AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (the "AGREEMENT") dated as of September 30,
1999, by and between NETRIX CORPORATION, a Delaware corporation ("ACQUIROR"),
and OPENROUTE NETWORKS, INC., a Massachusetts corporation (the "COMPANY").
Acquiror and the Company are referred to collectively herein as the "PARTIES."
WITNESSETH:
WHEREAS, this Agreement contemplates a transaction in which Acquiror will
acquire all of the outstanding capital stock of the Company through a merger of
the Company with and into Acquiror (the "MERGER");
WHEREAS, the Board of Directors of each of Acquiror and the Company has
approved the acquisition of the Company by Acquiror, including the Merger, upon
the terms and subject to the conditions set forth herein;
WHEREAS, the Board of Directors of the Company has determined that the
Merger is advisable and is fair to and in the best interests of the holders of
the Company's common stock, par value $.01 per share (the "COMPANY Shares"), and
has resolved to recommend the approval of the Merger and the adoption of this
Agreement by the Company Stockholders (as defined in ss.1 below);
WHEREAS, the Board of Directors of Acquiror has determined that the Merger
is advisable and is fair to and in the best interests of the holders of
Acquiror's common stock, par value $0.01 per share (the "ACQUIROR Shares"), and
has resolved to recommend the approval of the Merger and the adoption of this
Agreement by the Acquiror Stockholders (as defined in ss.1 below);
WHEREAS, the Acquiror Shares are listed for trading on the Nasdaq National
Market ("NASDAQ") and the Board of Directors of Acquiror has resolved to
recommend the approval by the Acquiror Stockholders of (i) the issuance of
Acquiror Shares in connection with the Merger as provided in this Agreement as
required by the Rules of Nasdaq and (ii) an amendment to the certificate of
incorporation of Acquiror to increase the authorized number of Acquiror Shares;
and
WHEREAS, this Agreement contemplates that for U.S. Federal income tax
purposes the Merger will qualify as a reorganization within the meaning of Code
ss.368(a).
NOW, THEREFORE, in consideration of the premises and the mutual
promises set forth herein, and in consideration of the representations,
warranties and covenants set forth herein, the Parties agree as follows:
1. DEFINITIONS.
"ACQUIROR" has the meaning set forth in the preambles.
"ACQUIROR 10-K" has the meaning set forth in ss.4(h) below.
"ACQUIROR 10-Q" has the meaning set forth in ss.4(h) below.
"ACQUIROR ACQUISITION PROPOSAL" means any proposal or offer
(including, without limitation, any proposal or offer to Acquiror Stockholders)
with respect to a merger, acquisition, consolidation, recapitalization,
reorganization, liquidation, tender offer or exchange offer or similar
transaction involving, or any purchase of 25% or more of the consolidated assets
of, or any equity interest representing 25% or more of the outstanding shares of
capital stock in, Acquiror.
"ACQUIROR BENEFIT PLAN" and "ACQUIROR BENEFIT PLANS" have the
respective meanings set forth in ss.4(o)(i) below.
"ACQUIROR BOARD" means the board of directors of Acquiror.
"ACQUIROR CONTRACTS" has the meaning set forth in ss.4(t) below.
"ACQUIROR DISCLOSURE LETTER" has the meaning set forth in ss.4(a)
below.
"ACQUIROR EMPLOYEES" has the meaning set forth in ss.4(o)(i) below.
"ACQUIROR ERISA AFFILIATE" has the meaning set forth in
ss.4(o)(iii) below.
"ACQUIROR FAIRNESS OPINION" means an opinion of Kaufman Brothers,
L.P., addressed to the Acquiror Board, as to the fairness of the Merger to
Acquiror from a financial point of view.
"ACQUIROR INTELLECTUAL PROPERTY" has the meaning set forth in
ss.4(r) below.
"ACQUIROR MATERIAL ADVERSE EFFECT" has the meaning set forth in
ss.4(a) below.
"ACQUIROR PENSION PLAN" has the meaning set forth in ss.4(o)(ii)
below.
"ACQUIROR REPORTS" has the meaning set forth in ss.4(g) below.
"ACQUIROR SHARES" has the meaning set forth in the preambles.
"ACQUIROR SPECIAL MEETING" has the meaning set forth in ss.5(c)(ii)
below.
"ACQUIROR STOCKHOLDER" means any Person who or which holds any
Acquiror Shares.
"ACQUIROR SUPERIOR PROPOSAL" has the meaning set forth in
ss.5(i)(ii) below.
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"ACQUIROR THIRD PARTY" means any Person (or group of Persons) other
than the Company or its respective Affiliates.
"ACQUISITION PROPOSAL" means any proposal or offer (including,
without limitation, any proposal or offer to the Company Stockholders) with
respect to a merger, acquisition, consolidation, recapitalization,
reorganization, liquidation, tender offer or exchange offer or similar
transaction involving, or any purchase of 25% or more of the consolidated assets
of, or any equity interest representing 25% or more of the outstanding shares of
capital stock in, the Company.
"AFFILIATE" has the meaning set forth in Rule 12b-2 of the
regulations promulgated under the Securities Exchange Act.
"AGREEMENT" has the meaning set forth in the preambles.
"BLUE SKY FILINGS" has the meaning set forth in ss.5(c)(i) below.
"CERTIFICATE OF MERGER" has the meaning set forth in ss.2(c) below.
"CLOSING" has the meaning set forth in ss.2(b) below.
"CLOSING DATE" has the meaning set forth in ss.2(b) below.
"CLOSING SALES PRICE" means with respect to an Acquiror Share or
Company Share, as the case may be, on any day, the average of the last reported
sale price of one such share on the Nasdaq Stock Market for each of the ten
trading days immediately preceding such day.
"CODE" has the meaning set forth in ss.3(o)(ii) below.
"COMPANY" has the meaning set forth in the preambles.
"COMPANY 10-K" has the meaning set forth in ss.3(h) below.
"COMPANY 10-Q" has the meaning set forth in ss.3(h) below.
"COMPANY BENEFIT PLAN" and "COMPANY BENEFIT PLANS" have the meanings
set forth in ss.3(o)(i) below.
"COMPANY BOARD" means the board of directors of the Company.
"COMPANY CONTRACTS" has the meaning set forth in ss.3(u) below.
"COMPANY DISCLOSURE LETTER" has the meaning set forth in ss.3(a)
below.
"COMPANY EMPLOYEES" has the meaning set forth in ss.3(o)(i) below.
"COMPANY ERISA AFFILIATE" has the meaning set forth in ss.3(o)(iii)
below.
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"COMPANY FAIRNESS OPINION" means an opinion of Tucker Anthony Cleary
Gull, addressed to the Company Board, as to the fairness of the Per Share Merger
Consideration to the Company Stockholders (other than Acquiror) from a financial
point of view.
"COMPANY INTELLECTUAL PROPERTY" has the meaning set forth in
ss.3(s) below.
"COMPANY MATERIAL ADVERSE EFFECT" has the meaning set forth in
ss.3(a) below.
"COMPANY PENSION PLAN" has the meaning set forth in ss.3(o)(ii)
below.
"COMPANY REPORTS" has the meaning set forth in ss.3(g) below.
"COMPANY SHARES" has the meaning set forth in the preambles.
"COMPANY SPECIAL MEETING" has the meaning set forth in ss.5(c)(ii)
below.
"COMPANY STOCKHOLDER" means any Person who or which holds any
Company Shares.
"CONFIDENTIALITY AGREEMENT" means the Mutual Non-Disclosure
Agreement dated August 11, 1999 between Acquiror and the Company, providing
that, among other things, each Party would maintain confidential certain
information of the other Party.
"CONFIDENTIAL INFORMATION" means Information, as defined in the
Confidentiality Agreement.
"DELAWARE GENERAL CORPORATION LAW" means Title 8, Chapter 1 of the
Delaware Code, as amended.
"DISSENTING HOLDER" has the meaning set forth in ss.2(d)(viii)
below.
"EFFECTIVE TIME" has the meaning set forth in ss.2(d)(i) below.
"ENVIRONMENTAL LAW" has the meaning set forth in ss.3(r) below.
"ERISA" has the meaning set forth in ss.3(o)(i) below.
"EXCHANGE AGENT" has the meaning set forth in ss.2(e)(i) below.
"EXCHANGE FUND" has the meaning set forth in ss.2(e)(i) below.
"FOREIGN COMPETITION LAWS" means foreign statutes, rules,
regulations, orders, decrees and administrative and judicial directives that are
designed or intended to prohibit, restrict or regulate actions having the
purpose or effect of monopolization, lessening of competition or restraint of
trade.
"GAAP" means United States generally accepted accounting principles
as in effect from time to time.
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"GOVERNMENT ENTITY" has the meaning set forth in ss.3(f) below.
"HART-SCOTT-RODINO ACT" means the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
"HAZARDOUS SUBSTANCE" has the meaning set forth in ss.3(r) below.
"INDEMNIFIED PARTY" has the meaning set forth in ss.5(j)(ii) below.
"JOINT PROXY STATEMENT/PROSPECTUS" has the meaning set forth in
ss.5(c)(i) below.
"MASSACHUSETTS BUSINESS CORPORATION LAW" means Chapter 156B of the
General Laws of the Commonwealth of Massachusetts.
"MERGER" has the meaning set forth in the preambles.
"MERGER CONSIDERATION" has the meaning set forth in ss.5(d)(v)
below.
"NASDAQ" has the meaning set forth in the preambles.
"ORDER" has the meaning set forth in ss.6(a)(v) below.
"OUTSIDE DATE" has the meaning set forth in ss.7(a)(ii) below.
"PARTY" has the meaning set forth in the preambles.
"PERSON" means an individual, a partnership, a corporation, a
limited liability company, an association, a joint stock company, a trust, a
joint venture, an unincorporated organization or a governmental entity (or any
department, agency or political subdivision thereof).
"PER SHARE MERGER CONSIDERATION" has the meaning set forth in
ss.2(d)(v) below.
"PRIOR CONSULTATION" means oral or written notice to the chief
executive officer of the Company at least two (2) business days prior to the
earlier of (x) taking the action or (y) committing to take the action with
respect to which Prior Consultation is necessary pursuant to ss.5(e) below and
subsequent to such notice making the chief executive officer of Acquiror
reasonably available to the chief executive officer of the Company to discuss
such action prior to taking such action.
"PROHIBITED ACQUIROR ACQUISITION PROPOSAL" has the meaning set
forth in ss.5(i)(i) below.
"REPRESENTATIVES" has the meaning set forth in ss.5(h)(i) below.
"REGISTRATION STATEMENT" has the meaning set forth in ss.5(c)(i)
below.
"REQUIRED ACQUIROR CONSENT" has the meaning set forth in ss.4(f)
below.
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"REQUIRED COMPANY CONSENT" has the meaning set forth in ss.3(f)
below.
"REQUISITE STOCKHOLDER APPROVAL" means, with respect to the Company,
the affirmative vote of a majority of the holders of the outstanding Company
Shares in favor of the adoption of this Agreement in accordance with the
Massachusetts Business Corporation Law or, with respect to Acquiror, the
affirmative vote of a majority of the holders of the outstanding Acquiror Shares
in favor of (a) approval of the issuance of Acquiror Shares in connection with
the Merger as provided in this Agreement in accordance with the rules of Nasdaq
and (b) an amendment to Acquiror's certificate of incorporation to increase the
authorized capital stock of Acquiror in accordance with the Delaware General
Corporation Law.
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder.
"SECURITIES EXCHANGE ACT" means the Securities Exchange Act of 1934,
as amended, and the rules and regulations promulgated thereunder.
"SECURITY INTEREST" means any mortgage, pledge, lien, encumbrance,
charge or other security interest, OTHER THAN (a) mechanic's, materialman's and
similar liens; (b) liens for taxes not yet due and payable or for taxes that the
taxpayer is contesting in good faith through appropriate proceedings; (c)
purchase money liens and liens securing rental payments under capital lease
arrangements; and (d) other liens arising in the ordinary course of business and
not incurred in connection with the borrowing of money.
"STOCK RIGHTS" means each option, warrant, purchase right,
subscription right, conversion right, exchange right or other contract,
commitment or security providing for the issuance or sale of any capital stock,
or otherwise causing to become outstanding any capital stock.
"STOCKHOLDER" has the meaning set forth in the preambles.
"SUBSIDIARY" of a specified Person means any corporation, limited
liability company, partnership, joint venture or other legal entity of which the
specified Person (either alone or together with any other Subsidiary of the
specified Person) owns, directly or indirectly, more than 50% of the stock or
other equity, partnership, limited liability company or equivalent interests,
the holders of which are generally entitled to vote for the election of the
board of directors or other governing body of such corporation or other legal
entity, or otherwise has the power to vote or direct the voting of sufficient
securities to elect a majority of such board of directors or other governing
body.
"SUPERIOR PROPOSAL" has the meaning set forth in ss.5(h)(ii)
below.
"SURVIVING CORPORATION" has the meaning set forth in ss.2(a) below.
"TAX RETURN" means any report, return, declaration or other
information required to be supplied to a taxing authority in connection with
Taxes.
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"TAXES" means all taxes or other like assessments including, without
limitation, income, withholding, gross receipts, excise, ad valorem, real or
personal property, asset, sales, use, license, payroll, transaction, capital,
net worth and franchise taxes imposed by or payable to any federal, state,
county, local or foreign government, taxing authority, subdivision or agency
thereof, including interest, penalties, additions to tax or additional amounts
thereto.
"THIRD PARTY" means any Person (or group of Persons) other than
Acquiror or its respective Affiliates.
"YEAR 2000 COMPLIANT" has the meaning set forth in ss.3(q) below.
2. THE TRANSACTION.
(a) THE MERGER. On and subject to the terms and conditions of this
Agreement, the Company will merge with and into Acquiror at the Effective Time.
Acquiror shall be the corporation surviving the Merger (the "SURVIVING
CORPORATION").
(b) THE CLOSING. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Kelley Drye &
Warren LLP, 101 Park Avenue, New York, New York, commencing at 9:00 a.m. local
time on the third business day following the satisfaction or waiver of all
conditions to the obligations of the Parties to consummate the transactions
contemplated hereby (other than conditions with respect to actions the
respective Parties will take at the Closing itself) or such other date as the
Parties may mutually determine (the "Closing Date").
(c) ACTIONS AT THE CLOSING. At the Closing, (i) the Company will
deliver to Acquiror the various certificates, instruments and documents referred
to in ss.6(a) below; (ii) Acquiror will deliver to the Company the various
certificates, instruments and documents referred to in ss.6(b) below; (iii) the
Company and Acquiror will file with the Secretary of State of the State of
Delaware a Certificate of Merger in such form as required by and executed in
accordance with the relevant provisions of the Delaware General Corporation Law
(the "CERTIFICATE OF MERGER"); (iv) the Company and Acquiror will file with the
Secretary of State of the Commonwealth of Massachusetts Articles of Merger in
such form as required by and executed in accordance with the relevant provisions
of the Massachusetts Business Corporation (the "ARTICLES OF Merger") and (v)
Acquiror will deliver or cause to be delivered the Exchange Fund to the Exchange
Agent in the manner provided below in this ss.2.
(d) EFFECT OF MERGER.
(i) GENERAL. The Merger shall become effective at the time
(the "EFFECTIVE TIME") the Company and Acquiror file the Certificate
of Merger with the Secretary of State of the State of Delaware or at
such later time as the Parties may agree and specify in the
Certificate of Merger. The Merger shall have the effects set forth in
the Delaware General Corporation Law and the Massachusetts Business
Corporation Law. The Surviving Corporation may, at any time after the
Effective Time, take any action (including executing and delivering
any document) in the name and on behalf of either the Company or
Acquiror in order to carry out and effectuate the transactions
contemplated by this Agreement.
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(ii) CERTIFICATE OF INCORPORATION. The certificate of
incorporation of Acquiror shall continue as the certificate of
incorporation of the Surviving Corporation until thereafter amended in
accordance with its terms and as provided by law, except that Article
Fourth thereof shall be amended to read in its entirety as follows:
FOURTH: I. The total number of shares of all classes of
stock which the Corporation shall have authority to issue is
56,000,000 shares, consisting of (i) 55,000,000 shares of
Common Stock, $.05 par value (the "Common Stock") and (ii)
1,000,000 shares of Preferred Stock, $.05 par value
("Preferred Stock").
II. The designations, powers, preferences and
relative, participating, optional or other special rights
of, and the qualifications, limitations or restrictions
upon, each class or series of the Corporation's capital
stock shall be as follows:
A. COMMON STOCK:
1. GENERAL. The voting, dividend and liquidation
rights of the holders of the Common Stock are subject to and
qualified by the rights of the holders of the Preferred
Stock of any series as may be designated by the Board of
Directors upon any issuance of the Preferred Stock of any
series.
2. VOTING. The holders of the Common Stock are
entitled to one vote for each share held at all meetings of
stockholders (and written actions in lieu of meetings).
There shall be no cumulative voting.
The number of authorized shares of Common Stock
may be increased or decreased (but not below the number of
shares thereof then outstanding) by the affirmative vote of
the holders of a majority of the stock of the Corporation
entitled to vote, irrespective of the provisions of Section
242(b)(2) of the General Corporation Law of the State of
Delaware.
3. DIVIDENDS. Dividends may be declared and paid
on the Common Stock from funds lawfully available therefor
as and when determined by the Board of Directors and subject
to any preferential dividend rights of any then outstanding
Preferred Stock.
4. LIQUIDATION. Upon the dissolution or
liquidation of the Corporation, whether voluntary or
involuntary, holders of Common Stock will be entitled to
receive all assets of the Corporation available for
distribution to its stockholders, subject to any
preferential rights of any then outstanding Preferred Stock.
B. PREFERRED STOCK.
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Preferred Stock may be issued from time to time in
one or more series, each of such series to have such terms
as stated or expressed herein and in the resolution or
resolutions providing for the issue of such series adopted
by the Board of Directors of the Corporation as hereinafter
provided. Any shares of Preferred Stock which may be
redeemed, purchased or acquired by the Corporation may be
reissued except as otherwise provided by law. Different
series of Preferred Stock shall not be construed to
constitute different classes of shares for the purposes of
voting by classes unless expressly provided.
Authority is hereby expressly granted to the Board
of Directors from time to time to issue the Preferred Stock
in one or more series, and in connection with the creation
of any such series, by resolution or resolutions providing
for the issue of the shares thereof, to determine and fix
such voting powers, full or limited, or no voting powers,
and such designations, preferences and relative
participating, optional or other special rights, and
qualifications, limitations or restrictions thereof,
including without limitation thereof, dividend rights,
conversion rights, redemption privileges and liquidation
preferences, as shall be stated and expressed in such
resolutions, all to the full extent now or hereafter
permitted by the General Corporation Law of the State of
Delaware. Without limiting the generality of the foregoing,
the resolutions providing for issuance of any series of
Preferred Stock may provide that such series shall be
superior or rank equally or be junior to the Preferred Stock
of any other series to the extent permitted by law. Except
as otherwise provided in this Restated Certificate of
Incorporation, no vote of the holders of the Preferred Stock
or Common Stock shall be a prerequisite to the designation
or issuance of any shares of any series of the Preferred
Stock authorized by and complying with the conditions of
this Restated Certificate of Incorporation, the right to
have such vote being expressly waived by all present and
future holders of the capital stock of the Corporation.
(iii) BY-LAWS. The by-laws of Acquiror in effect immediately
prior to the Effective Time shall be the By-laws of the Surviving
Corporation until thereafter amended in accordance with their terms
and as provided by law.
(iv) DIRECTORS AND OFFICERS. Except as provided in ss.6(m)
with respect to the directors of the Surviving Corporation, the
directors and officers of Acquiror immediately prior to the Effective
Time shall be the directors and officers of the Surviving Corporation
at and as of the Effective Time (retaining their respective positions
and terms of office), until the earlier of their respective
resignation, removal or otherwise ceasing to be a director or officer,
respectively, or until their respective successors are duly elected
and qualified, as the case may be.
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(v) CONVERSION OF COMPANY SHARES. At and as of the Effective
Time, (A) each issued and outstanding Company Share (other than any
Company Shares owned by Acquiror, the Company or any Dissenting
Holder) shall be converted into the right to receive one Acquiror
Share (the "PER SHARE MERGER CONSIDERATION"), and all such Company
Shares shall no longer be outstanding, shall be canceled and shall
cease to exist, and each holder of a certificate representing any such
Company Shares shall thereafter cease to have any rights with respect
to such Company Shares, except the right to receive the Per Share
Merger Consideration for each such Company Share and any unpaid
dividends and distributions, if any, to which the holder of such
Company Shares is entitled pursuant to ss.2(e) upon the surrender of
such certificate in accordance with ss.2(e) below (collectively, the
"MERGER CONSIDERATION"), PROVIDED, HOWEVER, that the Per Share Merger
Consideration shall be subject to proportionate adjustment in the
event of any stock split, stock dividend or reverse stock split, and
(B) each Company Share owned by Acquiror or the Company shall be
canceled without payment therefor. No Company Share shall be deemed to
be outstanding or to have any rights other than those set forth above
in this ss.2(d)(v) after the Effective Time. Notwithstanding anything
to the contrary in this ss.2(d)(v), no fractional Acquiror Shares
shall be issued to then former holders of Company Shares. In lieu
thereof, each then former holder of a Company Share who would
otherwise have been entitled to receive a fraction of a Acquiror Share
(after taking into account all certificates delivered by such then
former holder at any one time) shall receive an amount in cash equal
to such fraction of a Acquiror Share multiplied by the Closing Sales
Price per Acquiror Share on the date of the Effective Time.
(vi) CONVERSION OF STOCK RIGHTS. Each of the Parties shall
take all such action as may be necessary to cause, at the Effective
Time, each Stock Right granted by the Company to purchase Company
Shares which is outstanding and unexercised immediately prior thereto
(whether or not vested or exercisable), to be converted automatically
into an equivalent Stock Right to purchase Acquiror Shares in an
amount and at an exercise price determined as follows:
(x) The number of Acquiror Shares to be subject to the new
Stock Right shall be equal to the number of Company Shares
subject to the original Stock Right; and
(y) The exercise price per Acquiror Share under the new
Stock Right shall be equal to the exercise price per Company
Share under the original Stock Right.
The adjustments provided herein with respect to any original Stock
Rights which are "incentive stock options" (as defined in Section
422 of the Code) shall be and are intended to be effected in a
manner which is consistent with Section 424(a) of the Code. The
option plan of the Company under which the original Stock Rights
were issued shall be assumed by Acquiror, and the duration and other
terms of the new Stock Rights shall be the same as the original
Stock Rights, except that all references to the Company shall be
deemed to be references to Acquiror. At the Effective Time, Acquiror
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shall deliver to then former holders of original Stock Rights
appropriate agreements representing the right to acquire Acquiror
Shares on the terms and conditions set forth in this ss. 2(d)(vi).
Acquiror shall take all corporate action necessary to reserve for
issuance a sufficient number of Acquiror Shares for delivery upon
exercise of the new Stock Rights in accordance with this ss.
2(d)(vi). Acquiror shall file a registration statement on Form S-8
(or any successor form) or another appropriate form, and use its
reasonable best efforts to cause such Form S-8 to become effective
at or as soon as practicable after the Effective Time, with respect
to Acquiror Shares subject to new employee stock options included in
the Stock Rights and shall use reasonable efforts to maintain the
effectiveness of such registration statement or registration
statements (and maintain the current status of the prospectus or
prospectuses contained therein) for so long as such options remain
outstanding. Acquiror shall promptly take any action required to be
taken under state securities or Blue Sky laws in connection with the
issuance of Acquiror Shares in connection with new employee options
included in the Stock Rights. With respect to those individuals who
subsequent to the Merger will be subject to the reporting
requirements under Section 16(a) of the Securities Exchange Act,
Acquiror shall administer the option plans assumed pursuant to this
ss. 2(d)(vi) in a manner that complies with Rule 16b-3 promulgated
under the Securities Exchange Act to the extent the Company option
plan complied with such rule prior to the Merger.
(vii) NO EFFECT ON CAPITAL STOCK OF ACQUIROR. Each share of
the outstanding capital stock of Acquiror issued and outstanding
immediately prior to the Effective Time shall remain outstanding and
shall be unchanged after the Merger.
(viii) DISSENTER'S' RIGHTS.
(A) No conversion under ss.2(d)(v) hereof shall be made with
respect to the Company Shares held by a Dissenting Holder; PROVIDED,
HOWEVER, that each Company Share outstanding immediately prior to the
Effective Time and held by a Dissenting Holder who shall, after the
Effective Time, withdraw his demand for appraisal or lose his right of
appraisal, in either case pursuant to the applicable provisions of the
Massachusetts Business Corporation Law, shall be deemed to be
converted, as of the Effective Time, into the Merger Consideration as
set forth in ss.2(d)(v) hereof. The term "DISSENTING HOLDER" shall
mean a holder of Company Shares who has demanded appraisal rights in
compliance with the applicable provisions of the Massachusetts
Business Corporation Law concerning the right of such holder to
dissent from the Merger and demand appraisal of such holder's Company
Shares.
(B) Any Dissenting Holder (x) who files with the Company a
written objection to the Merger before the taking of the votes to
approve this Agreement by the Company Stockholders and who states in
such objection that he intends to demand payment for his Company
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Shares if the Merger is concluded and (y) whose Company Shares are not
voted in favor of the Merger shall be entitled to demand payment from
the Company for his Company Shares and an appraisal of the value
thereof, in accordance with the provisions of Sections 86 through 98
of the Massachusetts Business Corporation Law.
(e) PROCEDURE FOR EXCHANGE.
(i) At or prior to the Effective Time, (A) Acquiror will
furnish to Equiserve, its transfer agent, or such other bank or trust
company reasonably acceptable to the Company, to act as exchange agent
(the "EXCHANGE AGENT") a corpus (the "EXCHANGE FUND") consisting of
Acquiror Shares and cash sufficient to permit the Exchange Agent to
make full payment of the Merger Consideration to the holders of all of
the issued and outstanding Company Shares (other than any Company
Shares owned by Acquiror or the Company), and (B) Acquiror will cause
the Exchange Agent to mail a letter of transmittal (with instructions
for its use) in a form to be mutually agreed upon by the Company and
Acquiror prior to Closing to each holder of issued and outstanding
Company Shares (other than any Company Shares owned by Acquiror or the
Company) for the holder to use in surrendering the certificates which,
immediately prior to the Effective Time, represented his or its
Company Shares against payment of the Merger Consideration to which
such holder is entitled pursuant to ss.2(d)(v). Upon surrender to the
Exchange Agent of such certificates, together with such letter of
transmittal, duly executed and completed in accordance with the
instructions thereto, Acquiror shall promptly cause to be issued a
certificate representing that number of whole Acquiror Shares and a
check representing the amount of cash in lieu of any fractional shares
and unpaid dividends and distributions, if any, to which such Persons
are entitled, after giving effect to any required tax withholdings. No
interest will be paid or accrued on the cash in lieu of fractional
shares and unpaid dividends and distributions, if any, payable to
recipients of Acquiror Shares. If payment is to be made to a Person
other than the registered holder of the certificate surrendered, it
shall be a condition of such payment that the certificate so
surrendered shall be properly endorsed or otherwise in proper form for
transfer and that the Person requesting such payment shall pay any
transfer or other taxes required by reason of the payment to a Person
other than the registered holder of the certificate surrendered or
establish to the reasonable satisfaction of the Surviving Corporation
or the Exchange Agent that such tax has been paid or is not
applicable. In the event any certificate representing Company Shares
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, the Exchange Agent will issue in exchange
for such lost, stolen or destroyed certificate the Merger
Consideration deliverable in respect thereof; PROVIDED, HOWEVER, the
Person to whom such Merger Consideration is paid shall, as a condition
precedent to the payment thereof, give the Surviving Corporation a
bond in such sum as it may direct or otherwise indemnify the Surviving
Corporation in a manner reasonably satisfactory to it against any
claim that may be made against the Surviving Corporation with respect
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to the certificate alleged to have been lost, stolen or destroyed. No
dividends or other distributions declared after the Effective Time
with respect to Acquiror Shares and payable to the holders of record
thereof shall be paid to the holder of any unsurrendered certificate
until the holder thereof shall surrender such certificate in
accordance with thisss.2(e). After the surrender of a certificate in
accordance with this ss.2(e), the record holder thereof shall be
entitled to receive any such dividends or other distributions, without
any interest thereon, which theretofore had become payable with
respect to the Acquiror Shares represented by such certificate. No
holder of an unsurrendered certificate shall be entitled, until the
surrender of such certificate, to vote the Acquiror Shares into which
his or its Company Shares shall have been converted into the right to
receive.
(ii) The Company will cause its transfer agent to furnish
promptly to Acquiror a list, as of a recent date, of the record
holders of Company Shares and their addresses, as well as mailing
labels containing the names and addresses of all record holders of
Company Shares and lists of security positions of Company Shares held
in stock depositories. The Company will furnish Acquiror with such
additional information (including, but not limited to, updated lists
of holders of Company Shares and their addresses, mailing labels and
lists of security positions) and such other assistance as Acquiror or
its agents may reasonably request.
(iii) Acquiror may cause the Exchange Agent to invest the
cash included in the Exchange Fund in one or more investments selected
by Acquiror; PROVIDED, HOWEVER, that the terms and conditions of the
investments shall be such as to permit the Exchange Agent to make
prompt payment of the Merger Consideration as necessary. Acquiror may
cause the Exchange Agent to pay over to the Surviving Corporation any
net earnings with respect to the investments, and Acquiror will
replace promptly any portion of the Exchange Fund which the Exchange
Agent loses through investments.
(iv) Acquiror may cause the Exchange Agent to pay over to
the Surviving Corporation any portion of the Exchange Fund (including
any earnings thereon) remaining 180 days after the Effective Time, and
thereafter all former stockholders of the Company shall be entitled to
look to the Surviving Corporation (subject to abandoned property,
escheat and other similar laws) as general creditors thereof with
respect to the Merger Consideration and any cash payable upon
surrender of their certificates.
(v) Acquiror shall pay, or shall cause the Surviving
Corporation to pay, all charges and expenses of the Exchange Agent.
(f) CLOSING OF TRANSFER RECORDS. After the Effective Time, no transfer
of Company Shares outstanding prior to the Effective Time shall be made on the
stock transfer books of the Surviving Corporation. If, after the Effective Time,
certificates representing such shares are presented for transfer to the Exchange
Agent, they shall be canceled and exchanged for certificates representing
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Acquiror Shares, cash in lieu of fractional shares, if any, and unpaid dividends
and distributions, if any, as provided in ss.2(e).
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to Acquiror:
(a) ORGANIZATION, QUALIFICATION AND CORPORATE POWER. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of Massachusetts. If applicable to such country, each of the Company's
Subsidiaries operating in such country has been duly incorporated or otherwise
organized and is validly existing. Each of the Company and its Subsidiaries is
duly authorized to conduct business and, if applicable to such country, is in
good standing under the laws of each jurisdiction where such qualification is
required, except where the lack of such qualification or failure to be in good
standing would not reasonably be expected to have a material adverse effect on
the business, financial condition or results of operations of the Company and
its Subsidiaries taken as a whole or on the ability of the Company to consummate
the transactions contemplated by this Agreement (a "COMPANY MATERIAL ADVERSE
EFFECT"). Each of the Company and its Subsidiaries has full corporate power and
corporate authority, and all foreign, federal, state and local governmental
permits, licenses and consents, required to carry on the businesses in which it
is engaged and to own and use the properties owned and used by it, except for
such permits, licenses and consents the failure of which to have would not
reasonably be expected to have a Company Material Adverse Effect. The Company
does not own any equity interest in any corporation, partnership, limited
liability company, joint venture or other legal entity other than the
Subsidiaries listed in ss.3(a) of the Company Disclosure Letter accompanying
this Agreement (the "COMPANY DISCLOSURE LETTER"). The Company has delivered to
the Acquiror a true, complete and correct copy of the articles of incorporation
(or comparable charter document) and by-laws, each as amended to date, of
Company and all of its Subsidiaries. Neither Company nor any of its Subsidiaries
is in violation of any provision of its articles of incorporation (or comparable
charter document) or by-laws.
(b) CAPITALIZATION. The entire authorized capital stock of the Company
consists of 7,500,000 shares of preferred stock, $.01 par value per share, none
of which are issued and outstanding as of September 25, 1999, 30,000,000 Shares,
of which 15,916,570 Shares were issued and outstanding as of September 25, 1999
and 390,769 Shares were held in treasury as of September 25, 1999. All of the
issued and outstanding Company Shares have been duly authorized and are validly
issued, fully paid and nonassessable, and none have been issued in violation of
any preemptive or similar right. As of September 25, 1999, no warrants of the
Company were outstanding. As of September 25, 1999, 2,185,776 Shares were
subject to issuance pursuant to employee stock options issued under Company
Benefit Plans. Except as set forth above or in ss.3(b) of the Company Disclosure
Letter, neither the Company nor any of its Subsidiaries has any outstanding or
authorized Stock Rights. Except for stock appreciation rights authorized under
Company Benefit Plans, of which none are outstanding, there are no outstanding
or authorized stock appreciation, phantom stock, profit participation or similar
rights with respect to the Company or any of its Subsidiaries. Except as set
forth in ss.3(b) of the Company Disclosure Letter, there are no rights,
contracts, commitments or arrangements obligating the Company to redeem,
purchase or acquire, or offer to purchase, redeem or acquire, any outstanding
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shares of, or any outstanding options, warrants or rights of any kind to acquire
any shares of, or any outstanding securities that are convertible into or
exchangeable for any shares of, capital stock of the Company.
(c) SUBSIDIARIES. Except as set forth in ss.3(c) of the Company
Disclosure Letter, the Company owns, directly or indirectly, 100% of the
outstanding shares of capital stock of each of its Subsidiaries free and clear
of any Security Interest and each such share of capital stock has been duly
authorized and is validly issued, fully paid and nonassessable, and none of such
shares of capital stock has been issued in violation of any preemptive or
similar right. No shares of capital stock of, or other equity interests in, any
Subsidiary of the Company are reserved for issuance, and there are no contracts,
agreements, commitments or arrangements obligating the Company or any of its
Subsidiaries (i) to offer, sell, issue, grant, pledge, dispose of or encumber
any shares of capital stock of, or other equity interests in, or any options,
warrants or rights of any kind to acquire any shares of capital stock of, or
other equity interests in, any of the Subsidiaries of the Company or (ii) to
redeem, purchase or acquire, or offer to purchase or acquire, any outstanding
shares of capital stock of, or other equity interests in, or any outstanding
options, warrants or rights of any kind to acquire any shares of capital stock
of, or other equity interest in, or any outstanding securities that are
convertible into or exchangeable for, any shares of capital stock of, or other
equity interests in, any of the Subsidiaries of the Company.
(d) VOTING ARRANGEMENTS. Except as set forth in ss.3(d) of the Company
Disclosure Letter or in Company Reports filed prior to the date hereof, there
are no voting trusts, proxies or other similar agreements or understandings to
which the Company or any of its Subsidiaries is a party or by which the Company
or any of its Subsidiaries is bound with respect to the voting of any shares of
capital stock of the Company or any of its Subsidiaries or with respect to the
registration of the offering, sale or delivery of any shares of capital stock of
the Company or any of its Subsidiaries under the Securities Act. There are no
issued or outstanding bonds, debentures, notes or other indebtedness of the
Company having the right to vote on any matters on which stockholders of the
Company may vote.
(e) AUTHORIZATION OF TRANSACTION. The Company has full power and
authority (including full corporate power and corporate authority), and has
taken all required action, necessary to properly execute and deliver this
Agreement and to perform its obligations hereunder, and this Agreement
constitutes the valid and legally binding obligation of the Company, enforceable
in accordance with its terms and conditions, except as limited by (i) applicable
bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting enforcement of creditors' rights generally and (ii)
general principles of equity, regardless of whether asserted in a proceeding in
equity or at law; PROVIDED, HOWEVER, that the Company cannot consummate the
Merger unless and until it receives the Requisite Stockholder Approval of the
Company Stockholders.
(f) NONCONTRAVENTION. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
(i) violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree or other restriction of any government, governmental agency or
court of competent jurisdiction (a "GOVERNMENT ENTITY") to which the Company or
any of its Subsidiaries is subject or any provision of the charter or by-laws of
the Company or any of its Subsidiaries or (ii) conflict with, result in a breach
of, constitute a default under, result in the acceleration of, create in any
party the right to accelerate, terminate, modify or cancel or require any notice
-15-
under any agreement, contract, lease, license, instrument or other arrangement
to which the Company or any of its Subsidiaries is a party or by which it is
bound or to which any of its assets is subject, except where the violation,
conflict, breach, default, acceleration, termination, modification,
cancellation, or failure to give notice would not reasonably be expected to have
a Company Material Adverse Effect or except as set forth in ss.3(f) of the
Company Disclosure Letter. Other than as required under the provisions of the
Hart-Scott-Rodino Act, Foreign Competition Laws, the Massachusetts Business
Corporation Law, the Delaware General Corporation Law, Nasdaq, the Securities
Exchange Act, the Securities Act and state securities laws, neither the Company
nor any of its Subsidiaries needs to give any notice to, make any filing with or
obtain any authorization, consent or approval of any Government Entity in order
for the Parties to consummate the transactions contemplated by this Agreement,
except where the failure to give notice, to file or to obtain any authorization,
consent or approval would not reasonably be expected to have a Company Material
Adverse Effect or except as set forth in ss.3(f) of the Company Disclosure
Letter. "REQUIRED COMPANY CONSENTS" means any authorization, consent or approval
of a Government Entity or other Third Party required to be obtained pursuant to
any Foreign Competition Laws or state securities laws or so that a matter set
forth in ss.3(f) of the Company Disclosure Letter would not be reasonably
expected to have a Company Material Adverse Effect for purposes of this ss.3(f).
(g) FILING. The Company has made all filings with the SEC that it has
been required to make under the Securities Act and the Securities Exchange Act
(collectively, the "COMPANY REPORTS"). Each of the Company Reports has complied
with the Securities Act and the Securities Exchange Act in all material
respects. None of the Company Reports, as of their respective dates, contained
any untrue statement of a material fact or omitted to state a material fact
necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading.
(h) FINANCING STATEMENTS.
(i) The Company has filed an Annual Report on Form 10-K (the
"COMPANY 10-K") for the fiscal year ended December 31, 1998 and a
Quarterly Report on Form 10-Q (the "COMPANY 10-Q") for the fiscal
quarter ended June 26, 1999. The financial statements included in the
Company 10-K and the Company 10-Q (including the related notes and
schedules) have been prepared from the books and records of the
Company and its Subsidiaries in accordance with GAAP applied on a
consistent basis throughout the periods covered thereby, and present
fairly in all material respects the financial condition of the Company
and its Subsidiaries as of the indicated dates and the results of
operations and cash flows of the Company and its Subsidiaries for the
periods set forth therein (subject in the case of quarterly financial
statements to the absence of complete footnotes and subject to normal
year-end audit adjustments).
(ii) From January 1, 1999 until the date of this Agreement,
the Company and its Subsidiaries have not incurred any liabilities
that are of a nature that would be required to be disclosed on a
balance sheet of the Company and its Subsidiaries or the footnotes
thereto prepared in conformity with GAAP, other
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than (A) liabilities incurred in the ordinary course of business that
would not, individually or in the aggregate, reasonably be expected to
have a Company Material Adverse Effect or (B) liabilities disclosed in
ss.3(h) of the Company Disclosure Letter or in Company Reports filed
prior to the date hereof.
(i) EVENTS SUBSEQUENT TO JANUARY 1, 1999. From January 1, 1999 to the
date of this Agreement, except as disclosed in the Company Reports filed prior
to the date hereof or except as set forth in ss.3(i) of the Company Disclosure
Letter, (i) the Company and its Subsidiaries have conducted their respective
businesses only in, and have not engaged in any transaction other than according
to, the ordinary and usual course of such businesses, and (ii) there has not
been (A) any change in the financial condition, business or results of
operations of the Company or any of its Subsidiaries, or any development or
combination of developments relating to the Company or any of its Subsidiaries
of which management of the Company has knowledge, and which would reasonably be
expected to have a Company Material Adverse Effect; (B) any declaration, setting
aside or payment of any dividend or other distribution with respect to the
capital stock of the Company, or any redemption, repurchase or other
reacquisition of any of the capital stock of the Company; (C) any change by the
Company in accounting principles, practices or methods materially affecting the
reported consolidated assets, liabilities or results of operations of the
Company; (D) any increase in the compensation of any officer of the Company or
any of its Subsidiaries or grant of any general salary or benefits increase to
the employees of the Company or any of its Subsidiaries other than in the
ordinary course of business consistent with past practices; (E) any issuance or
sale of any capital stock or other securities (including any Stock Rights) by
the Company or any of its Subsidiaries of any kind, other than upon exercise of
Stock Rights issued by or binding upon the Company; (F) any modification,
amendment or change to the terms or conditions of any Stock Right; or (G) any
split, combination, reclassification, redemption, repurchase or other
reacquisition of any capital stock or other securities of the Company or any of
its Subsidiaries.
(j) COMPLIANCE. Except as set forth in ss.3(j) of the Company
Disclosure Letter or in Company Reports filed prior to the date hereof, the
Company and its Subsidiaries are in compliance with all applicable foreign,
federal, state and local laws, rules and regulations and all court orders,
judgments and decrees to which any of them is a party, except where the failure
to be in compliance would not reasonably be expected to have a Company Material
Adverse Effect.
(k) BROKERS' AND OTHER FEES. Except as set forth in ss.3(k) of the
Company Disclosure Letter, none of the Company and its Subsidiaries has any
liability or obligation to pay any fees or commissions to any broker, finder or
agent with respect to the transactions contemplated by this Agreement.
(l) LITIGATION AND LIABILITIES. Except as disclosed in ss.3(l) of the
Company Disclosure Letter or in Company Reports filed prior to the date hereof,
there are (i) no actions, suits or proceedings pending or, to the knowledge of
the Company, threatened against the Company or any of its Subsidiaries, or any
facts or circumstances known to the Company which may give rise to an action,
suit or proceeding against the Company or any of its Subsidiaries, which would
reasonably be expected to have a Company Material Adverse Effect, and (ii) no
obligations or liabilities of the Company or any of its Subsidiaries, whether
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accrued, contingent or otherwise, known to the Company which would reasonably be
expected to have a Company Material Adverse Effect.
(m) TAXES. Except as set forth in ss.3(m) of the Company Disclosure
Letter or in Company Reports filed prior to the date hereof, the Company and
each of its Subsidiaries have duly filed or caused to be duly filed on their
behalf all federal, state, local and foreign Tax Returns required to be filed by
them, and have duly paid, caused to be paid or made adequate provision for the
payment of all Taxes required to be paid in respect of the periods covered by
such Tax Returns, except where the failure to file such Tax Returns or to pay
such Taxes would not reasonably be expected to have a Company Material Adverse
Effect. Except as set forth in ss.3(m) of the Company Disclosure Letter, no
claims for Taxes have been asserted against the Company or any of its
Subsidiaries and no material deficiency for any Taxes has been proposed,
asserted or assessed which has not been resolved or paid in full. To the
knowledge of the Company, no Tax Return or taxable period of the Company or any
of its Subsidiaries is under examination by any taxing authority, and neither
the Company nor any of its Subsidiaries has received written notice of any
pending audit by any taxing authority. There are no outstanding agreements or
waivers extending the statutory period of limitation applicable to any Tax
Return for any period of the Company or any or its Subsidiaries. Except as set
forth in ss.3(m) of the Company Disclosure Letter, there are no tax liens other
than liens for Taxes not yet due and payable relating to the Company or any of
its Subsidiaries. The Company has no reason to believe that any conditions exist
that could reasonably be expected to prevent the Merger from qualifying as a
reorganization within the meaning of Section 368(a) of the Code. Except as
provided in ss.3(m) of the Company Disclosure Letter, neither the Company nor
any of its Subsidiaries is a party to any agreement or contract which would
result in payment of any "excess parachute payment" within the meaning of
Section 280G of the Code as of the date of this Agreement. Neither the Company
nor any of its Subsidiaries has filed any consent pursuant to Section 341(f) of
the Code or agreed to have Section 341(f)(2) of the Code apply to any
disposition of a subsection (f) asset owned by the Company or any of its
Subsidiaries. The Company has not been and is not a United Stated real property
holding company (as defined in Section 897(c)(2) of the Code) during the
applicable period specified in Section 897(c)(1)(A)(ii) of the Code. None of the
Company or its Subsidiaries (x) has been a member of an "affiliated group,"
within the meaning of Section 1504(a) of the Code, other than a group the common
acquiror of which was the Company or (y) has any liability for the Taxes of any
person, other than any of the Company or its Subsidiaries under Treasury
Regulation ss.1.1502-6 (or any similar provision of state, local or foreign law)
as a transferee, successor, by contract or otherwise.
(n) FAIRNESS OPINION. Tucker Anthony Cleary Gull has delivered the
Company Fairness Opinion to the Company Board, and a true and complete copy
thereof has been furnished to Acquiror.
(o) EMPLOYEE BENEFITS.
(i) All material pension, profit-sharing, deferred
compensation, savings, stock bonus and stock option plans, and all
employee benefit plans, whether or not covered by the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), which
are sponsored by the Company, any Subsidiary of the Company or any
Company ERISA Affiliate (as defined below) of the Company or to which
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the Company, any Subsidiary of the Company or any Company ERISA
Affiliate of the Company makes contributions, and which cover
employees of the Company or any Subsidiary (the "COMPANY EMPLOYEES")
or former employees of the Company or any Subsidiary, all employment
or severance contracts with employees of the Company or its
Subsidiaries, and any applicable "change of control" or similar
provisions in any plan, contract or arrangement that cover Company
Employees (collectively, "COMPANY BENEFIT PLANS" and individually a
"COMPANY BENEFIT PLAN") are accurately and completely listed in
ss.3(o) of the Company Disclosure Letter. No Company Benefit Plan is a
multi-employer plan, money purchase plan, defined benefit plan,
multiple employer plan or multiple employer welfare arrangement and no
Company Benefit Plan is covered by Title IV of ERISA. True and
complete copies of all Company Benefit Plans have been provided to
Acquiror.
(ii) All Company Benefit Plans to the extent subject to
ERISA, are in compliance in all material respects with ERISA and the
rules and regulations promulgated thereunder. Each Company Benefit
Plan which is an "employee pension benefit plan" within the meaning of
Section 3(2) of ERISA ("COMPANY PENSION PLAN") and which is intended
to be qualified under Section 401(a) of the Internal Revenue Code of
1986, as amended (the "CODE"), has received a favorable determination
letter from the Internal Revenue Service, which determination letter
is currently in effect, and there are no proceedings pending or, to
the knowledge of the Company, threatened, or any facts or
circumstances known to the Company, which are reasonably likely to
result in revocation of any such favorable determination letter. There
is no pending or, to the knowledge of the Company, threatened
litigation relating to the Company Benefit Plans. Neither the Company
nor any of its Subsidiaries has engaged in a transaction with respect
to any Company Benefit Plan that, assuming the taxable period of such
transaction expired as of the date hereof, is reasonably likely to
subject the Company or any of its Subsidiaries to a tax or penalty
imposed by either Section 4975 of the Code or Section 502(i) of ERISA.
(iii) No liability under Title IV of ERISA has been or is
reasonably likely to be incurred by the Company or any of its
Subsidiaries with respect to any ongoing, frozen or terminated Company
Benefit Plan that is a "single-employer plan", within the meaning of
Section 4001(a)(15) of ERISA, currently or formerly maintained by any
of them, or the single-employer plan of any entity which is considered
a predecessor of the Company or one employer with the Company under
Section 4001 of ERISA (a "COMPANY ERISA AFFILIATE"). All contributions
required to be made under the terms of any Company Benefit Plan have
been timely made or reserves therefor on the balance sheet of the
Company have been established, which reserves are adequate. Except as
required by Part 6 of Title I of ERISA, the Company does not have any
unfunded obligations for retiree health and life benefits under any
Company Benefit Plan.
(p) MASSACHUSETTS BUSINESS CORPORATION LAW. The execution and delivery
of this Agreement and consummation of transactions contemplated hereby will not
be subject to Sections 110C-110F of the Massachusetts General Laws in the
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consummation of the Merger or this Agreement or the transactions contemplated by
either thereof.
(q) YEAR 2000. Except as disclosed in the previously filed Company
Reports, the Company's products and information systems are Year 2000 Compliant
except to the extent that their failure to be Year 2000 Compliant would not,
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect. For purposes of this Agreement, "YEAR 2000 Compliant"
shall mean that a Person's products and information systems accurately process
date/time data (including, but not limited to, calculating, comparing and
sequencing) from, into and between the twentieth and twenty-first centuries, and
the years 1999 and 2000 and leap year calculations.
(r) ENVIRONMENTAL MATTERS. Except for such matters that, individually
or in the aggregate, would not reasonably be expected to have a Company Material
Adverse Effect or would not otherwise require disclosure pursuant to the
Securities Exchange Act, or are listed in ss.3(r) of the Company Disclosure
Letter or described in Company Reports filed prior to the date hereof, (i) each
of the Company and its Subsidiaries has complied and is in compliance with all
applicable Environmental Laws (as defined below); (ii) the properties currently
owned or operated by the Company or any of its Subsidiaries (including soils,
groundwater, surface water, buildings or other structures) are not contaminated
with Hazardous Substances (as defined below); (iii) neither the Company nor any
of its Subsidiaries is subject to liability for any Hazardous Substance disposal
or contamination on any third party property; (iv) neither the Company nor any
or its Subsidiaries has had any release or threat of release of any Hazardous
Substance; (v) neither the Company nor any of its Subsidiaries has received any
notice, demand, threat, letter, claim or request for information alleging that
it or any of its Subsidiaries may be in violation of or liable under any
Environmental Law (including any claims relating to electromagnetic fields or
microwave transmissions); (vi) neither the Company nor any of its Subsidiaries
is subject to any orders, decrees, injunctions or other arrangements with any
governmental or regulatory authority of competent jurisdiction or is subject to
any indemnity or other agreement with any third party relating to liability
under any Environmental Law or relating to Hazardous Substances; and (vii) there
are no circumstances or conditions involving the Company or any of its
Subsidiaries that would reasonably be expected to result in any claims,
liabilities, investigations, costs or restrictions on the ownership, use or
transfer of any of its properties pursuant to any Environmental Law.
As used herein, the term "ENVIRONMENTAL LAW" means any federal,
state, local, foreign or other law (including common law), statutes, ordinances
or codes relating to: (i) the protection, investigation or restoration of the
environment, health, safety or natural resources, (ii) the handling, use,
presence, disposal, release or threatened release of any Hazardous Substance, or
(iii) noise, odor, wetlands, pollution, contamination or any injury or threat of
injury to person or property in connection with any Hazardous Substance.
As used herein, the term "HAZARDOUS SUBSTANCES" means any substance
that is listed, classified or regulated pursuant to any Environmental Law,
including any petroleum product or by-product, asbestos-containing material,
lead-containing paint or plumbing, polychlorinated biphenyls, radioactive
materials or radon.
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(s) INTELLECTUAL PROPERTY. Except as disclosed in ss.3(s) of the
Company Disclosure Letter or in the Company Reports filed prior to the date
hereof, the Company and its Subsidiaries have all right, title and interest in,
or a valid and binding license to use, all Company Intellectual Property (as
defined below). Except as disclosed in ss.3(s) of the Company Disclosure Letter
or in the Company Reports filed prior to the date hereof, the Company and its
Subsidiaries (i) have not defaulted in any material respect under any license to
use any Company Intellectual Property, (ii) are not the subject of any
proceeding or litigation for infringement of any third party intellectual
property, (iii) have no knowledge of circumstances that would be reasonably
expected to give rise to any such proceeding or litigation and (iv) have no
knowledge of circumstances that are causing or would be reasonably expected to
cause the loss or impairment of any Company Intellectual Property, other than a
default, proceeding, litigation, loss or impairment that is not having or would
not be reasonably expected to have, individually or in the aggregate, a Company
Material Adverse Effect.
For purposes of this Agreement, "COMPANY INTELLECTUAL PROPERTY"
means patents and patent rights, trademarks and trademark rights, trade names
and trade name rights, service marks and service mark rights, copyrights and
copyright rights, trade secret and trade secret rights, and other intellectual
property rights, and all pending applications for and registrations of any of
the foregoing that are individually or in the aggregate material to the conduct
of the business of the Company and its Subsidiaries taken as a whole.
(t) INSURANCE. Except as set forth in ss.3(t) of the Company
Disclosure Letter, each of the Company and its Subsidiaries is insured with
financially responsible insurers in such amounts and against such risks and
losses as are customary for companies conducting the business as conducted by
the Company and its Subsidiaries.
(u) CERTAIN CONTRACTS. Except as set forth in ss.3(u) of the Company
Disclosure Letter, all material contracts to which the Company or any of its
Subsidiaries is a party or may be bound that are required by Item 610(b)(10) of
Regulation S-K to be filed as exhibits to, or incorporated by reference in, the
Company 10-K or the Company 10-Q have been so filed or incorporated by
reference. All material contracts to which the Company or any of its
Subsidiaries is a party or may be bound that have been entered into as of the
date hereof and will be required by Item 610(b)(10) of Regulation S-K to be
filed or incorporated by reference into the Company's Quarterly Report on Form
10-Q for the period ending September 30, 1999, but which have not previously
been filed or incorporated by reference into any Company Report, are set forth
in ss.3(u) of the Company Disclosure Letter. All contracts, licenses, consents,
royalty or other agreements which are material to the Company and its
Subsidiaries, taken as a whole, to which the Company or any of its Subsidiaries
is a party (the "Company Contracts") are valid and in full force and effect on
the date hereof except to the extent they have previously expired in accordance
with their terms or, to the extent such invalidity would not reasonably be
expected to have a Company Material Adverse Effect and, to the Company's
knowledge, neither the Company nor any of its Subsidiaries has violated any
provision of, or committed or failed to perform any act which with or without
notice, lapse of time or both would constitute a default under the provisions
of, any Company Contract, except for defaults which individually and in the
aggregate would not reasonably be expected to result in a Company Material
Adverse Effect.
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(v) ACCOUNTING AND TAX MATTERS. To the Company's knowledge, neither
the Company nor any of its Affiliates has taken or agreed to take any action, or
knows of any circumstances, that (without regard to any action taken or agreed
to be taken or agreed to be taken by Acquiror or any of its Affiliates) would
prevent the Merger from qualifying as a reorganization within the meaning of
Section 368(a) of the Code.
4. REPRESENTATIONS AND WARRANTIES OF ACQUIROR. Acquiror represents and
warrants to the Company:
(a) ORGANIZATION, QUALIFICATION AND CORPORATE POWER. Acquiror has been
duly organized, validly existing and in good standing under the laws of the
State of Delaware. If applicable to such country, each of Acquiror's
Subsidiaries operating in such country has been duly incorporated or otherwise
organized and is validly existing. Each of Acquiror and its Subsidiaries is duly
authorized to conduct business and, if applicable to such country, is in good
standing under the laws of each jurisdiction where such qualification is
required, except where the lack of such qualification or failure to be in good
standing would not reasonably be expected to have a material adverse effect on
the business, financial condition or results of operations of Acquiror and its
Subsidiaries taken as a whole or on the ability of Acquiror to consummate the
transactions contemplated by this Agreement (an "Acquiror Material Adverse
Effect"). Each of Acquiror and its Subsidiaries has full corporate power and
corporate authority, and all foreign, federal, state and local governmental
permits, licenses and consents, required to carry on the businesses in which it
is engaged and to own and use the properties owned and used by it, except for
such permits, licenses and consents the failure of which to have would not
reasonably be expected to have a Acquiror Material Adverse Effect. Acquiror does
not own any equity interest in any corporation, partnership, limited liability
company, joint venture or other entity other than the Subsidiaries listed in
ss.4(a) of Acquiror's disclosure letter accompanying this Agreement (the
"ACQUIROR DISCLOSURE LETTER"). Acquiror has delivered to the Company a true,
complete and correct copy of its certificate of incorporation and by-laws, each
as amended to date. Neither Acquiror nor any of its Subsidiaries is in violation
of any provision of its certificate of incorporation (or comparable charter
document) or by-laws.
(b) CAPITALIZATION. The entire authorized capital stock of Acquiror
consists of 15,249,599 shares of preferred stock, $.01 par value per share, of
which 298,187 shares are issued and outstanding as of September 1, 1999 and no
shares of Acquiror preferred stock were held in Treasury as of September 1,
1999, and 29,000,000 Acquiror Shares, of which 11,562,906 Acquiror Shares were
issued and outstanding as of September 1, 1999 and no Acquiror Shares were held
in treasury on September 1, 1999. All of the issued and outstanding Acquiror
Shares have been duly authorized and are validly issued, fully paid and
nonassessable, and none have been issued in violation of any preemptive or
similar right. Except as set forth in ss.4(b) of the Acquiror Disclosure Letter,
neither Acquiror nor any of its Subsidiaries has any outstanding or authorized
Stock Rights. There are no outstanding or authorized stock appreciation, phantom
stock, profit participation or similar rights with respect to Acquiror or any of
its Subsidiaries. There are no rights, contracts, commitments or arrangements
obligating Acquiror or any of its Subsidiaries to redeem, purchase or acquire,
or offer to purchase, redeem or acquire, any outstanding shares of, or any
outstanding options, warrants or rights of any kind to acquire any shares of, or
any outstanding securities that are convertible into or exchangeable for any
shares of, capital stock of Acquiror. The Acquiror Shares to be issued in
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connection with the Merger (including the Acquiror Shares to be issued to the
holders of Company Shares and the Acquiror Shares to be issued to holders of
Stock Rights to purchase or otherwise acquire Company Shares upon the exercise
and according to the terms of such Stock Rights) have been duly authorized by
all necessary corporate action, and when issued in accordance with the terms of
this Agreement, will be validly issued, fully paid and nonassessable and not
subject to any preemptive rights, and will be issued in compliance with the
requirements of the Securities Act and applicable state securities or Blue Sky
laws.
(c) SUBSIDIARIES. Except as set forth in ss.4(a) of the Acquiror
Disclosure Letter, Acquiror, directly or indirectly, owns 100% of the
outstanding shares of capital stock of each of its Subsidiaries free and clear
of any Security Interest and each such share of capital stock has been duly
authorized and is validly issued, fully paid and nonassessable, and none of such
shares of capital stock has been issued in violation of any preemptive or
similar right. No shares of capital stock of, or other equity interests in, any
Subsidiary of Acquiror are reserved for issuance, and there are no contracts,
agreements, commitments or arrangements obligating Acquiror or any of its
Subsidiaries (i) to offer, sell, issue, grant, pledge, dispose of or encumber
any shares of capital stock of, or other equity interests in, or any options,
warrants or rights of any kind to acquire any shares of capital stock of, or
other equity interests in, any of the Subsidiaries of Acquiror or (ii) to
redeem, purchase or acquire, or offer to purchase or acquire, any outstanding
shares of capital stock of, or other equity interests in, or any outstanding
options, warrants or rights of any kind to acquire any shares of capital stock
of, or other equity interest in, or any outstanding securities that are
convertible into or exchangeable for, any shares of capital stock of, or other
equity interests in, any of the Subsidiaries of Acquiror.
(d) VOTING ARRANGEMENTS. There are no voting trusts, proxies or other
similar agreements or understandings to which Acquiror or any of its
Subsidiaries is a party or by which Acquiror or any of its Subsidiaries is bound
with respect to the voting of any shares of capital stock of Acquiror or any of
its Subsidiaries. There are no issued or outstanding bonds, debentures, notes or
other indebtedness of Acquiror having the right to vote on any matters on which
stockholders of Acquiror may vote.
(e) AUTHORIZATION OF TRANSACTION. Acquiror has full power and
authority (including full corporate power and corporate authority), and has
taken all required action, necessary to properly execute and deliver this
Agreement and to perform its obligations hereunder, and this Agreement
constitutes the valid and legally binding obligation of Acquiror, enforceable in
accordance with its terms and conditions, except as limited by (i) applicable
bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting enforcement of creditors' rights generally and (ii)
general principles of equity, regardless of whether asserted in a proceeding in
equity or at law; PROVIDED, HOWEVER, that Acquiror cannot consummate the Merger
unless and until it receives the Requisite Stockholder Approval of the Acquiror
Stockholders.
(f) NONCONTRAVENTION. Except as disclosed in ss.4(h) of the Acquiror
Disclosure Letter, neither the execution and the delivery of this Agreement, nor
the consummation of the transactions contemplated hereby, will (i) violate any
constitution, statute, regulation, rule, injunction, judgment, order, decree or
other restriction of any Government Entity to which Acquiror or any of its
Subsidiaries is subject or any provision of the charter or by-laws of Acquiror
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or any of its Subsidiaries or (ii) conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create in any party
the right to accelerate, terminate, modify or cancel or require any notice under
any agreement, contract, lease, license, instrument or other arrangement to
which either Acquiror or any of its Subsidiaries is a party or by which it is
bound or to which any of its assets is subject, except in the case of clause
(ii) where the violation, conflict, breach, default, acceleration, termination,
modification, cancellation or failure to give notice would not reasonably be
expected to have a Acquiror Material Adverse Effect. Other than as required
under the provisions of the Hart-Scott-Rodino Act, Foreign Competition Laws,
Nasdaq, the Securities Exchange Act, the Securities Act and state securities
laws neither Acquiror nor any of its Subsidiaries needs to give any notice to,
make any filing with or obtain any authorization, consent or approval of any
Government Entity in order for the Parties to consummate the transactions
contemplated by this Agreement, except where the failure to give notice, to file
or to obtain any authorization, consent or approval would not reasonably be
expected to have a Acquiror Material Adverse Effect or except as set forth in
ss.4(f) of the Acquiror Disclosure Letter. "Required Acquiror Consents" means
any authorization, consent or approval of a Government Entity or other Third
Party required to be obtained pursuant to any Foreign Competition Laws or state
securities laws or so that a matter set forth in ss. 4(f) of the Acquiror
Disclosure Letter would not be reasonably expected to have a Acquiror Material
Adverse Effect for purposes of this ss.4(f).
(g) FILINGS WITH THE SEC. Acquiror has made all filings with the SEC
that it has been required to make under the Securities Act and the Securities
Exchange Act (collectively, the "Acquiror Reports"). Each of the Acquiror
Reports has complied with the Securities Act and the Securities Exchange Act in
all material respects. None of the Acquiror Reports, as of their respective
dates, contained any untrue statement of a material fact or omitted to state a
material fact necessary in order to make the statements made therein, in light
of the circumstances under which they were made, not misleading.
(h) FINANCIAL STATEMENTS.
(i) Acquiror has filed an Annual Report on Form 10-K (the
"ACQUIROR 10-K") for the fiscal year ended December 31, 1998 and a
Quarterly Report on Form 10-Q (the "ACQUIROR 10-Q") for the fiscal
quarter ended June 30, 1999. The financial statements included in the
Acquiror 10-K and the Acquiror 10-Q (including the related notes and
schedules) have been prepared from the books and records of Acquiror
and its Subsidiaries in accordance with GAAP applied on a consistent
basis throughout the periods covered thereby, and present fairly in
all material respects the financial condition of Acquiror and its
Subsidiaries as of the indicated dates and the results of operations
and cash flows of Acquiror and its Subsidiaries for the periods set
forth therein (subject in the case of quarterly financial statements
to the absence of complete footnotes and subject to normal year-end
audit adjustments).
(ii) From January 1, 1999 until the date of this Agreement,
Acquiror and its Subsidiaries have not incurred any liabilities that
are of a nature that would be required to be disclosed on a balance
sheet of Acquiror and its Subsidiaries or the footnotes thereto
prepared in conformity with GAAP, other than (A) liabilities incurred
-24-
in the ordinary course of business that would not, individually or in
the aggregate, reasonably be expected to have a Acquiror Material
Adverse Effect or (B) liabilities disclosed in ss.4(h) of the Acquiror
Disclosure Letter or in Acquiror Reports filed prior to the date
hereof.
(i) EVENTS SUBSEQUENT TO JANUARY 1, 1999. From January 1, 1999 to the
date of this Agreement, except as disclosed in the Acquiror Reports filed prior
to the date hereof or except as set forth in ss. 4(i) of the Acquiror Disclosure
Letter, (i) Acquiror and its Subsidiaries have conducted their respective
businesses only in, and have not engaged in any transaction other than according
to, the ordinary and usual course of such businesses, and (ii) there has not
been (A) any change in the financial condition, business or results of
operations of Acquiror or any of its Subsidiaries, or any development or
combination of developments relating to Acquiror or any of its Subsidiaries of
which management of Acquiror has knowledge, and which would reasonably be
expected to have an Acquiror Material Adverse Effect; (B) any declaration,
setting aside or payment of any dividend or other distribution with respect to
the capital stock of Acquiror, or any redemption, repurchase or other
reacquisition of any of the capital stock of Acquiror; (C) any change by
Acquiror in accounting principles, practices or methods; (D) any increase in the
compensation of any officer of Acquiror or any of its Subsidiaries or grant of
any general salary or benefits increase to the employees of Acquiror or any of
its Subsidiaries other than in the ordinary course of business consistent with
past practices; (E) any issuance or sale of any capital stock or other
securities (including any Stock Rights) by Acquiror or any of its Subsidiaries
of any kind, other than upon exercise of Stock Rights issued by or binding upon
Acquiror; (F) any modification, amendment or change to the terms or conditions
of any Stock Right; or (G) any split, combination, reclassification, redemption,
repurchase or other reacquisition of any capital stock or other securities of
Acquiror or any of its Subsidiaries.
(j) COMPLIANCE. Except as set forth in ss.4(j) of the Acquiror
Disclosure Letter or in Acquiror Reports filed prior to the date hereof,
Acquiror and its Subsidiaries are in compliance with all applicable foreign,
federal, state and local laws, rules and regulations and all court orders,
judgments and decrees to which any of them is a party except where the failure
to be in compliance would not reasonably be expected to have a Acquiror Material
Adverse Effect.
(k) BROKERS' AND OTHER FEES. Except as set forth in ss.4(k) of the
Acquiror Disclosure Letter, none of Acquiror and its Subsidiaries has any
liability or obligation to pay any fees or commissions to any broker, finder or
agent with respect to the transactions contemplated by this Agreement.
(l) LITIGATION AND LIABILITIES. Except as disclosed in ss.4(l) of the
Acquiror Disclosure Letter or in Acquiror Reports filed prior to the date
hereof, there are (i) no actions, suits or proceedings pending or, to the
knowledge of Acquiror, threatened against Acquiror or any of its Subsidiaries,
or any facts or circumstances known to Acquiror which may give rise to an
action, suit or proceeding against Acquiror or any of its Subsidiaries, which
would reasonably be expected to have a Acquiror Material Adverse Effect and (ii)
no obligations or liabilities of Acquiror or any of its Subsidiaries, whether
accrued, contingent or otherwise, to Acquiror which would reasonably be expected
to have an Acquiror Material Adverse Effect.
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(m) TAXES. Except as set forth in ss.4(m) of the Acquiror Disclosure
Letter or in Acquiror Reports filed prior to the date hereof, Acquiror and each
of its Subsidiaries have duly filed or caused to be duly filed on their behalf
all federal, state, local and foreign Tax Returns required to be filed by them,
and have duly paid, caused to be paid or made adequate provision for the payment
of all Taxes required to be paid in respect of the periods covered by such Tax
Returns, except where the failure to file such Tax Returns or pay such Taxes
would not reasonably be expected to have an Acquiror Material Adverse Effect.
Except as set forth in ss.4(m) of the Acquiror Disclosure Letter, no claims for
Taxes have been asserted against Acquiror or any of its Subsidiaries and no
material deficiency for any Taxes has been proposed, asserted or assessed which
has not been resolved or paid in full. To the knowledge of Acquiror, no Tax
Return or taxable period of Acquiror or any of its Subsidiaries is under
examination by any taxing authority, and neither Acquiror nor any of its
Subsidiaries has received written notice of any pending audit by any taxing
authority. There are no outstanding agreements or waivers extending the
statutory period of limitation applicable to any Tax Return for any period of
Acquiror or any or its Subsidiaries. Except as set forth in ss.4(m) of the
Acquiror Disclosure Letter, there are no tax liens other than liens for Taxes
not yet due and payable relating to Acquiror or any of its Subsidiaries.
Acquiror has no reason to believe that any conditions exist that could
reasonably be expected to prevent the Merger from qualifying as a reorganization
within the meaning of Section 368(a) of the Code. Neither Acquiror nor any of
its Subsidiaries is a party to any agreement or contract which would result in
payment of any "excess parachute payment" within the meaning of Section 280G of
the Code as a result of the transactions contemplated hereby. Neither Acquiror
nor any of its Subsidiaries has filed any consent pursuant to Section 341(f) of
the Code or agreed to have Section 341(f)(2) of the Code apply to any
disposition of a subsection (f) asset owned by Acquiror or any of its
Subsidiaries. Acquiror has not been and is not a United States real property
holding company (as defined in Section 897(c)(2) of the Code) during the
applicable period specified in Section 897(c)(1)(A)(ii) of the Code. None of
Acquiror or its Subsidiaries (x) has been a member of an "affiliated group,"
within the meaning of Section 1504(a) of the Code, other than a group the common
acquiror of which was the Acquiror or (y) has any liability for the Taxes of any
person, other than any of Acquiror or its Subsidiaries under Treasury Regulation
ss.1.1502-6 (or any similar provision of state, local or foreign law) as a
transferee, successor, by contract or otherwise.
(n) FAIRNESS OPINION. Kaufman Brothers, L.P. has delivered the
Acquiror Fairness Opinion to the Acquiror Board, and a true and complete copy
thereof has been furnished to the Company.
(o) EMPLOYEE BENEFITS.
(i) All pension, profit-sharing, deferred compensation,
savings, stock bonus and stock option plans, and all employee benefit
plans, whether or not covered by ERISA which are sponsored by
Acquiror, any Subsidiary of Acquiror or any Acquiror ERISA Affiliate
(as defined below) of Acquiror or to which Acquiror, any Subsidiary of
Acquiror or any Acquiror ERISA Affiliate of Acquiror makes
contributions, and which cover employees of Acquiror or any Subsidiary
of Acquiror (the "ACQUIROR EMPLOYEES") or former employees of Acquiror
or any Subsidiary of Acquiror, all employment or severance contracts
with employees of Acquiror or any Subsidiary of Acquiror, and any
applicable "change of control" or similar provisions in any plan,
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contract or arrangement that cover Acquiror Employees (collectively,
"ACQUIROR BENEFIT PLANS" and individually a "ACQUIROR BENEFIT PLAN")
are accurately and completely listed in ss.4(o) of the Acquiror
Disclosure Letter. No Acquiror Benefit Plan is a multi-employer plan,
money purchase plan, defined benefit plan, multiple employer plan or
multiple employer welfare arrangement and no Acquiror Benefit Plan is
covered by Title IV of ERISA. True and complete copies of all Acquiror
Benefit Plans (other than medical and other similar welfare plans made
generally available to all Acquiror Employees) have been made
available to the Company.
(ii) All Acquiror Benefit Plans to the extent subject to
ERISA, are in compliance in all material respects with ERISA and the
rules and regulations promulgated thereunder. Each Acquiror Benefit
Plan which is an "employee pension benefit plan" within the meaning of
Section 3(2) of ERISA ("ACQUIROR PENSION PLAN") and which is intended
to be qualified under Section 401(a) of the Code, has received a
favorable determination letter from the Internal Revenue Service,
which determination letter is currently in effect, and there are no
proceedings pending or, to the knowledge of Acquiror, threatened, or
any facts or circumstances known to Acquiror, which are reasonably
likely to result in revocation of any such favorable determination
letter. There is no pending or, to the knowledge of Acquiror,
threatened litigation relating to the Acquiror Benefit Plans. Neither
Acquiror nor any of its Subsidiaries has engaged in a transaction with
respect to any Acquiror Benefit Plan that, assuming the taxable period
of such transaction expired as of the date hereof, is reasonably
likely to subject Acquiror or any of its Subsidiaries to a tax or
penalty imposed by either Section 4975 of the Code or Section 502(i)
of ERISA.
(iii) No liability under Title IV of ERISA has been or is
reasonably likely to be incurred by Acquiror or any of its
Subsidiaries with respect to any ongoing, frozen or terminated
Acquiror Benefit Plan that is a "single-employer plan", within the
meaning of Section 4001(a)(15) of ERISA, currently or formerly
maintained by any of them, or the single-employer plan of any entity
which is considered a predecessor of Acquiror or one employer with
Acquiror under Section 4001 of ERISA (a "ACQUIROR ERISA AFFILIATE").
All contributions required to be made under the terms of any Acquiror
Benefit Plan have been timely made or reserves therefor on the balance
sheet of Acquiror have been established, which reserves are adequate.
Except as required by Part 6 of Title I of ERISA, Acquiror does not
have any unfunded obligations for retiree health and life benefits
under any Acquiror Benefit Plan.
(iv) Acquiror and its Subsidiaries have not incurred any
liability under, and have complied in all material respects with, the
WARN Act, and no fact or event exists that could give rise to
liability under such act.
(p) YEAR 2000. Except as disclosed in the previously filed Acquiror
Reports, Acquiror's products and information systems are Year 2000 Compliant
except to the extent that their failure to be Year 2000 Compliant would not,
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individually or in the aggregate, reasonably be expected to have an Acquiror
Material Adverse Effect.
(q) ENVIRONMENTAL MATTERS. Except for such matters that, individually
or in the aggregate, would not reasonably be expected to have an Acquiror
Material Adverse Effect or would not otherwise require disclosure pursuant to
the Securities Exchange Act, or are listed in ss.4(q) of the Acquiror Disclosure
Letter or described in Acquiror Reports filed prior to the date hereof, (i) each
of Acquiror and its Subsidiaries has complied and is in compliance with all
applicable Environmental Laws; (ii) the properties currently owned or operated
by Acquiror or any of its Subsidiaries (including soils, groundwater, surface
water, buildings or other structures) are not contaminated with Hazardous
Substances (as defined below); (iii) neither Acquiror nor any of its
Subsidiaries is subject to liability for any Hazardous Substance disposal or
contamination on any third party property; (iv) neither Acquiror nor any or its
Subsidiaries has had any release or threat of release of any Hazardous
Substance; (v) neither Acquiror nor any of its Subsidiaries has received any
notice, demand, threat, letter, claim or request for information alleging that
it or any of its Subsidiaries may be in violation of or liable under any
Environmental Law (including any claims relating to electromagnetic fields or
microwave transmissions); (vi) neither Acquiror nor any of its Subsidiaries is
subject to any orders, decrees, injunctions or other arrangements with any
governmental or regulatory authority of competent jurisdiction or is subject to
any indemnity or other agreement with any third party relating to liability
under any Environmental Law or relating to Hazardous Substances; and (vii) there
are no circumstances or conditions involving Acquiror or any of its Subsidiaries
that would reasonably be expected to result in any claims, liabilities,
investigations, costs or restrictions on the ownership, use or transfer of any
of its properties pursuant to any Environmental Law.
(r) INTELLECTUAL PROPERTY. Except as disclosed in ss.4(r) of the
Acquiror Disclosure Letter or in the Acquiror Reports filed prior to the date
hereof, Acquiror and its Subsidiaries have all right, title and interest in, or
a valid and binding license to use, all Acquiror Intellectual Property (as
defined below). Except as disclosed in ss.4(r) of the Acquiror Disclosure Letter
or in the Acquiror Reports filed prior to the date hereof, Acquiror and its
Subsidiaries (i) have not defaulted in any material respect under any license to
use any Acquiror Intellectual Property, (ii) are not the subject of any
proceeding or litigation for infringement of any third party intellectual
property, (iii) have no knowledge of circumstances that would be reasonably
expected to give rise to any such proceeding or litigation and (iv) have no
knowledge of circumstances that are causing or would be reasonably expected to
cause the loss or impairment of any Acquiror Intellectual Property, other than a
default, proceeding, litigation, loss or impairment that is not having or would
not be reasonably expected to have, individually or in the aggregate, an
Acquiror Material Adverse Effect.
For purposes of this Agreement, "ACQUIROR INTELLECTUAL PROPERTY"
means patents and patent rights, trademarks and trademark rights, trade names
and trade name rights, service marks and service mark rights, copyrights and
copyright rights, trade secret and trade secret rights, and other intellectual
property rights, and all pending applications for and registrations of any of
the foregoing that are individually or in the aggregate material to the conduct
of the business of Acquiror and its Subsidiaries taken as a whole.
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(s) INSURANCE. Except as set forth in ss.4(s) of the Acquiror
Disclosure Letter, each of Acquiror and its Subsidiaries is insured with
financially responsible insurers in such amounts and against such risks and
losses as are customary for companies conducting the business as conducted by
Acquiror and its Subsidiaries.
(t) CERTAIN CONTRACTS. Except as set forth in ss.4(t) of the Acquiror
Disclosure Letter, all material to which Acquiror or any of its Subsidiaries is
a party or may be bound that are required by Item 610(b)(10) of Regulation S-K
to be filed as exhibits to, or incorporated by reference in, the Acquiror 10-K
or the Acquiror 10-Q have been so filed or incorporated by reference. All
material contracts to which Acquiror or any of its Subsidiaries is a party or
may be bound that have been entered into as of the date hereof and will be
required by Item 610(b)(10) of Regulation S-K to be filed or incorporated by
reference into Acquiror's Quarterly Report on Form 10-Q for the period ending
September 30, 1999, but which have not previously been filed or incorporated by
reference into any Acquiror Reports, are set forth in ss.4(t) of the Acquiror
Disclosure Letter. All contracts, licenses, consents, royalty or other
agreements which are material to Acquiror and its Subsidiaries, taken as a
whole, to which Acquiror or any of its Subsidiaries is a party (the "ACQUIROR
CONTRACTS") are valid and in full force and effect on the date hereof except to
the extent they have previously expired in accordance with their terms or, to
the extent such invalidity would not reasonably be expected to have an Acquiror
Material Adverse Effect and, to Acquiror's knowledge, neither Acquiror nor any
of its Subsidiaries has violated any provision of, or committed or failed to
perform any act which with or without notice, lapse of time or both would
constitute a default under the provisions of, any Acquiror Contract, except for
defaults which individually and in the aggregate would not reasonably be
expected to result in an Acquiror Material Adverse Effect.
(u) ACCOUNTING AND TAX MATTERS. To Acquiror's knowledge, neither
Acquiror nor any of its Affiliates has taken or agreed to take any action, or
knows of any circumstances, that (without regard to any action taken or agreed
to be taken or agreed to be taken by the Company or any of its Affiliates) would
prevent the Merger from qualifying as a reorganization within the meaning of
Section 368(a) of the Code.
5. COVENANTS. The Parties agree as follows with respect to the period
from and after the execution of this Agreement through and including the
Effective Time (except for ss.5(j), ss.5(l) and ss.5(q), which will apply from
and after the Effective Time in accordance with their respective terms and
ss.5(p) which will apply from the date hereof and shall survive after the
Closing).
(a) GENERAL. Each of the Parties will use all reasonable efforts to
take all actions and to do all things necessary in order to consummate and make
effective the transactions contemplated by this Agreement (including
satisfaction, but not waiver, of the closing conditions set forth in ss.6
below).
(b) NOTICES AND CONSENTS. The Company and Acquiror will give any
notices (and will cause each of their respective Subsidiaries to give any
notices) to third parties, and will use all reasonable efforts to obtain (and
will cause each of their respective Subsidiaries to use all reasonable efforts
to obtain) any third-party consents, that may be required in connection with the
matters referred to in ss.3(f) and ss.4(f) above (regardless of whether the
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failure to give such notice or obtain such consent would result in a Company
Material Adverse Effect or a Acquiror Material Adverse Effect).
(c) REGULATORY MATTERS AND APPROVALS. Each of the Parties, promptly
after the date hereof, will (and the Company, promptly after the date hereof,
will cause each of its Subsidiaries to) give any notices to, make any filings
with and use all reasonable efforts to obtain any authorizations, consents and
approvals of Government Entities in connection with the matters referred to in
ss.3(f) and ss.4(f) above. Without limiting the generality of the foregoing:
(i) FEDERAL SECURITIES LAWS. As promptly as practicable
following the date hereof, Acquiror shall, in cooperation with the
Company, prepare and file with the SEC preliminary proxy materials
which shall constitute the Joint Proxy Statement/Prospectus (such
proxy statement/prospectus, and any amendments or supplements thereto,
the "JOINT PROXY STATEMENT/PROSPECTUS") and a registration statement
on Form S-4 with respect to the issuance of Acquiror Shares in
connection with the Merger (such registration statement, and any
amendments or supplements thereto, the "REGISTRATION STATEMENT"), and
file with state securities administrators such registration statements
or other documents as may be required under applicable blue sky laws
to qualify or register such Acquiror Shares in such states as are
designated by the Company (the "BLUE SKY FILINGS"). The Joint Proxy
Statement/Prospectus will be included in the Registration Statement as
Acquiror's prospectus. The Registration Statement and the Joint Proxy
Statement/Prospectus shall comply as to form in all material respects
with the applicable provisions of the Securities Act and the Exchange
Act and the rules and regulations thereunder. Acquiror shall use all
reasonable efforts to have the Registration Statement declared
effective by the SEC as promptly as practicable after filing with the
SEC and to keep the Registration Statement effective as long as is
necessary to consummate the Merger. Acquiror agrees that none of the
information supplied or to be supplied by Acquiror for inclusion or
incorporation by reference in the Registration Statement and/or the
Joint Proxy Statement/Prospectus and each amendment or supplement
thereto, at the time of mailing thereof and at the time of the Company
Special Meeting or the Acquiror Special Meeting, will contain an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The Company agrees that none of the information supplied
or to be supplied by the Company for inclusion or incorporation by
reference in the Joint Proxy Statement/Prospectus and each amendment
or supplement thereto, at the time of mailing thereof and at the time
of the Company Special Meeting or the Acquiror Special Meeting, will
contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they
were made, not misleading. For purposes of the foregoing, it is
understood and agreed that information concerning or related to
Acquiror and the Acquiror Special Meeting will be deemed to have been
supplied by Acquiror, and information concerning or related to the
Company and the Company Special Meeting shall be deemed to have been
supplied by the Company. Acquiror will provide the Company with a
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reasonable opportunity to review and comment on the Joint Proxy
Statement/Prospectus and any amendment or supplement thereto prior to
filing such with the SEC, will provide the Company with a copy of all
such filings concurrent with their filing with the SEC and will notify
the Company as promptly as practicable after the receipt of any
comments from the SEC or its staff or from any state securities
administrators and of any request by the SEC or its staff or by any
state securities administrators for amendments or supplements to the
Registration Statement or any Blue Sky Filings or for additional
information, and will supply the Company and its legal counsel with
copies of all correspondence between Acquiror or any of its
representatives, on the one hand, and the SEC, its staff or any state
securities administrators, on the other hand, with respect to the
Registration Statement. No change, amendment or supplement to the
information supplied by the Company for inclusion in the Joint Proxy
Statement/Prospectus shall be made without the approval of the
Company, which approval shall not be unreasonably withheld or delayed.
If, at any time prior to the Effective Time, any event relating to the
Company or Acquiror or any of their respective Affiliates, officers or
directors is discovered by the Company or Acquiror, as the case may
be, that is required by the Securities Act or the Securities Exchange
Act to be set forth in an amendment to the Registration Statement or a
supplement to the Joint Proxy Statement/Prospectus, the Company or
Acquiror, as the case may be, will as promptly as practicable inform
the other, and such amendment or supplement will be promptly filed
with the SEC and disseminated to the stockholders of the Company and
Acquiror, to the extent required by applicable securities laws. All
documents which the Company or Acquiror files or is responsible for
filing with the SEC and any other regulatory agency in connection with
the Merger (including, without limitation, the Registration Statement
and the Joint Proxy Statement/Prospectus) will comply as to form and
content in all material respects with the provisions of applicable
law. Notwithstanding the foregoing, the Company, on the one hand, and
Acquiror, on the other hand, make no representations or warranties
with respect to any information that has been supplied in writing by
the other, or the other's auditors, attorneys or financial advisors,
specifically for use in the Registration Statement or the Joint Proxy
Statement/Prospectus, or in any other documents to be filed with the
SEC or any other regulatory agency expressly for use in connection
with the transactions contemplated hereby.
(ii) STATE CORPORATION LAW. The Company will take all
action, to the extent necessary in accordance with applicable law, its
certificate of incorporation and by-laws to convene a special meeting
of its stockholders (the "COMPANY SPECIAL MEETING"), as soon as
reasonably practicable in order that its stockholders may consider and
vote upon the adoption of this Agreement and the approval of the
Merger in accordance with the Massachusetts Business Corporation Law.
Acquiror will take all action, to the extent necessary in accordance
with applicable law, its certificate of incorporation and by-laws to
convene a special meeting of its stockholders (the "ACQUIROR SPECIAL
MEETING"), as soon as reasonably practicable in order that its
stockholders may consider and vote upon the adoption of this Agreement
and the approval of the Merger in accordance with the Delaware
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Business Corporation Law, the issuance of Acquiror Shares in
connection with the Merger as provided in this Agreement as required
by the rules of Nasdaq and an amendment to the certificate of
incorporation of Acquiror to increase the number of authorized
Acquiror Shares. The Company and Acquiror shall mail the Joint Proxy
Statement/Prospectus to their respective stockholders simultaneously
and as soon as reasonably practicable. Subject to ss.5(h)(iv) and
ss.5(i)(iv) below, the Joint Proxy Statement/Prospectus shall contain
the affirmative unanimous recommendations of the Company Board in
favor of the adoption of this Agreement and the approval of the Merger
and of the Acquiror Board in favor of issuance of Acquiror Shares in
connection with the Merger as provided in the Agreement as required by
the rules of Nasdaq and the increase in the number of authorized
Acquiror Shares in accordance with the Delaware General Corporation
Law.
(iii) PERIODIC REPORTS. Each of the Parties and its counsel
shall be given an opportunity to review each Form 10-K and Form 10-Q
(and any amendments thereto) to be filed by the other Party under the
Securities Exchange Act prior to their being filed with the SEC and
Nasdaq, and shall be provided with final copies thereof concurrently
with their filing with the SEC.
(d) OPERATION OF THE COMPANY'S BUSINESS. Except as set forth in
ss.5(d) of the Company Disclosure Letter or as otherwise expressly contemplated
by this Agreement, the Company will not (and will not cause or permit any of its
Subsidiaries to), without the written consent of Acquiror, take any action or
enter into any transaction other than in the ordinary course of business
consistent with past practice. Without limiting the generality of the foregoing,
except as expressly provided in this Agreement or ss.5(d) of the Company
Disclosure Letter, without the written consent of Acquiror:
(i) none of the Company and its Subsidiaries will authorize
or effect any change in its charter or by-laws or comparable
organizational document;
(ii) none of the Company and its Subsidiaries will grant any
Stock Rights or issue, sell, authorize or otherwise dispose of any of
its capital stock, (x) except upon the conversion or exercise of Stock
Rights outstanding as of the date of this Agreement and (y) except for
stock options issued to employees of the Company and its Subsidiaries
in a manner consistent with past practice which (I) do not provide for
the issuance of more than 200,000 Company Shares in any calendar
quarter, (II) are issued only to new employees and employees promoted
after the date hereof, (III) are issued at not less than the market
price of the Company Stock on the date of grant, (IV) are not issued
to any executive officer or director of the Company and (V) do not
provide for accelerated vesting as a result of the Merger;
(iii) none of the Company and its Subsidiaries will sell,
lease, encumber or otherwise dispose of, or otherwise agree to sell,
lease, encumber or otherwise dispose of, any of its assets which are
material, individually or in the aggregate, to the Company and its
Subsidiaries taken as a whole, other than equipment sales from
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inventory arising in the ordinary course of business consistent with
past practice;
(iv) none of the Company and its Subsidiaries (other than
wholly-owned Subsidiaries) will declare, set aside or pay any dividend
or distribution with respect to its capital stock (whether in cash or
in kind);
(v) none of the Company and its Subsidiaries will split,
combine or reclassify any of its capital stock or redeem, repurchase
or otherwise acquire any of its capital stock;
(vi) none of the Company and its Subsidiaries will acquire
or agree to acquire by merger or consolidation with, or by purchasing
a substantial equity interest in or a substantial portion of the
assets of, or by any other manner, any business of any Person or
division thereof or otherwise acquire or agree to acquire any assets
(other than assets used in the operation of the business of the
Company and its Subsidiaries in the ordinary course consistent with
past practice);
(vii) none of Company or its Subsidiaries will incur or
commit to any capital expenditures other than capital expenditures
incurred or committed to in the ordinary course of business consistent
with past practice and which, together with all such expenditures
incurred or committed since January 1, 1999, are not in excess of the
respective amounts by category or in the aggregate set forth in the
Company's capital expenditure budget, as previously disclosed to
Acquiror or, if the Closing Date has not occurred prior to December
31, 1999, such additional amounts for any subsequent period as may be
consented to by Acquiror, such consent not to be unreasonably
withheld, or, if Acquiror shall not have so consented, an amount not
greater than an amount equal to a pro rata portion of the Company's
1999 capital expenditure budget;
(viii) none of the Company or its Subsidiaries will (x)
other than in connection with actions permitted by ss.5(d)(vi), make
any loans, advances or capital contributions to, or investments in,
any other Person, other than by the Company or a Subsidiary of the
Company to or in the Company or any Subsidiary of the Company, (y)
pay, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise),
other than payments, discharges or satisfactions incurred or committed
to in the ordinary course of business consistent with past practice or
(z) other than in connection with actions permitted by ss.5(d)(vi),
create, incur, assume or suffer to exist any indebtedness, issuances
of debt securities, guarantees, Security Interests, loans or advances
not in existence as of the date of this Agreement except pursuant to
the credit facilities, indentures and other arrangements in existence
on the date of this Agreement and incurred in the ordinary course of
business consistent with past practice, and any other indebtedness
existing on the date of this Agreement, in each case as such credit
facilities, indentures, other arrangements and other existing
indebtedness may be amended, extended, modified, refunded, renewed or
refinanced after the date of this Agreement, but only if the aggregate
principal amount thereof is not increased thereby, the term thereof is
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not extended thereby and the other terms and conditions thereof, taken
as a whole, are not less advantageous to the Company and its
Subsidiaries than those in existence as of the date of this Agreement;
(ix) none of the Company and its Subsidiaries will make any
change in employment terms for any of its directors, officers and
employees other than (A) customary increases to employees whose total
annual cash compensation is less than $120,000 awarded in the ordinary
course of business consistent with past practices, and (B) customary
employee bonuses (including to employees who are officers) approved by
the Company Board and paid in the ordinary course of business
consistent with past practices and (C) immaterial changes to Company
Benefit Plans;
(x) except as disclosed in the Company Reports filed prior
to the date of this Agreement, the Company will not change its methods
of accounting in effect at December 31, 1998 in a manner materially
affecting the consolidated assets, liabilities or results of
operations of the Company, except as required by changes in GAAP as
concurred in by the Company's independent auditors, and the Company
will not (i) change its fiscal year or (ii) make any material tax
election, other than in the ordinary course of business consistent
with past practice;
and (xi) none of the Company and its Subsidiaries will
resolve or commit to any of the foregoing.
In the event the Company shall request Acquiror to consent in writing
to an action otherwise prohibited by this ss.5(d), Acquiror shall use reasonable
efforts to respond in a prompt and timely fashion (but in no event later than
ten (10) business days following such request), but may otherwise respond
affirmatively or negatively in its sole discretion.
(e) OPERATION OF ACQUIROR'S BUSINESS. Except as set forth in ss.5(e)
of the Acquiror Disclosure Letter or as otherwise contemplated by this
Agreement:
(i) none of Acquiror and its Subsidiaries will authorize or
effect any change in its charter or by-laws or comparable
organizational document except for such amendments to its charter,
by-laws or other comparable charter or organizational documents that
do not have an adverse affect on the Merger and the other transactions
contemplated hereby;
(ii) none of Acquiror and its Subsidiaries will grant any
Stock Rights or issue, sell, authorize or otherwise dispose of any of
its capital stock, except (x) upon the conversion or exercise of Stock
Rights outstanding as of the date of this Agreement or issued pursuant
to the following clauses (y) and (z); (y) stock options issued to
employees of the Acquiror and its Subsidiaries in a manner consistent
with past practice which (I) do not provide for the issuance of more
than 200,000 Acquiror Shares in any calendar quarter, (II) are issued
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only to new employees and employees promoted after the date hereof,
(III) are issued at not less than the market price of the Acquiror
Stock on the date of grant, (IV) are not issued to any executive
officer or director of the Acquiror and (V) do not provide for
accelerated vesting as a result of the Merger; and (z) Stock Rights
and capital stock issued as consideration for acquisitions as
permitted by ss.5(e)(vi);
(iii) none of Acquiror and its Subsidiaries will sell,
lease, encumber or otherwise dispose of, or otherwise agree to sell or
otherwise dispose of, any of its assets which are material,
individually or in the aggregate, to Acquiror and its Subsidiaries
taken as a whole, other than equipment sales from inventory arising in
the ordinary course of business consistent with past practice;
(iv) none of Acquiror and its Subsidiaries (other than
wholly owned Subsidiaries) will declare, set aside or pay any dividend
or distribution with respect to its capital stock (whether in cash or
in kind);
(v) none of Acquiror and its Subsidiaries will split,
combine or reclassify any of its capital stock or redeem, repurchase
or otherwise acquire any of its capital stock;
(vi) without Prior Consultation, none of Acquiror and its
Subsidiaries will acquire or agree to acquire by merger or
consolidation with, or by purchasing a substantial equity interest in
or a substantial portion of the assets of, or by any other manner, any
business of any Person or division thereof or otherwise acquire or
agree to acquire any substantial assets in a single transaction or
series of related transactions;
(vii) without Prior Consultation, none of Acquiror or its
Subsidiaries will incur or commit to any capital expenditures other
than capital expenditures incurred or committed to in the ordinary
course of business consistent with past practice; (viii) without Prior
Consultation, none of Acquiror or its Subsidiaries will (A) other than
in connection with actions permitted by ss.5(e)(vii), make any loans,
advances or capital contributions to, or investments in, any other
Person, other than by Acquiror or a Subsidiary of Acquiror to or in
Acquiror or any Subsidiary of Acquiror, (B) pay, discharge or satisfy
any claims, liabilities or obligations (absolute, accrued, asserted or
unasserted, contingent or otherwise), other than loans, advances,
capital contributions, investments, payments, discharges or
satisfactions incurred or committed to in the ordinary course of
business consistent with past practice or (C) other than in connection
with actions permitted by ss.5(e)(vii), create, incur, assume or
suffer to exist any indebtedness, issuances of debt securities,
guarantees, Security Interests, loans or advances not in existence as
of the date of this Agreement except pursuant to the credit
facilities, indentures and other arrangements in existence on the date
of this Agreement and incurred in the ordinary course of business
consistent with past practice, and any other indebtedness existing on
the date of this Agreement, in each case as such credit facilities,
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indentures, other arrangements and other existing indebtedness may be
amended, extended, exchanged, modified, refunded, renewed or
refinanced after the date of this Agreement, but only if the aggregate
principal amount thereof is not increased thereby, the term thereof is
not extended thereby and the other terms and conditions thereof, taken
as a whole, are not less advantageous to Acquiror and its Subsidiaries
than those in existence as of the date of this Agreement;
(ix) none of the Acquiror and its Subsidiaries will make any
change in employment terms for any of its directors, officers and
employees other than (A) customary increases to employees whose total
annual cash compensation is less than $120,000 awarded in the ordinary
course of business consistent with past practices, and (B) customary
employee bonuses (including to employees who are officers) approved by
the Acquiror Board and paid in the ordinary course of business
consistent with past practices and (C) immaterial changes to Acquiror
Benefit Plans;
(x) Acquiror will not change its methods of accounting in
effect at December 31, 1998 in a manner materially affecting the
consolidated assets, liabilities or operating results of Acquiror,
except as required by changes in GAAP as concurred in by Acquiror's
independent auditors, and Acquiror will not (i) change its fiscal year
or (ii) make any material tax election, other than in the ordinary
course of business consistent with past practice; and
(xi) none of Acquiror and its Subsidiaries will resolve or
commit to any of the foregoing (A) which requires the Company's
consent unless it has obtained such consent or (B) which requires
Prior Consultation unless it has afforded Prior Consultation.
In the event Acquiror shall request the Company to consent in writing
to an action otherwise prohibited by this ss. 5(e), the Company shall use
reasonable efforts to respond in a prompt and timely fashion (but in no event
later than ten (10) business days following such request), but may otherwise
respond affirmatively or negatively in its sole discretion.
(f) ACCESS. Each Party will (and will cause each of its Subsidiaries
to) permit representatives of the other Party to have access at all reasonable
times and in a manner so as not to materially interfere with the normal business
operations of the Company and its Subsidiaries, or Acquiror and its
Subsidiaries, as applicable, to all premises, properties, personnel, books,
records (including without limitation tax and financial records), contracts and
documents of or pertaining to such Party. Each Party and all of its respective
representatives will treat and hold as such any Confidential Information it
receives from the other Party or any of its representatives in accordance with
the Confidentiality Agreement.
(g) NOTICE OF DEVELOPMENTS. Each Party will give prompt written notice
to the others of any material adverse development causing a breach of any of its
own representations and warranties in ss.3 and ss.4 above. No disclosure by any
Party pursuant to this ss.5(g), however, shall be deemed to amend or supplement
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the Company Disclosure Letter or Acquiror Disclosure Letter or to prevent or
cure any misrepresentation, breach of warranty or breach of covenant.
(h) COMPANY EXCLUSIVITY.
(i) The Company shall, and shall cause its Subsidiaries and
Representatives to, immediately cease and terminate any existing
solicitation, initiation, encouragement, activity, discussion or
negotiation with any Persons conducted heretofore by the Company, its
Subsidiaries or any of their respective Affiliates, officers,
directors, employees, financial advisors, agents or representatives
(each a "REPRESENTATIVE") with respect to any proposed, potential or
contemplated Acquisition Proposal.
(ii) From and after the date hereof, without the prior
written consent of Acquiror, the Company will not authorize or permit
any of its Subsidiaries to, and shall cause any and all of its
Representatives not to, directly or indirectly, (A) solicit, initiate,
or encourage any inquiries or proposals that constitute, or could
reasonably be expected to lead to, an Acquisition Proposal, or (B)
engage in negotiations or discussions with any Third Party concerning,
or provide any non-public information to any person or entity relating
to, an Acquisition Proposal, or (C) enter into any letter of intent,
agreement in principle or any acquisition agreement or other similar
agreement with respect to any Acquisition Proposal; PROVIDED, HOWEVER,
that nothing contained in this ss.5(h)(ii) shall prevent the Company
or the Company Board prior to receipt of the Requisite Stockholder
Approval of the Company Stockholders, from furnishing non-public
information to, or entering into discussions or negotiations with, any
Third Party in connection with an unsolicited, bona fide written
proposal for an Acquisition Proposal by such Third Party, if and only
to the extent that (1) such Third Party has made a written proposal to
the Company Board to consummate an Acquisition Proposal, (2) the
Company Board determines in good faith, based upon the advice of a
financial advisor of nationally recognized reputation, that such
Acquisition Proposal is reasonably capable of being completed on
substantially the terms proposed, and would, if consummated, result in
a transaction that would provide greater value to the holders of the
Company Shares than the transaction contemplated by this Agreement (a
"SUPERIOR PROPOSAL"), (3) the failure to take such action would, in
the reasonable good faith judgment of the Company Board, based upon a
written opinion of Company outside legal counsel, be a violation of
its fiduciary duties to the Company's stockholders under applicable
law, and (4) prior to furnishing such non-public information to, or
entering into discussions or negotiations with, such Person, the
Company Board receives from such Person an executed confidentiality
agreement with material terms no less favorable to the Company than
those contained in the Confidentiality Agreement and provides prior
notice of its decision to take such action to Acquiror. The Company
agrees not to release any Third Party from, or waive any provision of,
any standstill agreement to which it is a party or any confidentiality
agreement between it and another Person who has made, or who may
reasonably be considered likely to make, an Acquisition Proposal,
unless the failure to take such action would, in the reasonable good
-37-
faith judgment of the Company Board, based upon written opinion of
Company outside legal counsel, be a violation of its fiduciary duties
to the Company Stockholders under applicable law and such action is
taken prior to receipt of the Requisite Stockholder Approval of the
Company Stockholders. Without limiting the foregoing, it is understood
that any violation of the restrictions set forth in the preceding
sentence by any Representative of the Company or any of its
Subsidiaries shall be deemed to be a breach of this ss.5(h) by the
Company.
(iii) The Company shall notify Acquiror promptly after
receipt by the Company or the Company's knowledge of the receipt by
any of its Representatives of any Acquisition Proposal or any request
for non-public information in connection with an Acquisition Proposal
or for access to the properties, books or records of the Company by
any Person that informs such party that it is considering making or
has made an Acquisition Proposal. Such notice shall be made orally and
in writing and shall indicate the identity of the offeror and the
terms and conditions of such proposal, inquiry or contact. The Company
shall keep Acquiror informed of the status (including any change to
the material terms) of any such Acquisition Proposal or request for
non-public information.
(iv) The Company Board may not withdraw or modify, or
propose to withdraw or modify, in a manner adverse to Acquiror, the
approval or recommendation by the Company Board of this Agreement or
the Merger unless, following the receipt of a Superior Proposal but
prior to receipt of the Requisite Stockholder Approval of the Company
Stockholders, in the reasonable good faith judgment of the Company
Board, based upon the written opinion of Company's outside legal
counsel, the failure to do so would be a violation of the Company
Board's fiduciary duties to the Company's stockholders under
applicable law; PROVIDED, HOWEVER, that, the Company Board shall
submit this Agreement and the Merger to the Company's stockholders for
adoption and approval, whether or not the Company Board at any time
subsequent to the date hereof determines that this Agreement is no
longer advisable or recommends that the stockholders of the Company
reject it or otherwise modifies or withdraws its recommendation.
Unless the Company Board has withdrawn its recommendation of this
Agreement in compliance herewith, the Company shall use its best
efforts to solicit from the Company's stockholders proxies in favor of
the adoption and approval of this Agreement and the Merger and to
secure the vote or consent of the Company's stockholders required by
the Massachusetts Business Corporation Law and its articles of
incorporation and by-laws to adopt and approve this Agreement and the
Merger.
(i) ACQUIROR EXCLUSIVITY.
(i) Acquiror shall, and shall cause its Subsidiaries and
Representatives to, immediately cease and terminate any existing
solicitation, initiation, encouragement, activity, discussion or
negotiation with any Persons conducted heretofore by Acquiror, its
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Subsidiaries or any of its Representatives with respect to any
proposed, potential or contemplated Acquiror Acquisition Proposal the
consummation of which would be reasonably expected to (x) result in a
material delay in the Effective Time or (y) materially and adversely
impact the likelihood of obtaining any Required Company Consent or
Required Acquiror Consent other than those the failures to obtain
would not result in either a Company Material Adverse Effect or a
Acquiror Material Adverse Effect (a "PROHIBITED ACQUIROR ACQUISITION
PROPOSAL").
(ii) From and after the date hereof, Acquiror will notify
the Company of any Acquiror Acquisition Proposal of which notice is
given to the Acquiror Board. Such notice to the Company will be made
promptly after such notice to the Acquiror Board, but will be
conditional upon an appropriate confidentiality Agreement. Without the
prior written consent of the Company, Acquiror will not authorize or
permit any of its Subsidiaries to, and shall cause any and all of its
Representatives not to, directly or indirectly, (A) solicit, initiate,
or encourage any inquiries or proposals that constitute, or could
reasonably be expected to lead to, a Prohibited Acquiror Acquisition
Proposal, or (B) engage in negotiations or discussions with any
Acquiror Third Party concerning, or provide any nonpublic information
to any person or entity relating to, a Prohibited Acquiror Acquisition
Proposal, or (C) enter into any letter of intent, agreement in
principle or any acquisition agreement or other similar agreement with
respect to any Prohibited Acquiror Acquisition Proposal; PROVIDED,
HOWEVER, that nothing contained in this ss.5(i)(ii) shall prevent
Acquiror or the Acquiror Board from, prior to receipt of the Requisite
Stockholder Approval of the Acquiror Stockholders, furnishing
nonpublic information to, or entering into discussions or negotiations
with, any Acquiror Third Party in connection with an unsolicited, bona
fide written proposal for a Prohibited Acquiror Acquisition Proposal
by such Acquiror Third Party, if and only to the extent that (1) such
Acquiror Third Party has made a written proposal to the Acquiror Board
to consummate a Prohibited Acquiror Acquisition Proposal, (2) the
Acquiror Board determines in good faith, based upon the advice of a
financial advisor of nationally recognized reputation, that such
Prohibited Acquiror Acquisition Proposal is reasonably capable of
being completed on substantially the terms proposed, and would, if
consummated, result in a transaction that would provide greater value
to the holders of the Acquiror Shares than the transaction
contemplated by this Agreement (an "ACQUIROR SUPERIOR PROPOSAL"), (3)
the failure to take such action would, in the reasonable good faith
judgment of the Acquiror Board, based upon a written opinion of
Acquiror's outside legal counsel, be a violation of its fiduciary
duties to the Acquiror's stockholders under applicable law, and (4)
prior to furnishing such nonpublic information to, or entering into
discussions or negotiations with, such Person, the Acquiror Board
receives from such Person an executed confidentiality agreement with
material terms no less favorable to Acquiror than those contained in
the Confidentiality Agreement. Acquiror agrees not to release any
Acquiror Third Party from, or waive any provision of, any standstill
agreement to which it is a party or any confidentiality agreement
between it and another Person who has made, or who may reasonably be
considered likely to make, a Prohibited Acquiror Acquisition Proposal,
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unless the failure to take such action would, in the reasonable good
faith judgment of the Acquiror Board, based upon the written opinion
of Acquiror's outside legal counsel, be a violation of its fiduciary
duties to the Acquiror's stockholders under applicable law and such
action is taken prior to receipt of the Requisite Stockholder Approval
of the Acquiror Stockholders. Without limiting the foregoing, it is
understood that any violation of the restrictions set forth in the
preceding sentence by any director or officer of Acquiror or any of
its Subsidiaries or any investment bank, financial advisor, attorney,
accountant or other representative of Acquiror or any of its
Subsidiaries shall be deemed to be a breach of this ss.5(i)(ii) by
Acquiror. A Acquiror Acquisition Proposal shall be deemed a Prohibited
Acquiror Acquisition Proposal at the time (and not before) the
Acquiror Board is first notified of such Acquiror Acquisition
Proposal, and at any time that the Acquiror Board is notified of a
significant development with respect to such Acquiror Acquisition
Proposal, unless the Acquiror Board in good faith determines that such
Acquiror Acquisition Proposal is not, and is not reasonably likely to
become, a Prohibited Parent Acquisition Proposal.
(iii) Acquiror shall notify the Company promptly after
receipt by Acquiror or Acquiror's knowledge of the receipt by any of
its Representatives of any Prohibited Acquiror Acquisition Proposal or
any request for non-public information in connection with a Prohibited
Acquiror Acquisition Proposal or for access to the properties, books
or records of Acquiror by any Person that informs such party that it
is considering making or has made a Prohibited Acquiror Acquisition
Proposal. Such notice shall be made orally and in writing and shall
indicate the identity of the offeror and the terms and conditions of
such proposal, inquiry or contact. Acquiror shall keep the Company
informed of the status (including any change to the material terms) of
any such Prohibited Acquiror Acquisition Proposal or request for
nonpublic information.
(iv) The Acquiror Board may not withdraw or modify, or
propose to withdraw or modify, in a manner adverse to the Company, the
approval or recommendation by the Acquiror Board of this Agreement or
the Merger unless, following the receipt of a Acquiror Superior
Proposal but prior to receipt of the Requisite Stockholder Approval of
the Acquiror stockholders, in the reasonable good faith judgment of
the Acquiror Board, based upon the written opinion of Acquiror's
outside legal counsel, the failure to do so would be a violation of
the Acquiror Board's fiduciary duties to the Acquiror's stockholders
under applicable law; PROVIDED, HOWEVER, that the Acquiror Board shall
submit the Merger to the Acquiror stockholders for adoption and
approval, whether or not the Acquiror Board at any time subsequent to
the date hereof determines that this Agreement is no longer advisable
or recommends that the stockholders of the Acquiror reject the Merger
or otherwise modifies or withdraws its recommendation. Unless the
Acquiror Board has withdrawn its recommendation of the Merger in
compliance herewith, Acquiror shall use its best efforts to solicit
from the Acquiror stockholders proxies in favor of the adoption and
approval of the Merger and to secure the vote or consent of the
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Acquiror's stockholders required by Nasdaq and the Delaware General
Corporation Law.
(v) Prior to taking any action with respect to a Acquiror
Acquisition Proposal which is not a Prohibited Acquiror Acquisition
Proposal equivalent to those permitted by clauses (A), (B) or (C) of
ss.5(i)(ii), Acquiror shall notify each Acquiror Third Party which is
the object of or a party to such action of the limitation on
Prohibited Acquiror Acquisition Proposals set forth in this ss.5(i),
and Acquiror shall not enter into any letter of intent, agreement in
principle or any acquisition agreement or other similar agreement with
respect to any Acquiror Acquisition Proposal unless such letter or
agreement includes a covenant of the applicable Acquiror Third Party
not to take any action which would cause such Acquiror Acquisition
Proposal to become a Prohibited Acquiror Acquisition Proposal.
(j) INSURANCE AND INDEMNIFICATION.
(i) Surviving Corporation will provide each individual who
served as a director or officer of the Company at any time prior to
the Effective Time with liability insurance for a period of six years
after the Effective Time no less favorable in coverage and amount than
any applicable insurance of the Company in effect immediately prior to
the Effective Time; PROVIDED, HOWEVER, that if the existing liability
insurance expires, or is terminated or canceled by the insurance
carrier during such six-year period, the Surviving Corporation will
use its reasonable best efforts to obtain comparable insurance for the
remainder of such period on a commercially reasonable basis; PROVIDED
FURTHER, HOWEVER, that in the event any claim or claims are asserted
within such period, all rights to indemnification in respect of such
claim or claims shall continue until the final disposition thereof;
(ii) After the Effective Time, Surviving Corporation (A)
will not take or permit to be taken any action to alter or impair any
exculpatory or indemnification provisions now existing in the
certificate of incorporation, by-laws or indemnification and
employment agreements of the Company or any of its Subsidiaries for
the benefit of any individual who served as a director or officer of
the Company or any of its Subsidiaries (an "INDEMNIFIED PARTY") at any
time prior to the Effective Time (except as may be required by
applicable law), and (B) shall cause the Surviving Corporation to
honor and fulfill such provisions until the date which is six years
from the Effective Time (except as may be required by applicable law);
PROVIDED, HOWEVER, that in the event any claim or claims are asserted
within such period, all rights to indemnification in respect of such
claim or claims shall continue until the final disposition thereof.
(iii) To the extent clauses (i) and (ii) above shall not
serve to indemnify and hold harmless an Indemnified Party, Surviving
Corporation, subject to the terms and conditions of this clause (iii),
will indemnify, for a period of six years from the Effective Time, to
the fullest extent permitted under applicable law, each Indemnified
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Party from and against any and all actions, suits, proceedings,
hearings, investigations, charges, complaints, claims, demands,
injunctions, judgments, orders, decrees, rulings, damages, dues,
penalties, fines, costs, amounts paid in settlement, liabilities,
obligations, taxes, liens, losses, expenses and fees, including all
court costs and reasonable attorneys' fees and expenses, resulting
from, arising out of, relating to or caused by this Agreement or any
of the transactions contemplated herein; PROVIDED, HOWEVER, that in
the event any claim or claims are asserted or threatened within such
six-year period, all rights to indemnification in respect of any such
claim or claims shall continue until final disposition of any and all
such claims. Any Indemnified Party wishing to claim indemnification
under this clause (iii), notwithstanding anything to the contrary in
the provisions set forth in the Company's or the Surviving
Corporation's certificate of incorporation, by-laws or other
agreements respecting indemnification of directors or officers, upon
learning of any such claim, action, suit, proceeding or investigation,
shall promptly notify Surviving Corporation thereof, but the failure
to so notify shall not relieve Surviving Corporation of any liability
it may have to such Indemnified Party if such failure does not
materially prejudice Surviving Corporation. In the event of any such
claim, action, suit, proceeding or investigation (whether arising
before or after the Effective Time), (A) Acquiror or the Surviving
Corporation shall have the right following the Effective Time to
assume the defense thereof and Surviving Corporation shall not be
liable to such Indemnified Parties for any legal expenses of other
counsel or any other expenses subsequently incurred by such
Indemnified Parties in connection with the defense thereof, except
that if Acquiror or the Surviving Corporation fails to assume such
defense or counsel for the Indemnified Party advises that there are
issues which raise conflicts of interest between Acquiror or the
Surviving Corporation, on the one hand, and the Indemnified Parties,
on the other hand, the Indemnified Parties may retain counsel
satisfactory to them, and the Company, Surviving Corporation shall pay
all reasonable fees and expenses of such counsel for the Indemnified
Parties promptly as statements therefor are received; PROVIDED,
HOWEVER, that Surviving Corporation shall be obligated to pay for only
one firm of counsel for all Indemnified Parties in any jurisdiction
unless the use of one counsel for such Indemnified Parties would
present such counsel with a conflict of interest, in which case
Surviving Corporation need only pay for separate counsel to the extent
necessary to resolve such conflict; (B) the Indemnified Parties will
reasonably cooperate in the defense of any such matter; and (C)
Surviving Corporation shall not be liable for any settlement
effectuated without its prior written consent, which consent shall not
be unreasonably withheld or delayed. Surviving Corporation shall not
settle any action or claim identified in this ss.5(j)(iii) in any
manner that would impose any liability or penalty on an Indemnified
Party not paid by Acquiror or the Surviving Corporation without such
Indemnified Party's prior written consent, which consent shall not be
unreasonably withheld or delayed.
(iv) Notwithstanding anything contained in clause (iii)
above, Surviving Corporation shall not have any obligation hereunder
to any Indemnified Party (A) if the indemnification of such
Indemnified Party by Surviving Corporation in the manner contemplated
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hereby is prohibited by applicable law, (B) the conduct of the
Indemnified Party relating to the matter for which indemnification is
sought involved bad faith or willful misconduct of such Indemnified
Party, or (C) with respect to actions taken by any such Indemnified
Party in his or its individual capacity, including, without
limitations, with respect to any matters relating, directly or
indirectly, to the purchase, sale or trading of securities issued by
the Company other than a tender or sale pursuant to a stock tender
agreement or (D) if such Indemnified Party shall have breached its
obligation to cooperate with Surviving Corporation in the defense of
any claim in respect of which indemnification is sought and such
breach (x) materially and adversely affects Surviving Corporation's
defense of such claim or (y) will materially and adversely affect
Surviving Corporation's defense of such claim if such breach is not
cured within ten days after notice of such breach is delivered to the
Indemnified Party and such breach is not cured during such period.
(k) FINANCIAL STATEMENTS.
(i) As soon as they are made available to and reviewed by
senior management of the Company, the Company shall make available to
Acquiror the internally generated monthly, quarterly (including
quarterly statements for the three-month period ended September 25,
1999) and annual financial statements of the Company, consisting of
consolidated balance sheets, and consolidated statements of income and
of cash flows.
(ii) As soon as they are made available to and reviewed by
senior management of Acquiror, Acquiror shall make available to the
Company the internally generated monthly, quarterly (including,
quarterly statements for the three-month period ended September 30,
1999) and annual financial statements, consisting of consolidated
balance sheets, and consolidated statements of income and of cash
flows.
(l) CONTINUITY OF BUSINESS ENTERPRISE. Acquiror, Surviving Corporation
or any other member of the qualified group (as defined in Treasury Regulation
ss.1.368-1(d)) shall, for the foreseeable future, continue at least one
significant historic business line of the Company or use at least a significant
portion of the Company's historic business assets in a business, in each case
within the meaning of Treasury Regulation ss.1.368-1(d).
(m) ACQUIROR BOARD OF DIRECTORS. At or before the Effective Time, the
Board of Directors of Acquiror will take all action necessary to cause the
number of directors constituting the Acquiror Board of Directors to be fixed at
nine directors and to elect the Chief Executive Officer of the Company and three
independent directors (as defined in National Association of Securities Dealers
Rule 4200(a)(13)) designated by the Company Board to the Acquiror Board. In
addition, at the next annual meeting of Acquiror's stockholders held after the
Effective Time, Acquiror shall cause to be nominated, and Acquiror shall
undertake its commercially reasonable efforts to cause to be elected:
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(i) the Chief Executive Officer of the Company as a Class II
director, to serve until the annual meeting of the Acquiror
Stockholders in 2003;
(ii) two of such independent directors designated by the
Company Board, as Class I directors, to serve until the annual meeting
of the Acquiror's Stockholders in 2002; and
(iii) the other such independent director designated by the
Company Board as a Class III director, to serve until the annual
meeting of the Acquiror Stockholders in 2001.
(n) RULE 145 AFFILIATES. Prior to the Closing Date, the Company shall
deliver to Acquiror a letter identifying all persons who were, at the date of
the Company Special Meeting, "affiliates" of the Company for purposes of Rule
145 under the Securities Act. The Company shall use its reasonable efforts to
cause each such person to deliver to Acquiror on or prior to the Closing Date a
written agreement substantially in the form attached as Exhibit A.
(o) NASDAQ LISTING. Acquiror shall use all reasonable efforts to cause
the Acquiror Shares to be issued in connection with the Merger and under the
Company Benefit Plans to be approved for listing on Nasdaq, subject to official
notice of issuance, prior to the Closing Date.
(p) TAX FREE TREATMENT. The Parties intend the Merger to qualify as a
reorganization under Section 368(a) of the Code. Each Party shall use reasonable
efforts, and shall undertake reasonable efforts to cause its Affiliates to use
reasonable efforts, to cause the Merger to so qualify and to obtain the opinions
referred to in ss. 6(a)(ix) and ss. 6(b)(vii). For purposes of the tax opinions
described in ss. 6(a)(ix) and ss. 6(b)(vii), counsel may receive and rely upon
representations, including those contained in this Agreement or in separate
certificates, of the parties hereto and others. Acquiror and the Company and
each of their respective Affiliates shall not take any action and shall not fail
to take any action or suffer to exist any condition which action or failure to
act or condition would prevent, or would be reasonably likely to prevent, the
Merger from qualifying as a reorganization within the meaning of Section 368(a)
of the Code.
(q) COMPANY EMPLOYEE PLANS. After the Effective Time, Surviving
Corporation shall arrange for each employee participating in any of the Company
Benefits Plans to participate in any counterpart benefit plans of Acquiror or
its Subsidiaries (as appropriate) in accordance with the eligibility criteria
thereof, provided that (i) such participants shall receive full credit for years
of service with the Company or any of its Subsidiaries prior to the Effective
Time for all purposes for which such service was recognized under the Company
Benefit Plans and (ii) such participants shall participate in the Acquiror
Benefit Plans on terms no less favorable than those offered by Acquiror to
similarly situated employees of Acquiror or its Subsidiaries. Surviving
Corporation shall give credit under its applicable employee welfare benefit
plans for all copayments, deductibles and out-of-pocket maximums satisfied by
employees (and their eligible dependents) of the Company (and its Subsidiaries),
in respect of the calendar year in which the Closing Date occurs. Surviving
Corporation shall waive all pre-existing conditions (to the extent waived under
the applicable employee welfare benefit plans of the Company and its
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Subsidiaries) otherwise applicable to employees of the Company and its
Subsidiaries under Acquiror's employee welfare benefit plans in which employees
of the Company (and its Subsidiaries) become eligible to participate on or
following the Closing. Notwithstanding the foregoing, Surviving Corporation may
continue (or cause the Surviving Corporation to continue) one or more of the
Company Benefit Plans, in which case Surviving Corporation shall have satisfied
its obligations hereunder with respect to the benefits so provided if the terms
of the Company Benefit Plans which are continued are no less favorable, as a
whole, than the terms of the counterpart plans of Acquiror and its Subsidiaries
(as applicable).
(r) LETTER OF THE COMPANY'S ACCOUNTANTS. The Company shall use all
reasonable efforts to cause to be delivered to Acquiror a letter of BDO Seidman
LLP, the Company's independent auditors, dated a date within two business days
before the date on which the Registration Statement shall become effective and
addressed to Acquiror, in form reasonably satisfactory to Acquiror and customary
in scope and substance for letters delivered by independent public accountants
in connection with registration statements similar to the Registration
Statement.
(s) LETTER OF ACQUIROR'S ACCOUNTANTS. Acquiror shall use all
reasonable efforts to cause to be delivered to the Company a letter of Arthur
Andersen LLP, Acquiror's independent auditors, dated a date within two business
days before the date on which the Registration Statement shall become effective
and addressed to the Company, in form reasonably satisfactory to the Company and
customary in scope and substance for letters delivered by independent public
accountants in connection with registration statements similar to the
Registration Statement.
6. CONDITIONS TO OBLIGATION TO CLOSE.
(a) CONDITIONS TO OBLIGATION OF ACQUIROR. The obligation of Acquiror
to consummate the Merger is subject to satisfaction or waiver by Acquiror of the
following conditions at or prior to the Closing Date:
(i) this Agreement and the Merger shall have received the
Requisite Stockholder Approvals;
(ii) the Company and its Subsidiaries shall have obtained
the Required Company Consents, other than those Required Company
Consents the failure of which to obtain would not reasonably be
expected to have a Company Material Adverse Effect and Acquiror shall
have obtained the Required Acquiror Consents, other than those
Required Acquiror Consents the failure of which to obtain would not
reasonably be expected to have an Acquiror Material Adverse Effect;
(iii) the representations and warranties set forth in ss.3
above shall be true and correct in all material respects at and as of
the Closing Date, except for those representations and warranties
which address matters only as of a particular date (which shall have
been true and correct as of such date);
(iv) the Company shall have performed and complied with all
of its covenants hereunder in all material respects through the
Closing;
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(v) neither any statute, rule, regulation, order,
stipulation or injunction (each an "ORDER") shall be enacted,
promulgated, entered, enforced or deemed applicable to the Merger nor
any other action shall have been taken by any Government Entity (A)
which prohibits the consummation of the transactions contemplated by
the Merger; (B) which prohibits Acquiror's ownership or operation of
all or any material portion of their or the Company's business or
assets, or which compels Acquiror to dispose of or hold separate all
or any material portion of Acquiror's or the Company's business or
assets as a result of the transactions contemplated by the Merger; (C)
which makes the Merger illegal; (D) which imposes material limitations
on the ability of Acquiror to consummate the Merger; or (E) which
imposes any limitations on the ability of Acquiror or any of its
Subsidiaries effectively to control in any material respect the
business or operations of the Company or any of its Subsidiaries;
(vi) the Company shall have delivered to Acquiror a
certificate to the effect that each of the conditions specified above
in ss.6(a)(i)-ss.6(a)(iv) is satisfied in all respects; PROVIDED,
HOWEVER, with respect to ss.6(a)(i), the Company shall only be
required to certify that this Agreement and the Merger received the
Requisite Stockholder Approval of the Company Stockholders;
(vii) the Acquiror Shares to be issued in connection with
the Merger shall have been approved upon official notice of issuance
for quotation on Nasdaq, subject to official notice of issuance;
(viii) the Registration Statement shall have been declared effective
by the SEC under the Securities Act, and no stop order suspending the
effectiveness of the Registration Statement shall have been issued by
the SEC and no proceedings for that purpose shall have been initiated
or threatened by the SEC;
(ix) Acquiror shall have received a written opinion, dated
as of the Closing Date, from Kelley, Drye & Warren LLP, counsel to
Acquiror, to the effect that the Merger will be treated for U.S.
federal income tax purposes as a reorganization within the meaning of
Section 368(a) of the Code, and that Acquiror and the Company will
each be a party to that reorganization within the meaning of Section
368(b) of the Code; such counsel shall be entitled to rely upon
customary representations provided by the Parties; and
(x) holders of not more than $2,500,000 in value of Company
Shares (calculated based upon the Closing Price per Company Share as
of the date preceding the scheduled Closing Date) shall have exercised
and not withdrawn dissenters' rights with respect to their shares.
Subject to the provisions of applicable law, Acquiror may waive, in
whole or in part, any condition specified in this ss.6(a) if they execute a
writing so stating at or prior to the Closing.
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(b) CONDITIONS TO OBLIGATION OF THE COMPANY. The obligation of the
Company to consummate the Merger is subject to satisfaction or waiver by the
Company of the following conditions at or prior to the Closing Date:
(i) this Agreement and the Merger shall have received the
Requisite Stockholder Approvals;
(ii) Acquiror and its Subsidiaries shall have obtained the
Required Acquiror Consents, other than those Required Acquiror
Consents the failure of which to obtain would not reasonably be
expected to have a Acquiror Material Adverse Effect, and the Company
and its Subsidiaries shall have obtained the Required Company Consents
other than those Required Company Consents the failure of which to
obtain would not reasonably be expected to have a material adverse
effect on the business, financial condition or results of operations
of Acquiror, the Surviving Corporation and their Affiliates taken as a
whole;
(iii) the representations and warranties set forth in ss.4
above shall be true and correct in all material respects at and as of
the Closing Date, except for those representations and warranties
which address matters only as of a particular date (which shall have
been true and correct as of such date);
(iv) Acquiror shall have performed and complied with all of
its covenants hereunder in all material respects through the Closing;
(v) neither any Order shall be enacted, promulgated,
entered, enforced or deemed applicable to the Merger nor any other
action shall have been taken by any Government Entity (A) which
prohibits the consummation of the transactions contemplated by the
Merger; (B) which prohibits Acquiror's ownership or operation of all
or any material portion of their or the Company's business or assets,
or which compels Acquiror to dispose of or hold separate all or any
material portion of Acquiror's or the Company's business or assets as
a result of the transactions contemplated by the Merger; or (C) which
makes the Merger illegal;
(vi) Acquiror shall have delivered to the Company a
certificate to the effect that each of the conditions specified above
in ss.6(b)(i)-(iv) is satisfied in all respects; PROVIDED, HOWEVER,
with respect to ss.6(b)(i), Acquiror shall only be required to certify
that this Agreement and the Merger received the Requisite Stockholder
Approval of the Acquiror Stockholders;
(vii) the Company shall have received a written opinion,
dated as of the Closing Date, from Swidler Berlin Shereff Friedman
LLP, counsel to the Company, to the effect that the Merger will be
treated for U.S. Federal income tax purposes as a reorganization
within the meaning of Section 368(a) of the Code and as to such other
matters as are customary for transactions such as the Merger, and that
Acquiror and the Company will each be a party to that reorganization
within the meaning of Section 368(b) of the Code; it being understood
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that in rendering such opinion, such tax counsel shall be entitled to
rely upon customary representations provided by the Parties;
(viii) the Acquiror Shares to be issued in connection with
the Merger shall have been approved upon official notice of issuance
for quotation on Nasdaq, subject to official notice of issuance;
(ix) the Registration Statement shall have been declared
effective by the SEC under the Securities Act, no stop order
suspending the effectiveness of the Registration Statement shall have
been issued by the SEC and no proceedings for that purpose shall have
been initiated or threatened by the SEC; and
(x) holders of not more than $2,500,000 in value of Company
Shares (calculated based upon the Closing Price per Company Share as
of the date preceding the scheduled Closing Date) shall have exercised
and not withdrawn dissenters' rights with respect to their shares.
Subject to the provisions of applicable law, the Company may waive, in
whole or in part, any condition specified in this ss.6(b) if it executes a
writing so stating at or prior to the Closing.
7. TERMINATION.
(a) TERMINATION OF AGREEMENT. The Parties may terminate this Agreement
with the prior authorization of their respective board of directors as provided
below:
(i) The Parties may terminate this Agreement, and the Merger
may be abandoned, by mutual written consent at any time prior to the
Effective Time before or after the approval by the Company
Stockholders or the Acquiror Stockholders;
(ii) This Agreement may be terminated and the Merger may be
abandoned by action of the Board of Directors of either Acquiror or
the Company, before or after the approval by the Company Stockholders
or the Acquiror Stockholders, (A) if the Effective Time shall not have
occurred by February 29, 2000 (the "OUTSIDE DATE") (unless the failure
to consummate the Merger by such date is due to the action or failure
to act of the Party seeking to terminate) or (B) if any condition to
the obligation of the terminating Party to consummate the Merger shall
have become incapable of being satisfied prior to the Outside Date as
of a result of an Order that is final and non-appealable;
(iii) This Agreement may be terminated and the Merger may be
abandoned at any time prior to the Effective Time, before or after the
approval by the Company Stockholders or the Acquiror Stockholders, by
action of the Company Board, in the event that Acquiror shall have
breached any of its representations, warranties or covenants under
this Agreement which breach (A) would give rise to the failure of a
condition set forth in ss.6(b) above, and (B) cannot be or has not
been cured within 30 days after the giving of written notice by the
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Company to Acquiror of such breach (provided that the Company is not
then in material breach of any representation, warranty or covenant
contained in this Agreement);
(iv) This Agreement may be terminated and the Merger may be
abandoned at any time prior to the Effective Time, before or after the
approval by the Company Stockholders or the Acquiror Stockholders, by
action of the Acquiror Board, in the event that the Company shall have
breached any of its representations, warranties or covenants under
this Agreement which breach (A) would give rise to the failure of a
condition set forth in ss.6(a) above, and (B) cannot be or has not
been cured within 30 days after the giving of written notice by
Acquiror to the Company of such breach (provided that Acquiror is not
then in material breach of any representation, warranty or covenant
contained in this Agreement);
(v) This Agreement may be terminated by Acquiror, and the
Merger may be abandoned, (A) if the Company Board (i) enters into or
publicly announces its intention to enter into an agreement or
agreement in principle with respect to an Acquisition Proposal, (ii)
withdraws its recommendation to the Company Stockholders of this
Agreement or the Merger or (iii) after the receipt of an Acquisition
Proposal, fails to confirm publicly, within ten days after the request
of Acquiror, its recommendation to the Company Stockholders that the
Company Stockholders adopt and approve this Agreement and the Merger
or (B) if the Company or any of its Representatives takes any of the
actions that would be proscribed by ss.5(h) above, but for the
exceptions therein allowing certain actions to be taken pursuant to
the proviso in the first sentence of ss.5(h)(ii) above;
(vi) This Agreement may be terminated by the Company, and
the Merger may be abandoned, (A) if the Acquiror Board (i) enters into
or publicly announces its intention to enter into an agreement or
agreement in principle with respect to a Prohibited Acquiror
Acquisition Proposal, (ii) withdraws its recommendation to the
Acquiror Stockholders that the Acquiror Stockholders approve the
issuance of Acquiror Shares in connection with the Merger as provided
by the Agreement or, if necessary, that the Acquiror Stockholders
approve an amendment to the certificate of incorporation of Acquiror
to increase the authorized number of Acquiror Shares or (iii) after
receipt of a Acquiror Acquisition Proposal, fails to publicly confirm,
within ten days after the request of the Company, its recommendation
to the Acquiror Stockholders described in the foregoing clause (ii) or
(B) if Acquiror or any of its Representatives takes any of the actions
that would be proscribed by ss.5(i) but for the exceptions therein
allowing certain actions to be taken pursuant to the proviso in the
first sentence of ss.5(i)(ii);
(vii) Either Party may terminate this Agreement, and the
Merger may be abandoned, by giving written notice to the other Party
at any time after the Company Special Meeting in the event that (1)
this Agreement and the Merger fail to receive the Requisite
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Stockholder Approval by the Company Stockholders or (2) or dissenters
rights are exercised by the holders of Company Shares having an
aggregate value (based upon the Closing Sales Price per Company Share
on the date immediately prior to the scheduled Closing Date) in excess
of $2,500,000; and
(viii) Either Party may terminate this Agreement, and the
Merger may be abandoned, by giving written notice to the other Party
at any time after the Acquiror Special Meeting in the event that this
Agreement and the Merger fail to receive the Requisite Stockholder
Approval by the Acquiror Stockholders.
(b) EFFECT OF TERMINATION.
(i) Except as provided in clauses (ii) or (iii) of
thisss.7(b), if any Party terminates this Agreement pursuant toss.7(a)
above, all rights and obligations of the Parties hereunder shall
terminate without any liability of either Party to the other Party
(except for any liability of any Party then in breach); PROVIDED,
HOWEVER, that the provisions of the Confidentiality Agreement,
thisss.7(b) andss.8 below, shall survive any such termination.
(ii) If this Agreement is terminated (A) by the Company
pursuant to ss.7(a)(vii)(1) or (B) by Acquiror pursuant to ss.7(a)(v)
or ss.7(a)(vii)(1), or (C) any Person makes an Acquisition Proposal
that remains in effect on the date 60 days prior to the Outside Date
and the Requisite Stockholder Approval of the Company Stockholders is
not obtained prior to termination of this Agreement pursuant to
ss.7(a)(ii), then, within 60 days after such termination, the Company
shall pay Acquiror the sum of $1,000,000 in immediately available
funds.
(iii) If this Agreement is terminated (A) by Acquiror
pursuant to ss.7(a)(viii) or (B) by the Company pursuant to
ss.7(a)(vi) or ss.7(a)(viii) or (C) any person makes a Prohibited
Acquiror Acquisition Proposal that remains in effect on the date 60
days prior to the Outside Date and the Requisite Stockholder Approval
of the Acquiror Stockholders is not obtained prior to termination of
this Agreement pursuant to ss.7(a)(ii), then, within 60 days after
such termination, Acquiror shall pay the Company the sum of $1,000,000
in immediately available funds.
8. MISCELLANEOUS.
(a) SURVIVAL. None of the representations, warranties and covenants of
the Parties (other than the provisions in ss.2 concerning payment of the Merger
Consideration, the provisions in ss.5(j), ss.5(l), ss.5(m), ss.5(p) and ss.5(q)
shall survive the Effective Time.
(b) PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. No Party shall issue any
press release or make any public announcement relating to the subject matter of
this Agreement without the prior written approval of the other Parties;
PROVIDED, HOWEVER, that any Party may make any public disclosure it believes in
good faith is required by applicable law or any listing or trading agreement
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concerning its publicly-traded securities (in which case the disclosing Party
will use all reasonable efforts to advise the other Parties prior to making the
disclosure).
(c) NO THIRD-PARTY BENEFICIARIES. This Agreement shall not confer any
rights or remedies upon any Person other than the Parties and their respective
successors and permitted assigns; PROVIDED, HOWEVER, that (i) the provisions in
ss.2 above (A) concerning payment of the Merger Consideration are intended for
the benefit of the Company Stockholders and (B) concerning the conversion of the
stock options are intended for the benefit of the holders of such stock options,
(ii) the provisions in ss.5(j) above concerning insurance and indemnification
are intended for the benefit of the individuals specified therein and their
respective legal representatives and (iii) the provisions of ss.5(l), ss.5(m)
and ss.5(p) are intended for the benefit of the Company Stockholders.
(d) ENTIRE AGREEMENT. This Agreement (including the Confidentiality
Agreement and the other documents referred to herein) constitutes the entire
agreement among the Parties and supersedes any prior understandings, agreements
or representations by or among the Parties, written or oral, to the extent they
related in any way to the subject matter hereof.
(e) BINDING EFFECT; ASSIGNMENT. This Agreement shall be binding upon
and inure to the benefit of the Parties and their respective successors and
permitted assigns. No Party may assign or delegate either this Agreement or any
of its rights, interests or obligations hereunder, by operation of law or
otherwise, without the prior written approval of the other Parties. Any
purported assignment or delegation without such approval shall be void and of no
effect.
(f) COUNTERPARTS. This Agreement may be executed (including by
facsimile) in one or more counterparts, each of which shall be deemed an
original but all of which together will constitute one and the same instrument.
(g) HEADINGS. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(h) NOTICES. All notices, requests, demands, claims and other
communications hereunder shall be in writing. Any notice, request, demand, claim
or other communication hereunder shall be deemed duly given if (and then two
business days after) it is sent by registered or certified mail, return receipt
requested, postage prepaid and addressed to the intended recipient as set forth
below:
-51-
IF TO THE COMPANY:
----------------- OpenROUTE Networks, Inc.
Nine Technology Drive
Westborough, Massachusetts 01581
Attention: President
Telephone: (508) 898-2121
Facsimile: (508) 836-5396
WITH A COPY TO:
-------------- Swidler Berlin Shereff Friedman, LLP
3000 K. Street, N.W., Suite 300
Washington, D.C. 20007
Attention: Sean P. McGuinness, Esq.
Telephone: (202) 945-6979
Facsimile: (202) 424-7643
IF TO ACQUIROR:
-------------- Netrix Corporation
13595 Dulles Technology Drive
Herndon, Virginia 20171
Attention: Chairman
Telephone: (703) 742-6000
Facsimile: (703) 793-2060
WITH A COPY TO:
-------------- Kelley Drye & Warren LLP
Two Stamford Plaza
281 Tresser Boulevard
Stamford, Connecticut 06901
Attention: Jay R. Schifferli
Telephone: (203) 351-8023
Facsimile: (203) 327-2669
Either Party may send any notice, request, demand, claim or other communication
hereunder to the intended recipient at the address set forth above using
personal delivery, expedited courier, messenger service, telecopy or ordinary
mail, but no such notice, request, demand, claim or other communication shall be
deemed to have been duly given unless and until it actually is received by the
intended recipient. Either Party may change the address to which notices,
requests, demands, claims and other communications hereunder are to be delivered
by giving the other Party notice in the manner set forth in this ss.8(h),
provided that no such change of address shall be effective until it actually is
received by the intended recipient.
(i) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE DOMESTIC LAWS OF THE STATE OF NEW YORK WITHOUT GIVING
EFFECT TO ANY CHOICE OR CONFLICT OF LAW PROVISION OR RULE (WHETHER OF THE STATE
OF NEW YORK OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THE
LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF NEW YORK.
(j) AMENDMENTS AND WAIVERS. The Parties may mutually amend any
provision of this Agreement at any time prior to the Effective Time with the
prior authorization of their respective boards of directors; PROVIDED, HOWEVER,
-52-
that any amendment effected subsequent to Requisite Stockholder Approval will be
subject to the restrictions contained in the Massachusetts Business Corporation
Law and the Delaware General Corporation Law, to the extent applicable. No
amendment of any provision of this Agreement shall be valid unless the same
shall be in writing and signed by all of the Parties. No waiver by any Party of
any default, misrepresentation or breach of warranty or covenant hereunder,
whether intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation or breach of warranty or covenant hereunder or affect
in any way any rights arising by virtue of any prior or subsequent such
occurrence.
(k) SEVERABILITY. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
(l) EXPENSES. Except as expressly set forth elsewhere in this
Agreement, each of the Parties will bear its own costs and expenses (including
legal fees and expenses) incurred in connection with this Agreement and the
transactions contemplated hereby.
(m) CONSTRUCTION. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context otherwise requires. The
word "including" shall mean including without limitation. The phrase "business
day" shall mean any day other than a day on which banks in the State of New York
are required or authorized to be closed. Disclosure of any matter in the Company
Disclosure Letter or the Acquiror Disclosure Letter shall not be deemed an
admission that such matter is material.
(n) INCORPORATION OF EXHIBITS. The Exhibits identified in this
Agreement are incorporated herein by reference and made a part hereof.
(o) DEFINITION OF KNOWLEDGE. As used herein, the words "knowledge" or
"known" shall, (i) with respect to the Company, mean the actual knowledge of the
corporate executive officers of the Company, in each case after such individuals
have made due and diligent inquiry as to the matters which are the subject of
the statements which are "known" by the Company or made to the "knowledge" of
the Company, and (ii) with respect to Acquiror, mean the actual knowledge of the
corporate executive officers of Acquiror, in each case after such individuals
have made due and diligent inquiry as to the matters which are the subject of
the statements which are "known" by Acquiror or made to the "knowledge" of
Acquiror.
(p) WAIVER OF JURY TRIAL. EACH OF ACQUIROR AND THE COMPANY, AND EACH
INDEMNIFIED PARTY, HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
LAW, ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
-53-
(WHETHER BASED UPON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of
the date first above written.
OPENROUTE NETWORKS, INC.
By:-----------------------------------------
Name: Bryan R. Holley
Title: Chief Executive Officer and President
By:-----------------------------------------
Name: Henry Barber
Title: Vice President-Finance and
Administration, Chief Financial
Officer, Treasurer and Clerk
NETRIX CORPORATION
By:-----------------------------------------
Name:
Title:
-54-
AGREEMENT AND PLAN OF MERGER
BETWEEN
OPENROUTE NETWORKS, INC.,
AND
NETRIX CORPORATION
TABLE OF CONTENTS
PAGE
1. DEFINITIONS............................................................2
2. THE TRANSACTION........................................................7
(a) The Merger.......................................................7
(b) The Closing......................................................7
(c) Actions at the Closing...........................................7
(d) Effect of Merger.................................................7
(e) Procedure for Exchange..........................................12
(f) Closing of Transfer Records.....................................13
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.........................14
(a) Organization, Qualification and Corporate Power.................14
(b) Capitalization..................................................14
(c) Subsidiaries....................................................15
(d) Voting Arrangements.............................................15
(e) Authorization of Transaction....................................15
(f) Noncontravention................................................15
(g) Filings with the SEC............................................16
(h) Financial Statements............................................16
(i) Events Subsequent to January 1, 1999............................17
(j) Compliance......................................................17
(k) Brokers' and Other Fees.........................................17
(l) Litigation and Liabilities......................................17
(m) Taxes...........................................................18
(n) Fairness Opinion................................................18
(o) Employee Benefits...............................................18
(p) Massachusetts Business Corporation Law..........................19
(q) Year 2000.......................................................20
(r) Environmental Matters...........................................20
(s) Intellectual Property...........................................21
(t) Insurance.......................................................21
(u) Certain Contracts...............................................21
(v) Accounting and Tax Matters......................................22
4. REPRESENTATIONS AND WARRANTIES OF ACQUIROR............................22
(a) Organization, Qualification and Corporate Power.................22
(b) Capitalization..................................................22
(c) Subsidiaries....................................................23
(d) Voting Arrangements.............................................23
(e) Authorization of Transaction....................................23
(f) Noncontravention................................................23
(g) Filings with the SEC............................................24
(h) Financial Statements............................................24
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TABLE OF CONTENTS
(CONTINUED)
PAGE
(i) Events Subsequent to January 1, 1999............................25
(j) Compliance......................................................25
(k) Brokers' and Other Fees.........................................25
(l) Litigation and Liabilities......................................25
(m) Taxes...........................................................26
(n) Fairness Opinion................................................26
(o) Employee Benefits...............................................26
(p) Year 2000.......................................................27
(q) Environmental Matters...........................................28
(r) Intellectual Property...........................................28
(s) Insurance.......................................................29
(t) Certain Contracts...............................................29
(u) Accounting and Tax Matters......................................29
5. COVENANTS.............................................................29
(a) General.........................................................29
(b) Notices and Consents............................................29
(c) Regulatory Matters and Approvals................................30
(d) Operation of the Company's Business.............................32
(e) Operation of Acquiror's Business................................34
(f) Access..........................................................36
(g) Notice of Developments..........................................36
(h) Company Exclusivity.............................................37
(i) Acquiror Exclusivity............................................38
(j) Insurance and Indemnification...................................41
(k) Financial Statements............................................43
(l) Continuity of Business Enterprise...............................43
(m) Acquiror Board of Directors.....................................43
(n) Rule 145 Affiliates.............................................44
(o) Nasdaq Listing..................................................44
(p) Tax Free Treatment..............................................44
(q) Company Employee Plans..........................................44
(r) Letter of the Company's Accountants.............................45
(s) Letter of Acquiror's Accountants................................45
6. CONDITIONS TO OBLIGATION TO CLOSE.....................................45
(a) Conditions to Obligation of Acquiror............................45
(b) Conditions to Obligation of the Company.........................47
7. TERMINATION...........................................................48
(a) Termination of Agreement........................................48
(b) Effect of Termination...........................................50
8. MISCELLANEOUS.........................................................51
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TABLE OF CONTENTS
(CONTINUED)
PAGE
(a) Survival........................................................51
(b) Press Releases and Public Announcements.........................51
(c) No Third-Party Beneficiaries....................................51
(d) Entire Agreement................................................51
(e) Binding Effect; Assignment......................................51
(f) Counterparts....................................................51
(g) Headings........................................................51
(h) Notices.........................................................51
(i) Governing Law...................................................52
(j) Amendments and Waivers..........................................52
(k) Severability....................................................53
(l) Expenses........................................................53
(m) Construction....................................................53
(n) Incorporation of Exhibits.......................................53
(o) Definition of Knowledge.........................................53
(p) Waiver of Jury Trial............................................53
Exhibit A - Form of Affiliate Letter
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