EXHIBIT 1
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
SYBASE, INC.
SEURAT ACQUISITION CORPORATION
AND
AVANTGO, INC.
Dated as of December 19, 2002
TABLE OF CONTENTS
PAGE
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ARTICLE I THE MERGER.......................................................... 2
1.1 The Merger........................................................ 2
1.2 Effective Time; Closing........................................... 2
1.3 Effect of the Merger.............................................. 2
1.4 Certificate of Incorporation and Bylaws of Surviving Corporation.. 2
1.5 Directors and Officers of Surviving Corporation................... 3
1.6 Effect on Capital Stock........................................... 3
1.7 Dissenting Shares................................................. 5
1.8 Surrender of Certificates......................................... 5
1.9 No Further Ownership Rights in Shares............................. 6
1.10 Lost, Stolen or Destroyed Certificates............................ 6
1.11 Taking of Necessary Action; Further Action........................ 7
ARTICLE II REPRESENTATIONS AND WARRANTIES OF COMPANY.......................... 7
2.1 Organization and Qualification; Subsidiaries...................... 7
2.2 Certificate of Incorporation and Bylaws........................... 8
2.3 Capitalization.................................................... 8
2.4 Authority Relative to this Agreement.............................. 10
2.5 No Conflict; Required Filings and Consents........................ 10
2.6 Compliance; Permits............................................... 11
2.7 SEC Filings; Financial Statements................................. 12
2.8 No Undisclosed Liabilities........................................ 12
2.9 Absence of Certain Changes or Events.............................. 13
2.10 Absence of Litigation............................................. 13
2.11 Employee Benefit Plans............................................ 14
2.12 Proxy Statement................................................... 18
2.13 Restrictions on Business Activities............................... 19
2.14 Title to Property................................................. 19
2.15 Taxes............................................................. 19
2.16 Environmental Matters............................................. 21
2.17 Brokers; Third Party Expenses..................................... 23
2.18 Intellectual Property............................................. 23
2.19 Contracts......................................................... 29
2.20 Insurance......................................................... 31
2.21 Opinion of Financial Advisor...................................... 31
2.22 Board Approval.................................................... 31
2.23 Vote Required..................................................... 31
2.24 State Takeover Statutes........................................... 32
2.25 Interested Party Transactions..................................... 32
2.26 Privacy Policies; Third Party Privacy Obligations; Web Site Terms
and Conditions.................................................... 32
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TABLE OF CONTENTS
(CONTINUED)
PAGE
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ARTICLE III REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB........... 34
3.1 Corporate Organization............................................ 34
3.2 Authority Relative to this Agreement.............................. 34
3.3 No Conflict; Required Filings and Consents........................ 35
3.4 Proxy Statement................................................... 35
3.5 Financing......................................................... 36
ARTICLE IV CONDUCT PRIOR TO THE EFFECTIVE TIME................................ 36
4.1 Conduct of Business by Company.................................... 36
ARTICLE V ADDITIONAL AGREEMENTS............................................... 40
5.1 Proxy Statement; Board Recommendation............................. 40
5.2 Meeting of Company Stockholders................................... 40
5.3 Confidentiality; Access to Information............................ 41
5.4 No Solicitation................................................... 42
5.5 Public Disclosure................................................. 44
5.6 Reasonable Efforts; Notification.................................. 44
5.7 Third Party Consents.............................................. 45
5.8 Indemnification................................................... 45
5.9 Regulatory Filings; Reasonable Efforts............................ 46
5.10 Termination of Certain Benefit Plans.............................. 46
5.11 Employee Benefits................................................. 47
5.12 FIRPTA Certificate................................................ 47
ARTICLE VI CONDITIONS TO THE MERGER........................................... 47
6.1 Conditions to Obligations of Each Party to Effect the Merger...... 47
6.2 Additional Conditions to Obligations of Company................... 48
6.3 Additional Conditions to the Obligations of Parent and Merger Sub. 48
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER................................. 50
7.1 Termination....................................................... 50
7.2 Notice of Termination; Effect of Termination...................... 51
7.3 Fees and Expenses................................................. 52
7.4 Amendment......................................................... 54
7.5 Extension; Waiver................................................. 54
ARTICLE VIII GENERAL PROVISIONS............................................... 55
8.1 Non-Survival of Representations and Warranties.................... 55
8.2 Notices........................................................... 55
8.3 Interpretation; Knowledge......................................... 56
8.4 Counterparts...................................................... 57
8.5 Entire Agreement; Third Party Beneficiaries....................... 57
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TABLE OF CONTENTS
(CONTINUED)
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8.6 Severability...................................................... 57
8.7 Other Remedies; Specific Performance.............................. 57
8.8 Governing Law..................................................... 58
8.9 Rules of Construction............................................. 58
8.10 Assignment........................................................ 58
8.11 Waiver of Jury Trial.............................................. 58
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INDEX OF EXHIBITS
Exhibit A Form of Company Voting Agreement
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER is made and entered into as of December
19, 2002 (the "AGREEMENT"), by and among Sybase, Inc., a Delaware corporation
("PARENT"), Seurat Acquisition Corporation, a Delaware corporation and a
wholly-owned subsidiary of Parent ("MERGER SUB"), and AvantGo, Inc., a Delaware
corporation (the "COMPANY").
RECITALS
WHEREAS, the Boards of Directors of Parent, Merger Sub and the Company
have each determined that it is in the best interests of their respective
stockholders for Parent to acquire the Company upon the terms and subject to the
conditions set forth herein.
WHEREAS, the Board of Directors of the Company (the "BOARD") has
unanimously (i) determined that the Merger (as defined in Section 1.1 hereof) is
advisable and fair to, and in the best interests of, the Company and its
stockholders, (ii) approved this Agreement, the Merger and the other
transactions contemplated by this Agreement, including without limitation the
transactions contemplated by the Company Voting Agreements (the "TRANSACTIONS"),
and (iii) determined, subject to the terms of this Agreement, to recommend that
the stockholders of the Company adopt and approve this Agreement and approve the
Merger.
WHEREAS, concurrently with the execution of this Agreement, as a condition
and inducement to Parent's willingness to enter into this Agreement, all
executive officers and directors of the Company and all of their respective
affiliates, in their capacity as stockholders, are entering into Voting
Agreements in substantially the form attached hereto as Exhibit A (the "COMPANY
VOTING AGREEMENTS"), pursuant to which each such stockholder has agreed to vote
his, her or its Shares in favor of the Merger.
WHEREAS, concurrently with the execution of this Agreement, as a condition
and inducement to Parent's willingness to enter into this Agreement, (i) certain
employees of the Company have accepted offers of employment with a subsidiary of
Parent, (x) which offers of employment shall become effective immediately
following the Closing (as defined below), and (y) in connection with which each
such employee has irrevocably agreed to terminate the Retention Agreement by and
between such employee and the Company, effective as of the Closing; (ii) each of
the Company's officers and directors who are party to a Promissory Note with the
Company has executed a consent irrevocably granting Merger Sub, the Surviving
Corporation and Parent the absolute right to withhold, in satisfaction of any
indebtedness due and owing to the Company thereunder, an amount equal to the
aggregate principal and accrued interest amounts then due and owing under such
Notes from certain cash payments due and owing to such officer or director
pursuant to (x) the Merger, and (y) pursuant to the retention agreements by and
between such officer or director and the Company, as more fully described in
such consent; and (iii) each of the Company's officers and directors who are
party to a Consulting Agreement with the Company has irrevocably agreed to
terminate such Consulting Agreement effective at or prior to the Closing (as
defined below).
NOW, THEREFORE, in consideration of the covenants, promises and
representations set forth herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties agree
as follows:
ARTICLE I
THE MERGER
1.1 The Merger. At the Effective Time (as defined in Section 1.2 hereof)
and subject to and upon the terms and conditions of this Agreement and the
applicable provisions of the Delaware General Corporation Law ("DELAWARE LAW"),
Merger Sub shall be merged with and into the Company (the "MERGER"), the
separate corporate existence of Merger Sub shall cease and the Company shall
continue as the surviving corporation. The Company, as the surviving corporation
after the Merger, is hereinafter sometimes referred to as the "SURVIVING
CORPORATION."
1.2 Effective Time; Closing. Upon the terms and subject to the conditions
of this Agreement, the parties hereto shall cause the Merger to be consummated
by filing a certificate of merger (the "CERTIFICATE OF MERGER") with the
Secretary of State of the State of Delaware in accordance with the relevant
provisions of Delaware Law (the time of such filing (or such later time as may
be agreed in writing by the Company and Parent and specified in the Certificate
of Merger) being the "EFFECTIVE TIME") as soon as practicable on or after the
Closing Date (as herein defined). Unless the context otherwise requires, the
term "AGREEMENT" as used herein refers collectively to this Agreement and Plan
of Merger (as the same may be amended from time to time in accordance with the
terms hereof) and the Certificate of Merger. The closing of the Merger (the
"CLOSING") shall take place at the offices of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇,
Professional Corporation, One Market, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, at a time and date to be specified by the parties hereto,
which shall be no later than the second business day after the satisfaction or
waiver of the conditions set forth in Article VI hereof (other than those
conditions, which by their terms, are to be satisfied or waived on the Closing
Date), or at such other time, date and location as the parties hereto agree in
writing (the "CLOSING DATE").
1.3 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 Delaware
Law. Without limiting the generality of the foregoing, and subject thereto, at
the Effective Time all of the assets, properties, rights, privileges, powers and
franchises of the Company and Merger Sub shall vest in the Surviving
Corporation, and all of the debts, liabilities, obligations, restrictions and
duties of the Company and Merger Sub shall become the debts, liabilities,
obligations, restrictions and duties of the Surviving Corporation.
1.4 Certificate of Incorporation and Bylaws of Surviving Corporation.
(a) Certificate of Incorporation. As of the Effective Time, by
virtue of the Merger and without any action on the part of Merger Sub or the
Company, the Certificate of Incorporation of the Surviving Corporation shall be
amended and restated to read the same as the Certificate of Incorporation of
Merger Sub, as in effect immediately prior to the Effective Time,
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subject to Section 5.8 hereof, until thereafter amended in accordance with
Delaware Law and such Certificate of Incorporation; provided, however, that as
of the Effective Time the Certificate of Incorporation shall provide that the
name of the Surviving Corporation is "AvantGo, Inc."
(b) Bylaws. As of the Effective Time, by virtue of the Merger and
without any action on the part of Merger Sub or the Company, the Bylaws of the
Surviving Corporation shall be amended and restated to read the same as the
Bylaws of Merger Sub, as in effect immediately prior to the Effective Time,
subject to Section 5.8 hereof, until thereafter amended in accordance with
Delaware Law, the Certificate of Incorporation of the Surviving Corporation and
such Bylaws; provided, however, that all references in such Bylaws to Merger Sub
shall be amended to refer to "AvantGo, Inc."
1.5 Directors and Officers of Surviving Corporation.
(a) Directors. The initial directors of the Surviving Corporation
shall be the directors of Merger Sub as of immediately prior to the Effective
Time, until their respective successors are duly elected or appointed and
qualified.
(b) Officers. The initial officers of the Surviving Corporation
shall be the officers of Merger Sub as of immediately prior to the Effective
Time.
1.6 Effect on Capital Stock. Upon the terms and subject to the conditions
of this Agreement, at the Effective Time, by virtue of the Merger and without
any action on the part of Merger Sub, the Company or the holders of any of the
following securities, the following shall occur:
(a) Conversion of Shares. Each share of common stock, par value
$.0001 per share, of the Company ("SHARES") issued and outstanding immediately
prior to the Effective Time (other than any Shares to be canceled pursuant to
Section 1.6(b) hereof and any Dissenting Shares (as defined in Section 1.7
hereof), will be canceled and extinguished and automatically converted into the
right to receive, upon surrender of the certificate representing such Share in
the manner provided in Section 1.8 hereof (or in the case of a lost, stolen or
destroyed certificate, upon delivery of an affidavit (and bond, if required) in
the manner provided in Section 1.10 hereof), cash, without interest, in an
amount equal to $1.0294797 per Share (the "MERGER CONSIDERATION"). If any Shares
outstanding immediately prior to the Effective Time are unvested or are subject
to a repurchase option, risk of forfeiture or other condition under any
applicable restricted stock purchase agreement or other agreement with the
Company ("UNVESTED SHARES"), then the Merger Consideration issued in exchange
for such Unvested Shares shall also be unvested and subject to the same
repurchase option, risk of forfeiture or other condition. The Merger
Consideration payable upon conversion of any Unvested Share shall be withheld by
Merger Sub and paid to each such holder in accordance with the vesting and other
provisions set forth in the applicable restricted stock purchase agreement.
(b) Cancellation of Treasury and Parent-Owned Shares. Each Share
held by the Company or owned by Merger Sub, Parent or any direct or indirect
wholly-owned subsidiary of
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the Company or of Parent immediately prior to the Effective Time shall be
canceled and extinguished without any conversion thereof.
(c) Capital Stock of Merger Sub. Each share of common stock, par
value $0.001 per share, of Merger Sub (the "MERGER SUB COMMON STOCK") issued and
outstanding immediately prior to the Effective Time shall be converted into one
validly issued, fully paid and nonassessable share of common stock, par value
$0.001 per share, of the Surviving Corporation. Each certificate evidencing
ownership of shares of Merger Sub Common Stock outstanding immediately prior to
the Effective Time shall evidence ownership of such shares of capital stock of
the Surviving Corporation.
(d) Stock Options.
(i) At the Effective Time, each outstanding option to purchase
Shares (a "COMPANY STOCK OPTION") issued pursuant to Company stock plans or
other agreements or arrangements, whether vested or unvested, shall be
automatically cancelled and terminated and of no further force or effect, and
the holder thereof shall receive no consideration in connection with such
cancellation and termination.
(ii) Company shall take all necessary actions (including
providing all required notices) to ensure that all outstanding Company Stock
Options and all Company stock option plans (including without limitation the
1998 Globalware Computing, Inc. Plan, 1997 Stock Option Plan, 2000 Stock
Incentive Plan, 2001 Stock Incentive Plan, and the Stock Option Grant Program
for Non-employee Directors) are terminated immediately prior to the Effective
Time. For each holder of any Company Stock Option, the parties shall take steps
to enable the holder thereof to exercise the option (including any portion that
first becomes exercisable in connection with the Merger) prior to the
Effective Time.
(e) Employee Stock Purchase Plan. As of January 31, 2003 (which date
shall be the last day of a regular payroll period of the Company) (the "ESPP
DATE") all offering and purchase periods under way under the Company's Employee
Stock Purchase Plan (the "ESPP"), shall be terminated and, as of the date of
this Agreement, no new offering or purchase periods shall be commenced. The
Company shall take all necessary action, including providing all required
notices to participants, to ensure that the rights of participants in the ESPP
with respect to any such offering or purchase periods shall be determined by
treating the ESPP Date as the last day of such offering and purchase periods.
The Company shall take all actions as may be necessary in order to freeze the
rights of the participants in the ESPP, effective as of the date of this
Agreement, to existing participants and, to the extent permissible under the
ESPP, existing participation levels.
(f) Company Warrants. At the Effective Time, each warrant to
purchase shares of Company common stock (each a "COMPANY WARRANT") shall be
assumed by Parent and shall continue to have, and be subject to, the same terms
and conditions set forth in the applicable warrant agreement immediately prior
to the date hereof, except that such warrant will be exercisable for an amount
of cash equal to the product of the number of Shares that were issuable
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upon exercise of such Company Warrant immediately prior to the Effective Time
multiplied by the Merger Consideration.
1.7 Dissenting Shares.
(a) Notwithstanding any provision of this Agreement to the contrary,
Shares that are outstanding immediately prior to the Effective Time and that are
held by stockholders who shall have not voted in favor of the Merger and who
shall have demanded properly in writing appraisal for such Shares in accordance
with Section 262 of Delaware Law (collectively, the "DISSENTING SHARES") shall
not be converted into, or represent the right to receive, the Merger
Consideration. Such stockholders shall be entitled to receive payment of the
appraised value of such Shares held by them in accordance with the provisions of
such Section 262, except that all Dissenting Shares held by stockholders who
shall have failed to perfect or who effectively shall have withdrawn or lost
their rights to appraisal of such Shares under such Section 262 shall thereupon
be deemed to have been converted into, and to have become exchangeable for, as
of the Effective Time, the right to receive the Merger Consideration, without
any interest thereon, upon surrender, in the manner provided in Section 1.8
hereof, of the certificate or certificates that formerly evidenced such Shares.
(b) The Company shall give Parent (i) prompt notice of any demands
for appraisal received by the Company, withdrawals of such demands, and any
other instruments served pursuant to Delaware Law and received by the Company
and (ii) the opportunity to direct all negotiations and proceedings with respect
to demands for appraisal under Delaware Law. The Company shall not, except with
the prior written consent of Parent, make any payment with respect to any
demands for appraisal or offer to settle or settle any such demands.
1.8 Surrender of Certificates.
(a) Paying Agent. Prior to the Effective Time, Parent shall select a
bank or trust company reasonably acceptable to the Company to act as agent (the
"PAYING AGENT") for the holders of Shares to receive the funds to which holders
of Shares shall become entitled pursuant to Section 1.6(a) hereof. Such funds
shall be invested by the Paying Agent as directed by Parent.
(b) Payment Procedures. Promptly after the Effective Time, Parent
shall cause the Paying Agent to mail to each holder of record (as of the
Effective Time) of a certificate or certificates (the "CERTIFICATES"), which
immediately prior to the Effective Time represented the outstanding Shares
converted into the right to receive the Merger Consideration, (i) a letter of
transmittal in customary form (which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates shall pass, only upon
delivery of the Certificates to the Paying Agent and shall contain such other
provisions as Parent may reasonably specify) and (ii) instructions for use in
effecting the surrender of the Certificates in exchange for the Merger
Consideration. Upon surrender of Certificates for cancellation to the Paying
Agent or to such other agent or agents as may be appointed by Parent, together
with such letter of transmittal, duly completed and validly executed in
accordance with the instructions thereto, the holders of such Certificates
formerly representing the Shares shall be entitled to receive in exchange
therefor the Merger Consideration, and the Certificates so surrendered shall
forthwith be canceled. Until so
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surrendered, outstanding Certificates shall be deemed from and after the
Effective Time, for all corporate purposes, to evidence only the ownership of
the respective Merger Consideration. Promptly following surrender of any such
Certificates, the Paying Agent shall deliver to the record holders thereof,
without interest, the Merger Consideration.
(c) Payments with respect to Unsurrendered Shares; No Liability. At
any time following the 180th day after the Effective Time, the Surviving
Corporation shall be entitled to require the Paying Agent to deliver to it any
funds which had been made available to the Paying Agent and not disbursed to
holders of Shares (including, without limitation, all interest and other income
received by the Paying Agent in respect of all funds made available to it), and,
thereafter, such holders shall be entitled to look to the Surviving Corporation
(subject to abandoned property, escheat and other similar laws) only as general
creditors thereof with respect to any Merger Consideration that may be payable
upon due surrender of the Certificates held by them. Notwithstanding the
foregoing, neither Parent, the Surviving Corporation nor the Paying Agent shall
be liable to any holder of a Share for any Merger Consideration delivered in
respect of such Share to a public official pursuant to any abandoned property,
escheat or other similar law.
(d) Transfers of Ownership. If the payment of the Merger
Consideration is to be paid to a person other than the person in whose name the
Certificates surrendered in exchange therefor are registered, it will be a
condition of payment that the Certificates so surrendered be properly endorsed
and otherwise in proper form for transfer (including without limitation, if
requested by Parent or the Paying Agent, a medallion guarantee), and that the
persons requesting such payment will have paid to Parent or any agent designated
by it any transfer or other taxes required by reason of the payment of the
Merger Consideration to a person other than the registered holder of the
Certificates surrendered, or established to the satisfaction of Parent or any
agent designated by it that such tax has been paid or is not applicable.
(e) Required Withholding. Each of the Paying Agent, Parent and the
Surviving Corporation shall be entitled to deduct and withhold from any
consideration payable or otherwise deliverable pursuant to this Agreement to any
holder or former holder of the Shares such amounts as may be required to be
deducted or withheld therefrom under the Code or under any provision of state,
local or foreign tax law or under any other applicable legal requirement. To the
extent such amounts are so deducted or withheld, such amounts shall be treated
for all purposes under this Agreement as having been paid to the person to whom
such amounts would otherwise have been paid.
1.9 No Further Ownership Rights in Shares. Payment of the Merger
Consideration shall be deemed to have been paid in full satisfaction of all
rights pertaining to the Shares, and there shall be no further registration of
transfers on the records of the Surviving Corporation of the Shares which were
outstanding immediately prior to the Effective Time. If, after the Effective
Time, Certificates are presented to the Surviving Corporation for any reason,
they shall be canceled and exchanged as provided in this Article I.
1.10 Lost, Stolen or Destroyed Certificates. In the event that any
Certificates shall have been lost, stolen or destroyed, the Paying Agent shall
pay in exchange for such lost, stolen or destroyed Certificates, upon the making
of an affidavit of that fact by the holder thereof, the
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Merger Consideration payable with respect thereto; provided, however, that
Parent may, in its discretion and as a condition precedent to the payment of
such Merger Consideration, require the owner of such lost, stolen or destroyed
Certificates to deliver a bond in such reasonable and customary amount as it may
direct as indemnity against any claim that may be made against Parent, the
Surviving Corporation or the Paying Agent with respect to the Certificates
alleged to have been lost, stolen or destroyed.
1.11 Taking of Necessary Action; Further Action. If, at any time after the
Effective Time, any further action is necessary or desirable to carry out the
purposes of this Agreement and to vest the Surviving Corporation with full
right, title and possession to all assets, property, rights, privileges, powers
and franchises of the Company and Merger Sub, the officers and directors of the
Company and Merger Sub will take all such lawful and necessary action.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF COMPANY
The Company hereby represents and warrants to Parent and Merger Sub,
subject only to such exceptions as are specifically disclosed in writing in the
disclosure schedule supplied by the Company to Parent dated as of the date
hereof and certified by a duly authorized officer of the Company (the "COMPANY
SCHEDULE"), as follows:
2.1 Organization and Qualification; Subsidiaries.
(a) Each of the Company and its subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has the requisite corporate power and
authority to own, lease and operate its assets and properties and to carry on
its business as it is now being conducted. Each of the Company and its
subsidiaries is in possession of all franchises, grants, authorizations,
licenses, permits, easements, consents, certificates, approvals and orders
("APPROVALS") necessary to own, lease and operate the properties it purports to
own, operate or lease and to carry on its business as it is now being conducted,
except where the failure to have such Approvals would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect on the
Company (as defined in Section 8.3(c) hereof).
(b) The Company has no subsidiaries except for the corporations
identified in Section 2.1(b) of the Company Schedule. Section 2.1(b) of the
Company Schedule also sets forth the form of ownership and percentage interest
of the Company in its subsidiaries and, to the extent that a subsidiary set
forth thereon is not wholly owned by the Company, lists the other persons or
entities who have an interest in such subsidiary and sets forth the percentage
of each such interest. Neither the Company nor any of its subsidiaries has
agreed to make nor is obligated to make nor is bound by any written or oral
agreement, contract, subcontract, lease, mortgage, indenture, understanding,
arrangement, instrument, note, bond, option, warranty, purchase order, license,
sublicense, insurance policy, benefit plan, permit, franchise or other
instrument, obligation or commitment or undertaking of any nature (a
"CONTRACT"), in effect as of the date hereof or as may hereafter be in effect
under which it may become obligated to make, any future investment in or capital
contribution to any other entity. Except as set forth in
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Section 2.1(b) of the Company Schedule, neither the Company nor any of its
subsidiaries directly or indirectly owns any equity or similar interest in or
any interest convertible, exchangeable or exercisable for, any equity or similar
interest in, any corporation, partnership, limited liability company, joint
venture or other business, association or entity.
(c) The Company and each of its subsidiaries is duly qualified to do
business as a foreign corporation, and is in good standing, under the laws of
all jurisdictions where the character of the properties owned, leased or
operated by it or the nature of its activities makes such qualification
necessary, except where failures to be so qualified and in good standing would
not reasonably be expected to have a Material Adverse Effect on the Company.
2.2 Certificate of Incorporation and Bylaws. The Company has previously
furnished to Parent (i) a complete and correct copy of its Certificate of
Incorporation and Bylaws as amended to date (together, the "COMPANY CHARTER
DOCUMENTS") and (ii) the equivalent organizational documents for each subsidiary
of the Company, each as amended to date. The Company Charter Documents and
equivalent organizational documents of each subsidiary of the Company are in
full force and effect. The Company is not in violation of any of the provisions
of the Company Charter Documents, and no subsidiary of the Company is in
violation of its equivalent organizational documents.
2.3 Capitalization.
(a) The authorized capital stock of the Company consists of
150,000,000 shares of Company common stock, par value $0.0001 per share
("COMPANY COMMON STOCK") and 10,000,000 shares of Preferred Stock, par value of
$0.0001 per share ("COMPANY PREFERRED STOCK"). At the close of business on the
date of this Agreement (i) 35,736,977 shares of Company Common Stock were issued
and outstanding, all of which are validly issued, fully paid and nonassessable;
(ii) no shares of Company Common Stock were held by subsidiaries of the Company;
(iii) 312,342 shares of Company Common Stock were reserved for future issuance
pursuant to the Company's ESPP; (iv) 821,474 shares of Company Common Stock were
reserved for issuance upon the exercise of outstanding options to purchase
Company Common Stock under the 2001 Stock Incentive Plan and 878,526 shares of
Company Common Stock were reserved for future issuance pursuant to the Company's
2001 Stock Incentive Plan; (v) 5,473,072 shares of Company Common Stock were
reserved for issuance upon the exercise of outstanding options to purchase
Company Common Stock under the 2000 Stock Incentive Plan and 651,325 shares of
Company Common Stock were reserved for future issuance pursuant to the Company's
2000 Stock Incentive Plan; (vi) 1,625,975 shares of Company Common Stock were
reserved for issuance upon the exercise of outstanding options to purchase
Company Common Stock under the 1997 Stock Option Plan and no shares are reserved
for future issuance thereunder; (vii) 17,296 shares of Company Common Stock were
reserved for issuance upon the exercise of outstanding options to purchase
Company Common Stock under the Globalware Computing, Inc. Stock Option Plan and
no shares are reserved for future issuance thereunder; and (viii) 358,851 shares
of Company Common Stock were reserved for issuance upon exercise of outstanding
Company Warrants. Section 2.3(a) of the Company Schedule sets forth the
following information with respect to each Company Stock Option outstanding as
of the date of this Agreement: (i) the name and address of the optionee; (ii)
the particular plan pursuant to which
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such Company Stock Option was granted; (iii) the number of shares of Company
Common Stock subject to such Company Stock Option; (iv) the exercise price of
such Company Stock Option; (v) the date on which such Company Stock Option was
granted; (vi) the applicable vesting schedule; (vii) the date on which such
Company Stock Option expires; (viii) whether the exercisability of such Company
Stock Option will be accelerated in any way by the transactions contemplated by
this Agreement, and indicates the extent of acceleration; and (ix) whether such
Company Stock Option is intended to qualify as an incentive stock option within
the meaning of Section 422 of the Code. Section 2.3(a) of the Company Schedule
sets forth the following information with respect to each Company Warrant
outstanding as of the date of this Agreement: (i) the name and address of the
holder; (ii) the number of shares of Company Common Stock subject to such
Company Warrant; (iii) the exercise price of such Company Warrant; and (iv) the
date on which such Company Warrant expires. The Company has made available to
Parent accurate and complete copies of all stock option plans pursuant to which
the Company has granted such Company Stock Options that are currently
outstanding and the form of all stock option agreements evidencing such Company
Stock Options. The Company has made available to Parent accurate and complete
copies of all outstanding Company Warrants and agreements pursuant to which
Company Warrants have been issued. All shares of Company Common Stock subject to
issuance upon exercise of such Company Stock Options, and all shares of Company
Common Stock subject to issuance upon exercise of such outstanding Company
Warrants, upon issuance on the terms and conditions specified in the instrument
pursuant to which they are issuable, would be duly authorized, validly issued,
fully paid and nonassessable. Except as set forth in Section 2.3(a) of the
Company Schedule, there are no commitments or agreements of any character to
which the Company is bound obligating the Company to accelerate the vesting of
any Company Stock Option as a result of the Transactions. All outstanding shares
of Company Common Stock, all outstanding Company Stock Options, all outstanding
Company Warrants and all outstanding shares of capital stock of each subsidiary
of the Company have been issued and granted in compliance with (i) all
applicable securities laws and other applicable Legal Requirements (as defined
below) and (ii) all requirements set forth in applicable Contracts. For the
purposes of this Agreement, "LEGAL REQUIREMENTS" means any federal, state,
local, municipal, foreign or other law, statute, legislation, constitution,
principle of common law, resolution, ordinance, code, edict, order, judgment,
decree, rule, regulation, ruling or requirement issues, enacted, adopted,
promulgated, implemented or otherwise put into effect by or under the authority
of any Governmental Entity (as defined in Section 2.5(b) hereof). There are no
declared or accrued but unpaid dividends with respect to any shares of Company
Common Stock.
(b) The Company owns free and clear of all liens, pledges,
hypothecations, charges, mortgages, security interests, encumbrances, claims,
infringements, interferences, options, right of first refusals, preemptive
rights, community property interests or restriction of any nature (including any
restriction on the voting of any security, any restriction on the transfer of
any security or other asset, any restriction on the possession, exercise or
transfer of any other attribute of ownership of any asset) ("LIENS") directly or
indirectly through one or more subsidiaries, all equity securities, partnership
interests or similar ownership interests of any subsidiary of the Company, and
all securities convertible into, or exercisable or exchangeable for, such equity
securities, partnership interests or similar ownership interests, that are
issued, reserved for issuance or outstanding. Except as set forth in Section
2.3(a) hereof, there are no
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subscriptions, options, warrants, equity securities, partnership interests or
similar ownership interests, calls, rights (including preemptive rights),
commitments or agreements of any character to which the Company or any of its
subsidiaries is a party or by which the Company or any of its subsidiaries is
bound obligating the Company or any of its subsidiaries to issue, deliver or
sell, or cause to be issued, delivered or sold, or repurchase, redeem or
otherwise acquire, or cause the repurchase, redemption or acquisition of, any
shares of capital stock, partnership interests or similar ownership interests of
the Company or any of its subsidiaries or obligating the Company or any of its
subsidiaries to grant, extend, accelerate the vesting of or enter into any such
subscription, option, warrant, equity security, call, right, commitment or
agreement. There are no outstanding or authorized stock appreciation, phantom
stock, profit participation, or other similar rights with respect to the Company
or any of its subsidiaries. There are no registration rights in respect of any
shares of Company Common Stock, and except for the Company Voting Agreements,
there are no voting trusts, proxies, rights plans, antitakeover plans or other
agreements or understandings to which the Company or any of its subsidiaries is
a party or by which the Company or any of its subsidiaries is bound with respect
to any class of equity security of the Company or with respect to any equity
security, partnership interest or similar ownership interest of any of its
subsidiaries.
2.4 Authority Relative to this Agreement. The Company has all necessary
corporate power and authority to execute and deliver this Agreement, to perform
its obligations hereunder and to consummate the Transactions, subject, with
respect to the Merger, to the approval and adoption of this Agreement and the
Merger by holders of a majority of the outstanding Shares in accordance with
Delaware Law. The execution and delivery of this Agreement by the Company and
the consummation by the Company of the Transactions have been duly and validly
authorized by all necessary corporate action on the part 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 (other than (x) with
respect to the Merger, the approval and adoption of this Agreement and the
Merger by holders of a majority of the outstanding Shares if and to the extent
required by applicable law, and (y) the filing of the Certificate of Merger as
required by Delaware Law). This Agreement has been duly and validly executed and
delivered by the Company and, assuming the due authorization, execution and
delivery by Parent and Merger Sub, constitute legal and binding obligations of
the Company, enforceable against the Company in accordance with its terms,
subject to applicable bankruptcy, insolvency, moratorium or other similar laws
relating to creditors' rights and general principles of equity.
2.5 No Conflict; Required Filings and Consents.
(a) Except as set forth in Section 2.5(a) of the Company Schedule,
the execution and delivery of this Agreement by the Company does not, and the
performance of this Agreement by the Company will not, (i) conflict with or
violate the Company Charter Documents or the equivalent organizational documents
of any of the Company's subsidiaries, (ii) subject, (x) with respect to the
Merger, to the approval and adoption of this Agreement and the Merger by holders
of a majority of the outstanding Shares in accordance with Delaware Law and (y)
to compliance with the requirements set forth in Section 2.5(b) hereof, conflict
with or violate in any material respect any Legal Requirements applicable to the
Company or any of its subsidiaries or by which its or any of their respective
properties is bound or affected, or (iii) conflict with or violate, or
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result in any breach of or constitute a default (or an event that with notice or
lapse of time or both would become a default) under, or materially impair the
Company's or any of its subsidiaries' rights or alter the rights or obligations
of any third party under, or give to others any rights of termination,
amendment, acceleration or cancellation of, or result in the creation of a Lien
on any of the properties or assets of the Company or any of its subsidiaries
pursuant to, any Contract to which the Company or any of its subsidiaries is a
party or by which the Company or any of its subsidiaries or its or any of their
respective properties are bound or affected, except to the extent such conflict,
violation, breach, default, impairment or other effect would not in the case of
clauses (ii) or (iii), individually or in the aggregate: (A) reasonably be
expected to have a Material Adverse Effect on Company or (B) prevent or
materially delay consummation of the Transactions or otherwise prevent the
parties hereto from performing their obligations under this Agreement.
(b) The execution and delivery of this Agreement by the Company does
not, and the performance of this Agreement by the Company shall not, require any
consent, approval, authorization or permit of, or filing with or notification
to, any court, administrative agency, commission, governmental or regulatory
authority, domestic or foreign (a "GOVERNMENTAL ENTITY"), except (i) for
applicable requirements, if any, of the Securities Exchange Act of 1934, as
amended (the "EXCHANGE ACT"), state securities laws ("BLUE SKY LAWS") and state
takeover laws, the pre-merger notification requirements of foreign Governmental
Entities, the rules and regulations of the National Market System (the
"NASDAQ"), and the filing and recordation of the Certificate of Merger as
required by Delaware Law and (ii) where the failure to obtain such consents,
approvals, authorizations or permits, or to make such filings or notifications,
(A) could not, individually or in the aggregate, reasonably be expected to have
a Material Adverse Effect on the Company or, following the Effective Time,
Parent, or prevent consummation of the Transactions or (B) otherwise prevent the
parties hereto from performing their obligations under this Agreement.
2.6 Compliance; Permits.
(a) Except as set forth in Section 2.6(a) of the Company Schedule,
neither the Company nor any of its subsidiaries is in conflict with, or in
default or violation of, (i) any Legal Requirements applicable to the Company or
any of its subsidiaries or by which its or any of their respective properties is
bound or affected, or (ii) any Contract to which the Company or any of its
subsidiaries is a party or by which the Company or any of its subsidiaries or
its or any of their respective properties is bound or affected, except for any
conflicts, defaults or violations that (individually or in the aggregate) would
not cause the Company to lose any material benefit or incur any material
liability.
(b) The Company and its subsidiaries hold all material permits,
licenses, variances, exemptions, orders and approvals from Governmental Entities
which are required for the operation of the business and the holding of the
properties of the Company and its subsidiaries (each, a "COMPANY PERMIT" and
collectively, the "COMPANY PERMITS"). The Company Permits are in full force and
effect, and the Company and its subsidiaries are in compliance in all material
respects with the terms of each of the Company Permits.
-11-
2.7 SEC Filings; Financial Statements.
(a) Except as set forth in Section 2.7(a) of the Company Schedule,
the Company has made and will make available to Parent a correct and complete
copy of each report, schedule, registration statement and definitive proxy
statement filed by the Company with the Securities and Exchange Commission (the
"SEC") since June 8, 2000 (the "COMPANY SEC REPORTS"), which are all the forms,
reports and documents required to be filed by the Company with the SEC since
June 8, 2000. The Company SEC Reports (i) were prepared in accordance with the
requirements of the Securities Act or the Exchange Act, as the case may be, and
(ii) did not at the time they were filed (and if amended or superseded by a
filing prior to the date of this Agreement then on the date of such filing)
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. None of the Company's subsidiaries is required to file any reports
or other documents with the SEC.
(b) Each set of consolidated financial statements (including, in
each case, any related notes thereto) contained in the Company SEC Reports
(including any Company SEC Report filed after the date of this Agreement): (i)
complied and will comply as to form in all material respects with the published
rules and regulations of the SEC with respect thereto in effect at the time of
such filing; (ii) was and will be prepared in accordance with United States
generally accepted accounting principles ("GAAP") applied on a consistent basis
throughout the periods involved (except as may be indicated in the notes thereto
or, in the case of unaudited statements, may not contain footnotes as permitted
by Form 10-Q of the Exchange Act) and each fairly presents in all material
respects the consolidated financial position of the Company and its consolidated
subsidiaries at the respective dates thereof and the consolidated results of its
operations and cash flows for the periods indicated, except that the unaudited
interim financial statements were or are subject to normal year-end adjustments
which were not or are not expected to be material in amount or significance.
(c) The Company has previously furnished to Parent a complete and
correct copy of any amendments or modifications, which have not yet been filed
with the SEC but which are required to be filed, 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.
(d) As of the date of this Agreement, the Company's condensed
consolidated cash and cash equivalents (calculated in accordance with the
accounting policies described in the Company's Form 10-K filed with the SEC on
April 1, 2002 for the fiscal year ended December 31, 2001 (the "2001 FORM
10-K")) is not less than $30,150,000.00.
2.8 No Undisclosed Liabilities. Except as set forth in Section 2.8 of the
Company Schedule, neither the Company nor any of its subsidiaries has any
liability, indebtedness, obligation, expense, claim, deficiency, guaranty or
endorsement of any type (whether absolute, accrued, contingent or otherwise)
(collectively, "LIABILITIES") of a nature required to be disclosed on a balance
sheet or in the related notes to the consolidated financial statements prepared
in accordance with GAAP which are, individually or in the aggregate, material to
the business, results of operations, assets or financial condition of the
Company and its subsidiaries taken as a
-12-
whole, except (i) Liabilities reflected in the Company's balance sheet as of
September 30, 2002 (including any related notes thereto) (the "INTERIM BALANCE
SHEET"), (ii) Liabilities incurred since September 30, 2002 (the "INTERIM
BALANCE SHEET DATE") in the ordinary course of business, none of which
individually (in the case of this clause (ii)) is material to the business,
results of operations or financial condition of the Company and its
subsidiaries, taken as a whole, or (iii) Liabilities permitted under Section 4.1
hereof.
2.9 Absence of Certain Changes or Events. Except as set forth in Section
2.9 of the Company Schedule, since the Interim Balance Sheet Date there has not
been, occurred or arisen: (i) any event or condition of any character that has
had or is reasonably expected to have Material Adverse Effect on the Company;
(ii) any declaration, setting aside or payment of any dividend on, or other
distribution (whether in cash, stock or property) in respect of, any of the
Company's or any of its subsidiaries' capital stock, or any purchase, redemption
or other acquisition by the Company of any of the Company's capital stock or any
other securities of the Company or its subsidiaries or any options, warrants,
calls or rights to acquire any such shares or other securities except for
repurchases from employees following their termination pursuant to the terms of
their pre-existing stock option or purchase agreements; (iii) any split,
combination or reclassification of any of the Company's or any of its
subsidiaries' capital stock; (iv) any granting by the Company or any of its
subsidiaries of any increase in compensation or fringe benefits or any payment
by the Company or any of its subsidiaries of any bonus, or any granting by the
Company or any of its subsidiaries of any increase in severance or termination
pay or any entry by the Company or any of its subsidiaries into any currently
effective employment, severance, termination or indemnification agreement or any
agreement the benefits of which are contingent or the terms of which are
materially altered upon the occurrence of a transaction involving the Company of
the nature contemplated hereby; (v) entry by the Company or any of its
subsidiaries into (x) any licensing or other Contract relating to the use,
acquisition or disposition of any Intellectual Property (as defined in Section
2.18 hereof) other than (1) end-user licenses of commercially available software
applications for internal use by the Company in the ordinary course of business
consistent with past practice, and (2) commercial licenses of the Company's
software in the ordinary course of business consistent with past practice, or
(y) any amendment or consent with respect to any material licensing or other
Contract relating to the use, acquisition or disposition of any Intellectual
Property; (vi) any change by the Company in its accounting methods, principles
or practices, except as required by concurrent changes in GAAP; (vii) any
revaluation by the Company of any of its assets, including, without limitation,
writing down the value of capitalized inventory or writing off notes or accounts
receivable or any sale of assets of the Company other than in the ordinary
course of business consistent with past practice; (viii) entry by the Company or
any of its subsidiaries into any Contract filed or required to be filed by the
Company with the SEC; (ix) any negotiation or agreement by the Company or any of
its subsidiaries to do any of the things described in the preceding clauses (i)
through (viii) (other than negotiations or agreements with Parent regarding the
Transactions).
2.10 Absence of Litigation. Except (x) as set forth in Section 2.10 of the
Company Schedule and (y) for Actions (as defined below) against the Company or
any of its subsidiaries before any Governmental Entity or arbitrator related to
employment or personal injury matters arising in the ordinary course of business
at any time after the date of this Agreement, which Actions are not reasonably
expected to, individually or in the aggregate, result in a Material
-13-
Adverse Effect on the Company, there are no claims, actions, suits or
proceedings pending or, to the knowledge of the Company, threatened (each, an
"ACTION") against the Company or any of its subsidiaries, or any of their
respective properties or any of the executive officers or directors of the
Company or any of its subsidiaries, before any Governmental Entity or
arbitrator. Except as set forth in Section 2.10 of the Company Schedule, no
investigation or review by any Governmental Entity is pending or, to the
knowledge of the Company, threatened against the Company or any of its
subsidiaries, or any of their respective properties or any of the executive
officers or directors of the Company or any of its subsidiaries, nor has any
Governmental Entity indicated to the Company an intention to conduct the same.
To the knowledge of the Company, no Governmental Entity has at any time
challenged or questioned the legal right of the Company to conduct its
operations as presently or previously conducted. The Company has provided to
Parent true, correct and complete copies of all complaints regarding the
litigation referred to in Section 2.10 of the Company Schedule and has made
available to Parent true, correct and complete copies of all pleadings, motions
and written correspondence regarding the litigation referred to in Section 2.10
of the Company Schedule.
2.11 Employee Benefit Plans.
(a) Definitions. With the exception of the definition of "AFFILIATE"
set forth in Section 2.11(a)(i) below (which definition shall apply only to this
Section 2.11), for purposes of this Agreement, the following terms shall have
the meanings set forth below:
(i) "AFFILIATE" shall mean any other person or entity under
common control with the Company within the meaning of Section 414(b), (c), (m)
or (o) of the Code and the regulations issued thereunder;
(ii) "COBRA" shall mean the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended;
(iii) "CODE" shall mean the Internal Revenue Code of 1986, as
amended;
(iv) "COMPANY EMPLOYEE PLAN" shall mean any plan, program,
policy, practice, contract, agreement or other arrangement providing for
compensation, severance, termination pay, deferred compensation, performance
awards, stock or stock-related awards, fringe benefits or other employee
benefits or remuneration of any kind, whether written or unwritten or otherwise,
funded or unfunded, including without limitation, each "employee benefit plan,"
within the meaning of Section 3(3) of ERISA which is or has been maintained,
contributed to, or required to be contributed to, by the Company or any
Affiliate for the benefit of any Employee, or with respect to which the Company
or any Affiliate has or may have any liability or obligation;
(v) "DOL" shall mean the Department of Labor;
(vi) "EMPLOYEE" shall mean any current or former or retired
employee, consultant or director of the Company or any Affiliate;
-14-
(vii) "EMPLOYMENT AGREEMENT" shall mean each management,
employment, severance, consulting, relocation, repatriation, expatriation,
visas, work permit or other agreement, contract or understanding between the
Company or any Affiliate and any Employee;
(viii) "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended;
(ix) "FMLA" shall mean the Family Medical Leave Act of 1993,
as amended;
(x) "INTERNATIONAL EMPLOYEE PLAN" shall mean each Company
Employee Plan that has been adopted or maintained by the Company or any
Affiliate, whether informally or formally, or with respect to which the Company
or any Affiliate will or may have any liability, for the benefit of Employees
who perform services outside the United States;
(xi) "IRS" shall mean the Internal Revenue Service;
(xii) "MULTIEMPLOYER PLAN" shall mean any "Pension Plan" (as
defined below) which is a "multiemployer plan," as defined in Section 3(37) of
ERISA;
(xiii) "Pension Plan" shall mean each Company Employee Plan
which is an "employee pension benefit plan," within the meaning of Section 3(2)
of ERISA.
(b) Schedule. Section 2.11(b) of the Company Schedule contains an
accurate and complete list of each Company Employee Plan, International Employee
Plan, and each Employment Agreement. The Company does not have any plan or
commitment to establish any new Company Employee Plan, International Employee
Plan, or Employment Agreement, to modify any Company Employee Plan or Employment
Agreement (except to the extent required by law or to conform any such Company
Employee Plan or Employment Agreement to the requirements of any applicable law,
in each case as previously disclosed to Parent in writing, or as required by
this Agreement), or to adopt or enter into any Company Employee Plan,
International Employee Plan, or Employment Agreement.
(c) Documents. The Company has made available to Parent correct and
complete copies of: (i) all documents embodying each Company Employee Plan,
International Employee Plan, and each Employment Agreement including (without
limitation) all amendments thereto and all related trust documents,
administrative service agreements, group annuity contracts, group insurance
contracts, and policies pertaining to fiduciary liability insurance covering the
fiduciaries for each Plan; (ii) the most recent annual actuarial valuations, if
any, prepared for each Company Employee Plan; (iii) the three (3) most recent
annual reports (Form Series 5500 and all schedules and financial statements
attached thereto), if any, required under ERISA or the Code in connection with
each Company Employee Plan; (iv) if the Company Employee Plan is funded, the
most recent annual and periodic accounting of Company Employee Plan assets; (v)
the most recent summary plan description together with the summary(ies) of
material modifications thereto, if any, required under ERISA with respect to
each Company Employee Plan; (vi) all IRS
-15-
determination, opinion, notification and advisory letters, and all applications
and correspondence to or from the IRS or the DOL with respect to any such
application or letter; (vii) all communications material to any Employee or
Employees relating to any Company Employee Plan and any proposed Company
Employee Plans, in each case, relating to any amendments, terminations,
establishments, increases or decreases in benefits, acceleration of payments or
vesting schedules or other events which would result in any material liability
to the Company; (viii) all correspondence to or from any governmental agency
relating to any Company Employee Plan; (ix) all COBRA forms and related notices
(or such forms and notices as required under comparable law); (x) the three (3)
most recent plan years discrimination tests for each Company Employee Plan; and
(xi) all registration statements, annual reports (Form 11-K and all attachments
thereto) and prospectuses prepared in connection with each Company Employee
Plan.
(d) Employee Plan Compliance. Except as set forth in Section 2.11(d)
of the Company Schedule, (i) the Company has performed in all material respects
all obligations required to be performed by it under, is not in default or
violation of, and has no knowledge of any default or violation by any other
party to each Company Employee Plan, and each Company Employee Plan has been
established and maintained in all material respects in accordance with its terms
and in compliance with all applicable laws, statutes, orders, rules and
regulations, including but not limited to ERISA or the Code; (ii) each Company
Employee Plan intended to qualify under Section 401(a) of the Code and each
trust intended to qualify under Section 501(a) of the Code has either received a
favorable determination, opinion, notification or advisory letter from the IRS
with respect to each such Company Employee Plan as to its qualified status under
the Code, including all amendments to the Code effected by the Tax Reform Act of
1986 and subsequent legislation, or has remaining a period of time under
applicable Treasury regulations or IRS pronouncements in which to apply for such
a letter and make any amendments necessary to obtain a favorable determination
as to the qualified status of each such Company Employee Plan; (iii) no
"prohibited transaction," within the meaning of Section 4975 of the Code or
Sections 406 and 407 of ERISA, and not otherwise exempt under Section 4975 of
the Code or Section 408 of ERISA (or any administrative class exemption issued
thereunder), has occurred with respect to any Company Employee Plan; (iv) there
are no actions, suits or claims pending, or, to the knowledge of the Company,
threatened or reasonably anticipated (other than routine claims for benefits)
against any Company Employee Plan or against the assets of any Company Employee
Plan; (v) each Company Employee Plan (other than any stock option plan) can be
amended, terminated or otherwise discontinued after the Effective Time, without
material liability to the Parent, Company or any of its Affiliates (other than
ordinary administration expenses); (vi) there are no audits, inquiries or
proceedings pending or, to the knowledge of the Company or any Affiliates,
threatened by the IRS or DOL with respect to any Company Employee Plan; and
(vii) neither the Company nor any Affiliate is subject to any penalty or tax
with respect to any Company Employee Plan under Section 502(i) of ERISA or
Sections 4975 through 4980 of the Code.
(e) Pension Plan. Neither the Company nor any Affiliate has ever
maintained, established, sponsored, participated in, or contributed to, any
Pension Plan which is subject to Title IV of ERISA or Section 412 of the Code.
-16-
(f) Collectively Bargained, Multiemployer and Multiple Employer
Plans. At no time has the Company or any Affiliate contributed to or been
obligated to contribute to any Multiemployer Plan. Neither the Company, nor any
Affiliate has at any time ever maintained, established, sponsored, participated
in, or contributed to any multiple employer plan, or to any plan described in
Section 413 of the Code.
(g) No Post-Employment Obligations. Except as set forth in Section
2.11(g) of the Company Schedule, no Company Employee Plan provides, or reflects
or represents any liability to provide retiree health to any person for any
reason, except as may be required by COBRA or other applicable statute, and the
Company has never represented, promised or contracted (whether in oral or
written form) to any Employee (either individually or to Employees as a group)
or any other person that such Employee(s) or other person would be provided with
retiree health, except to the extent required by statute.
(h) Health Care Compliance. Neither the Company nor any Affiliate
has, prior to the Effective Time and in any material respect, violated any of
the health care continuation requirements of COBRA, the requirements of FMLA,
the requirements of the Health Insurance Portability and Accountability Act of
1996, the requirements of the Women's Health and Cancer Rights Act of 1998, the
requirements of the Newborns' and Mothers' Health Protection Act of 1996, or any
amendment to each such act, or any similar provisions of state law applicable to
its Employees.
(i) Effect of Transaction.
(i) Except as set forth in Section 2.11(i)(i) of the Company
Schedule, the execution of this Agreement and the consummation of the
Transactions will not (either alone or upon the occurrence of any additional or
subsequent events) constitute an event under any Company Employee Plan,
Employment Agreement, trust or loan that will or may result in any payment
(whether of severance pay or otherwise), acceleration, forgiveness of
indebtedness, vesting, distribution, increase in benefits or obligation to fund
benefits with respect to any Employee.
(ii) No payment or benefit which will or may be made by the
Company or its Affiliates with respect to any Employee or any other
"disqualified individual" (as defined in Code Section 280G and the regulations
thereunder) will be characterized as a "parachute payment," within the meaning
of Section 280G(b)(2) of the Code.
(j) Employment Matters. The Company: (i) is in compliance in all
respects with all applicable foreign, federal, state and local laws, rules and
regulations respecting employment, employment practices, terms and conditions of
employment and wages and hours, in each case, with respect to Employees; (ii)
has withheld and reported all amounts required by law or by agreement to be
withheld and reported with respect to wages, salaries and other payments to
Employees; (iii) is not liable for any arrears of wages or any taxes or any
penalty for failure to comply with any of the foregoing; and (iv) is not liable
for any payment to any trust or other fund governed by or maintained by or on
behalf of any governmental authority, with respect to unemployment compensation
benefits, social security or other benefits or obligations for
-17-
Employees (other than routine payments to be made in the normal course of
business and consistent with past practice). Except as set forth in Section
2.11(j) of the Company Schedule, there are no pending, threatened or reasonably
anticipated claims or actions against the Company under any worker's
compensation policy or long-term disability policy.
(k) Labor. No work stoppage or labor strike against the Company is
pending, threatened or reasonably anticipated. The Company does not know of any
activities or proceedings of any labor union to organize any Employees. There
are no actions, suits, claims, labor disputes or grievances pending, or, to the
knowledge of the Company, threatened or reasonably anticipated relating to any
labor, safety or discrimination matters involving any Employee, including,
without limitation, charges of unfair labor practices or discrimination
complaints, which, if adversely determined, would, individually or in the
aggregate, result in any material liability to the Company. Neither the Company
nor any of its subsidiaries has engaged in any unfair labor practices within the
meaning of the National Labor Relations Act. The Company is not presently, nor
has it been in the past, a party to, or bound by, any collective bargaining
agreement or union contract with respect to Employees and no collective
bargaining agreement is being negotiated by the Company.
(l) International Employee Plan. Each International Employee Plan
has been established, maintained and administered in compliance with its terms
and conditions and with the requirements prescribed by any and all statutory or
regulatory laws that are applicable to such International Employee Plan.
Furthermore, no International Employee Plan has unfunded liabilities, that as of
the Effective Time, will not be offset by insurance or fully accrued. Except as
required by law, no condition exists that would prevent the Company or Parent
from terminating or amending any International Employee Plan at any time for any
reason without liability to the Company or its Affiliates (other than ordinary
administration expenses or routine claims for benefits).
(m) WARN Act. The Company has complied with the Workers Adjustment
and Retraining Notification Act of 1988, as amended ("WARN ACT") and all similar
state laws including applicable provisions of the California Labor Code. All
Liabilities relating to the employment, termination or employee benefits of any
former Employees previously terminated by the Company or an Affiliate including,
without limitation, all termination pay, severance pay or other amounts in
connection with the WARN Act and all similar state laws including applicable
provisions of the California Labor Code, shall be the responsibility of the
Company.
2.12 Proxy Statement. Neither the proxy statement to be sent to the
stockholders of the Company in connection with the Stockholders' Meeting (as
hereinafter defined) or the information statement to be sent to such
stockholders, as appropriate (such proxy statement or information statement, as
amended or supplemented, being referred to herein as the "PROXY STATEMENT"),
shall, at the date the Proxy Statement (or any amendment or supplement thereto)
is first mailed to stockholders of the Company, at the time of the Stockholders'
Meeting and at the Effective Time, contain any statement which, at the time and
in light of the circumstances under which it was made, is false or misleading
with respect to any material fact, or which omits to state any material fact
necessary in order to make the statements therein not false or misleading or
necessary to correct any statement in any earlier communication with respect to
the solicitation
-18-
of proxies, if any, for the Stockholders' Meeting which shall have become false
or misleading. Notwithstanding the foregoing, the Company makes no
representation or warranty with respect to any information supplied by Parent,
Merger Sub or any of Parent's or Merger Sub's representatives in writing for
inclusion in the Proxy Statement. The Proxy Statement shall comply in all
material respects as to form with the requirements of the Exchange Act and the
rules and regulations thereunder.
2.13 Restrictions on Business Activities. There is no Contract (noncompete
or otherwise), commitment, judgment, injunction, order or decree binding upon
the Company or its subsidiaries or to which the Company or any of its
subsidiaries is a party which has or could reasonably be expected to have the
effect of prohibiting or impairing any business practice of the Company or any
of its subsidiaries, any acquisition of property by the Company or any of its
subsidiaries or the conduct of business by the Company or any of its
subsidiaries as currently conducted. Without limiting the foregoing, except as
set forth in Section 2.13 of the Company Schedule, neither the Company nor any
of its subsidiaries has entered into any Contract under which it is restricted
from selling, licensing or otherwise distributing any of its technology or
products to or providing services to, customers or potential customers or any
class of customers, in any geographic area, during any period of time or in any
segment of the market.
2.14 Title to Property.
(a) Neither the Company nor any of its subsidiaries owns any real
property nor have they ever owned any real property. Section 2.14(a) of the
Company Schedule sets forth a list of all real property currently leased by the
Company and any of its subsidiaries, the name of the lessor, the date of the
lease and each amendment thereto and, with respect to any current lease, the
aggregate annual rental and/or other fees payable under any such lease. All such
current leases are in full force and effect, are valid and effective in
accordance with their respective terms, and there is not, under any of such
leases, any existing default or event of default (or event which with notice or
lapse of time, or both, would constitute a default) of the Company or any of its
subsidiaries, or to the Company's knowledge, any other party thereto.
(b) The Company and each of its subsidiaries has good and valid
title to, or, in the case of leased properties and assets, valid leasehold
interests in, all of its properties and assets, real, personal and mixed, used
or held for use in its business, free and clear of all Liens except for (i)
Liens for Taxes (as herein defined) not yet due and payable and (ii) statutory
Liens which arise in the ordinary course of business, are not material in amount
and do not materially impair the Company's or its subsidiaries' ownership or use
of such properties and assets.
(c) All the plants, structures and material equipment of the Company
and its subsidiaries, are in good operating condition and repair, in all
material respects.
2.15 Taxes.
(a) Definition of Taxes. For the purposes of this Agreement, "TAX"
or "TAXES", means (i) any and all federal, state, local and foreign taxes,
assessments and other governmental charges, duties, impositions and liabilities,
including taxes based upon or measured by gross
-19-
receipts, income, profits, sales, use and occupation, and value added, ad
valorem, transfer, franchise, withholding, payroll, recapture, employment,
excise and property taxes, together with all interest, penalties and additions
imposed with respect to such amounts; (ii) any liability for the payment of any
amounts of the type described in clause (i) as a result of being a member of an
affiliated, consolidated, combined or unitary group for any period; and (iii)
any liability for the payment of any amounts of the type described in clause (i)
or (ii) as a result of any express or implied obligation to indemnify any other
person or as a result of any obligations under any agreements or arrangements
with any other person with respect to such amounts and including any liability
for taxes of a predecessor entity.
(b) Tax Returns and Audits.
(i) The Company and each of its subsidiaries have timely filed
all federal, state, local and foreign returns, forms, estimates, information
statements and reports ("RETURNS") relating to Taxes required to be filed by the
Company and each of its subsidiaries with any Tax authority, except such Returns
which are not, individually or in the aggregate, material to the Company. The
Company and each of its subsidiaries have paid all Taxes shown to be due on such
Returns.
(ii) The Company and each of its subsidiaries as of the
Effective Time will have withheld with respect to its employees all federal and
state income Taxes, Taxes pursuant to the Federal Insurance Contribution Act,
Taxes pursuant to the Federal Unemployment Tax Act and other Taxes required to
be withheld, except such Taxes which are not, individually or in the aggregate,
material to the Company.
(iii) Neither the Company nor any of its subsidiaries has been
delinquent in the payment of any material Tax nor is there any material Tax
deficiency outstanding, proposed or assessed against the Company or any of its
subsidiaries, nor has the Company or any of its subsidiaries executed any
unexpired waiver of any statute of limitations on or extension of any the period
for the assessment or collection of any Tax.
(iv) Except as set forth in Section 2.15(b)(iv) of the Company
Schedule, no audit or other examination of any Return of the Company or any of
its subsidiaries by any Tax authority is presently in progress, nor has the
Company or any of its subsidiaries been notified of any request for such an
audit or other examination.
(v) No adjustment relating to any Returns filed or required to
be filed by the Company or any of its subsidiaries has been proposed in writing,
formally or informally, by any Tax authority to the Company or any of its
subsidiaries or any representative thereof.
(vi) Neither the Company nor any of its subsidiaries has any
liability for any material unpaid Taxes (whether or not shown to be due on any
Return) which has not been accrued for or reserved on the Company's Interim
Balance Sheet in accordance with GAAP, whether asserted or unasserted,
contingent or otherwise, which is material to the Company, other than any
liability for unpaid Taxes that may have accrued since the Interim Balance Sheet
Date in connection with the operation of the business of the Company and its
subsidiaries in the ordinary
-20-
course. There are no Liens with respect to Taxes on any of the assets of the
Company or any of its subsidiaries, other than Liens which are not, individually
or in the aggregate, material, or customary Liens for Taxes not yet due and
payable.
(vii) There is no Contract, plan or arrangement to which the
Company or any of its subsidiaries is a party as of the date of this Agreement,
including but not limited to the provisions of this Agreement, covering any
employee or former employee of the Company or any of its subsidiaries that,
individually or collectively, would reasonably be expected to give rise to the
payment of any amount that would not be deductible pursuant to Sections 280G,
404 or 162(m) of the Code. There is no Contract, plan or arrangement to which
the Company or any of its subsidiaries is a party or by which it is bound to
compensate any individual for excise taxes paid pursuant to Section 4999 of the
Code.
(viii) 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 or any of its
subsidiaries.
(ix) Neither the Company nor any of its subsidiaries is party
to or has any obligation under any tax-sharing, tax indemnity or tax allocation
agreement or arrangement. Neither the Company nor any of its subsidiaries has
ever been a member of a group filing a consolidated, unitary, combined or
similar Return (other than Returns which include only the Company and any of its
subsidiaries) under any federal, state, local or foreign law. Neither the
Company nor any of its subsidiaries is party to any joint venture, partnership
or other arrangement that could be treated as a partnership for federal and
applicable state, local or foreign Tax purposes.
(x) None of the Company's or its subsidiaries' assets are tax
exempt use property within the meaning of Section 168(h) of the Code.
(xi) Neither the Company nor any of its subsidiaries has
constituted either a "distributing corporation" or a "controlled corporation" in
a distribution of stock intended to qualify for tax-free treatment under Section
355 of the Code (x) in the two years prior to the date of this Agreement or (y)
in a distribution which could otherwise constitute part of a "plan" or "series
of related transactions" (within the meaning of Section 355(e) of the Code) in
conjunction with the Transactions.
2.16 Environmental Matters.
(a) Hazardous Material. Except as would not result in material
liability to the Company or any of its subsidiaries, no underground storage
tanks and no amount of any substance that has been designated by any
Governmental Entity or by applicable federal, state or local law to be
radioactive, toxic, hazardous or otherwise a danger to health or the
environment, including, without limitation, PCBs, asbestos, petroleum,
urea-formaldehyde and all substances listed as hazardous substances pursuant to
the Comprehensive Environmental Response, Compensation, and Liability Act of
1980, as amended, or defined as a hazardous waste pursuant
-21-
to the United States Resource Conservation and Recovery Act of 1976, as amended,
and the regulations promulgated pursuant to said laws, but excluding office and
janitorial supplies, (a "HAZARDOUS MATERIAL") are present, (i) as a result of
the actions of the Company or any of its subsidiaries or any affiliate of the
Company, or, (ii) to the Company's knowledge, as a result of any actions of any
third party or otherwise, in, on or under any property, including the land and
the improvements, ground water and surface water thereof, that the Company or
any of its subsidiaries has at any time owned, operated, occupied or leased.
(b) Hazardous Materials Activities. Except as would not result in a
material liability to the Company (in any individual case or in the aggregate)
(i) neither the Company nor any of its subsidiaries has transported, stored,
used, manufactured, disposed of, released or exposed its employees or others to
Hazardous Materials in violation of any law in effect on or before the Effective
Time, and (ii) neither the Company nor any of its subsidiaries has disposed of,
transported, sold, used, released, exposed its employees or others to or
manufactured any product containing a Hazardous Material (collectively
"HAZARDOUS MATERIALS ACTIVITIES") in violation of any rule, regulation, treaty
or statute promulgated by any Governmental Entity in effect prior to or as of
the date hereof to prohibit, regulate or control Hazardous Materials or any
Hazardous Material Activity.
(c) Permits. The Company and its subsidiaries currently hold all
environmental approvals, permits, licenses, clearances and consents (the
"COMPANY ENVIRONMENTAL PERMITS") necessary for the conduct of the Company's and
its subsidiaries' Hazardous Material Activities and other businesses of the
Company and its subsidiaries as such activities and businesses are currently
being conducted. All such Company Environmental Permits are valid and in full
force and effect. The Company has complied in all material respects with all
covenants and conditions of any such Company Environmental Permit which is or
has been in force with respect to its Hazardous Material Activities. No
circumstances exist which could cause any such Company Environmental Permit to
be revoked, modified, or rendered non-renewable upon payment of the permit fee.
All such Company Environmental Permits and all other consent and clearances
required by any Environmental Law or any agreement to which the Company is bound
as a condition to the performance and enforcement of this Agreement, have been
obtained or will be obtained prior to the Effective Time at no cost to Parent.
(d) Environmental Liabilities. No action, proceeding, revocation
proceeding, amendment procedure, writ or injunction is pending, and to the
Company's knowledge, no action, proceeding, revocation proceeding, amendment
procedure, writ or injunction has been threatened by any Governmental Entity
against the Company or any of its subsidiaries in a writing delivered to the
Company or any of its subsidiaries concerning any Company Environmental Permit,
Hazardous Material or any Hazardous Materials Activity of the Company or any of
its subsidiaries. The Company has no knowledge of any fact or circumstance which
could involve the Company or any of its subsidiaries in any environmental
litigation or impose upon the Company any material environmental liability.
(e) Reports and Records. The Company has delivered to Parent or made
available for inspection by Parent and its agents, representatives and employees
all records in the Company's possession concerning the Hazardous Materials
Activities of the Company relating to
-22-
its business and all environmental audits and environmental assessments of any
facility conducted at the request of, or otherwise in the possession of the
Company. The Company has complied with all environmental disclosure obligations
imposed by applicable law with respect to the Merger.
2.17 Brokers; Third Party Expenses. Except as set forth in Section 2.17 of
the Company Schedule, neither the Company nor any of its subsidiaries has
incurred, nor will it incur, directly or indirectly, any liability for brokerage
or finders fees or agent's commissions or any similar charges in connection with
this Agreement or the Transactions contemplated hereby. The Company has
heretofore furnished Parent with a complete and correct copy of all agreements
between the Company and Alliant Partners pursuant to which such firm would be
entitled to any payment relating to the Transactions.
2.18 Intellectual Property.
(a) Definitions. For all purposes of this Agreement, the following
terms shall have the following respective meanings:
(i) "INTELLECTUAL PROPERTY" shall mean any or all of the
following: (a) works of authorship, including without limitation, computer
programs, algorithms, routines, source code and executable code, whether
embodied in firmware, software or otherwise, documentation, designs, files,
records and data ("SOFTWARE"); (b) inventions (whether or not patentable),
improvements, and technology; (c) proprietary and confidential information,
including technical data, customer and supplier lists and data, trade secrets,
show-how, know-how and techniques; (d) databases, data compilations and
collections and technical data; (e) tools, methods, processes, devices,
prototypes, schematics, bread boards, net lists, mask works, test methodologies
and hardware and Software development tools; (f) World Wide Web addresses
("WWW"), uniform resource locators and domain names; and (g) all instantiations
of the foregoing in any form and embodied in any media.
(ii) "INTELLECTUAL PROPERTY RIGHTS" shall mean any or all of
the following and all rights in, arising out of, or associated therewith: (a)
all United States and foreign patents and utility models and applications
therefor, and all reissues, divisions, re-examinations, renewals, extensions,
provisionals, continuations and continuations-in-part thereof, and equivalent or
similar rights anywhere in the world in inventions and discoveries, including
without limitation, invention disclosures ("PATENTS"); (b) all trade secrets and
other rights in privacy, data, know-how and confidential or proprietary
information; (c) all copyrights, copyrights registrations and applications
therefor and all other rights corresponding thereto throughout the world
("COPYRIGHTS"); (d) all industrial designs and any registrations and
applications therefor throughout the world; (e) all rights in WWW addresses,
uniform resource locators and domain names and applications and registrations
therefor ("INTERNET PROPERTIES"); (f) all rights in all trade names, logos,
common law trademarks and service marks, trademark and service ▇▇▇▇
registrations and applications therefor ("TRADEMARKS"); and (g) any similar,
corresponding or equivalent rights to any of the foregoing anywhere in the
world.
-23-
(iii) "IP LICENSES" means all the contracts, licenses and
agreements to which the Company or any of its subsidiaries is a party with
respect to any Intellectual Property or Intellectual Property Rights licensed to
or by, or created for or by, the Company or any of its subsidiaries.
(iv) "COMPANY INTELLECTUAL PROPERTY" shall mean any
Intellectual Property and Intellectual Property Rights, including the Company
Registered Intellectual Property Rights (as defined below), that are owned by,
or exclusively licensed to, the Company or any of its subsidiaries.
(v) "REGISTERED INTELLECTUAL PROPERTY RIGHTS" shall mean all
United States, international and foreign: (a) Patents, including applications
therefor; (b) registered Trademarks, applications to register Trademarks,
including intent-to-use applications, other registrations or applications
related to Trademarks; (c) registrations of, and applications for the use of,
Internet Properties; (d) Copyrights registrations and applications to register
Copyrights; and (e) any other Intellectual Property that is the subject of an
application, certificate, filing, registration or other document issued by,
filed with, or recorded by, any private, state, government or other public legal
authority or Governmental Entity at any time.
(b) Section 2.18(b) of the Company Schedule contains a complete and
accurate list (by name and version number) of all products, Internet Properties,
software or service offerings of the Company or any of its subsidiaries
(collectively, "COMPANY PRODUCTS") (i) that have been operated, sold, licensed,
distributed or otherwise provided in the three (3)-year period preceding the
date hereof, (ii) for which the Company or any of its subsidiaries has any
obligation or liability related thereto, or (iii) which the Company or any of
its subsidiaries intends to sell, distribute, operate, license or otherwise
provide in the future, including any Company Products under development.
(c) Section 2.18(c) of the Company Schedule lists all Registered
Intellectual Property Rights owned by, filed in the name of, or applied for, by
the Company or any of its subsidiaries (the "COMPANY REGISTERED INTELLECTUAL
PROPERTY RIGHTS") and lists any proceedings or actions before any court,
tribunal (including the United States Patent and Trademark Office (the "PTO") or
equivalent authority anywhere in the world) related to any of the Company
Registered Intellectual Property Rights or Company Intellectual Property.
(d) Each item of Company Registered Intellectual Property Right is
currently in compliance with all formal legal requirements (including payment of
filing, examination and maintenance fees and proofs of use) and is valid and
subsisting. All necessary documents and certificates in connection with such
Company Registered Intellectual Property Rights have been filed with the
relevant patent, copyright, trademark, Internet, or other authorities in the
United States or foreign jurisdictions, as the case may be, for the purposes of
applying for, perfecting, prosecuting and maintaining such Registered
Intellectual Property Right. Except as set forth on Section 2.18(d) of the
Company Schedule, there are no actions that must be taken by the Company or any
of its subsidiaries within one hundred twenty (120) days of the date hereof,
including the payment of any registration, maintenance or renewal fees or the
filing of any responses to PTO office actions, documents, applications or
certificates for the purposes of
-24-
obtaining, maintaining, perfecting or preserving or renewing any Registered
Intellectual Property Rights. Neither the Company nor any of its subsidiaries
have claimed any small business status in the application for or registration of
any Registered Intellectual Property Rights that would not be applicable
following the Effective Time.
(e) The Company's and each of its subsidiaries' use or distribution
of any data, information, content or other works (including data, information
content or works belonging to third parties) does not, has not, and following
the Transactions will not when conducted in substantially the same manner by the
Parent: (i) infringe or violate the rights (including Intellectual Property
Rights or rights under contract or policy) of any person or (ii) violate any law
or regulation of any country or jurisdiction, and neither the Company nor any of
its subsidiaries have received any notice of any infringement or violation with
respect thereto.
(f) In each case in which the Company or any of its subsidiaries
have acquired any Intellectual Property or Intellectual Property Right from any
person, the Company or such subsidiary has obtained a valid and enforceable
assignment sufficient to irrevocably transfer all rights in and to all such
Intellectual Property and the associated Intellectual Property Rights (including
the right to seek past and future damages with respect thereto) to the Company
or such subsidiary. To the maximum extent provided for by, and in accordance
with, applicable laws and regulations, the Company or each such subsidiary has
recorded each such assignment of a Registered Intellectual Property Right
assigned to the Company or such subsidiary with the relevant Governmental
Entity.
(g) Neither the Company nor any of its subsidiaries have any
knowledge of any facts or circumstances that would render any Company
Intellectual Property invalid or unenforceable, nor has the Company or any of
its subsidiaries taken, or failed to take, any action in the application for or
prosecution of any Company Registered Intellectual Property that would render
such Company Registered Intellectual Property invalid or unenforceable.
(h) All Company Intellectual Property will be fully transferable,
alienable and licensable by Surviving Corporation and/or Parent without
restriction and without payment of any kind to any third party.
(i) Each item of Company Intellectual Property is free and clear of
any liens or encumbrances, except for non-exclusive licenses granted to end-user
customers in the ordinary course of business, consistent with past practice, the
forms of which have been provided to Parent.
(j) The Company or one of its subsidiaries is the exclusive owner or
exclusive licensee of all Company Intellectual Property. Without limiting the
generality of the foregoing, (i) the Company or one of its subsidiaries is the
exclusive owner of all Trademarks and Internet Properties used in connection
with the operation or conduct of the business of the Company or such subsidiary,
including the sale, distribution or provision of any Company Products and the
operation of any WWW sites by the Company or such subsidiary, (ii) the Company
or one of its subsidiaries owns exclusively, and has good title to, all
Copyrighted works that are included or incorporated into Company Products or
which the Company or any such subsidiary otherwise
-25-
purports to own, and (iii) to the extent that any Patent would be infringed by
any Company Product, the Company or one of its subsidiaries is the exclusive
owner of such Patent.
(k) Section 2.18(k) of the Company Schedule lists all IP Licenses
pursuant to which the Company or any of its subsidiaries created or developed
any Intellectual Property for or on behalf of any third party and granted such
third party any exclusive rights to or joint ownership of such Intellectual
Property or related Intellectual Property Rights. Except as set forth on Section
2.18(k) of the Company Schedule, neither the Company nor any of its subsidiaries
have (i) transferred ownership of, or granted any exclusive license of or right
to use, or authorized the retention of any exclusive rights to use or joint
ownership of, any Intellectual Property or Intellectual Property Right that is
or was Company Intellectual Property, to any other person, or (ii) permitted
Company's or such subsidiary's rights in such Company Intellectual Property to
lapse or enter the public domain.
(l) Except as set forth on Section 2.18(l) of the Company Schedule,
all Intellectual Property (x) used in or necessary to the conduct of Company's
or any of its subsidiaries' business as presently conducted or (y) used at any
time in the conduct of Company's or any of its subsidiaries' business as
currently contemplated by Company to be conducted, was written and created
solely by either (i) employees of the Company or such subsidiary acting within
the scope of their employment, (ii) third parties who have validly and
irrevocably assigned all of their rights, including Intellectual Property Rights
therein, to the Company or such subsidiary, or (iii) third parties who have
entered into an agreement with the Company or one of its subsidiaries pursuant
to which any Intellectual Property authored or created by such third party would
be considered a work made for hire pursuant to 17 U.S.C. Section 101 et seq.,
and no third party owns or has any rights to any such Intellectual Property.
(m) To the extent that any Intellectual Property or Intellectual
Property Rights have been developed or created by a third party for Company or
any of its subsidiaries or is incorporated into any of the Company Products, the
Company or such subsidiary has a written agreement with such third party with
respect thereto and Company or such subsidiary thereby has obtained, pursuant to
an IP License listed on Section 2.18(m) of the Company Schedule, a perpetual,
non-terminable license (sufficient for the conduct of its business as currently
conducted and as proposed to be conducted) to, all such third party's
Intellectual Property and Intellectual Property Rights, and in each case such
rights and licenses shall survive the Transactions and be fully exercisable by
Parent and the Surviving Corporation following the Effective Time.
(n) Section 2.18(n) of the Company Schedule sets forth, for each
Company Product, (i) whether use or operation of such Company Product by any
customer or end-user on any third party hardware or software platform (a "Third
Party Platform") requires such customer or end-user to enter into an agreement
or license with the manufacturer of such Third Party Platform, and (ii) all IP
Licenses entered into with such manufacturer of such Third Party Platform.
Except as set forth on Section 2.18(n) of the Company Schedule, the Company
Intellectual Property constitutes all the Intellectual Property and Intellectual
Property Rights used in or necessary to the conduct of the business of the
Company and each of its subsidiaries as it currently is conducted, and as it is
currently planned or contemplated to be conducted by the
-26-
Company and each such subsidiary, including, without limitation, the operation,
design, development, manufacture, use, import, distribution and sale of Company
Products.
(o) No person who has licensed any Intellectual Property or
Intellectual Property Rights to the Company or any of its subsidiaries has
ownership rights or license rights to improvements made by or for the Company or
any such subsidiary in such Intellectual Property or Intellectual Property
Rights.
(p) Company and each of its subsidiaries has the right to use,
pursuant to valid licenses, all data (including personal data of third parties),
all software development tools, library functions, operating systems, data
bases, compilers and all other third-party Software that are used in the
operation of the Company and each of its subsidiaries or that are required to
create, modify, compile, operate or support any software that is Company
Intellectual Property or is incorporated into any Company Product.
(q) Except as set forth on Section 2.18(q) of the Company Schedule,
no open source or public library software, including without limitation, any
version of any software licensed pursuant to any GNU public license, was used in
the development or modification of any software that is or was Company
Intellectual Property or is incorporated into any Company Product.
(r) No government funding, facilities of a university, college,
other educational institution or research center or funding from third parties
was used in the development of any Company Intellectual Property. No current or
former employee, consultant or independent contractor of Company or any
subsidiary of the Company, who was involved in, or who contributed to, the
creation or development of any Company Intellectual Property, has performed
services for the government, university, college, or other educational
institution or research center during a period of time during which such
employee, consultant or independent contractor was also performing services for
Company or such subsidiary.
(s) The operation of the business of the Company and each subsidiary
of the Company as it is currently conducted, or is contemplated to be conducted,
by the Company and each such subsidiary, including but not limited to the
design, development, use, import, branding, advertising, promotion, marketing,
operation, manufacture and sale of Company Products does not and will not when
conducted by Parent and/or Surviving Corporation (including following any merger
of the Surviving Corporation into the Parent) in substantially the same manner
following the Closing, infringe or misappropriate any Intellectual Property
Right of any person, violate any right of any person (including any right to
privacy or publicity), or constitute unfair competition or trade practices under
the laws of any jurisdiction, and neither the Company nor any subsidiary of the
Company have received notice from any person claiming that such operation or any
act, product, technology or service (including products, technology or services
currently under development) of the Company or such subsidiary infringes or
misappropriates any Intellectual Property Right of any person or constitutes
unfair competition or trade practices under the laws of any jurisdiction (nor
does the Company or any of its subsidiaries have knowledge of any basis
therefor).
-27-
(t) No Company Intellectual Property or Company Product is subject
to any proceeding or outstanding decree, order, judgment or settlement agreement
or stipulation that restricts in any manner the use, transfer or licensing
thereof by the Company or any of its subsidiaries or may affect the validity,
use or enforceability of such Company Intellectual Property.
(u) Section 2.18(u)(i) of the Company Schedule lists all inbound IP
Licenses (including without limitation all non-negotiated IP Licenses such as
free downloads, shrinkwrap and click-through agreements and open source licenses
and agreements), Section 2.18(u)(ii) of the Company Schedule lists all material
outbound IP Licenses, and Section 2.18(u)(iii) of the Company Schedule lists,
for each Company Product, all Intellectual Property or Intellectual Property
Rights of a third party used in such Company Product and the IP License pursuant
to which Company acquired the right to use such Intellectual Property or
Intellectual Property Rights.
(v) All IP Licenses are in full force and effect. Neither the
Company nor any of its subsidiaries is in breach of nor have the Company or any
of its subsidiaries failed to perform under, and neither the Company nor any of
its subsidiaries have received any notice of any breach or failure to perform
under, any of the IP Licenses and, to the Company's and each of its
subsidiaries' knowledge, no other party to any such contract, license or
agreement is in breach thereof or has failed to perform thereunder. The
consummation of the Transactions contemplated by this Agreement will neither
violate nor result in the breach, modification, cancellation, termination or
suspension of any IP Licenses or entitle the other party or parties to such IP
Licenses to terminate such IP Licenses. Following the Closing Date, both the
Parent and the Surviving Corporation will be permitted to exercise all of
Company's and each of its subsidiaries' rights under the IP Licenses to the same
extent Company and each of its subsidiaries would have been able to had the
Transactions contemplated by this Agreement not occurred and without the payment
of any additional amounts or consideration other than ongoing fees, royalties or
payments which Company or such subsidiary would otherwise be required to pay.
Neither the Transactions nor any merger of the Surviving Company with the
Parent, will result in any third party being granted any rights to any Company
Intellectual Property Rights that are in addition to, or greater than, such
third party currently has under such IP Licenses, including any access to or
release of any source code owned by or licensed to the Company or any of its
subsidiaries.
(w) Section 2.18(w) of the Company Schedule lists all material IP
Licenses between the Company or any of its subsidiaries and any other person
wherein or whereby the Company or such subsidiary has agreed to, or assumed, any
obligation or duty to warrant, indemnify, reimburse, hold harmless, guaranty or
otherwise assume or incur any obligation or liability or provide a right of
rescission with respect to the infringement or misappropriation by the Company
or such subsidiary or such other person of the Intellectual Property Rights of
any person other than the Company or such subsidiary.
(x) To the knowledge of the Company and each of its subsidiaries,
there are no contracts, licenses or agreements between the Company or any such
subsidiary and any other person with respect to Company Intellectual Property
under which there is any dispute regarding
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the scope of such agreement, or performance under such agreement, including with
respect to any payments to be made or received by the Company or such subsidiary
thereunder.
(y) To the Company's and each of its subsidiaries' knowledge, no
person is infringing or misappropriating any Company Intellectual Property
Right.
(z) The Company and each of its subsidiaries have taken all steps
that are reasonably required to protect the Company's and such subsidiaries'
rights in confidential information and trade secrets of the Company or such
subsidiary or provided by any other person to the Company or such subsidiary.
Without limiting the foregoing, the Company and each of its subsidiaries have
and enforce a policy requiring each technical employee and consultant of the
Company and each of its subsidiaries to execute a proprietary rights and
confidentiality agreement substantially in the form set forth in Section 2.18(z)
of the Company Schedule and all current and former employees and consultants of
Company and each of its subsidiaries who have created or modified any of the
Company Intellectual Property have executed such an agreement assigning all of
such employees' and consultants' rights in and to the Company Intellectual
Property to the Company or such subsidiary.
(aa) Neither this Agreement nor the Transactions contemplated by
this Agreement, including the assignment to Parent or Surviving Corporation, by
operation of law or otherwise, of any contracts or agreements to which the
Company or any of its subsidiaries is a party, will result in (i) either
Parent's or the Surviving Corporation's granting to any third party any right to
or with respect to any Intellectual Property or Intellectual Property Right
owned by, or licensed to, either of them, (ii) either the Parent's or the
Surviving Corporation's being bound by, or subject to, any non-compete or other
restriction on the operation or scope of their respective businesses, or (iii)
either the Parent's or the Surviving Corporation's being obligated to pay any
royalties or other amounts to any third party in excess of those payable by
Parent or Surviving Corporation, respectively, prior to the Closing.
2.19 Contracts.
(a) Except as set forth in Section 2.19(a) of the Company Schedule,
neither the Company nor any of its subsidiaries is a party to or is bound by:
(i) any employment or consulting Contract with any officer or
director, or any Company employee or consultant (excluding offer letters for
"at-will" employees);
(ii) any Contract or plan, including, without limitation, any
stock option plan, stock appreciation right plan or stock purchase plan, any of
the benefits of which will be increased, or the vesting of benefits of which
will be accelerated, by the occurrence of any of the Transactions contemplated
by this Agreement or the value of any of the benefits of which will be
calculated on the basis of any of the Transactions contemplated by this
Agreement;
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(iii) any Contract of indemnification or any guaranty other
than any agreement of indemnification entered into in connection with the sale
or license of Company Products in the ordinary course of business;
(iv) any Contract containing any covenant limiting in any
respect the right of the Company or any of its subsidiaries to engage in any
line of business or to compete with any person or granting any exclusive
distribution rights;
(v) any Contract currently in force relating to the
disposition or acquisition by the Company or any of its subsidiaries after the
Interim Balance Sheet Date of a material amount of assets not in the ordinary
course of business or pursuant to which the Company or any of its subsidiaries
has any material ownership interest in any corporation, partnership, joint
venture or other business enterprise other than the Company's subsidiaries;
(vi) any dealer, distributor, joint marketing or development
Contract currently in force under which the Company or any of its subsidiaries
have continuing material obligations to jointly market any product, technology
or service, or any Contract pursuant to which the Company or any of its
subsidiaries have continuing material obligations to jointly develop any
Intellectual Property that will not be owned, in whole, by the Company or any of
its subsidiaries;
(vii) any Contract to provide source code to any third party
for any product or technology that is material to the Company and its
subsidiaries taken as a whole;
(viii) any Contract currently in force to license any third
party to manufacture or reproduce any Company product, service or technology or
any agreement, contract or commitment currently in force to sell or distribute
any Company products, service or technology except agreements with distributors
or sales representative in the normal course of business cancelable without
penalty upon notice of ninety (90) calendar days or less and substantially in
the form previously provided to Parent;
(ix) any mortgages, indentures, guarantees, loans or credit
agreements, security agreements or other agreements or instruments relating to
the borrowing of money or extension of credit (excluding standard invoice terms
for payment of invoices in connection with the sale of Company Products);
(x) any settlement agreement under which the Company has any
ongoing obligations;
(xi) any Contract under which the Company or any of its
subsidiaries (A) is committed to provide products or services at a later date at
a fixed price, or (B) has provided products or services, but which have not yet
been accepted thereunder;
(xii) any Contract not otherwise disclosed in Section 2.19 of
the Company Schedule under which the consequences of a default could reasonably
be expected to have a Material Adverse Effect on the Company;
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(xiii) any other Contract or commitment that is of the nature
required to be filed by Company as an exhibit to an Annual Report on Form 10-K
under the Exchange Act; or
(xiv) any Contract involving in excess of $200,000.00 being
paid by or to Company over the term thereof.
(b) Except as set forth in Section 2.19(b) of the Company Schedule,
neither the Company nor any of its subsidiaries, nor to the Company's knowledge
any other party to a Company Contract (as defined below), is in breach,
violation or default under, and neither the Company nor any of its subsidiaries
has received written notice that it has breached, violated or defaulted under,
any of the material terms or conditions of any of the Contracts or commitments
to which the Company or any of its subsidiaries is a party or by which it is
bound that are required to be disclosed in the Company Schedule (any such
Contract or commitment, a "COMPANY CONTRACT") in such a manner as would permit
any other party to cancel or terminate any such Company Contract, or would
permit any other party to seek material damages or other remedies (for any or
all of such breaches, violations or defaults, in the aggregate). The Company has
made available to Parent true and correct copies of any Contracts the Company
may have with its top twenty customers and suppliers.
2.20 Insurance. The Company maintains insurance policies and/or fidelity
bonds covering the assets, business, equipment, properties, operations,
employees, officers and directors of the Company and its subsidiaries
(collectively, the "INSURANCE POLICIES") which are of the type and in amounts
customarily carried by persons conducting businesses similar to those of the
Company and its subsidiaries. Section 2.20 of the Company Schedule lists all
such Insurance Policies. There is no claim by the Company or any of its
subsidiaries pending under any of the Insurance Policies as to which coverage
has been questioned, denied or disputed by the underwriters of such policies or
bonds. All premiums due and payable under all such Insurance Policies have been
paid, and the Company and each of its subsidiaries, as the case may be, is
otherwise in compliance with the terms of such Insurance Policies. The Company
does not have knowledge of any threatened termination of, or premium increase
with respect to, any such Insurance Policies.
2.21 Opinion of Financial Advisor. The Company has been advised in writing
by its financial advisor, Alliant Partners, that in its opinion, as of the date
of this Agreement, the Merger Consideration is fair to the stockholders of the
Company from a financial point of view.
2.22 Board Approval. The Board has, as of the date of this Agreement,
unanimously (i) determined that the Merger is advisable and fair to, and in the
best interests of, the Company and its stockholders, (ii) approved, subject to
stockholder approval, the Transactions, and (iii) determined, subject to the
terms of this Agreement, to recommend that the stockholders of the Company adopt
and approve this Agreement and approve the Merger.
2.23 Vote Required. The affirmative vote of a majority of the votes that
holders of the outstanding Shares are entitled to vote with respect to the
Merger is the only vote of the holders
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of any class or series of the Company's capital stock necessary to approve this
Agreement and the Transactions, including the Merger.
2.24 State Takeover Statutes. The Board has approved the Merger, this
Agreement and the Company Voting Agreements, and such approval is sufficient to
render inapplicable to the Merger, this Agreement and the Company Voting
Agreements and the Transactions and the transactions contemplated by the Company
Voting Agreements, the provisions of Section 203 of Delaware Law to the extent,
if any, such Section is applicable to the Merger, this Agreement and the Company
Voting Agreements and the Transactions and the transactions contemplated by the
Company Voting Agreements. No other state takeover statute or similar statute or
regulation applies to or purports to apply to the Merger, this Agreement and the
Company Voting Agreements or the Transactions and the transactions contemplated
by the Company Voting Agreements.
2.25 Interested Party Transactions. Except as set forth in Section 2.25 of
the Company Schedule, no officer or director of the Company (nor, to the
knowledge of the Company, any ancestor, sibling, descendant or spouse of any of
such persons, or any trust, partnership or corporation in which any of such
persons has or has had an interest), has or has had, directly or indirectly, (i)
an interest in any entity which furnished or sold, or furnishes or sells,
services, products or technology that the Company or any of its subsidiaries
furnishes or sells, or proposes to furnish or sell, or (ii) any interest in any
entity that purchases from or sells or furnishes to the Company or any of its
subsidiaries, any goods or services, or (iii) any interest in any entity that
makes loans to or guaranties on behalf of, or borrows or seeks guaranties from,
the Company or any of its subsidiaries, (iv) a beneficial interest in any
Contract to which the Company or any of its subsidiaries is a party; provided,
however, that ownership of no more than one percent (1%) of the outstanding
voting stock of a publicly traded corporation shall not be deemed to be an
"interest in any entity" for purposes of this Section 2.25.
2.26 Privacy Policies; Third Party Privacy Obligations; Web Site Terms and
Conditions.
(a) For purposes of this Section 2.26:
(i) "COMPANY SITES" means all of the Company's and its
subsidiaries' public sites on the WWW;
(ii) "PRIVACY STATEMENTS" means, collectively, any and all of
the Company's and its subsidiaries' privacy policies published on the Company
Sites or otherwise made available by the Company or its subsidiaries regarding
the collection, retention, use and distribution of the personal information of
individuals, including, without limitation, from visitors of any of the Company
Sites ("INDIVIDUALS"); and
(iii) "TERMS AND CONDITIONS" means any and all of the visitor
terms and conditions published on the Company Sites governing Individuals' use
of an access to the Company Sites.
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(b) A Privacy Statement is posted and is accessible to Individuals
at all times on each Company Site. Each of the Company and its subsidiaries
maintains a hypertext link to a Privacy Statement from the homepage of each
Company Site, and each of the Company and its subsidiaries uses its best efforts
to include a hypertext link to a Privacy Statement from every page of the
Company Sites on which personal information is collected from Individuals.
(c) The Privacy Statements are clearly written and include, at a
minimum, accurate notice to Individuals about the Company's collection,
retention, use and disclosure policies and practices with respect to
Individuals' personal information. The Privacy Statements are accurate and
consistent with the Terms and Conditions and the Company's actual practices with
respect to the collection, retention, use and disclosure of Individuals'
personal information.
(d) Each of the Company and its subsidiaries (i) complies with the
Privacy Statements as applicable to any given set of personal information
collected by the Company and its subsidiaries from Individuals; (ii) complies
with all applicable privacy laws and regulations regarding the collection
retention, use and disclosure of personal information; and (iii) takes all
appropriate industry standard measures to protect and maintain the confidential
nature of the personal information provided to the Company or its subsidiaries
by Individuals. Each of the Company and its subsidiaries has adequate
technological and procedural measures in place to protect personal information
collected from Individuals against loss, theft and unauthorized access or
disclosure. Neither the Company nor any of its subsidiaries knowingly collects
information from or targets children under the age of thirteen. Neither the
Company nor any of its subsidiaries sells, rents or otherwise make available to
third parties any personal information submitted by Individuals.
(e) The Company's and each of its subsidiaries' collection,
retention, use and distribution of all personal information collected by the
Company from Individuals is governed by the Privacy Statement pursuant to which
the data was collected. Each Privacy Statement contains rules for the review,
modification and deletion of personal information by the applicable Individual,
and the Company and each of its subsidiaries is and has been at all times in
compliance with such rules. All versions of the Privacy Statements used by the
Company and its subsidiaries at any time on or after December 1, 2002 are
attached hereto in Section 2.26 of the Company Schedule. Other than as
constrained by the Privacy Statements and by applicable laws and regulations,
neither the Company nor any of its subsidiaries is restricted in its use and/or
distribution of personal information collected by the Company and its
subsidiaries.
(f) Each of the Company and its subsidiaries has the full power and
authority to transfer all rights the Company and its subsidiaries have in all
Individuals' personal information in their possession and/or control to Parent
and Merger Sub. The Privacy Statements expressly permit the transfer of all
personal information collected from Individuals by the Company and its
subsidiaries in connection with the merger or acquisition or sale of all or
substantially all of the assets of the Company. The Company is not a party to
any Contract, or is subject to any other obligation that, following the date of
this Agreement, would prevent Parent and/or its affiliates from using the
information governed by the Privacy Statements in a manner consistent with
applicable privacy laws and industry standards regarding the disclosure and use
of information.
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No claims or controversies have arisen regarding the Privacy Statements or the
implementation thereof or of any of the foregoing.
(g) Each of the Company and its subsidiaries has complied with and
is not in violation of any applicable privacy obligations under any Legal
Requirements or under any Contract to which Company or any of its subsidiaries
is a party or by which their properties are bound ("THIRD PARTY PRIVACY
OBLIGATIONS"). Neither the execution, delivery or performance of this Agreement
nor the consummation of the Transactions will violate, contravene or conflict
with the Third Party Privacy Obligations. The Third Party Privacy Obligations
expressly permit the transfer of all personal information collected from
Individuals by the Company and its subsidiaries in connection with the merger or
acquisition or sale of all or substantially all of the assets of the Company. No
claims or controversies have arisen regarding the Third Party Privacy
Obligations or of the implementation thereof or of any of the foregoing.
(h) The Terms and Conditions are posted and are accessible to
Individuals at all times on the Company Sites. The Terms and Conditions
expressly permit the transfer of personal information collected from Individuals
by the Company and its subsidiaries in connection with the merger or acquisition
or sale of all or substantially all of the assets of the Company. No claims or
controversies have arisen regarding the Terms and Conditions or the
implementation thereof or of any of the foregoing.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub hereby jointly and severally represent and warrant
to the Company, as follows:
3.1 Corporate Organization. Each of Parent and Merger Sub is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has the requisite corporate power and authority and all
necessary governmental approvals to own, lease and operate its properties and to
carry on its business as it is now being conducted, except where the failure to
be so organized, existing or in good standing or to have such power, authority
and governmental approvals would not prevent or materially delay consummation of
the Transactions, or otherwise prevent Parent or Merger Sub from performing its
material obligations under this Agreement.
3.2 Authority Relative to this Agreement. Each of Parent and Merger Sub
has all necessary corporate power and authority to execute and deliver this
Agreement, and to perform its obligations hereunder and to consummate the
Transactions. The execution and delivery of this Agreement by Parent and Merger
Sub and the consummation by Parent and Merger Sub of the Transactions have been
duly and validly authorized by all necessary corporate action on the part of
Parent and Merger Sub, and no other corporate proceedings on the part of Parent
or Merger Sub are necessary to authorize this Agreement, or to consummate the
Transactions (other than, with respect to the Merger, the filing of the
Certificate of Merger as required by Delaware Law). This Agreement has been duly
and validly executed and delivered by Parent and Merger Sub and, assuming the
due authorization, execution and delivery by the Company, constitutes a
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legal and binding obligation of Parent and Merger Sub, enforceable against
Parent and Merger Sub in accordance with their respective terms, subject to
applicable bankruptcy, insolvency, moratorium or other similar laws relating to
creditors' rights and general principles of equity.
3.3 No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by Parent and
Merger Sub does not, and the performance of this Agreement by Parent and Merger
Sub will not, (i) conflict with or violate the Parent Charter Documents, (ii)
subject to compliance with the requirements set forth in Section 3.3(b) hereof,
conflict with or violate any Legal Requirements applicable to Parent or by which
its properties are bound or affected, or (iii) conflict with or violate, result
in any breach of or constitute a default (or an event that with notice or lapse
of time or both would become a default) under, or impair Parent's rights or
alter the rights or obligations of any third party under, or give to others any
rights of termination, amendment, acceleration or cancellation of, or result in
the creation of a Lien on any of the properties or assets of Parent pursuant to
any Contract to which Parent is a party or by which Parent or its properties are
bound or affected, except to the extent such conflict, violation, breach,
default, impairment or other effect could not in the case of clauses (ii) or
(iii) individually or in the aggregate, prevent or materially delay consummation
of the Transactions or otherwise prevent Parent or Merger Sub from performing
their material obligations under this Agreement.
(b) The execution and delivery of this Agreement by Parent and
Merger Sub does not, and the performance of this Agreement by Parent and Merger
Sub shall not, require any consent, approval, authorization or permit of, or
filing with or notification to, any Governmental Entity except (i) for
applicable requirements, if any, of the Exchange Act, Blue Sky Laws and state
takeover laws, the pre-merger notification requirements of foreign Governmental
Entities, the rules and regulations of the NYSE, and the filing and recordation
of the Certificate of Merger as required by Delaware Law and (ii) where the
failure to obtain such consents, approvals, authorizations or permits, or to
make such filings or notifications, could not, individually or in the aggregate,
prevent or materially delay consummation of the Transactions or otherwise
prevent Parent or Merger Sub from performing their material obligations under
this Agreement.
3.4 Proxy Statement. The information supplied by Parent and Merger Sub for
inclusion in the Proxy Statement shall not, at the date the Proxy Statement (or
any amendment or supplement thereto) is first mailed to stockholders of the
Company, at the time of the Stockholders' Meeting or at the Effective Time,
contain any untrue statement of a material fact, or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not false or
misleading, or necessary to correct any statement in any earlier communication
with respect to the solicitation of proxies for the Stockholders' Meeting which
shall have become false or misleading. Notwithstanding the foregoing, Parent and
Merger Sub make no representation or warranty with respect to any information
supplied by the Company or any of its representatives for inclusion in the Proxy
Statement.
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3.5 Financing. Parent will have at the Effective Time sufficient cash or
cash-equivalent funds available to permit Merger Sub to consummate the
Transactions, including, without limitation, acquiring all the outstanding
Shares in the Merger.
ARTICLE IV
CONDUCT PRIOR TO THE EFFECTIVE TIME
4.1 Conduct of Business by 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 or the Effective Time, the Company and each of
its subsidiaries shall, except to the extent that Parent shall otherwise consent
in writing (which consent or refusal to grant consent shall not be unreasonably
delayed), carry on its business in the usual, regular and ordinary course in
substantially the same manner as heretofore conducted and in compliance with all
applicable laws and regulations, pay its Liabilities and Taxes when due (subject
to good faith disputes over such Liabilities or Taxes), pay or perform other
obligations when due, and use its commercially reasonable efforts consistent
with past practices and policies to (i) preserve intact its present business
organization, (ii) keep available the services of its present officers and
employees, and (iii) preserve its relationships with customers, suppliers,
distributors, consultants, licensors, licensees and others with which it has
significant business dealings. In addition, the Company shall promptly notify
Parent of any material event involving its business or operations occurring
outside the ordinary course of business.
In addition, without the prior written consent of Parent (which consent or
refusal to grant consent shall not be unreasonably delayed), except as permitted
or required by this Agreement and except as provided in Section 4.1 of the
Company Schedule, during the period from the date of this Agreement and
continuing until the earlier of the termination of this Agreement pursuant to
its terms or the Effective Time, Company shall not do any of the following and
shall not permit its subsidiaries to do any of the following:
(a) Waive any stock repurchase rights, accelerate, amend or change
the period of exercisability of options or restricted stock, or reprice options
granted under any employee, consultant, director or other stock plans or
authorize cash payments in exchange for any options granted under any of such
plans;
(b) Grant any severance or termination pay (whether in cash, stock,
equity securities, or property) to any officer or employee except pursuant to
written agreements outstanding on the date hereof and as previously disclosed in
writing to Parent, or adopt any new severance plan, or amend or modify or alter
in any manner any severance plan, agreement or arrangement existing on the date
hereof (including without limitation any retention, change of control or similar
agreement), or grant any equity-based compensation, whether payable in cash or
stock;
(c) Transfer or license to any person or entity or otherwise extend,
amend or modify any rights to the Company Intellectual Property, or enter into
grants to transfer or license to any person future rights to the Company
Intellectual Property other than non-exclusive licenses granted to end-users and
non-exclusive distribution, reseller and similar commercial
-36-
agreements entered into in the ordinary course of business and consistent with
past practice; provided that in no event shall the Company (i) license, or enter
into a distribution, reseller or similar arrangement, on an exclusive basis, or
sell, any Company Intellectual Property; or (ii) enter into any Contract (v)
providing for any site licenses, (w) containing pricing or discounting terms or
provisions other than in the ordinary course of business consistent with past
practice, (x) requiring the Company to use its "best efforts", (y) limiting the
right of the Company to engage in any line of business or to compete with any
person, or (z) not otherwise in compliance with Section 4.1(d) hereof;
(d) Enter into any Contract (i) requiring the Company to purchase a
minimum amount of products or services with aggregate commitments over the life
of all such Contracts in excess of $50,000 individually or $200,000 in the
aggregate on a monthly basis, or (ii) requiring the Company to (x) provide a
minimum amount of products or services with aggregate commitments over the life
of such Contract in excess of $150,000, or (y) provide products or services at a
later date at a fixed price (except as set forth on Schedule 4.1(d)(ii)(y)
hereof);
(e) Declare, set aside or pay any dividends on or make any other
distributions (whether in cash, stock, equity securities or property) in respect
of any capital stock or split, combine or reclassify any capital stock or issue
or authorize the issuance of any other securities in respect of, in lieu of or
in substitution for any capital stock;
(f) Purchase, redeem or otherwise acquire, directly or indirectly,
any shares of capital stock of the Company or its subsidiaries, except
repurchases of unvested shares at or below cost in connection with the
termination of the employment relationship with any employee pursuant to stock
option or purchase agreements in effect on the date of this Agreement, provided
that no such repurchase shall be permitted in the event the per share repurchase
price is greater than the Merger Consideration;
(g) Issue, deliver, sell, authorize or designate (including by
certificate of designation) or pledge or otherwise encumber, or propose any of
the foregoing with respect to any shares of capital stock or any securities
convertible into shares of capital stock, or subscriptions, rights, warrants or
options to acquire any shares of capital stock or any securities convertible
into shares of capital stock, or enter into other agreements or commitments of
any character obligating it to issue any such shares or convertible securities,
other than the issuance, delivery and/or sale of (i) shares of Company Common
Stock pursuant to the exercise of Company Stock Options or Company Warrants
outstanding as of the date of this Agreement, or (ii) shares of Company Common
Stock issuable to participants in the ESPP consistent with the terms thereof and
subject to Section 1.6(e) hereof;
(h) Cause, permit or submit to a vote of the Company's stockholders
any amendments to the Company Charter Documents (or similar governing
instruments of any of its subsidiaries);
(i) Acquire or agree to acquire by merging or consolidating with, or
by purchasing any equity interest in or a portion of the assets of, or by any
other manner, any business or any corporation, partnership, association or other
business organization or division
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thereof, or otherwise acquire or agree to enter into any joint ventures,
strategic partnerships or similar alliances;
(j) Sell, lease, license, encumber or otherwise dispose of any
properties or assets except sales of inventory in the ordinary course of
business consistent with past practice, and except for the sale, lease,
licensing, encumbering or disposition (other than through licensing unless
permitted by Section 4.1(c)) of property or assets not in excess of $15,000
individually or $50,000 in the aggregate, provided such property or assets are
not material, individually or in the aggregate, to the business of the Company
and its subsidiaries;
(k) Grant any loans to employees, officers, directors or other third
parties, incur any indebtedness for borrowed money or guarantee any such
indebtedness of another person, issue or sell any debt securities or options,
warrants, calls or other rights to acquire any debt securities of the Company,
enter into any "keep well" or other agreement to maintain any financial
statement condition or enter into any arrangement having the economic effect of
any of the foregoing other than in connection with the financing of ordinary
course trade payables consistent with past practice;
(l) Adopt or amend any Plan or any employee stock purchase or
employee stock option plan; or enter into any employment contract or collective
bargaining agreement; pay any special bonus or special remuneration to any
director or employee (cash, equity or otherwise); or increase the salaries or
wage rates or fringe benefits (including rights to severance or indemnification)
of its directors, officers, employees or consultants (other than the bonus
amounts to be paid by the Company to employees who are not executive officers or
directors, as set forth in Section 4.1(l) of the Company Schedule);
(m) (i) Pay, discharge, settle or satisfy any Liabilities, other
than the payment, discharge, settlement or satisfaction, in the ordinary course
of business consistent with past practice or in accordance with their terms of
Liabilities recognized or disclosed in the most recent financial statements (or
the notes thereto) of the Company included in the Company SEC Reports or
incurred since the date of the Interim Balance Sheet in the ordinary course of
business consistent with past practices, or (ii) waive the benefits of, agree to
modify in any manner, terminate, release any person from or knowingly fail to
enforce the confidentiality or nondisclosure provisions of any Contract to which
the Company or any of its subsidiaries is a party or of which the Company or any
of its subsidiaries is a beneficiary;
(n) Enter into (unless otherwise permitted by this Section 4.1),
modify or amend (unless such amendment, if it were a new Contract, would be
otherwise permitted by this Section 4.1), or terminate any Contract of a nature
required to be listed as a Company Contract in Section 2.19 of the Company
Schedule or waive, delay the exercise of, release or assign any material rights
or claims thereunder;
(o) Except as required by GAAP, revalue any of its assets (including
without limitation writing down the value of inventory or writing off notes or
accounts receivable other than in the ordinary course of business consistent
with past practice) or make any change in accounting methods, principles or
practices;
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(p) Enter into, renew or materially modify any Contracts relating to
the distribution, sale, license or marketing by third parties of the products or
services of the Company or its subsidiaries or products or services licensed by
the Company or its subsidiaries, other than (i) renewals of existing Contracts
on a nonexclusive basis or modifications in connection with renewals of existing
Contracts on a nonexclusive basis, or (ii) new nonexclusive Contracts, either of
which can be terminated without penalty upon notice of ninety (90) calendar days
or less, and are otherwise in compliance with this Section 4.1;
(q) Make any Tax election or accounting method change (except as
required by GAAP) that, individually or in the aggregate, is reasonably likely
to adversely affect in any material respect the Tax liability or Tax attributes
of the Company or any of its subsidiaries, settle or compromise any material Tax
liability or consent to any extension or waiver of any limitation period with
respect to Taxes;
(r) Other than taking any action permitted by Section 5.4(c) hereof,
engage in any action with the intent to, directly or indirectly, adversely
impact or materially delay the consummation of the Transactions;
(s) (i) Hire any employee (except that in the event an employee is
terminated pursuant to clause (ii) hereof or voluntarily terminates (including
by death or disability) his or her employment, a replacement may be engaged as a
contractor to temporarily fill such terminated employee's position, provided (x)
such replacement may not be hired as an employee of the Company, (y) any
consideration payable for services rendered by such replacement is of a kind and
amount permitted by this Section 4.1, and (z) any such agreement with any such
replacement shall be terminable, at the sole option of Parent, without penalty
at the Effective Time), or (ii) terminate any employee (except for termination
for cause), or take any action that would allow any employee to claim a
constructive termination or termination for "good reason";
(t) Make any individual or series of related payments outside of the
ordinary course of business (including payments to legal, accounting or other
professional service advisors) in excess of $200,000 in the aggregate;
(u) Commence or settle (other then any settlements with all
plaintiffs and all insurance companies (but specifically excluding any
settlements with any investment banks or other underwriters of securities) that
are covered entirely by the Company's insurance carrier and that do not involve
deductible or retention payments of greater than $350,000; provided, that Parent
shall have had an opportunity to review and approve any such settlements, which
approval shall not be unreasonably withheld or delayed) any litigation (whether
or not commenced prior to the date of this Agreement) (other than any litigation
to enforce any of its rights under the Agreement);
(v) Agree in writing or otherwise to take any of the actions
described in Section 4.1(a) through 4.1(u) above.
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ARTICLE V
ADDITIONAL AGREEMENTS
5.1 Proxy Statement; Board Recommendation.
(a) As promptly as practicable after the execution of this
Agreement, the Company shall prepare and file the Proxy Statement with the SEC
under the Exchange Act. Parent shall provide promptly to the Company such
information concerning itself as, in the reasonable judgment of Parent or its
counsel, may be required or appropriate for inclusion in the Proxy Statement, or
in any amendments or supplements thereto. The Company shall respond to any
comments of the SEC, and shall use its best efforts to have Proxy Statement
cleared by the SEC as promptly as practicable after such filing, and the Company
shall cause the Proxy Statement to be mailed to its stockholders at the earliest
practicable time after the Proxy Statement is cleared by the SEC. The Company
shall notify Parent promptly upon the receipt of any comments from the SEC or
its staff and of any request by the SEC or its staff for amendments or
supplements to the Proxy Statement or for additional information and shall
supply Parent with copies of all correspondence between the Company or any of
its representatives, on the one hand, and the SEC or its staff, on the other
hand, with respect to the Proxy Statement or the Merger. The Company shall give
Parent and its counsel the opportunity to review the Proxy Statement, including
all amendments and supplements thereto, prior to its being filed with the SEC
and shall give Parent and its counsel the opportunity to review all responses to
requests for additional information and replies to comments prior to their being
filed with, or sent to, the SEC. The Company shall cause all documents that it
is responsible for filing with the SEC under this Section 5.1(a) to comply in
all material respects with all applicable requirements of law and the rules and
regulations promulgated thereunder. Whenever any event occurs which is required
to be set forth in an amendment or supplement to the Proxy Statement, the
Company shall promptly inform Parent of such occurrence and file with the SEC or
its staff and/or mail to stockholders of the Company, such amendment or
supplement.
(b) The Proxy Statement shall include the unanimous recommendation
of the Board in favor of adoption and approval of this Agreement and approval of
the Merger (subject to the terms of Section 5.4(c) hereof).
5.2 Meeting of Company Stockholders.
(a) Promptly after the date hereof, the Company shall take all
action necessary in accordance with Delaware Law and the Company Charter
Documents to convene an annual or special meeting of its stockholders for the
purpose of considering and taking action on this Agreement and the Merger (the
"STOCKHOLDERS' MEETING"), to be held as promptly as practicable, and in any
event (to the extent permissible under applicable law) within thirty (30)
calendar days after the Proxy Statement is cleared by the SEC. Subject to the
terms of Section 5.4(c) hereof, the Company shall use its commercially
reasonable efforts to solicit from its stockholders proxies in favor of the
adoption and approval of this Agreement and the approval of the Merger and shall
take all other action necessary or advisable to secure the vote or consent of
its stockholders required by the rules of the Nasdaq or Delaware Law to obtain
such approvals. Notwithstanding anything to the contrary contained in this
Agreement, the Company may adjourn or postpone the
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Stockholders' Meeting to the extent necessary to ensure that any necessary
supplement or amendment to the Proxy Statement is provided to the Company's
stockholders in advance of a vote on the Merger and this Agreement or, if as of
the time for which the Stockholders' Meeting is originally scheduled (as set
forth in the Proxy Statement) there are insufficient shares of Company Common
Stock represented (either in person or by proxy) to constitute a quorum
necessary to conduct the business of the Stockholders' Meeting. The Company
shall ensure that the Stockholders' Meeting is called, noticed, convened, held
and conducted, and that all proxies solicited by the Company in connection with
the Stockholders' Meeting are solicited, in compliance with Delaware Law, the
Company Charter Documents, the rules of the Nasdaq and all other applicable
legal requirements. The Company's obligation to call, give notice of, convene
and hold the Stockholders' Meeting in accordance with this Section 5.2(a) shall
not be limited to or otherwise affected by the commencement, disclosure,
announcement or submission to the Company of any Acquisition Proposal.
(b) Subject to the terms of Section 5.4(c) hereof: (i) the Board
shall unanimously recommend that the Company's stockholders vote in favor of and
adopt and approve this Agreement and approve the Merger at the Stockholders'
Meeting; (ii) the Proxy Statement shall include (x) the fairness opinion
referred to in Section 2.21 hereof and (y) a statement to the effect that the
Board has unanimously recommended that the Company's stockholders vote in favor
of and adopt and approve this Agreement and approve the Merger at the
Stockholders' Meeting; and (iii) neither the Board nor any committee thereof
shall withdraw, amend, change or modify, or propose or resolve to withdraw,
amend, change or modify in a manner adverse to Parent, the unanimous
recommendation of the Board that the Company's stockholders vote in favor of and
adopt and approve this Agreement and approve the Merger. For purposes of this
Agreement, said recommendation of the Board of Directors shall be deemed to have
been modified in a manner adverse to Parent if said recommendation shall no
longer be unanimous.
5.3 Confidentiality; Access to Information.
(a) The parties acknowledge that Parent and the Company have
previously executed a Corporate Development Group Mutual Nondisclosure
Agreement, dated as of April 30, 2002, as amended on October 30, 2002 (as
amended, the "CONFIDENTIALITY AGREEMENT"), which Confidentiality Agreement will
continue in full force and effect in accordance with its terms.
(b) The Company shall afford Parent and its accountants, counsel,
advisors and other representatives reasonable access during normal business
hours, upon reasonable notice, to the properties, books, records and personnel
of the Company during the period prior to the Effective Time to obtain all
information concerning the business, including the status of product development
efforts, properties, financial positions, results of operations and personnel of
the Company, as Parent may reasonably request.
(c) No information or knowledge obtained by Parent in any
investigation pursuant to this Section 5.3 will affect or be deemed to modify
any representation or warranty contained herein or the conditions to the
obligations of the parties to consummate the Transactions.
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5.4 No Solicitation.
(a) From the date hereof until the earlier of the approval and
adoption of this Agreement and approval of the Merger by the Company's
stockholders or the termination of this Agreement, the Company and its
subsidiaries shall not, nor will they authorize or permit any of their
respective officers, directors, affiliates or employees or any investment
banker, attorney, accountant, or other advisor or representative retained by any
of them ("REPRESENTATIVES") to, directly or indirectly: (i) solicit, initiate,
knowingly or intentionally encourage, facilitate or induce the making,
submission or announcement of any Acquisition Proposal (as defined in Section
5.4(d) hereof); (ii) participate in any negotiations or discussions regarding,
or furnish to any person any non-public information with respect to, or take any
other action to facilitate any inquiries or the making of any proposal that
constitutes or may reasonably be expected to lead to, any Acquisition Proposal;
(iii) subject to the terms of Section 5.4(c) hereof, approve, endorse or
recommend any Acquisition Proposal; or (iv) enter into any letter of intent or
similar document or any Contract contemplating or otherwise relating to any
Acquisition Transaction (as defined in Section 5.4(d) hereof); provided,
however, that the terms of this Section 5.4 shall not prohibit the Company from
furnishing nonpublic information regarding the Company and its subsidiaries to,
entering into a confidentiality agreement with or entering into negotiations or
discussions with, any person or group in response to a Acquisition Proposal
submitted by such person or group (and not withdrawn) if: (1) neither the
Company nor its subsidiaries nor any of their respective Representatives shall
have violated any of the restrictions set forth in this Section 5.4 in
connection with such Acquisition Proposal; (2) the Board concludes in good
faith, after consultation with its outside legal counsel, that such action is
required in order for the Board to comply with its fiduciary duties to the
Company's stockholders under applicable law; (3) (x) at least two (2) business
days prior to furnishing any such nonpublic information to, or entering into
negotiations or discussions with, such person or group, the Company gives Parent
written notice of the identity of such person or group and of the Company's
intention to furnish nonpublic information to, or enter into negotiations or
discussions with, such person or group, and (y) the Company receives from such
person or group an executed confidentiality agreement containing limitations on
the use and disclosure of all nonpublic written and oral information furnished
to such person or group by or on behalf of the Company which are no less
favorable to the Company than the Confidentiality Agreement; and (4)
contemporaneously with furnishing any such nonpublic information to such person
or group, the Company furnishes such nonpublic information to Parent (to the
extent such nonpublic information has not been previously furnished by the
Company to Parent). In addition to the foregoing, the Company shall (i) provide
Parent with at least forty-eight (48) hours prior written notice (or such lesser
prior notice as provided to the members of the Board, but in no event less than
eight hours) of a meeting of the Board at which the Board is reasonably expected
to consider a Superior Offer and (ii) provide Parent with at least two (2)
business days prior written notice of a meeting of the Board at which the Board
is reasonably expected to recommend a Superior Offer to its stockholders and
together with such notice a copy of any definitive documentation relating to
such Superior Offer and such other documentation reflecting the terms of the
Superior Offer as being considered by the Board. The terms of this Section 5.4
shall not prohibit the Company from taking any action necessary in order to
comply with Rule 14d-9 or Rule 14e-2 promulgated under the Exchange Act,
provided that neither the Company nor its Board shall, except as permitted by
Section 5.4(c), propose to
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withdraw, amend, change or modify its unanimous recommendation of this Agreement
and the Merger, or to approve or recommend, or propose to publicly approve or
recommend, an Acquisition Proposal. The Company and its subsidiaries shall
immediately cease any and all existing activities, negotiations or discussions
with any parties conducted heretofore with respect to any Acquisition Proposal.
Without limiting the foregoing, it is understood that any violation of the
restrictions set forth in the preceding two sentences by any officer or director
of the Company or any of its subsidiaries or any Representative of the Company
or any of its subsidiaries shall be deemed to be a breach of this Section 5.4 by
the Company.
(b) In addition to the obligations of the Company set forth in
Section 5.4(a) hereof, the Company as promptly as practicable shall advise
Parent orally (within one business day) and in writing (within two business
days) of any request received by the Company for nonpublic information which the
Company reasonably believes would lead to an Acquisition Proposal or of any
Acquisition Proposal, or any inquiry received by the Company with respect to or
which the Company reasonably believes would lead to any Acquisition Proposal,
the material terms and conditions of such request, Acquisition Proposal or
inquiry, and the identity of the person or group making any such request,
Acquisition Proposal or inquiry. The Company shall keep Parent informed in all
material respects of the status and details (including material amendments or
proposed amendments) of any such request, Acquisition Proposal or inquiry.
(c) Nothing in this Agreement shall prevent the Board from
withdrawing, amending, changing or modifying its unanimous recommendation in
favor of the Transactions at any time prior to the approval and adoption of this
Agreement and approval of the Merger by the Company's stockholders, but the
Board may do so only to terminate this Agreement in accordance with Section
7.1(e) hereof and only if (i) a Superior Offer (as defined in Section 5.4(d)
hereof) is made to the Company and is not withdrawn, and, concurrent with the
termination of this Agreement pursuant to Section 7.1(e) hereof, the Board shall
cause the Company to enter into a definitive agreement with respect to such
Superior Proposal, (ii) neither the Company nor any of its subsidiaries nor any
of their respective Representatives shall have violated any of the restrictions
set forth in Section 5.4 hereof in connection with such Superior Offer, and
(iii) the Board concludes in good faith, after consultation with its outside
counsel, that in light of such Superior Offer the withdrawal, amendment, change
or modification of such recommendation is required in order for the Board to
comply with its fiduciary duties to the Company's stockholders under applicable
law.
(d) For purposes of this Agreement, (i) "ACQUISITION PROPOSAL" shall
mean any offer or proposal (other than an offer or proposal by Parent or Merger
Sub) relating to any Acquisition Transaction. For the purposes of this
Agreement, (ii) "ACQUISITION TRANSACTION" shall mean any transaction or series
of related transactions other than the Transactions involving: (A) any
acquisition or purchase from the Company by any person or "group" (as defined
under Section 13(d) of the Exchange Act and the rules and regulations
thereunder) of more than a fifteen percent (15%) interest in the total
outstanding voting securities of the Company or any of its subsidiaries or any
tender offer or exchange offer that if consummated would result in any person or
"group" (as defined under Section 13(d) of the Exchange Act and the rules and
regulations thereunder) beneficially owning fifteen percent (15%) or more of the
total outstanding voting securities of the Company or any of its subsidiaries or
any merger,
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consolidation, business combination or similar transaction involving the Company
pursuant to which the stockholders of the Company immediately preceding such
transaction hold less than eighty five percent (85%) of the equity interests in
the surviving or resulting entity of such transaction; (B) any sale, lease,
exchange, transfer, license (other than in the ordinary course of business and
consistent with past practice), acquisition or disposition of more than fifteen
percent (15%) of the assets of the Company; or (C) any liquidation or
dissolution of the Company, and (iii) "SUPERIOR OFFER" shall mean an
unsolicited, bona fide written offer made by a third party to consummate any
Acquisition Proposal on terms that the Board determines, in its reasonable
judgment (after consultation with a reputable financial advisor) to be more
favorable to the Company stockholders from a financial point of view than the
terms of the Transactions; provided, however, that any such offer shall not be
deemed to be a "Superior Offer" if any financing required to consummate the
transaction contemplated by such offer is not committed and is not likely in the
reasonable judgment of the Board to be obtained by such third party on a timely
basis.
5.5 Public Disclosure.
(a) Parent and the Company shall consult with each other, and to the
extent practicable, agree, before issuing any press release or otherwise making
any public statement with respect to the Transactions, this Agreement or, except
for as necessary to effect the Company's rights under Section 5.4(c) hereof, an
Acquisition Proposal, and shall not issue any such press release or make any
such public statement prior to such consultation, except as may be required by
law or any listing agreement with a national securities exchange or Nasdaq, in
which case reasonable efforts to consult with the other party will be made prior
to such release or public statement. The parties have agreed to the text of the
joint press release announcing the signing of this Agreement.
(b) Company shall consult with Parent before issuing any press
release or otherwise making any public statement with respect to the Company's
earnings or results of operations, and shall not issue any such press release or
make any such public statement prior to such consultation.
5.6 Reasonable Efforts; Notification.
(a) Other than taking any action permitted by Section 5.4(c) hereof,
upon the terms and subject to the conditions set forth in this Agreement each of
the parties agrees to use all commercially reasonable efforts to take, or cause
to be taken, all actions, and to do, or cause to be done, and to assist and
cooperate with the other parties in doing, all things necessary, proper or
advisable to consummate and make effective, in the most expeditious manner
practicable, the Transactions, including using reasonable efforts to accomplish
the following: (i) the taking of all reasonable acts necessary to cause the
conditions precedent set forth in Article VI to be satisfied, (ii) the obtaining
of all necessary actions or nonactions, waivers, consents, approvals, orders and
authorizations from Governmental Entities and the making of all necessary
registrations, declarations and filings (including registrations, declarations
and filings with Governmental Entities, if any) and the taking of all reasonable
steps as may be necessary to avoid any suit, claim, action, investigation or
proceeding by any Governmental Entity, (iii) the obtaining of all
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consents, approvals or waivers from third parties required as a result of the
transactions contemplated in this Agreement, (iv) the defending of any suits,
claims, actions, investigations or proceedings, whether judicial or
administrative, challenging this Agreement or the consummation of the
transactions contemplated hereby, including seeking to have any stay or
temporary restraining order entered by any court or other Governmental Entity
vacated or reversed and (v) the execution or delivery of any additional
instruments reasonably necessary to consummate the Transactions, and to fully
carry out the purposes of, this Agreement. In connection with and without
limiting the foregoing, the Company and its Board shall, if any state takeover
statute or similar statute or regulation is or becomes applicable to the
Transactions or this Agreement, use all commercially reasonable efforts to
ensure that the Transactions may be consummated as promptly as practicable on
the terms contemplated by this Agreement and otherwise to minimize the effect of
such statute or regulation on the Transactions and this Agreement.
Notwithstanding anything herein to the contrary, nothing in this Agreement shall
be deemed to require Parent or any subsidiary or affiliate of Parent to agree to
any divestiture by itself or the Company or any of their respective affiliates
of shares of capital stock or of any business, assets or property, or the
imposition of any material limitation on the ability of any of them to conduct
their business or to own or exercise control of such assets, properties and
stock.
(b) The Company shall give prompt notice to Parent upon becoming
aware that any representation or warranty made by it contained in this Agreement
has become untrue or inaccurate in any material respect, or of any failure of
the Company to comply with or satisfy in any material respect any covenant,
condition or agreement to be complied with or satisfied by it under this
Agreement, in each case, such that the conditions set forth in Article VI hereof
would not be satisfied; provided, however, that no such notification shall
affect the representations, warranties, covenants or agreements of the parties
or the conditions to the obligations of the parties under this Agreement.
5.7 Third Party Consents. As soon as practicable following the date
hereof, Company shall use its commercially reasonable efforts to obtain any
consents, waivers and approvals under any of its or its subsidiaries' respective
Contracts required to be obtained in connection with the consummation of the
Transactions, including those set forth on Section 5.7 of the Company Schedule.
5.8 Indemnification.
(a) From and after the Effective Time, Parent shall, and shall cause
the Surviving Corporation to fulfill and honor in all respects the obligations
of the Company pursuant to any indemnification agreements between the Company
and its directors and officers (the "INDEMNIFIED PARTIES") in effect on the date
hereof and listed on the Company Schedule, and any indemnification provisions
under the Company Charter Documents as in effect on the date hereof. The
Certificate of Incorporation and Bylaws of the Surviving Corporation will
contain provisions with respect to exculpation and indemnification that are at
least as favorable to the Indemnified Parties as those contained in the Company
Charter Documents as in effect on the date hereof, which provisions will not be
amended, repealed or otherwise modified for a period of six (6) years from the
Effective Time in any manner that would adversely affect the rights
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thereunder of individuals who, immediately prior to the Effective Time, were
directors, officers, employees or agents of the Company, unless such
modification is required by applicable law.
(b) At any time prior to the Closing, Company may purchase, for a
price (which shall in no event exceed the Cap Amount regardless of any amounts
credited against premium payments previously paid by the Company) not to exceed
the amount set forth on Section 5.8(b) of the Company Schedule (the "CAP
AMOUNT"), directors' and officers' liability tail coverage (for a period of six
(6) years following the Effective Time), 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, and covering all periods prior to the Effective Time
(the "TAIL COVERAGE"). Following the Closing, in the event Company shall not
have purchased the Tail Coverage, Parent shall (or shall cause the Surviving
Corporation to) purchase the Tail Coverage, provided that in no event shall
Parent or the Surviving Corporation be required to expend in the aggregate in
connection with the purchase of such Tail Coverage an amount in excess of the
Cap Amount and, in the event a comparable level of directors' and officers'
liability Tail Coverage is not available for the Cap Amount, Parent (or the
Surviving Corporation, as the case may be) shall only be obligated to purchase
such Tail Coverage as may be purchased for the Cap Amount.
(c) This Section 5.8 is intended for the irrevocable benefit of, and
to grant third party rights to, the Indemnified Parties and shall be binding on
all successors and assigns of Parent, the Company and the Surviving Corporation.
Each of the Indemnified Parties shall be entitled to enforce the covenants
contained in this Section 5.8.
5.9 Regulatory Filings; Reasonable Efforts. As soon as may be reasonably
practicable, the Company and Parent each shall file any appropriate pre-merger
notifications under the competition laws or regulations of any foreign
jurisdiction, as reasonably agreed by the parties to apply. The Company and
Parent each shall promptly (a) supply the other with any information which may
be required in order to effectuate such filings and (b) supply any additional
information, which reasonably may be required by the competition or merger
control authorities of any other jurisdiction and which the parties may
reasonably deem appropriate; provided, however, that Parent shall not be
required to agree to any divestiture by Parent or the Company or any of Parent's
subsidiaries or affiliates of shares of capital stock or of any business, assets
or property of Parent or its subsidiaries or affiliates or of the Company, its
affiliates, or the imposition of any material limitation on the ability of any
of them to conduct their businesses or to own or exercise control of such
assets, properties and stock.
5.10 Termination of Certain Benefit Plans. Effective no later than the day
immediately preceding the Effective Time, the Company and its Affiliates, as
applicable, shall each terminate any and all group severance, separation or
salary continuation plans, programs or arrangements (excluding, in each case,
the agreements listed on Section 5.10 of the Company Schedule) and any and all
plans intended to include a Code Section 401(k) arrangement (unless Parent
provides written notice to the Company that such 401(k) plans shall not be
terminated) (collectively, for purposes of this Section 5.10 "COMPANY EMPLOYEE
PLANS"). Unless Parent provides such written notice to the Company, no later
than five business days prior to the Effective Time, the Company shall provide
Parent with evidence that such Company Employee Plan(s) have been
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terminated (effective no later than the day immediately preceding the Effective
Time) pursuant to resolutions of the Board. The form and substance of such
resolutions shall be subject to review and approval of Parent. The Company also
shall take such other actions in furtherance of terminating such Company
Employee Plan(s) as Parent may reasonably require.
5.11 Employee Benefits. As soon as practicable after the Effective Time,
Parent shall provide the employees of the Company and its subsidiaries who
remain employed after the Effective Time (each, a "TRANSFERRED COMPANY EMPLOYEE"
and collectively, the "TRANSFERRED COMPANY EMPLOYEES") with substantially
similar types and levels of employee benefits as those provided to similarly
situated employees of Parent. Parent shall treat and cause its applicable
benefit plans (with the exception of Parent's sabbatical program) to treat the
service of Transferred Company Employees with the Company or any subsidiary of
the Company prior to the Effective Time as service rendered to Parent or any
affiliate of Parent for purposes of eligibility to participate and vesting,
including applicability of minimum waiting periods for participation, but not
for benefit accrual. Parent shall use commercially reasonable efforts to provide
that no Transferred Company Employee, or any of his or her eligible dependents,
who, at the Effective Time, are participating in the Company group health plan
shall be excluded from the Parent's group plan, or limited in coverage
thereunder, by reason of any waiting period restriction or pre-existing
condition limitation; provided that such Transferred Employees are based in the
United States and meet applicable actively at work requirements as of the
Effective Time. Notwithstanding the foregoing, Parent shall not be required to
provide any coverage, benefits, or credit inconsistent with the terms of Parent
benefit plans.
5.12 FIRPTA Certificate. On or prior to the Effective Time, the Company
shall deliver to Parent a properly executed statement in a form reasonably
acceptable to Parent for purposes of satisfying Parent's obligations under
Treasury Regulation Section 1.1445-2(c)(3).
5.13 Form S-8 Filing. Prior to January 2, 2003, the Company shall have
filed with the SEC an effective registration statement on Form S-8 with respect
to at least 2,960,971 additional shares of the Company's common stock issuable
upon exercise of options granted under the Company's 2000 Stock Incentive Plan.
ARTICLE VI
CONDITIONS TO THE MERGER
6.1 Conditions to Obligations of Each Party to Effect the Merger. The
respective obligations of each party to this Agreement to effect the Merger
shall be subject to the satisfaction at or prior to the Closing Date of the
following conditions:
(a) Company Stockholder Approval. This Agreement shall have been
duly approved and adopted, and the Merger shall have been duly approved, by the
requisite vote under applicable law, by the stockholders of the Company.
(b) No Order. No Governmental Entity shall have enacted, issued,
promulgated, enforced or entered any statute, rule, regulation, executive order,
decree, injunction or other order (whether temporary, preliminary or permanent)
which is in effect and which has the effect of
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making the Merger illegal or otherwise prohibiting consummation of the Merger.
All material foreign antitrust approvals required to be obtained prior to the
Effective Time in connection with the Merger shall have been obtained.
(c) Proxy Statement. No order suspending the use of the Proxy
Statement or any part thereof shall have been issued and no proceeding for that
purpose shall have been initiated or threatened in writing by the SEC.
6.2 Additional Conditions to Obligations of Company. The obligation of the
Company to consummate and effect the Merger shall be subject to the satisfaction
at or prior to the Closing Date of each of the following conditions, any of
which may be waived, in writing, exclusively by the Company:
(a) Representations and Warranties. Each representation and warranty
of Parent and Merger Sub contained in this Agreement (i) shall have been true
and correct as of the date of this Agreement and (ii) shall be true and correct
on and as of the Closing Date with the same force and effect as if made on the
Closing Date except (A) in each case, or in the aggregate, as does not
constitute a Material Adverse Effect on Parent and Merger Sub, (B) for changes
contemplated by this Agreement and (C) for those representations and warranties
which address matters only as of a particular date (which representations shall
have been true and correct (subject to the qualifications as set forth in the
preceding clause (A)) as of such particular date) (it being understood that, for
purposes of determining the accuracy of such representations and warranties, all
"Material Adverse Effect" qualifications and other qualifications based on the
word "material" or similar phrases contained in such representations and
warranties shall be disregarded. The Company shall have received a certificate
with respect to the foregoing signed on behalf of Parent by an authorized
officer of Parent.
(b) Agreements and Covenants. Parent and Merger Sub shall have
performed or complied in all material respects with all agreements and covenants
required by this Agreement to be performed or complied with by them on or prior
to the Closing Date, and the Company shall have received a certificate to such
effect signed on behalf of Parent by an authorized officer of Parent.
6.3 Additional Conditions to the Obligations of Parent and Merger Sub. The
obligations of Parent and Merger Sub to consummate and effect the Merger shall
be subject to the satisfaction at or prior to the Closing Date of each of the
following conditions, any of which may be waived, in writing, exclusively by
Parent:
(a) Representations and Warranties. Each representation and warranty
of the Company contained in this Agreement (i) shall have been true and correct
as of the date of this Agreement and (ii) shall be true and correct on and as of
the Closing Date with the same force and effect as if made on and as of the
Closing Date except (A) in each case, or in the aggregate, as does not
constitute a Material Adverse Effect on the Company; (provided, however, that
such Material Adverse Effect qualifier shall be inapplicable with respect to the
representations and warranties set forth in Sections 2.3, 2.7(d), 2.10 (other
than as a result of any litigation of the type described in clause (v) of
Section 8.3(c)), 2.17, 2.18, 2.21, 2.22, 2.23 and 2.24 hereof), (B) for
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changes contemplated by this Agreement and (C) for those representations and
warranties which address matters only as of a particular date (which
representations shall have been true and correct (subject to the qualifications
as set forth in the preceding clause (A)) as of such particular date) (it being
understood that, for purposes of determining the accuracy of such
representations and warranties, (i) all "Material Adverse Effect" qualifications
and other qualifications based on the word "material" or similar phrases
contained in such representations and warranties shall be disregarded (other
than with respect to the representations and warranties set forth in Sections
2.3, 2.7(d), 2.10 (other than with respect to any litigation of the type
described in clause (v) of Section 8.3(c)), 2.17, 2.18, 2.21, 2.22, 2.23 and
2.24 hereof), and (ii) any update of or modification to the Company Schedule
made or purported to have been made after the date of this Agreement shall be
disregarded). Parent shall have received a certificate with respect to the
foregoing signed on behalf of the Company by the Chief Executive Officer and the
Chief Financial Officer of the Company.
(b) Agreements and Covenants. The Company shall have performed or
complied in all material respects with all agreements and covenants required by
this Agreement to be performed or complied with by it at or prior to the Closing
Date, and Parent shall have received a certificate to such effect signed on
behalf of the Company by the Chief Executive Officer and the Chief Financial
Officer of the Company.
(c) Material Adverse Effect. No Material Adverse Effect with respect
to the Company and its subsidiaries shall have occurred since the date of this
Agreement, and Parent shall have received a certificate to such effect signed on
behalf of the Company by the Chief Executive Officer and the Chief Financial
Officer of the Company.
(d) Consents. The Company shall have obtained all consents, waivers
and approvals required in connection with the consummation of the transactions
contemplated hereby under the Contracts set forth on Section 5.7 of the Company
Schedule in form and substance reasonably satisfactory to Parent.
(e) Financial Results. The Company's total revenues for the quarter
ending December 31, 2002 (calculated in accordance with the accounting policies
described in the Company's Form 10-Q for the quarter ended September 30, 2002
(the "Q3 FORM 10-Q")) shall not be less than 90% of the total revenues targeted
for the quarter ending December 31, 2002 (as set forth on Section 6.3(e) of the
Company Schedule), and the Company's total costs and expenses for the quarter
ending December 31, 2002 (calculated in accordance with the accounting policies
described in the Q3 Form 10-Q) shall not be greater than 110% of the total costs
and expenses budgeted for the quarter ending December 31, 2002 (as set forth on
Section 6.3(e) of the Company Schedule). Parent shall have received a
certificate to such effect signed on behalf of the Company by the Chief
Executive Officer and the Chief Financial Officer of the Company, which
certificate shall include as an exhibit a copy of the Company's actual results
of operations, including revenues and total costs and expenses, for the period
ended December 31, 2002.
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ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
7.1 Termination. This Agreement may be terminated at any time prior to the
Effective Time, and the Merger may be abandoned, notwithstanding any requisite
approval and adoption of this Agreement and the Transactions by the stockholders
of the Company:
(a) by mutual written consent duly authorized by the Boards of
Directors of Parent and the Company;
(b) by either the Company or Parent if the Effective Time shall not
have occurred on or before April 19, 2003 (the "END DATE") for any reason;
provided, however, that the right to terminate this Agreement under this Section
7.1(b) shall not be available to any party whose action or failure to act has
been a principal cause of or resulted in the failure of the Effective Time to
occur on or before such date and such action or failure to act constitutes a
breach of this Agreement;
(c) by either the Company or Parent if a Governmental Entity shall
have issued an order, decree or ruling or taken any other action, in any case
having the effect of permanently restraining, enjoining or otherwise prohibiting
the Merger, which order, decree, ruling or other action is final and
nonappealable;
(d) by either the Company or Parent if the required approval of the
stockholders of the Company contemplated by this Agreement shall not have been
obtained by reason of the failure to obtain the required vote at the
Stockholders' Meeting or at any adjournment thereof; provided, however, that the
right to terminate this Agreement under this Section 7.1(d) shall not be
available to the Company where the failure to obtain the Company stockholder
approval shall have been caused by the action or failure to act of the Company
and such action or failure to act constitutes a breach by the Company of this
Agreement;
(e) by the Company, upon approval of the Board, if the Board
concludes in good faith that it is required to do so by its fiduciary duties to
the Company's stockholders under applicable law, after consultation with its
outside legal counsel in connection with entering into a definitive agreement
with respect to a Superior Proposal, upon three (3) days' prior written notice
to Parent, setting forth in reasonable detail the identity of the person making,
and the final terms and conditions of, such Superior Proposal; provided,
however, that any termination of this Agreement pursuant to this Section 7.1(e)
shall not be effective until the Company has made full payment of all amounts
provided under Section 7.3 hereof.
(f) by the Company, upon a breach of any representation, warranty,
covenant or agreement on the part of Parent set forth in this Agreement, or if
any representation or warranty of Parent shall have become untrue, in either
case such that the conditions set forth in Section 6.2(a) or Section 6.2(b)
hereof would not be satisfied as of the time of such breach or as of the time
such representation or warranty shall have become untrue, provided, however,
that if such inaccuracy in Parent's representations and warranties or breach by
Parent is curable by Parent through the exercise of its commercially reasonable
efforts, then the Company may not
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terminate this Agreement under this Section 7.1(f) for thirty (30) calendar days
after delivery of written notice from the Company to Parent of such breach,
provided Parent continues to exercise commercially reasonable efforts to cure
such breach (it being understood that the Company may not terminate this
Agreement pursuant to this Section 7.1(f) if it shall have materially breached
this Agreement or if such breach by Parent is cured during such thirty (30)
calendar day period);
(g) by Parent, upon a breach of any representation, warranty,
covenant or agreement on the part of the Company set forth in this Agreement, or
if any representation or warranty of the Company shall have become untrue, in
either case such that the conditions set forth in Section 6.3(a) or Section
6.3(b) hereof would not be satisfied as of the time of such breach or as of the
time such representation or warranty shall have become untrue, provided,
however, that if such inaccuracy in the Company's representations and warranties
or breach by the Company is curable by the Company through the exercise of its
commercially reasonable efforts, then Parent may not terminate this Agreement
under this Section 7.1(g) for thirty (30) calendar days after delivery of
written notice from Parent to the Company of such breach, provided the Company
continues to exercise commercially reasonable efforts to cure such breach (it
being understood that Parent may not terminate this Agreement pursuant to this
Section 7.1(g) if it shall have materially breached this Agreement or if such
breach by the Company is cured during such thirty (30) calendar day period);
(h) by Parent, upon a breach of the provisions of Section 5.4
hereof; or
(i) by Parent if a Triggering Event (as defined below) shall have
occurred. For the purposes of this Agreement, a "TRIGGERING EVENT" shall be
deemed to have occurred if: (i) the Board or any committee thereof shall for any
reason have withdrawn or withheld, or shall have amended, changed or modified in
a manner adverse to Parent its unanimous recommendation in favor of, the
adoption and approval of the Agreement or the approval of the Transactions; (ii)
the Company shall have failed to include in the Proxy Statement the unanimous
recommendation of the Board that holders of Shares vote in favor of and adopt
and approve this Agreement and approve the Merger; (iii) the Board or any
committee thereof shall have approved or recommended any Acquisition Proposal;
(iv) the Company shall have entered into any letter of intent or similar
document or any Contract accepting any Acquisition Proposal; or (v) a tender or
exchange offer relating to securities of the Company shall have been commenced
by a person unaffiliated with Parent and the Company shall not have sent to its
securityholders pursuant to Rule 14e-2 promulgated under the Securities Act,
within ten (10) business days after such tender or exchange offer is first
published sent or given, a statement disclosing that the Board recommends
rejection of such tender or exchange offer.
7.2 Notice of Termination; Effect of Termination. Any termination of this
Agreement under Section 7.1 hereof will be effective immediately upon (or, if
the termination is pursuant to Section 7.1(f) or Section 7.1(g) hereof and the
proviso therein is applicable, thirty (30) calendar days after) the delivery of
written notice of the terminating party to the other parties hereto. In the
event of the termination of this Agreement as provided in Section 7.1 hereof,
this Agreement shall be of no further force or effect and there shall be no
liability to any party hereunder in connection with the Agreement or the
Transactions, except (i) as set forth in Section 5.3(a) hereof, this Section
7.2, Section 7.3 hereof and Article VIII hereof, each of which shall survive
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the termination of this Agreement, and (ii) nothing herein shall relieve any
party from liability for any intentional or willful breach of, or any
intentional misrepresentation made in this Agreement. No termination of this
Agreement shall affect the obligations of the parties contained in the
Confidentiality Agreement, all of which obligations shall survive termination of
this Agreement in accordance with their terms.
7.3 Fees and Expenses.
(a) General. Except as set forth in this Section 7.3, all fees and
expenses incurred in connection with this Agreement and the Transactions shall
be paid by the party incurring such expenses whether or not the Merger is
consummated; provided, however, that Parent and Company shall share equally all
fees and expenses (other than the fees and expenses of attorneys and
accountants) incurred in connection with the printing and filing with the SEC
the Proxy Statement and any amendments or supplements thereto.
(b) Company Payments.
(i) The Company shall pay to Parent in immediately available
funds, within one (1) business day after demand by Parent, an amount equal to
$1,140,000.00 (the "TERMINATION FEE") if this Agreement is terminated by Parent
pursuant to Section 7.1(i) hereof.
(ii) The Company shall pay to Parent in immediately available
funds, concurrent with a termination by Company of this Agreement pursuant to
Section 7.1(e) hereof, an amount equal to the Termination Fee, and no such
termination of this Agreement shall be deemed effected until such time as the
Termination Fee shall have been paid to Parent.
(iii) The Company shall pay Parent in immediately available
funds, within one (1) business day after demand by Parent, an amount equal to
the Termination Fee, if this Agreement is terminated by Parent pursuant to
Section 7.1(b) or Section 7.1(d) hereof and any of the following shall occur:
(A) if following the date hereof and prior to the
termination of this Agreement, a third party has announced an Acquisition
Proposal and has not publicly definitively withdrawn such Acquisition Proposal
at least five (5) business days prior to the earlier to occur of the End Date or
the Stockholders' Meeting, as applicable, and within twelve (12) months
following the termination of this Agreement any Company Acquisition (as defined
below) is consummated; or
(B) if following the date hereof and prior to the
termination of this Agreement, a third party has announced an Acquisition
Proposal and has not publicly definitively withdrawn such Acquisition Proposal
at least five (5) business days prior to the earlier to occur of the End Date or
the Stockholders' Meeting, as applicable, and within twelve (12) months
following the termination of this Agreement the Company enters into a letter of
intent or similar document or any Contract providing for any Company
Acquisition.
(iv) The Company shall pay to Parent in immediately available
funds, within one (1) business day after demand by Parent, if this Agreement is
terminated by Parent
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pursuant to Section 7.1(g) based on a failure to satisfy the condition set forth
in Section 6.3(b) and, (x) prior to such termination, the Company has received,
or a third party has announced, an Acquisition Proposal and (y) such breach is
intended to or has the effect of facilitating such Acquisition Proposal or
benefiting the person making such acquisition proposal without similarly
benefiting Parent, an amount equal to the out-of-pocket fees and expenses
incurred by Parent and Merger Sub in connection with the negotiation, execution
and delivery of this Agreement and the transactions contemplated hereby
(including, without limitation, reasonable attorney fees and expenses,
reasonable advisor fees and expenses, travel costs, filing fees, printing,
mailing and solicitation costs and expenses) (the "EXPENSES"); provided, that
the Company shall not be required, pursuant to this Section 7.3(b)(iv), to pay
Parent for Expenses in excess of $500,000 in the aggregate. Notwithstanding the
foregoing, payment of such Expenses shall not constitute liquidated damages with
respect to any claim which Parent or Merger Sub would be entitled to assert
against the Company or its assets, or against any of the Company's directors,
officers, employees or stockholders, with respect to any such breach, and shall
not constitute the sole and exclusive remedy with respect to any such breach.
(v) The Company hereby acknowledges and agrees that the
agreements set forth in this Section 7.3(b) are an integral part of the
transactions contemplated by this Agreement, and that, without these agreements,
Parent would not enter into this Agreement. Accordingly, if the Company fails to
pay in a timely manner the amounts due pursuant to this Section 7.3(b) and, in
order to obtain such payment, Parent makes a claim that results in a judgment
against the Company for the amounts set forth in this Section 7.3(b), the
Company shall pay to Parent its reasonable costs and expenses (including
reasonable attorneys' fees and expenses) in connection with such suit, together
with interest on the amounts set forth in this Section 7.3(b) at the prime rate
of The Chase Manhattan Bank in effect on the date such payment was required to
be made; provided, however, that if Parent makes a claim for the amounts set
forth in this Section 7.3(b) that results in a judgment against Parent, Parent
shall pay to the Company its reasonable costs and expenses (including reasonable
attorneys' fees and expenses) in connection with such suit. Payment of the fees
described in this Section 7.3(b) shall not be in lieu of damages incurred in the
event of any intentional or willful breach of, or any intentional
misrepresentation made in, this Agreement.
(vi) Notwithstanding anything to the contrary set forth in
this Agreement, each of the parties hereto hereby expressly acknowledges and
hereby agrees that, with respect to any termination of this Agreement pursuant
to Section 7.1 hereof (other than a termination based upon the willful or
intentional breach of, or any intentional misrepresentation made in, this
Agreement) under circumstances in which the Termination Fee is payable pursuant
to this Section 7.3(b), payment of the Termination Fee shall constitute
liquidated damages with respect to any claim for damages or any other claim
which Parent or Merger Sub would otherwise be entitled to assert against the
Company or its assets, or against any of the Company's directors, officers,
employees or stockholders, with respect to any such termination of this
Agreement, and shall constitute the sole and exclusive remedy with respect to
any such termination of this Agreement. The parties hereto expressly acknowledge
and agree that, in light of the difficulty of accurately determining actual
damages with respect to the foregoing upon any such termination of this
Agreement pursuant to Section 7.1 hereof (other than a termination based upon
the willful or intentional breach of, or any intentional misrepresentation made
in,
-53-
this Agreement) under circumstances in which the Termination Fee is payable
pursuant to this Section 7.3(b), the right to such payment: (A) constitutes a
reasonable estimate of the damages that will be suffered by reason of any such
termination this Agreement and (B) shall be in full and complete satisfaction of
any and all damages arising as a result of any such termination of this
Agreement. Except for nonpayment of the Termination Fee pursuant to this Section
7.3(b) the parties hereto hereby agree that, upon any termination of this
Agreement pursuant to Section 7.1 hereof (other than a termination based upon
the willful or intentional breach of, or any intentional misrepresentation made
in, this Agreement) under circumstances in which the Termination Fee is payable
pursuant to this Section 7.3(b), in no event shall Parent or Merger Sub be
entitled to seek or to obtain any recovery or judgment against the Company or
any subsidiaries of the Company or any of their respective assets, or against
any of their respective directors, officers, employees or stockholders for any
such termination of this Agreement, and in no event shall Parent or Merger Sub
be entitled to seek or obtain any other damages of any kind, including, without
limitation, consequential, special, indirect or punitive damages, for any such
termination of this Agreement. Notwithstanding the foregoing, payment of the
Termination Fee pursuant to this Section 7.3(b) shall not constitute liquidated
damages with respect to any claim for damages or any other claim which Parent or
Merger Sub would be entitled to assert against the Company or its assets, or
against any of the Company's directors, officers, employees or stockholders,
with respect to any such termination of this Agreement based upon the willful or
intentional breach or intentional misrepresentation of any representations,
warranties or covenants of the Company in this Agreement, and shall not
constitute the sole and exclusive remedy with respect to any such termination of
this Agreement based upon the willful or intentional breach or misrepresentation
of any of the representations, warranties or covenants of the Company in this
Agreement.
(vii) For the purposes of this Agreement, "COMPANY
ACQUISITION" shall mean any of the following transactions (other than the
transactions contemplated by this Agreement): (i) a merger, consolidation,
business combination, recapitalization, liquidation, dissolution or similar
transaction involving the Company pursuant to which the stockholders of the
Company immediately preceding such transaction hold less than a majority of the
aggregate equity interests in the surviving or resulting entity of such
transaction, (ii) a sale or other disposition by the Company of assets
representing in excess of a majority of the aggregate fair market value of the
Company's business immediately prior to such sale or (iii) the acquisition by
any person or group (including by way of a tender offer or an exchange offer or
issuance by the Company), directly or indirectly, of beneficial ownership or a
right to acquire beneficial ownership of shares representing in excess of a
majority of the voting power of the then outstanding shares of capital stock of
the Company.
7.4 Amendment. Subject to applicable law, this Agreement may be amended by
the parties hereto at any time by execution of an instrument in writing signed
on behalf of each of Parent and the Company.
7.5 Extension; Waiver. At any time prior to the Effective Time, any party
hereto may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties made to such
party contained herein or in any document delivered pursuant hereto and
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(iii) waive compliance with any of the agreements or conditions for the benefit
of such party contained herein; provided that Section 6.1(a) may not be waived
without the express written consent of Parent. Any agreement on the part of a
party hereto to any such extension or waiver shall be valid only if set forth in
an instrument in writing signed on behalf of such party. Delay in exercising any
right under this Agreement shall not constitute a waiver of such right.
ARTICLE VIII
GENERAL PROVISIONS
8.1 Non-Survival of Representations and Warranties. The representations
and warranties of the Company, Parent and Merger Sub contained in this Agreement
shall terminate at the Effective Time, and only the covenants that by their
terms survive the Effective Time shall survive the Effective Time.
8.2 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally or by commercial
delivery service, or sent via telecopy (receipt confirmed) to the parties at the
following addresses or telecopy numbers (or at such other address or telecopy
numbers for a party as shall be specified by like notice):
(a) if to Parent or Merger Sub, to:
Sybase, Inc.
▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇, General Counsel
Telephone No.: ▇▇▇-▇▇▇-▇▇▇▇
Telecopy No.: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
Professional Corporation
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to the Company, to:
AvantGo, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇, General Counsel
Telephone No.: ▇▇▇-▇▇▇-▇▇▇▇
Telecopy No.: ▇▇▇-▇▇▇-▇▇▇▇
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with a copy to:
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
8.3 Interpretation; Knowledge.
(a) When a reference is made in this Agreement to Exhibits, such
reference shall be to an Exhibit to this Agreement unless otherwise indicated.
When a reference is made in this Agreement to Sections, such reference shall be
to a Section of this Agreement unless otherwise indicated. Unless otherwise
indicated the words "include," "includes" and "including" when used herein shall
be deemed in each case to be followed by the words "without limitation." The
table of contents and headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. When reference is made herein to "the business of" an entity,
such reference shall be deemed to include the business of all direct and
indirect subsidiaries of such entity. Reference to the subsidiaries of an entity
shall be deemed to include all direct and indirect subsidiaries of such entity.
(b) For purposes of this Agreement, the term "KNOWLEDGE" means with
respect to a party hereto, with respect to any matter in question, that any of
the executive officers or directors of such party has actual knowledge of such
matter; provided that with respect to any executive officer, such executive
officer shall have made reasonable due and diligent inquiry of the employees
responsible for such matter in question; and provided, further, that if any
executive officer does not make such reasonable due and diligent inquiry, then
such executive officer shall be deemed to have actual knowledge of those facts
or matters that such executive officer would have had, had he or she made such
inquiry.
(c) For purposes of this Agreement, the term "MATERIAL ADVERSE
EFFECT" when used (x) in connection with the Company shall mean the requirement
to restate and/or the restatement of any Company SEC Report, and (y) when used
in connection with any entity means any change, event, violation, inaccuracy,
circumstance or effect, individually or when aggregated with other changes,
events, violations, inaccuracies, circumstances or effects, that is materially
adverse to the business, assets (including intangible assets), capitalization,
financial condition or results of operations of such entity and its subsidiaries
taken as a whole, or the ability of such entity to perform its obligations under
this Agreement and timely consummate the Transactions; provided, however, none
of the following shall be deemed in themselves, either alone or in combination,
to constitute, and none of the following shall be taken into account in
determining whether there has been or will be, a Material Adverse Effect on the
Company: (i) any change in the market price or trading volume of the Shares
after the date hereof; (ii) any failure by the Company to meet internal
projections or forecasts or published revenue or earnings predictions for any
period ending (or for which revenues or earnings are released) on or after the
date of this
-56-
Agreement; (iii) any adverse change, event, violation, inaccuracy, circumstance
or effect that results from the loss, diminution or disruption of the Company's
existing or prospective customer, distributor or supplier relationships that the
Company successfully bears the burden of proving directly results from or is
directly attributable to the public announcement or pendency of the Merger; (iv)
any adverse change, event, violation, inaccuracy, circumstance or effect that
the Company successfully bears the burden of proving results from or is
attributable to conditions affecting the industries in which the Company
participates, the United States economy as a whole, or foreign economies in any
locations where the Company or any of its subsidiaries has material operations
or sales (which changes in each case do not disproportionately affect the
Company or its subsidiaries, as the case may be); (v) the institution of
litigation against the Company or any of its officers or directors alleging
breach of their fiduciary duties in connection with the Company's entry into
this Agreement; or (vi) any adverse change, event, violation, inaccuracy,
circumstance or effect resulting from Company's compliance with the terms of, or
the taking of any action required by, this Agreement.
(d) For purposes of this Agreement, the term "PERSON" shall mean any
individual, corporation (including any non-profit corporation), general
partnership, limited partnership, limited liability partnership, joint venture,
estate, trust, company (including any limited liability company or joint stock
company), firm or other enterprise, association, organization, entity or
Governmental Entity.
8.4 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party, it being understood that all
parties need not sign the same counterpart.
8.5 Entire Agreement; Third Party Beneficiaries. This Agreement and the
documents and instruments and other agreements among the parties hereto as
contemplated by or referred to herein, including the Company Schedule, (a)
constitute the entire agreement among the parties with respect to the subject
matter hereof and supersede all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter hereof,
it being understood that the Confidentiality Agreement shall continue in full
force and effect and shall survive any termination of this Agreement; and (b)
are not intended to confer upon any other person any rights or remedies
hereunder, except as specifically provided in Section 5.8 hereof.
8.6 Severability. In the event that any provision of this Agreement, or
the application thereof, becomes or is declared by a court of competent
jurisdiction to be illegal, void or unenforceable, the remainder of this
Agreement will continue in full force and effect and the application of such
provision to other persons or circumstances will be interpreted so as reasonably
to effect the intent of the parties hereto. The parties further agree to replace
such void or unenforceable provision of this Agreement with a valid and
enforceable provision that will achieve, to the extent possible, the economic,
business and other purposes of such void or unenforceable provision.
8.7 Other Remedies; Specific Performance. Except as otherwise provided
herein, any and all remedies herein expressly conferred upon a party will be
deemed cumulative with and not
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exclusive of any other remedy conferred hereby, or by law or equity upon such
party, and the exercise by a party of any one remedy will not preclude the
exercise of any other remedy. The parties hereto agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to seek an injunction
or injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions hereof in any court of the United States or any state
having jurisdiction, this being in addition to any other remedy to which they
are entitled at law or in equity.
8.8 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, regardless of the laws that
might otherwise govern under applicable principles of conflicts of law thereof.
8.9 Rules of Construction. The parties hereto agree that they have been
represented by counsel during the negotiation and execution of this Agreement
and, therefore, waive the application of any law, regulation, holding or rule of
construction providing that ambiguities in an agreement or other document will
be construed against the party drafting such agreement or document.
8.10 Assignment. No party may assign either this Agreement or any of its
rights, interests, or obligations hereunder without the prior written approval
of the other parties. Subject to the preceding sentence, this Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and permitted assigns.
8.11 Waiver of Jury Trial. EACH OF PARENT, COMPANY AND MERGER SUB HEREBY
IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE ACTIONS OF PARENT, COMPANY OR MERGER SUB IN
THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT HEREOF.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement and Plan
of Merger to be executed by their duly authorized respective officers as of the
date first written above.
SYBASE, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇
-----------------------------------
Title: VP, Corporate Development
----------------------------------
SEURAT ACQUISITION CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
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Title: Secretary
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AVANTGO, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
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Title: President and CEO
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[SIGNATURE PAGE TO AGREEMENT AND PLAN OF MERGER]
