AGREEMENT AND PLAN OF MERGER
BY AND AMONG
GARTNER, INC.
GREEN FALCON, INC.
AND
META GROUP, INC.
DATED AS OF DECEMBER 26, 2004
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of December 26, 2004 (this
"AGREEMENT"), by and among Gartner, Inc. ("PARENT"), Green Falcon, Inc., a
Delaware corporation and a wholly-owned subsidiary of Parent ("MERGER SUB"), and
META Group, Inc., a Delaware corporation (the "COMPANY").
WHEREAS, the respective Boards of Directors of Parent, Merger Sub and the
Company have each determined that it is advisable and in the best interests of
their respective stockholders that Parent acquire the Company pursuant to the
terms and conditions of this Agreement, and, in furtherance of such acquisition,
such Boards of Directors have approved the merger of Merger Sub with and into
the Company (the "MERGER") in accordance with the terms of this Agreement and
the applicable provisions of the General Corporation Law of the State of
Delaware ("DGCL") and, in the case of the Board of Directors of the Company,
recommended that this Agreement be adopted by the Company's stockholders;
WHEREAS, pursuant to the Merger, among other things, the issued and
outstanding shares of the Company's Common Stock shall be converted into the
right to receive cash in the manner set forth herein;
WHEREAS, Parent, Merger Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and also to prescribe various conditions to the Merger; and
WHEREAS, it is acknowledged and agreed that Parent will cause Merger Sub
to execute this Agreement as promptly as practicable after the date hereof and
such later execution shall not in any way affect the binding nature of this
Agreement as between Parent and the Company;
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth below, the
parties hereto agree as follows:
ARTICLE 1. THE MERGER
1.1 THE MERGER. Subject to the terms and conditions of this Agreement, at
the Effective Time (as defined in Section 1.2), Merger Sub shall merge with and
into the Company in accordance with the DGCL, the separate corporate existence
of Merger Sub shall cease, and the Company shall continue as the surviving
corporation. The Company, in its capacity as the corporation surviving the
Merger, is hereinafter sometimes referred to as the "SURVIVING CORPORATION."
1.2 EFFECTIVE TIME. On the Closing Date (as defined below), Parent and the
Company shall cause the Merger to be consummated by filing a duly executed and
delivered certificate of merger as required by the DGCL (the "CERTIFICATE OF
MERGER") with the Secretary of State of the State of Delaware, in such form as
required by, and executed in accordance with the relevant provisions of, the
DGCL (the time of such filing, or such later time as is agreed between the
parties and specified in the Certificate of Merger, being the "EFFECTIVE TIME").
1.3 EFFECT OF THE MERGER. At the Effective Time, the effect of the Merger
shall be as provided in this Agreement, the Certificate of Merger and Section
259 of the DGCL.
1.4 CLOSING. Subject to the provisions of this Agreement, the closing of
the Merger (the "CLOSING") shall take place at 10:00 a.m. local time, at the
offices of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, ▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ on a date to be specified by Parent and the Company which
shall be no later than the second business day after satisfaction or waiver of
each of the conditions set forth in Article 7 (other than the delivery of items
to be delivered at Closing and other than those conditions that by their nature
are to be satisfied at the Closing, it being understood that the occurrence of
the Closing shall remain subject to the delivery of such items and the
satisfaction or waiver of such conditions at the Closing) or on such other date
and such other time and place as Parent and the Company shall agree. The date on
which the Closing shall occur is referred to herein as the "CLOSING DATE."
1.5 CERTIFICATE OF INCORPORATION OF THE SURVIVING CORPORATION. At and
after the Effective Time, the Certificate of Incorporation of Merger Sub (the
"MERGER SUB CHARTER"), as in effect immediately prior to the Effective Time,
shall be the Certificate of Incorporation of the Surviving Corporation, until
thereafter amended as provided by the DGCL and Certificate of Incorporation of
the Surviving Corporation; provided, however, that Article I of the Certificate
of Incorporation of the Surviving Corporation will be amended at the Effective
Time to read: "The name of the corporation is META Group, Inc."
1.6 BY-LAWS OF THE SURVIVING CORPORATION. At and after the Effective Time,
the By-Laws of Merger Sub (the "MERGER SUB BY-LAWS"), as in effect immediately
prior to the Effective Time, shall be the By-Laws of the Surviving Corporation,
until amended in accordance with the Certificate of Incorporation of the
Surviving Corporation, the DGCL and such By-Laws.
1.7 DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION.
(a) The directors of Merger Sub immediately prior to the Effective Time
shall be the initial directors of the Surviving Corporation and shall hold
office from the Effective Time until their respective successors are duly
elected or appointed and qualified in the manner provided in the Certificate of
Incorporation or By-Laws of the Surviving Corporation or as otherwise provided
by law.
(b) The officers of Merger Sub immediately prior to the Effective Time
shall be the initial officers of the Surviving Corporation and shall hold office
from the Effective Time until their respective successors are duly elected or
appointed and qualified in the manner provided in the Certificate of
Incorporation or By-Laws of the Surviving Corporation or as otherwise provided
by law.
ARTICLE 2.
CONVERSION AND EXCHANGE OF SECURITIES
2.1 CONVERSION OF CAPITAL STOCK. At the Effective Time, by virtue of the
Merger and without any action on the part of any holder of any shares of common
stock, par value $0.01 per share, of the Company ("COMPANY COMMON STOCK") or any
capital stock of Merger Sub:
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(a) CONVERSION OF COMPANY COMMON STOCK. Each share of Company Common Stock
issued and outstanding immediately prior to the Effective Time (other than
shares to be cancelled in accordance with Section 2.1(b) and Appraisal Shares
(as defined in Section 2.1(e)) shall be converted into the right to receive an
amount of cash equal to the Per-Share Cash Amount, without interest, payable
upon the surrender of the Certificates (as defined in Section 2.2(b)). At the
Effective Time, all such shares of Company Common Stock shall no longer be
outstanding and shall automatically be cancelled and retired and shall cease to
exist, and each holder of a Certificate or Certificates that immediately prior
to the Effective Time represented any such shares shall cease to have any rights
with respect thereto, except the right to receive the Per-Share Cash Amount,
without interest, upon surrender of Certificates in accordance with Section
2.2(b). Notwithstanding the foregoing, the Per-Share Cash Amount shall be
adjusted to reflect fully the effect of any stock split, reverse split,
reclassification, stock dividend (including any dividend or distribution of
securities convertible into Company Common Stock), reorganization,
recapitalization or other like change with respect to Company Common Stock
occurring (or having a record date) after the date of this Agreement and prior
to the Effective Time.
(b) CANCELLATION OF TREASURY STOCK AND PARENT-OWNED STOCK. All shares of
Company Common Stock that are (i) held by the Company as treasury shares or by
any direct or indirect wholly owned Subsidiary (as defined below) of the Company
or (ii) owned by Parent or any direct or indirect wholly owned Subsidiary of
Parent, shall be cancelled and retired and shall cease to exist and no
consideration shall be delivered in exchange therefor. As used in this
Agreement, the word "SUBSIDIARY" means, with respect to any party, any
corporation or other legal entity, whether incorporated or unincorporated, of
which (A) such party or any other Subsidiary of such party is a general partner
(excluding partnerships, the general partnership interests of which held by such
party or any Subsidiary of such party do not have a majority of the voting
interest in such partnership), (B) such party or any Subsidiary of such party
owns directly or indirectly in excess of a majority of the outstanding equity or
voting securities or interests or (C) such party or any Subsidiary of such party
has the right to elect at least a majority of the board of directors or others
performing similar functions with respect to such corporation or other legal
entity.
(c) CAPITAL STOCK OF MERGER SUB. Each share of common stock, par value
$0.01 per share, of Merger Sub ("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 $0.01 per share, of the Surviving Corporation.
(d) STOCK OPTIONS AND PURCHASE RIGHTS. Outstanding options to purchase
shares of Company Common Stock shall be treated in the manner set forth in
Section 6.8 hereof. Outstanding rights to purchase shares of Company Common
Stock under the Company Purchase Plan (as defined in Section 3.3(b)(iv)) shall
be treated in the manner set forth in Section 6.9 hereof.
(e) APPRAISAL RIGHTS. Notwithstanding anything in this Agreement to the
contrary, shares (the "APPRAISAL SHARES") of Company Common Stock issued and
outstanding immediately prior to the Effective Time that are held by any holder
who is entitled to demand and properly demands appraisal of such shares pursuant
to, and who complies in all respects
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with, the provisions of Section 262 of the DGCL ("SECTION 262") shall not be
converted into the right to receive the Per-Share Cash Amount as provided in
Section 2.1(a), but instead such holder shall be entitled to payment of the fair
value of such shares in accordance with the provisions of Section 262.
Notwithstanding the foregoing, if any such holder shall fail to perfect or
otherwise shall waive, withdraw or lose the right to appraisal under Section 262
or a court of competent jurisdiction shall determine that such holder is not
entitled to the relief provided by Section 262, then the right of such holder to
be paid the fair value of such holder's Appraisal Shares under Section 262 shall
cease and such Appraisal Shares shall be deemed to have been converted at the
Effective Time into, and shall have become, the right to receive the Per-Share
Cash Amount as provided in Section 2.1(a). The Company shall serve prompt notice
to Parent of any demands for appraisal of any shares of Company Common Stock,
withdrawals of such demands and any other instruments served pursuant to the
DGCL received by the Company, and Parent shall have the right to participate in
and direct all negotiations and proceedings with respect to such demands. The
Company shall not, without the prior written consent of Parent, or as otherwise
required under the DGCL, voluntarily make any payment with respect to, or settle
or offer to settle, any such demands, or agree to do or commit to do any of the
foregoing.
2.2 EXCHANGE OF CERTIFICATES.
(a) PAYING AGENT. Prior to the Closing Date, Parent shall designate a bank
or trust company reasonably acceptable to the Company to act as paying agent
hereunder (the "PAYING AGENT"). Promptly following the Effective Time, Parent
shall make available to the Paying Agent for exchange in accordance with this
Article 2, through such reasonable procedures as Parent may adopt, the cash
payable pursuant to Section 2.1(a).
(b) EXCHANGE PROCEDURES. As soon as practicable after the Effective Time,
Parent will instruct the Paying Agent to mail to each holder of record of a
certificate or certificates which immediately prior to the Effective Time
represented outstanding shares of Company Common Stock that were converted
pursuant to Section 2.1(a) into the right to receive the Per-Share Cash Amount
(the "CERTIFICATES"): (i) a letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates shall
pass, only upon proper delivery of the Certificates to the Paying Agent and
shall be in such form and have such other provisions as Parent may reasonably
specify that are not inconsistent with the terms of this Agreement); and (ii)
instructions for use in effecting the surrender of the Certificates in exchange
for the Per-Share Cash Amount. Upon surrender of a Certificate for cancellation
to the Paying Agent together with such letter of transmittal, duly executed, and
such other customary documents as may be required pursuant to such instructions,
the holder of such Certificate shall be entitled to receive in exchange therefor
the amount of cash into which the shares formerly represented by such
Certificate shall have been converted pursuant to Section 2.1(a) (less
applicable withholding taxes), and the Certificate so surrendered shall
forthwith be canceled. In the event of a transfer of ownership of shares of
Company Common Stock which is not registered in the transfer records of the
Company as of the Effective Time, payment may be made to a person other than the
person in whose name the Certificate so surrendered is registered if such
Certificate shall be properly endorsed or otherwise be in proper form for
transfer and the person requesting such payment shall pay any transfer or other
taxes required by reason of the payment to a person other than the registered
holder of such Certificate or establish to the satisfaction of the Surviving
Corporation that such tax has been paid or is not applicable. Until
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so surrendered, each outstanding Certificate that, prior to the Effective Time,
represented shares of Company Common Stock will be deemed, from and after the
Effective Time, for all corporate purposes, to represent only the right to
receive the Per-Share Cash Amount (less applicable withholding taxes) upon
surrender.
(c) TERMINATION OF EXCHANGE FUND; NO LIABILITY. At any time following the
90th day after the Effective Time, Parent shall be entitled to require the
Paying Agent to deliver to it all or any portion of the funds made available to
the Paying Agent which has not been disbursed to holders of Certificates, and
thereafter such holders shall be entitled to look only to Parent (subject to
abandoned property, escheat or other similar law) for their claims to the cash
payable to such holders pursuant to Section 2.1(a) upon due surrender of their
Certificates, without any interest thereon. Neither Parent, Merger Sub nor the
Company shall be liable to any holder of Company Common Stock for such shares
(or dividends or distributions with respect thereto) delivered to a public
official pursuant to any applicable abandoned property, escheat or other similar
law following the passage of time specified therein.
(d) WITHHOLDING RIGHTS. Parent, the Surviving Corporation or the Paying
Agent shall be entitled to deduct and withhold from the cash otherwise payable
pursuant to this Agreement to any person who was a holder of Company Common
Stock, Company Stock Options or rights to purchase Company Common Stock under
the Company Purchase Plan immediately prior to the Effective Time such amounts
as Parent, the Surviving Corporation or the Paying Agent is required to deduct
and withhold with respect to the making of such payment under the Internal
Revenue Code of 1986, as amended (the "CODE"), or any provision of state, local
or foreign tax law. To the extent that amounts are so withheld by Parent, the
Surviving Corporation or the Paying Agent, such withheld amounts shall be
treated for all purposes of this Agreement as having been paid to the former
holder of the shares of Company Common Stock, Company Stock Options or rights to
purchase Company Common Stock under the Company Purchase Plan in respect of
which such deduction and withholding was made by Parent, the Surviving
Corporation or the Paying Agent.
(e) NO FURTHER OWNERSHIP RIGHTS IN COMPANY STOCK. All cash paid upon the
surrender of a Certificate in accordance with the terms of this Article 2 shall
be deemed to have been paid in full satisfaction of all rights pertaining to the
shares of Company Common Stock formerly represented by such Certificate. At the
Effective Time, the stock transfer books of the Company shall be closed and
thereafter there shall be no further registration of transfers on the stock
transfer books of the Company or the Surviving Corporation of the shares of
Company Common Stock which were outstanding immediately prior to the Effective
Time. If, after the Effective Time, Certificates are presented to the Surviving
Corporation or the Paying Agent for transfer or any other reason, they shall be
canceled and exchanged as provided in this Article 2.
(f) LOST, STOLEN OR DESTROYED CERTIFICATES. In the event any Certificate
shall have been lost, stolen or destroyed, the Paying Agent shall pay in
exchange for such lost, stolen or destroyed Certificate, upon the making of an
affidavit of that fact by the record holder thereof, such cash as may be
required pursuant to Section 2.1(a) in respect of such Certificate; provided,
however, that Parent or the Paying Agent may, in its discretion and as a
condition precedent to the payment thereof, require the record holder of such
lost, stolen or destroyed Certificate to deliver an agreement of indemnification
in form reasonably satisfactory to Parent, or a bond in
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such sum as Parent or the Paying Agent may reasonably direct as indemnity
against any claim that may be made against Parent, the Surviving Corporation or
the Paying Agent with respect to the Certificate alleged to have been lost,
stolen or destroyed.
(g) TAKING OF NECESSARY ACTION; FURTHER ACTION. Each of Parent, Merger Sub
and the Company will take all such reasonable and lawful action as may be
necessary or appropriate in order to effectuate the Merger in accordance with
this Agreement as promptly as possible. If, at any time after the Effective
Time, any such further action is necessary or desirable to carry out the
purposes of this Agreement and to vest the Surviving Corporation with full
right, title and possession to all assets, property, rights, privileges, powers
and franchises of the Company and Merger Sub, the officers and directors of the
Surviving Corporation are fully authorized in the name of the Company and Merger
Sub, as the case may be, to take, and will take, all such lawful and necessary
action. Parent shall cause Merger Sub to perform all of its obligations relating
to this Agreement and the transactions contemplated hereby.
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth on the disclosure schedule (each section of which
qualifies the correspondingly numbered representation and warranty to the extent
expressly specified therein and such other representations and warranties to the
extent a matter in such section is disclosed in such a way as to make its
relevance to the information called for by such other representation and
warranty readily apparent) delivered by the Company to Parent prior to the
parties' execution of this Agreement (the "DISCLOSURE SCHEDULE"), the Company
represents and warrants to Parent and Merger Sub that:
3.1 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES. Each of the Company and
each of its Subsidiaries is an entity duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation and has
the requisite corporate power and authority necessary to own, lease and operate
the properties it purports to own, lease or operate and to carry on its business
as it is now being conducted or presently proposed to be conducted. Each of the
Company and each of its Subsidiaries is duly qualified or licensed as a foreign
corporation to do business, and is in good standing, in each jurisdiction where
the character of the properties owned, leased or operated by it or the nature of
its activities makes such qualification or licensing necessary, except for such
failures to be so duly qualified or licensed and in good standing that have not
had or would not reasonably be expected to have a Company Material Adverse
Effect, individually or in the aggregate. A true, complete and correct list of
all of the Company's Subsidiaries, together with the jurisdiction of
incorporation of each Subsidiary, the authorized capitalization of each
Subsidiary, and the percentage of each Subsidiary's outstanding capital stock
owned by the Company or another Subsidiary or affiliate, is set forth in Section
3.1 of the Disclosure Schedule. Except as set forth in the Filed Company SEC
Documents (as defined below), the Company does not directly or indirectly own
any equity or similar interest in, or any interest convertible into or
exchangeable or exercisable for any equity or similar interest in, any
corporation, partnership, limited liability company, joint venture or other
business association or entity, excluding securities in any publicly traded
company held for investment by the Company and comprising less than one percent
(1%) of the outstanding stock of such company.
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3.2 CERTIFICATE OF INCORPORATION AND BY-LAWS. The Company has heretofore
made available to Parent a true, complete and correct copy of its Amended and
Restated Certificate of Incorporation, as amended to date (the "COMPANY
CHARTER"), and By-Laws, as amended to date (the "COMPANY BY-LAWS"), and has made
available to Parent true, complete and correct copies of the charter and By-Laws
(or equivalent organizational documents), each as amended to date, of each of
its Subsidiaries (the "SUBSIDIARY DOCUMENTS"). The Company Charter, Company
By-Laws and the Subsidiary Documents are in full force and effect. The Company
is not in violation of any of the provisions of the Company Charter or Company
By-Laws and the Company's Subsidiaries are not in violation of any of the
provisions of their respective Subsidiary Documents.
3.3 CAPITAL STRUCTURE.
(a) As of the date hereof, the authorized capital stock of the Company
consists of 45,000,000 shares of Company Common Stock and 2,000,000 shares of
preferred stock, par value $0.01 per share ("COMPANY PREFERRED STOCK").
(b) At the close of business on December 23, 2004:
(i) 14,354,832 shares of Company Common Stock were issued and
outstanding.
(ii) No shares of Company Preferred Stock were issued and
outstanding.
(iii) 647,016 shares of Company Common Stock or Company Preferred
Stock were held in the treasury of the Company.
(iv) Under the Restated and Amended 1989 Stock Option Plan, the 1993
Stock Option and Incentive Plan, the Second Amended and Restated 1995 Stock
Plan, the Amended and Restated 1995 Non-Employee Director Stock Option Plan, the
2004 Stock Plan, the 2004 Non-Employee Director Stock Option Plan, and the
Amended and Restated 1996 Equity Compensation Plan of The Sentry Group, Inc.,
(collectively referred to herein as the "COMPANY STOCK PLANS"), options with
respect to 3,818,270 shares of Company Common Stock are outstanding, of which
there are options with respect to 2,456,921 shares of Company Common Stock
currently exercisable; and 2,079,577 shares of Company Common Stock are
available for future grants under such Company Stock Plans.
(xi) 199,997 shares of Company Common Stock are reserved for
issuance and available for purchase pursuant to the Second Amended and Restated
Employee Stock Purchase Plan (the "COMPANY PURCHASE PLAN").
(c) Section 3.3 of the Disclosure Schedule contains a correct and complete
(i) list as of December 23, 2004 of each outstanding option to purchase shares
of Company Common Stock under the Company Stock Plans (collectively the "COMPANY
STOCK OPTIONS"), including the holder, date of grant, exercise price and number
of shares of Company Common Stock subject thereto and (ii) list as of December
23, 2004 of employee options to purchase shares of Company Common Stock under
the Company Purchase Plan during the Payment Period (as defined in the Company
Purchase Plan) ending December 31, 2004.
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(d) Except for the Company Stock Options and the Company Purchase Plan,
there are no options, warrants, calls, rights or agreement to which the Company
is a party or by which it is bound obligating the Company to issue, deliver or
sell, or cause to be issued, delivered or sold, additional shares of capital
stock of the Company or obligating the Company to grant, extend or enter into
any such option, warrant, call, right or agreement, and there are no outstanding
contractual rights to which the Company is a party, the value of which is based
on the value of shares of Company Common Stock. There are no outstanding
contractual obligations of the Company to repurchase, redeem or otherwise
acquire any shares of Company Common Stock.
(e) Each outstanding share of Company Common Stock is, and each share of
Company Common Stock which may be issued pursuant to the Company Stock Options
or the Company Purchase Plan will be, when issued and paid for in accordance
with the respective terms thereof, duly authorized, validly issued, fully paid
and nonassessable and not subject to the preemptive or similar rights of third
parties in respect thereto.
(f) The Company does not have any outstanding bonds, debentures, notes or
other obligations the holders of which have the right to vote (or which are
convertible into or exercisable for securities having the right to vote) with
the stockholders of the Company on any matter.
(g) All of the outstanding shares of capital stock or other equity
interest of each Subsidiary of the Company have been duly authorized and validly
issued and are fully paid and nonassessable, have not been issued in violation
of any preemptive rights and are owned by the Company and one or more of its
Subsidiaries, free and clear of all mortgages, pledges, liens, claims, charges,
security interests, options, hypothecations, easements, restrictions (on
transfer, voting or otherwise) or conditional sale or other like restriction
agreements, or other encumbrances other than customary stockholder agreements.
3.4 AUTHORITY RELATIVE TO THIS AGREEMENT. Subject only to the Company
Stockholder Approvals (as defined below), the Company has all necessary
corporate power and authority to execute and deliver this Agreement and each
instrument required hereby to be executed and delivered by it at the Closing and
to perform its obligations hereunder and to consummate the transactions
contemplated hereby. The execution and delivery by the Company of this Agreement
and each instrument required hereby to be executed and delivered at the Closing
by the Company and the consummation by the Company of the transactions
contemplated hereby have been duly and validly authorized by all necessary
corporate action on the part of the Company, subject only to the Company
Stockholder Approvals. This Agreement has been duly and validly executed and
delivered by the Company and, assuming the due authorization, execution and
delivery of this Agreement by Parent and Merger Sub, constitutes the legal,
valid and binding obligation of the Company, enforceable against the Company in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or
other similar laws now or hereafter in effect relating to creditors' rights
generally and by general equitable principles (regardless of whether
enforceability is considered in a proceeding in equity or at law). As of the
date of this Agreement, the Board of Directors of the Company has determined
that it is fair to, advisable and in the best interests of the Company's
stockholders for the Company to enter into a business combination with Parent
and Merger Sub upon the terms and subject to the conditions
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of this Agreement, and has recommended that the Company's stockholders approve
and adopt this Agreement and the Merger, and, unless notice thereof has been
given to Parent in the manner required by this Agreement, none of the aforesaid
actions by the Company's Board of Directors has been amended, rescinded or
modified. The action taken by the Company's Board of Directors constitutes
approval of the Merger and the other transactions contemplated hereby by the
Company's Board of Directors under the provisions of Section 203 of the DGCL
such that Section 203 of the DGCL does not apply to this Agreement or the
transactions contemplated hereby. The affirmative votes of the holders of a
majority of the shares of Company Common Stock issued and outstanding on the
record date set for the meeting of the Company's stockholders to adopt and
approve this Agreement and approve the Merger (the "COMPANY STOCKHOLDERS
MEETING") are the only votes of the holders of any class or series of the
Company's capital stock necessary to approve and adopt this Agreement and
approve the Merger under the DGCL and the Company Charter (the "COMPANY
STOCKHOLDER APPROVALS").
3.5 ANTI-TAKEOVER. The Board of Directors of the Company has, to the
extent such statutes are applicable, taken all action so to render the
provisions of Section 203 of the DGCL inapplicable to the Merger and the
consummation of the transactions contemplated by this Agreement. As of the date
of this Agreement, no other "business combination," "fair price," "moratorium,"
"control share acquisition" or other similar anti-takeover statute or regulation
under the laws of the State of Delaware (each a "TAKEOVER STATUTE") is
applicable to the Company, the shares of Company Common Stock, the Merger or any
of the other transactions contemplated by this Agreement. The Board of Directors
has not taken any actions to render the provision of Section 203 in applicable
to any transaction other than the transaction contemplated by this Agreement.
The Company does not have and has not effected or voted to effect any
shareholder rights plan or agreement or so called "poison pill" that could
adversely affect the consummation of the transactions contemplated hereby.
3.6 NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) The execution and delivery by the Company of this Agreement do not,
the execution and delivery by the Company of any instrument required hereby to
be executed and delivered by the Company at the Closing will not, and the
performance by the Company of its agreements and obligations under this
Agreement will not, (i) conflict with or violate the Company Charter, Company
By-Laws or Subsidiary Documents, (ii) conflict with or violate any law, rule,
regulation, ordinance, order, judgment, injunction or decree, or restriction of
any Governmental Entity or court applicable to the Company or any of its
Subsidiaries or by which its or any of their respective properties is bound or
affected, or (iii) result in any breach of or constitute a default (or an event
that with notice or lapse of time or both would become a default), or impair the
Company's or any of its Subsidiaries' rights or alter the rights or obligations
of any third party under, or give to others any rights of termination,
amendment, acceleration or cancellation of, or result in the creation of a Lien
on any of the properties or assets (including intangible assets) of the Company
or any of its Subsidiaries pursuant to, any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise, judgment, decree or
other instrument or obligation to which the Company or any of its Subsidiaries
is a party or by which the Company or any of its Subsidiaries or its or any of
their respective properties is bound or affected, other than, in the case of
(iii) above, such breach, default, impairment, rights of termination, amendment,
acceleration or cancellation, or Liens that would
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not be reasonably expected to have a Company Material Adverse Effect,
individually or in the aggregate. For purposes of this Agreement, "LIENS" means
all security interests, liens, claims, pledges, agreements, limitations in
voting rights, charges or other encumbrances of any nature whatsoever.
(b) The execution and delivery by the Company of this Agreement do not,
the execution and delivery by the Company of any instrument required hereby to
be executed and delivered by the Company at the Closing will not, and the
performance of agreements and obligations under this Agreement by the Company
will not, require any consent, approval, order, license, authorization,
registration, declaration or permit of, or filing with or notification or
application to, any court, arbitrational tribunal, administrative or regulatory
agency or commission or other governmental authority or instrumentality (whether
domestic or foreign, a "GOVERNMENTAL ENTITY"), except (i) as may be required by
the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended (the "HSR
ACT"), (ii) as may be required under any foreign anti-trust or competition law
or regulation including without limitation Council Regulation No. 4064/89 of the
European Community, as amended (the "EC MERGER REGULATION"), (iii) the filing of
the Proxy Statement (as defined in Section 3.22) with the Securities and
Exchange Commission ("SEC") under the Securities Exchange Act of 1934, as
amended (the "EXCHANGE ACT"), (iv) such consents, approvals, orders, licenses,
authorizations, registrations, declarations, permits, filings, applications and
notifications as may be required under applicable federal and state securities
laws or the laws of any foreign country, (v) the filing of the Certificate of
Merger or other documents as required by the DGCL, (vi) any filings required
under the rules and regulations of The Nasdaq Stock Market Inc. and (vii) such
other consents, approvals, orders, licenses, authorizations, registrations,
declarations, permits, filings, applications and notifications which, if not
obtained or made, have not or would not reasonably be expected to have a Company
Material Adverse Effect, individually or in the aggregate.
(c) Section 3.6(c) of the Disclosure Schedule sets forth (a) all material
contracts of the Company or any of its Subsidiaries which would require a third
party to grant a novation or consent to assignment or change in control in
connection with the Merger or any other transaction contemplated by this
Agreement and (b) all other material consents, authorizations or approvals that
are required to be obtained by the Company or any of its Subsidiaries from
persons other than the parties to this Agreement, including any Governmental
Entity, in connection with the (x) valid and lawful authorization, execution,
delivery and performance by the Company of this Agreement and (y) the
consummation of the transactions contemplated herein. Each such novation,
consent, authorization or approval referred to in the foregoing sentence is
referred to in this Agreement as a "MATERIAL CONSENT".
3.7 COMPLIANCE; PERMITS.
(a) The Company and its Subsidiaries are and have been in compliance with
and are not in default or violation of (and have not received any notice of
non-compliance, default or violation with respect to) any law, rule, regulation,
order, judgment or decree applicable to the Company or any of its Subsidiaries
or by which any of their respective properties is bound or affected, and the
Company is not aware of any such non-compliance, default or violation
thereunder.
11
(b) The Company and its Subsidiaries hold all permits, licenses,
easements, variances, exemptions, consents, certificates, authorizations,
registrations, orders and other approvals from Governmental Entities that are
material to the operation of the business of the Company and its Subsidiaries
taken as a whole as currently conducted (collectively, the "COMPANY PERMITS").
The Company Permits are in full force and effect, have not been violated in any
material respect and, to the knowledge of the Company, no suspension, revocation
or cancellation thereof has been threatened, and there is no action, proceeding
or investigation pending or, to the Company's knowledge, threatened, seeking the
suspension, revocation or cancellation of any Company Permits. No Company Permit
shall cease to be effective as a result of the consummation of the transactions
contemplated by this Agreement.
3.8 SEC FILINGS; FINANCIAL STATEMENTS.
(a) The Company has timely filed and made available to Parent all forms,
reports, schedules, statements and other documents, including any exhibits
thereto, required to be filed by the Company with the SEC since January 1, 2003
(collectively, the "COMPANY SEC REPORTS"). The Company SEC Reports, including
all forms, reports and documents to be filed by the Company with the SEC after
the date hereof and prior to the Effective Time, (i) were and, in the case of
Company SEC Reports filed after the date hereof, will be prepared in all
material respects in accordance with the applicable requirements of the
Securities Act of 1933, as amended (the "SECURITIES ACT") and the Exchange Act,
as the case may be, and the rules and regulations thereunder, and (ii) did not
at the time they were filed (or if amended or superseded by a filing prior to
the date of this Agreement, then on the date of such filing), and in the case of
such forms, reports and documents filed by the Company with the SEC after the
date of this Agreement, will not as of the time they are filed, contain any
untrue statement of a material fact or omit to state a material fact required to
be stated in such Company SEC Reports or necessary in order to make the
statements in such Company SEC Reports, in light of the circumstances under
which they were and will be made, not misleading. None of the Company's
Subsidiaries is required to file any forms, reports, schedules, statements or
other documents with the SEC.
(b) Each of the consolidated financial statements (including, in each
case, any related notes and schedules), contained in the Company SEC Reports,
including any Company SEC Reports filed after the date of this Agreement,
complied or will comply, as of its respective date, in all material respects
with all applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto, was or will be prepared in
accordance with generally accepted accounting principles ("GAAP") (except as may
be indicated in the notes thereto) applied on a consistent basis throughout the
periods involved and fairly presented or will fairly present the consolidated
financial position of the Company and its Subsidiaries as of the respective
dates thereof and the consolidated results of its operations and cash flows for
the periods indicated, except that any unaudited interim financial statements
are subject to normal and recurring year-end adjustments which have not been and
are not expected to be material in amount, individually or in the aggregate. The
audited balance sheet of the Company contained in the Company SEC Report on Form
10-K for the fiscal year ended December 31, 2003 is referred to herein as the
"COMPANY BALANCE SHEET."
(c) Except as set forth on the Disclosure Schedule, neither the Company
nor any of its Subsidiaries has any outstanding claims, liabilities or
indebtedness (whether asserted, accrued,
12
absolute, contingent or otherwise, and whether due or to become due)
("LIABILITIES"), except Liabilities (i) set forth on the face of the unaudited
condensed consolidated balance sheet of the Company and its Subsidiaries as of
September 30, 2004 (the "MOST RECENT BALANCE SHEET"); (ii) incurred after the
Most Recent Balance Sheet Date in the ordinary course of business; or (iii) that
have been discharged or paid in full prior to the date hereof.
3.9 ABSENCE OF CERTAIN DEVELOPMENTS. Since the Most Recent Balance Sheet
Date, the operations of the Company have been conducted in the ordinary course
of business consistent with past practice and, except for the matters disclosed
in Section 3.9 of the Disclosure Schedule:
(a) (i) the Company Charter, the Company By-Laws and the Subsidiary
Documents have not been amended, and (ii) neither the Company nor its
Subsidiaries have amended any term of their outstanding equity interests or
other securities nor issued, sold, granted, or otherwise disposed of, their
equity interests or other securities;
(b) neither the Company nor any of its Subsidiaries has become liable in
respect of any guarantee of, or have incurred, assumed or otherwise become
liable in respect of, any indebtedness, except for borrowings in the ordinary
course of business under credit facilities in existence on the Most Recent
Balance Sheet Date;
(c) neither the Company nor any of its Subsidiaries has (i) made any
declaration, setting aside or payment of any dividend or other distribution with
respect to, or any repurchase, redemption or other acquisition of, any of their
capital stock or other equity interests or (ii) entered into, or performed, any
transaction with, or for the benefit of, any officer, director, employee or
other affiliate of the Company or any of its Subsidiaries (other than payments
made to officers, directors and employees in the ordinary course of business);
(d) there has been no material loss, destruction, damage or eminent domain
taking (in each case, whether or not insured) affecting the operations of the
Company or any of its Subsidiaries or any material asset of the Company or any
of its Subsidiaries;
(e) neither the Company nor any of its Subsidiaries has increased the
compensation payable or paid, whether conditionally or otherwise, to (i) any
employee, consultant or agent other than in the ordinary course of business or
(ii) any director or officer;
(f) neither the Company nor any of its Subsidiaries has entered into any
agreement that is, will be or would be (assuming the Company continued to be
subject to SEC rules and regulations requiring filing of current and periodic
reports under the Exchange Act) required to be filed as an exhibit to, or
described in, filings made or to be made by the company with the SEC;
(g) neither the Company nor any of its Subsidiaries has made any change in
its methods of accounting or accounting practices (including with respect to
reserves);
(h) neither the Company nor any of its Subsidiaries has made, changed or
revoked any material tax election, elected or changed any method of accounting
for tax purposes, settled any claim, action, cause of action, suit or other
proceeding in respect of taxes or entered into any contractual obligation in
respect of taxes with any Governmental Entity;
13
(i) neither the Company nor any of its Subsidiaries has terminated or
closed any facility, business or operation;
(j) neither the Company nor any of its Subsidiaries has adopted any
Employee Benefit Plan or, except in accordance with the terms thereof as in
effect on the Most Recent Balance Sheet Date, increased any benefits under any
Employee Benefit Plan;
(k) neither the Company nor any of its Subsidiaries has written up or
written down any of its material assets;
(l) neither the Company nor any of its Subsidiaries has entered into any
agreement to do any of the things referred to elsewhere in this Section 3.9; and
(m) no event or circumstance has occurred which has had, or is reasonably
likely to have, a Company Material Adverse Effect, individually or in the
aggregate.
3.10 ABSENCE OF LITIGATION; INVESTIGATIONS. Except as disclosed on Section
3.10 to the Disclosure Schedule or in the Company SEC Reports filed and publicly
available on the SEC's ▇▇▇▇▇ database prior to the date of this Agreement (the
"FILED COMPANY SEC DOCUMENTS"), there are no material claims, actions, suits,
proceedings or, to the knowledge of the Company, governmental investigations,
inquiries or subpoenas (a) pending against the Company or any of its
Subsidiaries or any properties or assets of the Company or of any of its
Subsidiaries, (b) to the knowledge of the Company, threatened against the
Company or any of its Subsidiaries, or any properties or assets of the Company
or of any of its Subsidiaries, (c) whether filed or threatened, that have been
settled or compromised by the Company or any Subsidiary within the three (3)
years prior to the date of this Agreement and at the time of such settlement or
compromise were material, (d) that seek to restrain or prohibit or otherwise
challenge the consummation, legality or validity of the transactions
contemplated hereby. Neither the Company nor any Subsidiary of the Company is
subject to any outstanding order, writ, injunction or decree. Since January 1,
2003 there has not been, nor are there currently, any internal investigations or
inquiries being conducted by the Company, its Board of Directors (or any
committee thereof) or any third party at the request of any of the foregoing
concerning any financial, accounting, tax, conflict of interest, self-dealing,
fraudulent or deceptive conduct or other misfeasance or malfeasance issues.
3.11 EMPLOYEE BENEFIT PLANS.
(a) Section 3.11(a) of the Disclosure Schedule sets forth a complete and
accurate list of all Employee Benefit Plans maintained, or contributed to, by
the Company, any of the Company's Subsidiaries or any of their ERISA Affiliates
or to which the Company, any of the Company's Subsidiaries or any of their
respective ERISA Affiliates is obligated to contribute, or under which any of
them has or may have any liability for premiums or benefits (collectively, the
"COMPANY EMPLOYEE PLANS"). For purposes of this Agreement, the following terms
shall have the following meanings: (i) "EMPLOYEE BENEFIT PLAN" means any
"employee pension benefit plan" (as defined in Section 3(2) of ERISA), any
"employee welfare benefit plan" (as defined in Section 3(1) of ERISA), and any
other written or oral plan, agreement or arrangement involving direct or
indirect compensation or fringe benefits, whether covering a single individual
or a
14
group of individuals, including insurance coverage, severance benefits,
disability benefits, deferred compensation, bonuses, stock options, stock
purchase, phantom stock, stock appreciation or other forms of incentive
compensation or post-retirement compensation and all severance agreements,
written or otherwise, for the benefit of, or relating to, any current or former
employee of the Company or any of its Subsidiaries or any ERISA Affiliate; (ii)
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended;
and (iii) "ERISA AFFILIATE" means any entity which is, or at any applicable time
was, a member of (A) a controlled group of corporations (as defined in Section
414(b) of the Code), (B) a group of trades or businesses under common control
(as defined in Section 414(c) of the Code) or (C) an affiliated service group
(as defined under Section 414(m) of the Code or the regulations under Section
414(o) of the Code), any of which includes or included the Company or a
Subsidiary.
(b) With respect to each Company Employee Plan, the Company has made
available to Parent complete and accurate copies of each such Company Employee
Plan (or a written summary of any unwritten plan) together with all amendments,
as well as any required IRS Forms 550 (with attachments) and actuarial reports
for the three most recent years.
(c) Each Company Employee Plan has been administered in all material
respects in accordance with ERISA, the Code or applicable laws outside the
jurisdiction of the United States and all other applicable laws and the
regulations thereunder (including without limitation Section 4980B of the Code,
Subtitle K, Chapter 100 of the Code and Sections 404(c), 601 through 608 and
Section 701 et seq. of ERISA) and in accordance with its terms and each of the
Company, the Company's Subsidiaries and their ERISA Affiliates have in all
material respects met their obligations with respect to each Company Employee
Plan and have timely made all required contributions thereto. All material
filings and reports as to each Company Employee Plan required to have been
submitted to the Internal Revenue Service or to the United States Department of
Labor have been timely submitted. With respect to the Company Employee Plans, no
event has occurred, and, to the knowledge of the Company, there exists no
condition or set of circumstances in connection with which Parent, the Company
or any of its Subsidiaries or any plan participant could be subject to any
material liability (including penalties or taxes) under ERISA, the Code or any
other applicable law, nor will the transactions contemplated by this Agreement
give rise to any such liability.
(d) Except as set forth in Section 3.11(d) of the Disclosure Schedule,
none of the Company, the Company's Subsidiaries and their ERISA Affiliates has,
with respect to any Company Employee Plan, ever (i) failed to satisfy the
minimum funding requirements of Section 412 of the Code or Section 302 of ERISA
(or the quarterly contribution requirements of Section 412(m) of the Code and
Section 302(e) of ERISA), unless the liability with respect thereto has been
discharged in full, (ii) terminated such a Plan which is subject to Title IV of
ERISA, other than in a standard termination or, (iii) effected either a
"complete withdrawal" or a "partial withdrawal," as those terms are defined in
Sections 4203 and 4205, respectively, of ERISA, from any Multiemployer Plans (as
defined in Section (3)(37) of ERISA).
(e) With respect to each Company Employee Plan, there are no existing (or,
to the Company's knowledge, threatened) lawsuits, claims or other controversies,
other than claims for information or benefits in the normal course.
15
(f) Neither the Company nor any ERISA Affiliate has ever maintained or
been required to contribute to a plan subject to Title IV of ERISA.
(g) Except as required under Section 601 et. seq. of ERISA, no Company
Plan that is a "employee welfare benefit plan" (as defined in Section 3(1) of
ERISA) provides benefits or coverage in the nature of health or life insurance
following retirement or other termination of employment.
3.12 LABOR MATTERS.
(a) The Company and each of its Subsidiaries are now, and during the past
three years have been, in compliance in all material respects with all
applicable federal, state, local and foreign laws respecting employment,
employment practices and occupational safety and health, terms and conditions of
employment and wages and hours, and are not engaged in any unfair labor
practices. There are no controversies pending or, to the knowledge of the
Company or any of its Subsidiaries, threatened, between the Company or any of
its Subsidiaries and any of their respective employees, consultants or
independent contractors, which controversies would reasonably be expected to
have a Company Material Adverse Effect, individually or in the aggregate.
Neither the Company nor any of its Subsidiaries is now, and during the past
three years has not been, a party to any collective bargaining agreement or
other labor union contract applicable to persons employed by the Company or its
Subsidiaries, nor does the Company or any of its Subsidiaries know of any
activities or proceedings of any labor union to organize any such employees.
There are not now, nor during the past three years have there been, and neither
the Company nor any of its Subsidiaries has any knowledge of, any labor
disputes, strikes, slowdowns, work stoppages, lockouts, or threats thereof, by
or with respect to any employees of, or consultants or independent contractors
to, the Company or any of its Subsidiaries. Neither the Company nor any of its
Subsidiaries is now, and during the last three years has been, the subject of
any complaint, charge, investigation, audit, suit or other legal process with
respect to any of its/their employees, independent contractors or consultants by
any state, federal or local government agency. None of the employees of the
Company or its Subsidiaries is, or within the last three years has been, the
subject of a representation petition before the National Labor Relations Board
of any state labor board. To the knowledge of the Company, no employee of the
Company or any of its Subsidiaries is in violation of any term of any employment
contract, patent disclosure agreement, non-competition agreement, or any
restrictive covenant to a former employer relating to the right of any such
employee to be employed by the Company or any of its Subsidiaries because of the
nature of the business conducted or presently proposed to be conducted by the
Company or any of its Subsidiaries or to the use of trade secrets or proprietary
information of others or, in the case of any executive officer, key employee or
group of key employees, has given notice as of the date of this Agreement to the
Company or any of its Subsidiaries that such officer, employee or any employee
in a group of key employees intends to terminate his or her employment with the
Company. Since the Company's inception, neither the Company or any of its
Subsidiaries has effected (i) a plant closing, as defined in the Worker
Adjustment and Retaining Notification Act of 1988, as amended ( the "WARN ACT"),
or (ii) a mass layoff as defined in the WARN Act.
(b) Set forth on Section 3.12(b) of the Disclosure Schedule is a
description of the extent, timing and nature of reductions in force completed
and any employee departures since
16
July 1, 2004 and reductions in force currently planned by the Company to be
effected on and after the date hereof, and of the types, timing and estimated
costs of associated severance and other obligations resulting or to result
therefrom, which description is true, correct and complete in all material
respects. Except as specifically identified in Section 3.12(b) of the Disclosure
Schedule, from June 1, 2004 to December 15, 2004 no Company Employee employed as
a research analyst, consultant or senior executive, for any reason, (i) has been
terminated or has resigned, retired or otherwise terminated his or her
employment with the Company or (ii) has notified the Company in writing, or to
the knowledge of the Company otherwise notified the Company or threatened of his
or her intention, to resign, retire or terminate his or employment with the
Company.
3.13 PROPERTIES; ENCUMBRANCES. Except as set forth in Section 3.13 of the
Disclosure Schedule, each of the Company and each of its Subsidiaries has good,
valid and marketable title to, or a valid leasehold interest in, all the
properties and assets which it purports to own or lease (real, personal and
mixed, tangible and intangible), including, without limitation, all the
properties and assets reflected in the Company Balance Sheet (except for
personal property sold since the date of the Company Balance Sheet in the
ordinary course of business consistent with past practice). All properties and
assets reflected in the Company Balance Sheet are free and clear of all Liens,
except for Liens reflected on the Company Balance Sheet and Liens for current
taxes not yet due and other Liens that do not materially detract from the value
or impair the use of the property or assets subject thereto. Section 3.13 of the
Disclosure Schedule sets forth a true, complete and correct list of all real
property owned, leased, subleased or licensed by the Company and the location of
such premises. Each of the Company and each of its Subsidiaries is and has been
in compliance with the material provisions of each lease or sublease for the
real property which is set forth in Section 3.13 of the Disclosure Schedule (the
"COMPANY LEASES"). The Company Leases are in full force and effect and are
legal, valid, binding and enforceable in accordance with their respective terms,
except as such enforceability may be limited by bankruptcy, insolvency,
fraudulent conveyance reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally and by general
equitable principles (regardless of whether enforceability is considered in a
proceeding in equity or at law). No amount payable under any Company Lease is
past due. Except as set forth in Section 3.13 of the Disclosure Schedule,
neither the Company nor any of its Subsidiaries has subleased, licensed or
otherwise granted to any person the right to use or occupy the properties
covered by the Company Leases or any portion thereof. To the knowledge of the
Company, there is no condemnation, expiration or other proceeding in eminent
domain pending or threatened, affecting any parcel of real estate covered by the
Company Leases or any portion thereof or interest therein.
3.14 TAXES.
(a) For purposes of this Agreement, "TAX" or "TAXES" shall mean taxes,
fees, assessments, liabilities, levies, duties, tariffs, imposts and
governmental impositions or charges of any kind in the nature of (or similar to)
taxes, payable to any federal, state, local or foreign taxing authority, or any
agency or subdivision thereof, including without limitation (i) income,
franchise, profits, gross receipts, ad valorem, net worth, value added, sales,
use, service, real or personal property, special assessments, capital stock,
license, payroll, withholding, employment, social security, workers'
compensation, unemployment compensation, utility, severance,
17
production, excise, stamp, occupation, premiums, windfall profits, transfer and
gains taxes, and (ii) interest, penalties, fines, additional taxes and additions
to tax imposed with respect thereto; and "TAX RETURNS" shall mean returns,
reports and information statements with respect to Taxes filed or required to be
filed with a taxing authority, domestic or foreign, including without
limitation, consolidated, combined or unitary tax returns and any amendments of,
and any attachments to, any of the foregoing.
(b) The Company and each of its Subsidiaries have filed with the
appropriate taxing authorities all Tax Returns required to be filed by them, and
all such Tax Returns were true, complete and correct in all material respects.
All Taxes due and owing by the Company and its Subsidiaries (whether or not
shown on any Tax Return) have been timely paid. There are no Tax Liens on any
assets of the Company or any Subsidiary thereof other than liens relating to
Taxes not yet due and payable. Neither the Company nor any of its Subsidiaries
has granted any waiver of any statute of limitations with respect to, or any
extension of a period for the assessment of, any Tax. No claim has ever been
made by an authority in a jurisdiction where any of the Company and its
Subsidiaries does not file Tax Returns that it is or may be subject to taxation
by that jurisdiction. Neither the Company nor any of its Subsidiaries is a party
to any agreement, contract, arrangement or plan that has resulted, or would
result, separately or in the aggregate, in (i) the payment of any "excess
parachute payment" within the meaning of Code Section 280G (or any corresponding
provision of state, local or foreign Tax law) or (ii) the payment of any amount
that will not be fully deductible as a result of Code Section 162(m) (or any
corresponding provision of state, local or foreign tax law). Neither the Company
nor any of its Subsidiaries is party to any Tax allocation or sharing agreement
or arrangement or has any liability for the Taxes of any Person (other than the
Company and its Subsidiaries) under Treas. Reg. 1.1502-6 (or any similar
provision of state, local or foreign law), as a transferee or successor, by
contract or otherwise. The accruals and reserves for Taxes (exclusive of any
accruals for "deferred taxes" or similar items that reflect timing differences
between tax and financial accounting principles) reflected in the Company
Balance Sheet are adequate to cover all Taxes accruable through the date thereof
(including interest and penalties, if any, thereon and Taxes being contested).
All liabilities for Taxes attributable to the period commencing on the date
following the date of the Company Balance Sheet were incurred in the ordinary
course of business and are consistent in type and amount with Taxes attributable
to similar prior periods.
(c) The Company and each of its Subsidiaries have withheld and finally
paid to the appropriate taxing authority with respect to its employees,
independent contractors, creditors, stockholders or other third parties all
Taxes required to be withheld, and neither the Company nor any of its
Subsidiaries has been delinquent in the payment of any Tax. Neither the Company
nor any of its Subsidiaries has received any written notice of or if aware of
any Tax deficiency outstanding, proposed or assessed against the Company or any
of its Subsidiaries. Neither the Company nor any of its Subsidiaries has
received any written notice of or is aware of any audit examination, deficiency,
refund litigation, proposed adjustment or matter in controversy with respect to
any Tax Return of the Company or any of its Subsidiaries.
3.15 ENVIRONMENTAL MATTERS.
(a) (i) The Company and its Subsidiaries are and have been in compliance
with all Environmental Laws; (ii) there has been no release or threatened
release of any pollutant,
18
contaminant or toxic or hazardous material, substance or waste, or petroleum or
any fraction thereof, (each a "HAZARDOUS SUBSTANCE") on, upon, into or from any
site currently or heretofore owned, leased or otherwise used by the Company or
its Subsidiaries; (iii) there have been no Hazardous Substances generated by the
Company or its Subsidiaries that have been disposed of or come to rest at any
site that has been included in any published U.S. federal, state or local
"superfund" site list or any other similar list of hazardous or toxic waste
sites published by any Governmental Entity within or outside the United States;
(iv) there are no underground storage tanks located on, no polychlorinated
biphenyls ("PCBS") or PCB-containing equipment used or stored on, and no
hazardous waste as defined by the Resource Conservation and Recovery Act, as
amended, stored on, any site owned or operated by the Company or its
Subsidiaries, except for the storage of hazardous waste in compliance with
Environmental Laws; and (v) the Company and its Subsidiaries have made available
to Parent true and correct copies of all environmental records, reports,
notifications, certificates of need, permits, pending permit applications,
correspondence, engineering studies, and environmental studies or assessments in
the possession of the Company, any Subsidiary of the Company, or any of their
respective representatives or advisors.
(b) For purposes of this Section 3.15, "ENVIRONMENTAL LAWS" means any law,
regulation, or other applicable requirement (whether domestic or foreign)
relating to (i) releases or threatened release of Hazardous Substance; (ii)
pollution or protection of employee health or safety, public health or the
environment; or (iii) the manufacture, handling, transport, use, treatment,
storage, or disposal of Hazardous Substances.
3.16 INTELLECTUAL PROPERTY.
(a) Section 3.16(a) of the Disclosure Schedule sets forth a true, complete
and correct list of all U.S. and foreign (i) registered copyrights or Community
Designs, and pending applications, owned by the Company or any of its
Subsidiaries as of the date of this Agreement; (ii) trademark registrations
(including internet domain registrations) and pending trademark applications
owned by the Company or any of its Subsidiaries as of the date of this
Agreement; and (iii) patents and pending applications owned by the Company or
any of its Subsidiaries as of the date of this Agreement (collectively the
"REGISTERED COMPANY INTELLECTUAL PROPERTY"). All of the Registered Company
Intellectual Property is owned solely by the Company or one of its Subsidiaries
free and clear of all Liens.
(b) The Company or one or more of its Subsidiaries owns, or has a valid
right to use, all of the material Intellectual Property that is used in the
business of the Company and its Subsidiaries as currently conducted or proposed
to be conducted (the "COMPANY INTELLECTUAL PROPERTY") free and clear of all
Liens.
(c) The Registered Company Intellectual Property is valid and subsisting
(except with respect to applications), and has not expired or been cancelled, or
abandoned.
(d) There is no pending or, to the Company's knowledge, threatened (and at
no time since January 1, 2003 has there been pending or, to the Company's
knowledge, threatened any) suit, arbitration or other adversarial proceeding
before any court, government agency or arbitral tribunal or in any jurisdiction
alleging that the activities or the conduct of the Company's or any
19
of its Subsidiaries' business infringe or misappropriate any Intellectual
Property owned by any third party ("THIRD PARTY INTELLECTUAL PROPERTY"), or
challenging the ownership, validity, enforceability or registerability of any
Company Intellectual Property owned by the Company or any of its Subsidiaries.
Neither the Company nor any of its Subsidiaries is a party to any settlements,
covenants not to ▇▇▇, consents, decrees, stipulations, judgments, or orders
which (i) restrict the Company's or any of its Subsidiaries' rights to use any
Company Intellectual Property owned by the Company or any of its Subsidiaries,
(ii) restrict the Company or any of its Subsidiaries from conducting its
business as currently conducted or proposed to be conducted in order to avoid
infringement or misappropriation of any Third Party Intellectual Property, or
(iii) permit third parties to use any Company Intellectual Property owned by the
Company or any of its Subsidiaries.
(e) The conduct of the business of the Company and its Subsidiaries as
previously conducted, currently conducted or proposed to be conducted does not
infringe upon or misappropriate any Third Party Intellectual Property. To the
Company's knowledge, no third party has misappropriated or infringed or is
misappropriating or infringing any Company Intellectual Property (1) owned by
the Company or any of its Subsidiaries or (2) that is material to the conduct of
the business of the Company and its Subsidiaries as currently conducted or
proposed to be conducted, and no intellectual property misappropriation or
infringement suits, arbitrations or other adversarial proceedings have been
brought before any court, government agency or arbitral tribunal against any
third party by the Company or any of its Subsidiaries.
(f) The Company and its Subsidiaries have taken reasonable measures to
protect the proprietary nature of the Company Intellectual Property that is (i)
owned by the Company and its Subsidiaries, or (ii) material to the business of
the Company or any of its Subsidiaries as currently conducted or proposed to be
conducted. To the Company's knowledge, there has been no disclosure to any third
party by the Company or any of its Subsidiaries of material confidential
information or trade secrets of the Company or any of its Subsidiaries or of any
of their respective clients related to any material proprietary product or
service currently being marketed, sold, licensed, provided or developed by the
Company or any of its Subsidiaries (each such product, a "PROPRIETARY PRODUCT")
other than disclosures made pursuant to reasonably protective nondisclosure or
confidentiality agreements entered into by the Company in the ordinary course of
business.
(g) All employees of the Company and its Subsidiaries who have made
material contributions to the development of any Proprietary Product or material
Company Intellectual Property (including without limitation all employees who
have designed, written, tested or worked on any software code or content
contained in any Proprietary Product or material Company Intellectual Property)
have signed confidentiality, non-competition (unless prohibited by applicable
law) and assignment of proprietary rights agreements substantially in one of the
forms attached to Section 3.16(g) of the Disclosure Schedule. All consultants
and independent contractors who have made material contributions to the
development of any Proprietary Product or material Company Intellectual Property
(including without limitation all consultants and independent contractors who
have designed, written, tested or worked on any software code or content
contained in any Proprietary Product or material Company Intellectual Property)
have assigned to the Company or one or more of its Subsidiaries (or a third
party that previously conducted any business currently conducted by the Company
or one or more of its Subsidiaries
20
and that has assigned its rights in such Proprietary Product or material Company
Intellectual Property to the Company or one or more of its Subsidiaries) all of
their right, title and interest (other than moral rights, if any, that are not
assignable, which have been waived unless un-waivable) in and to the portions of
such Proprietary Product or material Company Intellectual Property developed by
them in the course of their work for the Company or one or more of its
Subsidiaries (or applicable third party).
(h) (i) Neither the Company nor any of its Subsidiaries is in violation of
any license, sublicense or other agreement or instrument related to the Company
Intellectual Property to which the Company or any of its Subsidiaries is a party
or is otherwise bound; (ii) the consummation by the Company of the transactions
contemplated hereby will not result in any loss or impairment of ownership by
the Company or any of its Subsidiaries of, or the right of any of them to use
(or result in any term extension or expansion of the rights granted to any third
party in or to), any Company Intellectual Property that is material to the
business of the Company and its Subsidiaries as currently conducted or proposed
to be conducted; (iii) the consummation by the Company of the transactions
contemplated hereby will not require the consent of any third party or any
Governmental Entity, with respect to any such Intellectual Property.
(i) None of the Company Intellectual Property (1) owned by the Company or
any of its Subsidiaries and (2) material to the business of the Company and its
Subsidiaries as currently conducted or proposed to be conducted constitutes or
incorporates any software subject to an open source agreement (e.g. GPL) that
would require the Company or any of its Subsidiaries to divulge to any person
any source code or trade secret that is part thereof.
(j) The Company's, and each of its Subsidiaries', use and dissemination of
any and all data and information concerning consumers of its products or
services or users of any web sites operated by the Company or any of its
Subsidiaries is in material compliance with all applicable privacy policies,
terms of use, and laws. The consummation by the Company of the transactions
contemplated hereby will not violate any privacy policy, terms of use, or laws
relating to the use, dissemination, or transfer of such data or information.
(l) For purposes of this Agreement, "INTELLECTUAL PROPERTY" shall mean
trademarks, service marks, trade names, service names, brands, tradedress, logos
and internet domain names, together with all goodwill, registrations and
applications related to the foregoing; patentable inventions, patents and
industrial design registrations or applications (including any continuations,
divisionals, continuations-in-part, renewals, reissues, re-examinations and
applications for any of the foregoing); works of authorship and copyrights
(including any registrations and applications for any of the foregoing);
proprietary data and databases; mask works rights; trade secrets and other
confidential information, know-how, proprietary processes, formulae, algorithms,
models, and methodologies; computer hardware technology, software (including
source code or object code) and other technology; rights of privacy and
publicity, and moral rights; other proprietary rights of any kind or nature,
however denominated; and all rights to ▇▇▇ for any past or future infringement
or impairment of the foregoing.
3.17 ▇▇▇▇▇▇▇▇. Set forth on Section 3.17 of the Disclosure Schedule are,
on a month-by-month basis from January 1, 2004 through the date hereof, the
▇▇▇▇▇▇▇▇ by the Company for
21
each of research, consulting and other, aggregated within each category, and
such ▇▇▇▇▇▇▇▇ information is true, correct and complete in all material
respects.
3.18 INSURANCE. All fire and casualty, general liability, business
interruption, product liability, sprinkler and water damage insurance policies
and other insurance policies maintained by the Company or any of its
Subsidiaries, provide adequate coverage for all such risks incident to the
business of the Company and its Subsidiaries and their respective properties and
assets, and are in character and amount and with such deductibles and retained
amounts, as are generally insured against and carried by persons engaged in
similar businesses and subject to the same or similar perils or hazards. Each
such policy is in full force and effect and all premiums due thereon have been
paid in full. None of such policies shall terminate or lapse (or be affected in
any other materially adverse manner) by reason of the consummation of the
transactions contemplated by this Agreement. Neither the Company nor any of its
Subsidiaries has received any written notice, or, to the knowledge of the
Company, threats of cancellation or non-renewal of, or, since January 1, 2004,
any material increase of premiums with respect to, any of such insurance
policies. To the Company's knowledge, there are no material claims by the
Company or any of its Subsidiaries under any of such policies relating to the
business, assets or properties of the Company or its Subsidiaries as to which
any insurance company is denying liability or defending under a reservation of
rights or similar clause.
3.19 RESTRICTIONS ON BUSINESS. Except for this Agreement, there is no
agreement, judgment, injunction, order or decree binding upon the Company or any
of its Subsidiaries which has or could reasonably be expected to have the effect
of prohibiting or impairing any business practice of the Company or any of its
Subsidiaries, acquisition of property by the Company or any of its Subsidiaries
or the conduct of business by the Company or any of its Subsidiaries as
currently conducted or as proposed to be conducted by the Company.
3.20 CONTRACTS.
(a) Except for any contracts or agreements entered into after the date of
this Agreement in compliance with Section 5.1 hereof or as set forth in Section
3.20 of the Disclosure Schedule, neither the Company nor any of its Subsidiaries
is a party to or bound by, and neither the Company nor any of its Subsidiaries
or its properties are subject to, any contract or other agreement that is or
will be required to be disclosed in a Form 10-K, Form 10-Q or Form 8-K filed by
the Company with the SEC which is not disclosed in the Filed Company SEC
Documents. All such contracts or agreement and, all contracts and agreements
filed as exhibits to the Filed Company SEC Documents, and all of the contracts
required to be set forth in Section 3.20 of the Disclosure Schedule
(collectively, the "COMPANY CONTRACTS") are valid, binding and in full force and
effect and are enforceable by the Company or any of its Subsidiaries that is
party thereto in accordance with their terms. Neither the Company nor any of its
Subsidiaries nor, to the knowledge of the Company, any other party to any of the
Company Contracts is in breach or default thereunder. Neither the Company nor
any of its Subsidiaries has taken any action and, to the knowledge of the
Company, no condition exists or event has occurred which, with or without the
lapse of time or the giving of notice, or both, would constitute a default by
any party under any of the Company Contracts. Neither the Company nor any of its
Subsidiaries has received written notice under a Company Contract of the
intention of any third party to terminate such Company Contract.
22
(b) Except as set forth in Section 3.20 of the Disclosure Schedule, as of
the date of this Agreement, neither the Company nor any of its Subsidiaries is a
party to or bound by any:
(i) covenant not to compete in any geographical area or in any line
of business (other than pursuant to any radius restriction contained in any
lease, reciprocal easement or development, construction, operating or similar
agreement); or
(ii) employment or other contract or agreement pursuant to which a
director, officer or employee is required to perform personal services to the
Company.
True and complete copies of the contracts and agreements (or if such
agreement is not in writing, a written description thereof) set forth on Section
3.20 of the Disclosure Schedule have been made available to Parent or are
available in the Filed Company SEC Documents.
3.21 ILLEGAL PAYMENTS, ETC. In the conduct of their business, neither the
Company nor any of its Subsidiaries nor any of their respective directors,
officers, employees or agents, has (a) directly or indirectly, given, or agreed
to give, any illegal gift, contribution, payment or similar benefit to any
supplier, customer, governmental official or employee or other person who was,
is or may be in a position to help or hinder the Company or any of its
Subsidiaries (or assist in connection with any actual or proposed transaction)
or made, or agreed to make, any illegal contribution, or reimbursed any illegal
political gift or contribution made by any other person, to any candidate for
federal, state, local or foreign public office or (b) established or maintained
any unrecorded fund or asset or made any false entries on any books or records
for any purpose.
3.22 PROXY STATEMENT. The information supplied or to be supplied by the
Company for inclusion or incorporation by reference in the proxy statement (as
amended or supplemented, the "PROXY STATEMENT") to be sent to the stockholders
of the Company in connection with the meeting of the stockholders of the Company
to consider the Merger (the "COMPANY STOCKHOLDERS MEETING"), or to be included
or supplied by or on behalf of the Company for inclusion in any filing pursuant
to Rule 165 and Rule 425 under the Securities Act or Rule 14a-12 under the
Exchange Act (each, a "REGULATION M-A FILING") shall not, on the date the Proxy
Statement (or any amendment thereof or supplement thereto) is first mailed to
stockholders or at the time of the Company Stockholders Meeting or at the time
any Regulation M-A Filing is filed with the SEC, contain any untrue statement of
a material fact, or shall omit to state any material fact required to be stated
therein or necessary in order to make the statements made therein, in light of
the circumstances under which they were made, not false or misleading; or omit
to state any material fact necessary to correct any statement in any earlier
communication with respect to the solicitation of proxies for the Company
Stockholders Meeting which has become false or misleading. If at any time prior
to the Company Stockholders Meeting any event relating to the Company or any of
its respective affiliates, officers or directors should be discovered by the
Company which should be set forth in a supplement to the Proxy Statement, the
Company shall promptly inform Parent. The Proxy Statement shall comply in all
material respects as to form and substance with the requirements of the Exchange
Act and the rules and regulations thereunder. Notwithstanding the foregoing, the
Company makes no representation or warranty with respect to any information
supplied by Parent or Merger Sub which is contained in any of the foregoing
documents.
23
3.23 AFFILIATE TRANSACTIONS. Except as disclosed in Section 3.23 of the
Disclosure Schedule, (i) neither the Company nor any of its Subsidiaries is a
party to or bound by any contract or other agreement with any affiliate of the
Company or any of its Subsidiaries (other than the Company or any of its
Subsidiaries), (ii) no Affiliate of the Company or any of its Subsidiaries
(other than the Company or any of its Subsidiaries) is an officer, director,
employee, consultant, distributor, supplier, vendor, customer, client, lessor,
licensor, debtor, creditor, competitor or service provider to the Company or any
of its Subsidiaries, and (iii) no Affiliate of the Company or any of its
Subsidiaries (other than the Company or any of its Subsidiaries) owns or
otherwise has any rights to or interest in any of the properties or assets of
the Company or any of its Subsidiaries.
3.24 OPINION OF FINANCIAL ADVISOR. The financial advisor of the Company,
Wachovia Capital Markets, LLC ("WACHOVIA SECURITIES"), has delivered to the
Company an opinion dated on or about the date of this Agreement to the effect
that as of such date the Per-Share Cash Amount is fair, from a financial point
of view, to the stockholders of the Company. The Company has provided a true,
complete and correct copy of such opinion to Parent.
3.25 BROKERS. No broker, finder or investment banker (other than Wachovia
Securities, whose brokerage, finder's or other fees will be paid by the Company)
is entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of the Company or any of its Subsidiaries. The Company has
heretofore furnished to Parent a complete and correct copy of all agreements
between the Company and Wachovia Securities pursuant to which such firm would be
entitled to any payment relating to the transactions contemplated hereby.
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES
OF PARENT AND MERGER SUB
Parent and Merger Sub represent and warrant to the Company that:
4.1 ORGANIZATION AND QUALIFICATION. Each of Parent and Merger Sub is an
entity duly organized, validly existing and in good standing under the laws of
the jurisdiction of its incorporation. Each of Parent and Merger Sub is duly
qualified or licensed as a foreign corporation to do business, and is in good
standing, in each jurisdiction where the character of the properties owned,
leased or operated by it or the nature of its activities makes such
qualification or licensing necessary, except for such failures to be so duly
qualified or licensed or in good standing that have not had or would not
reasonably be expected to have a Parent Material Adverse Effect, individually or
in the aggregate.
4.2 AUTHORITY RELATIVE TO THIS AGREEMENT. Each of Parent and Merger Sub
has all necessary corporate power and authority to execute and deliver this
Agreement and each instrument required hereby to be executed and delivered by it
at Closing and to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and each instrument required hereby to be executed and delivered at Closing by
Parent and Merger Sub and the consummation by Parent and Merger Sub of the
transactions contemplated hereby have been duly and validly authorized by all
necessary
24
corporate action on the part of Parent and Merger Sub. This Agreement has been
duly and validly executed and delivered by Parent and Merger Sub and, assuming
the due authorization, execution and delivery hereof by the Company, constitutes
the legal, valid and binding obligation of Parent and Merger Sub, enforceable
against Parent and Merger Sub in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally and by general equitable principles
(regardless of whether enforceability is considered in a proceeding in equity or
at law).
4.3 NO CONFLICT, REQUIRED FILINGS AND CONSENTS.
(a) The execution and delivery by Parent and Merger Sub of this Agreement
do not, the execution and delivery by Parent and Merger Sub of each instrument
required hereby to be executed and delivered at the Closing will not, and the
performance of their respective agreements and obligations under this Agreement
by Parent and Merger Sub will not, (i) conflict with or violate the
organizational documents, By-Laws, or operating agreement, in each case, as
amended of Parent, the Merger Sub Charter or the Merger Sub By-Laws or (ii)
conflict with or violate any law, rule, regulation, ordinance, order, judgment,
injunction or decree, or restriction of any Governmental Entity or court,
applicable to Parent or Merger Sub by which its or their respective properties
are bound or affected.
(b) The execution and delivery by Parent and Merger Sub of this Agreement
do not, the execution and delivery by Parent and Merger Sub of any instrument
required hereby to be executed and delivered at the Closing will not, and the
performance of their respective agreements and obligations under this Agreement
by Parent and Merger Sub will not, require any consent, approval, order,
license, authorization, registration, declaration or permit of, or filing with
or notification or application to, any Governmental Entity, except (i) as may be
required by the HSR Act, (ii) as may be required under any foreign antitrust or
competition law or regulation including without limitation the EC Merger
Regulation, (iii) such consents, approvals, orders, licenses, authorizations,
registrations, declarations, permits, filings, applications and notifications as
may be required under applicable federal and state securities laws and the laws
of any foreign country, (iv) the filing of the Certificate of Merger or other
documents as required by the DGCL and (v) such other consents, approvals,
orders, licenses, authorizations, registrations, declarations, permits, filings,
applications or notifications which, if not obtained or made, have not had or
would not reasonably be expected to have a Parent Material Adverse Effect,
individually or in the aggregate.
4.4 SUFFICIENT FUNDS. Parent has, and will have available to it upon the
consummation of the Merger, access to sufficient funds to consummate the
transactions contemplated hereby, including payment in full of all cash amounts
contemplated by Section 2.1(a) hereof and all fees and expenses incurred in
connection with the Merger.
4.5 PROXY STATEMENT. The information supplied by Parent for inclusion or
incorporation by reference in the Proxy Statement to be sent to the stockholders
of the Company in connection with the Company Stockholders Meeting, shall not,
on the date the Proxy Statement (or any amendment thereof or supplement thereto)
is first mailed to stockholders or at the time of the Company Stockholders
Meeting, contain any untrue statement of material fact, or
25
shall omit to state any material fact required to be stated therein or necessary
in order to make the statements made therein, in light of the circumstances
under which they were made, not false or misleading; or omit to state any
material fact necessary to correct any statement in any earlier communication by
Parent with respect to the solicitation of proxies for the Company Stockholders
Meeting which has become false or misleading. If at any time prior to the
Company Stockholders Meeting any event relating to Parent or any of its
respective affiliates, officers or directors should be discovered by Parent
which should be set forth in supplement to the Proxy Statement, Parent shall
promptly inform the Company. Notwithstanding the foregoing, Parent makes no
representation or warranty with respect to any information supplied by the
Company which is contained in any of the foregoing documents.
4.6 BROKERS. No broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of Parent for which the Company may become liable.
4.7 NO PARENT STOCKHOLDER VOTE REQUIRED. The consummation of the
transactions contemplated by this Agreement does not require the approval of the
holders of any shares of capital stock of Parent.
4.8 INTERIM OPERATIONS OF MERGER SUB. Merger Sub was formed solely for the
purpose of engaging in the transactions contemplated by this Agreement, and
Merger Sub has engaged in no business other than in connection with the
transactions contemplated by this Agreement.
4.9 LITIGATION. There are no suits, actions or proceedings pending or, to
the knowledge of Parent, threatened against or affecting Parent or any of its
Subsidiaries, including Merger Sub, that could reasonably be expected to
prevent, hinder or delay the timely completion of the transactions contemplated
by this Agreement.
4.10 OWNERSHIP OF SHARES. Neither Parent nor any of its Subsidiaries,
including Merger Sub, owns any Company Common Stock, and during the period three
years prior to the date hereof (other than by reason of the execution of this
Agreement and the consummation of the transactions contemplated hereby), neither
Parent nor any of its Subsidiaries, including Merger Sub, was an "interested
stockholder" of the Company, as such term is defined in Section 203 of the DGCL.
ARTICLE 5.
CONDUCT OF BUSINESS
5.1 CONDUCT OF BUSINESS BY THE COMPANY PENDING THE MERGER. Except as
contemplated or required by this Agreement or as expressly consented to in
writing by Parent, which consent shall not be unreasonably withheld, during the
period from the date of this Agreement to the earlier of the termination of this
Agreement or the Effective Time, the Company will conduct its operations
according to its ordinary and usual course of business consistent with past
practice. Without limiting the generality of the foregoing, and except as
otherwise expressly provided in this Agreement, prior to the earlier of the
termination of this
26
Agreement or the Effective Time, the Company will not, and will not permit any
of its Subsidiaries to, without the prior written consent of Parent (which
consent shall not be unreasonably withheld), directly or indirectly, do any of
the following:
(a) enter into any agreement that would be required (assuming the Company
continued to be subject to SEC rules and regulations requiring the filing of
current and periodic reports under the Exchange Act) to be filed as an exhibit
to, or described in, filings made or to be made by the Company with the SEC;
(b) violate, extend, amend or otherwise modify or waive any of the terms
of any agreements filed with the SEC as exhibits to any of the Company SEC
Reports;
(c) adopt a plan of complete or partial liquidation, dissolution,
reorganization, merger or consolidation of the Company or any Subsidiary (other
than the Merger);
(d) maintain its books and records in a manner other than in the ordinary
course of business and consistent with past practice;
(e) institute any change in its accounting methods, principles or
practices other than as required by GAAP, or the rules and regulations
promulgated by the SEC, or revalue any assets, including without limitation,
writing down the value of inventory or writing off notes or accounts
receivables;
(f) in respect of any Taxes, make or change any material election, change
any accounting method, enter into any closing agreement, settle any material
claim or assessment, or consent to any extension or waiver of the limitation
period applicable to any material claim or assessment except as required by
applicable law;
(g) become liable in respect of any guarantee of, or incur, assume or
otherwise become liable in respect of, any indebtedness in excess of $100,000
except for borrowings in the ordinary course of business under credit facilities
in existence on the Most Recent Balance Sheet Date;
(h) issue or agree to issue (by the issuance or granting of options,
warrants or rights to purchase capital stock of the Company or otherwise) any
shares of capital stock of the Company, any securities exchangeable for or
convertible into capital stock of the Company, or any other securities, except
that the Company may issue or agree to issue shares of capital stock of the
Company upon exercise of the Company Options and rights to purchase Company
Common Stock, in each case, outstanding on the date hereof pursuant to the terms
of such securities on the date hereof;
(i) effect any stock split, reverse split, reclassification,
reorganization, recapitalization or other like change with respect to capital
stock of the Company, or make any declaration, setting aside or payment of any
dividend or other distribution with respect to, or any repurchase, redemption or
other acquisition of, any of the capital stock or other equity interests of the
Company or any of its Subsidiaries;
27
(j) increase the compensation payable to any officer, director, employee,
agent or consultant, including any increase in the upper limits of compensation
potentially payable under any sales compensation, bonus, incentive or other
compensation plan; enter into any agreement providing for the employment or
consultancy of any person on a full-time, part-time, consulting or other basis
or otherwise providing compensation or other benefits to any officer, director,
employee or consultant; hire any person on a full-time, part-time, consulting or
other basis or otherwise providing compensation or other benefits to any
officer, director, employee or consultant hired on or after the date hereof, if
the compensation to be paid and payable on an annualized basis to such person
(i) will exceed $50,000 or (ii) together with the compensation to be paid and
payable on an annualized basis to all other such persons hired on or after the
date hereof, will exceed $250,000;
(k) authorize or make any capital expenditure other than is specified in
the plan set forth as Exhibit 5.1(k) hereto or in excess of $100,000 in the
aggregate;
(l) pay, discharge, compromise, satisfy, cancel or forgive any debts or
claims or rights (or series of rights, debts or claims) involving, individually
or in the aggregate, consideration in excess of $100,000 except in the ordinary
course of business consistent with past practice;
(m) make any material investment in or make a material loan or advance or
agreement to loan or advance to any third party;
(n) layoff any employee of the Company or any of its Subsidiaries or
otherwise effect any reduction in force, except in accordance with the planned
reductions in force set forth in the materials referred to in Section 3.12(b);
(o) adopt or amend any Employee Benefit Plan or, except in accordance with
terms thereof as in effect on the Most Recent Balance Sheet Date, increase any
benefits under any Employee Benefit Plan;
(p) enter into, or perform, any transaction with, or for the benefit of,
any officer, director, employee or other affiliate of the Company or any of its
Subsidiaries (other than payments made to officers, directors and employees in
the ordinary course of business);
(q) settle or compromise any pending or threatened suit, action or claim
which is material or which relates to the transactions contemplated hereby;
(r) sell or transfer, or mortgage, pledge, lease or otherwise encumber any
of the assets of the Company or any of its Subsidiaries;
(s) make, or permit to be made, any material acquisition of property or
assets outside the ordinary course of business;
(t) cause, permit or propose any amendments to the Company Charter,
Company Bylaws or the Subsidiary Documents;
28
(u) enter into or modify in any material respect any contract that is or
would be, if entered into or as so amended, required to be filed with the SEC or
set forth in Section 3.20 of the Disclosure Schedule;
(v) discount or decrease any rate on the Company's rate cards, after
taking into account all other such discounts or decreases, in the aggregate,
more than 25% below the standard pricing without discounts for the related item;
or
(w) take or agree to take, any of the actions described in this Section
5.1, or any action which would make any of its representations or warranties
contained in this Agreement untrue or incorrect or prevent it from performing or
cause it not to perform its covenants hereunder.
5.2 COOPERATION; FILINGS. Subject to compliance with applicable law, from
the date of this Agreement until the earlier of the termination of this
Agreement in accordance with its terms or the Effective Time, the Company shall
confer on a regular basis with one or more representatives of Parent to report
on operational matters that are material and other matters requested by Parent.
The Company and Parent shall each promptly provide the other copies of all
filings made by such party with any Governmental Entity in connection with this
Agreement, the Merger and the transactions contemplated hereby. As soon as is
reasonably practicable, Parent and the Company shall file with the United States
Federal Trade Commission (the "FTC") and the Antitrust Division of the United
States Department of Justice (the "DOJ") any Notification and Report Forms
relating to the transactions contemplated hereby required by the HSR Act, as
well as comparable pre-merger notification forms required by the merger
notification and control laws and regulations of any other applicable
jurisdiction, as agreed to by the parties. The Company and Parent each shall
promptly (a) supply the other with any information which may be reasonably
required in order to make such filings and (b) supply any additional information
which may be requested by the FTC, the DOJ or the competition or merger control
authorities of any other jurisdiction and which the parties reasonably deem
appropriate.
ARTICLE 6.
ADDITIONAL AGREEMENTS
6.1 ACCESS TO INFORMATION; CONFIDENTIALITY.
(a) The Company shall (and shall cause its Subsidiaries and its and their
respective officers, directors, employees, auditors and agents to) afford to
Parent and to Parent's officers, employees, financial advisors, legal counsel,
accountants, consultants and other representatives reasonable access during
normal business hours throughout the period prior to the Effective Time to all
of its books, records and contracts (other than privileged documents), its
personnel, financial and operating data, and its properties, plants and
personnel and, during such period, the Company shall furnish promptly to Parent
a copy of each report, schedule and other document filed or received by it
pursuant to the requirements of federal securities laws, provided that no
investigation by Parent pursuant to this Section 6.1 shall affect any
representations, warranties, covenants or agreements of the parties (or remedies
with respect thereto) or any matter set forth
29
in the Disclosure Schedule or the conditions to the obligations of the parties
under this Agreement.
(b) Unless otherwise required by law, each party agrees that it (and its
Subsidiaries and its and their respective representatives) shall hold in
confidence all non-public information acquired from the other party or the other
party's representatives in accordance with the terms of the Mutual
Confidentiality Agreement dated as of October 27, 2004 between Parent and the
Company (the "CONFIDENTIALITY AGREEMENT").
6.2 NO SOLICITATION.
(a) The Company shall not, nor shall it authorize or permit any officer,
director or employee of or any financial advisor, attorney or other advisor or
representative of, the Company to, directly or indirectly (i) solicit, initiate
or encourage the submission of, any Takeover Proposal (as defined in Section
9.3), (ii) enter into any agreement with respect to or approve or recommend any
Takeover Proposal or (iii) participate in any discussions or negotiations
regarding, or furnish to any person any information with respect to the Company
in connection with, or take any other action to cooperate in any way with
respect to, or assist in or facilitate any inquiries or the making of any
proposal that constitutes, or may reasonably be expected to lead to, any
Takeover Proposal; provided, however, that nothing contained in this Section
6.2(a) shall prohibit the Company or its directors from (A) complying with Rule
14e-2 promulgated under the Exchange Act with regard to a tender or exchange
offer, (B) referring a third party to this Section 6.2(a) or making a copy of
this Section 6.2(a) available to any third party, or (C) taking any of the
actions set forth in clauses (i), (ii) or (iii) of this paragraph (a) for a
period beginning upon execution hereof until 9:00 p.m. (Connecticut time) on
December 25, 2004 (the "SOLICITATION PERIOD"); and provided, further, that prior
to obtaining the Company Stockholder Approvals, if the Board of Directors of the
Company reasonably determines that a Takeover Proposal that is submitted after
the Solicitation Period constitutes a Superior Proposal (as defined in Section
9.3), then, to the extent required by the fiduciary obligations of the Board of
Directors of the Company, as determined in good faith by a majority thereof
after consultation with independent counsel (who may be the Company's regularly
engaged independent counsel), the Company may, in response to a request
therefore that was not solicited by the Company nor resulted from a breach or
deemed breach of this Section 6.2(a), and subject to compliance with Section
6.2(b), furnish information with respect to the Company to any person making
such Takeover Proposal that is submitted after the Solicitation Period pursuant
to a confidentiality agreement, in customary form and in any event containing
terms as to the disclosure of confidential information, taken as a whole, which
are substantially equivalent to those contained in the Confidentiality Agreement
(as defined in Section 6.1), and participate in discussions or negotiations with
such person. Without limiting the foregoing, it is understood that any violation
of the restrictions set forth in this Section 6.2(a) by any officer, director or
employee of or any financial advisor, attorney or other advisor or
representative of, the Company, whether or not acting on behalf of the Company,
shall be deemed to be a breach of this Section 6.2 by the Company.
(b) Notwithstanding anything to the contrary in this Agreement, in
response to the receipt of a Superior Proposal prior to or during the
Solicitation Period, the Board of Directors of the Company may at any time prior
to 10:00 p.m. (Connecticut time) on December 26, 2004 (the
30
"SOLICITATION RESPONSE DEADLINE"), (x) withhold, withdraw, amend or modify its
recommendation in favor of the Merger, and, (y) in the case of a Superior
Proposal that is a tender or exchange offer made directly to the Company's
stockholders, may recommend that the Company stockholders accept and permit the
Company to enter into the tender or exchange offer (any of the foregoing actions
in clauses (x) and (y), whether by the Board of Directors of the Company or a
committee thereof, and whether effected or publicly proposed by the Company to
be effected, a "CHANGE OF RECOMMENDATION"), if all of the following conditions
are met:
(i) A Superior Proposal has been made prior to or during the
Solicitation Period and has not been withdrawn;
(ii) A majority of the Board of Directors of the Company has
concluded in good faith, after consultation with independent counsel (who may be
the Company's regularly engaged independent counsel), that, in light of such
Superior Proposal, the failure of the Board of Directors of the Company to
effect a Change of Recommendation would be reasonably likely to be a breach of
its fiduciary obligations to the Company's stockholders under applicable law;
(iii) The Company has delivered to Parent by 11:00 p.m. (Connecticut
time) on December 25, 2004 a written notice advising Parent that the Company's
Board of Directors has received a Superior Proposal during the Solicitation
Period (which notice shall include a copy of such Superior Proposal) and
identify the Person making such Superior Proposal and advising Parent that the
Company intends to effect such Change of Recommendation (specifying which
particular course of action the Company intends to effect as a Change of
Recommendation) (a "SUBSEQUENT DETERMINATION") (it being understood that during
period set forth below Parent may propose such adjustments in the terms and
conditions of this Agreement as would enable the Company to proceed with its
original recommendation to stockholders without making a Subsequent
Determination, with any such adjustments being at the discretion of the parties
at such time), and it is the later of (A) 24 hours after delivery of the written
notice to Parent set forth above and (A) 8:00 p.m. (Connecticut time) on
December 26, 2004;
(iv) The Company shall have complied in all respects with this
Section 6.2;
(v) The party making the Superior Proposal has executed a definitive
Merger Agreement in substantially the form of this Agreement, with no conditions
contained therein other than as set forth herein, delivery of such Merger
Agreement by such party being subject solely to the termination of this
Agreement in accordance with Section 8.1(e) hereof. Until public announcement in
accordance with Section 6.6 hereof, any disclosure of this Agreement to any
other party shall not include the name of Parent or Merger Sub, the Per-Share
Cash Amount or the Post Solicitation Period Termination Fee set forth herein;
(vi) the Company has terminated this Agreement pursuant to Section
8.1(e).
(c) During the Solicitation Period, the Company shall promptly (but in any
event within two hours) advise Parent orally and in writing of any Takeover
Proposal or any inquiry regarding the making of a, or that could reasonably be
expected to lead to any, Takeover Proposal, including any request for
information or any discussions sought to be initiated or continued with the
Company or its representatives, the material terms and conditions of such
31
request, discussions, Takeover Proposal or inquiry (in the case of written
materials, providing copies of such materials) and the identity of the person
making such request, Takeover Proposal or inquiry or initiating such
discussions. The Company will keep Parent fully informed of the status and
details (including amendments or proposed amendments) of any such request,
discussions, Takeover Proposal or inquiry.
(d) Notwithstanding anything to the contrary in this Agreement, in
response to the receipt of a Superior Proposal that is submitted after the
Solicitation Period, the Board of Directors of the Company may effect a Change
of Recommendation if all of the following conditions are met:
(i) A Superior Proposal has been made after the Solicitation Period
and has not been withdrawn;
(ii) The Company Stockholders Meeting has not occurred;
(iii) A majority of the Board of Directors of the Company has
concluded in good faith, after consultation with independent counsel (who may be
the Company's regularly engaged independent counsel), that, in light of such
Superior Proposal made after the Solicitation Period, the failure of the Board
of Directors of the Company to effect a Change of Recommendation would be
reasonably likely to be a breach of its fiduciary obligations to the Company's
stockholders under applicable law;
(iv) The Company shall have complied in all respects with this
Section 6.2;
(v) Three (3) business days have passed following the Company's
delivery to Parent of written notice advising Parent that the Company Board of
Directors has received a Superior Proposal after the Solicitation Period (which
notice shall include a copy of such Superior Proposal) and identify the Person
making such Superior Proposal and advising Parent that the Company intends to
effect such Change of Recommendation (specifying the Subsequent Determination
(it being understood that during such three (3) business day period Parent may
propose such adjustments in the terms and conditions of this Agreement as would
enable the Company to proceed with its original recommendation to stockholders
without making a Subsequent Determination, with any such adjustments being at
the discretion of the parties at such time); and
(vi) the Company has terminated this Agreement pursuant to Section
8.1(e).
(e) After the Solicitation Period, the Company shall promptly (but in any
event within one day) advise Parent orally and in writing of any Takeover
Proposal or any inquiry regarding the making of a, or that could reasonably be
expected to lead to any, Takeover Proposal, including any request for
information or any discussions sought to be initiated or continued with the
Company or its representatives, the material terms and conditions of such
request, discussions, Takeover Proposal or inquiry (in the case of written
materials, providing copies of such materials) and the identity of the person
making such request, Takeover Proposal or inquiry or initiating such
discussions. The Company will, to the extent reasonably practicable, keep Parent
fully informed of the status and details (including amendments or proposed
amendments) of any such request, discussions, Takeover Proposal or inquiry.
32
6.3 PROXY STATEMENT.
(a) As promptly as practicable after execution of this Agreement, Parent
and the Company shall in consultation with each other prepare, and the Company
shall file with the SEC, preliminary proxy materials which shall constitute the
Proxy Statement. As promptly as practicable after comments are received from the
SEC thereon and after the furnishing by the Company and Parent of all
information required to be contained therein, Parent and the Company shall, in
consultation with each other, prepare and the Company shall file any required
amendments to, and the definitive, Proxy Statement with the SEC. The Company
shall notify Parent promptly of the receipt of any comments from the SEC or its
staff and of any request by the SEC or its staff for amendments or supplements
to the Proxy Statement or for additional information and shall consult with
Parent regarding and supply Parent with copies of all correspondence between the
Company or any of its representatives, on the one hand, and the SEC or its
staff, on the other hand, with respect to the Proxy Statement.
(b) Subject to the right of the Company's Board of Directors to submit a
Change of Recommendation pursuant to Section 6.2(b) after terminating this
Agreement pursuant to Section 8.1(e), the Proxy Statement shall include the
recommendation of the Board of Directors of the Company in favor of the Merger.
(c) The Company shall furnish Parent with all information concerning the
Company and the holders of its capital stock and shall take such other action as
Parent may reasonably request in connection with the payment of cash in
accordance with Section 2.1(a) hereof. If at any time prior to the Effective
Time any event or circumstance relating to the Company, Parent or any of their
respective Subsidiaries, affiliates, officers or directors should be discovered
by such party which should be set forth in a supplement to the Proxy Statement,
such party shall promptly inform the other thereof and the Company shall
promptly prepare and mail to its stockholders such an amendment or supplement,
and, if required in connection therewith, resolicit proxies. The Company shall
not mail any Proxy Statement, or any amendment or supplement thereto, to which
Parent reasonably objects.
(d) The Company and Parent shall make any necessary filing with respect to
the Merger under the Exchange Act and the rules and regulations thereunder.
6.4 COMPANY STOCKHOLDERS MEETING.
(a) The Company, acting through its Board of Directors, shall take all
actions in accordance with applicable law, the Company Charter, the Company
By-Laws and the rules of The Nasdaq National Market to promptly and duly call,
give notice of, convene and hold as promptly as practicable, the Company
Stockholders Meeting for the purpose of considering and voting upon the approval
of this Agreement and the Merger. Subject to Section 6.2(b), to the fullest
extent permitted by applicable law, (i) the Company's Board of Directors shall
recommend adoption and approval of this Agreement and the Merger by the
stockholders of the Company and include such recommendation in the Proxy
Statement, and (ii) neither the Company's Board of Directors nor any committee
thereof shall withdraw or modify, or propose or resolve to withdraw or modify in
a manner adverse to Parent, the recommendation of the Company's Board of
Directors that the Company's stockholders vote in favor of the adoption
33
and approval of this Agreement and the Merger. Unless such recommendation shall
have been modified or withdrawn in accordance with Section 6.2(b) and this
Agreement terminated and the fee and expenses due under Section 8.3 paid, the
Company shall take all lawful action to solicit from its stockholders proxies in
favor of the proposal to adopt and approve this Agreement and the Merger and
shall take all other action necessary or advisable to secure the vote or consent
of the stockholders of the Company that are required by the rules of The Nasdaq
National Market or the DGCL. Notwithstanding anything to the contrary contained
in this Agreement, the Company, after consultation with Parent, may adjourn or
postpone the Company Stockholders Meeting to the extent necessary to ensure that
any legally required supplement or amendment to the Proxy Statement is provided
to the Company's stockholders or, if as of the time for which the Company
Stockholders Meeting is originally scheduled (as set forth in the Proxy
Statement), there are insufficient shares of Company Common Stock represented
(either in person or by proxy) to constitute a quorum necessary to conduct the
business of the Company Stockholders Meeting.
(b) At or prior to the Closing, the Company shall deliver to Parent a
certificate of its Corporate Secretary setting forth the voting results from the
Company Stockholders Meeting.
6.5 LEGAL CONDITIONS TO MERGER. Each of Parent and the Company will use
reasonable best efforts to comply promptly with all legal requirements which may
be imposed with respect to the Merger (which efforts shall include, without
limitation, furnishing all information required under the HSR Act and in
connection with approvals of or filings with any other Governmental Entity) and
will promptly cooperate with and furnish information to each other in connection
with any such requirements imposed upon any of them or any of their Subsidiaries
in connection with the Merger. Each of Parent and the Company will, and will
cause its Subsidiaries to, take all reasonable actions necessary to obtain (and
will cooperate with each other in obtaining) any consent, authorization, order
or approval of, or any exemption by, any Governmental Entity required to be
obtained or made by Parent, the Company or any of their Subsidiaries in
connection with the Merger or the taking of any action contemplated thereby or
by this Agreement; provided, however, that Parent or Merger Sub shall not be
required hereby to effect any divestiture of assets or operations.
6.6 PUBLIC ANNOUNCEMENTS. Parent and the Company shall consult with each
other before issuing any press release or making any public statement with
respect to the Merger or this Agreement and shall not issue any such press
release or make any such public statement without the prior written consent of
the other party, which shall not be unreasonably withheld or delayed; provided,
however, that a party may, without the prior consent of the other party, issue
such press release or make such public statement as may upon the written advice
of counsel be required by law or the rules and regulations of The Nasdaq
National Market if it has used all reasonable efforts to consult with the other
party a reasonable time prior thereto.
6.7 401(k) PLAN. Prior to the Effective Time, the Company shall take such
actions as Parent may reasonably request so as to enable the Surviving
Corporation to effect as of the Effective Time such actions relating to the
Company's 401(k) Plan (the "401(k) PLAN" ) as Parent may deem necessary or
appropriate, including without limitation, terminating the 401(k) Plan, subject
to the terms of the 401(k) Plan and applicable law and provided that such action
does not preclude the immediate participation of the Company Employees in any
successor plan.
34
6.8 STOCK OPTIONS.
(a) Prior to the Closing, the Board of Directors of the Company (or, if
appropriate, any committee thereof) shall adopt appropriate resolutions and take
all other necessary actions to cause each Company Stock Option that is
outstanding immediately prior to the Effective Time to vest in full and become
exercisable immediately prior to the Effective Time with respect to all of the
shares of Company Common Stock then subject to such Company Stock Option. Each
Company Stock Option that is outstanding immediately prior to the Effective Time
shall be automatically cancelled as of the Effective Time in exchange for a cash
amount payable by Parent to the holder thereof equal to (A) the product of (1)
the number of shares of Company Common Stock subject to such Company Stock
Option and (2) the amount, if any, by which the Per-Share Cash Amount exceeds
the exercise price per share of such Company Stock Option, minus (B) all
applicable federal, state and local Taxes required to be withheld in respect of
such payment. The cash amounts payable to holders of Company Stock Options
pursuant to this Section 6.8(a) shall be delivered as soon as reasonably
practicable following the Effective Time. The surrender of a Company Stock
Option in exchange for the consideration contemplated by this Section 6.8(a)
shall be deemed a release of any and all rights the holder thereof had or may
have had in respect thereof. Prior to the Closing, the Company shall take all
actions necessary to cause each Company Stock Option with an exercise price
equaling or exceeding the Per-Share Cash Amount to automatically and duly
terminate as of the Effective Time, and no Per-Share Cash Amount, other cash
amount or other property or obligation shall be owed, due or payable by the
Company, Parent or Merger Sub in respect of such Company Stock Option.
(b) If and to the extent necessary or required by the terms of the Company
Stock Plan or any Company Stock Option, the Company shall, prior to the
Effective Time, (i) obtain any consents from holders of Company Stock Options
and (ii) amend the terms of its equity incentive plans or arrangements, to give
effect to the provisions of Section 6.8(a).
6.9 PURCHASE PLAN. All outstanding purchase rights under the Company
Purchase Plan shall automatically be exercised, in accordance with the terms of
the Company Purchase Plan, as of the end of the Payment Period ending December
31, 2004, and shares of Company Common Stock shall be issued at the end of such
Payment Period in accordance with Article 6 of the Company Purchase Plan. After
the date hereof, the Company shall not commence any new offering periods, or
otherwise grant any rights to purchase Common Stock of the Company, under the
Company Purchase Plan. Effective immediately after the Payment Period ending
December 31, 2004, the Company Purchase Plan shall terminate with the
above-referenced exercise and purchase of shares, and no further purchase rights
shall be granted under the Company Purchase Plan.
6.10 CONSENTS. The Company shall use reasonable best efforts to obtain
prior to the Closing, and deliver to Parent at or prior to the Closing, the
Material Consents.
6.11 INDEMNIFICATION; DIRECTORS AND OFFICERS INSURANCE.
(a) From and after the Effective Time, Parent shall indemnify and hold
harmless all past and present officers and directors of the Company to the same
extent and in the same manner such persons are indemnified as of the date of
this Agreement by the Company pursuant
35
to the DGCL, the Company Charter or the Company By-Laws for acts or omissions
occurring at or prior to the Effective Time. The Certificate of Incorporation
and the By-Laws of the Surviving Corporation will contain provisions with
respect to exculpation and indemnification that are at least as favorable to the
indemnified parties as those contained in the Company Charter and the Company
By-Laws as in effect on the date hereof, which provisions will not be amended,
repealed or otherwise modified for a period of not less than six years from the
Effective Time in any manner that would adversely affect the rights thereunder
of individuals who, immediately prior to the Effective Time, were directors or
officers of the Company, unless such a modification is required by law.
(b) Parent shall cause the Surviving Corporation to provide, for an
aggregate period of not less than six years from the Effective Date, the
Company's current directors and officers an insurance and indemnification policy
that provides coverage for events occurring prior to the Effective Time (the
"D&O INSURANCE") that is substantially equivalent to the Company's existing
policy on terms with respect to coverage no less favorable than those of such
policy in effect on the date hereof, or, if substantially equivalent insurance
coverage is unavailable, the best available coverage; provided, however, that
the Surviving Corporation shall not be required to pay an annual premium for the
D&O Insurance in excess of 200% of the last annual premiums paid prior to the
date hereof (which premiums the Company has disclosed to Parent), but in such
case shall purchase as much coverage as possible for such amount.
(c) This Section 6.11 shall survive the consummation of the Merger, is
intended to benefit the Company, the Surviving Corporation and each indemnified
party, shall be binding on all successors and assigns of the Surviving
Corporation and Parent, and shall be enforceable by the indemnified parties. The
provisions of this Section 6.11 are intended to be for the benefit of, and will
be enforceable by, each indemnified party, his or her heirs, and his or her
representatives and are in addition to, and not in substitution for, any other
rights to indemnification or contribution that any such person may have by
contract or otherwise.
6.12 REASONABLE BEST EFFORTS. Subject to the terms and conditions of this
Agreement, each of the parties agrees to use reasonable best efforts to take, or
cause to be taken, all actions and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement.
6.13 NOTIFICATION OF CERTAIN MATTERS. Parent shall give prompt notice to
the Company, and the Company shall give prompt notice to Parent, of the
occurrence, or failure to occur, of any event, which occurrence or failure to
occur has caused or would be reasonably likely to cause (a)(i) any
representation or warranty of such party contained in this Agreement that is
qualified as to materiality to be untrue or inaccurate in any respect or (ii)
any other representation or warranty of such party contained in this Agreement
to be untrue or inaccurate in any material respect, in each case at any time
from and after the date of this Agreement until the Effective Time, or (b) any
material failure of Parent and the Merger Sub or the Company, as the case may
be, or of any officer, director, employee or agent thereof, to comply with or
satisfy any covenant, condition or agreement to be complied with or satisfied by
it under this Agreement. In addition, Parent shall give prompt notice to the
Company and the Company shall give prompt notice to Parent of any change or
event, individually or in the aggregate with other
36
changes or events, having, or which could reasonably be expected to have, a
Company Material Adverse Effect or a Parent Material Adverse Effect, as the case
may be, on such party or otherwise affect adversely the ability for the
conditions set forth in Article 7 to be satisfied. Notwithstanding the above,
the delivery of any notice pursuant to this Section 6.13 will not (a) be deemed
to amend or supplement the Disclosure Schedule or to prevent or cure any
misrepresentation or breach or failure to satisfy any representation, warranty,
covenant, condition or agreement hereunder, or (b) limit or otherwise affect the
remedies available hereunder to the party receiving such notice or the
conditions to such party's obligation to consummate the Merger.
6.14 TAKEOVER STATUTES. Except as otherwise specifically provided in
Section 6.2(b) of this Agreement, in no event shall the approval of the Merger
and this Agreement by the Board of Directors of the Company under Section 203 of
the DGCL be withdrawn, revoked or modified by the Board of Directors of the
Company. If any Takeover Statute is or may become applicable to the Merger or
any of the other transactions contemplated by this Agreement, the Company and
the Company's Board of Directors shall promptly grant such approvals and take
such lawful actions as are necessary so that such transactions may be
consummated as promptly as practicable on the terms contemplated by this
Agreement or the Merger, as the case may be, and otherwise take such lawful
actions to eliminate or minimize the effects of such statute, and any
regulations promulgated thereunder, on such transactions.
6.15 FIRPTA CERTIFICATE. The Company shall provide to Parent at Closing a
certificate from the Company to the effect that the Company is not a U.S. real
property holding company meeting the requirements of Treasury Regulations
1.1445-2(c)(3) and 1.897-2(h).
6.16 NO AFFILIATE AGREEMENTS. (i) The Company shall terminate, or cause
the termination of, all contracts or other agreements of the Company or any of
its Subsidiaries with any affiliate of the Company or any of its Subsidiaries
(other than with the Company itself or any of its Subsidiaries) and (ii) shall
make all reasonable efforts to ensure that no affiliate of the Company or any of
its Subsidiaries (other than the Company itself or any of its Subsidiaries)
shall own or otherwise have any rights to or interest in any of the properties
or assets of the Company or any of its Subsidiaries.
ARTICLE 7.
CONDITIONS TO THE MERGER
7.1 CONDITIONS TO OBLIGATION OF EACH PARTY TO EFFECT THE MERGER. The
respective obligations of each party to effect the Merger shall be subject to
the satisfaction at or prior to the Effective Time of the following conditions:
(a) STOCKHOLDER APPROVAL. The Company Stockholder Approvals shall have
been obtained;
(b) HSR ACT. The waiting period (and any extension thereof) applicable to
the consummation of the Merger under the HSR Act and under any other legal
requirement (including without limitation any authorization, consent, order or
approval, or dedication, filing
37
or expiration of any waiting period) of any Governmental Entity shall have
expired or been terminated, as the case may be;
(c) NO INJUNCTIONS OR RESTRAINTS; ILLEGALITY. No temporary restraining
order, preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the Merger shall be in effect, nor shall any proceeding brought
by any administrative agency or commission or other Governmental Entity seeking
any of the foregoing be pending; and there shall not be any governmental action
taken, or any statute, rule, regulation or order enacted, entered, enforced or
deemed applicable to the Merger which makes the consummation of the Merger
illegal or cause any of the transactions contemplated by this Agreement to be
rescinded following consummation.
7.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF PARENT AND MERGER SUB. The
obligations of Parent and Merger Sub to effect the Merger are also subject to
the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. Except for Sections 3.3 and 3.8(b) and
(c), the representations and warranties of the Company contained in this
Agreement, disregarding all qualifications and exceptions contained therein
relating to materiality or Company Material Adverse Effect or any similar
standard or qualification, shall be true and correct on and as of the date
hereof and on and as of the Closing Date as though such representations and
warranties were made on and as of such date (except for representations and
warranties which address matters only as to a specified date, which
representations and warranties shall be true and correct with respect to such
specified date), except where the failure of such representations or warranties
to be true and correct would not have, or reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect; and Parent
and Merger Sub shall have received a certificate signed by the chief executive
officer and chief financial officer of the Company to such effect. The
representations and warranties of the Company contained in Sections 3.3 and
3.8(b) and (c), giving effect to all qualifications and exceptions contained
therein relating to materiality or Company Material Adverse Effect or any
similar standard or qualification, shall be true and correct in all respects.
(b) AGREEMENTS AND COVENANTS. The Company shall have performed or complied
in all material respects with all agreements and covenants required by this
Agreement to be performed or complied with by it at or prior to the Closing
Date; and Parent and Merger Sub shall have received a certificate signed by the
chief executive officer and the chief financial officer of the Company to such
effect.
(c) CONSENTS OBTAINED. Parent shall have received satisfactory evidence
that the Company shall have obtained the Material Consents set forth on Schedule
7.2(c) hereto.
(d) GOVERNMENTAL ACTIONS. There shall not be pending or threatened any
action or proceeding (or any investigation or other inquiry that might result in
such an action or proceeding) by any Governmental Entity or administrative
agency before any Governmental Entity, administrative agency or court of
competent jurisdiction, nor shall there be in effect any judgment, decree or
order of any Governmental Entity, administrative agency or court of
38
competent jurisdiction, in either case, seeking to prohibit or limit Parent from
exercising all material rights and privileges pertaining to its ownership of the
Surviving Corporation or the ownership or operation by Parent of all or a
material portion of the business or assets of Parent, or seeking to compel
Parent to dispose of or hold separate all or any portion of the business or
assets of Parent or the Surviving Corporation (or any of their Subsidiaries), as
a result of the Merger or the transactions contemplated by this Agreement,
except as would not reasonably be expected to, individually or in the aggregate,
result in a Company Material Adverse Effect or a Parent Material Adverse Effect.
(e) FIRPTA. Parent shall have received a certificate from the Company to
the effect that the Company is not a U.S. real property holding company meeting
the requirements of Treasury Regulations 1.1445-2(c)(3) and 1.897-2(h).
(f) NO AFFILIATE AGREEMENTS. (i) Neither the Company nor any of its
Subsidiaries shall be a party to or bound by any contract or other agreement
with any affiliate of the Company or one of its Subsidiaries (other than with
another Subsidiary of the Company) and (ii) no affiliate of the Company or any
of its Subsidiaries (other than the Company or a Subsidiary of the Company
itself) shall own or otherwise have any rights to or interest in any of the
properties or assets of the Company or any of its Subsidiaries.
7.3 ADDITIONAL CONDITIONS TO OBLIGATIONS OF THE COMPANY. The obligation of
the Company to effect the Merger is also subject to the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties of
Parent and Merger Sub contained in this Agreement, disregarding all
qualifications and exceptions contained therein relating to materiality or
Parent Material Adverse Effect or any similar standard or qualification, shall
be true and correct on and as of the date hereof and on and as of the Closing
Date as though such representations and warranties were made on and as of such
date (except for representations and warranties which address matters only as to
a specified date, which representations and warranties shall be true and correct
with respect to such specified date), except where the failure of such
representations or warranties to be true and correct would not have, or
reasonably be expected to have, individually or in the aggregate, a Parent
Material Adverse Effect; and the Company shall have received a certificate
signed by the chief executive officer and chief financial officer of Parent to
such effect.
(b) AGREEMENTS AND COVENANTS. Parent and Merger Sub shall have performed
or complied in all material respects with all agreements and covenants required
by this Agreement to be performed or complied with by them at or prior to the
Closing Date; and the Company shall have received a certificate signed by the
chief executive officer and the chief financial officer of Parent to such
effect.
ARTICLE 8.
TERMINATION
8.1 TERMINATION. This Agreement may be terminated at any time prior to the
Effective Time, notwithstanding approval thereof by the stockholders of the
Company:
39
(a) by mutual written consent duly authorized by the Boards of Directors
of Parent and the Company;
(b) by either Parent or the Company if the Merger shall not have been
consummated by the 150th day following the date hereof (the "OUTSIDE DATE")
provided, that if (x) the Effective Time has not occurred by the 150th day
following the date hereof by reason of nonsatisfaction of any of the conditions
set forth in Section 7.1(b) or 7.1(c) and (y) all other conditions set forth in
Article VII have theretofore been satisfied or waived or are then capable of
being satisfied, then such date shall automatically be extended to the 180th day
following the date hereof (which shall then be the "OUTSIDE DATE"), (provided,
further, that the right to terminate this Agreement under this Section 8.1(b)
shall not be available to any party whose breach of a representation or warranty
hereunder or failure to fulfill any obligation under this Agreement has been the
cause of or resulted in the failure of the Merger to occur on or before the
Outside Date);
(c) by either Parent or the Company if a court of competent jurisdiction
or governmental, regulatory or administrative agency or commission shall have
issued a nonappealable final order, decree or ruling or taken any other action
having the effect of permanently restraining, enjoining or otherwise prohibiting
the Merger (provided that the party seeking to terminate pursuant to this
Section 8.1(c) shall have complied with its obligations under Section 6.5);
(d) by either Parent or, if the Company has not breached the provisions of
Section 6.4, the Company, if at the Company Stockholders Meeting (giving effect
to any adjournment or postponement thereof), the requisite vote of the
stockholders of the Company in favor of this Agreement and the Merger shall not
have been obtained, provided that the right to terminate this Agreement under
this Section 8.1(d) shall not be available to any party whose breach of a
representation or warranty hereunder or failure to fulfill any obligation under
this Agreement has been the cause of or resulted in the failure to obtain such
stockholder approval;
(e) by the Company if the Board of Directors of the Company effects a
Change of Recommendation in response to a Superior Proposal; provided the
Company shall have complied with the provisions and requirements of Section 6.2
of this Agreement;
(f) by Parent (at any time prior to obtaining the Company Stockholder
Approvals) if a Triggering Event (as defined below) shall have occurred;
(g) by the Company, if Parent shall have breached or failed to perform any
of its representations, warranties, covenants or other agreements contained in
this Agreement, which breach or failure to perform would or would be reasonably
expected to cause any of the conditions set forth in Sections 7.3(a) or 7.3(b),
to not be satisfied and which breach or failure, if capable of being cured,
shall not have been cured within twenty (20) business days following receipt by
Parent of written notice of such breach or failure from the Company; or
(h) by Parent, if the Company shall have breached or failed to perform any
of its representations, warranties, covenants or other agreements contained in
this Agreement, which breach or failure to perform would or would be reasonably
expected to cause any of the
40
conditions set forth in Section 7.2(a) or Section 7.2(b) to not be satisfied and
which breach or failure, if capable of being cured, shall not have been cured
within twenty (20) business days following receipt by the Company of written
notice of such breach or failure from Parent.
For purposes of this Agreement, a "TRIGGERING EVENT" shall be deemed to
have occurred if: (i) the Company's Board of Directors or any committee thereof
shall for any reason have effected a Change of Recommendation; (ii) the Company
shall have failed to include in the Proxy Statement the recommendation of the
Company's Board of Directors in favor of the adoption and approval of this
Agreement and the approval of the Merger; or (iii) the Company's Board of
Directors or any committee thereof shall have approved or publicly recommended
any Takeover Proposal or failed to publicly reaffirm its recommendation of this
Agreement and the Merger within 5 days following Parent's request to do so.
8.2 EFFECT OF TERMINATION. In the event of the termination of this
Agreement pursuant to Section 8.1, this Agreement shall forthwith become void
and there shall be no liability on the part of any party hereto or any of its
affiliates, directors, officers or stockholders, except (i) that the provisions
of Sections 6.1(b), this Section 8.2, Section 8.3 and Article 9 hereof shall
survive termination and (ii) nothing herein shall relieve any party from
liability for any willful breach of this Agreement or for fraud.
8.3 FEES AND EXPENSES.
(a) Whether or not the Merger is consummated, all fees and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby, including the fees and disbursements of counsel, financial advisors and
accountants, shall be paid by the party incurring such fees and expenses;
provided, however, that Parent and the Company shall share equally all fees and
expenses, other than attorneys' and accountants' fees and expenses, incurred (i)
in relation to the filing and printing of the Proxy Statement (including any
preliminary materials related thereto) and any amendments or supplements thereto
and (ii) in connection with the filing of the pre-merger notification forms
under the HSR Act and any other comparable pre-merger notification forms
required by the merger notification or control laws and regulations of any
applicable jurisdiction.
(b) If this Agreement is terminated by the Company or Parent pursuant to
Section 8.1(b), the Company shall pay to Parent reimbursement for all of
Parent's, Merger Sub's and Parent's financial sources' out-of-pocket expenses,
including without limitation fees and expenses payable to all legal, accounting,
financial and professional advisers thereof, relating to the Merger or the
transactions contemplated by this Agreement ("ACQUIRER EXPENSES") and the Post
Solicitation Termination Fee; provided, however, that the Company shall be
required to pay the Post Solicitation Termination Fee only if (i) prior to the
time of such termination a Takeover Proposal had been publicly announced or
otherwise communicated to the Company's Board of Directors, a majority of the
Company's stockholders or the Company's advisors and (ii) within twelve (12)
months of such termination, the Company has entered into a binding agreement
with respect to, or has consummated, a merger, business combination, acquisition
or other such transaction (regardless of whether related to such Takeover
Proposal) of a type described in clause (i), (ii) or (iii) of the definition of
"Takeover Proposal" in Section 9.3(k) hereof (such transaction, a "TAKEOVER
TRANSACTION"). Payment under this Section 8.3(b) of the Acquirer
41
Expenses shall be made upon the termination of the Agreement, and payment of the
Post Solicitation Termination Fee shall be made upon the earlier of the
consummation of such Takeover Transaction and the ninetieth (90th) day following
the entering into by the Company of the agreement to engage in such Takeover
Transaction.
(c) If this Agreement is terminated by the Company or Parent pursuant to
Section 8.1(d), the Company shall pay to Parent, upon such termination,
reimbursement for all Acquirer Expenses and the Post Solicitation Termination
Fee; provided, however, that the Company shall be required to pay the Post
Solicitation Termination Fee only if within twelve (12) months of such
termination, the Company has entered into a binding agreement with respect to,
or has consummated, a Takeover Transaction, and such Post Solicitation
Termination Fee shall be paid upon the earlier of the consummation of such
Takeover Transaction and the ninetieth (90th) day following the entering into by
the Company of the agreement to engage in such Takeover Transaction.
(d) If this Agreement is terminated by the Company pursuant to Section
8.1(e) or by Parent pursuant to Section 8.1(f), prior to the end of the
Solicitation Response Deadline, the Company shall pay to Parent reimbursement
for all Acquirer Expenses up to $1.75 million and the Solicitation Period
Termination Fee, each payable upon such termination.
(e) If this Agreement is terminated by the Company pursuant to Section
8.1(e) or by Parent pursuant to Section 8.1(f) other than as set forth in clause
(d) above, the Company shall pay to Parent reimbursement for all Acquirer
Expenses and the Post Solicitation Termination Fee, each payable upon such
termination.
(f) If this Agreement is terminated by Parent pursuant to Section 8.1(h),
the Company shall pay to Parent, upon such termination, reimbursement for all
Acquirer Expenses and the Post Solicitation Termination Fee; provided, however,
that the Company shall be required to pay the Post Solicitation Termination Fee
only if (i) the breach or failure to perform that is the basis for the
termination under Section 8.1(h) was willful or intentional on the part of the
Company and (ii) within twelve (12) months of such termination, the Company has
entered into a binding agreement with respect to, or has consummated, a Takeover
Transaction. Such Post Solicitation Termination Fee shall be paid upon the
earlier of the consummation of such Takeover Transaction and the ninetieth
(90th) day following the entering into by the Company of the agreement to engage
in such Takeover Transaction.
(g) All amounts due under this Section 8.3 shall be payable by wire
transfer in immediately available funds to such account as Parent may designate
in writing to the Company. If the Company fails to promptly make any payment
required under this Section 8.3 and Parent commences a suit to collect such
payment, the Company shall indemnify Parent for its fees and expenses (including
attorneys fees and expenses) incurred in connection with such suit and shall pay
interest on the amount of the payment at the prime rate of Bank of America, N.A.
(or its successors or assigns) in effect on the date the payment was payable
pursuant to this Section 8.3
42
ARTICLE 9.
GENERAL PROVISIONS
9.1 NONSURVIVAL OF REPRESENTATIONS; WARRANTIES AND AGREEMENTS. None of the
representations, warranties or agreements in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the Effective Time, except
for the agreements contained in: Articles 1 and 2; Sections 6.8 (Stock Plans),
6.9 (Purchase Plan), 6.11 (Indemnification; Directors and Officers Insurance),
6.12 (Commercially Reasonable Efforts), 8.2 (Effect of Termination) and 8.3
(Fees and Expenses); and this Article 9. The Confidentiality Agreement shall
survive the execution and delivery of this Agreement or the termination of this
Agreement in accordance with the provisions of this Agreement, as the case may
be, pursuant to its terms and conditions.
9.2 NOTICES. All notices and other communications given or made pursuant
hereto shall be in writing and shall be deemed to have been duly given or made
if and when delivered personally or by overnight courier to the parties at the
following addresses or sent by electronic transmission, with confirmation
received, to the telecopy numbers specified below (or at such other address or
telecopy number for a party as shall be specified by like notice):
(a) If to Parent or Merger Sub:
Gartner, Inc.
▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
Professional Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
and
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
Professional Corporation
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
43
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to the Company:
META Group, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇. ▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇ White & ▇▇▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
9.3 CERTAIN DEFINITIONS. For purposes of this Agreement, the term:
(a) "AFFILIATE" means a person that directly or indirectly, through one or
more intermediaries, controls, is controlled by, or is under common control
with, the first mentioned person; including, without limitation, any partnership
or joint venture in which the first mentioned person (either alone, or through
or together with any other subsidiary) has, directly or indirectly, an interest
of 5% or more;
(b) "BUSINESS DAY" means any day other than a Saturday or Sunday or any
day on which banks in Connecticut or Massachusetts are required or authorized to
be closed;
(c) "COMPANY MATERIAL ADVERSE EFFECT" means any change, effect or
circumstance that, individually or when taken together with all other such
changes, effects or circumstances, (i) is materially adverse to the business,
assets, operations, condition (financial or otherwise) or results of operations
of the Company and its Subsidiaries taken as a whole or (ii) would reasonably be
expected to prevent the Company from timely consummating the transactions
contemplated hereby; provided, however, that none of the following shall be
deemed to constitute a Company Material Adverse Effect: (A) any change or event
attributable to conditions affecting the industries in which the Company
participates or the U.S. economy as a whole that does not affect the Company in
a disproportionate manner (other than any change or event (including a national
calamity) that causes, is caused by or is related to (i) any general suspension
of trading in, or limitation on prices for, securities on the New York Stock
Exchange or the Nasdaq National Market, (ii) a declaration by a Governmental
Entity of a banking moratorium or any suspension of payments in respect of banks
in the United States, or (iii) any extraordinary limitation (whether or not
mandatory) by any Governmental Entity on the extension of credit generally by
banks or other financial institutions); (B) any change or event
44
resulting from compliance with the terms and conditions of this Agreement; (C)
any change required by any change in applicable accounting requirements or
principles, or applicable laws, rules or regulations which occurs or becomes
effective after the date of this Agreement or (D) any change or event to the
extent attributable to the announcement or pendency of the Merger that impacts
the Company's or any of its Subsidiary's revenues or relationships with its
employees, customers, suppliers or partners.
(d) "CONTROL" including the terms "CONTROLLED BY" and "UNDER COMMON
CONTROL WITH") means the possession, directly or indirectly or as trustee or
executor, of the power to direct or cause the direction of the management or
policies of a person, whether through the ownership of stock, as trustee or
executor, by contract or credit arrangement or otherwise.
(e) "INCLUDE" or "INCLUDING" means "include, without limitation" or
"including, without limitation," as the case may be, and the language following
"include" or "including" shall not be deemed to set forth an exhaustive list.
(f) "KNOWLEDGE" with respect to the Company means the actual knowledge of
the following officers of the Company: ▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
and ▇▇▇ ▇▇▇▇▇▇, following reasonable inquiry of their direct reports.
(g) "PARENT MATERIAL ADVERSE EFFECT" means any change, effect or
circumstance that, individually or when taken together with all other such
changes, effects or circumstances would reasonably be expected to prevent Parent
from timely consummating the transactions contemplated hereby.
(h) "PERSON" means an individual, corporation, partnership, association,
trust, unincorporated organization, other entity or group (as defined in Section
13(d)(3) of the Exchange Act).
(i) "PER-SHARE CASH AMOUNT" shall mean $10.00 per share of Company Common
Stock.
(j) "POST SOLICITATION PERIOD TERMINATION FEE" means $4.5 million.
(k) "SOLICITATION PERIOD TERMINATION FEE" means $3.8 million.
(l) "SUPERIOR PROPOSAL" means a 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,
liquidation, dissolution or similar transaction, more than 50% of the voting
power of the shares of Company Common Stock then outstanding or all or
substantially all of the assets of the Company and its Subsidiaries, taken as a
whole, (i) for consideration consisting of cash and/or securities that a
majority of the members of the Special Committee of the Board of Directors of
the Company (the "Special Committee") determines, at a duly constituted meeting
of the Special Committee of the Board of Directors or by unanimous written
consent, in its reasonable good faith judgment to be more favorable to the
Company's stockholders than the Merger (after consultation with the Company's
independent financial advisor) taking into account all the terms and conditions
of such proposal and this Agreement (including any proposal by Parent to amend
the terms of the transactions
45
contemplated hereby), (ii) for which financing, to the extent required, is then
committed, and (iii) that is reasonably capable of being completed, taking into
account all regulatory, legal and other aspects of such proposal.
(m) "TAKEOVER PROPOSAL" means any (i) proposal for a merger,
consolidation, restructuring, recapitalization or other reorganization, business
combination or similar such transaction involving the Company (other than one in
which the stockholders of the Company immediately preceding the transaction hold
80% or more of the equity interest in the surviving or resulting entity, in the
same proportion as they held equity interests in the Company prior to the
transaction), (ii) proposal or offer to acquire in any manner, directly or
indirectly, an equity interest in or any voting securities of the Company such
that those involved in making such proposal or offer will hold, as a result
(together with all other equity interests or securities previously held),
interests or securities representing 20% or more of the shares of Company Common
Stock or of the total voting securities of the Company outstanding immediately
following such acquisition or (iii) an offer to acquire in any manner, directly
or indirectly, a substantial portion of the assets of the Company, in each case
other than the transactions contemplated by this Agreement.
9.4 AMENDMENT. This Agreement may be amended by the parties hereto by
action taken by or on behalf of their respective Boards of Directors at any time
prior to the Effective Time; provided, however, that, after approval of the
Merger by the stockholders of the Company, no amendment may be made which by law
requires further approval by such stockholders without such further approval.
This Agreement may not be amended except by an instrument in writing signed by
the parties hereto.
9.5 EXTENSION; WAIVER. At any time prior to the Effective Time, the
parties hereto, by action taken or authorized by their respective Boards of
Directors, may to the extent legally allowed, (a) extend the time for the
performance of any of the obligations or other acts of any other party hereto,
(b) waive any inaccuracies in the representations and warranties of any other
party hereto contained herein or in any document delivered pursuant hereto or
(c) waive compliance with any of the agreements or conditions of any other party
hereto contained herein. Any agreement on the part of a party hereto to any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed on behalf of such party.
9.6 SEVERABILITY. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law, or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner adverse to
any party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the fullest extent possible.
9.7 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES. This Agreement
(including the documents and instruments referred to herein, including the
Confidentiality Agreement) (a) constitutes the entire agreement and supersedes
all prior agreements and understandings, both
46
written and oral, among the parties, or any of them, with respect to the subject
matter hereof, and (b) is not intended to confer upon any person other than the
parties hereto any rights or remedies hereunder, other than the persons intended
to benefit from the provisions of Section 6.11 (Indemnification; Directors and
Officers Insurance), who shall have the right to enforce such provisions
directly.
9.8 ASSIGNMENT. Subject to Section 1.1, neither this Agreement nor any of
the rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties.
9.9 INTERPRETATION. When a reference is made in this Agreement to
Sections, such reference shall be to a Section of this Agreement unless
otherwise indicated. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
9.10 FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE. No failure or
delay on the part of any party hereto in the exercise of any right hereunder
shall impair such right or be construed to be a waiver of, or acquiescence in,
any breach of any representation, warranty or agreement herein, nor shall any
single or partial exercise of any such right preclude any other or further
exercise thereof or of any other right. The waiver by any party hereto of a
breach of any term or provision of this Agreement shall not be construed as a
waiver of any subsequent breach. All rights and remedies existing under this
Agreement are cumulative to, and not exclusive of, any rights or remedies
otherwise available.
9.11 GOVERNING LAW. This Agreement shall be governed by, and construed in
accordance with, the internal laws of the State of Delaware, without regard to
the conflict of law provisions thereof.
9.12 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
9.13 WAIVER OF JURY TRIAL. EACH OF PARENT, MERGER SUB AND THE COMPANY
HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING
OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THE
ACTIONS OF PARENT, MERGER SUB OR THE COMPANY IN THE NEGOTIATION, ADMINISTRATION,
PERFORMANCE AND ENFORCEMENT OF THIS AGREEMENT.
9.14 ENFORCEMENT. The parties agree that irreparable damage would occur in
the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in the Court of Chancery of and for
the County of New Castle, State of Delaware, this being in addition to any other
remedy to which
47
they are entitled at law or in equity. In addition, each of the parties (a)
consents to submit itself to the personal jurisdiction of the Court of Chancery
of and for the County of New Castle, State of Delaware in the event any dispute
arises out of this Agreement or any of the transactions contemplated hereby, (b)
agrees that it will not attempt to deny or defeat such personal jurisdiction by
motion or other request for leave from any such court and (c) agrees that it
will not bring any action relating to this Agreement or any of the transactions
contemplated hereby in any court other than the Court of Chancery of and for the
County of New Castle, State of Delaware.
48
IN WITNESS WHEREOF, Parent, Merger Sub and the Company have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
GARTNER, INC.
/s/ ▇▇▇▇▇▇ ▇▇▇▇
By: ▇▇▇▇▇▇ ▇▇▇▇
Its: Chief Executive Officer
GREEN FALCON, INC.
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇
By: ▇▇▇▇▇ ▇▇▇▇▇▇
Its: President
META GROUP, INC.
/s/ ▇▇ ▇▇▇▇▇
By: ▇▇ ▇▇▇▇▇
Its: President and COO
49