EXHIBIT 99.3
AGREEMENT AND PLAN
OF MERGER
AMONG
INFERENCE CORPORATION,
EGAIN COMMUNICATIONS CORPORATION
AND
INTREPID ACQUISITION CORP.
Dated as of March 16, 2000
TABLE OF CONTENTS
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ARTICLE I The Merger.................................................................... 1
Section 1.1 The Merger............................................................ 1
Section 1.2 Conversion of Shares.................................................. 2
Section 1.3 Surrender and Payment................................................. 3
Section 1.4 Stock Options......................................................... 5
Section 1.5 Adjustments........................................................... 6
Section 1.6 Fractional Shares..................................................... 6
Section 1.7 Withholding Rights.................................................... 6
Section 1.8 Lost Certificates..................................................... 7
ARTICLE II Certain Governance Matters................................................... 7
Section 2.1 Certificate of Incorporation of the Surviving Corporation............. 7
Section 2.2 Bylaws of the Surviving Corporation................................... 7
Section 2.3 Directors and Officers of the Surviving Corporation................... 7
ARTICLE III Representations and Warranties of the Company............................... 7
Section 3.1 Organization and Qualification........................................ 7
Section 3.2 Capitalization........................................................ 8
Section 3.3 Authority............................................................. 9
Section 3.4 Governmental Authorization............................................ 9
Section 3.5 Non-Contravention..................................................... 9
Section 3.6 Subsidiaries.......................................................... 10
Section 3.7 SEC Filings........................................................... 10
Section 3.8 Financial Statements.................................................. 11
Section 3.9 Disclosure Documents.................................................. 11
Section 3.10 Absence of Certain Changes............................................ 12
Section 3.11 No Undisclosed Material Liabilities................................... 12
Section 3.12 Litigation............................................................ 13
Section 3.13 Taxes................................................................. 13
Section 3.14 Employee Benefit Plans................................................ 14
Section 3.15 Compliance with Laws.................................................. 15
Section 3.16 Finders' or Advisors' Fees............................................ 15
Section 3.17 Environmental Matters................................................. 15
Section 3.18 Labor Matters......................................................... 16
Section 3.19 Title to Property..................................................... 16
Section 3.20 Real Property......................................................... 16
Section 3.21 Management Payments; Vesting.......................................... 17
Section 3.22 Insurance............................................................. 17
Section 3.23 Intellectual Property................................................. 17
Section 3.24 Year 2000 Compliance.................................................. 18
Section 3.25 Opinion of Financial Advisor.......................................... 18
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Section 3.26 Tax Treatment......................................................... 18
Section 3.27 Takeover Statutes..................................................... 19
ARTICLE IV Representations and Warranties of Acquirer and Merger Subsidiary............. 19
Section 4.1 Organization and Qualification........................................ 19
Section 4.2 Capitalization........................................................ 19
Section 4.3 Authority............................................................. 20
Section 4.4 Governmental Authorization............................................ 20
Section 4.5 Non-Contravention..................................................... 20
Section 4.6 SEC Filings........................................................... 21
Section 4.7 Disclosure Documents.................................................. 21
Section 4.8 Litigation............................................................ 22
Section 4.9 Employee Benefit Plans................................................ 22
Section 4.10 Compliance with Laws.................................................. 22
Section 4.11 Finders' or Advisors' Fees............................................ 22
Section 4.12 Tax Treatment......................................................... 22
Section 4.13 Vote Required......................................................... 22
Section 4.14 Absence of Certain Changes............................................ 23
Section 4.15 No Undisclosed Material Liabilities................................... 23
Section 4.16 Litigation............................................................ 23
Section 4.17 Insurance............................................................. 23
ARTICLE V Covenants of the Company...................................................... 24
Section 5.1 Conduct of Business of the Company.................................... 24
Section 5.2 No Solicitation....................................................... 25
Section 5.3 Stockholders' Meetings................................................ 27
ARTICLE VI Covenants of Acquirer........................................................ 27
Section 6.1 Conduct of Business of Acquirer....................................... 27
Section 6.2 Indemnification....................................................... 27
Section 6.3 NNM Listings.......................................................... 28
Section 6.4 Employee Matters...................................................... 28
ARTICLE VII Covenants of Acquirer and the Company....................................... 28
Section 7.1 Access to Information................................................. 28
Section 7.2 Registration Statement and Proxy Statement............................ 29
Section 7.3 Reasonable Efforts; Other Actions..................................... 29
Section 7.4 Public Announcements.................................................. 30
Section 7.5 Notification of Certain Matters....................................... 30
Section 7.6 Expenses.............................................................. 30
Section 7.7 Affiliates............................................................ 30
Section 7.8 Tax-Free Reorganization Treatment..................................... 30
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ARTICLE VIII Conditions to the Merger................................................... 31
Section 8.1 Conditions to the Obligations of Each Party........................... 31
Section 8.2 Conditions to the Obligations of Acquirer and Merger Subsidiary....... 31
Section 8.3 Conditions to the Obligations of the Company.......................... 32
ARTICLE IX Termination.................................................................. 33
Section 9.1 Termination........................................................... 33
Section 9.2 Termination by Acquirer............................................... 33
Section 9.3 Termination by the Company............................................ 34
Section 9.4 Procedure for Termination............................................. 34
Section 9.5 Effect of Termination................................................. 34
ARTICLE X Miscellaneous................................................................. 36
Section 10.1 Notices............................................................... 36
Section 10.2 Non-Survival of Representations and Warranties........................ 36
Section 10.3 Amendments; No Waivers................................................ 36
Section 10.4 Successors and Assigns................................................ 37
Section 10.5 Governing Law......................................................... 37
Section 10.6 Jurisdiction.......................................................... 37
Section 10.7 Waiver of Jury Trial.................................................. 37
Section 10.8 Counterparts; Effectiveness........................................... 37
Section 10.9 Entire Agreement...................................................... 38
Section 10.10 Captions.............................................................. 38
Section 10.11 Severability.......................................................... 38
SCHEDULES
1.4 Company Stock Option Plans
3.5 Non-Contravention (Company)
3.6 Subsidiaries
3.10 Changes (Company)
3.11(c) Undisclosed Liabilities (Company)
3.13 Taxes
3.14 Company Employee Benefit Plans
3.20 Real Property
3.21 Management Payments
3.22 Insurance
4.5 Non-Contravention (Acquirer)
4.9 Acquirer Employee Benefit Plans
4.14 Changes (Acquirer)
4.15(c) Undisclosed Liabilities (Acquirer)
8.1(d) Third Party Approvals
EXHIBITS
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of March 16, 2000 (the
"Agreement"), is by and among INFERENCE CORPORATION, a Delaware corporation
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(the "Company"), EGAIN COMMUNICATIONS CORPORATION, a Delaware corporation
--------------------------------
("Acquirer"), and INTREPID ACQUISITION CORP., a newly formed Delaware
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corporation and wholly owned subsidiary of Acquirer. Acquirer and the Company
are hereinafter sometimes collectively referred to as the "Constituent
Corporations."
RECITALS:
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A. The respective Boards of Directors of Acquirer, Merger Subsidiary, and
the Company have approved this Agreement, and deem it advisable and in the best
interests of each corporation and its respective stockholders to consummate the
merger of Merger Subsidiary with and into the Company upon the terms and subject
to the conditions of this Agreement; and
B. It is intended that the Merger qualify as a tax-free reorganization
within the meaning of section 368(a) of the Internal Revenue Code of 1986, as
amended (the "Code") and be accounted for as a purchase; and
C. Each of the parties hereto desire to make certain representations,
warranties, covenants and agreements in connection with the transactions
contemplated hereby:
NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants, agreements and conditions contained
herein, the parties hereto agree as follows:
ARTICLE I
The Merger
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Section 1.1 The Merger.
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(a) In accordance with the provisions of this Agreement and the General
Corporation Law of the State of Delaware (the "Delaware Law"), at the Effective
Time, Merger Subsidiary shall be merged (the "Merger") with and into the
Company, whereupon the separate existence of Merger Subsidiary shall cease and
the Company shall be the surviving corporation (hereinafter sometimes called the
"Surviving Corporation") in the Merger.
(b) As soon as practicable after satisfaction or, to the extent permitted
hereunder, waiver of all conditions to the Merger, the Company and Merger
Subsidiary shall file a certificate of merger with the Secretary of State of the
State of Delaware and make all other filings or recordings required by Delaware
Law in connection with the Merger. The Merger shall become effective at such
time as the certificate of merger is duly filed with the Secretary of State of
the State of Delaware or at such later time as is specified in the certificate
of merger (the "Effective Time").
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(c) From and after the Effective Time, the Surviving Corporation shall
possess all the rights, privileges, powers and franchises and be subject to all
of the restrictions, disabilities and duties of the Company and Merger
Subsidiary, all as provided under the Delaware Law.
(d) The closing of the Merger (the "Closing") shall take place at the
offices of Pillsbury Madison & Sutro LLP, ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ as soon as practicable, but in any event within three (3) business
days after the day on which the last to be fulfilled or waived of the conditions
set forth in Article VIII (other than those conditions that by their nature are
to be fulfilled at the Closing, but subject to the fulfillment or waiver of such
conditions) shall be fulfilled or waived in accordance with this Agreement or at
such other time, place and date as is mutually agreed to in writing by the
parties hereto. The date of the Closing is referred to in this Agreement as the
"Closing Date."
Section 1.2 Conversion of Shares.
--------------------
(a) As of the Effective Time, by virtue of the Merger and without any
action on the part of the holders thereof:
(i) Each share of common stock of Merger Subsidiary outstanding
immediately prior to the Effective Time shall be converted into and become
one fully paid and nonassessable share of common stock, par value $.001 per
share, of the Surviving Corporation with the same rights, powers and
privileges as the shares so converted, and such shares shall constitute the
only outstanding shares of capital stock of the Surviving Corporation.
(ii) Each share of Class A Common Stock, par value $0.01 per share,
and Class B Common Stock, par value $0.01 per share, of the Company (each a
"Company Share") held by the Company as treasury stock or owned by Acquirer
or any subsidiary of Acquirer shall be cancelled, and no payment shall be
made with respect thereto.
(iii) Each Company Share outstanding immediately prior to the
Effective Time shall, except as otherwise provided in Section 1.2(a)(ii),
by virtue of the Merger and without any action on the part of the holder
thereof, be converted into the right to receive 0.1865 (the "Exchange
Ratio") shares of fully paid and nonassessable common stock, par value
$.001 per share, of Acquirer ("Acquirer Common Stock"), subject to
adjustment as provided below.
(iv) If, the Average Share Price (as defined herein) is greater than
fifty-nine dollars twenty-nine and seven tenths cents ($59.297) per share,
then the Exchange Ratio shall be adjusted to equal:
[(0.1865) x (59.297)]
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Average Share Price
(rounded to four decimal places)
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(v) If, the Average Share Price is less than forty-eight dollars
fifty-one and six tenths cents ($48.516) per share, then the Exchange Ratio
shall be adjusted to equal:
[(0.1865) x (48.516)]
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Average Share Price
(rounded to four decimal places)
The "Average Share Price" shall be equal to the average closing price of
Acquirer's Common Stock listed on the Nasdaq National Market for the twenty (20)
consecutive trading days ending on the third trading day prior to the Closing
Date.
(b) From and after the Effective Time, all Company Shares converted in
accordance with Section 1.2(a)(iii) shall no longer be outstanding and shall
automatically be cancelled and retired and shall cease to exist, and each holder
of a certificate representing any such Company Shares shall cease to have any
rights with respect thereto, except the right to receive the Merger
Consideration (as defined below), as applicable, and any dividends payable
pursuant to Section 1.3(f). From and after the Effective Time, all certificates
representing the common stock of Merger Subsidiary shall be deemed for all
purposes to represent the number of shares of common stock of the Surviving
Corporation into which they were converted in accordance with Section 1.2(a)(i).
(c) The Acquirer Common Stock to be received as consideration pursuant to
the Merger by each holder of Company Shares (together with cash in lieu of
fractional shares of Acquirer Common Stock as specified below) is referred to
herein as the "Merger Consideration."
(d) For purposes of this Agreement, the word "Subsidiary" when used with
respect to any Person means any other Person, whether incorporated or
unincorporated, of which (i) more than fifty percent of the securities or other
ownership interests or (ii) securities or other interests having by their terms
ordinary voting power to elect more than fifty percent of the board of directors
or others performing similar functions with respect to such corporation or other
organization, is directly owned or controlled by such Person or by any one or
more of its Subsidiaries. For purposes of this Agreement, "Person" means an
individual, a corporation, a limited liability company, a partnership, an
association, a trust or any other entity or organization, including a government
or political subdivision or any agency or instrumentality thereof.
Section 1.3 Surrender and Payment.
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(a) Prior to the Effective Time, Acquirer shall appoint an agent
reasonably acceptable to the Company (the "Exchange Agent") for the purpose of
exchanging certificates representing Company Shares (the "Certificates") for the
Merger Consideration. Acquirer will make available to the Exchange Agent, as
needed, the Merger Consideration to be paid in respect of the Company Shares.
Promptly after the Effective Time, Acquirer will send, or will cause the
Exchange Agent to send, to each holder of record at the Effective Time of
Company Shares a letter of transmittal for use in such exchange (which shall
specify that the delivery shall be effected, and risk of loss and title shall
pass, only upon proper delivery of the Certificates to the
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Exchange Agent) in such form as the Company and Acquirer may reasonably agree,
for use in effecting delivery of Company Shares to the Exchange Agent.
(b) Each holder of Company Shares that have been converted into a right to
receive the Merger Consideration, upon surrender to the Exchange Agent of a
Certificate, together with a properly completed letter of transmittal, will be
entitled to receive the Merger Consideration in respect of the Company Shares
represented by such Certificate. Until so surrendered, each such Certificate
shall, after the Effective Time, represent for all purposes only the right to
receive such Merger Consideration.
(c) If any portion of the Merger Consideration is to be paid to a Person
other than the Person in whose name the Certificate is registered, it shall be a
condition to such payment that the Certificate so surrendered shall be properly
endorsed or otherwise be in proper form for transfer and that the Person
requesting such payment shall pay to the Exchange Agent any transfer or other
taxes required as a result of such payment to a Person other than the registered
holder of such Certificate or establish to the satisfaction of the Exchange
Agent that such tax has been paid or is not payable.
(d) After the Effective Time, there shall be no further registration of
transfers of Company Shares. If, after the Effective Time, Certificates are
presented to the Surviving Corporation, they shall be cancelled and exchanged
for the consideration provided for, and in accordance with the procedures set
forth, in this Article I.
(e) Any portion of the Merger Consideration made available to the Exchange
Agent pursuant to Section 1.3(a) that remains unclaimed by the holders of
Company Shares one year after the Effective Time shall be returned to Acquirer,
upon demand, and any such holder who has not exchanged such holder's Company
Shares for the Merger Consideration in accordance with this Section 1.3 prior to
that time shall thereafter look only to Acquirer for payment of the Merger
Consideration in respect of such holder's Company Shares. Notwithstanding the
foregoing, Acquirer shall not be liable to any holder of Company Shares for any
amount paid to a public official pursuant to applicable abandoned property,
escheat or similar laws. Any amounts remaining unclaimed by holders of Company
Shares three years after the Effective Time (or such earlier date immediately
prior to such time as such amounts would otherwise escheat to or become property
of any governmental entity) shall, to the extent permitted by applicable law,
become the property of Acquirer free and clear of any claims or interest of any
Person previously entitled thereto.
(f) No dividends or other distributions with respect to Acquirer Common
Stock issued in the Merger shall be paid to the holder of any unsurrendered
Certificates until such Certificates are surrendered as provided in this Section
1.3. Subject to the effect of applicable laws, following such surrender, there
shall be paid, without interest, to the record holder of the Acquirer Common
Stock issued in exchange therefor (i) at the time of such surrender, all
dividends and other distributions payable in respect of such Acquirer Common
Stock with a record date on or after the Effective Time and a payment date on or
prior to the date of such surrender and not previously paid and (ii) at the
appropriate payment date, the dividends or other distributions payable in
respect of such Acquirer Common Stock with a record date on or after the
Effective Time but with a payment date subsequent to such surrender. For
purposes of dividends
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or other distributions in respect of Acquirer Common Stock, all Acquirer Common
Stock to be issued pursuant to the Merger (but not options therefor issued
pursuant to Section 1.4 unless actually exercised at the Effective Time) shall
be entitled to dividends pursuant to the immediately preceding sentence as if
issued and outstanding as of the Effective Time.
Section 1.4 Stock Options.
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(a) At the Effective Time, each outstanding option to purchase Company
Shares (a "Company Stock Option") granted under the Company's plans identified
in Schedule 1.4 as being the only compensation or benefit plans or agreements
------------
pursuant to which Company Shares may be issued (collectively, the "Company Stock
Option Plans"), whether vested or not vested, shall be deemed assumed by
Acquirer and shall thereafter be deemed to constitute an option to acquire, on
the same terms and conditions (including any provisions for acceleration) as
were applicable under such Company Stock Option prior to the Effective Time (in
accordance with the past practice of the Company with respect to interpretation
and application of such terms and conditions), the number (rounded down to the
nearest whole number) of shares of Acquirer Common Stock determined by
multiplying (x) the number of Company Shares subject to such Company Stock
Option immediately prior to the Effective Time by (y) the Exchange Ratio, at a
price per share of Acquirer Common Stock (rounded up to the nearest whole cent)
equal to (A) the exercise price per Company Share otherwise purchasable pursuant
to such Company Stock Option divided by (B) the Exchange Ratio. The parties
intend that the conversion of the Company Stock Options hereunder will meet the
requirements of section 424(a) of the Code and this Section 1.4(a) shall be
interpreted consistent with such intention. Subject to the terms of the Company
Options and the documents governing such Company Stock Options, the Merger will
not terminate or accelerate any Company Stock Option or any right of exercise,
vesting or repurchase relating thereto with respect to Acquirer Common Stock
acquired upon exercise of such assumed Company Stock Option. Holders of Company
Stock Options will not be entitled to acquire Company Shares after the Merger.
In addition, prior to the Effective Time, the Company will make any amendments
to the terms of such stock option or compensation plans or arrangements that are
necessary to give effect to the transactions contemplated by this Section 1.4.
The Company represents that no consents are necessary to give effect to the
transactions contemplated by this Section 1.4.
(b) Acquirer shall take all corporate action necessary to reserve for
issuance a sufficient number of shares of Acquirer Common Stock for delivery
pursuant to the terms set forth in this Section 1.4.
(c) At the Effective Time, each award or account (including restricted
stock, stock equivalents and stock units, but excluding Company Stock Options)
outstanding as of the date hereof ("Company Award") that has been established,
made or granted under any employee incentive or benefit plans, programs or
arrangements and non-employee director plans maintained by the Company on or
prior to the date hereof which provide for grants of equity-based awards or
equity-based accounts shall be amended or converted into a similar instrument of
Acquirer, in each case with such adjustments to the terms and conditions of such
Company Awards as are appropriate to preserve the value inherent in such Company
Awards with no detrimental effects on the holders thereof. The other terms and
conditions of each Company Award, and the plans or agreements under which they
were issued, shall continue to apply in
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accordance with their terms and conditions, including any provisions for
acceleration (as such terms and conditions have been interpreted and applied by
the Company in accordance with its past practice). The Company represents that
(i) there are no Company Awards or Company Stock Options other than those
reflected in Section 3.2 and (ii) all employee incentive or benefit plans,
programs or arrangements and non-employee director plans under which any Company
Award has been established, made or granted and all Company Stock Option Plans
are disclosed in Schedule 1.4.
------------
(d) At the Effective Time, Acquirer shall file with the Securities and
Exchange Commission (the "SEC") a registration statement on an appropriate form
or a post-effective amendment to a previously filed registration statement under
the Securities Act of 1933, as amended (the "1933 Act"), with respect to the
Acquirer Common Stock subject to options and other equity-based awards issued
pursuant to this Section 1.4, and shall use its reasonable efforts to maintain
the current status of the prospectus contained therein, as well as comply with
any applicable state securities or "blue sky" laws, for so long as such options
or other equity-based awards remain outstanding.
Section 1.5 Adjustments. If at any time during the period between the
-----------
date of this Agreement and the Effective Time, any change in the outstanding
shares of capital stock of Acquirer or the Company (other than as contemplated
in Section 3.2 or Section 4.2 or permitted under this Agreement) shall occur,
including, without limitation, by reason of any reclassification,
recapitalization, stock split or combination, exchange or readjustment of
shares, or any stock dividend thereon with a record date during such period, the
Merger Consideration shall be appropriately adjusted.
Section 1.6 Fractional Shares.
-----------------
(a) No fractional shares of Acquirer Common Stock shall be issued in the
Merger. All fractional shares of Acquirer Common Stock that a holder of Company
Shares would otherwise be entitled to receive as a result of the Merger shall be
aggregated and if a fractional share results from such aggregation, such holder
shall be entitled to receive from the Exchange Agent, in lieu thereof, an amount
in cash determined by multiplying the closing price of one share of Acquirer
Common Stock on the Nasdaq National Market ("NNM") on the trading day
immediately prior to the Closing Date by the fraction of a share of Acquirer
Common Stock to which such holder would otherwise have been entitled. The
parties acknowledge that payment of the cash consideration in lieu of issuing
fractional shares was not separately bargained for consideration but merely
represents a mechanical rounding off for purposes of simplifying the corporate
and accounting problems that would otherwise be caused by the issuance of
fractional shares. As promptly as practicable after the determination of the
amount of cash, if any, to be paid to holders of fractional interests, the
Exchange Agent shall so notify Acquirer, and Acquirer shall deposit or cause to
be deposited with the Exchange Agent such amount and shall cause the Exchange
Agent to make available such amounts to such holders of fractional interests
without interest.
Section 1.7 Withholding Rights. Each of the Surviving Corporation and
------------------
Acquirer shall be entitled to deduct and withhold from the consideration
otherwise payable to any person pursuant to this Article I such amounts as it is
required to deduct and withhold with respect to the
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making of such payment under any provision of federal, state, local or foreign
tax law. To the extent that amounts are so withheld by the Surviving Corporation
or Acquirer, as the case may be, such withheld amounts shall be treated for all
purposes of this Agreement as having been paid to the holder of the Company
Shares in respect of which such deduction and withholding was made by the
Surviving Corporation or Acquirer, as the case may be.
Section 1.8 Lost Certificates. If any Certificate shall have been lost,
-----------------
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming such Certificate to be lost, stolen or destroyed and, if required by
the Exchange Agent, the posting by such person of a bond, in such reasonable
amount as the Exchange Agent may direct, as indemnity against any claim that may
be made against it with respect to such Certificate, the Exchange Agent will
issue in exchange for such lost, stolen or destroyed Certificate the Merger
Consideration to be paid in respect of the Company Shares represented by such
Certificate as contemplated by this Article I.
ARTICLE II
Certain Governance Matters
--------------------------
Section 2.1 Certificate of Incorporation of the Surviving Corporation.
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The certificate of incorporation of Merger Subsidiary in effect at the Effective
Time shall be the certificate of incorporation of the Surviving Corporation
until amended in accordance with applicable law.
Section 2.2 Bylaws of the Surviving Corporation. The bylaws of Merger
-----------------------------------
Subsidiary in effect at the Effective Time shall be the bylaws of the Surviving
Corporation until amended in accordance with applicable law.
Section 2.3 Directors and Officers of the Surviving Corporation. From and
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after the Effective Time, until successors are duly elected or appointed and
qualified in accordance with applicable law, (a) the directors of Merger
Subsidiary at the Effective Time shall be the directors of the Surviving
Corporation, and (b) the officers of Merger Sub at the Effective Time shall be
the officers of the Surviving Corporation.
ARTICLE III
Representations and Warranties of the Company
---------------------------------------------
Except as disclosed in a letter delivered by the Company to Acquirer
immediately prior to the execution of this Agreement and signed by a duly
authorized officer of the Company (the "Company Disclosure Letter"), the Company
represents and warrants, to and for the benefit of, Acquirer as follows:
Section 3.1 Organization and Qualification. The Company is a corporation
------------------------------
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has all requisite corporate power and authority to own,
lease and operate its respective properties and to carry on its business as now
being conducted.
The Company is qualified to do business as a foreign corporation and is in
good standing under the laws of each state or other jurisdiction in which the
nature of its business requires such qualification, except where the failure to
be so qualified or in good standing which, taken together with all other such
failures, would not have a Material Adverse Effect on the Company.
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For purposes of this Agreement, the term "Material Adverse Effect" with respect
to any Person means a material adverse effect on the business, financial
condition, properties, assets, liabilities, or results of operations of such
Person and its Subsidiaries, taken as a whole, except to the extent that any
such change or effect results from (i) changes in general economic conditions or
changes affecting the industry generally in which such Person operates or (ii)
the direct effect of the public announcement or pendency of the transactions
contemplated hereby.
The Company has delivered or made available to Acquirer true and complete
copies of the Company's certificate of incorporation and bylaws, as amended to
the date hereof.
Section 3.2 Capitalization. The authorized capital stock of the Company
--------------
consists of 25,000,000 shares of Class A Common Stock, par value $0.01 per
share, 2,000,000 shares of Class B Common Stock, par value $0.01 per share, and
2,000,000 shares of undesignated Preferred Stock, par value $0.01 per share. As
of March 15, 2000, (i) 7,864,737 shares of Class A Common stock were issued and
outstanding, (ii) 0 shares of Class B Common Stock were issued and outstanding,
no shares of Preferred Stock were issued and outstanding, (iii) no Company
Shares were held in the treasury of the Company or any of its Subsidiaries, and
(iv) 3,321,616 Company Shares are reserved for issuance pursuant to the Company
Option Plans, of which employee stock options to purchase 2,443,222 Company
Shares are outstanding and 433,003 are available for future grant (of which
options to purchase an aggregate of 604,067 shares were exercisable). As of
March 15, 2000, 500,000 Company Shares were reserved under the Company's
Employee Stock Purchase Plan, of which 318,810 shares have been granted. All the
outstanding shares of the Company's capital stock are, and all Company Shares
that may be issued pursuant to the exercise of outstanding employee stock
options will be, when issued in accordance with the terms thereof, duly
authorized, validly issued, fully paid and non-assessable. Except as disclosed
in this Section 3.2 and except for changes since the close of business on March
15, 2000 resulting from the exercise of employee stock options outstanding on
such date or options granted as permitted by Section 5.1, there are outstanding
(x) no shares of capital stock or other voting securities of the Company, (y) no
securities of the Company convertible into or exchangeable for shares of capital
stock or voting securities of the Company, and (z) no options, warrants or other
rights to acquire from the Company, and no preemptive or similar rights,
subscription or other rights, convertible securities, agreements, arrangements
or commitments of any character, relating to the capital stock of the Company,
obligating the Company to issue, transfer or sell, any capital stock, voting
securities or securities convertible into or exchangeable for capital stock or
voting securities of the Company or obligating the Company to grant, extend or
enter into any such option, warrant, subscription or other right, convertible
security, agreement, arrangement or commitment (the items in clauses (x), (y)
and (z) being referred to collectively as the "Company Securities"). There are
no outstanding obligations of the Company or any of its Subsidiaries to
repurchase, redeem or otherwise acquire any Company Securities. There are not as
of the date hereof and there will not be at the Effective Time any stockholder
agreements, voting trusts or other agreements or understandings to which the
Company or any of its Subsidiaries is a party or by which it is bound relating
to the voting of any shares of the capital stock of the Company or any
agreements, arrangements, or other understandings to which the Company or any of
its Subsidiaries is a party or by which it is bound that will limit in any way
the solicitation of proxies by or on behalf of the Company from, or the casting
of votes by, the stockholders of the Company with respect to the Merger.
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Section 3.3 Authority. The Company has full corporate power and authority
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to execute and deliver this Agreement and, subject to the requisite approval of
its stockholders, to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized and
approved by the Company's Board of Directors, and other than the requisite
approval by its stockholders, no other corporate proceedings are necessary to
authorize this Agreement or the consummation of the transactions contemplated
hereby. This Agreement has been duly and validly executed and delivered by the
Company and, assuming this Agreement constitutes a legal, valid and binding
agreement of the other parties hereto, it constitutes a legal, valid and binding
agreement of the Company, enforceable against it in accordance with its terms,
except (i) as limited by applicable bankruptcy, insolvency, reorganization,
moratorium and other laws of general application affecting enforcement of
creditors' rights generally and (ii) as limited by laws relating to the
availability of specific performance, injunctive relief or other equitable
remedies.
Section 3.4 Governmental Authorization. The execution, delivery and
--------------------------
performance by the Company of this Agreement and the consummation of the Merger
by the Company require no action by or in respect of, or filing with, any
governmental body, agency, official or authority other than (a) the filing of a
certificate of merger in accordance with Delaware Law, (b) compliance with any
applicable requirements of the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
▇▇▇▇ (▇▇▇ "▇▇▇ ▇▇▇"), (▇) compliance with any applicable requirements of the
Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder (the "Exchange Act"), (d) compliance with any applicable
requirements of the 1933 Act and state securities laws, and (e) other actions or
filings which if not taken or made would not, individually or in the aggregate,
have a Material Adverse Effect on the Company.
Section 3.5 Non-Contravention. The execution, delivery and performance by
-----------------
the Company of this Agreement and the consummation by the Company of the
transactions contemplated hereby do not and will not (a) assuming compliance
with the matters referred to in Section 3.3, contravene or conflict with the
certificate of incorporation or bylaws of the Company, (b) assuming compliance
with the matters referred to in Section 3.4, contravene or conflict with or
constitute a violation of any provision of any law, regulation, judgment,
injunction, order or decree binding upon or applicable to the Company or any of
its Subsidiaries, (c) constitute a default under or give rise to a right of
termination, cancellation or acceleration of any right or obligation of the
Company or any of its Subsidiaries or to a loss of any benefit to which the
Company or any of its Subsidiaries is entitled under any provision of any
agreement, contract or other instrument binding upon the Company or any of its
Subsidiaries or any license, franchise, permit or other similar authorization
held by the Company or any of its Subsidiaries, or (d) result in the creation or
imposition of any Lien on any asset of the Company or any of its Subsidiaries,
except for such contraventions, conflicts or violations referred to in clause
(b) or defaults, rights of termination, cancellation or acceleration, or losses
or Liens referred to in clause (c) or (d) that would not, individually or in the
aggregate, have a Material Adverse Effect on the Company. For purposes of this
Agreement, "Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset
other than any such mortgage, lien, pledge, charge, security interest or
encumbrance (i) for Taxes (as defined in Section 3.13) not yet due or being
contested in good faith (and for which adequate accruals or reserves have been
established on the Company Balance Sheet (as such
-9-
term is defined in Section 3.8), as the case may be) or (ii) which is a
carriers', warehousemen's, mechanics', materialmen's, repairmen's or other like
lien arising in the ordinary course of business. Except as disclosed in Schedule
--------
3.5, neither the Company nor any Subsidiary of the Company is a party to any
---
agreement that expressly limits the ability of the Company or any Subsidiary of
the Company, or would limit Acquirer or any Subsidiary of Acquirer after the
Effective Time, to compete in or conduct any line of business or compete with
any Person or in any geographic area or during any period of time except to the
extent that any such limitation, individually or in the aggregate, would not be
reasonably likely to have a Material Adverse Effect on Acquirer after the
Effective Time.
Section 3.6 Subsidiaries. Each of the Company's Subsidiaries is a
------------
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation and has all requisite power and authority
(corporate and other) to own, lease and operate its properties and to carry on
its business as it is now being conducted. Each of the Subsidiaries is duly
qualified as a foreign corporation to do business, and is in good standing, in
each jurisdiction where the character of its properties owned or leased or the
nature of its activities makes such qualification necessary, except where the
failure to be so qualified or in good standing would not have a Material Adverse
Effect on the Company. Exhibit 21 to the Company's Annual Report on Form 10-K
for the fiscal year ended January 31, 1999 (the "1999 10-K"), as filed with the
Commission, lists the only Subsidiaries of the Company at January 31, 1999, and
all Subsidiaries of the Company thereafter formed or acquired are listed in
Schedule 3.6. All of the outstanding shares of capital stock of the
------------
Subsidiaries are validly issued, fully paid and nonassessable and, other than
directors' qualifying shares in the case of foreign Subsidiaries, are owned by
the Company or by a wholly owned Subsidiary of the Company free and clear of all
material liens, claims, charges or encumbrances, and there are no irrevocable
proxies with respect to such shares. Except as set forth in the Schedule 3.6 and
------------
except for the capital stock of its Subsidiaries, the Company does not own,
directly or indirectly, any capital stock or other ownership interest in any
corporation, partnership, joint venture, limited liability company or other
entity which is material to the business of the Company and its Subsidiaries,
taken as a whole. There are no restrictions on the Company to vote the stock of
any of its Subsidiaries.
Section 3.7 SEC Filings.
-----------
(a) The Company has made available to Acquirer (i) its annual reports on
Form 10-K for its fiscal years ended January 31, 1997, 1998 and 1999, (ii) its
quarterly reports on Form 10-Q for its quarters ended April 30, July 31 and
October 31, 1999, (iii) its proxy or information statements relating to meetings
of, or actions taken without a meeting by, the stockholders of the Company held
since December 31, 1998, and (iv) all of its other reports, statements,
schedules and registration statements filed with the SEC since December 31, 1998
(the documents referred to in this Section 3.7(a) being referred to collectively
as the "Company SEC Documents"). The Company's quarterly report on Form 10-Q for
its fiscal quarter ended October 31, 1999 is referred to herein as the "Company
10-Q."
(b) As of its filing date (or, if amended or superseded by a filing prior
to the date of this Agreement, then on the date of such filing), each Company
SEC Document complied as to form in all material respects with the applicable
requirements of the Exchange Act and the 1933 Act.
-10-
(c) As of its filing date (or, if amended or superseded by a filing prior
to the date of this Agreement, then on the date of such filing), each Company
SEC Document filed pursuant to the Exchange Act did not contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading.
(d) Each such registration statement, as amended or supplemented, if
applicable, filed pursuant to the 1933 Act as of the date such statement or
amendment became effective did not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading.
Section 3.8 Financial Statements. The audited consolidated financial
--------------------
statements and unaudited consolidated interim financial statements of the
Company (including any related notes and schedules) included in its annual
reports on Form 10-K and the quarterly report on Form 10-Q referred to in
Section 3.7 fairly present in all material respects, in conformity with
generally accepted accounting principles ("GAAP") applied on a consistent basis
(except as may be indicated in the notes thereto), the consolidated financial
position of the Company and its consolidated Subsidiaries as of the dates
thereof and their consolidated results of operations and changes in financial
position for the periods then ended (subject to normal year-end adjustments and
the absence of notes in the case of any unaudited interim financial statements).
For purposes of this Agreement, "Company Balance Sheet" means the consolidated
balance sheet of the Company as of October 31, 1999 set forth in the Company 10-
Q and "Company Balance Sheet Date" means October 31, 1999.
Section 3.9 Disclosure Documents.
--------------------
(a) The proxy statement of the Company relating to the meeting of
stockholders of the Company contemplated by Section 7.2 and prospectus of
Acquirer relating to the shares of Acquirer Common Stock to be issued in
connection with the Merger (the "Proxy Statement/ Prospectus") to be filed with
the SEC in connection with the Merger and the registration statement on Form S-4
of Acquirer (the "Form S-4") to be filed under the 1933 Act relating to the
issuance of Acquirer Common Stock in the Merger, and any amendments or
supplements thereto, will, when filed, subject to the last sentence of Section
3.9(b), comply as to form in all material respects with the requirements of the
Exchange Act and the 1933 Act.
(b) Neither the Proxy Statement/Prospectus to be filed with the SEC, nor
any amendment or supplement thereto, will, at the date the Proxy
Statement/Prospectus or any such amendment or supplement is first mailed to
stockholders of Company or at the time such stockholders vote on the adoption
and approval of this Agreement and the transactions contemplated hereby, contain
any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. Neither the Form S-4
nor any amendment or supplement thereto will at the time it becomes effective
under the 1933 Act or at the Effective Time contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading. No representation or
warranty is made by the Company in this Section 3.9 with respect to statements
made or
-11-
incorporated by reference therein based on information supplied by Acquirer for
inclusion or incorporation by reference in the Proxy Statement/Prospectus or the
Form S-4.
Section 3.10 Absence of Certain Changes. Except as set forth in Schedule
-------------------------- --------
3.10, since the Company Balance Sheet Date, the Company and its Subsidiaries
----
have conducted their business in the ordinary course consistent with past
practice and there has not been:
(a) any event, occurrence or development of a state of circumstances or
facts which has had or reasonably would be expected to have, individually or in
the aggregate, a Material Adverse Effect on the Company;
(b) any declaration, setting aside or payment of any dividend or other
distribution with respect to any shares of capital stock of the Company or any
repurchase, redemption or other acquisition by the Company or any of its
Subsidiaries of any outstanding shares of capital stock or other securities of,
or other ownership interests in, the Company or any of its Subsidiaries (except
in connection with the repurchase at cost of unvested shares of employees or
consultants upon the termination of their employment or consultancy with the
Company);
(c) any amendment of any material term of any outstanding security of the
Company or any of its Subsidiaries;
(d) any transaction or commitment made, or any contract, agreement or
settlement entered into, by (or judgment, order or decree affecting) the Company
or any of its Subsidiaries relating to its assets or business (including the
acquisition or disposition of any assets) or any relinquishment by the Company
or any of its Subsidiaries of any contract or other right, in either case,
material to the Company and its Subsidiaries taken as a whole, other than
transactions, commitments, contracts, agreements or settlements (including
without limitation settlements of litigation and tax proceedings) in the
ordinary course of business consistent with past practice, those contemplated by
this Agreement, or as agreed to in writing by Acquirer;
(e) any change in any method of accounting or accounting practice (other
than any change for tax purposes) by the Company or any of its Subsidiaries,
except for any such change which is not significant or which is required by
reason of a concurrent change in GAAP; or
(f) any (i) grant of any severance or termination pay to (or amendment to
any such existing arrangement with) any director, officer or employee of the
Company or any of its Subsidiaries, (ii) entering into of any employment,
deferred compensation or other similar agreement (or any amendment to any such
existing agreement) with any director, officer or employee of the Company or any
of its Subsidiaries, (iii) increase in benefits payable under any existing
severance or termination pay policies or employment agreements or (iv) increase
in (or amendments to the terms of) compensation, bonus or other benefits payable
to directors, officers or employees of the Company or any of its Subsidiaries,
other than in the ordinary course of business consistent with past practice, as
permitted by this Agreement, or as agreed to in writing by Acquirer.
Section 3.11 No Undisclosed Material Liabilities. There are no
-----------------------------------
liabilities of the Company or any Subsidiary of the Company of any kind
whatsoever, whether accrued, contingent, absolute, determined, determinable or
otherwise, other than:
-12-
(a) liabilities disclosed or provided for in the Company Balance Sheet or
in the notes thereto;
(b) liabilities which in the aggregate would not reasonably be expected to
have a Material Adverse Effect on the Company;
(c) liabilities disclosed in the Company SEC Documents filed prior to the
date hereof or set forth in Schedule 3.11(c); and
----------------
(d) liabilities under this Agreement.
Section 3.12 Litigation. Except as disclosed in the Company SEC Documents
----------
filed prior to the date hereof, there is no action, suit, investigation or
proceeding pending against, or to the knowledge of the Company threatened
against or affecting, the Company or any of its Subsidiaries or any of their
respective properties before any court or arbitrator or any governmental body,
agency or official which would reasonably be expected to have a Material Adverse
Effect on the Company.
Section 3.13 Taxes. Except as set forth in or reserved on the Company
-----
Balance Sheet (including the notes thereto) or as otherwise set forth in
Schedule 3.13 and except as would not, individually or in the aggregate, have
-------------
a Material Adverse Effect on the Company, (a) all Company Tax Returns required
to be filed with any taxing authority by, or with respect to, the Company and
its Subsidiaries have been filed in accordance with all applicable laws; (b) the
Company and its Subsidiaries have timely paid all Taxes shown as due and payable
on the Company Tax Returns that have been so filed, and, as of the time of
filing, the Company Tax Returns correctly reflected the facts regarding the
income, business, assets, operations, activities and the status of the Company
and its Subsidiaries (other than Taxes which are being contested in good faith
and for which adequate reserves are reflected on the Company Balance Sheet); (c)
the Company and its Subsidiaries have made provision for all Taxes payable by
the Company and its Subsidiaries for which no Company Tax Return has yet been
filed; (d) the charges, accruals and reserves for Taxes with respect to the
Company and its Subsidiaries reflected on the Company Balance Sheet are adequate
under GAAP to cover the Tax liabilities accruing through the date thereof; (e)
there is no action, suit, proceeding, audit or claim now proposed or pending
against or with respect to the Company or any of its Subsidiaries in respect of
any Tax; and (f) to the best of the Company's knowledge and belief, neither the
Company nor any of its Subsidiaries is liable for any Tax imposed on any entity
other than such Person, except as the result of the application of Treas. Reg.
section 1.1502-6 (and any comparable provision of the tax laws of any state,
local or foreign jurisdiction) to the affiliated group of which the Company is
the common parent. For purposes of this Agreement, "Taxes" shall mean any and
all taxes, charges, fees, levies or other assessments, including, without
limitation, all net income, gross income, gross receipts, excise, stamp, real or
personal property, ad valorem, withholding, social security (or similar),
unemployment, occupation, use, service, service use, license, net worth,
payroll, franchise, severance, transfer, recording, employment, premium,
windfall profits, environmental (including taxes under section 59A of the Code),
customs duties, capital stock, profits, disability, sales, registration, value
added, alternative or add-on minimum, estimated or other taxes, assessments or
charges imposed by any federal, state, local or foreign governmental entity and
any interest, penalties, or additions to tax attributable thereto. For purposes
of this Agreement, "Tax
-13-
Returns" shall mean any return, report, form or similar statement required to be
filed with respect to any Tax (including any attached schedules), including,
without limitation, any information return, claim for refund, amended return or
declaration of estimated Tax.
Section 3.14 Employee Benefit Plans.
----------------------
(a) Prior to the date hereof, the Company has provided Acquirer with a
list (set forth on Schedule 3.14) identifying each material "employee benefit
-------------
plan," as defined in section 3(3) of the Employee Retirement Income Security Act
of 1974 ("ERISA"), each material employment, severance or similar contract,
plan, arrangement or policy applicable to any director, former director,
employee or former employee of the Company and each material plan or arrangement
(written or oral), providing for compensation, bonuses, profit-sharing, stock
option or other stock related rights or other forms of incentive or deferred
compensation, vacation benefits, insurance coverage (including any self-insured
arrangements), health or medical benefits, disability benefits, workers'
compensation, supplemental unemployment benefits, severance benefits and post-
employment or retirement benefits (including compensation, pension, health,
medical or life insurance benefits) which is maintained, administered or
contributed to by the Company and covers any employee or director or former
employee or director of the Company, or under which the Company has any
liability. Such material plans (excluding any such plan that is a "multiemployer
plan", as defined in section 3(37) of ERISA) are referred to collectively herein
as the "Company Employee Plans."
(b) Each Company Employee Plan has been maintained in compliance with its
terms and with the requirements prescribed by any and all statutes, orders,
rules and regulations (including but not limited to ERISA and the Code) which
are applicable to such Plan, except where failure to so comply would not,
individually or in the aggregate, have a Material Adverse Effect on the Company.
(c) Neither the Company nor any affiliate of the Company has incurred a
liability under Title IV of ERISA that has not been satisfied in full, and no
condition exists that presents a material risk to the Company or any affiliate
of the Company of incurring any such liability other than liability for premiums
due the Pension Benefit Guaranty Corporation (which premiums have been paid when
due).
(d) Each Company Employee Plan which is intended to be qualified under
section 401(a) of the Code is, to the knowledge of the Company, so qualified and
has been so qualified during the period from its adoption to date, and each
trust forming a part thereof is, to the knowledge of the Company, exempt from
federal income tax pursuant to section 501(a) of the Code.
(e) Except as set forth in Schedule 3.14, no director or officer or other
-------------
employee of the Company or any of its Subsidiaries will become entitled to any
retirement, severance or similar benefit or enhanced or accelerated benefit
(including any acceleration of vesting or lapse of repurchase rights or
obligations with respect to any employee stock option or other benefit under any
stock option plan or compensation plan or arrangement of the Company) solely as
a result of the transactions contemplated hereby.
-14-
(f) No Company Employee Plan provides post-retirement health and medical,
life or other insurance benefits for retired employees of the Company or any of
its Subsidiaries other than as required by law.
(g) Except as set forth on Schedule 3.14, there has been no amendment to,
-------------
written interpretation or announcement (whether or not written) by the Company
or any of its affiliates relating to, or change in employee participation or
coverage under, any Company Employee Plan which would increase materially the
expense of maintaining such Company Employee Plan above the level of the expense
incurred in respect thereof for the 12 months ended on the Company Balance Sheet
Date.
Section 3.15 Compliance with Laws. Neither the Company nor any of its
--------------------
Subsidiaries is in violation of, or has since January 1, 1999 violated, any
applicable provisions of any laws, statutes, ordinances or regulations except
for any violations that, individually or in the aggregate, would not reasonably
be expected to have a Material Adverse Effect on the Company.
Section 3.16 Finders' or Advisors' Fees. Except for ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ &
--------------------------
Hill, a copy of whose engagement agreement has been provided to Acquirer, there
is no investment banker, broker, finder or other intermediary which has been
retained by or is authorized to act on behalf of the Company or any of its
Subsidiaries who might be entitled to any fee or commission in connection with
the transactions contemplated by this Agreement.
Section 3.17 Environmental Matters.
---------------------
(a) Except with such exceptions as, individually or in the aggregate, have
not had, and would not reasonably be expected to have, a Material Adverse Effect
on the Company, (i) no notice, notification, demand, request for information,
citation, summons, complaint or order has been received by, and no
investigation, action, claim, suit, proceeding or review is pending or, to the
knowledge of the Company or any of its Subsidiaries, threatened by any Person
against, the Company or any of its Subsidiaries, and no penalty has been
assessed against the Company or any of its Subsidiaries, in each case, with
respect to any matters relating to or arising out of any Environmental Law; (ii)
the Company and its Subsidiaries are and have been in compliance with all
Environmental Laws; (iii) there are no liabilities of or relating to the Company
or any of its Subsidiaries relating to or arising out of any Environmental Law
of any kind whatsoever, whether accrued, contingent, absolute, determined,
determinable or otherwise, and there is no existing condition, situation or set
of circumstances which could reasonably be expected to result in such a
liability; and (iv) there has been no environmental investigation, study, audit,
test, review or other analysis conducted of which the Company has knowledge in
relation to the current or prior business of the Company or any of its
Subsidiaries or any property or facility now or previously owned, leased or
operated by the Company or any of its Subsidiaries which has not been delivered
to Acquirer at least five (5) days prior to the date hereof.
(b) For purposes of this Section 3.17, the term "Environmental Laws" means
any federal, state, local and foreign statutes, laws (including, without
limitation, common law), judicial decisions, regulations, ordinances, rules,
judgments, orders, codes, injunctions, permits, governmental agreements or
governmental restrictions relating to human health and safety, the environment
or to pollutants, contaminants, wastes, or chemicals.
-15-
Section 3.18 Labor Matters. There are no controversies pending or, to the
-------------
knowledge of each of the Company and its respective Subsidiaries, threatened,
between the Company or any of its Subsidiaries and any of their respective
employees, which controversies have or could reasonably be expected to have a
Material Adverse Effect on the Company. As of the date of this Agreement,
neither the Company nor any of its Subsidiaries is 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 its
Subsidiaries know of any activities or proceedings of any labor union to
organize any such employees (i) as of the date of this Agreement and (ii) which,
as of the Closing Date, have or could reasonably be expected to have a Material
Adverse Effect on the Company and its Subsidiaries. As of the date of this
Agreement, neither the Company nor any of its Subsidiaries has any knowledge of
any strikes, slowdowns, work stoppages or lockouts, or threats thereof, by or
with respect to any employees of the Company or any of its Subsidiaries (x) as
of the date of this Agreement and (y) which, as of the Closing Date, have or
could reasonably be expected to have a Material Adverse Effect on the Company
and its Subsidiaries.
Section 3.19 Title to Property. The Company and each of its Subsidiaries
-----------------
has good and marketable title to all of its properties and assets, free and
clear of all Liens, except for liens for taxes not yet due and payable and such
liens or other imperfections of title, if any, as do not materially detract from
the value of or interfere with the present use of the property affected thereby
or which, individually or in the aggregate, would not have a Material Adverse
Effect on the Company.
Section 3.20 Real Property.
-------------
(a) Schedule 3.20 sets forth a list of all leasehold interests in real
-------------
property of the Company and the Subsidiaries of the Company, which collectively
constitute the "Specified Real Estate."
(b) Neither the Company nor any of its Subsidiaries has given or received
notice of any material default under any material lease under which the Company
or any of its Subsidiaries is the lessee of real property (each a "Lease" and
collectively the "Leases") and, to the knowledge of the Company, neither the
Company nor any of its Subsidiaries nor any other party thereto is in default in
any material respect under any of the Leases. Schedule 3.20 contains a complete
-------------
list of all leases (including all amendments, modifications, waivers,
supplements and other agreements relating thereto) under which the Company or
any of its Subsidiaries is the lessee of the real property. Except as set forth
in Schedule 3.20, none of the Leases has been modified in any material respect
-------------
and such Leases are in full force and effect. Except as set forth in Schedule
--------
3.20, neither the Company nor any of its Subsidiaries has leased, subleased,
----
licensed or assigned, as the case may be, all or any portion of its fee or
leasehold interest in any Specified Real Estate to any person and the Company or
one or more of its Subsidiaries is in sole and exclusive possession of and has
the right to use all of the Specified Real Estate. Except as set forth in
Schedule 3.20, to the knowledge of the Company no person other than the
-------------
Company or one or more of its Subsidiaries has any option or right to
purchase, lease or use any portion of the Specified Real Estate. Schedule
--------
3.20 sets forth all rights of the Company and its Subsidiaries to purchase
----
the Specified Real Estate leased by the Company or its Subsidiaries under
any Lease.
-16-
(c) Except as disclosed in Schedule 3.20, the buildings and improvements
-------------
on the Specified Real Estate (including all fixtures, roofs, plumbing systems,
fire protection systems, electrical systems, equipment, elevators and all
structural components) in all material respects are in operating condition and
in a state of good and working maintenance and repair, ordinary wear and tear
excepted, are adequate and suitable for the purposes for which they are
presently being used, and to the knowledge of the Company, there are no
condemnation or expropriation proceedings pending or threatened against any of
such Specified Real Estate.
(d) To the knowledge of the Company, no part of any Specified Real Estate
is subject to any building or use restriction that materially restricts or
prevents the present use and operation of such property. To the knowledge of the
Company, none of the Specified Real Estate nor the use thereof by the Company or
any of its Subsidiaries constitutes a nonconforming use or legal non-conforming
use.
(e) The Company or one or more of its Subsidiaries is in possession of and
has good title to, or has valid leasehold interests in or valid rights under
contract to use, all tangible personal property used in the business of the
Company and its Subsidiaries or reflected in the audited financial statements of
the Company and its consolidated subsidiaries dated as of January 31, 1999,
except for personal property disposed of in the ordinary course since the date
thereof.
(f) No labor has been performed or material furnished for any portion of
any property owned by the Company or any of its Subsidiaries for which a Lien in
excess of $50,000 in value can be claimed against any such property. All of the
Specified Real Estate is served by water, sewer, sanitary sewer, telephone,
electric, gas and other public utilities necessary or desirable for the current
use thereof by the Company and its Subsidiaries.
Section 3.21 Management Payments; Vesting. Other than as set forth in
----------------------------
Schedule 3.21, no employee or former employee of the Company will be entitled to
-------------
additional compensation or to the early vesting or acceleration of payment of
any compensation that arises out of or are related to the consummation of the
Merger and the transactions contemplated thereby.
Section 3.22 Insurance. Schedule 3.22 lists all of the Company's
--------- -------------
insurance policies. The Company believes that such insurance carried by the
Company and its Subsidiaries is in such types and amounts and covering such
risks as are consistent with customary practices and standards of companies
engaged in businesses and operations similar to those of the Company and its
Subsidiaries. Except as would not have a Material Adverse Effect on the Company,
all such insurance is in full force and effect and none of the Company nor any
of its Subsidiaries is in default thereunder. Except as would not have a
Material Adverse Effect on the Company, all claims thereunder have been filed in
a due and timely fashion. Except as would not have a Material Adverse Effect on
the Company, neither the Company nor any of its Subsidiaries has been notified
in writing of a refusal of any material insurance coverage relating to products
liability (including renewals of any such products liability coverage) by any
insurance carrier to which it has applied for insurance during the past three
years.
Section 3.23 Intellectual Property. The Company or its Subsidiaries owns
---------------------
each of the patents and patent applications referred to in the Company SEC
Documents except as otherwise
-17-
set forth herein or therein and, except as set forth in the Company SEC
Documents, (i) each of the Company and its Subsidiaries owns or possesses, or
could obtain ownership or possession of (on terms not materially adverse to the
consolidated financial position, stockholders' equity, or results of operations
of the Company and its Subsidiaries taken as a whole) adequate and enforceable
rights to use all other Intellectual Property (as defined below) necessary for
the conduct of their business, (ii) no claims have been asserted or, to the
knowledge of the Company, threatened that the Company or any Subsidiary is
infringing or otherwise violating the rights of any Person with regard to any
Intellectual Property that, if the subject of an unfavorable decision, ruling or
finding, could reasonably be expected to (or, with respect to any pending patent
litigation, the Company does not believe will) have a Material Adverse Effect
and the Company knows of no basis therefor, and (iii) to the knowledge of the
Company, no person is infringing on or otherwise violating any right of the
Company or any Subsidiary with respect to any Intellectual Property owned by or
licensed to the Company or any Subsidiary. Except as set forth in the Company
SEC Documents, the Company has received no notice of potential indemnity claims
from customers based upon a notice of infringement any such customer has
received from a patent owner relating to an assertion of infringement of a
patent other than potential indemnity claims that individually or in the
aggregate would not reasonably be expected to have a Material Adverse Effect.
The Company's policy is to require that its employees execute agreements
assigning to the Company all rights such employees otherwise would have an
Intellectual Property developed by such employees while in the employ of the
Company.
For purposes of this Agreement, "Intellectual Property" shall mean, with
respect a Person, patents, pending applications for patents, copyrights,
trademarks (registered and unregistered), service marks, brand names, trade
names, and registrations in any jurisdiction of, and applications in any
jurisdiction to register, the foregoing, technology, know-how, software, and
tangible or intangible proprietary information or materials and any other trade
secrets related thereto.
Section 3.24 Year 2000 Compliance. Except as would not reasonably be
--------------------
expected to have a Material Adverse Effect on the Company, all of the Company's
Information Technology (as defined below) effectively addresses the Year 2000
issues. For purposes of this Agreement, the term "Information Technology" shall
mean and include all software, hardware, firmware, telecommunications systems,
network systems, embedded systems and other systems, components and/or services
that are owned or used by the Company in the conduct of its business, or
purchased by the Company from third party suppliers.
Section 3.25 Opinion of Financial Advisor. The Company has received the
----------------------------
opinion of ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇ to the effect that, as of the date of such
opinion, the Exchange Ratio is fair from a financial point of view to the
holders of Company Shares (other than Acquirer or any of its Subsidiaries or
affiliates), and, as of the date hereof, such opinion has not been withdrawn.
Section 3.26 Tax Treatment. Neither the Company nor any of its affiliates
-------------
has taken or agreed to take any action or is aware of any fact or circumstance
that would prevent the Merger from qualifying as a reorganization within the
meaning of section 368 of the Code (a "368 Reorganization").
-18-
Section 3.27 Takeover Statutes. The Board of Directors of the Company has
-----------------
taken the necessary action to make inapplicable the application of section 203
of the Delaware Law and any other applicable antitakeover or similar statute or
regulation to this Agreement and the transactions contemplated hereby.
ARTICLE IV
Representations and Warranties of Acquirer and Merger Subsidiary
----------------------------------------------------------------
Except as disclosed in a letter delivered by Acquirer to the Company
immediately prior to the execution of this Agreement and signed by a duly
authorized officer of Acquirer (the "Acquirer Disclosure Letter"), Acquirer and
Merger Subsidiary represents and warrants, to and for the benefit of, the
Company as follows:
Section 4.1 Organization and Qualification. Each of Acquirer and Merger
------------------------------
Subsidiary is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has all requisite corporate
power and authority to own, lease and operate its respective properties and to
carry on its business as now being conducted.
Each of Acquirer and Merger Subsidiary is qualified to do business as a
foreign corporation and is in good standing under the laws of each state or
other jurisdiction in which the nature of its business requires such
qualification, except where the failure to be so qualified or in good standing
which, taken together with all other such failures, would not have a Material
Adverse Effect on Acquirer.
Since the date of its incorporation, Merger Subsidiary has not engaged in
any activities other than in connection with or as contemplated by this
Agreement. Acquirer has delivered or made available to the Company true and
complete copies of Acquirer's and Merger Subsidiary's certificate of
incorporation and bylaws, as amended to the date hereof.
Section 4.2 Capitalization. The authorized capital stock of Acquirer
--------------
consists of: (i) 50,000,000 shares of Common Stock, par value $.001 per share,
of which 28,836,694 shares have been issued and are outstanding as of February
7, 2000; and (ii) 5,000,000 shares of Preferred Stock, par value $.001 per
share, none of which is outstanding as of the date of this Agreement. An
aggregate of 6,500,000 shares of Acquirer Common Stock are reserved for issuance
under Acquirer's 1998 Stock Plan, of which options to purchase 3,982,113 shares
were outstanding as of February 7, 2000. As of February 7, 2000 options to
purchase an additional 713,196 shares of Acquirer Common Stock were outstanding
under the Sitebridge 1997 Stock Plan assumed by Acquirer in 1999; an aggregate
of 750,000 shares of Acquirer Common Stock were reserved for issuance under
Acquirer's 1999 Employee Stock Purchase Plan; and an additional 159,554 shares
of Acquirer Common Stock were reserved for issuance upon exercise of outstanding
warrants. On March 7, 2000 in connection with the acquisition of Big Science
Company, a Georgia corporation ("BSC"), Acquirer issued 739,588 shares of Common
Stock and options to purchase an additional 49,962 shares of Common Stock in
exchange for all of the outstanding capital stock and options to purchase
capital stock of BSC. Except as set forth above, there is no: (i) outstanding
subscription, option, call, warrant or right (whether or not currently
exercisable) to acquire any shares of the capital stock or other securities of
Acquirer; (ii) outstanding security, instrument or obligation that is or may
become convertible into or
-19-
exchangeable for any shares of the capital stock or other securities of
Acquirer; or (iii) Contract under which Acquirer is or may become obligated to
sell or otherwise issue any shares of capital stock or any other securities of
Acquirer.
Section 4.3 Authority. Each of Acquirer and Merger Subsidiary has full
---------
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby have
been duly and validly authorized and approved by the respective Boards of
Directors of Acquirer and Merger Subsidiary, and no other corporate proceedings
are necessary to authorize this Agreement or the consummation of the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by Acquirer and Merger Subsidiary and, assuming this
Agreement constitutes a legal, valid and binding agreement of the other parties
hereto, it constitutes a legal, valid and binding agreement of Acquirer,
enforceable against it in accordance with its terms.
Section 4.4 Governmental Authorization. The execution, delivery and
--------------------------
performance by Acquirer and Merger Subsidiary of this Agreement and the
consummation of the Merger by Acquirer and Merger Subsidiary require no action
by or in respect of, or filing with, any governmental body, agency, official or
authority other than (a) the filing of a certificate of merger in accordance
with Delaware Law, (b) compliance with any applicable requirements of the HSR
Act, (c) compliance with any applicable requirements of the Exchange Act, (d)
compliance with any applicable requirements of the 1933 Act, and (e) other
actions or filings which if not taken or made would not, individually or in the
aggregate, have a Material Adverse Effect on Acquirer.
Section 4.5 Non-Contravention. The execution, delivery and performance by
-----------------
Acquirer and Merger Subsidiary of this Agreement and the consummation by
Acquirer and Merger Subsidiary of the transactions contemplated hereby do not
and will not (a) assuming compliance with the matters referred to in Section
4.3, contravene or conflict with the certificate of incorporation or bylaws of
Acquirer or Merger Subsidiary, (b) assuming compliance with the matters referred
to in Section 4.4, contravene or conflict with or constitute a violation of any
provision of any law, regulation, judgment, injunction, order or decree binding
upon or applicable to Acquirer or any of its Subsidiaries, (c) constitute a
default under or give rise to a right of termination, cancellation or
acceleration of any right or obligation of Acquirer or any of its Subsidiaries
or to a loss of any benefit to which Acquirer or any of its Subsidiaries is
entitled under any provision of any agreement, contract or other instrument
binding upon Acquirer or any of its Subsidiaries or any license, franchise,
permit or other similar authorization held by Acquirer or any of its
Subsidiaries, or (d) result in the creation or imposition of any Lien on any
asset of Acquirer or any of its Subsidiaries, except for such contraventions,
conflicts or violations referred to in clause (b) or defaults, rights of
termination, cancellation or acceleration, or losses or Liens referred to in
clause (c) or (d) that would not, individually or in the aggregate, have a
Material Adverse Effect on Acquirer. Except as disclosed in Schedule 4.5,
------------
neither Acquirer nor any Subsidiary of Acquirer is a party to any agreement that
expressly limits the ability of Acquirer or any Subsidiary of Acquirer to
compete in or conduct any line of business or compete with any Person or in any
geographic area or during any period of time except to the extent that any such
limitation, individually or in the aggregate, would not be reasonably likely to
have a Material Adverse Effect on Acquirer after the Effective Time.
-20-
Section 4.6 SEC Filings.
-----------
(a) Each report, registration statement (on a form other than Form S-8)
and definitive proxy statement filed by Acquirer with the SEC between September
23, 1999 and the date of this Agreement (the "Acquirer SEC Documents") is
publicly available from the SEC and Acquirer will deliver to the Company
accurate and complete copies (excluding copies of exhibits) of each Acquirer SEC
Document prior to the Closing. As of the time it was filed with the SEC (or, if
amended or superseded by a filing prior to the date of this Agreement, then on
the date of such filing): (i) each of the Acquirer SEC Documents complied in all
material respects with the applicable requirements of the Securities Act or the
Exchange Act (as the case may be); and (ii) none of the Acquirer SEC Documents
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
(b) The consolidated financial statements contained in the Acquirer SEC
Documents: (i) complied as to form in all material respects with the published
rules and regulations of the SEC applicable thereto; (ii) were prepared in
accordance with generally accepted accounting principles applied on a consistent
basis throughout the periods covered, except as may be indicated in the notes to
such consolidated financial statements and (in the case of unaudited statements)
as permitted by Form 10-Q of the SEC, and except that the unaudited financial
statements may not contain footnotes and are subject to year-end audit
adjustments; and (iii) fairly present the consolidated financial position of
Acquirer as of the respective dates thereof and the consolidated results of
operations of Acquirer for the periods covered thereby.
Section 4.7 Disclosure Documents.
--------------------
(a) The Proxy Statement/Prospectus to be filed with the SEC in connection
with the Merger and the Form S-4 to be filed under the 1933 Act relating to the
issuance of Acquirer Common Stock in the Merger, and any amendments or
supplements thereto, will, when filed, subject to the last sentence of Section
4.7(b), comply as to form in all material respects with the requirements of the
Exchange Act and the 1933 Act.
(b) Neither the Proxy Statement/Prospectus to be filed with the SEC, nor
any amendment or supplement thereto, will, at the date the Proxy
Statement/Prospectus or any such amendment or supplement is first mailed to
stockholders of the Company or at the time such stockholders vote on the
adoption and approval of this Agreement and the transactions contemplated
hereby, contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading. Neither the Form
S-4 nor any amendment or supplement thereto will at the time it becomes
effective under the 1933 Act or at the Effective Time contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading. No
representation or warranty is made by Acquirer in this Section 4.7 with respect
to statements made or incorporated by reference therein based on information
supplied by the Company for inclusion or incorporation by reference in the Proxy
Statement/Prospectus or the Form S-4.
-21-
Section 4.8 Litigation. Except as disclosed in Acquirer SEC Documents
----------
filed prior to the date hereof, there is no action, suit, investigation or
proceeding pending against, or to the knowledge of Acquirer threatened against
or affecting, Acquirer or any of its Subsidiaries or any of their respective
properties before any court or arbitrator or any governmental body, agency or
official which would reasonably be expected to have a Material Adverse Effect on
Acquirer.
Section 4.9 Employee Benefit Plans.
----------------------
(a) Prior to the date hereof, Acquirer has provided the Company with a
list (set forth on Schedule 4.9) identifying each material "employee benefit
------------
plan," as defined in section 3(3) of ERISA, each material employment, severance
or similar contract, plan, arrangement or policy applicable to any director,
former director, employee or former employee of Acquirer and each material plan
or arrangement (written or oral), providing for compensation, bonuses, profit-
sharing, stock option or other stock related rights or other forms of incentive
or deferred compensation, vacation benefits, insurance coverage (including any
self-insured arrangements), health or medical benefits, disability benefits,
workers' compensation, supplemental unemployment benefits, severance benefits
and post-employment or retirement benefits (including compensation, pension,
health, medical or life insurance benefits) which is maintained, administered or
contributed to by Acquirer and covers any employee or director or former
employee or director of Acquirer, or under which Acquirer has any liability.
Such material plans (excluding any such plan that is a "multiemployer plan", as
defined in section 3(37) of ERISA) are referred to collectively herein as the
"Acquirer Employee Plans."
(b) Each Acquirer Employee Plan has been maintained in compliance with its
terms and with the requirements prescribed by any and all statutes, orders,
rules and regulations (including but not limited to ERISA and the Code) which
are applicable to such Plan, except where failure to so comply would not,
individually or in the aggregate, have a Material Adverse Effect on Acquirer.
Section 4.10 Compliance with Laws. Neither Acquirer nor any of its
--------------------
Subsidiaries is in violation of, or has since January 1, 1999 violated, any
applicable provisions of any laws, statutes, ordinances or regulations except
for any violations that, individually or in the aggregate, would not reasonably
be expected to have a Material Adverse Effect on Acquirer.
Section 4.11 Finders' or Advisors' Fees. There is no investment banker,
--------------------------
broker, finder or other intermediary which has been retained by or is authorized
to act on behalf of Acquirer or any of its Subsidiaries who might be entitled to
any fee or commission in connection with the transactions contemplated by this
Agreement.
Section 4.12 Tax Treatment. Neither Acquirer nor any of its affiliates
-------------
has taken or agreed to take any action or is aware of any fact or circumstance
that would prevent the Merger from qualifying as a 368 Reorganization.
Section 4.13 Vote Required. No vote of the holders of any class or series
-------------
of Acquirer capital stock is required to approve the Merger and adopt this
Agreement. Acquirer, as the sole shareholder of Merger Sub, will promptly vote
to approve the Merger and adopt this Agreement.
-22-
Section 4.14 Absence of Certain Changes. Except as set forth in Schedule
-------------------------- --------
4.14, since December 31, 1999, Acquirer and its Subsidiaries have conducted
----
their business in the ordinary course consistent with past practice and there
has not been:
(a) any event, occurrence or development of a state of circumstances or
facts which has had or reasonably would be expected to have, individually or in
the aggregate, a Material Adverse Effect on Acquirer;
(b) any declaration, setting aside or payment of any dividend or other
distribution with respect to any shares of capital stock of Acquirer or any
repurchase, redemption or other acquisition by Acquirer or any of its
Subsidiaries of any outstanding shares of capital stock or other securities of,
or other ownership interests in, Acquirer or any of its Subsidiaries; or
(c) any change in any method of accounting or accounting practice (other
than any change for tax purposes) by Acquirer or any of its Subsidiaries, except
for any such change which is not significant or which is required by reason of a
concurrent change in GAAP.
Section 4.15 No Undisclosed Material Liabilities. There are no
-----------------------------------
liabilities of Acquirer or any Subsidiary of Acquirer of any kind whatsoever,
whether accrued, contingent, absolute, determined, determinable or otherwise,
other than:
(a) liabilities disclosed or provided for in the Acquirer SEC Documents or
in the notes thereto;
(b) liabilities which in the aggregate would not reasonably be expected to
have a Material Adverse Effect on Acquirer;
(c) liabilities disclosed in Acquirer SEC Documents filed prior to the
date hereof or set forth in Schedule 4.15(c); and
----------------
(d) liabilities under this Agreement.
Section 4.16 Litigation. Except as set forth in the Acquirer SEC
----------
Documents, there is no claim, action, suit, litigation, proceeding or
arbitration of any kind, at law or in equity (including actions or proceedings
seeking injunctive relief), pending or, to Acquirer's knowledge, threatened
against Acquirer or any of its Subsidiaries or any assets or rights of Acquirer
or its Subsidiaries that would reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect on Acquirer. Neither Acquirer nor
any of its Subsidiaries is subject to any continuing order of, consent decree,
settlement agreement or other similar written agreement with, or, to Acquirer's
knowledge, any continuing investigation by, any governmental entity, or any
judgment, order, writ, injunction, decree or award of any government entity or
arbitrator, including, without limitation, cease-and-desist or other orders that
could prevent, enjoin or materially alter or delay any of the transactions
contemplated by this Agreement or that would reasonably be expected to have a
Material Adverse Effect on Acquirer.
Section 4.17 Insurance. To the knowledge of Acquirer the insurance
---------
carried by Acquirer and its Subsidiaries is in such types and amounts and
covering such risks as are consistent with customary practices and standards of
companies engaged in businesses and
-23-
operations similar to those of Acquirer and its Subsidiaries. Except as would
not have a Material Adverse Effect on Acquirer, all such insurance is in full
force and effect and none of Acquirer nor any of its Subsidiaries is in default
thereunder. Except as would not have a Material Adverse Effect on Acquirer, all
claims thereunder have been filed in a due and timely fashion. Except as would
not have a Material Adverse Effect on Acquirer, neither Acquirer nor any of its
Subsidiaries has been notified in writing of a refusal of any material insurance
coverage relating to products liability (including renewals of any such products
liability coverage) by any insurance carrier to which it has applied for
insurance during the past three (3) years.
ARTICLE V
Covenants of the Company
------------------------
Section 5.1 Conduct of Business of the Company. Except as contemplated by
----------------------------------
this Agreement or as expressly agreed to in writing by Acquirer, during the
period from the date of this Agreement to the earlier of the termination of this
Agreement in accordance with Article IX (the "Termination Date") and the
Effective Time, each of the Company and its Subsidiaries will conduct its
operations according to its ordinary course of business consistent with past
practice, and will use all commercially reasonable efforts to preserve intact
its business organization, to keep available the services of its officers and
employees and to maintain satisfactory relationships with suppliers,
distributors, customers and others having business relationships with it and
will take no action which would materially adversely affect the ability of the
parties to consummate the transactions contemplated by this Agreement. Without
limiting the generality of the foregoing, and except as otherwise expressly
provided in this Agreement, prior to the earlier of the Termination Date and the
Effective Time, the Company will not nor will it permit any of its Subsidiaries
to, without the prior written consent of Acquirer:
(a) amend its certificate of incorporation or bylaws;
(b) authorize for issuance, issue, sell, deliver, grant any options for,
or otherwise agree or commit to issue, sell or deliver any shares of any class
of its capital stock or any securities convertible into shares of any class of
its capital stock, except (i) pursuant to and in accordance with the terms of
currently outstanding convertible securities and options, and (ii) options
granted under the Company Stock Option Plans, in the ordinary course of business
consistent with past practice (but in no event shall options be granted covering
more than 75,000 Company Shares per individual or 300,000 Company Shares in the
aggregate);
(c) split, combine or reclassify any shares of its capital stock, declare,
set aside or pay any dividend or other distribution (whether in cash, stock or
property or any combination thereof) in respect of its capital stock or
purchase, redeem or otherwise acquire any shares of its own capital stock or any
of its Subsidiaries, other than the repurchase at cost of shares of employees
and consultants upon termination of their employment or consultancy with the
Company or its Subsidiaries;
(d) except in the ordinary course of business, consistent with past
practice (i) create, incur, assume, maintain or permit to exist any long-term
debt or any short-term debt for borrowed money other than under existing lines
of credit; (ii) assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, contingently or otherwise) for the
-24-
obligations of any other person except its wholly owned subsidiaries in the
ordinary course of business and consistent with past practices; or (iii) make
any loans, advances or capital contributions to, or investments in, any other
person;
(e) except as otherwise expressly contemplated by this Agreement or in the
ordinary course of business, consistent with past practice, (i) increase in any
manner the compensation of any of its directors, officers or other employees;
(ii) pay or agree to pay any pension, retirement allowance or other employee
benefit not required, or enter into or agree to enter into any agreement or
arrangement with such director, officer or employee, whether past or present,
relating to any such pension, retirement allowance or other employee benefit,
except as required under currently existing agreements, plans or arrangements;
(iii) grant any severance or termination pay to except as required under
currently existing agreements, plans or arrangements, or enter into any
employment or severance agreement with any of its directors, officers or other
employees; or (iv) except as may be required to comply with applicable law,
become obligated (other than pursuant to any new or renewed collective
bargaining agreement) under any new pension plan, welfare plan, multiemployer
plan, employee benefit plan, benefit arrangement, or similar plan or
arrangement, which was not in existence on the date hereof, including any bonus,
incentive, deferred compensation, stock purchase, stock option, stock
appreciation right, group insurance, severance pay, retirement or other benefit
plan, agreement or arrangement, or employment or consulting agreement with or
for the benefit of any person, and to amend any of such plans or any of such
agreements in existence on the date hereof;
(f) except as otherwise expressly contemplated by this Agreement, enter
into any other agreements, commitments or contracts, except agreements,
commitments or contracts for the purchase, sale or lease of goods or services in
the ordinary course of business, consistent with past practice;
(g) except in the ordinary course of business, consistent with past
practice, or as contemplated by this Agreement authorize, recommend, propose or
announce an intention to authorize, recommend or propose, or enter into any
agreement in principle or an agreement with respect to, any plan of liquidation
or dissolution, any acquisition of a material amount of assets or securities,
any sale, transfer, lease, license, pledge, mortgage, or other disposition or
encumbrance of a material amount of assets or securities or any material change
in its capitalization, or any entry into a material contract or any amendment or
modification of any material contract or any release or relinquishment of any
material contract rights; or
(h) agree to do any of the foregoing.
Section 5.2 No Solicitation. The Company agrees that from and after the
---------------
date of this Agreement until the earlier of the Termination Date and the
Effective Time, neither it nor any of its Subsidiaries nor any of the officers
or directors of it or its Subsidiaries, nor its employees, investment bankers,
attorneys, accountants, financial advisors, agents or other representatives
(collectively, "Representatives"), shall directly or indirectly, initiate or
solicit any inquiries or the making of a Company Acquisition Proposal. For
purposes of this Agreement, "Company Acquisition Proposal" shall mean any offer
or proposal (other than an offer or proposal by Acquirer) relating to any
transaction or series of related transactions involving: (A) any purchase from
the Company or acquisition by any Person or "group" (as defined under section
13(d) of the Exchange Act and the rules and regulations thereunder) of more than
a 5% interest in the total outstanding voting securities of the Company or any
of its subsidiaries or any tender offer or exchange offer that if consummated
would result in any person or "group" (as defined under section 13(d) of the
-25-
Exchange Act and the rules and regulations thereunder) beneficially owning 5% or
more of the total outstanding voting securities of the Company or any of its
Subsidiaries or any merger, consolidation, business combination or similar
transaction involving the Company; (B) any sale, lease (other than in the
ordinary course of business), exchange, transfer, license (other than in the
ordinary course of business), acquisition or disposition of more than 5% of the
assets of the Company (excluding the assets of the Company constituting the
Infind Business); or (C) any liquidation or dissolution of the Company. The
Company further agrees that neither it nor any of its Subsidiaries nor any of
its or its Subsidiaries' officers or directors shall, and that it shall direct
and use its best reasonable efforts to cause its Representatives not to,
directly or indirectly, have any discussions with or provide any confidential
information or data to any Person relating to a Company Acquisition Proposal or
engage in any negotiations concerning a Company Acquisition Proposal; provided,
however, that if the Board of Directors of the Company determines in good faith,
based on such matters as it deems relevant, acting only after consultation with
WSGR (or other legal counsel of nationally recognized standing) that the failure
to do so would be a breach of its fiduciary duties to the Company's stockholders
under the DGCL, the Company may, in response to a Company Acquisition Proposal
that was not solicited and that the Board of Directors of the Company
determines, based upon the advice of ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇ (or another
financial advisor of nationally recognized standing), is from a Person or group
other than Acquirer or its affiliates that is capable of consummating a Superior
Proposal and only for so long as the Board of Directors so determines that its
actions are likely to lead to a Superior Proposal, (i) furnish information to
any such Person or group only pursuant to a confidentiality agreement
substantially in the same form as was executed by Acquirer prior to the
execution of this Agreement and only if copies of such information are
concurrently provided to Acquirer, (ii) participate in discussions and
negotiations regarding such proposal or offer, (iii) make any disclosure to its
stockholders if, in the good faith judgment of its board of directors, failure
so to disclose would be inconsistent with its obligations under applicable
Delaware Law; or (iv) recommend such Company Acquisition Proposal to its
stockholders, if and only to the extent that, in the case of an action referred
to in clause (iv), such Company Acquisition Proposal is a Superior Proposal (as
defined below). For purposes of this Agreement, a "Superior Proposal" means, in
respect of the Company, any Company Acquisition Proposal by a third party on
terms which the board of directors of the Company determines in its reasonable
good faith judgment, based on such matters it deems relevant, including in the
case of clauses (i) and (ii) below the advice of the Company's financial
advisor, (i) provides greater benefits to the Company's stockholders than those
provided pursuant to this Agreement, (ii) provides that any financing required
to consummate the transaction contemplated by the offer is either in the
possession of the Person making such Acquisition Proposal or is likely to be
obtained by such Person on a timely basis, and (iii) does not contain a "right
of first refusal" or "right of first offer" with respect to any counter-proposal
that Acquirer might make; provided, further, that the Board of Directors of the
Company by a majority vote determines in its good faith judgment that such
Acquisition Proposal is reasonably capable of being completed (taking into
account all legal, financial, regulatory and other aspects of the proposal and
the person making the proposal). Nothing contained in this Section 5.2 shall
prohibit the Company or the Company's Board of Directors from taking and
disclosing to the Company's stockholders a position with
-26-
respect to a tender or exchange offer by a third party pursuant to Rules 14d-9
and 14e-2(a) promulgated under the Exchange Act or from making any disclosure
required by applicable law.
Section 5.3 Stockholders' Meetings. The Company shall in accordance with
----------------------
applicable law and the Certificate of Incorporation and Bylaws of the Company
duly call, convene and hold a special meeting of its stockholders as promptly as
practicable after the date hereof for the purpose of voting upon the adoption of
this Agreement and the transactions contemplated hereby.
ARTICLE VI
Covenants of Acquirer
---------------------
Section 6.1 Conduct of Business of Acquirer. During the period from the
-------------------------------
date of this Agreement to the earlier of the termination of this Agreement in
accordance with Article IX (the "Termination Date") and the Effective Time,
Acquirer will use all commercially reasonable efforts to preserve intact its
business organization, to keep available the services of its officers and
employees and to maintain satisfactory relationships with suppliers,
distributors, customers and others having business relationships with it and
will take no action which would materially adversely affect the ability of the
parties to consummate the transactions contemplated by this Agreement or that
would cause a Material Adverse Effect with respect to Acquirer.
Section 6.2 Indemnification.
---------------
(a) Acquirer shall indemnify, defend and hold harmless the present and
former officers, directors, employees and agents of the Company and its
Subsidiaries against all losses, claims, damages, expenses or liabilities
arising out of actions or omissions or alleged actions or omissions occurring at
or prior to the Effective Time to the same extent and on the same terms and
conditions (including with respect to advancement of expenses) provided for in
the Company's certificate of incorporation and bylaws and agreements in effect
at the date hereof (to the extent consistent with applicable law).
(b) For a period of six (6) years after the Effective Time, Acquirer shall
cause to be maintained in effect the current policies of directors' and
officers' liability insurance maintained by the Company (provided that Acquirer
may substitute therefor policies of at least the same coverage and amounts
containing terms and conditions which are no less advantageous) with respect to
claims arising from facts or events which occurred before the Effective Time;
provided, however, that Acquirer shall not be obligated to make annual premium
payments for such insurance to the extent such premiums exceed 200% of the
premiums paid as of the date hereof by the Company for such insurance.
(c) The provisions of this Section 6.2 are intended to be for the benefit
of, and shall be enforceable by each indemnified party hereunder, his or her
heirs and his or her representatives. The obligations of Acquirer under this
Section 6.2 shall not be terminated or modified in such a manner as to adversely
affect any Indemnitee to whom this Section 6.2 applies without the consent of
such affected Indemnitee (it being expressly agreed that the Indemnitees to whom
this Section 6.2 applies shall be third party beneficiaries of this Section
6.2).
-27-
Section 6.3 NNM Listings. Acquirer shall promptly prepare and submit to
------------
The Nasdaq Stock Market a listing application covering the shares of Acquirer
Common Stock (and associated Acquirer Rights) issuable in the Merger and upon
exercise of the Company Stock Options, and shall use all commercially reasonable
efforts to obtain, prior to the Effective Time, approval for the listing of such
Acquirer Common Stock (and associated Acquirer Rights), subject to official
notice of issuance.
Section 6.4 Employee Matters.
----------------
(a) Acquirer shall take such reasonable actions as are necessary to allow
eligible employees of the Company to participate in the benefit programs of
Acquirer, or alternative benefits programs substantially comparable to those
applicable to employees of Acquirer on similar terms, as soon as practicable
after the Effective Time. Without limiting the generality of the foregoing, (i)
to the extent that any employee of the Company becomes eligible to participate
in any employee benefit plan of Acquirer after the Effective Time, Acquirer and
Merger Subsidiary shall credit such employee's service with the Company, to the
same extent as such service was credited under the similar employee benefit
plans of the Company immediately prior to the Effective Time, for purposes of
determining eligibility to participate in and vesting under, and for purposes of
calculating benefits under, such employee benefit plan of Acquirer, and (ii) to
the extent permitted by such employee benefit plan of Acquirer and applicable
law, Acquirer and Merger Subsidiary shall waive any pre-existing condition
limitations, waiting periods or similar limitations under such employee benefit
plan of Acquirer.
(b) Acquirer shall, and shall cause the Surviving Corporation and
Acquirer's Subsidiaries to, honor in accordance with their terms all agreements,
contracts, arrangements, commitments and understandings described in Schedule
3.14 of the Company Disclosure Schedule as to the employees of the Company at
the Effective Time who continue to be employed by the Company as of the
Effective Time, except as may be modified by express agreements with such
individual employees.
ARTICLE VII
Covenants of Acquirer and the Company
-------------------------------------
Section 7.1 Access to Information.
---------------------
(a) From the date of this Agreement until the earlier of the Termination
Date and the Effective Time, each of the Company and Acquirer will give the
other party and their authorized representatives (including counsel,
environmental and other consultants, accountants and auditors) access during
normal business hours to all facilities, personnel and operations and to all
books and records of it and its Subsidiaries, will permit the other party to
make such inspections as it may reasonably require and will cause its officers
and those of its Subsidiaries to furnish the other party with such financial and
operating data and other information with respect to its business and properties
as such party may from time to time reasonably request.
(b) Each of the parties hereto will hold and will cause its consultants
and advisors to hold in strict confidence pursuant to the Confidentiality
Agreement dated February 20, 2000 between the parties (the "Confidentiality
Agreement") all documents and information furnished
-28-
to the other in connection with the transactions contemplated by this Agreement
as if each such consultant or advisor was a party thereto.
Section 7.2 Registration Statement and Proxy Statement.
------------------------------------------
(a) Acquirer and the Company shall file with the SEC as soon as is
reasonably practicable after the date hereof the Proxy Statement/Prospectus and
Acquirer shall file the Registration Statement in which the Proxy
Statement/Prospectus shall be included. Acquirer and the Company shall use all
commercially reasonable efforts to have the Registration Statement declared
effective by the SEC as promptly as practicable. Acquirer shall also take any
action required to be taken under applicable state blue sky or securities laws
in connection with the issuance of shares of Acquirer Common Stock pursuant to
this Agreement. Acquirer and the Company shall promptly furnish to each other
all information, and take such other actions, as may reasonably be requested in
connection with any action by any of them in connection with this Section
7.2(a).
(b) If at any time prior to the Effective Time any event shall occur which
is required to be described in the Proxy Statement/Prospectus or Form S-4, such
event shall be so described, and an amendment or supplement shall be promptly
filed with the SEC and, as required by law, disseminated to the stockholders of
the Company; provided that no amendment or supplement to the Proxy
Statement/Prospectus or the Form S-4 will be made by Acquirer or the Company
without the approval of the other party. To the extent applicable, each of
Acquirer and the Company will advise the other, promptly after it receives
notice thereof, of the time when the Form S-4 has become effective or any
supplement or amendment has been filed, the issuance of any stop order, the
suspension of the qualification of the shares of Acquirer Common Stock issuable
in connection with the Merger for offering or sale in any jurisdiction, or any
request by the SEC for amendment of the Proxy Statement/Prospectus or the Form
S-4 or comments thereon and responses thereto or requests by the SEC for
additional information. All filings by Acquirer and the Company with the SEC in
connection with the transactions contemplated hereby, including the Proxy
Statement, the Form S-4 and any amendment or supplement thereto, shall be
subject to the prior review of the other, and all mailings to the Company's
stockholders in connection with the transactions contemplated by this Agreement
shall be subject to the prior review of the other party.
(c) Acquirer and the Company shall each use all commercially reasonable
efforts to cause to be delivered to the other a comfort letter of its
independent auditors, dated a date within two (2) business days of the effective
date of the Form S-4, in form reasonably satisfactory to the other party and
customary in scope and substance for such letters in connection with similar
registration statements.
Section 7.3 Reasonable Efforts; Other Actions. Subject to the terms and
---------------------------------
conditions herein provided and applicable law, the Company and Acquirer shall
use all commercially reasonable efforts promptly to take, or cause to be taken,
all other actions and do, or cause to be done, all other things necessary,
proper or appropriate under applicable laws and regulations to consummate and
make effective the transactions contemplated by this Agreement, including,
without limitation, (i) the filing of Notification and Report Forms under the
HSR Act with the Federal Trade Commission (the "FTC") and the Antitrust Division
of the Department of Justice
-29-
(the "Antitrust Division") and using their reasonable best efforts to respond as
promptly as practicable to all inquiries received from the FTC or the Antitrust
Division for additional information or documentation, (ii) the taking of any
actions required to qualify the Merger as a 368 Reorganization, (iii) the
obtaining of all necessary consents, approvals or waivers under its material
contracts, and (iv) the lifting of any legal bar to the Merger.
Section 7.4 Public Announcements. Before issuing any press release or
--------------------
otherwise making any public statements with respect to the Merger, Acquirer and
the Company will consult with each other as to its form and substance and shall
not issue any such press release or make any such public statement prior to such
consultation, except as may be required by law or by any listing agreement with,
or the policies of, a national securities exchange in which circumstance
reasonable efforts to consult will still be required to the extent practicable.
Section 7.5 Notification of Certain Matters. Each of the Company and
-------------------------------
Acquirer shall give prompt notice to the other party of (i) any notice of, or
other communication relating to, a breach of this Agreement or event which, with
notice or lapse of time or both, would become a breach, received by it or any of
its Subsidiaries subsequent to the date of this Agreement and prior to the
Effective Time, under any contract to which it or any of its Subsidiaries is a
party or it, any of its Subsidiaries or any of its or their respective
properties is subject, which breach would be reasonably likely to have a
Material Adverse Effect on it, or (ii) any notice or other communication from
any third party alleging that the consent of such third party is or may be
required in connection with the transactions contemplated by this Agreement.
Section 7.6 Expenses. Except as set forth in Section 9.5, Acquirer, and
--------
the Company, shall bear their respective expenses incurred in connection with
the Merger, including, without limitation, the preparation, execution and
performance of this Agreement and the transactions contemplated hereby, and all
fees and expenses of investment bankers, finders, brokers, agents,
representatives, counsel and accountants, except that expenses incurred in
printing, mailing and filing (including without limitation, SEC filing fees and
stock exchange listing application fees) Form S-4 and the Proxy
Statement/Prospectus shall be shared equally by the Company and Acquirer.
Section 7.7 Affiliates. Each of the Company and Acquirer shall deliver to
----------
the other a letter identifying all persons who, as of the date hereof, may be
deemed to be "affiliates" thereof for purposes of Rule 145 under the Securities
Act (the "Affiliates") and shall advise the other in writing of any persons who
become an Affiliate prior to the Effective Time. The Company shall cause each
person who is so identified as an Affiliate to deliver to Acquirer, no later
than the earlier of the date hereof or the date such person becomes an
Affiliate, a written agreement substantially in the form of Exhibit 7.7 hereto.
-----------
Section 7.8 Tax-Free Reorganization Treatment. Each of Acquirer and the
---------------------------------
Company shall take all reasonable actions necessary to cause the Merger to
qualify as a reorganization under the provisions of section 368(a) of the Code
and to obtain the opinion of counsel referred to in Section 8.2(b) hereof, and
neither party will take any action inconsistent therewith.
-30-
ARTICLE VIII
Conditions to the Merger
------------------------
Section 8.1 Conditions to the Obligations of Each Party. The obligations
-------------------------------------------
of the Company, Acquirer and Merger Subsidiary to consummate the Merger are
subject to the satisfaction (or, to the extent legally permissible, waiver) of
the following conditions:
(a) this Agreement shall have been adopted and the Merger approved by the
stockholders of the Company in accordance with Delaware Law;
(b) any applicable waiting period under the HSR Act relating to the Merger
shall have expired or terminated;
(c) no provision of any applicable law or regulation and no judgment,
injunction, order or decree shall prohibit or enjoin the consummation of the
Merger;
(d) the parties shall have received all required approvals and third party
consents listed on Schedule 8.1(d);
---------------
(e) the Form S-4 shall have been declared effective under the 1933 Act and
no stop order suspending the effectiveness of the Form S-4 shall be in effect
and no proceedings for such purpose shall be pending before or threatened by the
SEC; and
(f) the shares of Acquirer Common Stock to be issued in the Merger shall
have been approved for listing on the NNM, subject to official notice of
issuance.
Section 8.2 Conditions to the Obligations of Acquirer and Merger
----------------------------------------------------
Subsidiary. The obligations of Acquirer and Merger Subsidiary to consummate the
----------
Merger are subject to the satisfaction (or, to the extent legally permissible,
waiver) of the following further conditions:
(a) (i) the Company shall have performed in all material respects all of
its obligations hereunder required to be performed by it at or prior to the
Effective Time, (ii) except to the extent expressly permitted under this
Agreement, the representations and warranties of the Company contained in this
Agreement and in any certificate or other writing delivered by the Company
pursuant hereto (x) that are qualified by materiality or Material Adverse Effect
shall be true at and as of the Effective Time as if made at and as of such time,
and (y) that are not qualified by materiality or Material Adverse Effect shall
be true in all material respects at and as of the Effective Time as if made at
and as of such time and (iii) Acquirer shall have received a certificate signed
by the chief executive officer of the Company to the foregoing effect;
(b) there shall not be instituted or pending any action or proceeding by
any governmental authority (whether domestic, foreign or supranational) before
any court or governmental authority or agency, domestic, foreign or
supranational, (i) seeking to restrain, prohibit or otherwise interfere with the
ownership or operation by Acquirer or any Subsidiary of Acquirer of all or any
portion of the business of the Company or any of its Subsidiaries or of Acquirer
or any of its Subsidiaries or to compel Acquirer or any Subsidiary of Acquirer
to dispose of or hold separate all or any portion of the business or assets of
the Company or any of its Subsidiaries or of Acquirer or any of its
Subsidiaries, (ii) seeking to impose or confirm limitations on the ability
-31-
of Acquirer or any Subsidiary of Acquirer effectively to exercise full rights of
ownership of the Company Shares (or shares of the Surviving Corporation)
including, without limitation, the right to vote any Company Shares (or shares
of the Surviving Corporation) on any matters properly presented to stockholders
or (iii) seeking to require divestiture by Acquirer or any Subsidiary of
Acquirer of any Company Shares (or shares of the Surviving Corporation) if any
such matter referred to in clause (i), (ii) or (iii) hereof could reasonably be
expected to result in a substantial detriment to Acquirer and its Subsidiaries
(including the Company and its Subsidiaries), taken as a whole (any such
substantial detriment being referred to in this Agreement as a "Substantial
Detriment");
(c) there shall not be any statute, rule, regulation, injunction, order or
decree, enacted, enforced, promulgated, entered, issued or deemed applicable to
the Merger and the other transactions contemplated hereby (or in the case of any
statute, rule or regulation, awaiting signature or reasonably expected to become
law), by any court, government or governmental authority or agency or
legislative body, domestic, foreign or supranational, that is reasonably likely,
directly or indirectly, to result in a Substantial Detriment;
(d) (i) all required approvals or consents of any governmental authority
(whether domestic, foreign or supranational) in connection with the Merger and
the consummation of the other transactions contemplated hereby shall have been
obtained (and all relevant statutory, regulatory or other governmental waiting
periods, whether domestic, foreign or supranational, shall have expired) unless
the failure to receive any such approval or consent would not be reasonably
likely, directly or indirectly, to result in a Substantial Detriment and (ii)
all such approvals and consents which have been obtained shall be on terms that
are not reasonably likely, directly or indirectly, to result in a Substantial
Detriment; and
(e) since the date of this Agreement, there shall not have been any event,
occurrence, development or state of circumstances which, individually or in the
aggregate, has had or would reasonably be expected to have a Material Adverse
Effect on the Company.
Section 8.3 Conditions to the Obligations of the Company. The obligation
--------------------------------------------
of the Company to consummate the Merger is subject to the satisfaction (or, to
the extent legally permissible, waiver) of the following further conditions:
(a) (i) Acquirer shall have performed in all material respects all of its
obligations hereunder required to be performed by it at or prior to the
Effective Time, (ii) except to the extent expressly permitted under this
Agreement, the representations and warranties of Acquirer contained in this
Agreement and in any certificate or other writing delivered by Acquirer pursuant
hereto (x) that are qualified by materiality or Material Adverse Effect shall be
true at and as of the Effective Time as if made at and as of such time, and (y)
that are not qualified by materiality or Material Adverse Effect shall be true
in all material respects at and as of the Effective Time as if made at and as of
such time and (iii) Acquirer shall have received a certificate signed by the
chief executive officer of Acquirer to the foregoing effect;
(b) the Company shall have received an opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
& ▇▇▇▇▇▇, Professional Corporation, in form and substance reasonably
satisfactory to the Company, on the basis of certain facts, representations and
assumptions set forth in such opinion, dated the
-32-
Effective Time, to the effect that the Merger will be treated for federal income
tax purposes as a reorganization qualifying under the provisions of section
368(a) of the Code and that each of the Company, Merger Subsidiary and Acquirer
will be a party to the reorganization within the meaning of section 368(b) of
the Code. In rendering such opinion, such counsel shall be entitled to rely upon
certain representations of officers of the Company and Acquirer reasonably
requested by counsel; and
(c) since the date of this Agreement, there shall not have been any event,
occurrence, development or state of circumstances which, individually or in the
aggregate, has had or would reasonably be expected to have a Material Adverse
Effect on Acquirer.
ARTICLE IX
Termination
-----------
Section 9.1 Termination. This Agreement may be terminated at any time
-----------
prior to the Effective Time, whether before or after approval by the
stockholders of the Company or Acquirer:
(a) by mutual consent of the Boards of Directors of Acquirer and the
Company;
(b) by either Acquirer or the Company if the Merger shall not have been
consummated on or before September 30, 2000, which date may be extended by
mutual written consent of the parties hereto; provided, that the party seeking
to terminate this Agreement pursuant to this Section 9.1(b) shall not have
breached in any material respect its obligations under this Agreement;
(c) by either Acquirer or the Company, if any court of competent
jurisdiction in the United States or other governmental body in the United
States shall have issued an order (other than a temporary restraining order),
decree or ruling or taken any other action restraining, enjoining or otherwise
prohibiting the Merger, and such order, decree, ruling or other action shall
have become final and nonappealable; provided that the party seeking to
terminate this Agreement shall have used all commercially reasonable efforts to
avoid, remove or lift such order, decree or ruling; or
(d) by either Acquirer or the Company, if the requisite stockholder
approvals of the stockholders of the Company are not obtained at the meeting of
stockholders duly called and held therefor; provided, however, that the right to
terminate this Agreement under this Section 9.1(d) shall not be available to the
Company where the failure to obtain stockholder approval of the Company shall
have been caused by the action or failure to act of the Company and such action
or failure to act constitutes a material breach by the Company of this
Agreement.
Section 9.2 Termination by Acquirer. This Agreement may be terminated by
-----------------------
action of the Board of Directors of Acquirer, at any time prior to the Effective
Time, before or after the approval by the stockholders of the Company, if (a)
the Company shall have failed to comply in any material respect with any of the
covenants or agreements contained in Articles I, II, V and VII of this Agreement
to be complied with or performed by the Company at or prior to such date of
termination; provided, however, that such failure to comply shall be continuing
for a period of ten (10) days after delivery to the Company of written notice of
such failure, (b) there exists a
-33-
breach or breaches of any representation or warranty of the Company contained in
this Agreement such that the closing condition set forth in Section 8.2(a) would
not be satisfied; provided, however, that if such breach or breaches are capable
of being cured prior to the Effective Time, such breaches shall not have been
cured within ten (10) days of delivery to the Company of written notice of such
breach or breaches, (c) the Board of Directors of the Company shall have failed
to recommend or withdrawn, modified or changed in a manner adverse to Acquirer
its recommendation of this Agreement or the Merger or shall have recommended any
proposal in respect of a Company Acquisition Transaction (or shall have resolved
to do any of the foregoing).
Section 9.3 Termination by the Company. This Agreement may be terminated
--------------------------
at any time prior to the Effective Time, before or after the approval by the
stockholders of the Company, by action of the Board of the Directors of the
Company, if (a) Acquirer shall have failed to comply in any material respect
with any of the covenants or agreements contained in Articles I, II, VI and VII
of this Agreement to be complied with or performed by Acquirer at or prior to
such date of termination; provided, however, that such failure to comply shall
be continuing for a period of ten (10) days after delivery to Acquirer of
written notice of such failure, (b) there exists a breach or breaches of any
representation or warranty of Acquirer contained in this Agreement such that the
closing condition set forth in Section 8.3(a) would not be satisfied; provided,
however, that if such breach or breaches are capable of being cured prior to the
Effective Time, such breaches shall not have been cured within fifteen (15) days
of delivery to Acquirer of written notice of such breach or breaches, (c)(i) the
Board of Directors of the Company authorizes the Company, subject to complying
with the terms of this Agreement, to enter into a binding written agreement
concerning a transaction that constitutes a Superior Proposal and the Company
notifies Acquirer in writing that it intends to enter into such an agreement,
attaching the most current version of such agreement (or a description of all
material terms and conditions thereof) to such notice, (ii) Acquirer does not
make, within three (3) business days of receipt of the Company's written
notification of its intention to enter into a binding agreement for a Superior
Proposal, an offer that the Board of Directors of the Company determines, in
good faith after consultation with its financial advisors, is at least as
favorable to the stockholders of the Company as the Superior Proposal, it being
understood that the Company shall not enter into any such binding agreement
during such three (3) day period, and (iii) the Company prior to such
termination pursuant to this clause (c) pays to Acquirer in immediately
available funds the fees required to be paid pursuant to Section 9.5. The
Company agrees to notify Acquirer promptly if its intention to enter into a
written agreement referred to in its notification pursuant to clause (c) above
shall change at any time after giving such notification.
Section 9.4 Procedure for Termination. In the event of termination by
-------------------------
Acquirer or the Company pursuant to this Article IX, written notice thereof
shall forthwith be given to the other.
Section 9.5 Effect of Termination.
---------------------
(a) In the event of termination of this Agreement pursuant to this Article
IX, no party hereto (or any of its directors or officers) shall have any
liability or further obligation to any other party to this Agreement, except as
provided in this Section 9.5 and Section 7.1(b) hereof.
-34-
(b) If,
(i) the Company shall terminate this Agreement pursuant to Section
9.3(c);
(ii) Acquirer shall terminate this Agreement pursuant to Section
9.2(c), unless at the time of such failure to recommend, withdrawal or
adverse modification or change, failure to call the Company Stockholder
Meeting or recommendation of a Superior Proposal, any of the conditions set
forth in Section 8.3(a) or 8.3(c) would not have been satisfied as of such
date and would not be reasonably capable of being satisfied; or
(iii) either the Company or Acquirer shall terminate this Agreement
pursuant to Section 9.1(d) in circumstances where the Company Stockholder
Approval has not been obtained and prior to the Company Stockholder Meeting
a Company Acquisition Proposal is made and not withdrawn by any Person and
within twelve (12) months after termination of this Agreement the Company
consummates such Company Acquisition or enters into a definitive agreement
providing for such Company Acquisition;
then in any case as described in clause (i), (ii) or (iii) the Company shall pay
to Acquirer (by wire transfer of immediately available funds not later than the
date of termination of this Agreement or, in the case of clause (iii), the date
of such definitive agreement) an amount equal to $3,600,000. The fees provided
for in this Section 9.5(b) are intended to be liquidated damages and, as such,
the sole and exclusive remedy for any and all claims on any theory that might be
asserted with respect to any of the matters discussed in this Article IX, and no
party hereto shall seek any additional damages or remedies at law or in equity
as a result or consequence of any such matter. Acceptance by Acquirer of the
payment referred to in the foregoing sentence shall constitute conclusive
evidence that this Agreement has been validly terminated and upon acceptance of
payment of such amount the Company shall be fully released and discharged from
any liability or obligation resulting from or under this Agreement. For
purposes of this Agreement, the term "Company Acquisition" shall mean (i) a
merger, consolidation, business combination, recapitalization, liquidation,
dissolution or similar transaction involving the Company pursuant to which the
stockholders of the Company immediately preceding such transaction hold less
than fifty percent (50%) of the aggregate equity interests in the surviving or
resulting entity of such transaction, (ii) a sale or other disposition by the
Company of assets representing in excess of fifty percent (50%) of the aggregate
fair market value of the Company's business immediately prior to such sale, or
(iii) the acquisition by any person or group (including by way of a tender offer
or an exchange offer or issuance by the Company), directly or indirectly, of
beneficial ownership or a right to acquire beneficial ownership of shares
representing in excess of fifty percent (50%) of the voting power of the then
outstanding shares of capital stock of the Company.
-35-
ARTICLE X
Miscellaneous
-------------
Section 10.1 Notices. Any notice, request, instruction or other document
-------
to be given hereunder by any party to the other shall be in writing and
delivered personally or sent by certified mail, postage prepaid, by telecopy
(with receipt confirmed and promptly confirmed by personal delivery, U.S. first
class mail, or courier), or by courier service, as follows:
(a) If to Acquirer or Merger Subsidiary to:
eGain Communications Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Chief Executive Officer
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Pillsbury Madison & Sutro LLP
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to the Company to:
Inference Corporation
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer
Fax: ____________________
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Section 10.2 Non-Survival of Representations and Warranties. The
----------------------------------------------
representations and warranties contained herein and in any certificate or other
writing delivered pursuant hereto shall not survive the Effective Time or the
termination of this Agreement.
Section 10.3 Amendments; No Waivers.
----------------------
(a) Any provision of this Agreement (including the Exhibits and Schedules
hereto) may be amended or waived prior to the Effective Time if, and only if,
such amendment or waiver
-36-
is in writing and signed, in the case of an amendment, by the Company, Acquirer
and Merger Subsidiary, or in the case of a waiver, by the party against whom the
waiver is to be effective; provided that after the adoption of this Agreement by
the stockholders of the Company, no such amendment or waiver shall, without the
further approval of such stockholders, alter or change (i) the amount or kind of
consideration to be received in exchange for any shares of capital stock of the
Company, (ii) any term of the certificate of incorporation of the Surviving
Corporation or (iii) any of the terms or conditions of this Agreement if such
alteration or change would adversely affect the holders of any shares of capital
stock of the Company.
(b) No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
Section 10.4 Successors and Assigns. The provisions of this Agreement
----------------------
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns; provided that no party may assign, delegate
or otherwise transfer any of its rights or obligations under this Agreement
without the consent of the other parties hereto except that Merger Subsidiary
may transfer or assign, in whole or from time to time in part, to one or more of
its affiliates, its rights under this Agreement, but any such transfer or
assignment will not relieve Merger Subsidiary of its obligations hereunder.
Section 10.5 Governing Law. This Agreement shall be construed in
-------------
accordance with and governed by the law of the State of Delaware, without regard
to principles of conflicts of law.
Section 10.6 Jurisdiction. Any suit, action or proceeding seeking to
------------
enforce any provision of, or based on any matter arising out of or in connection
with, this Agreement or the transactions contemplated hereby shall be brought
exclusively in the Court of Chancery of the State of Delaware, and each of the
parties hereby consents to the jurisdiction of such court (and of the
appropriate appellate courts therefrom) in any such suit, action or proceeding
and irrevocably waives, to the fullest extent permitted by law, any objection
which it may now or hereafter have to the laying of the venue of any such suit,
action or proceeding in any such court or that any such suit, action or
proceeding which is brought in any such court has been brought in an
inconvenient forum. Process in any such suit, action or proceeding may be served
on any party anywhere in the world, whether within or without the jurisdiction
of any such court. Without limiting the foregoing, each party agrees that
service of process on such party as provided in Section 10.1 shall be deemed
effective service of process on such party.
Section 10.7 Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY
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IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
Section 10.8 Counterparts; Effectiveness. This Agreement may be signed in
---------------------------
any number of counterparts, each of which shall be an original, with the same
effect as if the
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signatures thereto and hereto were upon the same instrument. This Agreement
shall become effective when each party hereto shall have received counterparts
hereof signed by all of the other parties hereto.
Section 10.9 Entire Agreement. This Agreement (including the Exhibits and
----------------
Schedules hereto) and the Confidentiality Agreement constitute the entire
agreement between the parties with respect to the subject matter of this
Agreement and supersede all prior agreements and understandings, both oral and
written, between the parties with respect to the subject matter hereof and
thereof. Except as provided in Section 6.3(c), no provision of this Agreement or
any other agreement contemplated hereby is intended to confer on any Person
other than the parties hereto any rights or remedies.
Section 10.10 Captions. The captions herein are included for convenience
--------
of reference only and shall be ignored in the construction or interpretation
hereof.
Section 10.11 Severability. If any term, provision, covenant or
------------
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated
so long as the economic or legal substance of the transactions contemplated
hereby is not affected in any manner materially adverse to any party. Upon such
a determination, the parties 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 in order that the transactions contemplated
hereby be consummated as originally contemplated to the fullest extent possible.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed,
all as of the date first above written.
EGAIN COMMUNICATIONS CORPORATION
By /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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Title Chief Financial Officer
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INTREPID ACQUISITION CORP.
By /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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Title Chief Financial Officer
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INFERENCE CORPORATION
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Chief Executive Officer
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