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EXHIBIT 2.1
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AGREEMENT AND PLAN OF MERGER
BY AND AMONG
▇▇▇▇▇▇▇▇.▇▇▇, INC.,
NEOIII ACQUISITION CORP.
AND
ECLIPSYS CORPORATION
MARCH 30, 2000
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TABLE OF CONTENTS
Page
ARTICLE I THE MERGER.......................................................2
1.1 The Merger.......................................................2
1.2 Effective Time; Closing..........................................2
1.3 Effect of the Merger.............................................2
1.4 Certificate of Incorporation; Bylaws.............................2
1.5 Directors and Officers...........................................2
1.6 Effect on Capital Stock..........................................3
1.7 Exchange of Certificates.........................................3
1.8 No Further Ownership Rights in Company Common Stock..............6
1.9 Restricted Stock.................................................7
1.10 Tax Consequences.................................................7
1.11 Taking of Necessary Action; Further Action.......................7
ARTICLE II REPRESENTATIONS AND WARRANTIES OF COMPANY.......................7
2.1 Organization; Subsidiaries.......................................8
2.2 Company Capitalization...........................................8
2.3 Obligations with Respect to Capital Stock........................9
2.4 Authority; Non-Contravention....................................10
2.5 SEC Filings; Company Financial Statements.......................11
2.6 Absence of Certain Changes or Events............................12
2.7 Taxes...........................................................13
2.8 Title to Properties.............................................15
2.9 Intellectual Property...........................................15
2.10 Compliance with Laws............................................17
2.11 Litigation......................................................17
2.12 Employee Benefit Plans..........................................18
2.13 Environmental Matters...........................................22
2.14 Certain Agreements..............................................23
2.15 Brokers' and Finders' Fees......................................23
2.16 Insurance.......................................................24
2.17 Disclosure......................................................24
2.18 Board Approval..................................................25
2.19 Opinion of Financial Advisor....................................25
2.20 Anti-Takeover Protections.......................................25
2.21 Affiliates......................................................25
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB.......25
3.1 Organization of Parent and Merger Sub...........................26
3.2 Parent and Merger Sub Capitalization............................26
3.3 Obligations With Respect to Capital Stock.......................27
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3.4 Authority; Non-Contravention....................................28
3.5 SEC Filings; Parent Financial Statements........................29
3.6 Absence of Certain Changes or Events............................30
3.7 Taxes...........................................................30
3.8 Title to Properties.............................................32
3.9 Intellectual Property...........................................32
3.10 Compliance with Laws............................................34
3.11 Litigation......................................................34
3.12 Employee Benefit Plans..........................................34
2.13 Environmental Matters...........................................38
3.14 Certain Agreements..............................................39
3.15 Brokers' and Finders' Fees......................................39
3.16 Insurance.......................................................40
3.17 Disclosure......................................................40
3.18 Board Approval..................................................40
3.19 Opinion of Financial Advisor....................................40
3.20 Anti-Takeover Protections.......................................41
ARTICLE IV CONDUCT PRIOR TO THE EFFECTIVE TIME............................41
4.1 Conduct of Business by Company..................................41
4.2 Conduct of Business by Parent...................................44
ARTICLE V ADDITIONAL AGREEMENTS...........................................47
5.1 Proxy Statement/Prospectus; Registration Statement;
Antitrust and Other Filings.....................................47
5.2 Meeting of Company Stockholders.................................48
5.3 Meeting of Parent Stockholders..................................50
5.4 No Solicitation.................................................50
5.5 Confidentiality; Access to Information..........................52
5.6 Public Disclosure...............................................52
5.7 Reasonable Efforts; Notification................................53
5.8 Third Party Consents............................................54
5.9 Stock Options and ESPP..........................................54
5.10 Form S-8........................................................55
5.11 Indemnification.................................................55
5.12 Parent Board of Directors; Executive Officers...................56
5.13 Nasdaq Listing..................................................56
5.14 Letters of Accountants..........................................56
5.15 Takeover Statutes...............................................56
5.16 Certain Employee Benefits.......................................56
5.17 Registration Rights.............................................57
5.18 Acquisitions of Company Stock...................................57
ARTICLE VI CONDITIONS TO THE MERGER.......................................57
6.1 Conditions to Obligations of Each Party to Effect the Merger....57
6.2 Additional Conditions to Obligations of Company.................58
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6.3 Additional Conditions to the Obligations of Parent and
Merger Sub......................................................59
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER.............................60
7.1 Termination.....................................................60
7.2 Notice of Termination Effect of Termination.....................62
7.3 Fees and Expenses...............................................63
7.4 Amendment.......................................................64
7.5 Extension; Waiver...............................................64
ARTICLE VIII GENERAL PROVISIONS...........................................64
8.1 Non-Survival of Representations and Warranties..................64
8.2 Notices.........................................................64
8.3 Interpretation; Certain Defined Terms...........................65
8.4 Counterparts....................................................66
8.5 Entire Agreement; Third Party Beneficiaries.....................66
8.6 Severability....................................................67
8.7 Other Remedies; Specific Performance............................67
8.8 Governing Law...................................................67
8.9 Rules of Construction...........................................67
8.10 Assignment......................................................67
8.11 Waiver Of Jury Trial............................................67
INDEX OF EXHIBITS
Exhibit A Form of Company Voting Agreement
Exhibit B Form of Parent Voting Agreement
Exhibit C Form of Certificate of Incorporation of Surviving Corporation
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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this "AGREEMENT") is made and
entered into as of March 30, 2000, among ▇▇▇▇▇▇▇▇.▇▇▇, Inc., a Delaware
corporation ("PARENT"), NeoIII Acquisition Corp., a Delaware corporation and
a wholly owned first-tier subsidiary of Parent ("MERGER SUB"), and Eclipsys
Corporation, a Delaware corporation ("COMPANY").
RECITALS
A. The respective Boards of Directors of Parent, Merger Sub and
Company have approved this Agreement, and declared advisable the merger of
Merger Sub with and into Company (the "MERGER") upon the terms and subject to
the conditions of this Agreement and in accordance with the General
Corporation Law of the State of Delaware ("DELAWARE LAW").
B. For United States federal income tax purposes, the Merger is
intended to qualify as a "reorganization" pursuant to the provisions of
Section 368 of the Internal Revenue Code of 1986, as amended (the "CODE").
For accounting purposes, the Merger is intended to be accounted for as a
purchase under United States generally accepted accounting principles
("GAAP").
C. Concurrently with the execution of this Agreement, and as a
condition and inducement to Parent's willingness to enter into this
Agreement, certain stockholders of Company are entering into Voting
Agreements with Parent in the form of Exhibit A (the "COMPANY VOTING
AGREEMENTS").
D. Concurrently with the execution of this Agreement, and as a
condition and inducement to Company's willingness to enter into this
Agreement, certain stockholders of Parent are entering into Voting Agreements
with Company and HEALTHvision, Inc., a Delaware corporation ("HEALTHVISION")
in the form of Exhibit B (the "PARENT VOTING AGREEMENTS").
E. Concurrently with the execution of this Agreement, Parent is
entering into an Agreement and Plan of Merger (the "HEALTHVISION MERGER
AGREEMENT") between Parent and Healthvision, an Outsourcing and Operating
Agreement (the "NOVATION OPERATING AGREEMENT") among Parent, Novation, LLC, a
Delaware limited liability company ("NOVATION"), VHA, Inc., a Delaware
corporation ("VHA"), University Healthsystem Consortium, an Illinois
corporation ("UHC"), and Healthcare Purchasing Partners International, LLC, a
Delaware limited liability company ("HPPI"), and Common Stock and Warrant
Agreements between Parent and VHA, and Parent and UHC, respectively (the
"STOCK AND WARRANT AGREEMENTS" and, together with the Novation Operating
Agreement, the "NOVATION DOCUMENTS," and the Novation Documents together with
the Healthvision Merger Agreement, the "RELATED AGREEMENTS"), copies of each
of which and all related documents are attached to the Parent Disclosure
Letter (as defined in the introduction to Article III).
In consideration of the foregoing and the representations, warranties,
covenants and agreements set forth in this Agreement, the parties agree as
follows:
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ARTICLE I
THE MERGER
1.1 The Merger. Upon the terms and subject to the conditions of this
Agreement and the applicable provisions of Delaware Law, at the Effective
Time, Merger Sub shall be merged with and into Company, the separate
corporate existence of Merger Sub shall cease, and Company shall continue as
the surviving corporation of the Merger (the "SURVIVING CORPORATION").
1.2 Effective Time; Closing. Subject to the provisions of this
Agreement, the parties hereto shall cause the Merger to be consummated by
filing a certificate of merger, in such appropriate form as determined by the
parties, with the Secretary of State of the State of Delaware in accordance
with the relevant provisions of Delaware Law (the "CERTIFICATE OF MERGER")
(the time of such filing (or such later time as may be agreed in writing by
Company and Parent and specified in the Certificate of Merger) being the
"EFFECTIVE TIME") as soon as practicable on or after the Closing Date. The
closing of the Merger (the "CLOSING") shall take place at the offices of
Fenwick & West LLP, Two Palo Alto Square, Palo Alto, California, at a time
and date to be specified by the parties, which shall be no later than the
second business day after the satisfaction or waiver of the conditions set
forth in Article VI, or at such other time, date and location as the parties
hereto agree in writing (the "CLOSING DATE").
1.3 Effect of the Merger. At the Effective Time, the effect of the
Merger shall be as provided in this Agreement and the applicable provisions
of Delaware Law. Without limiting the generality of the foregoing, at the
Effective Time, all the property, rights, privileges, powers and franchises
of Company and Merger Sub shall vest in the Surviving Corporation, and all
debts, liabilities and duties of Company and Merger Sub shall become the
debts, liabilities and duties of the Surviving Corporation.
1.4 Certificate of Incorporation; Bylaws.
(a) At the Effective Time, the Certificate of Incorporation of
Company, as in effect immediately prior to the Effective Time, shall be
amended to read in its entirety as set forth in Exhibit C, and thereafter
shall be the Certificate of Incorporation of the Surviving Corporation until
thereafter amended.
(b) At the Effective Time, 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.
1.5 Directors and Officers. The initial directors of the Surviving
Corporation shall be the directors of Merger Sub immediately prior to the
Effective Time, until their respective successors are duly elected or
appointed and qualified. The initial officers of the Surviving Corporation
shall be the officers of Merger Sub immediately prior to the Effective Time,
until their respective successors are duly appointed.
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1.6 Effect on Capital Stock. Subject to the terms and conditions of
this Agreement, at the Effective Time, by virtue of the Merger and without
any action on the part of Merger Sub, Company or the holders of any of the
following securities:
(a) Conversion of Company Common Stock. Each share of common
stock, par value $0.01 per share, of Company ("COMPANY COMMON STOCK") issued
and outstanding immediately prior to the Effective Time, other than any
shares of Company Common Stock to be canceled pursuant to Section 1.6(b),
will be canceled and extinguished and automatically converted (subject to
Section 1.6(e)) into the right to receive 1.344 (the "EXCHANGE RATIO") of a
share of common stock, par value $0.001 per share, of Parent ("PARENT COMMON
STOCK") upon surrender of the certificate representing such share of Company
Common Stock in the manner provided in Section 1.7. No fraction of a share
of Parent Common Stock will be issued by virtue of the Merger, but in lieu
thereof, a cash payment shall be made pursuant to Section 1.7(e).
(b) Cancellation of Company-Owned and Parent-Owned Stock. Each
share of Company Common Stock held by Company or owned by Merger Sub, Parent
or any direct or indirect wholly owned subsidiary of Company or of Parent
immediately prior to the Effective Time shall be canceled and extinguished
without any conversion thereof.
(c) Stock Options; Employee Stock Purchase Plan. At the
Effective Time, all options to purchase Company Common Stock then outstanding
under Company's 1996 Stock Option Plan, 1998 Stock Incentive Plan and 1999
Stock Incentive Plan (collectively, the "COMPANY STOCK OPTION PLANS") shall
be assumed by Parent in accordance with Section 5.9 of this Agreement.
Rights outstanding under Company's 1998 Employee Stock Purchase Plan (the
"COMPANY ESPP") shall be treated as set forth in Section 5.9 of this
Agreement.
(d) Capital Stock of Merger Sub. Each share of common stock,
par value $0.01 per share, of Merger Sub (the "MERGER SUB COMMON STOCK"),
issued and outstanding immediately prior to the Effective Time shall be
converted into one validly issued, fully paid and nonassessable share of
common stock, $0.01 par value per share, of the Surviving Corporation.
Following the Effective Time, each certificate evidencing ownership of shares
of Merger Sub common stock shall evidence ownership of such shares of capital
stock of the Surviving Corporation.
(e) Adjustments to Exchange Ratio. The Exchange Ratio shall be
adjusted to reflect appropriately the effect of any stock split, reverse
stock split, stock dividend (including any dividend or distribution of
securities convertible into Parent Common Stock or Company Common Stock),
reorganization, recapitalization, reclassification or other like change with
respect to Parent Common Stock or Company Common Stock occurring on or after
the date hereof and prior to the Effective Time.
1.7 Exchange of Certificates.
(a) Exchange Agent. Parent shall select an institution
reasonably acceptable to Company to act as the exchange agent (the "EXCHANGE
AGENT") in the Merger.
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(b) Exchange Fund. Promptly after the Effective Time, Parent
shall deposit with the Exchange Agent for exchange in accordance with this
Article I, the shares of Parent Common Stock (such shares of Parent Common
Stock, together with cash in lieu of fractional shares and any dividends or
distributions with respect thereto, are hereinafter referred to as the
"EXCHANGE FUND") issuable pursuant to Section 1.6 in exchange for outstanding
shares of Company Common Stock.
(c) Exchange Procedures. Promptly after the Effective Time,
Parent shall instruct the Exchange Agent to mail to each holder of record of
a certificate or certificates ("CERTIFICATES") which immediately prior to the
Effective Time represented outstanding shares of Company Common Stock whose
shares were converted into shares of Parent Common Stock pursuant to Section
1.6, (i) a letter of transmittal in customary form (that shall specify that
delivery shall be effected, and risk of loss and title to the Certificates
shall pass, only upon proper delivery of the Certificates to the Exchange
Agent and shall contain such other provisions as Parent may reasonably
specify) and (ii) instructions for use in effecting the surrender of the
Certificates in exchange for certificates representing shares of Parent
Common Stock. Upon surrender of Certificates for cancellation to the
Exchange Agent together with such letter of transmittal, duly completed and
validly executed in accordance with the instructions thereto, the holders of
such Certificates shall be entitled to receive in exchange therefor
certificates representing the number of whole shares of Parent Common Stock
into which their shares of Company Common Stock were converted at the
Effective Time, payment in lieu of fractional shares that such holders have
the right to receive pursuant to Section 1.7(e) and any dividends or
distributions payable pursuant to Section 1.7(d), and the Certificates so
surrendered shall forthwith be canceled. Until so surrendered, outstanding
Certificates will be deemed from and after the Effective Time, for all
corporate purposes, to evidence only the ownership of the number of full
shares of Parent Common Stock into which such shares of Company Common Stock
shall have been so converted and the right to receive an amount in cash in
lieu of the issuance of any fractional shares in accordance with Section
1.7(e) and any dividends or distributions payable pursuant to Section
1.7(d). No interest will be paid or accrued on any cash in lieu of
fractional shares of Parent Common Stock or on any unpaid dividends or
distributions payable to holders of Certificates. In the event of a transfer
of ownership of shares of Company Common Stock which is not registered in the
transfer records of Company, a certificate representing the proper number of
shares of Parent Common Stock may be issued to a transferee if the
Certificate representing such shares of Company Common Stock is presented to
the Exchange Agent, accompanied by all documents required to evidence and
effect such transfer and by evidence that any applicable stock transfer taxes
have been paid.
(d) Distributions With Respect to Unexchanged Shares. 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, following surrender of any such
Certificates, the Exchange Agent shall deliver to the holders of certificates
representing whole shares of Parent Common Stock issued in exchange therefor,
without interest, (i) promptly, the amount of any cash payable with respect
to a fractional share of Parent Common Stock to which such holder is entitled
pursuant to Section
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1.7(e) and the amount of dividends or other distributions with a record date
after the Effective Time theretofore paid with respect to such whole shares
of Parent Common Stock, and (ii) at the appropriate payment date, the amount
of dividends or other distributions with a record date after the Effective
Time but prior to surrender and a payment date occurring after surrender,
payable with respect to such whole shares of Parent Common Stock.
(e) Fractional Shares. (i) As promptly as practicable
following the Effective Time, the Exchange Agent shall determine the excess
of (A) the number of full shares of Parent Common Stock delivered to the
Exchange Agent pursuant to Section 1.7(b), over (B) the aggregate number of
full shares of Parent Common Stock to be distributed to holders of Company
Common Stock pursuant to Section 1.7(c) (such excess, the "EXCESS SHARES").
Following the Effective Time, the Exchange Agent, as agent for the holders of
Company Common Stock, shall sell the Excess Shares at then prevailing prices
on the Nasdaq Stock Market in the manner set forth in paragraph (ii) of this
Section 1.7(e).
(ii) The sale of the Excess Shares by the Exchange Agent
shall be executed on the Nasdaq Stock Market and shall be executed in round
lots to the extent practicable. The Exchange Agent shall use all
commercially reasonable efforts to complete the sale of the Excess Shares as
promptly following the Effective Time as, in the Exchange Agent's reasonable
judgment, is practicable consistent with obtaining the best execution of such
sales in light of prevailing market conditions. Until the net proceeds of
such sales have been distributed to the holders of Company Common Stock, the
Exchange Agent will hold such proceeds in trust for the holders of Company
Common Stock. The Exchange Agent will determine the portion of such net
proceeds to which each holder of Company Common Stock shall be entitled, if
any, by multiplying the amount of the aggregate net proceeds by a fraction
the numerator of which is the amount of the fractional share interest to
which such holder of Company Common Stock is entitled (after taking into
account all shares of Parent Common Stock to be issued to such holder) and
the denominator of which is the aggregate amount of fractional share
interests to which all holders of Company Common Stock are entitled. As soon
as practicable after the determination of the amount of cash, if any, to be
paid to holders of Company Common Stock with respect to fractional share
interests, the Exchange Agent shall promptly pay such amounts to such holders
of Company Common Stock in accordance with the terms of Section 1.7(c).
(iii) Notwithstanding the provisions of paragraphs (i) and
(ii) of this Section 1.7(e), Parent may decide, at its option, exercised
prior to the Effective Time, in lieu of the issuance and sale of Excess
Shares and the making of the payments contemplated in such paragraphs, that
Parent shall pay to the Exchange Agent an amount sufficient for the Exchange
Agent to pay each holder of Company Common Stock the amount such holder would
have received pursuant to Section 1.7(e)(ii) assuming that the sales of
Parent Common Stock were made at a price equal to the average of the closing
prices of the Parent Common Stock on the Nasdaq Stock Market for the ten
consecutive trading days immediately following the Effective Time and, in
such case, all references herein to the cash proceeds of the sale of the
Excess Shares and similar references shall be deemed to mean and refer to the
payments calculated as set forth in this paragraph (iii). In such event,
Excess Shares shall not be issued or otherwise transferred to the Exchange
Agent pursuant to Sections 1.7(b) or (e).
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(f) 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 such amounts as may be
required to be deducted or withheld therefrom under the Code or under any
provision of state, local or foreign tax law or under any other applicable
Legal Requirement (as defined in Section 2.2(b)). 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.
(g) 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, certificates representing the shares of Parent Common Stock into
which the shares of Company Common Stock represented by such Certificates
were converted pursuant to Section 1.6, cash for fractional shares, if any,
as may be required pursuant to Section 1.7(e) and any dividends or
distributions payable pursuant to Section 1.7(d); provided, however, that
Parent may, in its discretion and as a condition precedent to the issuance of
such certificates representing shares of Parent Common Stock, cash and other
distributions, require the owner 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.
(h) No Liability. Notwithstanding anything to the contrary in
this Section 1.7, neither the Exchange Agent, Parent, the Surviving
Corporation nor any party hereto 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.
(i) Termination of Exchange Fund. Any portion of the Exchange
Fund which remains undistributed to the holders of Company Common Stock for
twelve months after the Effective Time shall be delivered to Parent, upon
demand, and any holders of Company Common Stock who have not theretofore
complied with the provisions of this Section 1.7 shall thereafter look only
to Parent for the shares of Parent Common Stock, any cash in lieu of
fractional shares of Parent Common Stock to which they are entitled pursuant
to Section 1.7(e) and any dividends or other distributions with respect to
Parent Common Stock to which they are entitled pursuant to Section 1.7(d), in
each case, without any interest thereon.
1.8 No Further Ownership Rights in Company Common Stock. All shares
of Parent Common Stock issued in accordance with the terms hereof (including
any cash paid in respect thereof pursuant to Section 1.7(d) and (e)) shall be
deemed to have been issued in full satisfaction of all rights pertaining to
such shares of Company Common Stock, and there shall be no further
registration of transfers on the records of the Surviving Corporation of
shares of Company Common Stock that were outstanding immediately prior to the
Effective Time. If after the Effective Time Certificates are presented to
the Surviving Corporation for any reason, they shall be canceled and
exchanged as provided in this Article I.
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1.9 Restricted Stock. If any shares of Company Common Stock that are
outstanding immediately prior to the Effective Time are unvested or are
subject to a repurchase option, risk of forfeiture or other condition
providing that such shares ("COMPANY RESTRICTED STOCK") may be forfeited or
repurchased by the Company upon any termination of the stockholders'
employment, directorship or other relationship with the Company (and/or any
affiliate of the Company) under the terms of any restricted stock purchase
agreement or other agreement with the Company that does not by its terms
provide that such repurchase option, risk of forfeiture or other condition
lapses upon consummation of the Merger, then the shares of Parent Common
Stock issued upon the conversion of such shares of Company Common Stock in
the Merger will continue to be unvested and subject to the same repurchase
options, risks of forfeiture or other conditions following the Effective
Time, and the certificates representing such shares of Parent Common Stock
may accordingly be marked with appropriate legends noting such repurchase
options, risks of forfeiture or other conditions. Company shall take all
actions that may be necessary to ensure that, from and after the Effective
Time, Parent is entitled to exercise any such repurchase option or other
right set forth in any such restricted stock purchase agreement or other
agreement. A listing of the holders of Company Restricted Stock, together
with the number of shares and the vesting schedule of Company Restricted
Stock held by each, is set forth in Part 1.9 of the Company Disclosure Letter.
1.10 Tax and Accounting Consequences. It is intended by the parties
hereto that the Merger shall constitute a "reorganization" within the meaning
of Section 368 of the Code. The parties hereto adopt this Agreement as a
"plan of reorganization" within the meaning of Sections 354(a) and 361(a) of
the Code and Treas. Reg. Sections 1.368-2(g) and 1.368-3(a). It is intended
by the parties that the Merger shall qualify for accounting treatment as a
purchase.
1.11 Taking of Necessary Action; Further Action. If, at any time
after the Effective Time, any further action is necessary or desirable to
carry out the purposes of this Agreement and to vest the Surviving
Corporation with full right, title and possession to all assets, property,
rights, privileges, powers and franchises of Company and Merger Sub, the
officers and directors of Company and Merger Sub will take all such lawful
and necessary action. Parent shall cause Merger Sub to perform all of its
obligations relating to this Agreement and the transactions contemplated
hereby.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF COMPANY
As of the date of this Agreement and as of the Closing Date, Company
represents and warrants to Parent and Merger Sub, subject to the exceptions
specifically disclosed in writing in the disclosure letter and referencing a
specific representation delivered by Company to Parent dated as of the date
hereof and certified by a duly authorized officer of Company (the "COMPANY
DISCLOSURE LETTER"), as follows:
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2.1 Organization; Subsidiaries.
(a) Company and each of its subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has all requisite corporate power and
authority, and all requisite qualifications to do business as a foreign
corporation, to conduct its business in the manner in which its business is
currently being conducted, except where the failure to be so organized,
existing or in good standing or to have such power, authority or
qualifications would not, individually or in the aggregate, have a Material
Adverse Effect (as defined in Section 8.3) on Company.
(b) Other than the corporations identified in Part 2.1 of the
Company Disclosure Letter, neither Company nor any of the other corporations
identified in Part 2.1 of the Company Disclosure Letter owns any capital
stock of, or any equity interest of any nature in, any corporation,
partnership, joint venture arrangement or other business entity, other than
the entities identified in Part 2.1 of the Company Disclosure Letter, except
for passive investments in equity interests of public companies as part of
the cash management program of Company. Neither Company nor any of its
subsidiaries is obligated to make any material future investment in or
capital contribution to any other entity. Part 2.1 of the Company Disclosure
Letter indicates the jurisdiction of organization of each entity listed
therein and Company's direct or indirect equity interest therein.
(c) Company has delivered or made available to Parent a true
and correct copy of the Certificate of Incorporation (including any
Certificates of Designation) and Bylaws of Company and similar governing
instruments of each of its subsidiaries, each as amended to date
(collectively, the "COMPANY CHARTER DOCUMENTS"), and each such instrument is
in full force and effect. Neither Company nor any of its subsidiaries is in
violation of any of the provisions of the Company Charter Documents.
2.2 Company Capitalization.
(a) The authorized capital stock of Company consists solely of
200,000,000 shares of Company Common Stock, of which there were 36,530,325
shares issued and outstanding as of the close of business on March 14, 2000,
5,000,000 shares of non-voting common stock, par value $0.01 per share, none
of which are issued or outstanding as of the date of this Agreement or as of
the Effective Time, and 5,000,000 shares of preferred stock, par value $0.01
per share, none of which are issued or outstanding as of the date of this
Agreement or as of the Effective Time. All outstanding shares of Company
Common Stock are duly authorized, validly issued, fully paid and
nonassessable and are not subject to any rights of rescission or preemptive
rights created by statute, the Company Charter Documents or any agreement or
document to which Company is a party or by which it is bound. As of the date
of this Agreement, there are no shares of Company Common Stock held in
treasury by Company.
(b) As of the close of business on March 14, 2000, (i)
5,669,130 shares of Company Common Stock are subject to issuance pursuant to
outstanding options to purchase Company Common Stock under the Company Stock
Option Plans ("COMPANY OPTIONS") for an aggregate exercise price of
$99,634,227, and (ii) 150,000 shares of Company Common Stock are
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reserved for future issuance under the Company ESPP. Since March 14, 2000,
Company has granted an additional 1,000,000 Company Options having an
aggregate exercise price of $25,812,500 only to persons who have agreed in
writing to waive acceleration of the vesting of such Company Options and any
other Company Options granted under Company's 1999 Stock Incentive Plan upon
consummation of the Merger and the other transactions contemplated by the
Related Agreements pursuant to a form of waiver acceptable to Parent. Part
2.2(b) of the Company Disclosure Letter sets forth the following information
with respect to each Company Option outstanding as of the date of this
Agreement: (i) the name of the optionee; (ii) the number of shares of
Company Common Stock subject to such Company Option vested and unvested on
the date of this Agreement; (iii) the exercise price of such Company Option;
(iv) the date on which such Company Option was granted or assumed; (v) the
date on which such Company Option expires and (vi) whether the exercisability
of such option will be accelerated in any way by the transactions
contemplated by this Agreement, and indicates the extent of any such
acceleration. Company has made available to Parent an accurate and complete
copy of each of the Company Stock Option Plans and the form of all stock
option agreements evidencing Company Options. There are no options
outstanding to purchase shares of Company Common Stock other than pursuant to
the Company Stock Option Plans. All shares of Company Common Stock subject
to issuance as aforesaid, upon issuance on the terms and conditions specified
in the instruments pursuant to which they are issuable, will be duly
authorized, validly issued, fully paid and nonassessable. Other than as set
forth on Part 2.2(b) of the Company Disclosure Letter, there are no
commitments or agreements of any character to which the Company is bound
obligating Company to accelerate the vesting of any Company Option as a
result of the Merger.
(c) All outstanding shares of Company Common Stock, all
outstanding Company Options, and all outstanding shares of capital stock of
each subsidiary of Company have been issued and granted in material
compliance with (i) all applicable securities laws and other applicable
material Legal Requirements and (ii) all material requirements set forth in
applicable agreements or instruments. For the purposes of this Agreement,
"LEGAL REQUIREMENTS" means any federal, state, local, municipal, foreign or
other law, statute, constitution, principle of common law, resolution,
ordinance, code, edict, decree, rule, regulation, ruling or requirement
issued, enacted, adopted, promulgated, implemented or otherwise put into
effect by or under the authority of any Governmental Entity (as defined in
Section 2.4).
2.3 Obligations with Respect to Capital Stock. Except as set forth
in Section 2.2 or Part 2.3 of the Company Disclosure Letter, there are no
equity securities, partnership interests or similar ownership interests of
any class of Company equity security, or any securities exchangeable or
convertible into or exercisable for such equity securities, partnership
interests or similar ownership interests, issued, reserved for issuance or
outstanding. All stock and rights to purchase stock of any subsidiary of
Company are owned free and clear of all Encumbrances. For purposes of this
Agreement, "ENCUMBRANCES" means any lien, pledge, hypothecation, charge,
mortgage, security interest, encumbrance, claim, option, right of first
refusal, preemptive right, community property interest or restriction of any
nature (including any restriction on the voting of any security, any
restriction on the transfer of any security or other asset, any restriction
on the receipt of any income derived from any asset, any restriction on the
use of any asset and any restriction on the possession, exercise or transfer
of any other attribute of ownership of any asset)
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(other than (i) liens for Taxes (as defined in Section 2.7) not yet due and
payable; (ii) liens reflected on the Company Balance Sheet or Parent Balance
Sheet (each as defined below), as applicable; (iii) liens which are not
material in character, amount or extent, and which do not materially detract
from the value or materially interfere with the use of the property subject
thereto or affected thereby; and (iv) contractor's liens). Except as set
forth in Section 2.2, or Part 2.2 or Part 2.3 of the Company Disclosure
Letter, there are no subscriptions, options, warrants, equity securities,
partnership interests or similar ownership interests, calls, rights
(including preemptive rights), commitments or agreements of any character to
which Company or any of its subsidiaries is a party or by which it is bound
obligating 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
Company or any of its subsidiaries or obligating 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 there is no voting
trust, proxy, rights agreement, "poison pill" anti-takeover plan or other
agreement or understanding to which Company is a party or by which it is
bound with respect to any equity security of any class of Company or with
respect to any equity security, partnership interest or similar ownership
interest of any class of any of its subsidiaries. Stockholders of Company
will not be entitled to dissenters' or appraisal rights under applicable
state law in connection with the Merger.
2.4 Authority; Non-Contravention.
(a) Company has all requisite corporate power and authority to
enter into this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of Company, subject only to the
approval and adoption of this Agreement and the approval of the Merger by
Company's stockholders (the "COMPANY STOCKHOLDER APPROVALS") and the filing
of the Certificate of Merger pursuant to Delaware Law. The affirmative vote
of the holders of a majority of the outstanding shares of Company Common
Stock is sufficient for Company's stockholders to approve and adopt this
Agreement and approve the Merger, and no other approval of any holder of any
securities of Company is required in connection with the consummation of the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by Company and, assuming the due execution and delivery by Parent
and Merger Sub, constitutes the valid and binding obligation of Company,
enforceable against Company in accordance with its terms, except as
enforceability may be limited by bankruptcy and other similar laws affecting
the rights of creditors generally and general principles of equity.
(b) The execution and delivery of this Agreement by Company
does not, and the performance of this Agreement by Company will not, (i)
conflict with or violate the Company Charter Documents, (ii) subject to
obtaining the Company Stockholder Approvals and compliance with the
requirements set forth in Section 2.4(c), conflict with or violate any law,
rule, regulation, order, judgment or decree applicable to Company or any of
its subsidiaries or by which Company or any of its subsidiaries or any of
their respective properties is bound or affected, or (iii) result in any
breach of or constitute a default (or an event that with notice or
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lapse of time or both would become a default) under, or impair Company's
rights or alter the rights or obligations of any third party under, or give
to others any rights of termination, amendment, acceleration or cancellation
of, or result in the creation of an Encumbrance on any of the properties or
assets of Company or any of its subsidiaries pursuant to, any note, bond,
mortgage, indenture, agreement, lease, license, permit, franchise or other
instrument or obligation to which Company or any of its subsidiaries is a
party or by which Company or any of its subsidiaries or its or any of their
respective assets are bound or affected, except, in the case of clauses (ii)
and (iii), for such conflicts, violations, breaches, defaults, impairments,
or rights which, individually or in the aggregate, would not have a Material
Adverse Effect on Company. Part 2.4(b) of the Company Disclosure Letter
lists all consents, waivers and approvals under any of Company's or any of
its subsidiaries' agreements, licenses or leases required to be obtained in
connection with the consummation of the transactions contemplated hereby,
which, if individually or in the aggregate not obtained, would have a
Material Adverse Effect on Company, Parent or the Surviving Corporation as a
result of the Merger or would materially and adversely affect Company's
Intellectual Property (as defined below).
(c) No consent, approval, order or authorization of, or
registration, declaration or filing with any court, administrative agency or
commission or other governmental authority or instrumentality, foreign or
domestic ("GOVERNMENTAL ENTITY"), is required to be obtained or made by
Company in connection with the execution and delivery of this Agreement or
the consummation of the Merger, except for (i) the filing of the Certificate
of Merger with the Secretary of State of the State of Delaware and
appropriate documents with the relevant authorities of other states in which
the Company is qualified to do business, (ii) the filing of the Proxy
Statement/Prospectus (as defined in Section 2.17) with the Securities and
Exchange Commission ("SEC") in accordance with the Securities Exchange Act of
1934, as amended (the "EXCHANGE ACT"), and a Schedule 13D with regard to the
Parent Voting Agreements in accordance with the Exchange Act, and the
effectiveness of the Registration Statement (as defined in Section 2.17),
(iii) such consents, approvals, orders, authorizations, registrations,
declarations and filings as may be required under applicable federal, foreign
and state securities (or related) laws and the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended (the "HSR ACT"), and the securities or
antitrust laws of any foreign country, and (iv) such other consents,
authorizations, filings, approvals and registrations which if not obtained or
made would not have a Material Adverse Effect on Company, Parent or the
Surviving Corporation or would not have a material adverse effect on the
ability of the parties hereto to consummate the Merger.
2.5 SEC Filings; Company Financial Statements.
(a) Company has filed all forms, reports and documents required
to be filed by Company with the SEC since the effective date of the
registration statement (the "COMPANY INITIAL REGISTRATION STATEMENT") of
Company's initial public offering and has made available to Parent such
forms, reports and documents in the form filed with the SEC. All such
required forms, reports and documents (including those that Company may file
subsequent to the date hereof) and the Company Initial Registration Statement
are referred to herein as the "COMPANY SEC REPORTS." As of their respective
dates, the Company SEC Reports (i) were prepared in accordance with the
requirements of the Securities Act of 1933, as amended (the "SECURITIES
ACT"), or the Exchange Act, as the case may be, and the rules and regulations
of the SEC
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thereunder applicable to such Company SEC Reports and (ii) did not at the
time they were filed (or if amended or superseded by a filing prior to the
date of this Agreement, then on the date of such filing) contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading, except
to the extent corrected prior to the date of this Agreement by a subsequently
filed Company SEC Report. None of Company's subsidiaries is required to file
any forms, reports or other documents with the SEC.
(b) Each of the consolidated financial statements (including,
in each case, any related notes thereto) contained in the Company SEC Reports
(the "COMPANY FINANCIALS"), including each Company SEC Report filed after the
date hereof until the Closing, (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 interim financial statements, as
may be permitted by the SEC on Form 10-Q, 8-K or any successor form under the
Exchange Act) and (iii) fairly presented the consolidated financial position
of Company and its subsidiaries as at the respective dates thereof and the
consolidated results of Company's operations and cash flows for the periods
indicated, except that the unaudited interim financial statements may not
contain footnotes and were or are subject to normal and recurring year-end
adjustments. The balance sheet of Company contained in Company SEC Reports
as of December 31, 1999 is hereinafter referred to as the "COMPANY BALANCE
SHEET." Except as disclosed in the Company Financials filed on or prior to
the date hereof, since the date of the Company Balance Sheet, neither Company
nor any of its subsidiaries has any liabilities required under GAAP to be set
forth on a balance sheet (absolute, accrued, contingent or otherwise) which
are, individually or in the aggregate, material to the business, results of
operations or financial condition of Company and its subsidiaries taken as a
whole, except for liabilities incurred since the date of the Company Balance
Sheet in the ordinary course of business consistent with past practices and
liabilities incurred in connection with this Agreement.
2.6 Absence of Certain Changes or Events. Since the date of the
Company Balance Sheet through the date of this Agreement, there has not
been: (i) any Material Adverse Effect with respect to Company, (ii) any
declaration, setting aside or payment of any dividend on, or other
distribution (whether in cash, stock or property) in respect of, any of
Company's or any of its subsidiaries' capital stock, or any purchase,
redemption or other acquisition by Company of any of Company's capital stock
or any other securities of Company or its subsidiaries or any options,
warrants, calls or rights to acquire any such shares or other securities
except for repurchases from employees following their termination pursuant to
the terms of their pre-existing stock option or purchase agreements, (iii)
any split, combination or reclassification of any of Company's or any of its
subsidiaries' capital stock, (iv) any granting by Company or any of its
subsidiaries of any increase in compensation or fringe benefits to any of
their officers or employees, or any payment by Company or any of its
subsidiaries of any bonus to any of their officers or employees, or any
granting by Company or any of its subsidiaries of any increase in severance
or termination pay or any entry by Company or any of its subsidiaries into,
or material modification or amendment of, any currently effective employment,
severance, termination or indemnification agreement or any agreement the
benefits of which are contingent or the terms of
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which are materially altered upon the occurrence of a transaction involving
Company of the nature contemplated hereby, in each case, other than in the
ordinary course of business consistent with past practice, (v) any material
change or alteration in the policy of Company relating to the granting of
stock options or other equity compensation to its employees and consultants
other than in the ordinary course of business consistent with past practice,
(vi) entry by Company or any of its subsidiaries into, or material
modification, amendment or cancellation of, any licensing or other agreement
with regard to the acquisition, distribution or licensing of any material
Intellectual Property (as defined in Section 2.9) other than licenses,
distribution agreements, advertising agreements, or other similar agreements
entered into in the ordinary course of business consistent with past
practice, (vii) any material change by Company in its accounting methods,
principles or practices, except as required by concurrent changes in GAAP, or
(viii) any material revaluation by Company of any of its material assets,
including writing off notes or accounts receivable other than in the ordinary
course of business.
2.7 Taxes.
(a) Company and each of its subsidiaries have timely
filed all material Returns federal, state, local and foreign returns,
estimates, information statements and reports ("RETURNS") relating to Taxes
required to be filed by or on behalf of Company and each of its subsidiaries
with any Tax authority, such Returns are true, correct and complete in all
material respects, and Company and each of its subsidiaries have paid all
Taxes shown to be due on such Returns.
(b) Company and each of its subsidiaries have withheld
with respect to its employees all federal and state income Taxes, Taxes
pursuant to the Federal Insurance Contribution Act ("FICA"), Taxes pursuant
to the Federal Unemployment Tax Act ("FUTA") and other Taxes required to be
withheld, except such Taxes which are not material to Company.
(c) Neither Company nor any of its subsidiaries has been
delinquent in the payment of any material Tax nor is there any material Tax
deficiency outstanding, proposed or assessed against Company or any of its
subsidiaries, nor has Company or any of its subsidiaries executed any
unexpired waiver of any statute of limitations on or extending the period for
the assessment or collection of any Tax.
(d) No audit or other examination of any Return of
Company or any of its subsidiaries by any Tax authority is presently in
progress, nor has Company or any of its subsidiaries been notified of any
request for such an audit or other examination.
(e) No adjustment relating to any Returns filed by
Company or any of its subsidiaries has been proposed in writing formally or
informally by any Tax authority to Company or any of its subsidiaries or any
Tax or financial representative thereof.
(f) Neither Company nor any of its subsidiaries has any
liability for 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, which is material to Company, other than
any liability for unpaid Taxes that may have accrued since the
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date of the Company Balance Sheet in connection with the operation of the
business of Company and its subsidiaries in the ordinary course.
(g) There is no agreement, plan or arrangement to which
Company or any of its subsidiaries is a party, including this Agreement and
the agreements entered into in connection with this Agreement, covering any
employee or former employee of Company or any of its subsidiaries that,
individually or collectively, would be reasonably likely 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 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 Company.
(i) Neither Company nor any of its subsidiaries is party
to or has any obligation under any Tax-sharing, Tax indemnity or Tax
allocation agreement or arrangement.
(j) Except as may be required as a result of the Merger,
Company and its subsidiaries have not been and will not be required to
include any adjustment in taxable income for any Tax period (or portion
thereof) pursuant to Section 481 of the Code or any comparable provision
under state or foreign Tax laws as a result of transactions, events or
accounting methods employed prior to the Closing.
(k) None of Company's or its subsidiaries' assets are tax
exempt use property within the meaning of Section 168(h) of the Code.
(l) Company has not been distributed in a transaction
qualifying under Section 355 of the Code within the last two years, nor has
Company distributed any corporation in a transaction qualifying under Section
355 of the Code within the last two years.
For the purposes of this Agreement, "TAX" or "TAXES" refers
to (i) any and all federal, state, local and foreign taxes, assessments and
other governmental charges, duties, impositions and liabilities relating to
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 payment of any amounts of the
type described in clause (i) as a result of being a member of an affiliated
consolidated, combined or unitary group, and (iii) any liability for amounts
of the type described in clauses (i) and (ii) as a result of any express or
implied obligation to indemnify another 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.
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2.8 Title to Properties.
(a) All real property leases to which Company is a party and
each amendment thereto that is in effect as of the date of this Agreement
that provide for annual payments in excess of $250,000 are in full force and
effect and are valid and enforceable in accordance with their respective
terms, and there is not, under any of such leases, any existing default or
event of default (or event which with notice or lapse of time, or both, would
constitute a default) that would give rise to a material claim against
Company which could reasonably be expected to have a Material Adverse Effect
on Company.
(b) Company has good and valid title to, or, in the case of
leased properties and assets, valid leasehold interests in, all of its
tangible properties and assets, real, personal and mixed, used or held for
use in its business, free and clear of any Encumbrances, except as reflected
in Company Financials and except where the failure to have valid title or a
valid leasehold interest would not have a Material Adverse Effect on Company.
2.9 Intellectual Property. For the purposes of this Agreement, the
following terms have the following definitions:
"INTELLECTUAL PROPERTY" shall mean any or all of the following
and all rights in, arising out of, or associated therewith: (i) all United
States, international and foreign patents and applications therefor and all
reissues, divisions, renewals, extensions, provisionals, continuations and
continuations-in-part thereof; (ii) all inventions (whether patentable 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) all copyrights,
copyrights registrations and applications therefor, and all other rights
corresponding thereto throughout the world; (iv) all industrial designs and
any registrations and applications therefor throughout the world; (v) all
trade names, URLs, logos, common law trademarks and service marks, trademark
and service ▇▇▇▇ registrations and applications therefor throughout the
world; (vi) all databases and data collections and all rights therein
throughout the world; (vii) all moral and economic rights of authors and
inventors, however denominated, throughout the world, and (viii) any similar
or equivalent rights to any of the foregoing anywhere in the world.
"COMPANY INTELLECTUAL PROPERTY" shall mean any Intellectual
Property that is owned by, or exclusively licensed to, Company or one of its
subsidiaries.
"REGISTERED INTELLECTUAL PROPERTY" means all United States,
international and foreign: (i) patents and patent applications (including
provisional applications); (ii) registered trademarks, applications to
register trademarks, intent-to-use applications, or other registrations or
applications related to trademarks; (iii) registered copyrights and
applications for copyright registration; and (iv) any other Intellectual
Property that is the subject of an application, certificate, filing,
registration or other document issued, filed with, or recorded by any
Governmental Entity.
"COMPANY REGISTERED INTELLECTUAL PROPERTY" means all of the
Registered Intellectual Property owned by, or filed in the name of, Company
or one of its subsidiaries.
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(a) No material Company Intellectual Property or product or
service of Company is subject to any proceeding, agreement, or stipulation to
which Company is a party, or any outstanding decree, order or judgment, the
proceeding arising out of which Company was either a party or of which
Company has knowledge, restricting in any manner the use, transfer, or
licensing thereof by Company, or which may affect the validity, use or
enforceability of such Company Intellectual Property.
(b) Each material item of Company Registered Intellectual
Property is valid and subsisting, all necessary registration, maintenance and
renewal fees currently due in 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 maintaining such Company Registered
Intellectual Property, except, in each case, as would not materially
adversely affect such item of Company Registered Intellectual Property.
(c) Company or one of its subsidiaries owns and has good and
exclusive title to, or has license sufficient for the conduct of its business
as currently conducted to, each material item of Company Intellectual
Property free and clear of any Encumbrance (excluding licenses and related
restrictions).
(d) Neither Company nor any of its subsidiaries has transferred
ownership of, or granted any exclusive license with respect to, any
Intellectual Property that is or was material Company Intellectual Property,
to any third party.
(e) Part 2.9(e) of the Company Disclosure Letter lists all
material contracts, licenses and agreements to which Company is a party (i)
pursuant to which any exclusive rights with respect to any item of Company
Intellectual Property are licensed, granted or transferred to any third
party; or (ii) pursuant to which a third party has licensed, transferred,
sold or distributed any material Intellectual Property to Company.
(f) The operation of the business of Company as such business
currently is conducted, including Company's design, development, marketing
and sale of the products or services of Company (including with respect to
products currently under development) has not, does not and will not
materially infringe or materially misappropriate the Intellectual Property of
any third party or, to its knowledge, constitute unfair competition or trade
practices under the laws of any jurisdiction.
(g) Company has not received written notice from any third
party that the operation of the business of Company or any act, product or
service of Company, infringes or misappropriates the Intellectual Property of
any third party or constitutes unfair competition or trade practices under
the laws of any jurisdiction, which allegation, if true, would have a
Material Adverse Effect on Company.
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(h) To the knowledge of Company, no person has or is infringing
or misappropriating any Company Intellectual Property, which infringement or
misappropriation, individually or in the aggregate, would have a Material
Adverse Effect on Company.
(i) Company and its subsidiaries have taken reasonable steps to
protect Company's and its subsidiaries' rights in Company's and such
subsidiaries' confidential information and trade secrets, except where the
failure to do so would not have a Material Adverse Effect on Company.
(j) None of the Company Intellectual Property or product or
service of Company contains any defect in connection with processing data
containing dates in leap years or in the year 2000 or any preceding or
following years, which defects, individually or in the aggregate, would have
a Material Adverse Effect on Company.
2.10 Compliance with Laws.
(a) Neither Company nor any of its subsidiaries is in conflict
with, or in default or in violation of (i) any law, rule, regulation, order,
judgment or decree applicable to Company or any of its subsidiaries or by
which Company or any of its subsidiaries or any of their respective
properties is bound or affected, or (ii) any note, bond, mortgage, indenture,
agreement, lease, license, permit, franchise or other instrument or
obligation to which Company or any of its subsidiaries is a party or by which
Company or any of its subsidiaries or its or any of their respective
properties is bound or affected, except for conflicts, violations and
defaults that, individually or in the aggregate, would not have a Material
Adverse Effect on Company. To Company's knowledge, no investigation or
review by any Governmental Entity is pending or has been threatened in a
writing delivered to Company against Company or any of its subsidiaries.
There is no agreement with any Governmental Entity, judgment, injunction,
order or decree binding upon Company or any of its subsidiaries which has or
could reasonably be expected to have the effect of prohibiting or materially
impairing any material business practice of Company or any of its
subsidiaries, or any acquisition of material property by Company or any of
its subsidiaries.
(b) Company and its subsidiaries hold all permits, licenses,
exemptions, orders and approvals from governmental authorities that are
material to or required for the operation of the business of Company as
currently conducted (collectively, the "COMPANY PERMITS"), and are in
compliance with the terms of the Company Permits, except where the failure to
hold such Company Permits, or be in such compliance, would not, individually
or in the aggregate, have a Material Adverse Effect on Company.
2.11 Litigation. There are no claims, suits, actions or proceedings
pending or, to the knowledge of Company, threatened against, relating to or
affecting Company or any of its subsidiaries, before any Governmental Entity
or any arbitrator that seeks to restrain or enjoin the consummation of the
transactions contemplated by this Agreement or which could reasonably be
expected, either singularly or in the aggregate with all such claims, actions
or proceedings, to have a Material Adverse Effect on Company or on the
Surviving Corporation following the
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Merger or have a material adverse effect on the ability of the parties
hereto to consummate the Merger.
2.12 Employee Benefit Plans.
(a) Definitions. With the exception of the definition of
"Affiliate" set forth in Section 2.12(a)(i) below (which definition shall
apply only to this Section 2.12), for purposes of this Agreement, the
following terms shall have the meanings set forth below:
(i) "AFFILIATE" shall mean any other person or entity
under common control with Company within the meaning of Section 414(b), (c),
(m) or (o) of the Code and the regulations issued thereunder;
(ii) "COMPANY EMPLOYEE PLAN" shall mean any plan, program,
policy, practice, contract, agreement or other arrangement providing for
compensation, severance, termination pay, performance awards, stock or
stock-related awards, fringe benefits or other employee benefits or
remuneration of any kind, whether written or unwritten or otherwise, funded
or unfunded, including without limitation, each "EMPLOYEE BENEFIT PLAN,"
within the meaning of Section 3(3) of ERISA which is maintained, contributed
to, or required to be contributed to, by Company or any Affiliate for the
benefit of any Employee;
(iii) "COBRA" shall mean the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended;
(iv) "DOL" shall mean the Department of Labor;
(v) "EMPLOYEE" shall mean any current, former, or retired
employee, officer, or director of Company or any Affiliate;
(vi) "EMPLOYEE AGREEMENT" shall mean each management,
employment, severance, consulting, relocation, repatriation, expatriation,
visas, work permit or similar agreement or contract between Company or any
Affiliate and any Employee or consultant (excluding any offer letter or other
agreement that does not subject Company to any potential liability in excess
of $200,000);
(vii) "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended;
(viii) "FMLA" shall mean the Family Medical Leave Act
of 1993, as amended;
(ix) "INTERNATIONAL EMPLOYEE PLAN" shall mean each Company
Employee Plan that has been adopted or maintained by Company, whether
informally or formally, for the benefit of Employees outside the United
States;
(x) "IRS" shall mean the Internal Revenue Service;
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(xi) "MULTIEMPLOYER PLAN" shall mean any "PENSION PLAN"
(as defined below) which is a "multiemployer plan," as defined in Section
3(37) of ERISA;
(xii) "PBGC" shall mean the Pension Benefit Guaranty
Corporation; and
(xiii) "PENSION PLAN" shall mean each Company Employee
Plan which is an "employee pension benefit plan," within the meaning of
Section 3(2) of ERISA.
(b) Schedule. Part 2.12 of the Company Disclosure Letter
contains an accurate and complete list of each Company Employee Plan and each
Employee Agreement. Company does not have any plan or commitment to
establish any new Company Employee Plan, to modify any Company Employee Plan
or Employee Agreement (except to the extent required by law or to conform any
such Company Employee Plan or Employee Agreement to the requirements of any
applicable law, or as required by this Agreement), or to enter into any
Company Employee Plan or Employee Agreement, nor does it have any intention
or commitment to do any of the foregoing.
(c) Documents. Company has provided or has made available to
Parent: (i) correct and complete copies of all documents embodying each
Company Employee Plan and each Employee Agreement including all amendments
thereto and written interpretations thereof; (ii) the most recent annual
actuarial valuations, if any, prepared for each Company Employee Plan; (iii)
the three 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 or related trust; (iv) if
the Company Employee Plan is funded, the most recent annual and periodic
accounting of Company Employee Plan assets; (v) the most recent summary plan
description together with the summary of material modifications thereto, if
any, required under ERISA with respect to each Company Employee Plan; (vi)
all IRS determination, opinion, notification and advisory letters, and
rulings relating to Company Employee Plans and copies of all applications and
correspondence to or from the IRS or the DOL with respect to any Company
Employee Plan; (vii) all material written agreements and contracts relating
to each Company Employee Plan, including, but not limited to, administrative
service agreements, group annuity contracts and group insurance contracts;
(viii) all communications material to any Employee or Employees relating to
any Company Employee Plan and any proposed Company Employee Plans, in each
case, relating to any amendments, terminations, establishments, increases or
decreases in benefits, acceleration of payments or vesting schedules or other
events which would result in any material liability to Company; (ix) all
COBRA forms and related notices; and (x) all registration statements and
prospectuses prepared in connection with each Company Employee Plan.
(d) Employee Plan Compliance. Except, in each case, as would
not, individually or in the aggregate, have a Material Adverse Effect on
Company: (i) Company has performed in all material respects all obligations
required to be performed by it under, is not in default or violation of, and
has no knowledge of any default or violation by any other party to, each
Company Employee Plan, and each Company Employee Plan has been established
and maintained in all material respects in accordance with its terms and in
compliance with all
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applicable laws, statutes, orders, rules and regulations, including but not
limited to ERISA or the Code; (ii) each Company Employee Plan intended to
qualify under Section 401(a) of the Code and each trust intended to qualify
under Section 501(a) of the Code has either received a favorable
determination letter from the IRS with respect to each such Plan as to its
qualified status under the Code or has remaining a period of time under
applicable Treasury regulations or IRS pronouncements in which to apply for
such a determination letter and make any amendments necessary to obtain a
favorable determination and no event has occurred which would adversely
affect the status of such determination letter or the qualified status of
such Plan; (iii) no "prohibited transaction," within the meaning of Section
4975 of the Code or Sections 406 and 407 of ERISA, and not otherwise exempt
under Section 408 of ERISA, has occurred with respect to any Company Employee
Plan; (iv) there are no actions, suits or claims pending, or, to the
knowledge of Company, threatened or reasonably anticipated (other than
routine claims for benefits) against any Company Employee Plan or against the
assets of any Company Employee Plan; (v) each Company Employee Plan can be
amended, terminated or otherwise discontinued after the Effective Time in
accordance with its terms, without liability to Parent, Company or any of its
Affiliates (other than ordinary administration expenses typically incurred in
a termination event); (vi) there are no audits, inquiries or proceedings
pending or, to the knowledge of Company, threatened by the IRS or DOL with
respect to any Company Employee Plan; (vii) neither Company nor any Affiliate
is subject to any material penalty or tax with respect to any Company
Employee Plan under Section 402(i) of ERISA or Sections 4975 through 4980 of
the Code; and (viii) all contributions due from the Company or any Affiliate
with respect to any of the Company Employee Plans have been made as required
under ERISA or have been accrued on the Company Balance Sheet.
(e) Pension Plans. Company does not now, nor has it ever,
maintained, established, sponsored, participated in, or contributed to, any
Pension Plan which is subject to Title IV of ERISA or Section 412 of the Code.
(f) Multiemployer Plans. At no time has Company contributed to
or been required to contribute to any Multiemployer Plan.
(g) No Post-Employment Obligations. No Company Employee Plan
provides, or has any liability to provide, retiree life insurance, retiree
health or other retiree employee welfare benefits to any person for any
reason, except as may be required by COBRA or other applicable statute, and
Company has never represented, promised or contracted (whether in oral or
written form) to any Employee (either individually or to Employees as a
group) or any other person that such Employee(s) or other person would be
provided with retiree life insurance, retiree health or other retiree
employee welfare benefit, except to the extent required by statute.
(h) COBRA; FMLA. Except as would not have a Material Adverse
Effect on Company, neither Company nor any Affiliate has, prior to the
Effective Time violated any of the health care continuation requirements of
COBRA, the requirements of FMLA or any similar provisions of state law
applicable to its Employees.
(i) Effect of Transaction. The execution of this Agreement and
the consummation of the transactions contemplated hereby will not (either
alone or upon the
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occurrence of any additional or subsequent events) constitute an event under
any Company Employee Plan, Employee Agreement, trust or loan that will or may
result in any payment (whether of severance pay or otherwise), acceleration,
forgiveness of indebtedness, vesting, distribution, increase in benefits or
obligation to fund benefits with respect to any Employee. No payment or
benefit which will or may be made by Company or its Affiliates with respect
to any Employee as a result of the transactions contemplated by this
Agreement will be characterized as an "excess parachute payment," within the
meaning of Section 280G(b)(1) of the Code or will be treated as a
nondeductible expense within the meaning of Section 162 of the Code.
(j) Employment Matters. Except, in each case, as would not,
individually or in the aggregate, have a Material Adverse Effect on Company,
Company and each of its subsidiaries: (i) is in compliance in all material
respects with all applicable foreign, federal, state and local laws, rules
and regulations respecting employment, employment practices, terms and
conditions of employment and wages and hours, in each case, with respect to
Employees; (ii) has withheld all amounts required by law or by agreement to
be withheld from the wages, salaries and other payments to Employees; (iii)
has properly classified independent contractors for purposes of federal and
applicable state tax laws, laws applicable to employee benefits and other
applicable laws; (iv) is not liable for any arrears of wages or any taxes or
any penalty for failure to comply with any of the foregoing; and (v) is not
liable for any material payment to any trust or other fund or to any
governmental or administrative authority, with respect to unemployment
compensation benefits, social security or other benefits or obligations for
Employees (other than routine payments to be made in the normal course of
business and consistent with past practice). There are no pending, or, to
Company's knowledge, threatened material claims or actions against Company
under any worker's compensation policy or long-term disability policy. To
Company's knowledge, no Employee of Company has violated in any material
manner any employment contract, nondisclosure agreement or noncompetition
agreement by which such Employee is bound due to such Employee being employed
by Company and disclosing to Company or using trade secrets or proprietary
information of any other person or entity.
(k) Labor. No work stoppage or labor strike against Company is
pending, threatened or reasonably anticipated. Company does not know of any
activities or proceedings of any labor union to organize any Employees.
There are no actions, suits, claims, labor disputes or grievances pending,
or, to the knowledge of Company, threatened relating to any labor, safety or
discrimination matters involving any Employee, including charges of unfair
labor practices or discrimination complaints, which, if adversely determined,
would, individually or in the aggregate, result in any material liability to
Company. Neither Company nor any of its subsidiaries has engaged in any
unfair labor practices within the meaning of the National Labor Relations
Act. Company is not presently, nor has it been in the past, a party to, or
bound by, any collective bargaining agreement or union contract with respect
to Employees and no collective bargaining agreement is being negotiated by
Company.
(l) International Employee Plan. Each International Employee
Plan has been established, maintained and administered in material compliance
with its terms and conditions and with the requirements prescribed by any and
all statutory or regulatory laws that are applicable to such International
Employee Plan. Furthermore, no International Employee Plan has unfunded
liabilities, that as of the Effective Time, will not be offset by insurance
or fully
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accrued. Except as required by law, no condition exists that would prevent
Company or Parent from terminating or amending any International Employee
Plan at any time for any reason.
2.13 Environmental Matters. During the period that Company has leased
or owned its properties or leased, owned or operated any facilities, there
have been no disposals, releases or threatened releases of Hazardous
Materials (as defined below) on, from or under any such properties or
facilities that would have a Material Adverse Effect on Company. Company has
no knowledge of any presence, disposals, releases or threatened releases of
Hazardous Materials on, from or under any of such properties or facilities,
which may have occurred prior to Company or any of its subsidiaries having
taken possession of any of such properties or facilities which might
reasonably be expected to have a Material Adverse Effect on Company. None of
the properties or facilities currently leased or owned by Company or any of
its subsidiaries or any properties or facilities previously leased or owned
by Company or any of its subsidiaries is in violation of any federal, state
or local law, ordinance, regulation or order relating to industrial hygiene
or to the environmental conditions on, under or about such properties or
facilities, including, but not limited to, soil and ground water condition
which violation would have a Material Adverse Effect on Company. During
Company's occupancy of any properties or facilities owned or leased at any
time by Company, neither Company, nor to Company's knowledge, any third
party, has used, generated, manufactured, released or stored on, under or
about such properties and facilities or transported to or from such
properties and facilities any Hazardous Materials that would have or is
reasonably likely to have a Material Adverse Effect on Company. During the
time that Company or any of its subsidiaries has owned or leased the
properties and facilities currently occupied by it or any properties and
facilities previously occupied by Company or any of its subsidiaries, there
has been no material litigation, proceeding or administrative action brought
or threatened against Company or any of its subsidiaries, or any material
settlement reached by Company or any of its subsidiaries with, any party or
parties alleging the presence, disposal, release or threatened release of any
Hazardous Materials on, from or under any of such properties or facilities.
For purposes of this Agreement, the terms "DISPOSAL," "RELEASE," and
"THREATENED RELEASE" have the definitions assigned thereto by the
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
42 U.S.C. Section 9601 et seq., as amended ("CERCLA"). For the purposes of
this Section 2.13, "HAZARDOUS MATERIALS" mean any hazardous or toxic
substance, material or waste which is or becomes prior to the Closing Date,
regulated under, or defined as a "hazardous substance," "pollutant,"
"contaminant," "toxic chemical," "hazardous material," "toxic substance" or
"hazardous chemical" under (i) CERCLA; (ii) the Emergency Planning and
Community Right-to-Know Act, 42 U.S.C. Section 11001 et seq.; (iii) the
Hazardous Materials Transportation Act, 49 U.S.C. Section 1801, et seq.; (iv)
the Toxic Substances Control Act, 15 U.S.C. Section 2601 et seq.; (v) the
Occupational Safety and Health Act of 1970, 29 U.S.C. Section 651 et seq.;
(vi) regulations promulgated under any of the above statutes; or (vii) any
other applicable federal, state or local statute, ordinance, rule or
regulation that has a scope or purpose similar to those identified above.
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2.14 Certain Agreements. Other than the Related Agreements, except as
otherwise set forth in Part 2.14 of the Company Disclosure Letter, neither
Company nor any of its subsidiaries is a party to or is bound by:
(a) other than as disclosed in Part 2.12 of the Company
Disclosure Letter, any employment agreement or commitment with any officer or
member of Company's Board of Directors, other than those that are terminable
by Company or any of its subsidiaries on no more than thirty days notice
without liability or financial obligation, except to the extent general
principles of wrongful termination law may limit Company's or any of its
subsidiaries' ability to terminate employees at will, or any consulting
agreement;
(b) any material agreement of indemnification, any material
guaranty or any material instrument evidencing indebtedness for borrowed
money by way of direct loan, sale of debt securities or purchase money
obligation;
(c) any agreement or obligation containing covenants purporting
to limit or which effectively limit the Company's or any of its subsidiaries'
freedom to compete in any line of business or in any geographic area or which
would so limit Company or Surviving Corporation or any of its subsidiaries
after the Effective Time or granting any exclusive distribution or other
exclusive rights;
(d) any agreement or obligation currently in force relating to
the disposition or acquisition by Company or any of its subsidiaries after
the date of this Agreement of a material amount of assets not in the ordinary
course of business, or pursuant to which Company has any material ownership
or participation interest in any corporation, partnership, joint venture,
strategic alliance or other business enterprise other than Company's
subsidiaries;
(e) other than Company's standard source code escrow agreement
for the benefit of Company's customers (in the form provided to Parent), any
agreement or obligation currently in force to provide source code to any
third party for any product or technology;
(f) any agreement or obligation with any affiliate of Company;
or
(g) any agreement or obligation currently in force requiring
annual capital expenditures by Company or its subsidiaries in excess of
$1,000,000.
The agreements required to be disclosed in the Company Disclosure
Letter pursuant to clauses (a) through (g) above or pursuant to Section 2.9
or filed with any Company SEC Report ("COMPANY CONTRACTS") are valid and in
full force and effect, except to the extent that such invalidity would not
have a Material Adverse Effect on Company. Neither Company nor any of its
subsidiaries, nor to Company's knowledge, any other party thereto, is in
breach, violation or default under, and neither Company nor any of its
subsidiaries has received written notice that it has breached, violated or
defaulted, any of the terms or conditions of any Company Contract in such a
manner as would have a Material Adverse Effect on Company.
2.15 Brokers' and Finders' Fees. Except for fees payable to Warburg
Dillon Read LLC pursuant to an engagement letter, a copy of which has been
provided to Parent, Company
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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.
2.16 Insurance. Company and each of its subsidiaries have policies of
insurance and bonds of the type and in amounts customarily carried by persons
conducting business or owning assets similar to those of the Company and its
subsidiaries. There is no material claim pending under any of such policies
or bonds as to which coverage has been questioned, denied or disputed by the
underwriters of such policies or bonds. All premiums due and payable under
all such policies have been paid and the Company and its subsidiaries are
otherwise in compliance in all material respects with the terms of such
policies and bonds.
2.17 Disclosure. The information supplied by Company for inclusion in
the Registration Statement on Form S-4 (or any similar successor form
thereto) to be filed by Parent with the SEC in connection with the issuance
of Parent Common Stock in the Merger (the "REGISTRATION STATEMENT") shall not
at the time the Registration Statement is filed with the SEC and at the time
it becomes 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 information
supplied by Company for inclusion or incorporation by reference in the proxy
statement/prospectus to be filed with the SEC as part of the Registration
Statement (the "PROXY STATEMENT/PROSPECTUS") shall not (i) on the date the
Proxy Statement/Prospectus is mailed to Company's stockholders or to Parent's
stockholders, (ii) at the time of the meeting of Company's stockholders (the
"COMPANY STOCKHOLDERS' MEETING") to consider the Company Stockholder
Approvals, and (iii) at the time of the meeting of Parent's stockholders (the
"PARENT STOCKHOLDERS' MEETING") to consider the approval of (1) the issuance
of shares of Parent Common Stock pursuant to the Merger and the Related
Agreements and (2) an amendment to Parent's Certificate of Incorporation to
increase the authorized number of shares of Parent Common Stock in order to
permit the issuance of shares of Parent Common Stock pursuant to the Merger
and the transactions contemplated by the Related Agreements (the "PARENT
STOCKHOLDER APPROVALS") or as of the Effective Time, contain any untrue
statement of a material fact or omit to state any material fact required to
be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not false or
misleading; or omit to state any material fact necessary to correct any
statement in any earlier communication with respect to the solicitation of
proxies for the Company Stockholders' Meeting or Parent Stockholders' Meeting
which has become false or misleading. The Proxy Statement/Prospectus will
comply as to form in all material respects with the applicable provisions of
the Securities Act, the Exchange Act and the rules and regulations
thereunder. If at any time prior to the Effective Time any event relating to
Company or any of its affiliates, officers or directors should be discovered
by Company which is required to be set forth in an amendment to the
Registration Statement or a supplement to the Proxy Statement/Prospectus,
Company shall promptly inform Parent. Notwithstanding the foregoing, Company
makes no representation or warranty with respect to any information supplied
by Parent or Merger Sub which is contained in any of the foregoing documents.
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2.18 Board Approval. The Board of Directors of Company has, as of the
date of this Agreement, (i) determined that the Merger is fair to, and in the
best interests of Company and its stockholders, and has approved this
Agreement and (ii) declared the advisability of the Merger and recommends
that the stockholders of Company approve and adopt this Agreement and approve
the Merger.
2.19 Opinion of Financial Advisor. Company's Board of Directors has
received an opinion from Warburg Dillon Read LLC, dated as of the date of
this Agreement, to the effect that, as of such date, the Exchange Ratio is
fair to holders of Company's Common Stock from a financial point of view, a
copy of the written opinion of which will be delivered to Parent after
receipt thereof by Company.
2.20 Anti-Takeover Protections. The Board of Directors of Company has
taken all actions so that the restrictions contained in Section 203 of the
Delaware General Corporation Law applicable to a "business combination" (as
defined in such Section 203) will not apply to the execution, delivery or
performance of this Agreement or to the consummation of the Merger or the
other transactions contemplated by this Agreement. For the three years prior
to the date of this Agreement, none of Company, its "affiliates" nor
"associates" (as such terms are defined in Section 203 of the Delaware Law)
were the owner of 15% or more of the outstanding voting stock of Parent. To
Company's knowledge, no other anti-takeover, control share acquisition, fair
price, moratorium or other similar statute or regulation ("TAKEOVER STATUTE")
applies or purports to apply to this Agreement, the Merger or the other
transactions contemplated hereby. Company is not a party to, and Company's
equity securities will not be affected by, any rights agreement, "poison
pill" or similar plan, agreement or arrangement which would have an adverse
effect on the ability of Parent to consummate the Merger or the other
transactions contemplated hereby.
2.21 Affiliates. Part 2.21 of the Company Disclosure Letter is a
complete list of those persons who may be deemed to be, in Company's
reasonable judgment, affiliates of Company within the meaning of Rule 145
promulgated under the Securities Act ("COMPANY AFFILIATES"). Except as set
forth in the Company SEC Reports, since the date of the Company's last proxy
statement filed with the SEC, no event has occurred as of the date of this
Agreement that would be required to be reported by the Company pursuant to
Item 404 of Regulation S-K promulgated by the SEC.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
As of the date of this Agreement and as of the Closing Date, Parent and
Merger Sub represent and warrant to Company, subject to the exceptions
specifically disclosed in writing in the disclosure letter and referencing a
specific representation delivered by Parent to Company dated as of the date
hereof and certified by a duly authorized officer of Parent (the "PARENT
DISCLOSURE LETTER"), as follows:
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3.1 Organization of Parent and Merger Sub.
(a) Parent and each of its subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has all requisite corporate power and
authority, and all requisite qualifications to do business as a foreign
corporation, to conduct its business in the manner in which its business is
currently being conducted, except where the failure to be so organized,
existing or in good standing or to have such power, authority or
qualifications would not, individually or in the aggregate, have a Material
Adverse Effect on Parent.
(b) Other than the corporations identified in Part 3.1 of the
Parent Disclosure Letter, neither Parent nor any of the other corporations
identified in Part 3.1 of the Parent Disclosure Letter owns any capital stock
of, or any equity interest of any nature in, any corporation, partnership,
joint venture arrangement or other business entity, other than the entities
identified in Part 3.1 of the Parent Disclosure Letter, except for passive
investments in equity interests of public companies as part of the cash
management program of Parent. Neither Company nor any of its subsidiaries is
obligated to make any material future investment in or capital contribution
to any other entity. Part 3.1 of the Parent Disclosure Letter indicates the
jurisdiction of organization of each entity listed therein and Parent's
direct or indirect equity interest therein.
(b) Parent has delivered or made available to Company a true
and correct copy of the Certificate of Incorporation (including any
Certificates of Designation) and Bylaws of Parent and similar governing
instruments of each of its subsidiaries, each as amended to date
(collectively, the "PARENT CHARTER DOCUMENTS"), and each such instrument is
in full force and effect. Neither Parent nor any of its subsidiaries is in
violation of any of the provisions of the Parent Charter Documents.
3.2 Parent and Merger Sub Capitalization.
(a) The authorized capital stock of Parent consists solely of
200,000,000 shares of Parent Common Stock, of which there were 64,773,413
shares issued and outstanding as of the close of business on March 28, 2000,
and 5,000,000 shares of Preferred Stock, par value $0.001 per share, of which
no shares are issued or outstanding. All outstanding shares of Parent Common
Stock are duly authorized, validly issued, fully paid and nonassessable and
are not subject to any right of rescission or preemptive rights created by
statute, the Parent Charter Documents or any agreement or document to which
Parent is a party or by which it is bound. As of the date of this Agreement,
there are no shares of Parent Common Stock held in treasury by Parent.
(b) As of the close of business on March 28, 2000, (i)
7,242,904 shares of Parent Common Stock are subject to issuance pursuant to
outstanding options ("PARENT OPTIONS") to purchase Parent Common Stock under
Parent's 1997 Stock Plan and 1999 Equity Incentive Plan ("PARENT STOCK OPTION
PLANS") for an aggregate exercise price of $45,865,480, (ii) 142,551 shares
of Parent Common Stock are subject to issuance pursuant to Parent Options
other than pursuant to the Parent Stock Option Plans for an aggregate
exercise price of $512,704,
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and (iii) 750,000 shares of Parent Common Stock are reserved for future
issuance under Parent's 1998 Equity Employee Stock Purchase Plan ("PARENT
ESPP"). Parent has made available to Company an accurate and complete copy
of each of the Parent Stock Option Plans and the form of all stock option
agreements evidencing Parent Options. All shares of Parent Common Stock
subject to issuance as aforesaid, upon issuance on the terms and conditions
specified in the instruments pursuant to which they are issuable, will be
duly authorized, validly issued, fully paid and nonassessable. Other than as
set forth on Part 3.2(b) of the Parent Disclosure Letter, there are no
commitments or agreements of any character to which the Parent is bound
obligating Parent to accelerate the vesting of any Parent Option as a result
of the Merger.
(c) The authorized capital stock of Merger Sub consists of
1,000 shares of common stock, $0.01 par value, 100 of which, as of the date
hereof, are issued and outstanding and are held by Parent. All of the
outstanding shares of Merger Sub's common stock have been duly authorized and
validly issued, and are fully paid and nonassessable. Merger Sub was formed
for the purpose of consummating the Merger and has no material assets or
liabilities except as necessary for such purpose.
(c) All outstanding shares of Parent Common Stock, all
outstanding Parent Options, and all outstanding shares of capital stock of
each subsidiary of Parent have been issued and granted in material compliance
with (i) all applicable securities laws and other applicable material Legal
Requirements and (ii) all material requirements set forth in applicable
agreements or instruments.
(d) The Parent Common Stock to be issued in the Merger, when
issued in accordance with the provisions of this Agreement, will be validly
issued, fully paid and nonassessable.
3.3 Obligations With Respect to Capital Stock. Except as set forth
in Section 3.2 or Part 3.3 of the Parent Disclosure Letter, there are no
equity securities, partnership interests or similar ownership interests of
any class of Parent equity security, or any securities exchangeable or
convertible into or exercisable for such equity securities, partnership
interests or similar ownership interests, issued, reserved for issuance or
outstanding. All stock and rights to purchase stock of any subsidiary of
Parent are owned free and clear of all Encumbrances. Except as set forth in
Section 3.2 or Part 3.2 or Part 3.3 of the Parent Disclosure Letter, there
are no subscriptions, options, warrants, equity securities, partnership
interests or similar ownership interests, calls, rights (including preemptive
rights), commitments or agreements of any character to which Parent or any of
its subsidiaries is a party or by which it is bound obligating Parent 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 Parent or any of its
subsidiaries or obligating Parent 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 there is no voting trust, proxy, rights
agreement, "poison pill" anti-takeover plan or other agreement or
understanding to which Parent is a party or by which it is bound with respect
to any equity security of any class of Parent or with respect to any equity
security, partnership interest or similar ownership interest of any
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class of any of its subsidiaries.
3.4 Authority; Non-Contravention.
(a) Each of Parent and Merger Sub has all requisite corporate
power and authority to enter into this Agreement and the Related Agreements
and to consummate the transactions contemplated hereby and thereby. The
execution and delivery of this Agreement and the Related Agreements and the
consummation of the transactions contemplated hereby and thereby have been
duly authorized by all necessary corporate action on the part of Parent and
Merger Sub, subject only to the Parent Stockholder Approvals and the filing
of the Certificate of Merger pursuant to Delaware Law. The affirmative vote
of the holders of a majority in interest of the stock present or represented
by proxy at the Parent Stockholders' Meeting is sufficient for Parent's
stockholders to approve the issuance of shares of Parent Common Stock in the
Merger and pursuant to the Related Agreements, and the affirmative vote of
the holders of a majority of the outstanding shares of Parent Common Stock
entitled to vote is sufficient for Parent's stockholders to approve the
amendment to Parent's Certificate of Incorporation, and no other approval of
any holder of any securities of Parent is required in connection with the
consummation of the transactions contemplated hereby. This Agreement and the
Related Agreements have been duly executed and delivered by each of Parent
and Merger Sub, as applicable, and, assuming the due authorization, execution
and delivery by Company or the other parties thereto, constitute the valid
and binding obligations of Parent and Merger Sub, respectively, enforceable
against Parent and Merger Sub in accordance with their terms, except as
enforceability may be limited by bankruptcy and other similar laws affecting
the rights of creditors generally and general principles of equity.
(b) The execution and delivery of this Agreement and the
Related Agreements by each of Parent and Merger Sub does not, and the
performance of this Agreement and the Related Agreements by Parent and Merger
Sub will not, (i) conflict with or violate the Parent Charter Documents, (ii)
subject to obtaining the Parent Stockholder Approvals and compliance with the
requirements set forth in Section 3.4(c), conflict with or violate any law,
rule, regulation, order, judgment or decree applicable to Parent or Merger
Sub or by which any of their respective properties is 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
Parent's rights or alter the rights or obligations of any third party under,
or give to others any rights of termination, amendment, acceleration or
cancellation of; or result in the creation of an Encumbrance on any of the
properties or assets of Parent or Merger Sub pursuant to, any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise
or other instrument or obligation to which Parent or Merger Sub is a party or
by which Parent or Merger Sub or any of their respective properties are bound
or affected, except, in the case of clauses (ii) and (iii), for such
conflicts, violations, breaches, defaults, impairments, or rights which,
individually or in the aggregate, would not have a Material Adverse Effect on
Parent. Part 3.4(b) of the Parent Disclosure Letter lists all consents,
waivers and approvals under any of Parent's or any of its subsidiaries'
agreements, contracts, licenses or leases required to be obtained in
connection with the consummation of the transactions contemplated hereby,
which, if individually or in the aggregate not obtained, would have a
Material Adverse Effect on Parent,
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Company or the Surviving Corporation as a result of the Merger or would
materially and adversely affect Parent's Intellectual Property.
(c) No consent, approval, order or authorization of, or
registration, declaration or filing with any Governmental Entity is required
to be obtained or made by Parent or Merger Sub in connection with the
execution and delivery of this Agreement or the consummation of the Merger,
except for (i) the filing of the Certificate of Merger with the Secretary of
State of the State of Delaware, (ii) the filing of the Proxy
Statement/Prospectus and the Registration Statement with the SEC and a
Schedule 13D with regard to the Company Voting Agreements in accordance with
the Securities Act and the Exchange Act, and the effectiveness of the
Registration Statement, (iii) such consents, approvals, orders,
authorizations, registrations, declarations and filings as may be required
under applicable federal, foreign and state securities (or related) laws and
the HSR Act and the securities or antitrust laws of any foreign country, and
(iv) such other consents, authorizations, filings, approvals and
registrations which if not obtained or made would not have a Material Adverse
Effect on Parent or the Surviving Corporation or have a material adverse
effect on the ability of the parties hereto to consummate the Merger.
3.5 SEC Filings; Parent Financial Statements.
(a) Parent has filed all forms, reports and documents required
to be filed by Parent with the SEC since the effective date of the
registration statement (the "PARENT INITIAL REGISTRATION STATEMENT") of
Parent's initial public offering, and has made available to Company such
forms, reports and documents in the form filed with the SEC. All such
required forms, reports and documents (including those that Parent may file
subsequent to the date hereof) and the Parent Initial Registration Statement
are referred to herein as the "PARENT SEC REPORTS." As of their respective
dates, 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 the rules and regulations of the SEC thereunder applicable to such Parent
SEC Reports, and (ii) did not at the time they were filed (or if amended or
superseded by a filing prior to the date of this Agreement, then on the date
of such filing) contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under which
they were made, not misleading, except to the extent corrected prior to the
date of this Agreement by a subsequently filed Parent SEC Report. None of
Parent's subsidiaries is required to file any forms, reports or other
documents with the SEC.
(b) Each of the consolidated financial statements (including,
in each case, any related notes thereto) contained in the Parent SEC Reports
(the "PARENT FINANCIALS"), including any Parent SEC Reports filed after the
date hereof until the Closing, (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 interim financial statements, as
may be permitted by the SEC on Form 1O-Q, 8-K or any successor form under the
Exchange Act) and (iii) fairly presented the consolidated financial position
of Parent and its subsidiaries as at the respective dates thereof and the
consolidated results of Parent's operations and cash flows for the periods
indicated, except that the unaudited interim financial statements may not
contain footnotes and were or are subject to normal and recurring year-end
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adjustments. The balance sheet of Parent contained in Parent SEC Reports as
of September 30, 1999 is hereinafter referred to as the "PARENT BALANCE
Sheet." Except as disclosed in the Parent Financials filed on or prior to
the date hereof, since the date of the Parent Balance Sheet neither Parent
nor any of its subsidiaries has any liabilities required under GAAP to be set
forth on a balance sheet (absolute, accrued, contingent or otherwise) which
are, individually or in the aggregate, material to the business, results of
operations or financial condition of Parent and its subsidiaries taken as a
whole, except for liabilities incurred since the date of the Parent Balance
Sheet in the ordinary course of business consistent with past practices and
liabilities incurred in connection with this Agreement.
3.6 Absence of Certain Changes or Events. Since the date of the
Parent Balance Sheet there has not been (i) any Material Adverse Effect with
respect to Parent, (ii) any declaration, setting aside or payment of any
dividend on, or other distribution (whether in cash, stock or property) in
respect of, any of Parent's or any of its subsidiaries' capital stock, or any
purchase, redemption or other acquisition by Parent of any of Parent's
capital stock or any other securities of Parent or its subsidiaries or any
options, warrants, calls or rights to acquire any such shares or other
securities except for repurchases from employees following their termination
pursuant to the terms of their pre-existing stock option or purchase
agreements, (iii) any split, combination or reclassification of any of
Parent's or any of its subsidiaries' capital stock, (iv) any granting by
Parent or any of its subsidiaries of any increase in compensation or fringe
benefits to any of their officers or employees, or any payment by Parent or
any of its subsidiaries of any bonus to any of their officers or employees,
or any granting by Parent or any of its subsidiaries of any increase in
severance or termination pay or any entry by Parent or any of its
subsidiaries into, or material modification or amendment of, any currently
effective employment, severance, termination or indemnification agreement or
any agreement the benefits of which are contingent or the terms of which are
materially altered upon the occurrence of a transaction involving Parent of
the nature contemplated hereby, in each case, other than in the ordinary
course of business consistent with past practice, (v) any material change or
alteration in the policy of Parent relating to the granting of stock options
or other equity compensation to its employees and consultants other than in
the ordinary course of business consistent with past practice, (vi) entry by
Parent or any of its subsidiaries into, or material modification, amendment
or cancellation of, any licensing or other agreement with regard to the
acquisition, distribution or licensing of any material Intellectual Property
other than licenses, distribution agreements, advertising agreements, or
other similar agreements entered into in the ordinary course of business
consistent with past practice, (vii) any material change by Parent in its
accounting methods, principles or practices, except as required by concurrent
changes in GAAP, or (viii) any material revaluation by Parent of any of its
material assets, including writing off notes or accounts receivable other
than in the ordinary course of business.
3.7 Taxes.
(a) Parent and each of its subsidiaries have timely filed
all material Returns relating to Taxes required to be filed by or on behalf
of Parent and each of its subsidiaries with any Tax authority, such Returns
are true, correct and complete in all material respects, and Parent and each
of its subsidiaries have paid all Taxes shown to be due on such Returns.
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(b) Parent and each of its subsidiaries have withheld
with respect to its employees all federal and state income Taxes, Taxes
pursuant to FICA, Taxes pursuant to FUTA and other Taxes required to be
withheld, except such Taxes which are not material to Parent.
(c) Neither Parent nor any of its subsidiaries has been
delinquent in the payment of any material Tax nor is there any material Tax
deficiency outstanding, proposed or assessed against Parent or any of its
subsidiaries, nor has Parent or any of its subsidiaries executed any
unexpired waiver of any statute of limitations on or extending the period for
the assessment or collection of any Tax.
(d) No audit or other examination of any Return of Parent
or any of its subsidiaries by any Tax authority is presently in progress, nor
has Parent or any of its subsidiaries been notified of any request for such
an audit or other examination.
(e) No adjustment relating to any Returns filed by Parent
or any of its subsidiaries has been proposed in writing formally or
informally by any Tax authority to Parent or any of its subsidiaries or any
Tax or financial representative thereof.
(f) Neither Parent nor any of its subsidiaries has any
liability for unpaid Taxes which has not been accrued for or reserved on the
Parent Balance Sheet in accordance with GAAP, whether asserted or unasserted,
contingent or otherwise, which is material to Parent, other than any
liability for unpaid Taxes that may have accrued since the date of the Parent
Balance Sheet in connection with the operation of the business of Parent and
its subsidiaries in the ordinary course.
(g) There is no agreement, plan or arrangement to which
Parent or any of its subsidiaries is a party, including this Agreement and
the agreements entered into in connection with this Agreement, covering any
employee or former employee of Parent or any of its subsidiaries that,
individually or collectively, would be reasonably likely 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 Parent 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 Parent 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 Parent.
(i) Neither Parent nor any of its subsidiaries is party
to or has any obligation under any Tax-sharing, Tax indemnity or Tax
allocation agreement or arrangement.
(j) Except as may be required as a result of the Merger,
Parent and its subsidiaries have not been and will not be required to include
any adjustment in taxable income for any Tax period (or portion thereof)
pursuant to Section 481 of the Code or any comparable provision under state
or foreign Tax laws as a result of transactions, events or accounting methods
employed prior to the Closing.
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(k) None of Parent's or its subsidiaries' assets are tax
exempt use property within the meaning of Section 168(h) of the Code.
(l) Parent has not been distributed in a transaction
qualifying under Section 355 of the Code within the last two years, nor has
Parent distributed any corporation in a transaction qualifying under Section
355 of the Code within the last two years.
For the purposes of this Agreement, "TAX" or "TAXES" refers
to (i) any and all federal, state, local and foreign taxes, assessments and
other governmental charges, duties, impositions and liabilities relating to
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 payment of any amounts of the
type described in clause (i) as a result of being a member of an affiliated
consolidated, combined or unitary group, and (iii) any liability for amounts
of the type described in clauses (i) and (ii) as a result of any express or
implied obligation to indemnify another 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.
3.8 Title to Properties.
(a) All real property leases to which Parent is a party and
each amendment thereto that is in effect as of the date of this Agreement
that provide for annual payments in excess of $250,000 are in full force and
effect and are valid and enforceable in accordance with their respective
terms, and there is not, under any of such leases, any existing default or
event of default (or event which with notice or lapse of time, or both, would
constitute a default) that would give rise to a material claim against Parent
which could reasonably be expected to have a Material Adverse Effect on
Parent.
(b) Parent has good and valid title to, or, in the case of
leased properties and assets, valid leasehold interests in, all of its
tangible properties and assets, real, personal and mixed, used or held for
use in its business, free and clear of any Encumbrances, except as reflected
in Parent Financials and except where the failure to have valid title or a
valid leasehold interest would not have a Material Adverse Effect on Parent.
3.9 Intellectual Property. For the purposes of this Agreement, the
following terms have the following definitions:
"PARENT INTELLECTUAL PROPERTY" shall mean any Intellectual
Property that is owned by, or exclusively licensed to, Parent or one of its
subsidiaries.
"PARENT REGISTERED INTELLECTUAL PROPERTY" means all of the
Registered Intellectual Property owned by, or filed in the name of, Parent or
one of its subsidiaries.
(a) No material Parent Intellectual Property or product or
service of Parent is subject to any proceeding, agreement, or stipulation to
which Parent is a party, or any
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outstanding decree, order or judgment, the proceeding arising out of which
Parent was either a party or of which Parent has knowledge, restricting in
any manner the use, transfer, or licensing thereof by Parent, or which may
affect the validity, use or enforceability of such Parent Intellectual
Property.
(b) Each material item of Parent Registered Intellectual
Property is valid and subsisting, all necessary registration, maintenance and
renewal fees currently due in connection with such Parent Registered
Intellectual Property have been made and all necessary documents,
recordations and certificates in connection with such Parent 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 maintaining such Parent Registered
Intellectual Property, except, in each case, as would not materially
adversely affect such item of Parent Registered Intellectual Property.
(c) Parent or one of its subsidiaries owns and has good and
exclusive title to, or has license sufficient for the conduct of its business
as currently conducted to, each material item of Parent Intellectual Property
free and clear of any Encumbrance (excluding licenses and related
restrictions).
(d) Neither Parent nor any of its subsidiaries has transferred
ownership of, or granted any exclusive license with respect to, any
Intellectual Property that is or was material Parent Intellectual Property,
to any third party.
(e) Part 3.9(e) of the Parent Disclosure Letter lists all
material contracts, licenses and agreements to which Parent is a party (i)
pursuant to which any exclusive rights with respect to Parent Intellectual
Property are licensed, granted or transferred to any third party; or (ii)
pursuant to which a third party has licensed, transferred, sold or
distributed any material Intellectual Property to Parent.
(f) The operation of the business of Parent as such business
currently is conducted, including Parent's design, development, marketing and
sale of the products or services of Parent (including with respect to
products currently under development) has not, does not and will not
materially infringe or materially misappropriate the Intellectual Property of
any third party or, to its knowledge, constitute unfair competition or trade
practices under the laws of any jurisdiction.
(g) Parent has not received written notice from any third party
that the operation of the business of Parent or any act, product or service
of Parent, infringes or misappropriates the Intellectual Property of any
third party or constitutes unfair competition or trade practices under the
laws of any jurisdiction, which allegation, if true, would have a Material
Adverse Effect on Parent.
(h) To the knowledge of Parent, no person has or is infringing
or misappropriating any Parent Intellectual Property, which infringement or
misappropriation, individually or in the aggregate, would have a Material
Adverse Effect on Parent.
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(i) Parent and its subsidiaries have taken reasonable steps to
protect Parent's and its subsidiaries' rights in Parent's and such
subsidiaries' confidential information and trade secrets, except where the
failure to do so would not have a Material Adverse Effect on Parent.
(j) None of the Parent Intellectual Property or product or
service of Parent contains any defect in connection with processing data
containing dates in leap years or in the year 2000 or any preceding or
following years, which defects, individually or in the aggregate, would have
a Material Adverse Effect on Parent.
3.10 Compliance with Laws.
(a) Neither Parent nor any of its subsidiaries is in conflict
with, or in default or in violation of (i) any law, rule, regulation, order,
judgment or decree applicable to Parent or any of its subsidiaries or by
which Parent or any of its subsidiaries or any of their respective properties
is bound or affected, or (ii) any note, bond, mortgage, indenture, agreement,
lease, license, permit, franchise or other instrument or obligation to which
Parent or any of its subsidiaries is a party or by which Parent or any of its
subsidiaries or its or any of their respective properties is bound or
affected, except for conflicts, violations and defaults that, individually or
in the aggregate, would not have a Material Adverse Effect on Parent. To
Parent's knowledge, no investigation or review by any Governmental Entity is
pending or has been threatened in a writing delivered to Parent against
Parent or any of its subsidiaries. There is no agreement with any
Governmental Entity, judgment, injunction, order or decree binding upon
Parent or any of its subsidiaries which has or could reasonably be expected
to have the effect of prohibiting or materially impairing any material
business practice of Parent or any of its subsidiaries, or any acquisition of
material property by Parent or any of its subsidiaries.
(b) Parent and its subsidiaries hold all permits, licenses,
exemptions, orders and approvals from governmental authorities that are
material to or required for the operation of the business of Parent as
currently conducted (collectively, the "PARENT PERMITS"), and are in
compliance with the terms of the Parent Permits, except where the failure to
hold such Parent Permits, or be in such compliance, would not, individually
or in the aggregate, have a Material Adverse Effect on Parent.
3.11 Litigation. There are no claims, suits, actions or proceedings
pending or, to the knowledge of Parent, threatened against, relating to or
affecting Parent or any of its subsidiaries, before any Governmental Entity
or any arbitrator that seeks to restrain or enjoin the consummation of the
transactions contemplated by this Agreement or which could reasonably be
expected, either singularly or in the aggregate with all such claims, actions
or proceedings, to have a Material Adverse Effect on Parent or on the
Surviving Corporation following the Merger or have a material adverse effect
on the ability of the parties hereto to consummate the Merger.
3.12 Employee Benefit Plans.
(a) Definitions. With the exception of the definition of
"Affiliate" set forth in Section 3.12(a)(i) below (which definition shall
apply only to this Section 3.12), for purposes of this Agreement, the
following terms shall have the meanings set forth below:
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(i) "AFFILIATE" shall mean any other person or entity
under common control with Parent within the meaning of Section 414(b), (c),
(m) or (o) of the Code and the regulations issued thereunder;
(ii) "PARENT EMPLOYEE PLAN" shall mean any plan, program,
policy, practice, contract, agreement or other arrangement providing for
compensation, severance, termination pay, performance awards, stock or
stock-related awards, fringe benefits or other employee benefits or
remuneration of any kind, whether written or unwritten or otherwise, funded
or unfunded, including without limitation, each "EMPLOYEE BENEFIT PLAN,"
within the meaning of Section 3(3) of ERISA which is maintained, contributed
to, or required to be contributed to, by Parent or any Affiliate for the
benefit of any Parent Employee;
(iii) "PARENT EMPLOYEE" shall mean any current, former, or
retired employee, officer, or director of Parent or any Affiliate;
(iv) "PARENT EMPLOYEE AGREEMENT" shall mean each
management, employment, severance, consulting, relocation, repatriation,
expatriation, visas, work permit or similar agreement or contract between
Parent or any Affiliate and any Parent Employee or consultant (excluding any
offer letter or other agreement that does not subject Parent to any potential
liability in excess of $200,000);
(v) "INTERNATIONAL PARENT EMPLOYEE PLAN" shall mean each
Parent Employee Plan that has been adopted or maintained by Parent, whether
informally or formally, for the benefit of Parent Employees outside the
United States; and
(vi) "PENSION PLAN" shall mean each Parent Employee Plan
which is an "employee pension benefit plan," within the meaning of Section
3(2) of ERISA.
(b) Schedule. Part 3.12 of the Parent Disclosure Letter
contains an accurate and complete list of each Parent Employee Plan. Parent
does not have any plan or commitment to establish any new Parent Employee
Plan, to modify any Parent Employee Plan (except to the extent required by
law or to conform any such Parent Employee Plan to the requirements of any
applicable law, or as required by this Agreement), or to enter into any
Parent Employee Plan, nor does it have any intention or commitment to do any
of the foregoing.
(c) Documents. Parent has provided or has made available to
Company: (i) correct and complete copies of all documents embodying each
Parent Employee Plan (substituting for such including all amendments thereto
and written interpretations thereof); (ii) the most recent annual actuarial
valuations, if any, prepared for each Parent Employee Plan; (iii) the three
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 Parent Employee Plan or related trust; (iv) if the
Parent Employee Plan is funded, the most recent annual and periodic
accounting of Parent Employee Plan assets; (v) the most recent summary plan
description together with the summary of material modifications thereto, if
any, required under ERISA with respect to each Parent Employee Plan; (vi) all
IRS determination, opinion, notification and advisory letters, and rulings
relating to Parent Employee Plans and copies of all
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applications and correspondence to or from the IRS or the DOL with respect to
any Parent Employee Plan; (vii) all material written agreements and contracts
relating to each Parent Employee Plan, including, but not limited to,
administrative service agreements, group annuity contracts and group
insurance contracts; (viii) all communications material to any Parent
Employee or Parent Employees relating to any Parent Employee Plan and any
proposed Parent 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 Parent; (ix) all COBRA forms and related
notices; and (x) all registration statements and prospectuses prepared in
connection with each Parent Employee Plan.
(d) Employee Plan Compliance. Except, in each case, as would
not, individually or in the aggregate, have a Material Adverse Effect on
Parent (i) Parent has performed in all material respects all obligations
required to be performed by it under, is not in default or violation of, and
has no knowledge of any default or violation by any other party to, each
Parent Employee Plan, and each Parent Employee Plan has been established and
maintained in all material respects in accordance with its terms and in
compliance with all applicable laws, statutes, orders, rules and regulations,
including but not limited to ERISA or the Code; (ii) each Parent Employee
Plan intended to qualify under Section 401(a) of the Code and each trust
intended to qualify under Section 501(a) of the Code has either received a
favorable determination letter from the IRS with respect to each such Plan as
to its qualified status under the Code or has remaining a period of time
under applicable Treasury regulations or IRS pronouncements in which to apply
for such a determination letter and make any amendments necessary to obtain a
favorable determination and no event has occurred which would adversely
affect the status of such determination letter or the qualified status of
such Plan; (iii) no "prohibited transaction," within the meaning of Section
4975 of the Code or Sections 406 and 407 of ERISA, and not otherwise exempt
under Section 408 of ERISA, has occurred with respect to any Parent Employee
Plan; (iv) there are no actions, suits or claims pending, or, to the
knowledge of Parent, threatened or reasonably anticipated (other than routine
claims for benefits) against any Parent Employee Plan or against the assets
of any Parent Employee Plan; (v) each Parent Employee Plan can be amended,
terminated or otherwise discontinued after the Effective Time in accordance
with its terms, without liability to Parent, Parent or any of its Affiliates
(other than ordinary administration expenses typically incurred in a
termination event); (vi) there are no audits, inquiries or proceedings
pending or, to the knowledge of Parent, threatened by the IRS or DOL with
respect to any Parent Employee Plan; (vii) neither Parent nor any Affiliate
is subject to any material penalty or tax with respect to any Parent Employee
Plan under Section 402(i) of ERISA or Sections 4975 through 4980 of the Code;
and (viii) all contributions due from the Parent or any Affiliate with
respect to any of the Parent Employee Plans have been made as required under
ERISA or have been accrued on the Parent Balance Sheet.
(e) Pension Plans. Parent does not now, nor has it ever,
maintained, established, sponsored, participated in, or contributed to, any
Pension Plan which is subject to Title IV of ERISA or Section 412 of the Code.
(f) Multiemployer Plans. At no time has Parent contributed to
or been required to contribute to any Multiemployer Plan.
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(g) No Post-Employment Obligations. No Parent Employee Plan
provides, or has any liability to provide, retiree life insurance, retiree
health or other retiree employee welfare benefits to any person for any
reason, except as may be required by COBRA or other applicable statute, and
Parent has never represented, promised or contracted (whether in oral or
written form) to any Parent Employee (either individually or to Parent
Employees as a group) or any other person that such Parent Employee(s) or
other person would be provided with retiree life insurance, retiree health or
other retiree employee welfare benefit, except to the extent required by
statute.
(h) COBRA; FMLA. Except as would not have a Material Adverse
Effect on Parent, neither Parent nor any Affiliate has, prior to the
Effective Time violated any of the health care continuation requirements of
COBRA, the requirements of FMLA or any similar provisions of state law
applicable to its Parent Employees.
(i) Effect of Transaction. The execution of this Agreement and
the consummation of the transactions contemplated hereby will not (either
alone or upon the occurrence of any additional or subsequent events)
constitute an event under any Parent Employee Plan, Parent Employee
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 Parent Employee. No payment or benefit which will or may
be made by Parent or its Affiliates with respect to any Parent Employee as a
result of the transactions contemplated by this Agreement will be
characterized as an "excess parachute payment," within the meaning of Section
280G(b)(1) of the Code or will be treated as a nondeductible expense within
the meaning of Section 162 of the Code.
(j) Employment Matters. Except, in each case, as would not,
individually or in the aggregate, have a Material Adverse Effect on Parent,
Parent and each of its subsidiaries: (i) is in compliance in all material
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
Parent Employees; (ii) has withheld all amounts required by law or by
agreement to be withheld from the wages, salaries and other payments to
Parent Employees; (iii) has properly classified independent contractors for
purposes of federal and applicable state tax laws, laws applicable to
employee benefits and other applicable laws; (iv) is not liable for any
arrears of wages or any taxes or any penalty for failure to comply with any
of the foregoing; and (v) is not liable for any material payment to any trust
or other fund or to any governmental or administrative authority, with
respect to unemployment compensation benefits, social security or other
benefits or obligations for Parent Employees (other than routine payments to
be made in the normal course of business and consistent with past practice).
There are no pending, or, to Parent's knowledge, threatened material claims
or actions against Parent under any worker's compensation policy or long-term
disability policy. To Parent's knowledge, no Parent Employee has violated in
any material manner any employment contract, nondisclosure agreement or
noncompetition agreement by which such Parent Employee is bound due to such
Parent Employee being employed by Parent and disclosing to Parent or using
trade secrets or proprietary information of any other person or entity.
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(k) Labor. No work stoppage or labor strike against Parent is
pending, threatened or reasonably anticipated. Parent does not know of any
activities or proceedings of any labor union to organize any Parent
Employees. There are no actions, suits, claims, labor disputes or grievances
pending, or, to the knowledge of Parent, threatened or reasonably anticipated
relating to any labor, safety or discrimination matters involving any Parent
Employee, including charges of unfair labor practices or discrimination
complaints, which, if adversely determined, would, individually or in the
aggregate, result in any material liability to Parent. Neither Parent nor
any of its subsidiaries has engaged in any unfair labor practices within the
meaning of the National Labor Relations Act. Parent 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 Parent Employees and no
collective bargaining agreement is being negotiated by Parent.
(l) International Employee Plan. Each International Employee
Plan has been established, maintained and administered in material compliance
with its terms and conditions and with the requirements prescribed by any and
all statutory or regulatory laws that are applicable to such International
Employee Plan. Furthermore, no International Employee Plan has unfunded
liabilities, that as of the Effective Time, will not be offset by insurance
or fully accrued. Except as required by law, no condition exists that would
prevent Parent or Parent from terminating or amending any International
Employee Plan at any time for any reason.
3.13 Environmental Matters. During the period that Parent has leased
or owned its properties or leased, owned or operated any facilities, there
have been no disposals, releases or threatened releases of Hazardous
Materials (as defined below) on, from or under any such properties or
facilities that would have a Material Adverse Effect on Parent. Parent has
no knowledge of any presence, disposals, releases or threatened releases of
Hazardous Materials on, from or under any of such properties or facilities,
which may have occurred prior to Parent or any of its subsidiaries having
taken possession of any of such properties or facilities which might
reasonably be expected to have a Material Adverse Effect on Parent. None of
the properties or facilities currently leased or owned by Parent or any of
its subsidiaries or any properties or facilities previously leased or owned
by Parent or any of its subsidiaries is in violation of any federal, state or
local law, ordinance, regulation or order relating to industrial hygiene or
to the environmental conditions on, under or about such properties or
facilities, including, but not limited to, soil and ground water condition
which violation would have a Material Adverse Effect on Parent. During
Parent's occupancy of any properties or facilities owned or leased at any
time by Parent, neither Parent, nor to Parent's knowledge, any third party,
has used, generated, manufactured, released or stored on, under or about such
properties and facilities or transported to or from such properties and
facilities any Hazardous Materials that would have or is reasonably likely to
have a Material Adverse Effect on Parent. During the time that Parent or any
of its subsidiaries has owned or leased the properties and facilities
currently occupied by it or any properties and facilities previously occupied
by Parent or any of its subsidiaries, there has been no material litigation,
proceeding or administrative action brought or threatened against Parent or
any of its subsidiaries, or any material settlement reached by Parent or any
of its subsidiaries with, any party or parties alleging the presence,
disposal, release or threatened release of any Hazardous Materials on, from
or under any of such properties or facilities.
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3.14 Certain Agreements. Other than the Related Agreements, except as
otherwise set forth in Part 3.14 of the Parent Disclosure Letter, neither
Parent nor any of its subsidiaries is a party to or is bound by:
(a) other than as disclosed in Part 3.12 of the Parent
Disclosure Letter, any employment agreement or commitment with any officer or
member of Parent's Board of Directors, other than those that are terminable
by Parent or any of its subsidiaries on no more than thirty days notice
without liability or financial obligation, except to the extent general
principles of wrongful termination law may limit Parent's or any of its
subsidiaries' ability to terminate employees at will, or any consulting
agreement;
(b) any material agreement of indemnification, any material
guaranty or any material instrument evidencing indebtedness for borrowed
money by way of direct loan, sale of debt securities or purchase money
obligation;
(c) any agreement or obligation containing covenants purporting
to limit or which effectively limit the Parent's or any of its subsidiaries'
freedom to compete in any line of business or in any geographic area or which
would so limit Parent or Surviving Corporation or any of its subsidiaries
after the Effective Time or granting any exclusive distribution or other
exclusive rights;
(d) any agreement or obligation currently in force relating to
the disposition or acquisition by Parent or any of its subsidiaries after the
date of this Agreement of a material amount of assets not in the ordinary
course of business, or pursuant to which Parent has any material ownership or
participation interest in any corporation, partnership, joint venture,
strategic alliance or other business enterprise other than Parent's
subsidiaries;
(e) any agreement or obligation currently in force to provide
source code to any third party for any product or technology;
(f) any agreement or obligation with any affiliate of Parent; or
(g) any agreement or commitment currently in force requiring
capital expenditures by Parent or its subsidiaries in excess of $1,000,000.
The agreements required to be disclosed in the Parent Disclosure Letter
pursuant to clauses (a) through (g) above or pursuant to Section 3.9 or filed
with any Parent SEC Report ("PARENT CONTRACTS") are valid and in full force
and effect, except to the extent that such invalidity would not have a
Material Adverse Effect on Parent. Neither Parent nor any of its
subsidiaries, nor to Parent's knowledge, any other party thereto, is in
breach, violation or default under, and neither Parent nor any of its
subsidiaries has received written notice that it has breached, violated or
defaulted, any of the terms or conditions of any Parent Contract in such a
manner as would have a Material Adverse Effect on Parent.
3.15 Brokers' and Finders' Fees. Except for fees payable to ▇▇▇▇▇▇▇
▇▇▇▇▇ & Co., Parent has not incurred, nor will it incur, directly or
indirectly, any liability for brokerage or
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finders' fees or agents' commissions or any similar charges in connection
with this Agreement or any transaction contemplated hereby.
3.16 Insurance. Parent and each of its subsidiaries have policies of
insurance and bonds of the type and in amounts customarily carried by persons
conducting business or owning assets similar to those of the Parent and its
subsidiaries. There is no material claim pending under any of such policies
or bonds as to which coverage has been questioned, denied or disputed by the
underwriters of such policies or bonds. All premiums due and payable under
all such policies have been paid and the Parent and its subsidiaries are
otherwise in compliance in all material respects with the terms of such
policies and bonds.
3.17 Disclosure. The information supplied by Parent for inclusion in
the Registration Statement shall not at the time the Registration Statement
is filed with the SEC and at the time it becomes 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 information supplied by Parent for
inclusion or incorporation by reference in the Proxy Statement/Prospectus
shall not, on the date the Proxy Statement/Prospectus is mailed to Company's
stockholders or to Parent's stockholders, at the time of Company
Stockholders' Meeting, at the time of the Parent Stockholders' Meeting or as
of the Effective Time, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under
which they are made, not false or misleading, or omit to state any material
fact necessary to correct any statement in any earlier communication with
respect to the solicitation of proxies for Company Stockholders' Meeting or
the Parent Stockholders' Meeting which has become false or misleading. The
Registration Statement and Proxy Statement/Prospectus will comply as to form
in all material respects with the provisions of the Securities Act and the
rules and regulations thereunder. If at any time prior to the Effective
Time, any event relating to Parent or any of its affiliates, officers or
directors should be discovered by Parent which is required to be set forth in
an amendment to the Registration Statement or a supplement to the Proxy
Statement/Prospectus, Parent shall promptly inform Company. Notwithstanding
the foregoing, Parent makes no representation or warranty with respect to any
information supplied by Company which is contained in any of the foregoing
documents.
3.18 Board Approval. The Board of Directors of Parent has, as of the
date of this Agreement, (i) determined that the Merger is fair to, and in the
best interests of Parent and its stockholders, and has approved this
Agreement and (ii) recommends that the stockholders of Parent approve the
issuance of shares of Parent Common Stock pursuant to the Merger and the
Related Agreements, and the amendment of Parent's Certificate of
Incorporation.
3.19 Opinion of Financial Advisor. Parent's Board of Directors has
received an opinion from ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., dated as of the date of this
Agreement, to the effect that, as of such date, the exchange of consideration
in the Transaction is fair to Parent from a financial point of view, a copy
of the written opinion of which will be delivered to Company after receipt
thereof by Parent. The transactions contemplated by this Agreement and the
Related Agreements are collectively referred to herein as the "TRANSACTION".
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3.20 Anti-Takeover Protections. The Board of Directors of Parent has
taken all actions so that the restrictions contained in Section 203 of the
Delaware General Corporation Law applicable to a "business combination" (as
defined in such Section 203) will not apply to the execution, delivery or
performance of this Agreement or to the consummation of the Merger or the
other transactions contemplated by this Agreement. For the three years prior
to the date of this Agreement, none of Parent, its "affiliates" nor
"associates" (as such terms are defined in Section 203 of the Delaware Law)
were the owner of 15% or more of the outstanding voting stock of Company. To
Parent's knowledge, no other Takeover Statute applies or purports to apply to
this Agreement, the Merger or the other transactions contemplated hereby.
ARTICLE IV
CONDUCT PRIOR TO THE EFFECTIVE TIME
4.1 Conduct of Business by Company. During the period from the date
of this Agreement and continuing until the earlier of the termination of this
Agreement pursuant to its terms or the Effective Time, Company and each of
its subsidiaries shall, except to the extent that Parent shall otherwise
consent in writing, carry on its business in the usual, regular and ordinary
course, in substantially the same manner as heretofore conducted and in
compliance in all material respects with all applicable material laws and
regulations, pay its debts and Taxes when due subject to good faith disputes
over such debts or Taxes, pay or perform other material obligations when due,
and use its commercially reasonable efforts consistent with past practices
and policies to (i) preserve intact its present business organization, (ii)
keep available the services of its present officers and employees and (iii)
preserve its relationships with customers, suppliers, licensors, licensees,
and others with which it has business dealings. In addition, Company will
promptly notify Parent of any material adverse event involving its business
or operations.
In addition, except as permitted by the terms of this Agreement, and
except as contemplated by this Agreement or the Related Agreements or
provided in Part 4.1 of the Company Disclosure Letter, without the prior
written consent of Parent, during the period from the date of this Agreement
and continuing until the earlier of the termination of this Agreement
pursuant to its terms or the Effective Time, Company shall not do any of the
following and shall not permit its subsidiaries to do any of the following:
(a) Waive any stock repurchase rights, accelerate, amend or
change the period of exercisability of options or restricted stock, or
reprice options granted under any employee, consultant, director or other
stock plans or authorize cash payments in exchange for any options granted
under any of such plans;
(b) Grant any severance or termination pay to any officer or
employee except pursuant to written agreements in effect, or policies
existing, on the date hereof and as previously disclosed in writing to
Parent, or adopt any new severance plan;
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(c) Transfer or license to any person or entity or otherwise
extend, amend or modify in any material respect any rights to the Company
Intellectual Property, other than non-exclusive licenses in the ordinary
course of business and consistent with past practice;
(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 of Company or its subsidiaries,
except repurchases of unvested shares at cost in connection with the
termination of the employment relationship with any employee pursuant to
stock option or purchase agreements in effect on the date hereof;
(f) Issue, deliver, sell, authorize, pledge or otherwise
encumber any shares of capital stock or any securities convertible into
shares of capital stock, or subscriptions, rights, warrants or options to
acquire any shares of capital stock or any securities convertible into shares
of capital stock, or enter into other agreements or commitments of any
character obligating it to issue any such shares or convertible securities,
other than the grant, issuance, delivery and/or sale of (i) shares of Company
Common Stock pursuant to the exercise of Company Options outstanding on the
date of this Agreement, or granted in accordance with clause (iii) of this
Section 4.1(f), (ii) shares of Company Common Stock issuable to participants
in the Company ESPP consistent with the terms thereof, (iii) Company Options
granted to newly-hired employees in the ordinary course of business in
amounts comparable to similarly situated Company employees, and in an
aggregate amount not to exceed 330,870, none of which Company Options shall
provide for or permit any acceleration of the exercisability thereof in
connection with the Merger or any of the transactions contemplated by this
Agreement, and (iv) shares of Company Common Stock issued in connection with
acquisitions and commercial transactions permitted under Section 4.1(h) below;
(g) Cause, permit or propose any amendments to its Certificate
of Incorporation, Bylaws or other 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 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 which are material, individually or in
the aggregate, to the business of Company or enter into any material joint
ventures, strategic relationships or alliances, or enter into any commercial
transaction involving the issuance or potential issuance of equity securities
of Company; provided, that Company shall not be prohibited hereunder from
making or agreeing to make acquisitions, or entering into commercial
transactions involving the issuance or potential issuance of Company Common
Stock, all of which together do not involve the issuance or potential
issuance of more than 290,000 shares of Company Common Stock in the
aggregate, and none of which acquisitions, agreements or commercial
transactions could reasonably be expected to delay the effectiveness of the
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Registration Statement, the consummation of the Merger or the other
transactions contemplated by this Agreement or the Related Agreements;
provided, further, that Company shall provide written notice to Parent prior
to signing any agreement regarding any such acquisition or transaction;
(i) Sell, lease, license, encumber or otherwise dispose of any
properties or assets which are material, individually or in the aggregate, to
the business of Company;
(j) Incur any indebtedness for borrowed money or guarantee any
such indebtedness of another person, issue or sell any debt securities or
options, warrants, calls or other rights to acquire any debt securities of
Company, enter into any "keep well" or other agreement to maintain any
financial statement condition or enter into any arrangement having the
economic effect of any of the foregoing other than (i) in connection with the
financing of ordinary course trade payables consistent with past practice,
(ii) pursuant to existing credit facilities in the ordinary course of
business or (iii) in aggregate amount not to exceed $1,000,000;
(k) (i) Adopt or amend any employee benefit plan or employee
stock purchase or employee stock option plan, or enter into any employment
contract or collective bargaining agreement (other than offer letters and
letter agreements entered into in the ordinary course of business consistent
with past practice with employees who are terminable "at will"), or (ii) 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 other than in the ordinary course of business, consistent with
past practice, or change in any material respect any management policies or
procedures;
(1) Make any capital expenditures outside of the ordinary
course of business or any capital expenditures in excess of $500,000,
individually, or $4,000,000, in the aggregate;
(m) Materially modify, amend or terminate any Company Contract
or other material contract or agreement to which Company or any subsidiary
thereof is a party, or waive, release or assign any material rights or claims
thereunder, except in the ordinary course of business;
(n) Enter into any licensing or other agreement with regard to
the acquisition, distribution or licensing of any material Company
Intellectual Property (as defined in Section 2.9) other than licenses,
distribution agreements, advertising agreements, or other similar agreements
entered into in the ordinary course of business consistent with past practice;
(o) Materially revalue any of its assets or, except as required
by GAAP, make any change in accounting methods, principles or practices;
(p) Initiate or settle any material litigation, arbitration,
mediation or other legal proceeding;
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(q) Take or permit any action with the intent to directly or
indirectly adversely impact any of the transactions contemplated by this
Agreement, including the treatment of same for tax purposes as a
"reorganization"; or
(r) Agree in writing or otherwise to take any of the actions
described in Section 4.1 (a) through (q) above.
4.2 Conduct of Business by Parent. During the period from the date
of this Agreement and continuing until the earlier of the termination of this
Agreement pursuant to its terms or the Effective Time, Parent and each of its
subsidiaries shall, except to the extent that Company shall otherwise consent
in writing, carry on its business in the usual, regular and ordinary course,
in substantially the same manner as heretofore conducted and in compliance in
all material respects with all applicable material laws and regulations, pay
its debts and Taxes when due subject to good faith disputes over such debts
or Taxes, pay or perform other material obligations when due, and use its
commercially reasonable efforts consistent with past practices and policies
to (i) preserve intact its present business organization, (ii) keep available
the services of its present officers and employees and (iii) preserve its
relationships with customers, suppliers, licensors, licensees, and others
with which it has business dealings. In addition, Parent will promptly
notify Company of any material adverse event involving its business or
operations.
In addition, except as permitted by the terms of this Agreement, and
except as contemplated by this Agreement or the Related Agreements or
provided in Part 4.2 of the Parent Disclosure Letter, without the prior
written consent of Company, during the period from the date of this Agreement
and continuing until the earlier of the termination of this Agreement
pursuant to its terms or the Effective Time, Parent shall not do any of the
following and shall not permit its subsidiaries to do any of the following:
(a) Waive any stock repurchase rights, accelerate, amend or
change the period of exercisability of options or restricted stock, or
reprice options granted under any employee, consultant, director or other
stock plans or authorize cash payments in exchange for any options granted
under any of such plans;
(b) Grant any severance or termination pay to any officer or
employee except pursuant to written agreements in effect, or policies
existing, on the date hereof and as previously disclosed in writing to
Company, or adopt any new severance plan;
(c) Transfer or license to any person or entity or otherwise
extend, amend or modify in any material respect any rights to the Parent
Intellectual Property, other than non-exclusive licenses in the ordinary
course of business and consistent with past practice;
(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 of Parent or its subsidiaries, except
repurchases of unvested shares at cost in
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connection with the termination of the employment relationship with any
employee pursuant to stock option or purchase agreements in effect on the
date hereof;
(f) Issue, deliver, sell, authorize, pledge or otherwise
encumber any shares of capital stock or any securities convertible into
shares of capital stock, or subscriptions, rights, warrants or options to
acquire any shares of capital stock or any securities convertible into shares
of capital stock, or enter into other agreements or commitments of any
character obligating it to issue any such shares or convertible securities,
other than the grant, issuance, delivery and/or sale of (i) shares of Parent
Common Stock pursuant to the exercise of Parent Options outstanding on the
date of this Agreement, or granted in accordance with clause (iii) of this
Section 4.2(f), (ii) shares of Parent Common Stock issuable to participants
in the Parent ESPP consistent with the terms thereof, (iii) Parent Options
granted to newly-hired employees in the ordinary course of business in
amounts comparable to similarly situated Parent employees, and in an
aggregate amount not to exceed 550,000, none of which Parent Options shall
provide for or permit any acceleration of the exercisability thereof in
connection with the Merger or any of the transactions contemplated by this
Agreement, and (iv) shares of Parent Common Stock issued in connection with
acquisitions and commercial transactions permitted under Section 4.2(h) below;
(g) Cause, permit or propose any amendments to its Certificate
of Incorporation, Bylaws or other charter documents (or similar governing
instruments of any of its subsidiaries), other than an amendment to its
Certificate of Incorporation to increase the authorized number of shares of
Parent Common Stock;
(h) Acquire or agree to acquire by merging or consolidating
with, or by purchasing any equity interest in or a portion of the assets of,
or by any other manner, any business or any corporation, partnership,
association or other business organization or division thereof; or otherwise
acquire or agree to acquire any assets which are material, individually or in
the aggregate, to the business of Parent, or enter into any material joint
ventures, strategic relationships or alliances, or enter into any commercial
transaction involving the issuance or potential issuance of equity securities
of Parent; provided, that Parent shall not be prohibited hereunder from (x)
acquiring EquipMD, Inc. pursuant to the Agreement and Plan of Merger among
Parent, Augustacorp, Inc. and EquipMD, Inc. (a true and complete copy of
which has been provided to Company) or (y) making or agreeing to make
acquisitions, or entering into commercial transactions involving the issuance
or potential issuance of Parent Common Stock, all of which together do not
involve the issuance or potential issuance of more than 500,000 shares of
Parent Common Stock in the aggregate, and none of which acquisitions,
agreements or commercial transactions could reasonably be expected to delay
the effectiveness of the Registration Statement, the consummation of the
Merger or the other transactions contemplated by this Agreement or the
Related Agreements; provided, further, that Parent shall provide written
notice to Company prior to signing any agreement regarding any such
acquisition or transaction;
(i) Sell, lease, license, encumber or otherwise dispose of any
properties or assets which are material, individually or in the aggregate, to
the business of Parent;
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(j) Incur any indebtedness for borrowed money or guarantee any
such indebtedness of another person, issue or sell any debt securities or
options, warrants, calls or other rights to acquire any debt securities of
Parent, 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 (i) in connection with the
financing of ordinary course trade payables consistent with past practice,
(ii) equipment leasing arrangements or (iii) in aggregate amount not to
exceed $1,000,000;
(k) (i) Adopt or amend any employee benefit plan or employee
stock purchase or employee stock option plan, or enter into any employment
contract or collective bargaining agreement (other than offer letters and
letter agreements entered into in the ordinary course of business consistent
with past practice with employees who are terminable "at will") other than an
increase in the number of shares of Parent Common Stock reserved for issuance
under the Parent Stock Option Plans or the Parent ESPP, or (ii) 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 other than in the ordinary course of business, consistent with
past practice, or change in any material respect any management policies or
procedures;
(1) Make any capital expenditures outside of the ordinary
course of business or any capital expenditures in excess of $1,000,000,
individually, or $10,000,000, in the aggregate;
(m) Materially modify, amend or terminate any Parent Contract
or other material contract or agreement to which Parent or any subsidiary
thereof is a party, or waive, release or assign any material rights or claims
thereunder, except in the ordinary course of business;
(n) Enter into any licensing or other agreement with regard to
the acquisition, distribution or licensing of any material Parent
Intellectual Property (as defined in Section 2.9) other than licenses,
distribution agreements, advertising agreements, or other similar agreements
entered into in the ordinary course of business consistent with past practice;
(o) Materially revalue any of its assets or, except as required
by GAAP, make any change in accounting methods, principles or practices;
(p) Initiate or settle any material litigation, arbitration,
mediation or other legal proceeding;
(q) Take or permit any action with the intent to directly or
indirectly adversely impact any of the transactions contemplated by this
Agreement, including the treatment of same for tax purposes as a
"reorganization"; or
(r) Agree in writing or otherwise to take any of the actions
described in Section 4.2 (a) through (q) above.
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ARTICLE V
ADDITIONAL AGREEMENTS
5.1 Proxy Statement/Prospectus; Registration Statement;
Antitrust and Other Filings.
(a) As promptly as practicable after the execution of this
Agreement, Company and Parent will prepare and file with the SEC, the Proxy
Statement/Prospectus and Parent will prepare and file with the SEC the
Registration Statement in which the Proxy Statement/Prospectus will be
included as a prospectus. Each of Company and Parent will respond to any
comments of the SEC, will use its respective commercially reasonable efforts
to have the Registration Statement declared effective under the Securities
Act as promptly as practicable after such filing and each of Company and
Parent will cause the Proxy Statement/Prospectus to be mailed to its
respective stockholders at the earliest practicable time after the
Registration Statement is declared effective by the SEC. Promptly after the
date of this Agreement, each of the Company and Parent will prepare and file
(i) with the United States Federal Trade Commission and the Antitrust
Division of the United States Department of Justice Notification and Report
Forms relating to the transactions contemplated herein as required by the HSR
Act, as well as comparable pre-merger notification forms required by the
merger notification or control laws and regulations of any applicable
jurisdiction, as agreed to by the parties (the "ANTITRUST FILINGS") and (ii)
any other filings required to be filed by it under the Exchange Act, the
Securities Act or any other federal, state or foreign laws relating to the
Merger and the transactions contemplated by this Agreement (the "OTHER
FILINGS"). The Company and Parent each shall promptly supply the other with
any information which may be required in order to effectuate any filings
pursuant to this Section 5.1.
(b) Each of the Company and Parent will notify the other
promptly upon the receipt of any comments from the SEC or its staff or any
other government officials in connection with any filing made pursuant hereto
and of any request by the SEC or its staff or any other government officials
for amendments or supplements to the Registration Statement, the Proxy
Statement/Prospectus or any Antitrust Filings or Other Filings or for
additional information and will supply the other with copies of all
correspondence between such party or any of its representatives, on the one
hand, and the SEC, or its staff or any other government officials, on the
other hand, with respect to the Registration Statement, the Proxy
Statement/Prospectus, the Merger or any Antitrust Filing or Other Filing.
Each of the Company and Parent will cause all documents that it is
responsible for filing with the SEC or other regulatory authorities under
this Section 5.1 to comply in all material respects with all applicable
requirements of law and the rules and regulations promulgated thereunder.
Whenever any event occurs which is required to be set forth in an amendment
or supplement to the Proxy Statement/Prospectus, the Registration Statement
or any Antitrust Filing or Other Filing, the Company or Parent, as the case
may be, will promptly inform the other of such occurrence and cooperate in
filing with the SEC or its staff or any other government officials, and/or
mailing to stockholders of the Company and/or Parent, such amendment or
supplement.
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5.2 Meeting of Company Stockholders.
(a) Promptly after the date hereof, Company will take all
action necessary in accordance with the Delaware Law and its Certificate of
Incorporation and Bylaws to convene the Company Stockholders' Meeting to be
held as promptly as practicable, and in any event (to the extent permissible
under applicable law) within 45 days after the declaration of effectiveness
of the Registration Statement (provided that Company and Parent will notice
the Company Stockholders' Meeting and the Parent Stockholders' Meeting to be
held on the same day, and if Parent adjourns or postpones the Parent
Stockholders' Meeting, Company may adjourn or postpone the Company
Stockholders' Meeting in order that they be held on the same day), for the
purpose of voting upon approval and adoption of this Agreement and approval
of the Merger. Subject to Section 5.2(c), Company will use its commercially
reasonable efforts to solicit from its stockholders proxies in favor of the
adoption and approval of this Agreement and the approval of the Merger and
will take all other action necessary or advisable to secure the vote or
consent of its stockholders required by the rules of the Nasdaq Stock Market
or Delaware Law to obtain such approvals. Notwithstanding anything to the
contrary contained in this Agreement, Company may adjourn or postpone the
Company Stockholders' Meeting to the extent necessary to ensure that any
necessary supplement or amendment to the Proxy Statement/Prospectus is
provided to Company's stockholders in advance of a vote on the Merger and
this Agreement or, if as of the time for which Company Stockholders' Meeting
is originally scheduled (as set forth in the Proxy Statement/Prospectus)
there are insufficient shares of Company Common Stock represented (either in
person or by proxy) to constitute a quorum necessary to conduct the business
of the Company Stockholders' Meeting. Company shall ensure that the Company
Stockholders' Meeting is called, noticed, convened, held and conducted, and
that all proxies solicited by the Company in connection with the Company
Stockholders' Meeting are solicited, in compliance with the Delaware Law, its
Certificate of Incorporation and Bylaws, the rules of the Nasdaq Stock Market
and all other applicable legal requirements. Company's obligation to call,
give notice of, convene and hold the Company Stockholders' Meeting in
accordance with this Section 5.2(a) shall not be limited to or otherwise
affected by the commencement, disclosure, announcement or submission to
Company of any Acquisition Proposal or Superior Offer, or by any withdrawal,
amendment or modification of the recommendation of the Board of Directors of
Company with respect to this Agreement or the Merger.
(b) Subject to Section 5.2(c), to the fullest extent permitted
by applicable law: (i) the Board of Directors of Company shall recommend
that Company's stockholders vote in favor of and adopt and approve this
Agreement and approve the Merger at the Company Stockholders' Meeting; (ii)
the Proxy Statement/Prospectus shall include a statement to the effect that
the Board of Directors of Company has recommended that Company's stockholders
vote in favor of and adopt and approve this Agreement and the Merger at the
Company Stockholders' Meeting; and (iii) neither the Board of Directors of
Company 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 Board of Directors of Company that Company's
stockholders vote in favor of and adopt and approve this Agreement and the
Merger.
(c) Nothing in this Agreement shall prevent the Board of
Directors of the Company from withholding, withdrawing, amending or modifying
its recommendation in favor
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of the Merger if (i) a Superior Offer (as defined below) is made to the
Company and is not withdrawn, (ii) the Company shall have provided written
notice to Parent (a "NOTICE OF SUPERIOR OFFER") advising Parent that the
Company has received a Superior Offer, specifying all of the material terms
and conditions of such Superior Offer and identifying the person or entity
making such Superior Offer, (iii) Parent shall not have, within three
business days of Parent's receipt of the Notice of Superior Offer, made an
offer that the Company's Board of Directors by a majority vote determines in
its good faith judgment (after consultation with a financial advisor of
national standing) to be at least as favorable to Company's stockholders as
such Superior Offer (it being agreed that the Board of Directors of Company
shall convene a meeting to consider any such offer by Parent promptly
following the receipt thereof), (iv) the Board of Directors of Company
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 Board of
Directors of Company to comply with its fiduciary obligations to Company's
stockholders under applicable law and (v) Company shall not have violated any
of the restrictions set forth in Section 5.4 or this Section 5.2. Company
shall provide Parent with at least one day prior notice (or such lesser prior
notice as provided to the members of the Company's Board of Directors) of any
meeting of the Company's Board of Directors at which Company's Board of
Directors is reasonably expected to consider any Acquisition Proposal (as
defined in Section 5.4) to determine whether such Acquisition Proposal is a
Superior Offer. Nothing contained in this Section 5.2(c) shall limit the
Company's obligation to hold and convene the Company Stockholders' Meeting
(regardless of whether the recommendation of the Board of Directors of
Company shall have been withdrawn, amended or modified).
For purposes of this Agreement, "SUPERIOR OFFER" shall mean an
unsolicited, bona fide written offer made by a third party to consummate any
of the following transactions: (i) a merger or consolidation involving
Company pursuant to which the stockholders of Company immediately preceding
such transaction hold less than 50% of the equity interest in the surviving
or resulting entity of such transaction or (ii) the acquisition by any person
or group (including by way of a tender offer or an exchange offer or a two
step transaction involving a tender offer followed with reasonable promptness
by a merger involving the Company), directly or indirectly, of ownership of
100% of the then outstanding shares of capital stock of the Company, on terms
that the Board of Directors of the Company determines, in its reasonable
judgment (after consultation with a financial advisor of national standing)
to be more favorable to the Company stockholders than the terms of the
Merger; provided, however, that any such offer shall not be deemed to be a
"Superior Offer" if any financing required to consummate the transaction
contemplated by such offer is not committed and is not likely in the
reasonable judgment of the Company's Board of Directors (after consultation
with its financial advisor) to be obtained by such third party on a timely
basis.
(d) Nothing contained in this Agreement shall prohibit Company
or its Board of Directors from taking and disclosing to its stockholders a
position contemplated by Rules 14d-9 and 14e-2(a) promulgated under the
Exchange Act, or otherwise required by applicable law.
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5.3 Meeting of Parent Stockholders.
(a) Promptly after the date hereof, Parent will take all action
necessary in accordance with the Delaware Law and its Certificate of
Incorporation and Bylaws to convene the Parent Stockholders' Meeting to be
held as promptly as practicable, and in any event (to the extent permissible
under applicable law) within 45 days after the declaration of effectiveness
of the Registration Statement (provided that Company and Parent will notice
the Company Stockholders' Meeting and the Parent Stockholders' Meeting to be
held on the same day, and if Company adjourns or postpones the Company
Stockholders' Meeting, Parent may adjourn or postpone the Parent
Stockholders' Meeting in order that they be held on the same day), for the
purpose of voting upon the Parent Stockholder Approvals. Parent will use its
commercially reasonable efforts to solicit from its stockholders proxies in
favor of the approval of the Parent Stockholder Approvals and will take all
other action necessary or advisable to secure the vote or consent of its
stockholders required by the rules of the Nasdaq Stock Market or Delaware Law
to obtain such approvals. Notwithstanding anything to the contrary contained
in this Agreement, Parent may adjourn or postpone the Parent Stockholders'
Meeting to the extent necessary to ensure that any necessary supplement or
amendment to the Proxy Statement/Prospectus is provided to Parent's
stockholders in advance of a vote on the Parent Stockholder Approval or, if
as of the time for which Parent Stockholders' Meeting is originally scheduled
(as set forth in the Proxy Statement/Prospectus) there are insufficient
shares of Parent Common Stock represented (either in person or by proxy) to
constitute a quorum necessary to conduct the business of the Parent
Stockholders' Meeting. Parent shall ensure that the Parent Stockholders'
Meeting is called, noticed, convened, held and conducted, and that all
proxies solicited by Parent in connection with the Parent Stockholders'
Meeting are solicited, in compliance with the Delaware Law, its Certificate
of Incorporation and Bylaws, the rules of the Nasdaq Stock Market and all
other applicable legal requirements.
(b) (i) The Board of Directors of Parent shall recommend that
Parent's stockholders approve the Parent Stockholder Approval at the Parent
Stockholders' Meeting; (ii) the Proxy Statement/Prospectus shall include a
statement to the effect that the Board of Directors of Parent has recommended
that Parent's stockholders approve the Parent Stockholder Approval at the
Company Stockholders' Meeting; and (iii) neither the Board of Directors of
Parent nor any committee thereof shall withdraw, amend or modify, or propose
or resolve to withdraw, amend or modify in a manner adverse to Company, the
recommendation of the Board of Directors of Parent that Parent's stockholders
approve the Parent Stockholder Approval.
(c) Nothing contained in this Agreement shall prohibit Parent
or its Board of Directors from taking and disclosing to its stockholders a
position contemplated by Rules 14d-9 and 14e-2(a) promulgated under the
Exchange Act, or otherwise required by applicable law.
5.4 No Solicitation.
(a) From and after the date of this Agreement until the
Effective Time or termination of this Agreement pursuant to Article VII,
Company and its subsidiaries will not, nor will they authorize or permit any
of their respective officers, directors, affiliates or employees or any
investment banker, attorney or other advisor or representative retained by
any of them to,
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directly or indirectly, (i) solicit, initiate, encourage or induce the
making, submission or announcement of any Acquisition Proposal (as
hereinafter defined), (ii) participate in any discussions or negotiations
regarding, or furnish to any person any non-public information with respect
to, or take any other action to facilitate any inquiries or the making of any
proposal that constitutes an Acquisition Proposal, (iii) engage in
discussions with any person with respect to any Acquisition Proposal, except
as to the existence of these provisions, (iv) approve, endorse or recommend
any Acquisition Proposal or (v) enter into any letter of intent or similar
document or any contract, agreement or commitment contemplating or otherwise
relating to any Acquisition Proposal; provided, however, that prior to the
approval of this Agreement and the Merger at the Company Stockholders'
Meeting, Company may furnish nonpublic information regarding Company and its
subsidiaries to, or entering into discussions or negotiations with, any
person or group who has submitted (and not withdrawn) to Company an
unsolicited, written, bona fide Acquisition Proposal that the Board of
Directors of Company reasonably concludes (after consultation with a
financial advisor of national standing) may constitute a Superior Offer if
(1) neither Company nor any representative of Company and its subsidiaries
shall have violated any of the restrictions set forth in this Section 5.4,
(2) the Board of Directors of Company concludes in good faith, after
consultation with its outside legal counsel, that such action is required in
order for the Board of Directors of Company to comply with its fiduciary
obligations to Company's stockholders under applicable law, (3) 36 hours
prior to furnishing any such nonpublic information to, or entering into any
such discussions with, such person or group, Company gives Parent written
notice of the identity of such person or group and all of the material terms
and conditions of such Acquisition Proposal and of Company's intention to
furnish nonpublic information to, or enter into discussions with, such person
or group, and Company receives from such person or group an executed
confidentiality agreement containing terms at least as restrictive with
regard to Company's confidential information as the Confidentiality Agreement
(as defined in Section 5.5), and (4) contemporaneously with furnishing any
such nonpublic information to such person or group, Company furnishes such
nonpublic information to Parent (to the extent such nonpublic information has
not been previously furnished by the Company to Parent). Company and its
subsidiaries will immediately cease any and all existing activities,
discussions or negotiations with any parties conducted heretofore with
respect to any Acquisition Proposal. Without limiting the foregoing, it is
understood that any violation of the restrictions set forth in the preceding
two sentences by any officer, director or employee of Company or any of its
subsidiaries or any investment banker, attorney or other advisor or
representative of Company or any of its subsidiaries shall be deemed to be a
breach of this Section 5.4 by Company.
For purposes of this Agreement, "ACQUISITION PROPOSAL" shall mean
any offer or proposal (other than an offer or proposal by Parent) relating to
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 13(d) of
the Exchange Act and the rules and regulations thereunder) of more than a 15%
interest in the total outstanding voting securities of the Company or any of
its subsidiaries or any tender offer or exchange offer that if consummated
would result in any person or "group" (as defined under Section 13(d) of the
Exchange Act and the rules and regulations thereunder) beneficially owning
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
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the Company pursuant to which the stockholders of the Company immediately
preceding such transaction hold less than 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 15% of the assets of the Company; or (C) any liquidation or dissolution
of the Company.
(b) In addition to the obligations of Company set forth in
paragraph (a) of this Section 5.4, Company as promptly as practicable shall
advise Parent orally and in writing of any request for non-public information
which Company reasonably believes would lead to an Acquisition Proposal or of
any Acquisition Proposal, or any inquiry with respect to or which Company
reasonably should believe would lead to any Acquisition Proposal, the
material terms and conditions of such request, Acquisition Proposal or
inquiry, and the identity of the person or group making any such request,
Acquisition Proposal or inquiry. Company will keep Parent informed as
promptly as practicable in all material respects of the status and details
(including material amendments or proposed amendments) of any such request,
Acquisition Proposal or inquiry.
5.5 Confidentiality; Access to Information.
(a) The parties acknowledge that Company and Parent have
previously executed a mutual nondisclosure agreement, dated as of March 5,
2000 (the "CONFIDENTIALITY AGREEMENT"), which Confidentiality Agreement will
continue in full force and effect in accordance with its terms; provided,
that nothing in this Agreement or the Confidentiality Agreement will restrict
communications with parties to the Related Agreements.
(b) Access to Information. Company will afford Parent and its
accountants, counsel and other representatives reasonable access during
normal business hours to the properties, books, records and personnel of
Company during the period prior to the Effective Time to obtain all
information concerning the business, including the status of product
development efforts, properties, results of operations and personnel of
Company, as Parent may reasonably request. Parent will afford Company and
its accountants, counsel and other representatives reasonable access during
normal business hours to the properties, books, records and personnel of
Parent during the period prior to the Effective Time to obtain all
information concerning the business, including the status of product
development efforts, properties, results of operations and personnel of
Parent, as Company may reasonably request. No information or knowledge
obtained in any investigation pursuant to this Section 5.5 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.
5.6 Public Disclosure. Parent and Company will consult with each
other, and to the extent practicable, agree, before issuing any press release
or otherwise making any public statement with respect to the Merger, this
Agreement or any Acquisition Proposal and will not issue any such press
release or make any such public statement prior to such consultation, except
as may be required by law or any listing agreement with a national securities
exchange. The parties have agreed to the text of the joint press release
announcing the signing of this Agreement.
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5.7 Reasonable Efforts; Notification.
(a) Upon the terms and subject to the conditions set forth in
this Agreement, each of the parties agrees to use all reasonable efforts to
take, or cause to be taken, all actions, and to do, or cause to be done, and
to assist and cooperate with the other parties in doing, all things
necessary, proper or advisable to consummate and make effective, in the most
expeditious manner practicable, the Merger and the other transactions
contemplated by this Agreement and the Related Agreements, including using
reasonable efforts to accomplish the following: (i) the taking of all
reasonable acts necessary to cause the conditions precedent set forth in
Article VI to be satisfied, (ii) the obtaining of all necessary actions or
nonactions, waivers, consents, approvals, orders and authorizations from
Governmental Entities and the making of all necessary registrations,
declarations and filings (including registrations, declarations and filings
with Governmental Entities, if any) and the taking of all reasonable steps as
may be necessary to avoid any suit, claim, action, investigation or
proceeding by any Governmental Entity, (iii) the obtaining of all necessary
consents, approvals or waivers from third parties, (iv) the defending of any
suits, claims, actions, investigations or proceedings, whether judicial or
administrative, challenging this Agreement or the consummation of the
transactions contemplated hereby, including seeking to have any stay or
temporary restraining order entered by any court or other Governmental Entity
vacated or reversed and (v) the execution or delivery of any additional
instruments necessary to consummate the transactions contemplated by, and to
fully carry out the purposes of, this Agreement. Notwithstanding anything in
this Agreement to the contrary, neither Parent nor any of its affiliates
shall be under any obligation to make proposals, execute or carry out
agreements or submit to orders providing for the sale or other disposition or
holding separate (through the establishment of a trust or otherwise) of any
material assets or categories of assets of Parent, any of its affiliates or
Company or the holding separate of the shares of Company Common Stock (or
shares of stock of the Surviving Corporation) or imposing or seeking to
impose any material limitation on the ability of Parent or any of its
subsidiaries or affiliates to conduct their business or own such assets or to
acquire, hold or exercise full rights of ownership of the shares of Company
Common Stock (or shares of stock of the Surviving Corporation).
(b) Each of Company and Parent will give prompt notice to the
other of (i) any notice or other communication from any person alleging that
the consent of such person is or may be required in connection with the
Merger, (ii) any notice or other communication from any Governmental Entity
in connection with the Merger, (iii) any litigation relating to, involving or
otherwise affecting Company, Parent or their respective subsidiaries that
relates to the consummation of the Merger. Company shall give prompt notice
to Parent of any representation or warranty made by it contained in this
Agreement becoming untrue or inaccurate, or any failure of Company to comply
with or satisfy in any material respect any covenant, condition or agreement
to be complied with or satisfied by it under this Agreement, in each case,
such that the conditions set forth in Section 6.3 would not be satisfied,
provided, however, that no such notification shall affect the
representations, warranties, covenants or agreements of the parties or the
conditions to the obligations of the parties under this Agreement. Parent
shall give prompt notice to Company of any representation or warranty made by
it or Merger Sub contained in this Agreement becoming untrue or inaccurate,
or 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
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or satisfied by it under this Agreement, in each case, such that the
conditions set forth in Section 6.2 would not be satisfied, provided,
however, that no such notification shall affect the representations,
warranties, covenants or agreements of the parties or the conditions to the
obligations of the parties under this Agreement.
5.8 Third Party Consents. As soon as practicable following the date
hereof, Parent and Company will each use its commercially reasonable efforts
to obtain any material consents, waivers and approvals under any of its or
its subsidiaries' respective agreements, contracts, licenses or leases
required to be obtained in connection with the consummation of the
transactions contemplated hereby. As soon as practicable following the date
hereof, Parent will use its commercially reasonable efforts to obtain any
material consents, waivers and approvals under any of its or its
subsidiaries' respective agreements, contracts, licenses or leases required
to be obtained in connection with the consummation of the transactions
contemplated by the Related Agreements.
5.9 Stock Options and ESPP.
(a) At the Effective Time, each outstanding Company Option,
whether or not then exercisable, will be assumed by Parent. Each Company
Option so assumed by Parent under this Agreement will continue to have, and
be subject to, the same terms and conditions set forth in the Company Stock
Option Plan pursuant to which such Company Option was issued immediately
prior to the Effective Time (including, without limitation, any repurchase
rights or vesting provisions), except that (i) each Company 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 of
the number of shares of Company Common Stock that were issuable upon exercise
of such Company Option immediately prior to the Effective Time multiplied by
the Exchange Ratio, rounded down to the nearest whole number of shares of
Parent Common Stock and (ii) the per share exercise price for the shares of
Parent Common Stock issuable upon exercise of such assumed Company Option
will be equal to the quotient determined by dividing the exercise price per
share of Company Common Stock at which such Company Option was exercisable
immediately prior to the Effective Time by the Exchange Ratio, rounded up to
the nearest whole cent. Continuous employment with Company or its
subsidiaries shall be credited to the optionee for purposes of determining
the vesting of all assumed Company Options after the Effective Time.
(b) It is intended that Company Options assumed by Parent shall
qualify following the Effective Time as incentive stock options as defined in
Section 422 of the Code to the extent Company Options qualified as incentive
stock options immediately prior to the Effective Time and the provisions of
this Section 5.9 shall be applied consistent with such intent.
(c) Company shall take all actions necessary pursuant to the
terms of the Company ESPP in order to terminate the Company ESPP and each
"Option" (as defined in the Company ESPP) thereunder immediately prior to the
Effective Time; provided, that Company will give advance notice of such
termination to each holder of an Option not less than ten days preceding such
termination, and each holder of an Option shall have the right to exercise
such
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Option in full based on such holder's payroll deductions then credited to
such holder's account as of the date determined by the Board of Directors of
Company.
(d) Prior to the grant of any Company Options permitted under
Section 4.1(f), Company agrees to amend the Company Stock Option Plans to
eliminate for all Company Options granted after the date of this Agreement
the acceleration of the vesting of such Company Options upon consummation of
the Merger or the other transactions contemplated hereby. Company agrees to
use its best efforts to cause the holders of Company Options under the
Company's 1999 Stock Incentive Plan to waive any acceleration of the vesting
of such Company Options upon consummation of the Merger or the transactions
contemplated by the Related Agreements. Parent agrees to use its best
efforts to cause the holders of Parent Options to waive any acceleration of
the vesting of such Parent Options upon consummation of the Merger or the
transactions contemplated by the Related Agreements.
5.10 Form S-8. Parent agrees to file a registration statement on Form
S-8 for the shares of Parent Common Stock issuable with respect to assumed
Company Options as soon as is reasonably practicable after the Effective Time
and shall maintain the effectiveness of such registration statement
thereafter for so long as any of such options or other rights remain
outstanding.
5.11 Indemnification.
(a) From and after the Effective Time, Parent will cause the
Surviving Corporation to fulfill and honor in all respects the obligations of
Company pursuant to any indemnification agreements between Company and its
directors and officers as of the Effective Time (the "INDEMNIFIED PARTIES")
and any indemnification provisions under Company's Certificate of
Incorporation or Bylaws as in effect on the date hereof. The Certificate of
Incorporation and Bylaws of the Surviving Corporation will contain provisions
with respect to exculpation and indemnification that are at least as
favorable to the Indemnified Parties as those contained in the Certificate of
Incorporation and Bylaws of Company as in effect on the date hereof, which
provisions will not be amended, repealed or otherwise modified for a period
of six years from the Effective Time in any manner that would adversely
affect the rights thereunder of individuals who, immediately prior to the
Effective Time, were directors or officers of Company, unless such
modification is required by law.
(b) For a period of six years after the Effective Time, Parent
will cause the Surviving Corporation to use its commercially reasonable
efforts to maintain in effect, if available, directors' and officers'
liability insurance covering those persons who are currently covered by
Company's directors' and officers' liability insurance policy on terms
comparable to those applicable to the current directors and officers of
Company; provided, however, that in no event will Parent or the Surviving
Corporation be required to expend in excess of 200% of the annual premium
currently paid by Company for such coverage (or such coverage as is available
for such 200% of such annual premium).
(c) This Section 5.11 shall survive the consummation of the
Merger, is intended to benefit Company, the Surviving Corporation and each
Indemnified Party, shall be
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binding on all successors and assigns of the Surviving Corporation and Parent,
and shall be enforceable by the Indemnified Parties.
5.12 Parent Board of Directors; Executive Officers. The Board of
Directors of Parent will take all actions reasonably necessary such that as
soon as practicable following the Effective Time, (i) the size of Parent's
Board of Directors shall be increased to nine, and the following persons
shall be appointed to Parent's Board of Directors to fill the five vacancies
in the following classes: three persons nominated by Company, one of whom
shall be ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, who shall be appointed to Class III, one of whom
shall be affiliated with General Atlantic Partners, LLC, who shall be
appointed to Class I, and the other of whom shall be appointed to Class II,
one person shall be appointed by Healthvision to Class I, and one person
shall be appointed by VHA to Class I, and (ii) ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ shall be
elected Chairperson of the Board of Directors of Parent, and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
shall be elected Chief Executive Officer and President of Parent. Under the
Parent Charter Documents, the terms of Class I Directors expire in 2000, the
terms of Class II Directors expire in 2001 and the terms of Class III
Directors expire in 2002. The Class I Directors appointed pursuant to this
Section shall be appointed following Parent's annual meeting in 2000, or, if
such annual meeting is held following the Effective Time and such person so
elects, following the Effective Time but prior to such annual meeting. Class
I Directors appointed following such annual meeting shall have terms that end
in 2003, subject to such directors' earlier resignation or removal.
5.13 Nasdaq Listing. Parent agrees to authorize for listing on the
Nasdaq Stock Market the shares of Parent Common Stock issuable, and those
required to be reserved for issuance, in connection with the Merger,
effective upon official notice of issuance.
5.14 Letters of Accountants. Company and Parent shall use their
respective reasonable efforts to cause to be delivered to Parent a letter of
Company's and Parent's independent accountants, respectively, dated no more
than two business days before the date on which the Registration Statement
becomes effective (and satisfactory in form and substance to Company and
Parent), that is customary in scope and substance for letters delivered by
independent public accountants in connection with registration statements
similar to the Registration Statement.
5.15 Takeover Statutes. If any Takeover Statute is or may become
applicable to the Merger or the other transactions contemplated by this
Agreement, each of Parent and Company and their respective Boards of
Directors shall grant such approvals and take such lawful actions as are
necessary to ensure that such transactions may be consummated as promptly as
practicable on the terms contemplated by this Agreement and otherwise act to
eliminate or minimize the effects of such Takeover Statute and any
regulations promulgated thereunder on such transactions.
5.16 Certain Employee Benefits. As soon as practicable after the
execution of this Agreement, Parent and Company shall confer and work
together in good faith to agree upon mutually acceptable employee benefit and
compensation arrangements which carry out the agreements set forth in the
following two sentences. Parent will use reasonable efforts to arrange that,
as soon as reasonably practicable after the Effective Time, Parent's benefit
arrangements and employee plans provide similar or comparable benefits to
Company's employees generally
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as is provided to Parent's employees who are similarly situated. Parent's
benefit arrangements and employee plans shall give full credit for each
participant's continuous period of service with Company prior to the
Effective Time for all purposes for which length of service prior to the
Effective Time is recognized under Parent benefit arrangements and employee
plans. At Parent's request, Company agrees that it and its subsidiaries
shall terminate any and all Company Employee Plans, if appropriate (other
than contractual agreements disclosed in the Company Disclosure Letter)
immediately prior to the Effective Time.
5.17 Registration Rights. Parent agrees to use its reasonable efforts
to cause the holders of existing registration rights regarding Parent Common
Stock to surrender their existing registration rights in exchange for the
registration rights provided under the Registration Rights Agreement attached
hereto as Schedule 5.17 (the "NEW PARENT REGISTRATION RIGHTS AGREEMENT").
Company agrees to use its reasonable efforts to cause the holders of existing
registration rights regarding Company Common Stock to surrender their
existing rights in exchange for the registration rights provided to such
party under the New Parent Registration Rights Agreement. Upon receipt by
Parent of a valid termination of all Company registration rights held by a
party, Parent shall grant to such party the registration rights set forth in
the New Parent Registration Rights Agreement applicable to such party.
5.18 Acquisitions of Company Stock. From the date of this Agreement
through the earlier of the Effective Time or the termination of this
Agreement in accordance with its terms, Parent agrees that it will not
purchase shares of Company Common Stock or otherwise intentionally acquire
the right to vote shares of Company Common Stock, without the Company's
consent.
ARTICLE VI
CONDITIONS TO THE MERGER
6.1 Conditions to Obligations of Each Party to Effect the Merger.
The respective obligations of each party to this Agreement to effect the
Merger shall be subject to the satisfaction at or prior to the Closing Date
of the following conditions:
(a) Company Stockholder Approval. This Agreement shall have
been approved and adopted, and the Merger shall have been approved, by the
requisite vote of the stockholders of Company under applicable law and the
Company Charter Documents.
(b) Parent Stockholder Approval. The issuance of shares of
Parent Common Stock pursuant to the Merger shall have been approved by the
requisite vote of the stockholders of Parent under applicable law and the
Parent Charter Documents.
(c) Registration Statement Effective; Proxy Statement. The SEC
shall have declared the Registration Statement effective. No stop order
suspending the effectiveness of the Registration Statement or any part
thereof shall have been issued and no proceeding for that
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purpose, and no similar proceeding in respect of the Proxy
Statement/Prospectus, shall have been initiated or threatened in writing by
the SEC.
(d) No Order; HSR Act. No Governmental Entity shall have
enacted, issued, promulgated, enforced or entered any statute, rule,
regulation, executive order, decree, injunction or other order (whether
temporary, preliminary or permanent) which is in effect and which has the
effect of making the Merger illegal or otherwise prohibiting consummation of
the Merger. All waiting periods, if any, under the HSR Act relating to the
transactions contemplated hereby will have expired or been terminated.
(e) Nasdaq Listing. The shares of Parent Common Stock to be
issued in the Merger shall have been approved for listing on the Nasdaq Stock
Market, subject to official notice of issuance.
(f) Consents. (i) All required approvals or consents of any
Governmental Entity or other person in connection with the Merger and the
consummation of the other transactions contemplated hereby and by the Related
Agreements shall have been obtained (and all relevant statutory, regulatory
or other governmental waiting periods, shall have expired) unless the failure
to receive any such approval or consent would not be reasonably likely,
directly or indirectly, to result in a Material Adverse Effect on Parent and
its subsidiaries, Company and its subsidiaries and Healthvision and its
subsidiaries, taken as a whole, and (ii) all such approvals and consents
which have been obtained shall be on terms that are not reasonably likely,
directly or indirectly, to result in a Material Adverse Effect on Parent and
its subsidiaries, Company and its subsidiaries and Healthvision and its
subsidiaries, taken as a whole.
(g) No Restraints. There shall not be instituted or pending
any action or proceeding by any Governmental Entity (i) seeking to restrain,
prohibit or otherwise interfere with the ownership or operation by Parent or
any of its subsidiaries of all or any material portion of the business of
Company or any of its subsidiaries or of Parent or any of its subsidiaries or
to compel Parent or any of its subsidiaries to dispose of or hold separate
all or any material portion of the business or assets of Company or any of
its subsidiaries or of Parent or any of its subsidiaries, (ii) seeking to
impose or confirm limitations on the ability of Parent or any of its
subsidiaries effectively to exercise full rights of ownership of the shares
of Company Common Stock (or shares of stock of the Surviving Corporation)
including the right to vote any such shares on any matters properly presented
to stockholders or (iii) seeking to require divestiture by Parent or any of
its subsidiaries of any such shares.
6.2 Additional Conditions to Obligations of Company. The obligation
of Company to consummate and effect the Merger shall be subject to the
satisfaction at or prior to the Closing Date of each of the following
conditions, any of which may be waived, in writing, exclusively by Company:
(a) Representations and Warranties. The representations and
warranties of Parent and Merger Sub contained in this Agreement, disregarding
all qualifications and exceptions contained therein relating to materiality
or Material Adverse Effect or any similar standard or qualification, shall be
true and correct on and as of the Closing Date as if made on
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and as of the Closing Date (other than representations and warranties that
address matters only as of a particular date, which shall be true and correct
as of such date), except where the failure of such representations or
warranties to be true or correct would not have, individually or in the
aggregate, a Material Adverse Effect on Parent. It is understood that, for
purposes of determining the accuracy of such representations and warranties,
any update of or modification to the Parent Disclosure Letter made or
purported to have been made after the execution of this Agreement shall be
disregarded. Company shall have received a certificate with respect to the
foregoing signed on behalf of Parent by the Chief Executive Officer or Chief
Financial Officer of Parent.
(b) Agreements and Covenants. Parent and Merger Sub shall have
performed or complied in all material respects with all agreements and
covenants required by this Agreement to be performed or complied with by them
on or prior to the Closing Date, and Company shall have received a
certificate to such effect signed on behalf of Parent by the Chief Executive
Officer or Chief Financial Officer of Parent.
(c) Material Adverse Effect. No Material Adverse Effect with
respect to Parent shall have occurred since the date of this Agreement and be
continuing.
(d) Tax Opinion. Company shall have received an opinion of
▇▇▇▇ and ▇▇▇▇ LLP, dated as of the Closing Date, in form and substance
reasonably satisfactory to it, on the basis of the facts, representations and
assumptions set forth or referred to in such opinion, that the Merger will
constitute a reorganization within the meaning of Section 368(a) of the Code
and that each of Parent and Company will be a party to the reorganization
within the meaning of Section 368(a) of the Code. The parties to this
Agreement agree to make such reasonable representations as requested by such
counsel for the purpose of rendering such opinions.
(e) Related Transactions. (i) The Novation Documents shall
have become effective and shall be in full force and effect in accordance
with their terms, and Company shall have a received a certificate to such
effect executed by the Chief Executive Officers of Parent and Novation, and
(ii) Company shall have received a certificate executed by the Chief
Executive Officers of each of Parent and Healthvision, that such parties are
ready, willing and able to consummate the transactions contemplated by the
Healthvision Merger Agreement.
6.3 Additional Conditions to the Obligations of Parent and Merger
Sub. The obligations of Parent and Merger Sub to consummate and effect the
Merger shall be subject to the satisfaction at or prior to the Closing Date
of each of the following conditions, any of which may be waived, in writing,
exclusively by Parent:
(a) Representations and Warranties. The representations and
warranties of Company contained in this Agreement, disregarding all
qualifications and exceptions contained therein relating to materiality or
Material Adverse Effect or any similar standard or qualification, shall be
true and correct on and as of the Closing Date as if made on and as of the
Closing Date (other than representations and warranties that address matters
only as of a particular date, which shall be true and correct as of such
date), except where the failure of such representations or warranties to be
true or correct would not have, individually or in the aggregate, a Material
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Adverse Effect on Company. It is understood that, for purposes of
determining the accuracy of such representations and warranties, any update
of or modification to the Company Disclosure Letter made or purported to have
been made after the execution of this Agreement shall be disregarded. Parent
shall have received a certificate with respect to the foregoing signed on
behalf of Company by the Chief Executive Officer or Chief Financial Officer
of Company.
(b) Agreements and Covenants. 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 Company by the Chief Executive Officer or Chief Financial
Officer of Company.
(c) Material Adverse Effect. No Material Adverse Effect with
respect to Company shall have occurred since the date of this Agreement and
be continuing.
(d) Tax Opinion. Parent shall have received an opinion of
Fenwick & West LLP, dated as of the Closing Date, in form and substance
reasonably satisfactory to it, on the basis of the facts, representations and
assumptions set forth or referred to in such opinion, that the Merger will
constitute a reorganization within the meaning of Section 368(a) of the Code
and that each of Parent and Company will be a party to the reorganization
within the meaning of Section 368(a) of the Code. The parties to this
Agreement agree to make such reasonable representations as requested by such
counsel for the purpose of rendering such opinions.
(e) Related Transactions. (i) The Novation Documents shall
have become effective and shall be in full force and effect in accordance
with their terms, and Parent shall have a received a certificate to such
effect executed by the Chief Executive Officer of Novation; provided, that
the foregoing condition shall be deemed to have been satisfied if (A) the
transactions contemplated by the Stock and Warrant Agreements have not closed
due to the failure to satisfy the condition set forth in Section 8.4 of such
agreements, (B) each other condition to the obligation of Parent to
consummate such transactions in such agreements shall have been satisfied or
waived, and (C) neither Stock and Warrant Agreement nor the Novation
Operating Agreement shall have been terminated in accordance with its
respective terms, and (ii) Parent shall have received a certificate executed
by the Chief Executive Officer of Healthvision that Healthvision is ready,
willing and able to consummate the transactions contemplated by the
Healthvision Merger Agreement.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
7.1 Termination. This Agreement may be terminated at any time prior
to the Effective Time, whether before or after the requisite approvals of the
stockholders of Company or Parent:
(a) by mutual written consent duly authorized by the Boards of
Directors of Parent and Company;
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(b) by either Company or Parent if the Merger shall not have
been consummated by September 30, 2000 for any reason; provided, however,
that the right to terminate this Agreement under this Section 7.1(b) shall
not be available to any party whose action or failure to act has been a
principal cause of or resulted in the failure of the Merger to occur on or
before such date and such action or failure to act constitutes a breach of
this Agreement;
(c) by either Company or Parent if a Governmental Entity shall
have issued an order, decree or ruling or taken any other action, in any case
having the effect of permanently restraining, enjoining or otherwise
prohibiting the Merger, which order, decree, ruling or other action is final
and nonappealable;
(d) by either Company or Parent, if the approval and adoption
of this Agreement, and the approval of the Merger, by the stockholders of
Company shall not have been obtained by reason of the failure to obtain the
required vote at a meeting of Company stockholders duly convened therefore or
at any adjournment thereof; provided, however, that the right to terminate
this Agreement under this Section 7.1(d) shall not be available to Company
where the failure to obtain the Company stockholder approval shall have been
caused by the action or failure to act of Company and such action or failure
to act constitutes a material breach by Company of this Agreement;
(e) by either Company or Parent, if the approval of the
issuance of shares of Parent Common Stock pursuant to the Merger shall not
have been obtained by reason of the failure to obtain the respective required
votes at a meeting of Parent stockholders duly convened therefore or at any
adjournment thereof; provided, however, that the right to terminate this
Agreement under this Section 7.1(e) shall not be available to Parent where
the failure to obtain the Parent stockholder approvals shall have been caused
by the action or failure to act of Parent and such action or failure to act
constitutes a material breach by Parent of this Agreement;
(f) by Parent (at any time prior to the adoption and approval
of this Agreement and the Merger by the required vote of the stockholders of
Company) if a Triggering Event (as defined below) shall have occurred;
provided, however, that Parent shall not have the right to terminate this
Agreement under this Section 7.1(f) in response to the occurrence of the
Triggering Event set forth in clause (iii) of the definition thereof if at
the time the event set forth in such clause (iii) occurs Parent is in
material breach of this Agreement which breach has not been cured as of such
time;
(g) by Company, upon a breach of any representation, warranty,
covenant or agreement on the part of Parent set forth in this Agreement, or
if any representation or warranty of Parent shall have become untrue, in
either case such that the conditions set forth in Section 6.2(a) or Section
6.2(b) 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 that if
such inaccuracy in Parent's representations and warranties or breach by
Parent is curable by Parent through the exercise of its commercially
reasonable efforts, then Company may not terminate this Agreement under this
Section 7.1(g) for 30 days after delivery of written notice from Company to
Parent of such breach, provided Parent continues to exercise commercially
reasonable efforts to cure such
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breach (it being understood that Company may not terminate this Agreement
pursuant to this paragraph (g) if such breach by Parent is cured during such
30-day period, or if Company shall have materially breached this Agreement);
(h) by Parent, upon a breach of any representation, warranty,
covenant or agreement on the part of Company set forth in this Agreement, or
if any representation or warranty of Company shall have become untrue, in
either case such that the conditions set forth in Section 6.3(a) or Section
6.3(b) 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 that if
such inaccuracy in Company's representations and warranties or breach by
Company is curable by Company through the exercise of its commercially
reasonable efforts, then Parent may not terminate this Agreement under this
Section 7.1(h) for 30 days after delivery of written notice from Parent to
Company of such breach, provided Company continues to exercise commercially
reasonable efforts to cure such breach (it being understood that Parent may
not terminate this Agreement pursuant to this paragraph (h) if such breach by
Company is cured during such 30-day period, or if Parent shall have
materially breached this Agreement); or
(i) by either Company or Parent, if any of the Related
Agreements has been validly terminated by a party thereto in accordance with
its terms.
For the purposes of this Agreement, a "TRIGGERING EVENT" shall be
deemed to have occurred if: (i) the Board of Directors of Company or any
committee thereof shall for any reason have withdrawn or shall have amended
or modified in a manner adverse to Parent its recommendation in favor of the
adoption and approval of the Agreement or the approval of the Merger; (ii)
Company shall have failed to include in the Proxy Statement/Prospectus the
recommendation of the Board of Directors of Company in favor of the adoption
and approval of the Agreement and the approval of the Merger; (iii) the Board
of Directors of Company fails to reaffirm its recommendation in favor of the
adoption and approval of the Agreement and the approval of the Merger within
10 business days after Parent requests in writing that such recommendation be
reaffirmed at any time following the public announcement of an Acquisition
Proposal; (iv) the Board of Directors of Company or any committee thereof
shall have approved or publicly recommended any Acquisition Proposal; (v)
Company shall have entered into any letter of intent of similar document or
any agreement, contract or commitment accepting any Acquisition Proposal;
(vi) Company shall have materially breached any of the provisions of Sections
5.2 or 5.4; or (vii) a tender or exchange offer relating to securities of
Company shall have been commenced by a person unaffiliated with Parent, and
Company shall not have sent to its securityholders pursuant to Rule 14e-2
promulgated under the Securities Act, within 10 business days after such
tender or exchange offer is first published sent or given, a statement
disclosing that Company recommends rejection of such tender or exchange offer.
7.2 Notice of Termination Effect of Termination. Any proper
termination of this Agreement under Section 7.1 above will be effective
immediately upon the delivery of written notice of the terminating party to
the other parties hereto. In the event of the termination of this Agreement
as provided in Section 7.1, this Agreement shall be of no further force or
effect, except (i) as set forth in this Section 7.2, Section 7.3 and Article
8, each of which shall survive the termination of this Agreement, and (ii)
nothing herein shall relieve any party from liability
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for any 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.
7.3 Fees and Expenses.
(a) General. Except as set forth in this Section 7.3, all fees
and expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses
whether or not the Merger is consummated; provided, however, that Parent,
Company and Healthvision shall share equally all fees and expenses, other
than attorneys' and accountants fees and expenses, incurred in relation to
the preparation and filing with the SEC of the Proxy Statement/Prospectus
(including any preliminary materials related thereto) and the Registration
Statement (including financial statements and exhibits) and any amendments or
supplements thereto, provided, that Parent and Company shall share equally
the expenses of printing the finalized Proxy Statement/Prospectus (including
any preliminary materials related thereto) and any supplements thereto.
(b) Company Payments. In the event that this Agreement is
terminated by Parent or the Company, as applicable, pursuant to Sections
7.1(d), 7.1(f) or 7.1(h), Company shall promptly, but in no event later than
two days after the date of such termination, pay Parent a fee equal to $50
million in immediately available funds; provided, that in the case of a
termination under Sections 7.1(d) or 7.1(h) prior to which no Triggering
Event has occurred, (i) such payment shall be made only if (A) following the
date of this Agreement and prior to the termination of this Agreement, a
person has publicly announced a bona fide Acquisition Proposal and (B) within
nine months following the termination of this Agreement either a Company
Acquisition (as defined below) is consummated, or the Company enters into an
agreement providing for a Company Acquisition and such Company Acquisition is
later consummated with the person (or another person controlling, controlled
by or under common control with, such person) with whom such agreement was
entered into (regardless of when such consummation occurs if the Company has
entered into such an agreement within such nine-month period) and (ii) such
payment shall be made promptly, but in no event later than two days after the
consummation of such Company Acquisition (regardless of when such
consummation occurs if the Company has entered into such an agreement within
such nine-month period). Company acknowledges that the agreements contained
in this Section 7.3(b) are an integral part of the transactions contemplated
by this Agreement, and that, without these agreements, Parent would not enter
into this Agreement. Accordingly, if the Company fails to pay in a timely
manner the amounts due pursuant to this Section 7.3(b), and, in order to
obtain such payment, Parent makes a claim that results in a judgment against
the Company for the amounts set forth in this Section 7.3(b), Company shall
pay to Parent its reasonable costs and expenses (including reasonable
attorneys' fees and expenses) in connection with such suit, together with
interest on the amounts set forth in this Section 7.3(b) at the prime rate of
The Chase Manhattan Bank in effect on the date such payment was required to
be made. Payment of the fees described in this Section 7.3(b) shall not be
in lieu of damages incurred in the event of breach of this Agreement.
For the purposes of this Agreement, "COMPANY ACQUISITION" shall
mean any of the following transactions (other than the transactions
contemplated by this Agreement); (i) a
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merger, consolidation, business combination, recapitalization, liquidation,
dissolution or similar transaction involving the Company pursuant to which
the stockholders of the Company immediately preceding such transaction hold
less than 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 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 Company), directly or indirectly, of beneficial
ownership or a right to acquire beneficial ownership of shares representing
in excess of 50% of the voting power of the then outstanding shares of
capital stock of the Company.
7.4 Amendment. Subject to applicable law, this Agreement may be
amended by the parties hereto at any time by execution of an instrument in
writing signed on behalf of each of Parent and Company. Parent will not
agree to any amendment of any Related Agreement without the prior written
consent of Company (which consent shall not be unreasonably withheld or
delayed).
7.5 Extension; Waiver. At any time prior to the Effective Time any
party hereto may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties
hereto, (ii) waive any inaccuracies in the representations and warranties
made to such party contained herein or in any document delivered pursuant
hereto and (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 VIII
GENERAL PROVISIONS
8.1 Non-Survival of Representations and Warranties. The
representations and warranties of Company, Parent and Merger Sub contained in
this Agreement shall terminate at the Effective Time, and only the covenants
that by their terms survive the Effective Time shall survive the Effective
Time.
8.2 Notices. All notices and other communications hereunder shall be
in writing and shall be deemed given upon delivery either personally or by
commercial delivery service, or sent via facsimile (receipt confirmed) to the
parties at the following addresses or facsimile numbers (or at such other
address or facsimile numbers for a party as shall be specified by like
notice):
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(a) if to Parent or Merger Sub, to:
▇▇▇▇▇▇▇▇.▇▇▇, Inc.
▇▇▇▇-▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
Fenwick & West LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
(b) if to Company, to:
Eclipsys Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇ and ▇▇▇▇ LLP
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
In the event that Parent shall give or receive a notice relating to a
Material Adverse Effect on either Parent or Healthvision pursuant to the
Healthvision Merger Agreement, Parent shall also deliver a copy of such
notice to Company.
8.3 Interpretation; Certain Defined Terms.
(a) When a reference is made in this Agreement to Exhibits,
such reference shall be to an Exhibit to this Agreement unless otherwise
indicated. When a reference is made in this Agreement to Sections, such
reference shall be to a Section of this Agreement unless otherwise
indicated. The words "INCLUDE," "INCLUDES" and "INCLUDING" when used herein
shall be deemed in each case to be followed by the words "WITHOUT
limitation." The table of contents and headings contained in this Agreement
are for reference purposes only and shall not affect in
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any way the meaning or interpretation of this Agreement. When reference is
made herein to "THE BUSINESS OF" an entity, such reference shall be deemed to
include the business of all direct and indirect subsidiaries of such entity.
Reference to the subsidiaries of an entity shall be deemed to include all
direct and indirect subsidiaries of such entity.
(b) For purposes of this Agreement, the term "KNOWLEDGE" means
with respect to a party hereto, with respect to any matter in question, that
any of the officers of such party has actual knowledge of such matter, after
reasonable inquiry of such matter.
(c) For purposes of this Agreement, the term "MATERIAL ADVERSE
EFFECT" when used in connection with an entity means any change, event,
violation, inaccuracy, circumstance or effect that is or is reasonably likely
to be materially adverse to the business, assets (including intangible
assets), capitalization, financial condition, operations or results of
operations of such entity taken as a whole with its subsidiaries, except to
the extent that any such change, event, violation, inaccuracy, circumstance
or effect directly and primarily results from (i) changes in general economic
conditions or changes affecting the industry generally in which such entity
operates (provided that such changes do not affect such entity in a
substantially disproportionate manner) or (ii) changes in the trading prices
for such entity's capital stock.
(d) For purposes of this Agreement, the term "PERSON" shall
mean any individual, corporation (including any non-profit corporation),
general partnership, limited partnership, limited liability partnership,
joint venture, estate, trust, company (including any limited liability
company or joint stock company), firm or other enterprise, association,
organization, entity or Governmental Entity.
(e) For purposes of this Agreement, "SUBSIDIARY" of a specified
entity will be any corporation, partnership, limited liability company, joint
venture or other legal entity of which the specified entity (either alone or
through or together with any other subsidiary) owns, directly or indirectly,
50% or more of the stock or other equity or partnership interests the holders
of which are generally entitled to vote for the election of the Board of
Directors or other governing body of such corporation or other legal entity.
For the avoidance of doubt, Healthvision is not a subsidiary of Company.
(f) Disclosure made with regard to a representation or warranty
of a party in a Part of either the Company Disclosure Letter or Parent
Disclosure Letter shall also be deemed to qualify other representations and
warranties of the party making such disclosure if it is readily apparent from
the language contained in such disclosure that such disclosure is applicable
to such other representation or warranty.
8.4 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each
of the parties and delivered to the other party, it being understood that all
parties need not sign the same counterpart.
8.5 Entire Agreement; Third Party Beneficiaries. This Agreement, its
Exhibits and the documents and instruments and other agreements among the
parties hereto as contemplated
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by or referred to herein, including the Company Disclosure Letter and the
Parent Disclosure Letter (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) are not
intended to confer upon any other person any rights or remedies hereunder,
except as specifically provided in Section 5.11.
8.6 Severability. In the event that any provision of this Agreement
or the application thereof, becomes or is declared by a court of competent
jurisdiction to be illegal, void or unenforceable, the remainder of this
Agreement will continue in full force and effect and the application of such
provision to other persons or circumstances will be interpreted so as
reasonably to effect the intent of the parties hereto. The parties further
agree to replace such void or unenforceable provision of this Agreement with
a valid and enforceable provision that will achieve, to the extent possible,
the economic, business and other purposes of such void or unenforceable
provision.
8.7 Other Remedies; Specific Performance. Except as otherwise
provided herein, any and all remedies herein expressly conferred upon a party
will be deemed cumulative with and not exclusive of any other remedy
conferred hereby, or by law or equity upon such party, and the exercise by a
party of any one remedy will not preclude the exercise of any other remedy.
The parties hereto agree that irreparable damage would occur in the event
that any of the provisions of this Agreement were not performed in accordance
with their specific terms or were otherwise breached. It is accordingly
agreed that the parties shall be entitled to seek an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions hereof in any court of the United States or any
state having jurisdiction, this being in addition to any other remedy to
which they are entitled at law or in equity.
8.8 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware, regardless of the laws
that might otherwise govern under applicable principles of conflicts of law
thereof.
8.9 Rules of Construction. The parties hereto agree that they have
been represented by counsel during the negotiation and execution of this
Agreement and, therefore, waive the application of any law, regulation,
holding or rule of construction providing that ambiguities in an agreement or
other document will be construed against the party drafting such agreement or
document.
8.10 Assignment. No party may assign either this Agreement or any of
its rights, interests, or obligations hereunder without the prior written
consent of the other parties hereto. 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. Any purported
assignment in violation of this Section shall be void.
8.11 Waiver Of Jury Trial. EACH OF PARENT, COMPANY AND MERGER SUB
HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
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PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE)
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE ACTIONS OF PARENT,
COMPANY OR MERGER SUB IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND
ENFORCEMENT HEREOF.
* * * * *
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement and
Plan of Merger to be executed by their duly authorized respective officers as
of the date first written above.
▇▇▇▇▇▇▇▇.▇▇▇, INC.
By: /s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title: Chief Financial Officer
NEOIII ACQUISITION CORP.
By: /s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title: Chief Financial Officer
ECLIPSYS CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chairman and Chief
Executive Officer
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