EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
dated as of
June 9, 2002
among
SILVERSTREAM SOFTWARE, INC.
NOVELL, INC.
and
DELAWARE PLANET INC.
TABLE OF CONTENTS
PAGE
ARTICLE 1 DEFINITIONS.............................................. 1
Section 1.01 Definitions........................................ 1
ARTICLE 2 THE OFFER................................................ 6
Section 2.01 The Offer.......................................... 6
Section 2.02 Company Action..................................... 7
Section 2.03 Directors.......................................... 8
ARTICLE 3 THE MERGER............................................... 9
Section 3.01 The Merger......................................... 9
Section 3.02 Conversion of Shares............................... 10
Section 3.03 Surrender and Payment.............................. 10
Section 3.04 Dissenting Shares.................................. 11
Section 3.05 Stock Options...................................... 11
Section 3.06 Employee Stock Purchase Plan....................... 12
Section 3.07 Adjustments........................................ 12
Section 3.08 Withholding Rights................................. 12
Section 3.09 Lost Certificates.................................. 12
ARTICLE 4 THE SURVIVING CORPORATION................................ 12
Section 4.01 Certificate of Incorporation....................... 12
Section 4.02 Bylaws............................................. 12
Section 4.03 Directors and Officers............................. 12
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF THE COMPANY............ 13
Section 5.01 Corporate Existence and Power...................... 13
Section 5.02 Corporate Authorization............................ 13
Section 5.03 Governmental Authorization......................... 13
Section 5.04 Non-contravention.................................. 13
Section 5.05 Capitalization..................................... 14
Section 5.06 Subsidiaries....................................... 14
Section 5.07 SEC Filings........................................ 15
Section 5.08 Financial Statements............................... 15
Section 5.09 Disclosure Documents............................... 16
Section 5.10 Absence of Certain Changes......................... 16
Section 5.11 No Undisclosed Material Liabilities................ 17
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TABLE OF CONTENTS
(continued)
PAGE
Section 5.12 Compliance with Laws and Court Orders.............. 17
Section 5.13 Litigation......................................... 18
Section 5.14 Finders' Fees...................................... 18
Section 5.15 Taxes.............................................. 18
Section 5.16 Employee Benefit Plans............................. 20
Section 5.17 Environmental Matters.............................. 22
Section 5.18 Antitakeover Statutes.............................. 23
Section 5.19 Technology and Intellectual Property............... 23
Section 5.20 Material Contracts................................. 27
Section 5.21 Transactions with Affiliates....................... 28
Section 5.22 Rights Agreement or Plan........................... 28
Section 5.23 Insurance.......................................... 28
ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER
SUBSIDIARY............................................... 29
Section 6.01 Corporate Existence and Power...................... 29
Section 6.02 Corporate Authorization............................ 29
Section 6.03 Governmental Authorization......................... 29
Section 6.04 Non-contravention.................................. 29
Section 6.05 Disclosure Documents............................... 30
Section 6.06 Finders' Fees...................................... 30
Section 6.07 Financing.......................................... 30
Section 6.08 Litigation......................................... 30
Section 6.09 Company Stock...................................... 30
ARTICLE 7 COVENANTS OF THE COMPANY................................. 31
Section 7.01 Conduct of the Company............................. 31
Section 7.02 Stockholder Meeting; Proxy Material................ 33
Section 7.03 Access to Information.............................. 33
Section 7.04 No Solicitation; Other Offers...................... 33
Section 7.05 Section 16 Matters................................. 35
ARTICLE 8 COVENANTS OF PARENT...................................... 35
Section 8.01 Obligations of Merger Subsidiary................... 35
Section 8.02 Voting of Shares................................... 35
Section 8.03 Director and Officer Liability..................... 35
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TABLE OF CONTENTS
(continued)
PAGE
Section 8.04 Comparability of Employee Benefits................. 36
ARTICLE 9 COVENANTS OF PARENT AND THE COMPANY...................... 36
Section 9.01 Reasonable Best Efforts............................ 36
Section 9.02 Certain Filings.................................... 37
Section 9.03 Public Announcements............................... 37
Section 9.04 Further Assurances................................. 37
Section 9.05 Merger Without Meeting of Stockholders............. 37
Section 9.06 Option Plans; Stock Options........................ 37
Section 9.07 Notices of Certain Events.......................... 38
ARTICLE 10 CONDITIONS TO THE MERGER................................. 38
Section 10.01 Conditions to Obligations of Each Party............ 38
Section 10.02 Conditions to the Obligations of Parent and Merger
Subsidiary......................................... 38
ARTICLE 11 TERMINATION.............................................. 39
Section 11.01 Termination........................................ 39
Section 11.02 Effect of Termination.............................. 40
ARTICLE 12 MISCELLANEOUS............................................ 40
Section 12.01 Notices............................................ 40
Section 12.02 Survival of Representations and Warranties......... 41
Section 12.03 Amendments; No Waivers............................. 41
Section 12.04 Expenses........................................... 41
Section 12.05 Successors and Assigns............................. 42
Section 12.06 Governing Law...................................... 42
Section 12.07 Jurisdiction....................................... 42
Section 12.08 Waiver of Jury Trial............................... 43
Section 12.09 Counterparts; Effectiveness; Benefit............... 43
Section 12.10 Entire Agreement................................... 43
Section 12.11 Captions........................................... 43
Section 12.12 Severability....................................... 43
Section 12.13 Specific Performance............................... 43
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of June 9, 2002, among
SilverStream Software, Inc., a Delaware corporation (the "COMPANY"), Novell,
Inc., a Delaware corporation ("PARENT"), and Delaware Planet Inc., a Delaware
corporation and a wholly-owned subsidiary of Parent ("MERGER SUBSIDIARY").
RECITALS
WHEREAS, the Boards of Directors of the Company, Parent and Merger
Subsidiary have each determined that it is in the best interests of their
respective stockholders for Merger Subsidiary to acquire the Company upon the
terms and subject to the conditions set forth herein; and
WHEREAS, in furtherance thereof, it is proposed that Merger Subsidiary
will make a cash tender offer to acquire all shares of the issued and
outstanding common stock, $.001 par value, of the Company for $9.00 per share or
such higher price as may be paid in the tender offer, net to the seller in cash;
and
WHEREAS, also in furtherance of such acquisition, the Boards of Directors
of the Company, Merger Subsidiary and Parent have each approved the merger of
Merger Subsidiary with and into the Company (the "Merger") following the Offer
in accordance with Delaware Law and upon the terms and subject to the conditions
set forth herein; and
WHEREAS, as an inducement and a condition to Parent's and Merger
Subsidiary's entering into this Agreement certain stockholders of the Company
have entered into Stockholder's Agreements with Parent and Merger Subsidiary
(the "STOCKHOLDER'S AGREEMENTS"), pursuant to which each such stockholder has,
among other things, agreed to tender its shares of Company common stock in the
Offer, granted to Parent a proxy with respect to the voting of such shares and
granted to Parent an option to purchase such shares, in each case upon the terms
and subject to the conditions set forth in the Stockholder's Agreements; and
WHEREAS, the Board of Directors of the Company has approved this Agreement
and has determined that the consideration to be paid for each share of Company
common stock in the tender offer and the merger is fair to the holders of such
shares and has recommended that the holders of such shares tender their shares
in the tender offer and, if necessary under Delaware Law, vote to adopt this
Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements herein contained, and intending to be legally bound hereby, the
Company, Parent and Merger Subsidiary hereby agree as follows:
ARTICLE 1
Definitions
Section 1.01 Definitions.
(a) The following terms, as used herein, have the following meanings:
"ACQUISITION PROPOSAL" means, other than the transactions contemplated by
this Agreement, any Third Party offer, proposal or inquiry relating to, or any
Third Party indication of interest in, (i) any acquisition or purchase, direct
or indirect, of 20% or more of the consolidated assets of the Company and its
Subsidiaries or over 20% of any class of equity or voting securities of the
Company or any of its
Subsidiaries the assets of which, individually or in the aggregate, constitute
more than 20% of the consolidated assets of the Company, (ii) any tender offer
(including a self-tender offer) or exchange offer that, if consummated, would
result in any Third Party beneficially owning 20% or more of any class of equity
or voting securities of the Company or any of its Subsidiaries the assets of
which, individually or in the aggregate, constitute more than 20% of the
consolidated assets of the Company, (iii) a merger, consolidation, share
exchange, business combination, sale of substantially all the assets,
reorganization, recapitalization, liquidation, dissolution or other similar
transaction involving the Company or any of its Subsidiaries the assets of
which, individually or in the aggregate, constitute more than 20% of the
consolidated assets of the Company or (iv) any other transaction the
consummation of which could reasonably be expected to impede, interfere with,
prevent or materially delay the Offer or Merger or that could reasonably be
expected to dilute materially the benefits to Parent of the transactions
contemplated hereby.
"AFFILIATE" means, with respect to any Person, any other Person directly
or indirectly controlling, controlled by or under common control with such
Person.
"BENEFIT ARRANGEMENT" means any employment, consulting, severance or
similar contract or arrangement (whether or not written) providing for
compensation, bonus, profit-sharing, stock option, or other stock-related rights
or other forms of incentive or deferred compensation, vacation benefits,
insurance coverage (including any self-insured arrangements), health or medical
benefits, disability benefits, worker's compensation, supplemental unemployment
benefits, severance benefits and post-employment or retirement benefits
(including compensation, pension, health, medical or life insurance or other
benefits) that (i) is not an Employee Plan, (ii) is entered into, maintained,
administered or contributed to, as the case may be, by the Company or any of its
Affiliates and (iii) covers any employee, director, or consultant, or former
employee, director, or consultant of the Company or any of its Subsidiaries
employed in the United States.
"BUSINESS DAY" shall have the meaning set forth in Rule 14d-1(g)(3) under
the 1934 Act.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMPANY BALANCE SHEET" means the consolidated balance sheet of the
Company as of December 31, 2001 and the footnotes thereto set forth in the
Company 10-K.
"COMPANY DISCLOSURE SCHEDULE" shall have the meaning set forth in Article
5.
"COMPANY 10-K" means the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 2001.
"DELAWARE LAW" means the General Corporation Law of the State of
Delaware.
"EMPLOYEE PLAN" means any "employee benefit plan", as defined in Section
3(3) of ERISA, that (i) is subject to any provision of ERISA, (ii) is
maintained, administered, sponsored, or contributed to by the Company or any of
its ERISA Affiliates or for which the Company or any ERISA Affiliate has or may
have any liability, contingent or otherwise, and (iii) covers any employee or
former employee of the Company or any of its Subsidiaries employed in the United
States.
"ENVIRONMENTAL LAWS" means any applicable federal, state, local or
foreign law (including common law), treaty, judicial decision, regulation,
rule, judgment, order, decree, injunction, permit or governmental restriction
or requirement or any agreement with any governmental authority, relating to
human and/or worker health and safety, the environment, or governing the
handling, use, generation,
2
treatment, storage, transportation, disposal, manufacture, distribution,
formulation, packaging, labeling, or Release of Hazardous Materials, whether now
existing or subsequently amended or enacted, including but not limited to: the
Clean Air Act, 42 U.S.C. Section 7401 et seq.; the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, 42 U.S.C. Section 9601 et
seq.; the Federal Water Pollution Control Act, 33 U.S.C. Section 1251 et seq.;
the Hazardous Materials Transportation Act, 49 U.S.C. Section 1801 et seq.; the
Federal Insecticide, Fungicide and Rodenticide Act 7 U.S.C. Section 136 et seq.;
the Resource Conservation and Recovery Act of 1976, 42 U.S.C. Section 6901 et
seq.; the Toxic Substances Control Act, 15 U.S.C. Section 2601 et seq.; the
Occupational Safety & Health Act of 1970, 29 U.S.C. Section 651 et seq.; the Oil
Pollution Act of 1990, 33 U.S.C. Section 2701 et seq.; the Safe Drinking Water
Act of 1974, 42 U.S.C. Section 300(f) et seq.; and the state analogies thereto,
all as amended or superseded from time to time as of the Effective Time.
"ENVIRONMENTAL PERMITS" means all permits, licenses, franchises,
certificates, approvals and other similar authorizations of governmental
authorities relating to or required by Environmental Laws and affecting, or
relating in any way to, the business of the Company or any of its Subsidiaries
as currently conducted.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA AFFILIATE" means any Person that, together with the Company, is or
was at anytime treated as a single employer under Section 414 of the Code or
Section 4001 of ERISA.
"EXCHANGE RATIO" shall be a number (rounded to the nearest ten-thousandth)
determined by dividing $9.00, or such higher price as is paid in the Offer, by
the Market Price per share of Parent Common Stock.
"HAZARDOUS MATERIAL" means petroleum, petroleum hydrocarbons or petroleum
products, petroleum by-products, radioactive materials, asbestos or
asbestos-containing materials, gasoline, diesel fuel, pesticides, radon, urea
formaldehyde, lead or lead-containing materials, polychlorinated biphenyls; and
any other chemicals, materials, substances or wastes in amounts or
concentrations defined as or included in the definition of "hazardous
substances," "hazardous materials," "hazardous wastes," "extremely hazardous
wastes," "restricted hazardous wastes," "toxic substances," "toxic pollutants,"
"pollutants," "regulated substances," "solid wastes," or "contaminants" or words
of similar import, under any Environmental Law.
"HSR ACT" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended.
"INTERNATIONAL PLAN" means any employment, severance or similar contract
or arrangement (whether or not written) or any plan, policy, fund, program or
arrangement or contract providing for severance, insurance coverage (including
any self-insured arrangements), workers' compensation, disability benefits,
supplemental unemployment benefits, vacation benefits, pension or retirement
benefits or for deferred compensation, profit-sharing, bonuses, stock options,
stock appreciation rights or other forms of incentive compensation or
post-retirement insurance, compensation or benefits that (i) is not an Employee
Plan or a Benefit Arrangement, (ii) is entered into, maintained, administered or
contributed to by the Company or any of its Affiliates and (iii) covers any
employee, director or consultant, or former employee, director or consultant of
the Company or any of its Subsidiaries who is not employed in the United States.
"KNOWLEDGE" of any Person that is not an individual means the actual
knowledge of such Person's directors and Officers (and to the extent such Person
is the Company, those Persons listed on Schedule A), or the knowledge such
directors and Officers (and to the extent such Person is the Company,
3
those Persons listed on Schedule A) could be expected to discover or of which
they would otherwise become aware after reasonable inquiry.
"LIEN" means, with respect to any property or asset, any mortgage, lien,
pledge, charge, security interest, encumbrance or other adverse claim of any
kind in respect of such property or asset. For purposes of this Agreement, a
Person shall be deemed to own subject to a Lien, any property or asset that it
has acquired or holds subject to the interest of a vendor or lessor under any
conditional sale agreement, capital lease or other title retention agreement
relating to such property or asset.
"MARKET PRICE" per share of Parent Common Stock shall be the average
closing price per share of Parent Common Stock on the Nasdaq National Market for
the thirty calendar days ending with the date that is two calendar days prior to
the date on which the Effective Time occurs.
"MATERIAL ADVERSE EFFECT" means, with respect to any Person, a material
adverse effect on the condition (financial or otherwise), business, assets or
results of operations of such Person and its Subsidiaries, taken as a whole;
provided, however, that a "Material Adverse Effect" with respect to the Company
or any of its Subsidiaries shall not include (i) changes, effects and
circumstances that are the result of factors generally affecting the industry or
specific markets in which the Company and its Subsidiaries compete, or that are
the result of factors affecting the Company's customers or the industries or
markets in which the Company's customers operate (other than any such change
having a materially disproportionate effect on the Company relative to other
industry participants), (ii) any change, effect or circumstance resulting from
changes in general economic, regulatory or political conditions, conditions in
the United States or worldwide capital markets, any act of terrorism, or any
outbreak of hostilities or war (other than any such condition having a
materially disproportionate effect on the Company relative to other industry
participants), (iii) any change in the trading price or trading volume of the
Company's common stock (but not any change or effect underlying such change in
trading price or trading volume to the extent such change or effect would
otherwise constitute a Material Adverse Effect on the Company), (iv) any failure
by the Company to meet published revenue or earnings projections (but not any
change underlying either such failure to the extent such change would otherwise
constitute a Material Adverse Effect on the Company) or (v) any change, effect
or circumstance resulting from any action taken or announced, or any action not
taken, with the written consent of the Chief Executive Officer of Parent.
"1933 ACT" means the Securities Act of 1933, as amended.
"1934 ACT" means the Securities Exchange Act of 1934, as amended.
"OFFICER" of any Person means any executive officer of such Person within
the meaning of Rule 3b-7 of the 1934 Act.
"PARENT COMMON STOCK" means the shares of common stock, par value $.10 per
share, of Parent.
"PBGC" means the Pension Benefit Guaranty Corporation.
"PERSON" means an individual, corporation, partnership, limited liability
company, association, trust or other entity or organization, including a
government or political subdivision or an agency or instrumentality thereof.
"RELEASE" means any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping, or disposing of a
Hazardous Material into the environment.
4
"SEC" means the Securities and Exchange Commission.
"SHARES" means the shares of common stock, $.001 par value per share, of
the Company.
"SUBSIDIARY" means, with respect to any Person, any entity of which
securities or other ownership interests having ordinary voting power to elect a
majority of the board of directors or other persons performing similar functions
are at any time directly or indirectly owned by such Person.
"THIRD PARTY" means any Person as defined in this Agreement or in Section
13(d) of the 1934 Act, other than Parent or any of its Affiliates.
Any reference in this Agreement to a statute shall be to such statute, as
amended from time to time, and to the rules and regulations promulgated
thereunder.
(b) Each of the following terms is defined in the Section set forth
opposite such term:
TERM SECTION
---- -------
Accessibility Requirements........................ 5.19
Certificates...................................... 3.03
Certificate of Merger............................. 3.01
Company Disclosure Documents...................... 5.09
Company Disclosure Schedule....................... 5.00
Company ESPP...................................... 3.05
Company Intellectual Property..................... 5.19
Company Intellectual Property Assets.............. 5.19
Company Licensed Intellectual Property............ 5.19
Company Licensed Intellectual Property Assets..... 5.19
Company Material Contracts........................ 5.20
Company Owned Intellectual Property............... 5.19
Company Products.................................. 5.19
Company Proxy Statement........................... 5.09
Company SEC Documents............................. 5.07
Company Securities................................ 5.05
Company Stock Option.............................. 9.06
Company Stockholder Meeting....................... 7.02
Company Subsidiary Securities..................... 5.06
Confidentiality Agreement......................... 7.03
Continuing Directors.............................. 2.03
Continuing Employees.............................. 8.04
Effective Time.................................... 3.01
Exchange Agent.................................... 3.03
Expiration Date................................... 2.01
GAAP.............................................. 5.08
Indemnified Person................................ 8.03
IRS............................................... 5.15
Material Contracts................................ 5.20
Merger............................................ 3.01
Merger Consideration.............................. 3.02
Minimum Condition................................. 2.01
Offer............................................. 2.01
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TERM SECTION
---- -------
Offer Documents................................... 2.01
Option Plans...................................... 3.05
Outside Date...................................... 11.01
Preferred Stock................................... 5.05
Payment Event..................................... 12.04
Schedule 14D-9.................................... 2.02
Schedule TO....................................... 2.01
Stockholder's Agreements.......................... Recitals
Superior Proposal................................. 7.04
Surviving Corporation............................. 3.01
Tax Return........................................ 5.15
Taxes............................................. 5.15
Taxing Authority.................................. 5.15
ARTICLE 2
The Offer
Section 2.01 The Offer.
(a) Provided that nothing shall have occurred that, had the Offer
referred to below been commenced, would give rise to a right to terminate the
Offer pursuant to any of the conditions set forth in paragraphs (ii)(a) -
(ii)(g) of Annex I hereto, as promptly as practicable after the date hereof (and
in any event within eight (8) Business Days of the date of this Agreement),
Merger Subsidiary shall (A) commence (within the meaning of Rule 14d-2 under the
1934 Act) an offer (the "OFFER") to purchase any and all of the outstanding
Shares at a price of $9.00 per Share, net to the seller in cash and (B) after
affording the Company a reasonable opportunity to review and comment thereon,
file a Tender Offer Statement on Schedule TO (the "SCHEDULE TO") and all other
necessary documents with the SEC (collectively, the "OFFER DOCUMENTS"), make all
deliveries, mailings and telephonic notices required by Rule 14d-3 under the
1934 Act, and publish, send or give the disclosure required by Rule 14d-6 under
the 1934 Act by complying with the dissemination requirements of Rule 14d-4
under the 1934 Act in each case in connection with the Offer Documents. The
Offer shall be subject only to the condition that there shall be validly
tendered in accordance with the terms of the Offer, prior to the expiration date
of the Offer and not withdrawn, a number of Shares that, together with the
Shares then owned by Parent and/or Merger Subsidiary or any other Subsidiary of
Parent, represents at least a majority of the Shares outstanding on a
fully-diluted basis (the "MINIMUM CONDITION") and to the other conditions set
forth in Annex I hereto. Merger Subsidiary expressly reserves the right to waive
any of the conditions to the Offer and to make any change in the terms of or
conditions to the Offer, provided that without the prior written consent of the
Company, (i) the Minimum Condition may not be waived, (ii) no change may be made
that changes the form of consideration to be paid, decreases the price per Share
or the number of Shares sought in the Offer or imposes conditions to the Offer
in addition to those set forth in Annex I and (iii) no other change may be made
to any term of the Offer in any manner adverse to the holders of the Shares.
Notwithstanding the foregoing, without the consent of the Company, Merger
Subsidiary shall have the right to extend the Offer (i) from time to time if, at
the scheduled or extended expiration date of the Offer, any of the conditions to
the Offer shall not have been satisfied or waived, until such conditions are
satisfied or waived or (ii) for any period required by any rule, regulation,
interpretation or position of the SEC or the staff thereof applicable to the
Offer or any period required by applicable law. The Offer shall remain open
until the date that is twenty (20) Business Days after the commencement of the
Offer (the "EXPIRATION DATE"), unless Parent shall have extended the period of
time for which the Offer is open pursuant to, and in accordance with, the terms
of this Agreement or as may be required by applicable law, in which event, the
term "Expiration Date" shall mean the latest time and date as the Offer, as so
6
extended, may expire. If, at any Expiration Date, any of the conditions to the
Offer are not satisfied or waived by Parent, Parent may, but shall not be
required to, extend the Offer; provided, however, if the Offer shall not have
been consummated at the Expiration Date as a result of the failure to satisfy
the condition to the Offer relating to the expiration of the waiting period
under the HSR Act or under any applicable foreign antitrust statutes or
regulations, Parent will, at the request of the Company, cause Merger Subsidiary
to extend the Expiration Date for one or more periods (not in excess of ten (10)
Business Days each) but in no event later than December 31, 2002. If at the
expiration of the Offer all of the conditions to the Offer have been satisfied
or waived, Merger Subsidiary may extend the Offer pursuant to an amendment to
the Offer providing for a "subsequent offering period" not to exceed twenty (20)
Business Days to the extent permitted under, and in compliance with, Rule 14d-11
under the 1934 Act. Subject to the foregoing and upon the terms and subject to
the conditions of the Offer, Merger Subsidiary shall, and Parent shall cause it
to, accept for payment and pay for, as promptly as practicable after the
expiration of the Offer, all Shares validly tendered and not withdrawn pursuant
to the Offer.
(b) Parent, Merger Subsidiary and the Company agree that the Offer
Documents shall comply in all material respects with the requirements of
applicable U.S. federal securities laws and, on the date first filed with the
SEC and on the date first published, sent or given to the Company's
stockholders, shall not 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
were made, not misleading, except that in complying with the foregoing
commitments, Parent or Merger Subsidiary may rely on the accuracy of any
information supplied by the Company or any of its stockholders for inclusion or
incorporation by reference in the Offer Documents, and the Company may rely on
the accuracy of any information supplied by Parent or Merger Subsidiary for
inclusion or incorporation by reference in the Offer Documents. Parent, Merger
Subsidiary and the Company each agrees promptly to correct any information
provided by it for use in the Offer Documents if and to the extent that such
information shall have become false or misleading in any material respect.
Parent and Merger Subsidiary agree to take all steps necessary to cause the
Schedule TO as so corrected to be filed with the SEC and the other Offer
Documents as so corrected to be disseminated to holders of Shares, in each case
as and to the extent required by applicable federal securities laws. The Company
and its counsel shall be given a reasonable opportunity to review and comment on
the Offer Documents and any amendments thereto prior to their being filed with
the SEC or disseminated to the holders of Shares. Parent and Merger Subsidiary
shall provide the Company and its counsel with a copy of any written comments or
telephonic notification of any oral comments Parent, Merger Subsidiary or their
counsel may receive from the SEC or its staff with respect to the Offer promptly
after the receipt thereof, shall consult with the Company and its counsel prior
to responding to any such comments, and shall provide the Company and its
counsel with a copy of any written responses thereto and telephonic notification
of any oral responses thereto of Parent or Merger Subsidiary or their counsel.
(c) Parent shall provide or cause to be provided to Merger Subsidiary on
a timely basis the funds necessary to purchase any and all Shares that Merger
Subsidiary becomes obligated to purchase pursuant to the Offer.
Section 2.02 Company Action.
(a) The Company hereby consents to the Offer and represents that its
Board of Directors, at a meeting duly called and held has (i) unanimously
determined that this Agreement and the transactions contemplated hereby,
including the Offer and the Merger, are fair to and in the best interests of the
Company's stockholders, (ii) unanimously approved this Agreement and the
transactions contemplated hereby, including the Offer, the Merger and Parent's
acquisition of Shares pursuant to the Stockholder's Agreements, in accordance
with the requirements of the Delaware Law, (iii) subject to Section 7.04(b),
unanimously resolved to recommend to its Stockholders that they tender their
shares in the Offer and
7
vote to adopt this Agreement and (iv) taken all action necessary to render the
limitations on business combinations contained in Section 203 of Delaware Law
inapplicable to this Agreement, the Stockholder's Agreements and the
transactions contemplated hereby and thereby. The Company further represents
that Morgan Stanley & Co. Incorporated has delivered to the Company's Board of
Directors its written opinion to the effect that, as of the date of such
opinion, and on the basis of and subject to the assumptions set forth therein,
the consideration to be paid in the Offer and the Merger is fair to the holders
of Shares from a financial point of view. The Company will promptly furnish
Parent with a list of its stockholders, mailing labels and any available listing
or computer file containing the names and addresses of all record holders of
Shares and lists of securities positions of Shares held in stock depositories,
in each case true and correct as of the most recent practicable date, and will
provide to Parent such additional information (including updated lists of
stockholders, mailing labels and lists of securities positions) and such other
assistance as Parent may reasonably request in connection with the Offer. From
and after the date of this Agreement, all such information concerning the
Company's record holders and, to the extent known, beneficial holders, shall be
made available to Merger Subsidiary. Subject to the requirements of applicable
laws and except for such steps as are necessary to disseminate the Offer
Documents and any other documents necessary to consummate the Offer, the Merger
and the other transactions contemplated by this Agreement, Parent and Merger
Subsidiary shall, until consummation of the Offer, hold in confidence the
information contained in any of such labels and lists, shall use such
information only in connection with the Offer, the Merger and the other
transactions contemplated by this Agreement and, if this Agreement shall be
terminated in accordance with Section 11.01, shall deliver to the Company all
copies of such information then in their possession or under their control.
(b) As soon as practicable on the day that the Offer is commenced (which
shall not be prior to the fifth Business Day after the date hereof without the
Company's consent), the Company shall file with the SEC and disseminate to
holders of Shares, in each case as and to the extent required by applicable
federal securities laws, a Solicitation/Recommendation Statement on Schedule
14D-9 (together with any amendments or supplements thereto, the "SCHEDULE
14D-9") that, subject to Section 7.04(b), shall reflect the recommendations of
the Company's Board of Directors referred to above. The Company, Parent and
Merger Subsidiary each agrees promptly to correct any information provided by it
for use in the Schedule 14D-9 if and to the extent that such information shall
have become false or misleading in any material respect. The Company agrees to
take all steps necessary to cause the Schedule 14D-9 as so corrected to be filed
with the SEC and to be disseminated to holders of Shares, in each case as and to
the extent required by applicable federal securities laws. Parent and its
counsel shall be given a reasonable opportunity to review and comment on the
Schedule 14D-9 and each amendment thereto prior to its being filed with the SEC
or disseminated to the holders of Shares.
Section 2.03 Directors.
(a) Effective upon the acceptance for payment of, and payment for, any
Shares pursuant to the Offer, Parent shall be entitled to designate the number
of directors, rounded up to the next whole number, on the Company's Board of
Directors that equals the product of (i) the total number of directors on the
Company's Board of Directors (giving effect to the election of any additional
directors pursuant to this Section) and (ii) the percentage that the number of
Shares beneficially owned by Parent and/or Merger Subsidiary (including Shares
accepted for payment) bears to the total number of Shares outstanding, and the
Company shall take all action necessary to cause Parent's designees to be
elected or appointed to the Company's Board of Directors, including increasing
the number of directors, and seeking and accepting resignations of incumbent
directors. At such time, the Company will also use its reasonable best efforts
to cause individuals designated by Parent to constitute the number of members,
rounded up to the next whole number, on (i) each committee of the Board (subject
to any relevant independence requirements) and (ii) each board of directors of
each Subsidiary of the Company (and each committee
8
thereof) that represents the same percentage as such individuals represent on
the Board of Directors of the Company.
(b) The Company's obligations to appoint Parent's designees to the Board
of Directors shall be subject to Section 14(f) of the 1934 Act and Rule 14f-1
promulgated thereunder. The Company shall promptly take all actions, and shall
include in the Schedule 14D-9 such information with respect to the Company and
its Officers and directors, as Section 14(f) and Rule 14f-1 require in order to
fulfill its obligations under this Section. Parent shall supply to the Company
in writing and be solely responsible for any information with respect to itself
and its nominees, Officers, directors and affiliates required by Section 14(f)
and Rule 14f-1.
(c) Following the election or appointment of Parent's designees pursuant
to Section 2.03(a) and until the Effective Time, there shall be in office at
least one Continuing Director and the approval of not less than a majority of
the directors of the Company then in office, which majority shall include the
concurrence of a majority of the directors neither designated by Parent nor
employed by the Company (the "CONTINUING DIRECTORS"), shall be required to
authorize any termination of this Agreement by the Company, any amendment of
this Agreement requiring action by the Board of Directors, any extension of time
for performance of any obligation or action hereunder by Parent or Merger
Subsidiary and any waiver of compliance with any of the agreements or conditions
contained herein for the benefit of the Company or other action by the Company
hereunder which materially adversely affects the holders of Shares (other than
Parent and Merger Subsidiary); provided, however, if the foregoing provisions of
this subsection are invalid or incapable of being enforced under applicable law,
then neither Parent nor Merger Subsidiary shall approve (either in its capacity
as a stockholder or as a party to this Agreement, as applicable), and Parent and
Merger Subsidiary shall use their commercially reasonable efforts to prevent the
occurrence of, such action unless such action shall have received the unanimous
approval of the Board of Directors of the Company. Following the election or
appointment of Parent's designees pursuant to Section 2.03(a) and until the
Effective Time, the Company shall use its reasonable best efforts to ensure that
at least two Continuing Directors shall remain members of the Board of
Directors; provided that, if there shall be in office fewer than two Continuing
Directors for any reason, the parties shall use their commercially reasonable
efforts to cause the Board of Directors of the Company to cause the person
designated by the remaining Continuing Director to be elected to fill such
vacancy, which person shall be deemed to be a Continuing Director for all
purposes of this Agreement. If no Continuing Directors then remain, the other
directors of the Company then in office shall designate two persons to fill such
vacancies who will not be directors, Officers, employees or Affiliates of
Parent, Merger Subsidiary or the Company, and such persons shall be deemed to be
Continuing Directors for all purposes of this Agreement. The Board of Directors
of the Company shall not delegate any matter covered by this Section 2.03 to any
committee of the Board of Directors of the Company unless such committee
consists only of Continuing Directors.
ARTICLE 3
The Merger
Section 3.01 The Merger.
(a) Upon the terms and subject to the conditions of this Agreement and
the applicable provisions of Delaware Law, at the Effective Time, Merger
Subsidiary shall be merged (the "MERGER") with and into the Company in
accordance with Delaware Law, whereupon the separate existence of Merger
Subsidiary shall cease, and the Company shall be the surviving corporation (the
"SURVIVING CORPORATION").
9
(b) As soon as practicable after satisfaction or, to the extent
permitted hereunder, waiver of all conditions to the Merger, the Company and
Merger Subsidiary will file a certificate of merger (or certificate of ownership
and merger, as the case may be (the "CERTIFICATE OF MERGER")) with the Delaware
Secretary of State and make all other filings or recordings required by Delaware
Law in connection with the Merger. The Merger shall become effective at such
time (the "EFFECTIVE TIME") as the Certificate of Merger is duly filed with the
Delaware Secretary of State or at such later time as is agreed upon in writing
by the Company, Parent and Merger Subsidiary and specified in the Certificate of
Merger.
(c) From and after the Effective Time, the Surviving Corporation shall
possess all the rights, powers, privileges and franchises and be subject to all
of the obligations, liabilities, restrictions and disabilities of the Company
and Merger Subsidiary, all as provided under Delaware Law.
Section 3.02 Conversion of Shares. At the Effective Time:
(a) except as otherwise provided in Section 3.02(b) or Section 3.04,
each Share outstanding immediately prior to the Effective Time shall be
converted into the right to receive $9.00 in cash or any higher price paid for
each Share in the Offer, without interest (the "MERGER CONSIDERATION");
(b) each Share held by the Company as treasury stock or owned by Parent
or any of its Subsidiaries immediately prior to the Effective Time shall be
canceled, and no payment shall be made with respect thereto; and
(c) each share of common stock of Merger Subsidiary outstanding
immediately prior to the Effective Time shall be converted into and become one
share of common stock of the Surviving Corporation and shall constitute the only
outstanding shares of capital stock of the Surviving Corporation.
Section 3.03 Surrender and Payment.
(a) Prior to the Effective Time, Parent shall appoint an agent (the
"EXCHANGE AGENT") for the purpose of exchanging certificates representing Shares
outstanding as of the Effective Time (the "CERTIFICATES") for the Merger
Consideration. Parent will, or will cause Merger Subsidiary to, deposit with the
Exchange Agent, prior to or upon the Effective Time, the Merger Consideration to
be paid in respect of the Shares. Promptly after the Effective Time, Parent will
send, or will cause the Exchange Agent to send, to each holder of Shares at the
Effective Time a letter of transmittal and instructions (which shall be mutually
acceptable to Parent and the Company and specify that the delivery shall be
effected, and risk of loss and title shall pass, only upon proper delivery of
the Certificates to the Exchange Agent) for use in such exchange.
(b) Parent shall cause the Exchange Agent to deliver promptly to each
holder of Shares that have been converted into the right to receive the Merger
Consideration, upon surrender to the Exchange Agent of a Certificate, together
with a properly completed letter of transmittal, the Merger Consideration
payable for each Share formerly represented by such Certificate. Until so
surrendered, each such Certificate shall represent after the Effective Time for
all purposes only the right to receive such Merger Consideration.
(c) If any portion of the Merger Consideration is to be paid to a Person
other than the Person in whose name the surrendered Certificate is registered,
it shall be a condition to such payment that the Certificate so surrendered
shall be properly endorsed or otherwise be in proper form for transfer and that
the Person requesting such payment shall pay to the Exchange Agent any transfer
or other taxes required as a result of such payment to a Person other than the
registered holder of such Certificate or establish to the satisfaction of the
Exchange Agent that such tax has been paid or is not payable.
10
(d) After the Effective Time, there shall be no further registration of
transfers of Shares. If, after the Effective Time, Certificates are presented to
the Surviving Corporation, they shall be canceled and exchanged for the Merger
Consideration provided for, and in accordance with the procedures set forth, in
this Article.
(e) Any portion of the Merger Consideration deposited with the Exchange
Agent pursuant to Section 3.03(a) (and any interest or other income earned
thereon) that remains unclaimed by the holders of Shares six months after the
Effective Time shall be returned to Parent, upon demand, and any such holder who
has not exchanged them for the Merger Consideration in accordance with this
Section prior to that time shall thereafter look only to Parent for payment of
the Merger Consideration in respect of such Shares without any interest thereon.
Notwithstanding the foregoing, Parent shall not be liable to any holder of
Shares for any amount paid to a public official pursuant to applicable abandoned
property, escheat or similar laws. Any amounts remaining unclaimed by holders of
Shares two years after the Effective Time (or such earlier date immediately
prior to such time when the amounts would otherwise escheat to or become
property of any governmental authority) shall become, to the extent permitted by
applicable law, the property of Parent free and clear of any claims or interest
of any Person previously entitled thereto.
(f) Any portion of the Merger Consideration deposited with the Exchange
Agent pursuant to Section 3.03(a) to pay for Shares for which appraisal rights
have been perfected shall be returned to Parent, upon demand.
Section 3.04 Dissenting Shares. Notwithstanding Section 3.02, Shares
outstanding immediately prior to the Effective Time and held by a holder who has
not voted in favor of the Merger or consented thereto in writing and who has
demanded appraisal for such Shares in accordance with Delaware Law shall not be
converted into a right to receive the Merger Consideration but shall be
converted into the right to receive such consideration as may be determined to
be due to such holder pursuant to Delaware Law, unless such holder fails to
perfect, withdraws or otherwise loses its right to appraisal. If, after the
Effective Time, such holder fails to perfect, withdraws or loses its right to
appraisal, such Shares shall be treated as if they had been converted as of the
Effective Time into a right to receive the Merger Consideration. The Company
shall give Parent prompt notice of any demands received by the Company for
appraisal of Shares, and Parent shall have the right to direct all negotiations
and proceedings with respect to such demands. Except with the prior written
consent of Parent, the Company shall not voluntarily make any payment with
respect to, or settle or offer to settle, any such demands.
Section 3.05 Stock Options.
(a) At the Effective Time, all options to purchase Shares then
outstanding under the Company's 1997 Stock Incentive Plan, the Company's 2001
Stock Incentive Plan, the eObject, Inc. 2000 Stock Plan, and the Bondi Software,
Inc. Employee Stock Option Plan (collectively, the "OPTION PLANS"), whether or
not vested or exercisable, and the Option Plans themselves, shall be assumed by
Parent in accordance with Section 9.06.
(b) Except as set forth in Section 3.05(a) with respect to the Option
Plans and in Section 3.06 with respect to the Company's Employee Stock Purchase
Plan (the "COMPANY ESPP"), the Company shall cause the provisions in any other
plan, program or arrangement, providing for the issuance or grant by the Company
or any of its Subsidiaries of any interest in respect of the capital stock of
the Company or any of its Subsidiaries to be terminated as of the Effective
Time.
(c) The Company represents and warrants that all of the Option Plans
provide that the Company can take the actions described in this Section 3.05
without obtaining the consent of any holders of options under the Option Plans.
11
Section 3.06 Employee Stock Purchase Plan. Each outstanding option to
purchase Shares under the Company ESPP shall be treated in accordance with the
provisions of the Company ESPP (including Section 16 thereof). Prior to the date
on which Merger Subsidiary first accepts Shares for payment pursuant to the
Offer, the Company shall give any required notice to participants in the Company
ESPP of the cancellation of the Company ESPP, and each participant shall have
the right to exercise his or her outstanding option under the Company ESPP in
full based on the accumulated payroll deductions then credited to his or her
account. Thereafter, no new payroll contributions shall be accepted by, or made
to, the Company ESPP. As of the date on which Merger Subsidiary first accepts
Shares for payment pursuant to the Offer, the Company ESPP shall be terminated
in accordance with the provisions thereof.
Section 3.07 Adjustments. If, during the period between the date of
this Agreement and the Effective Time, any change in the outstanding Shares
shall occur by reason of any reclassification, recapitalization, stock split or
combination, exchange or readjustment of Shares, or stock dividend thereon with
a record date during such period, the cash payable pursuant to the Offer, the
Merger Consideration and any other amounts payable pursuant to this Agreement
shall be appropriately adjusted.
Section 3.08 Withholding Rights. Each of the Surviving Corporation and
Parent shall be entitled to deduct and withhold from the consideration otherwise
payable to any Person pursuant to this Article such amounts as it is required to
deduct and withhold with respect to the making of such payment under any
provision of federal, state, local or foreign tax law. If the Surviving
Corporation or Parent, as the case may be, so withholds amounts, such amounts
shall be treated for all purposes of this Agreement as having been paid to the
holder of the Shares in respect of which the Surviving Corporation or Parent, as
the case may be, made such deduction and withholding.
Section 3.09 Lost Certificates. If any Certificate shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by the
Person claiming such Certificate to be lost, stolen or destroyed and, if
required by the Surviving Corporation, the posting by such Person of a bond, in
such reasonable and customary amount as the Surviving Corporation may direct, as
indemnity against any claim that may be made against it with respect to such
Certificate, the Exchange Agent will pay, in exchange for such lost, stolen or
destroyed Certificate, the Merger Consideration to be paid in respect of the
Shares represented by such Certificate, as contemplated by this Article.
ARTICLE 4
The Surviving Corporation
Section 4.01 Certificate of Incorporation. The certificate of
incorporation of the Company shall be amended in the Merger to read in its
entirety as set forth in Exhibit A.
Section 4.02 Bylaws. The bylaws of the Company in the Merger shall be
amended in their entirety as set forth in Exhibit B.
Section 4.03 Directors and Officers. From and after the Effective
Time, until successors are duly elected or appointed and qualified in accordance
with applicable law, (i) the directors of Merger Subsidiary at the Effective
Time shall be the directors of the Surviving Corporation and (ii) the Officers
of the Company at the Effective Time shall be the Officers of the Surviving
Corporation.
12
ARTICLE 5
Representations and Warranties of the Company
The Company represents and warrants to Parent that the statements
contained in this Article 5 are true and correct, except as set forth in a
correspondingly numbered schedule delivered by the Company to Parent dated as of
the date hereof (the "COMPANY DISCLOSURE SCHEDULE"). The Company Disclosure
Schedule shall be arranged in paragraphs corresponding to numbered and lettered
sections contained in this Article 5, and the disclosures in any paragraph of
the Company Disclosure Schedule shall qualify other sections in this Article 5
to the extent it is reasonably and readily apparent from a reading of the
disclosure that such disclosure is applicable to such other sections. Neither
the Company nor any of its Subsidiaries or Affiliates has made or shall be
deemed to have made any representation or warranty to Parent or Merger
Subsidiary other than as set forth in this Article 5.
Section 5.01 Corporate Existence and Power. The Company is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware and has all corporate powers and all governmental
licenses, authorizations, permits, consents and approvals required to carry on
its business as now conducted, except for those licenses, authorizations,
permits, consents and approvals the absence of which would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect on
the Company. The Company is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction where such
qualification is necessary (each as listed on Schedule 5.01), except for those
jurisdictions where failure to be so qualified would not reasonably be expected
to have, individually or in the aggregate, a Material Adverse Effect on the
Company. The Company has heretofore delivered to Parent true and complete copies
of the certificate of incorporation and bylaws of the Company as currently in
effect.
Section 5.02 Corporate Authorization. The execution, delivery and
performance by the Company of this Agreement and the consummation of the
transactions contemplated hereby are within the Company's corporate powers and,
except for the affirmative vote of the holders of a majority of the outstanding
Shares in connection with the consummation of the Merger (if required by law),
have been duly authorized by all necessary corporate action on the part of the
Company. The affirmative vote of the holders of a majority of the outstanding
Shares (if required by law) is the only vote of the holders of any of the
Company's capital stock necessary in connection with the consummation of the
Merger. This Agreement constitutes a valid and binding agreement of the Company.
Section 5.03 Governmental Authorization. The execution, delivery and
performance by the Company of this Agreement and the consummation by the Company
of the transactions contemplated hereby require no action by or in respect of,
or filing with, any governmental body, agency, official or authority, domestic,
foreign or supranational, other than (i) the filing of the certificate of merger
with respect to the Merger with the Delaware Secretary of State and appropriate
documents with the relevant authorities of other states in which the Company is
qualified to do business, (ii) compliance with any applicable requirements of
the HSR Act or any foreign equivalents, (iii) compliance with any applicable
requirements of the 1933 Act, the 1934 Act and any other applicable securities
or takeover laws, whether state or foreign, and the rules and regulations of The
Nasdaq Stock Market and (iv) any actions, licenses, consents, permits, orders,
approvals or filings the absence of which could not be reasonably expected to
have, individually or in the aggregate, a Material Adverse Effect on the Company
or materially to impair the ability of the Company to consummate the
transactions contemplated by this Agreement.
Section 5.04 Non-contravention. The execution, delivery and
performance by the Company of this Agreement and the consummation of the
transactions contemplated hereby do not and will not (i) contravene, conflict
with, or result in any violation or breach of any provision of the certificate
of
13
incorporation or bylaws of the Company, (ii) assuming compliance with the
matters referred to in Section 5.03, contravene, conflict with, or result in a
violation or breach of any provision of any applicable material law, statute,
ordinance, rule, regulation, judgment, injunction, order or decree applicable to
the Company or by which any of its assets or properties are bound, (iii) require
any consent or other action by any Person under, constitute a default, or an
event that, with or without notice or lapse of time or both, could become a
default, under, or cause or permit the termination, cancellation, acceleration
or other change of any right or obligation or the loss of any benefit to which
the Company or any of its Subsidiaries is entitled under any provision of any
agreement or other instrument binding upon the Company or any of its
Subsidiaries or any license, franchise, permit, certificate, approval or other
similar authorization affecting, or relating in any way to, the assets or
business of the Company and its Subsidiaries, except for any consent or other
action the failure of which to obtain could not reasonably be expected to result
in a Material Adverse Effect on the Company, (iv) require any consent or other
action by any Person under, constitute a default, or an event that, with or
without notice or lapse of time or both, could become a default, under, or cause
or permit the termination, cancellation, acceleration or other change of any
right or obligation or the loss of any benefit to which the Company or any of
its Subsidiaries is entitled under any provision of any Company Material
Contract, or (v) result in the creation or imposition of any Lien on any asset
of the Company or any of its Subsidiaries.
Section 5.05 Capitalization.
(a) The authorized capital stock of the Company consists of 100,000,000
Shares and 2,000,000 shares of preferred stock, $.001 par value per share
("PREFERRED STOCK"). As of June 9, 2002, there were outstanding 22,708,605
Shares and employee stock options (as listed by optionee on Schedule 5.05) to
purchase an aggregate of 5,661,109 Shares (of which options to purchase an
aggregate of 1,808,791 Shares were exercisable). As of the date of this
Agreement, there are no shares of Preferred Stock outstanding. All outstanding
shares of capital stock of the Company have been, and all shares of capital
stock of the Company that may be issued pursuant to the Option Plans will be,
when issued in accordance with the respective terms thereof, duly authorized and
validly issued and are fully paid and nonassessable
(b) Except as set forth in this Section 5.05, as of June 9, 2002, there
are no outstanding (i) shares of capital stock or voting securities of the
Company, (ii) securities of the Company convertible into or exchangeable for
shares of capital stock or voting securities of the Company or (iii) options or
other rights to acquire from the Company or other obligation of the Company to
issue, any capital stock, voting securities or securities convertible into or
exchangeable for capital stock or voting securities of the Company (the items in
clauses (i), (ii) and (iii) being referred to collectively as the "COMPANY
SECURITIES"). There are no outstanding obligations of the Company or any of its
Subsidiaries to repurchase, redeem or otherwise acquire any of the Company
Securities.
Section 5.06 Subsidiaries.
(a) Each Subsidiary of the Company is a corporation or other entity duly
incorporated or organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation or organization, has all corporate or other
powers and all governmental licenses, authorizations, permits, consents and
approvals required to carry on its business as now conducted, except as would
not reasonably be expected to have a Material Adverse Effect on the Company.
Each such Subsidiary is duly qualified to do business as a foreign corporation
and is in good standing in each jurisdiction where such qualification is
necessary, except for those jurisdictions where failure to be so qualified would
not reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on the Company. A true and complete list of all the Subsidiaries,
together with the jurisdiction or incorporation or organization of each
Subsidiary, the jurisdictions in which each Subsidiary is licensed or qualified
to
14
do business and the percentage of each Subsidiary's outstanding capital stock or
other equity interests owned by the Company or another of its Subsidiaries as of
the date hereof, is set forth in Schedule 5.06 hereto.
(b) All of the outstanding capital stock of, or other voting securities
or ownership interests in, each Subsidiary of the Company, is owned by the
Company, directly or indirectly, free and clear of any Lien and free of any
other limitation or restriction (including any restriction on the right to vote,
sell or otherwise dispose of such capital stock or other voting securities or
ownership interests). There are no outstanding (i) securities of the Company or
any of its Subsidiaries convertible into or exchangeable for shares of capital
stock or other voting securities or ownership interests in any Subsidiary of the
Company or (ii) options or other rights to acquire from the Company or any of
its Subsidiaries, or other obligation of the Company or any of its Subsidiaries
to issue, any capital stock or other voting securities or ownership interests
in, or any securities convertible into or exchangeable for any capital stock or
other voting securities or ownership interests in, any Subsidiary of the Company
(the items in clauses (i) and (ii) being referred to collectively as the
"COMPANY SUBSIDIARY SECURITIES"). There are no outstanding obligations of the
Company or any of its Subsidiaries to repurchase, redeem or otherwise acquire
any of the Company Subsidiary Securities.
Section 5.07 SEC Filings.
(a) The Company has delivered to Parent (i) the Company's annual reports
on Form 10-K for its fiscal years ended December 31, 1999, 2000 and 2001, (ii)
its quarterly reports on Form 10-Q for its fiscal quarter ended March 31, 2002,
(iii) its proxy or information statements relating to meetings of, or actions
taken without a meeting by, the stockholders of the Company held since December
31, 2001, and (iv) all other reports, statements, schedules and registration
statements filed by the Company with the SEC since December 31, 2001 (the
documents referred to in this Section 5.07(a) and all other forms, reports and
documents required to be filed by the Company with the SEC since the effective
date of the registration statement for the Company's initial public offering,
collectively, the "COMPANY SEC DOCUMENTS").
(b) As of the filing date, each Company SEC Document complied as to form
in all material respects with the applicable requirements of the 1933 Act and
the 1934 Act, as the case may be.
(c) As of its filing date (or, if amended or superseded by a filing
prior to the date hereof, on the date of such filing), each Company SEC Document
filed pursuant to the 1934 Act did not, and each such Company SEC Document filed
subsequent to the date hereof will not, contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading.
(d) Each Company SEC Document that is a registration statement, as
amended or supplemented, if applicable, filed pursuant to the 1933 Act, as of
the date such statement or amendment became effective, did not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein not misleading.
Section 5.08 Financial Statements. The audited consolidated financial
statements and unaudited consolidated interim financial statements of the
Company included in the Company SEC Documents fairly present, in conformity with
United States generally accepted accounting principles ("GAAP") applied on a
consistent basis (except as may be indicated in the notes thereto), the
consolidated financial position of the Company and its consolidated Subsidiaries
as of the dates thereof and their consolidated results of operations and cash
flows for the periods then ended, except that the unaudited consolidated interim
financial statements are subject to normal and recurring year-end adjustments
which were not and will not be material in amount.
15
Section 5.09 Disclosure Documents.
(a) Each document required to be filed by the Company with the SEC or
required to be distributed or otherwise disseminated by the Company to the
Company's stockholders in connection with the transactions contemplated by this
Agreement (the "COMPANY DISCLOSURE DOCUMENTS"), including the Schedule 14D-9,
the proxy or information statement of the Company (the "COMPANY PROXY
STATEMENT"), if any, to be filed with the SEC in connection with the Merger, and
any amendments or supplements thereto, when filed, distributed or disseminated,
as applicable, will comply as to form in all material respects with the
applicable requirements of the 1934 Act.
(b) Any Company Disclosure Document (other than the Company Proxy
Statement), at the time of the filing of such Company Disclosure Document or any
supplement or amendment thereto and at the time of any distribution or
dissemination thereof, will not contain any untrue statement of a material fact
or omit to state any material fact necessary in order to make the statements
made therein, in the light of the circumstances under which they were made, not
misleading. The representations and warranties contained in this Section 5.09(b)
will not apply to statements or omissions included in the Company Disclosure
Documents based upon information furnished to the Company in writing by Parent
specifically for use therein.
(c) The information with respect to the Company or any of its
Subsidiaries that the Company furnishes to Parent specifically for use in the
Offer Documents, at the time of the filing thereof, at the time of any
distribution or dissemination thereof and at the time of the consummation of the
Offer, will not contain any untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements made therein, in the
light of the circumstances under which they were made, not misleading.
Section 5.10 Absence of Certain Changes. Since December 31, 2001 and
through the date hereof, the business of the Company and its Subsidiaries has
been conducted in the ordinary course consistent with industry practice and,
except as disclosed in Schedule 5.10 there has not been:
(a) any event, occurrence, development or state of circumstances or
facts that has had or could reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect on the Company;
(b) any declaration, setting aside or payment of any dividend or other
distribution with respect to any shares of capital stock of the Company, or any
repurchase, redemption or other acquisition by the Company or any of its
Subsidiaries of any outstanding shares of capital stock or other securities of,
or other ownership interests in, the Company or any of its Subsidiaries;
(c) any amendment of any material term of any outstanding security of
the Company or any of its Subsidiaries;
(d) any incurrence, assumption or guarantee by the Company or any of its
Subsidiaries of any indebtedness for borrowed money other than in the ordinary
course of business and in amounts and on terms consistent with past practice,
and in no one instance in an amount greater than $50,000;
(e) any creation or other incurrence by the Company or any of its
Subsidiaries of any Lien on any asset other than in connection with the purchase
and finance of equipment;
(f) any making of any loan, advance or capital contributions to or
investment in any Person;
16
(g) any damage, destruction or other casualty loss (whether or not
covered by insurance) affecting the business or assets of the Company or any of
its Subsidiaries that has had or could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on the Company;
(h) any transaction or commitment made, or any contract or agreement
entered into, by the Company or any of its Subsidiaries relating to its assets
or business (including the acquisition or disposition of any assets) or any
relinquishment by the Company or any of its Subsidiaries of any contract or
other right, in any case, material to the Company and its Subsidiaries, taken as
a whole, other than transactions and commitments in the ordinary course of
business consistent with past practice and those contemplated by this Agreement;
(i) any change in any method of accounting, method of tax accounting or
accounting principles or practice by the Company or any of its Subsidiaries,
except for any such change required by reason of a concurrent change in GAAP or
Regulation S-X under the 1934 Act;
(j) any (i) grant of any severance or termination pay to (or amendment
to any existing arrangement with) any director, Officer or employee of the
Company or any of its Subsidiaries, (ii) increase in benefits payable under any
existing severance or termination pay policies or employment agreements, (iii)
any entering into any employment, deferred compensation or other similar
agreement (or any amendment to any such existing agreement) with any director,
Officer or employee of the Company or any of its Subsidiaries, (iv)
establishment, adoption or amendment (except as required by applicable law) of
any collective bargaining, bonus, profit-sharing, thrift, pension, retirement,
deferred compensation, compensation, stock option, restricted stock or other
benefit plan or arrangement covering any director, Officer or employee of the
Company or any of its Subsidiaries, or (v) increase in compensation, bonus or
other benefits payable, or grant of any stock option or other equity rights, to
any director, Officer or employee of the Company or any of its Subsidiaries;
(k) any labor dispute, other than routine individual grievances, or any
activity or proceeding by a labor union or representative thereof to organize
any employees of the Company or any of its Subsidiaries, which employees were
not subject to a collective bargaining agreement at December 31, 2001, or any
lockouts, strikes, slowdowns, work stoppages or threats thereof by or with
respect to such employees; or
(l) any agreement, in writing or otherwise, by the Company or any of its
Subsidiaries to take any of the actions described in this Section 5.10.
Section 5.11 No Undisclosed Material Liabilities. There are no
material liabilities of the Company or any of its Subsidiaries, other than:
(a) liabilities or obligations disclosed and provided for in the Company
Balance Sheet or in the notes thereto or in the Company SEC Documents filed
prior to the date hereof,
(b) liabilities or obligations incurred in the ordinary course of
business consistent with past practice since December 31, 2001, and
(c) contractual and other liabilities incurred in the ordinary course of
business consistent with past practice that are not required by GAAP to be
reflected on a balance sheet.
Section 5.12 Compliance with Laws and Court Orders. The Company and
each of its Subsidiaries is and has been in compliance with, and to the
Knowledge of the Company is not under investigation with respect to and has not
been threatened to be charged with or given notice of any
17
violation of, any applicable material law, statute, ordinance, rule, regulation,
judgment, injunction, order or decree.
Section 5.13 Litigation. There is no action, suit, investigation or
proceeding pending against, or, to the Knowledge of the Company, threatened
against, the Company, any of its Subsidiaries, any present or former Officer,
director or, to the Knowledge of the Company, employee of the Company or any of
its Subsidiaries or any other Person for whom the Company or any of such
Subsidiary may be liable or any of their respective properties before any court
or arbitrator or before or by any governmental body, agency or official,
domestic or foreign that could reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect on the Company or that in any manner
challenges or seeks to prevent, enjoin, alter or materially delay the Offer or
the Merger or any of the other transactions contemplated hereby.
Section 5.14 Finders' Fees. Except for Morgan Stanley & Co.
Incorporated, a copy of whose engagement agreement has been provided to Parent,
there is no investment banker, broker, finder or other intermediary that has
been retained by or is authorized to act on behalf of the Company or any of its
Subsidiaries who might be entitled to any fee or commission from the Company or
any of its Affiliates in connection with the transactions contemplated by this
Agreement.
Section 5.15 Taxes.
(a) The Company and each of its Subsidiaries, and each affiliated group
(within the meaning of Section 1504 of the Code) of which the Company or any of
its Subsidiaries is or has been a member, has timely filed (or has had timely
filed on its behalf) or will file or cause to be timely filed all U.S. federal,
California, Illinois, Massachusetts, New York, Texas, Virginia or foreign
income, sales and use Tax Returns, VAT Tax Returns and other material Tax
Returns required by applicable law to be filed by it prior to or as of the
Effective Time, and all such Tax Returns are, or will be at the time of filing,
true and complete in all material respects.
(b) The Company and each of its Subsidiaries and each affiliated group
(within the meaning of Section 1504 of the Code) of which the Company or any
Subsidiary is or has been a member has paid (or has had paid on its behalf), or,
where payment is not yet due, has established (or has had established on its
behalf and for its sole benefit and recourse) or will establish or cause to be
established in accordance with GAAP on or before the Effective Time an adequate
accrual for the payment of, all Taxes due, whether asserted or unasserted,
contingent or otherwise, with respect to any period or portion thereof ending
prior to or as of the Effective Time.
(c) The federal income and state and local income or franchise Tax
Returns of the Company and its Subsidiaries have been examined and settled with
the Internal Revenue Service (the "IRS") (or the applicable statutes of
limitation for the assessment of federal income Taxes for such periods have
expired) for all years through 2001.
(d) There are no material Liens or encumbrances (whether existing or
threatened) for Taxes on any of the assets of the Company or any of its
Subsidiaries other than for Taxes not yet due and payable.
(e) All material Taxes that the Company or its Subsidiaries is or was
required by law to have withheld or collected have been duly withheld or
collected, and to the extent required, have been paid to the proper Taxing
Authority.
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(f) No federal, state, local or foreign audits or administrative
proceedings are pending with regard to any Taxes or Tax Return of the Company or
its Subsidiaries and none of them has received a written notice of any proposed
audit or proceeding regarding any pending audit or proceeding.
(g) Neither the Company nor any of its Subsidiaries has waived any
statute of limitations or otherwise agreed to the extension of any period for
the assessment or collection of any Tax.
(h) No adjustment relating to any U.S. federal, California, Illinois,
Massachusetts, New York, Texas, Virginia or foreign income, sales or use Tax
Returns, VAT Tax Returns or other material Tax Return filed by the Company or
any of its Subsidiaries (and no claim by a Taxing Authority in a jurisdiction in
which the Company does not file Tax Returns that the Company may be subject to
taxation by such jurisdiction) has been proposed by any Taxing Authority to the
Company or any of its Subsidiaries or any representative thereof.
(i) Neither the Company nor any of its Subsidiaries (i) is a party to
any Tax sharing or Tax allocation agreement, arrangement or understanding with a
Person other than the Company and its Subsidiaries, (ii) is liable for any
material Taxes of any other Person other than the Company and its Subsidiaries
under Treasury Regulation 1.1502-6 (or any similar provision of state, local or
foreign law), as a transferee or successor, by contract or otherwise, (iii) is a
party to any joint venture, partnership or other material arrangement that could
be treated as a partnership for income Tax purposes and (iv) has made an
election to be characterized as a partnership for U.S. federal income tax
purposes.
(j) Neither the Company nor any of its Subsidiaries has requested, nor
has there been granted, an extension of time within which to file any U.S.
federal, California, Illinois, Massachusetts, New York, Texas, Virginia or
foreign income, sales or use Tax Returns, VAT Tax Returns or other material Tax
Returns, which have not since been filed.
(k) Neither the Company nor any of its Subsidiaries is a party to a
closing agreement, or the subject of a private ruling, concerning Taxes.
(l) Neither the Company nor any of its Subsidiaries has participated in
or cooperated with an international boycott within the meaning of Section 999 of
the Code.
(m) The acquisition by the Company of each of GemLogic, Inc., Power
2000, Inc., eObject, Inc., and Bondi Software, Inc. was structured as a reverse
subsidiary merger with a first tier wholly-owned transitory subsidiary of the
Company or as a taxable stock purchase by the Company, followed by an upstream
merger into the Company. The acquisition by the Company of ObjectEra, Inc. was
structured as a taxable stock purchase. The acquisition by the Company of
GemLogic, Inc. was structured as a reverse subsidiary merger and, at the time of
the acquisition, there was no plan or intention to merge, dissolve or liquidate
GemLogic, Inc. into the Company.
(n) The Company (i) has neither agreed to make nor is required to make
any adjustment under Section 481 of the Code by reason of a change in accounting
method and (ii) is not a "consenting corporation" within the meaning of Section
341(f)(1) of the Code.
(o) The Company is not nor has it ever been a United States real
property holding corporation within the meaning of Section 897(c)(2) of the
Code.
(p) "TAXES" shall mean any and all taxes, charges, fees, duties, levies
or other similar assessments, including income, gross receipts, excise, real or
personal property, sales, withholding, social security, retirement,
unemployment, occupation, use, goods and services, service use, license, value
added, capital, net worth, payroll, profits, withholding, franchise, transfer
and recording taxes, fees and
19
charges in the nature of Taxes, and any other taxes, assessment or similar
charges imposed by the IRS or any taxing authority (whether domestic or foreign
including any state, county, local or foreign government or any subdivision or
taxing agency thereof (including a United States possession)) (a "TAXING
AUTHORITY"), whether computed on a separate, consolidated, unitary, combined or
any other basis; and such term shall include any interest whether paid or
received, fines, penalties or additional amounts attributable to, or imposed
upon, or with respect to, any such taxes, charges, fees, levies or other
assessments. "TAX RETURN" shall mean any report, return, document, declaration
or other information or filing required to be supplied to any Taxing Authority
or jurisdiction (foreign or domestic) with respect to Taxes, including
information returns, any documents with respect to or accompanying payments of
estimated Taxes, or with respect to or accompanying requests for the extension
of time in which to file any such report, return, document, declaration or other
information.
Section 5.16 Employee Benefit Plans.
(a) The Company has provided Parent with a list and copies of the
Employee Plans, Benefit Arrangements, and International Plans (and, if
applicable, related trust agreements) and all amendments thereto and written
interpretations thereof together with the three most recent annual reports (Form
5500 including, if applicable, Schedule B thereto), and the most recent
actuarial valuation report prepared in connection with any Employee Plan,
Benefit Arrangement and International Plan. Neither the Company nor any ERISA
Affiliate has any liability with respect to any benefit plan or arrangement
other than those provided to Parent in the list and on the Company Disclosure
Schedule.
(b) Neither the Company nor any ERISA Affiliate sponsors, maintains or
contributes to, and has never sponsored, maintained or contributed to, or had
any liability with respect to, any employee benefit plan subject to Section 302
of ERISA, Section 412 of the Code, or Title IV of ERISA. None of the Employee
Plans is a multiemployer plan (as defined in Section 3(37) of ERISA). Neither
the Company nor any ERISA Affiliate contributes to, and has never contributed
to, or had any liability with respect to, a multiemployer plan.
(c) No transaction prohibited by Section 406 of ERISA or Section 4975 of
the Code, or breach of any fiduciary duty described in Section 404 of ERISA, has
occurred with respect to any employee benefit plan or arrangement that is
covered by Title I of ERISA, which transaction or action has or will cause the
Company or any of its ERISA Affiliates to incur any liability under ERISA, the
Code or otherwise, excluding transactions or actions effected pursuant to and in
compliance with a statutory or administrative exemption.
(d) Each Employee Plan that is intended to be qualified under Section
401(a) of the Code is so qualified except for such failure to qualify as may be
corrected without material liability to the Company; each trust created under
any such Plan is exempt from tax under Section 501(a) of the Code. Nothing has
occurred with respect to the design or operation of any Employee Plan that could
reasonably be expected to cause the loss of such qualification or exemption or
the imposition of any liability, lien, penalty or tax under ERISA or the Code.
The Company has provided Parent with the most recent determination letter of the
Internal Revenue Service relating to each such Employee Plan. Each Employee Plan
has been maintained in compliance with its terms and with the requirements
prescribed by any and all applicable statutes, orders, rules and regulations,
including ERISA and the Code. No Employee Plan is currently under audit or
examination by the IRS, Department of Labor, or any other governmental entity,
and no matters are pending with respect to any Employee Benefit Plan under any
IRS program.
(e) Each Benefit Arrangement has been maintained in all material
respects in compliance with its terms and with the requirements prescribed by
any and all applicable statutes, orders, rules and regulations and has been
maintained in good standing with applicable regulatory authorities.
20
(f) Neither the Company nor any of its ERISA Affiliates has any current
or projected liability in respect of post-employment or post-retirement health
or medical or life insurance benefits for retired, former or current employees
of the Company or any of its ERISA Affiliates, except as required to avoid
excise tax under Section 4980B of the Code or as required under applicable law.
No condition exists that would prevent the Company or any of its ERISA
Affiliates from amending or terminating any Employee Plan, Benefit Arrangement
or International Plan providing health or medical benefits in respect of any
active employee of the Company or any of its ERISA Affiliates.
(g) All required contributions and payments under each Employee Plan,
Benefit Arrangement, and International Plan, determined in accordance with prior
funding and accrual practices, have been discharged and paid or accrued to the
Employee Plan, Benefit Arrangement, or International Plan, or to the participant
or beneficiary of such participant in such plan or arrangement, as applicable,
on or prior to the Effective Time. All monies withheld from participant
paychecks with respect to Employee Plans, Benefits Arrangements, and
International Plans have been transferred to the appropriate plan in a timely
manner. There has been no amendment to, written interpretation of or
announcement (whether or not written) by the Company or any of its ERISA
Affiliates relating to, or change in employee participation or coverage under,
any Employee Plan, Benefit Arrangement or International Plan that would increase
materially the expense of maintaining such Employee Plan, Benefit Arrangement,
or International Plan above the level of the expense incurred in respect thereof
for the most recent fiscal year ended prior to the date hereof.
(h) There is no contract, plan or arrangement (written or otherwise)
covering any employee or former employee of the Company or any of its
Subsidiaries that, individually or collectively, would give rise to the payment
of any amount that would not be deductible pursuant to the terms of Sections
162(m) or 280G of the Code.
(i) There has been no failure of a group health plan (as defined in
Section 5000(b)(1) of the Code) to meet the requirements of Code Section
4980B(f) with respect to a qualified beneficiary (as defined in Section
4980B(g)). Neither the Company nor any of its Subsidiaries has contributed to a
nonconforming group health plan (as defined in Section 5000(c)) and no ERISA
Affiliate of the Company or any of its Subsidiaries has incurred a tax under
Section 5000(a) that is or could become a liability of the Company or any of its
Subsidiaries.
(j) Each International Plan has been maintained in material compliance
with its terms and with the requirements prescribed by any and all applicable
statutes, orders, rules and regulations (including any special provisions
relating to qualified plans where such Plan was intended so to qualify) and has
been maintained in good standing with applicable regulatory authorities. There
has been no amendment to, written interpretation of or announcement (whether or
not written) by the Company or any of its Subsidiaries relating to, or change in
employee participation or coverage under, any International Plan that would
increase materially the expense of maintaining such International Plan above the
level of expense incurred in respect thereof for the most recent fiscal year
ended prior to the date hereof. No amount that is required to be contributed to
the International Plans in accordance with the terms of the relevant
International Plans and any and all applicable statutes, orders, rules and
regulations is overdue. Any accrued but unpaid liabilities with respect to the
International Plans (including, but not limited to, amounts that have been
withheld from participant paychecks or amounts that the Company or any
Subsidiary is required to pay in accordance with applicable statutes, orders,
rules and regulations of the jurisdiction governing such International Plan)
have been properly reflected on the Company's financial statements as described
in Section 5.08.
(k) No employee or former employee of the Company or any of its
Subsidiaries will become entitled to any bonus, retirement, severance, job
security, continued employment or similar benefit or
21
enhanced benefit (including acceleration of vesting or exercise of an incentive
award) as a result of the transactions contemplated hereby, except pursuant to
any agreement or arrangement with Parent or Merger Subsidiary.
(l) All Employee Plans, Benefit Arrangements and International Plans may
be amended or terminated without penalty by the Company at any time on or after
the Effective Time.
(m) There are no pending or threatened claims (other than claims for
benefits in the ordinary course), lawsuits or arbitrations that have been
asserted or instituted, and, to the Knowledge of the Company, no set of
circumstances exists that may reasonably give rise to a claim or lawsuit,
against any of the Employee Plans, Benefit Arrangements, or International Plans,
any fiduciaries thereof with respect to their duties thereto or the assets of
any of the trusts thereunder, that could reasonably be expected to result in any
material liability of the Company or any of its ERISA Affiliates to the PBGC,
the United States Department of Treasury, the Department of Labor, any foreign
governmental authority, any of the Employee Plans, Benefit Arrangements, and
International Plans, any participant therein, or any other Person.
(n) All Persons classified by the Company and any ERISA Affiliate as
independent contractors satisfy and at all times have satisfied the requirements
of applicable law to be so classified; the Company and each ERISA Affiliate has
fully and accurately reported their compensation on IRS Forms 1099 when required
to do so; and the Company and each ERISA Affiliate has no obligations to provide
benefits with respect to such Persons under the Employee Plans, Benefit
Arrangements or International Plans or otherwise. No individuals are currently
providing, or have ever provided, services to the Company or an ERISA Affiliate
pursuant to a leasing agreement or similar type of arrangement, nor has the
Company or any ERISA Affiliate entered into any arrangement whereby services
will be provided by such individuals.
Section 5.17 Environmental Matters.
(a) Except as would not reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect on the Company:
(i) no notice, notification, demand, request for information,
citation, summons or order has been received, no complaint has been filed,
no penalty has been assessed, and no action, claim, suit, proceeding or,
to the Knowledge of the Company, review or investigation (or any basis
therefor) is pending or is threatened by any governmental entity or other
Person relating to or arising out of any Environmental Law;
(ii) the Company is in compliance with all Environmental Laws and
holds and is in compliance with all Environmental Permits;
(iii) there are no liabilities of or relating to the Company or any
of its Subsidiaries of any kind whatsoever, whether accrued, contingent,
absolute, determined, determinable or otherwise arising under or relating
to any Environmental Law, and there are no facts, conditions, situations
or set of circumstances that are reasonably be expected to result in or be
the basis for any such liability;
(iv) no Release of Hazardous Materials has occurred at, from, in,
to, on, or under any property currently or previously owned or leased by
the Company or any of its Subsidiaries, any predecessors of the Company or
its Subsidiaries, or any entity previously owned by the Company or its
Subsidiaries, and no Hazardous Materials are present in, on, about or
migrating to or from any property currently or previously owned or leased
by the Company or any of its Subsidiaries,
22
any predecessors of the Company or its Subsidiaries, or any entity
previously owned by the Company or its Subsidiaries that could give rise
to any claim against, or liability of the Company; and
(v) neither the Company nor any of its Subsidiaries, any
predecessors of the Company or its Subsidiaries, nor any entity previously
owned by the Company or its Subsidiaries has transported or arranged for
the treatment, storage, handling, disposal, or transportation of any
Hazardous Material to any property location that is not owned, operated or
leased by the Company or any of its Subsidiaries which could reasonably be
expected to result in any claim against, or liability of the Company.
(b) There has been no environmental investigation, study, audit, test,
review or other analysis conducted by or on behalf of the Company or any of its
Subsidiaries, or of which the Company has Knowledge in relation to the current
or prior business of the Company or any of its Subsidiaries or any property or
facility now or previously owned or leased by the Company or any of its
Subsidiaries or any entity previously owned by the Company or its Subsidiaries
that has not been delivered or disclosed to Parent or its representatives at
least five (5) days prior to the date hereof.
(c) Neither the Company nor any of its Subsidiaries owns, leases or
operates or has owned, leased or operated any real property, or conducts or has
conducted any operations, in New Jersey.
(d) For purposes of this Section 5.17, the terms "COMPANY" and
"Subsidiaries" shall include any entity that is, in whole or in part, a
predecessor of the Company or any of its Subsidiaries.
Section 5.18 Antitakeover Statutes. The Company has taken all action
necessary to exempt the Offer, the Merger, this Agreement and the Stockholder's
Agreements and the transactions contemplated hereby and thereby from the
restrictions on "business combinations" (as defined in Section 203 of Delaware
Law).
Section 5.19 Technology and Intellectual Property. Unless otherwise
expressly stated or required by context, in Section 5.19 all references to the
Company shall include each of the Company's Subsidiaries.
(a) The "COMPANY INTELLECTUAL PROPERTY" consists of the following:
(i) all inventions (whether patentable or not), patents,
trademarks, trade names, service marks, logos, collective marks,
certification marks, mask works, domain names, web sites, web pages, web
content, copyrights and any renewal rights, applications, databases, data
collections, and registrations for any of the foregoing, and all trade
dress, net lists, schematics, technology, specifications, methodologies,
manufacturing processes, customer lists, databases and data collections,
supplier lists, trade secrets, know-how, moral rights, computer software
programs or applications (in both source and object code form);
(ii) all goodwill associated with trademarks, trade names, service
marks, logos, certification marks, collective marks, domain names, and
trade dress;
(iii) all software and firmware listings, and updated software
source code, and complete system build software and instructions related
to all software described herein;
(iv) all documents, records, user manuals and files relating to
design, end user documentation, manufacturing, quality control, sales,
marketing or customer support for all intellectual property described
herein;
23
(v) all other tangible or intangible proprietary information and
materials; and
(vi) any and all forms of legal rights and protections that may be
obtained for, or may pertain to, any of the foregoing in any country or
territory of the world, including, without limitation, all right, title
and interest arising under common and statutory law to: (A) all patents
and patent applications; (B) all copyrights, mask works and all other
rights in expressions; (C) all industrial designs; (D) all rights to
trademarks, service marks, trade names, logos, domain names, and other
proprietary indicia or addresses and all goodwill associated therewith;
(E) any equivalent rights relating to intangible intellectual property;
and (F) all applications, registrations, issuances, divisions,
continuations, renewals, reissuances and extensions of the foregoing
that are being, and/or have been, used, or are currently under development
for use, in the business of the Company as it has been, is currently or is
currently anticipated to be (up to the Effective Time) conducted. The
Company Intellectual Property that is owned by the Company is referred to
herein as the "COMPANY OWNED INTELLECTUAL PROPERTY" and the Company
Intellectual Property that is licensed by the Company is referred to
herein as the "COMPANY LICENSED INTELLECTUAL PROPERTY." Unless otherwise
noted, all references to the "COMPANY INTELLECTUAL PROPERTY" shall refer
to both the Company Owned Intellectual Property and the Company Licensed
Intellectual Property.
The "COMPANY INTELLECTUAL PROPERTY ASSETS" consist of the following subset
of Company Owned Intellectual Property: (i) trademarks, trade names,
service marks, logos, collective marks, certification marks, domain names,
web sites, web pages, web content, databases, technology, specifications,
(ii) all computer software programs or applications (in both source and
object code form) and related development environments, (iii) documents,
user manuals and documentation; and (iv) all other tangible proprietary
information and materials that are being, and/or have been, used, or are
currently under development for use, in the business of the Company as it
has been, is currently or is currently anticipated to be (up to the
Effective Time) conducted.
The "COMPANY LICENSED INTELLECTUAL PROPERTY ASSETS" consist of the
following subset of Company Licensed Intellectual Property: (i)
trademarks, trade names, service marks, logos, collective marks,
certification marks, domain names, web sites, web pages, web content,
databases, technology, specifications, (ii) all computer software programs
or applications (in both source and object code form) and related
development environments, (iii) documents, user manuals and documentation;
and (iv) all other tangible proprietary information and materials that are
being, and/or have been, used, or are currently under development for use,
in the business of the Company as it has been, is currently or is
currently anticipated to be (up to the Effective Time) conducted.
The "COMPANY PRODUCTS" consist of all software products, documentation,
technology, development tools and related development environments
currently published, offered, or under development by the Company.
(b) Schedule 5.19(b) lists: (i) all patents (by name, number,
jurisdiction and owner), registered copyrights, registered mask works,
registered trademarks, word marks that the Company uses and claims as the
Company's marks, service marks, logos, trade names, domain names, certification
marks, collective marks, any renewal rights for any of the foregoing, and any,
applications and registrations for any of the foregoing, that are included in
the Company Owned Intellectual Property; (ii) software products, software
development tools, and categories of material services that are currently
published, offered, or under development by the Company; (iii) all licenses,
sublicenses and other agreements to which the Company is a party and pursuant to
which any Third Party authorizes the
24
Company to have access to or use any Company Licensed Intellectual Property that
is included, embedded in whole or in part, or bundled with Company Products
(other than license agreements for standard "shrink wrapped, off the shelf,"
commercially available, Third Party products used by the Company but including
any software development tools or "open source" licenses); (iv) any obligations
of exclusivity, most favored nations, noncompetition, nonsolicitation, right of
first refusal, publication of source code, or first negotiation to which the
Company is subject; (v) any proceedings or actions, other than ex parte
proceedings to which the Company is a party, to which the Company is a party
before any court, tribunal (including, without limitation, the United States
Patent and Trademark Office or equivalent authority anywhere in the world),
government or other authority related to any Company Intellectual Property; and
(vi) any proceedings or actions, other than proceedings to which the Company is
a party, before any court, tribunal (including, without limitation, the United
States Patent and Trademark Office or equivalent authority anywhere in the
world), government or other authority that to the Knowledge of the Company
relate to any Company Intellectual Property. All licenses, sublicenses and other
agreements described in (iii) above are in full force and effect and, to the
Knowledge of the Company, the Company is in compliance with the terms and
conditions thereof and to the Knowledge of the Company there is no default
thereof by any party thereto and true and complete copies thereof have been
provided to Parent.
(c) To the Knowledge of the Company, the Company has all rights in the
Company Intellectual Property reasonably necessary to carry out the Company's
current and anticipated future (up to the Effective Time) activities and has or
had all rights in the Company Intellectual Property reasonably necessary to
carry out the Company's former activities, including without limitation, if
necessary to carry out such activities, rights to make, use, reproduce, modify,
adapt, create derivative works based on, translate, distribute (directly and
indirectly), transmit, display and perform publicly, license, rent, lease,
assign, and sell the Company Owned Intellectual Property in all geographic
locations and fields of use, and to sublicense any or all such reasonably
necessary rights to third parties, including the right to grant further
sublicenses. All software and firmware source code that is part of the Company
Owned Intellectual Property is reasonably documented in accordance with current
software industry standards. All the Company Owned Intellectual Property is free
and clear of Liens. The consummation of the transactions contemplated hereby
will not alter or impair in any respect the ability of the Surviving Corporation
and its Subsidiaries to use the Company Intellectual Property after the
Effective Time to conduct the Company's current and anticipated (up to the
Effective Time) business.
(d) The Company is not, nor as a result of the execution or delivery of
this Agreement, or performance of the Company's obligations hereunder, will the
Company be, in violation of any license, sublicense or other agreement relating
to the Company Intellectual Property to which the Company is a party or
otherwise bound that constitutes a Company Material Contract. Except pursuant to
the terms of the agreements listed in the Schedule 5.19(d), the Company is not
obligated to provide any consideration (whether financial or otherwise) to any
Third Party, nor is any Third Party otherwise entitled to any consideration,
with respect to any exercise of rights by the Company or its successors in the
Company Intellectual Property. Any and all renewal fees, license fees,
royalties, maintenance fees, and any other fees that have fallen, or will fall,
due by the Effective Time have been paid in full.
(e) The use, reproduction, modification, distribution, licensing,
sublicensing, sale, or any other exercise of rights in any of the Company
Intellectual Property Assets or any other authorized exercise of rights in or to
the Company Intellectual Property Assets by the Company or its licensees does
not and will not infringe any copyright or trade secret, or, to the Knowledge of
the Company, any patent, trademark, service mark, trade name, firm name, logo,
trade dress, mask work, moral right, right of privacy, right of publicity or
right in personal or other data of any person, or any other intellectual
property or proprietary right of a Third Party. To the Knowledge of the Company,
the authorized use, reproduction, modification, distribution, licensing,
sublicensing or sale, or any other exercise of rights in any Company Licensed
Intellectual Property Assets or any other authorized exercise of rights in or to
the
25
Company Licensed Intellectual Property Assets by the Company or its licensee
does not and will not infringe any copyright, patent, trade secret, trademark,
service mark, trade name, firm name, logo, trade dress, mask work, moral right,
right of privacy, right of publicity or right in personal or other data of any
person, or any other intellectual property or proprietary right of a Third
Party. No claims (i) challenging the validity, effectiveness, or ownership by
the Company of any of the Company Owned Intellectual Property, or (ii) to the
effect that the use, reproduction, modification, manufacturing, distribution,
licensing, sublicensing or sale of the Company Products by the Company or its
licensees infringes, or will infringe on, any intellectual property or other
proprietary or personal right of any person, have been asserted or are
threatened in writing by any person nor, to the Knowledge of the Company, are
there any valid grounds for any bona fide claim of any such kind. To the
Knowledge of the Company, all granted or issued patents and mask works and all
registered copyrights and trademarks listed on Schedule 5.19(b) are valid,
enforceable and subsisting. To the Knowledge of the Company, there is no
material unauthorized use, infringement or misappropriation of any of the
Company Intellectual Property by any Third Party, employee or former employee.
The Company owns the right to sue for past infringement of the Company Owned
Intellectual Property.
(f) Schedule 5.19(f) lists all parties other than the Company that
possess any current or contingent rights to any source code that is part of the
Company Owned Intellectual Property (including, without limitation, through any
escrow account).
(g) The Company has secured from all parties who have created any
material portion of, or otherwise have any rights in or to, the Company Owned
Intellectual Property valid and enforceable written assignments of any such work
or other rights to the Company and has provided true and complete copies of any
such material assignments to Parent or, in the case of employees of the Company
and its Subsidiaries, represents that such employees have entered the Saturn
Standard Employee Agreement, a copy of which has been provided to Parent, or an
equivalent agreement.
(h) The Company has obtained legally binding written agreements from all
employees and Third Parties with whom the Company has shared confidential
proprietary information (including, without limitation, the Company Intellectual
Property, but excluding any such information that the Company subsequently makes
public) (i) of the Company, or (ii) received from others which the Company is
obligated to treat as confidential, which agreements require such employees and
Third Parties to keep such information confidential (subject to any limitations
contained therein). The Company has taken all reasonable steps to protect such
confidential proprietary information that it desires to retain in confidence and
has taken all steps required by any contract or other agreement to which it is a
party to protect the confidential proprietary information of Third Parties.
(i) The Company has obtained any and all necessary consents from
consumers with regard to the Company's collection and dissemination of personal
consumer information in accordance with the privacy policy published on any
website owned and/or operated by or on behalf of the Company. The Company's
practices regarding the collection and use of consumer personal information are
and have been in accordance with such privacy policies. The Company's
Subsidiaries have no rights of ownership in or to the Company Products or any
source code form of Company Owned Intellectual Property
(j) Certain legislation creates requirements that information technology
products deployed by customers be accessible to persons with certain
disabilities. For products that are not compliant with such requirements,
customers, including governments and related entities, may be precluded by law
from acquiring licenses to such products under either the 1998 Rehabilitation
Act Amendments to Section 508 of the Rehabilitation Act of 1973, and associated
rules and regulations, or similar laws and regulations in other jurisdictions
(collectively "ACCESSIBILITY REQUIREMENTS"). The Company has not investigated
whether the Company Products are compliant with Accessibility Requirements.
26
(k) Schedule 5.19(k) lists all Export Control Classification Numbers
(ECCN) issued by the United States Department of Commerce for products and
programs distributed by the Company.
(l) Any products manufactured and commercially released by the Company
or currently under development, and to the Knowledge of the Company the Company
Licensed Intellectual Property to the extent included in such products, are
fully Year 2000 Compliant in all material respects and will not cease to be
fully Year 2000 Compliant in any material respect at any time. For the purposes
of this Agreement, "Year 2000 Compliant" means that neither the performance nor
the functionality of the applicable Company Owned Intellectual Property or
applicable product has been or will be materially affected by dates prior to,
during or after the calendar year 2000 AD.
Section 5.20 Material Contracts.
(a) As used herein, the term "MATERIAL CONTRACTS" means:
(i) any "material contract" (as such term is defined in Item
601(b)(10) of Regulation S-K of the SEC) to which the Company or any of
its Subsidiaries is a party or bound;
(ii) any contract or agreement for the purchase or lease (as
lessee) of materials or personal property from any supplier or for the
furnishing of services to the Company or any of its Subsidiaries that
involves or to the Knowledge of the Company is likely to involve future
aggregate payments by the Company or any of its Subsidiaries of $100,000
or more;
(iii) any contract or agreement for the sale, resale, distribution,
license or lease (as lessor) by the Company or any of its Subsidiaries of
services, materials, products, supplies or other assets, owned or leased
by the Company or any of its Subsidiaries, that involves or to the
Knowledge of the Company is likely to involve future aggregate payments to
the Company or any of the Subsidiaries of $100,000 or more;
(iv) any contract, agreement or instrument relating to or
evidencing indebtedness for borrowed money of the Company or any of its
Subsidiaries (excluding any equipment leases involving aggregate annual
payments of less than $60,000 per lease);
(v) any non-competition agreement or any other agreement or
obligation which limits or purports to limit in any respect the manner in
which, or the localities in which, the business of the Company or any of
its Subsidiaries may be conducted;
(vi) any agreement with any present or former director or Officer
of the Company;
(vii) any partnership, joint venture, material strategic alliance
(or any agreement substantially similar to any of the foregoing);
(viii) any voting or other agreement governing how any Shares shall
be voted;
(ix) any agreement with any stockholder of the Company who owns of
record over 5% of the outstanding capital stock of the Company of which
the Company has Knowledge;
(x) any contract or other agreement which would prohibit or
materially delay the consummation of the Merger or any of the transactions
contemplated by this Agreement;
(xi) any contract or other agreement that involves or to the
Knowledge of the Company is likely to involve aggregate payments to or
from the Company or any of its Subsidiaries of $500,000 or more; or
27
(xii) any contract or other agreement required to be listed on
Schedule 5.19(b)(iii) or 5.19(b)(iv).
Neither the Company nor any of its Subsidiaries is a party to or bound by any
Material Contracts other than the Material Contracts that are listed on
Schedules 5.19(b)(iii), 5.19(b)(iv) and 5.20 and the stock option agreements
fully disclosed pursuant to Section 5.16 (collectively, the "COMPANY MATERIAL
CONTRACTS").
(b) Each Company Material Contract is in full force and effect and is a
legal, valid and binding obligation of the Company (or, to the extent a
Subsidiary of the Company is a party, such Subsidiary) and, to the Knowledge of
the Company, each of the other parties thereto, enforceable in accordance with
its terms, except to the extent that enforceability thereof may be limited by
applicable bankruptcy, insolvency, reorganization or other similar laws
affecting the enforcement of creditors' rights generally and by principles of
equity regarding the availability of remedies. The Company and each of its
Subsidiaries have performed, in all material respects, all obligations required
to be performed by them to date under each Company Material Contract. Neither
the Company nor any of its Subsidiaries knows of, or has given or received
notice of, any material violation or default under (nor, to the Knowledge of the
Company, does there exist any condition which with the passage of time or the
giving of notice or both would result in such a material violation or default
under) any Company Material Contract.
(c) Neither the Company nor any of its Subsidiaries is a party to any
oral or written (i) employment, consulting or severance agreement that cannot be
terminated without liability to the Company or any of its Subsidiaries on thirty
days' or less notice, (ii) agreement with any Officer or other employee of the
Company or any of its Subsidiaries the benefits of which are contingent or vest,
or the terms of which are materially altered, upon the occurrence of a
transaction involving the Company or any of its Subsidiaries of the nature
contemplated by this Agreement, (iii) agreement with respect to any Officer or
other key employee of the Company or any of its Subsidiaries providing any term
of employment or compensation guarantee or (iv) stock or stock purchase plan,
any of the benefits of which will be increased, or the vesting of the 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 such transactions.
Section 5.21 Transactions with Affiliates. Except as disclosed in the
Company SEC Documents filed prior to the date of this Agreement, there are no
material contracts, commitments, agreements, arrangements or other transactions
required to be so disclosed between the Company or any of its Subsidiaries, on
the one hand, and any (i) director or Officer of the Company or any of their
immediate family members, or (ii) Person that, to the Knowledge of the Company,
is a record or beneficial owner of 5% or more of the voting securities of the
Company, on the other hand.
Section 5.22 Rights Agreement or Plan. As of the date hereof, the
Company is not a party to, and has no obligations under, any rights agreement or
similar stockholder rights plan.
Section 5.23 Insurance. Schedule 5.23 sets forth a true and complete
list of all insurance policies carried by, or covering the Company and its
Subsidiaries with respect to their businesses, assets and properties, together
with, in respect of each such policy, the name of the insurer, the policy
number, the type of policy, the amount of coverage and the deductible. True and
complete copies of each such policy have previously been provided to Parent. All
such policies are in full force and effect, and no notice of cancellation has
been given with respect to any such policy. All premiums due on such policies
have been paid in a timely manner and the Company and its Subsidiaries have
complied in all material respects with the terms and provisions of such
policies. The insurance coverage provided by such policies is adequate and
customary for the industries in which the Company and its Subsidiaries operate.
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ARTICLE 6
Representations and Warranties of Parent and Merger Subsidiary
Parent and Merger Subsidiary each represents and warrants to the Company
that the statements contained in this Article 6 are true and correct. Neither
Parent nor Merger Subsidiary has made or shall be deemed to have made any
representation or warranty to the Company other than as set forth in this
Article 6.
Section 6.01 Corporate Existence and Power. Each of Parent and Merger
Subsidiary is a corporation duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation and has all
corporate powers and all governmental licenses, authorizations, permits,
consents and approvals required to carry on its business as now conducted,
except for those licenses, authorizations, permits, consents and approvals the
absence of which would not reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect on Parent. Since the date of its
incorporation, Merger Subsidiary has not engaged in any activities other than in
connection with or as contemplated by this Agreement or in connection with
arranging any financing required to consummate the transactions contemplated
hereby.
Section 6.02 Corporate Authorization. The execution, delivery and
performance by Parent and Merger Subsidiary of this Agreement and the
consummation by Parent and Merger Subsidiary of the transactions contemplated
hereby are within the corporate powers of Parent and Merger Subsidiary and have
been duly authorized by all necessary corporate action. This Agreement
constitutes a valid and binding agreement of each of Parent and Merger
Subsidiary.
Section 6.03 Governmental Authorization. The execution, delivery and
performance by Parent and Merger Subsidiary of this Agreement and the
consummation by Parent and Merger Subsidiary of the transactions contemplated
hereby require no action by or in respect of, or filing with, any governmental
body, agency, official or authority, domestic, foreign or supranational, other
than (i) the filing of the Certificate of Merger with respect to the Merger with
the Delaware Secretary of State and appropriate documents with the relevant
authorities of other states in which Parent is qualified to do business, (ii)
compliance with any applicable requirements of the HSR Act or any foreign
equivalent, (iii) compliance with any applicable requirements of the 1933 Act,
the 1934 Act and any other applicable securities or takeover laws, whether state
or foreign, and the rules and regulations of The Nasdaq Stock Market and (iv)
any actions, licenses, consents, permits, orders, approvals or filings the
absence of which could not be reasonably expected to have, individually or in
the aggregate, a Material Adverse Effect on Parent or materially to impair the
ability of Parent and Merger Subsidiary to consummate the transactions
contemplated by this Agreement.
Section 6.04 Non-contravention. The execution, delivery and
performance by Parent and Merger Subsidiary of this Agreement and the
consummation by Parent and Merger Subsidiary of the transactions contemplated
hereby do not and will not (i) contravene, conflict with, or result in any
violation or breach of any provision of the certificate of incorporation or
bylaws of Parent or Merger Subsidiary, (ii) assuming compliance with the matters
referred to in Section 6.03, contravene, conflict with, or result in any
violation or breach of any provision of any law, rule, regulation, judgment,
injunction, order or decree or (iii) constitute a default under, or cause or
permit the termination, cancellation, acceleration or other change of any right
or obligation or the loss of any benefit to which Parent or Merger Subsidiary is
entitled under any provision of any agreement or other instrument binding upon
Parent or Merger Subsidiary, except for such contraventions, conflicts and
violations referred to in clause (ii) and for such failures to obtain consent or
other action, defaults, terminations, cancellations, accelerations, changes or
losses referred to in clause (iii) that would not be reasonably expected to
have,
29
individually or in the aggregate, a Material Adverse Effect on Parent or
materially to impair the ability of Parent and Merger Subsidiary to consummate
the transactions contemplated by this Agreement.
Section 6.05 Disclosure Documents.
(a) The information with respect to Parent and any of its Subsidiaries
that Parent furnishes to the Company in writing specifically for use in any
Company Disclosure Document will not contain any untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading (i) in the case of the Company Proxy Statement, as
supplemented or amended, if applicable, at the time such Company Proxy Statement
or any amendment or supplement thereto is first mailed to stockholders of the
Company and at the time such stockholders vote on adoption of this Agreement and
at the Effective Time, and (ii) in the case of any Company Disclosure Document
other than the Company Proxy Statement, at the time of the filing of such
Company Disclosure Document or any supplement or amendment thereto and at the
time of any distribution or dissemination thereof.
(b) The Offer Documents, when filed, distributed or disseminated, as
applicable, will comply as to form in all material respects with the applicable
requirements of the 1934 Act and, at the time of the filing thereof, at the time
of any distribution or dissemination thereof and at the time of consummation of
the Offer, will not contain any untrue statement of a material fact or omit to
state any material fact necessary to make the statements made therein, in the
light of the circumstances under which they were made, not misleading, provided
that this representation and warranty will not apply to statements or omissions
included in the Offer Documents based upon information furnished to Parent or
Merger Subsidiary in writing by the Company specifically for use therein.
Section 6.06 Finders' Fees. Except for Salomon Smith Barney Inc.,
whose fees will be paid by Parent, there is no investment banker, broker, finder
or other intermediary that has been retained by or is authorized to act on
behalf of Parent who might be entitled to any fee or commission from the Company
or any of its Affiliates upon consummation of the transactions contemplated by
this Agreement.
Section 6.07 Financing. Parent has and will have sufficient cash to
enable it to purchase all of the Shares outstanding on a fully-diluted basis and
to pay all related fees and expenses pursuant to the Offer.
Section 6.08 Litigation. There is no action, suit, investigation or
proceeding pending against, or, to the Knowledge of Parent or Merger Subsidiary,
threatened against or affecting, Parent, any of its Subsidiaries, any Officer,
director or, to the Knowledge of Parent or Merger Subsidiary, employee of Parent
or any of its Subsidiaries or any other Person for whom Parent or any of such
Subsidiaries may be liable or any of their respective properties, before any
court or arbitration or before or by any governmental body, agency or official,
domestic or foreign, that in any manner challenges or seeks to prevent, enjoin,
alter or materially delay the Offer or the Merger or any of the other
transactions contemplated hereby.
Section 6.09 Company Stock. Neither Parent nor Merger Subsidiary is,
nor at any time during the last three years had either been, an "interested
stockholder" of the Company as defined in Section 203 of Delaware Law. Neither
Parent nor Merger Subsidiary owns (directly or indirectly, beneficially or of
record) and is not a party to any agreement, arrangement or understanding for
the purpose of acquiring, holding, voting or disposing of, in each case, any
shares of capital stock of the Company (other than as contemplated by this
Agreement).
30
ARTICLE 7
Covenants of the Company
The Company agrees that:
Section 7.01 Conduct of the Company. From the date of this Agreement
to the Effective Time, except as expressly contemplated by this Agreement, the
Company shall, and shall cause each of its Subsidiaries, to (i) carry on its
respective businesses in the ordinary course and consistent with past practice,
(ii) use reasonable best efforts to preserve intact its current business
organizations and keep available the services of its current Officers and key
employees, (iii) use reasonable best efforts to preserve its relationships with
customers, suppliers and other Persons with which it has business dealings, (iv)
comply in all material respects with all laws and regulations applicable to it
or any of its properties, assets or businesses and (v) use reasonable best
efforts to maintain in full force and effect all authorizations necessary for
such business. Without limiting the generality of the foregoing, except as (x)
expressly contemplated by this Agreement, (y) set forth in Schedule 7.01 or (z)
approved in writing by Parent (which consent Parent agrees it shall not
unreasonably withhold, condition or delay), requests for which may be made, at
the option of the Company, pursuant to the provisions of Section 12.01 or by
telephonic request to Bill Smith III at 617.914.8312, the Company shall not, and
shall cause each of its Subsidiaries not to:
(a) amend its certificate of incorporation or bylaws or similar
organizational documents or change the number of directors constituting its
board of directors;
(b) (i)(A) declare, set aside or pay any dividend or other distribution
payable in cash, stock or property with respect to its capital stock or other
equity interests, except that a wholly-owned Subsidiary may declare and pay a
dividend or make advances to its parent or the Company or (B) redeem, purchase
or otherwise acquire, directly or indirectly, any of its capital stock or other
securities; (ii) issue, sell, pledge, dispose of or encumber any (A) additional
shares of its capital stock or other equity interest or (B) securities
convertible into or exchangeable for, or options, warrants, calls, commitments
or rights of any kind to acquire, any shares of its capital stock or other
equity interests (other than as permitted pursuant to Section 7.01(h) below),
except for the acquisition of Shares from holders of stock options to acquire
Shares in full or partial payment of the exercise price payable by such holder
upon exercise of such stock options to the extent permitted under the terms of
such stock options as in effect on the date hereof; or (iii) split, combine or
reclassify any of its outstanding capital stock or other equity interests;
(c) acquire or agree to acquire (i) by merging or consolidating with, or
by purchasing a substantial portion of the assets of, or by any other manner,
any business or any corporation, partnership, joint venture, association or
other business organization or division thereof (including entities which are
its Subsidiaries) or (ii) any assets, including real estate, except purchases in
the ordinary course of business;
(d) authorize or make any single capital expenditure in excess of
$50,000 or capital expenditures in excess of $200,000 in the aggregate;
(e) amend or terminate any Company Material Contract, or waive, release
or assign any material rights or claims;
(f) transfer, lease, license, sell, mortgage, pledge, dispose of, or
encumber any property or assets other than in the ordinary course of business
consistent with past practice;
31
(g) either (i) enter into any employment, consulting or severance
agreement with or grant any severance or termination pay to any Officer,
director or employee; or (ii) hire or agree to hire any new or additional
employees or Officers;
(h) except as required to comply with applicable law or pursuant to this
Agreement or the terms of existing plans or policies, (A) adopt, enter into,
terminate, amend or increase the amount or accelerate the payment or vesting of
any benefit or award or amount payable under any Employee Plan, Benefit
Arrangement, International Plan or other arrangement for the current or future
benefit or welfare of any director, Officer or current or former employee, (B)
increase in any manner the compensation or fringe benefits of, or pay any bonus
to, any director, or, other than in the ordinary course of business consistent
with past practice, Officer or employee, (C) pay any benefit not provided for
under any Employee Plan, Benefit Arrangement, or International Plan, (D) grant
any awards under any bonus, incentive, performance or other compensation plan or
arrangement, Employee Plan, Benefit Arrangement or International Plan (including
the grant of stock options, stock appreciation rights, stock based or stock
related awards, performance units or restricted stock, or the removal of
existing restrictions in any Employee Plans, Benefit Arrangements, or
International Plans or agreements or awards made thereunder) other than in the
ordinary course of business consistent with past practice or (E) take any action
to fund or in any other way secure the payment of compensation or benefits under
any agreement, contract, arrangement or Employee Plan, Benefit Plan, or
International Plan;
(i) (i) incur or assume any long-term debt, or incur or assume any
short-term indebtedness other than related to financings for the purchase of
equipment; (ii) incur or modify any material indebtedness or other liability;
(iii) assume, guarantee, endorse or otherwise become liable or responsible
(whether directly, contingently or otherwise) for the obligations of any other
Person (other than to its wholly-owned Subsidiaries in accordance with past
practice); (iv) make any loans, advances or capital contributions to, or
investments in, any other Person (other than to its wholly-owned Subsidiaries in
accordance with past practice); or (v) enter into any material commitment or
transaction;
(j) make, revoke or change the accounting methods, including accounting
methods with respect to Taxes, used by it unless required by GAAP;
(k) make any U.S. federal, state or foreign income Tax election or other
material Tax election or settle or compromise any U.S. federal, California,
Illinois, Massachusetts, New York, Texas, Virginia or foreign income Tax
liability, sales, use or VAT Tax liability or other material Tax liability;
(l) pay, discharge, settle or satisfy any other claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction of (i) any such
other claims, liabilities or obligations, in the ordinary course of business
consistent with past practice, or (ii) any such other claims, liabilities or
obligations reflected or reserved against in, or contemplated by, the Company's
consolidated financial statements (or the notes thereto);
(m) waive the benefits of, or agree to modify in any manner, any
confidentiality, standstill or similar agreement to which the Company or any of
its Subsidiaries is a party;
(n) permit any insurance policy naming the Company or any of its
Subsidiaries as a beneficiary or a loss payable payee to be canceled or
terminated without notice to Parent, except in the ordinary course of business
consistent with past practice;
(o) take any action that would make any of the representations or
warranties of the Company contained in this Agreement untrue and incorrect in
any material respect as of the date when made if such action had then been
taken, or that would result in any of the conditions set forth in Annex I hereto
or the conditions set forth in Article 10 hereof not being satisfied;
32
(p) notwithstanding anything contained herein to the contrary, enter
into any agreement, contract, commitment, arrangement or amendment with any
individual that provides for the acceleration of vesting of, or exercisability
of, any stock option, restricted stock, or other equity right under the Option
Plans or any other equity arrangement maintained by the Company that provides
for the receipt of Shares; or
(q) enter into an agreement, contract, commitment or arrangement to do
any of the foregoing, or to authorize or announce an intention to do any of the
foregoing.
Section 7.02 Stockholder Meeting; Proxy Material. The Company shall
cause a meeting of its stockholders (the "COMPANY STOCKHOLDER MEETING") to be
duly called and held as soon as reasonably practicable after Merger Subsidiary
accepts for payment and pays for Shares pursuant to the Offer for the purpose of
voting on the adoption of this Agreement, unless Delaware Law does not require a
vote of stockholders of the Company for consummation of the Merger. Subject to
Section 7.04(b), the Board of Directors of the Company shall recommend adoption
of this Agreement by the Company's stockholders. In connection with such
meeting, the Company will (i) promptly prepare and file with the SEC, will use
its reasonable best efforts to have cleared by the SEC and will thereafter mail
to its stockholders as promptly as practicable the Company Proxy Statement and
all other proxy materials for such meeting and (ii) otherwise comply with all
legal requirements applicable to such meeting.
Section 7.03 Access to Information. From the date hereof until the
Effective Time and subject to applicable law and the Confidentiality Agreement
dated as of January 30, 2002 between the Company and Parent (the
"CONFIDENTIALITY AGREEMENT"), the Company shall (i) give Parent, its counsel,
financial advisors, auditors and other authorized representatives full access to
the offices, properties, books and records of the Company and the Subsidiaries,
(ii) furnish to Parent, its counsel, financial advisors, auditors and other
authorized representatives such financial and operating data and other
information as such Persons may reasonably request and (iii) instruct the
employees, counsel, financial advisors, auditors and other authorized
representatives of the Company and its Subsidiaries to cooperate with Parent.
Any investigation pursuant to this Section shall be conducted in such manner as
not to interfere unreasonably with the conduct of the business of the Company
and its Subsidiaries. No information or Knowledge obtained by Parent in any
investigation pursuant to this Section shall affect or be deemed to modify any
representation or warranty made by the Company hereunder.
Section 7.04 No Solicitation; Other Offers.
(a) Neither the Company nor any of its Subsidiaries shall, nor shall the
Company or any of its Subsidiaries authorize or permit any of its or their
Officers, directors, employees, investment bankers, attorneys, accountants,
consultants or other agents or advisors to, directly or indirectly, (i) solicit,
initiate or take any action to facilitate or encourage the submission of any
Acquisition Proposal or any inquiry with respect thereto, (ii) enter into or
participate in any discussions or negotiations with, furnish any information
relating to the Company or any of its Subsidiaries or afford access to the
business, properties, assets, books or records of the Company or any of its
Subsidiaries to, otherwise cooperate in any way with, or knowingly assist,
participate in, facilitate or encourage any effort by any Third Party that is
seeking to make, or has made, an Acquisition Proposal, (iii) approve, endorse or
recommend any Acquisition Proposal, (iv) enter into any letter of intent or
similar document or any contract, agreement or commitment contemplating or
otherwise relating to an Acquisition Proposal, (v) fail to make, withdraw, or
modify in a manner adverse to Parent its recommendation to its stockholders
referred to in Sections 2.02 and/or 7.02 hereof, or (vi) grant any waiver or
release under any standstill or similar agreement with respect to any class of
equity securities of the Company or any of its Subsidiaries. Nothing contained
in this Section 7.04 shall prohibit the Company (x) from taking and disclosing
to its stockholders a position contemplated by Rule 14d-9 or Rule 14e-2(a)
promulgated under the 1934 Act with regard to an
33
Acquisition Proposal (provided that the Board of Directors of the Company shall
not withdraw or modify in an adverse manner its approval or recommendation
referred to in Sections 2.02 and/or 7.02 hereof except as set forth below) or
(y) in the event that a Superior Proposal is made and the Board of Directors of
the Company determines in good faith, after consultation with outside counsel,
that it would otherwise constitute a breach of its fiduciary duty to
stockholders, from withdrawing or modifying its recommendation referred to in
Sections 2.02 and/or 7.02 hereof prior to the purchase of Shares pursuant to the
Offer, so long as the Company continues to comply with all other provisions of
this Agreement and so long as all the conditions to the Company's rights to
terminate this Agreement in accordance with Section 11.01(b)(iii) have been
satisfied (including the expiration of the 72-hour period described therein and
the payment of all amounts required pursuant to Section 12.04).
(b) Notwithstanding the foregoing, the Board of Directors of the
Company, directly or indirectly through advisors, agents or other
intermediaries, may (i) engage in negotiations or discussions with any Third
Party that, without prior solicitation by or negotiation with the Company, has
made a Superior Proposal, (ii) furnish to such Third Party nonpublic information
relating to the Company or any of its Subsidiaries pursuant to a confidentiality
agreement with terms no less favorable to the Company than those contained in
the Confidentiality Agreement (a copy of which shall be provided for
informational purposes only to Parent), (iii) following receipt of such Superior
Proposal, take and disclose to its stockholders a position contemplated by Rule
14e-2(a) under the 1934 Act or otherwise make disclosure to them, (iv) following
receipt of such Superior Proposal, fail to make, withdraw, or modify in a manner
adverse to Parent its recommendation to its stockholders referred to in Sections
2.02 and/or 7.02 hereof and/or (v) take any non-appealable, final action ordered
to be taken by the Company by any court of competent jurisdiction, but in each
case referred to in the foregoing clauses (i) through (iv) only if the Board of
Directors of the Company determines in good faith by a majority vote, that it
must take such action to comply with its fiduciary duties under applicable law.
(c) The Board of Directors of the Company shall not take any of the
actions referred to in clauses (i) through (iv) of the preceding subsection
unless the Company shall have delivered to Parent 72 hours prior written notice
advising Parent that it intends to take such action, and the Company shall
continue to advise Parent after taking such action. In addition, the Company
shall notify Parent promptly (but in no event later than 24 hours) after receipt
by the Company (or any of its advisors) of any Acquisition Proposal or any
request for information relating to the Company or any of its Subsidiaries or
for access to the business, properties, assets, books or records of the Company
or any of its Subsidiaries by any Third Party that may be considering making, or
has made, an Acquisition Proposal. The Company shall provide such notice orally
and in writing and shall identify the Third Party making, and the terms and
conditions of, any such Acquisition Proposal, indication or request. The Company
shall keep Parent fully informed, on a current basis, of the status and details
of any such Acquisition Proposal, indication or request. The Company shall, and
shall cause its Subsidiaries and the advisors, employees and other agents of the
Company and any of its Subsidiaries to, cease immediately and cause to be
terminated any and all existing activities, discussions and negotiations, if
any, with any Third Party conducted prior to the date hereof with respect to any
Acquisition Proposal and shall use its reasonable best efforts to cause any such
Party (or its agents or advisors) in possession of confidential information
about the Company that was furnished by or on behalf of the Company to return or
destroy all such information.
"SUPERIOR PROPOSAL" means any bona fide, unsolicited written Acquisition
Proposal for all of the outstanding Shares on terms that the Board of Directors
of the Company determines in good faith by a majority vote after taking into
account the advice of a financial advisor of nationally recognized reputation
and considering all the terms and conditions of the Acquisition Proposal,
including any break-up fees, expense reimbursement provisions and conditions to
consummation, are more favorable to the Company's stockholders than as provided
hereunder and for which financing, to the extent required, is then fully
committed or reasonably determined to be available by the Board of Directors of
the Company.
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Section 7.05 Section 16 Matters. Prior to the Effective Time, the
Company shall take all such steps as may be required to cause any dispositions
of Shares in the Merger by each individual who is subject to the reporting
requirements under Section 16(a) of the 1934 Act with respect to the Company to
be exempt under Rule 16b-3 promulgated under the 1934 Act.
ARTICLE 8
Covenants of Parent
Parent agrees that:
Section 8.01 Obligations of Merger Subsidiary. Parent will take all
action necessary to cause Merger Subsidiary to perform its obligations under
this Agreement and to consummate the Merger on the terms and conditions set
forth in this Agreement.
Section 8.02 Voting of Shares. Parent agrees to vote all Shares
beneficially owned by it or any of its Subsidiaries in favor of adoption of this
Agreement at the Company Stockholder Meeting and agrees that it shall not
dispose of any Shares (and shall cause Merger Subsidiary not to dispose of any
Shares) prior to the Company Stockholder Meeting.
Section 8.03 Director and Officer Liability. Parent shall cause the
Surviving Corporation, and the Surviving Corporation hereby agrees, to do the
following:
(a) For six years after the Effective Time, the Surviving Corporation
shall indemnify and hold harmless the present and former Officers and directors
of the Company (each an "INDEMNIFIED PERSON") in respect of acts or omissions
occurring at or prior to the Effective Time to the fullest extent permitted by
Delaware Law or any other applicable laws or provided under the Company's
certificate of incorporation and bylaws in effect on the date hereof, provided
that such indemnification shall be subject to any limitation imposed from time
to time under applicable law.
(b) For six years after the Effective Time, the Surviving Corporation
shall provide officers' and directors' liability insurance in respect of acts or
omissions occurring prior to the Effective Time covering each such Indemnified
Person currently covered by the Company's officers' and directors' liability
insurance policy on terms with respect to coverage and amount no less favorable
than those of such policy in effect on the date hereof, provided that, in
satisfying its obligation under this Section 8.03(b), the Surviving Corporation
shall not be obligated to pay premiums in excess of 150% of the amount per annum
the Company paid in its last full fiscal year, which amount the Company has
disclosed to Parent prior to the date hereof. The provisions of this Section
8.03(b) shall be deemed to have been satisfied if the Surviving Corporation,
Parent or the Company (with the prior written consent of Parent, such consent
not to be unreasonably withheld) purchase a "tail" policy under the Company's
existing directors' and officers' insurance policy that (i) has an effective
term of six years from the Effective Time, (ii) covers those Persons who are
currently covered, or will be covered on or prior to the Effective Time, by the
Company's directors' and officers' insurance policy in effect on the date hereof
for actions and omissions occurring on or prior to the Effective Time and (iii)
contains terms and conditions (including without limitation coverage amounts)
that are at least as favorable in the aggregate as the terms and conditions of
the Company's directors' and officers' insurance policy in effect on the date
hereof.
(c) Parent shall not, and shall cause the Surviving Corporation not to,
for a period of six years after the Effective Time, take any action to alter or
impair any exculpatory, expense advancement or indemnification provisions now
existing in the Certificate of Incorporation or By-laws of the Company for the
benefit of any individual who served as a director or Officer of the Company at
any time prior to the Effective Time, except for any changes that may be
required in order to conform with changes in
35
applicable law and any changes that do not affect the application of such
provisions to acts or omissions of such individuals prior to the Effective Time.
(d) If Parent, the Surviving Corporation or any of its successors or
assigns (i) consolidates with or merges into any other Person and shall not be
the continuing or surviving corporation or entity of such consolidation or
merger, or (ii) transfers or conveys all or substantially all of its properties
and assets to any Person, then, and in each such case, to the extent necessary,
proper provision shall be made so that the successors and assigns of Parent or
the Surviving Corporation, as the case may be, shall assume the obligations set
forth in this Section 8.03.
(e) The rights of each Indemnified Person under this Section 8.03 shall
be in addition to any rights such Person may have under the certificate of
incorporation or bylaws of the Company or any of its Subsidiaries, under
Delaware Law or any other applicable laws or under any agreement of any
Indemnified Person with the Company or any of its Subsidiaries. These rights
shall survive consummation of the Merger and are intended to benefit, and shall
be enforceable by, each Indemnified Person.
Section 8.04 Comparability of Employee Benefits. Following the
Effective Time and until December 31, 2002, Parent shall provide or shall cause
the Surviving Corporation to provide, to all individuals who are employees of
the Company at the Effective Time and whose employment will continue following
the Effective Time (the "CONTINUING EMPLOYEES") with: (i) substantially similar
compensation, employee benefits, and terms and conditions of employment, in the
aggregate, as Parent provides to similarly-situated employees of Parent; (ii)
compensation, employee benefits, and terms and conditions of employment that are
substantially similar in the aggregate, to those of the Company as in effect
immediately prior to the Effective Time; or (iii) a combination of clauses (i)
and (ii); provided that compensation, employee benefits, and terms and
conditions of employment, in the aggregate, are substantially similar to those
in effect for Continuing Employees immediately prior to the Effective Time.
Following the Effective Time, to the extent permitted by law and applicable tax
qualification requirements, and subject to any generally applicable break in
service or similar rule, and the approval of any insurance carrier, third party
provider or the like with reasonable efforts of the Parent, each Continuing
Employee shall receive service credit for purposes of eligibility to participate
and vesting (but not for benefit accrual purposes) for employment, compensation,
and employee benefit plan purposes with the Company and its Subsidiaries prior
to the Effective Time. Notwithstanding any of the foregoing to the contrary,
none of the provisions contained herein shall operate to duplicate any benefit
provided to any Continuing Employee or the funding of any such benefit.
ARTICLE 9
Covenants of Parent and the Company
The parties hereto agree that:
Section 9.01 Reasonable Best Efforts. Subject to the terms and
conditions of this Agreement, the Company and Parent will use their reasonable
best efforts to take, or cause to be taken, all actions and to do, or cause to
be done, all things necessary, proper or advisable under applicable laws and
regulations to consummate the transactions contemplated by this Agreement. In
furtherance and not in limitation of the foregoing, each of Parent and the
Company agrees to make an appropriate filing of a Notification and Report Form
pursuant to the HSR Act with respect to the transactions contemplated hereby as
promptly as practicable and in any event within ten (10) Business Days of the
date hereof and to supply as promptly as practicable any additional information
and documentary material that may be requested pursuant to the HSR Act and to
take all other actions necessary to cause the expiration or termination of the
applicable
36
waiting periods under the HSR Act as soon as practicable; provided that nothing
in this Agreement shall oblige Parent or the Company or any of its Affiliates to
agree to dispose of, agree to cease operating or agree to hold separate any
business, properties or assets which are material to the business or operations,
as such business or operations are currently conducted, of the Company and its
Subsidiaries or Parent and its Subsidiaries.
Section 9.02 Certain Filings. The Company and Parent shall cooperate
with one another (i) in connection with the preparation of the Company
Disclosure Documents and the Offer Documents, (ii) in determining whether any
action by or in respect of, or filing with, any governmental body, agency,
official, or authority is required, or any actions, consents, approvals or
waivers are required to be obtained from parties to any material contracts, in
connection with the consummation of the transactions contemplated by this
Agreement and (iii) in taking such actions or making any such filings,
furnishing information required in connection therewith or with the Company
Disclosure Documents or the Offer Documents and seeking timely to obtain any
such actions, consents, approvals or waivers.
Section 9.03 Public Announcements. Parent and the Company will consult
with each other before issuing any press release or making any public statement
with respect to this Agreement or the transactions contemplated hereby and,
except as may be required by applicable law or any listing agreement with any
national securities exchange, will not issue any such press release or make any
such public statement prior to such consultation.
Section 9.04 Further Assurances. At and after the Effective Time, the
Officers and directors of the Surviving Corporation will be authorized to
execute and deliver, in the name and on behalf of the Company or Merger
Subsidiary, any deeds, bills of sale, assignments or assurances and to take and
do, in the name and on behalf of the Company or Merger Subsidiary, any other
actions and things to vest, perfect or confirm of record or otherwise in the
Surviving Corporation any and all right, title and interest in, to and under any
of the rights, properties or assets of the Company acquired or to be acquired by
the Surviving Corporation as a result of, or in connection with, the Merger.
Section 9.05 Merger Without Meeting of Stockholders. If Parent, Merger
Subsidiary or any other Subsidiary of Parent shall acquire at least 90% of the
outstanding Shares pursuant to the Offer or otherwise, the parties hereto agree
to take all necessary and appropriate action to cause the Merger to be effective
as soon as practicable after the acceptance for payment and purchase of Shares
pursuant to the Offer without a meeting of stockholders of the Company in
accordance with Delaware Law.
Section 9.06 Option Plans; Stock Options. At the Effective Time, each
outstanding option to purchase Shares under the Option Plans (each, a "COMPANY
STOCK OPTION"), whether or not vested or exercisable, and each Option Plan,
shall be assumed by Parent in a transaction described in Section 424(a) of the
Code. Each Company Stock Option so assumed by Parent under this Agreement will
continue to have, and be subject to, the same terms and conditions of such
Company Stock Options immediately prior to the Effective Time (including,
without limitation, any repurchase rights or vesting provisions), except that
(i) each Company Stock Option will be exercisable (or will become exercisable in
accordance with its terms) for that number of shares of Parent Common Stock
equal to the product of the number of Shares that were issuable upon exercise of
such Company Stock Option 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 the exercise of such assumed Company Stock Option
will be equal to the quotient determined by dividing the exercise price per
Share at which such Company Stock Option was exercisable immediately prior to
the Effective Time by the Exchange Ratio, rounded up to the nearest whole cent.
As soon as practicable after the Effective Time, Parent shall, or shall cause
the Surviving Corporation to, deliver to the holders of Company Stock Options,
notices describing the conversion of such Company Stock Options (as modified
37
by this Section 9.06), and the agreements evidencing the Company Stock Options
shall continue in effect on the same terms and conditions (as modified by this
Section 9.06). Parent shall comply with the terms of all such Company Stock
Options. As soon as practicable after the Effective Time, but in no event later
than ten (10) business days following the Effective Time, Parent shall file a
registration statement or statements on Form S-8 (or any successor form) with
respect to the shares of Parent Common Stock subject to stock options assumed by
Parent pursuant to this Agreement.
Section 9.07 Notices of Certain Events. The Company and Parent shall
promptly notify each other of:
(a) any notice or other communication from any Person alleging that the
consent of such Person is or may be required in connection with the transactions
contemplated by this Agreement;
(b) any notice or other communication from any governmental or
regulatory agency or authority in connection with the transactions contemplated
by this Agreement; and
(c) any actions, suits, claims, investigations or proceedings commenced
or, to its Knowledge, threatened against, relating to or involving or otherwise
affecting the Company, Parent or any of its respective Subsidiaries that, if
pending on the date of this Agreement, would have been required to have been
disclosed pursuant to Section 5.12, 5.13, 5.16, 5.17, 5.18, 5.19 or 6.08, as the
case may be, or that relate to the consummation of the transactions contemplated
by this Agreement.
ARTICLE 10
Conditions to the Merger
Section 10.01 Conditions to Obligations of Each Party. The obligations
of the Company, Parent and Merger Subsidiary to consummate the Merger are
subject to the satisfaction of the following conditions:
(a) if required by Delaware Law, this Agreement shall have been adopted
by the stockholders of the Company in accordance with such Law; provided,
however, that neither Parent nor Merger Subsidiary may assert this condition if
either of them or any of their respective Affiliates shall have failed to vote
the Shares held by it in favor of the adoption of the Agreement, and the Company
may not assert this condition if it shall have failed to fulfill its obligations
under Section 7.02;
(b) no provision of any applicable law or regulation and no judgment,
injunction, order or decree shall prohibit the consummation of the Merger;
provided, however, with respect to any injunction, order or decree, the party
asserting this condition shall use reasonable best efforts to have such
injunction, order or decree vacated; and
(c) Merger Subsidiary shall have purchased Shares pursuant to the Offer;
provided, however, neither Parent nor Merger Subsidiary may assert this
condition if Merger Subsidiary shall have failed, in violation of the terms of
this Agreement or the Offer, to purchase the Shares so tendered and not
withdrawn.
Section 10.02 Conditions to the Obligations of Parent and Merger
Subsidiary. The obligations of Parent and Merger Subsidiary to consummate the
Merger are subject to the satisfaction of the following further condition: that
the Company shall have performed in all material respects all of its obligations
hereunder required to be performed by it at or prior to the Effective Time.
38
ARTICLE 11
Termination
Section 11.01 Termination. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time (notwithstanding
any approval of this Agreement by the stockholders of the Company):
(a) by mutual written agreement of the Company and Parent;
(b) by either the Company or Parent, if:
(i) Parent shall not have purchased Shares pursuant to the Offer
on or before December 31, 2002 (the "OUTSIDE DATE"); provided that (A) the
right to terminate this Agreement pursuant to this Section 11.01(b)(i)
shall not be available to any party whose failure to fulfill any
obligation under this Agreement has been the primary cause of, or resulted
in, the failure of the Offer to be consummated on or before such date and
(B) if the waiting period (and any extension thereof) applicable to the
consummation of the Offer under the HSR Act shall expire or terminate less
than ten (10) Business Days prior to the Outside Date, the right to
terminate this Agreement pursuant to this Section 11.01(b)(i) shall not
become effective until the tenth Business Day following the Outside Date;
(ii) there shall be any law or regulation that makes acceptance for
payment of, and payment for, the Shares pursuant to the Offer or
consummation of the Merger illegal or otherwise prohibited or any
judgment, injunction, order or decree of any court or governmental body
having competent jurisdiction enjoining Merger Subsidiary from accepting
for payment of, and paying for, the Shares pursuant to the Offer or the
Company or Parent from consummating the Merger and such judgment,
injunction, order or decree shall have become final and nonappealable; or
(iii) prior to the acceptance for payment of the Shares under the
Offer, the Board of Directors of the Company shall have failed to make,
withdrawn, or modified in a manner adverse to Parent, its approval or
recommendation of this Agreement, the Offer or the Merger, as permitted by
Section 7.04(b)(iv), provided that, in the case of any termination by the
Company, (A) the Company shall have paid any amounts due pursuant to
Sections 12.04(b) and (c) in accordance with the terms, and at the times,
specified therein, (B) the Company notifies Parent, in writing and at
least 72 hours prior to such termination, promptly of its intention to
terminate this Agreement and to enter into a binding written agreement
concerning an Acquisition Proposal that constitutes a Superior Proposal of
the nature described in Section 7.04(c), attaching the most current
version of such agreement (or a description of all material terms and
conditions thereof), and (C) Parent does not make, within 72 hours of
receipt of such written notification, an offer that the Board of Directors
of the Company determines, in good faith after consultation with its
financial advisors, is at least as favorable to the shareholders of the
Company as such Superior Proposal, it being understood that the Company
shall not enter into any such binding agreement during such 72-hour
period.
(c) by Parent, if prior to the acceptance for payment of the Shares
under the Offer, any Person or group (as defined in Section 13(d)(3) under the
1934 Act) (other than Parent, Merger Subsidiary or any of their respective
Affiliates) shall have become the beneficial owner (as defined in Rule 13d-3
promulgated under the 1934 Act) of at least a majority of the outstanding
Shares;
(d) by Parent, if prior to the acceptance for payment of the Shares
under the Offer, the Company shall have breached in any material respect the
obligations imposed upon it by Section 7.04; or
39
(e) by (i) Parent, if prior to the acceptance for payment of the Shares
under the Offer, the Company shall have breached any of the representations,
warranties, covenants and agreements contained in this Agreement such that the
condition specified in clause (e) of Annex I is not capable of being satisfied
on or prior to expiration date of the Offer or (ii) the Company, if prior to the
acceptance for payment of the Shares under the Offer, Parent shall have breached
any of its covenants or agreements contained herein required to be performed by
it prior to the acceptance for payment of the Shares under the Offer or any of
its representations and warranties contained in this Agreement, which breach
would reasonably be expected to materially impair the ability of Parent to
consummate the transactions contemplated by this Agreement.
The party desiring to terminate this Agreement pursuant to this Section 11.01
(other than pursuant to Section 11.01(a)) shall give notice of such termination
to the other party.
Section 11.02 Effect of Termination. If this Agreement is terminated
pursuant to Section 11.01, this Agreement shall become void and of no effect
with no liability on the part of any party (or any stockholder, director,
Officer, employee, agent, consultant or representative of such party) to the
other party hereto, provided that, if such termination shall result from the
willful (i) failure of either party to fulfill a condition to the performance of
the obligations of the other party or (ii) failure of either party to perform a
covenant hereof, such party shall be fully liable for any and all liabilities
and damages incurred or suffered by the other party as a result of such failure.
The provisions of Sections 11.02, 12.04, 12.06, 12.07, 12.08, 12.09 and 12.10
shall survive any termination hereof pursuant to Section 11.01.
ARTICLE 12
Miscellaneous
Section 12.01 Notices. All notices, requests and other communications
to any party hereunder shall be in writing (including facsimile transmission)
and shall be given,
if to Parent or Merger Subsidiary, to:
Novell, Inc.
8 Cambridge Center
Cambridge, MA 02142
Attn: Joseph LaSala
Senior Vice President, General Counsel and Secretary
Fax: 617.551.5101
with a copy to:
Morgan, Lewis & Bockius LLP
101 Park Avenue
New York, NY 10178
Attn: Howard L. Shecter
Fax: 212.309.7044
40
if to the Company, to:
SilverStream Software, Inc.
2 Federal Street
Billerica, MA 01821
Attn: Steven Shishko
Vice President and General Counsel
Fax: 978.262.3349
with a copy to:
Hale and Dorr LLP
60 State Street
Boston, MA 02109
Attn: Michael J. LaCascia
William S. Gehrke
Fax: 617.526.50001
or such other address or facsimile number as such party may hereafter specify
for the purpose by notice to the other parties hereto. All such notices,
requests and other communications shall be deemed received on the date of
receipt by the recipient thereof if received prior to 5:00 p.m. in the place of
receipt and such day is a Business Day in the place of receipt. Otherwise, any
such notice, request or communication shall be deemed not to have been received
until the next succeeding Business Day in the place of receipt.
Section 12.02 Survival of Representations and Warranties. The
representations and warranties and agreements contained herein and in any
certificate or other writing delivered pursuant hereto shall not survive the
Effective Time or the termination of this Agreement, except for the agreements
the performance of which is to occur after the Effective Time and except for the
agreements set forth in Sections 11.02, 12.04, 12.06, 12.07, 12.08, 12.09 and
12.10.
Section 12.03 Amendments; No Waivers.
(a) Any provision of this Agreement may be amended or waived prior to
the Effective Time if, but only if, such amendment or waiver is in writing and
is signed, in the case of an amendment, by each party to this Agreement or, in
the case of a waiver, by each party against whom the waiver is to be effective,
provided that, after the adoption of this Agreement by the stockholders of the
Company no such amendment or waiver shall be made which under applicable law
requires the further approval of the stockholders of the Company without such
further approval.
(b) No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
Section 12.04 Expenses.
(a) Except as otherwise provided in this Section, all costs and expenses
incurred in connection with this Agreement shall be paid by the party incurring
such cost or expense.
(b) If a Payment Event (as hereinafter defined) occurs, the Company
shall pay to Parent (by wire transfer of immediately available funds), if,
pursuant to (w) below, simultaneously with the
41
occurrence of such Payment Event or, if pursuant to (x), (y) or (z) below,
within two (2) Business Days following such Payment Event, a fee of $7,434,000.
"PAYMENT EVENT" means (w) the termination of this Agreement pursuant to
Section 11.01(b)(iii), (x) the termination of this Agreement by Parent pursuant
to Section 11.01(c) or 11.01(d), (y) the termination of this Agreement by Parent
pursuant to Section 11.01(e)(i), except that such termination shall not be
considered a Payment Event if the breach causing such termination occurred
through no fault of the Company and as a result of events occurring after the
date hereof, or (z) the occurrence of any of the following events within twelve
(12) months of the termination of this Agreement pursuant to Section
11.01(b)(i), provided that an Acquisition Proposal shall have been made after
the date hereof and prior to such termination (which shall not have been
withdrawn in good faith prior to such termination): (i) the Company merges with
or into, or is acquired, directly or indirectly, by merger or otherwise by, a
Third Party; (ii) a Third Party, directly or indirectly, acquires more than 50%
of the total assets of the Company and its Subsidiaries, taken as a whole; (iii)
a Third Party, directly or indirectly, acquires more than 50% of the outstanding
Shares; or (iv) the Company adopts or implements a plan of liquidation,
recapitalization or share repurchase relating to more than 50% of the
outstanding Shares or an extraordinary dividend relating to more than 50% of the
outstanding Shares or 50% of the assets of the Company and its Subsidiaries,
taken as a whole.
(c) Upon any termination of this Agreement, pursuant to Section
11.01(b)(i), 11.01(b)(iii), 11.01(c), 11.01(d) or 11.01(e)(i), the Company shall
reimburse Parent and its Affiliates (by wire transfer of immediately available
funds), no later than two (2) Business Days after submission of reasonable
documentation thereof, for 100% of their documented out-of-pocket fees and
expenses (including reasonable fees and expenses of their counsel and
accountants) actually incurred by any of them in connection with this Agreement
and the transactions contemplated hereby up to a maximum of $2,500,000.
(d) The Company acknowledges that the agreements contained in this
Section 12.04 are an integral part of the transactions contemplated by this
Agreement and that, without these agreements, Parent and Merger Subsidiary would
not enter into this Agreement. Accordingly, if the Company fails promptly to pay
any amount due to Parent pursuant to this Section 12.04, it shall also pay any
costs and expenses incurred by Parent or Merger Subsidiary in connection with a
legal action to enforce this Agreement that results in a judgment against the
Company for such amount.
Section 12.05 Successors and Assigns. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, provided that no party may assign, delegate
or otherwise transfer any of its rights or obligations under this Agreement
without the consent of each other party hereto, except that Parent or Merger
Subsidiary may transfer or assign, in whole or from time to time in part, to one
or more of its Subsidiaries, the right to purchase all or a portion of the
Shares pursuant to the Offer, but no such transfer or assignment will relieve
Parent or Merger Subsidiary of its obligations under the Offer or prejudice the
rights of tendering stockholders to receive payment for Shares validly tendered
and accepted for payment pursuant to the Offer.
Section 12.06 Governing Law. This Agreement shall be governed by and
construed in accordance with the law of the State of Delaware, without regard to
the conflicts of law rules of such state.
Section 12.07 Jurisdiction. Any suit, action or proceeding seeking to
enforce any provision of, or based on any matter arising out of or in connection
with, this Agreement or the transactions contemplated hereby may be brought in
any federal court located in the State of Delaware or any Delaware state court,
and each of the parties hereby consents to the jurisdiction of such courts (and
of the
42
appropriate appellate courts therefrom) in any such suit, action or proceeding
and irrevocably waives, to the fullest extent permitted by law, any objection
that it may now or hereafter have to the laying of the venue of any such suit,
action or proceeding in any such court or that any such suit, action or
proceeding brought in any such court has been brought in an inconvenient form.
Process in any such suit, action or proceeding may to the fullest extent
permitted by applicable law be served on any party anywhere in the world,
whether within or without the jurisdiction of any such court. Without limiting
the foregoing, each party agrees that service of process on such party as
provided in Section 12.01 shall to the fullest extent permitted by applicable
law be deemed effective service of process on such party.
Section 12.08 Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
Section 12.09 Counterparts; Effectiveness; Benefit. This Agreement may
be signed in any number of counterparts, each of which shall be an original,
with the same effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement shall become effective when each party hereto shall
have received counterparts hereof signed by all of the other parties hereto.
Except as provided in Section 8.03, no provision of this Agreement is intended
to confer any rights, benefits, remedies, obligations, or liabilities hereunder
upon any Person other than the parties hereto and their respective successors
and assigns.
Section 12.10 Entire Agreement. This Agreement, the Confidentiality
Agreement and the Stockholder's Agreements constitutes the entire agreement
between the parties with respect to the subject matter of this Agreement and
supersedes all prior agreements and understandings, both oral and written,
between the parties with respect to the subject matter of this Agreement.
Section 12.11 Captions. The captions herein are included for
convenience of reference only and shall be ignored in the construction or
interpretation hereof.
Section 12.12 Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void, unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Agreement shall remain in full
force and effect and shall in no way be affected, impaired or invalidated so
long as the economic or legal substance of the transactions contemplated hereby
is not affected in any manner materially adverse to any party. Upon such a
determination, the parties shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner in order that the transactions contemplated
hereby be consummated as originally contemplated to the fullest extent possible.
Section 12.13 Specific Performance. The parties hereto agree that
irreparable damage would occur if any provision of this Agreement were not
performed in accordance with the terms hereof and that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
or to enforce specifically the performance of the terms and provisions hereof in
any federal court located in the State of Delaware or any Delaware state court,
in addition to any other remedy to which they are entitled at law or in equity.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
SILVERSTREAM SOFTWARE, INC.
By: /s/ David Litwack
---------------------------------------
Name: David Litwack
Title: President and CEO
NOVELL, INC.
By: /s/ Jack L. Messman
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Name: Jack L. Messman
Title: Chairman, President and CEO
DELAWARE PLANET INC.
By: /s/ Jack L. Messman
---------------------------------------
Name: Jack L. Messman
Title: President
ANNEX I
Notwithstanding any other provision of the Offer, Merger Subsidiary shall not be
required to accept for payment or, subject to applicable law, pay for any
Shares, and may terminate the Offer, if (i) immediately prior to the expiration
date of the Offer, (A) the Minimum Condition (as defined in the Merger
Agreement) shall not have been satisfied, or (B) the applicable waiting period
under the HSR Act or any applicable foreign antitrust law shall not have expired
or been terminated or (ii) at any time on or after the date of this Agreement
and prior to the expiration date of the Offer, any of the following conditions
exists and shall not have resulted from the breach by Parent or Merger
Subsidiary of any of their respective obligations under the Merger Agreement:
(a) there shall be instituted or pending any action or proceeding which,
in the reasonable judgment of Parent, has a reasonable likelihood of success, by
any government or governmental authority or agency or any other person,
domestic, foreign or supranational, before any court or governmental authority
or agency, domestic, foreign or supranational, (i) challenging or seeking to
make illegal, to delay materially or otherwise directly or indirectly to
restrain or prohibit the making of the Offer, the acceptance for payment of or
payment for some or all of the Shares by Parent or Merger Subsidiary or the
consummation of the Merger, (ii) seeking to obtain material damages or otherwise
directly or indirectly relating to the transactions contemplated by the Offer or
the Merger, (iii) seeking to restrain or prohibit Parent's ownership or
operation (or that of its Affiliates) of all or any material portion of the
business or assets of the Company and its Subsidiaries, taken as a whole, or of
Parent and its Subsidiaries, taken as a whole, or to compel Parent or any of its
Affiliates to dispose of or hold separate all or any material portion of the
business or assets of the Company and its Subsidiaries, taken as a whole, or of
Parent and its Subsidiaries, taken as a whole, (iv) seeking to impose or confirm
material limitations on the ability of Parent, Merger Subsidiary or any of
Parent's other Affiliates effectively to exercise full rights of ownership of
the Shares, including the right to vote any Shares acquired or owned by Parent,
Merger Subsidiary or any of Parent's other Affiliates on all matters properly
presented to the Company's stockholders, or (v) seeking to require divestiture
by Parent, Merger Subsidiary or any of Parent's other Affiliates of any Shares
or (vi) that otherwise, in the reasonable judgment of Parent, is likely to have
a Material Adverse Effect on the Company; or
(b) there shall have been any action taken, or any statute, rule,
regulation, injunction, order or decree enacted, enforced, promulgated, issued
or deemed applicable to the Offer or the Merger, by any court, government or
governmental authority or agency, domestic, foreign or supranational, other than
the application of the waiting period provisions of the HSR Act or any
applicable foreign antitrust law to the Offer or the Merger, that, in the
reasonable judgment of Parent, is likely, directly or indirectly, to result in
any of the consequences referred to in clauses (i) through (vi) of paragraph (a)
above; or
(c) any change shall have occurred or been threatened (or any
development shall have occurred or been threatened involving a prospective
change) in the business, assets, liabilities, financial condition,
capitalization, operations or results of operations of the Company or any of its
Subsidiaries that, in the reasonable judgment of Parent, is or is likely to have
a Material Adverse Effect on the Company; or
(d) it shall have been publicly disclosed or Parent shall have otherwise
learned that (i) any Third Party shall have acquired beneficial ownership of
more than 20% of any class or series of capital stock of the Company (including
the Shares), through the acquisition of stock, the formation of a group or
otherwise, or shall have been granted any option, right or warrant, conditional
or otherwise, to acquire beneficial ownership of more than 20% of any class or
series of capital stock of the Company (including the Shares), other than
acquisitions for bona fide arbitrage purposes only and other than as disclosed
in a Schedule 13D or 13G on file with the SEC on June 7, 2002, or (ii) any such
Third Party that, prior to June
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7, 2002, had filed such a Schedule with the Commission shall have acquired
beneficial ownership of additional shares of any class or series of capital
stock of the Company (including the Shares), through the acquisition of stock,
the formation of a group or otherwise, constituting 20% or more of any such
class or series, or shall have been granted any option, right or warrant,
conditional or otherwise, to acquire beneficial ownership of additional shares
of any class or series of capital stock of the Company (including the Shares)
constituting 20% or more of any such class or series; or
(e) the Company shall have breached or failed to perform in any material
respect any of its obligations under the Merger Agreement, or any of its
representations and warranties contained in the Merger Agreement, disregarding
all such qualifications and exceptions contained therein using the terms
"material" or "Material Adverse Effect," shall not be true when made or at any
time prior to the consummation of the Offer as if made at and as of such time
with only such exceptions as would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on the Company; or
(f) the Merger Agreement shall have been terminated in accordance with
its terms; or
(g) there shall have occurred (i) any general suspension of trading in,
or limitation on prices for, securities on any national securities exchange or
in the over-the-counter market for a period in excess of 18 hours, (ii) any
declaration of a banking moratorium or general suspension of payments in respect
of lenders that regularly participate in the U.S. market in loans to large
corporations, (iii) any material limitation by any Federal, state or local
government or any court, administrative or regulatory agency or commission or
other governmental authority or agency in the United States that materially
affects the extension of credit generally by lenders that regularly participate
in the U.S. market in loans to large corporations, (iv) any commencement of a
war involving the United States or any commencement of armed hostilities or
other national or international calamity involving the United States that has a
material adverse effect on bank syndication or financial markets in the United
States or, in the case of any of the foregoing occurrences existing on or at the
time of the commencement of the Offer, a material acceleration or worsening
thereof; which, in the reasonable judgment of Parent in any such case, and
regardless of the circumstances (including any action or omission by Parent)
giving rise to any such condition, could reasonably be expected to have a
Material Adverse Effect on the Company or Parent or a material adverse effect on
the Offer.
The foregoing conditions are for the sole benefit of Parent and may be
asserted by Parent regardless of the circumstances giving rise to any such
conditions and except with respect to the Minimum Condition may be waived by
Parent in whole or in part at any time and from time to time prior to the
expiration of the Offer, in each case, in the exercise of the good faith
judgment of Parent and subject to the terms of this Agreement. The failure by
Parent at any time to exercise any of the foregoing rights shall not be deemed a
waiver of any such right and each such right shall be deemed an ongoing right
which may be asserted at any time and from time to time prior to the expiration
of the Offer.
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