EXHIBIT 2.1
Execution Copy
AGREEMENT AND PLAN OF MERGER
AND REORGANIZATION
BY AND BETWEEN
GENESIS MICROCHIP INCORPORATED
AND
SAGE, INC.
Dated as of September 27, 2001
Execution Copy
TABLE OF CONTENTS
Page
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ARTICLE I RESTRUCTURING AND SUBSIDIARIES .................................. 2
1.1 Restructuring ...................................................... 2
1.2 Directors and Officers of Genesis Delaware ......................... 2
1.3 Organization of Merger Sub .........................................
1.4 Actions of Acquiror ................................................
ARTICLE II THE MERGER ..................................................... 3
2.1 The Merger ......................................................... 3
2.2 Effective Time; Closing ............................................ 3
2.3 Effect of the Merger ............................................... 3
2.4 Certificate of Incorporation and Bylaws of the Surviving
Corporation ........................................................ 3
2.5 Directors and Officers of the Surviving Corporation ................ 4
2.6 Effect on Capital Stock ............................................ 4
2.7 Surrender of Certificates; Payment of Cash and Stock
Consideration ...................................................... 6
2.8 No Further Ownership Rights in Company Capital Stock ............... 7
2.9 Lost, Stolen or Destroyed Certificates ............................. 7
2.10 Tax Consequences ................................................... 8
2.11 Taking of Necessary Action; Further Action ......................... 8
ARTICLE III REPRESENTATIONS AND WARRANTIES OF COMPANY ..................... 8
3.1 Organization and Qualification; Subsidiaries ....................... 8
3.2 Certificate of Incorporation and Bylaws ............................ 9
3.3 Capitalization ..................................................... 9
3.4 Authority Relative to this Agreement ............................... 11
3.5 No Conflict; Required Filings and Consents ......................... 11
3.6 Compliance; Permits ................................................ 12
3.7 SEC Filings; Financial Statements .................................. 12
3.8 No Undisclosed Liabilities ......................................... 13
3.9 Absence of Certain Changes or Events ............................... 13
3.10 Absence of Litigation .............................................. 14
3.11 Employee Benefit Plans ............................................. 14
3.12 Labor Matters ...................................................... 16
3.13 Registration Statement; Joint Proxy Statement/Prospectus ........... 16
3.14 Restrictions on Business Activities ................................ 17
3.15 Property ........................................................... 17
3.16 Taxes .............................................................. 18
3.17 Environmental Matters .............................................. 20
3.18 Brokers ............................................................ 21
3.19 Intellectual Property .............................................. 21
3.19 Agreements, Contracts and Commitments .............................. 25
3.20 Insurance .......................................................... 27
3.21 Opinion of Financial Advisor ....................................... 27
3.22 Board Approval ..................................................... 27
3.23 Vote Required ...................................................... 27
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TABLE OF CONTENTS
(continued)
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3.24 State Takeover Statutes ......................................................... 27
3.25 Amendment of Rights Plan ........................................................ 28
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF ACQUIROR, PLATO DELAWARE AND MERGER SUB .... 28
4.1 Organization and Qualification; Subsidiaries .................................... 28
4.2 Charter Documents ............................................................... 28
4.3 Capitalization .................................................................. 28
4.4 Genesis Delaware Common Stock ................................................... 29
4.5 Authority Relative to this Agreement ............................................ 29
4.6 No Conflict; Required Filings and Consents ...................................... 30
4.7 Compliance; Permits ............................................................. 30
4.8 SEC Fi1ings; Financial Statements ............................................... 31
4.9 No Undisclosed Liabilities ...................................................... 32
4.10 Absence of Certain Changes or Events ............................................ 32
4.11 Absence of Litigation ........................................................... 32
4.12 Labor Matters ................................................................... 33
4.13 Registration Statement; Joint Proxy Statement/Prospectus ........................ 33
4.14 Brokers ......................................................................... 33
4.15 Intellectual Property ........................................................... 33
4.16 Opinion of Financial Advisor .................................................... 34
4.17 Board Approval .................................................................. 34
4.18 Vote Required ................................................................... 34
ARTICLE V CONDUCT PRIOR TO THE EFFECTIVE TIME ........................................... 35
5.1 Conduct of Business by Company .................................................. 35
5.2 Conduct of Business by Acquiror ................................................. 38
ARTICLE VI ADDITIONAL AGREEMENTS ........................................................ 39
6.1 Joint Proxy Statement/Prospectus; Registration Statement ........................ 39
6.2 Stockholder Meetings ............................................................ 40
6.3 Confidentiality; Access to Information .......................................... 41
6.4 No Solicitation ................................................................. 41
6.5 Public Disclosure ............................................................... 43
6.6 Reasonable Efforts; Notification ................................................ 43
6.7 Third Party Consents ............................................................ 44
6.8 Company Stock Options; Company 401(k) Plan; Company ESPP; Employee Benefit
Matters ......................................................................... 44
6.9 Form S-8 ........................................................................ 46
6.10 Indemnification ................................................................. 46
6.11 Nasdaq Listing .................................................................. 47
6.12 Affiliates ...................................................................... 47
6.13 Regulatory Filings; Reasonable Efforts .......................................... 47
6.14 Restructuring of Acquiror ....................................................... 47
6.15 Obligations of Merger Sub and Genesis Delaware .................................. 48
6.16 Board of Directors of Genesis Delaware .......................................... 48
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TABLE OF CONTENTS
(continued)
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ARTICLE VII CONDITIONS TO THE MERGER ..................................... 48
7.1 Conditions to Obligations of Each Party to Effect the Merger ..... 48
7.2 Additional Conditions to Obligations of Company .................. 49
7.3 Additional Conditions to the Obligations of Acquiror ............. 50
ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER ........................... 51
8.1 Termination ...................................................... 51
8.2 Notice of Termination; Effect of Termination ..................... 53
8.3 Fees and Expenses ................................................ 53
8.4 Amendment ........................................................ 54
8.5 Extension; Waiver ................................................ 54
ARTICLE IX GENERAL PROVISIONS ............................................ 54
9.1 Survival of Representations and Warranties ....................... 54
9.2 Notices .......................................................... 54
9.3 Interpretation; Definitions ...................................... 55
9.4 Counterparts ..................................................... 56
9.5 Entire Agreement; Third Party Beneficiaries ...................... 56
9.6 Severability ..................................................... 57
9.7 Other Remedies; Specific Performance ............................. 57
9.8 Governing Law .................................................... 57
9.9 Rules of Construction ............................................ 57
9.10 Assignment ....................................................... 57
INDEX OF EXHIBITS
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Annex I Summary Plan of Arrangement
Exhibit A Form of Voting Agreement
Exhibit B Form of Affiliate Agreement
Exhibit C Form of Employment and Noncompetition Agreement
Exhibit D Form of Stock Restriction Agreement
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AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
THIS AGREEMENT AND PLAN OF MERGER AND REORGANIZATION (this "Agreement") is
made and entered into as of September 27, 2001 by and between Genesis Microchip
Incorporated, a Nova Scotia company ("Acquiror"), and Sage, Inc., a Delaware
corporation ("Company").
RECITALS:
A. Upon the terms and subject to the conditions of this Agreement and in
accordance with the Companies Act (Nova Scotia) (the "Companies Act") and the
General Corporation Law of the State of Delaware ("Delaware Law"), Acquiror and
Company intend to effect a business combination transaction as a result of which
(i) Acquiror will undertake a restructuring (the "Restructuring") pursuant to a
plan of arrangement, the terms and conditions of which are described in Annex I
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hereto (the "Summary Plan of Arrangement"), and as a result of which Acquiror
will become an indirect, wholly-owned subsidiary of a newly-formed corporation
organized by Acquiror under Delaware Law ("Genesis Delaware"), and (ii) a
newly-formed, wholly-owned subsidiary of Genesis Delaware ("Merger Sub") will be
merged with and into Company, with Company to be the surviving corporation of
such merger (the "Merger"), and all of the outstanding capital stock of Company
will be converted into shares of Genesis Delaware Common Stock (as defined
herein).
B. Upon the terms and subject to the conditions of this Agreement and in
accordance with Delaware law, the board of directors of Company has unanimously
(i) declared this Agreement to be advisable, (ii) approved this Agreement and
approved and authorized the Merger and the other transactions contemplated
hereby, (iii) determined that the Merger is consistent with and in furtherance
of the long-term business strategy of Company and fair to, and in the best
interests of, Company and its stockholders and (iv) determined to recommend that
the stockholders of Company adopt and approve this Agreement and approve the
Merger.
C. Subject to the terms and conditions set forth herein and in accordance
with the Companies Act, the board of directors of Acquiror has (i) approved and
authorized the Restructuring, (ii) approved this Agreement and approved and
authorized the Merger and the other transactions contemplated hereby, (iii)
determined that the Restructuring and the Merger are consistent with and in
furtherance of the long-term business strategy of Acquiror and fair to, and in
the best interests of, Acquiror and its shareholders and (iv) determined to
recommend that the shareholders of Acquiror (A) approve the Restructuring, and
(B) approve the issuance of shares of common stock of Genesis Delaware (as
successor in interest to Acquiror pursuant to the Restructuring) in the Merger
(the "Share Issuance").
D. Concurrently with the execution of this Agreement, and as a condition
of and inducement to the willingness of Acquiror to enter into this Agreement,
certain affiliates of Company are entering into a voting agreement with Acquiror
in the form attached hereto as Exhibit A (each, a "Voting Agreement" and
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collectively, the "Voting Agreements"), and an affiliate agreement with Acquiror
in the form attached hereto as Exhibit B (each, an "Affiliate Agreement" and
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collectively, the "Affiliate Agreements").
E. Concurrently with the execution of this Agreement, and as a condition
of and inducement to the willingness of Acquiror to enter into this Agreement,
certain officers of Company are entering into an employment and noncompetition
agreement with Acquiror in the form attached hereto as Exhibit C (each, an
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"Employment and Noncompetition Agreement" and collectively, the "Employment and
Noncompetition Agreements") and a lock-up agreement with Acquiror in the form
attached hereto as Exhibit D (each, a "Stock Restriction Agreement" and
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collectively, the "Stock Restriction Agreements").
F. The parties intend that the Restructuring together with the Merger
shall qualify as a tax-free exchange under the provisions of Section 351 of the
Internal Revenue Code of 1986, as amended (the "Code") and that the Merger shall
qualify as a reorganization within the meaning of Section 368(a) of the Code. By
executing this Agreement, the parties hereto intend to adopt a plan of
reorganization within the meaning of Sections 1.368-2(g) and 1.368-3(a) of the
United States Income Tax Regulations.
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
representations, warranties, covenants and other agreements set forth herein,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto, intending to be legally
bound, hereby agree as follows:
ARTICLE I
RESTRUCTURING AND SUBSIDIARIES
1.1 Restructuring. The terms of the Restructuring will be determined by
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Acquiror; provided, however, the terms of the Restructuring shall not deviate
from the Summary Plan of Arrangement without the prior consent of Company, which
consent shall not be unreasonably withheld or delayed. Acquiror shall provide or
otherwise make available to Company and its advisors, within a reasonable period
of time prior to the execution thereof, all certificates, instruments,
agreements and other documents to be executed and delivered in connection with
the Restructuring.
1.2 Formation of Genesis Delaware and Merger Sub; Execution of Agreement.
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As soon as practicable following the execution and delivery of this Agreement by
the parties hereto, Acquiror shall execute and file (as applicable) all
certificates, instruments, agreements and other documents, and take all actions,
necessary or advisable to organize Genesis Delaware and Merger Sub under
Delaware Law solely for the purpose of effecting the Restructuring in accordance
with the Summary Plan of Arrangement. As soon as practicable following the
organization of Genesis Delaware and Merger Sub under Delaware Law, Acquiror
shall cause Genesis Delaware and Merger Sub to execute and deliver a counterpart
to this Agreement, whereupon Genesis Delaware and Merger Sub shall be deemed to
be parties this Agreement for all purposes hereof.
1.3 Directors and Officers of Genesis Delaware. Until the earlier to occur
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of the termination of this Agreement or the consummation of the Restructuring,
the directors and officers of Genesis Delaware shall consist of representatives
of Acquiror designated and elected by Acquiror. Upon the consummation of the
Restructuring, the directors and officers of
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Acquiror shall become the directors and officers of Genesis Delaware. Each such
director and officer shall remain in office until his or her respective
successor is elected or appointed in accordance with the Bylaws of Genesis
Delaware.
ARTICLE II
THE MERGER
2.1 The Merger. Upon the terms and subject to the conditions of this
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Agreement and the applicable provisions of Delaware Law, at the Effective Time
(as defined in Section 2.2) Merger Sub shall be merged with and into Company,
the separate corporate existence of Merger Sub shall thereupon cease, and
Company shall continue as the surviving corporation and as a wholly-owned
subsidiary of Genesis Delaware. Company, as the surviving corporation of the
Merger, is sometimes referred to herein as the "Surviving Corporation."
2.2 Effective Time; Closing. Upon the terms and subject to the conditions
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of this Agreement, the parties hereto shall cause the Merger to be consummated
by filing a certificate of merger, and such other articles, certificates or
other appropriate filing documents, with the Secretary of State of the State of
Delaware in accordance with the relevant provisions of Delaware Law
(collectively, the "Certificate of Merger") (the time of such filing (or such
later time as may be agreed in writing by Company and Acquiror and specified in
the Certificate of Merger) being referred to herein as the "Effective Time") as
soon as practicable on or after the Closing Date (as defined below). The closing
of the Merger (the "Closing") shall take place at the offices of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, Professional Corporation, One Market Street, Spear Tower,
Suite 3300, San Francisco, California, at a time and date to be specified by the
parties hereto, which shall be no later than the second (2nd) business day after
the satisfaction or waiver of the conditions set forth in Article VII hereof, or
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at such other time, date and location upon which the parties shall mutually
agree in writing (the "Closing Date").
2.3 Effect of the Merger. At the Effective Time, the effect of the Merger
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shall be as provided in this Agreement and the applicable provisions of Delaware
Law. Without limiting the generality of the foregoing, and subject thereto, at
the Effective Time, all 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.
2.4 Certificate of Incorporation and Bylaws of the Surviving Corporation.
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(a) Certificate of Incorporation. At the Effective Time, the
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Certificate of Incorporation of the Surviving Corporation shall be amended and
restated to be identical to the Certificate of Incorporation of Merger Sub in
effect immediately prior to the Effective Time, and such amended and restated
Bylaws shall be the Bylaws of the Surviving Corporation until thereafter amended
in accordance with Delaware Law and such Certificate of Incorporation; provided,
however, that Article I of the Certificate of Incorporation of the Surviving
Corporation shall be amended and restated to provide that the name of the
Surviving Corporation shall be "Sage, Inc."
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(b) Bylaws. At the Effective Time, the Bylaws of the Surviving
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Corporation shall be amended and restated to be identical to the Bylaws of
Merger Sub in effect immediately prior to the Effective Time, and such amended
and restated Bylaws shall be the Bylaws of the Surviving Corporation until
thereafter amended in accordance with Delaware Law, the Certificate of
Incorporation of the Surviving Corporation and such Bylaws.
2.5 Directors and Officers of the Surviving Corporation.
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(a) Directors. The initial directors of the Surviving Corporation
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shall be the directors of Merger Sub immediately prior to the Effective Time,
each to hold office in accordance with the Certificate of Incorporation and
Bylaws of the Surviving Corporation until their respective successors are duly
elected or appointed and qualified in accordance with Delaware Law, and the
Certificate of Incorporation and Bylaws of the Surviving Corporation.
(b) Officers. The initial officers of the Surviving Corporation shall
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be the officers of Merger Sub immediately prior to the Effective Time, each to
hold office in accordance with the Certificate of Incorporation and Bylaws of
the Surviving Corporation until their respective successors are duly appointed
in accordance with Delaware Law, and the Certificate of Incorporation and Bylaws
of the Surviving Corporation.
2.6 Effect on Capital Stock. Upon the terms and subject to the conditions
-----------------------
of this Agreement, at the Effective Time, by virtue of the Merger and without
any action on the part of Merger Sub, Company or the holders of any of the
following securities, the following shall occur:
(a) Conversion of Company Capital Stock. Each share of capital stock,
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$0.01 par value per share, of Company (the "Company Capital Stock") issued and
outstanding immediately prior to the Effective Time, other than any shares of
Company Capital Stock to be cancelled pursuant to Section 2.6(b), will be
cancelled and extinguished and automatically converted (subject to Section
2.6(e) and Section 2.6(f)) into the right to receive 0.571 (the "Exchange
Ratio") of a validly issued, fully paid and nonassessable share of Common Stock,
par value $0.001 per share, of Genesis Delaware ("Genesis Delaware Common
Stock"), upon the surrender of the certificate representing such share of
Company Capital Stock in the manner provided in Section 2.7 (or, in the case of
a lost, stolen or destroyed certificate, upon the delivery of an affidavit (and
bond, if required) in the manner provided in Section 2.9). If any shares of
Company Capital Stock outstanding immediately prior to the Effective Time are
unvested or are subject to a repurchase option, risk of forfeiture or other
condition under any applicable restricted stock purchase agreement or other
agreement with Company, then the shares of Genesis Delaware Common Stock issued
in exchange for such shares of Company Capital Stock will also be unvested or
subject to the same repurchase option, risk of forfeiture or other condition,
and the certificates representing such shares of Genesis Delaware Common Stock
may accordingly be marked with appropriate legends. Company shall take all
action that may be necessary to ensure that, from and after the Effective Time,
Genesis Delaware is entitled to exercise any such repurchase option or other
right set forth in any such restricted stock purchase agreement or other
agreement.
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(b) Cancellation of Company-Owned and Genesis Delaware-Owned Company
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Capital Stock. Each share of Company Capital Stock held by Company, Genesis
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Delaware or any direct or indirect wholly-owned subsidiary of Company or Genesis
Delaware (including, without limitation, Merger Sub) immediately prior to the
Effective Time shall be cancelled and extinguished without any conversion
thereof.
(c) Stock Options. Each option to purchase Company Capital Stock and
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stock appreciation rights then outstanding under any of Company's Amended and
Restated 1997 Stock Plan (the "Company Option Plan"), whether vested or unvested
and whether exercisable or unexercisable (each, a "Company Stock Option" and
collectively, the "Company Stock Options"), shall be assumed by Genesis Delaware
in accordance with Section 6.8. Each purchase right outstanding under Company's
Amended and Restated 1999 Employee Stock Purchase Plan shall be treated as set
forth in Section 6.8.
(d) Capital Stock of Merger Sub. Each share of Common Stock, $0.001
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par value 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, $0.001 par
value per share, of the Surviving Corporation. 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
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adjusted to reflect appropriately the effect of any stock split, reverse stock
split, stock dividend (including any dividend or distribution of securities
convertible into Genesis Delaware Common Stock or Company Capital Stock),
reorganization, recapitalization, reclassification or other like change with
respect to Genesis Delaware Common Stock or Company Capital Stock occurring on
or after the date hereof and prior to the Effective Time.
(f) Fractional Shares. No fraction of a share of Genesis Delaware
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Common Stock will be issued by virtue of the Merger, but in lieu thereof, each
holder of shares of Company Capital Stock who would otherwise be entitled to a
fraction of a share of Genesis Delaware Common Stock (after aggregating all
fractional shares of Genesis Delaware Common Stock that otherwise would be
received by such holder) shall, upon the surrender of the certificate
representing such share of Company Capital Stock in the manner provided in
Section 2.7 (or, in the case of a lost, stolen or destroyed certificate, upon
the delivery of an affidavit (and bond, if required) in the manner provided in
Section 2.9), receive from Genesis Delaware an amount of cash (rounded to the
nearest whole cent), without interest, equal to the product obtained by
multiplying (x) such fraction, and (y) the average closing price of Common
Shares of Acquiror ("Acquiror Common Shares") for the five (5) consecutive
trading days immediately following the Effective Time beginning on the first
full trading day immediately following the date upon which the Effective Time
shall occur, as reported on the Nasdaq National Market System ("Nasdaq").
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2.7 Surrender of Certificates; Payment of Cash and Stock Consideration.
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(a) Exchange Agent. Prior to the Effective Time, Acquiror or Genesis
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Delaware shall select a bank or trust company reasonably acceptable to Company
to act as the exchange agent (the "Exchange Agent") for the Merger.
(b) Genesis Delaware to Provide Common Stock and Cash Consideration.
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Genesis Delaware shall make available to the Exchange Agent, as needed, for
exchange in accordance with this Article II, (i) the shares of Genesis Delaware
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Common Stock issuable pursuant to Section 2.6 in exchange for outstanding shares
of Company Capital Stock, and (ii) cash in an amount sufficient to make all
payments in lieu of fractional shares pursuant to Section 2.6(f) and any
dividends or distributions to which holders of shares of Company Capital Stock
may be entitled pursuant to Section 2.7(d).
(c) Exchange Procedures. As soon as practicable after the Effective
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Time, Acquiror shall cause the Exchange Agent to mail to each holder of record
(as of the Effective Time) of a certificate or certificates (the
"Certificates"), which immediately prior to the Effective Time represented
outstanding shares of Company Capital Stock (i) a letter of transmittal (which
shall specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the Exchange
Agent and shall contain such other provisions as Acquiror may reasonably
specify) and (ii) instructions for use in effecting the surrender of the
Certificates in exchange for certificates representing shares of Genesis
Delaware Common Stock, cash in lieu of any fractional shares pursuant to Section
2.6(f) and any dividends or other distributions pursuant to Section 2.7(d). Upon
surrender of Certificates for cancellation to the Exchange Agent or to such
other agent or agents as may be appointed by Acquiror or Genesis Delaware,
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 Genesis Delaware Common Stock into which their shares of
Company Capital Stock were converted at the Effective Time pursuant to Section
2.6, payment in lieu of fractional shares which such holders are entitled to
receive pursuant to Section 2.6(f) and any dividends or distributions to which
such holders may be entitled pursuant to Section 2.7(d), and the Certificates so
surrendered shall forthwith be cancelled. Until so surrendered, outstanding
Certificates will be deemed from and after the Effective Time, for all corporate
purposes, subject to Section 2.7(d) as to the payment of dividends, to evidence
only the ownership of the number of full shares of Genesis Delaware Common Stock
into which such shares of Company Capital Stock shall have been so converted
pursuant to Section 2.6, the right to receive an amount in cash in lieu of the
issuance of any fractional shares pursuant to Section 2.6(f) and the right to
receive any dividends or distributions to which holders of shares of Company
Capital Stock may be entitled pursuant to Section 2.7(d).
(d) Distributions With Respect to Unexchanged Shares. No dividends or
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other distributions declared or made after the date of this Agreement with
respect to Genesis Delaware Common Stock with a record date after the Effective
Time will be paid to the holders of any unsurrendered Certificate(s) with
respect to the shares of Genesis Delaware Common Stock represented thereby until
the holders of record of such Certificate(s) shall surrender such
Certificate(s). Subject to applicable law, following surrender of any such
Certificate(s), the
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Exchange Agent shall deliver to the record holders thereof, without interest, a
certificate(s) representing whole shares of Genesis Delaware Common Stock issued
in exchange therefor along with payment in lieu of fractional shares pursuant to
Section 2.6(f) hereof and the amount of any such dividends or other
distributions with a record date after the Effective Time payable with respect
to such whole shares of Genesis Delaware Common Stock.
(e) Transfers of Ownership. If any certificate representing shares of
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Genesis Delaware Common Stock is to be issued in a name other than that in which
the Certificate surrendered in exchange therefor is registered, it will be a
condition of the issuance thereof that the Certificate so surrendered will be
properly endorsed and otherwise in proper form for transfer and that the persons
requesting such exchange will have paid to Genesis Delaware or any agent
designated by it any transfer or other taxes required by reason of the issuance
of certificates representing shares of Genesis Delaware Common Stock in any name
other than that of the registered holder of the Certificates surrendered, or
established to the reasonable satisfaction of Genesis Delaware or any agent
designated by it that such tax has been paid or is not payable.
(f) Required Withholding. Each of the Exchange Agent, Genesis
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Delaware, 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 Capital 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. 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) No Liability. Notwithstanding anything to the contrary in this
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Section 2.7, neither of the Exchange Agent, Genesis Delaware, the Surviving
Corporation, or any party hereto shall be liable to a holder of shares of
Genesis Delaware Common Stock or Company Capital Stock for any amount properly
paid to a public official pursuant to any applicable abandoned property,
escheat, or similar law.
2.8 No Further Ownership Rights in Company Capital Stock. All shares of
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Genesis Delaware Common Stock issued in accordance with the terms hereof
(together with any cash paid in respect thereof pursuant to Section 2.6(f) and
Section 2.7(d)) shall be deemed to have been issued in full satisfaction of all
rights pertaining to such shares of Company Capital Stock, and there shall be no
further registration of transfers on the records of the Surviving Corporation of
shares of Company Capital Stock which were outstanding immediately prior to the
Effective Time. If, after the Effective Time, Certificates are presented to the
Surviving Corporation for any reason, they shall be cancelled and exchanged as
provided in this Article II.
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2.9 Lost, Stolen or Destroyed Certificates. In the event that any
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Certificate 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 Genesis Delaware Common Stock into which the shares
of Company Capital Stock represented by such Certificates were converted
pursuant to Section 2.6, cash for fractional shares, if any, as may be required
pursuant to Section 2.6(f) and any dividends or distributions payable pursuant
to Section 2.7(d); provided, however, that Genesis Delaware
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may, in its discretion and as a condition precedent to the issuance of such
certificates representing shares of Genesis Delaware Common Stock and other
distributions, require the owner of such lost, stolen or destroyed Certificate
to deliver a bond in such sum as it may reasonably direct as indemnity against
any claim that may be made against Genesis Delaware, the Surviving Corporation,
or the Exchange Agent with respect to the Certificates alleged to have been
lost, stolen or destroyed.
2.10 Tax Consequences. It is intended by the parties hereto that the
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Restructuring together with the Merger shall qualify as a tax-free exchange
under the provisions of Section 351 of the Code and that the Merger shall
qualify as a reorganization within the meaning of Section 368(a) of the Code.
Neither Acquiror nor Company, nor any of their respective affiliates, shall take
any action that would cause the Restructuring or the Merger to fail to so
qualify. The parties hereto adopt this Agreement as a "plan of reorganization"
within the meaning of Sections 1.368-2(g) and 1.368-3(a) of the United States
Income Tax Regulations.
2.11 Taking of Necessary Action; Further Action. If, at any time after the
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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 are fully authorized in the manner of their respective
corporations or otherwise to take, and will take, all such lawful and necessary
action.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF COMPANY
Company hereby represents and warrants to Acquiror, except as set forth in
the written disclosure letter delivered by Company to Acquiror prior to the date
hereof and dated as of the date hereof (the "Company Disclosure Letter"), as
follows:
3.1 Organization and Qualification; Subsidiaries.
--------------------------------------------
(a) Each of Company and its subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has the requisite corporate power and
authority to own, lease and operate its assets and properties and to carry on
its business as it is now being conducted except where the failure to be so
organized or have such power and authority would not, individually or in the
aggregate, have a Material Adverse Effect on Company or its subsidiaries, as
applicable. Each of Company and its subsidiaries is in possession of all
franchises, grants, authorizations, licenses, permits, easements, consents,
certificates, approvals and orders ("Approvals") necessary to own, lease and
operate the properties it purports to own, operate or lease and to carry on its
business as it is now being conducted, except where the failure to have such
Approvals would not have, either individually or in the aggregate, a Material
Adverse Effect (as defined in Section 9.3(b)(ii)), on Company or its
subsidiaries, as applicable. Each of Company and its subsidiaries is duly
qualified or licensed as a foreign corporation to do business, and is in good
standing, in each jurisdiction where the character of the properties owned,
leased or operated by it or the nature of its activities makes such
qualification or licensing necessary, except for such failures to be so duly
qualified or
-8-
licensed and in good standing that have not had, and would not reasonably be
expected to have, either individually or in the aggregate, a Material Adverse
Effect on Company or its subsidiaries, as applicable.
(b) Company has no subsidiaries. Neither Company nor any of its
subsidiaries has agreed nor is obligated to make nor be bound by any written,
oral or other agreement, contract, subcontract, lease, binding understanding,
instrument, note, option, warranty, purchase order, license, sublicense,
insurance policy, benefit plan, commitment or undertaking of any nature, as of
the date hereof or as may hereafter be in effect (a "Contract") under which it
may become obligated to make, any future investment in or capital contribution
to any other entity. Neither Company nor any of its subsidiaries directly or
indirectly owns any equity or similar interest in or any interest convertible,
exchangeable or exercisable for, any equity or similar interest in, any
corporation, partnership, joint venture or other business, association or
entity.
3.2 Certificate of Incorporation and Bylaws. Company has previously
---------------------------------------
furnished to Acquiror a complete and correct copy of its Certificate of
Incorporation and Bylaws as amended to date (together, the "Company Charter
Documents"). Such Company Charter Documents and equivalent organizational
documents of each of its subsidiaries are in full force and effect. Company is
not in violation of any of the provisions of the Company Charter Documents, and
no subsidiary of Company is in violation of its equivalent organizational
documents.
3.3 Capitalization.
--------------
(a) The authorized capital stock of Company consists of 50,000,000
shares of Common Stock, $0.01 par value ("Company Common Stock"), and 10,000,000
shares of Preferred Stock, $0.01 par value ("Company Preferred Stock"). At the
close of business on September 27, 2001, (i) 14,248,276 shares of Company Common
Stock were issued and outstanding, all of which are validly issued, fully paid
and nonassessable; (ii) no shares of Company Common Stock were held in treasury
by Company or by subsidiaries of Company; (iii) 3,475,332 shares of Company
Common Stock were reserved for issuance upon the exercise of outstanding options
to purchase Company Common Stock under the Company Option Plans; (iv) 180,027
shares of Company Common Stock were available for future grant under the Company
Option Plans; and (v) 412,567 shares of Company Common Stock were available for
future issuance under the Company's Amended and Restated 1999 Employee Stock
Purchase Plan (the "Company ESPP"). As of the date hereof, no shares of Company
Preferred Stock were issued or outstanding. Section 3.3(a) of the Company
Disclosure Letter sets forth the following information with respect to each
Company Stock Option (as defined in Section 6.8) outstanding as of the close of
business on September 27, 2001: (i) the name and address of the optionee; (ii)
the particular plan pursuant to which such Company Stock Option was granted;
(iii) the number of shares of Company Common Stock subject to such Company Stock
Option; (iv) the exercise price of such Company Stock Option; (v) the date on
which such Company Stock Option was granted; (vi) the applicable vesting
schedule; and (vii) the date on which such Company Stock Option expires. Company
has made available to Acquiror accurate and complete copies of all stock option
plans pursuant to which the Company has granted such Company Stock Options that
are currently outstanding and the form of all stock option agreements evidencing
such Company Stock Options. All shares of Company Common Stock
-9-
subject to issuance as aforesaid, upon issuance on the terms and conditions
specified in the instrument pursuant to which they are issuable, would be duly
authorized, validly issued, fully paid and nonassessable. There are no
commitments or agreements of any character to which the Company is bound
obligating the Company to accelerate the vesting of any Company Stock Option as
a result of the Merger. All outstanding shares of Company Common Stock, all
outstanding Company Stock Options, and all outstanding shares of capital stock
of each subsidiary of the Company have been issued and granted in compliance
with (i) all applicable securities laws and other applicable Legal Requirements
(as defined below) and (ii) all requirements set forth in applicable Contracts.
For the purposes of this Agreement, "Legal Requirements" means any federal,
state, local, municipal, foreign or other law, statute, constitution, principle
of common law, resolution, ordinance, code, edict, decree, rule, regulation,
ruling or requirement issues, enacted, adopted, promulgated, implemented or
otherwise put into effect by or under the authority of any Governmental Entity
(as defined in Section 3.5(b)) and (ii) all requirements set forth in applicable
contracts, agreements, and instruments.
(b) Except for securities Company owns free and clear of all liens,
pledges, hypothecations, charges, mortgages, security interests, encumbrances,
claims, infringements, interferences, options, right of first refusals,
preemptive rights, community property interests or restriction of any nature
(including any restriction on the voting of any security, any restriction on the
transfer of any security or other asset, any restriction on the possession,
exercise or transfer of any other attribute of ownership of any asset) directly
or indirectly through one or more subsidiaries, and except for shares of capital
stock or other similar ownership interests of subsidiaries of the Company that
are owned by certain nominee equity holders as required by the applicable law of
the jurisdiction of organization of such subsidiaries (which shares or other
interests do not materially affect the Company's control of such subsidiaries),
as of the date of this Agreement, there are no equity securities, partnership
interests or similar ownership interests of any class of equity security of any
subsidiary of the Company, or any security exchangeable or convertible into or
exercisable for such equity securities, partnership interests or similar
ownership interests, issued, reserved for issuance or outstanding. Except as set
forth in Section 3.3(a), 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 the
Company or any of its subsidiaries or obligating the Company or any of its
subsidiaries to grant, extend, accelerate the vesting of or enter into any such
subscription, option, warrant, equity security, call, right, commitment or
agreement. As of the date of this Agreement, except as contemplated by this
Agreement, there are no registration rights and there is, except for the Voting
Agreements, no voting trust, proxy, rights plan, antitakeover plan or other
agreement or understanding to which the Company or any of its subsidiaries is a
party or by which they are bound with respect to any equity security of any
class of the 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' rights under
applicable state law in connection with the Merger.
-10-
3.4 Authority Relative to this Agreement. Company has all necessary
------------------------------------
corporate power and authority to execute and deliver this Agreement and subject
to obtaining the approval of the stockholders of Company of the Merger and the
transactions contemplated hereby and thereby, to perform its obligations
hereunder and thereunder and to consummate the transactions contemplated hereby
and thereby. The execution and delivery of this Agreement by Company and the
consummation by Company of the transactions contemplated hereby and thereby have
been duly and validly authorized by all necessary corporate action on the part
of Company, and no other corporate proceedings on the part of Company are
necessary to authorize this Agreement or to consummate the transactions so
contemplated (other than, with respect to the Merger, the approval and adoption
of this Agreement by Company's stockholders in accordance with Delaware Law and
the Company Charter Documents and the filing and recordation of the Certificate
of Merger as required by Delaware Law). This Agreement has been duly and validly
executed and delivered by Company and, assuming the due authorization, execution
and delivery by Acquiror, Genesis Delaware and Merger Sub, constitute legal and
binding obligations of Company, enforceable against Company in accordance with
their respective terms, except as the enforcement thereof may be limited by
bankruptcy, insolvency (including, without limitation, all laws relating to
fraudulent transfers), reorganization, moratorium or similar laws affecting
enforcement of creditors' rights generally and except as enforcement thereof is
subject to general principles of equity (regardless of whether enforcement is
considered in a proceeding in equity or at law).
3.5 No Conflict; Required Filings and Consents.
------------------------------------------
(a) The execution and delivery of this Agreement by Company do not,
and the performance of this Agreement by Company will not, (i) conflict with or
violate the Company Charter Documents or the equivalent organizational documents
of any of Company's subsidiaries; (ii) subject to obtaining the approval of
Company's stockholders of the Merger and compliance with the requirements set
forth in Section 3.5(b) below, conflict with, or result in any violation of, any
law, rule, regulation, order, judgment or decree applicable to Company or any of
its subsidiaries or by which either Company or any of its subsidiaries or any of
their respective properties is bound or affected, except that which could not
reasonably be expected to have a Material Adverse Effect with respect to
Acquiror.; 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 Company's or any of its subsidiaries' rights or alter the rights or
obligations of any third party under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in the
creation of a lien or encumbrance on any of the properties or assets of Company
or any of its subsidiaries pursuant to, any note, bond, mortgage, indenture,
contract, 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
are bound or affected, except that which could not reasonably be expected to
have a Material Adverse Effect with respect to Acquiror.
(b) The execution and delivery of this Agreement by Company do not,
and the performance of this Agreement by Company will not, require any consent,
waiver, approval, authorization or permit of, or filing with or notification to,
any court, administrative agency, commission, governmental or regulatory
authority, domestic or foreign (a "Governmental Entity"), except (i) for
applicable requirements, if any, of the Securities Act of 1933, as
-11-
amended (together with the rules and regulations promulgated thereunder, the
"Securities Act"), the Securities Exchange Act of 1934, as amended (together
with the rules and regulations promulgated thereunder, the "Exchange Act"),
state securities laws ("Blue Sky Laws"), the pre-merger notification
requirements (the "HSR Approval") of the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended (together with the rules and regulations
promulgated thereunder, the "HSR Act"), the rules and regulations of Nasdaq,
state takeover laws and the filing and recordation of the Certificate of Merger
as required by Delaware Law and (ii) where the failure to obtain such consents,
approvals, authorizations or permits, or to make such filings or notifications,
would not reasonably be expected to have a Material Adverse Effect on Company or
a material adverse effect on the ability of Company to perform its obligations
under this Agreement, or prevent consummation of the Merger or otherwise prevent
the parties hereto from performing their obligations under this Agreement.
3.6 Compliance; Permits.
-------------------
(a) Neither Company nor any of its subsidiaries is in conflict with,
or in default or violation of, (i) any law, rule, regulation, order, judgment or
decree applicable to Company or any of its subsidiaries or by which its or any
of their respective properties is bound or affected or (ii) any note, bond,
mortgage, indenture, contract, 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 any conflicts, defaults
or violations that (individually or in the aggregate) would not have a Material
Adverse Effect on Company. No investigation or review by any governmental or
regulatory body or authority is pending or, to the knowledge of Company,
threatened against Company or its subsidiaries, nor has any governmental or
regulatory body or authority indicated to Company or any of its subsidiaries an
intention to conduct the same, other than, in each such case, those the outcome
of which would not, individually or in the aggregate, reasonably be expected to
have the effect of prohibiting or materially impairing any current business
practice of the Company or any of its subsidiaries, any acquisition of material
property by the Company or any of its subsidiaries or the conduct of business by
the Company or any of its subsidiaries.
(b) Company and its subsidiaries hold all permits, licenses,
variances, exemptions, orders and approvals from governmental authorities which
are material to operation of the business of Company and its subsidiaries taken
as a whole (collectively, the "Company Permits"). Company and its subsidiaries
are in compliance in all material respects with the terms of the Company
Permits.
3.7 SEC Filings; Financial Statements.
---------------------------------
(a) Company has made available to Acquiror a correct and complete
copy of each report, schedule, registration statement and definitive proxy
statement filed by Company with the Securities and Exchange Commission (the
"SEC") since November 3, 1999 (the "Company SEC Reports"), which are all the
forms, reports and documents required to be filed by Company with the SEC since
November 3, 1999. The Company SEC Reports (A) complied in all material respects
as of their respective dates with the requirements of the Securities Act or the
Exchange Act, as the case may be, and (B) did not at the time they were filed
(and if
-12-
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. None of Company's subsidiaries is required to file
any reports or other documents with the SEC.
(b) Each of the audited consolidated financial statements (including,
in each case, any related notes thereto) and unaudited interim financial
statements contained in the Company SEC Reports was prepared in accordance with
generally accepted accounting principles ("GAAP") applied on a consistent basis
throughout the periods involved (except as may be indicated therein or in the
notes thereto or, in the case of unaudited statements, as permitted by Form 10-Q
of the Exchange Act) and each fairly presents the consolidated financial
position of Company and its subsidiaries at the respective dates thereof and the
consolidated results of its operations and cash flows for the periods indicated,
except that the unaudited interim financial statements were or are subject to
normal and recurring year-end adjustments that were not or are not expected to
be material in amount.
(c) Company has previously furnished to Acquiror a complete and
correct copy of any amendments or modifications, which have not yet been filed
with the SEC but which are required to be filed, to agreements, documents or
other instruments which previously had been filed by Company with the SEC
pursuant to the Securities Act or the Exchange Act.
3.8 No Undisclosed Liabilities. Neither Company nor any of its
--------------------------
subsidiaries has any liabilities (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 (i) liabilities provided for in Company's balance sheet as of June
30, 2001, or in the related notes to the consolidated financial statements of
Company as of and for the period ended June 30, 2001, in each case which are
included in the Company SEC Reports, and (ii) liabilities incurred since June
30, 2001 in the ordinary and usual course of business, consistent with past
practice, none of which would reasonably be expected to have, either
individually or in the aggregate, a Material Adverse Effect on Company.
3.9 Absence of Certain Changes or Events. Since June 30, 2001, there has
------------------------------------
not been: (i) any Material Adverse Effect on 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, except
for normal increases of cash compensation to non-officer employees in the
ordinary and usual course of business consistent with past practice, or any
payment by Company or any of its subsidiaries of any bonus, except for bonuses
made to non-officer employees in the ordinary course of business consistent with
past practice, 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
-13-
its subsidiaries into any currently effective employment, severance, termination
or indemnification agreement or any agreement the benefits of which are
contingent or the terms of which are materially altered upon the occurrence of a
transaction involving Company of the nature contemplated hereby; (v) entry by
Company or any of its subsidiaries into any licensing or other agreement with
regard to the acquisition or disposition of any Intellectual Property (as
defined in Section 3.19) other than licenses in the ordinary and usual course of
business, consistent with past practice, or any amendment or consent with
respect to any licensing agreement filed or required to be filed by Company with
the SEC; (vi) any material change by Company in its accounting methods,
principles or practices, except as required by concurrent changes in GAAP or by
the SEC; or (vii) any revaluation by Company of any of its assets, including,
without limitation, writing down the value of capitalized inventory or writing
off notes or accounts receivable or any sale of assets of the Company other than
in the ordinary and usual course of business.
3.10 Absence of Litigation. There are no claims, actions, suits or
---------------------
proceedings pending or, to the knowledge of Company, threatened (or, to the
knowledge of Company, any governmental or regulatory investigation pending or
threatened) against Company or any of its subsidiaries or any properties or
rights of Company or any of its subsidiaries, before any court, arbitrator or
administrative, governmental or regulatory authority or body, domestic or
foreign, except for those claims, actions, suits or proceedings that are not
material to the business of Company as currently conducted.
3.11 Employee Benefit Plans.
----------------------
(a) All employee compensation, incentive, fringe or benefit plans,
programs, policies, commitments or other arrangements (whether or not set forth
in a written document and including, without limitation, all "employee benefit
plans" within the meaning of Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")) covering any active, former
employee, director or consultant of Company, any subsidiary of Company (an
"Employee," which shall for this purpose mean an Employee of the Company, any
subsidiary of the Company or any Affiliate (as defined below)) or any trade or
business (whether or not incorporated) which is a member of a controlled group
or which is under common control with Company within the meaning of Section 414
of the Code (an "Affiliate"), or with respect to which Company has or may in the
future have liability, are listed in Section 3.11(a) of the Company Disclosure
Letter (the "Plans"). Company has provided or made available to Acquiror: (i)
correct and complete copies of all documents embodying each Plan and each
material management, employment, severance, consulting, relocation, repatriation
or other agreement, contract or understanding between Company, any subsidiary of
the Company or any of Affiliate and any employee ("Employment Agreement"),
including (without limitation) all amendments thereto, all related trust
documents, and all material written agreements and contracts relating to each
Plan and Employment Agreement; (ii) the three (3) most recent annual reports
(Form Series 5500 and all schedules and financial statements attached thereto),
if any, required under ERISA or the Code in connection with each Plan; (iii) the
most recent summary plan description together with the summary(ies) of material
modifications thereto, if any, required under ERISA with respect to each Plan;
(iv) all Internal Revenue Service ("IRS") or United States Department of Labor
("DOL") determination, opinion, notification and advisory letters pertaining to
any of the Plans, in each case which were received in the last three years;
-14-
(v) all material correspondence to or from any governmental agency pertaining to
any of the Plans, in each case which was received in the last three years; (vi)
all COBRA (as defined below) forms and related notices in the form currently
being used in connection with any of the Plans; (vii) all discrimination tests
for each Plan for the most recent three (3) plan years; (viii) the most recent
annual actuarial valuations, if any, prepared for each Plan; (ix) if the Plan is
funded, the most recent annual and periodic accounting of Plan assets; (x) all
material written agreements and contracts currently in effect relating to each
Plan, including, but not limited to, administrative service agreements, group
annuity contracts and group insurance contracts; (xi) all material
communications to employees or former employees regarding 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 under any Plan or proposed Plan that were
given within the last six years; and (xii) all registration statements, annual
reports (Form 11-K and all attachments thereto) and prospectuses prepared in
connection with any Plan.
(b) Each Plan has been maintained and administered in all material
respects in compliance with its terms and with the requirements prescribed by
any and all statutes, orders, rules and regulations (foreign or domestic),
including but not limited to ERISA and the Code, which are applicable to such
Plans. No suit, action or other litigation (excluding claims for benefits
incurred in the ordinary course of Plan activities) has been brought, or to the
knowledge of Company, is threatened, against or with respect to any such Plan.
There are no audits, inquiries or proceedings pending or, to the knowledge of
Company, threatened by the IRS or DOL with respect to any Plan. All
contributions, reserves or premium payments required to be made or accrued as of
the date hereof to the Plans have been timely made or accrued. Any Plan intended
to be qualified under Section 401(a) of the Code and each trust intended to
qualify under Section 501(a) of the Code (i) has either obtained a favorable
determination notification, advisory and/or opinion letter, as applicable, as to
its qualified status (or the qualified status of the master or prototype form on
which it is established) from the IRS or still has a remaining period of time
under applicable Treasury Regulations or IRS pronouncements in which to apply
for such letter and to make any amendments necessary to obtain a favorable
determination and (ii) incorporates or has been amended to incorporate all
provisions required to comply with the Tax Reform Act of 1986 and subsequent
legislation, except for such changes as to which there is still a remaining
period of time to adopt such amendments. Company does not have any plan or
commitment to establish any new Plan, to modify any Plan (except to the extent
required by law or to conform any such Plan to the requirements of any
applicable law, in each case as previously disclosed to Acquiror in writing, or
as required by this Agreement), or to enter into any new Plan. Each Plan can be
amended, terminated or otherwise discontinued after the Effective Time in
accordance with its terms, without liability to Acquiror, Company or any of its
Affiliates (other than ordinary administration expenses and expenses for
benefits properly accrued but not yet paid).
(c) Neither Company, any of its subsidiaries, nor any of their
Affiliates has at any time ever maintained, established, sponsored, participated
in, or contributed to any plan subject to Title IV of ERISA or Section 412 of
the Code and at no time has Company or any of its subsidiaries contributed to or
been requested to contribute to any "multiemployer plan," as such term is
defined in ERISA or to any plan described in Section 413(c) of the Code. Neither
Company, any of its subsidiaries, nor any officer or director of Company or any
of its
-15-
subsidiaries is subject to any material liability or penalty under Sections 4975
through 4980B of the Code or Title I of ERISA. 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 Plan.
(d) Neither Company, any of its subsidiaries, nor any of their
Affiliates has, prior to the Effective Time and in any material respect,
violated any of the health continuation requirements of the Consolidated Omnibus
Budget Reconciliation Act of 1985, as amended ("COBRA"), the requirements of the
Family Medical Leave Act of 1993, as amended, the requirements of the Women's
Health and Cancer Rights Act, as amended, the requirements of the Newborns' and
Mothers' Health Protection Act of 1996, as amended, or any similar provisions of
state law applicable to employees of the Company or any of its subsidiaries.
None of the Plans promises or provides retiree medical or other retiree welfare
benefits to any person except as required by applicable law, and neither Company
nor any of its subsidiaries has represented, promised or contracted (whether in
oral or written form) to provide such retiree benefits to any employee, former
employee, director, consultant or other person, except to the extent required by
statute.
(e) Neither the execution and delivery of this Agreement, nor the
consummation of the transactions contemplated hereby will (either alone or upon
the occurrence of any additional or subsequent events) (i) constitute an event
under any Plan, Employment Agreement, trust, loan or other agreement that will
or may result in any payment (whether of severance pay or otherwise),
acceleration, forgiveness of indebtedness, vesting, distribution, increase in
benefits or obligation to fund benefits with respect to any Employee, (ii)
increase any benefits otherwise payable under any Plan or Employment Agreement,
or (iii) result in any payment or benefit which will or may be made by the
Company or any of its subsidiaries with respect to any Employee which will or
may be characterized as an "excess parachute payment," within the meaning of
Section 280G(b)(2) of the Code.
3.12 Labor Matters. (i) As of the date of this Agreement, neither Company
-------------
nor any of its subsidiaries is a party to any collective bargaining agreement or
other labor union contract applicable to persons employed by Company or its
subsidiaries nor does Company or its subsidiaries have knowledge of any
activities or proceedings of any labor union to organize any such employees; and
(ii) as of the date of this Agreement, neither Company nor any of its
subsidiaries has any knowledge of any strikes, slowdowns, work stoppages or
lockouts, or threats thereof, by or with respect to any employees of Company or
any of its subsidiaries. Company and its subsidiaries are in compliance in all
material respects with all applicable material foreign, federal, state and local
laws, rules and regulations respecting employment, employment practices, terms
and conditions of employment and wages and hours.
3.13 Registration Statement; Joint Proxy Statement/Prospectus. None of the
--------------------------------------------------------
information supplied or to be supplied by Company for inclusion or incorporation
by reference in (i) the registration statement on Form S-4 to be filed with the
SEC by Genesis Delaware in connection with the issuance of shares of Genesis
Delaware Common Stock in or as a result of the Merger (the "S-4") will, at the
time the S-4 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 the
light of the
-16-
circumstances under which they are made, not misleading; and (ii) the joint
proxy statement/prospectus to be filed with the SEC by Company and Acquiror
pursuant to Section 6.1 hereof (the "Joint Proxy Statement/Prospectus") will, at
the dates mailed to the stockholders of Company, at the times of the
stockholders meeting of Company (the "Company Stockholders' Meeting") in
connection with the transactions contemplated hereby at the dates mailed to the
shareholders of Acquiror, at the times of the shareholders' meeting of Acquiror
(the "Acquiror Shareholders' Meeting") in connection with the Share Issuance and
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 the light of the circumstances under
which they are made, not misleading. The Joint Proxy Statement/Prospectus will
comply as to form in all material respects with the provisions of the Exchange
Act and the rules and regulations promulgated by the SEC thereunder.
Notwithstanding the foregoing, the Company makes no representation or warranty
with respect to any information supplied by Acquiror or Merger Sub which is
contained in any of the foregoing documents.
3.14 Restrictions on Business Activities. There is no agreement,
-----------------------------------
commitment, judgment, injunction, order or decree binding upon Company or its
subsidiaries or to which the Company or any of its subsidiaries is a party which
has or would reasonably be expected to have the effect of prohibiting or
materially impairing any business practice material to Company or any of its
subsidiaries, any acquisition of property by Company or any of its subsidiaries
or the conduct of business by Company or any of its subsidiaries as currently
conducted.
3.15 Property. Neither Company nor any of its subsidiaries owns any real
--------
property. Section 3.15 of the Company Disclosure Letter contains a complete and
accurate list of all (i) real property leases, subleases or other occupancy
agreements to which Company or any of its subsidiaries is a party and each
amendment thereto, setting forth for each the address of the property, the name
of the lessor, master lessor and/or lessee, the term of the lease and the date
of the lease or sublease, and (ii) real property leases for residential space to
which Company or any of its subsidiaries is a party relating to field
application engineers. Each premises subject to any such lease, sublease or
other occupancy agreement (collectively, the "Leases") is hereinafter referred
to as a "Leased Property." The Company does not occupy any real property other
than the Leased Property. Company has provided or made available to Acquiror
true, complete and correct copies of each of the Leases; no term or condition of
any of the Leases has been modified, amended or waived except as shown in such
copies; each of the Leases constitutes the entire agreement of the landlord and
the tenant thereunder; and there are no other agreements or arrangements
whatsoever relating to Company's use or occupancy of any of the premises
described in any of the Leases. Company has not transferred, mortgaged or
assigned any interest in any of the Leases, nor has Company subleased or
otherwise granted rights of use or occupancy of any of the premises described
therein to any other person or entity. There are no other parties occupying, or
with a right to occupy, the Leased Property except as identified in Section 3.15
of the Company Disclosure Letter. Company and each of its subsidiaries have good
and valid title to all of their material properties and assets, free and clear
of all liens, charges and encumbrances, except liens for taxes not yet due and
payable, except as reflected in the financial statements contained in the
Company SEC Reports and except for such liens or other non-monetary
imperfections of title, if any, as do not materially detract from the value of
or materially interfere with the present use of the property affected thereby;
and all leases pursuant
-17-
to which Company or any of its subsidiaries lease from others real or material
personal property are in good standing, valid and effective in accordance with
their respective terms, and there is not, under any of such leases, any existing
material default or event of default (or any event which with notice or lapse of
time, or both, would constitute a material default and in respect of which
Company or subsidiary has not taken adequate steps to prevent such default from
occurring). There is no pending or, to Company's knowledge, threatened
condemnation or similar proceeding affecting any Leased Property or any portion
thereof, and Company has no knowledge that any such action is currently
contemplated. To the knowledge of Company, each Leased Property has received all
material approvals of governmental entities and otherwise meets all Legal
Requirements, and each Leased Property is supplied with utilities and other
services sufficient to operate the business of the Company as presently
conducted. To the best knowledge of the Company, neither the operations of the
Company on the Leased Property, or nor such Leased Property, nor the
improvements thereon, violate in any manner any applicable building code, zoning
requirement, or classification or statue relating to the particular property or
such operations and such non-violation is not dependent, in any instance, on
so-called non-conforming use exceptions.
3.16 Taxes.
-----
(a) For the purposes of this Agreement, "Tax" or "Taxes" refers to
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
and any obligations under any agreements or arrangements with any other person
with respect to such amounts and including any liability for taxes of a
predecessor entity.
(b) Company and each of its subsidiaries have timely filed all
material federal, state, local and foreign returns, estimates, information
statements and reports ("Returns") relating to Taxes required to be filed by
Company and each of its subsidiaries with any Tax authority. Such returns are
true and correct in all material respects and have been completed in accordance
with applicable Law, and Company and each of its subsidiaries have paid all
Taxes shown to be due on such Returns.
(c) Company and each of its subsidiaries has withheld with respect to
its employees all federal and state income taxes, Taxes pursuant to the Federal
Insurance Contribution Act, Taxes pursuant to the Federal Unemployment Tax Act
and other Taxes required to be withheld.
(d) 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 or
extension of any statute of limitations on or extending the period for the
assessment or collection of any Tax, nor has any such waiver or extension been
requested from the Company or any of its subsidiaries other than an extension
resulting from the filing of a Tax Return after its due date in the ordinary
course of business.
-18-
(e) 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.
(f) 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 representative thereof.
(g) Neither Company nor any of its subsidiaries has any liability for
any material unpaid Taxes which has not been accrued for or reserved on Company
balance sheet dated June 30, 2001 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 June 30, 2001 in
connection with the operation of the business of Company and its subsidiaries in
the ordinary course.
(h) There is no contract, agreement, plan or arrangement to which
Company or any of its subsidiaries is a party as of the date of this Agreement,
including but not limited to the provisions of this Agreement, covering any
employee or former employee or any director of the Company or any of its
subsidiaries that, individually or collectively, would reasonably be expected to
give rise to the payment of any amount that would not be deductible by reason of
Sections 280G or 162(m) of the Code. There is no contract, agreement, plan or
arrangement to which the Company or any of its subsidiaries is a party or by
which it is bound to compensate any individual for excise taxes paid pursuant to
Section 4999 of the Code.
(i) 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 the Company or any of its subsidiaries.
(j) Except as between Company and its current subsidiaries, neither
Company nor any of its subsidiaries is, or has ever been (i) a member of an
affiliated group within the meaning of Section 1504(a) of the Code filing a
consolidated federal income Tax Return (other than a group the common parent of
which was Company), (ii) a party to or bound by any tax indemnity agreement, tax
sharing agreement, tax allocation agreement or similar Contract (such agreements
and Contracts, "Tax Indemnity Agreements") and neither Company nor any of its
subsidiaries has or, by reason of the consummation of the transactions
contemplated under this Agreement, will have any liability or obligation under
any Tax Indemnity Agreement, (iii) liable for the Taxes of any person (other
than Company or any of its subsidiaries)by reason of Treasury Regulations
Section 1.1502-6 (or any similar provision of state, local or foreign law), as a
transferee or successor, or otherwise, or (iv) party to any joint venture,
partnership or, to the knowledge of Company, other agreement that could be
treated as a partnership for Tax purposes.
(k) No claim or action, suit, litigation, arbitration, proceeding
(including any civil, criminal, administrative, investigative or appellate
proceeding), hearing, inquiry or investigation commenced, brought, conducted or
heard by or before, or otherwise involving, any court or other governmental body
or any arbitrator or arbitration panel is pending or, to the
-19-
Company's knowledge, has been threatened against or with respect to the Company
or any of its subsidiaries in respect of any material Tax.
(l) Neither the Company nor any of its subsidiaries has been or will
be required to include any material adjustment in taxable income for any tax
period (or portion thereof) pursuant to Section 481 of the Code or any
comparable provision under any Tax laws as a result of transactions or events
occurring, or accounting methods employed, prior to the Closing.
(m) Neither the Company nor any of its subsidiaries has constituted
either a "distributing corporation" or a "controlled corporation" (as such terms
are defined in Section 355(a) of the Code) in a distribution of stock qualifying
for tax-free treatment under Section 355 of the Code (x) in the two years prior
to the date of this Agreement, or (y) in a distribution that could otherwise
constitute part of a "plan" or "series of related transactions" (within the
meaning of Section 355(e) of the Code) in conjunction with the Merger.
3.17 Environmental Matters. Company (i) has obtained all material permits,
---------------------
licenses and other authorizations that are required under Environmental Laws;
(ii) is in compliance in all material respects with all material terms and
conditions of such required permits, licenses and authorizations, and also is in
compliance in all material respects with all other material limitations,
restrictions, conditions, standards, prohibitions, requirements, obligations,
schedules and timetables contained in such laws or contained in any regulation,
code, plan, order, decree, judgment, notice or demand letter issued, entered,
promulgated or approved thereunder; and (iii) as of the date hereof, has no
knowledge of and has not received notice of any event, condition, circumstance,
activity, practice, incident, action or plan that is reasonably likely to
interfere with or prevent continued compliance or that would give rise to any
common law or statutory liability, or otherwise form the basis of any
Environmental Claim with respect to Company or any person or entity whose
liability for any Environmental Claim Company has retained or assumed either
contractually or by operation of law, other than, as to each of (i), (ii), and
(iii), such as would not have a Material Adverse Effect on Company. To the
knowledge of Company, no Hazardous Materials are present in, on or under any
properties owned, leased or used at any time (including both land and
improvements thereon) by Company, so as to give rise to any liability or
corrective or remedial obligation under any Environmental Laws (as defined
below). The Company has not contractually assumed liability for Environmental
Claims (as defined below) of any third parties. For the purposes of this Section
3.17, "Environmental Claim" means any notice, claim, act, cause of action or
investigation by any person alleging potential liability (including potential
liability for investigatory costs, cleanup costs, governmental response costs,
natural resources damages, property damages, personal injuries or penalties)
arising out of, based on or resulting from (i) the presence, or release into the
environment, of any Hazardous Materials (as defined below) or (ii) any
violation, or alleged violation, of any Environmental Laws. For the purposes of
this Section 3.17, "Environmental Laws" means all Federal, state, local and
foreign laws and regulations relating to pollution of the environment (including
ambient air, surface water, ground water, land surface or subsurface strata) or
the protection of human health and worker safety, including, without limitation,
laws and regulations relating to emissions, discharges, releases or threatened
releases of Hazardous Materials, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of Hazardous Materials. "Hazardous Materials" means
-20-
chemicals, pollutants, contaminants, wastes, toxic substances, radioactive and
biological materials, asbestos-containing materials, hazardous substances,
petroleum and petroleum products or any fraction thereof, excluding, however,
Hazardous Materials contained in products typically used for office and
janitorial purposes properly and safely maintained in accordance with
Environmental Laws.
3.18 Brokers. Except for fees payable to U.S. Bancorp ▇▇▇▇▇ ▇▇▇▇▇▇▇ Inc.
-------
pursuant to an engagement letter dated April 19, 2001, a copy of which has been
provided to Acquiror, Company 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
3.19 Intellectual Property.
---------------------
(a) For the purposes of this Agreement, the following terms have the
following definitions:
(i) "Intellectual Property" shall mean any or all of the
following and all rights in, arising out of, or associated therewith: (i) all
United States and foreign patents and applications therefor and all reissues,
divisions, renewals, extensions, provisionals, continuations and
continuations-in-part thereof ("Patents"); (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, copyright registrations and applications therefor and all other
rights corresponding thereto throughout the world ("Copyrights"); (iv) all
semiconductor and semiconductor circuit designs; (v) all rights to all mask
works and reticles, mask work registrations and applications therefor, and any
equivalent or similar rights in semiconductor masks, layouts, architectures or
topographies ("Mask Works"); (vi) all industrial designs and any registrations
and applications therefor throughout the world; (vii) all trade names, logos,
common law trademarks and service marks; trademark and service ▇▇▇▇
registrations and applications therefor and all goodwill associated therewith
throughout the world; (viii) all databases and data collections and all rights
therein throughout the world; (ix) all computer software, including all source
code, object code, firmware, development tools, files, records and data, all
media on which any of the foregoing is recorded, all Web addresses, sites and
domain names; (x) all processes, devices, prototypes, schematics, breadboards,
netlists, mask works, test methodologies, and hardware development tools; (xi)
any similar, corresponding or equivalent rights to any of the foregoing; and
(xii) all documentation related to any of the foregoing.
(ii) "Company Intellectual Property" shall mean any Intellectual
Property that is owned by or exclusively licensed to the Company or any of its
subsidiaries, including the Company Registered Intellectual Property (as defined
below). Without in any way limiting the generality of the foregoing, Company
Intellectual Property includes all Intellectual Property owned or exclusively
licensed to Company related to the Company's products, including without
limitation all rights in any design code, documentation, and tooling for
packaging of semiconductors in connection with all current products and products
in design and development.
-21-
(iii) "Registered Intellectual Property" shall mean all United
States, international and foreign: (i) Patents, 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; (iv) any mask work registrations and applications to
register mask works; and (v) any other Company Intellectual Property that is the
subject of an application, certificate, filing, registration or other document
issued by, filed with, or recorded by, any state, government or other public
legal authority.
(iv) "Company Registered Intellectual Property" means all of
the Registered Intellectual Property owned by, or filed in the name of, the
Company or any of its subsidiaries.
(b) Section 3.19(b) of the Company Disclosure Letter contains a
complete and accurate list of all Company Registered Intellectual Property and
specifies, where applicable, the jurisdictions in which each such item of
Company Registered Intellectual Property has been issued or registered and lists
any proceedings or actions before any court, tribunal (including the United
States Patent and Trademark Office (the "PTO") or equivalent authority anywhere
in the world) related to any of the Company Registered Intellectual Property.
(c) No Company Intellectual Property or product, device or component
(including any software incorporated in the same) manufactured, owned, sold or
offered by, or service offerings of, the Company or any of its subsidiaries (the
"Company Products") are subject to any proceeding or outstanding decree, order,
judgment, contract, license, agreement, or stipulation (except, in the case of
Intellectual Property licensed by third parties to Company, the contracts,
licenses and agreements with, or to the knowledge of Company, the rights of such
third parties granted to Company thereunder) materially restricting the use,
transfer, or licensing thereof by Company or any of its subsidiaries, or which
may materially adversely affect the validity, use or enforceability of such
Company Intellectual Property or Company Product.
(d) 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
perfecting or maintaining such Company Registered Intellectual Property. To the
knowledge of Company, there are no actions that must be taken within one hundred
twenty (120) days of the Closing, including the payment of any registration,
maintenance or renewal fees or the filing of any response to PTO office actions,
documents, applications or certificates for the purposes of obtaining,
perfecting, maintaining or preserving or renewing any Company Registered
Intellectual Property.
(e) Company and each of its subsidiaries owns and has good and
exclusive title to, each material item of Company Intellectual Property
purported to be owned by Company or such subsidiary free and clear of any lien
or encumbrance (excluding non-exclusive licenses and related restrictions
granted in the ordinary course). Without limiting the foregoing:
-22-
(i) Company or its subsidiary is the exclusive owner of all rights in trademarks
and trade names purported to be owned by Company or such subsidiary used in
connection with the operation or conduct of the business of Company and its
subsidiaries, including the sale or distribution of Company Products or the
provision of any services by Company or its subsidiaries; (ii) with respect to
all rights in trademarks and trade names not covered by the preceding clause
(i), Company has all rights and licenses necessary to use such trademarks and
trade names in connection with the operation or conduct of the business of
Company and its subsidiaries, including the sale or distribution of Company
Products or the provision of any services by Company or its subsidiaries; (iii)
Company owns exclusively, and has good title to, all Copyrighted works that are,
or Mask Works used in the manufacture of, Company Products or which Company or
any of its subsidiaries otherwise purports to own; and (iv) to the extent that
any Patents would be infringed by any Company Products, to the knowledge of
Company (without inquiry), Company is the owner or licensee of such Patents.
(f) To the extent that any material technology or Intellectual
Property has been developed or created independently or jointly by a third party
for Company or any of its subsidiaries or is incorporated into any of the
Company Products, Company has either (i) obtained ownership, or (ii) obtained a
perpetual and irrevocable license (sufficient for the conduct of its business as
currently conducted and as proposed by Company to be conducted) to such third
party's Intellectual Property in such work, technology, material or invention by
operation of law or by valid assignment or license.
(g) The Company Intellectual Property and other Intellectual Property
licensed by Company and its subsidiaries constitutes all the technology,
software and Intellectual Property material to and used in the conduct of the
business of Company and its subsidiaries as it currently is conducted,
including, without limitation, the design, development, manufacture, use, import
and sale of Company Products.
(h) No person who has licensed any technology or Intellectual
Property to the Company or any of its subsidiaries has ownership rights or
license rights to improvements made by the Company or such subsidiary in such
technology or Intellectual Property.
(i) Neither Company nor any of its subsidiaries has transferred
ownership of, or granted any exclusive license with respect to, any material
Intellectual Property that is or was Company Intellectual Property, to any third
party, or permitted Company's rights in such Company Intellectual Property to
lapse or enter the public domain.
(j) Section 3.19(j) of the Company Disclosure Letter contains a list
of all material contracts, licenses and agreements (other than agreements
entered into in the ordinary course of business and formed by the exchange of
purchase orders, acknowledgments and the like) to which Company or any of its
subsidiaries is a party: (i) with respect to Company Intellectual Property
licensed or transferred to any third party (other than end-user licenses or
related support and maintenance agreements in the ordinary course), including
any material agreements with third party foundries or distributors; or (ii)
pursuant to which a third party has licensed or transferred any material
Intellectual Property to Company (other than commercially available end user
licenses or related support and maintenance agreements licensed by Company in
the ordinary course of business).
-23-
(k) All contracts, licenses and agreements material to the business
of the Company and its subsidiaries as currently conducted and relating to
either (i) Company Intellectual Property or (ii) Intellectual Property of a
third party licensed to Company or any of its subsidiaries, are in full force
and effect (other than those which have expired or otherwise terminated by their
terms). The consummation of the transactions contemplated by this Agreement will
neither violate nor result in the breach, modification, cancellation,
termination or suspension of, or acceleration of any payments with respect to,
such contracts, licenses and agreements. To the knowledge of Company, each of
Company and its subsidiaries is in material compliance with, and has not
materially breached any material term of, any such contracts, licenses and
agreements and, to the knowledge of Company, all other parties to such
contracts, licenses and agreements are in compliance with, and have not
materially breached any term of, such contracts, licenses and agreements.
Following the Closing Date, the Surviving Corporation will be permitted to
exercise all of Company's and its subsidiaries rights under such contracts,
licenses and agreements to the same extent Company and its subsidiaries would
have been able to had the transactions contemplated by this Agreement not
occurred and without the payment of any additional amounts or consideration
other than ongoing fees, royalties or payments which Company or its subsidiaries
would otherwise be required to pay. Neither this Agreement nor the transactions
contemplated by this Agreement, including the assignment to Acquiror or
Surviving Corporation by operation of law or otherwise of any contracts or
agreements to which the Company or any subsidiary is a party, will result in (i)
either Acquiror's or the Surviving Corporation's granting to any third party any
right to or with respect to any material Intellectual Property right owned by,
or licensed to, either of them, (ii) either the Acquiror's or the Surviving
Corporation's being bound by, or subject to, any non-compete or other material
restriction on the operation or scope of their respective businesses or (iii)
either the Acquiror's or the Surviving Corporation being obligated to pay any
royalties or other material amounts to any third party in excess of those
payable by Acquiror or Surviving Corporation, respectively, prior to the Closing
(other than any royalties or other material amounts which Company or any of its
subsidiaries would have otherwise been required to pay had the transactions
contemplated by this Agreement not occurred). The foregoing sentence shall only
apply with respect to contracts of Company and its subsidiaries.
(l) The operation of the business of the Company and its subsidiaries
as such business currently is conducted or is contemplated to be conducted by
the Company or any of its subsidiaries, including without limitation (i)
Company's and its subsidiaries' design, development, manufacture, distribution,
reproduction, marketing or sale of the products or services of Company and its
subsidiaries (including Company Products) and (ii) the Company's and its
subsidiaries' use of any product, device or process in connection with design,
development, manufacture, distribution, reproduction, marketing or sale of the
products or services of Company and its subsidiaries (including Company
Products), has not, does not, and will not when conducted by Acquiror and/or
Surviving Corporation in substantially the same manner following the Closing,
infringe or misappropriate the Intellectual Property (other than Patents) of any
third party or constitute unfair competition or trade practices under the laws
of any jurisdiction, or, to the knowledge of Company (without inquiry), infringe
upon the Patents of any third parties, except, in each case, where such
infringement, misappropriation, unfair competition or trade practice would not
have a Material Adverse Effect on Company taken as a whole.
-24-
(m) Neither Company nor any of its subsidiaries has received notice
from any third party that the operation of the business of Company or any of its
subsidiaries or any act, product or service of Company or any of its
subsidiaries (including the manufacture, distribution and sale of Company
Products), infringes or misappropriates the Intellectual Property of any third
party or constitutes unfair competition or trade practices under the laws of any
jurisdiction.
(n) To the knowledge of Company, there are no material contracts,
licenses or agreements between the Company or any of its subsidiaries and any
other person with respect to Company Intellectual Property under which there is
any material dispute regarding the scope of such agreement, or performance under
such agreement, including with respect to any payments to be made or received by
the Company or any of its subsidiaries thereunder.
(o) Company and each of its subsidiaries has taken reasonable steps
to protect Company's and its subsidiaries' rights in Company's confidential
information and trade secrets that it wishes to protect or any trade secrets or
confidential information of third parties provided to Company or any of its
subsidiaries under an obligation of confidentiality, and, without limiting the
foregoing, each of Company and its subsidiaries has and enforces a policy
requiring each employee and contractor to execute a proprietary
information/confidentiality agreement substantially in the form provided to
Acquiror and all current and former employees, contractors and consultants of
Company and any of its subsidiaries have executed such an agreement.
3.20 Agreements, Contracts and Commitments.
-------------------------------------
(a) Neither Company nor any of its subsidiaries is a party to or is
bound by:
(i) any employment or consulting agreement, contract or
commitment with any officer or director or higher level employee 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 (30) days' notice without
liability or financial obligation to the Company;
(ii) any agreement or plan, including, without limitation, any
stock option plan, stock appreciation right plan or stock purchase plan, any of
the benefits of which will be increased, or the vesting of benefits of which
will be accelerated, by the occurrence of any of the transactions (either alone
or upon the occurrence of any additional or subsequent events) contemplated by
this Agreement or the value of any of the benefits of which will be calculated
on the basis of any of the transactions (either alone or upon the occurrence of
any additional or subsequent events) contemplated by this Agreement;
(iii) any agreement of indemnification or any guaranty other
than any agreement of indemnification entered into in connection with the sale
or license or purchase of products or services in the ordinary course of
business;
(iv) any agreement, contract or commitment containing any
covenant limiting in any respect the right of Company or any of its subsidiaries
to engage in any line of business or to compete with any person or granting any
exclusive distribution rights;
(v) any agreement, contract or commitment currently in force
relating to the disposition or acquisition by Company or any of its subsidiaries
after the date of this
-25-
Agreement of a material amount of assets not in the ordinary course of business
or pursuant to which Company or any of its subsidiaries has any material
ownership interest in any corporation, partnership, joint venture or other
business enterprise other than Company's subsidiaries;
(vi) any dealer, distributor, joint marketing or development
agreement currently in force under which Company or any of its subsidiaries have
continuing material obligations to jointly market any product, technology or
service and which may not be canceled without penalty upon notice of ninety (90)
days or less, or any material agreement pursuant to which Company or any of its
subsidiaries have continuing material obligations to jointly develop any
intellectual property that will not be owned, in whole or in part, by Company or
any of its subsidiaries and which may not be canceled without penalty upon
notice of ninety (90) days or less;
(v) any agreement, contract or commitment currently in force
to provide source code to any third party for any product or technology that is
material to Company and its subsidiaries taken as a whole;
(vi) any agreement, contract or commitment currently in force
to license any third party to manufacture or reproduce any Company product,
service or technology or any agreement, contract or commitment currently in
force to sell or distribute any Company products, service or technology except
agreements with distributors or sales representative in the normal course of
business cancelable without penalty upon notice of ninety (90) days or less and
substantially in the form previously provided to Acquiror;
(vii) any mortgages, leases, indentures, guarantees, loans or
credit agreements, security agreements or other agreements or instruments
relating to the borrowing of money or extension of credit;
(viii) any material settlement agreement entered into within five
(5) years prior to the date of this Agreement; or
(ix) any other agreement, contract or commitment that has a
value of $250,000 or more individually.
(b) Neither Company nor any of its subsidiaries, nor to Company's
knowledge any other party to a Company Contract (as defined below), 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 under, any of the material terms or conditions of any of the
agreements, contracts or commitments to which Company or any of its subsidiaries
is a party or by which it is bound that are required to be disclosed in the
Company Disclosure Letter (any such agreement, contract or commitment, a
"Company Contract") in such a manner as would permit any other party to cancel
or terminate any such Company Contract, or would be material to the business of
Company as currently conducted.
(c) Each material Company Contract is, with respect to Company or any
of its subsidiaries (as applicable), and, to the knowledge of Company with
respect to the other party thereto, valid and in full force and effect, and is
enforceable in accordance with its terms, subject
-26-
to (i) laws of general application relating to bankruptcy, insolvency and the
relief of debtors and (ii) rules of law governing specific performance,
injunctive relief and other equitable remedies.
3.21 Insurance. Company has provided or made available to Acquiror true,
---------
correct and complete copies of all insurance policies and fidelity bonds to
which each of Company and its subsidiaries are a party or a beneficiary or named
insured, which are of the type and in amounts the Company believes are
appropriate for its business. There is no claim by Company or any of its
subsidiaries pending under any of the insurance policies and fidelity bonds
covering the assets, business, equipment, properties, operations, employees,
officers and directors of Company and its subsidiaries as to which coverage has
been questioned, denied or disputed by the underwriters of such policies or
bonds.
3.22 Opinion of Financial Advisor. Company has received the written
----------------------------
opinion of U.S. Bancorp ▇▇▇▇▇ ▇▇▇▇▇▇▇, Inc. to the effect that as of the date of
such opinion and based upon and subject to matters stated therein, that in its
opinion, as of the date of this Agreement, the Exchange Ratio is fair to the
stockholders of Company (other than Acquiror andits affiliates) from a financial
point of view.
3.23 Board Approval. The board of directors of Company has, as of the date
--------------
of this Agreement, unanimously (i) declared this Agreement to be advisable, (ii)
approved this Agreement and approved and authorized the Merger and the other
transactions contemplated hereby, (iii) determined that the Merger is consistent
with and in furtherance of the long-term business strategy of Company and fair
to, and in the best interests of, Company and its stockholders and (iv)
determined to recommend that the stockholders of Company adopt and approve this
Agreement and approve the Merger. As of the Effective Time, the board of
directors of Company shall have complied, as applicable, with the provisions of
the SEC's No-Action Letter, addressed to Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇
LLP and relating to Rule 16(b) of the Exchange Act (dated January 12, 1999),
such that the assumption of Company Stock Options in connection with the Merger
shall be exempt transactions for purposes of Section 16(b) of the Exchange Act
by any officer or director of Company who may become a covered person for
purposes of Section 16(b) of the Exchange Act.
3.24 Vote Required. The affirmative vote of the holders of a majority of
-------------
the outstanding shares of Company Common Stock entitled to vote with respect to
the Merger is the only vote of the holders of any class or series of Company's
capital stock necessary to approve this Agreement and the transactions
contemplated hereby.
3.25 State Takeover Statutes. The board of directors of the Company has
-----------------------
approved the Merger, the Agreement and the transactions contemplated hereby and
thereby, and such approval is sufficient to render inapplicable to the Merger,
the Agreement and the transactions contemplated hereby and thereby the
provisions of Section 203 of the Delaware Law to the extent, if any, such
section is applicable to the Merger, the Agreement and the transactions
contemplated hereby and thereby. No other state takeover statute or similar
statute or regulation applies to or purports to apply to the Merger, the
Agreement or the transactions contemplated hereby and thereby.
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3.26 Amendment of Rights Plan. The Company has taken all action and
------------------------
entered into all amendments to the Rights Agreement dated as of June 1, 2001, by
and between Company and Mellon Investor Services LLC (the "Company Rights
Agreement"), as necessary or appropriate, such that (i) no "Stock Acquisition
Date" (as defined in the Company Rights Agreement) shall occur and neither
Acquiror nor its affiliates, individually or taken together, shall become an
"Acquiring Person" (as defined in the Company Rights Agreement), (ii) the
Company Rights Agreement and the Company Rights shall not apply to Acquiror or
any of its affiliates, individually or taken together, in the case of the
foregoing clause (i) or (ii), solely as a result of this Agreement, the Voting
Agreement or the transactions contemplated hereby and thereby and (iii) all
Rights (as defined in the Company Rights Agreement) issued under the Company
Rights Agreement shall, immediately prior to the Effective Time, be cancelled,
void and of no further force or effect.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF ACQUIROR
Acquiror hereby represents and warrants to Company, except as set forth in
the written disclosure letter delivered by Acquiror to Company prior to the date
hereof and dated as of the date hereof (the "Acquiror Disclosure Letter"), as
follows:
4.1 Organization and Qualification; Subsidiaries. Each of Acquiror and
--------------------------------------------
its subsidiaries is a company duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and has the
requisite corporate power and authority to own, lease and operate its assets and
properties and to carry on its business as it is now being conducted, except
where the failure to do so would not, individually or in the aggregate, have a
Material Adverse Effect on Acquiror. Each of Acquiror and its subsidiaries is in
possession of all Approvals necessary to own, lease and operate the properties
it purports to own, operate or lease and to carry on its business as it is now
being conducted, except where the failure to have such Approvals would not,
individually or in the aggregate, have a Material Adverse Effect on Acquiror.
Each of Acquiror and its subsidiaries is duly qualified or licensed as a foreign
or extra-provincial corporation to do business, and is in good standing, in each
jurisdiction where the character of the properties owned, leased or operated by
it or the nature of its activities makes such qualification or licensing
necessary, except for such failures to be so duly qualified or licensed and in
good standing that would not, either individually or in the aggregate, have a
Material Adverse Effect on Acquiror.
4.2 Charter Documents. Acquiror has previously furnished to Company
-----------------
complete and correct copies of its Memorandum of Association and Articles of
Association as amended to date (together, the "Acquiror Charter Documents").
Such Acquiror Charter Documents and equivalent organizational documents of each
of its subsidiaries are in full force and effect. Acquiror is not in violation
of any of the provisions of the Acquiror Charter Documents, and no subsidiary of
Acquiror is in violation of any of its equivalent organizational documents.
4.3 Capitalization.
--------------
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(a) The authorized capital stock of Acquiror consists of (i)
1,000,000,000 Common Shares without a nominal or par value, and (ii)
1,000,000,000 special shares without nominal or par value per share (the
"Acquiror Special Shares").
(b) At the close of business on September 24, 2001, (i) 21,200,075
shares of Acquiror Common Shares were issued and outstanding, all of which are
duly authorized, validly issued, fully paid and non-assessable; (ii) no shares
of Acquiror Common Shares are held in the treasury of Acquiror or by its
subsidiaries; (iii) 3,611,144 shares of Acquiror Common Shares were reserved for
issuance upon the exercise of outstanding options to purchase Acquiror Common
Shares under the Acquiror's 1987 Stock Plan, 1997 Employee Stock Option Plan,
1997 Paradise Stock Option Plan, 1997 Non-Employee Stock Option Plan, 1997
Employee Stock Purchase Plan, 2000 Nonstatutory Stock Option Plan and 2001
Nonstatutory Stock Option Plan; and (iv) no shares of Acquiror Common Shares
were reserved for issuance upon the exercise of outstanding warrants to purchase
Acquiror Common Shares. Acquiror has made available to Company accurate and
complete copies of all stock option plans pursuant to which Acquiror has granted
Acquiror Stock Options that are currently outstanding and the form of all stock
option agreements evidencing such Acquiror Stock Options, including the number
of Acquiror Common Shares subject to each Acquiror Stock Option, the relative
exercise prices of such Acquiror Stock Options. As of the date hereof, no shares
of Acquiror Special Shares were issued or outstanding. Except as set forth in
this Section 4.3(b), 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 Acquiror or any of its subsidiaries is a party or by which it is bound
obligating Acquiror or any of its subsidiaries to issue, deliver or sell, or
cause to be issued, delivered or sold, any shares of capital stock, partnership
interests or similar ownership interests of Acquiror or any of its subsidiaries
or obligating Acquiror or any of its subsidiaries to grant, extend, or enter
into any such subscription, option, warrant, equity security, call, right,
commitment or agreement.
(c) Except as contemplated by this Agreement, there are no
registration rights and there is, except for the Voting Agreements, no voting
trust, proxy, rights plan, antitakeover plan or other agreement or understanding
to which the Company or any of its subsidiaries is a party or by which they are
bound with respect to any equity security of any class of the Company or with
respect to any equity security, partnership interest or similar ownership
interest of any class of any of its subsidiaries.
4.4 Genesis Delaware Common Stock. The Genesis Delaware Common Stock to
-----------------------------
be issued pursuant to the Merger will have been duly authorized and will, when
issued in accordance with this Agreement, be validly issued, fully paid, and
nonassessable.
4.5 Authority Relative to this Agreement. Acquiror has all necessary
------------------------------------
corporate power and authority to execute and deliver this Agreement, to perform
its obligations hereunder and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement by Acquiror and the
consummation by Acquiror of the transactions contemplated hereby have been duly
and validly authorized by all necessary corporate action on the part of
Acquiror, and no other corporate proceedings on the part of Acquiror are
necessary to authorize this Agreement or to consummate the transactions so
contemplated, subject only to the approval of the Restructuring and the Share
Issuance by Acquiror's shareholders and the delivery of a
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certified copy of the order approving the Plan of Arrangement under Nova Scotia
law and the Certificate of Merger as required by Delaware Law. This Agreement
has been duly and validly executed and delivered by Acquiror, assuming the due
authorization, execution and delivery by Company, constitutes a legal and
binding obligation of Acquiror, enforceable against Acquiror in accordance with
its respective terms, except as the enforcement thereof may be limited by
bankruptcy, insolvency (including, without limitation, all laws relating to
fraudulent transfers), reorganization, moratorium or similar laws affecting
enforcement of creditors' rights generally and except as enforcement thereof is
subject to general principles of equity (regardless of whether enforcement is
considered in a proceeding in equity or at law).
4.6 No Conflict; Required Filings and Consents.
------------------------------------------
(a) The execution and delivery of this Agreement by Acquiror do not,
and the performance of this Agreement by Acquiror will not, (i) conflict with or
violate the Acquiror Charter Documents or the equivalent organizational
documents of any of Acquiror's subsidiaries; (ii) subject to obtaining the
approval of Acquiror's shareholders of the Share Issuance and Restructuring, of
the Supreme Court of Nova Scotia of the Plan of Arrangement, and compliance with
the requirements set forth in Section 4.6(b) below, conflict with, or result in
any violation of, any law, rule, regulation, order, judgment or decree
applicable to Acquiror or any of its subsidiaries or by which either Acquiror or
any of its subsidiaries or any of their respective properties is bound or
affected, except that which could not reasonably be expected to have a Material
Adverse Effect with respect to Acquiror; 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 Acquiror's or any of its subsidiaries'
rights or alter the rights or obligations of any third party under, or give to
others any rights of termination, amendment, acceleration or cancellation of, or
result in the creation of a material lien or encumbrance on any of the
properties or assets of Acquiror or any of its subsidiaries pursuant to, any
material note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which Acquiror or any of
its subsidiaries is a party or by which Acquiror or any of its subsidiaries or
its or any of their respective properties are bound or affected, except that
which could not reasonably be expected to have a Material Adverse Effect with
respect to Acquiror.
(b) The execution and delivery of this Agreement by Acquiror do not,
and the performance of this Agreement by Acquiror will not, require any consent,
waiver, approval, authorization or permit of, or filing with or notification to,
any Governmental Entity, except (i) for applicable requirements, if any, of the
Securities Act, the Exchange Act, Blue Sky Laws, HSR Approval, the rules and
regulations of Nasdaq, state takeover laws, the filing and recordation of the
Certificate of Merger as required by Delaware Law and the issuance of a
Certificate of Arrangement under Nova Scotia law, and (ii) where the failure to
obtain such consents, approvals, authorizations or permits, or to make such
filings or notifications, would not reasonably be expected to have a Material
Adverse Effect on Acquiror or a material adverse effect on the ability of
Acquiror to perform its obligations under this Agreement or prevent consummation
of the Merger or otherwise prevent the parties hereto from performing their
obligations under this Agreement.
4.7 Compliance; Permits.
-------------------
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(a) Neither Acquiror nor any of its subsidiaries is in conflict
with, or in default or violation of, (i) any law, rule, regulation, order,
judgment or decree applicable to Acquiror or any of its subsidiaries or by which
its or any of their respective properties is bound or affected or (ii) any note,
bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which Acquiror or any of its
subsidiaries is a party or by which Acquiror or any of its subsidiaries or its
or any of their respective properties is bound or affected, except for any
conflicts, defaults or violations that (individually or in the aggregate) would
not have a Material Adverse Effect on Acquiror. No investigation or review by
any governmental or regulatory body or authority is pending or, to the knowledge
of Acquiror, threatened against Acquiror or its subsidiaries, nor has any
governmental or regulatory body or authority indicated to Acquiror or any of its
subsidiaries an intention to conduct the same, other than, in each such case,
those the outcome of which would not, individually or in the aggregate,
reasonably be expected to have the effect of prohibiting or materially impairing
any current business practice of the Acquiror or any of its subsidiaries, any
acquisition of material property by the Acquiror or any of its subsidiaries or
the conduct of business by the Acquiror or any of its subsidiaries.
(b) Acquiror and its subsidiaries hold all permits, licenses,
variances, exemptions, orders and approvals from governmental authorities which
are material to operation of the business of Acquiror and its subsidiaries taken
as a whole (collectively, the "Acquiror Permits"). Acquiror and its subsidiaries
are in compliance in all material respects with the terms of the Acquiror
Permits, except where such failure would not have a Material Adverse Effect on
Company, except where such failure would not have a Material Adverse Effect on
Acquiror.
4.8 SEC Filings; Financial Statements.
---------------------------------
(a) Acquiror has made available to Company a correct and complete
copy of each report, schedule, registration statement and definitive proxy
statement filed by Acquiror with the SEC on or after December 31, 1999 (the
"Acquiror SEC Reports"), which are all the forms, reports and documents required
to be filed by Acquiror with the SEC since December 31, 1999. The Acquiror SEC
Reports (i) complied in all material respects as of their respective dates with
the requirements of the Securities Act or the Exchange Act, as the case may be,
and (ii) did not at the time they were filed (or if 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. None of Acquiror's subsidiaries is required to file any reports or
other documents with the SEC.
(b) Each of the audited consolidated financial statements
(including, in each case, any related notes thereto) and unaudited interim
financial statements contained in the Acquiror SEC Reports was prepared in
accordance with GAAP applied on a consistent basis throughout the periods
involved (except as may be indicated therein or in the notes thereto or, in the
case of unaudited statements, do not contain footnotes as permitted by Form 10-Q
of the Exchange Act) and each fairly presents the consolidated financial
position of Acquiror and its subsidiaries at the respective dates thereof and
the consolidated results of its operations and cash flows for the periods
indicated, except that the unaudited interim financial statements were or are
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subject to normal and recurring year-end adjustments that were not or are not
expected to be material in amount.
(c) Acquiror has previously furnished to Company a complete and
correct copy of any amendments or modifications, which have not yet been filed
with the SEC but which are required to be filed, to agreements, documents or
other instruments which previously had been filed by Acquiror with the SEC
pursuant to the Securities Act or the Exchange Act.
(d) As of the date of this Agreement, Acquiror is not a reporting
issuer under the securities legislation of any province or territory of Canada.
4.9 No Undisclosed Liabilities. Neither Acquiror nor any of its
--------------------------
subsidiaries has any liabilities (absolute, accrued, contingent or otherwise) of
a nature required to be disclosed on a balance sheet or in the related notes to
the consolidated financial statements prepared in accordance with GAAP which
are, individually or in the aggregate, material to the business, results of
operations or financial condition of Acquiror and its subsidiaries taken as a
whole, except (i) liabilities provided for in Acquiror's balance sheet as of
June 30, 2001, or in the related notes to the consolidated financial statements
of Acquiror as of and for the period ended June 30, 2001, in each case which are
included in the Acquiror SEC Reports, and (ii) liabilities incurred since June
30, 2001 in the ordinary and usual course of business, consistent with past
practice, none of which would reasonably be expected to have, either
individually or in the aggregate, a Material Adverse Effect on Acquiror.
4.10 Absence of Certain Changes or Events. Since June 30, 2001, except as
------------------------------------
contemplated by this Agreement, there has not been: (i) any Material Adverse
Effect on Acquiror; (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 Acquiror's or any of its subsidiaries' capital stock, or any
purchase, redemption or other acquisition by Acquiror of any of Acquiror's
capital stock or any other securities of Acquiror 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 Acquiror's or any of
its subsidiaries' capital stock; (iv) any material change by Acquiror in its
accounting methods, principles or practices, except as required by concurrent
changes in GAAP or by the SEC; or (v) any revaluation by Acquiror of any of its
assets, including, without limitation, writing down the value of capitalized
inventory or writing off notes or accounts receivable or any sale of assets of
the Acquiror other than in the ordinary course of business.
4.11 Absence of Litigation. There are no claims, actions, suits or
---------------------
proceedings pending or, to the knowledge of Acquiror, threatened (or, to the
knowledge of Acquiror, any governmental or regulatory investigation pending or
threatened) against Acquiror or any of its subsidiaries or any properties or
rights of Acquiror or any of its subsidiaries, before any court, arbitrator or
administrative, governmental or regulatory authority or body, domestic or
foreign, except for any claims, actions, suits or proceedings which would not
reasonably be expected to result in a Material Adverse Effect to Acquiror.
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4.12 Labor Matters. (a) As of the date of this Agreement, neither Acquiror
-------------
nor any of its subsidiaries is a party to any collective bargaining agreement or
other labor union contract applicable to persons employed by Acquiror or its
subsidiaries nor does Acquiror or its subsidiaries have knowledge of any
activities or proceedings of any labor union to organize any such employees; and
(b) as of the date of this Agreement, neither Acquiror nor any of its
subsidiaries has any knowledge of any strikes, slowdowns, work stoppages or
lockouts, or threats thereof, by or with respect to any employees of Acquiror or
any of its subsidiaries. Acquiror and its subsidiaries are in compliance in all
material respects with all applicable material foreign, federal, state and local
laws, rules and regulations respecting employment, employment practices, terms
and conditions of employment and wages and hours.
4.13 Registration Statement; Joint Proxy Statement/Prospectus. None of the
--------------------------------------------------------
information supplied or to be supplied by Acquiror for inclusion or
incorporation by reference in (i) the S-4 will, at the time the S-4 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; and (ii) the Joint Proxy
Statement/Prospectus will, at the dates mailed to the stockholders of Company
and of Acquiror, at the time of the Company Stockholders' Meeting, the time of
the Acquiror Shareholders' Meeting and 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 misleading. The S-4
will comply as to form in all material respects with the provisions of the
Securities Act and the rules and regulations promulgated by the SEC thereunder.
Notwithstanding the foregoing, Acquiror makes no representation or warranty with
respect to any information supplied by the Company which is contained in any of
the foregoing documents.
4.14 Brokers. Except for fees payable to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and Dresdner
-------
Kleinwort ▇▇▇▇▇▇▇▇▇▇▇, Acquiror has not incurred, nor will it incur, directly or
indirectly, any liability for brokerage or finders' fees or agents' commissions
or any similar charges in connection with this Agreement or any transaction
contemplated hereby.
4.15 Intellectual Property. Acquiror owns each of the patents and patent
---------------------
applications referred to in Acquiror SEC Reports and, except as set forth in the
Acquiror SEC Reports, (i) to the knowledge of Acquiror, Acquiror owns or
possesses, or could obtain ownership or possession of (on terms not materially
adverse to the consolidated financial position, shareholders' equity, or results
of operations of Acquiror) adequate and enforceable rights to use all other
Intellectual Property necessary for the conduct of its business, except that
which could not reasonably be expected to have a Material Adverse Effect with
respect to Acquiror, (ii) no claims are pending or, to the knowledge of
Acquiror, threatened that Acquiror is infringing on or otherwise violating the
rights of any person with regard to any Intellectual Property that, if the
subject of an unfavorable decision, ruling or finding, could reasonably be
expected to have a Material Adverse Effect and Acquiror knows of no basis
therefor, and (iii) to the knowledge of Acquiror, no person is infringing on or
otherwise violating any right of Acquiror with respect to any Intellectual
Property owned by or licensed to Acquiror, except that which could not
reasonably be expected to have a Material Adverse Effect with respect to
Acquiror.
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4.16 Opinion of Financial Advisor. Acquiror's board of directors has
----------------------------
received an opinion from Dresdner Kleinwort ▇▇▇▇▇▇▇▇▇▇▇, dated as of the date
hereof to the effect that as of the date hereof the Exchange Ratio is fair to
Acquiror from a financial point of view.
4.17 Board Approval. The board of directors of Acquiror has, as of the date
--------------
of this Agreement, (i) approved and authorized the Restructuring, (ii) approved
this Agreement and approved and authorized the Merger and the other transactions
contemplated hereby, (iii) determined that the Restructuring and the Merger are
consistent with and in furtherance of the long-term business strategy of
Acquiror and fair to, and in the best interests of, Acquiror and its
shareholders and (iv) determined to recommend that the shareholders of Acquiror
(A) approve the Restructuring, and (B) approve the Share Issuance. As of the
Effective Time, the board of directors of Acquiror shall have complied, as
applicable, with the provisions of the SEC's No-Action Letter, addressed to
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP and relating to Rule 16(b) of the
Exchange Act (dated January 12, 1999), such that the assumption of Company Stock
Options in connection with the Merger shall be exempt transactions for purposes
of Section 16(b) of the Exchange Act by any officer or director of Company who
may become a covered person for purposes of Section 16(b) of the Exchange Act.
4.18 Vote Required. The affirmative vote of the holders of a majority of
-------------
the outstanding shares of Acquiror Common Shares entitled to vote with respect
to the Merger is the only vote of the holders of any class or series of
Acquiror's capital stock necessary to approve the Share Issuance. The
affirmative vote of (i) a majority of the holders of the outstanding Acquiror
Common Shares entitled to vote with respect to the Restructuring and present in
person or by proxy at the Acquiror Shareholders' Meeting, and (ii) the holders
of seventy percent (75%) in value of the Acquiror Common Shares entitled to vote
with respect to the Restructuring and represented in person or by proxy at the
Acquiror Shareholders' Meeting, is the only vote of the holders of any class or
series of Acquiror's capital stock necessary to approve the Restructuring.
Except as set forth in this Section 4.18, no other vote of the holders of any
class or series of Acquiror's capital stock is necessary to approve this
Agreement, the Merger, the Restructuring or any other transaction contemplated
by this Agreement.
4.19 Tax Matters.
-----------
(a) Acquiror and each of its subsidiaries has timely filed all
material Returns relating to Taxes required to be filed by Acquiror and each of
its subsidiaries prior to the date hereof with any Tax authority, except such
Returns which are not material to Acquiror. Such Returns are true and correct in
all material respects and have been completed in accordance with applicable Law,
and Acquiror and each of its subsidiaries has paid all Taxes shown to be due on
such Returns. Neither Acquiror 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 Acquiror or any of its subsidiaries.
(b) Neither Acquiror nor any of its subsidiaries has any liability
for any material unpaid Taxes which has not been accrued for or reserved on the
Acquiror balance sheet dated June 30, 2001 in accordance with GAAP, whether
asserted or unasserted, contingent or otherwise, which is material to Acquiror,
other than any liability for unpaid Taxes that may have
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accrued since June 30, 2001 in connection with the operation of the business of
Acquiror and its subsidiaries in the ordinary course.
ARTICLE V
CONDUCT PRIOR TO THE EFFECTIVE TIME
5.1 Conduct of Business by Company.
------------------------------
(a) During the period from the date of this Agreement and continuing
until the earlier of termination of this Agreement or the Effective Time,
Company and each of its subsidiaries shall, except (i) as set forth in Section
5.1 of the Company Disclosure Letter, (ii) in connection with specific actions
that Company is explicitly required or permitted to take pursuant to this
Agreement or (iii) to the extent that Acquiror shall otherwise consent in
writing (which consent shall not be unreasonably withheld or delayed), carry on
its business in all material respects, in the usual, regular and ordinary
course, in substantially the same manner as heretofore conducted and in
compliance with all applicable laws and regulations, pay its 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,
distributors, licensors, licensees, and others with which it has significant
business dealings.
(b) During the period from the date of this Agreement and continuing
until the earlier of termination of this Agreement or the Effective Time, except
(i) as set forth in Section 5.1 of the Company Disclosure Letter, (ii) in
connection with specific actions that Company is explicitly required to take
pursuant to this Agreement, or (iii) to the extent that Acquiror shall otherwise
consent in writing (which consent shall not be unreasonably withheld or
delayed), Company shall not do any of the following and shall not permit its
subsidiaries to do any of the following:
(i) Waive any stock repurchase rights, accelerate, amend or
change the period of exercisability of options or restricted stock or preferred
stock purchase rights, 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;
(ii) Grant (or agree to grant, whether orally or in writing) any
severance or termination pay (cash, equity or otherwise) to any officer or
employee, except (x) pursuant to written agreements outstanding, or policies
existing, on the date hereof and (y) as previously disclosed in writing to
Acquiror in the Company Disclosure Letter, or adopt any new severance plan;
(iii) Transfer or license to any person or entity or otherwise
extend, amend or modify any rights to the Company Intellectual Property, or
enter into grants to transfer or license to any person future patent rights
other than in the ordinary course of business consistent with past practices.
Without limiting the foregoing, in no event shall Company
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license, sell, assign or transfer any Company Intellectual Property, other than
non-exclusive licenses in the ordinary course of business;
(iv) 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 of Company 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;
(v) 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;
(vi) Issue, deliver, sell, authorize, pledge or otherwise
encumber or propose any of the foregoing with respect to any shares of capital
stock or any securities convertible into shares of capital stock, or
subscriptions, rights, warrants or options to acquire any shares of capital
stock or any securities convertible into shares of capital stock, or enter into
other agreements or commitments of any character obligating it to issue any such
shares or convertible securities, other than (x) the issuance, delivery and/or
sale of (i) shares of Company Common Stock pursuant to the exercise of stock
options outstanding as of the date of this Agreement, and (ii) shares of Company
Common Stock issuable to participants in the Company ESPP consistent with the
terms thereof for periods commencing in July 2001, and (y) the granting of stock
options to purchase up to fifteen thousand (15,000) shares to any individual or
to purchase up to two hundred thousand (200,000) shares in the aggregate (and
the issuance of Common Stock upon exercise thereof) under the terms of the
Company 1997 Stock Option Plan;
(vii) Cause, permit or propose any amendments to the Company
Charter Documents (or similar governing instruments of any of its subsidiaries);
(viii) 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 partnerships or alliances;
(ix) Sell, lease, license, encumber or otherwise dispose of any
properties or assets which are material, except (A) sales, leases or licenses of
product or of inventory in the ordinary course of business consistent with past
practice, or (B) sales, leases or dispositions of property or assets which are
not material, individually or in the aggregate, to the business of Company and
its subsidiaries;
(x) 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 in connection with the financing of
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ordinary course trade payables consistent with past practice or pursuant to
existing credit facilities in the ordinary course of business consistent with
past practice;
(xi) Adopt or amend (except as necessary to conform to all
applicable laws, including, without limitation, ERISA or the Code) any employee
benefit plan, policy, 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"), pay any special bonus or special remuneration (cash, equity or
otherwise) 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 as required by
applicable law or this Agreement;
(xii) (A) pay, discharge, settle or satisfy any claims,
liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise, and whether or not arising prior to, on or after the
date of this Agreement), other than the payment, discharge, settlement or
satisfaction, in the ordinary course of business or in accordance with their
respective terms, or liabilities recognized or disclosed in the most recent
consolidated financial statements (or the notes thereto) of Company included in
the Company SEC Reports or incurred since the date of such financial statements,
or (B) amend, terminate, waive in writing or release any confidentiality or
similar agreement to which Company or any of its subsidiaries is a party or of
which Company or any of its subsidiaries is a beneficiary; provided, however,
that Company will use its good faith efforts to enforce any such agreements
specifically requested to be enforced by Acquiror;
(xiii) Make any individual or series of related payments outside
of the ordinary course of business (including payments to financial, legal,
accounting or other professional service advisors incurred in connection with
the transactions contemplated by this Agreement or otherwise) in excess of
$100,000;
(xix) Enter into or materially modify, amend or terminate any
material contract or agreement to which Company or any subsidiary thereof is a
party or waive, delay the exercise of, release or assign any material rights or
claims thereunder;
(xx) Except in the ordinary course of business consistent with
past practice, enter into any material contracts, agreements, or obligations
relating to the distribution, sale, license or marketing by third parties of
Company's products or products licensed by Company;
(xxi) Revalue any of its assets or, except as required by GAAP,
make any change in accounting methods, principles or practices;
(xxii) Incur or enter into any agreement, contract or commitment
outside of the ordinary course of business in excess of $500,000 individually;
(xxiii) Make or change any Tax election that, individually or in
the aggregate, is reasonably likely to adversely affect in any material respect
the Tax liability or Tax attributes of Company or any of its subsidiaries,
settle or compromise any material income Tax
-37-
liability or consent to any extension or waiver of the limitation period
applicable to any claim or assessment in respect of Taxes;
(xxiv) Make any loan, advance or capital contribution to or
investment in any person (other than a subsidiary of Company) other than in the
ordinary course of business consistent with past practice, but in no event in
the amount (to persons other than subsidiaries) of more than $10,000 for any one
transaction and $50,000 in the aggregate, and other than investments in cash
equivalents made in the ordinary course of business consistent with past
practice;
(xxv) Modify or amend in any manner that is adverse to Company
standstill or similar agreements to which Company or any of its subsidiaries is
a party;
(xxvi) Engage in any action or enter into any transaction or
permit any action to be taken that could reasonably be expected to (i) directly
or indirectly materially delay the consummation of any of the transactions
contemplated by this Agreement or (ii) increase the possibility that any
Governmental or Regulatory Authority will seek to object to or challenge or take
any action to interfere in any respect with or delay the consummation of any of
the transactions contemplated by this Agreement; or
(xxvii) Redeem rights under its rights plan or amend, modify or
terminate its rights plan;
(xxviii) Agree in writing or otherwise to take any of the actions
described in Section 5.1(b)(i) through Section 5.1(b)(xxvii) above, inclusive.
5.2 Conduct of Business by Acquiror.
-------------------------------
(a) During the period from the date of this Agreement and continuing
until the earlier of termination of this Agreement or the Effective Time,
Acquiror and each of its subsidiaries shall, except (i) as set forth in Section
5.2 of the Acquiror Disclosure Letter, (ii) in connection with specific actions
that Acquiror is explicitly required or permitted to take pursuant to this
Agreement or (iii) to the extent that Company shall otherwise consent in writing
(which consent shall not be unreasonably withheld or delayed), carry on its
business in all material respects, in the usual, regular and ordinary course, in
substantially the same manner as heretofore conducted and in compliance with all
applicable laws and regulations, pay its 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,
distributors, licensors, licensees, and others with which it has significant
business dealings.
(b) During the period from the date of this Agreement and continuing
until the earlier of termination of this Agreement or the Effective Time, except
(i) as set forth in Section 5.2 of the Acquiror Disclosure Letter, (ii) in
connection with specific actions that Acquiror is explicitly required to take
pursuant to this Agreement, or (iii) to the extent that Company shall otherwise
consent in writing (which consent shall not be unreasonably withheld
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or delayed), Acquiror shall not do any of the following and shall not permit its
subsidiaries to do any of the following:
(i) 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 of Acquiror; provided, however, that neither
Acquiror nor Genesis Delaware shall be prohibited under this clause (i) from
effecting any stock split, reverse stock split, stock dividend, reorganization,
recapitalization, reclassification or other like change with respect to Acquiror
Common Shares or shares of Genesis Delaware Common Stock on or after the date
hereof;
(ii) Purchase, redeem or otherwise acquire, directly or
indirectly, any shares of capital stock of Acquiror 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;
(iii) Cause, permit or propose any amendments to the Acquiror
Charter Documents or other charter documents;
(iv) Except as required by GAAP, make any change in accounting
methods, principles or practices or any change in tax accounting methods or any
tax elections;
(v) Take any action that would materially delay the
consummation of the transactions contemplated hereby; or
(vi) Agree in writing or otherwise to take any of the actions
described in Section 5.2(b)(i) through Section 5.2(b)(v) above, inclusive.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 Joint Proxy Statement/Prospectus; Registration Statement.
--------------------------------------------------------
(a) As promptly as practicable after the execution of this Agreement,
Acquiror and Company shall jointly prepare and shall file with the SEC a
document or documents that will constitute (i) the prospectus forming part of
the registration statement on the S-4 and (ii) the Joint Proxy
Statement/Prospectus. Each of the parties hereto shall use all reasonable
efforts to cause the S-4 to become effective as promptly as practicable after
the date hereof, and, prior to the effective date of the S-4, the parties hereto
shall take all action required under any applicable Laws in connection with the
issuance of shares of Genesis Delaware Common Stock pursuant to the Merger.
Acquiror or Company, as the case may be, shall furnish all information
concerning Acquiror, Genesis Delaware, Merger Sub or Company as the other party
may reasonably request in connection with such actions and the preparation of
the S-4 and the Joint Proxy Statement/Prospectus. As promptly as practicable
after the effective date of the S-4, the Joint Proxy Statement/Prospectus shall
be mailed to the stockholders of Company and of Acquiror. Each of the parties
hereto shall cause the Joint Proxy Statement/Prospectus to comply as to form and
substance to such party in all material respects with the applicable
requirements of (i) the Exchange Act, (ii) the Securities Act, (iii) the rules
and regulations of the Nasdaq and
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(iv) the Companies Act (Nova Scotia). If at any time prior to the Effective
Time, any event relating to Acquiror or Company or any of their respective
affiliates, officers or directors should be discovered by Acquiror or Company,
as the case may be, which should be set forth in an amendment to the S-4 or a
supplement to the Joint Proxy Statement/Prospectus, Acquiror or Company, as the
case may be, shall promptly inform the other.
(b) The Joint Proxy Statement/Prospectus shall include (i) a proposal
to approve this Agreement and the Merger and the recommendation of the board of
directors of Company to Company's stockholders that they vote in favor of
approval of this Agreement and the Merger, subject to the right of the board of
directors of the Company to withdraw its recommendation and recommend a Superior
Proposal determined to be such in compliance with Section 6.4 of this Agreement
and (ii) the opinion of U.S. Bancorp ▇▇▇▇▇ ▇▇▇▇▇▇▇ Inc. referred to in Section
3.22; provided, however, that the board of directors of Company shall submit
this Agreement to Company's stockholders whether or not at any time subsequent
to the date hereof such board determines that it can no longer make such
recommendation. The Joint Proxy Statement/Prospectus shall also include (i) the
approval of the Share Issuance and the recommendation of the board of directors
of Acquiror to Acquiror's shareholders that they vote in favor of approval of
the Share Issuance (ii) if the Restructuring has not then occurred, the approval
of the Restructuring and the recommendation of the board of directors of
Acquiror to Acquiror's shareholders that they vote in favor of approval of the
Restructuring, and (iii) the opinion of Dresdner Kleinwort ▇▇▇▇▇▇▇▇▇▇▇ referred
to in Section 4.14.
(c) No amendment or supplement to the Joint Proxy
Statement/Prospectus or the S-4 shall be made without the approval of Acquiror
and Company, which approval shall not be unreasonably withheld or delayed. Each
of the parties hereto shall advise the other parties hereto, promptly after it
receives notice thereof, of the time when the S-4 has become effective or any
supplement or amendment has been filed, of the issuance of any stop order, of
the suspension of the qualification of the Genesis Delaware Common Stock
issuable in connection with the Merger for offering or sale in any jurisdiction,
or of any request by the SEC for amendment of the Joint Proxy
Statement/Prospectus or the S-4 or comments thereon and responses thereto or
requests by the SEC for additional information.
6.2 Stockolder Meetings. Company shall call and hold the Company
-------------------
Stockholders' Meeting and Acquiror shall call and hold the Acquiror
Shareholders' Meeting as promptly as practicable after the date hereof for the
purpose of voting upon the approval of this Agreement and the Merger or the
Share Issuance, as the case may be, pursuant to the Joint Proxy
Statement/Prospectus, and Acquiror and Company shall use all reasonable efforts
to hold the Acquiror Shareholders' Meeting and the Company Stockholders' Meeting
on the same day and as soon as practicable after the date on which the S-4
becomes effective. Nothing herein shall prevent Company or Acquiror from
adjourning or postponing the Company Stockholders' Meeting or the Acquiror
Shareholders' Meeting, as the case may be, if there are insufficient shares of
Company Common Stock or Acquiror Common Shares, as the case may be, necessary to
conduct business at their respective meetings of the stockholders or
shareholders. Unless Company's board of directors has withdrawn its
recommendation of this Agreement and the Merger in compliance with Section 6.4,
Company shall use all commercially reasonable efforts to solicit from its
shareholders proxies in favor of the approval of this Agreement and the Merger
pursuant to the Joint Proxy Statement/Prospectus and shall take all other action
necessary or
-40-
advisable to secure the vote or consent of stockholders required by Delaware Law
or applicable stock exchange requirements to obtain such approval. Acquiror
shall use all commercially reasonable efforts to solicit from its shareholders
proxies in favor of the Share Issuance pursuant to the Joint Proxy
Statement/Prospectus and shall take all other action necessary or advisable to
secure the vote or consent of shareholders required by the Delaware Law or
applicable stock exchange requirements to obtain such approval. Company shall
call and hold the Company Stockholders' Meeting for the purpose of voting upon
the approval of this Agreement and the Merger whether or not Company's board of
directors at any time subsequent to the date hereof determines that this
Agreement is no longer advisable or recommends that Company's stockholders
reject it.
6.3 Confidentiality; Access to Information.
--------------------------------------
(a) The parties acknowledge that Company and Acquiror have previously
executed a Confidentiality Agreement, dated as of June 13, 2001 (the
"Confidentiality Agreement"), which Acquiror and Company mutually agree is
hereby amended so as to continue in full force and effect after the date of this
Agreement.
(b) Each of the Company and Acquiror will afford the other and the
other's accountants, counsel and other representatives reasonable access to its
properties, books, records and personnel during the period prior to the
Effective Time to obtain all information concerning its business as such other
party may reasonably request. No information or knowledge obtained in any
investigation pursuant to this Section 6.3 will affect or be deemed to modify
any representation or warranty contained herein or the conditions to the
obligations of the parties to consummate the Merger.
6.4 No Solicitation.
---------------
(a) From and after the date of this Agreement until the Effective
Time or termination of this Agreement pursuant to Article VIII hereof, Company
------------
and its subsidiaries will not, nor will they authorize or permit any of their
respective officers, directors, controlled affiliates or employees or any
investment banker, attorney or other advisor or representative retained by any
of them to, directly or indirectly, (i) solicit, initiate, induce or knowingly
encourage the making, submission or announcement of any Acquisition Proposal (as
defined below), (ii) enter or participate in any discussions or negotiations
with a third party regarding, or furnish to any person any information with
respect to Company or any of its subsidiaries, or take any other action to
cooperate in any way with, or knowingly assist, participate in, facilitate or
encourage any inquiries or the making of any proposal that constitutes or may
reasonably be expected to lead to, any Acquisition Proposal, (iii) approve,
endorse or recommend any Acquisition Proposal or (iv) enter into any letter of
intent or similar document or any contract, agreement or commitment
contemplating or otherwise relating to any Acquisition Transaction (as defined
below); provided, however, that nothing contained in this Section 6.4 shall
prohibit the board of directors of Company from (i) complying with Rule 14d-9 or
14e-2(a) promulgated under the Exchange Act or (ii) in response to an
unsolicited, bona fide written Acquisition Proposal that Company's board of
directors reasonably concludes (after consultation with the Company's financial
advisor) constitutes a Superior Proposal (as defined below), engaging in
discussions or participating in negotiations with and furnishing information to
the party making
-41-
such Acquisition Proposal and approving, endorsing or recommending such
Acquisition Proposal and withdrawing its recommendation of this Agreement and
the Merger to the extent (A) the board of directors of Company reasonably
determines in good faith after consultation with its outside legal counsel its
fiduciary obligations under applicable law require it to do so, (B) (x) at least
two (2) business days prior to furnishing any such nonpublic information to, or
entering into discussions or negotiations with, such party, Company gives
Acquiror written notice of Company's intention to furnish nonpublic information
to, or enter into discussions or negotiations with, such party and (y) Company
receives from such party an executed confidentiality agreement containing terms
no less favorable to the Company than those contained in the Confidentiality
Agreement, and (C) contemporaneously with furnishing any such nonpublic
information to such party, Company furnishes such nonpublic information to
Acquiror (to the extent such nonpublic information has not been previously
furnished by the Company to Acquiror). 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 this Section 6.4 by any officer, director, controlled
affiliate 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 6.4 by Company.
(b) For the purposes of this Agreement, (i) "Acquisition Proposal"
shall mean any offer or proposal (other than an offer or proposal by Acquiror)
relating to any Acquisition Transaction. For the purposes of this Agreement;
(ii) "Acquisition Transaction" shall mean any transaction or series of related
transactions other than the transactions 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 fifteen percent (15%) interest in the
total outstanding voting securities of the Company or any of its subsidiaries or
any tender offer or exchange offer that if consummated would result in any
person or "group" (as defined under Section 13(d) of the Exchange Act and the
rules and regulations thereunder) beneficially owning fifteen percent (15%) or
more of the total outstanding voting securities of the Company or any of its
subsidiaries or any merger, consolidation, business combination or similar
transaction involving the Company pursuant to which the stockholders of the
Company immediately preceding such transaction hold less than eighty five
percent (85%) of the equity interests in the surviving or resulting entity of
such transaction; (B) any sale, lease (other than in the ordinary course of
business), exchange, transfer, license (other than in the ordinary course of
business), acquisition or disposition of more than fifteen percent (15%) of the
assets of the Company; or (3) any liquidation, dissolution, recapitalization or
other significant corporate reorganization of the Company; and (iii) "Superior
Proposal" shall mean an Acquisition Proposal with respect to which (A) Company's
board of directors shall have reasonably determined (based upon the advice of
Company's independent financial advisors) that the acquiring party is capable of
consummating (including, if relevant, obtaining any necessary financing) the
proposed Acquisition Transaction on the terms proposed, and (B) Company's board
of directors shall have reasonably determined that the proposed Acquisition
Transaction provides greater value to the stockholders of Company than the
Merger (based upon the advice of Company's independent financial advisors).
-42-
(c) In addition to the obligations of Company set forth in paragraph
(a) of this Section 6.4, Company as promptly as practicable, and in any event
within one (1) business day, shall advise Acquiror orally and in writing of any
request for 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 Acquiror informed in
all material respects of the status and details (including material amendments
or proposed amendments) of any such request, Acquisition Proposal or inquiry. In
addition to the foregoing, Company shall (i) provide Acquiror with at least two
(2) business days prior notice (or such lesser prior notice as provided to the
members of Company's board of directors but in no event less than eight (8)
hours) of any meeting of Company's board of directors at which Company's board
of directors is reasonably expected to consider an Acquisition Proposal, (ii)
provide Acquiror with at least two (2) business days prior written notice of a
meeting of Company's board of directors at which Company's board of directors is
reasonably expected to recommend a Superior Proposal to its stockholders and
together with such notice a copy of the definitive documentation relating to
such Superior Proposal and (iii) not, nor will it authorize a permit any of its
respective officers, directors, controlled affiliates or employees or any
investment banker, attorney or representative retained by them to, directly or
indirectly, enter into any letter of intent or similar document or any contract,
agreement or commitment contemplating or relating to any Acquisition Transaction
unless the Company has provided Acquiror at least two (2) business days prior
written notice and Acquiror or Merger Sub shall have failed to offer to amend
the Agreement so that it is at least as favorable to the stockholders of Company
in the good faith, judgment of the board of directors of Company, after
consultation with its independent financial advisor and its outside counsel.
6.5 Public Disclosure. Acquiror and Company will consult with each other
-----------------
and agree before issuing any press release or otherwise making any public
statement with respect to the Merger, this Agreement or an Acquisition Proposal
and will not issue any such press release or make any such public statement
prior to such agreement, except as may be required by law or any listing
agreement with a national securities exchange, in which case reasonable efforts
to consult with the other party will be made prior to any such release or public
statement. The parties have agreed to the text of the joint press release
announcing the signing of this Agreement.
6.6 Reasonable Efforts; Notification.
--------------------------------
(a) Upon the terms and subject to the conditions set forth in this
Agreement, each of the parties agrees to use commercially reasonable efforts to
take, or cause to be taken, all actions, and to do, or cause to be done, and to
assist and cooperate with the other parties in doing, all things necessary,
proper or advisable to consummate and make effective, in the most expeditious
manner practicable, the Merger and the other transactions contemplated by this
Agreement, including using commercially reasonable efforts to accomplish the
following: (i) the taking of all reasonable acts necessary to cause the
conditions precedent set forth in Article VII hereof 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
-43-
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. In
connection with and without limiting the foregoing, Company and its board of
directors shall, if any state takeover statute or similar statute or regulation
is or becomes applicable to the Merger and this Agreement or any of the
transactions contemplated hereby and thereby, use commercially reasonable
efforts to ensure that the Merger and this Agreement, and the other transactions
contemplated hereby and thereby may be consummated as promptly as practicable on
the terms contemplated by this Agreement and otherwise to minimize the effect of
such statute or regulation on the Merger, this Agreement, and the transactions
contemplated hereby and thereby. Notwithstanding anything herein to the
contrary, nothing in this Agreement shall be deemed to require Acquiror or
Company or any subsidiary or affiliate thereof to agree to any divestiture by
itself or any of its affiliates of shares of capital stock or of any, material
business, assets or property, or the imposition of any material limitation on
the ability of any of them to conduct their business or to own or exercise
control of such assets, properties and stock.
(b) Company shall give prompt notice to Acquiror 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
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 7.3(a) or Section 7.3(b) 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.
(c) Acquiror 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 Acquiror or Merger Sub to
comply with or satisfy in any 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 7.2(a) or Section 7.2(b) 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.
6.7 Third Party Consents. As soon as practicable following the date
--------------------
hereof, Acquiror and Company will each use commercially reasonable efforts to
obtain any 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.
6.8 Company Stock Options; Company 401(k) Plan; Company ESPP; Employee
------------------------------------------------------------------
Benefit Matters.
---------------
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(a) Company Stock Options. At the Effective Time, Genesis Delaware
---------------------
shall assume all options to purchase Common Stock issued by Company pursuant to
the Company Option Plans, whether vested or unvested and whether exercisable or
unexercisable. The Company's repurchase right with respect to any unvested
shares of Company Common Stock shall be assigned to Genesis Delaware by virtue
of the Merger and without any further action on the part of the Company or the
holder of the outstanding Company Common Stock. Immediately after the Effective
Time, each Company Option outstanding immediately prior to the Effective Time
shall be deemed to constitute an option to acquire, on the same terms and
conditions as were applicable under such Company Option at the Effective Time,
such number of shares of Genesis Delaware Common Stock as is equal to the number
of shares of Company Common Stock subject to the unexercised portion of such
option multiplied by the Exchange Ratio, rounded down to the nearest whole
number. The exercise price per share of each such assumed Company Option shall
be equal to the exercise price of such option immediately prior to the Effective
Time divided by the Exchange Ratio, rounded up to the nearest whole cent. The
term, vesting schedule, and all of the other terms of the Company Options shall
otherwise remain unchanged. It is the intention of the parties that the Company
Options so assumed by Genesis Delaware qualify following the Effective Time as
incentive stock options as defined in Section 422 of the Code to the extent such
Company Options qualified as incentive stock options prior to the Effective
Time. Within 30 business days after the Effective Time, Genesis Delaware will
issue to each person who, immediately prior to the Effective Time, was a holder
of a Company Option assumed by Genesis Delaware a document evidencing the
foregoing assumption of such option by Genesis Delaware.
(b) 401(k) Plans. Effective as of the day immediately preceding the
------------
Closing Date, Company and its Affiliates, as applicable, shall each terminate
any and all plans intended to include a Code Section 401(k) arrangement (unless
Acquiror provides written notice to Company that such 401(k) plan(s) shall not
be terminated). Unless Acquiror provides such written notice to Company, no
later than five business days prior to the Closing Date, Company shall provide
Acquiror with evidence that such 401(k) plan(s) have been terminated (effective
as of the day immediately preceding the Closing Date) pursuant to resolutions of
the Company's board of directors. The form and substance of such resolutions
shall be subject to review and approval of Acquiror. Company also shall take
such other actions in furtherance of terminating such 401(k) Plan(s) as Acquiror
may reasonably require.
(c) Company ESPP. The rights of participants in the Company ESPP with
------------
respect to any offering then underway under the Company ESPP shall be determined
by treating the last business day prior to the Effective Time as the last day of
such offering and by making such other pro rata adjustments as may be necessary
to reflect the shortened offering but otherwise treating such shortened offering
as a fully effective and completed offering for all purposes under the Company
ESPP. Outstanding rights to purchase shares of Company Common Stock shall be
exercised in accordance with Section 13(b) of the Company ESPP, and each share
of Company Common Stock purchased pursuant to such exercise shall by virtue of
the Merger, and without any action on the part of the holder thereof, be
converted into the right to receive a number of shares of Genesis Delaware
Common Stock in accordance with Section 2.6(a), without issuance of certificates
representing issued and outstanding shares of Company Common Stock to
participants under the Company ESPP. As of the Effective Time, the Company ESPP
shall be terminated. Prior to the Effective Time, Company shall (i) provide
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Acquiror with evidence that the Company ESPP has been terminated pursuant to
resolutions of Company's board of directors; the form and substance of such
resolutions shall be subject to prior review and approval of Acquiror and (ii)
take such other actions (including, but not limited to, if appropriate, amending
the Company ESPP) that are necessary to give effect to the transaction
contemplated by this Section 6.8(c).
(d) Employee Benefit Matters. Except as otherwise provided in this
------------------------
Agreement, the Acquiror shall take reasonable actions to ensure that all
employees of Company continue participation in the same Company health and
welfare plans and arrangements in effect prior to the Effective Date.
Notwithstanding the foregoing, Acquiror may, in its sole discretion, terminate
any such benefit plans and arrangements, provided, however, that all employees
of Company are provided with substantially equivalent levels of health and
welfare benefits as those provided to similarly situated eligible employees of
Acquiror.
6.9 Form S-8. Within fifteen (15) days following the Effective Time,
--------
Genesis Delaware shall file, if available for use by Genesis Delaware, a
registration statement on Form S-8 (or any successor form thereto) relating to
Genesis Delaware Common Stock issuable pursuant to awards under the Company
Option Plan assumed by Genesis Delaware pursuant to this Agreement. If required
by applicable rules of the Nasdaq, Genesis shall use its commercially reasonable
efforts to cause the shares of Genesis Delaware Common Stock issuable upon the
exercise of Company Stock Options assumed by Genesis Delaware pursuant to this
Agreement to be approved for quotation on the Nasdaq, subject to official notice
of issuance.
6.10 Indemnification.
---------------
(a) From and after the Effective Time, Genesis Delaware will cause to
be maintained in effect in all respects the current obligations of Company
pursuant to any indemnification agreements between Company and its directors and
officers in effect immediately prior to the Effective Time and any
indemnification provisions under the Company Charter Documents as in effect on
the date hereof. The Certificate of Incorporation and Bylaws of the Surviving
Corporation will contain provisions with respect to exculpation and
indemnification that are at least as favorable to the indemnified parties
thereunder (the "Indemnified Parties") as those contained in the Company Charter
Documents as in effect on the date hereof, which provisions will not be amended,
repealed or otherwise modified for a period of six (6) years from the Effective
Time in any manner that would adversely affect the rights thereunder of the
Indemnified Parties, unless such modification is required by law.
(b) For a period of six (6) years after the Effective Time, Genesis
Delaware will cause the Surviving Corporation to maintain in effect, if
available, directors' and officers' liability insurance covering those persons
who are currently covered by the Company's directors' and officers' liability
insurance policy on terms comparable to those applicable to the current
directors and officers of the Company; provided, however, that in no event will
Genesis Delaware or the Surviving Corporation be required to expend an annual
premium for such coverage in excess of one hundred and seventy five percent
(175%) of the annual premium currently paid by the Company.
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(c) This Section 6.10 is intended to be for the benefit of, and shall
be enforceable by, the Indemnified Parties, their heirs and personal
representatives and shall be binding on the Surviving Corporation and its
respective successors and assigns. In the event Genesis Delaware or the
Surviving Corporation or any of their respective successors or assigns (i)
consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity in such consolidation or merger or
(ii) transfers all or substantially all its properties and assets to any person,
then, and in each case, proper provision shall be made so that the successors
and assigns of Acquiror or the Surviving Corporation, as the case may be, assume
the indemnification obligations set forth in this Section 6.10.
6.11 Nasdaq Listing. Acquiror agrees to cause Genesis Delaware to authorize
--------------
for listing on Nasdaq the shares of Genesis Delaware Common Stock issuable, and
those required to be reserved for issuance, in connection with the Merger, upon
official notice of issuance.
6.12 Affiliates. Set forth in Section 6.12 of the Company Disclosure Letter
----------
is a 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 (each, a "Company Affiliate"). Company will provide Acquiror
with such information and documents as Acquiror reasonably requests for purposes
of reviewing such list. Company will use its commercially reasonable efforts to
deliver or cause to be delivered to Acquiror, as promptly as practicable on or
following the date hereof, from each Company Affiliate an executed Affiliate
Agreement. Genesis Delaware will be entitled to place appropriate legends on the
certificates evidencing any Genesis Delaware Common Stock to be received by a
Company Affiliate pursuant to the terms of this Agreement, and to issue
appropriate stop transfer instructions to the transfer agent for the Genesis
Delaware Common Stock, consistent with the terms of the Affiliate Agreement.
6.13 Regulatory Filings; Reasonable Efforts. As soon as may be reasonably
--------------------------------------
practicable, Company and Acquiror each shall file with the United States Federal
Trade Commission (the "FTC") and the Antitrust Division of the United States
Department of Justice ("DOJ") 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. Company and Acquiror each shall promptly (a) supply the other with any
information which may be required in order to effectuate such filings and (b)
supply any additional information which reasonably may be required by the FTC,
the DOJ or the competition or merger control authorities of any other
jurisdiction and which the parties may reasonably deem appropriate; provided,
however, that Acquiror shall not be required to agree to any divestiture by
Acquiror or the Company or any of Acquiror's subsidiaries or affiliates of
shares of capital stock or of any business, assets or property of Acquiror or
its subsidiaries or affiliates or of the Company, its affiliates, or the
imposition of any material limitation on the ability of any of them to conduct
their businesses or to own or exercise control of such assets, properties and
stock (assuming for purposes of determining materiality in this Section 6.13
that the Merger shall have been effected).
6.14 Restructuring of Acquiror. As promptly as practicable after the
-------------------------
execution of this Agreement, Acquiror shall prepare and shall file with the SEC
and such other governmental
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regulatory authorities as may be required by law a document or documents that
will constitute a prospectus and proxy statement necessary to effect the
Restructuring in accordance with Annex I hereto. Acquiror shall use all
reasonable efforts to consummate the Restructuring as soon as practicable and in
any case prior to the Effective Time and to solicit shareholder approval of the
Restructuring in conjunction with the first to occur of the mailing of the Joint
Proxy Statement. Acquiror will inform Company promptly concerning any material
developments relating to the Restructuring and shall not make any material
change to the structure of the Restructuring without first advising Company of
the proposed change and offering Company an opportunity to review and comment
thereon. Company will cooperate with Acquiror in its efforts to consummate the
Restructuring including by providing assistance with respect to any proxy or
information statement required in connection with the Restructuring.
6.15 Obligations of Merger Sub and Genesis Delaware. Acquiror shall take
----------------------------------------------
all action necessary to cause Merger Sub and Genesis Delaware to perform their
respective obligations under this Agreement and to consummate the Merger on the
terms and conditions set forth in this Agreement.
6.16 Board of Directors of Genesis Delaware. The board of directors of
--------------------------------------
Acquiror will take all actions necessary to cause the board of directors of
Genesis Delaware, immediately after the Effective Time, to consist of seven (7)
persons, two (2) of whom shall be ▇▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇ ▇▇▇▇▇. If, prior to the
Effective Time, either of ▇▇▇▇▇▇▇ ▇▇▇▇▇ or ▇▇▇ ▇▇▇▇▇ shall decline or be unable
to serve as a director, Company shall designate another person to serve in such
person's stead, which person shall be reasonably acceptable to Acquiror.
ARTICLE VII
CONDITIONS TO THE MERGER
7.1 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) Stockholder Approvals. This Agreement shall have been approved
---------------------
and adopted, and the Merger shall have been duly approved, by the requisite vote
under applicable law, by the stockholders of Company. The Share Issuance shall
have been approved by the requisite vote under applicable Nasdaq rules by the
shareholders of Acquiror.
(b) Registration Statement Effective; Joint Proxy Statement. The SEC
-------------------------------------------------------
shall have declared the S-4 effective. No stop order suspending the
effectiveness of the S-4 or any part thereof shall have been issued and no
proceeding for that purpose, and no similar proceeding in respect of the Joint
Proxy Statement/Prospectus, shall have been initiated or threatened in writing
by the SEC.
(c) 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.
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All waiting periods, if any, under the HSR Act relating to the transactions
contemplated hereby will have expired or terminated early and all material
foreign antitrust or other regulatory approvals required to be obtained prior to
the Merger in connection with the transactions contemplated hereby shall have
been obtained.
(d) Restructuring. The Restructuring shall have been consummated.
-------------
(e) Tax Opinions. Acquiror shall have received a written opinion of
------------
its United States tax counsel that the Restructuring together with the Merger
qualifies as a tax-free exchange under the provisions of Section 351 of the Code
and Company shall have received a written opinion of its United States tax
counsel that the Merger qualifies as a reorganization within the meaning of
Section 368(a) of the Code (each such opinion, a "Tax Opinion"). Each Tax
Opinion shall be in form and substance reasonably satisfactory to the party
receiving such opinion, and shall not have been withdrawn. The parties agree to
make such representations as are reasonably requested by United States tax
counsel to Acquiror or Company in connection with rendering the Tax Opinions,
and United States tax counsel shall be entitled to rely upon such
representations.
(f) Nasdaq Listing. The shares of Genesis Delaware Common Stock
--------------
issuable to the stockholders of Company pursuant to this Agreement and such
other shares required to be reserved for issuance in connection with the Merger
shall have been authorized for listing on Nasdaq upon official notice of
issuance.
7.2 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. Each representation and warranty
------------------------------
of Acquiror contained in this Agreement (i) shall have been true and correct in
all respects as of the date of this Agreement and (ii) shall be true and correct
on and as of the Closing Date with the same force and effect as if made on the
Closing Date except, in the case of clauses (i) and (ii), (A) with respect to
representations and warranties other than those contained in Section 4.3, for
such failures to be true and correct that do not in the aggregate constitute a
Material Adverse Effect on Acquiror or, with respect to representations and
warranties contained in Sections 4.3, that are not material, and (B) for those
representations and warranties which address matters only as of a particular
date (which representations shall have been true and correct (subject to the
qualifications set forth in the preceding clause (A)) as of such particular
date) (it being understood that, for purposes of determining the accuracy of
such representations and warranties, (i) all "Material Adverse Effect"
qualifications and other qualifications based on the word "material" or similar
phrases contained in such representations and warranties shall be disregarded
and (ii) any update of or modification to the disclosure letter attached hereto
by Acquiror Disclosure Letter made or purported to have been made after the date
of this Agreement shall be disregarded). Company shall have received a
certificate with respect to the foregoing signed on behalf of Acquiror by an
authorized officer of Acquiror.
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(b) Agreements and Covenants. Acquiror 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 Acquiror by an authorized officer of Acquiror.
(c) No Acquiror Material Adverse Effect. No Material Adverse Effect
-----------------------------------
on Acquiror shall have occurred from the date of this Agreement. Company shall
have received a certificate with respect to the foregoing signed on behalf of
Acquiror by the Chief Executive Officer and the Chief Financial Officer of
Acquiror.
7.3 Additional Conditions to the Obligations of Acquiror. The obligations
----------------------------------------------------
of Acquiror 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 Acquiror:
(a) Representations and Warranties. Each representation and warranty
------------------------------
of Company contained in this Agreement (i) shall have been true and correct in
all respects as of the date of this Agreement and (ii) shall be true and correct
on and as of the Closing Date with the same force and effect as if made on and
as of the Closing Date except, in the case of clauses (i) and (ii), (A) with
respect to representations and warranties other than those contained in Sections
3.3, 3.23, 3.24, and 3.25, for such failures to be true and correct that do not
in the aggregate constitute a Material Adverse Effect on the Company or, with
respect to representations and warranties contained in Sections 3.3, 3.23, 3.24
and 3.25, that are not material, and (B) for those representations and
warranties which address matters only as of a particular date (which
representations shall have been true and correct (subject to the qualifications
set forth in the preceding clause (A)) as of such particular date) (it being
understood that, for purposes of determining the accuracy of such
representations and warranties, (i) all "Material Adverse Effect" qualifications
and other qualifications based on the word "material" or similar phrases
contained in such representations and warranties shall be disregarded and (ii)
any update of or modification to the Company Disclosure Letter made or purported
to have been made after the date of this Agreement shall be disregarded).
Acquiror shall have received a certificate with respect to the foregoing signed
on behalf of Company by an authorized 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 Acquiror shall have received a certificate to such effect signed on
behalf of Company by the Chief Executive Officer of Company.
(c) Other Agreements. The Employment and Noncompetition Agreements by
----------------
and among Acquiror and the following officers shall remain in full force and
effect: ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇▇, and ▇▇▇▇ ▇▇▇▇▇▇.
(d) No Company Material Adverse Effect. No Material Adverse Effect on
----------------------------------
Company shall have occurred from the date of this Agreement. Acquiror shall have
received a
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certificate with respect to the foregoing signed on behalf of Company by the
Chief Executive Officer and the Chief Financial Officer of Company.
(e) Consents. Company shall have obtained all consents, waivers and
--------
approvals required in connection with the consummation of the transactions
contemplated hereby in connection with the agreements, contracts, licenses or
leases set forth on Section 7.3(e) of the Company Disclosure Letter.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
8.1 Termination. This Agreement may be terminated at any time prior to the
-----------
Effective Time, whether before or after the requisite approval of the
stockholders of Company:
(a) by mutual written consent duly authorized by the Boards of
Directors of Acquiror and Company;
(b) by either Company or Acquiror if the Merger shall not have been
consummated by May 31, 2002 for any reason; provided, however, that the right to
terminate this Agreement under this Section 8.1(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 material breach of this Agreement;
(c) by either Company or Acquiror 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 Acquiror if (i) the required approval of the
stockholders of Company contemplated by this Agreement shall not have been
obtained by reason of the failure to obtain the required vote at a meeting of
Company stockholders duly convened therefor or at any adjournment or
postponement thereof, or (ii) the required approval by the shareholders of
Acquiror of the Restructuring shall not have been obtained by reason of the
failure to obtain the required vote at a meeting of Acquiror shareholders duly
convened therefor or at any adjournment or postponement thereof, or (iii) the
required approval by the shareholders of Acquiror of the Share Issuance required
under applicable Nasdaq rules shall not have been obtained by reason of the
failure to obtain the required vote at a meeting of Acquiror shareholders duly
convened therefor or at any adjournment or postponement thereof; provided,
however, that the right to terminate this Agreement under this Section 8.1(d)
shall not be available to any party where the failure to obtain the required
approval of Company stockholders or Acquiror shareholders, as applicable, shall
have been caused by the action or failure to act of Company or Acquiror, as
applicable, and such action or failure to act constitutes a material breach by
Company or Acquiror of this Agreement;
(e) by Company, upon a breach of any representation, warranty,
covenant or agreement on the part of Acquiror set forth in this Agreement, or if
any representation or warranty of Acquiror, Genesis Delaware or Merger Sub shall
have become untrue, in either case
-51-
such that the conditions set forth in Section 7.2(a) or Section 7.2(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, however, that notwithstanding
the foregoing, in the event that such breach by Acquiror, Genesis Delaware or
Merger Sub or such inaccuracies in the representations and warranties of
Acquiror, Genesis Delaware or Merger Sub are curable by Acquiror, Genesis
Delaware or Merger Sub through the exercise of its commercially reasonable
efforts, then the Company shall not be permitted to terminate this Agreement
pursuant to this Section 8.1(e) until the earlier to occur of (i) the expiration
of a thirty (30) calendar day period after delivery of written notice from
Company to Acquiror of such breach or inaccuracy, as applicable, or (ii)
Acquiror, Genesis Delaware or Merger Sub ceasing to exercise commercially
reasonable efforts to cure such breach or inaccuracy, provided that Acquiror,
Genesis Delaware or Merger Sub, as applicable, continues to exercise
commercially reasonable efforts to cure such breach or inaccuracy (it being
understood that Company may not terminate this Agreement pursuant to this
Section 8.1(e) if such breach or inaccuracy by Acquiror, Genesis Delaware or
Merger Sub is cured within such thirty (30) calendar day period);
(f) by Acquiror, 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 7.3(a) or Section 7.3(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, however, that
notwithstanding the foregoing, in the event that such breach by Company or such
inaccuracies in the representations and warranties of Company are curable by
Company through the exercise of its commercially reasonable efforts, then
Acquiror shall not be permitted to terminate this Agreement pursuant to this
Section 8.1(f) until the earlier to occur of (i) the expiration of a thirty (30)
calendar day period after delivery of written notice from Acquiror to Company of
such breach or inaccuracy, as applicable, or (ii) Company ceasing to exercise
commercially reasonable efforts to cure such breach or inaccuracy, provided that
Company continues to exercise commercially reasonable efforts to cure such
breach or inaccuracy (it being understood that Acquiror may not terminate this
Agreement pursuant to this Section 8.1(f) if such breach or inaccuracy by
Company is cured within such thirty (30) calendar day period); or
(g) by Acquiror, if (i) the board of directors of Company for any
reason directly or indirectly withdraws, modifies or changes its recommendation
in favor of the adoption and approval of this Agreement and approval of the
Merger by the Company stockholders (collectively, the "Recommendations"), (ii)
the board of directors fails to include the Recommendations in the Joint Proxy
Statement/Prospectus, (iii) the board of directors of Company approves, or
recommends that the Company stockholders approve, an Acquisition Proposal, (iv)
the Company enters into a letter of intent of similar agreement or arrangement
contemplating an Acquisition Proposal or an Acquisition Transaction, (v) in the
event that an Acquisition Proposal has been announced or otherwise become
publicly known, the board of directors of Company (A) fails to recommend that
the Company stockholders reject such Acquisition Proposal (including by taking
no position, or indicating its inability to take a position, with respect to the
acceptance by its stockholders of an Acquisition Proposal involving a tender
offer or exchange offer) or (B) fails to reconfirm the Recommendations, in each
case within five (5) business days after the announcement or other public
disclosure of such Acquisition Proposal, (vi) the Company fails to comply with
Section 6.4, or (vii) the board of
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directors of Company resolves to take any of the actions described in the
foregoing clauses (i) through (v).
8.2 Notice of Termination; Effect of Termination. Any termination of this
--------------------------------------------
Agreement under Section 8.1 above will be effective immediately upon the
delivery of written notice of the terminating party to the other party hereto
(or such later time as may be required by Section 8.1). In the event of the
termination of this Agreement as provided in Section 8.1, this Agreement shall
be of no further force or effect, except (i) as set forth in this Section 8.2,
Section 6.3(a), Section 8.3 and Article IX hereof, each of which shall survive
the termination of this Agreement, and (ii) nothing herein shall relieve any
party from liability for fraud in connection with, or any willful breach of,
this Agreement.
8.3 Fees and Expenses.
-----------------
(a) General. Except as set forth in this Section 8.3, all fees and
-------
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses whether
or not the Merger is consummated; provided, however, that Acquiror and Company
shall share equally all fees and expenses, other than attorneys' and accountants
fees and expenses, incurred (i) in relation to the printing and filing of the
Joint Proxy Statement/ Prospectus (including any preliminary materials related
thereto) and the S-4 (including financial statements and exhibits) and any
amendments or supplements thereto or (ii) for the premerger notification and
report forms under the HSR Act.
(b) Termination Fee.
---------------
(i) In the event that Acquiror shall terminate this Agreement
pursuant to Section 8.1(g), Company shall pay to Acquiror Nine Million, Six
Hundred and Forty Thousand Dollars ($9,640,000), plus an amount equal to the
Acquiror's actual and documented out-of-pocket fees and expenses incurred by
Acquiror in connection with this Agreement and the consummation of the
transactions contemplated hereby; provided, however, that such fees and expenses
shall not exceed $1,750,000 in the aggregate (the "Termination Fee"), which
Termination Fee shall be payable by wire transfer of immediately available funds
to such account designated by Acquiror in writing to Company.
(ii) Company shall pay to Acquiror an amount in cash equal to
the Termination Fee, by wire transfer of immediately available funds to an
account designated in writing by Acquiror to Company, within one (1) business
day after demand by Acquiror, in the event that this Agreement is terminated by
Acquiror or Company pursuant to Section 8.1(b) or Section 8.1(d)(i), and (A)
following the execution and delivery of this Agreement and prior to the
termination of this Agreement, an Acquisition Proposal shall have been publicly
announced or shall have become publicly known and not withdrawn, and (B) within
twelve (12) months following the termination of this Agreement, either a Company
Acquisition (as defined below) is consummated, or the Company enters into a
letter of intent or a definitive agreement providing for a Company Acquisition
and any Company Acquisition is later consummated. For the purposes of this
Agreement, the term "Company Acquisition" means any of the following
transactions (other than the transactions contemplated by this Agreement): (A) a
merger, consolidation, business combination, recapitalization, liquidation,
dissolution or similar
-53-
transaction involving the Company pursuant to which the stockholders of the
Company immediately preceding such transaction hold less than sixty percent
(60%) of the aggregate equity interests in the surviving or resulting entity of
such transaction, (B) a sale or other disposition by the Company of assets
representing in excess of thirty percent (30%) of the aggregate fair market
value of the Company's business immediately prior to such sale, or (C) the
acquisition by any person or group (including by way of a tender offer or an
exchange offer or issuance by the Company), directly or indirectly, of
beneficial ownership or a right to acquire beneficial ownership of shares
representing in excess of thirty percent (30%) of the voting power of the then
outstanding shares of capital stock of the Company.
(iii) The Company acknowledges that the agreements contained in
this Section 8.3(b) are an integral part of the transactions contemplated by
this Agreement, and that, without these agreements, Acquiror would not enter
into this Agreement; accordingly, if the Company fails to pay in a timely manner
the amounts due pursuant to this Section 8.3(b) and, in order to obtain such
payment, Acquiror makes a claim that results in a judgment against the Company
for the amounts set forth in this Section 8.3(b), the Company shall pay to
Acquiror its costs and expenses (including attorneys' fees and expenses) in
connection with such suit, together with interest on the amounts set forth in
this Section 8.3(b) at the prime rate of Citibank N.A. in effect on the date
such payment was required to be made. Payment of the fees described in this
Section 8.3(b) shall not be in lieu of damages incurred in the event of breach
of this Agreement.
8.4 Amendment. Subject to applicable law, this Agreement may be amended by
---------
the parties hereto at any time by execution of an instrument in writing signed
on behalf of each of Acquiror and Company.
8.5 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 IX
GENERAL PROVISIONS
9.1 Survival of Representations and Warranties. The representations and
------------------------------------------
warranties of Company and Acquiror 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.
9.2 Notices. All notices and other communications hereunder shall be in
-------
writing and shall be deemed given if delivered personally or by commercial
delivery service, or sent via
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telecopy (receipt confirmed) or by registered or certified mail (postage
prepaid, return receipt requested) to the parties at the following addresses or
telecopy numbers (or at such other address or telecopy numbers for a party as
shall be specified by like notice):
(a) if to Acquiror, to:
Genesis Microchip Incorporated
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
Professional Corporation
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Attention: Selim Day, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to Company, to:
Sage, Inc.
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Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
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Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ III, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
9.3 Interpretation; Definitions.
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(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
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deemed in each case to be followed by the words "without limitation." The table
of contents and headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. When reference is made herein to "the business of" an entity, such
reference shall be deemed to include the business of all direct and indirect
subsidiaries of such entity. Reference to the subsidiaries of an entity shall be
deemed to include all direct and indirect subsidiaries of such entity.
(b) For purposes of this Agreement:
(i) the term "knowledge" means with respect to a party hereto,
with respect to any matter in question, knowledge of the executive officers of
such party after reasonable inquiry;
(ii) the term "Material Adverse Effect," when used in
connection with a party to this Agreement, means any change, event, violation,
inaccuracy, circumstance or effect that is materially adverse to the business,
assets, liabilities, financial condition, capitalization or results of
operations of such party and its subsidiaries taken as a whole; provided,
however, that in no event shall any effect that results from (A) the loss of
customers, orders or design wins to the other party directly due to the public
announcement of the execution of this Agreement or the pendency of this
Agreement, and any change in the revenues or operating results of a party
directly attributable to such loss of customers, orders or design wins, (B)
changes in general economic conditions or the industry in which a party operates
generally and not affecting a party to a materially disproportionate degree, or
(C) changes in the trading prices of such party's common stock, constitute a
"Material Adverse Effect."
(iii) 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.
9.4 Counterparts. This Agreement may be executed in one or more
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counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party, it being understood that all
parties need not sign the same counterpart.
9.5 Entire Agreement; Third Party Beneficiaries. This Agreement and the
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documents and instruments and other agreements among the parties hereto as
contemplated by or referred to herein, including the Company Disclosure Letter
and the Acquiror 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 6.10.
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9.6 Severability. In the event that any provision of this Agreement, or
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the application thereof, becomes or is declared by a court of competent
jurisdiction to be illegal, void or unenforceable, the remainder of this
Agreement will continue in full force and effect and the application of such
provision to other persons or circumstances will be interpreted so as reasonably
to effect the intent of the parties hereto. The parties further agree to replace
such void or unenforceable provision of this Agreement with a valid and
enforceable provision that will achieve, to the extent possible, the economic,
business and other purposes of such void or unenforceable provision.
9.7 Other Remedies; Specific Performance. Except as otherwise provided
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herein, any and all remedies herein expressly conferred upon a party will be
deemed cumulative with and not exclusive of any other remedy conferred hereby,
or by law or equity upon such party, and the exercise by a party of any one
remedy will not preclude the exercise of any other remedy. The parties hereto
agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to seek an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
hereof in any court of the United States or any state having jurisdiction, this
being in addition to any other remedy to which they are entitled at law or in
equity.
9.8 Governing Law. This Agreement shall be governed by and construed in
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accordance with the laws of the State of California, regardless of the laws that
might otherwise govern under applicable principles of conflicts of law thereof.
9.9 Rules of Construction. The parties hereto agree that they have been
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represented by counsel during the negotiation and execution of this Agreement
and, therefore, waive the application of any law, regulation, holding or rule of
construction providing that ambiguities in an agreement or other document will
be construed against the party drafting such agreement or document.
9.10 Assignment. Company may not assign either this Agreement or any of its
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rights, interests, or obligations hereunder without the prior written approval
of the other parties. Subject to the preceding sentence, this Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and permitted assigns.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized respective officers as of the date first
written above.
GENESIS MICROCHIP
INCORPORATED
By: _________________________
Name: _______________________
Title: ______________________
SAGE, INC.
By: _________________________
Name: _______________________
Title: ______________________
[AGREEMENT AND PLAN OF MERGER AND REORGANIZATION]