EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
BY AND AMONG
PEREGRINE SYSTEMS, INC.
SODA ACQUISITION CORPORATION
AND
HARBINGER CORPORATION
DATED AS OF APRIL 5, 2000
TABLE OF CONTENTS
PAGE
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ARTICLE I THE MERGER.................................................. 1
1.1 The Merger.................................................. 1
1.2 Effective Time; Closing..................................... 2
1.3 Effect of the Merger........................................ 2
1.4 Articles of Incorporation; Bylaws........................... 2
1.5 Directors and Officers...................................... 2
1.6 Effect on Capital Stock..................................... 2
1.7 Surrender of Certificates................................... 3
1.8 No Further Ownership Rights in Company Common Stock......... 5
1.9 Lost, Stolen or Destroyed Certificates...................... 5
1.10 Tax and Accounting Consequences............................. 5
1.11 Taking of Necessary Action; Further Action.................. 5
ARTICLE II REPRESENTATIONS AND WARRANTIES OF COMPANY................... 5
2.1 Organization and Qualification; Subsidiaries................ 6
2.2 Articles of Incorporation and Bylaws........................ 6
2.3 Capitalization.............................................. 6
2.4 Authority Relative to this Agreement........................ 8
2.5 No Conflict; Required Filings and Consents.................. 8
2.6 Compliance; Permits......................................... 9
2.7 SEC Filings; Financial Statements........................... 9
2.8 No Undisclosed Liabilities.................................. 9
2.9 Absence of Certain Changes or Events........................ 10
2.10 Absence of Litigation....................................... 10
2.11 Employee Benefit Plans...................................... 10
2.12 Labor Matters............................................... 12
2.13 Registration Statement/Joint Proxy Statement/Prospectus..... 13
2.14 Restrictions on Business Activities......................... 13
2.15 Title to Property........................................... 13
2.16 Taxes....................................................... 13
2.17 Environmental Matters....................................... 15
2.18 Brokers..................................................... 15
2.19 Intellectual Property....................................... 15
2.20 Agreements, Contracts and Commitments....................... 18
2.21 Insurance................................................... 19
2.22 Opinion of Financial Advisor................................ 19
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2.23 Board Approval.............................................. 19
2.24 Vote Required............................................... 19
2.25 State Takeover Statutes..................................... 19
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB..... 20
ARTICLE III
3.1 Organization and Qualification; Subsidiaries................ 20
3.2 Certificate of Incorporation and Bylaws..................... 20
3.3 Capitalization.............................................. 20
3.4 Parent Common Stock......................................... 20
3.5 Authority Relative to this Agreement........................ 20
3.6 SEC Filings; Financial Statements........................... 21
3.7 No Undisclosed Liabilities.................................. 21
3.8 Compliance; Permits......................................... 21
3.9 Absence of Certain Changes or Events........................ 22
3.10 Absence of Litigation....................................... 22
3.11 Registration Statement; Joint Proxy Statement/Prospectus.... 22
3.12 Brokers..................................................... 23
3.13 Opinion of Financial Advisor................................ 23
3.14 Board Approval.............................................. 23
3.15 Vote Required............................................... 23
ARTICLE IV CONDUCT PRIOR TO THE EFFECTIVE TIME......................... 23
4.1 Conduct of Business by Company.............................. 23
4.2 Conduct of Business by Parent............................... 25
ARTICLE V ADDITIONAL AGREEMENTS....................................... 26
5.1 Joint Proxy Statement/Prospectus; Registration Statement.... 26
5.2 Shareholder and Stockholder Meetings........................ 27
5.3 Confidentiality; Access to Information...................... 27
5.4 No Solicitation............................................. 27
5.5 Public Disclosure........................................... 29
5.6 Reasonable Efforts; Notification............................ 29
5.7 Third Party Consents........................................ 30
5.8 Stock Options and Employee Benefits; Warrants............... 30
5.9 Form S-8.................................................... 31
5.10 Indemnification............................................. 31
5.11 Nasdaq Listing.............................................. 32
5.12 Affiliates.................................................. 32
5.13 Regulatory Filings; Reasonable Efforts...................... 32
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5.14 Parent Board of Directors................................... 32
5.15 Shareholder Litigation...................................... 32
ARTICLE VI CONDITIONS TO THE MERGER.................................... 33
Conditions to Obligations of Each Party to Effect the
6.1 Merger.................................................... 33
6.2 Additional Conditions to Obligations of Company............. 33
Additional Conditions to the Obligations of Parent and
6.3 Merger Sub................................................ 34
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER........................... 34
7.1 Termination................................................. 34
7.2 Notice of Termination; Effect of Termination................ 35
7.3 Fees and Expenses........................................... 36
7.4 Amendment................................................... 37
7.5 Extension; Waiver........................................... 37
ARTICLE VIII GENERAL PROVISIONS.......................................... 37
8.1 Survival of Representations and Warranties.................. 37
8.2 Notices..................................................... 37
8.3 Interpretation; Definitions................................. 38
8.4 Counterparts................................................ 39
8.5 Entire Agreement; Third Party Beneficiaries................. 39
8.6 Severability................................................ 39
8.7 Other Remedies; Specific Performance........................ 40
8.8 Governing Law............................................... 40
8.9 Rules of Construction....................................... 40
8.10 Assignment.................................................. 40
INDEX OF EXHIBITS
Exhibit 1 Form of Company Voting Agreement
Exhibit 2 Form of Parent Voting Agreement
Exhibit B Form of Stock Option Agreement
Exhibit C Form of Affiliate Agreement
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AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
This AGREEMENT AND PLAN OF MERGER AND REORGANIZATION is made and entered
into as of April 5, 2000, among Peregrine Systems, Inc., a Delaware corporation
("PARENT"), Soda Acquisition Corporation, a Delaware corporation and a
wholly-owned subsidiary of Parent ("MERGER SUB"), and Harbinger Corporation, a
Georgia corporation ("COMPANY").
RECITALS
A. Upon the terms and subject to the conditions of this Agreement (as
defined in Section 1.2 below) and in accordance with the Georgia Business
Corporation Code ("GEORGIA LAW") and the Delaware General Corporation Law
("DELAWARE LAW"), Parent and Company intend to enter into a business combination
transaction.
B. The Board of Directors of Company (i) has determined that the Merger (as
defined in Section 1.1) is consistent with and in furtherance of the long-term
business strategy of Company and fair to, and in the best interests of, Company
and its shareholders, (ii) has unanimously approved and declared advisable this
Agreement, and has approved the Merger (as defined in Section 1.1) and the other
transactions contemplated by this Agreement, and (iii) has determined to
recommend that the shareholders of Company adopt and approve this Agreement and
approve the Merger.
C. The Board of Directors of Parent (i) has determined that the Merger is
consistent with and in furtherance of the long-term business strategy of Parent
and is fair to, and in the best interests of, Parent and its stockholders,
(ii) has approved this Agreement, the Merger and the other transactions
contemplated by this Agreement, and (iii) has determined to recommend that the
stockholders of Parent approve the issuance of shares of Parent Common Stock (as
defined below) pursuant to the Merger (the "SHARE ISSUANCE").
D. Concurrently with the execution of this Agreement, (i) as a condition and
inducement to Parent's willingness to enter into this Agreement, each affiliate
of Company is entering into Voting Agreements in the form attached hereto as
EXHIBIT A-1 (the "COMPANY VOTING AGREEMENTS") and (ii) as a condition and
inducement to Company's willingness to enter into this Agreement, certain
affiliates of Parent are entering into Voting Agreements in the form attached
hereto as EXHIBIT A-2 (the "PARENT VOTING AGREEMENT").
E. Concurrently with the execution of this Agreement, and as a condition
and inducement to Parent's willingness to enter into this Agreement, Company
shall execute and deliver a Stock Option Agreement in favor of Parent in the
form attached hereto as EXHIBIT B (the "STOCK OPTION AGREEMENT").
F. The parties intend, by executing this Agreement, to adopt a plan of
reorganization within the meaning of Section 368 of the Internal Revenue Code of
1986, as amended (the "CODE").
NOW, THEREFORE, in consideration of the covenants, promises and
representations set forth herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties agree
as follows:
ARTICLE I
THE MERGER
1.1 THE MERGER. At the Effective Time (as defined in Section 1.2) and
subject to and upon the terms and conditions of this Agreement and the
applicable provisions of Georgia Law and Delaware Law, Merger Sub shall be
merged with and into Company (the "MERGER"), the separate corporate existence of
Merger Sub shall cease, and Company shall continue as the surviving corporation
and as a wholly-owned subsidiary of Parent. Company as the surviving corporation
after the Merger is hereinafter sometimes referred to as the "SURVIVING
CORPORATION."
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1.2 EFFECTIVE TIME; CLOSING. Subject to the provisions of this Agreement,
the parties hereto shall cause the Merger to be consummated by filing a
certificate of merger with the Secretary of State of the State of Georgia in
accordance with the relevant provisions of Georgia Law (the "CERTIFICATE OF
MERGER") and a certificate of merger with the Secretary of State of the State of
Delaware in accordance with the relevant provisions of Delaware Law (the
"DELAWARE CERTIFICATE OF MERGER") (the time of the later of such filings (or
such later time as may be agreed in writing by Company and Parent and specified
in the Certificate of Merger) being the "EFFECTIVE TIME") as soon as practicable
on or after the Closing Date (as herein defined). The closing of the Merger (the
"CLOSING") shall take place at the offices of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇,
Professional Corporation, ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
at a time and date to be specified by the parties, which shall be no later than
the second business day after the satisfaction or waiver of all of the
conditions set forth in Article VI, or at such other time, date and location as
the parties hereto agree in writing (the "CLOSING DATE").
1.3 EFFECT OF THE MERGER. At the Effective Time, the effect of the Merger
shall be as provided in this Agreement and the applicable provisions of Georgia
Law and Delaware Law. Without limiting the generality of the foregoing, and
subject thereto, at the Effective Time, all the property, rights, privileges,
powers, and franchises of Company and Merger Sub shall vest in the Surviving
Corporation, and all debts, liabilities and duties of Company and Merger Sub
shall become the debts, liabilities, and duties of the Surviving Corporation.
1.4 ARTICLES OF INCORPORATION; BYLAWS.
(a) At the Effective Time, the Articles of Incorporation of Company, as
in effect immediately prior to the Effective Time, shall be the Articles of
Incorporation of the Surviving Corporation until thereafter amended as
provided by law and such Articles of Incorporation of the Surviving
Corporation.
(b) The Bylaws of Company, as in effect immediately prior to the
Effective Time, shall be, at the Effective Time, the Bylaws of the Surviving
Corporation until thereafter amended.
1.5 DIRECTORS AND OFFICERS. The initial directors of the Surviving
Corporation shall be the directors of Merger Sub immediately prior to the
Effective Time, each to hold office in accordance with the Articles of
Incorporation and Bylaws of the Surviving Corporation until their respective
successors are duly elected or appointed and qualified. The initial officers of
the Surviving Corporation shall be the officers of Merger Sub immediately prior
to the Effective Time, each to hold office in accordance with the Articles of
Incorporation and Bylaws of the Surviving Corporation until their respective
successors are duly appointed.
1.6 EFFECT ON CAPITAL STOCK. Subject to the terms and conditions of this
Agreement, at the Effective Time, by virtue of the Merger and without any action
on the part of Merger Sub, Company or the holders of any of the following
securities, the following shall occur:
(a) CONVERSION OF COMPANY COMMON STOCK. Each share of Common Stock,
par value $.0001 per share, of Company (the "COMPANY COMMON STOCK") issued
and outstanding immediately prior to the Effective Time, other than any
shares of Company Common Stock to be cancelled pursuant to Section 1.6(b),
will be cancelled and extinguished and automatically converted (subject to
Sections 1.6(e) and (f)) into the right to receive that number of shares of
Common Stock, $0.001 par value per share, of Parent (the "PARENT COMMON
STOCK") equal to 0.75 (the "EXCHANGE RATIO") upon surrender of the
certificate representing such share of Company Common Stock in the manner
provided in Section 1.7 (or in the case of a lost, stolen or destroyed
certificate, upon delivery of an affidavit (and bond, if required) in the
manner provided in Section 1.9). If any shares of Company Common Stock
outstanding immediately prior to the Effective Time are unvested or are
subject to a repurchase option, risk of forfeiture or other condition under
any applicable restricted stock purchase agreement or other agreement with
the Company, then the shares of Parent Common Stock issued in
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exchange for such shares of Company Common Stock will also be unvested and
subject to the same repurchase option, risk of forfeiture or other
condition, and the certificates representing such shares of Parent Common
Stock may accordingly be marked with appropriate legends. The Company shall
take all action that may be necessary to ensure that, from and after the
Effective Time, Parent is entitled to exercise any such repurchase option or
other right set forth in any such restricted stock purchase agreement or
other agreement.
(b) CANCELLATION OF PARENT-OWNED STOCK. Each share of Company Common
Stock held by Company or owned by Merger Sub, Parent or any direct or
indirect wholly-owned subsidiary of Company or of Parent immediately prior
to the Effective Time shall be cancelled and extinguished without any
conversion thereof.
(c) STOCK OPTIONS; WARRANTS; EMPLOYEE STOCK PURCHASE PLANS. At the
Effective Time, each outstanding Warrant (as defined in Section 2.3), all
options to purchase Company Common Stock and stock appreciation rights then
outstanding under Company's Amended and Restated 1989 Stock Option Plan (the
"1989 PLAN"), Company's 1996 Stock Option Plan, as amended, (the "INCENTIVE
PLAN"), Company's 1993 Stock Option Plan for Nonemployee Directors (the
"DIRECTOR PLAN" and, together with the 1989 Plan and the Incentive Plan, the
"COMPANY OPTION PLANS"), and each of the Company Option Plans shall be
assumed by Parent in accordance with Section 5.8 hereof. Purchase rights
outstanding under Company's Amended and Restated Employee Stock Purchase
Plan (the "ESPP") shall be treated as set forth in Section 5.8.
(d) CAPITAL STOCK OF MERGER SUB. Each share of Common Stock, $0.001
par value per share, of Merger Sub (the "MERGER SUB COMMON STOCK") issued
and outstanding immediately prior to the Effective Time shall be converted
into one validly issued, fully paid and nonassessable share of Common Stock,
$0.001 par value per share, of the Surviving Corporation. Each certificate
evidencing ownership of shares of Merger Sub Common Stock shall evidence
ownership of such shares of capital stock of the Surviving Corporation.
(e) ADJUSTMENTS TO EXCHANGE RATIO. The Exchange Ratio shall be
adjusted to reflect proportionately and equitably the effect of any stock
split, reverse stock split, stock dividend (including any dividend or
distribution of securities convertible into Parent Common Stock or Company
Common Stock), reorganization, recapitalization, reclassification or other
like change with respect to Parent Common Stock or Company Common Stock
occurring on or after the date hereof and prior to the Effective Time.
(f) FRACTIONAL SHARES. No fraction of a share of Parent Common Stock
will be issued by virtue of the Merger, but in lieu thereof, each holder of
shares of Company Common Stock who would otherwise be entitled to a fraction
of a share of Parent Common Stock (after aggregating all fractional shares
of Parent Common Stock that otherwise would be received by such holder)
shall, upon surrender of such holder's Certificates(s) (as defined in
Section 1.7(c)), receive from Parent an amount of cash (rounded to the
nearest whole cent), without interest, equal to the product of (i) such
fraction and (ii) the average closing price of Parent Common Stock for the
five trading days immediately preceding the last full trading day prior to
the Effective Time, as reported on the Nasdaq National Market System
("NASDAQ").
1.7 SURRENDER OF CERTIFICATES.
(a) EXCHANGE AGENT. Parent shall select a bank or trust company
reasonably acceptable to Company to act as the exchange agent (the "EXCHANGE
AGENT") in the Merger.
(b) PARENT TO PROVIDE COMMON STOCK. Within five (5) business days
after the Effective Time, Parent shall make available to the Exchange Agent,
for exchange in accordance with this Article I, (i) the shares of Parent
Common Stock issuable pursuant to Section 1.6 in exchange for outstanding
shares of Company Common Stock and (ii) cash in an amount sufficient for
payment in lieu of
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fractional shares pursuant to Section 1.6(f) and any dividends or
distributions to which holders of shares of Company Common Stock may be
entitled pursuant to Section 1.7(d).
(c) EXCHANGE PROCEDURES. As soon as practicable after the Effective
Time, Parent shall cause the Exchange Agent to mail to each holder of record
(as of the Effective Time) of a certificate or certificates (the
"CERTIFICATES"), which immediately prior to the Effective Time represented
outstanding shares of Company Common Stock whose shares were converted into
the right to receive shares of Parent Common Stock pursuant to Section 1.6,
cash in lieu of any fractional shares pursuant to Section 1.6(f), and any
dividends or other distributions pursuant to Section 1.7(d), (i) a letter of
transmittal (which shall specify that delivery shall be effected, and risk
of loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent and shall contain such other provisions
as Parent may reasonably specify) and (ii) instructions for use in effecting
the surrender of the Certificates in exchange for certificates representing
shares of Parent Common Stock, cash in lieu of any fractional shares
pursuant to Section 1.6(f) and any dividends or other distributions pursuant
to Section 1.7(d). Upon surrender of Certificates for cancellation to the
Exchange Agent or to such other agent or agents as may be appointed by
Parent, together with such letter of transmittal, duly completed and validly
executed in accordance with the instructions thereto, the holders of such
Certificates shall be entitled to receive in exchange therefor certificates
representing the number of whole shares of Parent Common Stock into which
their shares of Company Common Stock were converted at the Effective Time,
payment in lieu of fractional shares which such holders have the right to
receive pursuant to Section 1.6(f) and any dividends or distributions
payable pursuant to Section 1.7(d), and the Certificates so surrendered
shall forthwith be cancelled. Until so surrendered, outstanding Certificates
will be deemed from and after the Effective Time, for all corporate
purposes, subject to Section 1.7(d) as to the payment of dividends, to
evidence only the ownership of the number of full shares of Parent Common
Stock into which such shares of Company Common Stock shall have been so
converted and the right to receive an amount in cash in lieu of the issuance
of any fractional shares in accordance with Section 1.6(f) and any dividends
or distributions payable pursuant to Section 1.7(d).
(d) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES. No dividends or
other distributions declared or made after the date of this Agreement with
respect to Parent Common Stock with a record date after the Effective Time
will be paid to the holders of any unsurrendered Certificate(s) with respect
to the shares of Parent Common Stock represented thereby until the holders
of record of such Certificate(s) shall surrender such Certificate(s).
Subject to applicable law, following surrender of any such Certificate(s),
the Exchange Agent shall deliver to the record holders thereof, without
interest, a certificate(s) representing whole shares of Parent Common Stock
issued in exchange therefor along with payment in lieu of fractional shares
pursuant to Section 1.6(f) hereof and the amount of any such dividends or
other distributions with a record date after the Effective Time payable with
respect to such whole shares of Parent Common Stock.
(e) TRANSFERS OF OWNERSHIP. If any certificate representing shares of
Parent Common Stock is to be issued in a name other than that in which the
Certificate surrendered in exchange therefor is registered, it will be a
condition of the issuance thereof that the Certificate so surrendered will
be properly endorsed and otherwise in proper form for transfer and that the
persons requesting such exchange will have paid any transfer or other taxes
required by reason of the issuance of certificates representing shares of
Parent Common Stock in any name other than that of the registered holder of
the Certificates surrendered, or established to the satisfaction of Parent
or any agent designated by it that such tax has been paid or is not payable.
(f) REQUIRED WITHHOLDING. Each of the Exchange Agent, Parent, and the
Surviving Corporation shall be entitled to deduct and withhold from any
consideration payable or otherwise deliverable pursuant to this Agreement to
any holder or former holder of Company Common Stock such amounts as may be
required to be deducted or withheld therefrom under the Code or under any
provision of
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state, local or foreign tax law or under any other applicable legal
requirement. To the extent such amounts are so deducted or withheld, such
amounts shall be treated for all purposes under this Agreement as having
been paid to the person to whom such amounts would otherwise have been paid.
(g) NO LIABILITY. Notwithstanding anything to the contrary in this
Section 1.7, neither of the Exchange Agent, Parent, the Surviving
Corporation, or any party hereto shall be liable to a holder of shares of
Parent Common Stock or Company Common Stock for any amount properly paid to
a public official pursuant to any applicable abandoned property, escheat, or
similar law.
1.8 NO FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON STOCK. All shares of
Parent Common Stock issued upon the surrender for exchange of Shares of Company
Common Stock in accordance with the terms hereof (together with any cash paid in
respect thereof pursuant to Section 1.6(f) and 1.7(d)) shall be deemed to have
been issued in full satisfaction of all rights pertaining to such shares of
Company Common Stock, and there shall be no further registration of transfers on
the records of the Surviving Corporation of shares of Company Common Stock which
were outstanding immediately prior to the Effective Time. If, after the
Effective Time, Certificates are presented to the Surviving Corporation for any
reason, they shall be cancelled and exchanged as provided in this Article I.
1.9 LOST, STOLEN OR DESTROYED CERTIFICATES. In the event that any
Certificate shall have been lost, stolen, or destroyed, the Exchange Agent shall
issue in exchange for such lost, stolen, or destroyed Certificates, upon the
making of an affidavit of that fact by the holder thereof, certificates
representing the shares of Parent Common Stock into which the shares of Company
Common Stock represented by such Certificates were converted pursuant to
Section 1.6, cash for fractional shares, if any, as may be required pursuant to
Section 1.6(f) and any dividends or distributions payable pursuant to
Section 1.7(d); PROVIDED, HOWEVER, that Parent may, in its discretion and as a
condition precedent to the issuance of such certificates representing shares of
Parent Common Stock, cash, and other distributions, require the owner of such
lost, stolen, or destroyed Certificate to deliver a bond in such sum as it may
reasonably direct as indemnity against any claim that may be made against
Parent, the Surviving Corporation, or the Exchange Agent with respect to the
Certificates alleged to have been lost, stolen or destroyed.
1.10 TAX AND ACCOUNTING CONSEQUENCES.
(a) It is intended by the parties hereto that the Merger shall
constitute a reorganization within the meaning of Section 368 of the Code.
The parties hereto adopt this Agreement as a "plan of reorganization" within
the meaning of Sections 1.368-2(g) and 1.368-3(a) of the United States
Income Tax Regulations.
(b) It is intended by the parties hereto that the Merger shall be
treated as a purchase for accounting purposes.
1.11 TAKING OF NECESSARY ACTION; FURTHER ACTION. If, at any time after the
Effective Time, any further action is necessary or desirable to carry out the
purposes of this Agreement and to vest the Surviving Corporation with full
right, title, and possession to all assets, property, rights, privileges, powers
and franchises of Company and Merger Sub, the officers and directors of Company
and Merger Sub are fully authorized in the manner of their respective
corporations or otherwise to take, and will take, all such lawful and necessary
action.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF COMPANY
As of the date hereof and as of the Closing Date, Company represents and
warrants to Parent and Merger Sub, subject to such exceptions as are
specifically disclosed in writing in the disclosure schedules, dated as of the
date hereof delivered by Company to Parent (the "COMPANY SCHEDULE"), as follows.
The Company Schedule shall be arranged in sections corresponding to the numbered
sections contained in this
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Article and the disclosure in any paragraph shall qualify other sections in this
Article only to the extent it is reasonably apparent from a reading of such
disclosure that it also qualifies such other sections.
2.1 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES.
(a) Each of Company and its subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has the requisite corporate power and
authority to own, lease and operate its assets and properties and to carry
on its business as it is now being conducted. Each of Company and its
subsidiaries is in possession of all franchises, grants, authorizations,
licenses, permits, easements, consents, certificates, approvals and orders
("APPROVALS") necessary to own, lease and operate the properties it purports
to own, operate or lease and to carry on its business as it is now being
conducted, except where the failure to have such Approvals would not,
individually or in the aggregate, have a Material Adverse Effect on Company.
Each of Company and its subsidiaries is duly qualified or licensed as a
foreign corporation to do business, and is in good standing, in each
jurisdiction where the character of the properties owned, leased or operated
by it or the nature of its activities makes such qualification or licensing
necessary, except for such failures to be so duly qualified or licensed and
in good standing that would not, either individually or in the aggregate,
have a Material Adverse Effect on Company.
(b) Company has no subsidiaries except for the corporations identified
in Section 2.1(b) of the Company Schedule. Neither Company nor any of its
subsidiaries has agreed nor is obligated to make nor be bound by any
written, oral or other agreement, contract, subcontract, lease, binding
understanding, instrument, note, option, warranty, purchase order, license,
sublicense, insurance policy, benefit plan, commitment or undertaking of any
nature, as of the date hereof or as may hereafter be in effect (a
"CONTRACT") under which it may become obligated to make, any future
investment in or capital contribution to any other entity. Neither Company
nor any of its subsidiaries directly or indirectly owns any equity or
similar interest in or any interest convertible, exchangeable or exercisable
for, any equity or similar interest in, any corporation, partnership, joint
venture or other business, association or entity, other than passive
investments in equity interests of public companies constituting less than
5% interests therein as part of Company's cash management program
2.2 ARTICLES OF INCORPORATION AND BYLAWS. Company has previously furnished
to Parent a complete and correct copy of its Articles of Incorporation and
Bylaws as amended to date (together, the "COMPANY CHARTER DOCUMENTS"). Such
Company Charter Documents and equivalent organizational documents of each of its
subsidiaries are in full force and effect. Company is not in violation of any of
the provisions of the Company Charter Documents, and no subsidiary of Company is
in violation of its equivalent organizational documents.
2.3 CAPITALIZATION.
(a) The authorized capital stock of Company consists of 100,000,000
shares of Company Common Stock, par value $0.0001 per share, and 20,000,000
shares of Preferred Stock, without par value ("COMPANY PREFERRED STOCK"). At
the close of business on March 31, 2000, (i) 40,057,369 shares of Company
Common Stock were issued and outstanding, all of which are validly issued,
fully paid and nonassessable; (ii) 4,323,050 shares of Company Common Stock
were held in treasury by Company or by subsidiaries of Company;
(iii) 233,633 shares of Company Common Stock were available for future
issuance pursuant to Company's ESPP; (iv) 6,505,987 shares of Company Common
Stock were reserved for issuance upon the exercise of outstanding options to
purchase Company Common Stock under the Incentive Plan; (v) 346,874 shares
of Company Common Stock were reserved for issuance upon the exercise of
outstanding options to purchase Company Common Stock under the Director
Plan; (vi) 266,168 shares of Company Common Stock were reserved for issuance
upon the exercise of outstanding options to purchase Company Common Stock
under the 1989 Plan; (vii) 8,007,468 shares of Company Common Stock were
reserved for issuance upon the exercise of the Stock Option Agreement;
(viii) 43,200 shares of Company Common Stock were reserved for issuance upon
the
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exercise of outstanding warrants to purchase Company Common Stock (the
"WARRANTS"); (ix) 106,473 shares of Company Common Stock were available for
future grant under the Incentive Plan; (x) 83,814 shares of Company Common
Stock were available for future grant under the Director Plan; and (xi) no
shares of Company Common Stock were reserved for future grant under the 1989
Plan. As of the date hereof, no shares of Company Preferred Stock were
issued or outstanding. There are no commitments or agreements of any
character to which the Company is bound obligating the Company to accelerate
the vesting of any Company Stock Option as a result of the Merger.
(b) Section 2.3(b) of the Company Schedule sets forth the following
information with respect to each Company Stock Option (as defined in
Section 5.8) outstanding as of the date of this Agreement: (i) the name and
address of the optionee; (ii) the particular plan pursuant to which such
Company Stock Option was granted; (iii) the number of shares of Company
Common Stock subject to such Company Stock Option; (iv) the exercise price
of such Company Stock Option; (v) the date on which such Company Stock
Option was granted; (vi) the applicable vesting schedule; and (vii) the date
on which such Company Stock Option expires. Company has made available to
Parent accurate and complete copies of all stock option plans pursuant to
which the Company has granted such Company Stock Options that are currently
outstanding and the form of all stock option agreements evidencing such
Company Stock Options. All shares of Company Common Stock subject to
issuance as aforesaid, upon issuance on the terms and conditions specified
in the instrument pursuant to which they are issuable, would be duly
authorized, validly issued, fully paid and nonassessable.
(c) All outstanding shares of Company Common Stock, all outstanding
Company Stock Options, and all outstanding shares of capital stock of each
subsidiary of the Company have been issued and granted in compliance with
(i) all applicable securities laws and other applicable Legal Requirements
(as defined below) and (ii) all requirements set forth in applicable
Contracts. For the purposes of this Agreement, "LEGAL REQUIREMENTS" means
any federal, state, local, municipal, foreign or other law, statute,
constitution, principle of common law, resolution, ordinance, code, edict,
decree, rule, regulation, ruling or requirement issues, enacted, adopted,
promulgated, implemented or otherwise put into effect by or under the
authority of any Governmental Entity (as defined below) and (ii) all
requirements set forth in applicable contracts, agreements, and instruments.
(d) Section 2.3(d) of the Company Schedule describes the interests of
all persons in the subsidiaries of Company, other than interests held by the
Company or any other of its subsidiaries and other than interests of
subsidiaries held by certain nominee holders as required by the laws of a
subsidiary's jurisdiction of incorporation (which interests do not
materially affect the Company's control of such subsidiary).
(e) Except as set forth in Section 2.3(d) and except for the Stock
Option Agreement, there are no subscriptions, options, warrants, equity
securities, partnership interests or similar ownership interests, calls,
rights (including preemptive rights), commitments or agreements of any
character to which Company or any of its subsidiaries is a party or by which
it is bound obligating Company or any of its subsidiaries to issue, deliver
or sell, or cause to be issued, delivered or sold, or repurchase, redeem or
otherwise acquire, or cause the repurchase, redemption or acquisition of,
any shares of capital stock, partnership interests or similar ownership
interests of the Company or any of its subsidiaries or obligating the
Company or any of its subsidiaries to grant, extend, accelerate the vesting
of or enter into any such subscription, option, warrant, equity security,
call, right, commitment or agreement. As of the date of this Agreement,
except as contemplated by this Agreement, there are no registration rights
and there is, except for the Company Voting Agreements, no voting trust,
proxy, rights plan, antitakeover plan or other agreement or understanding to
which the Company or any of its subsidiaries is a party or by which they are
bound with respect to any equity security of any class of the Company or
with respect to any equity security, partnership interest or similar
ownership interest of any class of any of its subsidiaries. Shareholders of
the Company will not be entitled to dissenters' rights under Georgia Law in
connection with the Merger.
7
2.4 AUTHORITY RELATIVE TO THIS AGREEMENT. Company has all necessary
corporate power and authority to execute and deliver this Agreement and the
Stock Option Agreement and to perform its obligations hereunder and thereunder
and, subject to obtaining the approval of the shareholders of Company of the
Merger, to consummate the transactions contemplated hereby and thereby. The
execution and delivery of this Agreement and the Stock Option Agreement by
Company and the consummation by Company of the transactions contemplated hereby
and thereby have been duly and validly authorized by all necessary corporate
action on the part of Company, and no other corporate proceedings on the part of
Company are necessary to authorize this Agreement and the Stock Option Agreement
or to consummate the transactions so contemplated (other than, with respect to
the Merger, the approval and adoption of this Agreement by holders of a majority
of the outstanding shares of Company Common Stock in accordance with Georgia
Law, the Company Charter Documents) and duly adopted resolutions of the Board of
Directors of Company. This Agreement and the Stock Option Agreement have been
duly and validly executed and delivered by Company and, assuming the due
authorization, execution and delivery by Parent and Merger Sub, constitute legal
and binding obligations of Company, enforceable against Company in accordance
with their respective terms.
2.5 NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) The execution and delivery of this Agreement and the Stock Option
Agreement by Company do not, and the performance of this Agreement and the
Stock Option Agreement by Company will not, (i) conflict with or violate the
Company Charter Documents or the equivalent organizational documents of any
of Company's subsidiaries; (ii) subject to obtaining the approval of
Company's shareholders of the Merger and compliance with the requirements
set forth in Section 2.5(b) below, conflict with, or result in any violation
of, any law, rule, regulation, order, judgment or decree applicable to
Company or any of its subsidiaries or by which either Company or any of its
subsidiaries or any of their respective properties is bound or affected; or
(iii) result in any breach of or constitute a default (or an event that with
notice or lapse of time or both would become a default) under, or impair
Company's or any of its subsidiaries' rights or alter the rights or
obligations of any third party under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in the
creation of a lien or encumbrance on any of the properties or assets of
Company or any of its subsidiaries pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which Company or any of its subsidiaries is a
party or by which Company or any of its subsidiaries or its or any of their
respective properties are bound or affected. Except where such conflict,
violation, breach, default, impairment or other effect could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on Company.
(b) The execution and delivery of this Agreement and the Stock Option
Agreement by Company do not, and the performance of this Agreement by
Company will not, require any consent, waiver, approval, authorization or
permit of, or filing with or notification to, any court, administrative
agency, commission, governmental or regulatory authority, domestic or
foreign (a "GOVERNMENTAL ENTITY"), except (A) for applicable requirements,
if any, of the Securities Act of 1933, as amended (the "SECURITIES ACT"),
the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), state
securities laws ("BLUE SKY LAWS"), the pre-merger notification requirements
(the "HSR APPROVAL") of the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976, as amended (the "HSR ACT"), the rules and regulations of Nasdaq, and
the filing and recordation of the Certificate of Merger as required by
Georgia Law and the Delaware Certificate of Merger as required by Delaware
Law and (B) where the failure to obtain such consents, approvals,
authorizations or permits, or to make such filings or notifications, could
not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect on the parties hereto, prevent consummation of the
Merger or otherwise prevent the parties hereto from performing their
obligations under this Agreement.
8
2.6 COMPLIANCE; PERMITS.
(a) Neither Company nor any of its subsidiaries is in conflict with, or
in default or violation of, (i) any law, rule, regulation, order, judgment
or decree applicable to Company or any of its subsidiaries or by which its
or any of their respective properties is bound or affected or (ii) any note,
bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which Company or any of its
subsidiaries is a party or by which Company or any of its subsidiaries or
its or any of their respective properties is bound or affected, except for
any conflicts, defaults or violations that (individually or in the
aggregate) would not cause the Company to lose any material benefit or incur
any material liability. No investigation or review by any governmental or
regulatory body or authority is pending or, to the knowledge of Company,
threatened against Company or its subsidiaries, nor has any governmental or
regulatory body or authority indicated an intention to conduct the same,
other than, in each such case, those the outcome of which could not,
individually or in the aggregate, reasonably be expected to have the effect
of prohibiting or materially impairing any business practice of the Company
or any of its subsidiaries, any acquisition of material property by the
Company or any of its subsidiaries or the conduct of business by the Company
or any of its subsidiaries.
(b) Company and its subsidiaries hold all permits, licenses, variances,
exemptions, orders and approvals from governmental authorities, the absence
of which could not reasonably be expected to have a Material Adverse Effect
on Company (collectively, the "COMPANY PERMITS"). Company and its
subsidiaries are in compliance in all material respects with the terms of
the Company Permits.
2.7 SEC FILINGS; FINANCIAL STATEMENTS.
(a) Company has made available to Parent a correct and complete copy of
each report, schedule, registration statement and definitive proxy statement
filed by Company with the Securities and Exchange Commission ("SEC") since
December 31, 1999 (the "COMPANY SEC REPORTS"), which are all the forms,
reports and documents required to be filed by Company with the SEC since
December 31, 1999. The Company SEC Reports (A) were prepared in accordance
with the requirements of the Securities Act or the Exchange Act, as the case
may be, and (B) did not at the time they were filed (and if amended or
superseded by a filing prior to the date of this Agreement, then on the date
of such filing) contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they
were made, not misleading. None of Company's subsidiaries is required to
file any reports or other documents with the SEC.
(b) Each of the consolidated financial statements (including, in each
case, any related notes thereto) contained in the Company SEC Reports was
prepared in accordance with generally accepted accounting principles
("GAAP") applied on a consistent basis throughout the periods involved
(except as may be indicated in the notes thereto or, in the case of
unaudited financial statements, do not contain footnotes as permitted by the
SEC on Form 10-Q, Form 8-K or any successor form under the Exchange Act) and
each fairly presents the consolidated financial position of Company and its
subsidiaries at the respective dates thereof and the consolidated results of
its operations and cash flows for the periods indicated, except that the
unaudited interim financial statements were or are subject to normal
adjustments which were not or are not expected to be material in amount.
(c) Company has previously furnished to Parent a complete and correct
copy of any amendments or modifications, which have not yet been filed with
the SEC but which are required to be filed, to agreements, documents or
other instruments which previously had been filed by Company with the SEC
pursuant to the Securities Act or the Exchange Act.
2.8 NO UNDISCLOSED LIABILITIES. Neither Company nor any of its
subsidiaries has any liabilities (absolute, accrued, contingent or otherwise)
which, individually or in the aggregate, could reasonably be
9
expected to have a Material Adverse Effect on Company and its subsidiaries taken
as a whole, except (i) liabilities provided for in Company's balance sheet as of
December 31, 1999 and (ii) liabilities incurred since December 31, 1999 in the
ordinary and usual course of business, consistent with past practice. None of
the liabilities described in the foregoing sections (i) or (ii) could reasonably
be expected, individually or in the aggregate, to have a Material Adverse Effect
on Company.
2.9 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since December 31, 1999, there
has not been: (i) any Material Adverse Effect on Company; (ii) any declaration,
setting aside or payment of any dividend on, or other distribution (whether in
cash, stock, or property) in respect of, any of Company's or any of its
subsidiaries' capital stock, or any purchase, redemption or other acquisition by
Company of any of Company's capital stock or any other securities of Company or
its subsidiaries or any options, warrants, calls or rights to acquire any such
shares or other securities except for repurchases from employees following their
termination pursuant to the terms of their pre-existing stock option or purchase
agreements; (iii) any split, combination or reclassification of any of Company's
or any of its subsidiaries' capital stock; (iv) any granting by Company or any
of its subsidiaries of any increase in compensation or fringe benefits, except
for normal increases of cash compensation to non-officer employees in the
ordinary and usual course of business consistent with past practice, or any
payment by Company or any of its subsidiaries of any bonus, except for bonuses
made to non-officer employees in the ordinary course of business consistent with
past practice, or any granting by Company or any of its subsidiaries of any
increase in severance or termination pay or any entry by Company or any of its
subsidiaries into any currently effective employment, severance, termination or
indemnification agreement or any agreement the benefits of which are contingent
or the terms of which are materially altered upon the occurrence of a
transaction involving Company of the nature contemplated hereby; (v) entry by
Company or any of its subsidiaries into any licensing or other agreement with
regard to the acquisition or disposition of any Intellectual Property (as
defined in Section 2.19) other than licenses in the ordinary and usual course of
business, consistent with past practice, or any amendment or consent with
respect to any licensing agreement filed or required to be filed by Company with
the SEC; (vi) any material change by Company in its accounting methods,
principles or practices, except as required by concurrent changes in GAAP; or
(vii) any material revaluation by Company of any of its assets, including,
without limitation, writing down the value of capitalized inventory or writing
off notes or accounts receivable or any sale of assets of the Company other than
in the ordinary and usual course of business, consistent with past practice.
2.10 ABSENCE OF LITIGATION. There are no claims, actions, suits or
proceedings pending or, to the knowledge of Company, threatened (or, to the
knowledge of Company, any governmental or regulatory investigation pending or
threatened) against Company or any of its subsidiaries or any properties or
rights of Company or any of its subsidiaries, before any court, arbitrator or
administrative, governmental or regulatory authority or body, domestic or
foreign which, if decided adversely to Company, could reasonably be expected to
have a Material Adverse Effect on Company.
2.11 EMPLOYEE BENEFIT PLANS.
(a) All employee compensation, incentive, material fringe or benefit
plans, programs, policies, commitments or other arrangements or remuneration
of any kind (whether or not set forth in a written document and including,
without limitation, all "employee benefit plans" within the meaning of
Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA")) for the benefit of any active, former employee, director
or consultant of Company ("EMPLOYEE"), any domestic subsidiary of Company or
any trade or business (whether or not incorporated) which is a member of a
controlled group or which is under common control with Company within the
meaning of Section 414 of the Code (a "PLAN AFFILIATE"), or with respect to
which Company has or may in the future have liability, are listed in
Section 2.11(a) of the Company Schedule (the "PLANS"); PROVIDED, HOWEVER,
consulting agreements not material to the Company's business or operations
are not listed on Schedule 2.11(a). Company has made available to Parent
correct and complete copies of all (i) documents embodying each Plan
including (without limitation) all amendments thereto, all related
10
trust documents, and all material written agreements and contracts relating
to each such Plan; (ii) the three (3) most recent annual reports (Form
Series 5500 and all schedules and financial statements attached thereto), if
any, required under ERISA or the Code in connection with each Plan;
(iii) the most recent summary plan description together with the
summary(ies) of material modifications thereto, if any, required under ERISA
with respect to each Plan; (iv) all Internal Revenue Service ("IRS") or
United States Department of Labor ("DOL") determination, opinion,
notification and advisory letters; (v) all material correspondence to or
from any governmental agency relating to any Plan; (vi) all COBRA (as
defined below) forms and related notices (or such forms and notices as
required under comparable law); (vii) all discrimination tests for each Plan
for the most recent three (3) plan years; (viii) the most recent annual
actuarial valuations, if any, prepared for each Plan; (ix) if the Plan is
funded, the most recent annual and periodic accounting of Plan assets;
(x) all material written agreements and contracts relating to each Plan,
including, but not limited to, administrative service agreements, group
annuity contracts and group insurance contracts; (xi) all material
communications to employees or former employees regarding in each case,
relating to any amendments, terminations, establishments, increases or
decreases in benefits, acceleration of payments or vesting schedules or
other events which would result in any material liability under any Plan or
proposed Plan; (xii) all policies pertaining to fiduciary liability
insurance covering the fiduciaries for each Plan; and (xiii) all
registration statements, annual reports (Form 11-K and all attachments
thereto) and prospectuses prepared in connection with any Plan.
(b) Each Plan has been established, maintained and administered in all
material respects in compliance with its terms and with the requirements
prescribed by any and all statutes, orders, rules and regulations (foreign
or domestic), including but not limited to ERISA and the Code, which are
applicable to such Plans. No suit, action or other litigation (excluding
claims for benefits incurred in the ordinary course of Plan activities) is
pending, or to the knowledge of Company, threatened, against or with respect
to any such Plan. There are no audits, inquiries or proceedings pending or,
to the knowledge of Company, threatened by the IRS or DOL with respect to
any Plan. All contributions, reserves or premium payments required to be
made or accrued as of the date hereof to the Plans have been timely made or
accrued. Any Plan intended to be qualified under Section 401(a) of the Code
and each trust intended to qualify under Section 501(a) of the Code (i) has
either obtained a favorable determination notification, advisory and/or
opinion letter, as applicable, as to its qualified status from the IRS or
still has a remaining period of time under applicable Treasury Regulations
or IRS pronouncements in which to apply for such letter and to make any
amendments necessary to obtain a favorable determination and
(ii) incorporates or has been amended to incorporate all provisions required
to comply with the Tax Reform Act of 1986 and subsequent legislation enacted
on or before December 6, 1994. Company does not have any plan or commitment
to establish any new Plan, to modify any Plan (except to the extent required
by law or to conform any such Plan to the requirements of any applicable
law, in each case as previously disclosed to Parent in writing, or as
required by this Agreement), or to enter into any new Plan. Each Plan
(including any stock option plan in respect of future stock grants) can be
amended, terminated or otherwise discontinued after the Effective Time in
accordance with its terms, without liability to Parent, Company or any of
its Plan Affiliates (other than ordinary administration expenses).
(c) Neither Company nor any Plan Affiliate has at any time ever
maintained, established, sponsored, participated in, or contributed to any
plan subject to Title IV of ERISA or Section 412 of the Code or to any
multiple employer plan, or to any plan described in Section 413 of the Code,
at no time has Company or any Plan Affiliate contributed to or been
obligated to contribute to any "multiemployer plan," as such term is defined
in ERISA. Neither Company, nor any of its Plan Affiliates, nor any officer
or director of Company or any of its Plan Affiliates is subject to any
liability, penalty or tax under Sections 4975 through 4980B of the Code or
Title I of ERISA. No "prohibited transaction," within the meaning of
Section 4975 of the Code or Sections 406 and 407 of ERISA, and
11
not otherwise exempt under Section 408 of ERISA (or any administrative class
exemption thereunder) or Section 4975 of the Code, has occurred with respect
to any Plan.
(d) Neither Company nor any Plan Affiliate has, prior to the Effective
Time and in any material respect, violated any of the health continuation
requirements of the Consolidated Omnibus Budget Reconciliation Act of 1985,
as amended ("COBRA"), the requirements of the Family Medical Leave Act of
1993, as amended, the requirements of the Women's Health and Cancer Rights
Act, as amended, the requirements of the Newborns' and Mothers' Health
Protection Act of 1996, as amended, or any similar provisions of state law
applicable to Employees of the Company or any of its Plan Affiliates. None
of the Plans promises or provides retiree health benefits to any person
except as required by applicable law, and neither Company nor any of its
Plan Affiliates has represented, promised or contracted (whether in oral or
written form) to provide such retiree benefits to any employee, former
employee, director, consultant or other person, except to the extent
required by statute.
(e) Neither Company nor any of its subsidiaries is bound by or subject
to (and none of its respective assets or properties is bound by or subject
to) any arrangement with any labor union. No employee of Company or any of
its subsidiaries is represented by any labor union or covered by any
collective bargaining agreement and, to the knowledge of Company, no
campaign to establish such representation is in progress. There is no
pending or, to the knowledge of Company, threatened labor dispute involving
Company or any of its subsidiaries and any group of its employees nor has
Company or any of its subsidiaries experienced any labor interruptions over
the past three (3) years, and Company and its subsidiaries consider their
relationships with their employees to be good. The Company and its
subsidiaries are in compliance in all material respects with all applicable
material foreign, federal, state and local laws, rules and regulations
respecting employment, employment practices, terms and conditions of
employment and wages and hours.
(f) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (i) result in any
payment (including severance, unemployment compensation, golden parachute,
bonus or otherwise) becoming due to any shareholder, director or employee of
Company or any of its subsidiaries under any Plan or otherwise,
(ii) materially increase any benefits otherwise payable under any Plan, or
(iii) result in the acceleration of the time of payment or vesting of any
such benefits. Without limiting the foregoing, no payment or benefit which
will or maybe made by the Company with respect to any person as a result of
the transactions contemplated by this Agreement will be characterized as an
"excess parachute payment," within the meaning of Section 280G(b)(1) of the
Code.
(g) Each employee compensation, incentive, fringe or benefit plans,
program, policy, commitment or other remuneration of any kind (whether or
not set forth in a written document) that has been adopted or maintained by
Company or any Plan Affiliate, whether informally or formally, or with
respect to which Company or any Plan Affiliate will or may have any
liability, for the benefit of Employees who perform services outside the
United States (each an "INTERNATIONAL EMPLOYEE PLAN") has been established,
maintained and administered in compliance with its terms and conditions and
with the requirements prescribed by any and all statutory or regulatory laws
that are applicable to such International Employee Plan. Furthermore, no
International Employee Plan has unfunded liabilities, that as of the
Effective Time, will not be offset by insurance or fully accrued. Except as
required by law, no condition exists that would prevent Company or Parent
from terminating or amending any International Employee Plan at any time for
any reason without liability to Company or its Plan Affiliates (other than
ordinary administration expenses or routine claims for benefits).
2.12 LABOR MATTERS. (i) There are no controversies pending or, to the
knowledge of each of Company and its respective subsidiaries, threatened,
between Company or any of its subsidiaries and any of their respective employees
that would reasonably be expected, individually or in the aggregate, to have a
12
Material Adverse Effect on Company; (ii) as of the date of this Agreement,
neither Company nor any of its subsidiaries is a party to any collective
bargaining agreement or other labor union contract applicable to persons
employed by Company or its subsidiaries nor does Company or its subsidiaries
know of any activities or proceedings of any labor union to organize any such
employees; and (iii) as of the date of this Agreement, neither Company nor any
of its subsidiaries has any knowledge of any strikes, slowdowns, work
stoppages or lockouts, or threats thereof, by or with respect to any employees
of Company or any of its subsidiaries.
2.13 REGISTRATION STATEMENT/JOINT PROXY STATEMENT/PROSPECTUS. None of the
information supplied or to be supplied by Company for inclusion or incorporation
by reference in (i) the registration statement on Form S-4 to be filed with the
SEC by Parent in connection with the issuance of the Parent Common Stock in or
as a result of the Merger (the "S-4") will, at the time the S-4 becomes
effective under the Securities Act, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they are made, not misleading; and (ii) the joint proxy
statement/prospectus to be filed with the SEC by Company pursuant to
Section 5.1 hereof (the "JOINT PROXY STATEMENT/PROSPECTUS") will, at the dates
mailed to the shareholders of Company, at the times of the shareholders meeting
of Company (the "COMPANY SHAREHOLDERS' MEETING") in connection with the
transactions contemplated hereby, at the dates mailed to the stockholders of
Parent, at the times of the stockholders' meeting of Parent (the "PARENT
STOCKHOLDERS' MEETING") in connection with the Share Issuance and as of the
Effective Time, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they are made,
not misleading. The Joint Proxy Statement/Prospectus will comply as to form in
all material respects with the provisions of the Exchange Act and the rules and
regulations promulgated by the SEC thereunder. Notwithstanding the foregoing,
the Company makes no representation or warranty with respect to any information
supplied by Parent or Merger Sub which is contained in any of the foregoing
documents.
2.14 RESTRICTIONS ON BUSINESS ACTIVITIES. There is no agreement,
commitment, judgment, injunction, order or decree binding upon Company or its
subsidiaries or to which the Company or any of its subsidiaries is a party which
has or could reasonably be expected to have the effect of prohibiting or
materially impairing any business practice of Company or any of its
subsidiaries, any acquisition of property by Company or any of its subsidiaries
or the conduct of business by Company or any of its subsidiaries as currently
conducted.
2.15 TITLE TO PROPERTY. Neither Company nor any of its subsidiaries owns
any material real property. Company and each of its subsidiaries have good and
valid title to all of their material properties and assets, free and clear of
all liens, charges and encumbrances except liens for taxes not yet due and
payable 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; and all leases pursuant to which Company or any of
its subsidiaries lease from others material real or personal property are in
good standing, valid and effective in accordance with their respective terms,
and there is not, under any of such leases, any existing material default or
event of default (or any event which with notice or lapse of time, or both,
would constitute a material default and in respect of which Company or
subsidiary has not taken adequate steps to prevent such default from occurring).
All the plants, structures and equipment of Company and its subsidiaries, except
such as may be under construction, are in good operating condition and repair,
in all material respects.
2.16 TAXES.
(a) For the purposes of this Agreement, "TAX" or "TAXES" refers to any
and all federal, state, local and foreign taxes, assessments and other
governmental charges, duties, impositions and liabilities relating to taxes,
including taxes based upon or measured by gross receipts, income, profits,
sales, use and occupation, and value added, ad valorem, transfer, franchise,
withholding, payroll, recapture,
13
employment, excise and property taxes, together with all interest, penalties
and additions imposed with respect to such amounts and any obligations under
any agreements or arrangements with any other person with respect to such
amounts and including any liability for taxes of a predecessor entity.
(b) (i) The Company and each of its subsidiaries have timely filed all
federal, state, local and foreign returns, estimates, information statements
and reports ("RETURNS") relating to Taxes required to be filed by the
Company and each of its subsidiaries with any Tax authority, except Returns
which are not material to the Company. Such returns are true and correct in
all material respects and have been completed in accordance with applicable
law, and the Company and each of its subsidiaries have paid all Taxes shown
to be due on such Returns.
(ii) The Company and each of its subsidiaries as of the Effective Time
will have withheld with respect to its employees all federal and state
income taxes, Taxes pursuant to the Federal Insurance Contribution Act,
Taxes pursuant to the Federal Unemployment Tax Act and other Taxes
required to be withheld, except Taxes which are not material to the
Company.
(iii) Neither the Company nor any of its subsidiaries has been
delinquent in the payment of any material Tax nor is there any material
Tax deficiency outstanding, proposed or assessed against the Company or
any of its subsidiaries, nor has the Company or any of its subsidiaries
executed any unexpired waiver of any statute of limitations on or
extending the period for the assessment or collection of any Tax.
(iv) No audit or other examination of any Return of the Company or any
of its subsidiaries by any Tax authority is presently in progress, nor
has the Company or any of its subsidiaries been notified of any request
for such an audit or other examination.
(v) No adjustment relating to any Returns filed by the Company or any
of its subsidiaries has been proposed in writing formally or informally
by any Tax authority to the Company or any of its subsidiaries or any
representative thereof.
(vi) Neither the Company nor any of its subsidiaries has any liability
for any material unpaid Taxes which has not been accrued for or reserved
on the Company balance sheet dated December 31, 1999 in accordance with
GAAP, whether asserted or unasserted, contingent or otherwise, which is
material to the Company, other than any liability for unpaid Taxes that
may have accrued since June 30, 1999 in connection with the operation of
the business of the Company and its subsidiaries in the ordinary course.
(vii) There is no contract, agreement, plan or arrangement to which
the Company or any of its subsidiaries is a party as of the date of this
Agreement, including but not limited to the provisions of this Agreement,
covering any employee or former employee of the Company or any of its
subsidiaries that, individually or collectively, would reasonably be
expected to give rise to the payment of any amount that would not be
deductible pursuant to Sections 280G, 404 or 162(m) of the Code. There is
no contract, agreement, plan or arrangement to which the Company or any
of its subsidiaries is a party or by which it is bound to compensate any
individual for excise taxes paid pursuant to Section 4999 of the Code.
(viii) Neither the Company nor any of its subsidiaries has filed any
consent agreement under Section 341(f) of the Code or agreed to have
Section 341(f)(2) of the Code apply to any disposition of a
subsection (f) asset (as defined in Section 341(f)(4) of the Code) owned
by the Company or any of its subsidiaries.
(ix) Neither the Company nor any of its subsidiaries is party to or
has any obligation under any tax-sharing, tax indemnity or tax allocation
agreement or arrangement.
(x) None of the Company's or its subsidiaries' assets are tax exempt
use property within the meaning of Section 168(h) of the Code.
14
2.17 ENVIRONMENTAL MATTERS. Company (i) has obtained all applicable
permits, licenses and other authorizations that are required under Environmental
Laws the absence of which would have a Material Adverse Effect on Company; and
(ii) is in compliance in all material respects with all material terms and
conditions of such required permits, licenses and authorizations, and also is in
compliance in all material respects with all other material limitations,
restrictions, conditions, standards, prohibitions, requirements, obligations,
schedules and timetables contained in such laws or contained in any regulation,
code, plan, order, decree, judgment, notice or demand letter issued, entered,
promulgated or approved thereunder. "ENVIRONMENTAL LAWS" means all Federal,
state, local and foreign laws and regulations relating to pollution of the
environment (including ambient air, surface water, ground water, land surface or
subsurface strata) or the protection of human health and worker safety,
including, without limitation, laws and regulations relating to emissions,
discharges, releases or threatened releases of Hazardous Materials, or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Materials. "HAZARDOUS MATERIALS"
means chemicals, pollutants, contaminants, wastes, toxic substances, radioactive
and biological materials, asbestos-containing materials, hazardous substances,
petroleum and petroleum products or any fraction thereof, excluding, however,
Hazardous Materials contained in products typically used for office and
janitorial purposes properly and safely maintained in accordance with
Environmental Laws.
2.18 BROKERS. Except for fees payable to ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co. pursuant to
an engagement letter dated March 21, 2000, a copy of which has been provided to
Parent, Company has not incurred, nor will it incur, directly or indirectly, any
liability for brokerage or finders' fees or agents' commissions or any similar
charges in connection with this Agreement or any transaction contemplated hereby
2.19 INTELLECTUAL PROPERTY. For the purposes of this Agreement, the
following terms have the following definitions:
"INTELLECTUAL PROPERTY" shall mean any or all of the following and all
rights in, or arising out of: (i) all United States and foreign patents and
applications therefor and all reissues, divisions, renewals, extensions,
provisionals, continuations and continuations-in-part thereof ("PATENTS");
(ii) all inventions (whether patentable or not), invention disclosures,
improvements, trade secrets, proprietary information, know how, technology,
technical data and customer lists, and all documentation relating to any of
the foregoing; (iii) all copyrights, copyright registrations and
applications therefor and all other rights corresponding thereto throughout
the world; (iv) all semiconductor and semiconductor circuit designs;
(v) all rights to all mask works and reticles, mask work registrations and
applications therefor; (vi) all industrial designs and any registrations and
applications therefor throughout the world; (vii) all trade names, logos,
common law trademarks and service marks; trademark and service ▇▇▇▇
registrations and applications therefor and all goodwill associated
therewith throughout the world; (viii) all databases and data collections
and all rights therein throughout the world; (ix) all computer software
including all source code, object code, firmware, development tools, files,
records and data, all media on which any of the foregoing is recorded, all
Web addresses, sites and domain names; (x) any similar, corresponding or
equivalent rights to any of the foregoing; and (xi) all documentation
related to any of the foregoing
"COMPANY INTELLECTUAL PROPERTY" shall mean any Intellectual Property that is
owned by or exclusively licensed to the Company or any of its subsidiaries.
Without in any way limiting the generality of the foregoing, Company
Intellectual Property includes all Intellectual Property owned or licensed
by the Company related to the Company's products, including without
limitation all rights in any design code, documentation, and tooling for
packaging of semiconductors in connection with all current products and
products in design and development.
"REGISTERED INTELLECTUAL PROPERTY" shall mean all United States,
international and foreign: (i) patents, patent applications (including
provisional applications); (ii) registered trademarks, applications to
register trademarks, intent-to-use applications, or other registrations or
applications related to
15
trademarks; (iii) registered copyrights and applications for copyright
registration; (iv) any mask work registrations and applications to register
mask works; and (v) any other Company Intellectual Property that is the
subject of an application, certificate, filing, registration or other
document issued by, filed with, or recorded by, any state, government or
other public legal authority
"COMPANY REGISTERED INTELLECTUAL PROPERTY" means all of the Registered
Intellectual Property owned by, or filed in the name of, the Company or any
of its subsidiaries.
(a) Section 2.19(a) of the Company Schedule is a complete and accurate
list of all Company Registered Intellectual Property and specifies, where
applicable, the jurisdictions in which each such item of Company Registered
Intellectual Property has been issued or registered and lists any
proceedings or actions before any court, tribunal (including the United
States Patent and Trademark Office (the "PTO") or equivalent authority
anywhere in the world) related to any of the Company Registered Intellectual
Property.
(b) Company has made available to Parent a complete and accurate price
list of all products and services currently offered by Company or any of its
subsidiaries ("COMPANY PRODUCTS").
(c) No Company Intellectual Property or Company Product is subject to
any proceeding or outstanding decree, order, judgment, contract, license,
agreement, or stipulation restricting in any manner the use, transfer, or
licensing thereof by Company or any of its subsidiaries, or which may affect
the validity, use or enforceability of such Company Intellectual Property or
Company Product, except for provisions contained in the documents granting
licenses as ownership to any portion of the Company Intellectual Property or
Company Product and in amendments thereto and provisions of licenses granted
to customers of Company.
(d) Each material item of Company Registered Intellectual Property is
valid and subsisting, all necessary registration, maintenance and renewal
fees currently due in connection with such Company Registered Intellectual
Property have been made and all necessary documents, recordations and
certificates in connection with such Company Registered Intellectual
Property have been filed with the relevant patent, copyright, trademark or
other authorities in the United States or foreign jurisdictions, as the case
may be, for the purposes of maintaining such Company Registered Intellectual
Property.
(e) Company owns and has good and exclusive title to, each material item
of Company Intellectual Property free and clear of any lien or encumbrance
(excluding non-exclusive licenses and related restrictions granted in the
ordinary course). Without limiting the foregoing: (i) Company is the
exclusive owner of all trademarks and trade names used in connection with
the operation or conduct of the business of Company and its subsidiaries,
including the sale, distribution or provision of any Company Products by
Company or its subsidiaries; (ii) Company owns exclusively, and has good
title to, all copyrighted works that are Company Products or which Company
or any of its subsidiaries otherwise purports to own; and (iii) to the
extent that any Patents would be infringed by any Company Products, Company
is the exclusive owner of such Patents.
(f) To the extent that any technology, software or material Intellectual
Property has been developed or created independently or jointly by a third
party for Company or any of its subsidiaries or is incorporated into any of
the Company Products, Company has a written agreement with such third party
with respect thereto and Company thereby either (i) has obtained ownership
of, and is the exclusive owner of, or (ii) has obtained a perpetual,
non-terminable license (sufficient for the conduct of its business as
currently conducted and as proposed to be conducted) to all such third
party's Intellectual Property in such work, material or invention by
operation of law or by valid assignment, to the fullest extent it is legally
possible to do so.
16
(g) Neither Company nor any of its subsidiaries has transferred
ownership of, or granted any exclusive license with respect to, any
Intellectual Property that is or was material Company Intellectual Property,
to any third party, or permitted Company's rights in such material Company
Intellectual Property to lapse or enter the public domain.
(h) Section 2.19(h) of the Company Schedule lists all material
contracts, licenses and agreements to which Company or any of its
subsidiaries is a party: (i) with respect to Company Intellectual Property
licensed or transferred to any third party (other than end-user licenses in
the ordinary course); or (ii) pursuant to which a third party has licensed
or transferred any material Intellectual Property to Company.
(i) All material contracts, licenses and agreements relating to either
(i) Company Intellectual Property or (ii) Intellectual Property of a third
party licensed to Company or any of its subsidiaries, are in full force and
effect. The consummation of the transactions contemplated by this Agreement
will neither violate nor result in the breach, modification, cancellation,
termination or suspension of such contracts, licenses and agreements. Each
of Company and its subsidiaries is in material compliance with, and has not
materially breached any term of any such contracts, licenses and agreements
and, to the knowledge of Company, all other parties to such contracts,
licenses and agreements are in compliance with, and have not materially
breached any term of, such contracts, licenses and agreements. Following the
Closing Date, the Surviving Corporation will be permitted to exercise all of
Company's rights under such contracts, licenses and agreements to the same
extent Company and its subsidiaries would have been able to had the
transactions contemplated by this Agreement not occurred and without the
payment of any additional amounts or consideration other than ongoing fees,
royalties or payments which Company would otherwise be required to pay.
Neither this Agreement nor the transactions contemplated by this Agreement,
including the assignment to Parent or Merger Sub by operation of law or
otherwise of any contracts or agreements to which the Company is a party,
will result in (i) either Parent's or the Merger Sub's granting to any third
party any right to or with respect to any material Intellectual Property
right owned by, or licensed to, either of them, (ii) either the Parent's or
the Merger Sub's being bound by, or subject to, any non-compete or other
material restriction on the operation or scope of their respective
businesses, or (iii) either the Parent's or the Merger Sub's being obligated
to pay any royalties or other material amounts to any third party in excess
of those payable by Parent or Merger Sub, respectively, prior to the
Closing.
(j) The operation of the business of the Company and its subsidiaries as
such business currently is conducted, including (i) Company's and its
subsidiaries' design, development, manufacture, distribution, reproduction,
marketing or sale of the products or services of Company and its
subsidiaries (including Company Products) and (ii) the Company's use of any
product, device or process, has not, does not and will not infringe or
misappropriate the Intellectual Property of any third party or constitute
unfair competition or trade practices under the laws of any jurisdiction.
(k) Neither Company nor any of its subsidiaries has received notice from
any third party that the operation of the business of Company or any of its
subsidiaries or any act, product or service of Company or any of its
subsidiaries, infringes or misappropriates the Intellectual Property of any
third party or constitutes unfair competition or trade practices under the
laws of any jurisdiction.
(l) To the knowledge of Company, no person has or is infringing or
misappropriating any Company Intellectual Property.
(m) Company and each of its subsidiaries has taken reasonable steps to
protect Company's and its subsidiaries' rights in Company's confidential
information and trade secrets that it wishes to protect or any trade secrets
or confidential information of third parties provided to Company or any of
its subsidiaries, and, without limiting the foregoing, each of Company and
its subsidiaries has and enforces a policy requiring each employee and
contractor to execute a proprietary information/ confidentiality agreement
substantially in the form provided to Parent and all current and former
17
employees and contractors of Company and any of its subsidiaries have
executed such an agreement, except where the failure to do so is not
reasonably expected to be material to Company.
2.20 AGREEMENTS, CONTRACTS AND COMMITMENTS. Neither Company nor any of its
subsidiaries is a party to or is bound by:
(a) any employment or consulting agreement, contract or commitment with
any officer or member of Company's Board of Directors, other than those that
are terminable by Company or any of its subsidiaries on no more than thirty
(30) days' notice without liability or financial obligation to the Company
(other than termination provisions provided by law);
(b) any agreement or plan for the benefit of any director, employee or
consultant, including, without limitation, any stock option plan, stock
appreciation right plan or stock purchase plan, any of the benefits of which
will be increased, or the vesting of benefits of which will be accelerated,
by the occurrence of any of the transactions contemplated by this Agreement
or the value of any of the benefits of which will be calculated on the basis
of any of the transactions contemplated by this Agreement;
(c) any agreement of indemnification or any guaranty other than any
agreement of indemnification entered into in connection with the sale or
license of software products in the ordinary course of business or guaranty
of a subsidiary's obligation by Company;
(d) any agreement, contract or commitment containing any covenant
limiting in any respect the right of Company or any of its subsidiaries to
engage in any line of business or to compete with any person or granting any
exclusive distribution rights;
(e) any agreement, contract or commitment currently in force relating to
the disposition or acquisition by Company or any of its subsidiaries after
the date of this Agreement of a material amount of assets not in the
ordinary course of business or pursuant to which Company or any of its
subsidiaries has any material ownership interest in any corporation,
partnership, joint venture or other business enterprise other than Company's
subsidiaries;
(f) any dealer, distributor, joint marketing or development agreement
(other than reseller agreements not material to Company's business)
currently in force under which Company or any of its subsidiaries have
continuing material obligations to jointly market any product, technology or
service and which may not be canceled without penalty upon notice of ninety
(90) days or less;
(g) any agreement, contract or commitment currently in force to provide
source code to any third party for any product or technology that is
material to Company and its subsidiaries taken as a whole (other than
(i) licenses granted in the ordinary course of business to the Company's
customers to use (but not to copy, sublicense, market, or otherwise
distribute) source code that do not in any way impair Company's ownership
interests in such source code and (ii) agreements requiring the Company to
place source code in escrow for the benefit of a customer in the event of
the Company's default, bankruptcy, insolvency, or similar event);
(h) any agreement, contract or commitment currently in force to license
any third party to manufacture or reproduce any Company product, service or
technology, or any agreement, contract or commitment currently in force to
sell or distribute any Company products, service or technology except
agreements with distributors or sales representative in the normal course of
business cancelable without penalty upon notice of ninety (90) days or less
and substantially in the form previously provided to Parent;
(i) any mortgages, indentures, guarantees, loans or credit agreements,
security agreements or other agreements or instruments relating to the
borrowing of money or extension of credit in excess of $250,000 individually
or $500,000 in the aggregate, other than between Company and its
subsidiaries
18
and except as disclosed in the Company's balance sheet as of December 31,
1999 or in the related footnotes;
(j) any settlement agreement entered into within three (3) years prior
to the date of this Agreement that involves a continuing material obligation
of Company; or
(k) any other agreement that has an aggregate value of (or represents
future aggregate obligations in excess of) $2,000,000 or more individually.
Neither Company nor any of its subsidiaries, nor to Company's knowledge any
other party to a Company Contract (as defined below), is in breach, violation or
default under, and neither Company nor any of its subsidiaries has received
written notice that it has breached, violated or defaulted under, any of the
terms or conditions of any of the agreements, contracts or commitments to which
Company or any of its subsidiaries is a party or by which it is bound that are
required to be disclosed in the Company Schedule (any such agreement, contract
or commitment, a "COMPANY CONTRACT") in such a manner as would permit any other
party to cancel or terminate any such Company Contract, or would permit any
other party to seek damages or other remedies (for any or all of such breaches,
violations or defaults, in the aggregate), the effect of which would not,
individually or in the aggregate have a Material Adverse Effect on Company.
2.21 INSURANCE. Company maintains insurance policies and fidelity bonds
covering the assets, business, equipment, properties, operations, employees,
officers and directors of Company and its subsidiaries (collectively, the
"INSURANCE POLICIES") which are of the type and in amounts customarily carried
by persons conducting businesses similar to those of Company and its
subsidiaries. There is no material claim by Company or any of its subsidiaries
pending under any of the material Insurance Policies as to which coverage has
been questioned, denied or disputed by the underwriters of such policies or
bonds.
2.22 OPINION OF FINANCIAL ADVISOR. Company has been advised by its
financial advisor, ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., that in its opinion, as of the date of
this Agreement, the Exchange Ratio is fair to the shareholders of Company from a
financial point of view. Company shall provide Parent a copy of the written
confirmation of such opinion, dated as of the date of this Agreement, promptly
after receipt thereof.
2.23 BOARD APPROVAL. The Board of Directors of Company has, as of the date
of this Agreement, unanimously (i) approved and declared advisable this
Agreement and has approved the Merger and the other transactions contemplated
hereby, (ii) determined that the Merger is consistent with and in furtherance of
the long-term business strategy of Company and fair to, and in the best
interests of, Company and its shareholders and (iii) determined to recommended
that the shareholders of Company adopt and approve this Agreement and approve
the Merger.
2.24 VOTE REQUIRED. The affirmative vote of a majority of the votes that
holders of the outstanding shares of Company Common Stock are entitled to vote
with respect to the Merger is the only vote of the holders of any class or
series of Company's capital stock necessary to approve this Agreement and the
transactions contemplated hereby.
2.25 STATE TAKEOVER STATUTES. The Board of Directors of the Company has
approved the Merger, the Merger Agreement, the Stock Option Agreement, the
Company Voting Agreements and the transactions contemplated hereby and thereby,
and such approval is sufficient to render inapplicable to the Merger, the Merger
Agreement, the Stock Option Agreement, the Company Voting Agreements and the
transactions contemplated hereby and thereby the provisions of Code
Section 14-2-1110 et seq. and 14-2-1131 et seq. of the Georgia Law to the
extent, if any, such section is applicable to the Merger, the Merger Agreement,
the Stock Option Agreement, the Company Voting Agreements and the transactions
contemplated hereby and thereby. To Company's knowledge, no other state takeover
statute or similar statute or regulation applies to or purports to apply to the
Merger, the Merger Agreement, the Stock Option Agreement, the Company Voting
Agreements or the transactions contemplated hereby and thereby.
19
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub jointly and severally represent and warrant to
Company, subject to such exceptions as are specifically disclosed in writing in
the disclosure schedules dated as of the date hereof delivered by Parent to
Company (the "PARENT SCHEDULE"), as follows. The Parent Schedule shall be
arranged in sections corresponding to the numbered sections contained in this
Article and the disclosure in any paragraph shall qualify other sections in this
Article only to the extent it is reasonably apparent from a reading of such
disclosure that it also qualifies such other sections.
3.1 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES. Each of Parent and its
subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and has the
requisite corporate power and authority to own, lease and operate its assets and
properties and to carry on its business as it is now being conducted, except
where the failure to do so would not, individually or in the aggregate, have a
Material Adverse Effect on Parent. Each of Parent and its subsidiaries is in
possession of all Approvals necessary to own, lease and operate the properties
it purports to own, operate or lease and to carry on its business as it is now
being conducted, except where the failure to have such Approvals would not,
individually or in the aggregate, have a Material Adverse Effect on Parent. Each
of Parent and its subsidiaries is duly qualified or licensed as a foreign
corporation to do business, and is in good standing, in each jurisdiction where
the character of the properties owned, leased or operated by it or the nature of
its activities makes such qualification or licensing necessary, except for such
failures to be so duly qualified or licensed and in good standing that would
not, either individually or in the aggregate, have a Material Adverse Effect on
Parent.
3.2 CERTIFICATE OF INCORPORATION AND BYLAWS. Parent has previously
furnished to Company complete and correct copies of its Certificate of
Incorporation and Bylaws as amended to date (together, the "PARENT CHARTER
DOCUMENTS"). Such Parent Charter Documents and equivalent organizational
documents of each of its subsidiaries are in full force and effect. Parent is
not in violation of any of the provisions of the Parent Charter Documents, and
no subsidiary of Parent is in violation of any of its equivalent organizational
documents.
3.3 CAPITALIZATION. The authorized capital stock of Parent consists of
(i) 200,000,000 shares of Parent Common Stock, and (ii) 5,000,000 shares of
Preferred Stock, $0.001 par value per share ("PARENT PREFERRED STOCK"). At the
close of business on March 31, 2000, (i) 109,228,419 shares of Parent Common
Stock were issued and outstanding, (ii) 157,472 shares of Parent Common Stock
were held in treasury by Parent or by subsidiaries of Parent, (iii) 609,764
shares of Parent Common Stock were reserved for future issuance pursuant to
Parent's employee stock purchase plan, and (iv) 19,853,100 shares of Parent
Common Stock were reserved for issuance upon the exercise of outstanding options
to purchase Parent Common Stock. As of the date hereof, no shares of Parent
Preferred Stock were issued or outstanding. The authorized capital stock of
Merger Sub consists of 1,000 shares of common stock, par value $0.001 per share,
all of which, as of the date hereof, are issued and outstanding.
3.4 PARENT COMMON STOCK. The Parent Common Stock to be issued pursuant to
the Merger has been duly authorized and will, when issued in accordance with
this Agreement be validly issued, fully paid, and unassessable and will not be
subject to any restrictions on resale under the Securities Act, other than
restrictions imposed by Rule 145 under the Securities Act.
3.5 AUTHORITY RELATIVE TO THIS AGREEMENT. Each of Parent and Merger Sub
has all necessary corporate power and authority to execute and deliver this
Agreement and the Stock Option Agreement and to perform its obligations
hereunder and thereunder and to consummate the transactions contemplated hereby
and thereby. The execution and delivery of this Agreement and the Stock Option
Agreement by Parent and Merger Sub and the consummation by Parent and Merger Sub
of the transactions contemplated hereby and thereby have been duly and validly
authorized by all necessary corporate action on the
20
part of Parent and Merger Sub, and no other corporate proceedings on the part of
Parent or Merger Sub are necessary to authorize this Agreement and the Stock
Option Agreement, or to consummate the transactions so contemplated, subject
only to the approval of the Share Issuance by Parent's stockholders and the
filing of the Certificate of Merger pursuant to Georgia Law and the Delaware
Certificate of Merger pursuant to Delaware Law. This Agreement and the Stock
Option Agreement have been duly and validly executed and delivered by Parent and
Merger Sub and, assuming the due authorization, execution and delivery by
Company, constitute legal and binding obligations of Parent and Merger Sub,
enforceable against Parent and Merger Sub in accordance with their respective
terms.
3.6 SEC FILINGS; FINANCIAL STATEMENTS.
(a) Parent has made available to Company a correct and complete copy of
each report, schedule, registration statement and definitive proxy statement
filed by Parent with the SEC on or after April 1, 1999 (the "PARENT SEC
REPORTS"), which are all the forms, reports and documents required to be
filed by Parent with the SEC since April 1, 1999. The Parent SEC Reports
(A) were prepared in accordance with the requirements of the Securities Act
or the Exchange Act, as the case may be, and (B) did not at the time they
were filed (or if amended or superseded by a filing prior to the date of
this Agreement, then on the date of such filing) contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading. None
of Parent's subsidiaries is required to file any reports or other documents
with the SEC.
(b) Each of the consolidated financial statements (including, in each
case, any related notes thereto) contained in the Parent SEC Reports was
prepared in accordance with GAAP applied on a consistent basis throughout
the periods involved (except as may be indicated in the notes thereto or, in
the case of unaudited statements, do not contain footnotes as permitted by
Form 10-Q of the Exchange Act) and each fairly presents the consolidated
financial position of Parent and its subsidiaries at the respective dates
thereof and the consolidated results of its operations and cash flows for
the periods indicated, except that the unaudited interim financial
statements were or are subject to normal adjustments which were not or are
not expected to be material in amount.
(c) Parent has previously furnished to Company a complete and correct
copy of any amendments or modifications, which have not yet been filed with
the SEC but which are required to be filed, to agreements, documents or
other instruments which previously had been filed by Parent with the SEC
pursuant to the Securities Act or the Exchange Act.
3.7 NO UNDISCLOSED LIABILITIES. Neither Parent nor any of its subsidiaries
has any liabilities (absolute, accrued, contingent, or otherwise), which,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect on Parent and its subsidiaries, taken as a whole, except
(i) liabilities provided for in Company's balance sheet as of December 31, 1999;
(ii) liabilities provided for in the balance sheet as of October 31, 1999 of
Telco Research Corporation Limited ("TELCO"), a copy of which has been made
available to Company; (iii) liabilities of ▇▇▇▇▇▇▇▇ Management Group, a Nevada
corporation acquired by Parent in March 2000 ("▇▇▇▇▇▇▇▇"), which liabilities are
not material to Parent and its subsidiaries, taken as a whole; and
(iv) liabilities incurred since December 31, 1999 by Parent and its subsidiaries
(including Telco and ▇▇▇▇▇▇▇▇) and liabilities incurred by Telco between
October 31, 1999 and December 31, 2000. None of the liabilities described in the
foregoing sections (i), (ii), (iii), or (iv) could reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect on Parent.
3.8 COMPLIANCE; PERMITS.
(a) Neither Parent nor any of its subsidiaries is in conflict with, or
in default or violation of, (i) any law, rule, regulation, order, judgment
or decree applicable to Parent or any of its subsidiaries or by which its or
any of their respective properties is bound or affected or (ii) any note,
bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or
21
obligation to which Parent or any of its subsidiaries is a party or by which
Parent or any of its subsidiaries or its or any of their respective
properties is bound or affected, except for any conflicts, defaults or
violations that (individually or in the aggregate) would not cause the
Parent to lose any material benefit or incur any material liability. No
investigation or review by any governmental or regulatory body or authority
is pending or, to the knowledge of Parent, threatened against Parent or its
subsidiaries, nor has any governmental or regulatory body or authority
indicated an intention to conduct the same, other than, in each such case,
those the outcome of which could not, individually or in the aggregate,
reasonably be expected to have the effect of prohibiting or materially
impairing any business practice of Parent or any of its subsidiaries, any
acquisition of material property by Parent or any of its subsidiaries or the
conduct of business by Parent or any of its subsidiaries.
(b) Parent and its subsidiaries hold all permits, licenses, variances,
exemptions, orders and approvals from governmental authorities, the absence
of which could not reasonably be expected to have a Material Adverse Effect
on Parent (collectively, the "PARENT PERMITS"). Parent and its subsidiaries
are in compliance in all material respects with the terms of the Parent
Permits.
3.9 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since December 31, 1999, there
has not been: (i) any Material Adverse Effect on Parent, (ii) any declaration,
setting aside or payment of any dividend on, or other distribution (whether in
cash, stock or property) in respect of, any of Parent's or any of its
subsidiaries' capital stock (other than a two-for-one stock split in the form of
a dividend effected in February 2000), or any purchase, redemption or other
acquisition by Parent of any of Parent's capital stock or any other securities
of Parent or its subsidiaries or any options, warrants, calls or rights to
acquire any such shares or other securities except for repurchases from
employees following their termination pursuant to the terms of their
pre-existing stock option or purchase agreements, (iii) any split, combination
or reclassification of any of Parent's or any of its subsidiaries' capital
stock, (iv) any material change by Parent in its accounting methods, principles
or practices, except as required by concurrent changes in GAAP, or (v) any
material revaluation by Parent of any of its assets, including, without
limitation, writing down the value of capitalized inventory or writing off notes
or accounts receivable or any sale of assets of the Parent other than in the
ordinary course of business.
3.10 ABSENCE OF LITIGATION. There are no claims, actions, suits or
proceedings pending or, to the knowledge of Parent, threatened (or, to the
knowledge of Parent, any governmental or regulatory investigation pending or
threatened) against Parent or any of it subsidiaries or any properties or rights
of Parent or any of its subsidiaries, before any court, arbitrator or
administrative, governmental or regulatory authority or body, domestic or
foreign, which, if decided adversely to Parent, could reasonably be expected to
have a Material Adverse Effect on Parent.
3.11 REGISTRATION STATEMENT; JOINT PROXY STATEMENT/PROSPECTUS. None of the
information supplied or to be supplied by Parent for inclusion or incorporation
by reference in (i) the S-4 will, at the time the S-4 becomes effective under
the Securities Act, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they are
made, not misleading; and (ii) the Joint Proxy Statement/ Prospectus will, at
the dates mailed to the shareholders of Company and of Parent, at the time of
the Company Shareholders' Meeting, the time of the Parent Shareholders' Meeting
and as of the Effective Time, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading. The S-4 will comply as to form in all material
respects with the provisions of the Securities Act and the rules and regulations
promulgated by the SEC thereunder. Notwithstanding the foregoing, Parent makes
no representation or warranty with respect to any information supplied by the
Company which is contained in any of the foregoing documents.
22
3.12 BROKERS. Except for fees payable to Deutsche Bank Securities, Inc.,
Parent has not incurred, nor will it incur, directly or indirectly, any
liability for brokerage or finders' fees or agents' commissions or any similar
charges in connection with this Agreement or any transaction contemplated
hereby.
3.13 OPINION OF FINANCIAL ADVISOR. Parent's Board of Directors has
received an opinion from Deutsche Bank Securities, Inc., dated as of the date
hereof, to the effect that as of the date hereof, the Exchange Ratio is fair to
Parent from a financial point of view.
3.14 BOARD APPROVAL. The Board of Directors of Parent has, as of the date
of this Agreement, unanimously (i) has determined that the Merger is consistent
with and in furtherance of the long-term business strategy of Parent and is fair
to, and in the best interests of, Parent and its stockholders; (ii) has approved
this Agreement, the Merger and the other transactions contemplated by this
Agreement; and (iii) has determined to recommend that the stockholders of Parent
approve the Share Issuance.
3.15 VOTE REQUIRED. The affirmative vote of a majority of the shares of
Parent Common Stock that cast votes regarding the Share Issuance in person or by
proxy at the Parent Stockholders' Meeting is the only vote of the holders of any
class or series of Parent's capital stock necessary to approve this Agreement
and the transactions contemplated hereby.
ARTICLE IV
CONDUCT PRIOR TO THE EFFECTIVE TIME
4.1 CONDUCT OF BUSINESS BY COMPANY. During the period from the date of
this Agreement and continuing until the earlier of the termination of this
Agreement pursuant to its terms or the Effective Time, Company and each of its
subsidiaries shall, except to the extent that Parent shall otherwise consent in
writing, carry on its business, in the usual, regular and ordinary course and in
compliance with all applicable laws and regulations, pay its debts and taxes
when due and pay or perform other material obligations when due, subject to good
faith disputes over such debts, taxes, and obligations, and use its commercially
reasonable efforts, consistent with past practices (except as set forth in
Schedule 4.1), and policies to (i) preserve intact its present business
organization, (ii) keep available the services of its present officers and
employees and (iii) preserve its relationships with customers, suppliers,
distributors, licensors, licensees, and others with which it has business
dealings, except in each case as set forth in Section 4.1 of the Company
Schedule.
In addition, except as expressly permitted by the terms of this Agreement
and, except in each case as set forth in Section 4.1 of the Company Schedule,
without the prior written consent of Parent, during the period from the date of
this Agreement and continuing until the earlier of the termination of this
Agreement pursuant to its terms or the Effective Time, Company shall not do any
of the following and shall not permit its subsidiaries to do any of the
following:
(a) Waive any stock repurchase rights, accelerate, amend or change the
period of exercisability of options or restricted stock, or reprice options
granted under any employee, consultant, director or other stock plans or
authorize cash payments in exchange for any options granted under any of
such plans except pursuant to plans and agreements existing as of the date
hereof the relevant terms of which are described in the Company Schedule;
(b) Grant any severance or termination pay to any officer or employee
except pursuant to written agreements outstanding, or policies existing, on
the date hereof and as previously disclosed in writing or made available to
Parent, or adopt any new severance plan;
(c) Transfer or license to any person or entity or otherwise extend,
amend or modify any rights to the Company Intellectual Property, or enter
into grants to transfer or license to any person future patent rights, other
than in the ordinary course of business consistent with past practices,
provided
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that in no event shall Company license to any person or entity on an
exclusive basis or sell any Company Intellectual Property;
(d) Declare, set aside or pay any dividends on or make any other
distributions (whether in cash, stock, equity securities or property) in
respect of any capital stock or split, combine or reclassify any capital
stock or issue or authorize the issuance of any other securities in respect
of, in lieu of or in substitution for any capital stock;
(e) Purchase, redeem or otherwise acquire, directly or indirectly, any
shares of capital stock of Company or its subsidiaries, except repurchases
of unvested shares at cost in connection with the termination of the
employment relationship with any employee pursuant to stock option or
purchase agreements in effect on the date hereof;
(f) Issue, deliver, sell, authorize, pledge or otherwise encumber or
propose any of the foregoing with respect to, any shares of capital stock or
any securities convertible into shares of capital stock, or subscriptions,
rights, warrants or options to acquire any shares of capital stock or any
securities convertible into shares of capital stock, or enter into other
agreements or commitments of any character obligating it to issue any such
shares or convertible securities, other than (x) the issuance delivery
and/or sale of (i) shares of Company Common Stock pursuant to the exercise
of stock options outstanding as of the date of this Agreement or granted
pursuant to clause (y) hereof, and (ii) shares of Company Common Stock
issuable to participants in the ESPP consistent with the terms thereof and
(y) the granting of non-discretionary stock options to non-employee
directors under the Director Plan in an amount not to exceed options to
purchase 135,000 shares in the aggregate;
(g) Cause, permit or propose any amendments to the Company Charter
Documents (or similar governing instruments of any of its subsidiaries);
(h) Acquire or agree to acquire by merging or consolidating with, or by
purchasing any equity interest in or a portion of the assets of, or by any
other manner, any business or any corporation, partnership, association or
other business organization or division thereof, or otherwise acquire or
agree to acquire any assets or enter into any joint ventures, strategic
partnerships or alliances;
(i) Sell, lease, license, encumber or otherwise dispose of any
properties or assets except sales of inventory or non-exclusive licenses of
Company intellectual property in the ordinary course of business consistent
with past practice and, except for the sale, lease or disposition (other
than through licensing) of property or assets which are not material,
individually or in the aggregate, to the business of Company and its
subsidiaries;
(j) Incur any indebtedness for borrowed money or guarantee any such
indebtedness of another person, issue or sell any debt securities or
options, warrants, calls or other rights to acquire any debt securities of
Company, enter into any "keep well" or other agreement to maintain any
financial statement condition or enter into any arrangement having the
economic effect of any of the foregoing other than in connection with the
financing of ordinary course trade payables consistent with past practice;
(k) Adopt or amend any employee benefit plan, policy or arrangement, any
employee stock purchase or employee stock option plan, or enter into any
employment contract or collective bargaining agreement (other than offer
letters and letter agreements entered into in the ordinary course of
business consistent with past practice with employees who are terminable "at
will"), pay any special bonus or special remuneration to any director or
employee, or increase the salaries or wage rates or fringe benefits
(including rights to severance or indemnification) of its directors,
officers, employees or consultants;
(l) (i) Pay, discharge, settle or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), or litigation (whether or not commenced prior to the
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date of this Agreement) other than the payment, discharge, settlement or
satisfaction, in the ordinary course of business consistent with past
practice or in accordance with their terms, or liabilities recognized or
disclosed in the most recent consolidated financial statements (or the notes
thereto) of Company included in the Company SEC Reports or incurred since
the date of such financial statements, or (ii) waive the benefits of, agree
to modify in any manner, terminate, release any person from or fail to
enforce any confidentiality or similar agreement to which Company or any of
its subsidiaries is a party or of which Company or any of its subsidiaries
is a beneficiary;
(m) Make any individual or series of related payments outside of the
ordinary course of business (other than payments to financial, legal,
accounting or other professional service advisors not in excess of the
estimates thereof set forth in Section 4.1 of the Company Schedule);
(n) Except in the ordinary course of business consistent with past
practice, modify, amend or terminate any material contract or agreement to
which Company or any subsidiary thereof is a party or waive, delay the
exercise of, release or assign any material rights or claims thereunder;
(o) Enter into or materially modify any contracts, agreements, or
obligations relating to the distribution, sale, license or marketing by
third parties of Company's products or products licensed by Company on an
exclusive basis;
(p) Revalue any of its assets or, except as required by GAAP, make any
change in accounting methods, principles or practices;
(q) Incur or enter into any agreement, contract or commitment outside of
the ordinary course of business calling for payments by Company in excess of
$350,000 individually;
(r) Engage in any action that could cause the Merger to fail to qualify
as a "reorganization" under Section 368(a) of the Code, whether or not
otherwise permitted by the provisions of this Article IV;
(s) Engage in any action with the intent to directly or indirectly
adversely impact any of the transactions contemplated by this Agreement;
(t) Make any tax election that, individually or in the aggregate, is
reasonably likely to adversely affect in any material respect the tax
liability or tax attributes of Company or any of its subsidiaries or settle
or compromise any material income tax liability; or
(u) Agree in writing or otherwise to take any of the actions described
in Section 4.1 (a) through (t) above.
4.2 CONDUCT OF BUSINESS BY PARENT. During the period from the date of this
Agreement and continuing until the earlier of the termination of this Agreement
pursuant to its terms or the Effective Time, Parent shall not do any of the
following and shall not permit its subsidiaries to do any of the following:
(a) Declare, set aside, or pay any dividends or make any other
distributions (whether in cash, stock, equity securities or property) in
respect to Parent's capital stock, except where (i) an adjustment is made to
the Exchange Ratio in accordance with Section 1.6(e) or (ii) the holders of
Company Common Stock will otherwise receive an equivalent, proportional
dividend or distribution (based on the Exchange Ratio, as adjusted pursuant
to Section 1.6(e)) in connection with the Merger as if they had been holders
of Parent Common Stock on the record date for such dividend or distribution;
(b) Purchase, redeem, or otherwise acquire, directly or indirectly, any
shares of capital stock of Parent or its subsidiaries in any amounts that
would adversely affect Parent's financial condition or liquidity;
25
(c) Effect any amendment to the Company's Certificate of Incorporation
that would have an adverse effect on the rights of holders of Parent's
Common Stock (including the Parent Common Stock to be issued pursuant to
this Agreement);
(d) Engage in any action that could cause the Merger to fail to qualify
as a "reorganization" under Section 368(a) of the Code, whether or not
otherwise permitted by the provisions of this Article IV;
(e) Engage in any action with the intent to directly or indirectly
adversely impact any of the transactions contemplated by this Agreement;
(f) Following the filing of the S-4, acquire or agree to acquire any
business or any corporation, partnership, association or other business
organization or division if such acquisition or agreement would require the
inclusion in the S-4 of proforma financial information regarding such
acquisition; or
(g) Agree in writing or otherwise to take any of the actions described
in Section 4.1(a) through (f) above.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 JOINT PROXY STATEMENT/PROSPECTUS; REGISTRATION STATEMENT.
(a) As promptly as practicable after the execution of this Agreement,
Parent and Company shall jointly prepare and shall file with the SEC a
document or documents that will constitute (i) the S-4 and (ii) the Joint
Proxy Statement/Prospectus. Each of the parties hereto shall use
commercially reasonable efforts to cause the S-4 to become effective as
promptly as practicable after the date hereof, and, prior to the effective
date of the S-4, the parties hereto shall take all action required under any
applicable Laws in connection with the issuance of shares of Parent Common
Stock pursuant to the Merger. Parent or Company, as the case may be, shall
furnish all information concerning Parent or Company as the other party may
reasonably request in connection with such actions and the preparation of
the S-4 and the Joint Proxy Statement/Prospectus. As promptly as practicable
after the effective date of the S-4, the Joint Proxy Statement/Prospectus
shall be mailed to the shareholders of Company and of Parent. Each of the
parties hereto shall cause the Joint Proxy Statement/Prospectus to comply as
to form and substances to such party in all material respects with the
applicable requirements of (i) the Exchange Act, (ii) the Securities Act,
(iii) the rules and regulations of the Nasdaq.
(b) The Joint Proxy Statement/Prospectus shall include the approval of
this Agreement and the Merger and the recommendation of the Board of
Directors of Company to Company's shareholders that they vote in favor of
approval of this Agreement and the Merger, subject to the right of the Board
of Directors of the Company to withdraw its recommendation and to recommend
a Superior Proposal determined to be such in compliance with Section 5.4 of
this Agreement; PROVIDED, HOWEVER, that the Board of Directors of Company
shall submit this Agreement to Company's shareholders whether or not at any
time subsequent to the date hereof such board determines that it can no
longer make such recommendation. The Joint Proxy Statement/Prospectus shall
also include the approval of the Share Issuance and the recommendation of
the Board of Directors of Parent to Parent's stockholders that they vote in
favor of approval of the Share Issuance.
(c) No amendment or supplement to the Joint Proxy Statement/Prospectus
or the S-4 shall be made without the approval of Parent and Company, which
approval shall not be unreasonably withheld or delayed. Each of the parties
hereto shall advise the other parties hereto, promptly after it receives
notice thereof, of the time when the S-4 has become effective or any
supplement or amendment has been filed, of the issuance of any stop order,
of the suspension of the qualification of
26
the Parent Common Stock issuable in connection with the Merger for offering
or sale in any jurisdiction, or of any request by the SEC for amendment of
the Joint Proxy Statement/Prospectus or the S-4 or comments thereon and
responses thereto or requests by the SEC for additional information.
5.2 SHAREHOLDER AND STOCKHOLDER MEETINGS. Company shall call and hold the
Company Shareholders' Meeting and Parent shall call and hold the Parent
Stockholders' Meeting as promptly as practicable after the date hereof for the
purpose of voting upon the adoption and approval of this Agreement and the
approval of the Merger (in the case of the Company Shareholders' Meeting) and
the Share Issuance (in the case of the Parent Stockholders' Meeting) pursuant to
the Joint Proxy Statement/Prospectus, and Company and Parent shall use all
reasonable efforts to hold the Parent Stockholders' Meeting and the Company
Shareholders' Meeting on the same day and as soon as practicable after the date
on which the S-4 becomes effective. Nothing herein shall prevent Company or
Parent from adjourning or postponing the Company Shareholders' Meeting or the
Parent Stockholders' Meeting, as the case may be, if there are insufficient
shares of Company Common Stock or Parent Common Stock, as the case may be,
necessary to conduct business at their respective meetings of the shareholders
or stockholders. The Board of Directors of Company shall submit this Agreement
and the Merger for shareholder approval pursuant to Section 14-2-1103(c) of
Georgia Law subject only to the condition of shareholder approval as described
in Section 2.24. Unless Company's Board of Directors has withdrawn its
recommendation of this Agreement and the Merger in compliance with Section 5.4,
Company shall use commercially reasonable efforts to solicit from its
shareholders proxies in favor of the adoption and approval of this Agreement and
the approval of the Merger pursuant to the Joint Proxy Statement/Prospectus and
shall take all other commercially reasonable action necessary or advisable to
secure the vote or consent of shareholders required by Georgia Law or applicable
stock exchange requirements to obtain such approval. Parent shall use
commercially reasonable efforts to solicit from its stockholders proxies in
favor of the Share Issuance pursuant to the Joint Proxy Statement/Prospectus and
shall take all other commercially reasonable action necessary or advisable to
secure the vote or consent of stockholders required by the Delaware Law or
applicable stock exchange requirements to obtain such approval. Company shall
call and hold the Company Shareholders' Meeting for the purpose of voting upon
the adoption and approval of this Agreement and the approval of the Merger
whether or not Company's Board of Directors at any time subsequent to the date
hereof determines that this Agreement is no longer advisable or recommends that
Company's shareholders reject it.
5.3 CONFIDENTIALITY; ACCESS TO INFORMATION.
(a) The parties acknowledge that Company and Parent have previously
executed a Confidentiality Agreement, dated as of March 1, 2000 (the
"CONFIDENTIALITY AGREEMENT"), which Confidentiality Agreement will continue
in full force and effect in accordance with its terms.
(b) Each of the Company and Parent will afford the other and the other's
accountants, counsel and other representatives reasonable access to its
properties, books, records and personnel during the period prior to the
Effective Time to obtain all information concerning its business as such
other party may reasonably request. No information or knowledge obtained in
any investigation pursuant to this Section 5.3 will affect or be deemed to
modify any representation or warranty contained herein or the conditions to
the obligations of the parties to consummate the Merger.
5.4 NO SOLICITATION.
(a) From and after the date of this Agreement until the Effective Time
or termination of this Agreement pursuant to Article VII, Company and its
subsidiaries will not, nor will they authorize or permit any of their
respective officers, directors, affiliates or employees or any investment
banker, attorney or other advisor or representative retained by any of them
to, directly or indirectly, (i) solicit, initiate, encourage or induce the
making, submission or announcement of any Acquisition Proposal (as defined
below), (ii) participate in any discussions or negotiations regarding, or
furnish to any
27
person any information with respect to, or take any other action to
facilitate any inquiries or the making of any proposal that constitutes or
would reasonably be expected to lead to, any Acquisition Proposal,
(iii) engage in discussions with any person with respect to any Acquisition
Proposal, (iv) approve, endorse or recommend any Acquisition Proposal or
(v) enter into any letter of intent or similar document or any contract,
agreement or commitment contemplating or otherwise relating to any
Acquisition Transaction (as defined below); PROVIDED, HOWEVER, that nothing
contained in this Section 5.4 shall prohibit the Board of Directors of
Company from (i) complying with Rule 14d-9 or 14e-2(a) promulgated under the
Exchange Act with regard to a tender or exchange offer or (ii) in response
to an unsolicited, bona fide written Acquisition Proposal that Company's
Board of Directors reasonably concludes constitutes a Superior Offer (as
defined below), engaging in discussions or participating in negotiations
with and furnishing information to the party making such Acquisition
Proposal to the extent (A) the Board of Directors of the Company determines
in good faith after consultation with its outside legal counsel that failure
to take such action would be inconsistent with its fiduciary obligations
under applicable law, (B) (x) at least two business days prior to furnishing
any such nonpublic information to, or entering into discussions or
negotiations with, such party, Company gives Parent written notice of
Company's intention to furnish nonpublic information to, or enter into
discussions or negotiations with, such party and (y) Company receives from
such party an executed confidentiality agreement containing customary
limitations on the use and disclosure of all nonpublic written and oral
information furnished to such party by or on behalf of Company, and
(C) contemporaneously with furnishing any such nonpublic information to such
party, Company furnishes such nonpublic information to Parent (to the extent
such nonpublic information has not been previously furnished by the Company
to Parent). Company and its subsidiaries will immediately cease any and all
existing activities, discussions or negotiations with any parties conducted
heretofore with respect to any Acquisition Proposal. Without limiting the
foregoing, it is understood that any violation of the restrictions set forth
in this Section 5.4 by any officer, director or employee of Company or any
of its subsidiaries or any investment banker, attorney or other advisor or
representative of Company or any of its subsidiaries shall be deemed to be a
breach of this Section 5.4 by Company.
For purposes of this Agreement, "ACQUISITION PROPOSAL" shall mean any offer
or proposal (other than an offer or proposal by Parent) relating to any
Acquisition Transaction. For the purposes of this Agreement, "ACQUISITION
TRANSACTION" shall mean any transaction or series of related transactions other
than the transactions contemplated by this Agreement involving: (A) any
acquisition or purchase from the Company by any person or "group" (as defined
under Section 13(d) of the Exchange Act and the rules and regulations
thereunder) of more than a 15% interest in the total outstanding voting
securities of the Company or any of its subsidiaries or any tender offer or
exchange offer that if consummated would result in any person or "group" (as
defined under Section 13(d) of the Exchange Act and the rules and regulations
thereunder) beneficially owning 15% or more of the total outstanding voting
securities of the Company or any of its subsidiaries or any merger,
consolidation, business combination or similar transaction involving the Company
pursuant to which the shareholders of the Company immediately preceding such
transaction hold less than [85]% of the equity interests in the surviving or
resulting entity of such transaction; (B) any sale, lease (other than in the
ordinary course of business), exchange, transfer, license (other than in the
ordinary course of business), acquisition or disposition of more than 15% of the
assets of the Company; or (C) any liquidation, dissolution, recapitalization or
other significant corporate reorganization of the Company; and (C) "SUPERIOR
PROPOSAL" shall mean an Acquisition Proposal with respect to which (x) if any
cash consideration is involved, shall not be subject to any financing
contingency (or, after consultation with Company's financial advisors, the Board
of Directors shall have determined in good faith that such financing is
reasonably likely to be obtained by such acquiring party on a timely basis), and
with respect to which Company's Board of Directors shall have determined in good
faith (after consultation with Company's financial advisors) that the acquiring
party is capable of consummating the proposed Acquisition Transaction on the
terms proposed, and (y) Company's Board of Directors shall have
28
determined in good faith that the proposed Acquisition Transaction provides
greater value to the shareholders of Company than the Merger (taking into
account the advice of Company's independent financial advisors).
(b) In addition to the obligations of Company set forth in paragraph
(a) of this Section 5.4, Company as promptly as practicable, and in any
event within 24 hours, shall advise Parent orally and in writing of any
request for information which Company reasonably believes would lead to an
Acquisition Proposal or of any Acquisition Proposal, or any inquiry with
respect to or which Company reasonably believes would lead to any
Acquisition Proposal, the material terms and conditions of such request,
Acquisition Proposal or inquiry, and the identity of the person or group
making any such request, Acquisition Proposal or inquiry. Company will keep
Parent informed in all material respects of the status and terms (including
material amendments or proposed amendments) of any such request, Acquisition
Proposal or inquiry. In addition to the foregoing, Company shall
(i) provide Parent with at least 48 hours prior notice (or such lesser prior
notice as provided to the members of Company's Board of Directors but in no
event less than eight hours) of any meeting of Company's Board of Directors
at which Company's Board of Directors is reasonably expected to consider an
Acquisition Proposal and (ii) provide Parent with at least 48 hours prior
written notice (or such lesser prior notice as provided to the members of
the Company's Board of Directors but in no event less than eight hours) of a
meeting of Company's Board of Directors at which Company's Board of
Directors is reasonably expected to recommend a Superior Offer to its
shareholders and together with such notice a copy of the definitive
documentation relating to such Superior Offer.
5.5 PUBLIC DISCLOSURE. Parent and Company will consult with each other and
agree before issuing any press release or otherwise making any public statement
with respect to the Merger, this Agreement or an Acquisition Proposal and will
not issue any such press release or make any such public statement prior to such
agreement, except as may be required by law or any listing agreement with a
national securities exchange, in which case reasonable efforts to consult with
the other party will be made prior to any such release or public statement. The
parties have agreed to the text of the joint press release announcing the
signing of this Agreement.
5.6 REASONABLE EFFORTS; NOTIFICATION.
(a) Upon the terms and subject to the conditions set forth in this
Agreement (including the provisions of Section 5.4), each of the parties
agrees to use commercially reasonable efforts to take, or cause to be taken,
all actions, and to do, or cause to be done, and to assist and cooperate
with the other parties in doing, all things necessary, proper or advisable
to consummate and make effective, in the most expeditious manner
practicable, the Merger and the other transactions contemplated by this
Agreement, including using commercially reasonable efforts to accomplish the
following: (i) the taking of all reasonable acts necessary to cause the
conditions precedent set forth in Article VI to be satisfied, (ii) the
obtaining of all necessary actions or nonactions, waivers, consents,
approvals, orders and authorizations from Governmental Entities and the
making of all necessary registrations, declarations and filings (including
registrations, declarations and filings with Governmental Entities, if any)
and the taking of all reasonable steps as may be necessary to avoid any
suit, claim, action, investigation or proceeding by any Governmental Entity,
(iii) the obtaining of all necessary consents, approvals or waivers from
third parties, (iv) the defending of any suits, claims, actions,
investigations or proceedings, whether judicial or administrative,
challenging this Agreement or the consummation of the transactions
contemplated hereby, including seeking to have any stay or temporary
restraining order entered by any court or other Governmental Entity vacated
or reversed and (v) the execution or delivery of any additional instruments
necessary to consummate the transactions contemplated by, and to fully carry
out the purposes of, this Agreement. In connection with and without limiting
the foregoing, Company and its Board of Directors shall, if any state
takeover statute or similar statute or regulation is or becomes applicable
to the Merger, this Agreement or any of the transactions contemplated by
this Agreement, use commercially reasonable efforts to ensure that the
Merger and
29
the other transactions contemplated by this Agreement may be consummated as
promptly as practicable on the terms contemplated by this Agreement and
otherwise to minimize the effect of such statute or regulation on the
Merger, this Agreement and the transactions contemplated hereby.
Notwithstanding anything herein to the contrary, nothing in this Agreement
shall be deemed to require Parent or Company or any subsidiary or affiliate
thereof to agree to any divestiture by itself or any of its affiliates of
shares of capital stock or of any business, assets or property, or the
imposition of any material limitation on the ability of any of them to
conduc their business or to own or exercise control of such assets,
properties and stock.
(b) Company shall give prompt notice to Parent of any representation or
warranty made by it contained in this Agreement becoming untrue or
inaccurate, or any failure of Company to comply with or satisfy in any
material respect any covenant, condition or agreement to be complied with or
satisfied by it under this Agreement, in each case, such that the conditions
set forth in Section 6.3(a) or 6.3(b) would not be satisfied; PROVIDED,
HOWEVER, that no such notification shall affect the representations,
warranties, covenants or agreements of the parties or the conditions to the
obligations of the parties under this Agreement.
(c) Parent shall give prompt notice to Company of any representation or
warranty made by it or Merger Sub contained in this Agreement becoming
untrue or inaccurate, or any failure of Parent or Merger Sub to comply with
or satisfy in any material respect any covenant, condition or agreement to
be complied with or satisfied by it under this Agreement, in each case, such
that the conditions set forth in Section 6.2(a) or 6.2(b) would not be
satisfied; PROVIDED, HOWEVER, that no such notification shall affect the
representations, warranties, covenants or agreements of the parties or the
conditions to the obligations of the parties under this Agreement.
5.7 THIRD PARTY CONSENTS. As soon as practicable following the date
hereof, Parent and Company will each use its commercially reasonable efforts to
obtain any consents, waivers and approvals under any of its or its subsidiaries'
respective agreements, contracts, licenses or leases required to be obtained in
connection with the consummation of the transactions contemplated hereby.
5.8 STOCK OPTIONS AND EMPLOYEE BENEFITS; WARRANTS.
(a) At the Effective Time, each outstanding option to purchase shares of
Company Common Stock (each, a "COMPANY STOCK OPTION") under the Company
Option Plans, whether or not vested, shall by virtue of the Merger be
assumed by Parent. Each Company Stock Option and Warrant so assumed by
Parent under this Agreement will continue to have, and be subject to, the
same terms and conditions of such options or Warrant immediately prior to
the Effective Time (including, without limitation, any repurchase rights or
vesting provisions of outstanding options), except that (i) each Company
Stock Option and Warrant will be exercisable (or will become exercisable in
accordance with its terms) for that number of whole shares of Parent Common
Stock equal to the product of the number of shares of Company Common Stock
that were issuable upon exercise of such Company Stock Option and Warrant
immediately prior to the Effective Time multiplied by the Exchange Ratio,
rounded down to the nearest whole number of shares of Parent Common Stock
and (ii) the per share exercise price for the shares of Parent Common Stock
issuable upon exercise of such assumed Company Stock Option and Warrant will
be equal to the quotient determined by dividing the exercise price per share
of Company Common Stock at which such Company Stock Option and each
outstanding Warrant was exercisable immediately prior to the Effective Time
by the Exchange Ratio, rounded up to the nearest whole cent.
30
(b) ESPP. Prior to the Effective Time, outstanding purchase rights
under Company's ESPP shall be exercised in accordance with Sections 14 and
16 of the ESPP and each share of Company Common Stock purchased pursuant to
such exercise shall by virtue of the Merger, and without any action on the
part of the holder thereof, be converted into the right to receive a number
of shares of Parent Common Stock equal to the Exchange Ratio without
issuance of certificates representing issued and outstanding shares of
Company Common Stock to ESPP participants. Company agrees that it shall
terminate the ESPP immediately following the aforesaid purchase of shares of
Company Common Stock thereunder.
(c) 401(k) PLANS. Company and its Plan Affiliates, as applicable,
shall each terminate (i) any and all group severance, separation or salary
continuation plans, programs, or arrangements and (ii) any and all 401(k)
plans, effective as of the day immediately preceding the Closing Date.
Parent shall receive from Company evidence that Company's and each Plan
Affiliate's, as applicable, program(s) have been terminated pursuant to
resolutions of each such entity's Board of Directors (the form and substance
of such resolutions shall be subject to review and approval of Parent),
effective as of the day immediately preceding the Effective Time.
(d) SERVICE CREDIT. To the extent permitted by Parent's employee
benefit plan and applicable law, Parent will use reasonable efforts, or will
cause Company to use reasonable efforts, give individuals who are employed
by Company and its subsidiaries as of the Effective Time ("AFFECTED
EMPLOYEES") full credit for purposes of eligibility, vesting, benefit
accrual (excluding, however, benefit accrual under any defined benefit
pension plans) and determination of the level of benefits under any employee
benefit plans or arrangements maintained by Parent or any subsidiary of
Parent for such Affected Employees' service with Company or any subsidiary
of the Company to the same extent recognized by Company immediately prior to
the Effective Time. To the extent permitted by Parent's employee benefit
plans and applicable law, Parent will, or will cause Company to (i) waive
all limitations as to preexisting conditions, exclusions and waiting periods
with respect to participation and coverage requirements applicable to the
Affected Employees under any welfare benefit plans that such employees may
be eligible to participate in after the Effective Time, other than
limitations or waiting periods that are already in effect with respect to
such employees and that have not been satisfied as of the Effective Time
under any welfare plan maintained for the Affected Employees immediately
prior to the Effective Time, and (ii) provide each Affected Employee with
credit for any co-payments and deductibles paid prior to the Effective Time
in satisfying any applicable deductible or out-of-pocket requirements under
any welfare plans that such employees are eligible to participate in after
the Effective Time.
5.9 FORM S-8. Parent agrees to file a registration statement on Form S-8
for the shares of Parent Common Stock issuable with respect to assumed Company
Stock Options as soon as is reasonably practicable (and in any event within
twenty business days) after the Effective Time.
5.10 INDEMNIFICATION.
(a) From and after the Effective Time, Parent will, and will cause the
Surviving Corporation to, fulfill and honor in all respects the obligations
of Company pursuant to any indemnification agreements between Company and
its directors and officers in effect immediately prior to the Effective Time
and any indemnification provisions under the Company Charter Documents as in
effect on the date hereof. The Certificate of Incorporation and Bylaws of
the Surviving Corporation will contain provisions with respect to
exculpation and indemnification that are at least as favorable to the
indemnified parties thereunder (the "INDEMNIFIED PARTIES") as those
contained in the Company Charter Documents as in effect on the date hereof,
which provisions will not be amended, repealed or otherwise modified for a
period of six years from the Effective Time in any manner that would
adversely affect the rights thereunder of the Indemnified Parties, unless
such modification is required by law.
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(b) For a period of six years after the Effective Time, Parent will, and
will cause the Surviving Corporation to, use its commercially reasonable
efforts to maintain in effect directors' and officers' liability insurance
covering those persons or classes of persons who are currently covered by
Company's directors' and officers' liability insurance policy with coverage
in an amount and scope at least as favorable as that applicable to the
current directors and officers of Company; PROVIDED, HOWEVER, that in no
event will Parent or the Surviving Corporation be required to expend an
annual premium for such coverage in excess of 150% of the annual premium
most recently paid by Company (the "PREMIUM CAP"); PROVIDED, FURTHER, that
if the annual premium for such coverage would at any time exceed the Premium
Cap, then the Surviving Corporation shall maintain insurance policies that
provide the maximum coverage available at an annual premium equal to the
Premium Cap.
(c) The provisions of this Section 5.10 are intended to be in addition
to the rights otherwise available to the Indemnified Parties by law,
charter, statute, bylaw or agreement, and shall operate for the benefit of,
and shall be enforceable by, each of the Indemnified Parties.
5.11 NASDAQ LISTING. Parent agrees to authorize for listing on Nasdaq the
shares of Parent Common Stock issuable, and those required to be reserved for
issuance, in connection with the Merger, upon official notice of issuance.
5.12 AFFILIATES. Set forth in Section 5.12 of the Company Schedule is a
list of those persons who may be deemed to be, in Company's reasonable judgment,
affiliates of Company within the meaning of Rule 145 promulgated under the
Securities Act (each, a "COMPANY AFFILIATE"). Company will provide Parent with
such information and documents as Parent reasonably requests for purposes of
reviewing such list. Company will use its commercially reasonable efforts to
deliver or cause to be delivered to Parent, as promptly as practicable on or
following the date hereof, from each Company Affiliate an executed affiliate
agreement in substantially the form attached hereto as EXHIBIT C (the "COMPANY
AFFILIATE AGREEMENT"), each of which will be in full force and effect as of the
Effective Time. Parent will be entitled to place appropriate legends on the
certificates evidencing any Parent Common Stock to be received by a Company
Affiliate pursuant to the terms of this Agreement, and to issue appropriate stop
transfer instructions to the transfer agent for the Parent Common Stock,
consistent with the terms of the Company Affiliate Agreement.
5.13 REGULATORY FILINGS; REASONABLE EFFORTS. As soon as may be reasonably
practicable, Company and Parent each shall file with the United States Federal
Trade Commission (the "FTC") and the Antitrust Division of the United States
Department of Justice ("DOJ") Notification and Report Forms relating to the
transactions contemplated herein as required by the HSR Act, as well as
comparable pre-merger notification forms required by the merger notification or
control laws and regulations of any applicable jurisdiction, as agreed to by the
parties. Company and Parent each shall promptly (a) supply the other with any
information which may be required in order to effectuate such filings and
(b) supply any additional information which reasonably may be required by the
FTC, the DOJ or the competition or merger control authorities of any other
jurisdiction and which the parties may reasonably deem appropriate; PROVIDED,
HOWEVER, that Parent shall not be required to agree to any divestiture by Parent
or the Company or any of Parent's subsidiaries or affiliates of shares of
capital stock or of any business, assets or property of Parent or its
subsidiaries or affiliates or of the Company, its affiliates, or the imposition
of any material limitation on the ability of any of them to conduct their
businesses or to own or exercise control of such assets, properties and stock.
5.14 PARENT BOARD OF DIRECTORS. The Board of Directors of Parent will take
all actions necessary such that two members of Company's Board of Directors
reasonably acceptable to Parent, at least one of whom is an independent director
of the Company's Board of Directors, shall be appointed to Parent's Board of
Directors as of the Effective Time with a term expiring at the next annual
meeting of Parent's stockholders.
5.15 SHAREHOLDER LITIGATION. Until the earlier of termination of this
Agreement in accordance with its terms or the Effective Time, Company shall give
Parent the opportunity to participate in the defense or settlement of any
shareholder litigation against Company or members of its Board of Directors
relating to
32
this Agreement and the transactions contemplated hereby or otherwise, and shall
not settle any such litigation without Parent' prior written consent.
ARTICLE VI
CONDITIONS TO THE MERGER
6.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY TO EFFECT THE MERGER. The
respective obligations of each party to this Agreement to effect the Merger
shall be subject to the satisfaction at or prior to the Closing of the following
conditions:
(a) SHAREHOLDER AND STOCKHOLDER APPROVALS. This Agreement shall have
been approved and adopted, and the Merger shall have been duly approved, by
the requisite vote under applicable law, by the shareholders of Company. The
Share Issuance shall have been approved by the requisite vote under
applicable Nasdaq rules by the stockholders of Parent.
(b) REGISTRATION STATEMENT EFFECTIVE; JOINT PROXY STATEMENT. The SEC
shall have declared the S-4 effective. No stop order suspending the
effectiveness of the S-4 or any part thereof shall have been issued and no
proceeding for that purpose, and no similar proceeding in respect of the
Joint Proxy Statement/Prospectus, shall be pending or shall then be
threatened in writing by the SEC.
(c) NO ORDER; HSR ACT. No Governmental Entity shall have enacted,
issued, promulgated, enforced or entered any statute, rule, regulation,
executive order, decree, injunction or other order (whether temporary,
preliminary or permanent) which is in effect and which has the effect of
making the Merger illegal or otherwise prohibiting consummation of the
Merger. All waiting periods, if any, under the HSR Act relating to the
transactions contemplated hereby will have expired or terminated early and
all material foreign antitrust approvals required to be obtained prior to
the Merger in connection with the transactions contemplated hereby shall
have been obtained.
(d) TAX OPINIONS. Parent and Company shall each have received written
opinions from their respective tax counsel, in form and substance reasonably
satisfactory to them, to the effect that the Merger will constitute a
reorganization within the meaning of Section 368(a) of the Code and such
opinions shall not have been withdrawn; PROVIDED, HOWEVER, that if the
counsel to either Parent or Company does not render such opinion, this
condition shall nonetheless be deemed to be satisfied with respect to such
party if counsel to the other party renders such opinion to such party. The
parties to this Agreement agree to make such reasonable representations as
requested by such counsel for the purpose of rendering such opinions.
6.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF COMPANY. The obligation of
Company to consummate and effect the Merger shall be subject to the satisfaction
at or prior to the Closing Date of each of the following conditions, any of
which may be waived, in writing, exclusively by Company:
(a) REPRESENTATIONS AND WARRANTIES. Each representation and warranty
of Parent and Merger Sub contained in this Agreement (i) shall have been
true and correct in all material respects as of the date of this Agreement
and (ii) shall be true and correct on and as of the Closing Date with the
same force and effect as if made on the Closing Date except, in the case of
each of clauses (i) and (ii), (A) for such failures to be true and correct
that do not in the aggregate constitute a Material Adverse Effect on Parent
and Merger Sub, and (B) for those representations and warranties which
address matters only as of a particular date (which representations shall
have been true and correct (subject to the qualifications set forth in the
preceding clause (A)) as of such particular date) (it being understood that,
for purposes of determining the accuracy of such representations and
warranties, (i) all "Material Adverse Effect" qualifications and other
qualifications based on the word "material" contained in such
representations and warranties shall be disregarded and (ii) any update of
or modification to the Parent Schedule made or purported to have been made
after the date of this
33
Agreement shall be disregarded). Company shall have received a certificate
with respect to the foregoing signed on behalf of Parent by an authorized
officer of Parent.
(b) AGREEMENTS AND COVENANTS. Parent and Merger Sub shall have
performed or complied in all material respects with all agreements and
covenants required by this Agreement to be performed or complied with by
them on or prior to the Closing Date, and Company shall have received a
certificate to such effect signed on behalf of Parent by an authorized
officer of Parent.
6.3 ADDITIONAL CONDITIONS TO THE OBLIGATIONS OF PARENT AND MERGER SUB. The
obligations of Parent and Merger Sub to consummate and effect the Merger shall
be subject to the satisfaction at or prior to the Closing Date of each of the
following conditions, any of which may be waived, in writing, exclusively by
Parent:
(a) REPRESENTATIONS AND WARRANTIES. Each representation and warranty
of Company contained in this Agreement (i) shall have been true and correct
in all material respects as of the date of this Agreement and (ii) shall be
true and correct on and as of the Closing Date with the same force and
effect as if made on and as of the Closing Date except, in the case of each
of clauses (i) and (ii), (A) for such failures to be true and correct that
do not in the aggregate constitute a Material Adverse Effect on the Company
PROVIDED, HOWEVER, such Material Adverse Effect qualifier shall be
inapplicable with respect to representations and warranties contained in
Section 2.3(a), 2.3(e), 2.23, and 2.24, which shall be true and correct in
all material respects, and (B) for those representations and warranties
which address matters only as of a particular date (which representations
shall have been true and correct (subject to the qualifications set forth in
the preceding clause (A)) as of such particular date) (it being understood
that, for purposes of determining the accuracy of such representations and
warranties, (i) all "Material Adverse Effect" qualifications and other
qualifications based on the word "material" contained in such
representations and warranties shall be disregarded and (ii) any update of
or modification to the Company Schedule made or purported to have been made
after the date of this Agreement shall be disregarded). Parent shall have
received a certificate with respect to the foregoing signed on behalf of
Company by an authorized officer of Company.
(b) AGREEMENTS AND COVENANTS. Company shall have performed or complied
in all material respects with all agreements and covenants required by this
Agreement to be performed or complied with by it at or prior to the Closing
Date, and Parent shall have received a certificate to such effect signed on
behalf of Company by the Chief Executive Officer and the Chief Financial
Officer of Company.
(c) CONSENTS. Company shall have obtained all consents, waivers and
approvals required in connection with the consummation of the transactions
contemplated hereby in connection with the agreements, contracts, licenses
or leases set forth on Schedule 6.3(c).
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
7.1 TERMINATION. This Agreement may be terminated at any time prior to the
Effective Time, whether before or after the requisite approval of the
shareholders of Company:
(a) by mutual written consent duly authorized by the Boards of Directors
of Parent and Company;
(b) by either Company or Parent, by written notice to the other, if the
Merger shall not have been consummated by October 31, 2000 for any reason;
PROVIDED, HOWEVER, that the right to terminate this Agreement under this
Section 7.1(b) shall not be available to any party whose action or failure
to act has been a principal cause of the failure of the Merger to occur on
or before such date and such action or failure to act constitutes a breach
of this Agreement;
34
(c) by either Company or Parent, by written notice to the other, if a
Governmental Entity shall have issued an order, decree or ruling or taken
any other action that has the effect of permanently restraining, enjoining
or otherwise prohibiting the Merger and is final and nonappealable;
(d) by either Company or Parent, by written notice to the other, if
(i) the required approval of the shareholders of Company contemplated by the
first sentence of Section 6.1(a) of this Agreement shall not have been
obtained by reason of the failure to obtain the required vote at a meeting
of Company shareholders duly convened therefor or at any adjournment or
postponement therefor or (ii) the required approval by the stockholders of
Parent of the Share Issuance required under applicable Nasdaq rules shall
not have been obtained by reason of the failure to obtain the required vote
at a meeting of Parent stockholders duly convened therefor or at any
adjournment or postponement thereof;
(e) by Company, by written notice to Parent, upon a breach of any
representation, warranty, covenant or agreement on the part of Parent set
forth in this Agreement, or if any representation or warranty of Parent
shall have become untrue, in either case such that the conditions set forth
in Section 6.2(a) or Section 6.2(b) would not be satisfied as of the time of
such breach or as of the time such representation or warranty shall have
become untrue, PROVIDED, that if such inaccuracy in Parent's representations
and warranties or breach by Parent is curable by Parent, then Company may
not terminate this Agreement under this Section 7.1(e) for thirty (30) days
after delivery of written notice from Company to Parent of such breach,
provided Parent continues to exercise commercially reasonable efforts to
cure such breach (it being understood that Company may not terminate this
Agreement pursuant to this paragraph (e) if such breach by Parent is cured
during such thirty (30)-day period);
(f) by Parent, by written notice to Company, upon a breach of any
representation, warranty, covenant or agreement on the part of Company set
forth in this Agreement, or if any representation or warranty of Company
shall have become untrue, in either case such that the conditions set forth
in Section 6.3(a) or Section 6.3(b) would not be satisfied as of the time of
such breach or as of the time such representation or warranty shall have
become untrue, PROVIDED, that if such inaccuracy in Company's
representations and warranties or breach by Company is curable by Company,
then Parent may not terminate this Agreement under this Section 7.1(f) for
thirty (30) days after delivery of written notice from Parent to Company of
such breach, provided Company continues to exercise commercially reasonable
efforts to cure such breach (it being understood that Parent may not
terminate this Agreement pursuant to this paragraph (f) such breach by
Company is cured during such thirty (30)-day period); or
(g) by Parent, by written notice to Company, if (i) the Board of
Directors of Company withdraws, modifies or changes its recommendation of
this Agreement or the Merger in a manner adverse to Parent or its
stockholders, (ii) the Board of Directors of Company shall have recommended
to the shareholders of Company an Acquisition Proposal, (iii) the Company
fails to comply with Section 5.4, (iv) a bona fide Acquisition Proposal
shall have been publicly announced or otherwise become publicly known and
the Board of Directors of Company shall have (A) failed to recommend against
acceptance of such by its shareholders (including by taking no position, or
indicating its inability to take a position, with respect to the acceptance
by its shareholders of an Acquisition Proposal involving a tender offer or
exchange offer) or (B) failed to reconfirm its approval and recommendation
of this Agreement and the transactions contemplated hereby within ten
business days thereafter, or (v) the Board of Directors of Company resolves
to take any of the actions described above.
7.2 NOTICE OF TERMINATION; EFFECT OF TERMINATION. Any termination of this
Agreement under Section 7.1 above will be effective immediately upon the
delivery of written notice of the terminating party to the other parties hereto
(or such later time as may be required by Section 7.1). In the event of the
35
termination of this Agreement as provided in Section 7.1, this Agreement shall
be of no further force or effect, except (i) as set forth in this Section 7.2,
Section 5.3(a), Section 7.3 and Article 8, each of which shall survive the
termination of this Agreement, and (ii) nothing herein shall relieve any party
from liability for fraud in connection with, or any willful breach of, this
Agreement.
7.3 FEES AND EXPENSES.
(a) GENERAL. Except as set forth in this Section 7.3, all fees and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses
whether or not the Merger is consummated; PROVIDED, HOWEVER, that Parent and
Company shall share equally all fees and expenses, other than attorneys' and
accountants fees and expenses, incurred in relation to the printing and
filing of the Joint Proxy Statement/Prospectus (including any preliminary
materials related thereto) and the S-4 (including financial statements and
exhibits) and any amendments or supplements thereto.
(b) TERMINATION FEE.
(i) In the event that (A) Parent shall terminate this Agreement
pursuant to Section 7.1(g), or (B) this Agreement shall be terminated (x)
pursuant to Section 7.1(b) or (y) pursuant to Section 7.1(d)(i) and, in
the case of clause (B)(x) or clause (B)(y), (1) prior to such
termination, a bona fide Acquisition Proposal shall have been announced
or shall otherwise have become publicly known and (2) within 12 months
after such termination, Company shall enter into a definitive agreement
providing for any Company Acquisition or any Company Acquisition shall be
consummated, then, in the case of clause (A) or (B), respectively,
Company shall pay to Parent cash and issue to Parent shares of Company
Common Stock, in such combination as Company may elect (provided that the
cash component must be at least $20 million) with an aggregate value
(such shares of Company Common Stock to be valued at $24.125 per share
for all purposes of this Section 7.3(b)(i)) of $50 million (the
"TERMINATION FEE"). In the event this Agreement shall be terminated as
set forth in clause (A), the Termination Fee shall be payable in two
installments of equal value, the first of which shall be paid
contemporaneously with the termination of this Agreement pursuant to
Section 7.1(g), and the second of which shall be due and payable on the
30th day after such termination. In the event this Agreement shall be
terminated as set forth in clause (B), the Termination Fee shall be
payable in two installments of equal value, the first of which shall be
paid contemporaneously with the execution of a definitive agreement
providing for the Company Acquisition, and the second of which shall be
due and payable on the earlier to occur of (i) the consummation of such
Company Acquisition and (ii) the 90th days after the date of execution of
the definitive agreement relating to such Company Acquisition. If Company
satisfies its obligation to pay the Termination Fee in part by delivering
to Parent shares of Company Common Stock (the "TERMINATION FEE SHARES"),
then Parent shall be entitled to registration rights with respect to such
shares as described in the Option Agreement (treating the Termination Fee
Shares for all purposes of Section 7 of the Option Agreement as if they
were Option Shares (as defined in the Option Agreement)).
(ii) The Company acknowledges that the agreements contained in this
Section 7.3(b) are an integral part of the transactions contemplated by
this Agreement, and that, without these agreements, Parent would not
enter into this Agreement; accordingly, if the Company fails to pay in a
timely manner the amounts due pursuant to this Section 7.3(b) and, in
order to obtain such payment, Parent makes a claim that results in a
judgment against the Company for the amounts set forth in this
Section 7.3(b), the Company shall pay to Parent its actual out-of-pocket
costs and expenses (including reasonable attorneys' fees and expenses) in
connection with such suit, together with interest on the amounts set
forth in this Section 7.3(b) at the prime rate of Citibank, N.A. in
effect on the date such payment was required to be made. Payment of the
fees
36
described in this Section 7.3(b) shall not be in lieu of damages incurred
in the event of fraud in connection with or willful breach of this
Agreement.
(iii) In the event that Parent shall terminate this Agreement pursuant
to Section 7.1(f), then Company shall promptly reimburse Parent for
Parent's costs and expenses in connection with this Agreement and the
transactions contemplated hereby.
(iv) For the purposes of this Agreement, "COMPANY ACQUISITION" shall
mean any of the following transactions (other than the transactions
contemplated by this Agreement): (i) a merger, consolidation, business
combination, recapitalization, liquidation, dissolution or similar
transaction involving the Company pursuant to which the shareholders of
the Company immediately preceding such transaction hold less than 60% 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 40% 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" (as defined under Section 13(d) of
the Exchange Act) (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 40% of the voting power of the then outstanding
shares of capital stock of the Company.
(v) For purposes only of this Section 7.3(b), each reference to "15%"
in the definition of Acquisition Transaction set forth in Section
5.4(a) shall be deemed to be "40%," and the reference to "85%" in such
definition shall be deemed to be "60%."
(vi) In the event that Company shall terminate this Agreement
pursuant to Section 7.1(e), then Parent shall promptly reimburse Company
for Company's costs and expenses in connection with this Agreement and
the transactions contemplated hereby.
7.4 AMENDMENT. Subject to applicable law, this Agreement may be amended by
the parties hereto at any time by execution of an instrument in writing signed
on behalf of each of Parent, Merger Sub and Company.
7.5 EXTENSION; WAIVER. At any time prior to the Effective Time, any party
hereto may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties made to such
party contained herein or in any document delivered pursuant hereto and
(iii) waive compliance with any of the agreements or conditions for the benefit
of such party contained herein. Any agreement on the part of a party hereto to
any such extension or waiver shall be valid only if set forth in an instrument
in writing signed on behalf of such party. Delay in exercising any right under
this Agreement shall not constitute a waiver of such right.
ARTICLE VIII
GENERAL PROVISIONS
8.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Company, Parent and Merger Sub contained in this Agreement shall
terminate at the Effective Time, and only the covenants that by their terms
survive the Effective Time shall survive the Effective Time.
8.2 NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally or by commercial
delivery service, or sent via telecopy (receipt confirmed) to the parties at the
following addresses or telecopy numbers (or at such other address or telecopy
numbers for a party as shall be specified by like notice):
(a) if to Parent or Merger Sub, to:
Peregrine Systems, Inc.
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
37
with copies to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
Professional Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
and
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
Professional Corporation
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to Company, to:
Harbinger Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
and (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇, Phleger & ▇▇▇▇▇▇▇▇ LLP
Two Embarcadero Place
▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇. ▇▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇ and (▇▇▇) ▇▇▇-▇▇▇▇
and
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
1600 Atlanta Financial Center
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
8.3 INTERPRETATION; DEFINITIONS.
(a) When a reference is made in this Agreement to Exhibits, such
reference shall be to an Exhibit to this Agreement unless otherwise
indicated. When a reference is made in this Agreement to Sections, such
reference shall be to a Section of this Agreement. Unless otherwise
indicated the words "include," "includes" and "including" when used herein
shall be deemed in each case to be followed by the words "without
limitation." The table of contents and headings contained in this Agreement
38
are for reference purposes only and shall not affect in any way the meaning
or interpretation of this Agreement. When reference is made herein to "the
business of" an entity, such reference shall be deemed to include the
business of all direct and indirect subsidiaries of such entity. Reference
to the subsidiaries of an entity shall be deemed to include all direct and
indirect subsidiaries of such entity.
(b) For purposes of this Agreement:
(i) the term "KNOWLEDGE" means with respect to a party hereto, with
respect to any matter in question, knowledge of the executive officers of
such party after reasonable inquiry;
(ii) the term "MATERIAL ADVERSE EFFECT" when used in connection with
an entity means any change, event, violation, inaccuracy, circumstance or
effect, individually or when aggregated with other such changes, events,
violations, inaccuracies, circumstances or effects, that is materially
adverse to the business, assets, liabilities, financial condition or
results of operations of such entity and its subsidiaries taken as a
whole; PROVIDED, HOWEVER, in no event shall either of the following,
alone or in combination, be deemed to constitute, nor shall either of the
following be taken into account in determining whether there has been or
will be a Material Adverse Effect on any entity: (A) any change in such
entity's stock price or trading volume or the failure to meet or exceed
Wall Street research analysts' or such entity's internal earnings or
other estimates or projections in and of itself constitute a Material
Adverse Effect or (B) any change, event, violation, inaccuracy,
circumstance or effect that such entity successfully bears the burden of
proving results from (x) changes affecting the industry in which such
entity operates generally (which changes do not disproportionately affect
such entity), (y) changes affecting the United States economy generally
or (z) the public announcement or pendency of the transactions
contemplated hereby;
(iii) the term "PERSON" shall mean any individual, corporation
(including any non-profit corporation), general partnership, limited
partnership, limited liability partnership, joint venture, estate, trust,
company (including any limited liability company or joint stock company),
firm or other enterprise, association, organization, entity or
Governmental Entity; and
(iv) the term "SUBSIDIARY" shall mean any corporation, association,
joint venture, partnership, or similar business arrangement or entity in
which Company or Parent, as the case may require, owns 50% or more of the
outstanding voting interests.
8.4 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party, it being understood that all
parties need not sign the same counterpart.
8.5 ENTIRE AGREEMENT; THIRD PARTY BENEFICIARIES. This Agreement and the
documents and instruments and other agreements among the parties hereto as
contemplated by or referred to herein, including the Company Disclosure Schedule
and the Parent Disclosure Schedule (a) constitute the entire agreement among the
parties with respect to the subject matter hereof and supersede all prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter hereof, it being understood that the
Confidentiality Agreement shall continue in full force and effect until the
Closing and shall survive any termination of this Agreement; and (b) are not
intended to confer upon any other person any rights or remedies hereunder,
except as specifically provided in Section 5.10.
8.6 SEVERABILITY. In the event that any provision of this Agreement, or
the application thereof, becomes or is declared by a court of competent
jurisdiction to be illegal, void or unenforceable, the remainder of this
Agreement will continue in full force and effect and the application of such
provision to other persons or circumstances will be interpreted so as reasonably
to effect the intent of the parties hereto. The parties further agree to replace
such void or unenforceable provision of this Agreement with a
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valid and enforceable provision that will achieve, to the extent possible, the
economic, business and other purposes of such void or unenforceable provision.
8.7 OTHER REMEDIES; SPECIFIC PERFORMANCE. Except as otherwise provided
herein, any and all remedies herein expressly conferred upon a party will be
deemed cumulative with and not exclusive of any other remedy conferred hereby,
or by law or equity upon such party, and the exercise by a party of any one
remedy will not preclude the exercise of any other remedy. The parties hereto
agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to seek an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
hereof in any court of the United States or any state having jurisdiction, this
being in addition to any other remedy to which they are entitled at law or in
equity.
8.8 GOVERNING LAW. Except to the extent mandatorily governed by Georgia
Law, this Agreement shall be governed by and construed in accordance with the
laws of the State of Delaware, regardless of the laws that might otherwise
govern under applicable principles of conflicts of law thereof.
8.9 RULES OF CONSTRUCTION. The parties hereto agree that they have been
represented by counsel during the negotiation and execution of this Agreement
and, therefore, waive the application of any law, regulation, holding or
rule of construction providing that ambiguities in an agreement or other
document will be construed against the party drafting such agreement or
document.
8.10 ASSIGNMENT. No party may assign either this Agreement or any of its
rights, interests, or obligations hereunder without the prior written approval
of the other parties. Subject to the preceding sentence, this Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and permitted assigns.
****
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement and Plan
of Reorganization to be executed by their duly authorized respective officers as
of the date first written above.
PEREGRINE SYSTEMS, INC.
a Delaware corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Title: President
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SODA ACQUISITION CORPORATION
a Georgia corporation
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
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Title: Secretary
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HARBINGER CORPORATION
a Georgia corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Title:
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