EXHIBIT 1
AGREEMENT AND PLAN OF MERGER
AND REORGANIZATION
BY AND AMONG
PEREGRINE SYSTEMS, INC.
ROSE ACQUISITION CORPORATION
AND
REMEDY CORPORATION
TABLE OF CONTENTS
Page
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ARTICLE I DEFINITIONS............................................... 2
1.1 Certain Definitions...................................... 2
1.2 Other Definitions........................................ 6
ARTICLE II THE MERGER............................................... 7
2.1 The Merger............................................... 7
2.2 The Effective Time....................................... 8
2.3 The Closing.............................................. 8
2.4 Effect of the Merger..................................... 8
2.5 Certificate of Incorporation and Bylaws.................. 8
2.6 Directors and Officers................................... 9
2.7 Effect on Capital Stock.................................. 9
2.8 Exchange of Certificates................................. 11
2.9 No Further Ownership Rights in Company Common Stock...... 13
2.10 Lost, Stolen or Destroyed Certificates................... 13
2.11 Dividends and Other Distributions........................ 14
2.12 Merger Structure......................................... 14
2.13 Tax and Accounting Consequences.......................... 14
2.14 Taking of Necessary Action; Further Action............... 14
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY........... 15
3.1 Organization and Qualification........................... 15
3.2 Subsidiaries............................................. 15
3.3 Certificate of Incorporation and Bylaws.................. 15
3.4 Capitalization........................................... 15
3.5 Authority................................................ 17
3.6 No Conflict; Required Filings and Consents............... 17
3.7 Compliance with Laws..................................... 18
3.8 Permits.................................................. 18
3.9 SEC Filings; Financial Statements........................ 19
3.10 No Undisclosed Liabilities............................... 20
3.11 Absence of Certain Changes or Events..................... 20
3.12 Absence of Litigation.................................... 21
3.13 Employee and Employee Benefit Matters.................... 21
3.14 Restrictions on Business Activities...................... 24
3.15 Real Property Matters.................................... 24
3.16 Tax Matters.............................................. 25
3.17 Intellectual Property Matters............................ 26
3.18 Environmental Matters.................................... 30
3.19 Contracts................................................ 31
3.20 Insurance................................................ 32
3.21 Opinion of Financial Advisor............................. 32
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TABLE OF CONTENTS
(continued)
Page
3.22 Brokers..................................................................................... 32
3.23 State Takeover Statutes..................................................................... 33
3.24 Board Approval.............................................................................. 33
3.25 Reorganization.............................................................................. 33
3.26 Registration Statement; Proxy Statement/Prospectus.......................................... 33
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB..................................... 34
4.1 Organization and Qualification; Subsidiaries................................................ 34
4.2 Certificate of Incorporation and Bylaws..................................................... 34
4.3 Capitalization.............................................................................. 34
4.4 Authority Relative to this Agreement........................................................ 35
4.5 No Conflict; Required Filings and Consents.................................................. 35
4.6 SEC Filings; Financial Statements........................................................... 36
4.7 No Undisclosed Liabilities.................................................................. 37
4.8 No Material Adverse Effect.................................................................. 37
4.9 Absence of Litigation....................................................................... 37
4.10 Intellectual Property....................................................................... 37
4.11 Funds....................................................................................... 37
4.12 Merger Sub.................................................................................. 37
4.13 Brokers..................................................................................... 38
4.14 Registration Statement; Proxy Statement/Prospectus.......................................... 38
ARTICLE V INTERIM CONDUCT.............................................................................. 38
5.1 Conduct of Business by the Company.......................................................... 38
5.2 Additional Restriction on Conduct of Business by the Company................................ 41
5.3 Conduct of Business by Parent and Merger Sub................................................ 41
ARTICLE VI ADDITIONAL AGREEMENTS....................................................................... 42
6.1 No Solicitation............................................................................. 42
6.2 Company Stockholder Meeting................................................................. 44
6.3 Preparation and Filing of Registration Statement and Proxy Statement/Prospectus;
Withdrawal of Company Board Recommendation.................................................. 45
6.4 Confidentiality............................................................................. 47
6.5 Access to Information....................................................................... 47
6.6 Public Disclosure........................................................................... 47
6.7 Commercially Reasonable Efforts............................................................. 47
6.8 Notification................................................................................ 48
6.9 Third Party Consents........................................................................ 48
6.10 Company Stock Options; Company ESPP......................................................... 48
6.11 Employee Matters............................................................................ 49
6.12 Rights Plan Amendment....................................................................... 50
6.13 Directors' and Officers' Indemnification.................................................... 50
6.14 Regulatory Filings.......................................................................... 51
6.15 Company Affiliate Agreements................................................................ 52
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TABLE OF CONTENTS
(continued)
Page
6.16 Nasdaq Listing............................................................. 52
6.17 Obligations of Merger Sub.................................................. 52
6.18 Parent Board Designee...................................................... 52
ARTICLE VII CONDITIONS TO THE MERGER.................................................. 53
7.1 Conditions to Obligations of Parent, Merger Sub and the Company............ 53
7.2 Additional Conditions to Obligations of the Company........................ 54
7.3 Additional Conditions to the Obligations of Parent and Merger Sub.......... 54
ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER........................................ 55
8.1 Termination................................................................ 55
8.2 Notice of Termination; Effect of Termination............................... 57
8.3 Fees and Expenses.......................................................... 57
8.4 Amendment.................................................................. 59
8.5 Extension; Waiver.......................................................... 59
ARTICLE IX GENERAL PROVISIONS......................................................... 59
9.1 Survival of Representations; Warranties and Covenants...................... 59
9.2 Notices.................................................................... 59
9.3 Interpretation............................................................. 60
9.4 Counterparts............................................................... 60
9.5 Headings................................................................... 60
9.6 Entire Agreement; Third Party Beneficiaries................................ 60
9.7 Severability............................................................... 61
9.8 Other Remedies; Specific Performance....................................... 61
9.9 Governing Law.............................................................. 61
9.10 Rules of Construction...................................................... 61
9.11 Assignment................................................................. 61
9.12 WAIVER OF JURY TRIAL....................................................... 61
9.13 Consent to Jurisdiction.................................................... 62
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INDEX OF EXHIBITS
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Exhibit A - Form of Company Voting Agreement
Exhibit B - Form of Company Affiliate Agreement
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
THIS AGREEMENT AND PLAN OF MERGER AND REORGANIZATION is made and entered
into as of June 10, 2001 by and among Peregrine Systems, Inc., a Delaware
corporation ("Parent"), Rose Acquisition Corporation, a Delaware corporation and
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a wholly owned subsidiary of Parent ("Merger Sub"), and Remedy Corporation, a
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Delaware corporation (the "Company").
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RECITALS
A. Upon the terms and subject to the conditions set forth in this
Agreement, and in accordance with the Delaware Law, Parent and the Company have
agreed to enter into a business combination transaction.
B. Each of the respective Boards of Directors of Parent, Merger Sub and
the Company have (i) determined that this Agreement is advisable, (ii)
determined that the Merger and the other transactions contemplated hereby are
fair to and in the best interests of their respective stockholders, and (iii)
approved this Agreement, the Merger and the other transactions contemplated
hereby, all upon the terms and subject to the conditions set forth in this
Agreement.
C. Concurrently with the execution of this Agreement, as a condition and
inducement to Parent's willingness to enter into this Agreement, (i) all
executive officers and directors of the Company and all of their respective
affiliates, in their capacity as stockholders of the Company, are entering into
Voting Agreements with Parent in substantially the form attached hereto as
Exhibit A (each, a "Company Voting Agreement" and collectively, the "Company
--------- ------------------------ -------
Voting Agreements"), (ii) all of the affiliates of the Company are entering into
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Company Affiliate Agreements with Parent in substantially the form attached
hereto as Exhibit B (each, a "Company Affiliate Agreement" and collectively, the
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"Company Affiliate Agreements"), and (iii) the Company and Computershare
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Investor Services LLC (formerly ▇▇▇▇▇▇ Trust Company of California) have amended
(the "Rights Plan Amendment") the Rights Agreement, dated as of July 25, 1997,
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as amended (the "Company Rights Plan"), between the Company and ▇▇▇▇▇▇ Trust
-------------------
Company of California, as Rights Agent, so as to render the rights thereunder
inapplicable to the Merger and the other transactions contemplated by this
Agreement and the Company Voting Agreements.
D. The parties hereto intend, by executing this Agreement, to adopt a
"plan of reorganization" within the meaning of the Internal Revenue Code of
1986, as amended.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing premises and the
representations, warranties, covenants and agreements herein contained, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged and accepted, and intending to be legally bound hereby,
Parent, Merger Sub and the Company hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 Certain Definitions. For all purposes of and under this Agreement,
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the following terms shall have the following respective meanings:
(a) "Approvals" means franchises, grants, authorizations, licenses,
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permits, easements, consents, certificates, approvals and other orders.
(b) "Cash Portion" means, subject to the terms of Section 2.7(c)
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hereof, an amount in cash equal to Nine Dollars ($9.00).
(c) "COBRA" means the Consolidated Omnibus Budget Reconciliation Act
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of 1985, as amended, and the rules and regulations promulgated thereunder, or
any successor statute, rules and regulations thereto.
(d) "Code" means the Internal Revenue Code of 1986, as amended, and
----
the rules and regulations promulgated thereunder, or any successor statute,
rules and regulations thereto.
(e) "Company Board" means the Board of Directors of the Company.
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(f) "Company Common Stock" means the Common Stock, par value $0.00005
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per share, of the Company.
(g) "Company Employee" means any current or former or retired
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employee, consultant or director of the Company or any Company Affiliate (as
defined in Section 3.12 hereof).
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(h) "Company Employee Plan" means any plan, program, policy,
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practice, contract, agreement or other arrangement providing for compensation,
severance, termination pay, deferred compensation, performance awards, stock or
stock-related awards (whether payable in cash and/or shares), 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
Company or any Affiliate for the benefit of any Employee, or with respect to
which Company or any Affiliate has or may have any liability or obligation.
(i) "Company Employment Agreement" means each employment, severance,
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consulting, relocation, repatriation, expatriation, visas, work permit or
other agreement or contract relating to provisions of services between the
Company or any Company Affiliate (as defined in Section 3.13 hereof) and
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any Employee other than the Company's standard offer letter, proprietary
information and invention assignment agreement in the form furnished or made
available to Parent.
(j) "Company Intellectual Property" means any Intellectual Property
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that is owned by, or exclusively licensed to, the Company and/or any of it
subsidiaries.
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(k) "Company International Employee Plan" means each Company Employee
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Plan that has been adopted or maintained by Company or any Company Affiliate (as
defined in Section 3.13 hereof), whether informally or formally, or with respect
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to which Company or any Company Affiliate (as defined in Section 3.13 hereof)
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will or may have any liability, for the benefit of Company Employees who perform
services outside the United States.
(l) "Company Multiemployer Plan" means any Company Pension Plan which
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is a "multiemployer plan," as defined in Section 3(37) of ERISA.
(m) "Company Pension Plan" means any Company Employee Plan which is
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an "employee pension benefit plan," within the meaning of Section 3(2) of ERISA.
(n) "Company Preferred Stock" means the Preferred Stock, par value
-----------------------
$0.00005 per share, of the Company.
(o) "Company Registered Intellectual Property" means all of the
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Registered Intellectual Property owned by, or filed in the name of, the Company
or any of its subsidiaries.
(p) "Contract" means any contract, subcontract, agreement,
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commitment, note, bond, mortgage, indenture, lease, license, sublicense, permit,
franchise or other instrument, obligation or binding arrangement or
understanding of any kind or character, whether oral or in writing.
(q) "Delaware Law" means the DGCL and any other applicable law of the
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State of Delaware.
(r) "DGCL" means the General Corporation Law of the State of
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Delaware, or any successor statute thereto.
(s) "DOJ" means the United States Department of Justice.
---
(t) "DOL" shall mean the United States Department of Labor.
---
(u) "ERISA" means the Employee Retirement Income Security Act of
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1974, as amended, and the rules and regulations promulgated thereunder, or any
successor statue, rules and regulations thereto.
(v) "Exchange Act" means the Securities and Exchange Act of 1934, as
------------
amended, and the rules and regulations promulgated thereunder, or any successor
statute, rules and regulations thereto.
(w) "FMLA" means the Family Medical Leave Act of 1993, as amended,
----
and the rules and regulations promulgated thereunder, or any successor statute,
rules and regulations thereto.
(x) "FTC" means the United States Federal Trade Commission.
---
(y) "GAAP" means United States generally accepted accounting
----
principles.
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(z) "Governmental Entity" means any government, any governmental
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entity, department, commission, board, agency or instrumentality, and any court,
tribunal or judicial body, in each case whether federal, state, county,
provincial, and whether local or foreign.
(aa) "HSR Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act
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of 1976, as amended, and the rules and regulations promulgated thereunder, or
any successor statute, rules and regulations thereto.
(bb) "Intellectual Property" means any or all of the following and all
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worldwide common law and statutory rights in, arising out of, or associated
therewith: (i) U.S. and foreign patents and applications therefor and all
reissues, divisions, renewals, extensions, provisionals, continuations and
continuations-in-part thereof ("Patents"); (ii) inventions (whether patentable
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or not), invention disclosures, improvements, trade secrets, proprietary
information, know how, technology, technical data and customer lists, and all
documentation relating to any of the foregoing; (iii) copyrights, copyrights
registrations and applications therefor, and all other rights corresponding
thereto throughout the world; (iv) domain names, uniform resource locators
("URLs"), other names and locators associated with the Internet, and
----
applications or registrations therefor ("Domain Names"); (v) industrial designs
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and any registrations and applications therefor; (vi) trade names, logos, common
law trademarks and service marks, trademark and service ▇▇▇▇ registrations,
related goodwill and applications therefor throughout the world; (vii) all
databases and data collections and all rights therein; (viii) all moral and
economic rights of authors and inventors, however denominated, (ix) any works of
authorship, including, without limitation, computer programs, source code,
executable code, whether embodied in software, firmware or otherwise,
documentation, designs, files, records, data and mask works; and (x) any similar
or equivalent rights to any of the foregoing (as applicable).
(cc) "Legal Requirements" means any federal, state, local, municipal,
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foreign or other law, statute, constitution, principle of common law,
resolution, ordinance, code, edict, 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.
(dd) "lien" means any liens, pledges, hypothecations, charges,
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mortgages, security interests, encumbrances, claims, infringements,
interferences, options, right of first refusals, preemptive rights, community
property interests or restrictions of any kind or character (including any
restriction on voting, transfer and possession), other than restrictions imposed
by federal or state securities laws.
(ee) "Material Adverse Effect" means any change or effect that,
-----------------------
individually or when taken together with all other such changes or effects that
have occurred prior to the date of determination of the occurrence of the
Material Adverse Effect, is or is reasonably likely to be materially adverse to
the business, assets (including intangible assets), financial condition or
results of operations of such entity and its Subsidiaries, taken as a whole;
provided, however, that in no event shall any of the following, alone or in
combination, be deemed to constitute, nor shall any of the following be taken
into account in determining whether there has been or will be, a Material
Adverse Effect on any entity: (i) any change resulting from compliance with the
terms and conditions of this Agreement; (ii) any change resulting from the
pendency of the Merger or any other transactions contemplated hereby (including,
without limitation, any cancellation or
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deferral of product or service orders by customers); (iii) any change in such
entity's stock price or trading volume or any failure by such entity to meet
internal projections or forecasts or published revenue or earnings projections,
in each case in and of itself; (iv) any change or effect that results or arises
from changes affecting any of the industries in which such entity operates
generally or the United States economy generally (which changes or effects in
each case do not disproportionately affect such entity in any material respect);
or (v) any change or effect that results or arises from changes affecting
general worldwide economic or capital market conditions (which changes in each
case do not disproportionately affect such entity in any material respect);
provided, however, that the party hereto asserting the exception in clause (i),
(ii), (iv) and/or (v) above shows by a preponderance of the evidence that such
change results from compliance with the terms and conditions of this Agreement
or the pendency of the Merger or any other transactions contemplated hereby, as
applicable.
(ff) "Nasdaq" means the Nasdaq National Market, or any successor
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inter-dealer quotation system operated by the Nasdaq Stock Market, Inc. or any
successor thereto.
(gg) "Parent Board" the Board of Directors of Parent.
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(hh) "Parent Common Stock" means the Common Stock, par value $0.001
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per share, of Parent.
(ii) "Parent Preferred Stock" means the Preferred Stock, par value
----------------------
$0.001 per share, of Parent.
(jj) "person" means any individual, corporation (including any non-
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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.
(kk) "Registered Intellectual Property" means all United States,
--------------------------------
international and foreign: (i) Patents, including applications therefor; (ii)
registered trademarks, applications to register trademarks, including intent-to-
use applications, or other registrations or applications related to trademarks;
(iii) copyrights registrations and applications to register copyrights; (iv)
registered mask works and applications to register mask works; and (v) 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 or quasi-public legal authority
at any time.
(ll) "SEC" means the United States Securities and Exchange Commission,
---
or any successor agency thereto.
(mm) "Section 16 Affiliate" means each individual who (x) immediately
--------------------
prior to the Effective Time is a director or officer of the Company or (y) at
the Effective Time will become a director or officer of Parent, Merger Sub or
the Company.
(nn) "Securities Act" means the Securities Act of 1933, as amended,
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and the rules and regulations promulgated thereunder, or any successor statute,
rules and regulations thereto.
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(oo) "Stock Portion" means, subject to the terms of Section 2.7(c)
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hereof, a fraction of a share of Parent Common Stock equal to 0.9065.
(pp) "subsidiary" means, with respect to any person, any entity of
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which securities or other ownership interests having ordinary voting power to
elect a majority of the board of directors or other persons performing similar
functions are at any time directly or indirectly owned by such person.
(qq) "Tax" means (i) any and all federal, state, local and foreign
---
taxes, including taxes based upon or measured by gross 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 or ceasing to be a member of an
affiliated, consolidated, combined or unitary group for any period (including,
without limitation, any liability under Treasury Regulation Section 1.1502-6 or
any comparable provision of foreign, state or local law), 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.
1.2 Other Definitions. For all purposes of and under this Agreement, the
-----------------
following terms shall have the respective meanings ascribed thereto in the
respective Sections of this Agreement set forth opposite each respective term
below:
Term Section
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401(k) Termination Date 6.11(a)
Acquisition Proposal 6.1(b)
Acquisition Transaction 6.1(b)
Agreement Recital / 2.2
Certificate(s) 2.8(c)
Certificate of Merger 2.2
Closing 2.3
Closing Date 2.3
Company Preamble
Company Acquisition 8.3(c)
Company Affiliate(s) 3.13 / 6.15
Company Affiliate Agreement Recitals
Company Charter Documents 3.3
Company ESPP 2.7(b)
Company Indemnified Parties 6.13
Company Insurance Policy(ies) 3.20
Company Lease(s) 3.15(b)
Company Option Plan(s) 2.7(b)
Company Permits 3.8
Company Product 3.17
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Company Rights Plan Recitals
Company Schedule Article III Preamble
Company SEC Report(s) 3.9
Company Stock Option(s) 2.7(b)
Company Stockholder Meeting 6.2(c)
Company Voting Agreement Recitals
Confidentiality Agreement 6.4
Delaware Secretary of State 2.2
Dissenting Company Shares 2.7(d)
Domain Names 1.1(bb)
Effective Time 2.2
Exchange Agent 2.8(a)
Exchange Fund 2.8(b)
Hazardous Material 3.18(a)
Hazardous Materials Activities 3.18(b)
Material Company Contract 3.19(b)
Merger 2.1
Merger Consideration 2.7(a)
Merger Sub Preamble
Merger Sub Common Stock 2.7(a)
Option Exchange Ratio 6.10(a)
Parent Preamble
Parent Charter Documents 4.2
Parent Schedule Article IV Preamble
Parent SEC Report(s) 4.6
Patents 1.1(bb)
Proxy Statement/Prospectus 6.3
Recommendations 8.1(d)
Registration Statement 6.3
Requisite Company Stockholder Approval 3.5
Returns 3.16
Rights Plan Amendment Recitals
Superior Proposal 6.1(b)
Surviving Corporation 2.1
Termination Date 8.1(b)
Termination Fee Amount 8.3(b)
Triggering Event 8.1(d)
URL 1.1(bb)
ARTICLE II
THE MERGER
2.1 The Merger. At the Effective Time and upon the terms and subject to
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the conditions set forth in this Agreement (including, without limitation, the
terms of Section 2.12 hereof) and the applicable provisions of Delaware Law, the
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Company shall be merged with and into Merger Sub (the "Merger"), the separate
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corporate existence of the Company shall cease and Merger Sub shall continue as
the surviving corporation of the Merger. Merger Sub, as the
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surviving corporation of the Merger, is sometimes referred to herein as the
"Surviving Corporation."
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2.2 The Effective Time. Upon the terms and subject to the conditions set
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forth in this Agreement, as soon as practicable on or after the Closing Date,
Parent, Merger Sub and the Company shall cause the Merger to be effected under
Delaware Law by filing a certificate of merger in customary form with the
Secretary of State of the State of Delaware (the "Delaware Secretary of State")
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in accordance with the applicable provisions of the DGCL (the "Certificate of
--------------
Merger") (the time of such filing and acceptance by the Delaware Secretary of
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State, or such later time as may be agreed in writing by the Company and Parent
and specified in the Certificate of Merger, being referred to herein as the
"Effective Time"). Unless the context otherwise requires, the term "Agreement"
-------------- ---------
as used herein refers collectively to this Agreement and Plan of Merger and
Reorganization and the Certificate of Merger.
2.3 The Closing. The closing of the Merger (the "Closing") shall take
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place at the offices of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, Professional
Corporation, ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, at a date and time
to be agreed upon by Parent, Merger Sub and the Company, which date shall be no
later than the second (2/nd/) business day after the satisfaction or waiver of
the conditions set forth in Article VII hereof, or at such other location, date
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and time as Parent, Merger Sub and the Company shall mutually agree upon in
writing (the date and time upon which the Closing shall actually occur pursuant
hereto being referred to herein as the "Closing Date").
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2.4 Effect of the Merger. At the Effective Time, the effect of the Merger
--------------------
shall be as provided in this Agreement and the applicable provisions of Delaware
Law. Without limiting the generality of the foregoing, and subject thereto, at
the Effective Time all of the property, rights, privileges, powers and
franchises of the Company and Merger Sub shall vest in the Surviving
Corporation, and all debts, liabilities and duties of the Company and Merger Sub
shall become the debts, liabilities and duties of the Surviving Corporation.
2.5 Certificate of Incorporation and Bylaws.
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(a) Certificate of Incorporation. At the Effective Time, subject to
----------------------------
the terms of Section 6.13 hereof, the Certificate of Incorporation of Merger
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Sub, as in effect immediately prior to the Effective Time, shall be the
Certificate of Incorporation of Surviving Corporation (except that the name of
Merger Sub shall be amended to be "Remedy Corporation") until thereafter amended
in accordance with the applicable provisions of Delaware Law and such
Certificate of Incorporation.
(b) Bylaws. At the Effective Time, subject to the terms of Section
------ -------
6.13 hereof, the Bylaws of Merger Sub, as in effect immediately prior to the
----
Effective Time, shall be the Bylaws of the Surviving Corporation until
thereafter amended in accordance with the applicable provisions of Delaware Law,
the Certificate of Incorporation of the Surviving Corporation and such Bylaws.
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2.6 Directors and Officers
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(a) Directors. At the Effective Time, the initial directors of the
---------
Surviving Corporation shall be the directors of Merger Sub immediately prior to
the Effective Time, each to hold office in accordance with the Certificate of
Incorporation and Bylaws of the Surviving Corporation until their respective
successors are duly elected or appointed and qualified.
(b) Officers. At the Effective Time, the initial officers of the
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Surviving Corporation shall be the officers of Merger Sub immediately prior to
the Effective Time, each to hold office in accordance with the Certificate of
Incorporation and Bylaws of the Surviving Corporation until their respective
successors are duly appointed.
2.7 Effect on Capital Stock
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(a) Upon the terms and subject to the conditions set forth in this
Agreement, at the Effective Time, by virtue of the Merger and without any action
on the part of Parent, Merger Sub, the Company or the holders of any of the
following securities, the following shall occur:
(i) Company Common Stock. Each share of Company Common Stock
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issued and outstanding immediately prior to the Effective Time (other than (i)
shares held by Parent, Merger Sub, the Company or any other subsidiary of
Parent, or (ii) Dissenting Company Shares) shall be canceled and extinguished
and automatically converted into the right to receive (A) an amount of cash
equal to the Cash Portion, without any interest thereon, and (B) a fraction of a
share of Parent Common Stock equal to the Stock Portion (the Cash Portion and
the Stock Portion, and any cash paid in lieu of fractional shares pursuant to
Section 2.8(g) hereof, being collectively referred to herein as the "Merger
-------------- ------
Consideration"), upon surrender of the certificate representing such share of
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Company Common Stock in the manner provided in Section 2.8 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 2.10 hereof). The
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Company shall take all action necessary to ensure that, from and after the
Effective Time, Parent shall be entitled to exercise any such repurchase option
or other right set forth in any restricted stock purchase agreement or other
similar agreement in respect of any Parent Common Stock issued in exchange for
shares of Company Common Stock subject to any such restricted stock purchase
agreement or other similar agreement.
(ii) Owned Company Common Stock. Each share of Company Common
--------------------------
Stock held by Parent, Merger Sub, the Company or any other subsidiary of Parent
immediately prior to the Effective Time shall be cancelled and extinguished
without any conversion thereof or consideration or distribution paid therefor.
(iii) Capital Stock of Merger Sub. Each share of Common Stock,
---------------------------
par value $0.001 per share, of Merger Sub ("Merger Sub Common Stock") issued and
-----------------------
outstanding immediately prior to the Effective Time shall represent 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 immediately
-9-
prior to the Effective Time shall, as of the Effective Time, continue to
evidence ownership of such shares of capital stock of the Surviving Corporation.
(b) Stock Options; Employee Stock Purchase Plan Rights. At the
--------------------------------------------------
Effective Time: (i) each option to purchase Company Common Stock (each, a
"Company Stock Option" and collectively, the "Company Stock Options") then
-------------------- ---------------------
outstanding under the Company's 1991 Stock Option/Stock Issuance Plan, 1995
Stock Option/Stock Issuance Plan, 1995 Non-Employee Directors Stock Option Plan,
2000 Supplemental Stock Option Plan or other compensatory option plans or
agreements, including option plans or agreements assumed by the Company pursuant
to a merger or acquisition (each, a "Company Option Plan" and collectively, the
-------------------
"Company Option Plans") shall be treated in accordance with Section 6.10 hereof,
-------------------- ------------
and (ii) each purchase right outstanding under the Company's Employee Stock
Purchase Plan (the "Company ESPP") shall be treated as set forth in Section 6.10
------------ ------------
hereof.
(c) Adjustments to the Stock Portion and the Cash Portion.
-----------------------------------------------------
(i) Parent, Merger Sub and the Company hereby acknowledge and
agree that the Cash Portion and the Stock Portion have been determined based
upon the representations and warranties of the Company set forth in Section 3.4
-----------
hereof. Accordingly, in the event that the representations and warranties of the
Company set forth in Section 3.4 hereof shall be determined to be inaccurate in
-----------
any respect prior to the Effective Time, the Cash Portion and the Stock Portion
shall be appropriately adjusted such that (i) the aggregate amount of cash
payable pursuant to the transactions contemplated hereby shall not exceed the
aggregate amount of cash that otherwise would have been payable pursuant the
transactions contemplated hereby had such representations and warranties been
accurate, and (ii) the aggregate number of shares of Parent Common Stock
issuable pursuant to the transactions shall not exceed the aggregate number of
shares of Parent Common Stock that otherwise would have been issuable pursuant
the transactions contemplated hereby had such representations and warranties
been accurate.
(ii) The Stock Portion and the Cash Portion shall be adjusted
appropriately to reflect the effect of any stock split, reverse stock split,
stock dividend (including any dividend or distribution of securities convertible
into Company Common Stock), extraordinary cash dividends, reorganization,
recapitalization, reclassification, combination, exchange of shares or other
like change with respect to Company Common Stock occurring on or after the date
hereof and prior to the Effective Time. The Stock Portion shall be adjusted
appropriately to reflect the effect of any stock split, reverse stock split,
stock dividend (including any dividend or distribution of securities convertible
into Parent Common Stock), extraordinary cash dividends, reorganization,
recapitalization, reclassification, combination, exchange of shares or other
like change with respect to the Parent Common Stock occurring on or after the
date hereof and prior to the Effective Time.
(d) Dissenting Company Shares.
-------------------------
(i) Notwithstanding anything to the contrary set forth in this
Agreement, all Company Shares that are outstanding immediately prior to the
Effective Time which are held by stockholders who shall have neither voted in
favor of the Merger nor consented thereto in writing and who shall have properly
and validly exercised their dissenters'
-10-
rights of appraisal of such Company Shares in accordance with Section 262 of the
DGCL (collectively, "Dissenting Company Shares") shall not be converted into, or
-------------------------
represent the right to receive, the Merger Consideration pursuant to this
Section 2.7. Such stockholders shall be entitled to receive payment of the
-----------
appraised value of such Dissenting Company Shares in accordance with the
provisions of Section 262 of the DGCL, except that all Dissenting Company Shares
held by stockholders who shall have failed to perfect or who effectively shall
have withdrawn or lost their rights to appraisal of such Dissenting Company
Shares under such Section 262 of the DGCL 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 of the certificate or certificates that formerly evidenced such
Company Shares in the manner provided in Section 2.8 hereof.
-----------
(ii) 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 in respect of Dissenting Company Shares, and (ii) the opportunity to
direct all negotiations and proceedings with respect to demands for appraisal
under Delaware Law in respect of Dissenting Company Shares. 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 in respect of Dissenting Company Shares.
2.8 Exchange of Certificates.
------------------------
(a) Exchange Agent. Prior to the Effective Time, Parent shall select
--------------
a bank or trust company reasonably acceptable to the Company to act as the
exchange agent for the Merger (the "Exchange Agent").
--------------
(b) Exchange Fund. Promptly after the Effective Time and from time to
-------------
time thereafter (as applicable), Parent shall make available to the Exchange
Agent, for payment to the holders of shares of Company Common Stock in
accordance with this Article II, (i) an amount in cash equal to the product
----------
obtained by multiplying (x) the Cash Portion, and (y) the aggregate number of
shares of Company Common Stock outstanding immediately prior to the Effective
Time (excluding Dissenting Company Shares and shares of Company Common Stock
held by Parent, Merger Sub, the Company or any other subsidiary of Parent
immediately prior to the Effective Time), (ii) a number of shares of Parent
Common Stock equal to the product obtained by multiplying (x) the Stock Portion,
by (y) the aggregate number of shares of Company Common Stock outstanding
immediately prior to the Effective Time (excluding Dissenting Company Shares and
shares of Company Common Stock held by Parent, Merger Sub, the Company or any
other subsidiary of Parent immediately prior to the Effective Time), (iii) the
cash amount payable in lieu of fractional shares pursuant to Section 2.8(g)
--------------
hereof, and (iv) any dividends and other distributions payable pursuant to
Section 2.11 hereof in respect of shares of Parent Common Stock the certificates
------------
for which have not yet been issued pursuant to this Section 2.8 (such cash,
-----------
shares of Parent Common Stock, cash in lieu of fractional shares and dividends
and other distributions being referred to herein as the "Exchange Fund").
-------------
(c) Payment Procedures. Promptly after the Effective Time (but in no
------------------
event more than ten (10) business days thereafter), Parent shall cause the
Exchange Agent to mail to
-11-
each holder of record (as of the Effective Time) of a certificate or
certificates (each, a "Certificate" and collectively, the "Certificates") which
----------- ------------
immediately prior to the Effective Time represented outstanding shares of
Company Common Stock (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 Exchange
Agent), and (ii) instructions for use in effecting the surrender of the
Certificates in exchange for the Merger Consideration payable in respect of such
Certificates and any dividends and other distributions to which the holder of
such Certificates is entitled pursuant to Section 2.11 hereof. Upon surrender of
------------
Certificates for cancellation to the Exchange Agent or to such other agent or
agents reasonably acceptable to the Company as may be appointed by Parent,
together with such letter of transmittal, duly completed and validly executed in
accordance with the instructions thereto, and such other documents as may be
required pursuant to such instructions, the holder of each such Certificate
shall be entitled to receive in exchange therefor the Merger Consideration
payable in respect of the Company Shares represented by such Certificate and any
dividends and other distributions to which the holder of such Certificates is
entitled pursuant to Section 2.11 hereof, and the Certificate so surrendered
------------
shall forthwith be cancelled. The Exchange Agent shall accept such Certificates
upon compliance with such reasonable terms and conditions as the Exchange Agent
may impose to effect an orderly exchange thereof in accordance with normal
exchange practices. No interest shall be paid or accrued for the benefit of
holders of the Certificates on the cash payable upon the surrender of such
Certificates pursuant to this Section 2.8. Until so surrendered, outstanding
-----------
Certificates shall be deemed from and after the Effective Time to evidence only
the right to receive the Merger Consideration payable in respect of the Company
Shares formerly represented thereby pursuant to the terms of this Article II and
----------
any dividends and other distributions to which the holder of such Certificates
is entitled pursuant to Section 2.11 hereof.
------------
(d) Transfers of Ownership. In the event of a transfer of ownership
----------------------
of Company Shares that is not registered in the stock transfer books of the
Company, the Merger Consideration and any dividends and other distributions to
which the holder of such Certificates is entitled pursuant to Section 2.11
------------
hereof may be paid in exchange therefor to a person other than the person in
whose name the Certificate so surrendered is registered if such Certificate
shall be properly endorsed or otherwise be in proper form for transfer and the
person requesting such payment shall pay any transfer or other taxes required by
reason of the payment of Merger Consideration to a person other than the
registered holder of such Certificate or establish to the satisfaction of Parent
that such tax has been paid or is not applicable.
(e) Required Withholding. Each of the Exchange 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 Company Common Stock, or to any holder of a Company
Stock Option, such amounts as may be required to be deducted or withheld
therefrom under United States federal or state, local or foreign law. 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.
(f) No Liability. Notwithstanding anything to the contrary set forth
------------
in this Agreement, none of the Exchange Agent, Parent, the Surviving Corporation
or any party hereto
-12-
shall be liable to a holder of shares of Parent Common Stock or Company Common
Stock for any amount properly paid to a public official pursuant to any
applicable abandoned property, escheat or similar law.
(g) No Fractional Shares. No fraction of a share of Parent Common
--------------------
Stock will be issued in connection with the payment of the Stock Portion of the
Merger Consideration, but in lieu thereof each holder of a Certificate who would
otherwise be entitled to receive a fraction of a share of Parent Common Stock
(after aggregating all fractional shares of Parent Common Stock that otherwise
would be received by such holder) in the Merger shall receive from Parent an
amount of cash (rounded to the nearest whole cent), without interest, equal to
the product obtained by multiplying such fraction by the closing price of one
(1) share of Parent Common Stock on the date on which the Effective Time occurs,
as reported on the Nasdaq.
(h) Distribution of Exchange Fund to Parent. Any portion of the
---------------------------------------
Exchange Fund which remains undistributed to the holders of the Certificates on
the date that is six (6) months after the Effective Time shall be delivered to
Parent upon demand, and any holders of Company Shares prior to the Merger who
have not theretofore surrendered their Certificates evidencing such Company
Shares for exchange pursuant to this Section 2.8 shall thereafter look for
-----------
payment of the Merger Consideration payable in respect of the Company Shares
evidenced by such Certificates solely to Parent, as general creditors thereof,
for any claim to the applicable Merger Consideration to which such holders may
be entitled pursuant to this Article II.
----------
2.9 No Further Ownership Rights in Company Common Stock. From and after
---------------------------------------------------
the Effective Time, all shares of Company Common Stock shall no longer be
outstanding and shall automatically be cancelled, retired and cease to exist and
each holder of a Certificate representing any such Company Shares shall cease to
have any rights with respect thereto, except the right to receive the Merger
Consideration payable therefor upon the surrender thereof in accordance with
Section 2.8 hereof. The Merger Consideration issued in accordance with the terms
-----------
hereof shall be deemed to have been issued in full satisfaction of all rights
pertaining to such Company Shares. There shall be no further registration of
transfers on the records of the Surviving Corporation of shares of Company
Common Stock 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 II.
----------
2.10 Lost, Stolen or Destroyed Certificates. In the event that any
--------------------------------------
Certificates shall have been lost, stolen or destroyed, the Exchange Agent shall
issue in exchange for such lost, stolen or destroyed Certificates, upon the
making of an affidavit of that fact by the holder thereof, the Merger
Consideration pursuant to Section 2.7 hereof and any dividends and other
-----------
distributions to which the holder of such Certificates is entitled pursuant to
Section 2.11 hereof; provided, however, that Parent may, in its discretion and
------------
as a condition precedent to the issuance of such Merger Consideration and any
dividends and other distributions to which the holder of such Certificates is
entitled pursuant to Section 2.11 hereof, require the owners of such lost,
------------
stolen or destroyed Certificates to deliver a bond in such sum as it may
reasonably direct as indemnity against any claim that may be made against
Parent, the Surviving Corporation or the Exchange Agent with respect to the
Certificates alleged to have been lost, stolen or destroyed.
-13-
2.11 Dividends and Other Distributions. No dividends or other
---------------------------------
distributions declared or made after the date of this Agreement with respect to
Parent Common Stock with a record date after the Effective Time will be paid to
the holders of any unsurrendered Certificates with respect to the shares of
Parent Common Stock represented thereby until the holders of record of such
Certificates shall surrender such Certificates. Subject to applicable law,
promptly following surrender of any such Certificates, the Exchange Agent shall
deliver to the record holders thereof, without interest, the amount of any such
dividends or other distributions with a record date after the Effective Time
payable with respect to such whole shares of Parent Common Stock.
2.12 Merger Structure. At the election of Parent, the Merger may be
----------------
restructured such that, at the Effective Time and upon the terms and subject to
the conditions set forth in this Agreement and the applicable provisions of
Delaware Law, either (i) Merger Sub shall be merged with and into the Company,
the separate corporate existence of Merger Sub shall cease and the Company shall
continue as the surviving corporation of the Merger, or (ii) the Company shall
be merged with and into Parent, the separate corporate existence of the Company
shall cease and Parent shall continue as the surviving corporation of the
Merger; provided, however, that the Merger shall not be restructured pursuant to
this Section 2.12 if any such restructuring would cause the condition set forth
------------
in Section 7.1(f) hereof to fail to be satisfied. In the event that the Merger
--------------
is restructured pursuant to this Section 2.12, all references in this Article II
------------
and elsewhere in this Agreement to the Surviving Corporation shall be deemed to
be references to the Company as the surviving corporation of the Merger in the
case of clause (i) above, or Parent as the surviving corporation of the Merger
in the case of clause (ii) above. Notwithstanding any restructuring of the
Merger pursuant to this Section 2.12, the terms and conditions of this Agreement
------------
shall remain in full force and effect, subject to any changes or revisions that
are or may be necessary or appropriate as a result of such restructuring of the
Merger.
2.13 Tax and Accounting Consequences.
-------------------------------
(a) Tax. It is intended by the parties hereto that the Merger will
---
constitute a "reorganization" within the meaning of Section 368(a) of the Code,
and the parties hereto adopt this Agreement as a "plan of reorganization" within
the meaning of Section 1.368-2(g) and Section 1.368-3(a) of the United States
Income Tax Regulations. No party hereto shall take any action that is
inconsistent with such treatment.
(b) Accounting. It is intended by the parties that the Merger will
----------
be accounted for as a purchase.
2.14 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 or intent 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.
-14-
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and Merger Sub,
subject to the information set forth in the disclosure letter delivered by the
Company to Parent and Merger Sub dated as of the date hereof (the "Company
-------
Schedule"), as follows:
--------
3.1 Organization and Qualification. 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 currently being conducted,
except as would not, individually or in the aggregate, have a Material Adverse
Effect on the Company. Each of the Company and its subsidiaries is in possession
of all 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 currently being
conducted, except as would not, individually or in the aggregate, have a
Material Adverse Effect on the Company. Each of the Company and its subsidiaries
at all times has been, and currently is, in compliance with the terms of the
Approvals applicable to it, except where the failure would not, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect on
the Company. Each of the Company and its subsidiaries is qualified to do
business as a foreign corporation and is in good standing under the laws of each
jurisdiction where the nature of its business requires such qualification or to
be in good standing, except where the failure to be so qualified or in good
standing would not, individually or in the aggregate, have a Material Adverse
Effect on the Company.
3.2 Subsidiaries. Section 3.2 of the Company Schedule contains a complete
------------ -----------
and accurate list of each of the Company's subsidiaries, the jurisdiction of
incorporation of each such subsidiary, and Company's equity interest therein.
Neither the Company nor any of its subsidiaries has agreed, is obligated to
make, or is bound by, any Contract 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. Other than the Company's interests
in its subsidiaries, neither the Company nor any of its subsidiaries directly or
indirectly owns any equity or similar interest in, or any interest convertible
into, or exchangeable or exercisable for, any equity or similar interest in, any
other person.
3.3 Certificate of Incorporation and Bylaws. The Company has furnished or
---------------------------------------
made available to Parent a complete and correct copy of its Certificate of
Incorporation and Bylaws as amended to date and in effect as of the date hereof
(together, the "Company Charter Documents"). The Company Charter Documents and
-------------------------
equivalent organizational documents of each of its subsidiaries 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, except as would not, individually or
in the aggregate, have a Material Adverse Effect on the Company.
3.4 Capitalization
--------------
(a) The authorized capital stock of the Company consists of
240,000,000 shares of Common Stock, par value $0.00005 per share, and 20,000,000
shares of Preferred
-15-
Stock, par value $0.00005 per share. As of the close of business on June 7,
2001: (i) 30,746,992 shares (excluding treasury stock) of Company Common Stock
were issued and outstanding; (ii) 4,132,300 shares of Company Common Stock were
held by the Company as treasury stock; (iii) no shares of Company Common Stock
were held by any subsidiaries of the Company; (iv) 2,442,270 shares of Company
Common Stock were reserved for future issuance under the Company ESPP; (v)
9,657,247 shares of Company Common Stock were reserved for issuance upon the
exercise of Company Stock Options outstanding under the Company Option Plans;
and (vi) no shares of Company Preferred Stock were issued or outstanding. Other
than pursuant to the exercise of outstanding Company Stock Options, the Company
has not issued any shares of its capital stock between June 7, 2001 and the date
hereof. Except as set forth in this Section 3.4(a) or the Company Rights Plan,
--------------
there are no securities of the Company authorized, reserved for issuance, issued
or outstanding. All of the outstanding shares of Company Common Stock, and all
outstanding shares of capital stock of each subsidiary of the Company, are
validly issued, fully paid and nonassessable shares of Company Common Stock, and
were issued in compliance in all material respects with all applicable
securities laws and other applicable Legal Requirements and all applicable
Contracts to which the Company or any of its subsidiaries is a party or by which
they are bound.
(b) Section 3.4(b) of the Company Schedule sets forth the following
--------------
information with respect to each Company Stock Option outstanding as of the
close of business on June 7, 2001: (i) the name of the optionee; (ii) the number
of shares of Company Common Stock issuable upon the exercise of such Company
Stock Option; (iii) the exercise price of such Company Stock Option; (iv) the
date on which such Company Stock Option was granted; and (v) the date on which
such Company Stock Option will expire. As of the close of business on June 7,
2001, an aggregate of 3,908,867 shares of Company Common Stock are issuable upon
the exercise of outstanding exercisable Company Stock Options. Except for shares
of Company Common Stock issuable upon the exercise of Company Stock Options
granted after the date hereof in compliance with Section 5.1 hereof, as of
-----------
December 31, 2001, an aggregate of not in excess of 5,300,000 shares of Company
Common Stock will be issuable upon the exercise of outstanding then exercisable
Company Stock Options. The Company has delivered to Parent a complete and
accurate copy of all Company Option Plans and the form of all stock option
agreements evidencing any Company Stock Options granted thereunder. All shares
of Company Common Stock subject to issuance upon the exercise of any Company
Stock Option will, upon the valid issuance thereof on the terms and subject to
the conditions set forth in the instrument pursuant to which they are issuable,
be duly authorized, validly issued, fully paid and nonassessable shares of
Company Common Stock. All outstanding Company Stock Options have been granted in
compliance in all material respects with all applicable securities laws and
other applicable Legal Requirements and all applicable Contracts to which the
Company is a party or by which it is bound. There are no agreements of any kind
or character to which the Company is a party or by which it is bound obligating
the Company to accelerate the vesting of any Company Stock Option as a result of
or in connection with the Merger or any other transaction contemplated hereby.
(c) Except for securities that the Company owns (free and clear of
all liens) directly or indirectly through one or more subsidiaries, and except
for shares of capital stock or other similar ownership interests of subsidiaries
of the Company that are owned by certain nominee equity holders as required by
the applicable law of the jurisdiction of organization of
-16-
such subsidiaries (which shares or other interests do not materially affect the
Company's control of such subsidiaries), there are no equity securities,
partnership interests or similar ownership interests of any subsidiary of the
Company, or any security convertible into, or exercisable or exchangeable for,
any equity securities, partnership interests or similar ownership interests in
any subsidiaries of the Company, issued, reserved for issuance or outstanding.
Except as set forth in Section 3.4(b) hereof, there are no subscriptions,
--------------
options, warrants, equity securities, partnership interests or similar ownership
interests, calls, rights (including preemptive rights), commitments or
agreements of any kind or character to which the Company or any of its
subsidiaries is a party or by which they are 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 registration rights
and, except for the Company Voting Agreements and the Company Rights Plan, there
is no voting trust, proxy, rights plan, anti-takeover plan or other agreement or
understanding to which the Company or any of its subsidiaries is a party or by
which they are bound with respect to any equity security of the Company or with
respect to any equity security, partnership interest or similar ownership
interest of any of the subsidiaries of the Company.
3.5 Authority. The Company has all necessary corporate power and
---------
authority to execute and deliver this Agreement, the Company Voting Agreements
and the Company Affiliate Agreements, to perform its obligations hereunder and
thereunder and, subject to the adoption and approval of this Agreement and the
Merger by the stockholders of the Company (if required under Delaware Law), to
consummate the transactions contemplated hereby and thereby. The execution and
delivery of this Agreement, the Company Voting Agreements and the Company
Affiliate Agreements by the Company, the performance by the Company of its
obligations hereunder and thereunder, and the consummation by the Company of the
transactions contemplated hereby and thereby, 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 (other than the adoption
and approval of this Agreement and approval of the Merger by the holders of a
majority of the outstanding shares of Company Common Stock in accordance with
Delaware Law and the Company Charter Documents, if required (the "Requisite
---------
Company Stockholder Approval")), are necessary to authorize the Company to
----------------------------
execute and deliver this Agreement, the Company Voting Agreements and the
Company Affiliate Agreements, to perform its obligations hereunder and
thereunder or to consummate the transactions contemplated hereby and thereby.
This Agreement, the Company Voting Agreements and the Company Affiliate
Agreements have been duly and validly executed and delivered by the Company and,
assuming the due authorization, execution and delivery by Parent and Merger Sub,
constitute the legal and binding obligations of the Company, enforceable against
the Company in accordance with their respective terms, except as the enforcement
thereof may be limited by bankruptcy, insolvency (including, without limitation,
all laws relating to fraudulent transfers), reorganization, moratorium or
similar laws affecting enforcement of creditors' rights generally and except as
enforcement thereof is subject to general principles of equity (regardless of
whether enforcement is considered in a proceeding in equity or at law).
3.6 No Conflict; Required Filings and Consents.
------------------------------------------
-17-
(a) The execution and delivery of this Agreement by the Company does
not, and the performance by the Company of its obligations hereunder and the
consummation by the Company of the transactions contemplated hereby will not,
(i) violate the Company Charter Documents or the equivalent organizational
documents of any of the Company's subsidiaries, (ii) subject to obtaining the
Requisite Company Stockholder Approval and the consents, approvals,
authorizations and permits, and making the filings and notifications, set forth
in Section 3.6(b) hereof, conflict with or violate any law, rule, regulation,
--------------
order, judgment or decree applicable to the Company or any of its subsidiaries,
or by which the Company, any of its subsidiaries or any of their respective
assets and properties are bound or affected, or (iii) 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 the rights of the Company or any of its
subsidiaries under, or alter the rights or obligations of any person under, or
give to any person any rights of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien on any of the assets or
properties of the Company or any of its subsidiaries pursuant to, any material
Contract to which the Company or any of its subsidiaries is a party or by which
the Company, any of its subsidiaries or any of their respective assets and
properties are bound or affected, except, with respect to clause (ii) and (iii)
of this Section 3.6(a), for such conflicts, violations, breaches, defaults or
--------------
other occurrences that would not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect on the Company or a material
adverse effect on the Company's ability to timely perform its obligations under
this Agreement or consummate the transactions contemplated hereby.
(b) The execution and delivery of this Agreement by the Company does
not, and the performance by the Company of its obligations hereunder and the
consummation by the Company of the transactions contemplated hereby will not,
require any consent, approval, authorization or permit of, or filing with or
notification to, any Governmental Entity, except (i) for applicable requirements
under the Exchange Act, the HSR Act, the applicable antitrust or competition
laws and regulations of foreign Governmental Entities, if any, and the rules of
the Nasdaq, (ii) for the filing and recordation of the Certificate of Merger as
required by Delaware Law and (iii) where the failure to obtain such consents,
approvals, authorizations or permits, or to make such filings or notifications
(A) would not prevent or materially delay the parties hereto from performing
their respective obligations under this Agreement or consummating the
transactions contemplated hereby, or (B) would not, individually or in the
aggregate, have a Material Adverse Effect on Company.
3.7 Compliance with Laws. Neither Company nor any of its subsidiaries is
--------------------
in conflict with, or in default or violation under any law, rule, regulation,
order, judgment or decree applicable to the Company or any of its subsidiaries,
or by which the Company, any of its subsidiaries or any of their respective
assets and properties are bound or affected, except for any conflicts, defaults
or violations that would not, individually or in the aggregate, have a Material
Adverse Effect on the Company. No investigation or review by any Governmental
Entity is pending or, to the knowledge of Company, threatened against the
Company or any of its subsidiaries, nor has any Governmental Entity indicated to
the Company or any of its subsidiaries an intention to conduct the same.
3.8 Permits. The Company and its subsidiaries hold all permits, licenses,
-------
variances, exemptions, orders, approvals and other authorizations from
Governmental Entities the absence
-18-
of which would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect on the Company (collectively, the "Company
--------
Permits"). The Company and its subsidiaries have been and are in compliance in
-------
all material respects with the terms of the Company Permits and any conditions
placed thereon. No investigation or review by any Governmental Entity is pending
or, to the knowledge of Company, threatened against the Company or any of its
subsidiaries with respect to any of the Company Permits or that could reasonably
be expected to result in the revocation or material limitation of the rights of
the Company or any of its subsidiaries under any of the Company Permits, nor has
any Governmental Entity indicated to the Company or any of its subsidiaries an
intention to conduct the same.
3.9 SEC Filings; Financial Statements.
---------------------------------
(a) The Company has made available to Parent a complete and accurate
copy of each report, schedule, registration statement, proxy and information
statements and other documents filed by the Company with the SEC since December
31, 1997 (each, a "Company SEC Report" and collectively, the "Company SEC
------------------ -----------
Reports"), which are all the reports, schedules, registration statements, proxy
-------
and information statements and other documents required to be filed by the
Company with the SEC since such date. As of their respective dates, the Company
SEC Reports (i) complied in all material respects 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 (or, if such Company SEC Report was amended or superseded
by another filing, then on the date of filing of such amendment or superceding
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) As of their respective dates, each set of consolidated financial
statements (including, in each case, any related notes thereto) contained in the
Company SEC Reports, (i) complied as to form in all material respects with the
published rules and regulations of the SEC with respect thereto, (ii) was
prepared in accordance with 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, for the absence of footnotes as permitted by Form
10-Q promulgated under the Exchange Act), and (iii) fairly presents in all
material respects the consolidated financial condition of the Company and its
subsidiaries at the respective dates thereof and the consolidated results of
operations and cash flows of the Company and its subsidiaries for the periods
indicated, except that the unaudited interim financial statements were or are
subject to normal and year-end recurring adjustments which were not or are not
expected to be material in amount or significance.
(c) The Company has furnished or made available 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 with the SEC, 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.
-19-
3.10 No Undisclosed Liabilities. Neither the Company nor any of its
--------------------------
subsidiaries has any liabilities (whether absolute, accrued, contingent or
otherwise) of a nature required to be disclosed on a balance sheet prepared in
accordance with GAAP which are, individually or in the aggregate, material to
the business, assets, financial condition or results of operations of the
Company and its subsidiaries, taken as a whole, except (i) liabilities set forth
or reflected in the Company's balance sheet as of March 31, 2001 contained in
the Company SEC Reports, or (ii) liabilities incurred since March 31, 2001 in
the ordinary course of business, none of which is material to the business,
assets, financial condition or results of operations of the Company and its
subsidiaries, taken as a whole.
3.11 Absence of Certain Changes or Events. Except as required by this
------------------------------------
Agreement, since December 31, 2000, there has not been:
(a) any event, occurrence or condition that has had, or would
reasonably be expected to have, a Material Adverse Effect on the Company;
(b) 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 capital stock of the Company or any of its subsidiaries, or any purchase,
redemption or other acquisition by the Company of any capital stock of the
Company or any other securities of the Company or any of its subsidiaries,
except for repurchases from Company Employees following their termination
pursuant to the terms of their pre-existing stock option or purchase agreements
with the Company, or any granting of any options, warrants, calls or rights to
acquire any shares of capital stock of the Company or any other securities of
the Company;
(c) any split, combination or reclassification of any of the capital
stock of the Company or any of its subsidiaries;
(d) any granting by the Company or any of its subsidiaries of any
increase in compensation or fringe benefits to any Company Employees, or any
payment by the Company or any of its subsidiaries of any bonus to any Company
Employees, or any granting by the Company or any of its subsidiaries of any
increase in severance or termination pay to any Company Employees, or any entry
by the Company or any of its subsidiaries into any currently effective
employment, severance, termination or indemnification agreement or any agreement
with any Company Employees (or former Company employees) 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 by this
Agreement;
(e) the entry by the Company or any of its subsidiaries into any
material licensing or other agreement with regard to the acquisition or
disposition of any Intellectual Property other than licenses in the ordinary
course of business, or any amendment or consent with respect to any licensing
agreement filed or required to be filed by the Company with the SEC;
(f) any material change by the Company in its accounting methods,
principles or practices, except as required by concurrent changes in GAAP; or
-20-
(g) any material 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 Company
other than in the ordinary course of business.
3.12 Absence of Litigation.
---------------------
(a) There are no claims, actions, suits or proceedings pending or,
to the knowledge of the Company, threatened against the Company, any of its
subsidiaries or any of their respective assets and properties before any
Governmental Entity that (i) if adversely determined against the Company would,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on the Company, or (ii) seeks to delay or prevent the
consummation of the Merger or any other transaction contemplated by this
Agreement.
(b) Section 3.12(b) of the Company Schedule contains a complete and
---------------
accurate list of all claims, actions, suits or proceedings pending against the
Company involving claims in excess of $100,000.
3.13 Employee and Employee Benefit Matters.
-------------------------------------
(a) Definition. For all purposes of and under this Section 3.13,
---------- ------------
the term "Company 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.
(b) Schedule. Section 3.13(b) of the Company Schedule contains an
-------- ---------------
accurate and complete list of each Company Employee Plan and Company Employment
Agreement. The Company does not have any plan or commitment to establish any new
Company Employee Plan or Company Employment Agreement, to modify any Company
Employee Plan or Company Employment Agreement (except to the extent required by
applicable law or to conform any such Company Employee Plan or Company
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 or Company Employment
Agreement. Section 3.13(b) of the Company Schedule contains a representation of
---------------
the percentage of the Company's employee base which falls within each of the
following categories: non-exempt employees, exempt employees and key employees;
average employee salary in each such category; and average tenure in each such
category.
(c) Documents. The Company has delivered to Parent a complete and
---------
accurate copy of the following: (i) all documents embodying each Company
Employee Plan and Company 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
Company Employee Plan and Company Employment Agreement; (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 Company
Employee Plan is funded, the most recent annual and
-21-
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) the most recent IRS determination letter, and all applications and
correspondence to or from the IRS or the DOL with respect to any such
application or letter; (vii) all written communications material to any Company
Employee or Company 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 material correspondence to or from
any governmental agency relating to any Company Employee Plan; (ix) all current
model 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) Company Employee Plan Compliance. The Company has performed in
--------------------------------
all material respects all obligations required to be performed by it under, is
not in material default or violation of, and has no knowledge of any material
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. Each Company Employee Plan intended to qualify under Section
401(a) of the Code and each related 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. 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. All contributions required to be made by the
Company or Company Affiliate, to any Company Employee Plan have either been made
on or before their due dates or a reasonable amount has been paid or accrued, in
accordance with the Company's ordinary business procedures for the current plan
years; provided, however, that any contributions made to a Company Employee Plan
intended to be qualified under Code Section 401(k), have been timely made in
accordance with DOL regulation Section 2510.3-102. There are no actions, suits
or, to the knowledge of the Company, claims pending or threatened (other than
routine claims for benefits) against any Company Employee Plan or against the
assets of any Company Employee Plan. 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 Parent, the Company or any of
the Company Affiliates (other than benefits accrued to date and ordinary
administration expenses). There are no audits, inquiries or proceedings pending
or, to the knowledge of the Company, threatened by the IRS or DOL with respect
to any Company Employee Plan. Neither the Company nor any Company Affiliate is
subject to any penalty or tax
-22-
with respect to any Company Employee Plan under Section 502(i) of ERISA or
Sections 4975 through 4980 of the Code.
(e) Company Pension Plans. Neither the Company nor any Company
---------------------
Affiliate has ever maintained, established, sponsored, participated in, or
contributed to, any Company Pension Plan which is subject to Title IV of ERISA
or Section 412 of the Code.
(f) Collectively Bargained, Multiemployer and Multiple Employer
-----------------------------------------------------------
Plans. At no time within the six (6) year period ending on the date hereof, has
-----
the Company or any Company Affiliate contributed to or been obligated to
contribute to any Company Multiemployer Plan or 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. No Company Employee Plan
------------------------------
provides, or reflects or represents any liability to provide retiree health
insurance coverage to any person for any reason, except as may be required by
COBRA or other applicable statute.
(h) Health Care Compliance. Neither the Company nor any Company
----------------------
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 the Company Employees.
(i) Effect of Transaction.
---------------------
(i) The execution and delivery of this Agreement by the Company
did not, the performance by the Company of its obligations hereunder and the
consummation by the Company of the transactions contemplated hereby will not
(either alone or upon the occurrence of any additional or subsequent events),
constitute an event under any Company Employee Plan, Company 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 Company Employee.
(ii) No payment or benefit which will or may be made by the
Company or any Company Affiliates with respect to any Company Employee will be
characterized as a "parachute payment," within the meaning of Section 280G(b)(2)
of the Code.
(j) Employment Matters. To the knowledge of the Company, the
------------------
Company: (i) is in material 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 Company 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 Company
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 Entity, with respect to unemployment compensation
benefits,
-23-
social security or other benefits or obligations for Company Employees (other
than routine payments to be made in the normal course of business and consistent
with past practice). To the knowledge of the Company, 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 (other than
routine claims for benefits).
(k) Labor Matters. No work stoppage or labor strike against the
-------------
Company is pending or, to the knowledge of the Company, threatened. The Company
does not know of any activities or proceedings of any labor union to organize
any Company 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 Company 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
Company Employees and no collective bargaining agreement is being negotiated by
the Company.
(l) Company International Employee Plans. The Company has no
------------------------------------
knowledge of, nor has the Company ever had the obligation to maintain,
establish, sponsor, participate in or contribute to, any Company International
Employee Plan.
3.14 Restrictions on Business Activities. There is no Contract or
-----------------------------------
judgment, injunction, order or decree binding upon the Company or any of its
subsidiaries or to which the Company or any of its subsidiaries is a party which
has or could have the effect of prohibiting or materially impairing any material
business practice of the Company or any of its subsidiaries, any material
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.
3.15 Real Property Matters.
---------------------
(a) Real Property. Neither the Company nor any of its subsidiaries
-------------
owns any material real property. The Company and each of its subsidiaries have
good and marketable title to all of their owned real property, free and clear of
all liens except (i) for liens for taxes not yet due and payable, (ii) as
reflected in the financial statements contained in the Company SEC reports, and
(iii) for such liens or other imperfections of title, if any, as do not
materially interfere with the present use and enjoyment of the property affected
thereby.
(b) Leased Property. Section 3.15 of the Company Schedule contains
--------------- ------------
a complete and accurate list of all real property currently leased by Company,
and with respect to each Company Lease, the aggregate monthly rental payable
thereunder and the expiration date thereof. The Company has furnished or made
available to Parent a complete and accurate copy of all leases (each, a "Company
-------
Lease" and collectively, the "Company Leases") pursuant to which the Company or
----- --------------
any of its subsidiaries lease any real property. All of the Company Leases are
valid and enforceable in accordance with their respective terms, and there is
not, under any of the Company Leases, any existing material default or event of
default on the part of the Company or
-24-
any of its subsidiaries or, to the knowledge of the Company, on the part of any
other party to any such Company Lease (or any event which with notice or lapse
of time, or both, would constitute a material default and in respect of which
the Company or any of its subsidiaries has not taken adequate steps to prevent
such default from occurring). No term or condition of any Company Lease has been
modified, amended or waived except as shown in such documents heretofore
furnished or made available to Parent. Each Company Lease constitutes the entire
agreement of the landlord and the tenant thereunder, and there are no other
Contracts whatsoever relating to the Company's use or occupancy of any of the
premises described in the Company Leases. The Company has not transferred or
assigned any interest in any Company Lease, nor has the Company subleased or
otherwise granted rights of use or occupancy of any of the premises described
therein to any other person. As of the date of this Agreement, to the knowledge
of Company, the landlord under each Company Lease has complied with all of the
material requirements, conditions, representations, warranties and covenants of
the landlord thereunder, including, without limitation, the timely completion of
construction of the leased premises in a good and workmanlike manner and
otherwise in accordance with the Company Leases.
3.16 Tax Matters.
-----------
(a) The Company and each of its subsidiaries have timely filed all
federal, state, local and foreign returns, 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 material to the Company. All such Returns were correct and complete in all
material respects. The Company and each of its subsidiaries have paid all Taxes
shown to be due on such Returns. Except to the extent that an accrual or reserve
for Taxes has been established on the consolidated financial statements included
in the Company SEC Reports or the balance sheet of the Company included in the
most recently filed Company SEC Report, the Company has paid all Taxes payable
as of the date of such consolidated financial statements or balance sheet.
(b) The Company and each of its subsidiaries has withheld with
respect to its employees, independent contractors, creditors, stockholders, and
all other third parties 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 and have timely
paid over to the proper governmental authorities all amounts required to be
withheld and paid over under all applicable laws.
(c) Neither the Company nor any of its subsidiaries has executed any
unexpired waiver of any statute of limitations on or extending the period for
the assessment or collection of any Tax.
(d) To the knowledge of the Company, 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 in writing of any request for such an audit or other examination.
(e) No material adjustment relating to any Returns filed by the
Company or any of its subsidiaries (and no claim by a Tax authority in a
jurisdiction in which the Company
-25-
or any of its subsidiaries does not file Returns that the Company or any of its
subsidiaries may be subject to taxation by such jurisdiction) has been proposed
in writing formally or informally by any Tax authority to the Company or any of
its subsidiaries.
(f) Neither the Company nor any of its subsidiaries has any
liability for any unpaid Taxes which has not been accrued for or reserved on the
Company Balance Sheet in accordance with GAAP, whether asserted or unasserted,
contingent or otherwise, other than any liability for unpaid Taxes that may have
accrued since March 31, 2001 in connection with the operation of the business of
the Company and its subsidiaries in the ordinary course.
(g) There is no contract, agreement, 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, agreement, plan
or arrangement to which the Company is a party or by which it is bound to
compensate any individual for excise taxes paid pursuant to Section 4999 of the
Code.
(h) 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.
(i) Neither the Company nor any of its subsidiaries has constituted
either a "distributing corporation" or a "controlled corporation" in a
distribution of stock qualifying for tax-free treatment under Section 355 of the
Code (i) in the two years prior to the date of this Agreement or (ii) in a
distribution 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 Merger.
(j) The Company has not granted any power of attorney with respect
to Taxes.
(k) The Company is not, and has not been at any time, a "United
States real property holding corporation" within the meaning of section 897(c)
of the Code.
3.17 Intellectual Property Matters.
-----------------------------
(a) No Company Intellectual Property or product owned by the Company
or service offering of the Company or any of its subsidiaries (a "Company
-------
Product") is subject to any proceeding or outstanding decree, order, judgment,
-------
or stipulation restricting in any material manner, or any Contract restricting
in any material manner the use, transfer, or licensing thereof by the Company or
any of its subsidiaries, or which may materially affect the validity, use or
enforceability of such Company Intellectual Property or Company Product.
(b) Each material item of Company Registered Intellectual Property
is valid and subsisting, all necessary registration, maintenance and renewal
fees currently due in
-26-
connection with such Company Registered Intellectual Property have been made and
all necessary documents, recordations and certificates in connection with such
Company Registered Intellectual Property have been filed with the relevant
patent, copyright, trademark or other authorities in the United States or
foreign jurisdictions, as the case may be, for the purposes of prosecuting,
perfecting and maintaining such Company Registered Intellectual Property. The
Company has not claimed any status in the application for or registration of any
Registered Intellectual Property Rights, including "small business status," that
would not be applicable to Purchaser.
(c) In each case in which the Company has acquired any Intellectual
Property from any person, the Company has obtained a valid and enforceable
assignment sufficient to irrevocably transfer all rights in and to such
Intellectual Property (including the right to seek past and future damages with
respect thereto) to the Company sufficient for the Company to conduct its
business as currently conducted or proposed to be conducted. To the maximum
extent provided for by, and in accordance with, applicable laws and regulations,
the Company has recorded each such assignment of a Registered Intellectual
Property Right assigned to the Company with the relevant Governmental Entity.
(d) All Company Intellectual Property will be fully transferable,
alienable or licensable by Surviving Corporation and/or Parent without
restriction and without payment of any kind to any person except for ordinary
course restrictions or payments that would apply to the Company had the
transactions contemplated by this Agreement not occurred.
(e) The Company owns, and has good and exclusive title to, each item
of Company Intellectual Property owned by it free and clear of any lien or
encumbrance (excluding non-exclusive licenses and related restrictions granted
in the ordinary course). Without limiting the foregoing: (i) the Company is the
exclusive owner of all trademarks and trade names purported to be owned by the
Company that are used in connection with the operation or conduct of the
business of the Company and its subsidiaries, including the sale, distribution
or provision of any Company Products by the Company or its subsidiaries; (ii)
the Company owns exclusively, and has good title to, all copyrighted works that
are Company Products or services or which the Company or any of its subsidiaries
otherwise purports to own; and (iii) to the extent that any Patents would be
infringed by any Company Products, to the knowledge of the Company, the Company
is the exclusive owner of such Patents, or has secured appropriate rights
through license or other agreement.
(f) Within the past year, the Company has not (i) transferred
ownership of, or granted any exclusive license of or exclusive right to use, or
authorized the retention of any exclusive rights to use or joint ownership of,
material Company Intellectual Property that was or is currently purported to be
owned by the Company, to any other person, or (ii) permitted the Company's
rights in such material Company Intellectual Property to lapse or enter the
public domain.
(g) All Company Intellectual Property used in or necessary to the
conduct of the Company's business as presently conducted or reasonably
contemplated to be conducted by the Company was written and created solely by
either (i) employees of the Company acting within the scope of their employment
or (ii) by third parties who have exclusively licensed to the
-27-
Company or validly and irrevocably assigned all of their rights, including all
Intellectual Property rights therein, to the Company, and no such third party
owns or has any rights to any of the Company Intellectual Property purported to
be owned by the Company.
(h) The Company Intellectual Property and other Intellectual Property
licensed by the Company constitutes all the Intellectual Property used in and/or
necessary to the conduct of the business of the Company as it currently is
conducted, and as it is reasonably planned or contemplated to be conducted by
the Company, including, without limitation, the design, development,
manufacture, use, import, sale and licensing of Company Products.
(i) No person who has licensed any Intellectual Property to the
Company has ownership rights or license rights granted by the Company to
improvements made by or for the Company in such Intellectual Property.
(j) The Company has the right to use, pursuant to valid licenses, all
operating software (including software required to provide services offered by
the Company), software development tools, library functions, compilers and all
other third-party software that are used in the operation of the Company 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.
Without limiting the foregoing, no open source or public library software,
including any version of any software licensed pursuant to any GNU public
license, was used in the development or modification of any software that is
Company Intellectual Property.
(k) Any agreements between the Company and other persons for the
development or manufacture of a Company Product will permit the Company to
continue the development or manufacture of any such product notwithstanding any
termination or expiration of such agreement(s), without the payment of any
additional royalty, fee or other payment to any such other person (other than
accrued fees or payments).
(l) The Company has no knowledge of any information, materials,
facts, or circumstances, including any information or fact that would constitute
prior art, that would render any of the Company Registered Intellectual Property
invalid or unenforceable, or would materially affect any pending application for
any Company Registered Intellectual Property and the Company has not knowingly
misrepresented, or knowingly failed to disclose, any facts or circumstances in
any application for any Company Registered Intellectual Property that would
constitute fraud or a misrepresentation with respect to such application or that
would otherwise affect the validity or enforceability of any Company Registered
Intellectual Property.
(m) To the extent that any technology, software or Intellectual
Property has been developed or created independently or jointly by another
person or employee for the Company or any of its subsidiaries or is incorporated
into any of the Company Products, the Company has a written or electronic
agreement with such third party or employee with respect thereto and the Company
thereby either (i) has obtained ownership of, and is the exclusive owner of, or
(ii) has obtained a license (sufficient for the conduct of its business as
currently conducted and as proposed to be conducted) to such person's
Intellectual Property in such work, material or invention.
-28-
(n) Section 3.17(n) of the Company Schedule contains a complete
---------------
and accurate list of all material Contracts to which the Company or any of
its subsidiaries is a party (i) with respect to Company Intellectual
Property licensed or transferred to any third party (other than licenses or
support and maintenance agreements entered into in the ordinary course), or
(ii) pursuant to which a third party has licensed or transferred any
material Intellectual Property to the Company.
(o) Section 3.17(o) of the Company Schedule contains a complete
---------------
and accurate list of all material contracts, licenses and agreements
between the Company and any other person wherein or whereby the Company 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 of the Intellectual
Property Rights of any person other than the Company, other than in the
ordinary course of business.
(p) All material Contracts relating to either (i) Company
Intellectual Property, or (ii) Intellectual Property of another person
licensed to the Company or any of its subsidiaries, including, without
limitation, third party licenses to the Company relating to or in any way
permitting Company Products, services or Company Intellectual Property to
interoperate with other products, systems or standards, are in full force
and effect (other than those which have expired by their terms). The
execution and delivery of this Agreement by the Company have not violated
or resulted in, and the performance by the Company of its obligations
hereunder and the consummation by the Company of the transactions
contemplated hereby will not violate or result in, the breach,
modification, cancellation, termination or suspension of such Contracts.
Each of the Company and its subsidiaries is in material compliance with,
and has not materially breached any term of any such Contracts and, to the
knowledge of the Company, all other parties to such contracts, licenses and
agreements are in compliance with, and have not materially breached any
term of, such Contracts. Following the Effective Time, the Surviving
Corporation will be permitted to exercise all of the Company's rights under
such Contracts to the same extent the Company and 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 the Company would
otherwise be required to pay. Neither this Agreement nor the transactions
contemplated by this Agreement will result in, by virtue of the terms of
any Contract to which the Company or any of its subsidiaries is a party or
by they are bound, (i) either the granting by Parent or Merger Sub to any
other person any right to or with respect to any Intellectual Property
right owned by, or licensed to, either of them (other than Intellectual
Property acquired pursuant to this Agreement), (ii) either Parent's or the
Merger Sub's being bound by, or subject to, any non-compete or other
material restriction on the operation or scope of their respective
businesses, or (iii) either Parent, Merger Sub or the Company, as the case
may be, being obligated to pay any royalties or other material amounts to
any third party in excess of those payable by Parent or the Company,
respectively, prior to the Effective Time.
(q) The operation of the business of the Company and its
subsidiaries as such business currently is conducted or is currently
contemplated to be conducted has not, does not and, to its knowledge, will
not infringe or misappropriate, the Intellectual Property of any third
party or constitute unfair competition or trade practices under the laws of
any jurisdiction;
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provided however, that with respect to Patents, the foregoing
representation is made to the knowledge of the Company.
(r) Neither the Company nor any of its subsidiaries has received
written notice from any third party alleging that the operation of the
business of the Company or any of its subsidiaries or any act, product or
service (including Company Products, technology or service offerings
currently under development) of the Company or any of its subsidiaries,
infringes or misappropriates the Intellectual Property of any third party
or constitutes unfair competition or trade practices under the laws of any
jurisdiction.
(s) To the knowledge of the Company, no person has or is
infringing or misappropriating any Company Intellectual Property.
(t) The Company and each of its subsidiaries has taken
reasonable steps to protect the rights of the Company and its subsidiaries
in the Company's confidential information and trade secrets that it wishes
to protect or any trade secrets or confidential information of third
parties provided to the Company or any of its subsidiaries under an
obligation of confidentiality, and, without limiting the foregoing, each of
the Company and its subsidiaries has required each employee and contractor
to execute a proprietary information/confidentiality agreement and all
current and former employees and contractors of the Company and any of its
subsidiaries have executed such an agreement, except where the failure to
do so is not reasonably expected to be material to the Company.
3.18 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 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 knowledge of
the Company, 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 Closing Date, 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
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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.
3.19 Contracts.
---------
(a) Neither the Company nor any of its subsidiaries is a party
to or is bound by any executory:
(i) Contract with any officer, director, Company Employee
or member of the Company Board, or any service, operating or management
agreement or arrangement with respect to any of its assets or properties
(whether leased or owned), other than those that are terminable by the
Company or any of its subsidiaries on no more than thirty (30) days' notice
without liability or financial obligation to the Company or any of its
subsidiaries;
(ii) Contract or plan (including, without limitation, any
stock option plan, stock appreciation right plan, equity based compensation
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;
(iii) Contract of indemnification, guaranty or warranty
other than any Contract of indemnification, guaranty or warranty entered
into in connection with the sale, license or purchase of products or
services in the ordinary course of business;
(iv) 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 entity or granting
any exclusive distribution rights;
(v) Contract currently in force relating to the
disposition or acquisition by the Company or any of its subsidiaries after
the date of this Agreement of a material amount of assets outside the
ordinary course of business, or pursuant to which the Company or any of its
subsidiaries has acquired any material ownership interest in any person
other than Company's subsidiaries;
(vi) dealer, distributor, joint marketing or development
Contract under which the Company or any of its subsidiaries has continuing
material obligations to jointly market any product, technology or service
and which may not be canceled without penalty upon notice of ninety (90)
days or less, or any material Contract pursuant to which the Company or any
of its subsidiaries has continuing material obligations to jointly develop
any Intellectual Property that will not be owned, in whole or in part, by
the Company or any of its subsidiaries and which may not be canceled
without penalty upon notice of ninety (90) days or less;
(vii) Contract to license any third party the right to
manufacture or reproduce (other than copies of licensed software) any
Company Product, service or technology or any Contract granting rights to a
third party to sell or publicly distribute any Company Products, service or
technology except agreements with distributors or sales representatives in
-31-
the normal course of business cancelable without penalty upon notice of
ninety (90) days or less and substantially in the form furnished or made
available to Parent;
(viii) 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;
(ix) mortgages, indentures, guarantees, loans or credit
agreements, security agreements or other agreements or instruments relating
to the borrowing of money or extension of credit;
(x) material settlement agreement under which the
Company has ongoing obligations: or
(xi) Contract with a customer of the Company involving
payments to the Company in excess of $500,000 in any individual case or in
the aggregate.
(b) Neither the Company nor any of its subsidiaries, nor to the
knowledge of the Company, any other party to a Material 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 terms or conditions
of any of the material Contracts to which the Company or any of its
subsidiaries is a party or by which the Company or any of its subsidiaries
is bound (including, without limitation, the Contracts that are required to
be set forth in the Company Schedule) (any such Contract, a "Material
--------
Company Contract") in such a manner as would permit any other party to
----------------
cancel or terminate any such Material 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).
3.20 Insurance. The Company has furnished or made available to Parent
---------
a complete and accurate copy of all insurance policies and fidelity bonds
to which the Company or any of its subsidiaries is a party, beneficiary or
named insured (each a "Company Insurance Policy" and collectively, the
------------------------
"Company Insurance Policies"). The Company believes that the Company
--------------------------
Insurance Policies are of the type and in amounts customarily carried by
persons conducting businesses similar to those of the Company and its
subsidiaries. There is no material claim by the Company or any of its
subsidiaries pending under any of the Company Insurance Policies as to
which coverage has been questioned, denied or disputed by the underwriters
of such policies or bonds.
3.21 Opinion of Financial Advisor. The Company Board has been advised
----------------------------
by its financial advisor, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co., Inc., that in such
advisor's opinion, as of the date of this Agreement, the Merger
Consideration is fair to the holders of Company Shares (other than Parent
and its affiliates) from a financial point of view, and the written
confirmation of such opinion has been delivered to Parent.
3.22 Brokers. Except for fees payable to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co., Inc.
-------
pursuant to an engagement letter, dated May 23, 2001, a complete and
accurate copy of which has been furnished to Parent, the Company has not
incurred, nor will it incur, directly or indirectly, any
-32-
liability for brokerage or finders fees or agent's commissions or any
similar charges in connection with this Agreement, the Merger or any
transaction contemplated hereby.
3.23 State Takeover Statutes. The Company Board has approved this
-----------------------
Agreement, the Merger and the other transactions contemplated hereby, and
the Company Voting Agreements and the transactions contemplated thereby,
and such approval is sufficient to render inapplicable to this Agreement,
the Merger and the other transactions contemplated hereby, and to the
Company Voting Agreements and the transactions contemplated thereby, the
provisions of Section 203 of the DGCL to the extent, if any, Section 203 of
the DGCL is applicable to this Agreement, the Merger and the other
transactions contemplated hereby, and to the Company Voting Agreements and
the transactions contemplated thereby. No other state takeover statute or
similar statute or regulation applies to or purports to apply to this
Agreement, the Merger or the other transactions contemplated hereby, or to
the Company Voting Agreements and the transactions contemplated thereby.
3.24 Board Approval. The Company Board, at a meeting duly called and
--------------
held on June 10, 2001 (i) unanimously determined that this Agreement is
advisable, (ii) unanimously determined that this Agreement and the
transactions contemplated hereby are fair to and in the best interests of
the Company and its stockholders; (iii) approved this Agreement and the
transactions contemplated hereby, and (iv) resolved to recommend that the
stockholders of the Company adopt and approve this Agreement and approve
the Merger under Delaware Law.
3.25 Reorganization. Neither the Company nor any of its subsidiaries
--------------
has taken any action that has caused, or would reasonably be expected to
cause, the Merger to fail to qualify a "reorganization" within the meaning
of Section 368(a) of the Code.
3.26 Registration Statement; Proxy Statement/Prospectus. None of the
--------------------------------------------------
information supplied or to be supplied by the Company for inclusion or
incorporation by reference in the Registration Statement will, at the time
the Registration Statement is declared or ordered effective under the
Securities Act, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which
they are made, not misleading. The Proxy Statement/Prospectus will not, as
of the Effective Time, on the date mailed to the Company's stockholders,
and at the time of the Company Stockholder Meeting, contain any untrue
statement of a material fact or omit to state any material fact required to
be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not misleading. The
Proxy Statement/Prospectus will comply as to form in all material respects
with the provisions of the Exchange Act and the rules and regulations
promulgated by the SEC thereunder. Notwithstanding the foregoing, the
Company makes no representation or warranty with respect to any information
supplied by Parent or Merger Sub which is contained in the Registration
Statement or the Proxy Statement/Prospectus.
-33-
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub hereby jointly and severally represent and
warrant to the Company, subject to the information set forth in the
disclosure letter delivered by Parent and Merger Sub to the Company dated
as of the date hereof (the "Parent Schedule"), as follows:
---------------
4.1 Organization and Qualification; Subsidiaries. Each of Parent 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 currently
being conducted, except as would not, individually or in the aggregate,
have a Material Adverse Effect on Parent. Each of Parent and its
subsidiaries is in possession of all 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 currently being conducted, except as would not,
individually or in the aggregate, have a Material Adverse Effect on Parent.
Each of Parent and its subsidiaries at all times has been, and currently
is, in compliance with the terms of the Approvals applicable to it, except
where the failure would not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect on Parent. Each of Parent and
its subsidiaries is qualified to do business as a foreign corporation and
is in good standing under the laws of each jurisdiction where the nature of
its business requires such qualification or to be in good standing, except
where the failure to be so qualified or in good standing would not,
individually or in the aggregate, have a Material Adverse Effect on Parent.
4.2 Certificate of Incorporation and Bylaws. Parent has delivered to
---------------------------------------
the Company complete and correct copies of its Certificate of Incorporation
and Bylaws as amended to date (together, the "Parent Charter Documents").
------------------------
The Parent Charter Documents and equivalent organizational documents of
each of its subsidiaries are in full force and effect, Parent is not in
violation of any of the provisions of the Parent Charter Documents, and no
subsidiary of Parent is in violation of any of its equivalent
organizational documents, except as would not, individually or in the
aggregate, have a Material Adverse Effect on Parent.
4.3 Capitalization.
--------------
(a) The authorized capital stock of Parent consists of
500,000,000 shares of Common Stock, par value $0.001 per share, and
5,000,000 shares of Preferred Stock, par value $0.001 per share. As of the
close of business on June 1, 2001: (i) 162,130,889 shares of Parent Common
Stock were issued and outstanding; (ii) 455,654 shares of Parent Common
Stock were held by Parent as treasury stock; (iii) no shares of Parent
Common Stock were held by any subsidiaries of Parent; (iv)1,000,000 shares
of Parent Common Stock were reserved for future issuance under the employee
stock purchase plan of Parent; (v) 24,126,378 shares of Parent Common Stock
were reserved for issuance upon the exercise of stock options outstanding
under Parent's stock plans; (vi) 10,800,000 shares of Parent Common Stock
were reserved for issuance upon conversion of Parent's 5 1/2 % convertible
subordinated notes; and (vii) no shares of Parent Preferred Stock were
issued or outstanding. Except as set forth in this Section 4.3(a), there
--------------
are no securities of Parent authorized, reserved for issuance, issued or
outstanding. All of the outstanding shares of Parent Common Stock, and all
outstanding shares of capital stock of each subsidiary of Parent, are
validly issued, fully paid and nonassessable shares of Parent Common Stock,
and were issued in compliance in all
-34-
material respects with all applicable securities laws and other applicable
Legal Requirements and all applicable Contracts to which Parent or any of
its subsidiaries is a party or by which they are bound.
(b) The shares of Parent Common Stock issued as part of the
Merger Consideration will, when issued, be duly authorized, validly issued,
fully paid and nonassessable shares of Parent Common Stock, and not subject
to any preemptive rights created by statute, Parent's Certificate of
Incorporation or Bylaws or any agreement to which Parent is a party or is
bound, and will, when issued, be registered under the Securities Act and
the Exchange Act and registered or qualified (or exempt from registration
and qualification requirements) under all applicable state "blue sky"
securities laws.
4.4 Authority Relative to this Agreement. Parent has all necessary
------------------------------------
corporate power and authority to execute and deliver this Agreement, to
perform its obligations hereunder and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by
Parent, the performance by Parent of its obligations hereunder, and the
consummation by Parent of the transactions contemplated hereby, have been
duly and validly authorized by all necessary corporate action (including
any action of the Parent Board or Parent's stockholders) on the part of
Parent, and no other corporate proceedings on the part of Parent, are
necessary to authorize Parent to execute and deliver this Agreement, to
perform its obligations hereunder or to consummate the transactions
contemplated hereby, subject only to filing the Certificate of Merger under
the applicable provisions of Delaware Law. This Agreement has been duly and
validly executed and delivered by Parent and, assuming the due
authorization, execution and delivery by the Company, constitutes the legal
and binding obligation of Parent, enforceable against Parent in accordance
with its terms, except as the enforcement thereof may be limited by
bankruptcy, insolvency (including, without limitation, all laws relating to
fraudulent transfers), reorganization, moratorium or similar laws affecting
enforcement of creditors' rights generally and except as enforcement
thereof is subject to general principles of equity (regardless of whether
enforcement is considered in a proceeding in equity or at law).
4.5 No Conflict; Required Filings and Consents.
------------------------------------------
(a) The execution and delivery of this Agreement by Parent does
not, and the performance by Parent of its obligations hereunder and the
consummation by Parent of the transactions contemplated hereby will not,
(i) violate the Parent Charter Documents or the equivalent organizational
documents of any of Parent's subsidiaries, (ii) subject to obtaining the
consents, approvals, authorizations and permits, and making the filings and
notifications, set forth in Section 4.5(b) hereof, conflict with or violate
--------------
any law, rule, regulation, order, judgment or decree applicable to Parent
or any of its subsidiaries, or by which Parent, any of its subsidiaries or
any of their respective assets and properties are bound or affected, or
(iii) 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 the rights of Parent or any of its subsidiaries under, or alter the
rights or obligations of any person under, or give to any person any rights
of termination, amendment, acceleration or cancellation of, or result in
the creation of a lien on any of the assets or properties of Parent or any
of its subsidiaries pursuant to, any material Contract to which Parent or
any of its subsidiaries is a party or by which Parent, any of its
subsidiaries or any of their respective assets and properties are bound or
affected, except, with respect to clause (ii) and
-35-
(iii) of this Section 4.5(a), for such conflicts, violations, breaches,
--------------
defaults or other occurrences that would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on
Parent or a material adverse effect on Parent's ability to timely perform
its obligations under this Agreement or consummate the transactions
contemplated hereby.
(b) The execution and delivery of this Agreement by Parent does
not, and the performance by Parent of its obligations hereunder and the
consummation by Parent of the transactions contemplated hereby will not,
require any consent, approval, authorization or permit of, or filing with
or notification to, any Governmental Entity, except (i) for applicable
requirements under the Securities Act, the Exchange Act, the HSR Act, the
applicable antitrust or competition laws and regulations of foreign
Governmental Entities, if any, and the rules of the Nasdaq, (ii) for the
filing and recordation of the Certificate of Merger as required by Delaware
Law and (iii) where the failure to obtain such consents, approvals,
authorizations or permits, or to make such filings or notifications (A)
would not prevent or materially delay the parties hereto from performing
their respective obligations under this Agreement or consummating the
transactions contemplated hereby, or (B) would not, individually or in the
aggregate, have a Material Adverse Effect on Parent.
4.6 SEC Filings; Financial Statements.
---------------------------------
(a) Parent has made available to the Company a complete and
accurate copy of each report, schedule, registration statement, proxy and
information statements and other documents filed by Parent with the SEC
since December 31, 1997 (each, a "Parent SEC Report" and collectively, the
-----------------
"Parent SEC Reports"), which are all the reports, schedules, registration
------------------
statements, proxy and information statements and other documents required
to be filed by Parent with the SEC since such date. The Parent 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 (or, if such Parent SEC Report was amended or superseded by
another filing, then on the date of filing of such amendment or superceding
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 Parent's subsidiaries is required to file any
reports or other documents with the SEC.
(b) As of their respective dates, each set of consolidated
financial statements (including, in each case, any related notes thereto)
contained in the Parent SEC Reports, (i) complied as to form in all
material respects with the published rules and regulations of the SEC with
respect thereto, (ii) was prepared in accordance with 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, for
the absence of footnotes as permitted by Form 10-Q promulgated under the
Exchange Act), and (iii) fairly presents in all material respects the
consolidated financial condition of Parent and its subsidiaries at the
respective dates thereof and the consolidated results of operations and
cash flows of Parent and its subsidiaries for the periods indicated, except
that the unaudited interim financial statements were or are subject to
normal year-end recurring adjustments which were not or are not expected to
be material in amount or significance.
-36-
(c) Parent has previously delivered to the Company a complete
and correct copy of any amendments or modifications, which have not yet
been filed as of the date hereof with the SEC but which are required to be
filed as of the date hereof, to agreements, documents or other instruments
which previously had been filed by Parent with the SEC pursuant to the
Securities Act or the Exchange Act.
4.7 No Undisclosed Liabilities. Neither Parent nor any of its
--------------------------
subsidiaries has any liabilities (whether absolute, accrued, contingent or
otherwise) of a nature required to be disclosed on a balance sheet prepared
in accordance with GAAP which are, individually or in the aggregate,
material to the business, assets, financial condition or results of
operations of Parent and its subsidiaries, taken as a whole, except (i)
liabilities set forth or reflected in Parent's balance sheet as of December
31, 2001 contained in the Parent SEC Reports, (ii) liabilities incurred
since December 31, 2001 in the ordinary course of business, none of which
is material to the business, assets, financial condition or results of
operations of Parent and its subsidiaries, taken as a whole, or (iii)
liabilities published in Parent's press release dated April 26, 2001
(relating to Parent's fiscal fourth quarter and year-end financial
results). Parent and each of its subsidiaries has timely filed all Returns
relating to Taxes required to be filed by Parent and each of its
subsidiaries with any Tax authority, except such Returns which are not
material to Parent. Parent and each of its subsidiaries has paid all Taxes
shown to be due on such Returns.
4.8 No Material Adverse Effect. Except as require by this Agreement,
--------------------------
since December 31, 2000, there has not been any event, occurrence or
condition that has had, or would reasonably be expected to have, a Material
Adverse Effect on Parent.
4.9 Absence of Litigation. Except as set forth in the Parent SEC
---------------------
Documents filed with the SEC prior to the date hereof, there are no claims,
actions, suits or proceedings pending or, to the knowledge of Parent,
threatened against Parent, any of its subsidiaries or any of their
respective assets and properties before any Governmental Entity that if
adversely determined against Parent would, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on
Parent.
4.10 Intellectual Property. Except as would not reasonably be expected
---------------------
to have, individually or in the aggregate, a Material Adverse Effect on
Parent, Parent and its subsidiaries own or possess adequate licenses or
other valid rights to us all Intellectual Property used or held for use in
connection with the business of Parent and its subsidiaries as currently
conducted. To the knowledge of Parent, the conduct of the business of
Parent and its subsidiaries as currently conducted does not and will not
conflict with any Intellectual Property of any third party, except as would
not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on Parent.
4.11 Funds. As of the Effective Time, Parent will have sufficient
-----
funds to pay the Merger Consideration in connection with the Merger and all
other fees and expenses incurred in connection with the Merger.
4.12 Merger Sub. Merger Sub was formed solely for the purpose of
----------
engaging in the Merger and has not engaged in any business activities or
conducted any operations other than in connection with the Merger and the
other transactions contemplated by this Agreement. As of
-37-
the Effective Time, all of the outstanding capital stock of Merger Sub will
be owned directly by Parent.
4.13 Brokers. Except for fees payable to Banc of America Securities
-------
LLC, Parent has not incurred nor will it incur, directly or indirectly, any
liability for brokerage or finders' fees or agents' commissions or any
similar charges in connection with this Agreement or any transaction
contemplated hereby.
4.14 Registration Statement; Proxy Statement/Prospectus. None of the
--------------------------------------------------
information supplied or to be supplied by Parent for inclusion or
incorporation by reference in the Registration Statement will, at the time
the Registration Statement is declared or ordered effective under the
Securities Act, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which
they are made, not misleading. The Proxy Statement/Prospectus will not, as
of the Effective Time, on the date it is mailed to the Company's
stockholders, and at the time of the Company Stockholder Meeting, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading. The Registration Statement will comply as to form in all
material respects with the provisions of the Securities Act and the rules
and regulations promulgated by the SEC thereunder. Notwithstanding the
foregoing, Parent makes no representation or warranty with respect to any
information supplied by the Company which is contained in any of the
Registration Statement or the Proxy Statement/Prospectus.
ARTICLE V
INTERIM CONDUCT
5.1 Conduct of Business by the Company. Except as contemplated by
----------------------------------
this Agreement or as otherwise approved by Parent in writing, during the
period commencing with the execution and delivery of this Agreement and
continuing until the earlier to occur of the termination of this Agreement
pursuant to Article VIII hereof or the Effective Time, the Company and each
------------
of its subsidiaries shall, except to the extent that Parent shall otherwise
consent in writing, (i) carry on its business in the usual, regular and
ordinary course and in substantially the same manner as heretofore
conducted and in material compliance with all applicable laws and
regulations, pay its debts and taxes when due subject to good faith
disputes over such debts or taxes, (ii) pay or perform other material
obligations when due, and (iii) use all commercially reasonable efforts
consistent with past practices and policies to (A) preserve intact its
present business organization, (B) keep available the services of its
present officers and employees, and (C) preserve its relationships with
customers, suppliers, distributors, licensors, licensees and other persons
with which it has significant business dealings. In addition to the
foregoing, except (i) as permitted by the terms of this Agreement, (ii) as
set forth in Section 5.1 of the Company Schedule, or (iii) as otherwise
-----------
approved by Parent in writing (which approval shall not be unreasonably
withheld or delayed), at all times during the period commencing with the
execution and delivery of this Agreement and continuing until the earlier
to occur of the termination of this Agreement pursuant to Article VIII
------------
hereof or the Effective Time, the Company shall not do any of the following
and shall not permit any of its subsidiaries to do any of the following:
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(a) waive any stock repurchase rights, accelerate, amend or
change the period of exercisability of Company Stock Options or restricted
stock, reprice Company Stock Options granted under any employee,
consultant, director or other Company Stock Option Plans, or authorize cash
payments in exchange for any Company Stock Options granted under any of
such employee, consultant, director or other Company Stock Option Plans;
(b) grant any severance or termination pay or benefits, or
payments or benefits triggered by a change of control or merger, to any
officer or employee of the Company, except pursuant to written agreements
outstanding, or written policies existing, on the date hereof and as
previously disclosed in writing or delivered 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;
(c) other than in the ordinary course of business, transfer or
license to any person, 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 patent rights;
(d) 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;
(e) purchase, redeem or otherwise acquire, directly or
indirectly, any shares of capital stock, except repurchases of unvested
shares at cost in connection with the termination of the employment
relationship with any employee pursuant to a Company Stock Option or
purchase agreements in effect on the date hereof;
(f) issue, deliver, sell, authorize, pledge or otherwise
encumber (or propose any of the foregoing) any shares of capital stock or
other securities convertible into, or exercisable or exchangeable for,
shares of capital stock, or subscriptions, rights, warrants or options to
acquire any shares of capital stock or other securities convertible into,
or exercisable or exchangeable for, shares of capital stock, or enter into
other Contract obligating it to issue any such shares of capital stock or
securities convertible into, or exercisable or exchangeable for, shares of
capital stock, or issue or grant any other equity-based compensation award
(whether payable in cash and/or stock), other than (i) the issuance of
shares of Company Common Stock pursuant to the exercise of Company Stock
Options and Company Warrants outstanding as of the date hereof, (ii) the
issuance of shares of Company Common Stock issuable to participants in the
Company ESPP consistent with the terms thereof, or (iii) the granting of
Company Stock Options to newly-hired employees of the Company (other than
directors, officers and other executive level employees) in the ordinary
course of business consistent with past practice in an amount not to exceed
50,000 shares of Company Common Stock in the aggregate, or 5,000 shares of
Company Common Stock in any individual case; provided, however, that (x)
none of such Company Stock Options, pursuant to their respective terms,
will vest or be exercised prior to January 1, 2002, (y) the recipients of
each such Company Stock Option waives any and all rights to acceleration of
the vesting of such Company Stock Options under the applicable Company
Option Plan, and (z) the agreement pursuant to which each such Company
Stock Option is granted does not provide for acceleration in any
circumstance;
-39-
(g) cause, permit or propose any amendments to the Company
Charter Documents or similar governing instruments of any of its
subsidiaries;
(h) acquire or agree to acquire by merging or consolidating
with, or by purchasing any equity interest in or the assets of, or by any
other manner, any business or any person or division thereof, or otherwise
acquire or agree to enter into any joint ventures, strategic partnerships
or alliances;
(i) sell, lease, license, encumber or otherwise dispose of any
properties or assets, except for sales of inventory in the ordinary course
of business or the sale, lease or disposition (other than through licensing
permitted by Section 5.1(c) hereof) of property or assets which are not
--------------
material, individually or in the aggregate, to the business of the Company
and its subsidiaries, taken as a whole;
(j) other than in the ordinary course of business, enter into,
modify, amend or terminate any existing lease, license or contract
affecting the use, possession or operation of any properties or assets, or
grant or otherwise create or consent to the creation of any lien on or
affecting any owned or leased property or any portion thereof, or convey,
assign, sublease, license or otherwise transfer all or any portion of any
owned or leased property or any interest or rights therein;
(k) incur any indebtedness for borrowed money, or guarantee any
such indebtedness of another person, or issue or sell any debt securities
or options, warrants, calls or other rights to acquire any debt securities
of the Company, or 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 working capital consistent with past practice;
(l) adopt or amend any employee benefit plan, policy or
arrangement, any employee stock purchase or employee stock option plan, or
enter into any employment contract or collective bargaining agreement
(other than (i) offer letters and letter agreements entered into in the
ordinary course of business consistent with past practice with employees
who are terminable "at will" and (ii) employment obligations to foreign
employees under applicable Legal Requirements), or pay any special bonus or
special remuneration to any director or employee, or increase the salaries
or wage rates or fringe benefits (including rights to severance or
indemnification) of its directors, officers, employees or consultants
except, in each case, as may be required by applicable law;
(m) pay, discharge, settle or satisfy any litigation (whether or
not commenced prior to the date hereof) or any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge, settlement or satisfaction,
in the ordinary course of business or in accordance with their terms, or
liabilities recognized or disclosed in the most recent consolidated
financial statements (or the notes thereto) of the Company included in the
Company SEC Reports or incurred since the date of such financial
statements, or waive the benefits of, agree to modify in any manner,
terminate, release any person from or knowingly fail to enforce any
confidentiality or similar agreement to which
-40-
the Company or any of its subsidiaries is a party or of which the Company
or any of its subsidiaries is a beneficiary;
(n) except in the ordinary course of business, modify, amend or
terminate any material contract or agreement to which the Company or any of
its subsidiary is a party, 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 or
make any change in accounting methods, principles or practices;
(p) make any capital expenditures in excess of $50,000 in any
individual case, and $400,000 in the aggregate;
(q) incur or enter into any Contract requiring the Company or
any of its subsidiaries to pay in excess of $25,000 in any individual case;
(r) make any Tax election or accounting method change
inconsistent with past practice that, individually or in the aggregate,
would adversely affect in any material respect the Tax liability or Tax
attributes of the Company or any of its subsidiaries, taken as a whole, or
settle or compromise any material Tax liability, or consent to any
extension or waiver of any limitation period with respect to Taxes; or
(s) agree in writing or otherwise to take any of the actions
referred to in Section 5.1(a) through Section 5.1(r) hereof, inclusive.
-------------- --------------
5.2 Additional Restriction on Conduct of Business by the Company.
------------------------------------------------------------
Except (i) as permitted by the terms of this Agreement, or (ii) as
otherwise approved by Parent and Merger Sub in writing, at all times during
the period commencing with the execution and delivery of this Agreement and
continuing until the earlier to occur of the termination of this Agreement
pursuant to Article VIII hereof or the Effective Time, the Company shall
------------
not, and shall not permit any of its subsidiaries to, take any action that
would reasonably be expected to cause the Merger to fail to qualify as a
"reorganization" within the meaning of Section 368(a) of the Code.
5.3 Conduct of Business by Parent and Merger Sub. Except (i) as
--------------------------------------------
permitted by the terms of this Agreement, (ii) as set forth in Section 5.3
-----------
of the Parent Schedule, or (iii) as otherwise approved by the Company in
writing, at all times during the period commencing with the execution and
delivery of this Agreement and continuing until the earlier to occur of the
termination of this Agreement pursuant to Article VIII hereof or the
------------
Effective Time, Parent and Merger Sub shall not, and shall not permit any
of their respective subsidiaries to do any of the following:
(a) 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;
(b) effect any amendment to Parent's Certificate of
Incorporation that would have an adverse effect on the rights of holders of
Parent Common Stock (including, without limitation, the Parent Common Stock
to be issued as part of the Merger Consideration);
-41-
(c) acquire or agree to acquire, by merging or consolidating
with, by purchasing an 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 thereof, or
otherwise acquire or agree to acquire any assets of any other person, or
dispose of any assets, which, in any case, would reasonably be expected to
prevent or delay beyond the Termination Date the consummation of the Merger
or any other transaction contemplated by this Agreement; or
(d) take any action that would reasonably be expected to cause
the Merger to fail to qualify as a "reorganization" within the meaning of
Section 368(a) of the Code.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 No Solicitation.
---------------
(a) From and after the execution and delivery of this Agreement
until the earlier to occur of the Effective Time or termination of this
Agreement pursuant to Article VIII hereof, the Company and its subsidiaries
------------
shall not, nor will they authorize or permit any of their respective
officers, directors, controlled affiliates or employees or any investment
banker, attorney or other advisor or representative retained by any of them
to, directly or indirectly, (i) solicit, initiate, encourage or induce the
making, submission or announcement of an Acquisition Proposal (as defined
below), (ii) participate in any discussions or negotiations regarding, or
furnish to any person any information relating to the Company or any of its
subsidiaries, or afford access to the business, properties, assets, books
or records of the Company or any of its subsidiaries to any person that has
made, or take any other action intended to assist or facilitate any
inquiries or the making of any proposal that constitutes or would
reasonably be expected to lead to, an Acquisition Proposal, (iii) engage in
discussions or negotiations with any person with respect to an Acquisition
Proposal, (iv) approve, endorse or recommend an Acquisition Proposal, or
(v) enter into any letter of intent or similar Contract contemplating or
otherwise relating to an Acquisition Transaction (as defined below);
provided, however, that notwithstanding the foregoing, prior to the
Effective Time the Company Board may, directly or indirectly through
advisors, agents or other intermediaries, subject to the Company's
compliance with the terms of this Section 6.1, (A) engage or participate in
-----------
discussions or negotiations with any person that has made (and not
withdrawn) a bona fide Acquisition Proposal that the Company Board
reasonably concludes in good faith (after consultation with a financial
advisor of nationally recognized reputation) constitutes a Superior
Proposal, and/or (B) furnish to such person nonpublic information relating
to the Company or any of its subsidiaries pursuant to a confidentiality
agreement with terms that in the aggregate are no less favorable to the
Company than those contained in the Confidentiality Agreement, provided
that in each case (1) none of the Company, any of its subsidiaries or any
representative of the Company or its subsidiaries shall have violated any
of the terms of this Section 6.1 in connection with such Acquisition
-----------
Proposal, (2) the Company Board reasonably concludes in good faith, after
consultation with its outside legal counsel, that in light of such Superior
Proposal such action is required in order for the Company Board to comply
with its fiduciary obligations to the Company's stockholders under Delaware
Law, (3) at least two (2) business days prior to engaging or participating
in any such discussions or negotiations with, such person, the Company
gives Parent written notice of the
-42-
identity of such person and all of the material terms and conditions of
such Acquisition Proposal and of the Company's intention to furnish
nonpublic information to, or engage or participate in discussions or
negotiations with, such person, and (4) contemporaneously with furnishing
any such information to such person, the Company furnishes such information
to Parent (to the extent such information has not been previously furnished
by Company to Parent). The Company and its subsidiaries shall immediately
cease any and all existing activities, discussions or negotiations with any
persons conducted heretofore with respect to any Acquisition Proposal.
Without limiting the foregoing, it is understood that any violation of the
restrictions set forth in this Section 6.1 by any officer, director or
-----------
employee of the Company or any of its subsidiaries or any investment
banker, attorney or other advisor or representative of the Company or any
of its subsidiaries shall be deemed to be a breach of this Section 6.1 by
-----------
Company. The Company shall not be entitled to enter into any letter of
intent or similar document or any Contract (other than a confidentiality
agreement as permitted by this Section 6.1) contemplating or otherwise
-----------
relating to an Acquisition Proposal unless and until this Agreement is
terminated by its terms pursuant to Article VIII hereof and the Company has
------------
paid all amounts due to Parent pursuant to Section 8.4 hereof.
-----------
(b) For all purposes of and under this Agreement, (i) the term
"Acquisition Proposal" shall mean any offer or proposal (other than an
--------------------
offer or proposal by Parent) relating to any Acquisition Transaction; (ii)
the term "Acquisition Transaction" shall mean any transaction or series of
-----------------------
related transactions other than the transactions contemplated by this
Agreement involving: (A) any acquisition or purchase from the Company by
any person or "group" (as defined under Section 13d of the Exchange Act) 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) beneficially owning
fifteen percent (15%) or more of the total outstanding voting securities of
the Company or any of its subsidiaries or any merger, 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 (other than in the ordinary course of business), exchange,
transfer, license (other than in the ordinary course of business),
acquisition or disposition of more than fifteen percent (15%) of the assets
of the Company; or (C) any liquidation, dissolution, recapitalization or
other significant corporate reorganization of the Company; and (iii) the
term "Superior Proposal" shall mean an Acquisition Proposal involving the
-----------------
acquisition of at least a majority of the outstanding voting securities of
the Company with respect to which the Company Board shall have reasonably
determined in good faith (after consultation with a financial advisor of a
nationally recognized standing) (A) taking into account, among other
things, the legal, financial and regulatory aspects of such Acquisition
Proposal and the person making such Acquisition Proposal, that the
acquiring party is capable of consummating the proposed Acquisition
Transaction on the terms proposed (including, without limitation, the
acquiring person's ability to obtain any necessary financing), and (B) that
the proposed Acquisition Transaction would, if consummated, be more
favorable to the Company's stockholders (in their capacities as such), from
a financial point of view, than the transactions contemplated by this
Agreement.
-43-
(c) In addition to the obligations of Company set forth in
Section 6.1(a) hereof, the Company shall, as promptly as practicable,
--------------
advise Parent orally and in writing of any request for information which
the Company reasonably believes could lead to a bona fide Acquisition
Proposal or of any Acquisition Proposal, or any inquiry with respect to or
which the Company reasonably believes could lead to any bona fide
Acquisition Proposal, the material terms and conditions of such request,
Acquisition Proposal or inquiry, and the identity of the person making any
such request, Acquisition Proposal or inquiry. The Company shall keep
Parent informed of the status and details (including material amendments or
proposed material amendments) of any such request, Acquisition Proposal or
inquiry. 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 Company Board) of any
meeting of the Company Board at which the Company Board is reasonably
expected to consider an Acquisition Proposal, and (ii) provide Parent with
at least twenty four (24) hours prior written notice of a meeting of the
Company Board at which the Company Board is reasonably expected to approve,
endorse or recommend a Superior Proposal to its stockholders, and together
with such notice a copy of the definitive documentation relating to such
Superior Proposal.
6.2 Company Stockholder Meeting. Promptly after the date hereof,
---------------------------
the Company shall take all action necessary under Delaware Law and the
Company Charter Documents to call and hold a meeting of the stockholders of
the Company (the "Company Stockholder Meeting") to be held as promptly as
---------------------------
reasonably practicable for the purpose of voting upon the adoption and
approval of this Agreement and the approval of the Merger, and the Company
shall use all commercially reasonable efforts to hold the Company
Stockholder Meeting as promptly as practicable after the date upon which
the Registration Statement is declared or ordered effective by the SEC.
Notwithstanding anything to the contrary set forth in this Agreement, the
Company may adjourn or postpone the Company Stockholder Meeting to the
extent necessary to ensure that any necessary supplement or amendment to
the Proxy Statement/Prospectus is provided to the Company's stockholders in
advance of a vote on this Agreement and the Merger at the Company
Stockholder Meeting or if, as of the time for which the Company Stockholder
Meeting (as set forth in the Proxy Statement/Prospectus), there are
insufficient shares of Company Common Stock represented (either in person
or by proxy) at the Company Stockholder Meeting to constitute a quorum
necessary to conduct business at the Company Stockholder Meeting. Subject
to Section 6.3(c) hereof, the Company shall use all 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 commercially reasonable action necessary or advisable to
secure the Requisite Company Stockholder Vote at the Company Stockholder
Meeting. The Company shall ensure that the Company Stockholder Meeting is
called, noticed, convened, held and conducted, and that all proxies
solicited by the Company in connection with the Company Stockholder
Meeting, are solicited in compliance with Delaware Law, the Company Charter
Documents, the rules of the Nasdaq and all other applicable Legal
Requirements. Unless this Agreement shall be earlier terminated pursuant to
Article VIII hereof, the Company shall call and hold the Company
------------
Stockholder Meeting for the purpose of voting upon the adoption and
approval of this Agreement and the approval of the Merger whether or not
the Company Board at any time subsequent to the date hereof determines that
this Agreement is no longer advisable or recommends that Company's
stockholders reject it. Notwithstanding anything to the contrary contained
in this Agreement, the Company's obligation to establish a record date for,
call, give notice of, convene and hold the Company Stockholder Meeting
-44-
pursuant to this Section 6.2 shall not be limited to or otherwise affected
-----------
by the commencement, disclosure, announcement or submission to the Company
of any Acquisition Proposal.
6.3 Preparation and Filing of Registration Statement and Proxy
----------------------------------------------------------
Statement/Prospectus; Withdrawal of Company Board Recommendation.
----------------------------------------------------------------
(a) Promptly after the date hereof, Parent and the Company shall
prepare and the Company shall file with the SEC a proxy statement for use
in connection with the solicitation of proxies from the Company's
stockholders in favor of the adoption and approval of this Agreement and
the approval of the Merger at the Company Stockholder Meeting (the "Proxy
-----
Statement/Prospectus"), and Parent and the Company shall prepare and Parent
--------------------
shall file with the SEC a registration statement on Form S-4 (or any
successor form thereto) (the "Registration Statement") for the offer and
----------------------
sale of the Parent Common Stock pursuant to the Merger and in which the
Proxy Statement/Prospectus will be included as a prospectus. Each of Parent
and the Company shall provide promptly to the other such information
concerning its business and financial statements and affairs as, in the
reasonable judgment of the providing party or its counsel, may be required
or appropriate for inclusion in the Proxy Statement/Prospectus and the
Registration Statement, or in any amendments or supplements thereto, and to
cause its counsel and auditors to cooperate with the other's counsel and
auditors in the preparation of the Proxy Statement/Prospectus and the
Registration Statement. Each of Parent and the Company shall use all
commercially reasonable efforts to have the Registration Statement declared
or ordered effective under the Securities Act as promptly as practicable
after such filing with the SEC. The Company shall use all commercially
reasonable efforts to cause the Proxy Statement/Prospectus to be mailed to
the Company's stockholders as promptly as practicable after the
Registration Statement is declared or ordered effective under the
Securities Act. Parent shall also take any action (other than qualifying to
do business in any jurisdiction in which it is not now so qualified or to
file a general consent to service of process) required to be taken under
any applicable state securities laws in connection with the issuance of
Parent Common Stock in the Merger and the Company shall furnish all
information concerning the Company and the holders of capital stock of the
Company as may be reasonably requested in connection with any such action
and the preparation, filing and distribution of the Proxy
Statement/Prospectus. No filing of, or amendment or supplement to, or
correspondence to the SEC or its staff with respect to, the Registration
Statement will be made by Parent, or with respect to the Proxy
Statement/Prospectus will be made by Company, without providing the other
party hereto a reasonable opportunity to review and comment thereon. Parent
will advise the Company, promptly after it receives notice thereof, of the
time when the Registration Statement has become effective or any supplement
or amendment has been filed, the issuance of any stop order, the suspension
of the qualification of the Parent Common Stock issuable in connection with
the Merger for offering or sale in any jurisdiction, or any request by the
SEC for amendment of the Registration Statement or comments thereon and
responses thereto or requests by the SEC for additional information. The
Company shall advise Parent, promptly after it receives notice thereof, of
any request by the SEC for the amendment of the Proxy Statement/Prospectus
or comments thereon and responses thereto or requests by the SEC for
additional information. If at any time prior to the Effective Time any
information relating to Parent or the Company, or any of their respective
affiliates, officers or directors, should be discovered by Parent or the
Company which should be set forth in an amendment or supplement to either
of the Registration Statement or the Proxy Statement/Prospectus, so that
any of such documents would not include
-45-
any misstatement of a material fact or omit to state any material fact
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading, the party which discovers such
information shall promptly notify the other party or parties hereto, as
applicable, and an appropriate amendment or supplement to the Registration
Statement and/or the Proxy Statement/Prospectus describing such information
shall be promptly filed with the SEC and, to the extent required by
applicable law, disseminated to the stockholders of the Company. Each of
the parties hereto shall cause the Proxy Statement/Prospectus to comply as
to form and substance to such party in all material respects with the
applicable requirements of the Exchange Act, the Securities Act and the
rules of the Nasdaq.
(b) Subject to the terms of Section 6.3(c) hereof, (i) the
--------------
Company Board shall recommend that the Company's stockholders vote in favor
of the adoption and approval of this Agreement and the approval of the
Merger at the Company Stockholder Meeting; provided, however, that the
Company Board shall submit this Agreement to the Company's stockholders
whether or not at any time subsequent to the date hereof the Company Board
determines that it can no longer make such recommendation, (ii) the Proxy
Statement/Prospectus shall include a statement to the effect that the
Company Board has recommended that the Company's stockholders vote in favor
of the adoption and approval of this Agreement and the approval of the
Merger at the Company Stockholder Meeting, and (iii) neither the Company
Board nor any committee thereof shall withdraw, amend or modify, or propose
or resolve to withdraw, amend or modify, in a manner adverse to Parent, the
recommendation of the Company Board that the Company's stockholders vote in
favor of the adoption and approval of this Agreement and the approval of
the Merger at the Company Stockholder Meeting.
(c) Nothing in this Agreement shall prevent the Company Board
from withholding, withdrawing, amending or modifying its unanimous
recommendation in favor of the approval and adoption of this Agreement and
approval of the Merger if (i) a Superior Offer is made to the Company and
is not withdrawn, (ii) neither the Company nor any of its representatives
shall have violated any of the terms of Section 6.1 hereof, and (iii) the
-----------
Company Board concludes in good faith, after consultation with its outside
counsel, that, in light of such Superior Offer, the withholding,
withdrawal, amendment or modification of such recommendation is required in
order for the Company Board to comply with its fiduciary duties to the
Company's stockholders under Delaware Law; provided, however, that prior to
any commencement thereof the Company shall have given Parent at least
seventy two (72) hours notice thereof. Nothing contained in this Section
-------
6.3(c) shall limit the Company's obligation to hold and convene the Company
------
Stockholder Meeting (regardless of whether the unanimous recommendation of
the Company Board shall have been withdrawn, amended or modified). Nothing
in this Section 6.3(c) shall prohibit the Company Board from (i) taking and
--------------
disclosing to the Company's stockholders a position contemplated by Rule
14e-2(a) promulgated under the Exchange Act, (ii) complying with the
provisions of Rule 14d-9 promulgated under the Exchange Act, or (iii)
making any disclosure that is required to comply with the Company Board's
duty of candor (including, without limitation, a change of recommendation
in favor of the adoption and approval of this Agreement and the approval of
the Merger by the Company's stockholders) to the Company's stockholders
under Delaware Law, provided that the Company Board concludes in good
faith, after consultation with its outside legal counsel, that taking any
of the actions referred to in the foregoing clauses (i), (ii) or (iii) is
required in order for the
-46-
Company Board to comply with its fiduciary obligations to the Company's
stockholders under Delaware Law.
6.4 Confidentiality. The parties acknowledge that Company and Parent
---------------
have previously executed a Confidentiality Agreement, dated as of June 1,
2001 (the "Confidentiality Agreement"), which will continue in full force
-------------------------
and effect in accordance with its terms.
6.5 Access to Information. The Company and Parent shall afford each
---------------------
other and their respective accountants, counsel and other representatives
reasonable access during normal business hours, upon reasonable notice, to
their respective properties, books, records and personnel during the period
prior to the Effective Time to obtain all information concerning their
respective businesses, including the status of product development efforts,
properties, results of operations and personnel, as either Parent or the
Company may reasonably request. No information or knowledge obtained by
Parent or the Company in any investigation pursuant to this Section 6.5
-----------
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 Merger.
6.6 Public Disclosure. Parent and the Company shall consult with each
-----------------
other, and agree, before issuing any press release or otherwise making any
public statement with respect to this Agreement, the Merger, the other
party or parties hereto, or any 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 applicable law or any listing
agreement with a national securities exchange or the Nasdaq, in which case
reasonable efforts to consult with the other party will be made prior to
any such release or public statement.
6.7 Commercially Reasonable Efforts. Upon the terms and subject to
-------------------------------
the conditions set forth in this Agreement, each of Parent, Merger Sub and
the Company shall use its respective commercially reasonable efforts to
take, or cause to be taken, all reasonable actions, and to do, or cause to
be done, and to assist and cooperate with the other party or parties hereto
in doing, all things reasonably necessary, proper or advisable to
consummate and make effective, in the most expeditious manner practicable,
the Merger and the other transactions contemplated hereby, including,
without limitation, to accomplish the following: (i) causing of the
conditions precedent set forth in Article VII hereto 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 commercially reasonable steps as may be necessary to
avoid any suit, claim, action, investigation or proceeding by any
Governmental Entity, (iii) the defending of any suits, claims, actions,
investigations or proceedings, whether judicial or administrative,
challenging this Agreement or the consummation of the Merger or any other
transactions contemplated hereby, including, without limitation, seeking to
have any stay or temporary restraining order entered by any court or other
Governmental Entity vacated or reversed; and (iv) the execution or delivery
of any additional instruments reasonably necessary to consummate the Merger
or the other transactions contemplated hereby, and to fully carry out the
purposes and intent of, this Agreement. In connection with and without
limiting the foregoing, the Company and the Company Board shall, if any
state takeover statute or similar statute or regulation is or becomes
applicable to this Agreement or any of the transactions contemplated by
this Agreement, use all commercially
-47-
reasonable efforts to take, or cause to be taken, all reasonable actions to
ensure that the transactions contemplated by this Agreement 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 this Agreement and the transactions contemplated hereby.
Notwithstanding anything herein to the contrary, nothing in this Agreement
shall be deemed to require Parent, Merger Sub or the Company or any
subsidiary or affiliate thereof to agree to any divestiture (including,
without limitation, through a licensing arrangement) by itself or any of
its affiliates of shares of capital stock or of any business, assets or
property, or the imposition of any limitation on the ability of any of them
to conduct their business or to own or exercise control of such assets,
properties and stock.
6.8 Notification. 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 materially untrue or inaccurate, 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
the Company under this Agreement; provided, however, that no such
notification shall affect the representations, warranties, covenants or
agreements of the Company set forth in this Agreement or the conditions to
the obligations of the Company set forth in this Agreement. Parent shall
give prompt notice to the Company upon becoming aware that any
representation or warranty made by Parent or Merger Sub contained in this
Agreement has become materially untrue or inaccurate, or of any failure of
Parent or Merger Sub to comply with or satisfy in any material respect any
covenant, condition or agreement to be complied with or satisfied by Parent
or Merger Sub under this Agreement; provided, however, that no such
notification shall affect the representations, warranties, covenants or
agreements of Parent or Merger Sub or the conditions to the obligations of
Parent and Merger Sub under this Agreement.
6.9 Third Party Consents. As soon as practicable following the date
--------------------
hereof, the Company shall use all commercially reasonable efforts to obtain
all consents, waivers and approvals set forth in Section 3.6 of the Company
-----------
Schedule that Parent has requested in writing that the Company obtain.
6.10 Company Stock Options; Company ESPP.
-----------------------------------
(a) Company Stock Options.
---------------------
(i) At the Effective Time, each Company Stock Option,
whether or not then vested or exercisable, shall be assumed by Parent. Each
Company Stock Option so assumed by Parent under this Agreement will
continue to have, and be subject to, the same terms and conditions of such
options immediately prior to the Effective Time (including, without
limitation, any repurchase rights or vesting provisions), except that (i)
each Company Stock Option will be exercisable (or will become exercisable
in accordance with its terms) for that number of whole shares of Parent
Common Stock equal to the product (rounded down to the nearest whole number
of shares of Parent Common Stock) of the number of shares of Company Common
Stock that were issuable upon exercise of such Company Stock Option
immediately prior to the Effective Time multiplied by the Option Exchange
Ratio and (ii) the per share exercise price for the shares of Parent Common
Stock issuable upon exercise of such assumed Company Stock Option will be
equal to the quotient (rounded up to the nearest whole cent)
-48-
determined by dividing the exercise price per share of Company Common Stock at
which such Company Stock Option was exercisable immediately prior to Closing by
the Option Exchange Ratio. For purposes of this Section 6.10(a) the term "Option
--------------- ------
Exchange Ratio" shall mean the sum of (x) the Stock Portion, and (y) the
--------------
quotient determined by dividing the Cash Portion by the fair market value of one
(1) share of Parent Common Stock, as determined at the Effective Time.
(ii) As promptly as practicable (but in no event more than 30
calendar days) following the Effective Time, Parent shall file, if available for
use by Parent, a registration statement on Form S-8 to register under the
Securities Act the issuance and resale of all shares of Parent Common Stock
issuable upon the exercise of the Company Stock Options assumed by Parent
pursuant to Section 6.9(a) hereof.
--------------
(b) Company ESPP. The Company shall take all steps necessary or
------------
appropriate (as determined by Parent) to terminate the Company ESPP on either
(i) the day immediately prior to the Effective Time, or (ii) the last day of the
last full payroll period ending immediately prior to the Effective Time.
6.11 Employee Matters
----------------
(a) The Company shall terminate, effective as of the day immediately
preceding the date the Company becomes a member of the same Controlled Group of
Corporations (as defined in Section 414(b) of the Code) as Parent (the "401(k)
------
Termination Date"), any and all 401(k) plans maintained by the Company or any of
----------------
its subsidiaries unless Parent shall provide notice to the Company that any such
401(k) plan(s) shall not be terminated pursuant to this Section 6.11. The
------------
Company shall provide Parent evidence that the 401(k) plan(s) of the Company and
its subsidiaries have been terminated pursuant to resolutions of the Company
Board or the board of directors of its subsidiaries, as applicable (the form and
substance of such resolutions shall be subject to review and approval of
Parent), effective as of the 401(k) Termination Date. All employees of the
Company shall continue on their existing benefit plans until such time as, in
Parent's sole discretion, an orderly transition can be accomplished to employee
benefit plans and programs maintained by Parent for its and its affiliates'
employees. Pending such action, Parent shall maintain the effectiveness of the
Company's benefit plans.
(b) To the extent permitted under applicable law, each employee of the
Company or its subsidiaries who shall become an employee of Parent in connection
with the Merger shall be given credit for all service with the Company or its
subsidiaries (or service credited by the Company or its subsidiaries) under all
employee benefit plans, programs, policies and arrangements maintained by Parent
or the Surviving Corporation (other than sabbatical benefits, for which
employees of the Company or its subsidiaries will not receive any such past
service credit) in which they participate or in which they become participants
for purposes of eligibility and vesting; provided, however, that no such credit
shall be provided in any circumstance that would result in duplicative benefits,
and provided, further, however, that such insurance carriers, outside providers
or the like are able to honor such commitments or terms reasonably acceptable to
Parent.
-49-
(c) The Company shall terminate any and all group severance,
separation or salary continuation plans, programs or arrangements maintained by
the Company or any of its subsidiaries, effective in each case as of the day
immediately preceding the Effective Time. The Company shall provide Parent
evidence that such plans have been terminated pursuant to resolutions of the
Company Board or the board of directors of its subsidiaries, as applicable (the
form and substance of which resolutions shall be subject to review and approval
of Parent).
6.12 Rights Plan Amendment
---------------------
(a) From the date of this Agreement until the earlier to occur of the
termination Agreement pursuant Article VIII hereof or the Effective Time, the
------------
Company and the Company Board shall not amend or modify, or take any other
action with regard to the Company Rights Plan in any manner, or take any other
action so as to (i) render the Company Rights Plan inapplicable to any
transaction other than the Merger and other transactions contemplated by this
Agreement and the Company Voting Agreements and the transactions contemplated
thereby, or (ii) permit any person (other than Parent, Merger Sub or any of
their affiliates) who would otherwise be an Acquiring Person (as defined in the
Company Rights Plan) not to be an Acquiring Person thereunder, or (iii) provide
that a Distribution Date or a Stock Acquisition Date (as such terms are defined
in the Company Rights Plan) or similar event does not occur as promptly as
practicable by reason of the execution of any agreement or transaction other
than this Agreement and the Company Voting Agreements and the Merger and the
agreements and transactions contemplated hereby and thereby, or (iv) except as
specifically contemplated by this Agreement, otherwise affect the rights of
holders of Company Rights, or (v) otherwise render the Company Rights Plan
applicable to Parent or its affiliates.
(b) In the event that this Agreement is terminated pursuant to
Article VIII hereof or otherwise (other than the termination of this Agreement
------------
by the Company pursuant to Section 8.1(c)(i) hereof) the Company shall not, for
-----------------
a period of six months from such termination, amend, modify, terminate or
otherwise rescind the Rights Plan Amendment without the prior written consent of
Parent.
6.13 Directors' and Officers' Indemnification
----------------------------------------
(a) For a period six (6) years from and after the Effective Time,
Parent shall cause the Surviving Corporation to fulfill and honor in all
respects the obligations of the Company under any indemnification agreements
between the Company and its directors and officers in effect immediately prior
to the Effective Time (the "Company Indemnified Parties") and any
---------------------------
indemnification provisions under the Company Charter Documents as in effect on
the date hereof to the maximum extent permitted by applicable law. The
Certificate of Incorporation of the Surviving Corporation shall contain
provisions with respect to exculpation and indemnification that are at least as
favorable to the Company Indemnified Parties as those contained in the Company
Charter Documents as in effect on the date hereof, which provisions shall not be
amended, repealed or otherwise modified in any manner that would adversely
affect the rights 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.
-50-
(b) For a period of six (6) years from and after the Effective Time,
Parent shall cause the Surviving Corporation to maintain in effect, if
available, directors' and officers' liability insurance covering those persons
who are currently covered by the Company's directors' and officers' liability
insurance policy in an amount and on terms no less advantageous, when taken as a
whole, to those applicable to the current directors and officers of the Company;
provided, however, that in no event shall Parent or the Surviving Corporation be
required to expend an annual premium for such coverage in excess of 150% of the
annual premium currently paid by the Company under its directors' and officer's
liability insurance policy in effect as of the date hereof, and if the cost for
such coverage is in excess of such amount, the Surviving Corporation shall only
be required to maintain such coverage as is available for such amount; and
provided further, however, that notwithstanding the foregoing, Parent may
fulfill its obligations under this Section 6.13(b) by purchasing a policy of
---------------
directors' and officers' insurance approved in advance by the Company, or a
"tail" policy under the Company's existing directors' and officers' insurance
policy, in either case which (i) has an effective term of six (6) years from the
Effective Time, (ii) covers only those persons who are currently covered by the
Company's directors' and officers' insurance policy in effect as of the date
hereof and only for actions and omissions occurring on or prior to the Effective
Time, (iii) contains terms and conditions (including, without limitation,
coverage amounts) that are no less advantageous, when taken as a whole, to those
applicable to the current directors and officers of the Company.
(c) In the event the Surviving Corporation or any of their respective
successors or assigns (i) consolidates with or merges into any other person and
is not the continuing or surviving corporation or entity of such consolidation
or merger or (ii) transfers all or substantially all of its properties and
assets to any person, proper provisions shall be made so that the successors and
assigns of the Surviving Corporation, assume or continue the obligations set
forth in this Section 6.13.
------------
(d) The provisions of this Section 6.13 shall survive the
------------
consummation of the Merger at the Effective Time and continue for the periods
specified in this Section 6.13 and are (i) intended to be for the benefit of,
------------
and shall be enforceable by, each of the Indemnified Parties and their
respective heirs and representatives and (ii) in addition to, and not in
substitution for, any other rights to indemnification or contribution that any
such person may have by contract or otherwise.
6.14 Regulatory Filings. As soon as may be reasonably practicable, the
------------------
Company and Parent each shall file with the FTC and the Antitrust Division of
the DOJ Notification and Report Forms relating to the transactions contemplated
herein as required by the HSR Act, as well as comparable pre-merger notification
filings and submissions with any foreign Governmental Entity as the parties may
agree in their best judgment are necessary, material or appropriate. The Company
and Parent each shall (i) cooperate and coordinate with one another in the
making of such filings, (ii) supply the other with any information which may be
required in order to effectuate such filings, and (iii) supply any additional
information which may be required by the FTC, the DOJ or the competition or
merger control authorities of any other Governmental Entity; provided, however,
that Parent shall not be required to agree to any divestiture by Parent, the
Company or any of their respective subsidiaries or affiliates of shares of
capital stock or of any business, assets or property of Parent, the Company or
any of their respective subsidiaries or affiliates, or the imposition of any
limitation on the ability of any of the foregoing to conduct
-51-
their respective businesses or to own or exercise control of their respective
assets, properties and stock.
6.15 Company Affiliate Agreements. Section 6.15 of the Company Schedule
---------------------------- ------------
contains a complete and accurate list of those persons who may be deemed to be,
in the Company's reasonable judgment, affiliates of the Company within the
meaning of Rule 145 promulgated under the Securities Act (each, a "Company
-------
Affiliate" and collectively, the "Company Affiliates"). The Company shall
--------- ------------------
provide Parent with such information and documents as Parent reasonably requests
for purposes of reviewing and evaluating the foregoing schedule of Company
Affiliates. Parent will be entitled to place appropriate legends on the
certificates evidencing any Parent Common Stock to be issued to a Company
Affiliate pursuant to the terms of this Agreement, and to issue appropriate stop
transfer instructions to the transfer agent for the Parent Common Stock,
consistent with the terms of the Company Affiliate Agreements. The Company and
Parent will comply with each of their respective obligations and covenants under
each of the Company Affiliate Agreements.
6.16 Nasdaq Listing. If required by applicable rules of the Nasdaq,
--------------
Parent shall cause the listing on the Nasdaq of the shares of Parent Common
Stock issuable, and those required to be reserved for issuance, pursuant to the
Merger and the other transactions contemplated hereby, subject to official
notice of issuance.
6.17 Obligations of Merger Sub. Parent shall take all action necessary to
-------------------------
cause Merger Sub to perform its obligations under this Agreement and to
consummate the Merger and the other transactions contemplated by this Agreement
on the terms and subject to the conditions set forth in this Agreement.
6.18 Parent Board Designee. At the Effective Time, the Company shall be
---------------------
entitled to designate one (1) director (the "Company Designee") on the Parent
----------------
Board, who shall serve for an initial term ending on the date of the next
succeeding annual meeting of stockholders of Parent. If Parent's next scheduled
annual meeting of stockholders is scheduled to occur within six (6) months of
the Effective Time, Parent shall take all commercially reasonable actions
necessary to cause the Company Designee to be so elected or appointed to the
Parent Board at or immediately after such next annual meeting of stockholders,
including, without limitation, at the option of Parent, by either increasing the
size of the Parent Board or seeking and accepting the resignations of such
number of then incumbent directors (subject to any limitations set forth in
Parent's Certificate of Incorporation or Bylaws) as is necessary to enable the
Company Designee to be so elected or appointed to the Parent Board.
6.19 Section 16 Affiliates. Parent, Merger Sub and the Company shall take
----------------------
all such steps as may be required to provide that, with respect to each Section
16 Affiliate, (i) the transactions contemplated by this Agreement, and (ii) any
other dispositions of Company equity securities (including derivative
securities) or other acquisitions of Parent equity securities (including
derivative securities) in connection with this Merger, shall be exempt under
Rule 16b-3 promulgated under the Exchange Act, in accordance with the terms and
conditions set forth in that certain No-Action Letter, dated January 12, 1999,
issued by the SEC to Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP.
-52-
ARTICLE VII
CONDITIONS TO THE MERGER
7.1 Conditions to Obligations of Parent, Merger Sub and the Company. The
---------------------------------------------------------------
respective obligations of each of Parent, Merger Sub and the Company to
consummate the Merger and the other transactions contemplated hereby shall be
subject to the satisfaction or waiver, where permissible, of each of the
following conditions at or prior to the Effective Time:
(a) Stockholder Approval. The Requisite Company Stockholder Approval
--------------------
shall have been obtained.
(b) Litigation. No court or other Governmental Entity of competent
----------
jurisdiction shall have enacted, issued, promulgated, enforced or entered any
statute, rule, regulation, executive order, judgment, decree, injunction or
other order (whether temporary, preliminary or permanent) which is in effect and
which has the effect of making the Merger illegal or otherwise prohibiting the
consummation of the Merger.
(c) Regulatory Approvals. All waiting periods under the HSR Act
--------------------
relating to the Merger and the other transactions contemplated hereby shall have
expired or been terminated early, and all material foreign antitrust approvals
required to be obtained prior to the consummation of the Merger in connection
with the transactions contemplated hereby shall have been obtained, the failure
of obtaining which would have the effect of making the Merger illegal in such
jurisdiction.
(d) No Stop Orders. The Registration Statement shall have been
--------------
declared or ordered effective under the Securities Act by the SEC. No stop order
suspending the effectiveness of the Registration Statement shall have been
issued or be in effect, and no proceeding for such purpose, and no similar
proceeding in respect of the Proxy Statement/Prospectus, shall have been
initiated or threatened in writing by the SEC.
(e) Nasdaq Listing. If required by applicable rules of the Nasdaq,
--------------
the shares of Parent Common Stock issuable to the Company's stockholders in
connection with the Merger pursuant to this Agreement, and such other shares
required to be reserved for issuance in connection with the Merger, shall have
been authorized for listing on the Nasdaq, subject to official notice of
issuance.
(f) Tax Opinions. Parent and the Company shall each have received
------------
written opinions from their respective tax counsel (▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ &
▇▇▇▇▇▇, Professional Corporation, and ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, LLP, respectively), in form and substance reasonably
satisfactory to each of them, to the effect that the Merger will constitute a
"reorganization" within the meaning of Section 368(a) of the Code and such
opinions shall not have been withdrawn. Each of Parent, Merger Sub and the
Company shall make such customary representations as requested by such counsel
for the purpose of rendering such opinions.
-53-
7.2 Additional Conditions to Obligations of the Company. The obligations
---------------------------------------------------
of the Company to consummate the Merger and the other transactions contemplated
hereby shall be subject to the satisfaction or waiver of each of the following
conditions at or prior to the Effective Time, 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 set forth in this Agreement shall have been true and
correct as of the date hereof and 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 (i) in each case, or in the aggregate, as does not constitute a Material
Adverse Effect on Parent, (ii) for changes contemplated by this Agreement, and
(iii) 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 (i)) as of
such particular date) (it being understood that, for purposes of determining the
accuracy of such representations and warranties, (A) 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 and (B) any update of or modification to the Parent Schedule made or
purported to have been made after the date of this Agreement shall be
disregarded). The Company shall have received a certificate with respect to the
foregoing signed on behalf of each of Parent and Merger Sub by an authorized
officer of each of Parent and Merger Sub.
(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 Parent and/or
Merger Sub on or prior to the Closing Date, and the Company shall have received
a certificate to such effect signed on behalf of each of Parent and Merger Sub
by an authorized officer of each of Parent and Merger Sub.
7.3 Additional Conditions to the Obligations of Parent and Merger Sub.
-----------------------------------------------------------------
The obligations of Parent and Merger Sub to consummate the Merger and the other
transactions contemplated hereby shall be subject to the satisfaction or waiver
of each of the following conditions at or prior to the Effective Time, any of
which may be waived, in writing, exclusively by Parent and Merger Sub:
(a) Representations and Warranties. Each representation and warranty
------------------------------
of the Company set forth in this Agreement shall have been true and correct as
of the date hereof and 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
(i) in each case, or in the aggregate, as does not constitute a Material Adverse
Effect on the Company, (ii) for changes contemplated by this Agreement and (iii)
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 (i)) as of such
particular date) (it being understood that, for purposes of determining the
accuracy of such representations and warranties, (A) 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 and (B) 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 an authorized officer of the
Company.
-54-
(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.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
8.1 Termination. This Agreement may be terminated and the Merger may be
-----------
abandoned, at any time prior to the Effective Time (it being agreed that the
party hereto terminating this Agreement pursuant to this Section 8.1 shall give
-----------
prompt written notice of such termination to the other party or parties hereto):
(a) by mutual written agreement of Parent and the Company.
(b) by either Parent or the Company, if:
(i) the Merger shall not have been consummated on or before
October 31, 2001 (the "Termination Date"); provided, however, that in the event
----------------
that the Merger shall not have been consummated on or before October 31, 2001
solely as a result of the failure to obtain all regulatory Approvals required to
consummate the Merger, the Termination Date shall be extended for two successive
thirty (30) calendar day periods (provided that in no event will the Termination
Date be extended beyond December 31, 2001); and provided further, however, that
the right to terminate this Agreement pursuant to this Section 8.1(b)(i) shall
-----------------
not be available to any party hereto whose failure to fulfill any obligation
under this Agreement has been the principal cause of, or resulted in the failure
of, the Merger to have been consummated on or before the Termination Date and
such action or failure to act constitutes a material breach of this Agreement;
or
(ii) the Requisite Company Stockholder Approval shall not have
been obtained by reason of the failure to obtain the required vote at a meeting
of the Company stockholders duly convened therefor or at any adjournment
thereof; provided, however, that the right to terminate this Agreement under
this Section 8.1(b)(ii) shall not be available to the Company where the failure
------------------
to obtain the Requisite 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 material breach by the Company of this Agreement; or
(iii) there shall have been enacted, issued, promulgated or
enforced any law, rule or regulation that makes the consummation of the Merger
illegal, or any judgment, injunction, order or decree of any Governmental Entity
having competent jurisdiction permanently restraining, enjoining or otherwise
prohibiting Parent or the Company from consummating the Merger, and such
judgment, injunction, order or decree shall have become final and nonappealable.
(c) by the Company:
-55-
(i) in the event of a material breach of any covenant or
agreement on the part of Parent or Merger Sub set forth in this Agreement, or in
the event that any representation or warranty of Parent and Merger Sub set forth
in this Agreement shall have been inaccurate when made or shall have become
inaccurate, in either case such that the condition set forth in Section 7.2
-----------
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 notwithstanding the foregoing, in the event that such breach by Parent or
Merger Sub or such inaccuracies in the representations and warranties of Parent
or Merger Sub are curable by Parent or Merger Sub through the exercise of its
commercially reasonable efforts, then the Company shall not be permitted to
terminate this Agreement pursuant to this Section 8.1(c)(i) until the earlier to
-----------------
occur of (A) the expiration of a thirty (30) calendar day period after delivery
of written notice from the Company to Parent of breach or inaccuracy, as
applicable, or (B) Parent or Merger Sub ceasing to exercise commercially
reasonable efforts to cure such breach or inaccuracy, provided that Parent or
Merger Sub continues to exercise commercially reasonable efforts to cure such
breach or inaccuracy (it being understood that the Company may not terminate
this Agreement pursuant to this Section 8.1(c)(i) if such breach or inaccuracy
-----------------
by Parent or Merger Sub is cured within such thirty (30) calendar day period);
or
(ii) prior to entering into a definitive agreement with respect
to an Superior Proposal, provided that (A) the Company has not breached and is
not then in breach of the terms of Section 6.1 hereof, (B) subject to the terms
-----------
of this Agreement, the Company Board has authorized the Company to enter into a
definitive agreement for a transaction that constitutes a Superior Proposal, (C)
the Company has notified Parent in writing that the Company has received an
Acquisition Proposal that constitutes a Superior Proposal and intends to enter
into a definitive agreement with respect to such Superior Proposal, which notice
shall include the most current version of such definitive agreement and the
identity of the person making such Superior Proposal, all with the purpose and
intent of enabling Parent and the Company to discuss in good faith a
modification of the terms and conditions of this Agreement so that the
transactions contemplated hereby may be effected, (D) Parent does not make,
within five (5) business days after receipt of the Company's written notice of
its intention to enter into a definitive agreement with respect to such Superior
Proposal, an offer that the Company Board reasonably determines in good faith,
after consultation with a financial advisor of nationally recognized standing
and its outside legal counsel, is at least as favorable to Company's
stockholders as such Superior Proposal, and (E) concurrently with the
termination of this Agreement, the Company pays to Parent the Termination Fee
set forth in Section 8.4 hereof and enters into a definitive agreement with
-----------
respect to such Superior Proposal.
(d) by Parent:
(i) in the event of a material breach of any covenant or
agreement on the part of the Company set forth in this Agreement, or in the
event that any representation or warranty of the Company set forth in this
Agreement shall have been inaccurate when made or shall have become inaccurate,
in either case such that the condition set forth in Section 7.3 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 notwithstanding
the foregoing, in the event that such breach by the Company or such inaccuracies
in the representations and warranties of the Company are curable by the Company
through the exercise of its commercially
-56-
reasonable efforts, then Parent shall not be permitted to terminate this
Agreement pursuant to this Section 8.1(d)(i) until the earlier to occur of (A)
-----------------
the expiration of a thirty (30) calendar day period after delivery of written
notice from Parent to the Company of such breach or inaccuracy, as applicable,
or (B) the ceasing by the Company to exercise commercially reasonable efforts to
cure such breach or inaccuracy, provided that the Company continues to exercise
commercially reasonable efforts to cure such breach or inaccuracy (it being
understood that Parent may not terminate this Agreement pursuant to this Section
-------
8.1(d)(i) if such breach or inaccuracy by the Company is cured within such
---------
thirty (30) calendar day period); or
(ii) if a Triggering Event shall have occurred. For purposes of
this Section 8.1, a "Triggering Event" shall be deemed to have occurred if,
----------- ----------------
prior to the Effective Time: (A) the Company Board or any committee thereof
shall for any reason have directly or indirectly withheld, withdrawn, amended or
modified its recommendation (including, without limitation, by virtue of taking
any position or making any disclosure pursuant to the last sentence of Section
-------
6.3(c) hereof) in favor of the adoption and approval of this Agreement or the
------
approval of the Merger by the Company's stockholders (collectively, the
"Recommendations"); (B) the Company shall have failed to include the
---------------
Recommendations in the Proxy Statement/Prospectus; (C) the Company Board or any
committee thereof shall have approved, or recommended that the Company
stockholders approve, an Acquisition Proposal; (D) the Company shall have
entered into any letter of intent or similar document or a Contract (other than
a confidentiality agreement as permitted by Section 6.1 hereof) accepting an
-----------
Acquisition Proposal; or (E) a tender or exchange offer shall have been
commenced by a person unaffiliated with Parent, and the Company shall not have
sent to its stockholders 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 to the Company's stockholders, a statement reaffirming
the Recommendations and recommending that the Company's stockholders reject such
tender or exchange offer.
8.2 Notice of Termination; Effect of Termination. Any termination of
--------------------------------------------
this Agreement under Section 8.1 hereof will be effective immediately upon (or
-----------
if this Agreement is terminated is pursuant to Section 8.1(c)(i) or Section
-----------------
8.1(d)(i) hereof and the proviso is applicable, thirty (30) days after) the
---------
delivery of written notice of the terminating party to the other party or
parties hereto, as applicable. In the event of the termination of this Agreement
pursuant to Section 8.1 hereof, this Agreement shall be of no further force or
-----------
effect without liability of any party (or any stockholder, director, officer,
employee, agent, consultant or representative of such party) to the other
parties hereto, except (i) as set forth in this Section 8.2, Section 8.3 and
----------- -----------
Article IX hereof, each of which shall survive the termination of this
----------
Agreement, and (ii) that nothing herein shall relieve any party from liability
for any intentional or willful breach of 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 its terms.
8.3 Fees and Expenses.
-----------------
(a) General. Except as set forth in this Section 8.3, all fees and
------- -----------
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the respective party incurring such fees
and expenses whether or not the Merger or any
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other transaction contemplated hereby is consummated; provided, however, that
notwithstanding the foregoing, Parent and the Company shall share equally (i)
all fees and expenses (other than attorneys' and accountants' fees and expenses)
in connection with the printing, filing and mailing of the Registration
Statement and the Proxy Statement/Prospectus (including any preliminary
materials related thereto and including the financial statements included
therein and exhibits thereto) and any amendments or supplements thereto, and
(ii) any filing fees required to be paid under the HSR Act or in connection with
any Foreign Filings.
(b) Company Payments.
----------------
(i) In the event that this Agreement is terminated by Parent
pursuant to Section 8.1(d)(ii) hereof, the Company shall pay to Parent a fee
------------------
equal to Forty Million Dollars ($40,000,000) by wire transfer of immediately
available funds to an account designated in writing by Parent (the "Termination
-----------
Fee Amount").
----------
(ii) The Company shall pay to Parent a fee equal to the
Termination Fee Amount, by wire transfer of immediately available funds to an
account designated in writing by Parent, within one (1) business day after
demand by Parent, in the event that (A) this Agreement is terminated by Parent
or the Company pursuant to Section 8.1(b)(i) or Section 8.1(b)(ii) hereof, or
----------------- ------------------
(B) this Agreement is terminated by Parent pursuant to Section 8.1(d)(i), and
-----------------
(x) following the execution and delivery of this Agreement and prior to the
termination of this Agreement, an Acquisition Proposal shall have been publicly
announced or shall have become publicly known and shall not have been
unconditionally and publicly withdrawn, and (y) within twelve (12) months
following the termination of this Agreement, either a Company Acquisition (as
defined below) is consummated, or the Company enters into a letter of intent or
Contract providing for a Company Acquisition and any Company Acquisition is
later consummated.
(iii) In the event that this Agreement is terminated by the
Company pursuant to Section 8.1(c)(ii) hereof, as a condition and prior to such
------------------
termination, the Company shall pay to Parent a fee equal to the Termination Fee
Amount by wire transfer of immediately available funds to an account designated
in writing by Parent.
(c) Definition of Company Acquisition. For purposes of this Section
--------------------------------- -------
8.3, the term "Company Acquisition" shall mean any of the following transactions
--- -------------------
or a series of related transactions having any of the following effects (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 shareholders
of Company immediately preceding such transaction hold less than fifty percent
(50%) 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 fifty percent (50%) 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 fifty percent (50%) of the voting power of the then
outstanding shares of capital stock of the Company.
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(d) Enforceability. The Company hereby acknowledges that the
--------------
agreements set forth in this Section 8.3 are an integral part of the
-----------
transactions contemplated by this Agreement, and that, without such agreements,
Parent would not enter into this Agreement. Accordingly, if the Company shall
fail to pay in a timely manner the amounts due pursuant to this Section 8.3,
-----------
and, in order to obtain such payment, Parent makes a claim that results in a
judgment against the Company, 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 8.3 at the base rate established by Citibank, N.A. in effect on the
-----------
date such payment was required to be made. Payment of the fees set forth in this
Section 8.3 shall not be in lieu of damages incurred in the event of breach of
-----------
this Agreement.
8.4 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, Merger Sub and Company.
8.5 Extension; Waiver. At any time prior to the Effective Time any party
-----------------
hereto may, to the extent legally allowed and except as otherwise set forth
herein, (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 (iii) waive compliance with any of the
agreements or conditions for the benefit of such party contained herein. Any
agreement on the part of a party hereto to any such extension or waiver 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 IX
GENERAL PROVISIONS
9.1 Survival of Representations; Warranties and Covenants. The
-----------------------------------------------------
representations, warranties and covenants of Parent, Merger Sub and the Company
set forth in this Agreement shall terminate at the Effective Time, and only the
covenants that by their terms survive the Effective Time (including, without
limitation, the terms of Section 6.19 hereof) shall survive the Effective Time.
------------
9.2 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:
Peregrine Systems, Inc
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
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with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
Professional Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to Company, to:
Remedy Corporation
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
9.3 Interpretation. 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 the words "include," "includes" and "including" when used herein shall
be deemed in each case to be followed by the words "without limitation." 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.
9.4 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.
9.5 Headings. The table of contents and headings contained in this
--------
Agreement are for convenience of reference only and shall not affect in any way
the meaning or interpretation of this Agreement.
9.6 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
-60-
herein, including the Company Schedule and the Parent 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 until
the Closing and shall survive any termination of this Agreement; and (b) except
with respect to the Indemnified Parties pursuant to Section 6.12 and with
------------
respect to the Company Designee pursuant to Section 6.18 hereof, are not
------------
intended to confer upon any other person any rights or remedies hereunder.
9.7 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.
9.8 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 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.
9.9 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 laws.
9.10 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.
9.11 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.
9.12 WAIVER OF JURY TRIAL. EACH OF PARENT, MERGER SUB AND THE COMPANY
--------------------
HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING
OR COUNTERCLAIM (WHETHER BASED ON
-61-
CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
ACTIONS OF PARENT, MERGER SUB OR THE COMPANY IN THE NEGOTIATION, ADMINISTRATION,
PERFORMANCE AND ENFORCEMENT OF THIS AGREEMENT.
9.13 Consent to Jurisdiction. Each of the parties hereto irrevocably
-----------------------
consents to the exclusive jurisdiction and venue of any court within the State
of Delaware in connection with any matter based upon or arising out of this
Agreement or the matters contemplated herein, and hereby further agrees that
process may be served upon each of them in any manner authorized by the laws of
the State of Delaware for such persons, and waives and covenants not to assert
or plead any objection which they might otherwise have to such jurisdiction,
venue and such process.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the undersigned parties have caused this Agreement to
be executed by their duly authorized respective officers as of the date first
above written.
PEREGRINE SYSTEMS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------
Title: Senior Vice President And Secretary
-------------------------------------
ROSE ACQUISITION CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------
Title: President and Chief Financial Officer
-------------------------------------
REMEDY CORPORATION
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------------
Title: Chairman and Chief Executive Officer
-------------------------------------
* * * * * AGREEMENT AND PLAN OF MERGER AND REORGANIZATION * * * * *