EXHIBIT 10.67
AGREEMENT AND PLAN OF MERGER
dated as of February 22, 2004
among
TRINITY LEARNING CORPORATION
PROSOFTTRAINING
and
MTX ACQUISITION CORP.
TABLE OF CONTENTS
Page
ARTICLE I THE MERGER......................................................1
SECTION 1.1 The Merger...............................................1
SECTION 1.2 Effective Time...........................................2
SECTION 1.3 Closing of the Merger....................................2
SECTION 1.4 Effects of the Merger....................................2
SECTION 1.5 Articles of Incorporation and Bylaws.....................2
SECTION 1.6 Directors................................................2
SECTION 1.7 Officers.................................................2
SECTION 1.8 Corporate Headquarters...................................3
ARTICLE II CONVERSION OF SECURITIES........................................3
SECTION 2.1 Conversion of Shares.....................................3
SECTION 2.2 Stock Options, Warrants and Convertible Notes............4
SECTION 2.3 Exchange Fund............................................5
SECTION 2.4 Exchange Procedures......................................5
SECTION 2.5 Distributions with Respect to Unsurrendered
Certificates.............................................6
SECTION 2.6 No Further Ownership Rights in Company Common Stock......6
SECTION 2.7 No Fractional Shares of Parent Common Stock..............6
SECTION 2.8 Termination of Exchange Fund.............................7
SECTION 2.9 No Liability.............................................7
SECTION 2.10 Investment of the Exchange Fund..........................7
SECTION 2.11 Lost Certificates........................................7
SECTION 2.12 Withholding Rights.......................................7
SECTION 2.13 Stock Transfer Books.....................................7
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY...................8
SECTION 3.1 Organization and Qualification; Subsidiaries.............8
SECTION 3.2 Capitalization of the Company and Its Subsidiaries.......8
SECTION 3.3 Authority Relative to This Agreement.....................9
SECTION 3.4 SEC Reports; Financial Statements.......................10
SECTION 3.5 No Undisclosed Liabilities..............................11
SECTION 3.6 Absence of Changes......................................11
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TABLE OF CONTENTS
(continued)
Page
SECTION 3.7 Information Supplied....................................13
SECTION 3.8 Consents and Approvals..................................13
SECTION 3.9 No Default..............................................14
SECTION 3.10 Real Property...........................................14
SECTION 3.11 Litigation..............................................16
SECTION 3.12 Compliance with Applicable Law; Permits.................17
SECTION 3.13 Employee Plans..........................................17
SECTION 3.14 Labor Matters...........................................19
SECTION 3.15 Environmental Matters...................................20
SECTION 3.16 Tax Matters.............................................23
SECTION 3.17 Absence of Questionable Payments........................25
SECTION 3.18 Material Contracts......................................26
SECTION 3.19 Subsidies...............................................27
SECTION 3.20 Intellectual Property...................................27
SECTION 3.21 Opinion of Financial Advisor............................29
SECTION 3.22 Brokers.................................................29
SECTION 3.23 URBCAss. 203............................................29
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB........29
SECTION 4.1 Organization and Qualification; Subsidiaries............30
SECTION 4.2 Capitalization of Parent and Its Subsidiaries...........30
SECTION 4.3 Authority Relative to This Agreement....................31
SECTION 4.4 SEC Reports; Financial Statements.......................32
SECTION 4.5 No Undisclosed Liabilities..............................32
SECTION 4.6 Absence of Changes......................................32
SECTION 4.7 Information Supplied....................................34
SECTION 4.8 Consents and Approvals..................................35
SECTION 4.9 No Default..............................................35
SECTION 4.10 Real Property...........................................36
SECTION 4.11 Litigation..............................................38
SECTION 4.12 Compliance with Applicable Law; Permits.................38
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TABLE OF CONTENTS
(continued)
Page
SECTION 4.13 Employee Plans..........................................38
SECTION 4.14 Labor Matters...........................................41
SECTION 4.15 Environmental Matters...................................42
SECTION 4.16 Tax Matters.............................................43
SECTION 4.17 Absence of Questionable Payments........................45
SECTION 4.18 Material Contracts......................................46
SECTION 4.19 Subsidies...............................................47
SECTION 4.20 Intellectual Property...................................47
SECTION 4.21 Opinion of Financial Advisor............................49
SECTION 4.22 Brokers.................................................49
SECTION 4.23 Nevada Combination Statute..............................49
ARTICLE V COVENANTS RELATED TO CONDUCT OF COMPANY'S BUSINESS.............49
SECTION 5.1 Conduct of Business of the Company......................49
SECTION 5.2 Company Strategic Alliances and Acquisitions............52
SECTION 5.3 Access to Information...................................52
ARTICLE VI COVENANTS RELATED TO THE CONDUCT OF PARENT'S BUSINESS..........53
SECTION 6.1 Conduct of Business of the Parent.......................53
SECTION 6.2 Access to Information...................................56
ARTICLE VII ADDITIONAL AGREEMENTS..........................................57
SECTION 7.1 Preparation of S-4 and the Joint Proxy Statement........57
SECTION 7.2 Letter of Accountants...................................58
SECTION 7.3 Meetings................................................58
SECTION 7.4 Government Filings; Reasonable Best Efforts;
Litigation..............................................59
SECTION 7.5 Acquisition Proposals...................................60
SECTION 7.6 Public Announcements....................................61
SECTION 7.7 Notification of Certain Matters.........................61
SECTION 7.8 Tax-Free Reorganization Treatment.......................61
SECTION 7.9 Employee Matters........................................61
SECTION 7.10 Intentionally omitted...................................61
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TABLE OF CONTENTS
(continued)
Page
SECTION 7.11 SEC and Other Filings...................................61
SECTION 7.12 Fees and Expenses.......................................62
SECTION 7.13 Obligations of Merger Sub...............................62
SECTION 7.14 Anti-takeover Statutes..................................62
SECTION 7.15 Amendment of Disclosure Schedules.......................62
ARTICLE VIII CONDITIONS TO CONSUMMATION OF THE MERGER.......................62
SECTION 8.1 Conditions to Each Party's Obligations to Effect
the Merger..............................................62
SECTION 8.2 Conditions to the Obligations of Parent and Merger Sub..63
SECTION 8.3 Conditions to the Obligations of the Company............64
ARTICLE IX TERMINATION; AMENDMENT; WAIVER.................................65
SECTION 9.1 Termination by Mutual Agreement.........................65
SECTION 9.2 Termination by Either Parent or the Company.............66
SECTION 9.3 Termination by the Company..............................66
SECTION 9.4 Termination by Parent...................................67
SECTION 9.5 Effect of Termination and Abandonment...................68
SECTION 9.6 Amendment...............................................68
SECTION 9.7 Extension; Waiver.......................................68
ARTICLE X MISCELLANEOUS..................................................68
SECTION 10.1 Entire Agreement; Assignment............................68
SECTION 10.2 Nonsurvival of Representations and Warranties...........69
SECTION 10.3 Notices.................................................69
SECTION 10.4 Governing Law...........................................70
SECTION 10.5 Descriptive Headings....................................70
SECTION 10.6 Parties in Interest.....................................70
SECTION 10.7 Severability............................................71
SECTION 10.8 Specific Performance....................................71
SECTION 10.9 Counterparts............................................71
SECTION 10.10 Interpretation..........................................71
SECTION 10.11 Definitions.............................................72
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EXHIBITS
Intentionally Omitted A
Intentionally Omitted B
Intentionally Omitted C
Company Certificate D
Parent Certificate E
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement"), dated as of February
22, 2004, is among Trinity Learning Corporation, a Utah corporation (the
"Company"), ProsoftTraining, a Nevada corporation ("Parent"), and MTX
Acquisition Corp., a Utah corporation and a direct wholly owned Subsidiary of
Parent ("Merger Sub"). Certain capitalized and non-capitalized terms used herein
are defined in Section 10.11.
RECITALS
WHEREAS, the boards of directors of the Company, Parent and Merger Sub each
have, in light of and subject to the terms and conditions set forth herein,
approved this Agreement and the transactions contemplated hereby, including the
Merger (as hereinafter defined), and the boards of directors of the Company,
Parent and Merger Sub have declared the Merger advisable and fair to, and in the
best interests of, their respective stockholders and will recommend the Merger
to such stockholders;
WHEREAS, pursuant to the Merger, among other things, and subject to the
terms and conditions of this Agreement, all of the issued and outstanding shares
of stock of the Company shall be converted into shares of common stock, par
value $.001 per share, of Parent (collectively, "Parent Common Stock");
WHEREAS, for U.S. federal income tax purposes, it is intended that the
Merger shall qualify as a reorganization within the meaning of Section 368(a) of
the Internal Revenue Code of 1986, as amended (the "Code"), and that this
Agreement shall be, and is hereby, adopted as a plan of reorganization for
purposes of Section 368(a) of the Code; and
WHEREAS, the Company, Parent and Merger Sub desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger as set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises and the representations,
warranties, covenants and agreements herein contained, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and intending to be legally bound hereby, the Company, Parent and
Merger Sub hereby agree as follows:
ARTICLE I
THE MERGER
SECTION 1.1 The Merger. At the Effective Time and upon the terms and
subject to the conditions of this Agreement and in accordance with the Utah
Revised Business Corporation Act (the "URBCA"), the Company shall be merged with
and into Merger Sub (the "Merger"). Following the Merger, Merger Sub shall
continue as the surviving corporation (the "Surviving Corporation") and the
separate corporate existence of the Company shall cease.
SECTION 1.2 Effective Time. Subject to the provisions of this Agreement,
Parent, Merger Sub and the Company shall cause the Merger to be consummated by
filing Articles of Merger (the "Articles of Merger") with the Department of
Commerce Division of Corporations and Commercial Code of the State of Utah (the
"Division") in such form as required by, and executed in accordance with, the
relevant provisions of the URBCA, as soon as practicable on or after the Closing
Date (as hereinafter defined). The Merger shall become effective upon the filing
of such Articles of Merger with the Division or at such later time as agreed in
writing by Parent and the Company and specified in the Articles of Merger (the
"Effective Time" and the date on which the Effective Time falls shall be
referred to herein as the "Effective Date").
SECTION 1.3 Closing of the Merger. The closing of the Merger (the
"Closing") will take place as soon as practicable at a time and on a date to be
specified by the parties (the "Closing Date"), which shall be no later than the
second Business Day after satisfaction or waiver of the conditions set forth in
Article VII (other than those conditions that by their nature are to be
satisfied at the Closing, but subject to the fulfillment or waiver of those
conditions), at the offices of ▇▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, or at such other time, date or place as
agreed to in writing by the parties hereto.
SECTION 1.4 Effects of the Merger. The Merger shall have the effects set
forth in the URBCA. Without limiting the generality of the foregoing, and
subject thereto, at the Effective Time, all of the properties, rights,
privileges, powers and franchises of the Company and Merger Sub shall vest in
the Surviving Corporation, and all debts, liabilities and duties of the Company
and Merger Sub shall become the debts, liabilities and duties of the Surviving
Corporation.
SECTION 1.5 Articles of Incorporation and Bylaws. Effective immediately
following the Merger, the articles of incorporation of Merger Sub, as in effect
immediately prior to the Effective Time, shall be the articles of incorporation
of the Surviving Corporation until amended in accordance with applicable Law (as
hereinafter defined); provided, however, that at the Effective Time, Article I
of the articles of incorporation of the Surviving Corporation shall be amended
to provide that the name of the corporation is Trinity Learning Corporation
Effective immediately following the Merger, the bylaws of Merger Sub, as in
effect immediately prior to the Effective Time, shall be the bylaws of the
Surviving Corporation until amended in accordance with applicable Law.
SECTION 1.6 Directors. The directors of the Company immediately prior to
the Effective Time shall be the initial directors of the Surviving Corporation
and shall hold office from the Effective Time in accordance with the charter and
bylaws of the Surviving Corporation until their successors are duly elected or
appointed and qualified or until their earlier death, resignation or removal.
SECTION 1.7 Officers. The executive officers of the Company immediately
prior to the Effective Time shall be the initial officers of the Surviving
Corporation and shall hold office from the Effective Time in accordance with the
charter and bylaws of the Surviving Corporation until their successors are duly
elected or appointed and qualified or until their earlier death, resignation or
removal.
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SECTION 1.8 Corporate Headquarters. The corporate headquarters of the
Surviving Corporation shall be located at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇. The Surviving Corporation shall maintain operating offices at
▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ and such other places around
the world as it may determine is in the best interest of the Surviving
Corporation.
ARTICLE II
CONVERSION OF SECURITIES
SECTION 2.1 Conversion of Shares.
(a) At the Effective Time, each issued and outstanding share of the common
stock of Merger Sub shall, by virtue of the Merger and without any action on the
part of Parent, Merger Sub or the Company, be converted into one fully paid and
non-assessable share of common stock of the Surviving Corporation.
(b) At the Effective Time, each share of common stock, no par value, of the
Company, ("Company Common Stock"), issued and outstanding immediately prior to
the Effective Time (individually, a "Share" and collectively, the "Shares")
(other than (i) Shares held by the Company and (ii) Shares held by Parent or
Merger Sub) shall, by virtue of the Merger and without any action on the part of
Parent, Merger Sub, the Company or any holder thereof, be converted into the
right to receive one (1) share of Parent Common Stock (referred to herein as the
"Exchange Ratio" as may be adjusted pursuant to Section 9.4(iii), and all such
shares of Parent Common Stock issued pursuant to this Section 2.1(b), together
with any cash in lieu of fractional shares of Parent Common Stock to be paid
pursuant to Section 2.7, being referred to herein as the "Merger
Consideration"). At the Effective Time, all Company Common Stock shall no longer
be outstanding and shall automatically be cancelled and extinguished and shall
cease to exist, and each holder of a certificate representing any such Company
Common Stock shall cease to have any rights with respect thereto, except the
right to receive the Merger Consideration therefore upon surrender of such
certificate in accordance with this Article II.
(c) At the Effective Time each Share of Company Common Stock held by the
Company, Parent or any of their Subsidiaries shall be cancelled and extinguished
without any consideration therefor.
(d) The Exchange Ratio shall be adjusted to reflect appropriately the
effect of any stock split, stock dividend (including any dividend or
distribution of securities convertible into Parent Common Stock or Company
Common Stock) reorganization, recapitalization, reclassification or other like
change with respect to Parent Common Stock or Company Common Stock occurring on
or after the date hereof and prior to the Effective Time.
(e) Notwithstanding subsections (a) through (d), above, shares of Company
Common Stock outstanding immediately prior to the Effective Time and held by a
holder who has not voted in favor of the Merger or consented thereto in writing
and who has demanded appraisal for such shares in accordance with Part 13 of the
URBCA ("Dissenter's Shares") shall not be
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converted into the right to receive Parent Common Stock, unless such holder
fails to perfect or withdraws or otherwise loses such holder's right to
appraisal. If after the Effective Time such holder fails to perfect or withdraws
or otherwise loses such holder's right to appraisal, such Dissenters' Shares
shall be treated as if they had been converted as of the Effective Time into the
right to receive Parent Common Stock. The Company shall give Parent prompt
written notice of any demands received for appraisal of Dissenters' Shares, and
Parent shall have the right to participate in all negotiations and Proceedings
with respect to such demands. The Company shall not, except with the prior
written consent of Parent, make any payment with respect to, or settle or offer
to settle, any such demands.
SECTION 2.2 Stock Options, Warrants and Convertible Notes.
(a) As soon as practicable following the date of this Agreement, Parent and
the Company (or, if appropriate, any committee of the Board of Directors of the
Company administering the Company's stock option plans or arrangements
(collectively, the "Company Option Plans")) shall take such action, and the
Company shall obtain all such agreements and consents, if any, as may be
required to effect the following provisions of this Section 2.2. As of the
Effective Time each outstanding option to purchase shares of Company Common
Stock pursuant to the Company Option Plans (a "Company Stock Option") shall be
replaced by a new substitute option to purchase shares of Parent Common Stock
(in each case, an "Assumed Stock Option") as follows:
(i) In the case of any Company Stock Option, (x) the number of shares
of Parent Common Stock subject to the Assumed Stock Option shall be the
product (rounded up to the nearest whole share) of the number of shares of
Company Common Stock subject to the Company Stock Option multiplied by the
Exchange Ratio, and (y) the exercise price per share under the Assumed
Stock Option shall be the quotient (truncated to the nearest $.01) of the
exercise price per share of Company Common Stock under the Company Stock
Option immediately prior to the Effective Time divided by the Exchange
Ratio.
(ii) Each Assumed Stock Option shall be subject to the same expiration
date and vesting provisions as were applicable to the relevant Company
Stock Option immediately prior to the Effective Time.
(b) As of the Effective Time, the obligation to issue shares of the Company
Common Stock upon exercise of each outstanding warrant to purchase shares of
Company Common Stock (a "Company Warrant") shall be assumed by Parent (in each
case, an "Assumed Warrant"). Each Assumed Warrant shall be subject to the same
expiration date and other terms as were applicable to the relevant Company
Warrant immediately prior to the Effective Time. The number of shares of Parent
Common Stock subject to the Assumed Warrant shall be the product (rounded up to
the nearest whole share) of the number of shares of Company Common Stock subject
to the Company Warrant multiplied by the Exchange Ratio, and the exercise price
per share under the Assumed Warrant shall be the quotient (truncated to the
nearest $.01) of the exercise price per share of Company Common Stock under the
Company Warrant immediately prior to the Effective Time divided by the Exchange
Ratio.
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(c) As of the Effective Time, the obligation to issue shares of Company
Common Stock upon conversion of each outstanding promissory note or other
indebtedness of the Company (or its Subsidiaries) convertible into shares of
Company Common Stock (a "Company Convertible Note") shall be assumed by Parent
(in each case, an "Assumed Convertible Note"). The conversion price per share
under the Assumed Convertible Note shall be the quotient (truncated to the
nearest $.01) of the conversion price per share of the Company Common Stock
under the Company Convertible Note immediately prior to the Effective Time
divided by the Exchange Ratio.
SECTION 2.3 Exchange Fund. Prior to the Effective Time, Parent shall
appoint an institution reasonably acceptable to the Company to act as exchange
agent hereunder for the purpose of exchanging Shares for the Merger
Consideration (the "Exchange Agent"). At or prior to the Effective Time, Parent
shall deposit with the Exchange Agent, in trust for the benefit of holders of
Shares (other than Parent, the Company and any of their respective
Subsidiaries), certificates representing the Parent Common Stock issuable
pursuant to Section 2.1 in exchange for outstanding Shares. Parent agrees to
make available to the Exchange Agent from time to time as needed, sufficient
cash amounts payable in lieu of fractional shares of Parent Common Stock
pursuant to Section 2.7 and any dividends and other distributions payable
pursuant to Section 2.5. Any cash and certificates of Parent Common Stock,
together with any dividends or distributions with respect thereto, deposited
with the Exchange Agent shall hereinafter be referred to as the "Exchange Fund."
SECTION 2.4 Exchange Procedures. Promptly after the Effective Time, the
Surviving Corporation shall cause the Exchange Agent to mail to each holder of a
certificate or certificates which immediately prior to the Effective Time
represented outstanding Shares (the "Certificates") whose shares were converted
pursuant to Section 2.1(b) into Parent Common Stock (i) a letter of transmittal
which shall specify that delivery shall be effective, and risk of loss and title
to the Certificates shall pass, only upon delivery of the Certificates to the
Exchange Agent, and which letter shall be in customary form and have such other
provisions as Parent and the Company may reasonably specify; and (ii)
instructions for effecting the surrender of such Certificates in exchange for
the Merger Consideration. Upon surrender of a Certificate to the Exchange Agent
together with such letter of transmittal, duly executed and completed in
accordance with the instructions thereto, and such other documents as may
reasonably be required by the Exchange Agent, the holder of such Certificate
shall be entitled to receive in exchange therefor (A) a certificate or
certificates representing that number of shares of Parent Common Stock
representing, in the aggregate, the whole number of shares that such holder has
the right to receive pursuant to Section 2.1 and (B) any dividends or
distributions to which such holder is entitled pursuant to Section 2.5 and cash
in lieu of fractional shares pursuant to Section 2.7, and the Certificate so
surrendered shall forthwith be cancelled. No interest will be paid or will
accrue on any cash payable pursuant to Section 2.5 or Section 2.7. In the event
of a transfer of ownership of Company Common Stock which is not registered in
the transfer records of the Company, certificates evidencing, in the aggregate,
the proper number of shares of Parent Common Stock, a check in the proper amount
of cash in lieu of any fractional shares of Parent Common Stock pursuant to
Section 2.7 and any dividends or other distributions to which such holder is
entitled pursuant to Section 2.5, may be issued with respect to such Shares to
such a
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transferee if the Certificate representing such Shares is presented to the
Exchange Agent, accompanied by all documents required to evidence and effect
such transfer and to evidence that any applicable stock transfer Taxes have been
paid.
SECTION 2.5 Distributions with Respect to Unsurrendered Certificates. No
dividends or other distributions declared or made with respect to shares of
Parent Common Stock with a record date after the Effective Time shall be paid to
the holder of any unsurrendered Certificate with respect to the shares of Parent
Common Stock that such holder would be entitled to receive upon surrender of
such Certificate, and no cash payment in lieu of fractional shares of Parent
Common Stock shall be paid to any such holder pursuant to Section 2.7 until such
holder shall surrender such Certificate in accordance with Section 2.4. Subject
to the effect of applicable Laws, following surrender of any such Certificate,
there shall be paid to such holder of shares of Parent Common Stock issuable in
exchange therefor, without interest, (a) promptly after the time of such
surrender, the amount of any cash payable in lieu of fractional shares of Parent
Common Stock to which such holder is entitled pursuant to Section 2.7 and the
amount of dividends or other distributions with a record date after the
Effective Time theretofore paid with respect to such whole shares of Parent
Common Stock, and (b) at the appropriate payment date, the amount of dividends
or other distributions with a record date after the Effective Time but prior to
such surrender and a payment date subsequent to such surrender, payable with
respect to such shares of Parent Common Stock.
SECTION 2.6 No Further Ownership Rights in Company Common Stock. All shares
of Parent Common Stock issued and cash paid upon conversion of the Shares in
accordance with the terms of Article I and this Article II (including any cash
paid pursuant to Sections 2.5 and 2.7) shall be deemed to have been issued or
paid in full satisfaction of all rights under the URBCA pertaining to the
Shares.
SECTION 2.7 No Fractional Shares of Parent Common Stock.
(a) No certificates or scrip of shares of Parent Common Stock representing
fractional shares of Parent Common Stock or book-entry credit of the same shall
be issued upon the surrender for exchange of Certificates and such fractional
share interests will not entitle the owner thereof to vote or to have any rights
of a stockholder of Parent or a holder of shares of Parent Common Stock.
(b) Notwithstanding any other provision of this Agreement, each holder of
Shares exchanged pursuant to the Merger who would otherwise have been entitled
to receive a fraction of a share of Parent Common Stock (after taking into
account all Certificates delivered by such holder) shall receive, in lieu
thereof, cash (without interest) in an amount equal to the product of (i) such
fractional part of a share of Parent Common Stock multiplied by (ii) the closing
price on the NASDAQ SmallCap Market for a share of Parent Common Stock on the
date of the Effective Time. As promptly as practicable after the determination
of the aggregate amount of cash to be paid to holders of fractional interests,
the Exchange Agent shall notify Parent and Parent shall cause the Surviving
Corporation to deposit such amount with the Exchange Agent and shall cause the
Exchange Agent to forward payments to such holders of fractional interests
subject to and in accordance with the terms hereof.
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SECTION 2.8 Termination of Exchange Fund. Any portion of the Exchange Fund
which remains undistributed to the holders of Certificates for twelve months
after the Effective Time shall be delivered to the Surviving Corporation or
otherwise on the instruction of the Surviving Corporation, and any holders of
the Certificates who have not theretofore complied with this Article II shall
thereafter look only to the Surviving Corporation and Parent for the Merger
Consideration with respect to the Shares formerly represented thereby to which
such holders are entitled pursuant to Section 2.1 and Section 2.4, any cash in
lieu of fractional shares of Parent Common Stock to which such holders are
entitled pursuant to Section 2.7 and any dividends or distributions with respect
to shares of parent Common Stock to which such holders are entitled pursuant to
Section 2.5.
SECTION 2.9 No Liability. None of Parent, Merger Sub, the Company, the
Surviving Corporation or the Exchange Agent, or any directors, officers,
employees or agents of each of the foregoing shall be liable to any Person in
respect of any Parent Common Stock, any dividends or distributions with respect
thereto, any cash in lieu of fractional shares of Parent Common Stock or any
cash from the Exchange Fund delivered to a public official pursuant to any
applicable abandoned property, escheat or similar Law.
SECTION 2.10 Investment of the Exchange Fund. The Exchange Agent shall
invest any cash included in the Exchange Fund as directed by Parent on a daily
basis. Any interest and other income resulting from such investments promptly
shall be paid to Parent.
SECTION 2.11 Lost Certificates. If any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the Person
claiming such Certificate to be lost, stolen or destroyed and, if reasonably
required by the Surviving Corporation, the posting by such Person of a bond in
such reasonable amount as the Surviving Corporation may direct as indemnity
against any claim that may be made against it with respect to such Certificate,
the Exchange Agent will deliver in exchange for such lost, stolen or destroyed
Certificate the applicable Merger Consideration with respect to the Shares
formerly represented thereby, any cash in lieu of fractional shares of Parent
Common Stock and unpaid dividends and distributions on shares of Parent Common
Stock deliverable in respect thereof, pursuant to this Agreement.
SECTION 2.12 Withholding Rights. Each of the Surviving Corporation, Parent
and the Exchange Agent shall be entitled to deduct and withhold from the Merger
Consideration otherwise payable pursuant to this Agreement to any holder of
Shares such amounts as it is required to deduct and withhold with respect to the
making of such payment under the Code and the rules and regulations promulgated
thereunder, or any applicable Law. To the extent that amounts are so withheld by
the Surviving Corporation, Parent or the Exchange Agent, as the case may be,
such withheld amounts shall be treated for all purposes of this Agreement as
having been paid to the holder of the Shares in respect to which such deduction
and withholding was made by the Surviving Corporation, Parent or the Exchange
Agent, as the case may be.
SECTION 2.13 Stock Transfer Books. The stock transfer books of the Company
shall be closed immediately upon the Effective Time and there shall be no
further registration of transfers of Shares thereafter on the records of the
Company. On or after the Effective Time, any Certificates presented to the
Exchange Agent (in its capacity as Exchange Agent) or Parent for
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any reason shall be converted into the Merger Consideration with respect to the
Shares formerly represented thereby, any cash in lieu of fractional shares of
Parent Common Stock to which the holders thereof are entitled pursuant to
Section 2.7 and any dividends or other distributions to which the holders
thereof are entitled pursuant to Section 2.5 and the Certificates so presented
shall be cancelled.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the disclosure schedule delivered by the Company to
Parent prior to the execution of this Agreement (the "Company Disclosure
Schedule"), or in the amendments to certain sections of the Company Disclosure
Schedule permitted by Section 7.15 hereof, the Company hereby represents and
warrants to each of Parent and Merger Sub as follows:
SECTION 3.1 Organization and Qualification; Subsidiaries.
(a) The Company and each of its Subsidiaries is, or will be as of the
Effective Time, a corporation or legal entity duly organized, validly existing
and in good standing under the applicable Laws of the jurisdiction of its
incorporation or organization and has all requisite corporate, partnership or
similar power and authority to own, lease and operate its properties and to
carry on its businesses as now being conducted.
(b) Except as listed in Section 3.1 of the Company Disclosure Schedule, the
Company does not own, directly or indirectly, beneficially or of record, any
shares of capital stock or other securities of any other entity or any other
investment in any other entity.
(c) The Company is, and each of its Subsidiaries is or will be as of the
Effective Time, duly qualified or licensed and in good standing to do business
in each jurisdiction in which the property owned, leased, or operated by it or
the nature of the business conducted by it makes such qualification or licensing
necessary, except where the failure to be so duly qualified or licensed and in
good standing is not reasonably expected to have, individually or in the
aggregate, a Material Adverse Effect on the Company and its Subsidiaries taken
as a whole.
(d) The Company has heretofore delivered to Parent accurate and complete
copies of the articles of incorporation and bylaws, as currently in effect, of
the Company. The Company has heretofore delivered to Parent accurate and
complete copies of the charter or certificate of incorporation and bylaws (or
other similar organizational and governing documents), as currently in effect,
of each of its Subsidiaries.
SECTION 3.2 Capitalization of the Company and Its Subsidiaries.
(a) The authorized stock of the Company consists of: (i) 110,000,000 shares
of Company Common Stock, of which 25,661,122 shares are issued and outstanding
as of the date hereof and held by less than 1,000 stockholders, and (ii)
10,000,000 shares of Preferred Stock, no par value, no shares of which are
issued and outstanding. All of the issued and outstanding Shares have been
validly issued, and are duly authorized, fully paid, non-assessable and free of
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preemptive rights. As of the date hereof, 3,492,000 Shares are reserved for
issuance and issuable upon or otherwise deliverable in connection with the
exercise of outstanding Company Stock Options issued pursuant to the Company's
2002 Stock Plan. Except as set forth above or listed in Section 3.2(a) of the
Company Disclosure Schedule, as of the date hereof, there are no outstanding (i)
shares of stock or other voting securities of the Company; (ii) securities of
the Company or any of its Subsidiaries convertible into or exchangeable for
shares of stock or voting securities of the Company; (iii) options or other
rights to acquire from the Company or any of its Subsidiaries, and no
obligations of the Company or any of its Subsidiaries to issue, any stock,
voting securities, or securities convertible into or exchangeable for stock or
voting securities of the Company; or (iv) equity equivalents, interests in the
ownership or earnings of the Company, or other similar rights (including stock
appreciation rights) (collectively, "Company Securities"). There are no
outstanding obligations of the Company or any of its Subsidiaries to repurchase,
redeem or otherwise acquire any Company Securities. There are no stockholder
agreements, voting trusts or other agreements or understandings to which the
Company or any of its Subsidiaries is a party or to which it is bound relating
to the voting of any shares of capital stock of the Company (other than the
Company Voting Agreement).
(b) Except as provided in Section 3.2(b) of the Company Disclosure
Schedule, all of the outstanding capital stock of the Company's Subsidiaries is
owned by the Company, directly or indirectly, free and clear of any Lien or any
other limitation or restriction (including, any restriction on the right to vote
or sell the same) except as may be provided as a matter of Law. Except as
provided in Section 3.2(b) of the Company Disclosure Schedule, there are no debt
or equity securities of the Company or its Subsidiaries convertible into or
exchangeable for, no options or other rights to acquire from the Company or its
Subsidiaries, and no other contract, understanding, arrangement, or obligation
(whether or not contingent) providing for the issuance or sale, directly or
indirectly of, any capital stock or other ownership interests in, or any other
securities of, any Subsidiary of the Company. Except as provided in Section
3.2(b) of the Company Disclosure Schedule, there are no outstanding contractual
obligations of the Company or its Subsidiaries to repurchase, redeem, or
otherwise acquire any outstanding shares of capital stock or other ownership
interests in any Subsidiary of the Company. None of the Company's Subsidiaries
owns any capital stock of the Company. For purposes of this Agreement, "Lien"
means, in respect of any asset (including any security) any mortgage, lien,
pledge, charge, security interest, or encumbrance of any kind in respect of such
asset.
SECTION 3.3 Authority Relative to This Agreement.
(a) The Company has all necessary corporate power and authority to execute
and deliver this Agreement and to consummate the transactions contemplated
hereby. No other corporate proceedings on the part of the Company are necessary
to authorize this Agreement or to consummate the transactions contemplated
hereby and thereby (other than, in respect of the Merger and this Agreement, the
Company Requisite Vote (as hereinafter defined)). This Agreement has been duly
and validly executed and delivered by the Company and constitutes a valid,
legal, and binding agreement of the Company, enforceable against the Company in
accordance with its terms, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar Laws affecting
creditors' rights and remedies generally, and subject, as to enforceability, to
general principles of equity, including principles of
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commercial reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity).
(b) As of the date hereof, the Board of Directors of the Company (the
"Company Board") has duly and validly authorized the execution and delivery of
this Agreement and approved the consummation of the transactions contemplated
hereby and has resolved (i) this Agreement and the transactions contemplated
hereby, including the Merger, taken together, to be advisable and fair to, and
in the best interests of, the Company and its stockholders; and (ii) to
recommend that the stockholders of the Company approve and adopt this Agreement
and approve the Merger. The Company Board has directed that this Agreement be
submitted to the stockholders of the Company for their approval and adoption.
The affirmative approval of the holders of Shares representing a majority of the
votes that may be cast by the holders of all outstanding Shares (voting as a
single class) as of the record date for the Company (the "Company Requisite
Vote") is the only vote of the holders of any class or series of stock of the
Company necessary to approve and adopt this Agreement and approve the Merger.
Holders of Shares have dissenters' rights in connection with the Merger.
SECTION 3.4 SEC Reports; Financial Statements. Except as provided on
Section 3.4 of the Company Disclosure Schedule, Since February 1, 2002, the
Company has filed all forms, reports and documents with the SEC required to be
filed by it under the Securities Act of 1933, as amended (the "Securities Act"),
and the Securities Exchange Act of 1934, as amended (the "Exchange Act" and the
"Company SEC Reports", respectively), each of which complied in all material
respects with all applicable requirements of the Securities Act and the Exchange
Act, each as in effect on the dates such Company SEC Reports were filed. None of
the Company SEC Reports contained, when filed, any untrue statement of a
material fact or omitted to state a material fact required to be stated or
incorporated by reference therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, except to the extent amended prior to the date hereof by a
subsequently filed Company SEC Report. The consolidated financial statements of
the Company included in the Company SEC Reports complied as to form in all
material respects with applicable accounting requirements and the published
rules and regulations of the SEC in respect thereof and fairly presented, in
conformity with United States generally accepted accounting principles applied
on a consistent basis during the periods involved ("GAAP") (except as may be
indicated in the notes thereto), the consolidated financial position of the
Company and its consolidated Subsidiaries, in each case as of the dates thereof
and their consolidated results of operations and changes in financial position
for the periods then ended (subject, in the case of the unaudited interim
financial statements, to the absence of footnote disclosure and to normal
year-end adjustments). For purposes of this Agreement, "Company Balance Sheet"
means the consolidated balance sheet of the Company as of September 30, 2003, as
set forth in the Company's Quarterly Report on Form 10-Q for the fiscal quarter
ended September 30, 2003, and "Company Balance Sheet Date" means September 30,
2003. Since the Company Balance Sheet Date, there has not been any change, or
any application or request for any change, by the Company or any of its
Subsidiaries in accounting principles, methods or policies for financial
accounting or Tax purposes, other than as a result of any changes under GAAP or
other relevant accounting principles or changes required by any applicable Tax
rule or regulation.
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SECTION 3.5 No Undisclosed Liabilities. There are no material liabilities
of the Company or any of its Subsidiaries of any kind whatsoever, whether
accrued, contingent, absolute, determined, determinable or otherwise, which are
required to be reflected in its financial statements (or in the notes thereto)
in accordance with GAAP, other than: (a) liabilities disclosed, provided for or
reserved against in the Company Balance Sheet or in the notes thereto; (b)
liabilities arising in the ordinary course of business after the date of the
Company Balance Sheet; (c) liabilities disclosed in the Company SEC Reports
prior to the date hereof; (d) liabilities arising under this Agreement; and (e)
liabilities disclosed in the Company Disclosure Schedule.
SECTION 3.6 Absence of Changes. Except as contemplated by this Agreement or
as set forth in Section 3.6 of the Company Disclosure Schedule and except as and
to the extent publicly disclosed in the Company's SEC Reports prior to the date
hereof, since the Company Balance Sheet Date, the Company and its Subsidiaries
have conducted their business in the ordinary and usual course consistent with
past practice and there has not been:
(a) any event, occurrence or development which had or is reasonably
expected to have, individually or in the aggregate, a Material Adverse
Effect on the Company and its Subsidiaries taken as a whole;
(b) any declaration, setting aside or payment of any dividend or other
distribution in respect of any shares of capital stock of the Company or
(except to the Company or other Subsidiaries) any Subsidiary, any split,
combination or reclassification of any shares of capital stock of the
Company or any Subsidiary, or any repurchase, redemption or other
acquisition by the Company or any of its Subsidiaries of any Company or
Subsidiary securities;
(c) any amendment or change to the certificate of incorporation or
bylaws of the Company or any amendment of any term of any outstanding
security of the Company or any of its Subsidiaries that would materially
increase the obligations of the Company or any such Subsidiary under such
security;
(d) (i) any incurrence or assumption by the Company or any Subsidiary
of any indebtedness for borrowed money other than under existing credit
facilities (or any renewals, replacements or extensions that do not
increase the aggregate commitments thereunder) except (A) in the ordinary
and usual course of business consistent with past practice or (B) as
permitted by Section 5.1, or (ii) any guarantee, endorsement, or other
incurrence or assumption of liability (whether directly, contingently or
otherwise) by the Company or any of its Subsidiaries for the obligations of
any other Person (other than any wholly owned Subsidiary of the Company),
other than in the ordinary and usual course of business consistent with
past practice;
(e) any creation or assumption by the Company or any of its
Subsidiaries of any Lien on any material asset of the Company or any of its
Subsidiaries other than in the ordinary and usual course of business
consistent with past practice;
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(f) any making of any loan, advance or capital contribution to or
investment in any Person by the Company or any of its Subsidiaries other
than (i) as permitted by Section 5.1, (ii) loans, advances or capital
contributions to or investments in wholly owned Subsidiaries of the
Company, (iii) loans or advances to employees of the Company or any of its
Subsidiaries in the ordinary course of business consistent with past
practice or (iv) extensions of credit to customers in the ordinary course
of business consistent with past practice;
(g) any contract or agreement entered into by the Company or any of
its Subsidiaries on or prior to the date hereof relating to any material
acquisition or disposition of any assets or business, other than contracts
or agreements in the ordinary and usual course of business consistent with
past practice and those contemplated by this Agreement;
(h) any modification, amendment, assignment, termination or
relinquishment by the Company or any of its Subsidiaries of any contract,
license or other right (including any insurance policy naming it as a
beneficiary or a loss payable payee) that is reasonably expected to have a
Material Adverse Effect on the Company and its Subsidiaries taken as a
whole;
(i) any material change in any method of accounting or accounting
principles or practice by the Company or any of its Subsidiaries, except
for any such change required by reason of a change in GAAP;
(j) any (i) grant of any severance or termination pay to any director,
officer or employee of the Company or any of its Subsidiaries exceeding the
amounts set forth in the Company's severance plans or agreements listed in
Sections 3.13(a) or 3.18 of the Company Disclosure Schedule; (ii) entering
into of any employment, deferred compensation, severance, consulting,
termination or other similar agreement (or any amendment to any such
existing agreement) with any director, officer or employee of the Company
or any of its Subsidiaries whose annual cash compensation exceeds $80,000;
(iii) increase in benefits payable under any existing severance or
termination pay policies or employment agreements; or (iv) increase in
compensation, bonus or other benefits payable to directors, officers or
employees of the Company or any of its Subsidiaries other than, in the case
of clause (iv) only, increases prior to the date hereof in compensation,
bonus or other benefits payable to directors, officers or employees of the
Company or any of its Subsidiaries in the ordinary and usual course of
business consistent with past practice or merit increases in salaries of
employees at regularly scheduled times in customary amounts consistent with
past practices;
(k) any change or amendment of the contracts, salaries, wages or other
compensation of any officer, director, employee, agent or other similar
representative of the Company or any of its Subsidiaries whose annual cash
compensation exceeds $80,000 other than changes or amendments that do not
and will not result in increases of more than five percent in the salary,
wages or other compensation of any such Person;
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(l) any adoption, entering into, amendment, alteration or termination
of (partially or completely) any Benefit Plan or Employee Arrangement
except as contemplated by this Agreement or to the extent required by
applicable Law or GAAP;
(m) any entering into of any contract with an officer, director,
employee, agent or other similar representative of the Company or any of
its Subsidiaries that is not terminable, without penalty or other
liability, upon not more than 60 calendar days' notice; or
(n) any (i) making or revoking of any material election relating to
Taxes, (ii) settlement or compromise of any material claim, action, suit,
litigation, proceeding, arbitration, investigation, audit or controversy
relating to Taxes, or (iii) change to any material methods of reporting
income or deductions for federal income tax purposes.
SECTION 3.7 Information Supplied. None of the information supplied or to be
supplied by the Company specifically for inclusion or incorporation by reference
in (i) the registration statement on Form S-4 to be filed with the SEC by Parent
in connection with the issuance of Parent Common Stock as required by the terms
of this Agreement pursuant to the Merger (the "S-4"), at the time the S-4 is
filed with the SEC and at the time it becomes effective under the Securities
Act, will contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading, and (ii) the joint proxy statement/prospectus relating
to the Company Stockholder Meeting and Parent Stockholder Meeting to be held in
connection with the Merger (the "Joint Proxy Statement") will, at the date
mailed to stockholders and at the times of the Company Stockholder Meeting and
the Parent Stockholder Meeting, contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading. If at any time prior to the Effective Time any
event in respect of the Company, its officers and directors or any of its
Subsidiaries should occur which is required to be described in an amendment of,
or a supplement to, the S-4 or the Joint Proxy Statement, the Company shall
promptly so advise Parent and such event shall be so described, and such
amendment or supplement (which Parent shall have a reasonable opportunity to
review) shall be promptly filed with the SEC and, as required by Law,
disseminated to the stockholders of the Company. The Joint Proxy Statement,
insofar as it relates to the Company Stockholder Meeting, will comply as to form
in all material respects with the provisions of the Exchange Act and the rules
and regulations thereunder. No representation is made under this Section 3.7
with respect to any statements made or incorporated by reference in the S-4 or
the Joint Proxy Statement based on information supplied by the Parent
specifically for inclusion or incorporation by reference therein.
SECTION 3.8 Consents and Approvals. Except for filings, permits,
authorizations, consents and approvals as may be required under, and other
applicable requirements of, the Securities Act, state securities or blue sky
Laws, the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended (the
"HSR Act") and any comparable requirements of foreign Governmental Entities (as
defined below), the filing and acceptance for record of the Articles of Merger
as required by the URBCA, and such other filings, permits, consents and
approvals
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which, if not obtained or made, are not reasonably expected to have a Material
Adverse Effect on the Company and its Subsidiaries taken as a whole, no filing
with or notice to, and no permit, authorization, consent or approval of, any
court or tribunal or administrative, governmental or regulatory body, agency or
authority, whether domestic or foreign (a "Governmental Entity") is necessary
for the execution and delivery by the Company of this Agreement or the
consummation by the Company of the transactions contemplated hereby.
SECTION 3.9 No Default. Neither the Company nor any of its Subsidiaries is
in violation of any term of (i) its charter, certificate or articles of
incorporation or bylaws (or other similar organizational or governing
documents), (ii) any agreement or instrument related to indebtedness for
borrowed money or any other agreement to which it is a party or by which it is
bound, or (iii) any domestic or foreign law, order, writ, injunction, decree,
ordinance, award, stipulation, statute, judicial or administrative doctrine,
rule or regulation entered by a Governmental Entity ("Law") applicable to the
Company, its Subsidiaries or any of their respective assets or properties, the
consequence of which violation is reasonably expected to (A) have, individually
or in the aggregate, a Material Adverse Effect on the Company and its
Subsidiaries taken as a whole or (B) prevent or materially delay the performance
of this Agreement by the Company. Except as provided in Section 3.9 of the
Company Disclosure Schedule, the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby and
thereby will not (A) result in any violation of or conflict with, constitute a
default under (with or without due notice or lapse of time or both), require any
consent, waiver or notice under any term of, or result in the reduction or loss
of any benefit or the creation or acceleration of any right or obligation
(including any termination rights) under, (i) the charter, certificate or
articles of incorporation or bylaws (or other similar organizational or
governing documents) of the Company or any of its Subsidiaries, (ii) any
material agreement, note, bond, mortgage, indenture, contract, lease, Company
Permit or other obligation or right to which the Company or any of its
Subsidiaries is a party or by which any of the assets or properties of the
Company or any of its Subsidiaries is bound, or (iii) any applicable Law, except
in the case of clause (ii) and (iii) where any of the foregoing is not
reasonably expected to have, individually or in the aggregate, a Material
Adverse Effect on the Company and its Subsidiaries taken as a whole, or (B)
result in the creation of (or impose any obligation on the Company or any of its
Subsidiaries to create) any Lien upon any of the material assets or properties
of the Company or any of its Subsidiaries pursuant to any such term.
SECTION 3.10 Real Property.
(a) Except as disclosed in Section 3.10(a) of the Company Disclosure
Schedule, no real property is owned, leased or used by the Company or its
current Subsidiaries in the course of their respective businesses. The address,
general use of, and period of ownership or occupancy of all of the real property
owned in fee by the Company and its Subsidiaries (the "Company Owned Facilities"
and, individually referred to herein as a "Company Owned Facility") and all of
the real property the Company and its Subsidiaries use or occupy or have the
right to use or occupy, now or in the future, pursuant to any lease, sublease,
or other occupancy agreement (the "Company Leased Facilities" and individually
referred to herein as a "Company Leased Facility") are set forth in Section 3.10
of the Company Disclosure Schedule. No real property is
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owned, leased or used by the Company or its current Subsidiaries in the course
of their respective businesses other than the Company Owned Facilities and
Company Leased Facilities.
(b) With respect to each Company Owned Facility and except as set forth on
the Company Balance Sheet, the Company Disclosure Schedule, or in the Company
SEC Reports:
(i) the Company or its Subsidiary has good and marketable title to
Company Owned Facilities free and clear of all Liens, except (x) Taxes and
general and special assessments not in default and payable without penalty
and interest, and (y) Liens, easements, covenants and other restrictions or
imperfections of title that do not materially impair the current use,
occupancy, or value in excess of any indebtedness secured by such Lien, or
the marketability of title of such Company Owned Facilities;
(ii) to the Company's Knowledge, there are no pending or threatened
condemnation proceedings, lawsuits or administrative actions relating to
any Company Owned Facility or other matters affecting materially and
adversely the current use, occupancy or value thereof;
(iii) there are no leases, subleases, licenses, concessions or other
agreements, written or oral, granting to any party or parties (other than
wholly-owned Subsidiaries of the Company) the right of use or occupancy of
any portion of any Company Owned Facility that materially adversely affect
the Company's use of the property;
(iv) there are no outstanding options or rights of first refusal to
purchase any Company Owned Facility, or any portion thereof or interest
therein;
(v) there are no parties (other than the Company or its Subsidiaries)
in possession of any Company Owned Facility, other than tenants under any
leases to be provided to Parent who are in possession of space to which
they are entitled; and
(vi) all facilities located on Company Owned Facilities are now, and
will be at the time of Closing, in good operating condition and repair, and
structurally sound and free of known defects, with no material alterations
or repairs required thereto (other than ordinary and routine maintenance
and repairs) under applicable Laws, Company Permits or insurance company
requirements. To the Company's Knowledge, all such Company Owned Facilities
have been operated and maintained in all material respects in accordance
with applicable Laws and Company Permits. All such Company Owned Facilities
are supplied with utilities and other services, including gas, electricity,
water, telephone, sanitary sewer and storm sewer, all of which services are
adequate for the uses to which such Company Owned Facility is being put and
are provided via public roads or via permanent, irrevocable, appurtenant
easements benefiting the parcel of real property.
-15-
(c) With respect to each Company Leased Facility:
(i) the Company will make available to Parent a true, correct, and
complete copy of the lease, sublease or other occupancy agreement for such
Company Leased Facility (and all modifications, amendments, and supplements
thereto and all side letters to which Company or any of its Subsidiaries is
a party affecting the obligations of any party thereunder) (each such
agreement is referred to herein as a "Company Real Property Lease");
(ii) to the Company's Knowledge, the Company or its Subsidiary has a
good and valid leasehold interest in such Company Leased Facility free and
clear of all Liens, except (x) Taxes and general and special assessments
not in default and payable without penalty and interest, and (y) easements,
covenants and other restrictions that do not materially impair the current
use, occupancy or value, or the marketability of the Company's or its
Subsidiary's interest in such real property;
(iii) to the Company's Knowledge, each Company Real Property Lease
constitutes the valid and legally binding obligation of the parties
thereto, enforceable in accordance with its terms, and is in full force and
effect;
(iv) all rent and other sums and charges payable by the Company or its
Subsidiary as tenant under the Company Real Property Lease covering the
Company Leased Facility are current, no termination event or condition or
uncured default on the part of the tenant or, to the Company's Knowledge,
the landlord, exists under any Company Real Property Lease. No party to
such Company Real Property Lease has given written notice to the Company or
its Subsidiary or made a claim in writing against the Company or its
Subsidiary in respect of any breach or default thereunder; and
(v) neither the Company nor its Subsidiary has assigned, transferred,
conveyed, mortgaged, deeded in trust or encumbered its leasehold interest
in the Company Leased Facility.
SECTION 3.11 Litigation. Except as disclosed in Section 3.11 of the Company
Disclosure Schedule, there is no other suit, claim, action, proceeding or, to
the Company's Knowledge, investigation, pending or, to the Company's Knowledge,
threatened which is reasonably expected to have, individually and in the
aggregate, a Material Adverse Effect on the Company and its Subsidiaries taken
as a whole. Except as disclosed in Section 3.11 of the Company Disclosure
Schedule or the Company SEC Reports, none of the Company or its Subsidiaries is
subject to any outstanding order, writ, injunction or decree which is reasonably
expected to have, individually or in the aggregate, a Material Adverse Effect on
the Company and its Subsidiaries taken as a whole. To the Company's Knowledge,
there is no action, suit, proceeding or investigation pending or threatened
against any current or former officer, director, employee or agent of the
Company or any of its Subsidiaries which is reasonably expected to give rise to
a claim for contribution or indemnification against the Company or any of its
Subsidiaries. Notwithstanding the foregoing, any shareholder litigation or
litigation by any Governmental Entity, in each case brought or threatened
against the Company or any officer,
-16-
director, employee or agent of the Company in any respect of this Agreement or
the transactions contemplated hereby, shall not be deemed to have a Material
Adverse Effect on the Company and its Subsidiaries taken as a whole.
SECTION 3.12 Compliance with Applicable Law; Permits. The Company and its
Subsidiaries hold all permits, licenses, variances, exemptions, orders, and
approvals of all Governmental Entities necessary for the lawful conduct of their
respective businesses (the "Company Permits"), except for failures to hold such
permits, licenses, variances, exemptions, orders and approvals which are not
reasonably expected to have, individually or in the aggregate, a Material
Adverse Effect on the Company and its Subsidiaries taken as a whole. The Company
and its Subsidiaries are in compliance with the terms of the Company Permits,
except where the failure to comply is not reasonably expected to have,
individually or in the aggregate, a Material Adverse Effect on the Company and
its Subsidiaries taken as a whole. The businesses and operations of the Company
and its Subsidiaries comply in all respects with all Laws applicable to the
Company or its Subsidiaries, except where the failure to so comply is not
reasonably expected to have, individually or in the aggregate, a Material
Adverse Effect on the Company and its Subsidiaries taken as a whole.
SECTION 3.13 Employee Plans
(a) Section 3.13(a) of the Company Disclosure Schedule sets forth a true,
correct, and complete list of:
(i) all material "employee benefit plans," as defined in Section 3(3)
of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), under which the Company or any of its Subsidiaries has any
obligation or liability, contingent or otherwise, including, but not
limited to, (i) all severance plans or arrangements other than any such
plan or arrangement (x) under which severance benefits do not exceed two
weeks' salary for each year of employment or, in the case of employees
whose annual cash compensation exceeds $80,000, three months' salary, or
(y) which is legally mandated by applicable non-U.S. law; and (ii) all
supplemental or U.S. non-qualified retirement plans or arrangements which
provide benefits to any employee whose annual cash compensation exceeds
$80,000 or benefits in excess of $5,000 for each year of employment (the
"Benefit Plans"); and
(ii) all employment, consulting, termination, severance or individual
compensation agreements (other than any such agreement which is terminable
within 90 days without liability or at any time without liability exceeding
two weeks' salary for each year of employment or, in the case of employees
whose annual cash compensation exceeds $80,000, three months' salary, or is
legally mandated by applicable non-U.S. law); all stock award, stock
option, stock purchase or other equity-based (including phantom stock or
stock appreciation rights) plans or arrangements; all material bonus or
other incentive compensation plans or agreements (including, but not
limited to, any such plan or agreement covering any officer or employee
whose annual cash compensation exceeds $80,000); all material salary
continuation or deferred compensation plans or agreements (including, but
not limited to, any such plan or agreement covering any
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current or former officer or employee whose annual cash compensation
exceeds $80,000; in each case, as to which the Company or any of its
Subsidiaries has any obligation or liability (contingent or otherwise) (the
"Employee Arrangements").
(b) A complete and correct copy of each Employee Arrangement, including the
forms of stock option grant agreements generally used to make grants under the
Company Option Plans, has been provided to Parent. In respect of each Benefit
Plan, a complete and correct copy of each of the following documents (if
applicable) has been provided to Parent: (i) the most recent plan and related
trust documents, and all amendments thereto; (ii) the most recent summary plan
description, and all related summaries of material modifications thereto; (iii)
the most recent Form 5500 (including, schedules and attachments); (iv) the most
recent Internal Revenue Service ("IRS") determination letter; and (v) the most
recent actuarial reports (including for purposes of Financial Accounting
Standards Board report nos. 87, 106 and 112).
(c) Except as disclosed in Section 3.13(c) of the Company Disclosure
Schedule, none of the Benefit Plans or Employee Arrangements is subject to Title
IV of ERISA, constitutes a defined benefit retirement plan or is a
multi-employer plan described in Section 3(37) of ERISA, and the Company and its
Subsidiaries do not have any material obligation or liability (contingent or
otherwise) in respect of any such plans. The Company and its Subsidiaries are
not members of a group of trades or businesses (other than that consisting of
the Company and its Subsidiaries) under common control or treated as a single
employer pursuant to Section 414 of the Code.
(d) The Benefit Plans and their related trusts intended to qualify under
Sections 401 and 501(a) of the Code, respectively, have received a favorable
determination letter from the IRS and the Company has no Knowledge that any
event has occurred since the date of such letter that could cause the IRS to
revoke such determination. Any voluntary employee benefit association which
provides benefits to current or former employees of the Company and its
Subsidiaries, or their beneficiaries, is and has been qualified under Section
501(c)(9) of the Code.
(e) In all material respects, all contributions or other payments required
to have been made by the Company and its Subsidiaries to or under any Benefit
Plan or Employee Arrangement by applicable Law or the terms of such Benefit Plan
or Employee Arrangement (or any agreement relating thereto) have been timely and
properly made or have been accrued in the Company's financial statements.
(f) The Benefit Plans and Employee Arrangements have been maintained and
administered in accordance with their terms and applicable Laws and no
individual who has performed services for the Company or any of its Subsidiaries
has been improperly excluded from participation in any Benefit Plan or Employee
Arrangement, except where the failure to so maintain and administer such Benefit
Plans or the exclusion of any such individuals is not reasonably expected to
have, individually or in the aggregate, a Material Adverse Effect on the Company
and its Subsidiaries taken as a whole.
(g) There are no pending or, to the Company's Knowledge, threatened
actions, claims, or proceedings against or relating to any Benefit Plan or
Employee Arrangement (other
-18-
than routine benefit claims by Persons claiming benefits thereunder), and, to
the Knowledge of the Company, there are no facts or circumstances which could
form a reasonable basis for any of the foregoing, except for such actions,
claims or proceedings which are not reasonably expected to have, individually or
in the aggregate, a Material Adverse Effect on the Company and its Subsidiaries
taken as a whole.
(h) The Company and its Subsidiaries do not have any material obligation or
liability (contingent or otherwise) to provide post-retirement life insurance or
health benefits coverage for current or former officers, directors, or employees
of the Company or any of its Subsidiaries except (i) as may be required under
Part 6 of Title I of ERISA at the sole expense of the participant or the
participant's beneficiary, (ii) a medical expense reimbursement account plan
pursuant to Section 125 of the Code, (iii) as may be required by a foreign
jurisdiction, or (iv) through the last day of the calendar month in which the
participant terminates employment with the Company or any Subsidiary of the
Company.
(i) Except as set forth in Section 3.13(i) of the Company Disclosure
Schedule, none of the assets of any Benefit Plan is stock of the Company or any
of its affiliates, or property leased to or jointly owned by the Company or any
of its affiliates.
(j) Except as disclosed in Section 3.13(j) of the Company Disclosure
Schedule or in connection with equity compensation, neither the execution and
delivery of this Agreement nor the consummation of the transactions contemplated
hereby will (i) result in any payment becoming due to any employee (current,
former, or retired) of the Company or any of its Subsidiaries, (ii) increase any
benefits under any Benefit Plan or Employee Arrangement (determined without
regard to the "materiality" limits set forth in the definitions of such terms),
or (iii) result in the acceleration of the time of payment of, vesting of, or
other rights in respect of any such benefits.
(k) Except as disclosed in Section 3.13(k) of the Company Disclosure
Schedule, each of the Benefit Plans covering employees outside of the United
States is funded in all material respects through adequate reserves on the
financial statements of the Company or its Subsidiaries, insurance contracts,
annuity contracts, trust funds or similar arrangements. The benefits and
compensation under the Benefit Plans and Employee Arrangements covering
employees outside of the United States are no more than customary and reasonable
for the country in which such employees work and the industry in which the
Company and its Subsidiaries conduct their business.
(l) The aggregate number of shares of Company Common Stock purchasable
under all outstanding purchase rights under the Company Option Plans does not
exceed the maximum number of shares remaining available for issuance under such
plan.
SECTION 3.14 Labor Matters.
(a) The Company and its Subsidiaries are not parties to any labor or
collective bargaining agreement, and no employees of the Company or any of its
Subsidiaries are represented by any labor organization. There are no
representation or certification proceedings,
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or petitions seeking a representation proceeding, pending or, to the Company's
Knowledge, threatened in writing to be brought or filed with the National Labor
Relations Board or any other labor relations tribunal or authority. Within the
last twelve months, to the Company's Knowledge, there have been no organizing
activities involving the Company or any of its Subsidiaries in respect of any
group of employees of the Company or any of its Subsidiaries.
(b) There are no strikes, work stoppages, slowdowns, lockouts, material
arbitrations or material grievances or other material labor disputes pending or
threatened in writing against or involving the Company or any of its
Subsidiaries. There are no unfair labor practice charges, grievances or
complaints pending or, to the Company's Knowledge, threatened in writing by or
on behalf of any employee or group of employees of the Company or any of its
Subsidiaries which, if individually or collectively resolved against the Company
or any of its Subsidiaries, would reasonably be expected to have a Material
Adverse Effect on the Company and its Subsidiaries taken as a whole.
(c) There are no complaints, charges or claims against the Company or any
of its Subsidiaries pending or, to the Company's Knowledge, threatened to be
brought or filed with any Governmental Entity or arbitrator based on, arising
out of, in connection with, or otherwise relating to the employment or
termination of employment of any individual by the Company or any of its
Subsidiaries which, if individually or collectively resolved against the Company
or any of its Subsidiaries, would reasonably be expected to have a Material
Adverse Effect on the Company and its Subsidiaries taken as a whole, and, to the
Knowledge of the Company, there are no facts or circumstances which could form a
reasonable basis for any of the foregoing.
(d) There has been no "mass layoff" or "plant closing" as defined by the
Worker Adjustment and Retraining Notification Act, as amended ("WARN"), in
respect of the Company or any of its Subsidiaries within the six months prior to
the Effective Time.
(e) All employees of the Company and its Subsidiaries possess all
applicable passports, visas, permits and other authorizations required by all
applicable immigration or similar Laws to be employed by and to perform services
for and on behalf of the Company and its Subsidiaries, except where the failure
to possess such passports, visas, permits or other authorizations would not,
individually or in the aggregate, reasonably be expected to materially affect
the conduct of business by the Company or its Subsidiaries. The Company and its
Subsidiaries, and their employees, have complied in all material respects with
all applicable immigration and similar Laws.
SECTION 3.15 Environmental Matters.
(a) For purposes of this Agreement:
(i) "Environmental Law" means all federal, state, local or foreign
Law, or other legal requirement regulating or prohibiting Releases of
Hazardous Materials into the indoor or outdoor environment, or pertaining
to the protection of natural resources or wildlife, the environment or
public and employee health and safety or pollution or the exposure to
Hazardous Materials, including, but not limited to, the
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Comprehensive Environmental Response, Compensation, and Liability Act
("CERCLA") (42 U.S.C. Section 9601 et seq.), the Hazardous Materials
Transportation Act (49 U.S.C. Section 1801 et seq.), the Resource
Conservation and Recovery Act (42 U.S.C. Section 6901 et seq.), the Clean
Water Act (33 U.S.C. Section 1251 et seq.), the Clean Air Act (42 U.S.C.
Section 7401 et seq.), the Toxic Substances Control Act (15 U.S.C. Section
7401 et seq.), the Atomic Energy Act (42 U.S.C. Section 2014 et seq.), the
Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. Section 136
et seq.), the Communications Act (47 U.S.C. Section 151 et seq.), and the
Occupational Safety and Health Act (29 U.S.C. Section 651 et seq.)
("OSHA"), as such laws or other legal requirements have been and may be
amended or supplemented through the Closing Date;
(ii) "Hazardous Material" means any substance, material or waste which
is regulated pursuant to any applicable Environmental Law as a "hazardous
waste," "hazardous material," "hazardous substance," "extremely hazardous
waste," "restricted hazardous waste," "contaminant," "toxic waste," "toxic
substance," "source material," "special nuclear material," "byproduct
material," "high-level radioactive waste," "low-level radioactive waste,"
"spent nuclear material" or "radio frequency" and includes petroleum,
petroleum products and petroleum by-products and waste;
(iii) "Release" means any release, spill, emission, leaking, pumping,
dumping, injection, deposit, disposal, discharge, dispersal, leaching or
migration into the indoor or outdoor environment, or into or out of any
property currently or formerly owned, operated or leased by the applicable
party or its Subsidiaries; and
(iv) "Remedial Action" means all actions, including any capital
expenditures, required by a Governmental Entity or required under or taken
pursuant to any Environmental Law, or voluntarily undertaken to (A) clean
up, remove, treat, remediate or address any Hazardous Materials in the
indoor or outdoor environment; (B) prevent the Release or threat of
Release, or minimize the further Release of any Hazardous Material so it
does not endanger or threaten to endanger the public or employee health or
welfare or the indoor or outdoor environment; (C) perform pre-remedial
studies and investigations or post-remedial monitoring and care pertaining
or relating to a Release.
(b) Except as set forth in Section 3.15 of the Company Disclosure Schedule:
(i) The operations of the Company and its Subsidiaries are in material
compliance with all Environmental Laws, and the Company is not aware of any
facts, circumstances or conditions which, without significant capital
expenditures, would prevent material compliance in the future;
(ii) To the Company's Knowledge, the Company and its Subsidiaries have
obtained all Company Permits, required under applicable Environmental Laws
for the continued operations of their respective businesses; the Company
and its Subsidiaries have made all material filings, reports and notices
required under any Environmental Law for the past and future operations of
their respective businesses;
-21-
(iii) The Company and its Subsidiaries are not subject to any
outstanding written orders or material contracts or agreements with any
Governmental Entity or other Person respecting (A) Environmental Laws, (B)
any Remedial Action, (C) any Release or threatened Release of a Hazardous
Material, or (D) an assumption of responsibility for environmental claims
of another Person or entity;
(iv) The Company and its Subsidiaries have not received any written
communication alleging, in respect of any such party, the material
violation of or liability (real or potential) under any Environmental Law;
or requesting, with respect to any such party, information with respect to
an investigation pursuant to CERCLA, or any foreign or state counterpart
thereto, or any other Environmental Law;
(v) To the Company's Knowledge, neither the Company nor any of its
Subsidiaries has any material contingent liability in connection with any
Remedial Action or the Release of any Hazardous Material (whether on-site
or off-site) or employee or third party exposure to Hazardous Materials;
(vi) The current operations of the Company and its Subsidiaries do not
involve the generation, transportation, treatment, storage or disposal of
Hazardous Materials. To the Company's Knowledge, there has been no disposal
by the Company or its Subsidiaries of any Hazardous Materials on or in any
site listed or formally proposed to be listed on the National Priorities
List promulgated pursuant to CERCLA or any foreign or state remedial
priority list promulgated or maintained pursuant to comparable foreign or
state law;
(vii) To the Company's Knowledge, there is not now nor has there been
in the past, on, in or at any Company Owned Facility, Company Leased
Facility, Former Company Facility (defined as all of the real property
formerly owned, leased or used, other than those used solely for office or
administrative purposes, by the Company or any of its current or former
Subsidiaries or corporate predecessors in interest at any time in the
past), or any other facility for which the Company or its Subsidiaries has
assumed responsibility for environmental claims, any of the following: (A)
any underground storage tanks; (B) landfills, dumps or surface
impoundments; (C) any planned, ongoing or completed Remedial Action; (D)
any asbestos-containing materials; or (E) any polychlorinated biphenyls;
(viii) There is not now, nor to the Company's Knowledge, has there
been in the past, on, in or at any Company Owned Facility, Company Leased
Facility, Former Company Facility, or any other facility for which the
Company or its Subsidiaries has assumed responsibility for environmental
claims, any site on or nominated for the National Priority List promulgated
pursuant to CERCLA or any foreign or state remedial priority list
promulgated or published pursuant to any comparable foreign or state law;
and
(ix) No judicial or administrative proceedings are pending or, to the
Company's Knowledge, threatened against the Company or its Subsidiaries
alleging the
-22-
material violation of or seeking to impose material liability pursuant to
any Environmental Law and, to the Company's Knowledge, there are no
investigations pending or threatened against the Company or any of its
Subsidiaries under Environmental Laws.
(c) The Company will make available to Parent copies of all material
environmentally related assessments, audits, investigations, or similar reports
(and, upon reasonable specific request, sampling reports) in its possession or
control and which were prepared in the last five years (and, upon reasonable
specific request, earlier information) relating to the Company or its
Subsidiaries or any real property currently or formerly owned, operated or
leased by or for the Company or its Subsidiaries, including any Company Owned
Facility, Company Leased Facility, or Former Company Facility.
SECTION 3.16 Tax Matters.
(a) Each of the Company and its Subsidiaries has timely filed (or has had
timely filed) all Tax Returns required to be filed by it (or on its behalf). All
such Tax Returns are complete and correct in all material respects. The Company
and its Subsidiaries have paid all Taxes due for the periods covered by such Tax
Returns. The most recent Company SEC Reports reflect an adequate reserve for all
Taxes payable by the Company and its Subsidiaries for all Taxable periods and
portions thereof through the date of such Company SEC Reports. The Company has
previously delivered (or will deliver prior to the Effective Date) to Parent
copies of (i) all federal, state, local and foreign income and franchise Tax
Returns filed by the Company and its Subsidiaries relating to any taxable
periods of the Company or any of its Subsidiaries that remains subject to audit
under applicable statutes of limitations; and (ii) any audit report issued
within the last three years (or otherwise in respect of any audit or
investigation in progress) relating to Taxes due from or in respect of the
Company or its Subsidiaries.
(b) No material deficiencies for any Taxes have been proposed, asserted, or
assessed against the Company or its Subsidiaries that have not been fully paid
or adequately provided for in the appropriate financial statements of the
Company, no requests for waivers of the time to assess any Taxes are pending,
and no power of attorney in respect of any Taxes has been executed or filed with
any taxing authority. No material issues relating to Taxes have been raised by
the relevant taxing authority during any presently pending audit or examination.
All income and franchise Tax Returns filed by or on behalf of the Company and
its Subsidiaries for the taxable years ended on or prior to September 30, 2000
have been reviewed by the relevant taxing authority or the statute of
limitations with respect to such Tax Returns has expired.
(c) No material Liens for Taxes exist in respect of any assets or
properties of the Company or its Subsidiaries, except for statutory Liens for
Taxes not yet due.
(d) Neither the Company nor any of its Subsidiaries is a party to or is
bound by any Tax sharing agreement, Tax indemnity obligation, or similar
agreement, arrangement, or practice in respect of Taxes (whether or not written)
(including any advance pricing agreement, closing agreement, or other agreement
relating to Taxes with any taxing authority).
-23-
(e) Neither the Company nor any of its Subsidiaries (i) has ever been a
member of an affiliated group within the meaning of Section 1504(a) of the Code
(or any similar or analogous group defined under a similar or analogous state,
local or foreign Law) other than an affiliated group the common parent of which
is the Company, or (ii) has any liability under Treasury Regulation Section
1.1502-6 (or any predecessor or successor thereof or analogous or similar
provision under state, local or foreign Law), as a transferee or successor, by
contract or otherwise for Taxes of any affiliated group of which the Company is
not the common parent.
(f) To the Company's Knowledge, neither the Company nor any of its
Subsidiaries has taken or agreed to take any action that would prevent the
Merger from constituting a reorganization qualifying under the provisions of
Section 368(a) of the Code.
(g) Except as set forth in Section 3.16(g) of the Company Disclosure
Schedule, there are no employment, severance, or termination agreements or other
compensation arrangements currently in effect which provide for the payment of
any amount (whether in cash or property or the vesting of property) as a result
of any of the transactions contemplated by this Agreement that individually or
collectively (either alone or upon the occurrence of any additional or
subsequent event), could give rise to a payment which is nondeductible by reason
of Section 280G of the Code.
(h) The Company and its Subsidiaries have complied in all material respects
with all Laws applicable to the payment and withholding of Taxes and have duly
and timely withheld from employee salaries, wages and other compensation and
have paid over to the appropriate taxing authority all amounts required to be so
withheld and paid over for all periods under all applicable Laws.
(i) No federal, state, local, or foreign audits or other administrative
proceedings or court proceedings are presently pending in respect of any Taxes
or Tax Returns of the Company or its Subsidiaries and neither the Company nor
its Subsidiaries have received a written notice of any pending audit or
proceeding.
(j) Except as set forth in Section 3.16(i) of the Company Disclosure
Schedule, neither the Company nor any of its Subsidiaries has agreed to or is
required to make any adjustment under Section 481(a) of the Code or any similar
provision of state, local or foreign Law by reason of a change in accounting
method initiated by the Company or its Subsidiaries or has any Knowledge that a
taxing authority has proposed any such adjustment or change in accounting
method, or has any application pending with any taxing authority requesting
permission for any changes in accounting methods that relate to the business or
operations of the Company or its Subsidiaries.
(k) Except as set forth in Section 3.16(k) of the Company Disclosure
Schedule, neither the Company nor any of its Subsidiaries is a party to any
contract, agreement, or other arrangement which could result in the payment of
amounts that could be nondeductible by reason of Section 162(m) of the Code,
provided that no representation or warranty is made as to performance-based or
equity-based compensation.
-24-
(l) Neither the Company nor any of its Subsidiaries has received any
private letter rulings from the IRS or comparable rulings from other taxing
authorities.
(m) Neither the Company nor any of its Subsidiaries has constituted either
a "distributing corporation" or a "controlled corporation" (within the meaning
of Section 355(a)(1)(A) of the Code) in a distribution of stock qualifying for
tax-free treatment under Section 355 of the Code (i) in the two years prior to
the date of this Agreement or (ii) in a distribution which could otherwise
constitute part of a "plan" or "series of related transactions" (within the
meaning of Section 355(e) of the Code) in conjunction with the Merger.
(n) Neither the Company nor any of its Subsidiaries (i) engaged in any
"intercompany transactions" in respect of which gain was and continues to be
deferred pursuant to Treasury Regulation Section 1.1502-13 or any predecessor or
successor thereof or analogous or similar provision under state, local or
foreign Law; or (ii) has "excess loss accounts" in respect of the stock of any
Subsidiary pursuant to Treasury Regulation Section 1.1502-19, or any predecessor
or successor thereof or analogous or similar provision under state, local or
foreign Law.
For purposes of this Agreement, "Tax" or "Taxes" means all federal, state,
local or foreign Taxes, charges, fees, imposts, duties, levies, gaming or other
assessments, including, all net income, gross receipts, capital, sales, use, ad
valorem, value added, transfer, franchise, profits, inventory, capital stock,
license, withholding, payroll, employment, social security, unemployment,
excise, severance, stamp, occupation, property, and estimated Taxes, customs
duties, fees, assessments and charges of any kind whatsoever, together with any
interest and any penalties, fines, additions to Tax or additional amounts
imposed by any taxing authority (domestic or foreign) and shall include any
transferee liability in respect of Taxes, any liability in respect of Taxes
imposed by contract, Tax sharing agreement, Tax indemnity agreement or any
similar agreement. "Tax Returns" means any report, return, document,
declaration, or any other information or filing required to be supplied to any
taxing authority or jurisdiction (domestic or foreign) in respect of Taxes,
including information returns, any document in respect of or accompanying
payments or estimated Taxes, or in respect of or accompanying requests for the
extension of time in which to file any such report, return document,
declaration, or other information, including amendments thereof and attachments
thereto.
SECTION 3.17 Absence of Questionable Payments. To the Company's Knowledge,
neither the Company nor any of its Subsidiaries nor any director, officer,
agent, employee or other Person acting on behalf of the Company or any of its
Subsidiaries, has used any corporate or other funds for unlawful contributions,
payments, gifts or entertainment, or made any unlawful expenditures relating to
political activity to government officials or others or established or
maintained any unlawful or unrecorded funds in violation of the Foreign Corrupt
Practices Act of 1977, as amended, or any other domestic or foreign Law. To the
Company's Knowledge, neither the Company nor any of its Subsidiaries nor any
director, officer, agent, employee or other Person acting on behalf of the
Company or any of its Subsidiaries has accepted or received any unlawful
contributions, payments, gifts or expenditures.
-25-
SECTION 3.18 Material Contracts.
(a) Set forth in Section 3.18(a) of the Company Disclosure Schedule and/or
the Company's SEC Filings, is a list of all contracts and agreements (and all
amendments, modifications and supplements thereto and all side letters to which
the Company or any of its Subsidiaries is a party affecting the obligations of
any party thereunder) to which the Company or any of its Subsidiaries is a party
or by which any of its assets or properties are bound that are material to the
business, assets or properties of the Company and its Subsidiaries taken as a
whole, including, to the extent any of the following are, individually or in the
aggregate, material to the business, assets or properties of the Company and its
Subsidiaries taken as a whole, all: (i) employment, severance, product design or
development, personal services, consulting, non-competition or indemnification
contracts (including, any contract to which the Company or any of its
Subsidiaries is a party involving employees of the Company), but excluding
normal indemnification provisions under license or sale contracts; (ii)
licensing, merchandising or distribution agreements involving the payment of
more than $50,000 per year; (iii) contracts granting a right of first refusal or
first negotiation involving in excess of $50,000; (iv) partnership or joint
venture agreements; (v) agreements for the acquisition, sale or lease of
material assets or properties of the Company (by merger, purchase or sale of
assets or stock or otherwise) entered into since December 31, 2003; (vi)
contracts or agreements with any Governmental Entity involving the payment of
more than $50,000 per year; (vii) loan or credit agreements, mortgages,
indentures or other agreements or instruments evidencing indebtedness for
borrowed money by the Company or any of its Subsidiaries or any such agreement
pursuant to which indebtedness for borrowed money may be incurred, in each case
involving in excess of $50,000; (viii) agreements that purport to limit, curtail
or restrict the ability of the Company or any of its Subsidiaries to compete in
any geographic area or line of business; (ix) assembly (packaging), testing, or
supply agreements, in each case, involving in excess of $50,000; and (x)
commitments and agreements to enter into any of the foregoing (collectively,
together with any such contracts entered into in accordance with Section 5.1,
the "Company Material Contracts"). Section 3.18 of the Company Disclosure
Schedule sets forth a list of all Company Material Contracts and the Company has
heretofore made available to Parent true, correct, and complete copies of all
such Company Material Contracts.
(b) To the Company's Knowledge, each of the Company Material Contracts
constitutes the valid and legally binding obligation of the Company or its
Subsidiaries, enforceable in accordance with its terms, and is in full force and
effect. There is no material default under any Company Material Contract either
by the Company (or its Subsidiaries) or, to the Company's Knowledge, by any
other party thereto, and no event has occurred that with the giving of notice,
the lapse of time, or both would constitute a default thereunder by the Company
(or its Subsidiaries) or, to the Company's Knowledge, any other party. As of the
date hereof, no party has notified the Company in writing that it intends to
terminate or fail to extend its contract with the Company within one year of the
date of the Agreement, except for any such termination or failure as would not
have a Material Adverse Effect on the Company and its Subsidiaries taken as a
whole.
-26-
(c) No party to any such Company Material Contract has given notice to the
Company of or made a claim against the Company in respect of any material breach
or default thereunder.
(d) Except as set forth in Section 3.18(d) of the Company Disclosure
Schedule, no consent of any third party is required under any Company Material
Contract as a result of or in connection with, and the enforceability of any
Company Material Contract will not be affected in any manner by, the execution,
delivery, and performance of this Agreement or the consummation of the
transactions contemplated hereby.
SECTION 3.19 Subsidies. Section 3.19 of the Company Disclosure Schedule
sets forth a list of all material grants, subsidies and similar arrangements
directly or indirectly between or among the Company or any of its Subsidiaries,
on the one hand, and any domestic or foreign Governmental Entity or any other
Person, on the other hand. Except as set forth on Section 3.19 of the Company
Disclosure Schedule, neither the Company nor any of its Subsidiaries has
requested, sought, applied for or entered into any material grant, subsidy or
similar arrangement directly or indirectly from or with any domestic or foreign
Governmental Entity or any other Person.
SECTION 3.20 Intellectual Property.
(a) As used herein, the term "Intellectual Property" means domestic and
foreign letters patent, patents, patent applications, patent licenses, know-how
licenses, trademark registrations and applications, service ▇▇▇▇ registrations
and applications and copyright registrations and applications, databases,
software licenses, trade names, trade secrets, technical Knowledge, know-how,
confidential information, customer lists, proprietary processes, techniques,
formulae, and related ownership, use and other rights (including rights of
renewal and rights to ▇▇▇ for past, present and future infringements or
misappropriations thereof).
(b) To the Company's Knowledge, and except as are not reasonably expected
to have a Material Adverse Effect on the Company and its Subsidiaries taken as a
whole: (i) each item of Intellectual Property is in compliance with applicable
legal requirements relating to the enforceability or maintenance of such item
(including payment of filing, examination and maintenance fees and proofs of
working or use, as applicable) other than any requirement that if, not
satisfied, would not result in a revocation or otherwise materially affect the
enforceability of the item of Intellectual Property in question, and the Company
has taken reasonable steps to protect such Intellectual Property; (ii) the
Company and its Subsidiaries own or have the right to use, free and clear of all
Liens, all Intellectual Property necessary for the operation of the businesses
of the Company and its Subsidiaries as presently conducted and as presently
proposed to be conducted; (iii) each material item of Intellectual Property
owned or used by the Company and its Subsidiaries immediately prior to the
Effective Time will be owned or available for use by Parent and the Surviving
Corporation immediately subsequent to the Effective Time; (iv) the Company and
its Subsidiaries have taken all action deemed by the Company or the relevant
Subsidiary to be necessary or reasonable, but in no event less than all
commercially reasonable action, to protect and preserve the confidentiality of
all technical Intellectual Property not otherwise protected by patents, patent
applications or copyrights; (v) the Company has had and
-27-
continues to have a requirement that all employees of the Company and its
Subsidiaries must execute a non-disclosure agreement which includes an agreement
to assign to the Company or its Subsidiaries all rights to Intellectual Property
originated or invented by such employee relating to the business of the Company
and its Subsidiaries; and (vi) no trade secret or confidential know-how material
to the business of the Company or any of its Subsidiaries as currently operated
has been disclosed or authorized to be disclosed to any third party, other than
pursuant to a non-disclosure agreement that protects the Company's or such
Subsidiary's proprietary interests in and to such trade secrets and confidential
know-how.
(c) Except as set forth in Section 3.20(c) of the Company Disclosure
Schedule, to the Company's Knowledge, neither the Company nor any of its
Subsidiaries has interfered with, infringed upon, misappropriated or otherwise
come into conflict with any Intellectual Property rights of third parties, and
neither the Company nor any of its Subsidiaries has received any charge,
complaint, claim or notice alleging any such interference, infringement,
misappropriation or violation that remains unresolved and, if decided adversely
to the Company, would be reasonably likely to have a Material Adverse Effect on
the Company and Subsidiaries taken as a whole. No third party has, to the
Company's Knowledge, interfered with, infringed upon, misappropriated or
otherwise come into conflict with any Intellectual Property rights of the
Company or its Subsidiaries, except where such actions are not reasonably
expected to have a Material Adverse Effect on the Company and its Subsidiaries
taken as a whole.
(d) Section 3.20(d) of the Company Disclosure Schedule identifies each
material item of Intellectual Property that any third party owns and that the
Company or any of its Subsidiaries uses pursuant to license, sublicense,
agreement or permission that either (i) if such license, sublicense, agreement
or permission were denied, would reasonably be expected to have a Material
Adverse Effect on the Company or its Subsidiaries taken as a whole, or (ii)
includes any unsatisfied obligation to pay any royalty amount or any obligation
to pay a royalty, whether fixed or determined based on usage, following the
Effective Date in excess of $10,000. To the Company's Knowledge, in respect of
each such item of used Intellectual Property:
(i) the license, sublicense, agreement or permission covering the item
is legal, valid, binding, enforceable and in full force and effect;
(ii) the licenses, sublicenses, agreements or permissions will in all
material respects continue to be legal, valid, binding, enforceable and in
full force and effect on identical terms following the Effective Time;
(iii) no party to the license, sublicense, agreement or permission is
in breach or default, and no event has occurred which with notice or lapse
of time would constitute a breach or default or permit termination,
modification or acceleration thereunder such as would have a Material
Adverse Effect on the Company and its Subsidiaries taken as a whole; and
(iv) no party to the license, sublicense, agreement or permission has
repudiated any provision thereof.
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(e) Except as set forth in Section 3.20(e) of the Company Disclosure
Schedule, neither the Company nor any of its Subsidiaries has granted (i) any
exclusive licenses (other than implied patent licenses in the ordinary course of
business) in any patents owned by the Company or any of its Subsidiaries or (ii)
any exclusive licenses in any other Intellectual Property owned by the Company
or any of its Subsidiaries to any third party.
(f) Except as may have been given in connection with patent licenses set
forth in Section 3.20(e) of the Company Disclosure Schedule or given in the
ordinary course of business within the scope of the Company's standard terms and
conditions of sale, neither the Company nor any of its Subsidiaries has entered
into any material agreement to indemnify any other Person against any charge of
infringement or misappropriation of any Intellectual Property.
(g) The execution, delivery and performance by the Company of this
Agreement, and the consummation of the transactions contemplated hereby, will
not (i) result in the loss or impairment of, or give rise to any right of any
third party to terminate or alter, any of the Company's or any of its
Subsidiaries' rights to own any of its Intellectual Property except as are not
reasonably expected to have a Material Adverse Effect on the Company and its
Subsidiaries taken as a whole, nor (ii) require the consent of any Governmental
Entity or third party in respect of any such Intellectual Property that, if not
obtained, is reasonably expected to have a Material Adverse Effect on the
Company and its Subsidiaries taken as a whole.
SECTION 3.21 Opinion of Financial Advisor. The Company Board has received
an oral opinion from its financial advisor prior to the date of this Agreement,
to the effect that, as of such date, the Exchange Ratio is fair to the
stockholders of the Company from a financial point of view.
SECTION 3.22 Brokers. Except as set forth in Section 3.22 of the Company
Disclosure Schedule, no broker, finder, investment banker or other Person (other
than the Company's Financial Advisor, a true and correct copy of whose
engagement letter has been provided to Parent) is entitled to any brokerage,
finder's or other fee or commission or expense reimbursement in connection with
the transactions contemplated by this Agreement based upon arrangements made by
and on behalf of the Company or any of its affiliates.
SECTION 3.23 URBCA ss. 203. The restrictions contained in Title 61 Chapter
6 of the Utah Code (i.e., The Utah Control Shares Acquisitions Act) will not
apply to the execution, delivery or performance of this Agreement, the Company
Voting Agreement or the consummation of the Merger. No other antitakeover Laws
of any state are applicable to this Agreement, the Company Voting Agreement, or
the transactions contemplated hereby or thereby.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF PARENT AND MERGER SUB
Except as set forth in the disclosure schedule delivered by Parent to the
Company prior to the execution of this Agreement (the "Parent Disclosure
Schedule") or in the amendments to
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certain sections of the Parent Disclosure Schedule permitted by Section 7.15
hereof, Parent and Merger Sub hereby represent and warrant to the Company as
follows:
SECTION 4.1 Organization and Qualification; Subsidiaries.
(a) Each of Parent and Merger Sub and each of their Subsidiaries is, or
will be as of the Effective Time, a corporation or legal entity duly organized,
validly existing and in good standing under the applicable Laws of the
jurisdiction of its incorporation or organization and has all requisite
corporate, partnership or similar power and authority to own, lease and operate
its properties and to carry on its businesses as now being conducted.
(b) Exhibit 21 to Parent's Annual Report on Form 10-K on October 22, 2001
sets forth a list of all Subsidiaries of Parent. Except as listed therein or in
Section 4.1 of the Parent Disclosure Schedule, neither Parent nor Merger Sub
owns, directly or indirectly, beneficially or of record, any shares of capital
stock or other securities of any other entity or any other investment in any
other entity.
(c) Each of Parent and Merger Sub is, and each of their Subsidiaries is or
will be as of the Effective Time, duly qualified or licensed and in good
standing to do business in each jurisdiction in which the property owned,
leased, or operated by it or the nature of the business conducted by it makes
such qualification or licensing necessary, except where the failure to be so
duly qualified or licensed and in good standing is not reasonably expected to
have, individually or in the aggregate, a Material Adverse Effect on Parent and
its Subsidiaries taken as a whole.
(d) Each of Parent and Merger Sub has heretofore delivered to the Company
accurate and complete copies of the certificate of incorporation and bylaws, as
currently in effect, of Parent and Merger Sub. Each of Parent and Merger Sub has
heretofore delivered to the Company accurate and complete copies of the charter
or certificate of incorporation and bylaws (or other similar organizational and
governing documents), as currently in effect, of each of its Subsidiaries.
SECTION 4.2 Capitalization of Parent and Its Subsidiaries.
(a) The authorized stock of Parent consists of 75,000,000 shares of Parent
Common Stock, of which 24,221,326 shares are issued and 24,209,414 are
outstanding (the Parent Common Stock is sometimes referred to herein as the
"Parent Shares"). All of the issued and outstanding Parent Shares have been
validly issued, and are duly authorized, fully paid, non-assessable and free of
preemptive rights. As of the date hereof, 3,074,880 Shares are reserved for
issuance and issuable upon or otherwise deliverable in connection with the
exercise of outstanding Parent Stock Options issued pursuant to Parent's stock
option plans. Except as set forth above or listed in Section 4.2(a) of the
Parent Disclosure Schedule, as of the date hereof, there are no outstanding (i)
shares of stock or other voting securities of Parent; (ii) securities of Parent
or any of its Subsidiaries convertible into or exchangeable for shares of stock
or voting securities of Parent; (iii) options or other rights to acquire from
Parent or any of its Subsidiaries, and no obligations of Parent or any of its
Subsidiaries to issue, any stock, voting securities, or securities convertible
into or exchangeable for stock or voting securities of Parent; or (iv) equity
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equivalents, interests in the ownership or earnings of Parent, or other similar
rights (including stock appreciation rights) (collectively, "the Parent
Securities"). There are no outstanding obligations of Parent or any of its
Subsidiaries to repurchase, redeem or otherwise acquire any the Company
Securities. There are no stockholder agreements, voting trusts or other
agreements or understandings to which Parent or any of its Subsidiaries is a
party or to which it is bound relating to the voting of any shares of capital
stock of Parent (other than the Parent Voting Agreement).
(b) Except as provided in Section 4.2(b) of Parent Disclosure Schedule, all
of the outstanding capital stock of Parent's Subsidiaries is owned by Parent,
directly or indirectly, free and clear of any Lien or any other limitation or
restriction (including, any restriction on the right to vote or sell the same)
except as may be provided as a matter of Law. Except as provided in Section
4.2(b) of Parent Disclosure Schedule, there are no debt or equity securities of
Parent or its Subsidiaries convertible into or exchangeable for, no options or
other rights to acquire from Parent or its Subsidiaries, and no other contract,
understanding, arrangement, or obligation (whether or not contingent) providing
for the issuance or sale, directly or indirectly of, any capital stock or other
ownership interests in, or any other securities of, any Subsidiary of Parent.
Except as provided in Section 4.2(b) of Parent Disclosure Schedule, there are no
outstanding contractual obligations of Parent or its Subsidiaries to repurchase,
redeem, or otherwise acquire any outstanding shares of capital stock or other
ownership interests in any Subsidiary of Parent. None of Parent's Subsidiaries
owns any capital stock of Parent. For purposes of this Agreement, "Lien" means,
in respect of any asset (including any security) any mortgage, lien, pledge,
charge, security interest, or encumbrance of any kind in respect of such asset.
SECTION 4.3 Authority Relative to This Agreement.
(a) Each of Parent and Merger Sub has all necessary corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. No other corporate proceedings on the part of
Parent or Merger Sub are necessary to authorize this Agreement or to consummate
the transactions contemplated hereby and thereby (other than, in respect of the
Merger and this Agreement, Parent Requisite Vote (as hereinafter defined)). This
Agreement has been duly and validly executed and delivered by each of Parent and
Merger Sub and constitutes a valid, legal, and binding agreement of Parent and
Merger Sub, enforceable against Parent and Merger Sub in accordance with its
terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar Laws affecting creditors' rights and
remedies generally, and subject, as to enforceability, to general principles of
equity, including principles of commercial reasonableness, good faith and fair
dealing (regardless of whether enforcement is sought in a proceeding at law or
in equity).
(b) As of the date hereof, the Board of Directors of Parent (the "Parent
Board") has duly and validly authorized the execution and delivery of this
Agreement and approved the consummation of the transactions contemplated hereby,
and has resolved (i) this Agreement and the transactions contemplated hereby,
including the Merger, taken together, to be advisable and fair to, and in the
best interests of, Parent and its stockholders; and (ii) to recommend that the
stockholders of Parent approve and adopt this Agreement and approve the Merger.
Parent Board has directed that this Agreement be submitted to the stockholders
of Parent for their approval and
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adoption. The affirmative approval of the holders of Shares representing a
majority of the votes that may be cast by the holders of all outstanding Shares
(voting as a single class) as of the record date for Parent (the "Parent
Requisite Vote") is the only vote of the holders of any class or series of stock
of Parent necessary to approve and adopt this Agreement and approve the Merger.
SECTION 4.4 SEC Reports; Financial Statements. Since October 31, 2001,
Parent has filed all forms, reports and documents with the SEC required to be
filed by it under the Securities Act and the Exchange Act (the "Parent SEC
Reports"), each of which complied in all material respects with all applicable
requirements of the Securities Act and the Exchange Act, each as in effect on
the dates such Parent SEC Reports were filed. None of the Parent SEC Reports
contained, when filed, any untrue statement of a material fact or omitted to
state a material fact required to be stated or incorporated by reference therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, except to the extent
amended prior to the date hereof by a subsequently filed the Company SEC Report.
The consolidated financial statements of Parent included in the Parent SEC
Reports complied as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC in respect
thereof and fairly presented, in conformity with GAAP (except as may be
indicated in the notes thereto), the consolidated financial position of Parent
and its consolidated Subsidiaries, in each case as of the dates thereof and
their consolidated results of operations and changes in financial position for
the periods then ended (subject, in the case of the unaudited interim financial
statements, to the absence of footnote disclosure and to normal year-end
adjustments). For purposes of this Agreement, "the Parent Balance Sheet" means
the consolidated balance sheet of Parent as of October 31, 2003, as set forth in
Parent's Quarterly Report on Form 10-Q for the fiscal quarter ended October 31,
2003, and "the Parent Balance Sheet Date" means October 31, 2003. Since the
Parent Balance Sheet Date, there has not been any change, or any application or
request for any change, by Parent or any of its Subsidiaries in accounting
principles, methods or policies for financial accounting or Tax purposes, other
than as a result of any changes under GAAP or other relevant accounting
principles or changes required by any applicable Tax rule or regulation.
SECTION 4.5 No Undisclosed Liabilities. There are no material liabilities
of Parent or Merger Sub or any of their Subsidiaries of any kind whatsoever,
whether accrued, contingent, absolute, determined, determinable or otherwise,
which are required to be reflected in its financial statements (or in the notes
thereto) in accordance with GAAP, other than: (a) liabilities disclosed,
provided for or reserved against in Parent Balance Sheet or in the notes
thereto; (b) liabilities arising in the ordinary course of business after the
date of Parent Balance Sheet; (c) liabilities disclosed in the Parent SEC
Reports prior to the date hereof; (d) liabilities arising under this Agreement;
and (e) liabilities disclosed in Section 4.5 of the Parent Disclosure Schedule.
SECTION 4.6 Absence of Changes. Except as contemplated by this Agreement or
as set forth in Section 4.6 of the Parent Disclosure Schedule and except as and
to the extent publicly disclosed in the Parent's SEC Reports prior to the date
hereof, since the Parent Balance Sheet Date, Each of Parent, Merger Sub and
their Subsidiaries have conducted their business in the ordinary and usual
course consistent with past practice and there has not been:
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(a) any event, occurrence or development which had or is reasonably
expected to have, individually or in the aggregate, a Material Adverse
Effect on Parent and its Subsidiaries taken as a whole;
(b) any declaration, setting aside or payment of any dividend or other
distribution in respect of any shares of capital stock of Parent or (except
to Parent or other Subsidiaries) any Subsidiary, any split, combination or
reclassification of any shares of capital stock of Parent or any
Subsidiary, or any repurchase, redemption or other acquisition by Parent or
any of its Subsidiaries of any Parent or Subsidiary securities;
(c) any amendment or change to the certificate of incorporation or
bylaws of Parent or Merger Sub or any amendment of any term of any
outstanding security of Parent or any of its Subsidiaries that would
materially increase the obligations of Parent or any such Subsidiary under
such security;
(d) (i) any incurrence or assumption by Parent or any Subsidiary of
any indebtedness for borrowed money other than under existing credit
facilities (or any renewals, replacements or extensions that do not
increase the aggregate commitments thereunder) except (A) in the ordinary
and usual course of business consistent with past practice or (B) as
permitted by Section 6.1, or (ii) any guarantee, endorsement, or other
incurrence or assumption of liability (whether directly, contingently or
otherwise) by Parent or any of its Subsidiaries for the obligations of any
other Person (other than any wholly owned Subsidiary of Parent), other than
in the ordinary and usual course of business consistent with past practice;
(e) any creation or assumption by Parent or any of its Subsidiaries of
any Lien on any material asset of Parent or any of its Subsidiaries other
than in the ordinary and usual course of business consistent with past
practice;
(f) any making of any loan, advance or capital contribution to or
investment in any Person by Parent or any of its Subsidiaries other than
(i) as permitted by Section 6.1, (ii) loans, advances or capital
contributions to or investments in wholly owned Subsidiaries of Parent,
(iii) loans or advances to employees of Parent or any of its Subsidiaries
in the ordinary course of business consistent with past practice or (iv)
extensions of credit to customers in the ordinary course of business
consistent with past practice;
(g) any contract or agreement entered into by Parent or any of its
Subsidiaries on or prior to the date hereof relating to any material
acquisition or disposition of any assets or business, other than contracts
or agreements in the ordinary and usual course of business consistent with
past practice and those contemplated by this Agreement;
(h) any modification, amendment, assignment, termination or
relinquishment by Parent or any of its Subsidiaries of any contract,
license or other right (including any insurance policy naming it as a
beneficiary or a loss payable payee) that is reasonably
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expected to have a Material Adverse Effect on Parent and its Subsidiaries
taken as a whole;
(i) any material change in any method of accounting or accounting
principles or practice by Parent or any of its Subsidiaries, except for any
such change required by reason of a change in GAAP;
(j) any (i) grant of any severance or termination pay to any director,
officer or employee of Parent or any of its Subsidiaries exceeding the
amounts set forth in Parent's severance plans or agreements listed in
Sections 4.13(a) or 4.18 of the Parent Disclosure Schedule; (ii) entering
into of any employment, deferred compensation, severance, consulting,
termination or other similar agreement (or any amendment to any such
existing agreement) with any director, officer or employee of Parent or any
of its Subsidiaries whose annual cash compensation exceeds $80,000; (iii)
increase in benefits payable under any existing severance or termination
pay policies or employment agreements; or (iv) increase in compensation,
bonus or other benefits payable to directors, officers or employees of
Parent or any of its Subsidiaries other than, in the case of clause (iv)
only, increases prior to the date hereof in compensation, bonus or other
benefits payable to directors, officers or employees of Parent or any of
its Subsidiaries in the ordinary and usual course of business consistent
with past practice or merit increases in salaries of employees at regularly
scheduled times in customary amounts consistent with past practices;
(k) any change or amendment of the contracts, salaries, wages or other
compensation of any officer, director, employee, agent or other similar
representative of Parent or any of its Subsidiaries whose annual cash
compensation exceeds $80,000 other than changes or amendments that do not
and will not result in increases of more than five percent in the salary,
wages or other compensation of any such Person;
(l) any adoption, entering into, amendment, alteration or termination
of (partially or completely) any Benefit Plan or Employee Arrangement
except as contemplated by this Agreement or to the extent required by
applicable Law or GAAP;
(m) any entering into of any contract with an officer, director,
employee, agent or other similar representative of Parent or any of its
Subsidiaries that is not terminable, without penalty or other liability,
upon not more than 60 calendar days' notice; or
(n) any (i) making or revoking of any material election relating to
Taxes, (ii) settlement or compromise of any material claim, action, suit,
litigation, proceeding, arbitration, investigation, audit or controversy
relating to Taxes, or (iii) change to any material methods of reporting
income or deductions for federal income tax purposes.
SECTION 4.7 Information Supplied. None of the information supplied or to be
supplied by Parent or Merger Sub specifically for inclusion or incorporation by
reference in (i) the S-4, at the time the S-4 is filed with the SEC and at the
time it becomes effective under the Securities Act, will contain any untrue
statement of a material fact or omit to state any material
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fact required to be stated therein or necessary to make the statements therein
not misleading, and (ii) the Joint Proxy Statement will, at the date mailed to
stockholders and at the times of the Parent Stockholder Meeting and the Company
Stockholder Meeting, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they are
made, not misleading. If at any time prior to the Effective Time any event in
respect of Parent, Merger Sub, their officers and directors or any of their
Subsidiaries should occur which is required to be described in an amendment of,
or a supplement to, the S-4 or the Joint Proxy Statement, Parent shall promptly
so advise the Company and such event shall be so described, and such amendment
or supplement (which the Company shall have a reasonable opportunity to review)
shall be promptly filed with the SEC and, as required by Law, disseminated to
the stockholders of Parent. The Joint Proxy Statement, insofar as it relates to
Parent Stockholder Meeting, will comply as to form in all material respects with
the provisions of the Exchange Act and the rules and regulations thereunder. No
representation is made under this Section 4.7 with respect to any statements
made or incorporated by reference in the S-4 or the Joint Proxy Statement based
on information supplied by the Company specifically for inclusion or
incorporation by reference therein.
SECTION 4.8 Consents and Approvals. Except for filings, permits,
authorizations, consents and approvals as may be required under, and other
applicable requirements of, the Securities Act, state securities or blue sky
Laws, the HSR Act and any comparable requirements of foreign Governmental
Entities, the filing and acceptance for record of the Articles of Merger as
required by the URBCA, and such other filings, permits, consents and approvals
which, if not obtained or made, are not reasonably expected to have a Material
Adverse Effect on Parent, and its Subsidiaries taken as a whole, no filing with
or notice to, and no permit, authorization, consent or approval of a
Governmental Entity is necessary for the execution and delivery by Parent and
Merger Sub of this Agreement or the consummation by Parent and Merger Sub of the
transactions contemplated hereby.
SECTION 4.9 No Default. Neither Parent nor any of its Subsidiaries is in
violation of any term of (i) its charter, certificate or articles of
incorporation or bylaws (or other similar organizational or governing
documents), (ii) any agreement or instrument related to indebtedness for
borrowed money or any other agreement to which it is a party or by which it is
bound, or (iii) any Law applicable to Parent, its Subsidiaries or any of their
respective assets or properties, the consequence of which violation is
reasonably expected to (A) have, individually or in the aggregate, a Material
Adverse Effect on Parent and its Subsidiaries taken as a whole or (B) prevent or
materially delay the performance of this Agreement by Parent and Merger Sub.
Except as set forth in Section 4.9 of the Parent Disclosure Schedule, the
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby and thereby will not (A) result in any
violation of or conflict with, constitute a default under (with or without due
notice or lapse of time or both), require any consent, waiver or notice under
any term of, or result in the reduction or loss of any benefit or the creation
or acceleration of any right or obligation (including any termination rights)
under, (i) the charter, certificate or articles of incorporation or bylaws (or
other similar organizational or governing documents) of Parent or any of its
Subsidiaries, (ii) any material agreement, note, bond, mortgage, indenture,
contract,
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lease, the Company Permit or other obligation or right to which Parent or any of
its Subsidiaries is a party or by which any of the assets or properties of
Parent or any of its Subsidiaries is bound, or (iii) any applicable Law, except
in the case of clause (ii) and (iii) where any of the foregoing is not
reasonably expected to have, individually or in the aggregate, a Material
Adverse Effect on Parent and its Subsidiaries taken as a whole, or (B) result in
the creation of (or impose any obligation on Parent or any of its Subsidiaries
to create) any Lien upon any of the material assets or properties of Parent or
any of its Subsidiaries pursuant to any such term.
SECTION 4.10 Real Property.
(a) Except as disclosed in Section 4.10(a) of the Parent Disclosure
Schedule, no real property is owned, leased or used by Parent or its current
Subsidiaries in the course of their respective businesses. Parent has provided
the Company with the address, general use of, and period of ownership or
occupancy of all of the real property owned in fee by Parent and its
Subsidiaries (the "Parent Owned Facilities" and referred to individually herein
as a "Parent Owned Facility") and all of the real property Parent and its
Subsidiaries use or occupy or have the right to use or occupy, now or in the
future, pursuant to any lease, sublease, or other occupancy agreement (the
"Parent Leased Facilities" and referred to individually herein as a "Parent
Leased Facility"). No real property is owned, leased or used by Parent or its
current Subsidiaries in the course of their respective businesses other than the
Parent Owned Facilities and Parent Leased Facilities.
(b) With respect to each Parent Owned Facility and except as set forth on
the Parent Balance Sheet, the Parent Disclosure Schedule, or in the Parent SEC
Reports:
(i) Parent or its Subsidiary has good and marketable title to the
Parent Owned Facilities free and clear of all Liens, except (x) Taxes and
general and special assessments not in default and payable without penalty
and interest, and (y) Liens, easements, covenants and other restrictions or
imperfections of title that do not materially impair the current use,
occupancy, or value in excess of any indebtedness secured by such Lien, or
the marketability of title of such Parent Owned Facilities;
(ii) to Parent's Knowledge, there are no pending or threatened
condemnation proceedings, lawsuits or administrative actions relating to
any Parent Owned Facility or other matters affecting materially and
adversely the current use, occupancy or value thereof;
(iii) there are no leases, subleases, licenses, concessions or other
agreements, written or oral, granting to any party or parties (other than
wholly-owned Subsidiaries of Parent) the right of use or occupancy of any
portion of any Parent Owned Facility that materially adversely affect
Parent's use of the property;
(iv) there are no outstanding options or rights of first refusal to
purchase any Parent Owned Facility, or any portion thereof or interest
therein;
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(v) there are no parties (other than Parent or its Subsidiaries) in
possession of any Parent Owned Facility, other than tenants under any
leases to be provided to the Company who are in possession of space to
which they are entitled; and
(vi) all facilities located on Parent Owned Facilities are now, and
will be at the time of Closing, in good operating condition and repair, and
structurally sound and free of known defects, with no material alterations
or repairs required thereto (other than ordinary and routine maintenance
and repairs) under applicable Laws, the Company Permits or insurance
company requirements. To Parent's Knowledge, all such Parent Owned
Facilities have been operated and maintained in all material respects in
accordance with applicable Laws and the Company Permits. All such Parent
Owned Facilities are supplied with utilities and other services, including
gas, electricity, water, telephone, sanitary sewer and storm sewer, all of
which services are adequate for the uses to which such Parent Owned
Facility is being put and are provided via public roads or via permanent,
irrevocable, appurtenant easements benefiting the parcel of real property.
(c) With respect to each Parent Leased Facility:
(i) Parent will make available to the Company a true, correct, and
complete copy of the lease, sublease or other occupancy agreement for such
Parent Leased Facility (and all modifications, amendments, and supplements
thereto and all side letters to which the Company or any of its
Subsidiaries is a party affecting the obligations of any party thereunder)
(each such agreement is referred to herein as a "Parent Real Property
Lease");
(ii) to Parent's Knowledge, Parent or its Subsidiary has a good and
valid leasehold interest in such Parent Leased Facility free and clear of
all Liens, except (x) Taxes and general and special assessments not in
default and payable without penalty and interest, and (y) easements,
covenants and other restrictions that do not materially impair the current
use, occupancy or value, or the marketability of Parent's or its
Subsidiary's interest in such real property;
(iii) to Parent's Knowledge, each Parent Real Property Lease
constitutes the valid and legally binding obligation of the parties
thereto, enforceable in accordance with its terms, and is in full force and
effect;
(iv) all rent and other sums and charges payable by Parent or its
Subsidiary as tenant under the Parent Real Property Lease covering the
Parent Leased Facility are current, no termination event or condition or
uncured default on the part of the tenant or, to Parent's Knowledge, the
landlord, exists under any Parent Real Property Lease. No party to such
Parent Real Property Lease has given written notice to Parent or its
Subsidiary or made a claim in writing against Parent or its Subsidiary in
respect of any breach or default thereunder; and
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(v) neither Parent nor its Subsidiary has assigned, transferred,
conveyed, mortgaged, deeded in trust or encumbered its leasehold interest
in the Parent Leased Facility.
SECTION 4.11 Litigation. Except as disclosed in Section 4.11 of the Parent
Disclosure Schedule, there is no other suit, claim, action, proceeding or, to
Parent's Knowledge, investigation, pending or, to Parent's Knowledge, threatened
which is reasonably expected to have, individually and in the aggregate, a
Material Adverse Effect on Parent and its Subsidiaries taken as a whole. Except
as disclosed in Section 4.11 of the Parent Disclosure Schedule or the Parent SEC
Reports, none of Parent or its Subsidiaries is subject to any outstanding order,
writ, injunction or decree which is reasonably expected to have, individually or
in the aggregate, a Material Adverse Effect on Parent and its Subsidiaries taken
as a whole. To Parent's Knowledge, there is no action, suit, proceeding or
investigation pending or threatened against any current or former officer,
director, employee or agent of Parent or any of its Subsidiaries which is
reasonably expected to give rise to a claim for contribution or indemnification
against Parent or any of its Subsidiaries. Notwithstanding the foregoing, any
shareholder litigation or litigation by any Governmental Entity, in each case
brought or threatened against Parent or any officer, director, employee or agent
of Parent in any respect of this Agreement or the transactions contemplated
hereby, shall not be deemed to have a Material Adverse Effect on Parent and its
Subsidiaries taken as a whole.
SECTION 4.12 Compliance with Applicable Law; Permits. Parent and its
Subsidiaries hold all permits, licenses, variances, exemptions, orders, and
approvals of all Governmental Entities necessary for the lawful conduct of their
respective businesses (the "the Parent Permits"), except for failures to hold
such permits, licenses, variances, exemptions, orders and approvals which are
not reasonably expected to have, individually or in the aggregate, a Material
Adverse Effect on Parent and its Subsidiaries taken as a whole. Parent and its
Subsidiaries are in compliance with the terms of Parent Permits, except where
the failure to comply is not reasonably expected to have, individually or in the
aggregate, a Material Adverse Effect on Parent and its Subsidiaries taken as a
whole. The businesses and operations of Parent and its Subsidiaries comply in
all respects with all Laws applicable to Parent or its Subsidiaries, except
where the failure to so comply is not reasonably expected to have, individually
or in the aggregate, a Material Adverse Effect on Parent and its Subsidiaries
taken as a whole.
SECTION 4.13 Employee Plans
(a) Section 4.13(a) of the Parent Disclosure Schedule sets forth a true,
correct, and complete list of:
(i) all material "employee benefit plans," as defined in Section 3(3)
of ERISA, under which Parent or any of its Subsidiaries has any obligation
or liability, contingent or otherwise, including, but not limited to, (i)
all severance plans or arrangements other than any such plan or arrangement
(x) under which severance benefits do not exceed two weeks' salary for each
year of employment or, in the case of employees whose annual cash
compensation exceeds $80,000, three months' salary, or (y) which is legally
mandated by applicable non-U.S. law; and (ii) all supplemental or
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U.S. non-qualified retirement plans or arrangements which provide benefits
to any employee whose annual cash compensation exceeds $80,000 or benefits
in excess of $5,000 for each year of employment (the "Parent Benefit
Plans"); and
(ii) all employment, consulting, termination, severance or individual
compensation agreements (other than any such agreement which is terminable
within 90 days without liability or at any time without liability exceeding
two weeks' salary for each year of employment or, in the case of employees
whose annual cash compensation exceeds $80,000, three months' salary, or is
legally mandated by applicable non-U.S. law); all stock award, stock
option, stock purchase or other equity-based (including phantom stock or
stock appreciation rights) plans or arrangements; all material bonus or
other incentive compensation plans or agreements (including, but not
limited to, any such plan or agreement covering any officer or employee
whose annual cash compensation exceeds $80,000); all material salary
continuation or deferred compensation plans or agreements (including, but
not limited to, any such plan or agreement covering any current or former
officer or employee whose annual cash compensation exceeds $80,000; in each
case, as to which Parent or any of its Subsidiaries has any obligation or
liability (contingent or otherwise) (the "Parent Employee Arrangements").
(b) A complete and correct copy of each Parent Employee Arrangement,
including the forms of stock option grant agreements generally used to make
grants under Parent option plans, has been provided to the Company. In respect
of each Parent Benefit Plan, a complete and correct copy of each of the
following documents (if applicable) has been provided to the Company: (i) the
most recent plan and related trust documents, and all amendments thereto; (ii)
the most recent summary plan description, and all related summaries of material
modifications thereto; (iii) the most recent Form 5500 (including, schedules and
attachments); (iv) the most recent IRS determination letter; and (v) the most
recent actuarial reports (including for purposes of Financial Accounting
Standards Board report nos. 87, 106 and 112).
(c) Except as disclosed in Section 4.13(c) of Parent Disclosure Schedule,
none of the Parent Benefit Plans or Parent Employee Arrangements is subject to
Title IV of ERISA, constitutes a defined benefit retirement plan or is a
multi-employer plan described in Section 3(37) of ERISA, and Parent and its
Subsidiaries do not have any material obligation or liability (contingent or
otherwise) in respect of any such plans. Parent and its Subsidiaries are not
members of a group of trades or businesses (other than that consisting of Parent
and its Subsidiaries) under common control or treated as a single employer
pursuant to Section 414 of the Code.
(d) The Parent Benefit Plans and their related trusts intended to qualify
under Sections 401 and 501(a) of the Code, respectively, have received a
favorable determination letter from the IRS and Parent has no Knowledge that any
event has occurred since the date of such letter that could cause the IRS to
revoke such determination. Any voluntary employee benefit association which
provides benefits to current or former employees of Parent and its Subsidiaries,
or their beneficiaries, is and has been qualified under Section 501(c)(9) of the
Code.
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(e) In all material respects, all contributions or other payments required
to have been made by Parent and its Subsidiaries to or under any Parent Benefit
Plan or Parent Employee Arrangement by applicable Law or the terms of such
Parent Benefit Plan or Parent Employee Arrangement (or any agreement relating
thereto) have been timely and properly made or have been accrued in Parent's
financial statements.
(f) The Parent Benefit Plans and Parent Employee Arrangements have been
maintained and administered in accordance with their terms and applicable Laws
and no individual who has performed services for Parent or any of its
Subsidiaries has been improperly excluded from participation in any Parent
Benefit Plan or Parent Employee Arrangement, except where the failure to so
maintain and administer such Parent Benefit Plans or the exclusion of any such
individuals is not reasonably expected to have, individually or in the
aggregate, a Material Adverse Effect on Parent and its Subsidiaries taken as a
whole.
(g) There are no pending or, to Parent's Knowledge, threatened actions,
claims, or proceedings against or relating to any Parent Benefit Plan or Parent
Employee Arrangement (other than routine benefit claims by Persons claiming
benefits thereunder), and, to the Knowledge of Parent, there are no facts or
circumstances which could form a reasonable basis for any of the foregoing,
except for such actions, claims or proceedings which are not reasonably expected
to have, individually or in the aggregate, a Material Adverse Effect on Parent
and its Subsidiaries taken as a whole.
(h) Parent and its Subsidiaries do not have any material obligation or
liability (contingent or otherwise) to provide post-retirement life insurance or
health benefits coverage for current or former officers, directors, or employees
of Parent or any of its Subsidiaries except (i) as may be required under Part 6
of Title I of ERISA at the sole expense of the participant or the participant's
beneficiary, (ii) a medical expense reimbursement account plan pursuant to
Section 125 of the Code, (iii) as may be required by a foreign jurisdiction, or
(iv) through the last day of the calendar month in which the participant
terminates employment with Parent or any Subsidiary of Parent.
(i) Except as set forth in Section 4.13(i) of the Parent Disclosure
Schedule, none of the assets of any Parent Benefit Plan is stock of Parent or
any of its affiliates, or property leased to or jointly owned by Parent or any
of its affiliates.
(j) Except as disclosed in Section 4.13(j) of the Parent Disclosure
Schedule or in connection with equity compensation, neither the execution and
delivery of this Agreement nor the consummation of the transactions contemplated
hereby will (i) result in any payment becoming due to any employee (current,
former, or retired) of Parent or any of its Subsidiaries, (ii) increase any
benefits under any Parent Benefit Plan or Parent Employee Arrangement
(determined without regard to the "materiality" limits set forth in the
definitions of such terms), or (iii) result in the acceleration of the time of
payment of, vesting of, or other rights in respect of any such benefits.
(k) Except as disclosed in Section 4.13(k) of the Parent Disclosure
Schedule, each of the Parent Benefit Plans covering employees outside of the
United States is funded in all material
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respects through adequate reserves on the financial statements of Parent or its
Subsidiaries, insurance contracts, annuity contracts, trust funds or similar
arrangements. The benefits and compensation under the Parent Benefit Plans and
Parent Employee Arrangements covering employees outside of the United States are
no more than customary and reasonable for the country in which such employees
work and the industry in which Parent and its Subsidiaries conduct their
business.
(l) The aggregate number of shares of the Company Common Stock purchasable
under all outstanding purchase rights under Parent option plans does not exceed
the maximum number of shares remaining available for issuance under such plan.
SECTION 4.14 Labor Matters.
(a) Parent and its Subsidiaries are not parties to any labor or collective
bargaining agreement, and no employees of Parent or any of its Subsidiaries are
represented by any labor organization. There are no representation or
certification proceedings, or petitions seeking a representation proceeding,
pending or, to Parent's Knowledge, threatened in writing to be brought or filed
with the National Labor Relations Board or any other labor relations tribunal or
authority. Within the last twelve months, to Parent's Knowledge, there have been
no organizing activities involving Parent or any of its Subsidiaries in respect
of any group of employees of Parent or any of its Subsidiaries.
(b) There are no strikes, work stoppages, slowdowns, lockouts, material
arbitrations or material grievances or other material labor disputes pending or
threatened in writing against or involving Parent or any of its Subsidiaries.
There are no unfair labor practice charges, grievances or complaints pending or,
to Parent's Knowledge, threatened in writing by or on behalf of any employee or
group of employees of Parent or any of its Subsidiaries which, if individually
or collectively resolved against Parent or any of its Subsidiaries, would
reasonably be expected to have a Material Adverse Effect on Parent and its
Subsidiaries taken as a whole.
(c) There are no complaints, charges or claims against Parent or any of its
Subsidiaries pending or, to Parent's Knowledge, threatened to be brought or
filed with any Governmental Entity or arbitrator based on, arising out of, in
connection with, or otherwise relating to the employment or termination of
employment of any individual by Parent or any of its Subsidiaries which, if
individually or collectively resolved against Parent or any of its Subsidiaries,
would reasonably be expected to have a Material Adverse Effect on Parent and its
Subsidiaries taken as a whole, and, to the Knowledge of Parent, there are no
facts or circumstances which could form a reasonable basis for any of the
foregoing.
(d) There has been no "mass layoff" or "plant closing" as defined by WARN,
in respect of Parent or any of its Subsidiaries within the six months prior to
the Effective Time.
(e) All employees of Parent and its Subsidiaries possess all applicable
passports, visas, permits and other authorizations required by all applicable
immigration or similar Laws to be employed by and to perform services for and on
behalf of Parent and its Subsidiaries, except where the failure to possess such
passports, visas, permits or other authorizations would not,
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individually or in the aggregate, reasonably be expected to materially affect
the conduct of business by Parent or its Subsidiaries. Parent and its
Subsidiaries, and their employees, have complied in all material respects with
all applicable immigration and similar Laws.
SECTION 4.15 Environmental Matters.
(a) Except as set forth in Section 4.15 of the Parent Disclosure Schedule:
(i) The operations of Parent and its Subsidiaries are in material
compliance with all Environmental Laws, and Parent is not aware of any
facts, circumstances or conditions which, without significant capital
expenditures, would prevent material compliance in the future;
(ii) To Parent's Knowledge, Parent and its Subsidiaries have obtained
all the Parent Permits, required under applicable Environmental Laws for
the continued operations of their respective businesses; Parent and its
Subsidiaries have made all material filings, reports and notices required
under any Environmental Law for the past and future operations of their
respective businesses;
(iii) Parent and its Subsidiaries are not subject to any outstanding
written orders or material contracts or agreements with any Governmental
Entity or other Person respecting (A) Environmental Laws, (B) any Remedial
Action, (C) any Release or threatened Release of a Hazardous Material, or
(D) an assumption of responsibility for environmental claims of another
Person or entity;
(iv) Parent and its Subsidiaries have not received any written
communication alleging, in respect of any such party, the material
violation of or liability (real or potential) under any Environmental Law;
or requesting, with respect to any such party, information with respect to
an investigation pursuant to CERCLA, or any foreign or state counterpart
thereto, or any other Environmental Law;
(v) To Parent's Knowledge, neither Parent nor any of its Subsidiaries
has any material contingent liability in connection with any Remedial
Action or the Release of any Hazardous Material (whether on-site or
off-site) or employee or third party exposure to Hazardous Materials;
(vi) The operations of Parent and its Subsidiaries do not involve the
generation, transportation, treatment, storage or disposal of Hazardous
Materials. There has been no disposal by Parent or its Subsidiaries of any
Hazardous Materials on or in any site listed or formally proposed to be
listed on the National Priorities List promulgated pursuant to CERCLA or
any foreign or state remedial priority list promulgated or maintained
pursuant to comparable foreign or state law;
(vii) To Parent's Knowledge, there is not now nor has there been in
the past, on, in or at any Parent Owned Facility, Parent Leased Facility,
Former Parent Facility (defined as all of the real property formerly owned,
leased or used, other than
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those used solely for office or administrative purposes, by Parent or any
of its current or former Subsidiaries or corporate predecessors in interest
at any time in the past), or any other facility for which Parent or its
Subsidiaries has assumed responsibility for environmental claims, any of
the following: (A) any underground storage tanks; (B) landfills, dumps or
surface impoundments; (C) any planned, ongoing or completed Remedial
Action; (D) any asbestos-containing materials; or (E) any polychlorinated
biphenyls;
(viii) There is not now, nor to Parent's Knowledge, has there been in
the past, on, in or at any Parent Owned Facility, Parent Leased Facility,
Former Parent Facility, or any other facility for which Parent or its
Subsidiaries has assumed responsibility for environmental claims, any site
on or nominated for the National Priority List promulgated pursuant to
CERCLA or any foreign or state remedial priority list promulgated or
published pursuant to any comparable foreign or state law; and
(ix) No judicial or administrative proceedings are pending or, to
Parent's Knowledge, threatened against Parent or its Subsidiaries alleging
the material violation of or seeking to impose material liability pursuant
to any Environmental Law and, to Parent's Knowledge, there are no
investigations pending or threatened against Parent or any of its
Subsidiaries under Environmental Laws.
(b) Parent will make available to the Company copies of all material
environmentally related assessments, audits, investigations, or similar reports
(and, upon reasonable specific request, sampling reports) in its possession or
control and which were prepared in the last five years (and, upon reasonable
specific request, earlier information) relating to Parent or its Subsidiaries or
any real property currently or formerly owned, operated or leased by or for
Parent or its Subsidiaries, including any Parent Owned Facility, Parent Leased
Facility, or Former Parent Facility.
SECTION 4.16 Tax Matters.
(a) Each of Parent and its Subsidiaries has timely filed (or has had timely
filed) all Tax Returns required to be filed by it (or on its behalf). All such
Tax Returns are complete and correct in all material respects. Parent and its
Subsidiaries have paid all Taxes due for the periods covered by such Tax
Returns. The most recent Parent SEC Reports reflect an adequate reserve for all
Taxes payable by Parent and its Subsidiaries for all Taxable periods and
portions thereof through the date of such Parent SEC Reports. Parent has
previously delivered (or will deliver prior to the Effective Date) to the
Company copies of (i) all federal, state, local and foreign income and franchise
Tax Returns filed by Parent and its Subsidiaries relating to any taxable periods
of Parent or any of its Subsidiaries that remains subject to audit under
applicable statutes of limitations; and (ii) any audit report issued within the
last three years (or otherwise in respect of any audit or investigation in
progress) relating to Taxes due from or in respect of Parent or its
Subsidiaries.
(b) No material deficiencies for any Taxes have been proposed, asserted, or
assessed against Parent or its Subsidiaries that have not been fully paid or
adequately provided for in the
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appropriate financial statements of Parent, no requests for waivers of the time
to assess any Taxes are pending, and no power of attorney in respect of any
Taxes has been executed or filed with any taxing authority. No material issues
relating to Taxes have been raised by the relevant taxing authority during any
presently pending audit or examination. All income and franchise Tax Returns
filed by or on behalf of Parent and its Subsidiaries for the taxable years ended
on or prior to October 31, 2000 have been reviewed by the relevant taxing
authority or the statute of limitations with respect to such Tax Returns has
expired.
(c) No material Liens for Taxes exist in respect of any assets or
properties of Parent or its Subsidiaries, except for statutory Liens for Taxes
not yet due.
(d) Neither Parent nor any of its Subsidiaries is a party to or is bound by
any Tax sharing agreement, Tax indemnity obligation, or similar agreement,
arrangement, or practice in respect of Taxes (whether or not written) (including
any advance pricing agreement, closing agreement, or other agreement relating to
Taxes with any taxing authority).
(e) Neither Parent nor any of its Subsidiaries (i) has ever been a member
of an affiliated group within the meaning of Section 1504(a) of the Code (or any
similar or analogous group defined under a similar or analogous state, local or
foreign Law) other than an affiliated group the common parent of which is
Parent, or (ii) has any liability under Treasury Regulation Section 1.1502-6 (or
any predecessor or successor thereof or analogous or similar provision under
state, local or foreign Law), as a transferee or successor, by contract or
otherwise for Taxes of any affiliated group of which Parent is not the common
parent.
(f) To Parent's Knowledge, neither Parent nor any of its Subsidiaries has
taken or agreed to take any action that would prevent the Merger from
constituting a reorganization qualifying under the provisions of Section 368(a)
of the Code.
(g) Except as set forth in Section 4.16(g) of the Parent Disclosure
Schedule, there are no employment, severance, or termination agreements or other
compensation arrangements currently in effect which provide for the payment of
any amount (whether in cash or property or the vesting of property) as a result
of any of the transactions contemplated by this Agreement that individually or
collectively (either alone or upon the occurrence of any additional or
subsequent event), could give rise to a payment which is nondeductible by reason
of Section 280G of the Code.
(h) Parent and its Subsidiaries have complied in all material respects with
all Laws applicable to the payment and withholding of Taxes and have duly and
timely withheld from employee salaries, wages and other compensation and have
paid over to the appropriate taxing authority all amounts required to be so
withheld and paid over for all periods under all applicable Laws.
(i) Except as set forth in Section 4.16(i) of the Parent Disclosure
Schedule, no federal, state, local, or foreign audits or other administrative
proceedings or court proceedings are presently pending in respect of any Taxes
or Tax Returns of Parent or its Subsidiaries and
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neither Parent nor its Subsidiaries have received a written notice of any
pending audit or proceeding.
(j) Except as set forth in Section 4.16(j) of the Parent Disclosure
Schedule, neither Parent nor any of its Subsidiaries has agreed to or is
required to make any adjustment under Section 481(a) of the Code or any similar
provision of state, local or foreign Law by reason of a change in accounting
method initiated by Parent or its Subsidiaries or has any Knowledge that a
taxing authority has proposed any such adjustment or change in accounting
method, or has any application pending with any taxing authority requesting
permission for any changes in accounting methods that relate to the business or
operations of Parent or its Subsidiaries.
(k) Except as set forth in Section 4.16(k) of the Parent Disclosure
Schedule, neither Parent nor any of its Subsidiaries is a party to any contract,
agreement, or other arrangement which could result in the payment of amounts
that could be nondeductible by reason of Section 162(m) of the Code, provided
that no representation or warranty is made as to performance-based or
equity-based compensation.
(l) Neither Parent nor any of its Subsidiaries has received any private
letter rulings from the IRS or comparable rulings from other taxing authorities.
(m) Neither Parent nor any of its Subsidiaries has constituted either a
"distributing corporation" or a "controlled corporation" (within the meaning of
Section 355(a)(1)(A) of the Code) in a distribution of stock qualifying for
tax-free treatment under Section 355 of the Code (i) in the two years prior to
the date of this Agreement or (ii) in a distribution which could otherwise
constitute part of a "plan" or "series of related transactions" (within the
meaning of Section 355(e) of the Code) in conjunction with the Merger.
(n) Neither Parent nor any of its Subsidiaries (i) engaged in any
"intercompany transactions" in respect of which gain was and continues to be
deferred pursuant to Treasury Regulation Section 1.1502-13 or any predecessor or
successor thereof or analogous or similar provision under state, local or
foreign Law; or (ii) has "excess loss accounts" in respect of the stock of any
Subsidiary pursuant to Treasury Regulation Section 1.1502-19, or any predecessor
or successor thereof or analogous or similar provision under state, local or
foreign Law.
SECTION 4.17 Absence of Questionable Payments. To Parent's Knowledge,
neither Parent nor any of its Subsidiaries nor any director, officer, agent,
employee or other Person acting on behalf of Parent or any of its Subsidiaries,
has used any corporate or other funds for unlawful contributions, payments,
gifts or entertainment, or made any unlawful expenditures relating to political
activity to government officials or others or established or maintained any
unlawful or unrecorded funds in violation of the Foreign Corrupt Practices Act
of 1977, as amended, or any other domestic or foreign Law. To Parent's
Knowledge, neither Parent nor any of its Subsidiaries nor any director, officer,
agent, employee or other Person acting on behalf of Parent or any of its
Subsidiaries has accepted or received any unlawful contributions, payments,
gifts or expenditures.
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SECTION 4.18 Material Contracts.
(a) Set forth in Section 4.18(a) of the Parent Disclosure Schedule is a
list of all contracts and agreements (and all amendments, modifications and
supplements thereto and all side letters to which Parent or any of its
Subsidiaries is a party affecting the obligations of any party thereunder) to
which Parent or any of its Subsidiaries is a party or by which any of its assets
or properties are bound that are material to the business, assets or properties
of Parent and its Subsidiaries taken as a whole, including, to the extent any of
the following are, individually or in the aggregate, material to the business,
assets or properties of Parent and its Subsidiaries taken as a whole, all: (i)
employment, severance, product design or development, personal services,
consulting, non-competition or indemnification contracts (including, any
contract to which Parent or any of its Subsidiaries is a party involving
employees of Parent), but excluding normal indemnification provisions under
license or sale contracts; (ii) licensing, merchandising or distribution
agreements involving the payment of more than $50,000 per year; (iii) contracts
granting a right of first refusal or first negotiation involving in excess of
$50,000; (iv) partnership or joint venture agreements; (v) agreements for the
acquisition, sale or lease of material assets or properties of Parent (by
merger, purchase or sale of assets or stock or otherwise) entered into since
December 31, 2003; (vi) contracts or agreements with any Governmental Entity
involving the payment of more than $50,000 per year; (vii) loan or credit
agreements, mortgages, indentures or other agreements or instruments evidencing
indebtedness for borrowed money by Parent or any of its Subsidiaries or any such
agreement pursuant to which indebtedness for borrowed money may be incurred, in
each case involving in excess of $50,000; (viii) agreements that purport to
limit, curtail or restrict the ability of Parent or any of its Subsidiaries to
compete in any geographic area or line of business; (ix) assembly (packaging),
testing, or supply agreements, in each case, involving in excess of $50,000; and
(x) commitments and agreements to enter into any of the foregoing (collectively,
together with any such contracts entered into in accordance with Section 5.1,
the "Parent Material Contracts"). Section 4.18 of the Parent Disclosure Schedule
sets forth a list of all Parent Material Contracts and Parent has heretofore
made available to the Company true, correct, and complete copies of all such
Parent Material Contracts.
(b) To Parent's Knowledge, each of the Parent Material Contracts
constitutes the valid and legally binding obligation of Parent or its
Subsidiaries, enforceable in accordance with its terms, and is in full force and
effect. There is no material default under any Parent Material Contract either
by Parent (or its Subsidiaries) or, to Parent's Knowledge, by any other party
thereto, and no event has occurred that with the giving of notice, the lapse of
time, or both would constitute a default thereunder by Parent (or its
Subsidiaries) or, to Parent's Knowledge, any other party. As of the date hereof,
no party has notified Parent in writing that it intends to terminate or fail to
extend its contract with Parent within one year of the date of the Agreement,
except for any such termination or failure as would not have a Material Adverse
Effect on Parent and its Subsidiaries taken as a whole.
(c) No party to any such Parent Material Contract has given notice to
Parent of or made a claim against Parent in respect of any material breach or
default thereunder.
(d) Except as set forth in Section 4.18(d) of the Parent Disclosure
Schedule, no
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consent of any third party is required under any Parent Material Contract as a
result of or in connection with, and the enforceability of any Parent Material
Contract will not be affected in any manner by, the execution, delivery, and
performance of this Agreement or the consummation of the transactions
contemplated hereby.
SECTION 4.19 Subsidies. Section 4.19 of the Parent Disclosure Schedule sets
forth a list of all material grants, subsidies and similar arrangements directly
or indirectly between or among Parent or any of its Subsidiaries, on the one
hand, and any domestic or foreign Governmental Entity or any other Person, on
the other hand. Except as set forth on Section 4.19 of the Parent Disclosure
Schedule, neither Parent nor any of its Subsidiaries has requested, sought,
applied for or entered into any material grant, subsidy or similar arrangement
directly or indirectly from or with any domestic or foreign Governmental Entity
or any other Person.
SECTION 4.20 Intellectual Property.
(a) To Parent's Knowledge, and except as are not reasonably expected to
have a Material Adverse Effect on Parent and its Subsidiaries taken as a whole:
(i) each item of Intellectual Property is in compliance with applicable legal
requirements relating to the enforceability or maintenance of such item
(including payment of filing, examination and maintenance fees and proofs of
working or use, as applicable) other than any requirement that if, not
satisfied, would not result in a revocation or otherwise materially affect the
enforceability of the item of Intellectual Property in question, and Parent has
taken reasonable steps to protect such Intellectual Property; (ii) Parent and
its Subsidiaries own or have the right to use, free and clear of all Liens, all
Intellectual Property necessary for the operation of the businesses of Parent
and its Subsidiaries as presently conducted and as presently proposed to be
conducted; (iii) each material item of Intellectual Property owned or used by
Parent and its Subsidiaries immediately prior to the Effective Time will be
owned or available for use by the Company and the Surviving Corporation
immediately subsequent to the Effective Time; (iv) Parent and its Subsidiaries
have taken all action deemed by Parent or the relevant Subsidiary to be
necessary or reasonable, but in no event less than all commercially reasonable
action, to protect and preserve the confidentiality of all technical
Intellectual Property not otherwise protected by patents, patent applications or
copyrights; (v) Parent has had and continues to have a requirement that all
employees of Parent and its Subsidiaries must execute a non-disclosure agreement
which includes an agreement to assign to Parent or its Subsidiaries all rights
to Intellectual Property originated or invented by such employee relating to the
business of Parent and its Subsidiaries; and (vi) no trade secret or
confidential know-how material to the business of Parent or any of its
Subsidiaries as currently operated has been disclosed or authorized to be
disclosed to any third party, other than pursuant to a non-disclosure agreement
that protects Parent's or such Subsidiary's proprietary interests in and to such
trade secrets and confidential know-how.
(b) Except as set forth in Section 4.20(b) of the Parent Disclosure
Schedule, to Parent's Knowledge, neither Parent nor any of its Subsidiaries has
interfered with, infringed upon, misappropriated or otherwise come into conflict
with any Intellectual Property rights of third parties, and neither Parent nor
any of its Subsidiaries has received any charge, complaint, claim or notice
alleging any such interference, infringement, misappropriation or violation that
remains unresolved and, if decided adversely to Parent, would be reasonably
likely to have a
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Material Adverse Effect on Parent and Subsidiaries taken as a whole. No third
party has, to Parent's Knowledge, interfered with, infringed upon,
misappropriated or otherwise come into conflict with any Intellectual Property
rights of Parent or its Subsidiaries, except where such actions are not
reasonably expected to have a Material Adverse Effect on Parent and its
Subsidiaries taken as a whole.
(c) Section 4.20(c) of the Parent Disclosure Schedule identifies each
material item of Intellectual Property that any third party owns and that Parent
or any of its Subsidiaries uses pursuant to license, sublicense, agreement or
permission that either (i) if such license, sublicense, agreement or permission
were denied, would reasonably be expected to have a Material Adverse Effect on
Parent or its Subsidiaries taken as a whole, or (ii) includes any unsatisfied
obligation to pay any royalty amount or any obligation to pay a royalty, whether
fixed or determined based on usage, following the Effective Date in excess of
$10,000. To Parent's Knowledge, in respect of each such item of used
Intellectual Property:
(i) the license, sublicense, agreement or permission covering the item
is legal, valid, binding, enforceable and in full force and effect;
(ii) the licenses, sublicenses, agreements or permissions will in all
material respects continue to be legal, valid, binding, enforceable and in
full force and effect on identical terms following the Effective Time;
(iii) no party to the license, sublicense, agreement or permission is
in breach or default, and no event has occurred which with notice or lapse
of time would constitute a breach or default or permit termination,
modification or acceleration thereunder such as would have a Material
Adverse Effect on Parent and its Subsidiaries taken as a whole; and
(iv) no party to the license, sublicense, agreement or permission has
repudiated any provision thereof.
(d) Except as set forth in Section 4.20(d) of the Parent Disclosure
Schedule, neither Parent nor any of its Subsidiaries has granted (i) any
exclusive licenses (other than implied patent licenses in the ordinary course of
business) in any patents owned by Parent or any of its Subsidiaries or (ii) any
exclusive licenses in any other Intellectual Property owned by Parent or any of
its Subsidiaries to any third party.
(e) Except as may have been given in connection with patent licenses set
forth in Section 4.20(d) of Parent Disclosure Schedule or given in the ordinary
course of business within the scope of Parent's standard terms and conditions of
sale, neither Parent nor any of its Subsidiaries has entered into any material
agreement to indemnify any other Person against any charge of infringement or
misappropriation of any Intellectual Property.
(f) The execution, delivery and performance by Parent of this Agreement,
and the consummation of the transactions contemplated hereby, will not (i)
result in the loss or impairment of, or give rise to any right of any third
party to terminate or alter, any of Parent's or
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any of its Subsidiaries' rights to own any of its Intellectual Property except
as are not reasonably expected to have a Material Adverse Effect on Parent and
its Subsidiaries taken as a whole, nor (ii) require the consent of any
Governmental Entity or third party in respect of any such Intellectual Property
that, if not obtained, is reasonably expected to have a Material Adverse Effect
on Parent and its Subsidiaries taken as a whole.
SECTION 4.21 Opinion of Financial Advisor. Parent Board has received an
oral opinion from its financial advisor prior to the date of this Agreement, to
the effect that, as of such date, the Exchange Ratio is fair to the stockholders
of Parent from a financial point of view.
SECTION 4.22 Brokers. Except as set forth in Section 4.22 of Parent
Disclosure Schedule, no broker, finder, investment banker or other Person (other
than Parent's Financial Advisor, a true and correct copy of whose engagement
letter has been provided to the Company) is entitled to any brokerage, finder's
or other fee or commission or expense reimbursement in connection with the
transactions contemplated by this Agreement based upon arrangements made by and
on behalf of Parent or any of its affiliates.
SECTION 4.23 Nevada Combination Statute. Parent Board has taken all action
required so that the restrictions contained in Sections 78.411 to 78.444 of the
Nevada General Corporations Law ("NRS") applicable to a "combination" (as
defined in NRS ss. 78.416) will not apply to the execution, delivery or
performance of this Agreement or the consummation of the Merger. No other
anti-takeover Laws of any state are applicable to this Agreement or the
transactions contemplated hereby.
ARTICLE V
COVENANTS RELATED TO CONDUCT OF COMPANY'S BUSINESS
SECTION 5.1 Conduct of Business of the Company. Except as set forth in
Section 5.1 of the Company Disclosure Schedule, as consented to by Parent or as
contemplated by this Agreement, during the period from the date hereof to the
Effective Time, the Company will, and will cause each of its Subsidiaries to,
conduct its operations in the ordinary and usual course of business consistent
with past practice and use reasonable best efforts to preserve intact its
current business organizations, keep available the service of its current
officers and key employees and preserve its relationships with customers,
suppliers and others having business dealings with it to the end that goodwill
and ongoing businesses shall not be materially impaired at the Effective Time.
Without limiting the generality of the foregoing, and except as otherwise
expressly provided in this Agreement or in Section 5.1 of the Company Disclosure
Schedule, prior to the Effective Time, neither the Company nor any of its
Subsidiaries will, without the prior written consent of Parent:
(a) amend its charter or bylaws (or other similar organizational or
governing instruments);
(b) authorize for issuance, issue, sell, deliver or agree or commit to
issue, sell or deliver (whether through the issuance or granting of
options, warrants, commitments, subscriptions, rights to purchase or
otherwise) any stock of any class or any other
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securities convertible into or exchangeable for any stock or any equity
equivalents (including, any stock options or stock appreciation rights),
except for (x) the issuance of Shares upon the exercise of outstanding
Company Stock Options, and the grant to newly hired officers, employees or
agents (in the ordinary course of business consistent with past practice)
of additional Company Stock Options after the date hereof to purchase up to
250,000 additional Shares and the issuance of shares on the exercise
thereof (y) the issuance of Shares upon the exercise of outstanding Company
Warrants and (z) the issuance of Shares upon the conversion of outstanding
Company Convertible Notes;
(c) (i) split, combine or reclassify any shares of its capital stock;
(ii) declare, set aside or pay any dividend or other distribution (whether
in cash, stock or property or any combination thereof) in respect of its
capital stock (other than any dividends or distributions payable to the
Company or its Subsidiaries); (iii) make any other actual, constructive or
deemed distribution in respect of any shares of its capital stock or
otherwise make any payments to stockholders in their capacity as such
(other than any distributions or payments to the Company or its
Subsidiaries); or (iv) redeem, repurchase or otherwise acquire any of its
securities or any securities of any of its Subsidiaries;
(d) adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other
reorganization of the Company or any of its Subsidiaries (other than the
Merger);
(e) alter through merger, liquidation, reorganization, restructuring
or in any other fashion the corporate structure or ownership of any
Subsidiary of Company;
(f) (i) incur or assume any indebtedness for borrowed money other than
under existing credit facilities (or any renewals, replacements or
extensions that do not increase the aggregate commitments thereunder)
except (A) in the ordinary and usual course of business consistent with
past practice or (B) in connection with any acquisition or capital
expenditure permitted by this Section 5.1; (ii) assume, guarantee, endorse
or otherwise become liable or responsible (whether directly, contingently
or otherwise) for the obligations of any other Person, except in the
ordinary and usual course of business consistent with past practice, and
except for obligations of the Subsidiaries of the Company; (iii) make any
loans, advances or capital contributions to, or investments in, any other
Person (other than (A) any acquisition permitted by this Section 5.1, (B)
loans, advances or capital contributions to or investments in Subsidiaries
of the Company, (C) loans or advances to employees of the Company or any of
its Subsidiaries in the ordinary course of business consistent with past
practice or (D) extensions of credit to customers in the ordinary course of
business consistent with past practice); (iv) pledge or otherwise encumber
shares of capital stock of the Company or its Subsidiaries; or (v) create
or assume any Lien on any material assets of the Company or any of its
Subsidiaries other than in the ordinary and usual course of business
consistent with past practice;
(g) (i) increase in any manner the compensation or fringe benefits of
any director, officer or employee except in the ordinary course of business
consistent with
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past practice or pay any benefit not required by any plan and arrangement
as in effect as of the date hereof or grant any completion bonuses or
change of control payments in respect of the Merger or that will be
affected thereby; (ii) except in the ordinary course of business consistent
with past practice, promote or change the classification or status in
respect of or hire any employee or individual; or (iii) make any
contributions or other deposits to any trust that is not qualified under
Section 501(a) of the Code;
(h) acquire, sell, lease or dispose of any material assets outside the
ordinary and usual course of business consistent with past practice or any
assets which in the aggregate are material to the Company and its
Subsidiaries taken as a whole, other than to grant extensions or renewals
in the ordinary course of business consistent with past practice;
(i) except as may be required as a result of a change in Law or in
GAAP, make any material change in any of the accounting principles or
practices used by it;
(j) revalue in any material respect any of its assets, including,
writing down the value of inventory or writing-off notes or accounts
receivable other than in the ordinary and usual course of business
consistent with past practice or as required by GAAP;
(k) (i) acquire (by merger, consolidation or acquisition of stock or
assets) any corporation, partnership or other business organization or
division thereof or any equity interest therein; (ii) other than in the
ordinary and usual course of business consistent with past practice, enter
into any material contract or agreement or amend in any material respect
any of the Company Material Contracts or the agreements referred to in
Section 3.18; (iii) authorize any new capital expenditure or expenditures
which are not provided for in the Company's current capital expenditure
plan and which, individually, is in excess of $100,000 or, in the
aggregate, are in excess of $500,000; or (iv) enter into or amend any
contract, agreement, commitment or arrangement providing for the taking of
any action that would be prohibited hereunder;
(l) make or revoke any Tax election, or settle or compromise any
material Tax liability, or change (or make a request to any taxing
authority to change) any aspect of its method of accounting for Tax
purposes;
(m) pay, discharge or satisfy any material claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction in the
ordinary and usual course of business consistent with past practice or in
accordance with their terms of liabilities reflected, or reserved against
in, the consolidated financial statements of the Company and its
Subsidiaries or incurred since the date of such financial statements or
waive the benefits of, or agree to modify in any manner, any
confidentiality, standstill or similar agreement related to a business
combination involving the Company to which the Company or any of its
Subsidiaries is a party;
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(n) settle or compromise any pending or threatened suit, action or
claim relating to the transactions contemplated hereby;
(o) enter into any agreement or arrangement that limits or otherwise
restricts the Company or any of its Subsidiaries or any successor thereto
or that could, after the Effective Time, limit or restrict the Surviving
Corporation and its affiliates (including Parent) or any successor thereto,
from engaging or competing in any line of business or in any geographic
area;
(p) fail to comply in any material respect with any Law applicable to
the Company, its Subsidiaries, or their respective assets;
(q) enter into any direct or indirect arrangements for financial
subsidies from a Governmental Entity;
(r) adopt, enter into, amend, alter or terminate (partially or
completely) any Company Benefit Plan or Company Employee Arrangement except
as contemplated by this Agreement or to the extent required by applicable
Law;
(s) enter into any contract with an officer, director, employee, agent
or other similar representative of the Company or any of its Subsidiaries
that is not terminable, without penalty or other liability, upon not more
than 60 calendar days' notice;
(t) declare, set aside, or pay any dividends on or make any other
distributions (whether in cash, stock, or property) in respect of any of
the Company's capital stock, or split, combine or reclassify any of the
Company's capital stock or issue or authorize the issuance of any other
securities in respect of, in lieu of or in substitution for shares of
capital stock, or repurchase, redeem or otherwise acquire, directly or
indirectly, any shares of its capital stock (or options, warrants or other
rights exercisable therefore), except upon termination of employment at
cost; or
(u) take, propose to take, or agree in writing or otherwise to take,
any of the actions described in Sections 5.1(a) through 5.1(t) or
intentionally take any action which would cause the condition set forth in
Section 8.2(a) not to be satisfied.
SECTION 5.2 Company Strategic Alliances and Acquisitions. Notwithstanding
anything to the contrary contained in this Article V or this Agreement, the
Company may continue to pursue and consummate strategic alliance and business
acquisitions transactions. The Company shall obtain the written consent of
Parent prior to entering into a binding agreement with respect to any such
transaction.
SECTION 5.3 Access to Information.
(a) Between the date hereof and the Effective Time and subject to
applicable Law, the Company will give Parent and Merger Sub and their authorized
representatives (including counsel, financial advisors, environmental
consultants and auditors) reasonable access to all
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employees, plants, offices, warehouses and other facilities and to all books and
records of the Company and its Subsidiaries, will permit Parent and Merger Sub
to make such inspections as Parent and Merger Sub may reasonably require, and
will cause the Company's officers and those of its Subsidiaries to furnish
Parent and Merger Sub with such financial and operating data and other
information in respect of the business, properties and personnel of the Company
and its Subsidiaries as Parent or Merger Sub may from time to time reasonably
request, provided that no investigation pursuant to this Section 5.3(a) shall
affect or be deemed to modify any of the representations or warranties made by
the Company; provided, however, that nothing contained in this Section 5.3 shall
be interpreted to require the Company to disclose any source code or any
information which it is prohibited from disclosing pursuant to the terms of a
confidentiality undertaking to a third party.
(b) Between the date hereof and the Effective Time, the Company shall
furnish to Parent and Merger Sub (i) within five Business Days after the
delivery thereof to management, such monthly financial statements and data as
are regularly prepared for distribution to Company management and (ii) at the
earliest time they are available, such quarterly and annual financial statements
as are prepared for the Company Board, which shall be in accordance with the
books and records of the Company.
(c) The Company will hold and will cause its authorized representatives to
hold in confidence all documents and information furnished to the Company in
connection with the transactions contemplated by this Agreement pursuant to the
terms of that certain Confidentiality Agreement entered into between the Company
and Parent dated June 11, 2003 (the "Confidentiality Agreement"), which shall
survive any termination of this Agreement in all respects.
ARTICLE VI
COVENANTS Related to THE CONDUCT OF PARENT'S BUSINESS
SECTION 6.1 Conduct of Business of the Parent. Except as set forth in
Section 6.1 of the Parent Disclosure Schedule, as consented to by the Company or
as contemplated by this Agreement, during the period from the date hereof to the
Effective Time, Parent will, and will cause each of its Subsidiaries to, conduct
its operations in the ordinary and usual course of business consistent with past
practice and use reasonable best efforts to preserve intact its current business
organizations, keep available the service of its current officers and key
employees and preserve its relationships with customers, suppliers and others
having business dealings with it to the end that goodwill and ongoing businesses
shall not be materially impaired at the Effective Time. Without limiting the
generality of the foregoing, and except as otherwise expressly provided in this
Agreement or in Section 6.1 of the Parent Disclosure Schedule, prior to the
Effective Time, neither Parent nor any of its Subsidiaries will, without the
prior written consent of the Company:
(a) amend its charter or bylaws (or other similar organizational or
governing instruments);
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(b) authorize for issuance, issue, sell, deliver or agree or commit to
issue, sell or deliver (whether through the issuance or granting of
options, warrants, commitments, subscriptions, rights to purchase or
otherwise) any stock of any class or any other securities convertible into
or exchangeable for any stock or any equity equivalents (including, any
stock options or stock appreciation rights), except for (x) the issuance of
Shares upon the exercise of outstanding Parent Stock Options, and the grant
to newly hired officers, employees or agents (in the ordinary course of
business consistent with past practice) of additional Parent Stock Options
after the date hereof to purchase up to 250,000 additional Shares and the
issuance of shares on the exercise thereof, (y) the issuance of shares upon
the exercise of outstanding Parent warrants and (z) the issuance of shares
upon the conversion of outstanding Parent convertible notes;
(c) (i) split, combine or reclassify any shares of its capital stock;
(ii) declare, set aside or pay any dividend or other distribution (whether
in cash, stock or property or any combination thereof) in respect of its
capital stock (other than any dividends or distributions payable to Parent
or its Subsidiaries); (iii) make any other actual, constructive or deemed
distribution in respect of any shares of its capital stock or otherwise
make any payments to stockholders in their capacity as such (other than any
distributions or payments to Parent or its Subsidiaries); or (iv) redeem,
repurchase or otherwise acquire any of its securities or any securities of
any of its Subsidiaries;
(d) adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other
reorganization of Parent or any of its Subsidiaries (other than the
Merger);
(e) alter through merger, liquidation, reorganization, restructuring
or in any other fashion the corporate structure or ownership of any
Subsidiary of Parent;
(f) (i) incur or assume any indebtedness for borrowed money other than
under existing credit facilities (or any renewals, replacements or
extensions that do not increase the aggregate commitments thereunder)
except (A) in the ordinary and usual course of business consistent with
past practice or (B) in connection with any acquisition or capital
expenditure permitted by this Section 6.1; (ii) assume, guarantee, endorse
or otherwise become liable or responsible (whether directly, contingently
or otherwise) for the obligations of any other Person, except in the
ordinary and usual course of business consistent with past practice, and
except for obligations of the Subsidiaries of Parent; (iii) make any loans,
advances or capital contributions to, or investments in, any other Person
(other than (A) any acquisition permitted by this Section 6.1, (B) loans,
advances or capital contributions to or investments in Subsidiaries of
Parent, (C) loans or advances to employees of Parent or any of its
Subsidiaries in the ordinary course of business consistent with past
practice or (D) extensions of credit to customers in the ordinary course of
business consistent with past practice); (iv) pledge or otherwise encumber
shares of capital stock of Parent or its Subsidiaries; or (v) create or
assume any Lien on any material assets of Parent or any of its Subsidiaries
other than in the ordinary and usual course of business consistent with
past practice;
-54-
(g) (i) increase in any manner the compensation or fringe benefits of
any director, officer or employee except in the ordinary course of business
consistent with past practice or pay any benefit not required by any plan
and arrangement as in effect as of the date hereof or grant any completion
bonuses or change of control payments in respect of the Merger or that will
be affected thereby; (ii) except in the ordinary course of business
consistent with past practice, promote or change the classification or
status in respect of or hire any employee or individual; or (iii) make any
contributions or other deposits to any trust that is not qualified under
Section 501(a) of the Code;
(h) acquire, sell, lease or dispose of any material assets outside the
ordinary and usual course of business consistent with past practice or any
assets which in the aggregate are material to Parent and its Subsidiaries
taken as a whole, other than to grant extensions or renewals in the
ordinary course of business consistent with past practice;
(i) except as may be required as a result of a change in Law or in
GAAP, make any material change in any of the accounting principles or
practices used by it;
(j) revalue in any material respect any of its assets, including
writing down the value of inventory or writing-off notes or accounts
receivable other than in the ordinary and usual course of business
consistent with past practice or as required by GAAP;
(k) (i) acquire (by merger, consolidation or acquisition of stock or
assets) any corporation, partnership or other business organization or
division thereof or any equity interest therein; (ii) other than in the
ordinary and usual course of business consistent with past practice, enter
into any material contract or agreement or amend in any material respect
any of the Parent Material Contracts or the agreements referred to in
Section 4.18; (iii) authorize any new capital expenditure or expenditures
which are not provided for in Parent's current capital expenditure plan and
which, individually, is in excess of $100,000 or, in the aggregate, are in
excess of $500,000; or (iv) enter into or amend any contract, agreement,
commitment or arrangement providing for the taking of any action that would
be prohibited hereunder;
(l) make or revoke any Tax election, or settle or compromise any
material Tax liability, or change (or make a request to any taxing
authority to change) any aspect of its method of accounting for Tax
purposes;
(m) pay, discharge or satisfy any material claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction in the
ordinary and usual course of business consistent with past practice or in
accordance with their terms of liabilities reflected, or reserved against
in, the consolidated financial statements of Parent and its Subsidiaries or
incurred since the date of such financial statements or waive the benefits
of, or agree to modify in any manner, any confidentiality, standstill or
similar agreement related to a business combination involving Parent to
which Parent or any of its Subsidiaries is a party;
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(n) settle or compromise any pending or threatened suit, action or
claim relating to the transactions contemplated hereby;
(o) enter into any agreement or arrangement that limits or otherwise
restricts Parent or any of its Subsidiaries or any successor thereto or
that could, after the Effective Time, limit or restrict the Surviving
Corporation and its affiliates (including the Company) or any successor
thereto, from engaging or competing in any line of business or in any
geographic area;
(p) fail to comply in any material respect with any Law applicable to
Parent, its Subsidiaries, or their respective assets;
(q) enter into any direct or indirect arrangements for financial
subsidies from a Governmental Entity;
(r) adopt, enter into, amend, alter or terminate (partially or
completely) any Parent Benefit Plan or Parent Employee Arrangement except
as contemplated by this Agreement or to the extent required by applicable
Law;
(s) enter into any contract with an officer, director, employee, agent
or other similar representative of Parent or any of its Subsidiaries that
is not terminable, without penalty or other liability, upon not more than
60 calendar days' notice;
(t) declare, set aside, or pay any dividends on or make any other
distributions (whether in cash, stock, or property) in respect of any of
Parent's capital stock, or split, combine or reclassify any of Parent's
capital stock or issue or authorize the issuance of any other securities in
respect of, in lieu of or in substitution for shares of capital stock, or
repurchase, redeem or otherwise acquire, directly or indirectly, any shares
of its capital stock (or options, warrants or other rights exercisable
therefore), except upon termination of employment at cost; or
(u) take, propose to take, or agree in writing or otherwise to take,
any of the actions described in Sections 6.1(a) through 6.1(t) or
intentionally take any action which would cause the condition set forth in
Section 8.2(a) not to be satisfied.
SECTION 6.2 Access to Information.
(a) Between the date hereof and the Effective Time and subject to
applicable Law, Parent will give Company and its authorized representatives
(including counsel, financial advisors, environmental consultants and auditors)
reasonable access to all employees, plants, offices, warehouses and other
facilities and to all books and records of Parent and its Subsidiaries, will
permit Company to make such inspections as Company may reasonably require, and
will cause Parent's officers and those of its Subsidiaries to furnish Company
with such financial and operating data and other information in respect of the
business, properties and personnel of Parent and its Subsidiaries as Company may
from time to time reasonably request, provided that no investigation pursuant to
this Section 6.3(a) shall affect or be deemed to modify
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any of the representations or warranties made by Parent; provided, however, that
nothing contained in this Section 6.3 shall be interpreted to require Parent to
disclose any source code or any information which it is prohibited from
disclosing pursuant to the terms of a confidentiality undertaking to a third
party.
(b) Between the date hereof and the Effective Time, Parent shall furnish to
Company (i) within five Business Days after the delivery thereof to management,
such monthly financial statements and data as are regularly prepared for
distribution to Parent management and (ii) at the earliest time they are
available, such quarterly and annual financial statements as are prepared for
Parent Board, which shall be in accordance with the books and records of Parent.
(c) Parent will hold and will cause its authorized representatives to hold
in confidence all documents and information furnished to Parent in connection
with the transactions contemplated by this Agreement pursuant to the terms of
the Confidentiality Agreement, which shall survive any termination of this
Agreement in all respects
ARTICLE VII
ADDITIONAL AGREEMENTS
SECTION 7.1 Preparation of S-4 and the Joint Proxy Statement. Parent and
the Company will, as promptly as practicable, (i) jointly prepare and will file
with the SEC the Joint Proxy Statement in connection with the votes of the
stockholders of the Company and shareholders of Parent in respect of the Merger
and other matters related thereto, and (ii) Parent will file with the SEC the
S-4 in connection with the registration under the Securities Act of the shares
of Parent Common Stock issuable upon conversion of the Shares and the other
transactions contemplated hereby, in which the Joint Proxy Statement will be
included as a prospectus. Parent and the Company will, and will cause their
accountants and lawyers to, use their reasonable best efforts to have or cause
the S-4 to be declared effective as promptly as practicable after filing with
the SEC, including causing their accountants to deliver necessary or required
instruments such as opinions, consents and certificates, and will take any other
action required or necessary to be taken under federal or state securities Laws
or otherwise in connection with the registration process (other than qualifying
to do business in any jurisdiction which it is not now so qualified or filing a
general consent to service of process in any jurisdiction). The Company and
Parent shall, as promptly as practicable after the receipt thereof, provide to
the other party copies of any written comments and advise the other party of any
oral comments in respect of the Joint Proxy Statement or the S-4 received from
the staff of the SEC. Each of the Company and Parent will provide the other with
a reasonable opportunity to review and comment on any amendment or supplement to
the Joint Proxy Statement prior to filing with the SEC and will provide each
other with a copy of all such filings with the SEC. Parent will provide the
Company with a reasonable opportunity to review and comment on any amendment or
supplement on the S-4 prior to filing with SEC and will provide the Company with
a copy of all such filings with the SEC. Parent will advise the Company,
promptly after it receives notice thereof, of the time when the Form S-4 has
become effective or any supplement or amendment has been filed, the issuance of
any stop order, the suspension of the qualification of the Parent Common Stock
issuable in connection with the Merger for offering or sale in any jurisdiction,
or any request by the SEC for amendment of the Form S-4 or comments thereon and
responses
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thereto or requests by the SEC for additional information. Each of the Company
and Parent will use its reasonable best efforts to cause the Joint Proxy
Statement to be mailed to its stockholders at the earliest practicable date.
SECTION 7.2 Letter of Accountants.
(a) The Company shall use all reasonable best efforts to cause to be
delivered to Parent a letter of Bierwolf, Nilson & Associates, the Company's
independent auditors, dated as of the date on which the S-4 shall become
effective and addressed to Parent, in form and substance reasonably satisfactory
to Parent and customary in scope and substance for letters delivered by
independent public accountants in connection with registration statements
similar to the S-4.
(b) Parent shall use all reasonable best efforts to cause to be delivered
to the Company a letter of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, the Parent's independent
auditors, dated as of the date on which the S-4 shall become effective and
addressed to the Company, in form and substance reasonably satisfactory to the
Company and customary in scope and substance for letters delivered by
independent public accountants in connection with registration statements
similar to the S-4.
SECTION 7.3 Meetings.
(a) The Company shall take all lawful action to (i) cause a special meeting
of its stockholders (the "Company Stockholder Meeting") to be duly called and
held as soon as practicable after the effective date of the S-4 for the purpose
of voting on the approval and adoption of this Agreement and approval of the
Merger and related matters and (ii) subject to applicable Law, solicit proxies
from its stockholders to obtain the Company Requisite Vote for the approval and
adoption of this Agreement and approval of the Merger. The Company Board shall
recommend approval and adoption of this Agreement and approval of the Merger by
the Company's stockholders and the Company Board shall not withdraw, amend or
modify in a manner adverse to Parent such recommendation (or announce publicly
its intention to do so).
(b) Parent shall take all lawful action to (i) cause a special meeting of
its stockholders (the "Parent Stockholder Meeting") to be duly called and held
as soon as practicable after the effective date of the S-4 for the purpose of
(A) voting on the approval and adoption of this Agreement and approval of the
Merger and related matters, (B) voting on the approval and authorization of the
increase of Parent's authorized shares of common stock to an amount sufficient
for the consummation of the transactions contemplated by this Agreement, (C)
voting on the approval and authorization of the 2004 Equity Incentive Plan, and
(D) voting on the approval of a change of Parent's name to "Trinity Learning
Corporation"; and (ii) subject to applicable Law, solicit proxies from its
stockholders to obtain the Parent Requisite Vote for the approval and adoption
of this Agreement and approval of the Merger. Parent Board shall recommend
approval and adoption of this Agreement and approval of (A), (B), (C), and (D),
above, by the Parent's stockholders and the Parent Board shall not withdraw,
amend or modify in a manner adverse to the Company such recommendation (or
announce publicly its intention to do so).
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SECTION 7.4 Government Filings; Reasonable Best Efforts; Litigation.
(a) Subject to the terms and conditions of this Agreement and applicable
Law, each party will use its reasonable best efforts to take, or cause to be
taken, all actions and to do, or cause to be done, all things necessary, proper
or advisable under applicable Laws to consummate the Merger and the other
transactions contemplated by this Agreement. In furtherance and not in
limitation of the foregoing, each party hereto shall, if required under the HSR
Act, (i) make an appropriate filing of a Notification and Report Form pursuant
to the HSR Act in respect of the transactions contemplated hereby as promptly as
practicable and in any event within ten Business Days of the date hereof and to
supply as promptly as practicable any additional information and documentary
material that may be requested pursuant to the HSR Act and use its reasonable
best efforts to take, or cause to be taken, all other actions consistent with
this Section 6.4 necessary to cause the expiration or termination of the
applicable waiting periods under the HSR Act as soon as practicable; and (ii)
make appropriate filings required under any other applicable Antitrust Law (as
hereinafter defined) in respect of the transactions contemplated hereby as
promptly as practicable and to supply as promptly as practicable any additional
information and documentary material that may be requested by the applicable
Governmental Entities administering such Laws and use its reasonable best
efforts to take, or cause to be taken, all other action consistent with this
Section 6.4 necessary to secure the applicable clearances or approvals under
such Laws as soon as practicable. For purposes of this Agreement, "Antitrust
Law" means the ▇▇▇▇▇▇▇ Act, as amended, the ▇▇▇▇▇▇▇ Act, as amended, the HSR
Act, the Federal Trade Commission Act, as amended, and all other Laws that are
designed or intended to prohibit, restrict or regulate actions having the
purpose or effect of monopolization or restraint of trade or lessening of
competition through merger or acquisition.
(b) Each of Parent and the Company shall, in connection with the efforts
referenced in Section 7.4(a) to obtain all requisite approvals and
authorizations for the transactions contemplated by this Agreement under the HSR
Act or any other Antitrust Law, use its reasonable best efforts subject to
applicable Law to (i) cooperate in all respects with each other in connection
with any filing or submission and in connection with any investigation or other
inquiry, including any proceeding initiated by a private party; (ii) keep the
other party informed in all material respects of any material communication
received by such party from, or given by such party to, the Federal Trade
Commission (the "FTC"), the Antitrust Division of the Department of Justice (the
"DOJ") or any other Governmental Entity and of any material communication
received or given in connection with any proceeding by a private party, in each
case regarding any of the transactions contemplated hereby; and (iii) permit the
other party to review any material communication given by it to, and consult
with each other in advance of any meeting or conference with, the FTC, the DOJ
or any such other domestic or foreign Governmental Entity or, in connection with
any proceeding by a private party, with any other Person, and to the extent
permitted by the FTC, the DOJ or such other applicable domestic or foreign
Governmental Entity or other Person, give the other party the opportunity to
attend and participate in such meetings and conferences.
(c) In furtherance and not in limitation of the covenants of the parties
contained in Sections 7.4(a) and (b), each of Parent and the Company shall,
subject to applicable Law, use its reasonable best efforts to resolve such
objections if any, as may be asserted by a Governmental
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Entity or other Person in respect of the transactions contemplated hereby under
any Antitrust Law. In connection with the foregoing, if any administrative or
judicial action or proceeding, including any proceeding by a private party, is
instituted (or threatened to be instituted) challenging any transaction
contemplated by this Agreement as violative of any Antitrust Law, each of Parent
and the Company shall cooperate in all respects with each other and use its
respective reasonable best efforts to contest and resist any such action or
proceeding and to have vacated, lifted, reversed or overturned any decree,
judgment, injunction or other order, whether temporary, preliminary or
permanent, that is in effect and that prohibits, prevents or restricts
consummation of the transactions contemplated by this Agreement. Notwithstanding
the foregoing or any other provision of this Agreement, nothing in this Section
7.4 shall (i) limit a party's right to terminate this Agreement pursuant to
Section 9.2 so long as such party has up to then complied in all material
respects with its obligations under this Section 7.4, (ii) require Parent to
dispose or hold separate any part of its business or operations or agree not to
compete in any geographic area or line of business or (iii) require Parent to
dispose or hold separate any part of the Company's business or operations or
agree to cause the Company not to compete in any geographic area or line of
business which would in any such case impair in any material respect any of the
benefits intended to be derived by Parent after the Effective Time as a result
of the Merger.
(d) The Company agrees that in connection with any litigation which may be
brought against the Company or its directors relating to the transactions
contemplated hereby, the Company will keep Parent, and any counsel which Parent
may retain at its own expense, informed of the course of such litigation, to the
extent Parent is not otherwise a party thereto. The Company agrees that it will
consult with Parent prior to entering into any settlement or compromise of any
such litigation, and that no such settlement or compromise will be entered into
without Parent's prior written consent, which consent shall not be unreasonably
withheld.
SECTION 7.5 Acquisition Proposals. Until the Effective Time or earlier
termination of this Agreement pursuant to Article IX and except as provided in
Section 5.2, neither Parent nor the Company will, nor will they permit any of
their Subsidiaries to, nor will they authorize or permit any officer, director
or employee of or any investment banker, attorney, accountant or other advisor
or representative of, Parent or the Company, respectively, or any of their
Subsidiaries to, directly or indirectly, (i) solicit, initiate or encourage the
submission of any Acquisition Proposal or (ii) participate in any discussions or
negotiations regarding, or furnish to any Person any information in respect of,
or take any other action to facilitate, any Acquisition Proposal or any
inquiries or the making of any proposal that constitutes, or may reasonably be
expected to lead to, any Acquisition Proposal. "Acquisition Proposal" means an
inquiry, offer or proposal regarding any of the following (other than the
transactions contemplated by this Agreement) involving Parent, Merger Sub, the
Company or any of their respective Subsidiaries: (w) any merger, consolidation,
share exchange, recapitalization, business combination or other similar
transaction; (x) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition of all or substantially all the assets of such party and its
Subsidiaries, taken as a whole, in a single transaction or series of related
transactions; (y) any tender offer or exchange offer for 20% or more of such
party's outstanding shares or the filing of a registration statement under the
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Securities Act in connection therewith; or (z) any public announcement of a
proposal, plan or intention to do any of the foregoing or any agreement to
engage in any of the foregoing.
SECTION 7.6 Public Announcements. Each of Parent, Merger Sub and the
Company will mutually agree on the issuance of any press release or otherwise
making any public statements in respect of the transactions contemplated by this
Agreement, including, the Merger, and shall not issue any such press release or
make any such public statement prior to such agreement, except as may be
required by applicable Law or by obligations pursuant to any listing agreement
with NASDAQ, as determined by Parent, Merger Sub or the Company, as the case may
be.
SECTION 7.7 Notification of Certain Matters. The Company shall give prompt
notice to Parent and Merger Sub, and Parent and Merger Sub shall give prompt
notice to the Company (which notice may be in the form of an amendment to the
Company Disclosure Schedule or Parent Disclosure Schedule in accordance with
Section 7.15), of (i) the occurrence or nonoccurrence of any event the
occurrence or nonoccurrence of which would be likely to cause any representation
or warranty contained in this Agreement to be untrue or inaccurate prior to the
Effective Time, so as to cause the conditions set forth in Article VIII hereof
to fail to be satisfied, or (ii) any material failure of the Company, Parent or
Merger Sub, as the case may be, to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it hereunder so as to
cause the conditions set forth in Article VIII hereof to fail to be satisfied;
provided, however, that the delivery of any notice pursuant to this Section 7.7
shall not cure such breach or non-compliance or limit or otherwise affect the
remedies available hereunder to the party receiving such notice.
SECTION 7.8 Tax-Free Reorganization Treatment. The parties hereto intend
that the Merger will qualify as a reorganization within the meaning of Section
368(a) of the Code. Each of the parties hereto shall, and shall cause its
respective Subsidiaries to, use its reasonable best efforts to cause the Merger
to so qualify. The parties will use their reasonable best efforts to cause the
opinions of counsel contemplated by Sections 8.2(e) and 8.3(d) to be timely
delivered, including providing all supporting representations reasonably
requested by such counsel and customary in scope and substance.
SECTION 7.9 Employee Matters. Except as contemplated by this Agreement,
Parent and the Company will and will cause the Surviving Corporation to honor
the obligations of the Company or any of its Subsidiaries under the provisions
of each Company Benefit Plan and Company Employee Arrangement; provided that the
Company shall have the right at any time to amend or terminate any such Company
Benefit Plan or Company Employee Arrangement in accordance with its terms.
SECTION 7.10 Intentionally omitted.
SECTION 7.11 SEC and Other Filings. Each of Parent and the Company shall
promptly provide the other party (or its counsel) with copies of all filings
made by the other party or any of its Subsidiaries with the SEC or any other
state, federal or foreign Governmental Entity in connection with this Agreement
and the transactions contemplated hereby.
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SECTION 7.12 Fees and Expenses. Whether or not the Merger is consummated,
all Expenses incurred in connection with this Agreement and the transactions
contemplated hereby and thereby shall be paid by the party incurring such
Expenses, except (a) Expenses incurred in connection with the filing, printing
and mailing of the S-4, which shall be shared equally by the Company and Parent,
(b) the filing fees required under the HSR Act, which shall be shared equally by
the Company and Parent and (c) if applicable, as provided in Sections 9.3(b)
and/or 9.4(b). As used in this Agreement, "Expenses" includes all out-of-pocket
expenses (including all fees and expenses of counsel, accountants, investment
bankers, experts and consultants to a party hereto and its affiliates) incurred
by a party or on its behalf in connection with, or related to, the
authorization, preparation, negotiation, execution and performance of this
Agreement and the transactions contemplated hereby, including the preparation,
filing, printing and mailing of the Joint Proxy Statement and the S-4 and the
solicitation of stockholder approvals and all other matters related to the
transactions contemplated hereby.
SECTION 7.13 Obligations of Merger Sub. Parent will take all action
necessary to cause Merger Sub to perform its obligations under this Agreement
and to consummate the Merger on the terms and conditions set forth in this
Agreement.
SECTION 7.14 Anti-takeover Statutes. If any Takeover Statute is or may
become applicable to the Merger, each of Parent and the Company shall use their
reasonable best efforts to permit the transactions contemplated by this
Agreement, as applicable, to be consummated as promptly as practicable on the
terms contemplated hereby and otherwise act to eliminate or minimize the effects
of any Takeover Statute on the Merger.
SECTION 7.15 Amendment of Disclosure Schedules. Parent and Merger Sub and
the Company shall each have the right, subject to the provisions of Sections 9.3
and 9.4, to amend the Parent Disclosure Schedules and the Company Disclosure
Schedules, respectively, at any time prior to the earlier of (i) the filing of
the S-4 or (ii) thirty (30) days after the date of this Agreement. Upon receipt
of the amended Company Disclosure Schedules, Parent shall have five (5) Business
Days to either accept such amended schedules or terminate this Agreement. Upon
receipt of the amended Parent Disclosure Schedules, the Company shall have five
(5) Business Days to either accept such amended schedules or terminate this
Agreement.
ARTICLE VIII
CONDITIONS TO CONSUMMATION OF THE MERGER
SECTION 8.1 Conditions to Each Party's Obligations to Effect the Merger.
The respective obligations of each party to consummate the transactions
contemplated by this Agreement are subject to the fulfillment at or prior to the
Effective Time of each of the following conditions:
(a) The Merger shall have been approved and adopted by the Company
Requisite Vote and the Parent Requisite Vote.
(b) Any waiting periods applicable to the Merger under the HSR Act
shall have expired or early termination thereof shall have been granted and
any waiting periods
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or consents under any comparable foreign antitrust Laws shall have expired
or been obtained.
(c) There shall not be in effect any Law of any Governmental Entity of
competent jurisdiction restraining, enjoining or otherwise preventing
consummation of the transactions contemplated by this Agreement and no
Governmental Entity shall have instituted any proceeding which continues to
be pending seeking any such Law.
(d) The S-4 shall have been declared effective by the SEC and shall be
effective at the Effective Time, and no stop order suspending effectiveness
shall have been issued and no action, suit, proceeding or investigation by
the SEC or any state securities regulator to suspend the effectiveness
thereof shall have been initiated and be continuing.
(e) NASDAQ (or another national exchange mutually agreeable to the
Company and Parent) shall have confirmed to Parent that, following the
Merger, Parent's common stock will continue to be listed on the NASDAQ
SmallCap Market (or other national exchange mutually agreeable to the
Company and Parent.
SECTION 8.2 Conditions to the Obligations of Parent and Merger Sub. The
respective obligations of Parent and Merger Sub to consummate the transactions
contemplated by this Agreement are subject to the fulfillment at or prior to the
Effective Time of each of the following additional conditions, any or all of
which may be waived in whole or part by Parent to the extent permitted by
applicable Law:
(a) The representations and warranties of the Company contained herein
shall have been true in all respects when made and on and as of the Closing Date
as though made on and as of the Closing Date (except for representations and
warranties made as of a specified date, which shall speak only as of the
specified date), except where the failure to be true, individually or in the
aggregate, has not had or is not reasonably expected to have a Material Adverse
Effect on the Company and its Subsidiaries taken as a whole.
(b) The Company shall have performed or complied in all material respects
with all agreements and covenants contained herein required to be performed or
complied with by it prior to or at the time of the Closing.
(c) The Company shall have delivered to Parent a certificate, dated the
date of the Closing, signed by the President of the Company (but without
personal liability thereto), certifying as to the fulfillment of the conditions
specified in Sections 8.2(a) and 8.2(b).
(d) Parent shall have received an opinion from the Company's tax counsel
reasonably acceptable to Parent dated the Effective Time, to the effect that (i)
the Merger will qualify as a reorganization within the meaning of Section 368(a)
of the Code; and (ii) each of Parent, Merger Sub and the Company will be a party
to the reorganization within the meaning of Section 368(b) of the Code.
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(e) Parent shall have received an opinion from the Company's legal counsel
reasonably acceptable to Parent dated the Effective Time in a form customary
with respect to the transactions contemplated hereby.
(f) All authorizations, consents or approvals of a Governmental Entity
(other than those specified in Section 8.1(b)) required in connection with the
execution and delivery of this Agreement and the performance of the obligations
hereunder shall have been made or obtained, without any limitation, restriction
or condition that is reasonably expected to have a Material Adverse Effect on
the Company and its Subsidiaries taken as a whole (or an effect on Parent and
its Subsidiaries that, were such effect applied to the Company and its
Subsidiaries, would be reasonably expected to have a Material Adverse Effect on
the Company), except for such authorizations, consents or approvals, the failure
of which to have been made or obtained is not reasonably expected to have a
Material Adverse Effect on the Company and its Subsidiaries taken as a whole (or
an effect on Parent and its Subsidiaries that, were such effect applied to the
Company and its Subsidiaries, would be reasonably expected to have a Material
Adverse Effect on the Company).
(g) [Intentionally omitted.]
(h) Parent and each of ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇ shall have
entered into employment agreements in the form reasonably acceptable to Parent.
(i) No more than two percent (2%) the stockholders of the Company shall
have elected any appraisal rights or associated payments under Section
16-10a-1302 through 1331 of the URBCA.
(j) ▇▇▇▇▇▇ ▇▇▇▇▇ & Co. shall have delivered a to Parent an opinion to the
effect that, as of the date of such opinion, the Exchange Ratio is fair to the
stockholders of Parent from a financial point of view, and such opinion has not
been withdrawn or modified.
SECTION 8.3 Conditions to the Obligations of the Company. The obligations
of the Company to consummate the transactions contemplated by this Agreement are
subject to the fulfillment at or prior to the Effective Time of each of the
following conditions, any or all of which may be waived in whole or in part by
the Company to the extent permitted by applicable Law:
(a) The representations and warranties of Parent and Merger Sub contained
herein shall be true in all respects when made and on and as of the Closing Date
as though made on and as of the Closing Date (except for representations and
warranties made as of a specified date, which shall speak only as of the
specified date), except where the failure to be true, individually or in the
aggregate, has not had or is not reasonably expected to have a Material Adverse
Effect on Parent and its Subsidiaries taken as a whole.
(b) Parent shall have performed or complied in all material respects with
all agreements and covenants contained herein required to be performed or
complied with by it prior to or at the time of the Closing.
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(c) Parent shall have delivered to the Company a certificate, dated the
date of the Closing, signed by the President of Parent (but without personal
liability thereto), certifying as to the fulfillment of the conditions specified
in Sections 8.3(a) and 8.3(b).
(d) The Company shall have received an opinion from its tax counsel
reasonably acceptable to the Company, dated the Effective Time, to the effect
that (i) the Merger will qualify as a reorganization within the meaning of
Section 368(a) of the Code; and (ii) each of Parent, Merger Sub and the Company
will be a party to the reorganization within the meaning of Section 368(b) of
the Code. The issuance of such opinion shall be conditioned on the receipt by
such tax counsel of representation letters from each of the Parent, Merger Sub
and the Company, substantially in the forms attached hereto as Exhibits D and E.
Each such representation letter shall be dated on or before the date of such
opinion and shall not have been withdrawn or modified in any material respect.
(e) Parent and each of ▇▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇▇▇▇▇ ▇▇▇▇ shall have entered
into amended employment agreements in the form reasonably acceptable to the
Company.
(f) ▇▇▇▇▇▇▇, LLC (the "Company's Financial Advisor") shall have delivered
to the Company Board its opinion, to the effect that, as of the date of such
opinion, the Exchange Ratio is fair to the stockholders of the Company from a
financial point of view, and such opinion has not been withdrawn or modified.
(g) Each of the Company Stock Options, Company Warrants and Company
Convertible Notes shall have been assumed and/or replaced as provided in Section
2.2.
(h) Parent and Merger Sub shall cause Parent's board of directors upon the
Effective Time to consist of eight (8) directors. Such directors shall be
comprised of: (i) six (6) directors designated by the Company, (ii) two (2) of
directors designated by Parent. Four (4) of the directors designated by the
Company and one (1) of the directors designated by Parent shall be "independent
directors" as such term is defined in NASDAQ marketplace rule 4200(14).
(i) The Company shall have received an opinion from Parent's legal counsel
reasonably acceptable to the Company dated the Effective Time in a form
customary with respect to the transactions contemplated hereby.
ARTICLE IX
TERMINATION; AMENDMENT; WAIVER
SECTION 9.1 Termination by Mutual Agreement. This Agreement may be
terminated and the Merger may be abandoned at any time prior to the Effective
Time, whether before or after the approval of the Merger by the Company
Requisite Vote and Parent Requisite Vote referred to in Section 8.1(a), by
mutual written consent of the Company and Parent by action of their respective
boards of directors.
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SECTION 9.2 Termination by Either Parent or the Company. This Agreement may
be terminated and the Merger may be abandoned at any time prior to the Effective
Time by action of the board of directors of either Parent or the Company if:
(a) the Merger shall not have been consummated by June 30, 2004, whether
such date is before or after the date of approval of the Merger by the Company
Requisite Vote (the "Termination Date"); provided, however, that if either
Parent or the Company reasonably determines in good faith that additional time
is necessary in connection with obtaining any consent, registration, approval,
permit or authorization required to be obtained from any Governmental Entity,
the Termination Date may be extended by Parent or the Company from time to time
by written notice to the other party to a date not beyond August 31, 2004;
(b) the Company Requisite Vote and Parent Requisite Vote shall not have
been obtained at the Company Stockholder Meeting or Parent Stockholder Meeting,
respectively, or at any adjournment or postponement thereof;
(c) any Law permanently restraining, enjoining or otherwise prohibiting
consummation of the Merger shall become final and non-appealable (whether before
or after the approval of the Merger by the Company Requisite Vote); or
(d) any Governmental Entity shall have failed to issue an order, decree or
ruling or to take any other action which is necessary to fulfill the conditions
set forth in Sections 8.1(b), 8.1(d) and 8.2(f), as applicable, and such denial
of a request to issue such order, decree or ruling or take such other action
shall have been final and non-appealable;
provided, however, that the right to terminate this Agreement pursuant to this
Section 9.2 shall not be available to any party that has breached in any
material respect its obligations under this Agreement in any manner that shall
have proximately contributed to the occurrence of the failure of the Merger to
be consummated.
SECTION 9.3 Termination by the Company.
(a) This Agreement may be terminated and the Merger may be abandoned at any
time prior to the Effective Time by action of the Company Board if:
(i) the Merger shall not have been approved by the Company Requisite
Vote; or
(ii) there is a material breach by Parent or Merger Sub of any
representation, warranty, covenant or agreement contained in this Agreement
that cannot be cured and would cause a condition set forth in Section
8.3(a), 8.3(b) or 8.3(c) to be incapable of being satisfied as of the
Termination Date.
(iii) the average price per share of Parent's Common Stock during the
twenty (20) - Business Day period ending on the third Business Day prior to
the Company's stockholder vote on this Agreement and the Merger is less
than $0.50; or
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(iv) elected by the Company pursuant to Section 7.15;
(v) if the Company has not received a written fairness opinion from
▇▇▇▇▇▇▇ LLC as provided in Section 8.3(f) on or before February 27, 2004
supporting the oral opinion disclosed in Section 3.21; provided that this
termination right must be exercised on or before the fifth Business Day
following such date.
(b) Parent shall pay to Company a termination fee equal to $500,000 within
thirty (30) days of Company's written notice of a termination: (i) pursuant to
Section 9.3(a)(ii); or, (ii). pursuant to Section 9.3(a)(iv) because the
disclosure in the amended Parent Disclosure Schedule should have been made on
the date of this Agreement and reflects or results in a Material Adverse Effect
on or to Parent. In no event shall Parent's aggregate liability for termination
fees exceed $500,000. Notwithstanding anything to the contrary, such termination
fee shall be the sole and exclusive remedy for any breach by Parent or Merger
Sub of any representation, warranty, covenant or agreement contained in this
Agreement, other than a willful breach, that cannot be cured and would cause a
condition set forth in Section 8.3(a) or 8.3(b) to be incapable of being
satisfied as of the Termination Date.
SECTION 9.4 Termination by Parent.
(a) This Agreement may be terminated and the Merger may be abandoned at any
time prior to the Effective Time by Parent, if:
(i) the Merger shall not have been approved by the Parent Requisite
Vote; or
(ii) there is a material breach by the Company of any representation,
warranty, covenant or agreement contained in this Agreement that cannot be
cured and would cause a condition set forth in Section 8.2(a), 8.2(b) or
8.2(c) to be incapable of being satisfied as of the Termination Date.
(iii) the average price per share of Parent's Common Stock during the
twenty (20) - Business Day period ending on the third Business Day prior to
the Company's stockholder vote on this Agreement and the Merger (the
"Assumed Value") is greater than $2.00; provided, however, that Parent may
not terminate this Agreement under this subsection (iii) if the Company
elects to accept a lower Exchange Ratio such that the value of the Parent
stock (based on the Assumed Value) received by the Company stockholders
equals $2.00 per share of Company Common Stock.
(iv) elected by Parent pursuant to Section 7.15.
(v) if Parent has not received a written fairness opinion from ▇▇▇▇▇▇
▇▇▇▇▇ & Co. as provided in Section 8.2(i) on or before February 27, 2004
supporting the oral opinion disclosed in Section 4.21; provided that this
termination right must be exercised on or before the fifth Business Day
following such date.
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(b) The Company shall pay to Parent a termination fee equal to $500,000
within thirty (30) days of Parent's written notice of a termination: (i)
pursuant to Section 9.4(a)(ii); or, (ii) pursuant to Section 9.4(a)(iv) because
the disclosure in the amended Company Disclosure Schedule should have been made
as of the date of this Agreement and reflects or results in a Material Adverse
Effect on or to the Company. In no event shall the Company's aggregate liability
for termination fees exceed $500,000. Notwithstanding anything to the contrary,
such termination fee shall be the sole and exclusive remedy for any breach by
the Company of any representation, warranty, covenant or agreement contained in
this Agreement, other than a willful breach, that cannot be cured and would
cause a condition set forth in Section 8.3(a) or 8.3(b) to be incapable of being
satisfied as of the Termination Date.
SECTION 9.5 Effect of Termination and Abandonment. In the event of
termination of this Agreement and the abandonment of the Merger pursuant to this
Article VIII, this Agreement (other than this Section 9.5, Sections 5.3(b) and
7.12, 9.3(b) and 9.4(b), and Article X) shall become void and of no effect with
no liability on the part of any party hereto (or of any of its directors,
officers, employees, agents, legal and financial advisors, or other
representatives); provided, however, that except as otherwise provided herein,
no such termination shall relieve any party hereto of any liability or damages
resulting from any willful breach of this Agreement.
SECTION 9.6 Amendment. This Agreement may be amended by action taken by the
Company, Parent and Merger Sub at any time before or after approval of the
Merger by the Company Requisite Vote and the Parent Requisite Vote but, after
any such approval, no amendment shall be made which requires the approval of
such stockholders under applicable Law without such approval. This Agreement may
not be amended except by an instrument in writing signed on behalf of the
parties hereto.
SECTION 9.7 Extension; Waiver. At any time prior to the Effective Time,
each party hereto (for these purposes, Parent and Merger Sub shall together be
deemed one party and the Company shall be deemed the other party) may (i) extend
the time for the performance of any of the obligations or other acts of the
other party, (ii) waive any inaccuracies in the representations and warranties
of the other party contained herein or in any document, certificate or writing
delivered pursuant hereto, or (iii) waive compliance by the other party with any
of the agreements or conditions contained herein. Any agreement on the part of
either 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. The failure of
any party hereto to assert any of its rights hereunder shall not constitute a
waiver of such rights.
ARTICLE X
MISCELLANEOUS
SECTION 10.1 Entire Agreement; Assignment.
(a) This Agreement (including the documents and instruments referred to
herein) constitutes the entire agreement between the parties hereto in respect
of the subject matter hereof and supersedes all other prior agreements and
understandings, both written and oral, between the
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parties in respect of the subject matter hereof, other than the Confidentiality
Agreement (which shall remain in effect).
(b) Neither this Agreement nor any of the rights, interests or obligations
hereunder shall be assigned by operation of Law (including by merger or
consolidation) or otherwise without the prior written consent of the other
parties. Any assignment in violation of the preceding sentence shall be null and
void. Subject to the preceding sentence, this Agreement will be binding upon,
inure to the benefit of, and be enforceable by the parties and their respective
successors and permitted assigns.
SECTION 10.2 Nonsurvival of Representations and Warranties. The
representations and warranties made herein by the parties hereto shall not
survive the Effective Time. This Section 10.2 shall not limit any covenant or
agreement of the parties hereto which by its terms contemplates performance
after the Effective Time or after termination of this Agreement.
SECTION 10.3 Notices. All notices, requests, instructions or other
documents to be given under this Agreement shall be in writing and shall be
deemed given (i) five Business Days following sending by registered or certified
mail, postage prepaid, (ii) when sent if sent by facsimile; provided, however,
that the facsimile is promptly confirmed by telephone confirmation thereof,
(iii) when delivered, if delivered personally to the intended recipient, and
(iv) one Business Day following sending by overnight delivery via a national
courier service, and in each case, addressed to a party at the following address
for such party:
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if to Merger Sub or to
Parent, to: ProsoftTraining
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
with copies to: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
#8 - ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
▇▇▇▇▇▇ & ▇'▇▇▇▇ LLP
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
if to the Company, to: Trinity Learning Corporation
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: President
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇▇, PLC
▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address or facsimile number as the Person to whom notice
is given may have previously furnished to the other in writing in the
manner set forth above.
SECTION 10.4 Governing Law. This Agreement shall be governed by and
construed in accordance with the Laws of the State of Utah, without giving
effect to the choice of Law principles thereof.
SECTION 10.5 Descriptive Headings. The descriptive headings herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
SECTION 10.6 Parties in Interest. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto and its successors and
permitted assigns.
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SECTION 10.7 Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof. If any
provision of this Agreement, or the application thereof to any Person or any
circumstance, is invalid or unenforceable, (a) a suitable and equitable
provision shall be substituted therefor in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid or unenforceable
provision and (b) the remainder of this Agreement and the application of such
provision to other Persons or circumstances shall not be affected by such
invalidity or unenforceability, nor shall such invalidity or unenforceability
affect the validity or enforceability of such provision, or the application
thereof, in any other jurisdiction.
SECTION 10.8 Specific Performance. The parties 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 an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions of this Agreement in any court of the
United States located in the State of Utah or in Utah state court, this being in
addition to any other remedy to which they are entitled at Law or in equity. In
addition, each of the parties hereto (a) consents to submit itself to the
personal jurisdiction of any federal court located in the State of Utah or any
Utah state court in the event any dispute arises out of this Agreement or any of
the transactions contemplated hereby, (b) agrees that it will not attempt to
deny or defeat such personal jurisdiction by motion or other request for leave
from any such court, and (c) agrees that it will not bring any action relating
to this Agreement or any of the transactions contemplated hereby in any court
other than a federal or state court sitting in the State of Utah.
SECTION 10.9 Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties.
SECTION 10.10 Interpretation.
(a) The words "hereof," "herein," "herewith" and words of similar import
shall, unless otherwise stated, be construed to refer to this Agreement as a
whole and not to any particular provision of this Agreement, and article,
section, paragraph, exhibit, and schedule references are to the articles,
sections, paragraphs, exhibits, and schedules of this Agreement unless otherwise
specified. Whenever the words "include," "includes," or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation," the word "or" shall mean "and/or." All terms defined in this
Agreement shall have the defined meanings contained herein when used in any
certificate or other document made or delivered pursuant hereto unless otherwise
defined therein. The definitions contained in this Agreement are applicable to
the singular as well as the plural forms of such terms and to the masculine as
well as to the feminine and neuter genders of such terms. Any agreement,
instrument or statute defined or referred to herein or in any agreement or
instrument that is referred to herein means such agreement, instrument or
statute as from time to time amended, qualified or supplemented, including (in
the case of agreements and instruments) by waiver or consent and (in the case of
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statutes) by succession of comparable successor statutes and all attachments
thereto and instruments incorporated therein. References to a Person are also to
its permitted successors and assigns.
(b) The phrases "the date of this Agreement," "the date hereof," and terms
of similar import, unless the context otherwise requires, shall be deemed to
refer to February 22, 2004. The phrase "made available" in this Agreement shall
mean that the information referred to has been actually delivered to the party
to whom such information is to be made available.
(c) The parties have participated jointly in the negotiation and drafting
of this Agreement. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the parties and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any provisions of this
Agreement.
SECTION 10.11 Definitions. As used herein,
(a) "beneficial ownership" or "beneficially own" has the meaning provided
in Section 13(d) of the Exchange Act and the rules and regulations thereunder.
(b) "Business Day" shall mean any day other than Saturday, Sunday or any
day on which banks in Salt Lake City, Utah are required or authorized by Law to
be closed for business.
(c) "know" or "Knowledge" means, in respect of any party, the actual
Knowledge of the officers and employees of such party actively participating in
the negotiation of this agreement and related due diligence activities, without
any requirement to undertake an independent investigation, provided that, (i) in
the case of the Company, such officers and employees shall be limited to those
Persons named in Section 10.11(c) of the Company Disclosure Schedule, and (ii)
in the case of Parent, such officers and employees shall be limited to those
Persons named in Section 10.11(c) of the Parent Disclosure Schedule.
(d) "Material Adverse Effect" means in respect of any entity, any material
adverse effect on (i) the assets, properties, financial condition or results of
operations of such entity and its Subsidiaries taken as a whole, other than (A)
any change, circumstance, effect or development relating to the training,
content and certification industries (it being understood that this clause (A)
shall not exclude, in the case of any Material Adverse Effect with respect to
either party, any change, circumstance, effect or development relating to the
training, content and certification industries or economy in general in any
location in which such entity operates or owns assets that materially
disproportionately impacts such party), (B) any change, circumstance, effect or
development arising out of or resulting from actions contemplated by the parties
in connection with, or which is attributable to, the announcement of this
Agreement and the transactions contemplated hereby (including loss of customers,
suppliers or employees or the delay or cancellation of orders for products), or
(C) any shareholder litigation or litigation by any Governmental Entity, in each
case brought or threatened against such entity or any member of its board of
directors in respect of this Agreement or the transactions contemplated hereby;
provided that any change in the market price or trading volume of the Company
Common Stock or Parent
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Common Stock shall not, in and of itself, constitute a Material Adverse Effect,
or (ii) the ability of such party to consummate the transactions contemplated by
this Agreement.
(e) "Person" means an individual, corporation, limited liability company,
partnership, association, trust, unincorporated organization, other entity or
group (as defined in the Exchange Act).
(f) "Subsidiary" means, in respect of any party, any corporation,
partnership or other entity or organization, whether incorporated or
unincorporated, of which (i) such other party or any other subsidiary of such
party is a general partner (excluding such partnerships where such party or any
subsidiary of such party does not have a majority of the voting interest in such
partnership) or (ii) at least a majority of the securities or other interests
having by their terms ordinary voting power to elect a majority of the board of
directors or others performing similar functions in respect of such corporation
or other organization is directly or indirectly owned or controlled by such
party or by any one or more of its subsidiaries, or by such party and one or
more of its subsidiaries.
[THE REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
duly executed on its behalf as of the date first above written.
TRINITY LEARNING CORPORATION
By:________________________________
Name:
Title:
PROSOFTTRAINING
By:________________________________
Name:
Title:
MTX ACQUISITION CORP.
By:________________________________
Name:
Title:
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GLOSSARY OF DEFINED TERMS [[[TO BE UPDATED]]]
Defined Terms Defined in Section
------------- ------------------
Acquisition Proposal...................................................6.5(a)
Antitrust Law..........................................................6.4(a)
Assumed Stock Option...................................................2.2(a)
beneficial ownership..................................................9.11(a)
beneficially own......................................................9.11(a)
Benefit Plans......................................................3.13(a)(i)
Benefits Integration Date................................................6.10
Business Day..........................................................9.11(b)
CERCLA.............................................................3.15(a)(i)
Articles of Merger........................................................1.2
Certificates..............................................................2.4
Closing...................................................................1.3
Closing Date .............................................................1.3
Code.................................................................Recitals
Company..............................................................Preamble
Company Balance Sheet.....................................................3.4
Company Balance Sheet Date................................................3.4
Company Board..........................................................3.3(b)
Company Common Stock...................................................2.1(b)
Company Disclosure Schedule.......................................Article III
Company Employees........................................................6.10
Company Option Plans......................................................2.2
Company Permits..........................................................3.12
Company Requisite Vote.................................................3.3(b)
Company Rights Agreement.................................................3.26
Company SEC Reports.......................................................3.4
Company Securities.....................................................3.2(a)
Company Stock Option......................................................2.2
Company Stockholder Meeting...............................................6.3
Confidentiality Agreement..............................................5.3(c)
URBCA.....................................................................1.1
DOJ....................................................................6.4(b)
Effective Time............................................................1.2
Employee Arrangements.............................................3.13(a)(ii)
Environmental Law..................................................3.15(a)(i)
ERISA..............................................................3.13(a)(i)
Exchange Act..............................................................3.4
Exchange Agent............................................................2.3
Exchange Fund.............................................................2.3
Exchange Ratio.........................................................2.1(b)
Exempt Acquired Person.................................................8.5(b)
Expenses.................................................................6.13
Company's Financial Advisor..............................................3.21
FTC....................................................................6.4(b)
GAAP......................................................................3.4
Governmental Entity.......................................................3.8
Hazardous Material................................................3.15(a)(ii)
HSR Act...................................................................3.8
Indemnified Party(ies).................................................6.7(a)
Intellectual Property.................................................3.20(a)
IRS...................................................................3.13(b)
know..................................................................9.11(c)
Knowledge.............................................................9.11(c)
Law.......................................................................3.9
Leased Facilities.....................................................3.10(a)
Lien...................................................................3.2(b)
Material Adverse Effect...............................................9.11(d)
Material Contracts....................................................3.18(a)
Merger....................................................................1.1
Merger Consideration...................................................2.1(b)
Merger Sub...........................................................Preamble
Option Agreement.....................................................Recitals
Owned Facilities......................................................3.10(a)
Parent...............................................................Preamble
Parent Balance Sheet......................................................4.3
Parent Balance Sheet Date.................................................4.3
Parent Board...........................................................4.2(b)
Parent Common Stock..................................................Recitals
Parent Disclosure Schedule.........................................Article IV
Parent Plan..............................................................6.10
Parent SEC Reports........................................................4.3
Parent Shares.............................................................4.5
Person ...............................................................9.11(e)
Product..................................................................3.24
Company Proxy Statement...................................................3.7
Real Property Lease...................................................3.10(c)
Release..........................................................3.15(a)(iii)
Remedial Action...................................................3.15(a)(iv)
Retirement Plan.......................................................6.10(a)
S-4.......................................................................3.7
SAR....................................................................2.2(d)
SEC....................................................................2.2(d)
Division..................................................................1.2
Securities Act............................................................3.4
Share(s)...............................................................2.1(b)
Subsidiary............................................................9.11(f)
Superior Proposal......................................................6.5(a)
Surviving Corporation.....................................................1.1
Tax(es)..................................................................3.16
Tax Return(s)............................................................3.16
Termination Date ......................................................8.2(a)
Voting Agreement.....................................................Recitals
WARN..................................................................3.14(d)