EXHIBIT 10.4
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AGREEMENT AND PLAN OF MERGER
by and between
BLAZE SOFTWARE, INC.
and
BROKAT AKTIENGESELLSCHAFT
June 19, 2000
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TABLE OF CONTENTS
Page
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RECITALS........................................................................................... 1
ARTICLE II THE MERGER........................................................................... 2
Section 2.1 The Merger.................................................... 2
Section 2.2 Effective Time................................................ 2
Section 2.3 Closing....................................................... 3
Section 2.4 Effects of the Merger......................................... 3
Section 2.5 The Certificate of Incorporation.............................. 3
Section 2.6 The By-Laws................................................... 3
Section 2.7 Directors of Surviving Corporation............................ 3
Section 2.8 Officers of Surviving Corporation............................. 3
ARTICLE III EFFECT OF THE MERGER ON CAPITAL STOCK;
EXCHANGE OF CERTIFICATES........................................................................... 4
Section 3.1 Conversion of Capital Stock................................... 4
Section 3.2 Exchange of Certificates...................................... 5
Section 3.3 No Appraisal Rights........................................... 9
Section 3.4 Adjustments to Prevent Dilution............................... 9
Section 3.5 Withholding Rights............................................ 9
Section 3.6 Treatment of Stock Options/Restricted Stock................... 9
Section 3.7 Treatment of Warrants......................................... 11
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY........................................ 12
Section 4.1 Organization and Qualification; Subsidiaries.................. 12
Section 4.2 Certificate of Incorporation and By-Laws...................... 12
Section 4.3 Capitalization................................................ 13
Section 4.4 Authority..................................................... 14
Section 4.5 No Conflict................................................... 15
Section 4.6 Required Filings and Consents................................. 16
Section 4.7 Permits; Compliance with Law.................................. 16
Section 4.8 SEC Filings; Financial Statements............................. 17
Section 4.9 Absence of Certain Changes or Events.......................... 18
Section 4.10 Employee Benefit Plans; Employee Relations.................... 20
Section 4.11 Accounting and Tax Matters.................................... 22
Section 4.12 Contracts; Debt Instruments................................... 22
Section 4.13 Litigation.................................................... 22
Section 4.14 Environmental Matters......................................... 23
Section 4.15 Intellectual Property......................................... 23
Section 4.16 Taxes......................................................... 26
Section 4.17 Non-Competition Agreements.................................... 26
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Section 4.18 Agreements with Regulatory Agencies........................... 27
Section 4.19 Opinion of Financial Advisor.................................. 27
Section 4.20 Brokers....................................................... 27
Section 4.21 Certain Statutes.............................................. 27
Section 4.22 Information................................................... 28
Section 4.23 Vote Required................................................. 28
ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE PARENT......................................... 28
Section 5.1 Organization and Qualification; Subsidiaries.................. 28
Section 5.2 Charter Documents............................................. 29
Section 5.3 Capitalization................................................ 29
Section 5.4 Authority..................................................... 30
Section 5.5 No Conflict................................................... 31
Section 5.6 Required Filings and Consents................................. 31
Section 5.7 Financial Statements.......................................... 32
Section 5.8 Absence of Certain Changes or Events.......................... 33
Section 5.9 Accounting and Tax Matters.................................... 34
Section 5.10 Litigation.................................................... 34
Section 5.11 Intellectual Property......................................... 34
Section 5.12 Taxes 35
Section 5.13 Brokers....................................................... 35
Section 5.14 Information................................................... 35
ARTICLE VI COVENANTS............................................................................ 36
Section 6.1 Conduct of Business of the Company............................ 36
Section 6.2 Certain Interim Operations of the Parent...................... 39
Section 6.3 Notification of Certain Matters............................... 39
Section 6.4 Proxy Statement............................................... 40
Section 6.5 Company Stockholders Meeting.................................. 42
Section 6.6 Access to Information; Confidentiality........................ 42
Section 6.7 No Solicitation............................................... 42
Section 6.8 Employee Benefits Matters..................................... 44
Section 6.9 Directors' and Officers' Indemnification and Insurance........ 45
Section 6.10 Letters of Accountants........................................ 46
Section 6.11 Commercially Reasonable Efforts............................... 47
Section 6.12 Consents; Filings; Further Action............................. 47
Section 6.13 Plan of Reorganization........................................ 48
Section 6.14 Public Announcements.......................................... 49
Section 6.15 Stock Exchange Listings and De-Listings....................... 49
Section 6.16 Expenses...................................................... 49
Section 6.17 Takeover Statutes; Exon-▇▇▇▇▇▇................................ 49
Section 6.18 Dividends..................................................... 49
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Section 6.19 Control of the Company's Operations........................... 50
Section 6.20 Certain Obligations of the Parent............................. 50
ARTICLE VII CONDITIONS........................................................................... 50
Section 7.1 Conditions to Each Party's Obligation to Effect the
Merger........................................................ 50
Section 7.2 Conditions to Obligations of the Parent....................... 51
Section 7.3 Conditions to Obligation of the Company....................... 52
ARTICLE VIII TERMINATION.......................................................................... 53
Section 8.1 Termination................................................... 53
Section 8.2 Effect of Termination......................................... 55
Section 8.3 Expenses Following Certain Termination Events................. 55
ARTICLE IX MISCELLANEOUS................................................. 57
Section 9.1 Certain Definitions........................................... 57
Section 9.2 Survival...................................................... 57
Section 9.3 Counterparts.................................................. 58
Section 9.4 GOVERNING LAW; WAIVER OF JURY TRIAL........................... 58
Section 9.5 Notices....................................................... 59
Section 9.6 Entire Agreement.............................................. 59
Section 9.7 No Third Party Beneficiaries.................................. 60
Section 9.8 Amendment..................................................... 60
Section 9.9 Waiver........................................................ 60
Section 9.10 Obligations of the Parent and of the Company.................. 60
Section 9.11 Severability.................................................. 60
Section 9.12 Interpretation................................................ 61
Section 9.13 Assignment.................................................... 61
Section 9.14 Specific Performance.......................................... 61
Section 9.15 Submission to Jurisdiction; Waivers; Consent to
Service of Process............................................ 61
EXHIBITS
Exhibit A Company Voting Agreements
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated June 19, 2000,
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by and between BLAZE SOFTWARE, INC., a Delaware corporation (the "Company"), and
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BROKAT AKTIENGESELLSCHAFT, a German corporation which is in the process of
changing its name from BROKAT Infosystems Aktiengesellschaft (the "Parent").
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RECITALS
(a) The management board (Vorstand) of the Parent and the board of
directors of the Company have determined that the merger of Merger Sub with and
into the Company on the terms and subject to the conditions set forth on this
Agreement (the "Merger"), with the Company surviving as a wholly owned
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subsidiary of the Parent, is advisable and that it is in the best interests of
their respective corporations and stockholders to combine the respective
businesses of the Parent and the Company, and consequently have approved the
merger of Merger Sub with and into the Company (the "Merger") and have approved
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and adopted the Merger and this Agreement, in accordance with the General
Corporation Law of the State of Delaware (the "DGCL") and the laws of Germany.
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(b) Concurrently with the execution of this Agreement, as a condition
to the willingness of the Parent to enter into this Agreement, (i) certain
holders (the "Principal Stockholders") of the Company's common stock, par value
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$0.0001 per share ("Company Common Stock"), are entering into one or more
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stockholders' agreements, dated as of the date hereof, with the Parent and the
Company, copies of which are attached to this Agreement as Exhibit A (the
"Company Voting Agreements").
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(c) For federal income tax purposes it is intended that the Merger
shall qualify as a reorganization under the provisions of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code"), and the rules and
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regulations promulgated under the Code.
(d) Certain terms used in this Agreement which are not capitalized
have the meanings specified in Section 8.1.
NOW, THEREFORE, the parties to this Agreement, intending to be legally
bound by this Agreement, agree as follows:
ARTICLE II
THE MERGER
Section 2.1 The Merger.
(a) As promptly as practicable following the date hereof, the Parent
and the Company shall appoint a United States bank or trust company or other
independent financial institution in the United States (the "Exchange Agent") to
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act as exchange agent for the Share Exchange (as defined in Section 2.2 (a)(ii)
hereof) and the delivery of the Merger Consideration (as defined in Section
2.1(c) hereof). Following such appointment, the Exchange Agent (as agent for
the Parent) shall cause to be incorporated pursuant to the DGCL a corporation
which shall be a constituent company in the Merger ("Merger Sub") and which
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shall not transact any business other than participating in the Merger as
described herein. To accommodate the transactions described in this Article I
and Article II, the Exchange Agent shall hold all the issued and outstanding
shares of common stock, par value $0.01 per share, of the Merger Sub (the
"Merger Sub Common Stock") as agent for the Parent; at and following the
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Effective Time, the Exchange Agent shall receive and hold the Merger
Consideration and the Exchange Fund solely as agent for the Company's
shareholders. The Parent and the Company shall enter into an exchange agent
agreement with the Exchange Agent in form and substance reasonably satisfactory
to the Parent and the Company, which agreement shall set forth the duties,
responsibilities and obligations of the Exchange Agent consistent with the terms
of this Agreement.
(b) Upon the terms and subject to the conditions set forth in this
Agreement, at the Effective Time, in accordance with the DGCL, Merger Sub shall
be merged with and into the Company in accordance with this Agreement and the
separate corporate existence of Merger Sub shall cease. The Company shall be
the surviving corporation in the Merger (sometimes referred to as the "Surviving
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Corporation") and shall continue to be governed by the laws of the State of
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Delaware, and the separate corporate existence of the Company with all its
rights, privileges, immunities, powers and franchises shall continue unaffected
by the Merger.
Section 2.2 Effective Time. As soon as practicable following the
satisfaction or, if permissible, waiver of the conditions set forth in Article
VI but in no event later than the third business day following such satisfaction
or waiver (unless another date is agreed to by each of the parties in writing),
the Company, Merger Sub and the Parent will cause a Certificate of Merger (the
"Certificate of Merger") to be signed, acknowledged and delivered for filing
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with the Secretary of State of the State of Delaware as provided in Section 251
of the DGCL. The Merger shall become effective at the time when a Certificate
of Merger has been duly filed with the Secretary of State of the State of
Delaware or such other subsequent date or time as shall be agreed upon
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by the parties and set forth in the Certificate of Merger and in accordance with
the DGCL (the "Effective Time").
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Section 2.3 Closing. Subject to the satisfaction or waiver of all of the
conditions to closing contained in Article VI hereof, the closing of the
Merger (the "Closing") shall take place (a) at the offices of Paul, Weiss,
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Rifkind, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, New York, New York at 12:00 (noon, New York time)
on the third business day after the day on which the last to be fulfilled or
waived of such conditions (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) shall be satisfied or waived in accordance with this Agreement
or (b) at such other place and time or on such other date as the Company and the
Parent may agree in writing (the "Closing Date").
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Section 2.4 Effects of the Merger. The Merger shall have the effects set
forth in the DGCL, including Section 259 of the DGCL, and in accordance
therewith, at the Effective Time, all 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 2.5 The Certificate of Incorporation. The certificate of
incorporation of Merger Sub in effect immediately prior to the Effective Time
shall, from and after the Effective Time, be the certificate of incorporation of
the Surviving Corporation until duly amended as provided therein or by
applicable law; provided, however, that at the Effective Time, the certificate
of incorporation of the Surviving Corporation shall be amended so that the name
of the Surviving Corporation shall be "Blaze Software, Inc."
Section 2.6 The By-Laws. The by-laws of Merger Sub in effect immediately
prior to the Effective Time shall, from and after the Effective Time, be the
by-laws of the Surviving Corporation until duly amended as provided therein or
by applicable law.
Section 2.7 Directors of Surviving Corporation. The directors of Merger Sub
at the Effective Time shall, from and after the Effective Time, be the directors
of the Surviving Corporation until their successors have been duly elected or
appointed and qualified or until their earlier death, resignation or removal in
accordance with the Certificate of Incorporation and by-laws of the Surviving
Corporation.
Section 2.8 Officers of Surviving Corporation. The officers of the Company
at the Effective Time shall, from and after the Effective Time, be the officers
of the Surviving Corporation until their successors have been duly elected or
appointed
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and qualified or until their earlier death, resignation or removal in accordance
with the certificate of incorporation and by-laws of the Surviving Corporation.
ARTICLE III
EFFECT OF THE MERGER ON CAPITAL STOCK;
EXCHANGE OF CERTIFICATES
Section 3.1 Conversion of Capital Stock. At the Effective Time, by virtue
of the Merger and without any action on the part of the holder of any capital
stock of the Company:
(a) Capital Stock of Merger Sub. Each share of Merger Sub Common
Stock issued and outstanding immediately prior to the Effective Time shall be
converted into and become one validly issued, fully paid and nonassessable share
of common stock, par value $0.0001 per share, of the Surviving Corporation
("Surviving Corporation Common Stock").
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(b) Cancellation of Treasury Stock and Parent-Owned Stock. All shares
of Company Common Stock that are owned by the Company as treasury stock or by
the Parent, Merger Sub or any Parent Subsidiary issued and outstanding
immediately prior to the Effective Time shall, by virtue of the Merger and
without any action on the part of the holder of any such shares, no longer be
outstanding, shall be canceled and retired without payment of any consideration
therefor and shall cease to exist; provided, however, that all shares of Company
Common Stock that are owned by any trust established pursuant to Section 2.6
hereof shall remain issued and outstanding and the holders thereof shall be
entitled to the Merger Consideration.
(c) Exchange Ratio. Each share of the common stock, par value $0.0001
per share, of the Company (the "Company Common Stock") issued and outstanding
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immediately prior to the Effective Time (other than shares of Company Common
Stock that are owned by the Company as treasury stock or by the Parent or any
Parent Subsidiary) shall be converted into the right to receive (the "Exchange
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Ratio") 0.3652 American Depositary Shares of the Parent ("Parent ADSs"), each
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representing 0.5 shares (stuckaktien) of the Parent ("Parent Common Stock"),
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subject to adjustment as provided in Section 2.4 and subject to cash in lieu of
fractional Parent ADSs, if any, pursuant to Section 2.2(f) (collectively, the
"Merger Consideration"). At the Effective Time, all shares of Company Common
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Stock shall no longer be outstanding, shall be canceled and retired and shall
cease to exist, and each certificate (a "Certificate") formerly representing any
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Shares of Company Common Stock (other than shares of Company Common Stock owned
by the Company or by the Parent,
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Merger Sub or any Parent Subsidiary) shall thereafter represent only the right
to receive the Merger Consideration and any distribution or dividend under
Section 2.2(c) in each case without interest.
Section 3.2 Exchange of Certificates.
(a) The Share Exchange. Consistent with the terms of this Agreement,
as soon as practicable following the signing of this Agreement and in no event
later than five business days following the Effective Time (unless otherwise
agreed to by each of the parties in writing):
(b) the Parent shall issue the Parent Common Stock underlying the
Parent ADSs to be issued on behalf of the Parent in connection with the Merger
and cause American Depositary Receipts ("ADRs") representing Parent ADSs
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representing such Parent Common Stock (such Parent ADSs, together with any
dividends or distributions with respect thereto to which the holders of
Certificates may be entitled pursuant to Section 2.2(c) and with the proceeds
held in the Exchange Trust, being hereinafter referred to as the "Exchange
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Fund") to be delivered to the Exchange Agent, for the benefit of the holders of
Certificates, for exchange in accordance with this Article II, through the
Exchange Agent, issuable pursuant to Section 2.1(c) in exchange for outstanding
shares of Company Common Stock; and
(c) the Exchange Agent shall contribute, on behalf of the former
stockholders of the Company, all of the issued and outstanding shares of
Surviving Corporation Common Stock to the Parent as a contribution in kind (the
"Share Exchange").
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Subject to Section 5.20, the Share Exchange shall be effected in
accordance with Sections 52, 203, 185 et seq. (including in particular Section
187) of the German Stock Corporation Law (Aktiengesetz), in each case to the
extent each such provision may be applicable, by registering the increase of the
Parent stated share capital by contribution-in-kind (the "Share Capital
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Increase") with the commercial register (Handelsregister) for the Parent. At
the Effective Time, the obligation of the parties to effect the Share Exchange
shall be unconditional.
(b) Exchange Procedures. Promptly after the Effective Time, and in no
event later than five business days thereafter (unless otherwise agreed to by
each of the parties in writing), the Surviving Corporation shall cause the
Exchange Agent to mail to each holder of record of a Certificate (other than the
Company, the Parent, Merger Sub or any Parent Subsidiary) (i) a letter of
transmittal specifying that delivery shall be effected, and that risk of loss
and title to the Certificates shall pass, only upon proper delivery of the
Certificates (or affidavits of loss in lieu of Certificates) to the Exchange
Agent, in a form and with other customary
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provisions reasonably specified by the Parent and the Company, and (ii)
instructions for surrendering the Certificates to the Exchange Agent in exchange
for (A) an ADR representing the number of whole Parent ADSs pursuant to Section
2.2(f), (B) cash in lieu of any fractional Parent ADSs, and (C) any unpaid
dividends and other distributions (if any) pursuant to Section 2.2(c). Upon
surrender of a Certificate for cancellation to the Exchange Agent together with
such letter of transmittal, duly executed, the holder of that Certificate shall
be entitled to receive in exchange (1) an ADR representing that number of whole
Parent ADSs that the holder is entitled to receive under this Article II, (2) a
check in the amount (after giving effect to any required tax withholding) of (x)
any cash in lieu of fractional Parent ADSs plus (y) any unpaid dividends (other
than stock dividends) and any other dividends or other distributions that such
holder has the right to receive under the provisions of this Article II (if
any), and the Certificate so surrendered shall immediately be canceled. No
interest will be paid or accrued on any amount payable upon due surrender of the
Certificates. In the event of a transfer of ownership of shares of Company
Common Stock that is not registered in the transfer records of the Company, an
ADR representing the proper number of Parent ADSs, together with a check for any
cash to be paid upon the surrender of the Certificate and any other dividends or
distributions (if any) in respect of those shares, may be issued or paid to such
a transferee if the Certificate formerly representing such Shares of Company
Common Stock is presented to the Exchange Agent, accompanied by all documents
required to evidence and effect the transfer and to evidence that any applicable
stock transfer taxes have been paid. If any ADRs for shares of Parent ADSs is to
be issued in a name other than that in which the surrendered Certificate is
registered, it shall be a condition of such exchange that the person requesting
such exchange shall pay any transfer or other taxes required by reason of the
issuance of certificates for shares of Parent Common Stock in a name other than
that of the registered holder of the surrendered Certificate, or shall establish
to the satisfaction of the Parent or the Exchange Agent that such tax has been
paid or is not applicable.
(c) Distributions with Respect to Unexchanged Company Common Stock.
Whenever a dividend or other distribution is declared by the Parent in respect
of Parent Common Stock and the record date for that dividend or other
distribution is at or after the Effective Time, that declaration shall include
dividends or other distributions in respect of all ADSs issuable under this
Agreement. No dividends or other distributions in respect of the Parent ADSs
shall be paid to any holder of any unsurrendered Certificate until that
Certificate is surrendered for exchange in accordance with this Article II.
Subject to the effect of applicable laws, following surrender of any such
Certificate, there shall be issued or paid to the holder of the ADRs
representing whole shares of Parent ADSs issued in exchange therefor, without
interest, (i) at the time of such surrender, the dividends or other
distributions with a record date at or after the Effective Time and a payment
date on or prior to the date of issuance of such whole Parent ADSs and not
previously paid, and (ii) at the appropriate
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payment date, the dividends or other distributions payable with respect to such
whole shares of Parent Common Stock with a record date at or after the Effective
Time but with a payment date subsequent to surrender. For purposes of dividends
or other distributions in respect of Parent ADSs, all Parent ADSs to be issued
pursuant to the Merger shall be deemed issued and outstanding as of the
Effective Time.
(d) No Further Ownership Rights in Company Common Stock. Until
surrendered as contemplated by this Section 2.2, each Certificate shall be
deemed at any time after the Effective Time to represent only the right to
receive the ADR representing Parent ADSs and cash in lieu of any fractional
Parent ADSs, as contemplated by this Section 2.2. All Parent ADSs, together
with any cash paid under Section 2.2(c) or Section 2.2(f) issued upon the
surrender for or exchange of Certificates in accordance with the terms of this
Agreement, shall be deemed to have been issued in full satisfaction of all
rights pertaining to the shares of Company Common Stock formerly represented by
such Certificates.
(e) No Further Transfers. After the Effective Time, the stock
transfer books of the Company shall be closed and there shall be no further
registration of transfers on the records of the Company of the shares of Company
Common Stock that were outstanding immediately prior to the Effective Time.
(f) Fractional Shares.
(i) No ADRs representing fractional Parent ADSs shall be issued
upon the surrender for exchange of Certificates, and such fractional interest
will not entitle its owner to receive dividends or to any other rights of a
holder of Parent ADSs. Notwithstanding any other provision of this Agreement,
each holder of shares of Company Common Stock exchanged pursuant to the Merger
who would otherwise have been entitled to receive a fraction of a Parent ADS
(after taking into account all Certificates delivered by such holder) shall
receive from the Exchange Agent, in accordance with the provisions of this
Article II, a cash payment in lieu of such fractional Parent ADS, as applicable,
representing such holder's proportionate interest, if any, in the net proceeds
from the sale by the Exchange Agent in one or more transactions (which sale
transactions shall be made at such times, in such manner and on such terms as
the Exchange Agent shall determine in its reasonable discretion) on behalf of
all such holders of the aggregate of the fractional Parent ADSs, as applicable,
which would otherwise have been issued (the "Excess Parent ADSs"). The sale of
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the Excess Parent ADSs by the Exchange Agent shall be executed on the Nasdaq
National Market, at such time the Parent ADSs are quoted on the Nasdaq National
Market, and shall be executed in round lots to the extent practicable. Until the
net proceeds of such sale or sales have been distributed to the holders of
Certificates, the Exchange Agent will hold such proceeds in trust (the "Exchange
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Trust") for the holders of Certificates. All commissions, transfer taxes and
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other out-of-pocket transaction costs, including the
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expenses and compensation of the Exchange Agent, incurred in connection with
this sale of the Excess Parent ADSs shall be paid by the Parent. As soon as
practicable after the determination of the amount of cash, if any, to be paid to
holders of Certificates in lieu of any fractional shares of Parent ADSs, the
Exchange Agent shall make available such amounts to such holders of Certificates
without interest. The Exchange Agent shall determine the portion of such net
proceeds to which each holder of shares of Company Common Stock shall be
entitled, if any, by multiplying the amount of the aggregate net proceeds by a
fraction the numerator of which is the amount of the fractional share interest
to which such holder of shares of Company Common Stock is entitled (after taking
into account all shares of Company Common Stock then held by such holder) and
the denominator of which is the aggregate amount of fractional interests to
which all holders of Certificates representing shares of Company Common Stock
are entitled.
(ii) Notwithstanding the provisions of subsection (i) of this Section
2.2(f), the Parent may elect, at its option exercised prior to the Effective
Time and in lieu of the issuance and sale of Excess Parent ADSs and the making
of the payments contemplated in such subsection, to pay to the Exchange Agent an
amount in cash sufficient for the Exchange Agent to pay each holder of shares of
Company Common Stock an amount in cash equal to the product obtained by
multiplying (A) the fractional interest to which such holder would otherwise be
entitled (after taking into account all shares of Company Common Stock held at
the Effective Time by such holder) by (B) the closing price for a share of
Parent ADSs on the Nasdaq National Market (or, if there is not yet a closing
price for Parent ADSs on such market, the closing price for the Parent Common
Stock underlying such Parent ADS on the Neuer Market (as defined in Section
4.6)) on the first business day immediately following the Effective Time and, in
such case, all references in this Agreement to the cash proceeds of the sale of
the Excess Shares and similar references shall be deemed to mean and refer to
the payments calculated as set forth in this Section 2.2(f)(ii).
(g) Termination of Exchange Fund. Any Parent ADSs and any portion of
the Exchange Fund or of dividends or other distributions with respect to the
Parent ADSs deposited by the Parent with the Exchange Agent (including the
proceeds of any investments of those funds) that remains unclaimed by the former
stockholders of the Company within one year after the Effective Time shall be
delivered by the Exchange Agent to a depositary bank deposited by the Parent,
upon demand, whereupon such depositary bank shall hold the Exchange Fund on
behalf of holders of unsurrendered Certificates, and any former stockholders of
the Company who have not theretofore complied with this Article II shall
thereafter look only to such depositary bank for payment of their claim for
Merger Consideration and any dividends and other distributions issuable or
payable pursuant to Section 2.1 and Section 2.2(c) upon due surrender of their
Certificates (or affidavits of loss in lieu of Certificates), in each case,
without any interest and the Parent shall cause the depositary bank to satisfy
such
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claim. Notwithstanding the foregoing, none of the Parent, the Surviving
Corporation, the Exchange Agent, the depositary bank or any other person shall
be liable to any former holder of shares of Company Common Stock for any amount
properly delivered to a public official under applicable abandoned property,
escheat or similar laws.
(h) Lost, Stolen or Destroyed Certificates. In the event 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 the posting by such person of a bond in the form
customarily required by the Parent as indemnity against any claim that may be
made against it with respect to such Certificate, the Exchange Agent will issue
in exchange for such lost, stolen or destroyed Certificate the Parent ADSs, any
unpaid dividends or other distributions and any cash payment in lieu of a
fractional share in respect of that Certificate issuable or payable under this
Article II upon due surrender thereof and deliverable in respect of the shares
of Company Common Stock represented by such Certificate under this Agreement, in
each case, without interest.
(i) No Liability. None of the Parent, the Surviving Corporation or
the Exchange Agent shall be liable to any person in respect of any Parent ADSs,
any dividends or distributions with respect to Parent ADSs or any cash from the
Exchange Fund, in each case properly delivered to a public official pursuant to
any applicable abandoned property, escheat or similar law.
Section 3.3 No Appraisal Rights. In accordance with Section 262(b)(1) of
the DGCL, no appraisal rights shall be available to holders of shares of Company
Common Stock in connection with the Merger.
Section 3.4 Adjustments to Prevent Dilution. In the event that prior to the
Effective Time there is a change in the number of shares of Company Common Stock
or shares of Parent Common Stock or securities convertible or exchangeable into
or exercisable for shares of Company Common Stock or shares of Parent Common
Stock issued and outstanding as a result of a distribution, reclassification,
stock split (including a reverse stock split), stock dividend or distribution or
other similar transaction, the Exchange Ratio shall be equitably adjusted to
eliminate the effects of that event.
Section 3.5 Withholding Rights. Each of the Exchange Agent and Parent shall
be entitled to deduct and withhold from any amounts otherwise payable pursuant
to this Agreement to any holder of a Certificate such amounts as it is required
to deduct and withhold with respect to the making of such payment under the
Code, or any provisions of Law (as defined in Section 3.5(a)(ii) hereof). To the
extent that amounts are so withheld by the Exchange Agent or the Parent, as the
case may be, such withheld amounts shall be treated for purposes of this
Agreement as having been paid to
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the holder of a Certificate in respect to which such deduction and withholding
was made by the Exchange Agent or Parent, as the case may be.
Section 3.6 Treatment of Stock Options/Restricted Stock.
(a) On June 14, 2000, the Company established a trust, which trust was
funded by the Company promptly after its establishment with shares of the
Company Common Stock in order to satisfy the obligations of the Company under
the outstanding Company Stock Options and the outstanding Company Warrants (as
defined in Section 2.7(a)) (the "Trust"). Prior to the Effective Time, the
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Company shall issue and deliver to the Trust such number of shares of Company
Common Stock to satisfy the obligations under all outstanding Company Stock
Options immediately prior to the Effective Time.
(b) Each Company Stock Option granted prior to the Effective Time and
which remains outstanding immediately prior to the Effective Time shall cease to
represent a right to acquire shares of Company Common Stock and shall be
converted, at the Effective Time, into an option to acquire from the Trust, on
the same terms and conditions as were applicable under the Company Stock Option
(but taking into account any changes thereto, except for any acceleration
thereof, by reason of this Agreement or the transactions contemplated hereby as
may be provided for in the Company's Option Plans, in any award agreement or in
such option), that number of Parent ADSs determined by multiplying the number of
shares of Company Common Stock subject to such Company Stock Option by the
Exchange Ratio, rounded, if necessary, to the nearest whole Parent ADS, at a
price per share (rounded to the nearest one-hundredth of a cent) equal to the
per share exercise price specified in such Company Stock Option divided by the
Exchange Ratio; provided, however, that in the case of any Company Stock Option
to which Section 421 of the Code applies by reason of its qualification under
Section 422 of the Code, the option price, the number of shares subject to such
option and the terms and conditions of exercise of such option shall be
determined in a manner consistent with the requirements of Section 424(a) of the
Code.46
(c) At the Effective Time, each right of the Company to repurchase
shares of Company Common Stock from optionees pursuant to the Company's Option
Plans ("Repurchase Right") shall be assigned to the Trust, and shall apply to
----------------
the Parent ADSs received in exchange for the shares of Company Common Stock
pursuant to Section 2.2 hereof, on the same terms and conditions as were
applicable under the Company's Option Plans (but taking into account any changes
thereto, except for any acceleration thereof, by reason of this Agreement or the
transactions contemplated hereby as may be provided for in the Company's Option
Plans, in any award agreement or in such option). Prior to the Effective Time,
the
10
Company shall obtain from holders of the shares of Company Common Stock subject
to Repurchase Rights (such shares being referred to as "Company Restricted
------------------
Stock") waivers (as may be reasonably requested by the Parent and in the form
-----
reasonably satisfactory to the Parent) waiving any and all rights to accelerate
the vesting of the shares of Company Common Stock.
(d) Prior to the Effective Time, the Company shall (i) cause the plan
administrator of each of the Company's Option Plans to determine that the
adjustments pursuant to this Section 2.6 are sufficient to not cause any vesting
in connection with the Merger, and (ii) deliver to the holders of Company Stock
Options and Company Restricted Stock appropriate notices setting forth such
holders' rights (including that (A) such Company Stock Options or Company
Restricted Stock have not accelerated in connection with the Merger, and (B) the
Trust shall satisfy the obligations under the Company Stock Options) and the
agreements evidencing the grants of such Company Stock Options shall continue in
effect on the same terms and conditions (subject to the adjustments required by
this Section 2.6).
(e) No later than 15 business days following the Effective Time, the
Parent shall file a registration statement on Form S-8 (or any successor or
other appropriate forms), with respect to the Parent ADSs subject to such
Company Stock Options or shares of Company Restricted Stock and shall use
commercially reasonable efforts to maintain the effectiveness of such
registration statement or registration statements (and maintain the current
status of the prospectus or prospectuses contained therein) for so long as such
Company Stock Options or shares of Company Restricted Stock remain outstanding.
Section 3.7 Treatment of Warrants.
(a) Each warrant to purchase shares of Company Common Stock ("Company
-------
Warrant") granted prior to the Effective Time and which remains outstanding
-------
immediately prior to the Effective Time shall cease to represent a right to
acquire shares of Company Common Stock and shall be converted, at the Effective
Time, into a warrant to acquire from the Trust, on the same terms and conditions
as were applicable under the Company Warrants, that number of shares of Parent
ADSs determined by multiplying the number of shares of Company Common Stock
subject to such Company Warrant by the Exchange Ratio, rounded, if necessary, to
the nearest whole Parent ADS, at a price per share (rounded to the nearest one-
hundredth of a cent) equal to the per share exercise price specified in such
Company Warrant divided by the Exchange Ratio. As soon as practicable after the
Effective Time, the Parent shall deliver to the holders of Company Warrants
appropriate notices setting forth such holders' rights and the agreements
evidencing the grants of such Company Warrants shall continue in effect on the
same terms and conditions.
11
(b) Prior to the Effective Time, the Company shall deliver to the
holders of Company Warrants appropriate notices setting forth such holders'
rights (including that the Trust shall satisfy the obligations under the Company
Warrants) and the agreements evidencing the grants of such Company Warrants
shall continue in effect on the same terms and conditions (subject to the
adjustments required by this Section 2.7).
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Parent, subject to such
exceptions or qualifications to specific representations and warranties as are
disclosed in writing in the disclosure letter previously delivered by the
Company to the Parent (the "Company Disclosure Letter"), that:
-------------------------
Section 4.1 Organization and Qualification; Subsidiaries .
(a) Each of the Company and each subsidiary of the Company
(collectively, the "Company Subsidiaries") has been duly organized and is
--------------------
validly existing and in good standing under the laws of the jurisdiction of its
incorporation or organization, as the case may be, and has the requisite power
and authority and all necessary governmental approvals to own, lease and operate
its properties and to carry on its business as it is now being conducted. Each
of the Company and each Company Subsidiary is duly qualified or licensed to do
business, and is in good standing, in each jurisdiction where the character of
the properties owned, leased or operated by it or the nature of its business
makes such qualification or licensing necessary, except for such failures to be
so qualified or licensed and in good standing that, individually or in the
aggregate, have no Material Adverse Effect on the Company. For purposes of this
Agreement, "Material Adverse Effect on the Company" means any state of affairs
--------------------------------------
or change that has had, or will have, a material adverse effect on the business,
assets, properties, results of operations or condition (financial or otherwise)
of the Company and the Company Subsidiaries, taken as a whole, or that has
materially impaired or will materially impair the ability of the Company to
perform its obligations under this Agreement or to consummate the Merger and the
other transactions contemplated by this Agreement, except that none of the
following shall be deemed in themselves to constitute a Material Adverse Effect
on the Company: (i) any change in the market price or trading volume of the
Company Common Stock after the date hereof, (ii) any change in general economic
conditions, (iii) any adverse change affecting the e-commerce industry
generally, and (iv) transaction costs, taxes, accounting changes, integration
costs and other effects that result directly from the announcement or
consummation of the transactions contemplated by this Agreement.
12
(b) Section 3.1(b) of the Company Disclosure Letter sets forth a
complete and correct list of all of the Company Subsidiaries, their jurisdiction
of organization and the ownership or other interest therein of the Company and
of each other Company Subsidiary. Neither the Company nor any Company
Subsidiary holds any interest in any person other than the Company Subsidiaries
so listed.
Section 4.2 Certificate of Incorporation and By-Laws. The copies of the
Company's certificate of incorporation and by-laws, each as amended through the
date of this Agreement that are filed as exhibits to the Company's registration
statement on Form S-1 (Registration No. 333-94549) are complete and correct
copies of those documents. Such certificate of incorporation and by- laws and
all comparable organizational documents of the Company Subsidiaries are in full
force and effect. The Company is not in violation of any of the provisions of
such certificate of incorporation or by-laws.
Section 4.3 Capitalization.
(a) The authorized capital stock of the Company consists of (i)
200,000,000 shares of Company Common Stock and (ii) 10,000,000 shares of
undesignated preferred stock, $0.0001 par value (the "Company Preferred Stock").
-----------------------
As of May 31, 2000 (i) 22,624,834 shares of Company Common Stock were issued and
outstanding (of which 680,891 shares were subject to repurchase rights/options
and shall be deemed to be Company Restricted Stock for purposes of this
Agreement and treated pursuant to Section 2.6 hereof), all of which were validly
issued and are fully paid, nonassessable and not subject to preemptive rights,
(ii) no shares of Company Common Stock were held in the treasury of the Company
or by the Company Subsidiaries, (iii) 4,719,424 shares of Company Common Stock
were reserved for issuance upon exercise of outstanding Company Stock Options,
(iv) an additional 813,059 shares of Company Common Stock were reserved for
grants of additional Company Stock Options pursuant to the Company's 1996 Stock
Option Plan and 2000 Stock Option Plan, (v) 750,000 shares of Company Common
Stock were reserved for issuance pursuant to the Company's 2000 Employee Stock
Purchase Plan, and (vi) 1,005 shares of Company Common Stock were reserved for
issuance upon the exercise of outstanding Warrants. Except as set forth above,
as of May 31, 2000, no shares of capital stock or other voting securities of the
Company were issued, reserved for issuance or outstanding and, since such date,
no shares of capital stock or other voting securities or options in respect
thereof have been issued except upon the exercise of the Company Stock Options
outstanding on such date.
(b) Between May 31, 2000 and the date of this Agreement, (i) an
aggregate of 31,500 options to purchase shares of Company Common Stock ("Company
-------
Stock Options") have been granted by the Company under the Company's 1996 Stock
-------------
Option Plan and the Company's 2000 Stock Option Plan (collectively, the
13
"Company's Option Plans"), and (ii) no shares of Company Common Stock vested
-----------------------
pursuant to the Company's Option Plans and are not subject to any repurchase
options/rights. Except for (i) Company Stock Options to purchase an aggregate
of 5,782,483 shares of Company Common Stock outstanding or available for grant
to the extent permitted under Section 5.1(b) hereof under the Company's Option
Plans, (ii) the Warrants to purchase 1,005 shares of Company Common Stock or
(iii) under agreements or arrangements described in Section 3.3(b) of the
Company Disclosure Letter, there are no options, warrants, calls, conversion
rights, stock appreciation rights, redemption rights, repurchase rights or other
rights, agreements, arrangements or commitments of any character to which the
Company is a party or by which the Company is bound relating to the issued or
unissued capital stock of the Company or any Company Subsidiary or obligating
the Company or any Company Subsidiary to issue or sell any shares of capital
stock of, other equity interests in, or securities exchangeable for or
convertible into capital stock or other equity interests in, the Company or any
Company Subsidiary. Section 3.3(b) of the Company Disclosure Letter sets forth,
as of the date of this Agreement, (x) the persons to whom Company Stock Options
have been granted and the persons who hold Company Restricted Stock, (y) the
exercise price for the Company Stock Options held by each such person and (z)
whether such Company Stock Options (or Company Restricted Stock issued upon
exercise of any Company Stock Options) are subject to vesting and, if subject to
vesting, the dates on which each of those Company Stock Options (or Company
Restricted Stock issued upon exercise of any Company Stock Options) vest. None
of the Company Stock Options or Company Restricted Stock which are subject to
vesting will vest as a result of the consummation of the Merger and the
transactions contemplated by this Agreement.
(c) All shares of Company Common Stock subject to issuance, upon
issuance prior to the Effective Time on the terms and conditions specified in
the instruments under which they are issuable, will be duly authorized, validly
issued, fully paid, nonassessable and will not be subject to preemptive rights.
There are no outstanding contractual obligations of the Company or any Company
Subsidiary to repurchase, redeem or otherwise acquire any shares of Company
Common Stock or any capital stock of any Company Subsidiary. Each outstanding
share of capital stock of each Company Subsidiary is duly authorized, validly
issued, fully paid, nonassessable and not subject to preemptive rights and each
such share owned by the Company or a Company Subsidiary is free and clear of all
security interests, liens, claims, pledges, options, rights of first refusal,
agreements, limitations on the Company's or such other Company Subsidiary's
voting rights, charges and other encumbrances of any nature whatsoever
(collectively, "Liens"). There are no outstanding material contractual
-----
obligations of the Company or any Company Subsidiary to provide funds to, or
make any investment (in the form of a loan, capital contribution or otherwise)
in, any Company Subsidiary that is not wholly owned by the Company or in any
other person.
14
Section 4.4 Authority.
(a) The Company has all necessary corporate power and authority to
execute and deliver this Agreement and, subject to adoption of this Agreement by
the affirmative vote by a majority of the holders of the outstanding Company
Common Stock (the "Requisite Company Vote"), to perform its obligations under
----------------------
this Agreement and to consummate the Merger and the other transactions
contemplated by this Agreement to be consummated by the Company. The execution
and delivery of this Agreement by the Company and the consummation by the
Company of such transactions have been duly and validly authorized by all
necessary corporate action and no other corporate proceedings on the part of the
Company are necessary to authorize this Agreement or to consummate such
transactions, other than, with respect to the Merger, the adoption of this
Agreement by the Requisite Company Vote. This Agreement has been duly
authorized and validly executed and delivered by the Company and constitutes a
legal, valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms.
(b) The Board of Directors of the Company (i) has unanimously adopted
the plan of merger set forth in this Agreement and approved this Agreement and
the other transactions contemplated by this Agreement and (ii) has declared that
the Merger and this Agreement and the other transactions contemplated by this
Agreement are advisable.
Section 4.5 No Conflict.
(a) The execution and delivery of this Agreement by the Company do
not, and the performance of this Agreement by the Company will not:
(i) conflict with or violate any provision of the Company's
certificate of incorporation or by-laws or any comparable organizational
documents of any Company Subsidiary;
(ii) assuming that all consents, approvals, authorizations and
other actions described in Section 3.6 have been obtained and all filings and
obligations described in Section 3.6 have been made, conflict with or violate
any foreign or domestic law, statute, ordinance, rule, regulation, order,
judgment or decree ("Law") applicable to the Company or any Company Subsidiary
---
or by which any property or asset of the Company or any Company Subsidiary
is or may be bound or affected; or
(iii) result in any breach of or constitute a default (or an event
which with or without notice or lapse of time or both would become a default)
under, or give to others any right of termination, amendment, acceleration or
15
cancellation of, or result in the creation of a Lien on any property or asset of
the Company or any Company Subsidiary under any note, bond, mortgage, indenture,
contract, agreement, commitment, lease, license, permit, franchise or other
instrument or obligation (collectively, "Contracts") to which the Company or any
---------
Company Subsidiary is a party or by which any of them or their assets or
properties is or may be bound or affected, except for any such breaches,
defaults or other occurrences which, individually or in the aggregate, have no
Material Adverse Effect on the Company.
(b) Section 3.5(b) of the Company Disclosure Letter sets forth a
list of all Contracts to which the Company or any Company Subsidiaries are a
party or by which they or their assets or properties are or may be bound or
affected under which consents or waivers are or may be required prior to
consummation of the transactions contemplated by this Agreement, except for
those Contracts under which the Company's failure to obtain the required
consents or waivers, individually or in the aggregate, would not result in a
Material Adverse Effect on the Company.
Section 4.6 Required Filings and Consents. The execution and
delivery of this Agreement by the Company do not, and the performance of this
Agreement by the Company will not, require any consent, approval, authorization
or permit of, or filing with or notification to, any domestic or foreign
national, federal, state, provincial or local governmental, regulatory or
administrative authority, agency, commission, court, tribunal or arbitral body
or self-regulated entity (each, a "Governmental Entity"), except (i) for
-------------------
applicable requirements of the United States Securities Exchange Act of 1934 as
amended (together with the rules and regulations promulgated thereunder, the
"Exchange Act"), applicable requirements of the United States Securities Act of
-------------
1933, as amended (together with the rules and regulations promulgated
thereunder, the "Securities Act"), applicable requirements of state securities
--------------
or "blue sky" laws ("Blue Sky Laws"), the rules and regulations of the Nasdaq
-------------
National Market, applicable requirements of Takeover Statutes, the pre-merger
notification requirements of the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976, as amended, and the rules and regulations promulgated thereunder (the "HSR
---
Act"), for the filing of the Certificate of Merger as required by the DGCL and
---
(ii) where failure to obtain such consents, approvals, authorizations or
permits, or to make such filings or notifications, individually or in the
aggregate, would have no Material Adverse Effect on the Company.
Section 4.7 Permits; Compliance with Law. Each of the Company
and the Company Subsidiaries is in possession of all franchises, grants,
authorizations, licenses, permits, easements, variances, exceptions, consents,
certificates, approvals and orders of any Governmental Entity necessary for the
Company or any Company Subsidiary to own, lease and operate its properties or to
carry on its business as it is now being conducted (collectively, the "Company
-------
Permits"), except where the failure to have, or the suspension or cancellation
-------
of, any of the Company Permits, individually or in the aggregate, has no
Material Adverse Effect on the Company, and, as of the
16
date of this Agreement, no suspension or cancellation of any of the Company
Permits is pending or, to the knowledge of the Company, threatened, except where
the failure to have, or the suspension or cancellation of, any of the Company
Permits, individually or in the aggregate, has no Material Adverse Effect on the
Company. Neither the Company nor any Company Subsidiary is in conflict with, or
in default or violation of, (i) any Law applicable to the Company or any Company
Subsidiary or by which any property or asset of the Company or any Company
Subsidiary is or may be bound or affected or (ii) any Company Permits, except
for any such conflicts, defaults or violations that, individually or in the
aggregate, have no Material Adverse Effect on the Company.
Section 4.8 SEC Filings; Financial Statements.
(a) Prior to March 23, 2000, the Company was not subject to the
periodic reporting requirements of the Exchange Act or was otherwise required to
file any documents with the SEC or any national securities exchange or quotation
service or comparable Governmental Entity. The Company has filed all forms,
reports, schedules, statements and other documents (including all exhibits,
annexes, supplements and amendments to such documents) required to be filed by
it under the Exchange Act and the Securities Act since January 12, 2000
(collectively, including any such documents filed subsequent to the date of this
Agreement, the "Company SEC Reports") and the Company has made available to the
-------------------
Parent each Company SEC Report filed with the United States Securities and
Exchange Commission (the "SEC"). The Company SEC Reports, including any
---
financial statements or schedules included or incorporated therein by reference,
at the time they were filed, (i) complied in all material respects with the
requirements of the Exchange Act or the Securities Act or both, as the case may
be, applicable to those Company SEC Reports and (ii) did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated or necessary in order to make the statements made in those Company SEC
Reports, in the light of the circumstances under which they were made, not
misleading. No Company Subsidiary is subject to the periodic reporting
requirements of the Exchange Act or is otherwise required to file any documents
with the SEC or any national securities exchange or quotation service or
comparable Governmental Entity.
(b) Each of the consolidated balance sheets included in or
incorporated by reference into the Company SEC Reports (including the related
notes and schedules) fairly presented, in all material respects, the
consolidated financial position of the Company as of the dates set forth in
those consolidated balance sheets. Each of the consolidated statements of
income and of cash flows included in or incorporated by reference into the
Company SEC Reports (including any related notes and schedules) fairly
presented, in all material respects, the consolidated results of operations and
cash flows, as the case may be, of the Company and the consolidated Company
Subsidiaries for the periods set forth in those consolidated statements of
income and of cash flows (subject, in the case of unaudited quarterly
statements, to
17
notes and normal year-end audit adjustments that will not be material in amount
or effect), in each case in conformity with United States generally accepted
accounting principles ("U.S. GAAP") (except, in the case of unaudited quarterly
---------
statements, as permitted by Form 10-Q of the SEC) consistently applied
throughout the periods indicated. All of such balance sheets and statements
complied as to form in all material respects with applicable accounting
requirements and with the published rules and regulations of the SEC with
respect thereto.
(c) The consolidated balance sheet as of March 31, 2000 provided by
the Company to the Parent (including the related notes and schedules) fairly
presented, in all material respects, the consolidated financial position of the
Company as of such date. The consolidated statement of income and of cash flows
for the year ended March 31, 2000 provided by the Company to the Parent
(including the related notes and schedules) fairly presented, in all material
respects, the consolidated results of operations and cash flows, as the case may
be, of the Company and the consolidated Company Subsidiaries for such period, in
conformity with U.S. GAAP consistently applied with previous periods. All of
such balance sheets and statements comply as to form in all material respects
with applicable accounting requirements and with the published rules and
regulations of the SEC with respect thereto.
(d) Except as and to the extent set forth on the consolidated balance
sheet of the Company and the consolidated Company Subsidiaries as of March 31,
2000 including the related notes, neither the Company nor any Company Subsidiary
has any liabilities or obligations of any nature (whether accrued, absolute,
contingent or otherwise) that would be required to be reflected on a balance
sheet or in the related notes prepared in accordance with U.S. GAAP, except for
liabilities or obligations incurred in the ordinary course of business that,
individually or in the aggregate, have no Material Adverse Effect on the
Company.
Section 4.9 Absence of Certain Changes or Events.
(a) Since March 31, 2000, the Company and the Company Subsidiaries
have conducted their businesses only in the ordinary course and, since such
date, there has not been any Material Adverse Effect on the Company.
(b) Except as set forth in Section 3.9(b) of the Company Disclosure
Letter, or except as disclosed in the Company SEC Reports filed with the SEC
since March 23, 2000 and which have been filed and are publicly available prior
to the date of this Agreement (the "Company Filed SEC Reports") and except as
-------------------------
permitted pursuant to Section 5.1, since March 31, 2000, there has not been:
(i) any damage, destruction or other casualty loss with respect to
any asset or property owned, leased or otherwise used by it or any Company
18
Subsidiaries, whether or not covered by insurance, which damage, destruction or
loss, individually or in the aggregate, has a Material Adverse Effect on the
Company;
(ii) any material change by the Company in its or any Company
Subsidiary's accounting methods, principles or practices, except as required by
U.S. GAAP and disclosed in Section 3.9(b) of the Company Disclosure Letter;
(iii) any declaration, setting aside or payment of any dividend or
distribution in respect of Shares of Company Common Stock or any redemption,
purchase or other acquisition of any of the Company's securities other than the
repurchase at cost of unvested shares held by employees of the Company on the
termination of their employment;
(iv) any increase in the compensation or benefits or establishment of
any bonus, insurance, severance, deferred compensation, pension, retirement,
profit sharing, stock option (including, the granting of stock options, stock
appreciation rights, performance awards or restricted stock awards), stock
purchase or other employee benefit plan, or any other increase in the
compensation payable or to become payable to any executive officers of the
Company or any Company Subsidiary except as required by applicable Law other
than any increase or modification in the ordinary course of business;
(v) (A) any incurrence or assumption by the Company or any Company
Subsidiary of any indebtedness for borrowed money or (B) any guarantee,
endorsement or other incurrence or assumption of material liability (whether
directly, contingently or otherwise) by the Company or any Company Subsidiary
for the obligations of any other person (other than any wholly owned Company
Subsidiary), other than indebtedness of less than U.S. $500,000 in the aggregate
in the ordinary course of business;
(vi) any creation or assumption by the Company or any Company
Subsidiary of any Lien on any material asset of the Company or any Company
Subsidiary, other than (i) in the ordinary course of business, or (ii) Liens
arising after the date of this Agreement by operation of Law or without the
Company's consent, in each case that has no Material Adverse Effect on the
Company;
(vii) any making of any loan, advance or capital contribution to or
investment in any person by the Company or any Company Subsidiary, other than in
the ordinary course of business, and not in excess of U.S. $500,000;
(viii) (A) any contract or agreement entered into by the Company or
any Company Subsidiary on or prior to the date hereof relating to any material
acquisition or disposition of any assets or business or (B) any modification,
19
amendment, assignment or termination of or relinquishment by the Company or any
Company Subsidiary of any rights under any other Contract (including any
insurance policy naming it as a beneficiary or a loss payable payee) that has,
individually or in the aggregate, a Material Adverse Effect on the Company other
than transactions, commitments, contracts or agreements in the ordinary course
of business or those contemplated by this Agreement;
(ix) any adverse change in the Company's relationships with its
material customers, except for changes that, individually or in the aggregate,
have no Material Adverse Effect on the Company.
Section 4.10 Employee Benefit Plans; Employee Relations.
(a) Section 3.10(a) of the Company Disclosure Letter contains a true
and complete list of each "employee benefit plan" (within the meaning of Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), including multiemployer plans within the meaning of ERISA section
-----
3(37) of ERISA), stock purchase, stock option, severance, employment, change-in-
control, fringe benefit, welfare benefit, collective bargaining, bonus,
incentive, deferred compensation and all other employee benefit plans,
agreements, programs, policies or other arrangements, whether or not subject to
ERISA (including any funding mechanism therefor now in effect or required in the
future as a result of the transaction contemplated by this Agreement or
otherwise), whether formal or informal, oral or written, legally binding or not,
under which any employee or former employee of the Company has any present or
future right to benefits or under which the Company has any present or future
liability. All such plans, agreements, programs, policies and arrangements
shall be collectively referred to as the "Benefit Plans." Where appropriate all
-------------
references to the "Company" in this Section 3.10 shall refer to the Company and
any member of its "controlled group" within the meaning of Section 414 of the
Code.
(b) The Company has, with respect to each Benefit Plan, if applicable,
delivered or made available to the Parent true and complete copies of: (i) all
plan texts and agreements and related trust agreements (or other funding
vehicles); (ii) the most recent summary plan descriptions and material employee
communications; (iii) the most recent annual report (including all schedules
thereto); (iv) the most recent annual audited financial statement and opinion;
(v) if the plan is intended to qualify under Section 401(a) of the Code, the
most recent determination letter received from the Internal Revenue Service; and
(vi) all material communications with any Governmental Entity (including the
Pension Benefit Guaranty Corporation and the Internal Revenue Service) given or
received within the past three years.
(c) Except as set forth on Section 3.10(c) of the Company Disclosure
Letter, all amounts properly accrued as liabilities to or expenses of any
20
Benefit Plan have been properly reflected on the Company's most recent financial
statements to the extent required by U.S. GAAP. Since December 31, 1998, there
has been no amendment or change in interpretation by the Company relating to any
Benefit Plan which would materially increase the cost thereof.
(d) No Benefit Plan is subject to either Section 412 of the Code or
Title IV of ERISA.
(e) Each Benefit Plan is in material compliance with all applicable
laws and regulations. Each Benefit Plan which is intended to qualify under
Section 401(a) of the Code has been issued a favorable determination, opinion,
notification or advisory letter by the Internal Revenue Service and has not been
amended in a manner, and no event has occurred since such date, which would
cause any such plan to fail to remain so qualified. Each Benefit Plan that
requires registration with a relevant Governmental Entity has been so
registered.
(f) Except as set forth on Section 3.10(f) of the Company Disclosure
Letter, there are no actions, liens, suits or Claims pending or threatened
(other than routine claims for benefits) with respect to any Benefit Plan as to
which the Company has or could reasonably be expected to have any direct or
indirect actual or contingent material liability.
(g) Each Benefit Plan which is a "group health plan" (as defined in
Section 607(1) of ERISA) is in material compliance with the provisions of the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, the Health
Insurance Portability and Accountability Act and any other applicable federal,
state or local law.
(h) There are no (i) Benefit Plans maintained by the Company pursuant
to which welfare benefits are provided to current or former employees beyond
their retirement or other termination of service, other than coverage mandated
by applicable Law, the cost of which is fully paid by the current or former
employees or their dependents; or (ii) unfunded Benefit Plan obligations with
respect to any employee of the Company which are not fairly reflected by
reserves shown on the Company's financial statements for March 31, 2000.
(i) The consummation of the transactions contemplated by this
Agreement will not (i) except as disclosed in Section 3.10(i) of the Company
Disclosure Letter, entitle any current or former employee of the Company to
severance pay, unemployment compensation or any similar payment, (ii) except as
disclosed in Section 3.10(i) of the Company Disclosure Letter, accelerate the
time of payment or vesting, or increase the amount of any compensation due to,
any current or former employee of the Company, or (iii) constitute or involve a
21
prohibited transaction (as defined in Section 406 of ERISA or Section 4975 of
the Code), constitute or involve a breach of fiduciary responsibility within the
meaning of Section 502(l) of ERISA as to which the Company has or reasonably
could be expected to have any direct or indirect actual material liability.
(j) No Benefit Plan is a "multiemployer plan" or "multiple employer
plan" within the meaning of the Code or ERISA or the regulations promulgated
thereunder.
(k) Neither the Company nor any Benefit Plan, or to the knowledge of
the Company, any "disqualified person" (as defined in Section 4975 of the Code)
or any "party in interest" (as defined in Section 3(18) of ERISA), has engaged
in any non-exempt prohibited transaction (within the meaning of Section 4975 of
the Code or Section 406 of ERISA) which could reasonably be expected to result
in any material liability to the Company.
(l) None of the employees is represented by a union, and no union
organizing efforts have been conducted within the last five years or are now
being conducted. The Company does not currently have, nor to knowledge of the
Company, is there now threatened, a strike, picket, work stoppage, work slowdown
or other organized labor dispute. The Company has not as of the date hereof
incurred any liability or obligation under the Worker Adjustment and Retraining
Notification Act, as it may have been amended from time to time, or any similar
state law.
Section 4.11 Accounting and Tax Matters. Neither the Company nor, to the
knowledge of the Company, any of its affiliates has taken or agreed to take any
action, nor is the Company aware of any agreement, plan or other circumstance,
that would prevent the Merger from constituting a transaction qualifying as a
reorganization under Section 368(a) of the Code.
Section 4.12 Contracts; Debt Instruments. Except for the Contracts filed
as exhibits to the Company's Registration Statement on Form S-1 and subsequent
Contracts disclosed in Section 3.12 of the Company Disclosure Letter (copies of
which have been made available to the Parent), there is no Contract that is
material to the business, financial condition or results of operations of the
Company and the Company Subsidiaries taken as a whole. Each of the Contracts to
which the Company or a Company Subsidiary is a party or by which it or any of
its properties or assets is or may be bound or affected, constitutes a valid and
legally binding obligation of the Company or such Company Subsidiary and of the
other parties thereto, enforceable in accordance with its terms, and is in full
force and effect, except to the extent the failure to be so valid, binding or
enforceable, individually or in the aggregate, has no Material Adverse Effect on
the Company. Neither the Company nor any Company Subsidiary, nor to the
Company's knowledge, any other person, is in violation of or in default under
(nor does there exist any condition which with the passage of time or the giving
of notice would cause such a violation of or default under) any Contract to
which the
22
Company or a Company Subsidiary is a party or by which it or any of its
properties or assets is or may be bound or affected, except for violations or
defaults that, individually or in the aggregate, have no Material Adverse Effect
on the Company. Set forth in Section 3.12 of the Company Disclosure Letter is a
description of any material changes to the amount and terms of the indebtedness
of the Company and the consolidated Company Subsidiaries as described in the
notes to the financial statements set forth in the Company's consolidated
financial statements for the year ended March 31, 2000 provided by the Company
to the Parent prior to the execution of this Agreement.
Section 4.13 Litigation. Except as disclosed in Section 3.13 of
the Company Disclosure Letter, and except as disclosed in the Company Filed SEC
Reports, there is no suit, claim, action, proceeding or investigation
(collectively, "Claims") pending or, to the knowledge of the Company, threatened
------
against the Company or any Company Subsidiary before any Governmental Entity
that, if adversely determined, individually or in the aggregate, has a Material
Adverse Effect on the Company. Neither the Company nor any Company Subsidiary
is subject to any outstanding order, writ, injunction or decree which,
individually or in the aggregate, has a Material Adverse Effect on the Company.
Section 4.14 Environmental Matters. Except as has no Material
Adverse Effect on the Company or as disclosed in the Company Filed SEC Reports:
(a) the Company and the Company Subsidiaries are and have been in
compliance with all applicable Laws relating to pollution, protection of the
environment or health and safety ("Environmental Laws");
------------------
(b) there is no claim pursuant to Environmental Laws or principles
of common law relating to pollution, protection of the environment or health and
safety (an "Environmental Claim") pending or threatened against the Company or
-------------------
any Company Subsidiary; and
(c) there is no civil, criminal or administrative judgment or
notice of violation outstanding against the Company or any Company Subsidiary
pursuant to Environment Laws or principles of common law relating to pollution,
protection of the environment or health and safety.
Section 4.15 Intellectual Property.
(a) For purposes of this Agreement, "Intellectual Property" means
---------------------
all of the following as they exist in any jurisdiction throughout the world, in
each case, to the extent owned by, licensed to, or otherwise used or held for
use by the Company:
23
(i) patents, patent applications and the inventions, designs and
improvements described and claimed therein, patentable inventions, and other
patent rights (including any divisions, continuations, continuations-in-part,
substitutions, or reissues thereof, whether or not patents are issued on any
such applications and whether or not any such applications are amended,
modified, withdrawn, or resubmitted) (collectively, "Patents");
-------
(ii) trademarks, service marks, trade dress, trade names, brand names,
Internet domain names, designs, logos, or corporate names (including, in each
case, the goodwill associated therewith), whether registered or unregistered,
and all registrations and applications for registration thereof (collectively,
"Trademarks");
----------
(iii) copyrights, including all renewals and extensions, copyright
registrations and applications for registration, and non-registered copyrights
(collectively, "Copyrights");
----------
(iv) trade secrets, confidential business information, concepts,
ideas, designs, research or development information, processes, procedures,
techniques, technical information, specifications, operating and maintenance
manuals, engineering drawings, methods, know-how, data, mask works, discoveries,
inventions, modifications, extensions, improvements, and other proprietary
rights (whether or not patentable or subject to copyright, trademark, or trade
secret protection) (collectively, "Technology");
----------
(v) computer software programs, including all source code, object
code, and documentation related thereto ("Software"); and
--------
(vi) all licenses, and sublicenses, and other agreements or
permissions related to the property described in Section 3.15(a).
(b) Disclosure.
(i) Section 3.15(b)(i) of the Company Disclosure Letter sets forth all
United States and foreign patents and patent applications, trademark and service
▇▇▇▇ registrations and applications, Internet domain name registrations and
applications, and copyright registrations and applications owned or licensed by
the Company or any Company Subsidiary or otherwise used or held for use by the
Company or any Company Subsidiary (excluding off-the-shelf software licensed to
the Company and licenses or sublicenses that are not material to the business of
the Company and the Company Subsidiaries, taken as a whole), specifying as to
each item, as applicable: (A) the nature of the item, including the title; (B)
the owner of the item; (C) the jurisdictions in which the item is issued or
registered or in which an application
24
for issuance or registration has been filed; and (D) the issuance, registration
or application numbers and dates.
(ii) Section 3.15(b)(ii) of the Company Disclosure Letter sets forth
all licenses, sublicenses and other agreements or permissions ("IP Licenses")
-----------
under which the Company or any Company Subsidiary is a licensee or otherwise is
authorized to use or practice any Intellectual Property other than licenses of
off-the-shelf software and licenses or sublicenses that are not material to the
business of the Company and the Company Subsidiaries, taken as a whole.
(iii) Section 3.15(b)(iii) of the Company Disclosure Letter sets forth
and describes the status of any material agreements (including licenses and
sublicenses, but excluding off-the-shelf software licensed to the Company)
involving Intellectual Property currently in negotiation or proposed ("Proposed
--------
Intellectual Property Agreements") by the Company or any Company Subsidiary.
--------------------------------
(c) Ownership. Except as set forth on Section 3.15(c) of the Company
Disclosure Letter, the Company owns, free and clear of all Liens, has valid and
enforceable rights in, and has the unrestricted right to use, sell, license,
transfer or assign, all Intellectual Property that is material to the business
of the Company and the Company Subsidiaries, taken as a whole.
(d) Licenses. The Company has a valid and enforceable license to use all
Intellectual Property not owned by the Company that is material to the business
of the Company and the Company Subsidiaries, taken as a whole.
(e) Claims.
(i) No claim or action is pending or threatened and the Company does
not know of any basis for any claim that challenges the validity,
enforceability, ownership, or right to use, sell or license any Intellectual
Property, and no item of Intellectual Property is subject to any outstanding
order, ruling, decree, stipulation, charge or agreement restricting in any
manner the use or the licensing thereof, except for those claims, actions,
orders, rulings, decrees, stipulations, charges and agreements which,
individually or in the aggregate, have no Material Adverse Effect on the
Company.
(ii) The Company has not received any notice that it has infringed
upon or otherwise violated the intellectual property rights of third parties or
received any claim, charge, complaint, demand or notice alleging any such
infringement or violation, or knows of any basis for any such claim.
(iii) To the knowledge of the Company, no third party is infringing
upon or otherwise violating any material Intellectual Property.
25
(iv) The Company's products have been marked as required by the
applicable Patent statute and the Company has given the public notice of its
Copyrights and notice of its Trademarks as required by the applicable Trademark
and Copyright statutes, in each case except to the extent the failure to do so
has no Material Adverse Effect on the Company.
(f) Administration and Enforcement. The Company has taken all
reasonable actions to maintain and protect the Intellectual Property owned by
the Company.
(g) Protection of Intellectual Property. The Company has taken
reasonable precautions to protect the secrecy, confidentiality, and value of its
trade secrets and the proprietary nature and value of the Intellectual Property.
(h) Software. All Software that is material to the Company's business
is described in Section 3.15(h) of the Company Disclosure Letter. The Software
performs in material conformance with its documentation and may following the
Merger be used by the Surviving Corporation on identical terms and conditions as
the Company enjoyed immediately prior to the Merger.
(i) Year 2000 Compliance. All Software, hardware, databases and
embedded control systems (collectively, the "Systems") used by the Company (i)
-------
accurately process date and time data (including calculating, comparing, and
sequencing) from, into, and between the twentieth and twenty-first centuries,
the years 1999 and 2000, and leap year calculations and (ii) operate accurately
with other software and hardware that use standard date format (4 digits) for
representation of the year.
(j) Employee Breaches. To the Company's knowledge, no employee of the
Company or any of the Company Subsidiaries has transferred Intellectual Property
or confidential or proprietary information to the Company or any of the Company
Subsidiaries or to any third party in violation of any Law or any term of any
employment agreement, patent or invention disclosure agreement or other contract
or agreement relating to the relationship of such employee with the Company or
any of the Company Subsidiaries or any prior employer.
(k) Related Parties; Etc. The Company and the Company Subsidiaries do
not use any Intellectual Property owned by any director, officer, employee or
consultant of the Company. At no time during the conception or reduction to
practice of any of the Intellectual Property owned by the Company or any of the
Company Subsidiaries was any developer, inventor or other contributor to such
Intellectual Property operating under any grants from any Governmental Entity or
subject to any employment agreement, invention assignment, nondisclosure
agreement or other Contract with any person that could adversely affect the
rights of the Company
26
or any of the Company Subsidiaries to any Intellectual Property that is material
to the business of the Company and the Company Subsidiaries, taken as a whole.
Section 4.16 Taxes. Except to the extent that failure to do so,
individually or in the aggregate, has no Material Adverse Effect on the Company,
the Company and the Company Subsidiaries have filed all Tax returns and reports
to be filed by them and have paid, or established adequate reserves for, all
Taxes required to be paid by them. Except as, individually or in the aggregate,
has no Material Adverse Effect on the Company, no deficiencies for any Taxes
have been proposed, asserted or assessed against the Company or any Company
Subsidiaries, and no requests for waivers of the time to assess any such Taxes
are pending. As used in this Agreement, "Taxes" shall mean all federal, state,
-----
local and foreign income, property, sales, excise and other taxes, tariffs or
governmental charges of any nature whatsoever.
Section 4.17 Non-Competition Agreements. Neither the Company nor
any Company Subsidiary is a party to any Contract which purports to restrict or
prohibit in any material respect the Company and the Company Subsidiaries
collectively from, directly or indirectly, engaging in any business involving
the development, marketing and offering of computer software and the provision
of related services currently engaged in by the Company, any Company Subsidiary
or any other persons affiliated with the Company. None of the Company's
officers, directors or key employees is a party to any agreement which, by
virtue of such person's relationship with the Company, restricts in any material
respect the Company or any Company Subsidiary or affiliate of either of them
from, directly or indirectly, engaging in any of the businesses described above.
Section 4.18 Agreements with Regulatory Agencies. Neither the
Company nor any of the Company Subsidiaries is subject to any cease-and-desist
or other order issued by, or is a party to any written agreement, consent
agreement or memorandum of understanding with, or is a party to any commitment
letter or similar undertaking to, or is subject to any order or directive by, or
is a recipient of any extraordinary supervisory letter from, or has adopted any
board resolutions at the request of (each, whether or not listed in Section 3.18
of the Company Disclosure Letter, a "Company Regulatory Agreement"), any
----------------------------
Governmental Entity that restricts the conduct of its business or that in any
manner relates to its management or its business, except for any Company
Regulatory Agreements that, individually or in the aggregate, have no Material
Adverse Effect on the Company or could reasonably be expected, following
consummation of the Merger, to impair the Parent's ability to conduct the
business of the Surviving Corporation, the Parent or any Parent Subsidiary, as
presently conducted. Neither the Company nor any Company Subsidiary has been
advised by any Governmental Entity that such Governmental Entity is considering
issuing or requesting any Company Regulatory Agreement, except for any such
proposed Company Regulatory Agreements that, individually or in the aggregate,
has no Material Adverse Effect on the Company.
27
Section 4.19 Opinion of Financial Advisor. Chase Securities,
Inc. (the "Company Financial Advisor") has delivered to the Board of Directors
-------------------------
of the Company its oral opinion to the effect that, as of the date of this
Agreement, the Exchange Ratio is fair to the Company's stockholders from a
financial point of view, which opinion was or will promptly after the date of
this Agreement be confirmed in writing and accompanied by an authorization to
include a copy of such opinion in the Proxy Materials. The Company has
delivered or will, promptly after receipt of such written opinion, deliver a
signed copy of that written opinion to the Parent.
Section 4.20 Brokers. No broker, finder or investment banker
other than the Company Financial Advisor is entitled to any brokerage, finder's
or other fee or commission in connection with the Merger or the other
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Company. Prior to the date of this Agreement, the Company has
made available to the Parent a complete and correct copy of all agreements
between the Company and the Company Financial Advisor under which the Company
Financial Advisor would be entitled to any payment relating to the Merger or
such other transactions.
Section 4.21 Certain Statutes. The Board of Directors of the
Company has taken or will take all appropriate and necessary actions to ensure
that the restrictions on business combinations in Section 203 of the DGCL will
not have any effect on the Merger or the other transactions contemplated by this
Agreement. No "fair price," "moratorium," "control share acquisition" or other
similar state or federal anti-takeover statute or regulation (each a "Takeover
--------
Statute") is, as of the date of this Agreement, applicable to the Merger or such
-------
other transactions.
Section 4.22 Information. To the best of the Company's
knowledge, none of the information to be supplied by the Company for inclusion
or incorporation by reference in the Proxy Statement or the Registration
Statement will, in the case of the Registration Statement, at the time it
becomes effective and at the Effective Time, contain any untrue statement of a
material fact or omit to state any material fact required to be stated in that
Registration Statement or necessary to make the statements in that Registration
Statement not misleading, or, in the case of the Proxy Statement or any
amendments of or supplements to the Proxy Statement, at the time of the mailing
of the Proxy Statement and any amendments of or supplements to the Proxy
Statement and at the time of the Company Stockholders Meeting, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated in that Proxy Statement or necessary in order to make the
statements in that Proxy Statement, in light of the circumstances under which
they are made, not misleading. The Proxy Statement (except for those portions
of the Proxy Statement that relate only to the Parent or the Parent Subsidiaries
or affiliates of the Parent) will comply as to form in all material respects
with the provisions of the Exchange Act.
28
Section 4.23 Vote Required. The Requisite Company Vote is the
only vote of the holders of any class or series of the Company's capital stock
necessary (under the Company Charter Documents, the DGCL, other applicable Law
or otherwise) to approve this Agreement, the Merger or the other transactions
contemplated by this Agreement.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE PARENT
The Parent represents and warrants to the Company, subject to such
exceptions or qualifications to specific representations and warranties as are
disclosed in writing in the disclosure letter previously delivered by the Parent
to the Company (the "Parent Disclosure Letter"):
------------------------
Section 5.1 Organization and Qualification; Subsidiaries.
(a) The Parent has been duly organized and is validly existing
and in good standing under the laws of its jurisdiction of incorporation or
organization, and has the requisite power and authority and all necessary
governmental approvals to own, lease and operate its properties and to carry on
its business as it is now being conducted. Each of the Parent and the
subsidiaries of the Parent (each a "Parent Subsidiary") is duly qualified or
-----------------
licensed to do business, and is in good standing, in each jurisdiction where the
character of the properties owned, leased or operated by it or the nature of its
business makes such qualification or licensing necessary, except for such
failures to be so qualified or licensed and in good standing that, individually
or in the aggregate, has no Material Adverse Effect on the Parent. For purposes
of this Agreement, "Material Adverse Effect on the Parent" means any state of
-------------------------------------
affairs or change that has had, or will have, a material adverse effect on the
business, assets, properties, results of operations or condition (financial or
otherwise) of the Parent and the Parent Subsidiaries, taken as a whole, or that
has materially impaired or will materially impair the ability of the Parent to
perform its obligations under this Agreement or to consummate the Merger and the
other transactions contemplated by this Agreement, except that none of the
following shall be deemed in themselves to constitute a Material Adverse Effect
on the Parent: (i) any change in the market price or trading volume of the
securities of the Parent after the date hereof, (ii) any change in general
economic conditions, (iii) any adverse change involving the e-commerce industry
generally, and (iv) transaction costs, taxes, accounting changes, integration
costs and other effects that result directly from the announcement or
consummation of the transactions contemplated by this Agreement.
(b) Section 4.1(b) of the Parent Disclosure Letter sets forth a
complete and correct list of all of the Parent Subsidiaries, their jurisdiction
of
29
organization and the ownership or other interest therein of the Parent and of
each other Parent Subsidiary. Neither the Parent nor any Parent Subsidiary holds
any interest in any person other than the Parent Subsidiaries so listed.
Section 5.2 Charter Documents. The copies of the Parent's
articles of incorporation (Satzung) and management board (Vorstand) Rules of
Procedure (Geschaftsordnung), each as amended through the date of this Agreement
that have been furnished to the Company (collectively, the "Parent Charter
--------------
Documents"), are complete and correct copies of those documents. The Parent is
---------
not in violation of any of the provisions of such charter documents.
Section 5.3 Capitalization.
(a) As of May 19, 2000, (i) 27,311,184 shares of Parent Common
Stock were issued and outstanding, all of which were validly issued and are
fully paid, nonassessable and not subject to preemptive rights, (ii) the
authorized I capital of the Parent consisted of 10,337,589 shares of Parent
Common Stock, (iii) the authorized II capital of the Parent consisted of
2,600,000 shares of Parent Common Stock, and (iv) 2,409,639 shares of Parent
Common Stock were reserved for issuance upon exercise of outstanding Parent
Stock Options. Except as set forth above, as of May 19, 2000, no shares of
capital stock or other voting securities of the Parent were issued, reserved for
issuance or outstanding and, since such date, no shares of capital stock or
other voting securities or options in respect thereof have been issued except
upon the exercise of the Parent Stock Options outstanding on such date. On May
26, 2000, the Parent's shareholders authorized the issuance of convertible bonds
in an aggregate principal amount of Euro 2,600,000 which may be used in
connection with employee participation scheme and the Parent's shareholders
resolved to create a new Contingent Capital II in the amount of Euro 2,600,000
non-par value bearer shares and authorized the management board to purchase own
shares of up to 10% of the share capital for a time period of 18 months. No
other increase of share capital has been resolved since May 19, 2000. The Parent
has sufficient authorized share capital to proceed with the Share Capital
increase as set forth in this Agreement.
(b) Between December 31, 1999 and the date of this Agreement, no
options to purchase shares of Parent Common Stock ("Parent Stock Options") have
--------------------
been granted by the Parent under the Parent's 1998 Plan or the Parent's 1999
Plan (collectively, the "Parent's Option Plans"). Except (i) Parent Stock
---------------------
Options to purchase an aggregate of 2,409,639 shares of Parent Common Stock
outstanding or available for grant under the Parent's Option Plans, or (ii)
under agreements or arrangements described in Section 4.3(b) of the Parent
Disclosure Letter, there are no options, warrants, calls, conversion rights,
stock appreciation rights, redemption rights, repurchase rights or other rights,
agreements, arrangements or commitments of any character to which the Parent is
a party or by which the Parent is bound relating to the issued or unissued
capital stock of the Parent or any Parent
30
Subsidiary or obligating the Parent or any Parent Subsidiary to issue or sell
any shares of capital stock of, other equity interests in, or securities
exchangeable for or convertible in the capital stock or other equity interest in
the Parent or any Parent Subsidiary. None of the Parent Stock Options which are
subject to vesting will vest as a result of the consummation of the Merger.
(c) Subject to Section 5.20, the shares of Parent Common Stock that
underlie the Parent ADSs to be delivered in connection with the Merger have been
duly authorized by all necessary corporate action, and when issued in accordance
with this Agreement, will be validly issued, fully paid, nonassessable and will
not be subject to preemptive rights. Each outstanding share of capital stock of
each Parent Subsidiary is duly authorized, validly issued, fully paid,
nonassessable and not subject to preemptive rights and each such share owned by
the Parent or a Parent Subsidiary is free and clear of all security interests,
liens, claims, pledges, options, rights of first refusal, agreements,
limitations on the Parent's or such other Parent Subsidiary's voting rights,
charges and other encumbrances or any nature whatsoever (collectively, "Liens"),
-----
except where failure to own such shares free and clear, individually or in the
aggregate, has no Material Adverse Effect on the Parent.
Section 5.4 Authority.
(a) The Parent has all necessary corporate power and authority to
execute and deliver this Agreement and, subject to compliance with Section 52 of
the German Stock Corporation Law (Aktiengesetz), the resolutions of the
management board (Vorstand) and the supervisory board (Aufsichtsrat) of the
Parent with respect to the Share Capital Increase, the appointment of an auditor
and the preparation of an audit (valuation) report by such auditor in connection
with the Share Capital Increase and the registration of the Share Capital
Increase with the commercial register (Handelsregister) for the Parent (the
"Requisite Parent Approval"), to perform its obligations under this Agreement
--------------------------
and to consummate the Merger and the other transactions contemplated by this
Agreement to be consummated by the Parent. This Agreement has been validly
executed and delivered by the Parent, and assuming the due authorization,
execution and delivery by the other parties hereto and subject to Section 5.20,
constitutes a legal, valid and binding obligation of the Parent, enforceable
against the Parent in accordance with its terms.
Section 5.5 No Conflict.
(a) Except as set forth in Section 4.5 of the Parent Disclosure
Letter, the execution and delivery of this Agreement by the Parent do not, and
the performance of this Agreement by the Parent will not:
31
(i) conflict with or violate any provision of the Parent's articles of
association (Satzung) or management board (Vorstand) rules of procedure
(Geschaftsordnung) of the Parent;
(ii) assuming that all consents, approvals, authorizations and other
actions described in Section 4.6 have been obtained and all filings and
obligations described in Section 4.6 have been made, conflict with or violate
any Law applicable to the Parent or by which any property or asset of the Parent
is or may be bound or affected, except for any such conflicts or violations
that, individually or in the aggregate, have no Material Adverse Effect on the
Parent; or
(iii) result in any breach of or constitute a default (or an event
which with or without notice or lapse of time or both would become a default)
under, or give to others any right of termination, amendment, acceleration or
cancellation of, or result in the creation of a Lien on any property or asset of
the Parent or any Parent Subsidiary under, any Contract to which the Parent or
any Parent Subsidiary is a party or by which any of them or their assets or
properties is or may be bound or affected, except for any such breaches,
defaults or other occurrences which, individually or in the aggregate, have no
Material Adverse Effect on the Parent.
(b) Section 4.5(b) of the Parent Disclosure Letter sets forth a list of
all Contracts to which the Parent or any Parent Subsidiaries are a party or by
which they or their assets or properties are or may be bound or affected under
which consents or waivers are or may be required prior to consummation of the
transactions contemplated by this Agreement, except for those Contracts under
which the Parent's failure to obtain the required consents or waivers,
individually or in the aggregate, would not result in a Material Adverse Effect
on the Parent.
Section IV.6 Required Filings and Consents. The execution and delivery of
this Agreement by the Parent do not, and the performance of this Agreement by
the Parent will not, require any consent, approval, authorization or permit of,
or filing with or notification to, any Governmental Entity except (i) for
applicable requirements of the Exchange Act, applicable requirements of the
Securities Act, applicable requirements of Blue Sky Laws, the rules and
regulations of the Nasdaq National Market, the rules and regulations of the
Neuer Markt segment of the Frankfurt Stock Exchange (the "Neuer Markt"),
-----------
applicable requirements of Takeover Statutes, the pre-merger notification
requirements of the HSR Act, the filing of the Certificate of Merger as required
by the DGCL, compliance with Section 52 of the German Stock Corporation Law
(Aktiengesetz) and the registration of the Share Capital Increase with the
commercial register (Handelsregister) for the Parent, and (ii) where failure to
obtain such consents, approvals, authorizations or permits, or to make such
filings or notifications, individually or in the aggregate, have no Material
Adverse Effect on the Parent. Neither the Parent nor any of the Parent
Subsidiaries is a party to, bound by, any contract or other agreement that would
prohibit or materially delay the transactions
32
contemplated by this Agreement. Except as set forth in Section 4.6 of the Parent
Disclosure Letter, as of the date of this Agreement, neither the Parent nor any
of the Parent Subsidiaries is in negotiations in respect of an acquisition of a
business, corporation, partnership, association or other business organization
or division thereof that would require the inclusion in the Registration
Statement (as defined in Section 5.4(a)) pro forma financial information
regarding such acquisition.
Section 5.7 Financial Statements.
(a) The Parent has provided the Company with true and complete copies
of (i) the audited consolidated balance sheet of the Parent as of December 31,
1999, June 30, 1999 and June 30, 1998 and the related consolidated statements of
operations, cash flows and shareholders' equity for the six month period ended
December 31, 1999 and for each of the three fiscal years ended June 30, 1999
(including all related notes and schedules thereto) (collectively, including any
such documents provided subsequent to the date of this Agreement, the "Parent
------
Financial Statements").
--------------------
(b) Each of the consolidated balance sheets included in the Parent
Financial Statements (including the related notes and schedules) fairly
presented, in all material respects, the consolidated financial position of the
Parent as of the dates set forth in those consolidated balance sheets. Each of
the consolidated statements of income and of cash flows included in the Parent
Financial Statements (including any related notes and schedules) fairly
presented, in all material respects, the consolidated results of operations and
cash flows, as the case may be, of the Parent and the consolidated Parent
Subsidiaries for the periods set forth in those consolidated statements of
income and of cash flows, in each case in conformity with generally accepted
accounting principles in Germany ("German GAAP") or U.S. GAAP, as noted in the
-----------
Parent Financial Statements, consistently applied throughout the periods
indicated.
(c) Except as and to the extent set forth on the consolidated balance
sheet of the Parent and the consolidated Parent Subsidiaries as of December 31,
1999 including the related notes, neither the Parent nor any Parent Subsidiary
has any liabilities or obligations of any nature (whether accrued, absolute,
contingent or otherwise) that would be required to be reflected on a balance
sheet or in the related notes, except for liabilities or obligations incurred in
the ordinary course of business since December 31, 1999 that, individually or in
the aggregate, have no Material Adverse Effect on the Parent.
Section 5.8 Absence of Certain Changes or Events.
33
(a) Since December 31, 1999, the Parent and the Parent Subsidiaries
have conducted their businesses only in the ordinary course and, since such
date, there has not been any Material Adverse Effect on the Parent.
(b) Except as set forth in Section 4.8(b) of the Parent Disclosure
Letter and except as permitted pursuant to Section 5.2, since December 31, 1999,
there has not been:
(i) any damage, destruction or other casualty loss with respect
to any asset or property owned, leased or otherwise used by it or any Parent
Subsidiaries, whether or not covered by insurance, which damage, destruction or
loss, individually or in the aggregate, has a Material Adverse Effect on the
Parent;
(ii) any material change by the Parent in its or any Parent
Subsidiary's accounting methods, principles or practices, except as required by
U.S. GAAP or German GAAP and disclosed in Section 4.8(b) of the Parent
Disclosure Letter;
(iii) any declaration, setting aside or payment of any dividend
or distribution in respect of Parent Shares or any redemption, purchase or other
acquisition of any of the Parent's securities;
(iv) any increase in the compensation or benefits or
establishment of any bonus, insurance, severance, deferred compensation,
pension, retirement, profit sharing, stock option (including, the granting of
stock options, stock appreciation rights, performance awards or restricted stock
awards), stock purchase or other employee benefit plan, or any other increase in
the compensation payable or to become payable to any executive officers of the
Parent or any Parent Subsidiary except in the ordinary course of business or
except as required by applicable Law;
(v) (A) any incurrence or assumption by the Parent or any Parent
Subsidiary of any indebtedness for borrowed money or (B) any guarantee,
endorsement or other incurrence or assumption of material liability (whether
directly, contingently or otherwise) by the Parent or any Parent Subsidiary for
the obligations of any other person (other than any wholly owned Parent
Subsidiary), other than in the ordinary course of business;
(vi) any creation or assumption by the Parent or any Parent
Subsidiary of any Lien on any material asset of the Parent or any Parent
Subsidiary, other than (i) in the ordinary course of business, or (ii) Liens
arising after the date of this Agreement by operation of Law or without the
Parent's consent, in each case that has no Material Adverse Effect on the
Parent;
34
(vii) any making of any loan, advance or capital contribution to or
investment in any person by the Parent or any Parent Subsidiary, other than in
the ordinary course of business, and not in excess of U.S.$500,000;
(viii) (A) any contract or agreement entered into by the Parent or any
Parent Subsidiary on or prior to the date hereof relating to any material
acquisition or disposition of any assets or business or (B) any modification,
amendment, assignment or termination of or relinquishment by the Parent or any
Parent Subsidiary of any rights under any other Contract (including any
insurance policy naming it as a beneficiary or a loss payable payee) that has,
individually or in the aggregate, a Material Adverse Effect on the Parent other
than transactions, commitments, contracts or agreements in the ordinary course
of business or those contemplated by this Agreement;
(ix) any adverse change in the Parent's relationships with its
material customers, except for changes that, individually or in the aggregate,
have no Material Adverse Effect on the Parent.
Section 5.9 Accounting and Tax Matters. Neither the Parent, nor to the
knowledge of the Parent, any of Parent's affiliates has taken or agreed to take
any action, nor is the Parent aware of any agreement, plan or other
circumstance, that (i) would prevent the Merger from constituting a transaction
qualifying as a reorganization under Section 368(a) of the Code or (ii) prevent
the exchange of shares of Parent Common Stock from meeting the requirements of
Treasury Regulation Section 1.367(a)-3(c)(1).
Section 5.10 Litigation. Except as disclosed in Section 4.10 of the Parent
Disclosure Letter, there is no Claim pending or, to the knowledge of the Parent,
threatened against the Parent or any Parent Subsidiary before any Governmental
Entity that, individually or in the aggregate, has a Material Adverse Effect on
the Parent. Neither the Parent nor any Parent Subsidiary is subject to any
outstanding order, writ, injunction or decree which, individually or in the
aggregate, has a Material Adverse Effect on the Parent.
Section 5.11 Intellectual Property. The Parent owns, or is validly
licensed or otherwise has the right to use all Intellectual Property that is
material to the conduct of the business of the Parent and the Parent
Subsidiaries, taken as a whole. To the reasonable knowledge of the Parent, as of
the date of this Agreement, no suits, actions or proceedings are pending, and no
person has threatened in a writing delivered to the Parent since January 1, 1999
to commence any suit, action or proceeding, alleging that the Parent or any
Parent Subsidiaries are infringing the rights of any person with regard to any
Intellectual Property, except for suits, actions or proceedings that,
individually or in the aggregate, would not have a Material Adverse Effect on
the Parent. To the knowledge of the Parent, no person is infringing the
Intellectual
35
Property rights of the Parent or any Parent Subsidiary, except for infringements
which, individually or in the aggregate, would not have a Material Adverse
Effect on the Parent.
Section 5.12 Taxes. Except to the extent that failure to do so,
individually or in the aggregate, has no Material Adverse Effect on the Parent,
the Parent and the Parent Subsidiaries have filed all Tax returns and reports to
be filed by them and have paid, or established adequate reserves for, all Taxes
required to be paid by them. Except as, individually or in the aggregate, has
no Material Adverse Effect on the Parent, no deficiencies for any Taxes have
been proposed, asserted or assessed against the Parent or any Parent
Subsidiaries, and no requests for waivers of the time to assess any such Taxes
are pending.
Section 5.13 Brokers. No broker, finder or investment banker
other than the Parent Financial Advisor is entitled to any brokerage, finder's
or other fee or commission in connection with the Merger or the other
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Parent. Prior to the date of this Agreement, the Parent has
made available to the Company a complete and correct copy of all agreements
between the Parent and the Parent Financial Advisor under which the Parent
Financial Advisor would be entitled to any payment relating to the Merger or
such other transactions.
Section 5.14 Information. To the best of the Parent's knowledge,
none of the information to be supplied by the Parent for inclusion or
incorporation by reference in the Registration Statement or the Proxy Statement
will, in the case of the Registration Statement, at the time it becomes
effective and at the Effective Time, contain any untrue statement of a material
fact or omit to state any material fact required to be stated in that
Registration Statement or necessary to make the statements in that Registration
Statement not misleading, or, in the case of the Proxy Statement or any
amendments of or supplements to the Proxy Statement, at the time of the mailing
of the Proxy Statement and any amendments of or supplements to the Proxy
Statement and at the time of the Company Stockholders Meeting, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated in that Proxy Statement or necessary in order to make the
statements in that Proxy Statement, in light of the circumstances under which
they are made, not misleading. The Proxy Statement (except for those portions
of the Proxy Statement that relate only to the Company or the Company
Subsidiaries or affiliates of the Company) and the Registration Statement will
comply as to form in all material respects with the provisions of the Exchange
Act and the Securities Act, respectively.
36
ARTICLE VI
COVENANTS
Section 6.1 Conduct of Business of the Company. Except as contemplated by
this Agreement or with the prior written approval of the Parent, during the
period from the date of this Agreement to the Effective Time, the Company will,
and will cause each of the Company Subsidiaries to, conduct its operations only
in the ordinary course of business and, to the extent consistent therewith, with
no less diligence and effort then would be applied in the absence of this
Agreement, will use commercially reasonable efforts to, and to cause each
Company Subsidiary to, preserve intact the business organization of the Company
and each of the Company Subsidiaries, to keep available the services of the
present officers and key employees of the Company and the Company Subsidiaries,
and to preserve the good will of customers, suppliers and all other persons
having business relationships with the Company and the Company Subsidiaries.
Without limiting the generality of the foregoing, and except as otherwise
contemplated by this Agreement or disclosed in Section 5.1 of the Company
Disclosure Letter, prior to the Effective Time, the Company will not, and will
not permit any Company Subsidiary to, without the prior written approval of the
Parent:
(a) except as required by applicable Law, adopt any amendment to the
certificate of incorporation or by-laws of the Company or the comparable
organizational documents of any Company Subsidiary;
(b) except for (i) issuances of capital stock of Company Subsidiaries
to the Company or a wholly owned Company Subsidiary, (ii) issuances of options
to purchase shares of Company Common Stock pursuant to the Company's 2000 Stock
Option Plan effected in accordance with Section 5.8, (iii) grants of rights
pursuant to the Company's 2000 Employee Stock Purchase Plan, and (iv)
repurchases of unvested shares at cost in connection with the termination of a
relationship with any employee, consultant or director pursuant to stock option
or purchase agreement in effect on the date hereof, issue, reissue, sell or
pledge, or authorize the issuance, reissuance, sale or pledge of (x) additional
shares of capital stock or other equity securities of any class, or securities
convertible into capital stock or other equity securities or any rights,
warrants or options to acquire any such convertible securities or capital stock
or other equity securities, other than the issue of Company Common Stock, in
accordance with the terms of the instruments governing such issuance on the date
hereof, pursuant to the exercise of Company Stock Options outstanding on the
date hereof, or (y) any other securities in respect of, in lieu of, or in
substitution for, Company Common Stock outstanding on the date hereof;
(c) declare, set aside, make or pay any dividend or other
distribution (whether in cash, securities or property or any combination
thereof) in
37
respect of any class or series of its capital stock other than between the
Company and any wholly owned Company Subsidiary;
(d) directly or indirectly, split, combine, subdivide, reclassify or
redeem, retire, purchase or otherwise acquire, or propose to redeem, retire or
purchase or otherwise acquire, any shares of its capital stock, or any of its
other securities;
(e) except for (A) increases in salary, wages and benefits of
officers or employees of the Company or the Company Subsidiaries or increases in
salary, wages and benefits granted to officers and employees of the Company or
the Company Subsidiaries in conjunction with new hires, promotions or other
changes in job status or increases in salary, wages and benefits to employees of
the Company or the Company Subsidiaries pursuant to collective bargaining
agreements entered into in the ordinary course of business, and (B) the
modification of the terms of the 75,000 Company Stock Options issued to certain
members of the board of directors of the Company prior to the date of this
Agreement to allow for such Company Stock Options to vest immediately but expire
by June 30, 2000, (i) increase the compensation or fringe benefits payable or to
become payable to its directors, officers or employees (whether from the Company
or any Company Subsidiaries), (ii) pay any benefit not required by any existing
plan or arrangement (including the granting of stock options, stock appreciation
rights, shares of restricted stock or performance units) or grant any severance
or termination pay to (except pursuant to existing agreements, plans or
policies), or enter into any employment or severance agreement with, any
director, officer or other employee of the Company or any Company Subsidiaries
or (iii) establish, adopt, enter into, amend or take any action to accelerate
rights under any collective bargaining, bonus, profit sharing, thrift,
compensation, stock option, restricted stock, pension, retirement, savings,
welfare, deferred compensation, employment, termination, severance or other
employee benefit plan, agreement, trust, fund, policy or arrangement for the
benefit or welfare of any directors, officers or current or former employees,
except in each case to the extent required by applicable Law; provided, however,
that nothing in this Agreement will be deemed to prohibit the payment of
benefits as they become payable or prevent the Company from fulfilling any
obligation entered into prior to the date of this Agreement;
(f) acquire, sell, lease, license, transfer, pledge, encumber, grant
or dispose of (whether by merger, consolidation, purchase, sale or otherwise)
any assets, including capital stock of Company Subsidiaries (other than the
acquisition and sale of inventory or the disposition of used or excess equipment
and the purchase of raw materials, supplies and equipment, or licensing the
Company's products, in each case in the ordinary course of business), or enter
into any material commitment or transaction outside the ordinary course of
business, other than transactions between a wholly owned Company Subsidiary and
the Company or another wholly owned Company Subsidiary;
38
(g) (i) incur, assume or prepay any long-term indebtedness or incur
or assume any short-term indebtedness (including, in either case, by issuance of
debt securities), (ii) assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, contingently or otherwise) for the obligations of
any other person, or (iii) make any loans, advances or capital contributions to,
or investments in, any other person except for loans, advances, capital
contributions or investments between any wholly owned Company Subsidiary and the
Company or another wholly owned Company Subsidiary, except (A) in connection
with the financing of ordinary course trade payables, (B) advances to customers
in the ordinary course of business, or (C) indebtedness between the Company and
any directly or indirectly wholly owned subsidiary of the Company; or
(h) terminate, cancel or request any material change in, or agree to
any material change in any Contract which is material to the Company and the
Company Subsidiaries taken as a whole, or enter into any Contract which would be
material to the Company and the Company Subsidiaries taken as a whole, in each
case other than in the ordinary course of business; or make or authorize any
capital expenditure, other than capital expenditures that are not, in the
aggregate, for any fiscal year, in excess of U.S.$2,000,000 for the Company and
the Company Subsidiaries taken as a whole;
(i) change the Company's accounting policies or procedures, other
than actions in the ordinary course of business and consistent with past
practice or as required pursuant to applicable Law or U.S. GAAP in the
reasonable opinion of the Company's independent certified accountants;
(j) waive, release, assign, settle or compromise any material rights,
claims or litigation;
(k) pay, discharge or satisfy any material claim, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or otherwise)
other than in the ordinary course of business;
(l) enter into any agreement or arrangement that materially limits or
otherwise restricts the Company or any Company Subsidiary or any successor
thereto, or that would, 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;
(m) make any Tax election or settle or compromise any material
federal, state, local or foreign Tax liability;
(n) authorize or enter into any formal or informal written or other
agreement or otherwise make any commitment to do any of the foregoing; or
39
(o) take any action with the intent to directly or indirectly
adversely affect the Merger.
Section 6.2 Certain Interim Operations of the Parent. The Parent covenants
and agrees that, except as expressly provided in this Agreement or as disclosed
in Section 5.2 of the Parent Disclosure Letter, during the term of this
Agreement, without the prior written consent of the Company, which consent will
not be unreasonably withheld or delayed, the Parent will not:
(a) adopt any amendment to the articles of incorporation (Satzung) of
the Parent in any manner that changes the fundamental attributes, or adversely
affects the value or rights, of the Parent Common Stock;
(b) declare, set aside, make or pay any dividend or other distribution
(whether in cash, securities or property or any combination thereof) in respect
of any class or series of its capital stock other than between the Parent and
any wholly owned Parent Subsidiary;
(c) liquidate or adopt a plan of liquidation;
(d) purchase, redeem or otherwise acquire, directly or indirectly, any
shares of capital stock of the Parent or any Parent Subsidiary in any amount
that would adversely affect the Parent's financial condition or liquidity;
(e) authorize or enter into any formal or informal written or other
agreement or otherwise make any commitment to do any of the foregoing;
(f) take any action with the intent to directly or indirectly
adversely affect Merger; or
(g) change the Parent's accounting policies or procedures, other than
actions in the ordinary course of business and consistent with past practice or
as required pursuant to applicable Law or U.S. GAAP or German GAAP.
Section 6.3 Notification of Certain Matters. The Parent and the Company
shall promptly notify each other of (a) the occurrence or non-occurrence of any
fact or event which could reasonably be expected (i) to cause any representation
or warranty contained in this Agreement to be untrue or inaccurate in any
material respect at any time from the date of this Agreement to the Effective
Time, (ii) to cause any material covenant, condition or agreement hereunder not
to be complied with or satisfied in all material respects or (iii) to result in,
in the case of Parent, a Material Adverse Effect on the Parent; and, in the case
of the Company, a Material Adverse Effect on the Company, (b) any failure of the
Company or the Parent, as the case may be, to comply with or satisfy any
covenant, condition or agreement to be complied with
40
or satisfied by it hereunder in any material respect; provided, however, that no
such notification shall affect the representations or warranties of any party or
the conditions to the obligations of any party hereunder, (c) any notice or
other material communications from any Governmental Entity in connection with
the transactions contemplated by this Agreement and (d) the commencement of any
suit, action or proceeding that seeks to prevent, seeks damages in respect of,
or otherwise relates to the consummation of the transactions contemplated by
this Agreement.
Section 6.4 Proxy Statement.
(a) As promptly as practicable after the execution of this Agreement,
the Parent and the Company shall jointly prepare and file with the SEC a single
document that will constitute (i) the proxy statement of the Company relating to
the special meeting of the Company's stockholders (the "Company Stockholders
--------------------
Meeting") to be held to consider approval and adoption of this Agreement and the
-------
Merger, (ii) the registration statement on Forms F-4 and F-6 of the Parent
(together with all amendments thereto, the "Registration Statement"), in
----------------------
connection with the registration under the Securities Act of the Parent ADSs
(and the Parent Common Stock underlying such Parent ADSs) to be issued to the
stockholders of the Company in connection with the Merger and the prospectus
included in the Registration Statement (such single document, together with any
amendments thereof or supplements thereto, the "Proxy Statement").
---------------
Substantially contemporaneously with the filing of the Proxy Statement with the
SEC, copies of the Proxy Statement shall be provided to the Nasdaq National
Market. The Parent and the Company each shall use commercially reasonable
efforts to cause the Registration Statement to become effective as promptly as
practicable, and, prior to the effective date of the Registration Statement (the
"Registration Statement Effective Date"), the Parent shall take all or any
-------------------------------------
action required under any applicable Law in connection with the issuance of
Parent ADSs pursuant to the Merger. The Parent or the Company, as the case may
be, shall furnish all information concerning the Parent or the Company as the
other party may reasonably request in connection with such actions and the
preparation of the Proxy Statement. As promptly as practicable after the
Registration Statement Effective Date, the proxy statement and prospectus
included in the Proxy Statement (collectively, the "Proxy Materials") will be
---------------
mailed to the stockholders of the Company. The Parent and the Company shall
cause the Proxy Statement to comply as to form and substance in all material
respects with the applicable requirements of (i) the Exchange Act, including
Sections 14(a) and 14(d) thereof and the respective regulations promulgated
thereunder, (ii) the Securities Act, (iii) the rules and regulations of the
Nasdaq National Market principal securities exchanges and quotation services on
which the common stock, (iv) the DGCL and (v) any other applicable law.
(b) The Proxy Statement shall include the unconditional recommendation
of the Board of Directors of the Company to the stockholders of the Company that
they vote in favor of the adoption of this Agreement and the Merger;
41
provided, however, that the Board of Directors of the Company may, at any time
prior to the Effective Time, withdraw, modify or change any such recommendation
if the Board of Directors of the Company determines in good faith (after
consultation with the Company's counsel) that failure to so withdraw, modify or
change its recommendation would be inconsistent with its fiduciary duties to the
Company's stockholders under applicable Laws. In addition, the Proxy Statement
and the Proxy Materials will include a copy of the written opinion of the
Company Financial Advisor referred to in Section 3.19.
(c) No amendment or supplement to the Proxy Statement will be made
without the approval of each of the Parent and the Company, which approval shall
not be unreasonably withheld or delayed. Each of the Parent and the Company
will advise the other, promptly after it receives notice thereof, of the time
when the Registration Statement has become effective or any supplement or
amendment has been filed, of the issuance of any stop order, of the suspension
of the qualification of Parent Common Stock issuable in connection with the
Merger for offering or sale in any jurisdiction, or of any request by the SEC or
the Nasdaq National Market for amendment of the Proxy Statement or comments
thereon and responses thereto or requests by the SEC for additional information.
(d) The information supplied by the Company for inclusion in the Proxy
Statement shall not, at (i) the time the Registration Statement is declared
effective, (ii) the time the Proxy Materials (or any amendment of or supplement
to the Proxy Materials) is first mailed to the stockholders of Company, (iii)
the time of the Company Stockholders Meeting, and (iv) the Effective Time,
contain any untrue statement of a material fact or fail to state any material
fact required to be stated in the Proxy Statement or necessary in order to make
the statements in the Proxy Statement not misleading. If at any time prior to
the Effective Time any event or circumstance relating to the Company or any
Company Subsidiary, or their respective officers or directors, should be
discovered by the Company that should be set forth in an amendment or a
supplement to the Proxy Statement, the Company shall promptly inform the Parent.
All documents that the Company is responsible for filing with the SEC in
connection with the transactions contemplated by this Agreement will comply as
to form and substance in all material respects with the applicable requirements
of the DGCL, the Securities Act and the Exchange Act.
(e) The information supplied by the Parent for inclusion in the Proxy
Statement shall not, at (i) the time the Registration Statement is declared
effective, (ii) the time the Proxy Materials (or any amendment of or supplement
to the Proxy Materials) are first mailed to the stockholders the Company, (iii)
the time of the Company Stockholders Meeting, and (iv) the Effective Time,
contain any untrue statement of a material fact or fail to state any material
fact required to be stated in the Proxy Statement or necessary in order to make
the statements in the Proxy Statement not misleading. If, at any time prior to
the Effective Time, any event or circumstance
42
relating to the Parent or any Parent Subsidiary, or their respective officers or
directors, should be discovered by the Parent that should be set forth in an
amendment or a supplement to the Proxy Statement, the Parent shall promptly
inform the Company. All documents that the Parent is responsible for filing in
connection with the transactions contemplated by this Agreement will comply as
to form and substance in all material aspects with the applicable requirements
of the DGCL, the Securities Act and the Exchange Act.
Section 6.5 Company Stockholders Meeting.
The Company shall call and hold the Company Stockholders Meeting as
promptly as practicable after the Registration Statement Effective Date for the
purpose of voting upon the adoption of this Agreement and the Parent and the
Company will cooperate with each other to cause the Company Stockholders Meeting
to be held as soon as practicable following the mailing of the Proxy Materials
to the stockholders of the Company. The Company shall use commercially
reasonable efforts (through its agents or otherwise) to solicit from its
stockholders proxies in favor of the adoption of this Agreement, and shall take
all other action necessary or advisable to secure Requisite Company Vote, except
to the extent that the Board of Directors of the Company determines in good
faith (after consultation with the Company's counsel) that doing so would be
inconsistent with its fiduciary duties to the Company's stockholders under
applicable Laws.
Section 6.6 Access to Information; Confidentiality.
(a) Except as required under any confidentiality agreement or similar
agreement or arrangement to which the Parent or the Company or any of their
respective subsidiaries is a party or under applicable Law or the regulations or
requirements of any securities exchange or quotation service or other self
regulatory organization with whose rules the parties are required to comply,
from the date of this Agreement to the Effective Time, the Parent and the
Company shall (and shall cause their respective subsidiaries to): (i) provide
to the other (and its officers, directors, employees, accountants, consultants,
legal counsel, financial advisors, investment bankers, agents and other
representatives (collectively, "Representatives")) access at reasonable times
---------------
upon prior notice to the officers, employees, agents, properties, offices and
other facilities of the other and its subsidiaries and to the books and records
thereof; and (ii) furnish promptly such information concerning the business,
properties, Contracts, assets, liabilities, personnel and other aspects of the
other party and its subsidiaries as the other party or its Representatives may
reasonably request. No investigation conducted under this Section 5.6 shall
affect or be deemed to modify any representation or warranty made in this
Agreement.
(b) The parties shall comply with, and shall cause their respective
Representatives to comply with, all of their respective obligations under the
43
Confidentiality Agreement, dated May 17, 2000 (the "Confidentiality Agreement"),
-------------------------
between the Parent and the Company with respect to the information disclosed
under this Section 5.6.
Section 6.7 No Solicitation.
(a) The Company agrees that, prior to the Effective Time, it shall
not, and shall not authorize or permit any Company Subsidiaries or any of its or
the Company Subsidiaries' Representatives, directly or indirectly, to (i)
solicit, initiate or encourage any inquiries or the making of any offer or
proposal with respect to (x) any merger, consolidation, share exchange,
recapitalization, business combination or similar transaction, (y) any sale,
lease, exchange, mortgage, transfer or other disposition, in a single
transaction or series of related transactions, of assets representing 15% or
more of the assets of the Company and the Company Subsidiaries, taken as a
whole, or (z) any sale of shares of capital stock representing, individually or
in the aggregate, 10% or more of the voting power of the Company other than to
the Company or a Company Subsidiary, including by way of a tender offer or
exchange offer by any person (other than the Company or a Company Subsidiary)
for shares of capital stock representing 5% or more of the voting power of the
Company, other than the transactions contemplated by this Agreement (any of the
foregoing inquiries, offers or proposals being referred to in this Agreement as
a "Takeover Proposal"), (ii) negotiate or otherwise engage in substantive
-----------------
discussions with any person (other than the Parent, Merger Sub or their
respective Representatives) that has submitted or proposed to submit any
Takeover Proposal, (iii) provide to any person any non-public information or
data relating to the Company or any Company Subsidiary for the purpose of
facilitating the making of any Takeover Proposal, or (iv) agree to approve or
recommend any Takeover Proposal or otherwise enter into any agreement,
arrangement or understanding requiring it to abandon, terminate or fail to
consummate the Merger or any other transactions contemplated by this Agreement;
provided, however, that if the Board of Directors of the Company determines in
good faith (after consultation with the Company's legal counsel) that failure to
do so would be inconsistent with its fiduciary duties to the Company's
stockholders under applicable Laws, the Company may, in response to any Superior
Proposal, or any Takeover Proposal that would reasonably be expected to lead to
a Superior Proposal, which proposal was not solicited by it and which did not
otherwise result from a breach of this Section 5.7, and subject to providing
prior written notice of its decision to take such action to the Parent and
compliance with the other requirements of this Section 5.7, (A) furnish
information with respect to the Company and the Company Subsidiaries to any
person making a Superior Proposal pursuant to a customary confidentiality
agreement (as determined in good faith by the Company after consultation with
its independent legal counsel), (B) participate in discussions or negotiations
regarding such Superior Proposal or (C) enter into a definitive agreement
providing for the implementation of a Superior Proposal (as defined below) if
the Company or the Board of Directors is simultaneously terminating this
Agreement pursuant to Section 7.1(h).
44
(b) In addition to the obligations of the Company set forth in
paragraph (a) of this Section 5.7, the Company shall as promptly as is
practicable advise the Parent orally and in writing of any request for
information relating to any Takeover Proposal, the material terms and conditions
of such request or Takeover Proposal and the identity of the person making such
request or Takeover Proposal. The Company will keep the Parent informed of the
status (including amendments or proposed amendments) of any such request or
Takeover Proposal.
(c) Nothing contained in this Section 5.7 shall prohibit the Company
from taking and disclosing to its stockholders a position contemplated by Rule
14e-2(a) promulgated under the Exchange Act, or from making any other disclosure
to the Company's stockholders, that is required by applicable Law or by the
Board of Directors' fiduciary duties.
(d) The Company will immediately cease and cause to be terminated any
existing activities, discussions or negotiations by the Company or its
Representatives with any parties conducted heretofore with respect to any of the
foregoing, and will promptly inform the Representatives of the obligations
undertaken in this Section 5.7.
(e) The Board of Directors of the Company will not withdraw or modify,
or propose to withdraw or modify, in any manner adverse to the Parent, its
approval or recommendation of this Agreement or the Merger except in connection
with a Superior Proposal and then only upon or after the termination of this
Agreement pursuant to Section 7.1(h) and payment to the Parent of the amounts
referred to in Section 7.3(b).
(f) For purposes of this Agreement:
(i) "Superior Proposal" means any bona fide written proposal made
-----------------
by a third party to acquire, directly or indirectly, including pursuant to a
tender offer, exchange offer, merger, consolidation, business combination,
recapitalization, reorganization, liquidation, dissolution or similar
transaction, for consideration to the Company's stockholders consisting of cash
and/or securities, over 50% of the shares of the Company's capital stock then
outstanding on terms which the Board of Directors of the Company determines in
their good faith judgment (after consultation with the Company's financial
advisors), to be more favorable to the Company's stockholders than the Merger
and for which financing, to the extent required, is then committed or which a
majority of the members of the Board of Directors of the Company determines in
their good faith judgment (after such consultation), is likely to be obtained by
such third party.
45
(ii) "Acquisition Agreement" means any letter of intent, agreement
---------------------
in principle, definitive acquisition or merger agreement or other similar
agreement, contract or commitment related to any Takeover Proposal.
Section 6.8 Employee Benefits Matters.
(a) Effective as of the Effective Time and for a one-year period
following the Effective Time, the Parent shall provide, or cause the Surviving
Corporation and its subsidiaries and successors to provide, those persons who,
at the Effective Time, were employees of the Company and its subsidiaries
("Covered Employees"), with benefits and compensation during their continuing
-----------------
employment that are substantially equivalent, in the aggregate, to the
compensation and benefits provided to such employees as of the date of this
Agreement; provided that the foregoing shall not apply to the Company's 2000
Employee Stock Purchase Plan, which shall be terminated upon or prior to the
Effective Time; provided, further, that nothing herein shall restrict the Parent
or the Surviving Corporation from terminating the employment of any such
employees in accordance with applicable laws and contractual rights, if any, of
such employees.
(b) The Parent will, or will cause the Surviving Corporation to: (i)
waive all limitations as to pre-existing conditions, exclusions and waiting
periods with respect to participation and coverage requirements applicable to
the Covered Employees under any welfare plan that such employees may be eligible
to participate in after the Effective Time; (ii) provide each such Covered
Employee with credit for any co-payment and deductibles paid prior to the
Effective Time in satisfying any applicable deductible or out-of-pocket
requirements under any welfare plans that such employees are eligible to
participate in after the Effective Time; and (iii) provide each Covered Employee
with credit for purposes of vesting and eligibility for all service with the
Company and its affiliates under each employee benefit plan, program, or
arrangement of the Parent or its affiliates in which such employees are eligible
to participate to the extent such service was credited for similar purposes
under similar plans of the Company or its subsidiaries; provided, however, that
in no event shall the Covered Employees be entitled to any credit to the extent
that it would result in a duplication of benefits with respect to the same
period of service.
(c) The Parent shall (i) cause the Surviving Corporation after the
consummation of the Offer to pay all amounts provided under all of the Company's
Benefit Plans in accordance with their terms, and (ii) honor and cause the
Surviving Corporation to honor all rights, privileges and modifications to or
with respect to any Benefit Plans which become effective as a result of such
change in control in accordance with their terms, subject in each case to all
rights amend or terminate any Benefit Plan in accordance with its terms.
46
(d) The Parent and the Company shall jointly determine, no later than
June 30, 2000, an appropriate number of options to be granted between the date
of this Agreement and the Effective Time. The Parent and the Company shall, in
good faith, jointly identify the optionees and determine the amount and terms of
individual grants.
Section 6.9 Directors' and Officers' Indemnification and Insurance.
(a) The Parent agrees that the Certificate of Incorporation and By-
laws of the Surviving Corporation will contain provisions with respect to
exculpation and indemnification at least as favorable to employees, agents,
directors or officers of the Company and the Company Subsidiaries (the
"Indemnified Parties") as those provided in the certificate of incorporation or
-------------------
by-laws of the Company as in effect on the date hereof, which provisions will
not be amended, repealed or otherwise modified for a period of six years from
the Effective Time in any manner that would adversely affect the rights
thereunder of individuals who, immediately prior to the Effective Time, were
directors, officers, employees or agents of the Company, unless such
modification is required by law; provided, however, that in the event any claim
or claims are asserted or made within such six-year period, all rights to
indemnification in respect of any such claim or claims shall continue until
final disposition of any and all such claims. The foregoing parties are
expressly made third party beneficiaries to the provisions of this Section 5.9.
The Parent also agrees to indemnify all Indemnified Parties to the fullest
extent permitted by applicable law with respect to all acts and omissions
arising out of such individuals' services as officers, directors, employees or
agents of the Company or any of the Company Subsidiaries or as trustees or
fiduciaries of any plan for the benefit of employees, or otherwise on behalf of,
the Company or any of the Company Subsidiaries, occurring prior to the Effective
Time, including the transactions contemplated by this Agreement. Without
limiting of the foregoing, in the event any such Indemnified Party is or becomes
involved in any capacity in any action, proceeding or investigation in
connection with any matter, including the transactions contemplated by this
Agreement, occurring prior to, and including, the Effective Time, the Parent
will pay as incurred such Indemnified Party's legal and other expenses
(including the cost of any investigation and preparation) incurred in connection
therewith.
(b) The Parent agrees that the Company and, at and after the Effective
Time, the Surviving Corporation shall cause to be maintained in effect for not
less than six years from the Effective Time the current policies of the
directors' and officers' liability insurance maintained by the Company; provided
that the Surviving Corporation may substitute therefor policies of at least the
same coverage containing terms and conditions which are at least as favorable
and provided that such substitution shall not result in any gaps or lapses in
coverage with respect to matters occurring prior to the Effective Time; and
provided, further, that the Surviving Corporation shall not
47
be required to pay an annual premium in excess of 175% of the last annual
premium paid by the Company prior to the date of this Agreement and if the
Surviving Corporation is unable to obtain the insurance required by this Section
5.9(b) it shall obtain as much comparable insurance as possible for an annual
premium equal to such maximum amount.
Section 6.10 Letters of Accountants.
(a) The Company shall cause to be delivered to the Parent "comfort"
letters of PricewaterhouseCoopers LLP, the Company's independent public
accountants, dated and delivered on the Registration Statement Effective Date
and as of the Effective Time, and addressed to the Parent in form and substance
reasonably satisfactory to the Parent and reasonably customary in scope and
substance for letters delivered by independent public accountants in connection
with transactions contemplated by this Agreement.
(b) The Parent shall cause to be delivered to the Company "comfort"
letters of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, the Parent's independent public accountants, dated
and delivered the Registration Statement Effective Date and as of the Effective
Time, and addressed to the Company, in form and substance reasonably
satisfactory to the Company and reasonably customary in scope and substance for
letters delivered by independent public accountants in connection with
transactions contemplated by this Agreement.
Section 6.11 Commercially Reasonable Efforts. Subject to the terms and
conditions provided in this Agreement and to applicable legal requirements, each
of the parties to this Agreement agrees to use commercially reasonable efforts
to take, or cause to be taken, all action, and to do, or cause to be done, and
to assist and cooperate with the other parties to this Agreement in doing, as
promptly as practicable, all things necessary, proper or advisable under
applicable laws and regulations to ensure that the conditions set forth in
Article VI are satisfied and to consummate and make effective the transactions
contemplated by this Agreement. If at any time after the Effective Time any
further action is necessary or desirable to carry out the purposes of this
Agreement, including the execution of additional instruments, the proper
officers and directors of each party to this Agreement shall take all such
necessary or desirable action.
Section 6.12 Consents; Filings; Further Action.
(a) Upon the terms and subject to the conditions of this Agreement,
each of the parties to this Agreement shall use commercially reasonable efforts
to (i) take, or cause to be taken, all appropriate action, and do, or cause to
be done, all things necessary, proper or advisable under applicable Law or
otherwise to consummate and make effective the Merger and the other transactions
contemplated by
48
this Agreement, (ii) obtain from Governmental Entities any consents, licenses,
permits, waivers, approvals, authorizations or orders required to be obtained or
made by the Parent or the Company or any of their subsidiaries in connection
with the authorization, execution and delivery of this Agreement and the
consummation of the Merger and the other transactions contemplated by this
Agreement, (iii) make all necessary filings, and thereafter make any other
submissions either required or deemed appropriate by each of the parties, with
respect to this Agreement and the Merger and the other transactions contemplated
by this Agreement required under (A) the Securities Act, the Exchange Act and
any other applicable federal or Blue Sky Laws, (B) the HSR Act, (C) the DGCL and
the German Stock Corporation Law (Aktiengesetz), (D) any other applicable Law
and (E) the rules and regulations of the Nasdaq National Market. The parties to
this Agreement shall cooperate and consult with each other in connection with
the making of all such filings, including by providing copies of all such
documents to the nonfiling party and its advisors prior to filing, and none of
the parties will file any such document if any of the other parties shall have
reasonably objected to the filing of such document. No party to this Agreement
shall consent to any voluntary extension of any statutory deadline or waiting
period or to any voluntary delay of the consummation of the Merger and the other
transactions contemplated by this Agreement at the behest of any Governmental
Entity without the consent and agreement of the other parties to this Agreement,
which consent shall not be unreasonably withheld or delayed.
(b) Without limiting the generality of Section 5.12(a), each party to
this Agreement shall promptly inform the others of any material communication
from the Federal Trade Commission, the Department of Justice or any other
domestic or foreign government or governmental or multinational authority
regarding any of the transactions contemplated by this Agreement. If any party
or any affiliate thereof receives a request for additional information or
documentary material from any such government or authority with respect to the
transactions contemplated by this Agreement, then such party will endeavor in
good faith to make, or cause to be made, as soon as reasonably practicable and
after consultation with the other party, an appropriate response in compliance
with such request. The Parent will advise the Company promptly in respect of
any understandings, undertakings or agreements (oral or written) which the
Parent proposes to make or enter into with the Federal Trade Commission, the
Department of Justice or any other domestic or foreign government or
governmental or multinational authority in connection with the transactions
contemplated by this Agreement. In furtherance and not in limitation of the
foregoing, the Parent shall use commercially reasonable efforts to resolve such
objections, if any, as may be asserted with respect to the transactions
contemplated by this Agreement under any antitrust, competition or trade
regulatory laws, rules or regulations of any domestic or foreign government or
governmental authority or any multinational authority. Notwithstanding the
foregoing, nothing in this Section 5.12 shall require, or be construed to
require, the Parent or the Company, in connection with the receipt of any
regulatory approval, to proffer to, or agree to (A) sell or hold separate and
agree to sell, divest or to discontinue or limit, before or after the Effective
Time, any assets,
49
businesses, or interest in any assets or businesses of the Parent, the Company
or any of their respective affiliates (or to the consent to any sale, or
agreement to sell, or discontinuance or limitation by the Parent or the Company,
as the case may be, of any of its assets or businesses) or (B) agree to any
conditions relating to, or changes or restriction in, the operations of any such
asset or businesses which, in either case, could reasonably be expected to
result in a Material Adverse Effect on the Parent or a Material Adverse Effect
on the Company.
Section 6.13 Plan of Reorganization. This Agreement is intended to
constitute a "plan of reorganization" within the meaning of Section 1.368-2(g)
of the income tax regulations promulgated under the Code. From and after the
date of this Agreement and until the Effective Time, each party to this
Agreement shall use commercially reasonable efforts to cause the Merger to
qualify, and will not, without the prior written consent of the parties to this
Agreement, take any actions or cause any actions to be taken which could prevent
the Merger from qualifying, as a reorganization under the provisions of Section
368(a) of the Code. Following the Effective Time, and consistent with any such
consent, (i) none of the Surviving Corporation, the Parent or any of their
affiliates shall take any action or cause any action to be taken which would
cause the Merger to fail to so qualify as a reorganization under Section 368(a)
of the Code and (ii) the Surviving Corporation and the Parent shall comply with
the record keeping and reporting requirements of Sections 368(a) and 367 of the
Code.
Section 6.14 Public Announcements. The initial press release
concerning the Merger shall be a joint press release and, thereafter, the Parent
and Merger Sub and the Company shall consult with each other before issuing any
press release or otherwise making any public statements with respect to this
Agreement or any of the transactions contemplated by this Agreement and shall
not issue any such press release or make any such public statement prior to such
consultation, except to the extent required by applicable Law or the
requirements of the Nasdaq National Market and the Neuer Markt, in which case
the issuing party shall use commercially reasonable efforts to consult with the
other parties before issuing any such release or making any such public
statement.
Section 6.15 Stock Exchange Listings and De-Listings. Each of the
Company and the Parent shall use commercially reasonable efforts to cause (i)
the Parent ADSs to be issued in the Merger to be approved for quotation on the
Nasdaq National Market subject to official notice of issuance, prior to the
Effective Time, and (ii) if necessary, the Parent Common Stock underlying the
Parent ADSs to be approved for listing on the Neuer Markt subject to official
notice of issuance, prior to the Effective Time. The parties shall use their
commercially reasonable efforts to cause the Surviving Corporation to cause the
Company Common Stock to be de-listed from Nasdaq National Market and de-
registered under the Exchange Act as soon as practicable following the Effective
Time.
50
Section 6.16 Expenses. Except as otherwise provided in Section
7.3, whether or not the Merger is consummated, all Expenses incurred in
connection with this Agreement and the Merger and the other transactions
contemplated by this Agreement shall be paid by the party incurring such
Expense, except that Expenses incurred in connection with the filing fee for the
Proxy Statement and printing and mailing the Proxy Materials (other than legal,
accounting, investment and banking, expert and consultant fees and expenses) and
the filing fee under the HSR Act shall be shared equally by the Parent and the
Company.
Section 6.17 Takeover Statutes; Exon-▇▇▇▇▇▇. If any Takeover
Statute is or may become applicable to the Merger or the other transactions
contemplated by this Agreement, each of the Parent and the Company and its
respective board of directors shall grant such approvals and take such actions
as are necessary so that such transactions may be consummated as promptly as
practicable on the terms contemplated by this Agreement, any necessary filings
are made and otherwise act to eliminate or minimize the effects of such statute
or regulation on such transactions. In addition, if the Parent so requests, the
Parent and the Company shall cooperate to file a notification pursuant to
Section 721(a) of the Exon-▇▇▇▇▇▇ Amendment to the Defense Production Act of
1950
Section 6.18 Dividends. The Company shall coordinate with the
Parent the declaration, setting of record dates and payment dates of dividends
on Company Common Stock so that holders of Company Common Stock do not receive
dividends on both Company Common Stock and Parent ADS received in the Merger in
respect of any calendar quarter or fail to receive a dividend on either Company
Common Stock or Parent Common Stock received in the Merger in respect of any
calendar quarter.
Section 6.19 Control of the Company's Operations. Nothing
contained in this Agreement shall give the Parent or the Company, directly or
indirectly, rights to control or direct the other party's operations prior to
the Effective Time.
Section 6.20 Certain Obligations of the Parent.
(a) Certain obligations of the Parent set forth in this Agreement,
including those obligations designed to survive the consummation of the Share
Exchange, may require additional corporate actions specified in the German Stock
Corporation Law (Aktiengesetz), including Sections 52, 203 and 185 et seq.
thereof, be taken by or with respect to the Parent. As required by law, certain
of such obligations of the Parent shall be incorporated in agreements in
connection with the contributions in kind to the Parent, which agreements shall
be entered into by the Parent and the Exchange Agent in the context of the Share
Exchange pursuant to Sections 52 and 183 et seq. of the German Stock Corporation
Law (Aktiengesetz).
51
(b) Effective as of the Effective Time and during the period in which
any of the Company Stock Options remain outstanding, the Parent shall not cause
the Surviving Corporation to commence a bankruptcy or insolvency proceeding
under any applicable Law.
ARTICLE VII
CONDITIONS
Section 7.1 Conditions to Each Party's Obligation to Effect the Merger.
The respective obligation of each party to consummate the other transactions
contemplated by this Agreement to be consummated on the Closing Date is subject
to the satisfaction or waiver at or prior to the Effective Time of each of the
following conditions:
(a) Stockholder Approval. This Agreement and consummation of the
Merger shall have been duly approved by holders of outstanding Company Common
Stock by the Requisite Company Vote, and this Agreement, the consummation of the
Merger, the Share Capital Increase (including the approvals of the Parent's
management board (Vorstand) and supervisory board (Aufsichtsrat)) and the
issuance of the Parent Common Stock underlying the Parent ADSs to be issued in
the Merger shall have been duly approved in accordance with applicable law and
the articles of association (Satzung) of the Parent;
(b) Listing. The Parent ADSs issuable to the Company's stockholders
pursuant to this Agreement shall have been authorized for quotation on the
Nasdaq National Market, upon official notice of issuance.
(c) HSR. The waiting period applicable to the consummation of the
Merger under the HSR Act shall have expired or been terminated.
(d) Consents. All consents, approvals and action of any Governmental
Entity required to permit the consummation of the Merger, the Share Capital
Increase and the other transactions contemplated by this Agreement shall have
been obtained or made, free of any condition that could reasonably be expected
to result in a Material Adverse Effect on the Parent or a Material Adverse
Effect on the Company.
(e) Injunctions. No Governmental Entity of competent jurisdiction
shall have enacted, issued, promulgated, enforced or entered any Law, orders,
injunction or decree (whether temporary, preliminary or permanent) that is in
effect and restrains, enjoins or otherwise prohibits consummation of the Merger,
the Share Capital Increase or the other transactions contemplated by this
Agreement.
52
(f) Registration Statement. The Registration Statement shall have
become effective under the Securities Act. No stop order suspending the
effectiveness of the Registration Statement shall have been issued, and no
proceedings for that purpose shall have been initiated or be threatened by the
SEC.
Section 7.2 Conditions to Obligations of the Parent. The obligations of
the Parent to consummate the transactions contemplated by this Agreement to be
consummated on the Closing Date are also subject to the satisfaction or waiver
by the Parent at or prior to the Effective Time of the following conditions:
(a) Representations and Warranties. The representations and
warranties of the Company set forth in this Agreement that are qualified as to
materiality shall be true and correct, and the representations and warranties of
the Company set forth in this Agreement that are not so qualified shall be true
and correct in all material respects, in each case as of the date of this
Agreement and as of the Closing Date, as though made on and as of the Closing
Date, except to the extent the representation or warranty is expressly limited
by its terms to another date, and the Parent shall have received a certificate
(which certificate may be qualified by knowledge to the same extent as the
representations and warranties of the Company contained in this Agreement are so
qualified) signed on behalf of the Company by an executive officer of the
Company to such effect.
(b) Performance of Obligations of the Company. The Company shall have
performed in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Closing Date, and the Parent shall
have received a certificate signed on behalf of the Company by an executive
officer of the Company to such effect.
(c) Material Adverse Effect. Since the date of this Agreement, there
shall have been no Material Adverse Effect on the Company.
(d) Consents Under Agreements. The Company shall have obtained the
consent, approval or waiver of each person that is not a Governmental Entity
whose consent, approval or waiver shall be required in order to consummate the
transactions contemplated by this Agreement, except those for which the failure
to obtain such consent, approval or waiver, individually or in the aggregate,
would have no Material Adverse Effect on the Company.
(e) Tax Opinion. The Parent shall have received the opinion of ▇▇▇▇,
Weiss, Rifkind, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, special counsel to the Parent, dated the
Closing Date, to the effect that the Merger will be treated for federal income
tax purposes as a reorganization within the meaning of Section 368(a) of the
Code, and that each of the Parent, Merger Sub and the Company will be a party to
that reorganization within the meaning of Section 368(b) of the Code. Each of
the parties hereto agree to
53
make such reasonable representations related to the requirements of Sections 367
and 368 of the Code as may be requested by counsel in connection with such
opinion.
(f) Auditors' Report. The Parent shall have received an unqualified
auditors' report from the Company's independent certified auditors on the
Company's consolidated balance sheet and consolidated statement of income and of
cash flows (including the related notes and schedules) provided by the Company
to the Parent prior to the signing of this Agreement.
Section 7.3 Conditions to Obligation of the Company. The obligation of the
Company to effect the Merger and consummate the other transactions contemplated
by this Agreement to be consummated on the Closing Date is also subject to the
satisfaction or waiver by the Company at or prior to the Effective Time of the
following conditions:
(a) Representations and Warranties. The representations and
warranties of the Parent set forth in this Agreement that are qualified as to
materiality shall be true and correct, and the representations and warranties of
the Parent set forth in this Agreement that are not so qualified shall be true
and correct in all material respects, in each case as of the date of this
Agreement and as of the Closing Date, as though made on and as of the Closing
Date, except to the extent the representation or warranty is expressly limited
by its terms to another date, and the Company shall have received a certificate
(which certificate may be qualified by knowledge to the same extent as the
representations and warranties of each of the Parent contained in this Agreement
are so qualified) signed on behalf of each of the Parent by an executive officer
of the Parent to such effect.
(b) Performance of Obligations of the Parent. The Parent shall have
performed in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Closing Date, and the Company shall
have received a certificate signed on behalf of the Parent by an executive
officer of the Parent to such effect.
(c) Material Adverse Effect. Since the date of this Agreement, there
shall have been no Material Adverse Effect on the Parent.
(d) Consents Under Agreements. The Parent shall have obtained the
consent, approval or waiver of each person that is not a Governmental Entity
whose consent, approval or waiver shall be required in order to consummate the
transactions contemplated by this Agreement, except those for which failure to
obtain such consents, approval or waiver, individually or in the aggregate,
would have no Material Adverse Effect on the Parent.
54
(e) Tax Opinion. The Company shall have received the opinion of
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, Professional Corporation, counsel to the
Company, dated the Closing Date, to the effect that the Merger will be treated
for federal income tax purposes as a reorganization within the meaning of
Section 368(a) of the Code, and that each of the Parent, Merger Sub and the
Company will be a party to that reorganization within the meaning of Section
368(b) of the Code. Each of the parties hereto agree to make such reasonable
representations related to the requirements of Sections 367 and 368 of the Code
as may be requested by counsel in connection with such opinion.
ARTICLE VIII
TERMINATION
Section 8.1 Termination. This Agreement may be terminated and the Merger
may be abandoned at any time prior to the Effective Time, notwithstanding any
requisite approval and adoption of this Agreement, as follows:
(a) by mutual written consent of the Parent and the Company duly
authorized by their board of directors of the Company and by the management
board of the Parent;
(b) by either the Parent or the Company, if the Effective Time shall
not have occurred on or before December 31, 2000; provided, however, that the
right to terminate this Agreement under this Section 7.1(b) shall not be
available to the party whose failure to fulfill any obligation under this
Agreement shall have been the cause of, or resulted in, the failure of the
Effective Time to occur on or before such date;
(c) by either the Parent or the Company, if any order, injunction or
decree preventing the consummation of the Merger shall have been entered by any
court of competent jurisdiction or Governmental Entity and shall have become
final and nonappealable;
(d) by the Parent or the Company, if this Agreement shall fail to
receive the Requisite Company Vote at the Company Stockholders Meeting or any
adjournment or postponement thereof;
(e) by the Parent, upon a breach of any material representation,
warranty, covenant or agreement on the part of the Company set forth in this
Agreement, or if any representation or warranty of the Company shall have become
untrue, in either case such that the conditions set forth in either of Section
6.2(a) or 6.2(c) would not be satisfied (a "Terminating Company Breach");
--------------------------
55
provided, however, that, if such Terminating Company Breach is curable by the
Company through the exercise of commercially reasonable efforts and for so long
as the Company continues to exercise such commercially reasonable efforts, the
Parent may not terminate this Agreement under this Section 7.1(e);
(f) by the Company, upon breach of any material representation,
warranty, covenant or agreement on the part of the Parent set forth in this
Agreement, or if any representation or warranty of the Parent shall have become
untrue, in either case such that the conditions set forth in either of Section
6.3(a) or 6.3(c) would not be satisfied (a "Terminating Parent Breach");
-------------------------
provided, however, that, if such Terminating Parent Breach is curable by the
Parent through commercially reasonable efforts and for so long as the Parent
continues to exercise such commercially reasonable efforts, the Company may not
terminate this Agreement under this Section 7.1(f);
(g) by the Parent, if (i) the Board of Directors of the Company
withdraws, modifies or changes its approval or recommendation of this Agreement
in a manner adverse to the Parent or shall have resolved to do so, (ii) the
Board of Directors of the Company shall have recommended to the stockholders of
the Company a Takeover Proposal or shall have resolved to do so, or (iii) a
tender offer or exchange offer for 10% or more of the outstanding shares of
capital stock of the Company is commenced by a person other than the Parent and
either (a) the Board of Directors of the Company recommends acceptance of such
tender offer or exchange offer by its stockholders or (b) within ten (10)
business days of such commencement the Board of Directors of the Company shall
have failed to recommend against acceptance of such tender offer or exchange
offer by its stockholders (including by taking no position with respect to the
acceptance of such tender offer or exchange offer by its stockholders);
(h) by the Company, if the Board of Directors of the Company shall
have concluded in good faith (after consultation with the Company's counsel)
that failure to so terminate would be inconsistent with its fiduciary duties
under applicable Laws and, on or prior to such date, any person or group (other
than the Parent) shall have made a public announcement or otherwise communicated
to the Company and its stockholders with respect to a Superior Proposal;
provided, however, that the Company may not terminate this Agreement pursuant to
this Section 7.1(h) until three business days have elapsed following delivery to
the Parent of written notice of such determination of the Company (which written
notice will inform the Parent of the material terms and conditions of the
Superior Proposal); provided, further, however, that such termination under this
Section 7.1(h) shall not be effective until the Company has made payment to the
Parent of the amounts required to be paid pursuant to Section 7.3(b).
56
(i) on or after July 8, 2000, by the Company, if both the management
board (Vorstand) and the supervisory board (Aufsichsrat) of the Parent shall not
have approved the Share Capital Increase.
Section 8.2 Effect of Termination. Except as provided in Section 8.2, in
the event of termination of this Agreement pursuant to Section 7.1, this
Agreement shall forthwith become void, there shall be no liability under this
Agreement on the part of the Parent or the Company or any of their respective
Representatives, and all rights and obligations of each party to this Agreement
shall cease, subject to the remedies of the parties as set forth in Sections
7.3(b) and (c); provided, however, that nothing in this Agreement shall relieve
any party from liability for the breach of any of its representations and
warranties or the breach of any of its covenants or agreements set forth in this
Agreement.
Section 8.3 Expenses Following Certain Termination Events.
(a) Except as set forth in this Section 7.3, all Expenses incurred in
connection with this Agreement and the transactions contemplated by this
Agreement shall be paid in accordance with the provisions of Section 5.16. For
purposes of this Agreement, "Expenses" consist of all out-of-pocket expenses
--------
(including, all fees and expenses of counsel, accountants, investment bankers,
experts and consultants to a party to this Agreement 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, the preparation, printing, filing and mailing of the Proxy Statement
or the Proxy Materials, the solicitation of stockholder approval and all other
matters related to the closing of the transactions contemplated by this
Agreement.
(b) If this Agreement (i) is terminated by the Parent pursuant to
Section 7.1(g), (ii) is terminated by the Company pursuant to Section 7.1(h) or
(iii) is terminated by the Company or the Parent pursuant to Section 7.1(d),
then, subject to the proviso below, the Company shall (x) on the date specified
in the penultimate sentence of this Section 7.3 in the case of a termination
pursuant to Section 7.1(d), or (y) simultaneously with a termination of this
Agreement in the case of a termination pursuant to Section 7.1(g) or 7.1(h), pay
to the Parent (by wire transfer of immediately available funds to an account
designated by the Parent) a termination fee of U.S.$20,000,000 plus, subject to
the last sentence of this Section 7.3, the reimbursement of all of Parent's
actual and documented out-of-pocket expenses (including all investment banking,
legal, accounting and other similar expenses) up to a maximum reimbursable
amount of U.S.$2,000,000 (the "Parent Expenses"); provided, however, that the
---------------
Company shall not be obligated to pay such fee to the Parent if this Agreement
is terminated pursuant to Section 7.1(d) unless (i) at the time of the Company
Stockholders Meeting, the Company has received a bona fide alternative
Acquisition Proposal or a third party has made or publicly announced its
intention to
57
make a bona fide Acquisition Proposal and (ii) within 12 months after the
termination of this Agreement, the Company enters into a definitive agreement
providing for an alternative Acquisition Proposal with any third party or an
alternative Acquisition Proposal is consummated with any third party. If a
termination fee becomes payable as a result of a termination pursuant to Section
7.1(d), then such termination fee shall be paid promptly (and in any event
within two (2) days of receipt by Company of a written notice from the Parent)
following the earlier of the execution of such definitive agreement providing
for an alternative Acquisition Proposal or the consummation of an alternative
Acquisition Proposal, as the case may be. In addition, in the event the Parent
or the Company terminates this Agreement pursuant to Section 7.1(d) and at the
time of the Company Stockholders Meeting the Company has received a bona fide
alternative Acquisition Proposal or a third party has made or publicly announced
its intention to make a bona fide Acquisition Proposal, the Company shall
promptly on demand reimburse all of the Parent Expenses and thereafter be
obligated to pay the termination fee referred to above only in the event such
fee becomes payable pursuant to this Section 7.3(b).
(c) Each of the Parent and the Company agrees that the payments
provided for in Section 7.3(b) shall be the sole and exclusive remedy of the
parties upon a termination of this Agreement pursuant to Section 7.1(d), (g) or
(h), as the case may be, and such remedy shall be limited to the payment
stipulated in Section 7.3(b).
(d) The Company acknowledges that the agreements contained in this
Section 7.3 are an integral part of the transactions contemplated by this
Agreement, and that, without these agreements, the Parent would not enter into
this Agreement; accordingly, if the Company fails to pay promptly the amounts
due pursuant to Section 7.3(b), and, in order to obtain such payment, the Parent
commences a suit which results in a judgment against the Company for all or a
portion of such amounts, the Company shall pay to the Parent's Expenses in
connection with such suit, together with interest on the amounts payable to the
Parent at the prime rate of Deutsche Bank in effect on the date such payment was
required to be made.
ARTICLE IX
MISCELLANEOUS
Section 9.1 Certain Definitions. For purposes of this Agreement:
(a) The term "affiliate," as applied to any person, means any other
---------
person directly or indirectly controlling, controlled by, or under common
control with, that person. For the purposes of this definition, "control"
-------
(including, with correlative meanings, the terms "controlling," "controlled by"
----------- -------------
and "under common
------------
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control with"), as applied to any person, means the possession, directly or
------------
indirectly, of the power to direct or cause the direction of the management and
policies of that person, whether through the ownership of voting securities, by
contract or otherwise.
(b) The term "business day" means any day, other than Saturday,
------------
Sunday or a federal holiday, and shall consist of the time period from 12:01
a.m. through 12:00 midnight Eastern time. In computing any time period under
this Agreement, the date of the event which begins the running of such time
period shall be included except that if such event occurs on other than a
business day such period shall begin to run on and shall include the first
business day thereafter.
(c) The term "including" means, unless the context clearly requires
---------
otherwise, including but not limited to the things or matters named or listed
after that term.
(d) The term "knowledge," as applied to the Company or the Parent,
---------
means the knowledge of the officers of the Company or the Parent, as the case
may be.
(e) The term "person" shall include individuals, corporations, limited
------
and general partnerships, trusts, limited liability companies, associations,
joint ventures, Governmental Entities and other entities and groups (which term
shall include a "group" as such term is defined in Section 13(d)(3) of the
-----
Exchange Act).
(f) The term "subsidiary" or "subsidiaries" means, with respect to the
---------- ------------
Parent, the Company or any other person, any entity of which the Parent, the
Company or such other person, as the case may be (either alone or through or
together with any other subsidiary), owns, directly or indirectly, stock or
other equity interests constituting more than 50% of the voting or economic
interest in such entity.
Section 9.2 Survival. The representations, warranties and agreements in
this Agreement and in any certificate delivered under this Agreement shall
terminate at the Effective Time or upon the termination of this Agreement under
Section 7.1, as the case may be, except that the agreements set forth in
Articles I and II and Sections 5.8, 5.9, 5.13 and 5.15 and this Article VIII
shall survive the Effective Time, those set forth in Sections 5.6(b), 5.16, 7.2
and 7.3 and this Article VIII shall survive termination of this Agreement and
those set forth in Section 5.14 shall survive for a period of one year after
termination of this Agreement. Each party agrees that, except for the
representations and warranties contained in this Agreement, the Company
Disclosure Letter and the Parent Disclosure Letter, no party to this Agreement
has made any other representations and warranties, and each party disclaims any
other representations and warranties, made by itself or any of its officers,
directors, employees, agents, financial and legal advisors or other
Representatives with respect to
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the execution and delivery of this Agreement or the transactions contemplated by
this Agreement, notwithstanding the delivery of disclosure to any other party or
any party's representatives of any documentation or other information with
respect to any one or more of the foregoing.
Section 8.3 Counterparts. This Agreement may be executed in any number
of counterparts, each such counterpart being deemed to be an original
instrument, and all such counterparts shall together constitute the same
agreement.
Section 8.4 GOVERNING LAW; WAIVER OF JURY TRIAL.
(a) THIS AGREEMENT SHALL BE DEEMED TO BE MADE IN AND IN ALL RESPECTS
SHALL BE INTERPRETED, CONSTRUED AND GOVERNED BY AND IN ACCORDANCE WITH THE LAW
OF THE STATE OF DELAWARE WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES.
(b) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY
ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT
ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT,
OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES AND
ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (ii) EACH SUCH PARTY
UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (iii) EACH SUCH
PARTY MAKES THIS WAIVER VOLUNTARILY, AND (iv) EACH SUCH PARTY HAS BEEN INDUCED
TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 8.4(b).
Section 9.5 Notices. Any notice, request, instruction or other document
to be given hereunder by any party to the others shall be in writing and
delivered personally or sent by registered or certified mail, postage prepaid,
or by facsimile:
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if to the Parent:
BROKAT ▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
Attention: ▇▇▇▇-▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Fax: ▇▇▇-▇▇▇-▇▇▇-▇▇-▇▇▇
with copies to:
▇▇▇▇, Weiss, Rifkind, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
1285 Avenue of the Americas
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, ▇.▇.▇.
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Fax: ▇▇-▇▇▇-▇▇▇-▇▇▇▇
if to the Company:
Blaze Software, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇.▇.▇.
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, Esq.
Fax: ▇▇-▇▇▇-▇▇▇-▇▇▇▇
with copies to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇, U.S.A.
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
Fax: ▇▇-▇▇▇-▇▇▇-▇▇▇▇
or to such other persons or addresses as may be designated in writing by the
party to receive such notice as provided above.
Section 9.6 Entire Agreement. This Agreement (including any
exhibits and annexes to this Agreement), the Company Disclosure Letter and the
Parent Disclosure Letter constitute the entire agreement and supersede all other
prior agreements, understandings, representations and warranties, both written
and oral, among the parties, with respect to the subject matter of this
Agreement.
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Section 9.7 No Third Party Beneficiaries. Except as provided in
Section 5.9 of this Agreement is not intended to confer upon any person other
than the parties to this Agreement any rights or remedies under this Agreement.
Section 9.8 Amendment. This Agreement may be amended by the parties to
this Agreement by action taken by or on behalf of their respective Boards of
Directors at any time prior to the Effective Time; provided that, after the
approval of this Agreement by the stockholders of the Company, no amendment may
be made that would reduce the amount or change the type of consideration into
which each share of Company Common Stock shall be converted upon consummation of
the Merger or that is otherwise prohibited by applicable Law. This Agreement may
not be amended except by an instrument in writing signed by the parties to this
Agreement.
Section 9.9 Waiver. At any time prior to the Effective Time, any party
to this Agreement may (a) extend the time for the performance of any obligation
or other act of any other party to this Agreement, (b) waive any inaccuracy in
the representations and warranties contained in this Agreement or in any
document delivered pursuant to this Agreement, and (c) waive compliance with any
agreement or condition contained in this Agreement. Any waiver of a condition
set forth in Section 6.1, or any determination that such a condition has been
satisfied, will be effective only if made in writing by each of the Company and
the Parent and, unless otherwise specified in such writing, shall thereafter
operate as a waiver (or satisfaction) of such conditions for any and all
purposes of this Agreement. Any such extension or waiver shall be valid if set
forth in an instrument in writing signed by the party or parties to be bound
thereby.
Section 9.10 Obligations of the Parent and of the Company. Whenever
this Agreement requires a Parent Subsidiary to take any action, that requirement
shall be deemed to include an undertaking on the part of the Parent to cause
that Parent Subsidiary to take that action. Whenever this Agreement requires a
Company Subsidiary to take any action, that requirement shall be deemed to
include an undertaking on the part of the Company to cause that Company
Subsidiary to take that action and, after the Effective Time, on the part of the
Surviving Corporation to cause that Company Subsidiary to take that action.
Section 9.11 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 or the other provisions of this
Agreement. If any provision of this Agreement, or the application of that
provision to any person or any circumstance, is invalid or unenforceable, (a) a
suitable and equitable provision shall be substituted for that provision in
order to carry out, so far as may be valid and enforceable, the intent and
purpose of the invalid or unenforceable provision and (b) the remainder of this
Agreement and the application of the provision to other persons or circumstances
shall not be affected by such invalidity or unenforceability, nor shall
62
such invalidity or unenforceability affect the validity or enforceability of the
provision, or the application of that provision, in any other jurisdiction.
Section 9.12 Interpretation. The table of contents and headings in
this Agreement are for convenience of reference only, do not constitute part of
this Agreement and shall not be deemed to limit or otherwise affect any of the
provisions of this Agreement. Where a reference in this Agreement is made to a
Section, exhibit or annex, that reference shall be to a Section of or exhibit or
annex to this Agreement unless otherwise indicated.
Section 9.13 Assignment. This Agreement shall not be assignable by
operation of law or otherwise, except that pursuant to Section 1.1(b) the Parent
may designate, by written notice to the Company, a Parent Subsidiary that is
wholly owned directly or indirectly by the Parent to be merged with and into the
Company in lieu of Merger Sub, in which event all references in this Agreement
to Merger Sub shall be deemed references to such Parent Subsidiary.
Section 9.14 Specific Performance. The parties to this Agreement 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 reached. 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 or any state having jurisdiction, this being in
addition to any other remedy to which they are entitled at law or in equity.
Section 9.15 Submission to Jurisdiction; Waivers; Consent to Service
of Process. Each of the Parent and the Company irrevocably agree that any legal
action or proceeding with respect to this Agreement or for recognition and
enforcement of any judgment in respect hereof brought by another party hereto or
its successors or assigns may be brought and determined in any Delaware state
court or Federal court sitting in the State of Delaware, and each of the Parent
and the Company thereby (x) irrevocably submits with regard to any such action
or proceeding for itself and in respect to its property, generally and
unconditionally, to the personal jurisdiction of the aforesaid court in the
event any dispute arises out of this Agreement or any transaction contemplated
hereby, (y) 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 (z)
agrees that it will not bring any action relating to this Agreement or any
transaction contemplated hereby in any court other than any Delaware state or
Federal court sitting in the State of Delaware. Any service of process to be
made in such action or proceeding may be made by delivery of process in
accordance with the notice provisions contained in Section 8.5. Each of the
Parent and the Company hereby irrevocably waives, and agrees not to assert, by
way of motion, as a defense, counterclaim or otherwise, in any action or
proceeding with respect to this Agreement,
63
(a) the defense of sovereign immunity, (b) any claim that it is not personally
subject to the jurisdiction of the above-named court for any reason other than
the failure to serve process in accordance with this Section 8.15 that it or its
property is exempt or immune from jurisdiction of any such court or from any
legal process commenced in such courts (whether through service of notice,
attachment prior to judgment, attachment in aid of execution of judgment,
execution of judgment or otherwise), and (d) to the fullest extent permitted by
application law the (i) the suit, action or proceeding i any such court is
brought in an inconvenient forum, (ii) the venue of such suit, action or
proceeding is improper and (iii) this Agreement, or the subject matter hereof,
may not be enforced in or by such courts.
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IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the duly authorized officers of the parties to this Agreement as of
the date first written above.
BLAZE SOFTWARE INC.
By:_________________________________
Name:
Title:
BROKAT AKTIENGESELLSCHAFT
By:_________________________________
Name:
Title:
By:_________________________________
Name:
Title:
65