Company and each of its Subsidiaries has
timely filed (after taking into account any extensions to
file) all federal, state, local and foreign Returns required
by applicable Tax law to be filed by the Company and each of
its Subsidiaries. All Taxes owed by the Company or any of its
Subsidiaries to a taxing authority, or for which the Company
or any of its Subsidiaries is liable, whether to a taxing
authority or to other Persons or entities under a Significant
Tax Agreement, as of the date hereof, have been paid and, as
of the Effective Time, will have been paid. All Returns were
true and correct in all material respects when filed. Other
than any reserve for deferred Taxes established to reflect
timing differences between book and Tax treatment, the Company
has made accruals for Taxes on the Company Financial
Statements which are adequate to cover any Tax liability of
the Company and each of its Subsidiaries determined in
accordance with generally accepted accounting principles
through the date of the Company Financial Statements.
(ii) The Company and each of its Subsidiaries have
withheld with respect to its employees, creditors, independent
contractors,
25
stockholders or other parties all federal and state income
taxes, FICA, FUTA and other Taxes required to be withheld.
(iii) There is no Tax deficiency outstanding,
assessed, or to the Company's Knowledge, proposed against the
Company or any of its Subsidiaries. Neither the Company nor
any of its Subsidiaries have executed or requested any waiver
of any statute of limitations on or extending the period for
the assessment or collection of any federal or material state
Tax that is still in effect. There are no liens for Taxes on
the assets of Company or of any of its Subsidiaries other than
with respect to Taxes not yet due and payable.
(iv) No federal or state Tax audit or other
examination of the Company or any of its Subsidiaries is
presently in progress, nor has the Company or any of its
Subsidiaries been notified either in writing or orally of any
request for such federal or state Tax audit or other
examination.
(v) Neither the Company nor any of its Subsidiaries
has filed any consent agreement under Section 341(f) of the
Code or agreed to have Section 341(f)(2) of the Code apply to
any disposition of a subsection (f) asset (as defined in
Section 341(f)(4) of the Code) owned by the Company.
(vi) Neither the Company nor any of its Subsidiaries
is a party to (A) any agreement with a party other than the
Company or any of its Subsidiaries providing for the
allocation or payment of Tax liabilities or payment for Tax
benefits with respect to a consolidated, combined or unitary
Return which Return includes or included the Company or any
Subsidiary or (B) any Significant Tax Agreement other than any
Significant Tax Agreement described in (A).
(vii) Except for the group of which the Company and
its Subsidiaries are now presently members, neither the
Company nor any of its Subsidiaries has ever been a member of
an affiliated group of corporations within the meaning of
Section 1504 of the Code. There is no excess loss account,
deferred intercompany gain or loss, or intercompany items as
such terms are defined in the regulations promulgated under
the Code, that exist with respect to the Company or any of its
Subsidiaries.
(viii) Neither the Company nor any of its
Subsidiaries is a party to any joint venture, partnership or
other arrangement or contract which could be treated as a
partnership for federal income tax purposes.
(ix) Neither the Company nor any of its Subsidiaries
has agreed to make nor is it required to make any adjustment
under Section 481(a) of the Code by reason of a change in
accounting method or otherwise which have not yet been taken
into account.
26
(x) There is no contract, agreement, plan or
arrangement covering any individual or entity treated as an
individual included in the business or assets of the Company
or its Subsidiaries that, individually or collectively, could
give rise to the payment by the Company, a Subsidiary, Merger
Sub or Parent of an amount that would not be deductible by
reason of Sections 280G or 162(m) of the Code or similar
provisions of Tax law.
(n) EMPLOYEE BENEFITS.
(i) For purposes hereof, the term "COMPANY SCHEDULED
PLANS" means each "employee pension benefit plan" (as such
term is defined in Section 3(2) of ERISA), "employee welfare
benefit plan" (as such term is defined in Section 3(1) of
ERISA), material personnel or payroll policy (including
vacation time, holiday pay, service awards, moving expense
reimbursement programs and sick leave) or material fringe
benefit, severance agreement or plan or any medical, hospital,
dental, life or disability plan, pension benefit plan, excess
benefit plan, bonus, stock option, stock purchase or other
incentive plan (including any equity or equity-based plan),
tuition reimbursement, automobile use, club membership,
parental or family leave, top hat plan or deferred
compensation plan, salary reduction agreement,
change-of-control agreement, employment agreement, consulting
agreement, or collective bargaining agreement, indemnification
agreement, retainer agreement, or any other material benefit
plan, policy, program, arrangement, agreement or contract,
with respect to any employee, former employee, director,
independent contractor, or any beneficiary or dependent
thereof of the Company, with respect to which the Company has
any liability (whether accrued, absolute, contingent or
otherwise, and whether due or to become due or asserted or
unasserted). A "COMPANY PLAN AFFILIATE" is each entity which
is treated as a single employer with the Company pursuant to
Section 4001 of ERISA or Section 414 of the Code. The Company
has made available to Parent copies of all employee manuals of
the Company and its Subsidiaries that include personnel
policies applicable to any of their respective employees.
(ii) The Company has made available to Parent a
complete and accurate copy of each written Company Scheduled
Plan, together with, if applicable, a copy of audited
financial statements, actuarial reports and Form 5500 Annual
Reports (including required schedules), if any, for the three
(3) most recent plan years, the most recent Internal Revenue
Service ("IRS") determination letter or IRS recognition of
exemption; each other material letter, ruling or notice issued
by a governmental body with respect to each such plan during
the last three (3) years, a copy of each trust agreement,
insurance contract or other funding vehicle, if any, with
respect to each such plan, the current summary plan
description and summary of material modifications thereto with
respect to each such plan and Form 5310. There are no
unwritten Company Scheduled Plans except
27
as set forth and described as comprehended to the Closing Date
on SECTION 5.2(n) of the Company Disclosure Schedule. There
are no negotiations, demands or proposals which are pending or
threatened which concern matters now covered, or that would be
covered, by the foregoing types of unwritten Company Scheduled
Plans, if any.
(iii) Except for instances of non-compliance that
would not, individually or in the aggregate, be reasonably
expected to have a Material Adverse Effect on the Company,
each Company Scheduled Plan (1) has been in substantial
compliance and currently complies in form and in operation
with all applicable requirements of ERISA and the Code, and
any other (foreign or domestic) legal requirements applicable
thereto; (2) has been and is operated and administered in
compliance with its terms (except as otherwise required by
law); and (3) has been and is operated in compliance with
applicable legal requirements in such a manner as to qualify,
where appropriate, for both Federal and state purposes, for
income tax exclusions to its participants, tax-exempt income
for its funding vehicle, and the allowance of deductions and
credits with respect to contributions thereto. Each Company
Scheduled Plan which is intended to be qualified under Section
401(a) of the Code has received a favorable determination
letter or recognition of exemption from the IRS on which the
Company can rely.
(iv) With respect to each Company Scheduled Plan,
there are no claims or other proceedings pending or, to the
Knowledge of the Company, threatened with respect to the
assets thereof (other than routine claims for benefits).
(v) Except as would not be reasonably expected to
have a Material Adverse Effect on the Company, with respect to
each Company Scheduled Plan, no Person: (1) has entered into
any "prohibited transaction," as such term is defined in ERISA
or the Code and the regulations, administrative rulings and
case law thereunder that is not otherwise exempt under Code
Section 4975 or ERISA Section 408 (or any administrative class
exemption issued thereunder); (2) has breached a fiduciary
obligation or violated Sections 402, 403, 405, 503, 510 or 511
of ERISA; (3) has any liability for any failure to act or
comply in connection with the administration or investment of
the assets of such plans; or (4) engaged in any transaction or
otherwise acted with respect to such plans in such a manner
which could subject Parent, or any fiduciary or plan
administrator or any other Person dealing with any such plan,
to liability under Section 409 or 502 of ERISA or Sections
4972 or 4976 through 4980B of the Code.
(vi) Each Company Scheduled Plan (other than any
individual contract with an employee or any stock option plan)
may be amended, terminated, modified or otherwise revised by
the Company or Parent, on
28
and after the Closing, without incurring further obligations
to the Company or Parent (other than ordinary administrative
expenses or routine claims for benefits). No Company Scheduled
Plan has unfunded liabilities, that, as of the Effective Time,
will not be offset by insurance or fully accrued, except for
such funding deficiencies as would not result in a Material
Adverse Effect to the Company.
(vii) None of the Company or any current or former
Company Plan Affiliate has at any time participated in, made
contributions to or had any other liability with respect to
any Company Scheduled Plan which is a "multiemployer plan" as
defined in Section 4001 of ERISA, a "multiemployer plan"
within the meaning of Section 3(37) of ERISA, a "multiple
employer plan" within the meaning of Section 413(c) of the
Code, a "multiple employer welfare arrangement" within the
meaning of Section 3(40) of ERISA or a plan that is subject to
Title IV of ERISA.
(viii) No Company Scheduled Plan provides, or
reflects or represents any liability to provide retiree health
coverage to any person for any reason, except as may be
required by Part 6 of Subtitle B of Title I of ERISA or
applicable state insurance laws, and neither the Company nor
any Company Plan Affiliate has any liability (whether accrued,
absolute, contingent or otherwise, and whether due or to
become due to asserted or unasserted) to any current or former
employee, consultant or director (either individually or as a
group) to provide retiree health coverage, except to the
extent required by applicable continuation coverage statutes.
(ix) Neither the Company nor a Company Plan Affiliate
has any liability for any material excise tax imposed by Code
Sections 4971 or 4977. The Company has no material liability
for any excise tax imposed by Code Section 4972 or 4979.
(x) With respect to any Company Scheduled Plan which
is a welfare plan as defined in Section 3(1) of ERISA (1) each
such welfare plan which is intended to meet the requirements
for tax-favored treatment under Subchapter B of Chapter 1 of
the Code materially meets such requirements; and (2) there is
no disqualified benefit (as such term is defined in Code
Section 4976(b)) which would subject the Company or any
Company Plan Affiliate to a material tax under Code Section
4976(a).
(xi) No Company Scheduled Plan has been adopted or
maintained by the Company or any Company Plan Affiliate,
whether informally or formally, or with respect to which the
Company or any Company Plan Affiliate will or may have any
liability, exclusively for the benefit of the Company
employees who perform services outside the United States.
29
(xii) Neither the Company nor any current or former
Company Plan Affiliate has any material liability (including,
but not limited to, any contingent liability) with respect to
any plan subject to Title IV of ERISA or Section 412 of the
Code or any plan maintained by any former Company Plan
Affiliate.
(xiii) Other than by reason of actions taken
following the Closing and except as otherwise set forth in the
Company Disclosure Schedule, neither the execution of this
Agreement nor the consummation of the transactions
contemplated by this Agreement will (1) entitle any current or
former employee of the Company to severance pay, unemployment
compensation or any other payment, (2) accelerate the time of
payment or vesting of any payment (other than for a terminated
or frozen tax-qualified plan, pursuant to a requirement herein
to freeze or terminate such plan), cause the forgiveness of
any indebtedness, or increase the amount of any compensation
due to any such employee or former employee or (3) result in
any prohibited transaction described in Section 406 of ERISA
or Section 4975 of the Code for which an exemption is not
available.
(xiv) The Company has not entered into any contract,
agreement or arrangement covering any employee that gives rise
to the payment of any amount that would not be deductible
pursuant to the terms of Section 162(m) of the Code.
(xv) The Company Option Plans and the ESPP are
"broadly-based plans" as defined under the rules and
regulations of the NNM and have been approved by Company
stockholders at duly convened stockholders meetings with
respect to which the Company solicited proxies in favor of
each of the Company Option Plans and the ESPP.
(o) COMPANY INTANGIBLE PROPERTY.
(i) Except as set forth in SECTION 5.2(o) of the
Company Disclosure Schedule, the Company owns, or is licensed,
or otherwise possesses legally enforceable rights, to use,
sell or license, as applicable, all Proprietary Rights
(excluding in each case Commercial Software) used, sold,
distributed or licensed in or as a part of the business of the
Company and its Subsidiaries as currently conducted (the
"COMPANY PROPRIETARY RIGHTS"). Except as disclosed in SECTION
5.2(o) of the Company Disclosure Schedule, the Company has
licenses for all copies of Commercial Software used in its
business and the Company does not have any obligation to pay
fees, royalties and other amounts at any time pursuant to any
such license.
(ii) Except for Company Software and Company Embedded
Products for which the Company has valid non-exclusive
licenses that are adequate for the conduct of the Company's
business, the Company is the
30
sole and exclusive owner of the Company Proprietary Rights
(free and clear of any Encumbrances), and, except for
non-exclusive licenses and non-exclusive reseller and OEM
agreements entered into in the ordinary course of business,
has sole and exclusive rights to the use and distribution
therefor of the material covered thereby in connection with
the services or products in respect of which such Company
Proprietary Rights are currently being used, sold, licensed or
distributed in the course of or as part of the business of the
Company and its Subsidiaries as currently conducted. The
Company is not contractually obligated to pay compensation to
any third party with respect to the use or distribution of any
Company Proprietary Rights, except pursuant to the contracts
set forth in SECTION 5.2(o) of the Company Disclosure
Schedule.
(iii) Except as disclosed in SECTION 5.2(o) of the
Company Disclosure Schedule, to the Knowledge of the Company
(A) the Company has not infringed on any intellectual property
rights of any third Persons and (B) none of the Company
Proprietary Rights infringes on any intellectual property
rights of any third Persons.
(iv) Except as disclosed in SECTION 5.2(o) of the
Company Disclosure Schedule, no actions, suits, claims,
investigations or proceedings with respect to the Company
Proprietary Rights (other than Company Embedded Products) are
pending or, to the Knowledge of the Company, threatened by any
Person, (A) alleging that the manufacture, sale, license,
distribution or use of any Company Proprietary Rights as now
manufactured, sold, licensed, distributed or used by the
Company or any third party infringes on any intellectual
property rights of any third party, (B) against the use or
distribution by the Company or any third party of any Company
Proprietary Rights or (C) challenging the ownership by the
Company or validity of any Company Proprietary Rights.
(v) Except as disclosed in SECTION 5.2(o) of the
Company Disclosure Schedule, the Company has not entered into
any agreement, contract or commitment under which the Company
is restricted, and the Company is not otherwise restricted,
from (A) selling, licensing or otherwise distributing any
products to any class or type of customers or directly or
through any type of channel in any geographic area or during
any period of time, or (B) combining, incorporating, embedding
or bundling or allowing others to combine, incorporate, embed
or bundle any of its products with those of another party, as
each such restriction may effect any product currently being
developed, marketed or sold by the Company or that otherwise
would have a Material Adverse Effect on the Company.
(vi) The Company has taken reasonable security
measures to safeguard and maintain its rights in all of the
Company Proprietary Rights.
31
To the Company's Knowledge, except as set forth in SECTION
5.2(o) of the Company Disclosure Schedule, all copies of the
source code to Company Software and Company trade secrets are
physically in the control of the Company at the Company's
facilities. All officers, employees and consultants of the
Company who have access to proprietary information have
executed and delivered to the Company an agreement regarding
the protection of proprietary information, and the assignment
to or ownership by the Company of all Company Proprietary
Rights arising from the services performed for the Company by
such Persons. To the Knowledge of the Company, no current or
prior officers, employees or consultants of the Company have
asserted a claim, and the Company is not aware of any grounds
to assert a claim to, any ownership interest in any Company
Proprietary Right as a result of having been involved in the
development of such property while employed by or consulting
to the Company or otherwise.
(vii) To the Knowledge of the Company, all authors of
the software included in the Company Proprietary Rights (the
"COMPANY SOFTWARE") or any other Person who participated in
the development of the Company Software or any portion thereof
or performed any work related to the Company Software (such
authors and other persons or entities are collectively
referred to as the "COMPANY SOFTWARE AUTHORS") made his or her
contribution to the Company Software within the scope of
employment with the Company, as a "work made for hire," and
was directed by the Company to work on the Company Software,
or as a consultant who assigned all rights to such products to
the Company. Except as set forth in SECTION 5.2(o) of the
Company Disclosure Schedule, to the Knowledge of the Company,
the Company Software and every portion thereof are an original
creation of the Company Software Authors and do not contain
any source code or portions of source code (including any
"canned program") created by any persons other than the
Company Software Authors. The Company has not, by any of its
acts or omissions, or, to its Knowledge, by acts or omissions
of its affiliates, directors, officers, employees, agents, or
representatives caused any of its proprietary rights in the
Company Software, including copyrights, trademarks, and trade
secrets to be transferred, diminished, or adversely affected
to any material extent.
(viii) There are no defects in the Company's software
products, and such products shall perform in substantial
accordance with related documentation and promotional material
supplied by Company, and there are no errors in any
documentation, specifications, manuals, user guides,
promotional material, internal notes and memos, technical
documentation, drawings, flow charts, diagrams, source
language statements, demo disks, benchmark test results, and
other written materials related to, associated with or used or
produced in the development of the Company's software products
except, in either case, where such defects, failure to
perform, or
32
errors would not reasonably be expected to have a Material
Adverse Effect on the Company. Except as disclosed in SECTION
5.2(o) of the Company Disclosure Schedule, computer software
included in the Company Proprietary Rights does not contain
any "back door," "time bomb," "Trojan horse," "worm," "drop
dead device," "virus" (as these terms are commonly used in the
computer software industry), or other software routines
designed to permit unauthorized access, to disable or erase
software or data, or to perform any other similar type of
functions.
(ix) No government funding or university or college
facilities were used in the development of the computer
software programs or applications owned by the Company.
(x) For the purpose of this SECTION 5.2(o), the
following terms have the following definitions: (A) the term
"COMMERCIAL SOFTWARE" means packaged commercially available
software programs generally available to the public which have
been licensed to the Company pursuant to end-user licenses
that permit the use of such programs without a right to
modify, distribute or sublicense the same; (B) the term
"COMPANY EMBEDDED PRODUCTS" means third party software that is
incorporated in any existing product or service of the
Company; and (C) the term "PROPRIETARY RIGHTS" means (1)
patents, patent applications, and inventions, (2) trademarks,
service marks, trade dress, trade names, Internet domain names
and the Company's corporate name (in its state of
incorporation) and registrations and applications for
registration thereof, (3) copyrights and registrations and
applications for registration thereof, (4) mask works and
registrations and applications for registration thereof, (5)
computer software, data and documentation (in both source code
and object code form), (6) trade secrets, know-how and
copyrightable works, (7) other confidential and proprietary
intellectual property rights, (8) copies and tangible
embodiments thereof (in whatever form or medium) and (9) all
renewals, extensions, revivals and resuscitations thereof.
(p) AGREEMENTS, CONTRACTS AND COMMITMENTS; MATERIAL CONTRACTS.
Except as set forth in SECTION 5.2(p) of the Company Disclosure
Schedule or the Software Distribution Agreement, neither the
Company nor any of its Subsidiaries is a party to or is bound by:
(i) any contract relating to the borrowing of money,
the guaranty of another Person's borrowing of money, or the
creation of an encumbrance or lien on the assets of the
Company or any of its Subsidiaries and with outstanding
obligations in excess of $150,000;
(ii) any employment or consulting agreement, contract
or commitment with any officer or director level employee or
member of the Company's board of directors or any other
employee who is one of the ten (10) most highly compensated
employees, including base salary and
33
bonuses (the "COMPANY KEY EMPLOYEES"), other than those that
are terminable by the Company or any of its Subsidiaries on no
more than thirty (30) days notice without liability or
financial obligation or benefits generally available to
employees of the Company, except to the extent general
principles of wrongful termination law may limit the Company's
or any of its Subsidiaries' ability to terminate employees at
will;
(iii) any agreement of indemnification or guaranty by
the Company or any of its Subsidiaries not entered into in the
ordinary course of business other than indemnification
agreements between the Company or any of its Subsidiaries and
any of its officers or directors in standard forms as filed by
the Company with the SEC;
(iv) any agreement, contract or commitment containing
any covenant limiting the freedom of the Company or any of its
Subsidiaries to engage in any line of business or conduct
business in any geographical area, compete with any person or
granting any exclusive distribution rights or limits the use
or exploitation of the Company Proprietary Rights;
(v) any contract for capital expenditures in excess
of $250,000;
(vi) any agreement, contract or commitment currently
in force relating to the disposition or acquisition of assets
not in the ordinary course of business; or
(vii) any agreement, contract or commitment for the
purchase of any ownership interest in any corporation,
partnership, joint venture or other business enterprise for
consideration in excess of $250,000, in any case, which
includes all escrow and earn-out agreements with outstanding
obligations.
A true and complete copy (including all material amendments)
of each agreement, contract, obligation, promise or undertaking
(whether written or oral and whether express or implied) set forth in
SECTION 5.2(p)(i)-(vii) of the Company Disclosure Schedule (a "COMPANY
CONTRACT"), or a summary of each oral contract, has been made available
to Parent. Each Company Contract is in full force and effect. No
condition exists or event has occurred that, (whether with or without
notice or lapse of time or both, or the happening or occurrence of any
other event) would constitute a default by the Company or a Subsidiary
of the Company or, to the Knowledge of the Company, any other party
thereto under, or result in a right in termination of, any Company
Contract, except as would not, individually or in the aggregate, be
reasonably expected to result in a Material Adverse Effect on the
Company.
(q) UNLAWFUL PAYMENTS AND CONTRIBUTIONS. To the Knowledge of
the Company, neither the Company, any Subsidiary of the Company nor any
of their respective directors, officers, employees or agents has, with
respect to the businesses of the Company or its Subsidiaries, (i) used
any funds for any unlawful
34
contribution, endorsement, gift, entertainment or other unlawful
expense relating to political activity; (ii) made any direct or
indirect unlawful payment to any foreign or domestic government
official or employee; (iii) violated or is in violation of any
provision of the Foreign Corrupt Practices Act of 1977, as amended; or
(iv) made any bribe, rebate, payoff, influence payment, kickback or
other unlawful payment to any Person or entity.
(r) LISTINGS. The Company's securities are not listed for
trading on any U.S. domestic or foreign securities exchange, other than
the NNM.
(s) ENVIRONMENTAL MATTERS. Except as disclosed in the Company
Disclosure Schedules, (i) the Company and its Subsidiaries and the
operations, assets and properties thereof are in material compliance
with all Environmental Laws; (ii) there are no judicial or
administrative actions, suits, proceedings or investigations pending
or, to the Knowledge of the Company, threatened against the Company or
any Subsidiary of the Company alleging the violation of any
Environmental Law and neither the Company nor any Subsidiary of the
Company has received notice from any governmental body or Person
alleging any violation or liability of the Company or any of its
Subsidiaries under any Environmental Laws, in either case which could
reasonably be expected to result in a Material Adverse Effect on the
Company; (iii) to the Knowledge of the Company, there are no facts,
circumstances or conditions relating to, arising from, associated with
or attributable to the Company or its Subsidiaries or any real property
currently or previously owned, operated or leased by the Company or its
Subsidiaries that could result in Environmental Costs and Liabilities
that would reasonably be expected to result in a Material Adverse
Effect on the Company; and (iv) to the Knowledge of the Company,
neither the Company nor any of its Subsidiaries has ever generated,
transported, treated, stored, handled or disposed of any Hazardous
Material at any site, location or facility in a manner that could
create any Environmental Costs and Liabilities that would reasonably be
expected to result in a Material Adverse Effect on the Company, and, to
the Knowledge of the Company, no such Hazardous Material has been or is
currently present on, in, at or under any real property owned or used
by the Company or any of its Subsidiaries in a manner (including
without limitation, containment by means of any underground or
aboveground storage tank) that could create any Environmental Costs and
Liabilities that would reasonably be expected to result in a Material
Adverse Effect on the Company. For the purpose of this SECTION 5.2(s),
the following terms have the following definitions: (X) "ENVIRONMENTAL
COSTS AND LIABILITIES" means any losses, liabilities, obligations,
damages, fines, penalties, judgments, actions, claims, costs and
expenses (including, without limitation, fees, disbursements and
expenses of legal counsel, experts, engineers and consultants and the
costs of investigation and feasibility studies, remedial or removal
actions and cleanup activities) arising from or under any Environmental
Law; (Y) "ENVIRONMENTAL LAWS" means any applicable federal, state,
local or foreign law (including common law), statute, code, ordinance,
rule, regulation or other requirement relating to the environment,
natural resources, or public or employee health and safety; and (Z)
"HAZARDOUS MATERIAL" means any substance,
35
material or waste regulated by federal, state or local government,
including, without limitation, any substance, material or waste which
is defined as a "hazardous waste," "hazardous material," "hazardous
substance," "toxic waste" or "toxic substance" under any provision of
Environmental Law and including but not limited to petroleum and
petroleum products.
(t) TITLE TO PROPERTIES; LIENS; CONDITION OF PROPERTIES. The
Company and its Subsidiaries have good and marketable title to, or a
valid leasehold interest in, the real and personal property, shown on
the most recent Company Financial Statement or acquired after the date
thereof. Except as set forth in the Company Disclosure Schedule, none
of the property owned or used by the Company or any of its Subsidiaries
is subject to any mortgage, pledge, deed of trust, lien (other than for
taxes not yet due and payable), conditional sale agreement, security
title, encumbrance, or other adverse claim or interest of any kind.
Since June 30, 2001, there has not been any sale, lease, or any other
disposition or distribution by the Company or any of its Subsidiaries
of any of its assets or properties material to the Company and its
Subsidiaries, taken as a whole, except transactions in the ordinary
course of business, consistent with past practices.
(u) INSURANCE. All insurance policies (including
"self-insurance" programs) now maintained by the Company (the "COMPANY
INSURANCE POLICIES") are in full force and effect, the Company is not
in default under any of the Company Insurance Policies, and no claim
for coverage under any of the Company Insurance Policies has been
denied. The Company has not received any notice of cancellation or
intent to cancel or increase or intent to increase premiums with
respect to such insurance policies nor, to the Knowledge of the
Company, is there any basis for any such action.
(v) LABOR AND EMPLOYEE RELATIONS.
(i) Except as set forth in SECTION 5.2(v) of the
Company Disclosure Schedule, (A) none of the employees of the
Company or any of its Subsidiaries is represented in his or
her capacity as an employee of such company by any labor
organization; (B) neither the Company nor any of its
Subsidiaries has recognized any labor organization nor has any
labor organization been elected as the collective bargaining
agent of any of their employees, nor has the Company or any of
its Subsidiaries signed any collective bargaining agreement or
union contract recognizing any labor organization as the
bargaining agent of any of their employees; and (C) to the
Knowledge of the Company, there is no active or current union
organization activity involving the employees of the Company
or any of its Subsidiaries, nor has there ever been union
representation involving employees of the Company or any of
its Subsidiaries.
(ii) The Company has made available to Parent a
description of all written employment policies under which the
Company and each of its Subsidiaries is operating.
36
(iii) The Company and each of its Subsidiaries is in
compliance with all federal, foreign (as applicable), and
state laws regarding employment practices, including laws
relating to workers' safety, sexual harassment or
discrimination, except where the failure to so be in
compliance, individually or in the aggregate, would not have a
Material Adverse Effect on the Company.
(iv) To the Knowledge of the Company, none of the
Company Key Employees has any plans to terminate his or her
employment with the Company or any of its Subsidiaries.
(w) PERMITS. The Company and each of its Subsidiaries hold all
licenses, permits, registrations, orders, authorizations, approvals and
franchises that are required to permit it to conduct its businesses as
presently conducted, except where the failure to hold such licenses,
permits, registrations, orders, authorizations, approvals or franchises
would not reasonably be expected to, individually or in the aggregate,
have a Material Adverse Effect on the Company. All such licenses,
permits, registrations, orders, authorizations, approvals and
franchises are now, and will be after the Closing, valid and in full
force and effect, and Surviving Corporation shall have full benefit of
the same, except where the failure to be valid and in full force and
effect or to have the benefit of any such license, permit,
registration, order, authorization, approval or franchise would not
reasonably be expected to, individually or in the aggregate, have a
Material Adverse Effect on the Company or Surviving Corporation.
Neither the Company nor any of its Subsidiaries has received any
notification of any asserted present failure (or past and unremedied
failure) by it to have obtained any such license, permit, registration,
order, authorization, approval or franchise, except where such failure
would not reasonably be expected to, individually or in the aggregate,
have a Material Adverse Effect on the Company or Surviving Corporation.
(x) TRANSACTIONS WITH AFFILIATES. Except as set forth in the
Company SEC Reports filed prior to the date of this Agreement or in the
Company Disclosure Schedule, since the date of Company's last proxy
statement to its stockholders, no event has occurred that would be
required to be reported by Company pursuant to Item 404 of Regulation
S-K promulgated by the SEC.
(y) AMENDMENT TO COMPANY RIGHTS PLAN. The board of directors
of the Company has authorized an amendment to the Rights Agreement,
dated as of December 18, 2000 among the Company, and Fleet Bank N.A.
c/o EquiServe, L.P. (the "COMPANY RIGHTS AGREEMENT"), so that (i)
neither the Parent nor any of it affiliates, will become an "Acquiring
Person" (as defined in the Company Rights Agreement) as a result of the
consummation of the transactions contemplated by this Agreement, (ii)
no "Stock Acquisition Date" or "Distribution Date" (as such terms are
defined in the Company Rights Agreement) will occur as a result of the
consummation of the transactions contemplated by this Agreement, and
(iii) all "Rights" (as defined in the Company Rights Agreement and
referred to herein as "COMPANY RIGHTS") issued
37
and outstanding under the Company Rights Agreement will expire
immediately prior to the Effective Time.
(z) TAKEOVER STATUTES. No "fair price", "moratorium", "control
share acquisition" or other similar antitakeover statute or regulation
enacted under state or federal laws in the United States (with the
exception of Section 203 of the DGCL) applicable to the Company is
applicable to the Merger or the other transactions contemplated hereby.
Assuming the accuracy of the representation and warranty set forth in
SECTION 5.1(q), the action of the board of directors of the Company in
approving this Agreement (and the transactions provided for herein) is
sufficient to render inapplicable to this Agreement (and the
transactions provided for herein) the restrictions on "business
combinations" (as defined in Section 203 of the DGCL) as set forth in
Section 203 of the DGCL.
(aa) PARENT COMMON STOCK. Neither the Company nor any of its
Subsidiaries is, nor at any time during the last three years has any of
such been, an "interested stockholder" of Parent as defined in Section
203 of the DGCL.
ARTICLE VI
ADDITIONAL COVENANTS AND AGREEMENTS
6.1A CONDUCT OF BUSINESS OF THE COMPANY. During the period from the
date of this Agreement and continuing until the earlier of the termination of
this Agreement pursuant to its terms and the Effective Time, the Company (which
for the purposes of this SECTION 6.1A shall include the Company and each of its
Subsidiaries) agrees, except to the extent that Parent shall otherwise consent
in writing (which consent shall not be unreasonably withheld or delayed), to
carry on its business and to cause each of its Subsidiaries to carry on its
business in the usual, regular and ordinary course in substantially the same
manner as heretofore conducted, and to use and cause each of its Subsidiaries to
use all commercially reasonable efforts consistent with past practices and
policies to preserve intact its present business organizations, keep available
the services of its present officers and employees and preserve its
relationships with customers, suppliers, distributors, licensors, licensees, and
others having business dealings with the Company or any such Subsidiaries, to
the end that the goodwill and ongoing businesses of Company and each of its
Subsidiaries be unimpaired at the Effective Time. Except as expressly provided
for by this Agreement, or the Software Distribution Agreement, the Company shall
not, and shall not permit any of its Subsidiaries to, prior to the Effective
Time or earlier termination of this Agreement pursuant to its terms, without the
prior written consent of Parent (which consent shall not be unreasonably
withheld or delayed):
(a) Except as provided in this Agreement or the Company Option
Plans (without any additional action by the Company's board of
directors, its compensation committee, or an administrator of any of
the Company Option Plans), accelerate, amend or change the period of
exercisability of options or restricted stock, or reprice options
granted under the Company Option Plans or authorize cash payments in
exchange for any options granted under any of such plans;
38
(b) Enter into any material partnership, arrangement, joint
development agreement or strategic alliance, except for such
partnerships, arrangements, agreements or alliances that (1) anticipate
the provision of goods or services or other consideration with a value
of less than $500,000, (2) are entered into in the ordinary course of
business consistent with the past practice of the Company, and (3) are
entered into with third parties that do not presently compete with
Parent's software business;
(c) Except as required by law, grant any severance or
termination pay (i) to any executive officer or (ii) to any other
employee except payments made (A) in connection with the termination of
employees who are not executive officers in amounts consistent with the
Company's policies and past practices or (B) pursuant to written
agreements outstanding, or policies existing, on the date hereof and as
previously disclosed in writing to Parent or set forth in the Company
Disclosure Schedule or (C) pursuant to written agreements consistent
with the past agreements of the Company or any of its Subsidiaries
under similar circumstances;
(d) Transfer, license or sell to any person or entity or
otherwise extend, amend or modify any rights to the Company Proprietary
Rights (including rights to resell or relicense the Company Proprietary
Rights) or enter into grants to future patent rights, other than on
standard forms of the Company or any of its Subsidiaries (or pursuant
to written agreements negotiated at arm's length) providing for a
non-exclusive license entered into in the ordinary course of business,
including non-exclusive, enterprise-wide or site licenses.
(e) Commence any material litigation other than (i) for the
routine collection of bills, (ii) for software piracy, or (iii) in such
cases where the Company in good faith determines that failure to
commence suit would result in the material impairment of a valuable
aspect of the business of the Company or any of its Subsidiaries,
provided that the Company consults with the Parent prior to the filing
of such a suit and keeps Parent advised of the status and details of
such litigation (provided that, notwithstanding the foregoing, the
Company shall not be required to obtain Parent's consent to any claim,
suit or proceeding against Parent, Merger Sub, any other Subsidiary of
Parent, or any of their affiliates, nor shall the Company be required
to consult with Parent with respect thereto);
(f) Declare or pay any dividends on or make any other
distributions (whether in cash, stock or property) in respect of any of
its capital stock, or split, combine or reclassify any of its capital
stock or issue or authorize the issuance of any other securities in
respect of, in lieu of or in substitution for shares of capital stock
of the Company;
(g) Repurchase or otherwise acquire, directly or indirectly,
any shares of its capital stock, other than pursuant to the terms of
the Company Option Plans (without any additional action by the
Company's board of directors, its compensation committee, or an
administrator of any Company Option Plan);
39
(h) Issue, deliver, sell or authorize or propose the issuance,
delivery, grant or sale of, any shares of its capital stock of any
class or securities convertible into, or any subscriptions, rights,
warrants or options to acquire, or enter into other agreements or
commitments of any character obligating it to issue any such shares or
other convertible securities, other than the (1) issuance of shares of
Company Stock (with Company Rights attached thereto) pursuant to the
exercise of stock options or warrants outstanding as of the date of
this Agreement, (2) the grant of stock options to new employees in
amounts that are consistent with past practice; or (3) if the Closing
occurs after December 12, 2001, the grant of stock options pursuant to
the Company's option exchange program;
(i) Cause, permit or propose any amendments to the Company's
certificate of incorporation or by-laws;
(j) Sell, lease, license, encumber or otherwise dispose of any
of the properties or assets of the Company or any of its Subsidiaries
or terminate or waive any contracts, claims, or rights, in each case,
except in the ordinary course of business consistent with past
practice;
(k) Incur any material indebtedness for borrowed money (other
than ordinary course trade payables or pursuant to existing credit
facilities in the ordinary course of business) or guarantee any such
prohibited indebtedness or issue or sell any debt securities or
warrants or rights to acquire debt securities of the Company or any of
its Subsidiaries or guarantee any debt securities of others;
(l) Except as required by law, adopt or amend any Company
Scheduled Plan or increase the salaries or wage rates of any of its
employees (except for wage increases in the ordinary course of business
and consistent with past practices), including but not limited to (but
without limiting the generality of the foregoing), the adoption or
amendment of any stock purchase or option plan, the entering into of
any employment contract or the payment of any special bonus or special
remuneration to any director or employee (other than pursuant to sales
commissions, bonus programs or particular bonuses approved by the board
of directors of the Company or its compensation committee prior to the
date hereof);
(m) Revalue any of the assets of the Company or any of its
Subsidiaries, including without limitation writing down the value of
inventory, writing off notes or accounts receivable, other than in the
ordinary course of business consistent with past practice or as
required by GAAP or applicable law;
(n) Except as set forth in the Company Disclosure Schedule,
pay, discharge or satisfy in an amount in excess of $200,000 (in any
one case) or $500,000 (in the aggregate), any claim, liability or
obligation (absolute, accrued, asserted or unasserted, contingent or
otherwise), including, without limitation, under any employment
contract or with respect to any bonus or special remuneration, other
than the payment, discharge or satisfaction in the ordinary
40
course of business of liabilities of the type or specifically
reflected or reserved against in the Company Financial Statements (or
in the notes thereto);
(o) Except as required by applicable Tax law, make or change
any material election in respect of Taxes, adopt or change in any
material respect any accounting method in respect of Taxes, file any
material Return or any amendment to a material Return, enter into any
closing agreement, settle any claim or assessment in respect of Taxes
(except settlements effected solely through payment of immaterial sums
of money), or consent to any extension or waiver of the limitation
period applicable to any claim or assessment in respect of Taxes;
(p) Except for any change which is required by reason of a
concurrent change in GAAP, the Company will not, and will not permit
any of its Subsidiaries to, change any method of accounting or
accounting practice used by it;
(q) Except as otherwise permitted pursuant to SECTION 6.3,
take any action to exempt or make any person, entity or action (other
than Parent) not subject to the provision of Section 203 of the
Delaware Law or any other potentially applicable anti-takeover or
similar statute or regulation; or
(r) Release or permit the release of any Person from, or waive
or permit the waiver of any provision of, any confidentiality,
"standstill" or similar agreement to which any of the Company or any of
its Subsidiaries is a party or under which the Company or any of its
Subsidiaries has any rights, and will use its best efforts to enforce
or cause to be enforced each such agreement at the request of Parent.
The Company will also promptly request each Person other than Open
Market, Inc. that has executed, within 12 months prior to the date of
this Agreement, a confidentiality agreement in connection with such
Person's consideration of a possible Alternate Transaction or equity or
debt investment in the Company to return all confidential information
heretofore furnished to such Person by or on behalf of the Company or
any of its Subsidiaries.
(s) Take, or agree in writing or otherwise to take, any of the
actions described in SECTION 6.1A(a) THROUGH (r) above, or any action
which would cause or would be reasonably likely to cause any of the
conditions to the Merger set forth in SECTIONS 7.1 OR 7.3, not to be
satisfied.
41
6.1B CONDUCT BY PARENT. During the period from the date of this
Agreement and continuing until the earlier of the termination of this Agreement
pursuant to its terms and the Effective Time, the Parent shall not, prior to the
Effective Time or earlier termination of this Agreement pursuant to its terms,
without the prior written consent of the Company (which consent shall not be
unreasonably withheld or delayed):
(a) adopt any amendments to its certificate of incorporation
which would materially adversely affect the terms and provisions of the
Parent Common Stock or the rights of the holders of such shares; or
(b) declare or pay any dividends on or make any other
distributions (whether in cash, stock or property) in respect of any of
its capital stock, or split, combine or reclassify any of its capital
stock or issue or authorize the issuance of any other securities in
respect of, in lieu of or in substitution for shares of capital stock
of Parent, or, except in accordance with agreements existing as of the
date hereof, repurchase or otherwise acquire, directly or indirectly,
any shares of its capital stock in excess of 10% of the number of
shares of capital stock of Parent then outstanding.
6.2 NO SOLICITATION.
(a) From and after the date of this Agreement until the
Effective Time or the earlier termination of this Agreement in
accordance with its terms, the Company will not, and will not permit
any of its Subsidiaries or its or their respective directors, officers,
investment bankers, affiliates, representatives and agents to, (i)
solicit, initiate, or knowingly encourage (including by way of
furnishing unsolicited information), or take any other action to
facilitate, any inquiries or proposals that constitute, or could
reasonably be expected to lead to, any Company Acquisition Proposal, or
(ii) engage in, or enter into, any negotiations or discussions
concerning any Company Acquisition Proposal. Notwithstanding the
foregoing, in the event that, notwithstanding compliance with the
preceding sentence, prior to receipt of the Company stockholder
approval, (x) the Company receives a Company Acquisition Proposal that
the board of directors of the Company determines in good faith (after
consultation with its outside legal counsel and financial advisors) is
or may reasonably be expected to lead to a Company Superior Proposal
that was not solicited by the Company or otherwise obtained in
violation of this SECTION 6.2, and (y) after the Company gives the
Parent written notice of its intention to do so, the Company may
participate in discussions and negotiations regarding such Company
Acquisition Proposal, and provide confidential information concerning
the Company, in order to be informed and make a determination with
respect to such Company Acquisition Proposal. In such event, the
Company shall (i) promptly inform Parent of the material terms and
conditions of such Company Acquisition Proposal, including the identity
of the Person making such Company Acquisition Proposal, (ii) promptly
keep Parent informed of the status including any material change to the
terms of any such Company Acquisition Proposal, and (iii) promptly
deliver to Parent copies of all confidential information regarding the
42
Company delivered by the Company to any third party in connection with
such Company Acquisition Proposal. As used herein, the term "COMPANY
ACQUISITION PROPOSAL" shall mean any bona fide inquiry, proposal or
offer relating to any (i) merger, consolidation, business combination,
or similar transaction involving the Company or any Subsidiary of the
Company, (ii) sale, lease or other disposition, directly or indirectly,
by merger, consolidation, share exchange or otherwise, of any assets of
the Company or any Subsidiary of the Company in one or more
transactions, (iii) issuance, sale, or other disposition of (including
by way of merger, consolidation, share exchange or any similar
transaction) securities (or options, rights or warrants to purchase
such securities, or securities convertible into such securities) of the
Company or any Subsidiary of the Company, (iv) liquidation,
dissolution, recapitalization or other similar type of transaction with
respect to the Company or any Subsidiary of the Company, (v) tender
offer or exchange offer for Company securities; in the case of (i),
(ii), (iii), (iv) or (v) above, which transaction would result in a
third party acquiring beneficial ownership of more than fifty percent
(50%) of the voting power of the Company or the assets representing
more than fifty percent (50%) of the net income, net revenue or assets
of the Company on a consolidated basis, (vi) transaction which is
similar in form, substance or purpose to any of the foregoing
transactions, or (vii) public announcement of an agreement, proposal,
plan or intention to do any of the foregoing, PROVIDED, HOWEVER, that
the term "Company Acquisition Proposal" shall not include the Merger
and the transactions contemplated thereby. For purposes of this
Agreement, "COMPANY SUPERIOR PROPOSAL" means any offer not solicited
after the date of this Agreement by the Company, or by other Persons in
violation of the first sentence of this SECTION 6.2(a), and made by a
third party to consummate a tender offer, exchange offer, merger,
consolidation or similar transaction which would result in such third
party beneficially owning, directly or indirectly, more than fifty
percent (50%) of the shares of Company Stock then outstanding (or of
the surviving entity in a merger) or all or substantially all of the
assets of Company and its Subsidiaries, taken together, and which the
board of directors of the Company determines in good faith has a
reasonable likelihood of closing and otherwise on terms which the board
of directors of the Company determines in good faith (after consulting
with a financial advisor of nationally recognized reputation and
considering such other matters that it deems relevant) would, if
consummated, result in a transaction more favorable to the Company's
stockholders than the Merger, taking into account, in the reasonable
good faith judgment of the board of directors of the Company after
consultation with its financial advisor, the availability to the person
or entity making such Company Superior Proposal of the financial means
to conclude such transaction. The Company will immediately cease any
and all existing activities, discussions or negotiations with any
parties conducted heretofore with respect to any of the foregoing.
(b) Neither the board of directors of the Company nor any
committee thereof shall, except as required by its fiduciary duties as
determined in good faith thereby (in consultation with its outside
counsel), (i) withdraw or modify, or propose to withdraw or modify, in
a manner adverse to Parent or Merger Sub, the
43
approval or recommendation by the board of directors of the Company or
such committee of this Agreement or the Merger, (ii) approve,
recommend, or otherwise support or endorse any Company Acquisition
Proposal, or (iii) cause the Company to enter into any letter of
intent, agreement in principle, acquisition agreement or similar
agreement with respect to any Company Acquisition Proposal. Nothing
contained in this Agreement shall prohibit the Company from taking and
disclosing to its stockholders a position contemplated by Rule 14d-9 or
14e-2 promulgated under the Exchange Act or from making any disclosure
to the Company's stockholders if, in the good faith judgment of the
board of directors of the Company (in consultation with its outside
counsel), such disclosure is necessary for the board of directors to
comply with its fiduciary duties under applicable law; PROVIDED,
HOWEVER, that, except as required by their fiduciary duties as
determined in good faith and in consultation with its outside counsel
and investment advisor, neither the Company nor its board of directors
nor any committee thereof shall withdraw or modify, or propose publicly
to withdraw or modify, its position with respect to this Agreement or
the Merger or approve or recommend or propose publicly to approve or
recommend, a Company Acquisition Proposal.
(c) In addition to the obligations of the Company set forth in
paragraphs (a) and (b) of this SECTION 6.2, the Company will promptly
(and in any event within forty eight (48) hours) advise Parent, orally
and in writing, if any Company Acquisition Proposal is made or, to its
Knowledge, proposed to be made or any information or access to
properties, books or records of the Company is requested in connection
with a Company Acquisition Proposal, (i) the principal terms and
conditions of any such Company Acquisition Proposal or potential
Company Acquisition Proposal or inquiry, and (ii) the identity of the
party making such Company Acquisition Proposal, potential Company
Acquisition Proposal or inquiry. The Company will keep Parent advised
of the status and details (including amendments and proposed
amendments) of any such request or Company Acquisition Proposal.
6.3 MEETING OF STOCKHOLDERS.
(a) Except as set forth in SECTION 6.2(b), promptly after the
date hereof, the Company shall take all action necessary in accordance
with the DGCL and its certificate of incorporation and by-laws to
convene a meeting of stockholders ("COMPANY STOCKHOLDERS MEETING") to
be held as promptly as practicable after the S-4 Registration Statement
is declared effective by the SEC for the purposes of voting upon the
adoption of this Agreement and the Merger.
(b) If, after the date the S-4 Registration Statement is
declared effective by the SEC, in the reasonable judgment of the
Company, the issuance of Parent Shares pursuant to this Agreement could
require the approval of the stockholders of Parent pursuant to the
rules of the NNM, Parent shall take all action necessary in accordance
with the DGCL and its certificate of incorporation and by-laws to
convene a meeting of stockholders (the "PARENT STOCKHOLDERS
44
MEETING") to be held as promptly as practicable after the S-4
Registration Statement is declared effective by the SEC for the
purposes of voting upon this Agreement and the Merger. In the event
that prior to the date of the Parent Stockholders Meeting, the rules of
the NNM permit Parent to consummate the Merger without the approval of
Parent's stockholders, Parent shall be entitled to cancel the Parent
Stockholders Meeting and/or the vote on the adoption of this Agreement
and the Merger.
6.4 REGISTRATION STATEMENT. Parent will, as promptly as practicable,
prepare and file with the SEC a registration statement on Form S-4 (the "S-4
REGISTRATION STATEMENT"), containing a proxy statement/prospectus and a form of
proxy, in order to effect the registration under the Securities Act of the
Parent Shares issuable in respect of the shares of Company Common Stock in
connection with the Merger and the other transactions contemplated hereby. The
Company and Parent will, as promptly as practicable, prepare and file with the
SEC a proxy statement that will be the same proxy statement/prospectus contained
in the S-4 Registration Statement and a form of proxy, in connection with the
vote of the Company's (and Parent's, if necessary) stockholders with respect to
the adoption of this Agreement and approval of the Merger (such proxy
statement/prospectus, together with any amendments thereof or supplements
thereto, in each case in the form or forms mailed to the Company's (and
Parent's, if necessary) stockholders is herein called the "PROXY STATEMENT").
The Company and Parent will, and will cause their accountants and lawyers to,
use their reasonable efforts to cause the S-4 Registration Statement to be
declared effective as promptly as practicable thereafter, including, without
limitation, causing their accountants to deliver necessary or required
instruments such as opinions, consents and certificates, and will take any other
action required or necessary to be taken under federal or state securities laws
or otherwise in connection with the registration process it being understood
that each of Hill & Xxxxxx, counsel to the Company, and, if a Parent Stockholder
Meeting is then deemed necessary in the reasonable judgement of the Company,
Xxxx, Xxxx & Xxxxx LLC, counsel to Parent, will render the tax opinions referred
to in SECTION 6.12 below on the date the preliminary proxy is first filed with
the SEC. The Company and Parent (if necessary) will each use its reasonable
efforts to cause the Proxy Statement to be mailed to its stockholders at the
earliest practicable date and the Company and Parent (if necessary) shall each
use its commercially reasonable efforts to hold the Company Stockholders Meeting
and the Parent Stockholders Meeting, as the case may be, in accordance with
SECTION 6.3 as soon as practicable after the S-4 Registration Statement is
declared effective by the SEC. Parent shall also take any action required to be
taken under state blue sky or other securities laws in connection with the
issuance of Parent Shares in the Merger.
6.5 REASONABLE EFFORTS.
(a) Subject to the terms and conditions of this Agreement, the
Parties shall: (i) promptly make their respective filings and
thereafter make any other required submissions under all applicable
laws with respect to the Merger and the other transactions contemplated
hereby; and (ii) use their reasonable best efforts to take promptly, or
cause to be taken, all other actions and do, or cause to be done, all
other things necessary, proper or appropriate to consummate and make
effective the transactions contemplated by this Agreement as soon as
practicable.
45
(b) Parent and the Company shall keep each other reasonably
apprised of the status of matters relating to the completion of the
transactions contemplated hereby and work cooperatively in connection
with obtaining all required approvals or consents of any governmental
authority (whether domestic, foreign or supranational). In that regard,
each party shall without limitation: (i) promptly notify the other of,
and if in writing, furnish the other with the copies of (or, in the
case of material oral communications, advise the other orally of) any
communications from or with any governmental authority (whether
domestic, foreign of supranational) with respect to the Merger or any
of the other transactions contemplated by this Agreement, (ii) permit
the other to review and discuss in advance, and consider in good faith
the views of the other in connection with, any proposed written (or any
material proposed oral) communication with any such governmental
authority, (iii) not participate in any meeting with any such
governmental authority unless it consults with the other in advance and
to the extent permitted by such governmental authority gives the other
the opportunity to attend and participate thereat, and (iv) furnish the
other with copies of all correspondence, filing and communications (and
memoranda setting forth the substance thereof) between it and any such
governmental authority with respect to this Agreement and the Merger.
(c) Each of the Company and Parent shall promptly notify the
other party of:
(i) any notice or other communication from any Person alleging
that the consent of such Person is or may be required in
connection with the transactions contemplated by this
Agreement if the failure of the Company or Parent, as the
case may be, to obtain such consent would be material to
the Company or Parent as applicable; and
(ii) any notice or other communication from any governmental
or regulatory agency or authority in connection with the
transactions contemplated by this Agreement.
(d) The Company and Parent shall promptly notify the other
party of any actions, suits, claims, investigations or proceedings
commenced or, to its Knowledge, threatened against, relating to or
involving or otherwise affecting such party or any of its Subsidiaries
which relate to the consummation of the transactions contemplated by
this Agreement.
6.6 ACCESS TO INFORMATION. Upon reasonable notice, Parent, on the one
hand, and the Company, on the other, shall (and shall cause each of their
Subsidiaries to) afford to officers, employees, counsel, accountants and other
authorized representatives of the other such party (the "AUTHORIZED
REPRESENTATIVES") reasonable access, during normal business hours throughout the
period prior to the Effective Time, to their properties, assets, books and
records and, during such period, shall (and shall cause each of their
Subsidiaries to) furnish promptly to such Authorized Representatives all
information concerning their business, properties, assets and personnel as may
reasonably be requested for purposes of appropriate and necessary due diligence,
provided
46
that no investigation pursuant to this SECTION 6.6 shall affect or be deemed to
modify any of the representations or warranties made by the Parties. The Parties
each agree to treat (and cause their Authorized Representatives to treat) any
and all information provided pursuant to this SECTION 6.7 in strict compliance
with the terms of that certain Confidentiality Agreement, entered by and between
the Company and Parent, dated August 27, 2001 (the "CONFIDENTIALITY AGREEMENT").
6.7 PUBLICITY. The Parties agree that they will consult with each other
concerning any proposed press release or public announcement pertaining to the
Merger in order to agree upon the text of any such press release or the making
of such public announcement, which agreement shall not be unreasonably withheld
or delayed, except as may be required by applicable law or by obligations
pursuant to any listing agreement with a national securities exchange or
national automated quotation system, in which case the party proposing to issue
such press release or make such public announcement shall use reasonable efforts
to consult in good faith with the other party before issuing any such press
release or making any such public announcement. The Parties will prepare a joint
release for the announcement of the execution of this Agreement.
6.8 AFFILIATES OF THE COMPANY AND PARENT. The Company has identified
the Persons listed on SECTION 6.8 of the Company Disclosure Schedule as
"affiliates" of the Company for purposes of Rule 145 promulgated under the
Securities Act (each, a "COMPANY AFFILIATE") and the Company will use its
reasonable efforts to obtain as promptly as practicable from each Company
Affiliate written agreements in the form attached hereto as EXHIBIT B (the
"COMPANY AFFILIATE LETTER") that such Company Affiliate will not sell, pledge,
transfer or otherwise dispose of any Parent Shares issued to such Company
Affiliate pursuant to the Merger, except in compliance with Rule 145 promulgated
under the Securities Act or an exemption from the registration requirements of
the Securities Act.
6.9 MAINTENANCE OF INSURANCE. Between the date hereof and through the
Effective Time, the Company will maintain in full force and effect all of its
and its Subsidiaries presently existing policies of insurance or insurance
comparable to the coverage afforded by such policies.
6.10 REPRESENTATIONS AND WARRANTIES. Each of the Company and Parent
shall give prompt notice to the other, of any circumstances that would cause any
of its representations and warranties set forth in SECTION 5.1 OR 5.2, as the
case may be, that are qualified as to materiality or Material Adverse Effect not
to be true and correct, and those that are not so qualified not to be true and
correct in all material respects, in each case at and as of the Effective Time.
6.11 FILINGS; OTHER ACTION. Subject to the terms and conditions herein
provided, the Parties shall: (a) promptly make their respective filings and
thereafter make any other required submissions under the HSR Act, the Securities
Act and the Exchange Act, and comparable foreign laws, rules and regulations,
with respect to the Merger; (b) cooperate in the preparation of such filings or
submissions under the HSR Act, the Securities Act and the Exchange Act and other
comparable foreign laws, rules and regulations; and (c) use reasonable efforts
promptly to take, or cause to be taken, all other actions and do, or cause to be
done, all other things necessary, proper or appropriate under applicable laws
and regulations to consummate and make effective the transactions contemplated
by this Agreement as soon as practicable. Notwithstanding anything to the
contrary contained herein, nothing in this Agreement will
47
require Parent, whether pursuant to an order of the Federal Trade Commission or
the United States Department of Justice or otherwise, to dispose of any assets,
lines of business or equity interests in order to obtain the consent of the
Federal Trade Commission or the United States Department of Justice to the
transactions contemplated by this Agreement.
6.12 TAX-FREE REORGANIZATION TREATMENT. The Parties shall use their
commercially reasonable efforts to cause the Merger to be treated as a
reorganization within the meaning of Section 368(a) of the Code and shall not
knowingly take or fail to take any action which action or failure to act would
jeopardize the qualification of the Merger as a reorganization within the
meaning of Section 368(a) of the Code. So long as the Merger qualifies as a
reorganization described in Section 368(a) of the Code, each of Parent, Merger
Sub, and the Company (i) shall not file any Return or take any position
inconsistent with the treatment of the Merger as a reorganization described in
Section 368(a) of the Code, and (ii) shall comply with the record keeping and
information-reporting requirements set forth in Treas. Reg. Section 1.368-3.
Furthermore, prior to the Effective Time, the Parties shall use their
commercially reasonable efforts to obtain the tax opinions specified in SECTION
7.1(f) of the Agreement.
6.13 NASDAQ LISTING. Parent agrees to authorize for listing on the NNM
the shares of Parent Common Stock issuable in connection with the Merger, upon
official notice of issuance. Parent shall take all steps reasonably necessary to
maintain the listing of the Parent Common Stock on the NNM.
6.14 INDEMNIFICATION.
(a) From and after the Effective Time, the Surviving
Corporation will fulfill and honor in all respects the obligations of
the Company to indemnify and hold harmless the Company's and its
Subsidiaries' present and former directors, officers, employees, and
agents and their heirs, executors and assigns (collectively, the
"COVERED PARTIES") against all claims, losses, liabilities, damages,
judgments, fines and reasonable fees, costs and expenses, including
attorneys' fees and disbursements, incurred in connection with any
claim, action, suit, proceeding or investigation, whether civil,
criminal, administrative or investigative, and to advance any amount
required with respect to such indemnification (but solely if the
Surviving Corporation has not assumed the defense of such Covered
Party) arising out of or pertaining to (i) the fact that the Covered
Party is or was an officer, director, employee or agent of the Company
or any of its subsidiaries or (ii) matters existing or occurring at or
prior to the Effective Time (including this Agreement and the
transactions and actions contemplated hereby), whether asserted or
claimed prior to, at or after the Effective Time, to the fullest extent
permitted under applicable law.
(b) The certificate of incorporation and by-laws of the
Surviving Corporation shall contain provisions no less favorable with
respect to indemnification, advancement of expenses and exculpation of
present and former directors, officers, employees and agents of the
Company and its subsidiaries than are presently set forth in the
certificate of incorporation and by-laws of the Company and for a
period of six (6) years from the Effective Time, those
48
provisions will not be repealed or amended or otherwise modified in any
manner that would adversely affect the rights thereunder of the Covered
Parties, except to the extent, if any, that such modification is
required by applicable law.
(c) For a period of six (6) years after the Effective Time,
the Surviving Corporation will either (i) maintain in effect, if
available, directors' and officers' liability insurance covering those
persons who are currently covered by the Company's directors' and
officers' liability insurance policy on terms comparable to those
applicable to the current directors and officers of the Company;
PROVIDED, HOWEVER, that in no event will the Surviving Corporation be
required to expend in excess of 150% of the annual premium currently
paid by the Company for such coverage (or such coverage as is available
for such 150% of such annual premium), or (ii) if mutually agreed
between the Company and the Surviving Corporation, purchase a
directors' and officers' liability insurance policy on terms comparable
to those applicable to the current directors and officers of the
Company covering all periods prior to the Effective Time.
6.15 SALE OF COMPANY SOFTWARE PRODUCTS. Concurrently with the execution
and delivery of this Agreement, Parent and the Company have entered into a
Nonexclusive Software Distribution Agreement in the form attached as EXHIBIT C
hereto (the "SOFTWARE DISTRIBUTION AGREEMENT") pursuant to which the Company
will grant Parent a license to market, sell, distribute, license and sublicense
certain software products sold by the Company on the terms specified in the
Software Distribution Agreement.
6.16 REGISTRATION ON FORM S-8. Parent agrees to cause the shares of
Parent Stock issuable upon exercise of the Substitute Options to be covered by a
Form S-8 Registration Statement filed with the SEC within 30 days of the
Effective Time. Parent further agrees to cause the shares of Parent Stock
issuable upon exercise of the Substitute Options to be registered or exempt from
the registration requirements of all applicable state securities laws, rules and
regulations.
6.17 SECTION 16(b). Parent and the Company shall take all such steps
reasonably necessary to cause the transactions contemplated hereby and any other
dispositions of equity securities of the Company (including derivative
securities) or acquisitions of Parent equity securities (including derivative
securities) in connections with this Agreement by each individual who (a) is a
director or officer of the Company or (b) at the Effective Time, will become a
director or officer of Parent, to be exempt under Rule 16b-3 promulgated under
the Exchange Act.
6.18 TAKEOVER STATUTES. If any "fair price", "moratorium", "control
share acquisition" or other form of anti-takeover statute or regulation shall
become applicable to the transactions contemplated hereby, each of the Parties
and its board of directors shall grant such approvals and take all such actions
as are reasonably necessary so that the transactions contemplated hereby may be
consummated as promptly as practicable on the terms contemplated hereby and
thereby and otherwise act to eliminate or minimize the effects of such statute
or regulation on the transactions contemplated hereby and thereby.
49
6.19 FURTHER AMENDMENTS TO RIGHTS PLAN. Prior to the Effective Time or
the earlier termination of this Agreement in accordance with its terms, the
Board of Directors of the Company shall not take any action that would amend, or
have the effect of amending, the Company Rights Agreement so that (i) the Parent
would become an "Acquiring Person" (as such terms are defined in the Company
Rights Agreement) as a result of the consummation of the transactions
contemplated by this Agreement, (ii) a "Stock Acquisition Date" or "Distribution
Date" (as such terms are defined in the Company Rights Agreement) would occur as
a result of the consummation of the transactions contemplated by this Agreement,
and (iii) all "Company Rights" issued and outstanding under the Company Rights
Agreement would not expire immediately prior to the Effective Time.
ARTICLE VII
CONDITIONS
7.1 CONDITIONS TO EACH PARTY'S OBLIGATIONS. The respective obligations
of each Party to consummate the Merger are subject to the satisfaction or waiver
by each of the Parties of the following conditions:
(a) this Agreement and the Merger shall have been adopted by
the requisite vote under applicable law of the stockholders of the
Company and this Agreement and the issuance of Parent Shares in
connection with this Merger shall have been approved by the requisite
vote under the rules and regulations of the NNM by the stockholders of
Parent (if necessary);
(b) the SEC shall have declared the S-4 Registration Statement
effective; no stop order suspending the effectiveness of the S-4
Registration Statement or any part thereof shall have been issued and
no proceeding for that purpose, and no similar proceeding in respect of
the Proxy Statement, shall have been initiated or threatened in writing
by the SEC; and all requests for additional information on the part of
the SEC shall have been complied with to the reasonable satisfaction of
the Parties;
(c) no judgment, order, decree, statute, law, ordinance, rule
or regulation, entered, enacted, promulgated, enforced or issued by any
court or other Governmental Entity of competent jurisdiction or other
legal restraint or prohibition preventing the consummation of the
Merger or making the Merger illegal (collectively, "RESTRAINTS") shall
be in effect;
(d) the waiting period(s) under the HSR Act and all other
applicable material foreign antitrust, competition and merger laws, if
any, shall have expired or been terminated;
(e) the Parent Shares issuable to stockholders of the Company
pursuant to this Agreement shall have been authorized for listing on
the NNM upon official notice of issuance; and, if the Closing occurs
after December 31, 2001 and the Parent does not then satisfy the
maintenance criteria (qualitative and otherwise) of the NNM (or any
other requirements set forth in a letter from the
50
NNM to Parent regarding the possible delisting of the Parent Shares),
there shall then remain at least forty five (45) calendar days before a
Final Delisting Date, if any;
(f) The Company shall have received a written opinion from its
tax counsel (Hill & Xxxxxx), and, if a Parent Stockholder Meeting was
held, the Parent shall have received a written opinion from its tax
counsel (Xxxx, Xxxx & Xxxxx LLC), each in form and substance reasonably
satisfactory to it, to the effect that for federal income tax purposes
the Merger will constitute a reorganization within the meaning of
Section 368(a) of the Code and such opinion shall not have been
withdrawn; PROVIDED, HOWEVER, that if the counsel to the Company does
not render such opinion, this condition shall nonetheless be deemed to
be satisfied with respect to the Company if counsel for the Parent
renders such opinion. The Parties to this Agreement agree to make such
reasonable and customary representations as requested by such counsel
for the purpose of rendering such opinions;
(g) (i) all required approvals or consents of any Governmental
Entity or third party shall have been obtained (and all relevant
statutory, regulatory or other governmental waiting periods, whether
domestic, foreign or supranational, shall have expired), except, in the
case of consents the absence of which could not result in civil or
criminal sanctions being imposed on Parent or the Surviving Corporation
or their respective affiliates, where the failures to obtain any such
consents and approvals would not reasonably be expected to have a
Material Adverse Effect on the Company, the Surviving Corporation or
the Parent and (ii) all such approvals and consents which have been
obtained shall be on terms that would not reasonably be expected to
have a Material Adverse Effect on the Company, the Surviving
Corporation or the Parent; and
(h) there shall not be any statute, rule, regulation,
injunction, order or decree, enacted, enforced, promulgated, entered,
issued or deemed applicable to the Merger and the other transactions
contemplated hereby (or in the case of any statue, rule or regulation,
awaiting signature or reasonably expected to become law), by any court,
government or governmental authority or agency or legislative body,
domestic, foreign or supranational, that could, or could reasonably be
expected to, have a Material Adverse Effect on the Company, the
Surviving Corporation or the Parent at or after the Effective Time.
7.2 CONDITIONS TO THE OBLIGATIONS OF THE COMPANY. The obligations of
the Company to consummate the Merger are subject to the fulfillment at or prior
to the Effective Time of the following additional conditions, any or all of
which may be waived in whole or in part by the Company to the extent permitted
by applicable law:
(a) the representations and warranties set forth in SECTION
5.1 that are qualified as to materiality or Material Adverse Effect
shall be true and correct, and those that are not so qualified shall be
true and correct in all material respects, in each case as of the date
of this Agreement, and as of the Effective Time with
51
the same force and effect as if made on and as of the Effective Time
(except to the extent expressly made as of an earlier date, in which
case as of such date), in each case except as permitted or contemplated
by this Agreement (it being understood that for purposes of determining
the accuracy of such representations and warranties any update or
modification to the Parent Disclosure Schedule made or purported to
have been made without the Company's written consent thereto shall be
disregarded), except, in all cases where the failure of such
representations and warranties to be true and correct would not,
individually or in the aggregate, have a Material Adverse Effect on
Parent;
(b) Parent shall have performed or complied in all material
respects with its agreements and covenants required to be performed or
complied with under this Agreement as of or prior to the Effective
Time; and
(c) Parent shall have delivered to the Company a certificate
of its chief executive officer or chief financial officer, on behalf of
Parent, to the effect that each of the conditions specified in SECTION
7.1 (as it relates to Parent) and clauses (a) and (b) of this SECTION
7.2 has been satisfied in all respects.
7.3 CONDITIONS TO THE OBLIGATIONS OF PARENT. The obligation of Parent
to consummate the Merger is subject to the fulfillment at or prior to the
Effective Time of the following additional conditions, any or all of which may
be waived in whole or in part by Parent to the extent permitted by applicable
law:
(a) the representations and warranties of the Company set
forth in SECTION 5.2 that are qualified as to materiality or Material
Adverse Effect shall be true and correct and those that are not so
qualified shall be true and correct in all material respects, in each
case as of the date of this Agreement, and as of the Effective Time
with the same force and effect as if made on and as of the Effective
Time (except to the extent expressly made as of an earlier date, in
which case as of such date), in each case except as permitted or
contemplated by this Agreement (it being understood that for purposes
of determining the accuracy of such representations or warranties any
update or modifications to the Company Disclosure Schedule made or
purported to have been made without Parent's written consent thereto
shall be disregarded), except, in all cases, where the failure of such
representations and warranties to be so true and correct would not,
individually or in the aggregate, have a Material Adverse Effect on the
Company, the Surviving Corporation or the Parent;
(b) the Company shall have performed or complied with in all
material respects its agreements and covenants required to be performed
or complied with under this Agreement as of or prior to the Effective
Time;
(c) the Company shall have delivered to Parent a certificate
of its chief executive officer or chief financial officer, on behalf of
the Company, to the effect that each of the conditions specified in
SECTION 7.1 (as it relates to the Company) and clauses (a) and (b) of
this SECTION 7.3 has been satisfied in all respects;
52
(d) to the extent the option agreement or option plan
governing any Company Option does not currently permit the Company to
take any of the actions contemplated by SECTION 4.1(c) hereof, the
Company shall have entered into agreements with the holders of such
Company Options which allow the Company to take the actions
contemplated by SECTION 4.1(c) hereof, which agreements shall be in
form and substance reasonably acceptable to Parent; and
(e) the Company shall have received all written consents,
assignments, waivers, authorizations or other certificates necessary to
provide for the continuation in full force and effect of any and all
material contracts and leases of the Company and for the Company to
consummate the transactions contemplated hereby.
ARTICLE VIII
TERMINATION
8.1 TERMINATION BY MUTUAL CONSENT. This Agreement may be terminated and
the Merger may be abandoned at any time prior to the Effective Time, before or
after the adoption of this Agreement by the stockholders of the Company or
Merger Sub and the approval (if necessary) of the issuance of the Parent Shares
in connection with the Merger by the stockholders of Parent, by the mutual
written consent of the Company and Parent.
8.2 TERMINATION BY EITHER THE COMPANY OR PARENT. This Agreement may be
terminated and the Merger may be abandoned at any time prior to the Effective
Time, before or after the adoption of this Agreement by the stockholders of the
Company or Merger Sub and the approval (if necessary) of the issuance of the
Parent Shares in connection with the Merger by the stockholders of Parent, by
action of the board of directors of either the Company or Parent if:
(a) the Merger shall not have been consummated by December 31,
2001 (as adjusted in the manner set forth below, the "TERMINATION
DATE"); PROVIDED, HOWEVER, that if (x) the Effective Time has not
occurred by the Termination Date by reason of nonsatisfaction of any of
the conditions set forth in SECTIONS 7.1(b), 7.1(c) OR 7.1(d) and (y)
all other conditions set forth in ARTICLE VII have heretofore been
satisfied or waived or are then capable of being satisfied, then the
Termination Date shall automatically be extended to January 31, 2002;
(b) any Restraint shall be in effect and shall have become
final and nonappealable; PROVIDED, HOWEVER, that each of the parties
shall have used reasonable efforts to prevent the entry of such
Restraints and to appeal as promptly as possible any such Restraints
that may be entered; or
(c) at the duly held Company Stockholders Meeting (including
any adjournments thereof), the requisite approval of the Company's
stockholders shall not have been obtained; PROVIDED, HOWEVER, that the
Company's right to terminate this Agreement under this SECTION 8.2(c)
shall not be available to the Company if the Company has violated the
provisions of SECTION 6.2; or
53
(d) the Parent Stockholders Meeting is required and at the
duly held Parent Stockholders Meeting (including any adjournments
thereof), the requisite approval of Parent's stockholders shall not
have been obtained.
8.3 TERMINATION BY THE COMPANY. This Agreement may be terminated by the
Company upon written notice to Parent and the Merger may be abandoned at any
time prior to the Effective Time, before or after adoption of this Agreement by
the stockholders of the Company or Merger Sub, by action of the board of
directors of the Company, if:
(a) Parent shall have breached or failed to perform any of the
covenants or other agreements contained in this Agreement, or if any
representation or warranty shall have become untrue, in either case
such that (i) the conditions set forth in SECTION 7.2(a) OR (b) would
not be satisfied as of the time of such breach or as of such time as
such representation or warranty shall have become untrue and (ii) such
breach or failure to be true has not been or is incapable of being
cured within twenty (20) business days following receipt by Parent of
notice of such failure to comply; or
(b) the Parent Stockholders Meeting is required and the board
of directors of Parent, or any committee thereof, shall have withdrawn
or modified in a manner adverse to the Company its approval or
recommendation of the Merger or this Agreement, or Parent shall have
failed to include in the Proxy Statement the recommendation of the
board of directors of Parent in favor of approval of the Merger and
this Agreement; or
(c) if the Company is in active negotiations, or executes a
definitive agreement, with respect to a Company Superior Proposal, but
only at a time that is prior to the adoption of this Agreement by the
stockholders of the Company and that is after the second business day
following the Company's delivery of a written notice to Parent advising
that the board of directors of the Company is prepared to accept a
Company Superior Proposal and identifying the Person making such
Company Superior Proposal.
8.4 TERMINATION BY PARENT. This Agreement may be terminated by Parent
upon written notice to the Company and the Merger may be abandoned at any time
prior to the Effective Time, before or after the approval (if necessary) of the
issuance of the Parent Shares in connection with the Merger by the stockholders
of Parent, by any action of the Board of Directors of Parent, if:
(a) the Company shall have breached or failed to perform any
of the covenants or other agreements contained in this Agreement, or if
any representation or warranty shall have become untrue, in either case
such that (i) the conditions set forth in SECTION 7.3(a) OR (b) would
not be satisfied as of the time of such breach or as of such time as
such representation or warranty shall have become untrue and (ii) such
breach or failure to be true has not been or is incapable of being
cured within twenty (20) business days following receipt by the Company
of notice of such failure to comply; or
54
(b) (i) the board of directors of the Company or any committee
thereof, shall have withdrawn or modified in a manner adverse to Parent
its approval or recommendation of the Merger or this Agreement, (ii)
the Company shall have failed to include in the Proxy Statement the
recommendation of the board of directors of the Company in favor of
adoption of this Agreement, (iii) in connection with a Rule 14d-9
disclosure, the board of directors of the Company shall have taken any
action other than a rejection of a Rule 14d-9 proposal, (iv) the board
of directors of the Company or any committee thereof shall have
recommended any Company Acquisition Proposal, (v) the Company or any of
its officers or directors shall have entered into discussions or
negotiations in violation of SECTION 6.2, (vi) the board of directors
of the Company or any committee thereof shall have resolved to do any
of the foregoing or (vii) any Company Acquisition Proposal is
consummated or an agreement with respect to any Company Acquisition
Proposal is validly signed on behalf of the Company.
8.5 EFFECT OF TERMINATION; TERMINATION FEE.
(a) Except as set forth in this SECTION 8.5, in the event of
termination of this Agreement by either Parent or the Company as
provided in this ARTICLE VIII, this Agreement shall forthwith become
void and there shall be no liability or obligation on the part of the
Parties or their respective affiliates, officers, directors or
stockholders except (x) with respect to the treatment of confidential
information pursuant to SECTION 6.6, the payment of expenses pursuant
to SECTION 9.1, and ARTICLE IX generally, (y) to the extent that such
termination results from the willful and material breach of a Party of
any of its representations or warranties, or any of its covenants or
agreements and (z) with respect to any intentional or knowing
misrepresentations in connection with or pursuant to this Agreement or
the transactions contemplated hereby.
(b) In the event that (i) this Agreement is terminated
pursuant to SECTION 8.2(a) due to the Company Stockholders Meeting not
occurring as a result of a Company Acquisition Proposal, and within one
year of such termination an Alternate Transaction is consummated or the
Company enters into a definitive agreement to consummate an Alternate
Transaction, (ii) (1) a Company Acquisition Proposal or the intention
or desire to make a Company Acquisition Proposal shall have been made
directly to the stockholders of the Company generally or otherwise
publicly announced by the Company or the Person making a Company
Acquisition Proposal, (2) such Company Acquisition Proposal or
intention or desire is not withdrawn prior to the vote of the Company
stockholders at the duly held Company Stockholders Meeting, (3)
thereafter this Agreement is terminated pursuant to SECTION 8.2(c) or
SECTION 8.4(a), and (4) within one year of such termination an
Alternate Transaction is consummated or the Company enters into a
definitive agreement to consummate an Alternate Transaction, or (iii)
this Agreement is terminated by the Company pursuant to SECTION 8.3(c)
or by Parent pursuant to SECTION 8.4(b), then the Company shall pay
Parent a fee equal to $2,000,000 (the "TERMINATION FEE"), payable by
wire transfer of same day funds. The Company shall pay the Termination
Fee promptly, but in no event later than
55
the date of such termination, in the case of termination pursuant to
SECTION 8.3(c), within three business days, in the case of termination
pursuant to SECTION 8.4(b), or the earlier of the date the Company
enters into a definitive agreement to consummate the transactions
contemplated by an Alternate Transaction or an Alternate Transaction is
consummated, as the case may be, in the case of termination pursuant to
SECTIONS 8.2(a), 8.2(c) or 8.4(a). The Company acknowledges that the
agreements contained in this SECTION 8.5(b) are an integral part of the
transactions contemplated by this Agreement, and that, without these
agreements, Parent would not enter into this Agreement, and
accordingly, if the Company fails promptly to pay the amount due
pursuant to this SECTION 8.5(b), and, in order to obtain such payment,
Parent commences a suit which results in a judgment against the Company
for the fee set forth in this SECTION 8.5(b), the Company shall pay to
Parent its costs and expenses (including reasonable attorneys' fees and
expenses) in connection with such suit, together with interest on the
amount of the fee at the prime rate of Citibank, N.A. in effect on the
date such payment was required to be made.
(c) In the event that this Agreement is terminated by the
Company pursuant to SECTIONS 8.3(b), then Parent shall promptly, but in
no event later than the date of such termination, pay the Company a fee
equal to the Termination Fee, payable by wire transfer of same day
funds. Parent acknowledges that the agreements contained in this
SECTION 8.5(c) are an integral part of the transactions contemplated by
this Agreement, and that, without these agreements, the Company would
not enter into this Agreement, and accordingly, if Parent fails
promptly to pay the amount due pursuant to this SECTION 8.5(c), and, in
order to obtain such payment, the Company commences a suit which
results in a judgment against Parent for the fee set forth in this
SECTION 8.5(c), Parent shall pay to the Company its costs and expenses
(including reasonable attorneys' fees and expenses) in connection with
such suit, together with interest on the amount of the fee at the prime
rate of Citibank, N.A. in effect on the date such payment was required
to be made.
(d) In the event that this Agreement is terminated by either
Party pursuant to SECTION 8.2(d) or by the Company pursuant to SECTION
8.3(a), Parent shall pay to the Company an amount (the "EXPENSES FEE")
equal to the lesser of (i) $500,000 and (ii) all Transaction Expenses
(as defined below) incurred by the Company prior to such termination,
such payment to be made promptly but in no event later than the fifth
business day after receipt of an invoice from the Company for such
Transaction Expenses, including reasonably detailed backup therefor. In
the event this Agreement is terminated by either Party pursuant to
SECTION 8.2(c) (other than as provided in SECTION 8.5(b)(ii) above) or
by Parent pursuant to SECTION 8.4(a), the Company shall pay to Parent
the Expenses Fee promptly but in no event later than the fifth business
day after receipt of an invoice from Parent for such Transaction
Expenses, including reasonably detailed backup therefor.
56
(e) In the event both Parent and the Company would otherwise
be entitled to receive the Termination Fee under this SECTION 8.5 in
connection with the termination of this Agreement, neither party shall
be required to make any payment under this SECTION 8.5.
(f) If this Agreement is terminated under circumstances in
which Parent or the Company is entitled to receive the Termination Fee,
(i) the obligation to pay the Termination Fee shall survive the
termination of this Agreement and (ii) the payment of the Termination
Fee shall be the sole and exclusive remedy available to Parent or the
Company, as applicable, except in the event of (A) a willful breach of
any provision of this Agreement or (B) an intentional or knowing
misrepresentation in connection with this Agreement or the transactions
contemplated hereby, in which event the party entitled to the
Termination Fee shall have all rights, powers and remedies against the
other party that may be available at law or in equity. All rights,
powers and remedies provided under this Agreement or otherwise
available in respect hereof at law or in equity shall be cumulative and
not alternative, and the exercise of any such right, power or remedy by
any Party shall not preclude the simultaneous or later exercise of any
other such right, power or remedy by such Party.
ARTICLE IX
MISCELLANEOUS AND GENERAL
9.1 PAYMENT OF EXPENSES. Except as set forth in SECTION 8.5 hereof,
whether or not the Merger shall be consummated, each Party shall pay its own
expenses incident to preparing for, entering into and carrying out this
Agreement and the consummation of the transactions contemplated hereby (the
"TRANSACTION EXPENSES").
9.2 NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations
and warranties made in SECTIONS 5.1 AND 5.2 hereof shall not survive beyond the
Effective Time or a termination of this Agreement, except to the extent a
willful breach of such representation or intentional or knowing
misrepresentation formed the basis for such termination. This SECTION 9.2 shall
not limit any covenant or agreement of the Parties which by its terms
contemplates performance after the Effective Time or after termination of this
Agreement pursuant to ARTICLE VIII, including the payment of any Termination
Fee.
9.3 MODIFICATION OR AMENDMENT. Subject to the applicable provisions of
the DGCL, at any time prior to the Effective Time, the Parties, by resolution of
their respective board of directors, may modify or amend this Agreement, by
written agreement executed and delivered by duly authorized officers of the
respective Parties; provided, however, that after approval of this Agreement by
the stockholders of the Company is obtained, no amendment which requires further
stockholder approval shall be made without such approval of stockholders.
9.4 WAIVER OF CONDITIONS. The conditions to each of the Parties'
obligations to consummate the Merger are for the sole benefit of such party and
may be waived by such party in whole or in part to the extent permitted by
applicable law.
57
9.5 COUNTERPARTS. For the convenience of the Parties, this Agreement
may be executed in any number of counterparts, each such counterpart being
deemed to be an original instrument, and all such counterparts shall together
constitute the same agreement.
9.6 GOVERNING LAW; JURISDICTION.
(a) This Agreement shall be governed by and construed in
accordance with the laws of the State of
Delaware, without giving
effect to the principles of conflicts of law thereof.
(b) Each of Parent, Merger Sub and the Company hereby
irrevocably submits in any suit, action or proceeding arising out of or
related to this Agreement or any other instrument, document or
agreement executed or delivered in connection herewith and the
transactions contemplated hereby and thereby, whether arising in
contract, tort, equity or otherwise, to the exclusive jurisdiction of
any state or federal court located in the State of
Delaware and waives
any and all objections to jurisdiction that it may have under the laws
of the United States or of any state.
(c) Each of Parent, Merger Sub and the Company waives any
objection that it may have (including, without limitation, any
objection of the laying of venue or based on FORUM NON CONVENIENS) to
the location of the court in any proceeding commenced in accordance
with this SECTION 9.6.
9.7 NOTICES. Any notice, request, instruction or other document to be
given hereunder by any party to the other Parties shall be deemed delivered upon
actual receipt and shall be in writing and delivered personally or sent by
registered or certified mail, postage prepaid, reputable overnight courier, or
by facsimile transmission (with a confirming copy sent by reputable overnight
courier), as follows:
(a) if to Parent or Merger Sub, to:
divine, inc.
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxx, XX 00000
Attention: Chief Financial Officer and General Counsel
Facsimile: (000)000-0000
58
with a copy to:
Xxxx, Xxxx & Xxxxx LLC
00 Xxxx Xxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, XX 00000
Attention: D. Xxxx XxXxxxxx, Esq.
Facsimile: (000) 000-0000
(b) if to the Company, to:
Eprise Corporation
000 Xxxxxxxx Xxxxxxxxx
Xxxxxxxxxx, XX 00000
Attention: President and Chief Executive Officer
Facsimile: ___________________
with copies to:
Hill & Xxxxxx
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, XX 00000
Attention: Xxxxx X. Xxxxx, Esq.
Facsimile: (000) 000-0000
or to such other Persons or addresses as may be designated in writing by the
party to receive such notice.
9.8 ENTIRE AGREEMENT; ASSIGNMENT. This Agreement, including the
Exhibits and Disclosure Schedules, together with the Confidentiality Agreement,
(i) constitutes the entire agreement among the Parties with respect to the
subject matter hereof and supersedes all other prior or contemporaneous
agreements and understandings, both written and oral, among the Parties or any
of them with respect to the subject matter hereof, and (ii) shall not be
assigned by operation of law or otherwise (and any attempt to do so shall be
void).
9.9 PARTIES IN INTEREST. This Agreement shall be binding upon and inure
solely to the benefit of each party hereto and their respective successors and
assigns. Nothing in this Agreement, express or implied, other than the right to
receive the consideration payable in connection with the Merger pursuant to
ARTICLE IV hereof other than SECTIONS 6.15, 6.16 AND 6.17 hereof, 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.
9.10 CERTAIN DEFINITIONS. As used herein:
(a) "ALTERNATE TRANSACTION" shall mean any transaction or
series of transactions involving: (1) any merger, consolidation,
amalgamation, share exchange, business combination, issuance of
securities, acquisition of securities,
59
tender offer, exchange offer or other similar transaction (i) in which
any of the Company or its Subsidiaries is a constituent corporation,
(ii) in which a Person or "group" (as defined in the Exchange Act and
the rules promulgated thereunder) of Persons directly or indirectly
acquires beneficial or record ownership of securities representing more
than 50% of the outstanding securities of any class of voting
securities of any of the Company or its Subsidiaries, or (iii) in which
any of the Company or its Subsidiaries issues securities representing
more than 50% of the outstanding securities of any class of voting
securities of any of the Company or its Subsidiaries; or (2) any sale,
lease, exchange, transfer, license, acquisition or disposition of any
business or businesses or assets that constitute or account for 50% or
more of the consolidated net revenues, net income or assets of any of
the Company or its Subsidiaries.
(b) "ENCUMBRANCE" means any claim, lien, pledge, charge,
security interest, equitable interest, option, right of first refusal
or preemptive right, condition, or other restriction of any kind,
including any restriction on use, voting (in the case of any security),
transfer, receipt of income, or exercise of any other attribute of
ownership.
(c) "ERISA" means the Employee Retirement Income Security Act
of 1974, as amended.
(d) "FINAL DELISTING DATE" means the date, including any
extensions, deferrals, or restatements thereof, specified by the NNM in
a notice to Parent upon which date the Parent Shares will be delisted
from the NNM if Parent shall have not then satisfied the criteria of
the NNM necessary to maintain the listing of the Parent Shares on the
NNM; PROVIDED, HOWEVER, that if the NNM shall have withdrawn such
notice or otherwise suspended, revoked, or waived its maintenance
criteria (or any other requirements set forth in a letter from the NNM
to Parent regarding the possible delisting of the Parent Shares), there
shall be no Final Delisting Date for all purposes of this Agreement.
(e) "GOVERNMENTAL ENTITY" means the United States or any
state, local or foreign government, or instrumentality, division,
subdivision, agency, department or authority of any thereof.
(f) "KNOWLEDGE" with respect to a party hereto shall mean the
actual knowledge of any of the chief executive officer and the chief
financial officer thereof.
(g) "MATERIAL ADVERSE EFFECT" shall mean any adverse effect or
change in the business, operations, liabilities (contingent or
otherwise), results of operations or financial performance, condition
or prospects of Parent or any of its Subsidiaries or the Company or any
of its Subsidiaries, as the case may be, which is material to the
Parent and its Subsidiaries, taken as a whole, or the Company and its
Subsidiaries, taken as a whole, as the case may be; PROVIDED, HOWEVER,
that in no event shall any of the following, in and of themselves,
constitute a Material
60
Adverse Effect: (i) any change in or effect on the business of Parent
or any of its Subsidiaries or the Company or any of its Subsidiaries,
as applicable, caused by, relating to or resulting from, directly or
indirectly, the transactions contemplated by this Agreement or the
announcement thereof; (ii) any change in the market price or trading
volume of the shares of Company Stock or Parent Stock, as applicable,
on or after the date of this Agreement; or (iii) any adverse change,
effect or occurrence attributable to the United States or European
economy as a whole, the industries in which Parent or the Company, as
applicable, compete or such other foreign economies where Parent or the
Company, as applicable, have material operations or sales. The parties
specifically agree that any changes in the Company's quarterly revenues
from previous quarters or from any projections disclosed to Parent at
any time shall not constitute a Material Adverse Effect hereunder;
PROVIDED that, so long as the Closing occurs on or before December 31,
2001, the Company's cash balance at Closing is no less than
$37,800,000.
(h) "MATERIAL SUBSIDIARY" means with reference to any entity,
any Subsidiary of such entity which, as of the date hereof or as of the
Closing Date, would qualify as a "significant subsidiary" within the
meaning of Rule 1-02(w) of Regulation S-X promulgated under the
Exchange Act.
(i) "PERSON" means any individual, sole proprietorship,
partnership, joint venture, trust, unincorporated association,
corporation, entity or Governmental Entity.
(j) "RETURNS" means all returns, declarations, reports,
statements and other documents required to be filed in respect of
Taxes, and any claims for refund for Taxes, including any amendments or
supplements to any of the foregoing.
(k) "SIGNIFICANT TAX AGREEMENT" is any agreement to which the
Company or any Subsidiary of the Company is a party under which the
Company or any Subsidiary could reasonably be expected to be liable to
another party under such agreement in an amount in excess of $25,000 in
respect of Taxes payable by such other party to any taxing authority.
(l) "SUBSIDIARY" shall mean, when used with reference to any
entity, (i) any entity of which fifty percent (50%) or more of (i) the
outstanding voting securities or interests or (ii) the economic
interests, are owned directly or indirectly by such former entity.
(m) "TAX" or "TAXES" refers to any and all federal, state,
local and foreign, taxes, assessments and other governmental charges,
duties, impositions and liabilities in the nature of and relating to
such taxes, including without limitation taxes based upon or measured
by gross receipts, income, profits, sales, use and occupation, and
value added, ad valorem, transfer, franchise, net worth, capital stock,
withholding, payroll, recapture, employment, excise and property
61
taxes, together with all interest, penalties and additions imposed with
respect to such amounts and including any liability for taxes of a
predecessor entity; PROVIDED, HOWEVER, that the term "TAX" or "TAXES"
shall not be deemed to include claims by any governmental authority
under an escheat, unclaimed property, or similar provision of
applicable law.
9.11 SEVERABILITY. If any term or other provision of this Agreement is
invalid, illegal or unenforceable, all other provisions of this Agreement shall
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner materially
adverse to any party.
9.12 SPECIFIC PERFORMANCE. The Parties acknowledge that irreparable
damage would result if this Agreement were not specifically enforced, and they
therefore consent that the rights and obligations of the Parties under this
Agreement may be enforced by a decree of specific performance issued by a court
of competent jurisdiction. Such remedy shall, however, not be exclusive and
shall be in addition to any other remedies which any party may have under this
Agreement or otherwise.
9.13 RECOVERY OF ATTORNEY'S FEES. In the event of any litigation
between the Parties relating to this Agreement, the prevailing party shall be
entitled to recover its reasonable attorney's fees and costs (including court
costs) from the non-prevailing party, provided that if both Parties prevail in
part, the reasonable attorney's fees and costs shall be awarded by the court in
such manner as it deems equitable to reflect the relative amounts and merits of
the Parties' claims.
9.14 CAPTIONS. The Article, Section and paragraph captions herein are
for convenience of reference only, do not constitute part of this Agreement and
shall not be deemed to limit or otherwise affect any of the provisions hereof.
9.15 NO STRICT CONSTRUCTION. The language used in this Agreement will
be deemed to be the language chosen by the parties hereto to express their
mutual intent, and no rule of strict construction will be used against any party
hereto.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK;
THE SIGNATURE PAGES FOLLOW]
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IN WITNESS WHEREOF, this Agreement has been duly executed and delivered
by the duly authorized officers of the Parties hereto and shall be effective as
of the date first hereinabove written.
PARENT:
DIVINE, INC.
By: /s/ Xxxx X. Xxxxxxxx
Name: Xxxx X. Xxxxxxxx
Its: Senior Vice President and General Counsel
MERGER SUB:
DI2 ACQUISITION COMPANY
By: /s/ Xxxx X. Xxxxxxxx
Name: Xxxx X. Xxxxxxxx
Its: President
[REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK;
THE SIGNATURE PAGE FOR THE COMPANY FOLLOWS]
[SIGNATURE PAGE TO
AGREEMENT AND PLAN OF MERGER]
63
COMPANY:
EPRISE CORPORATION
By: /s/ X.X. Xxxxxxxx
Name: Xxxxxx X. Xxxxxxxx
Its: President and Chief Executive Officer
[SIGNATURE PAGE TO
AGREEMENT AND PLAN OF MERGER]
64
