EXHIBIT 2.3
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AGREEMENT AND PLAN OF MERGER
Among
INTERNATIONAL BUSINESS MACHINES CORPORATION
KENNESAW ACQUISITION CORPORATION
and
MRO SOFTWARE, INC.
Dated as of August 3, 2006
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TABLE OF CONTENTS
Page
ARTICLE I
The Merger
SECTION 1.01. The Merger..........................................................................................1
SECTION 1.02. Closing.............................................................................................2
SECTION 1.03. Effective Time of the Merger........................................................................2
SECTION 1.04. Effects of the Merger...............................................................................2
SECTION 1.05. Articles of Organization and Bylaws.................................................................2
SECTION 1.06. Directors...........................................................................................2
SECTION 1.07. Officers............................................................................................3
ARTICLE II
Conversion of Securities
SECTION 2.01. Conversion of Capital Stock.........................................................................3
SECTION 2.02. Exchange of Certificates............................................................................3
ARTICLE III
Representations and Warranties
SECTION 3.01. Representations and Warranties of the Company.......................................................5
SECTION 3.02. Representations and Warranties of Parent and Sub...................................................40
ARTICLE IV
Covenants Relating to Conduct of Business
SECTION 4.01. Conduct of Business................................................................................42
SECTION 4.02. No Solicitation....................................................................................48
SECTION 4.03. Conduct by Parent..................................................................................51
ARTICLE V
Additional Agreements
SECTION 5.01. Preparation of the Proxy Statement; Stockholders Meeting...........................................51
SECTION 5.02. Access to Information; Confidentiality.............................................................53
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SECTION 5.03. Reasonable Best Efforts; Consultation and Notice...................................................54
SECTION 5.04. Equity Awards......................................................................................58
SECTION 5.05. Indemnification, Exculpation and Insurance.........................................................60
SECTION 5.06. Fees and Expenses..................................................................................61
SECTION 5.07. Public Announcements...............................................................................62
SECTION 5.08. Sub Compliance.....................................................................................62
SECTION 5.09. Company Rights Agreement...........................................................................62
SECTION 5.10. Certain Pre-Closing Actions........................................................................62
ARTICLE VI
Conditions Precedent
SECTION 6.01. Conditions to Each Party's Obligation to Effect the Merger.........................................63
SECTION 6.02. Conditions to Obligations of Parent and Sub........................................................63
SECTION 6.03. Conditions to Obligation of the Company............................................................64
SECTION 6.04. Frustration of Closing Conditions..................................................................65
ARTICLE VII
Termination, Amendment and Waiver
SECTION 7.01. Termination........................................................................................65
SECTION 7.02. Effect of Termination..............................................................................66
SECTION 7.03. Amendment..........................................................................................66
SECTION 7.04. Extension; Waiver..................................................................................67
ARTICLE VIII
General Provisions
SECTION 8.01. Nonsurvival of Representations and Warranties......................................................67
SECTION 8.02. Notices............................................................................................67
SECTION 8.03. Definitions........................................................................................68
SECTION 8.04. Exhibits and Schedules; Interpretation.............................................................70
SECTION 8.05. Counterparts.......................................................................................70
SECTION 8.06. Entire Agreement; No Third-Party Beneficiaries.....................................................71
SECTION 8.07. Governing Law......................................................................................71
SECTION 8.08. Assignment.........................................................................................71
SECTION 8.09. Consent to Jurisdiction; Service of Process; Venue.................................................71
SECTION 8.10. Waiver of Jury Trial...............................................................................72
SECTION 8.11. Enforcement........................................................................................72
SECTION 8.12. Consents and Approvals.............................................................................72
SECTION 8.13. Severability.......................................................................................72
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GLOSSARY
TERM SECTION
1994 Stock Option Plan 3.01(c)(i)
1999 Equity Incentive Plan 3.01(c)(i)
1999 Option 5.04(a)(i)
Acquisition Agreement 4.02(b)
Adverse Recommendation Change 4.02(b)
Adverse Recommendation Change Notice 4.02(b)
affiliate 8.03(a)
Agreement Preamble
Applicable RS Portion 5.04(c)
Article 6A 3.01(s)
Articles of Merger 1.03
Baseline Financials 3.01(e)(i)
Benefit Agreements 3.01(g)(ii)
Benefit Plans 3.01(k)(i)
Certificate 2.01(c)
Closing 1.02
Closing Date 1.02
Code 2.02(f)
Commonly Controlled Entity 3.01(k)(i)
Company Preamble
Company Articles 1.05(a)
Company Bylaws 3.01(a)
Company Common Stock 2.01
Company Letter 8.03(b)
Company Personnel 3.01(g)(ii)
Company Preferred Stock 3.01(c)(i)
Company Rights 3.01(c)(i)
Company Rights Agreement 3.01(c)(i)
Company Stock Plans 3.01(c)(i)
Confidentiality Agreement 4.02(a)
Contract 3.01(d)
Derivative Work 3.01(p)(iii)
Effective Time 1.03
Environmental Claims 3.01(l)(ii)(A)
Environmental Law 3.01(l)(ii)(B)
ERISA 3.01(m)(i)
ESPP 3.01(c)(i)
ESPP Offering Period 5.04(b)
Exchange Act 3.01(d)
FCC 5.02(b)
FCC Licenses 5.02(b)
Filed SEC Document 3.01(e)(i)
GAAP 3.01(e)(i)
iii
TERM SECTION
Governmental Entity 3.01(d)
Grant Date 3.01(c)(iii)
Hazardous Materials 3.01(l)(ii)(C)
HSR Act 3.01(d)
indebtedness 3.01(c)(iv)
Intellectual Property 3.01(p)(iv)
Intervening Event 4.02(b)
IRS 3.01(m)(ii)
Judgment 3.01(d)
knowledge 8.03(c)
Lapse Date 5.04(c)
Law 3.01(d)
Leased Real Property 3.01(o)(iii)
Legal Restraints 6.01(c)
Liens 3.01(b)
Major Customer 3.01(i)(i)(R)
Major Customer Contract 3.01(i)(i)(R)
Major Supplier 3.01(i)(i)(S)
Major Supplier Contract 3.01(i)(i)(S)
Material Adverse Effect 8.03(d)
MBCA 1.01
Merger Recitals
Merger Consideration 2.01(c)
Non-Affiliate Plan Fiduciary 3.01(m)(ix)
Offer Letters Recitals
Parent Preamble
Paying Agent 2.02(a)
Pension Plan 3.01(m)(i)
Permit 8.03(e)
Permitted Liens 3.01(i)(i)(F)
person 8.03(f)
Post-Signing Returns 4.01(b)
Primary Company Executives 3.01(n)(vii)
principal executive officer 3.01(e)(iii)
principal financial officer 3.01(e)(iii)
Proxy Statement 3.01(d)
Receivables 3.01(q)(ii)
Release 3.01(l)(ii)(D)
Restricted Share Cash Amount 5.04(a)(iii)
Restricted Shares 3.01(c)(i)
RS Holder 5.04(a)(iii)
SEC 3.01(d)
SEC Documents 3.01(e)(i)
Software 3.01(p)(iv)
SOX 3.01(e)(i)
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TERM SECTION
Specified Contracts 3.01(i)(i)
Stockholder Approval 3.01(u)
Stockholders Meeting 5.01(c)
Stock Options 3.01(c)(i)
Sub Preamble
subsidiary 8.03(g)
Subsidiary 8.03(h)
Superior Proposal 4.02(a)
Surviving Corporation 1.01
Takeover Proposal 4.02(a)
Taxes 3.01(n)(xvi)
Tax Return 3.01(n)(xvi)
Taxing Authority 3.01(n)(xvi)
Termination Date 7.01(b)(i)
Termination Fee 5.06(b)
Third Party Software 3.01(p)(iv)
Welfare Plan 3.01(m)(iv)
wholly-owned Subsidiary 8.03(i)
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AGREEMENT AND PLAN OF MERGER dated as of August 3,
2006 (this "Agreement"), by and among INTERNATIONAL BUSINESS
MACHINES CORPORATION, a New York corporation ("Parent"),
KENNESAW ACQUISITION CORPORATION, a Massachusetts corporation
and a wholly owned subsidiary of Parent ("Sub"), and MRO
SOFTWARE, INC., a Massachusetts corporation (the "Company").
WHEREAS the Board of Directors of each of the Company and Sub
deems it in the best interests of their respective stockholders to consummate
the merger (the "Merger"), on the terms and subject to the conditions set forth
in this Agreement, of Sub with and into the Company in which the Company would
become a wholly-owned subsidiary of Parent, and such Boards of Directors have
adopted this Agreement (and, in the case of the Board of Directors of the
Company, recommended that this Agreement be approved by the Company's
stockholders);
WHEREAS Parent, Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and also to prescribe various conditions to the Merger;
WHEREAS concurrently with the execution of this Agreement and
as a condition to the willingness of Parent to enter into this Agreement,
certain employees of the Company have executed offer letters (the "Offer
Letters") regarding the employment of such employees following the consummation
of the Merger; and
WHEREAS concurrently with the execution of this Agreement and
as a condition to the willingness of Parent to enter into this Agreement, Parent
has entered into agreements pursuant to which certain stockholders and employees
have agreed, among other things, to certain non-competition, non-solicitation
and no hire restrictions.
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements set forth
herein, the parties hereto agree as follows:
ARTICLE I
The Merger
SECTION 1.01. The Merger. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with the Massachusetts
Business Corporation Act (the "MBCA"), Sub shall be merged with and into the
Company at the Effective Time. At the Effective Time, the separate corporate
existence of Sub shall cease and the Company shall continue as the surviving
corporation (the "Surviving Corporation").
SECTION 1.02. Closing. The closing of the Merger (the
"Closing") will take place at 10:00 a.m., New York time, on a date to be
specified by the parties, which shall be no later than the second business day
after satisfaction or waiver of the conditions set forth in Article VI (other
than those that by their terms are to be satisfied or waived at the Closing, it
being understood that the occurrence of the Closing shall remain subject to the
satisfaction or waiver of such conditions at Closing), at the offices of
Cravath, Swaine & Moore LLP, 825 Eighth Avenue, New York, New York 10019, unless
another time, date or place is agreed to in writing by Parent and the Company;
provided, however, that if all the conditions set forth in Article VI shall not
have been satisfied or waived on such second business day, then the Closing
shall take place on the first business day on which all such conditions shall
have been satisfied or waived. The date on which the Closing occurs is referred
to in this Agreement as the "Closing Date".
SECTION 1.03. Effective Time of the Merger. Upon the terms and
subject to the conditions set forth in this Agreement, prior to the Closing
Parent and the Company shall jointly prepare, and immediately following the
Closing the Company and Sub shall execute and cause to be filed with the
Secretary of the Commonwealth of Massachusetts, articles of merger (the
"Articles of Merger") in such form as is required by, and executed in accordance
with, the relevant provisions of the MBCA. The Merger shall become effective at
such date and time as the Articles of Merger are duly filed with the Secretary
of the Commonwealth of Massachusetts or at such subsequent date and time as
Parent and the Company shall agree and specify in the Articles of Merger. The
date and time at which the Merger becomes effective is referred to in this
Agreement as the "Effective Time".
SECTION 1.04. Effects of the Merger. The Merger shall have the
effects set forth in the applicable provisions of the MBCA.
SECTION 1.05. Articles of Organization and Bylaws. (a) The
Restated Articles of Organization of the Company, as amended, (the "Company
Articles") as in effect immediately prior to the Effective Time shall be the
Articles of Organization of the Surviving Corporation except that Article III of
the Company Articles shall be amended at the Effective Time to provide that the
total number of shares of stock that the Surviving Corporation is authorized to
issue shall be 1,000 shares of Common Stock having a par value of $0.01 per
share, and, as so amended, such Restated Articles of Organization shall be the
Restated Articles of Organization of the Surviving Corporation until thereafter
changed or amended as provided therein or by applicable Law.
(b) The Bylaws of Sub as in effect immediately prior to the
Effective Time shall be the Bylaws of the Surviving Corporation until thereafter
changed or amended as provided therein or by applicable Law.
SECTION 1.06. Directors. The directors of Sub immediately
prior to the Effective Time shall be the directors of the Surviving Corporation
until the earlier of their resignation or removal or until their respective
successors are duly elected and qualified, as the case may be.
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SECTION 1.07. Officers. The officers of the Sub immediately
prior to the Effective Time shall be the officers of the Surviving Corporation
until the earlier of their resignation or removal or until their respective
successors are duly elected and qualified, as the case may be.
ARTICLE II
Conversion of Securities
SECTION 2.01. Conversion of Capital Stock. At the Effective
Time, by virtue of the Merger and without any action on the part of the holder
of any shares of Common Stock, par value $0.01 per share, of the Company (the
"Company Common Stock"), or the holder of any shares of capital stock of Sub:
(a) Capital Stock of Sub. Each issued and outstanding share of
common stock of Sub, par value $0.01 per share, shall be converted into
and become one fully paid and nonassessable share of common stock, par
value $0.01 per share, of the Surviving Corporation.
(b) Cancelation of Treasury Stock and Parent-Owned Stock. All
shares of Company Common Stock that are owned as treasury stock by the
Company or owned by Parent or Sub immediately prior to the Effective
Time shall automatically be canceled and retired and shall cease to
exist and no consideration shall be delivered or deliverable in
exchange therefor.
(c) Conversion of Company Common Stock. Each share of Company
Common Stock issued and outstanding immediately prior to the Effective
Time (after giving effect to the purchase described in Section 5.04(b)
with respect to the ESPP and other than (i) shares to be canceled and
retired in accordance with Section 2.01(b) and (ii) Restricted Shares
to the extent set forth in Section 5.04) shall be converted into the
right to receive $25.80 in cash, without interest (the "Merger
Consideration"). At the Effective Time such shares shall no longer be
outstanding and shall automatically be canceled and shall cease to
exist, and each holder of a certificate that immediately prior to the
Effective Time represented any such shares (a "Certificate") shall
cease to have any rights with respect thereto, except the right to
receive the Merger Consideration in accordance with the terms of this
Agreement. The right of any holder of any share of Company Common Stock
to receive the Merger Consideration shall be subject to and reduced by
the amount of any withholding that is required under applicable Tax
Law, such withholding to be pursuant to the terms of Section 2.02(f)
hereof and any other requirements under applicable Tax Law.
SECTION 2.02. Exchange of Certificates. (a) Paying Agent.
Prior to the Effective Time, Parent shall designate a bank or trust company
reasonably acceptable to the Company to act as agent for the payment of the
Merger Consideration upon surrender of Certificates (the "Paying Agent"), and,
from time to time after the Effective Time,
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Parent shall make available to the Paying Agent funds in amounts and at the
times necessary for the payment of the Merger Consideration pursuant to Section
2.01(c) upon surrender of Certificates, it being understood that any and all
interest or other amounts earned with respect to funds made available to the
Paying Agent pursuant to this Agreement shall be turned over to Parent.
(b) Exchange Procedure. As soon as reasonably practicable
after the Effective Time, the Paying Agent shall mail to each holder of record
of a Certificate (i) a form of letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates held
by such person shall pass, only upon proper delivery of the Certificates to the
Paying Agent and shall be in a form and have such other provisions as Parent may
reasonably specify and the Company shall reasonably approve prior to the
Effective Time) and (ii) instructions for use in effecting the surrender of the
Certificates in exchange for the Merger Consideration. Upon surrender of a
Certificate for cancelation to the Paying Agent or to such other agent or agents
as may be appointed by Parent, together with such letter of transmittal, duly
completed and validly executed, and such other documents as may reasonably be
required by the Paying Agent, the holder of such Certificate shall be entitled
to receive in exchange therefor the amount of cash equal to the Merger
Consideration that such holder has the right to receive pursuant to Section
2.01(c), and the Certificate so surrendered shall forthwith be canceled. Subject
to the terms of this Agreement, neither Parent nor Sub shall take any action
that would prevent the Paying Agent from making payment of the Merger
Consideration in accordance with its customary procedures. In the event of a
transfer of ownership of Company Common Stock that is not registered in the
stock transfer books of the Company, payment of the Merger Consideration in
exchange therefor may be made to a person other than the person in whose name
the Certificate so surrendered is registered if such Certificate shall be
properly endorsed or otherwise be in proper form for transfer and the person
requesting `such payment shall pay any transfer or other Taxes required by
reason of the payment to a person other than the registered holder of such
Certificate or establish to the satisfaction of the Surviving Corporation that
such tax has been paid or is not applicable. No interest shall be paid or shall
accrue on the cash payable upon surrender of any Certificate.
(c) No Further Ownership Rights in Company Common Stock. All
cash paid upon the surrender of a Certificate in accordance with the terms of
this Article II shall be deemed to have been paid in full satisfaction of all
rights pertaining to the shares of Company Common Stock formerly represented by
such Certificate. At the close of business on the day on which the Effective
Time occurs, the stock transfer books of the Company shall be closed and there
shall be no further registration of transfers on the stock transfer books of the
Surviving Corporation of the shares that were outstanding immediately prior to
the Effective Time. If, after the Effective Time, Certificates are presented to
the Surviving Corporation or the Paying Agent for transfer or any other reason,
they shall be canceled and exchanged as provided in this Article II.
(d) No Liability. None of Parent, Sub, the Company or the
Paying Agent shall be liable to any person in respect of any cash which would
otherwise have been payable in respect of any Certificate which is delivered to
a public official in accordance
4
with any applicable abandoned property, escheat or similar Law. If any
Certificates shall not have been surrendered prior to two years after the
Effective Time (or immediately prior to such earlier date on which any Merger
Consideration would otherwise escheat to or become the property of any
Governmental Entity), any such Merger Consideration in respect thereof shall, to
the extent permitted by applicable Law, become the property of the Surviving
Corporation, free and clear of all claims or interest of any person previously
entitled thereto.
(e) Lost Certificates. If any Certificate shall have been
lost, stolen, defaced or destroyed, upon the making of an affidavit of that fact
by the person claiming such Certificate to be lost, stolen, defaced or destroyed
and, if required by the Surviving Corporation, the posting by such person of a
bond in such reasonable and customary amount as the Surviving Corporation may
direct as indemnity against any claim that may be made against it with respect
to such Certificate, the Paying Agent shall pay the Merger Consideration in
respect of such lost, stolen, defaced or destroyed Certificate.
(f) Withholding Rights. Parent, the Surviving Corporation or
the Paying Agent shall be entitled to deduct and withhold from the Merger
Consideration otherwise payable pursuant to this Agreement to any holder of
shares of Company Common Stock such amounts as Parent, the Surviving Corporation
or the Paying Agent is required to deduct and withhold with respect to the
making of such payment under the Internal Revenue Code of 1986, as amended (the
"Code"), or any provision of state, local or foreign Tax Law. To the extent that
amounts are so withheld and paid over to the appropriate taxing authority by
Parent, the Surviving Corporation or the Paying Agent, such withheld amounts
shall be treated for all purposes of this Agreement as having been paid to the
holder of the shares of Company Common Stock in respect of which such deduction
and withholding was made by Parent, the Surviving Corporation or the Paying
Agent.
ARTICLE III
Representations and Warranties
SECTION 3.01. Representations and Warranties of the Company.
Except as set forth in the Company Letter (with specific reference to the
section of this Agreement to which the information stated in such disclosure
relates; provided that information contained in any section of the Company
Letter shall be deemed to be disclosed with respect to any other section of this
Agreement to the extent that it is readily apparent from the face of such
disclosure that such information is applicable to such other section of this
Agreement) delivered by the Company to Parent prior to the execution and
delivery of this Agreement, the Company represents and warrants to Parent and
Sub as follows:
(a) Organization, Standing and Corporate Power. Each
of the Company and the Subsidiaries (i) is a corporation duly
organized, validly existing and in good standing under the
Laws of the jurisdiction of its organization (except, in the
case of good standing, for entities organized under
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the Laws of any jurisdiction that does not recognize such
concept), (ii) has all requisite corporate, company,
partnership or other organizational power and authority to
carry on its business as now being conducted and (iii) is duly
qualified or licensed to do business and is in good standing
in each jurisdiction (except, in the case of good standing,
any jurisdiction that does not recognize such concept) in
which the nature of its business or the ownership, leasing or
operation of its properties makes such qualification or
licensing necessary or desirable, other than where the failure
to be so organized, existing, qualified or licensed or in good
standing (except in the case of clause (i) above with respect
to the Company), individually or in the aggregate, is not
reasonably likely to have a Material Adverse Effect on the
Company. The Company has made available to Parent complete and
accurate copies of the Company Articles and the Bylaws of the
Company, as amended (the "Company Bylaws") and the certificate
of incorporation and bylaws (or similar organizational
documents) of each of the Subsidiaries, in each case as
amended to the date of this Agreement. The Company has made
available to Parent and its representatives complete and
accurate copies of the minutes (or, in the case of draft
minutes, the most recent drafts thereof) of all meetings of
the stockholders, the Board of Directors and each committee of
the Board of Directors of the Company and each of the
Subsidiaries held since October 1, 2003.
(b) Subsidiaries. Section 3.01(b) of the Company
Letter sets forth a complete and accurate list of each
Subsidiary and its place of organization. All the outstanding
shares of capital stock of, or other equity or voting
interests in, each such Subsidiary are owned by the Company,
by one or more wholly-owned Subsidiaries or by the Company and
one or more wholly-owned Subsidiaries, free and clear of all
pledges, claims, liens, charges, options to purchase, security
interests or other encumbrances of any kind or nature
whatsoever (collectively, "Liens"), except for transfer
restrictions imposed by applicable securities Laws and are
duly authorized, validly issued, fully paid and nonassessable.
Except for the capital stock of, or other equity or voting
interests in, the Subsidiaries, the Company does not own,
directly or indirectly, any capital stock of, or other equity
or voting interests in, any person.
(c) Capital Structure. (i) The authorized capital
stock of the Company consists of 50,000,000 shares of Company
Common Stock and 1,000,000 shares of Preferred Stock, par
value $0.01 per share of the Company (the "Company Preferred
Stock"). At the close of business on July 17, 2006, (A)
26,624,356 shares of Company Common Stock (excluding treasury
shares) were issued and outstanding, including 431,991 shares
of Company Common Stock that are subject to transfer
restrictions and subject to forfeiture back to the Company or
repurchase by the Company pursuant to agreements with the
Company ( "Restricted Shares"), (B) 11,699 shares of Company
Common Stock were held by the Company as treasury shares, (C)
4,786,129 shares of Company Common Stock were subject to
outstanding
6
options (other than rights under the Company's 2002 Employee
Stock Purchase Plan (the "ESPP")) to acquire shares of Company
Common Stock pursuant to the Company's Amended and Restated
1999 Equity Incentive Plan (the "1999 Equity Incentive Plan")
and the Company's 1994 Incentive and Nonqualified Stock Option
Plan (the "1994 Stock Option Plan") (such plans, together with
the ESPP, the "Company Stock Plans") (together with any other
stock options granted after July 17, 2006 under the Company
Stock Plans pursuant to the terms of this Agreement or
disclosed in the Company Letter, the "Stock Options") and (D)
543,071 shares of Company Common Stock were reserved and
available for issuance by the Company pursuant to the ESPP.
Other than the Company Stock Plans, there is no Contract, plan
or other arrangement providing for the grant of options
exercisable for or into shares of Company Common Stock by the
Company or any of the Subsidiaries. No shares of Company
Preferred Stock are issued or outstanding. No shares of
Company Common Stock are owned by any Subsidiary. The Company
has made available to Parent (A) a complete and accurate list,
as of the close of business on July 17, 2006, of all
outstanding Stock Options, the number of shares subject to
each such Stock Option, the grant date, exercise price and
expiration date of each such Stock Option and the name of the
holder thereof and an indication of whether or not such Stock
Option was intended at the time of grant to qualify as an
"incentive stock option" under Section 422 of the Code and (B)
a complete and accurate list, as of the close of business on
July 17, 2006, of all Restricted Shares, the grant dates, the
names of the holders thereof and the form of Restricted Share
grant agreement, and any Restricted Share grant agreements
that differ in any material respect from such form, pursuant
to which each Restricted Share was granted. As of the date of
this Agreement, other than pursuant to the Stock Options,
rights under the ESPP, the Restricted Shares and the Company's
Series A Junior Participating Preferred Stock purchase rights
(the "Company Rights") issued pursuant to the Rights Agreement
dated January 27, 1998, between the Company and BankBoston,
N.A. (the "Company Rights Agreement"), there are no
outstanding rights of any person to receive from the Company
Company Common Stock under the Company Stock Plans or
otherwise, on a deferred basis or otherwise. Based upon the
assumptions set forth in Section 3.01(c)(i) of the Company
Letter, and further assuming that the fair market value per
share of Company Common Stock on the last day of the ESPP
Offering Period will be equal to the Merger Consideration, the
Company estimates that 24,853 shares of Company Common Stock
will be issued under the ESPP immediately prior to the
Effective Time pursuant to the exercise of purchase rights by
participants in the current ESPP Offering Period.
(ii) Except as set forth in Section 3.01(c)(i), as of the
close of business on July 17, 2006, no shares of capital stock of, or
other equity or voting interests in, the Company, or options, warrants,
shares of deferred stock, restricted stock awards, stock appreciation
rights, phantom stock awards or other rights to acquire any such stock
or securities or similar rights that are linked to the value of the
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Company Common Stock or the value of the Company or any part thereof,
in each case issued by the Company, were outstanding. From July 17,
2006 to the date of this Agreement, (A) there have been no issuances by
the Company of shares of capital stock of, or other equity or voting
interests in, the Company other than issuances of shares of Company
Common Stock and attached Company Rights pursuant to the exercise of
Stock Options or rights under the ESPP, in each case outstanding as of
July 17, 2006 and only if and to the extent required by their terms as
in effect on July 17, 2006 and (B) there have been no issuances by the
Company of options, warrants, shares of deferred stock, restricted
stock awards, stock appreciation rights, phantom stock awards, other
rights to acquire shares of capital stock or other equity or voting
interests from the Company or other rights that are linked to the value
of Company Common Stock or the value of the Company or any part
thereof, other than rights under the ESPP.
(iii) All outstanding shares of capital stock of the Company
are, and all shares that may be issued pursuant to the Company Stock
Plans will be, when issued in accordance with the terms thereof, duly
authorized, validly issued, fully paid and nonassessable and not
subject to preemptive rights. There are no (A) bonds, debentures, notes
or other indebtedness of the Company or any of the Subsidiaries, and
(B) except as set forth in this Section 3.01(c), securities or other
instruments or obligations of the Company or any of the Subsidiaries,
in each case under clause (A) or (B), the value of which is in any way
based upon or derived from any capital stock of, or other equity or
voting interests in, the Company or which has or which by its terms may
have at any time (whether actual or contingent) the right to vote (or
which is convertible into, or exchangeable for, securities having the
right to vote) on any matters on which stockholders of the Company or
any of the Subsidiaries may vote. Except (1) as set forth in this
Section 3.01(c) and (2) for rights under the ESPP, the Company Rights
Agreement or the Stock Options in effect as of the date of this
Agreement, there are no securities, options, warrants, calls, rights or
Contracts of any kind to which the Company or any of the Subsidiaries
is a party, or by which the Company or any of the Subsidiaries is
bound, obligating the Company or any of the Subsidiaries to issue,
deliver or sell, or cause to be issued, delivered or sold, additional
shares of capital stock of, or other equity or voting interests in, or
securities convertible into, or exchangeable or exercisable for, shares
of capital stock of, or other equity or voting interests in, the
Company or any of the Subsidiaries or obligating the Company or any of
the Subsidiaries to issue, grant, extend or enter into any such
security, option, warrant, call, right or Contract. With respect to the
Stock Options, (u) each Stock Option intended to qualify as an
"incentive stock option" under Section 422 of the Code so qualifies,
(v) each grant of a Stock Option was duly authorized no later than the
date on which the grant of such Stock Option was by its terms to be
effective (the "Grant Date") by all necessary corporate action,
including, as applicable, approval by the Board of Directors of the
Company (or a duly constituted and authorized committee thereof) and
any required stockholder approval by the necessary number of votes or
written consents, (w) the award agreement governing such grant (if any)
was duly delivered by the Company to the recipient, (x) each such grant
was made in
8
accordance with the terms of the Company Stock Plan under which it was
issued, the Exchange Act and all other applicable Laws and regulatory
rules or requirements, including the rules of The Nasdaq Global Select
Market or any other exchange on which Company securities are traded,
(y) the per share exercise price of each Stock Option was greater than
or equal to the fair market value of a share of Company Common Stock on
the applicable Grant Date and (z) each such grant was properly
accounted for in accordance with GAAP in the financial statements
(including the related notes) of the Company and disclosed in the
Company's Filed SEC Documents in accordance with the Exchange Act and
all other applicable Laws. Except for the Restricted Shares outstanding
as of the date of this Agreement, there are no outstanding contractual
or other obligations of the Company or any of the Subsidiaries to (A)
repurchase, redeem or otherwise acquire any shares of capital stock of,
or other equity or voting interests in, the Company or any of the
Subsidiaries or (B) vote or dispose of any shares of capital stock of,
or other equity or voting interests in, the Company or any of the
Subsidiaries. The Company is not a party to any voting agreements with
respect to any shares of capital stock of, or other equity or voting
interests in, the Company or any of the Subsidiaries and, to the
knowledge of the Company, as of the date of this Agreement there are no
irrevocable proxies and no voting agreements with respect to any shares
of capital stock of, or other equity or voting interests in, the
Company or any of the Subsidiaries. All Stock Options and Restricted
Shares may be treated in accordance with Section 5.04(a).
(iv) Neither the Company nor any of the Subsidiaries has any
(A) indebtedness for borrowed money, (B) indebtedness evidenced by any
bond, debenture, note, mortgage, indenture or other debt instrument or
debt security, (C) accounts payable to trade creditors and accrued
expenses not arising in the ordinary course of business, (D) amounts
owing as deferred purchase price for the purchase of any property
(other than accounts payable, accrued expenses and amounts owing
referred to in clauses (C) and (D) taken in the aggregate which do not
exceed $350,000) or (E) guarantees with respect to any indebtedness or
obligation of a type described in clauses (A) through (D) above of any
other person (other than, in the case of clauses (A), (B) and (D),
accounts payable to trade creditors and accrued expenses arising in the
ordinary course of business) (collectively, "indebtedness", which term
shall exclude any indebtedness of the Company or any wholly-owned
Subsidiary to any wholly-owned Subsidiary or of any wholly-owned
Subsidiary to the Company).
(d) Authority; Noncontravention. The Company has the
requisite corporate power and authority to execute and deliver
this Agreement, to consummate the Merger and the other
transactions contemplated by this Agreement (subject to
obtaining the Stockholder Approval) and to comply with the
provisions of this Agreement. The execution and delivery of
this Agreement by the Company, the consummation by the Company
of the Merger and the other transactions contemplated by this
Agreement and the compliance by the Company with the
provisions of this Agreement have been duly authorized by all
necessary corporate action on the part of the Company
9
and no other corporate proceedings on the part of the Company
are necessary to authorize this Agreement, to comply with the
terms of this Agreement or to consummate the Merger and the
other transactions contemplated by this Agreement, subject, in
the case of the Merger, to obtaining the Stockholder Approval.
This Agreement has been duly executed and delivered by the
Company and, assuming the due execution and delivery of this
Agreement by Parent and Sub, constitutes a valid and binding
obligation of the Company, enforceable against the Company in
accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or other similar Laws relating to
the enforcement of creditors' rights generally and by general
principles of equity. The Board of Directors of the Company,
at a meeting duly called and held at which all directors of
the Company were present, duly and unanimously adopted
resolutions (i) adopting this Agreement, (ii) declaring that
it is in the best interests of the Company's stockholders that
the Company enter into this Agreement and consummate the
Merger on the terms and subject to the conditions set forth in
this Agreement, (iii) declaring that the consideration to be
paid to the Company's stockholders in the Merger is fair to
such stockholders, (iv) directing that the approval of this
Agreement be submitted to a vote at a meeting of the Company's
stockholders to be held as set forth in Section 5.01(c) and
(v) recommending that the Company's stockholders approve this
Agreement. The execution and delivery of this Agreement by the
Company, the consummation by the Company of the Merger and the
other transactions contemplated by this Agreement and
compliance by the Company with the provisions of this
Agreement do not and will not conflict with, or result in any
violation or breach of, or default (with or without notice or
lapse of time or both) under, or give rise to a right of, or
result in, termination, cancelation or acceleration of any
obligation or to a loss of a benefit under, or result in the
creation of any Lien in or upon any of the properties or
assets of the Company or any of the Subsidiaries under, or
give rise to any increased, additional, accelerated or
guaranteed rights or entitlements under (including any right
of a holder of a security of the Company or any of the
Subsidiaries to require the Company or any of the Subsidiaries
to acquire such security), any provision of (i) the Company
Articles or the Company Bylaws or the certificate of
incorporation or bylaws (or similar organizational documents)
of any of the Subsidiaries, (ii) any loan or credit agreement,
bond, debenture, note, mortgage, indenture, guarantee, lease,
contract, agreement, license or instrument or any other
legally binding commitment, arrangement, understanding,
obligation or undertaking, whether oral or written (each,
including all amendments thereto, a "Contract") or Permit to
which the Company or any of the Subsidiaries is a party or
bound by or any of their respective properties or assets are
bound by or subject to or (iii) subject to the governmental
filings and other matters referred to in the following
sentence, any (A) Federal, state or local, domestic or
foreign, statute, law, code, ordinance, rule or regulation
(each, a "Law") or (B) Federal, state or local, domestic or
foreign, judgment, injunction, order, writ or decree (each, a
10
"Judgment"), in each case under clause (A) or (B), applicable
to the Company or any of the Subsidiaries or their respective
properties or assets, other than in the case of clause (i)
solely with respect to the Subsidiaries and in the case of
clauses (ii) and (iii), any such conflicts, violations,
breaches, defaults, rights, results, losses, Liens, rights or
entitlements that individually or in the aggregate are not
reasonably likely to (x) have a Material Adverse Effect on the
Company, (y) impair in any material respect the ability of the
Company to perform its obligations under this Agreement or (z)
prevent, materially impede or materially delay the
consummation of the Merger and the other transactions
contemplated by this Agreement. No consent, approval, order or
authorization of, registration, declaration or filing with, or
notice to, any Federal, state or local, domestic or foreign,
government or any court, administrative agency or commission
or other governmental or regulatory authority or agency,
domestic or foreign (a "Governmental Entity"), is required by
or with respect to the Company or any of the Subsidiaries in
connection with the execution and delivery of this Agreement
by the Company, the consummation by the Company of the Merger
or the other transactions contemplated by this Agreement or
the compliance by the Company with the provisions of this
Agreement, except for (A) the filing of a premerger
notification and report form by the Company under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), the termination or expiration of the
waiting period thereunder, and the provision of such
information as may be requested by the Department of Justice
or the Federal Trade Commission in connection therewith, and
the filings and receipt, termination or expiration, as
applicable, of such other approvals or waiting periods
required under any other applicable competition, merger
control, antitrust or similar Law, (B) the filing with the
Securities and Exchange Commission (the "SEC") of a proxy
statement relating to the approval of this Agreement by the
Company's stockholders (as amended or supplemented from time
to time, the "Proxy Statement") and such reports under the
Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder (the "Exchange Act"), as
may be required in connection with the execution and delivery
of this Agreement by the Company, the consummation by the
Company of the Merger and the other transactions contemplated
by this Agreement or the compliance by the Company with the
provisions of this Agreement, (C) the filing of the Articles
of Merger with the Secretary of the Commonwealth of
Massachusetts and appropriate documents with the relevant
authorities of other states in which the Company or any of the
Subsidiaries is qualified to do or does business, (D) any
filings required under the rules and regulations of The Nasdaq
Stock Market, Inc. and (E) such other consents, approvals,
orders, authorizations, registrations, declarations, filings
and notices, the failure of which to be obtained or made
individually or in the aggregate are not reasonably likely to
have a Material Adverse Effect on the Company or that
individually or in the aggregate are not reasonably likely to
(x) impair in any material respect the ability of the Company
to perform its obligations under this Agreement or
11
(y) prevent, materially impede or materially delay the
consummation of the Merger and the other transactions
contemplated by this Agreement.
(e) SEC Documents. (i)The Company has made available
to Parent, or the Electronic Data Gathering, Analysis and
Retrieval (EDGAR) database of the SEC contains in a publicly
available format, complete and accurate copies of all reports,
schedules, forms, statements and other documents filed with or
furnished to the SEC by the Company since October 1, 2003
(together with all information incorporated therein by
reference, the "SEC Documents"). The Company has filed with or
furnished to the SEC each report, schedule, form, statement or
other document or filing required by Law to be filed or
furnished by the Company. No Subsidiary is required to file or
furnish any report, schedule, form, statement or other
document or make any other filing with, or furnish any other
material to, the SEC. As of their respective dates, each of
the SEC Documents complied in all material respects with the
requirements of the Exchange Act, the Securities Act of 1933,
as amended, and the rules and regulations promulgated
thereunder, and the Sarbanes-Oxley Act of 2002 and the rules
and regulations promulgated thereunder ("SOX"), in each case,
to the extent applicable to such SEC Document at the time of
filing or furnishing, and none of the SEC Documents at the
time it was filed or furnished contained any untrue statement
of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under
which they were made, not misleading. Except to the extent
that information contained in any SEC Document filed or
furnished and publicly available prior to the date of this
Agreement (a "Filed SEC Document") has been revised or
superseded by a later filed or furnished Filed SEC Document,
none of the SEC Documents contains any untrue statement of a
material fact or omits to state a material fact required to be
stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were
made, not misleading. Each of the financial statements
(including the related notes) of the Company included in the
SEC Documents complied at the time it was filed as to form in
all material respects with the applicable accounting
requirements and the published rules and regulations of the
SEC with respect thereto in effect at the time of filing, was
prepared in accordance with generally accepted accounting
principles in effect from time to time in the United States of
America ("GAAP") (except, in the case of unaudited statements,
as permitted by the rules and regulations of the SEC) applied
on a consistent basis during the periods involved (except as
may be indicated in the notes thereto) and fairly present in
accordance with GAAP in all material respects the consolidated
financial position of the Company and its consolidated
Subsidiaries as of the dates thereof and their consolidated
results of operations and cash flows for the periods then
ended (subject, in the case of unaudited statements, to normal
and recurring year-end audit adjustments). Except (x) as set
forth or fully reserved against in the most recent financial
statements included in the Filed SEC Documents (the "Baseline
Financials"), or (y) as incurred since the date of the most
recent
12
balance sheet in the Baseline Financials in the ordinary
course of business consistent with past practice, the Company
and the Subsidiaries have no material liabilities or
obligations of any nature (whether accrued, absolute,
contingent or otherwise).
(ii) The Company is, and has been, in compliance in
all material respects with the provisions of SOX applicable to
it on or prior to the date hereof and has implemented such
reasonable programs and has taken the reasonable steps
necessary to ensure the Company's future compliance (not later
than the relevant statutory and regulatory deadlines
therefore) in all material respects with all provisions of SOX
which shall become applicable to the Company after the date
hereof.
(iii) Each of the principal executive officer of the
Company and the principal financial officer of the Company has
made all certifications required by Rule 13a-14 or 15d-14
under the Exchange Act and Sections 302 and 906 of SOX as
applicable with respect to the SEC Documents, and the
statements contained in such certifications were true and
accurate as of the date they were made. For purposes of this
Agreement, "principal executive officer" and "principal
financial officer" shall have the meanings given to such terms
in SOX. Neither the Company nor any of the Subsidiaries has
outstanding, or has arranged any outstanding, "extension of
credit" to directors or executive officers of the Company
within the meaning of Section 402 of SOX.
(iv) Neither the Company nor any of the Subsidiaries
is a party to, or has any legally binding commitment to become
a party to, any joint venture, off-balance sheet partnership
or any similar Contract (including any Contract relating to
any transaction or relationship between or among the Company
and any of the Subsidiaries, on the one hand, and any
unconsolidated affiliate, including any structured finance,
special purpose or limited purpose entity or person, on the
other hand or any "off-balance sheet arrangements" (as defined
in Item 303(a) of Regulation S-K of the SEC)), where the
purpose or intended or known result or effect of such joint
venture, partnership or Contract is to avoid disclosure of any
material transaction involving, or material liabilities of,
the Company or any of the Subsidiaries in the Company's or
such Subsidiary's published financial statements or other SEC
Documents.
(v) The books, records and accounts of the Company,
all of which have been made available to Parent upon Parent's
request, are complete and correct in all material respects and
represent actual, bona fide transactions and have been
maintained in all material respects in accordance with
customary and reasonable business practices and the
requirements of the Exchange Act, the Securities Act, and to
the extent in effect, SOX.
13
(vi) The Company's "internal control over financial
reporting" (as defined in Rule 13a-15(f) and 15d-15(f) of the
Exchange Act) is sufficient in all material respects to
provide reasonable assurance (A) regarding the reliability of
financial reporting and the preparation of financial
statements for external purposes in accordance with GAAP, (B)
that transactions are recorded as necessary to permit
preparation of financial statements in conformity with GAAP,
(C) that receipts and expenditures of the Company are made
only in accordance with the authorizations of management and
directors of the Company, and (D) regarding prevention or
timely detection of the unauthorized acquisition, use or
disposition of the Company's assets that could have a material
effect on the financial statements.
(vii) The Company's "disclosure controls and
procedures" (as defined in Rules 13a-15(e) and 15d-15(e) of
the Exchange Act) are reasonably designed to ensure that (A)
information required to be disclosed by the Company in the
reports that it files or submits under the Exchange Act is
recorded, processed, summarized and reported within the time
periods specified in the rules and forms of the SEC and (B)
all such information is accumulated and communicated to the
Company's management, including its principal executive and
principal financial officers, or persons performing similar
functions, as appropriate to allow timely decisions regarding
required disclosure.
(f) Information Supplied. None of the information included or
incorporated by reference in the Proxy Statement will, at the date it
is first mailed to the Company's stockholders, at the time of the
Stockholders Meeting or at the time of any amendment or supplement
thereof, as amended or supplemented at such date or time, contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are
made, not misleading, except that no representation is made by the
Company with respect to statements made or incorporated by reference
therein based on information supplied or to be supplied by Parent or
Sub specifically for inclusion or incorporation by reference in the
Proxy Statement. The Proxy Statement will comply as to form in all
material respects with the requirements of the Exchange Act.
(g) Absence of Certain Changes or Events. (i) Since September
30, 2005, (A) the Company and the Subsidiaries have conducted their
respective businesses only in the ordinary course consistent with past
practice, (B) there has not been (1) any Material Adverse Effect on the
Company, (2) any material write-down by the Company or any of the
Subsidiaries of any of the assets of the Company or any of the
Subsidiaries, (3) any declaration, setting aside or payment of any
dividend on, or other distribution (whether in cash, stock or property)
in respect of, any of the Company's or any of the Subsidiaries' capital
stock or other equity or voting interests, except for
14
dividends or distributions by a direct or indirect wholly-owned
Subsidiary to its parent, (4) any split, combination or
reclassification of any of the Company's or any of the Subsidiaries'
capital stock or other equity or voting interests or any issuance or
the authorization of any issuance of any other securities in respect
of, in lieu of or in substitution for shares of capital stock of, or
other equity or voting interests in, the Company or any of the
Subsidiaries, (5) any change in financial or tax accounting principles,
methods or practices by the Company or any of the Subsidiaries, except
insofar as may have been required by a change in GAAP or applicable
Law, (6) any material Tax election or change in any material Tax
election or any settlement or compromise of any material income Tax
liability or (7) any licensing or other agreement with regard to the
acquisition or disposition of any material Intellectual Property or
rights thereto, other than nonexclusive licenses granted in the
ordinary course of the business of the Company and the Subsidiaries and
(C) each of the Company and the Subsidiaries has continued all pricing,
sales, receivables and payables practices in accordance with the
ordinary course of business consistent with past practice and has not
engaged, except in the ordinary course of business consistent with past
practice, in (1) any promotional sales or discount activity with any
customers or distributors with the effect of accelerating to prior
fiscal quarters (including the current fiscal quarter) sales to the
trade or otherwise that would otherwise be expected to occur in
subsequent fiscal quarters, (2) any practice which would have the
effect of accelerating to prior fiscal quarters (including the current
fiscal quarter) collections of receivables that would otherwise be
expected to be made in subsequent fiscal quarters, (3) any practice
which would have the effect of postponing to subsequent fiscal quarters
payments by the Company or any of the Subsidiaries that would otherwise
be expected to be made in prior fiscal quarters (including the current
fiscal quarter) or (4) any other promotional sales or discount
activity.
(ii) Since March 31, 2006, there has not been (A)(1)
any grant by the Company or any of the Subsidiaries to any
current or former director, officer, employee, contractor or
consultant of the Company or any of the Subsidiaries
(collectively, "Company Personnel") of any bonus opportunity,
any loan or any increase in any type of compensation or
benefits, except for grants of normal bonus opportunities and
normal increases of base compensation and benefits, in each
case, prior to the date of this Agreement in the ordinary
course of business consistent with past practice, or (2) any
payment by the Company or any of the Subsidiaries to any
Company Personnel of any bonus, except for bonuses paid or
accrued in the ordinary course of business consistent with
past practice, (B) any grant by the Company or any of the
Subsidiaries to any Company Personnel of any severance, change
in control, termination or similar compensation or benefits or
increases therein or of the right to receive any severance,
change in control, termination or similar compensation or
benefits or increases therein, (C) any adoption of or entry by
the Company or any of the Subsidiaries into, any amendment of
or modification to or
15
agreement to amend or modify (or announcement of an intention
to amend or modify) or any termination, in each case, by the
Company or any Subsidiary of, (1) any employment, deferred
compensation, change in control, severance, termination,
employee benefit, loan, indemnification, retention, stock
repurchase, stock option, consulting or similar Contract
between the Company or any of the Subsidiaries, on the one
hand, and any Company Personnel, on the other hand, (2) any
Contract between the Company or any of the Subsidiaries, on
the one hand, and any Company Personnel, on the other hand,
the benefits of which are contingent, or the terms of which
are materially altered, upon the occurrence of a transaction
involving the Company of the nature contemplated by this
Agreement or (3) any trust or insurance Contract or other
agreement to fund or otherwise secure payment of any
compensation or benefit to be provided to any Company
Personnel (all such Contracts under this clause (C), including
any such Contract which is entered into on or after the date
of this Agreement, collectively, "Benefit Agreements"), (D)
any grant or amendment by the Company or any Subsidiary of any
incentive award (including Stock Options, Restricted Shares,
stock appreciation rights, performance units, stock repurchase
rights or other stock-based or stock-related awards) or the
removal or modification by the Company or any Subsidiary of
any restrictions in any such award.
(h) Litigation. Section 3.01(h) of the Company Letter sets
forth a complete and accurate list of all actions, suits or judicial,
administrative or regulatory proceedings pending or, to the knowledge
of the Company, threatened, or to the knowledge of the Company, any
claims or investigations pending or threatened, by or against the
Company or any of the Subsidiaries as of the date of this Agreement (i)
which involves an amount in controversy in excess of $250,000 (or the
equivalent amount in any other applicable currency based on the
exchange rate published in the Financial Times (or such other authority
agreed by Parent and the Company) on the business day five days prior
to the date of this Agreement as the mid-point closing U.S. dollar
exchange rate with respect to such currency for the most recent prior
business day), (ii) which seeks material injunctive relief, (iii) which
may give rise to any legal restraint on or prohibition against or limit
the Surviving Corporation's ability to operate the business of the
Company and the Subsidiaries substantially as it was operated
immediately prior to the date of this Agreement or (iv) which if
resolved in accordance with plaintiff's demands is reasonably likely to
have a Material Adverse Effect on the Company. There is no Judgment of
any Governmental Entity or arbitrator outstanding against, or, to the
knowledge of the Company, investigation, proceeding, notice of
violation, order of forfeiture or complaint by any Governmental Entity
involving the Company or any of the Subsidiaries that individually or
in the aggregate is reasonably likely to have a Material Adverse Effect
on the Company. There are no actions, suits or judicial, administrative
or regulatory proceedings pending or, to the knowledge of the Company,
threatened, or to the knowledge of the Company, any claims or
16
investigations pending or threatened, by or against the Company or any
of the Subsidiaries which seek injunctive or similar relief against the
Company or any of the Subsidiaries that would apply to Parent or any of
its existing subsidiaries or any of their existing businesses following
the Merger. There is no Judgment of any Governmental Entity or
arbitrator outstanding against, or, to the knowledge of the Company,
investigation, proceeding, notice of violation, order of forfeiture or
complaint by any Governmental Entity involving the Company or any of
the Subsidiaries that would apply to Parent or any of its existing
subsidiaries or any of their existing businesses following the Merger.
(i) Contracts. (i) Section 3.01(i) of the Company Letter
contains a complete and accurate list, as of the date hereof, of:
(A) each Contract pursuant to which the
Company or any of the Subsidiaries has agreed not to
compete with any person or in any area or to engage
in any activity or business, or pursuant to which any
benefit or right is required to be given or lost as a
result of so competing or engaging;
(B) each Contract to which the Company or a
Subsidiary is a party providing for exclusivity to
any other person or any similar requirement, or
pursuant to which the Company or any of the
Subsidiaries is restricted in any way, or which after
the Effective Time could restrict Parent or any of
its subsidiaries in any way, with respect to the
development, manufacture, marketing or distribution
of their respective products or services or otherwise
prohibits any activity in respect of the operation of
their businesses, or pursuant to which any benefit or
right is required to be given or lost as a result of
non-compliance with any such exclusive or restrictive
requirements or which requires the Company or any
Subsidiary to refrain from granting license or
franchise rights to any other person;
(C) each Contract between the Company or a
Subsidiary (or by which the Company or a Subsidiary
is bound), on the one hand, and, on the other hand,
(1) any affiliate of the Company or any of the
Subsidiaries, (2) any Company Personnel, (3) any
union or other labor organization or (4) any
affiliate of any director or executive officer of the
Company (other than, in each case, (I) offer letters
or employment agreements that are terminable at will
by the Company or any of the Subsidiaries both
without any penalty and without any
17
obligation of the Company or any of the Subsidiaries
to pay severance or other compensation or benefits
(other than accrued base salary, accrued commissions,
accrued bonuses, accrued vacation pay, accrued
floating holidays and legally mandated benefits),
(II) invention assignment and confidentiality
agreements relating to the assignment of inventions
to the Company or any of the Subsidiaries not
involving the payment of money and (III) Benefit
Plans and Benefit Agreements);
(D) each Contract under which the Company or
any of the Subsidiaries has incurred any indebtedness
having an aggregate principal amount in excess of
$100,000;
(E) each material Contract to which the
Company or a Subsidiary is a party that requires
consent, approval or waiver of, or notice to, a
Governmental Entity or other third party in the event
of or with respect to the Merger or any of the other
transactions contemplated by this Agreement,
including in order to avoid termination of or loss of
a material benefit under any such Contract;
(F) each Contract to which the Company or a
Subsidiary is a party creating or granting a Lien
(including Liens upon properties acquired under
conditional sales, capital leases or other title
retention or security devices), other than (1) Liens
for Taxes not yet due and payable, that are payable
without penalty or that are being contested in good
faith and for which adequate reserves have been
recorded, (2) Liens for assessments and other
governmental charges or Liens of landlords, carriers,
warehousemen, mechanics and repairmen incurred in the
ordinary course of business, in each case for sums
not yet due and payable or due but not delinquent or
being contested in good faith by appropriate
proceedings, (3) Liens incurred in the ordinary
course of business in connection with workers'
compensation, unemployment insurance and other types
of social security or to secure the performance of
tenders, statutory obligations, surety and appeal
bonds, bids, leases, government contracts,
performance and return of money bonds and similar
obligations and (4) Liens incurred in the ordinary
course of business that are not reasonably likely to
adversely interfere in a
18
material way with the use of assets encumbered
thereby ("Permitted Liens");
(G) each material Contract containing any
provisions (1) having the effect of providing that
the consummation of the Merger or any of the other
transactions contemplated by this Agreement or the
execution, delivery or effectiveness of this
Agreement will materially conflict with, result in a
material violation or material breach of, or
constitute a default (with or without notice or lapse
of time or both) under, such Contract or give rise
under such Contract to any right of, or result in, a
termination, right of first refusal, material
amendment, revocation, cancelation or material
acceleration, or a loss of a material benefit or the
creation of any material Lien upon any of the
properties or assets of the Company, Parent or any of
their respective subsidiaries, or to any increased,
guaranteed, accelerated or additional material rights
or material entitlements of any person or (2) having
the effect of providing that the consummation of the
Merger or any of the other transactions contemplated
by this Agreement or the execution, delivery or
effectiveness of this Agreement will require that a
third party be provided with access to source code of
the Company or any Subsidiary or that any source code
of the Company or any Subsidiary be released from
escrow and provided to any third party;
(H) each Contract to which the Company or a
Subsidiary is a party providing for payments by the
Company or a Subsidiary of royalties or other license
fees to third parties in excess of $100,000 annually
that is not terminable on 90 days or less notice;
(I) each Contract granting a third party any
license to Intellectual Property that is not limited
to the internal use of such third party, it being
understood that internal use may include use by third
party customers in the ordinary course of business
consistent with past practice without any sublicense
or similar rights;
(J) each Contract to which the Company or a
Subsidiary is a party granting the other party to
such Contract or a third party "most favored nation"
pricing or terms that (1) applies to the Company or
any of the Subsidiaries or (2) following the Merger
would apply to
19
Parent or any of its subsidiaries other than the
Surviving Corporation;
(K) each Contract pursuant to which the
Company or any of the Subsidiaries has agreed or is
required to provide any third party with access to
source code or to provide for source code of the
Company or any Subsidiary to be put in escrow;
(L) each Contract to which the Company or a
Subsidiary is a party for any joint venture (whether
in partnership, limited liability company or other
organizational form) (or any similar arrangement that
provides for the sharing of profits and losses);
(M) each Contract to which the Company or a
Subsidiary is a party with any Governmental Entity;
(N) each material Contract entered into in
the last five years in connection with the settlement
or other resolution of any suit, claim, action,
investigation or proceeding;
(O) each Contract to which the Company or a
Subsidiary is a party providing for future
performance by the Company or a Subsidiary in
consideration of amounts previously paid, other than
maintenance and support Contracts entered into in the
ordinary course of business consistent with past
practice;
(P) each Contract to which the Company or a
Subsidiary is a party providing for liquidated
damages (other than in an aggregate amount for all
Contracts containing liquidated damages provisions
that is immaterial to the business of the Company and
the Subsidiaries, taken as a whole) by the Company or
any Subsidiary;
(Q) each material Contract under which the
Company or a Subsidiary has agreed to provide
professional services for a fixed fee and that
guarantees a specific result;
(R) each Contract between the Company or any
of the Subsidiaries and any of the 20 largest
customers of the Company and the Subsidiaries
(determined on the basis of aggregate software
license revenues recognized by the Company and the
Subsidiaries in the
20
twelve months ended June 30, 2006) (each such
customer, a "Major Customer" and each such Contract,
a "Major Customer Contract");
(S) each Contract between the Company or any
of the Subsidiaries, on the one hand, and any of the
ten largest licensors or any of the ten largest
non-licensor suppliers to the Company and the
Subsidiaries, on the other hand (determined on the
basis of aggregate amounts paid by the Company and
the Subsidiaries in the twelve months ended June 30,
2006) (each such licensor or other supplier, a "Major
Supplier" and each such Contract, a "Major Supplier
Contract");
(T) each Contract which has aggregate sums
due to or from the Company and the Subsidiaries,
taken as a whole, during the twelve months ending
June 30, 2007 in excess of $500,000; and
(U) each other material Contract to which
the Company or a Subsidiary is a party not made in
the ordinary course of business.
The Company has made available to Parent complete and accurate copies
of the Contracts referred to above (the "Specified Contracts"). Each
Specified Contract is in full force and effect (except for those
Specified Contracts that have expired or terminated in accordance with
their terms) and is a legal, valid and binding agreement of the Company
or its Subsidiary, as the case may be and, to the knowledge of the
Company, of each other party thereto, enforceable against the Company
or such Subsidiary, as the case may be, and, to the knowledge of the
Company, against the other party or parties thereto, in each case, in
accordance with its terms, except as the enforceability thereof may be
limited by bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or other similar Laws relating to the
enforcement of creditors' rights generally and by general principles of
equity. Each of the Company and the Subsidiaries has performed or is
performing all material obligations required to be performed by it
under the Specified Contracts and is not (with or without notice or
lapse of time or both) in breach in any material respect or default and
has not knowingly waived or failed to enforce any material rights or
benefits thereunder, other than in the ordinary course of business
consistent with past practice, and, to the knowledge of the Company, as
of the date of this Agreement no other party to any of the Specified
Contracts is (with or without notice or lapse of time or both) in
breach in any material respect or default thereunder and to the
knowledge of the Company, as of the date of this Agreement there has
occurred no event giving (with or without notice or lapse of time or
both) to others any right of termination, material amendment or
cancelation of any such Specified Contract.
21
(ii) As of the date of this Agreement, since October
1, 2005, none of the Major Customers or Major Suppliers has
terminated, failed to renew or requested any material
amendment to any of its Major Customer Contracts or Major
Supplier Contracts (other than renewals and amendments in the
ordinary course of business not adverse in any material
respect to the Company or any Subsidiary), with the Company or
any of the Subsidiaries.
(j) Compliance with Laws. The Company and the Subsidiaries
have in effect all material Permits that are necessary for them to own,
lease or operate their properties and assets and to carry on their
businesses as presently conducted. The Company and the Subsidiaries
have complied and are in compliance in all material respects with all
applicable Laws and Judgments; provided, however, that no
representation is made in this Section 3.01(j) with respect to any Laws
or Judgments which are the subject of representations made in Sections
3.01(e), (l), (m) and (n). The execution and delivery of this Agreement
by the Company does not, and the consummation by the Company of the
Merger and the other transactions contemplated by this Agreement and
compliance by the Company with the terms of this Agreement are not
reasonably likely to, cause the revocation or cancelation of any
material Permit. As of the date hereof, neither the Company nor any of
the Subsidiaries has received any written communication during the past
three years from any person that alleges that the Company or any of the
Subsidiaries is not in compliance in all material respects with, or is
subject to liability under, any material Permit, Law or Judgment or
relating to the revocation or modification of any material Permit. As
of the date hereof, neither the Company nor any of the Subsidiaries has
received any written notice that any investigation or review by any
Governmental Entity is pending with respect to the Company or any of
the Subsidiaries or any of the assets or operations of the Company or
any of the Subsidiaries or that any such investigation or review is
contemplated, other than any audit, examination or review of any Tax
Return in the ordinary course of business.
(k) Absence of Changes in Benefit Plans; Employment
Agreements; Labor Relations. (i) Except as disclosed in the Filed SEC
Documents, since September 30, 2005, none of the Company or any of the
Subsidiaries has adopted, entered into, terminated, amended, modified
or agreed to adopt, enter into, terminate, amend or modify (or
announced an intention to adopt, enter into, terminate, amend or
modify) in any material respect any collective bargaining agreement or
any bonus, pension, profit sharing, deferred compensation, incentive
compensation, stock ownership, stock purchase, stock appreciation,
restricted stock, stock repurchase rights, stock option (including the
Company Stock Plans), phantom stock, stock-based compensation,
performance, retirement, savings, paid time off, perquisite, vacation,
severance, change in control, termination, retention, disability, death
benefit, hospitalization, medical or other welfare benefit or other
plan, program, arrangement or understanding (whether oral or written,
formal or
22
informal, funded or unfunded and whether or not legally binding or
subject to the Laws of the United States), sponsored, maintained,
contributed to or required to be maintained or contributed to by the
Company, any of the Subsidiaries or any other person that, together
with the Company, is treated as a single employer under Section 414(b),
(c), (m) or (o) of the Code or with respect to which the Company is
otherwise jointly or severally liable under applicable Law (each, a
"Commonly Controlled Entity"), in each case, providing compensation or
benefits to any Company Personnel, but not including the Benefit
Agreements (all such plans, programs, arrangements and understandings,
including any such plan, program, arrangement or understanding entered
into or adopted on or after the date of this Agreement, collectively,
"Benefit Plans"), or has made any change in any actuarial or other
assumption used to calculate funding obligations with respect to any
Pension Plan, or any change in the manner in which contributions to any
such Pension Plan are made or the basis on which such contributions are
determined.
(ii) As of the date of this Agreement, there are no
collective bargaining or other labor union agreements to which
the Company or any of the Subsidiaries is a party or by which
it is bound. Since October 1, 2003, neither the Company nor
any of the Subsidiaries has encountered any labor union
organizing activity, or had any actual or threatened employee
strikes, work stoppages, slowdowns or lockouts. As of the date
of this Agreement, none of the employees of the Company or any
of the Subsidiaries is represented by any union with respect
to his or her employment by the Company or such Subsidiary.
Each of the Company and the Subsidiaries is, and since October
1, 2003, has been, in compliance in all material respects with
all applicable Laws and Judgments relating to employment and
employment practices, occupational safety and health
standards, terms and conditions of employment and wages and
hours, and is not, and since October 1, 2003, has not, engaged
in any unfair labor practice. As of the date of this
Agreement, the Company has not received notice of any unfair
labor practice charge or complaint against the Company or any
of the Subsidiaries that is pending and, to the knowledge of
the Company, there is no unfair labor practice charge or
complaint against the Company or any of the Subsidiaries
threatened, in each case before the National Labor Relations
Board or any comparable Governmental Entity.
(l) Environmental Matters. (i)(A) Each of the Company and the
Subsidiaries is and has been, in compliance in all material respects
with all applicable Environmental Laws, and neither the Company nor any
of the Subsidiaries has received any written communication alleging
that the Company or such Subsidiary is in violation of, or may have
liability under, any Environmental Law; (B) each of the Company and the
Subsidiaries possesses all material Permits required under
Environmental Laws for the conduct of its operations and is in
compliance in all material respects with
23
such Permits, and neither the Company nor any of the Subsidiaries has
been advised in writing by any Governmental Entity of any actual or
potential change in any material respect in the status or terms and
conditions of any such Permit; (C) there are no material Environmental
Claims pending or, to the knowledge of the Company, threatened against
the Company or any of the Subsidiaries; (D) there has been no Release
of any Hazardous Material that could reasonably be expected to form the
basis of any material Environmental Claim against the Company or any of
the Subsidiaries or against any person whose liabilities for such
Environmental Claims the Company or any of the Subsidiaries has, or may
have, retained or assumed, either contractually or by operation of Law;
(E) neither the Company nor any of the Subsidiaries has retained or
assumed, either contractually or by operation of Law, any liabilities
or obligations that are reasonably likely to form the basis of any
material Environmental Claim against the Company or any of the
Subsidiaries; (F) there are no aboveground or underground storage tanks
or known or suspected asbestos-containing materials for which the
Company or any of the Subsidiaries could reasonably be expected to be
responsible at, on, under or about property owned, operated or leased
by the Company or any of the Subsidiaries, nor, to the knowledge of the
Company, were there any underground storage tanks on, under or about
any such property in the past; (G) neither the Company nor any of the
Subsidiaries stores, generates or disposes of Hazardous Materials
(excluding office, cleaning or similar supplies used in the ordinary
course of the Company's or the Subsidiaries' operations) at, on, under,
about or from property owned or leased by the Company or any of the
Subsidiaries; and (H) there are no past or present events, conditions,
circumstances, activities, practices, incidents, actions or plans that
could reasonably be expected to form the basis of any material
Environmental Claim against the Company or any of the Subsidiaries.
(ii) For all purposes of this Agreement, (A)
"Environmental Claims" means any and all administrative,
regulatory or judicial actions, suits, Judgments, demands,
directives, claims, Liens, investigations, proceedings or
written or oral notices of noncompliance or violation by or
from any person alleging liability of any kind or nature
(including liability or responsibility for the costs of
enforcement proceedings, investigations, cleanup, governmental
response, removal or remediation, natural resource damages,
property damages, personal injuries, medical monitoring,
penalties, contribution, indemnification and injunctive
relief) arising out of, based on or resulting from (1) the
presence or Release of, or exposure to, any Hazardous Material
at any location, or (2) the failure to comply with any
Environmental Law; (B) "Environmental Law" means any Law,
Judgment, legally binding agreements or Permit issued,
promulgated or entered into by or with any Governmental Entity
relating to pollution, the environment (including ambient air,
surface water, groundwater, land surface or subsurface
strata), natural resources or human health and safety; (C)
"Hazardous Materials" means any petroleum or petroleum
products, radioactive materials or wastes, asbestos in any
form, polychlorinated
24
biphenyls and any other chemical, material, substance or waste
that is prohibited, limited or regulated under any
Environmental Law; and (D) "Release" means any actual or
threatened release, spill, emission, leaking, dumping,
injection, pouring, deposit, disposal, discharge, dispersal,
leaching or migration into or through the environment or
within any building, structure, facility or fixture.
(m) ERISA Compliance. (i) Section 3.01(m)(i) of the Company
Letter sets forth a complete and accurate list of all "employee pension
benefit plans" (as defined in Section 3(2) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")) (each, a "Pension
Plan") and all other Benefit Plans and Benefit Agreements that, in each
case, are in effect as of the date of this Agreement. The Company has
made available to Parent complete and accurate copies of (A) each
Benefit Plan and each Benefit Agreement (or, in the case of any
unwritten Benefit Plans or Benefit Agreements, descriptions thereof),
(B) the two most recent annual reports, or such similar reports,
statements, information returns or material correspondence required to
be filed, with or delivered to any Governmental Entity, if any, with
respect to each Benefit Plan (including reports filed on Form 5500),
(C) the most recent summary plan description (if any), and any summary
of material modifications prepared for each Benefit Plan for which such
summary plan description is required under applicable Law and (D) each
trust agreement and group annuity or insurance Contract and other
documents relating to the funding or payment of compensation or
benefits under any Benefit Plan or Benefit Agreement. Each Benefit Plan
has been administered in all material respects in accordance with its
terms. The Company and the Subsidiaries and all the Benefit Plans are
in compliance in all material respects with applicable Law, including
ERISA and the Code.
(ii) All Pension Plans intended to be tax qualified
under the Code are so qualified and have been the subject of
favorable determination letters from the Internal Revenue
Service (the "IRS") with respect to all Tax Law changes with
respect to which the IRS is currently willing to provide a
determination letter to the effect that such Pension Plans are
qualified and exempt from United States Federal income Taxes
under Sections 401(a) and 501(a), respectively, of the Code,
and no such determination letter has been revoked (nor, to the
knowledge of the Company as of the date of this Agreement, has
revocation been threatened) and no event has occurred since
the date of the most recent determination letter or
application therefor relating to any such Pension Plan that is
reasonably likely to adversely affect the qualification of
such Pension Plan or increase the costs relating thereto or
require security under Section 307 of ERISA. All Pension Plans
required to have been approved by any non-United States
Governmental Entity (or permitted to have been approved to
obtain any beneficial tax or other status) have been so
approved or timely submitted for approval, no such approval
has been revoked (nor, to the knowledge of the Company as of
the date of this
25
Agreement, has revocation been threatened) and no event has
occurred since the date of the most recent approval or
application therefor relating to any such Pension Plan that is
reasonably likely to affect any such approval relating thereto
or increase the costs relating thereto. The Company has made
available to Parent a copy of the most recent determination or
approval letter received with respect to each Pension Plan, as
well as a copy of each pending application for a determination
or approval letter, if any.
(iii) Neither the Company nor any Commonly Controlled
Entity has sponsored, maintained, contributed to or been
obligated to maintain or contribute to, or has any actual or
contingent liability under, any Benefit Plan that is subject
to Section 302 or Title IV of ERISA or Section 412 of the Code
or is otherwise a defined benefit pension plan or that
provides for the payment of termination indemnities.
(iv) No Benefit Plan or Benefit Agreement that
provides welfare benefits (each, a "Welfare Plan") is funded
through a "welfare benefits fund" (as such term is defined in
Section 419(e) of the Code), or is unfunded or self-insured.
There are no understandings, agreements or undertakings,
written or oral, that would prevent any Welfare Plan
(including any Welfare Plan covering retirees or other former
employees) from being amended or terminated without material
liability to the Company or any of the Subsidiaries on or at
any time after the Effective Time. No Welfare Plan provides
benefits after termination of employment, except where the
cost thereof is borne entirely by the former employee (or his
or her eligible dependents or beneficiaries) or as required by
Section 4980B(f) of the Code.
(v) Section 3.01(m)(v) of the Company Letter sets
forth a complete and accurate list, as of the date of this
Agreement, of (A) each Benefit Plan and each Benefit Agreement
pursuant to which any Company Personnel could become entitled
to any additional compensation, severance or other benefits or
any acceleration of the time of payment or vesting of any
compensation, severance or other benefits as a result of the
Merger and the other transactions contemplated by this
Agreement (alone or in combination with any other event) or
termination of employment, or any benefits the value of which
would be calculated on the basis of the Merger and the other
transactions contemplated by this Agreement (alone or in
combination with any other event), (B) the names of all
Company Personnel entitled to any such compensation or
benefits actually payable as of the Closing Date or upon
termination of employment after the Closing Date and the
category or type of each such form of compensation or benefit
to which such Company Personnel is entitled, (C) the aggregate
value of each such form of compensation or benefit actually
payable as of the Closing Date and each such form of
compensation or benefit that would be payable upon termination
of employment or otherwise after the
26
Closing Date, in each case, to all Company Personnel, and (D)
the aggregate value of any such compensation or benefits that
would be paid to each individual set forth in Section
3.01(m)(v) of the Company Letter as of the Closing Date and
upon termination of employment. Except as expressly set forth
in the Offer Letters or in Section 5.04, no Company Personnel
will be entitled to any severance, change in control,
termination, bonus or other additional compensation or
benefits from or on behalf of the Company or any of its
Subsidiaries or any acceleration of the time of payment or
vesting of any compensation or benefits from or on behalf of
the Company or any of its Subsidiaries as a result of the
Merger and the other transactions contemplated by this
Agreement (alone or in combination with any other event) or
any compensation or benefits from or on behalf of the Company
or any of its Subsidiaries related to or contingent upon, or
the value of which will be calculated on the basis of, the
Merger and the other transactions contemplated by this
Agreement (alone or in combination with any other event). The
execution and delivery of this Agreement, the consummation of
the Merger and the other transactions contemplated by this
Agreement (alone or in combination with any other event) and
compliance by the Company with the provisions of this
Agreement do not and will not (A) trigger any funding (through
a grantor trust or otherwise) of, or increase the cost of, or
give rise to any other obligation under, any Benefit Plan,
Benefit Agreement or any other employment arrangement, (B)
trigger the forgiveness of indebtedness owed by any Company
Personnel to the Company or any of its affiliates or (C)
result in any violation or breach of, or a default (with or
without notice or lapse of time or both) under, or limit to
the Company's ability to amend, modify or terminate any
Benefit Plan or Benefit Agreement.
(vi) No deduction of any amount payable pursuant to
the terms of the Benefit Plans, Benefit Agreements or any
other employment arrangements has been disallowed or is
subject to disallowance under Section 162(m) of the Code.
(vii) As of the date of this Agreement, neither the
Company nor any of the Subsidiaries has received written
notice of, and, to the knowledge of the Company, there are no,
pending investigations by any Governmental Entity with respect
to, or pending termination proceedings or other material
claims (except claims for benefits payable in the normal
operation of the Benefit Plans), suits or proceedings against
or involving any Benefit Plan or Benefit Agreement or
asserting any rights or claims to benefits under, any Benefit
Plan or Benefit Agreement.
(viii) All contributions, premiums and benefit
payments under or in connection with the Benefit Plans or
Benefit Agreements that are required to have been made by the
Company or any of the Subsidiaries have been timely made.
Neither the Company nor any of the Subsidiaries has
27
incurred, or could reasonably be expected to incur, any
unfunded liabilities in relation to any Benefit Plan or
Benefit Agreement.
(ix) With respect to each Benefit Plan, (A) there has
not occurred any prohibited transaction in which the Company,
any of the Subsidiaries or any of their respective officers,
directors or employees or, to the knowledge of the Company as
of the date of this Agreement, any trustee or other fiduciary
or administrator of any Benefit Plan or trust created
thereunder, in each case, who is not an officer, director or
employee of the Company or any of the Subsidiaries (a
"Non-Affiliate Plan Fiduciary"), has engaged that is
reasonably likely to subject the Company, any of the
Subsidiaries or any of their respective officers, directors or
employees or any Non-Affiliate Plan Fiduciary, to the tax or
penalty on prohibited transactions imposed by Section 4975 of
the Code or the sanctions imposed under Title I of ERISA or
any other applicable Law and (B) none of the Company, any of
the Subsidiaries or any of their respective officers,
directors or employees, or, to the knowledge of the Company,
as of the date of this Agreement, any Non-Affiliate Plan
Fiduciary, nor any agent of any of the foregoing, has engaged
in any transaction or acted in a manner, or failed to act in a
manner, that is reasonably likely to subject the Company, any
Subsidiary of the Company or, to the knowledge of the Company,
as of the date of this Agreement, any Non-Affiliate Plan
Fiduciary to any liability for breach of fiduciary duty under
ERISA or any other applicable Law.
(x) The Company and the Subsidiaries do not have any
liability or obligations (other than immaterial liabilities or
obligations), including under or on account of a Benefit Plan
or Benefit Agreement, arising out of the hiring of persons to
provide services to the Company or any of the Subsidiaries and
treating such persons as consultants or independent
contractors and not as employees of the Company or any of the
Subsidiaries.
(n) Taxes. (i) Each of the Company and the Subsidiaries has
timely filed all material Tax Returns required to be filed by it and
all such Tax Returns are complete and accurate in all material
respects. Each of the Company and the Subsidiaries has timely paid all
material Taxes due and owing, and the most recent financial statements
contained in the Filed SEC Documents reflect an adequate reserve, in
accordance with GAAP, for all material Taxes payable by the Company and
the Subsidiaries for all taxable periods and portions thereof through
the date of such financial statements.
(ii) As of the date of this Agreement, no material
Tax Return of the Company or any of the Subsidiaries is
currently under audit or examination by any Taxing Authority,
and no written notice of such an audit or examination has been
received by the Company or any of the Subsidiaries. There is
no material deficiency, refund litigation, proposed
28
adjustment or matter in controversy with respect to any Taxes
due and owing by the Company or any of the Subsidiaries. Each
deficiency resulting from any completed audit or examination
or concluded litigation relating to Taxes by any Taxing
Authority has been timely paid. As of the date of this
Agreement, no issues relating to Taxes were raised by the
relevant Taxing Authority during any presently pending audit
or examination, and no issues relating to Taxes were raised by
the relevant Taxing Authority in any completed audit or
examination, that are reasonably likely to recur in a later
taxable period, except for issues that individually or in the
aggregate are not reasonably likely to result in a material
liability for the Company or any of the Subsidiaries. The
relevant statute of limitations is closed with respect to the
U.S. federal income Tax Returns of the Company and the
Subsidiaries for all tax years ending on or before December
31, 1998.
(iii) There is no currently effective agreement or
other document extending, or having the effect of extending,
the period of assessment or collection of any material Taxes
and no currently effective power of attorney (other than
powers of attorney authorizing employees of the Company to act
on behalf of the Company) with respect to any material Taxes
has been executed or filed with any Taxing Authority.
(iv) No material Liens for Taxes exist with respect
to any assets or properties of the Company or any of the
Subsidiaries, except for statutory Liens for Taxes not yet due
and Liens for Taxes that the Company or any of the
Subsidiaries is contesting in good faith through appropriate
proceedings and for which adequate reserves, in accordance
with GAAP, have been established.
(v) None of the Company or any of the Subsidiaries is
a party to or bound by any Tax sharing agreement, Tax
indemnity obligation or similar agreement, arrangement or
practice with respect to Taxes (including any advance pricing
agreement, closing agreement pursuant to Section 7121 of the
Code, or other agreement relating to Taxes with any Taxing
Authority).
(vi) None of the Company or any of the Subsidiaries
will be required to include in a taxable period ending after
the Effective Time a material amount of taxable income
attributable to income that accrued (for purposes of the
financial statements of the Company included in the Filed SEC
Documents) in a prior taxable period but was not recognized
for Tax purposes in any prior taxable period as a result of
the installment method of accounting, the completed contract
method of accounting, the long-term contract method of
accounting, the cash method of accounting or Section 481 of
the Code or comparable provisions of any Tax Law, or for any
other reason (including as a result of prepaid amounts or
deferred revenue received on or prior to the Effective Time).
29
(vii) Other than agreements pursuant to which the
Company or a Subsidiary may be required to make payments to
persons set forth on Section 3.01(n)(vii) of the Company
Letter (the "Primary Company Executives"), neither the Company
nor any Subsidiary is a party to any Contract that could
result in the payment of any amount or other entitlement
(whether in cash or property or the vesting of property) as a
result of the Merger (alone or in combination with any other
event) to any person who is a "disqualified individual" (as
defined in Treasury Regulation Section 1.280G-1) with respect
to the Company, which payment would be characterized as an
"excess parachute payment" (as defined in Section 280G(b)(1)
of the Code). The Company has provided Parent with
documentation evidencing the "base amount" (as defined in
Section 280G(b)(3) of the Code) for each Primary Company
Executive as of the date of this Agreement. No current or
former director, officer, employee, contractor or consultant
of the Company or any of the Subsidiaries is entitled to any
gross-up, make-whole or other additional payment from the
Company or any of the Subsidiaries in respect of any tax
(including Federal, state, local and foreign income, excise
and other taxes (including taxes imposed under Sections 280G
or 409A of the Code)) or interest or penalty related thereto.
(viii) The Company and the Subsidiaries have complied
in all material respects with all applicable Laws relating to
the payment and withholding of Taxes (including withholding of
Taxes pursuant to Sections 1441, 1442, 3121 and 3402 of the
Code or similar provisions under any Laws) and have, within
the time and the manner prescribed by Law, withheld from and
paid over to the proper Taxing Authorities all amounts
required to be so withheld and paid over under applicable
Laws.
(ix) Neither the Company nor any of the Subsidiaries
has ever participated in a reportable transaction within the
meaning of Treasury Regulations Section 1.6011-4(b).
(x) Neither the Company nor any of the Subsidiaries
has constituted either a "distributing corporation" or a
"controlled corporation" (A) in a distribution of stock
qualifying for tax-free treatment under Section 355 of the
Code in the two years prior to the date of this Agreement or
(B) in a distribution that could otherwise constitute part of
a "plan" or "series of related transactions" (within the
meaning of Section 355(e) of the Code) in conjunction with the
Merger or any of the other transactions contemplated by this
Agreement.
(xi) To the best of the Company's knowledge, (A) all
material related party transactions involving the Company or
any of the Subsidiaries are at arm's length in compliance with
Section 482 of the Code and the Treasury Regulations
promulgated thereunder and any comparable provision of any Tax
Law, (B) none of the Company or any of
30
the Subsidiaries is a party to any material cost-sharing
agreement or similar arrangement that is not a "qualified cost
sharing arrangement" within the meaning of U.S. Treasury
Regulation Section 1.482-7 and any comparable provision of any
Tax Law and (C) all material intercompany payments have been
calculated in accordance with U.S. Treasury Regulation Section
1.482-7. Each of the Company and the Subsidiaries has
maintained in all material respects all necessary
documentation in connection with material related party
transactions in accordance with Sections 482 and 6662 of the
Code and the Treasury Regulations promulgated thereunder and
any comparable provision of any Tax Law. The Company has made
available to Buyer complete and correct copies of all transfer
pricing studies relating to the Company or any of the
Subsidiaries for all taxable years since 1999.
(xii) Neither the Company nor any of the Subsidiaries
has been subject to an "accumulated earnings tax" pursuant to
Section 531 of the Code or any comparable provision of any Tax
Law.
(xiii) Neither the Company nor any of the
Subsidiaries (A) is, to the knowledge of the Company, a
"passive foreign investment company" within the meaning of
Section 1297(a) of the Code and the Treasury Regulations
promulgated thereunder or (B) has ever made an election under
Section 1362 of the Code to be treated as an S corporation for
Federal income Tax purposes or made a similar election under
any comparable provision of any Tax Law.
(xiv) Each of the Company and the Subsidiaries has
conducted all aspects of its business materially in accordance
with the terms and conditions of all Tax rulings and Tax
concessions that were provided specifically to it by any
relevant Taxing Authority.
(xv) Each of the Company and the Subsidiaries has
disclosed in its Federal income Tax Returns all positions
taken therein that could give rise to a substantial
understatement of Federal income Tax within the meaning of
Section 6662 of the Code.
(xvi) For purposes of this Agreement, "Taxes" shall
include all (A) Federal, state and local, domestic and
foreign, income, franchise, property, sales, excise,
employment, payroll, social security, value-added, ad valorem,
transfer, withholding and other taxes, including taxes based
on or measured by gross receipts, profits, sales, use or
occupation, tariffs, levies, impositions, assessments or
governmental charges of any nature whatsoever, including any
interest penalties or additions with respect thereto, and any
obligations under any Permits or any Contracts with any other
person with respect to such amounts, (B) liability for the
payment of any amounts of the types described in clause (A) as
a result of being a member of an affiliated, consolidated,
combined, unitary or aggregate
31
group and (C) liability for the payment of any amounts as a
result of an obligation to indemnify any other person with
respect to the payment of any amounts of the type described in
clause (A) or (B). For purposes of this Agreement, "Taxing
Authority" shall mean any Governmental Entity exercising
regulatory authority in respect of any Taxes. For purposes of
this Agreement, "Tax Return" shall mean any Federal, State and
local, domestic and foreign return, declaration, report, form,
claim for refund, disclosure statement (including any
statement pursuant to Treasury Regulation Section
1.6011-4(a)), or information, return statement or other
document relating to Taxes, including any certificate,
schedule or attachment hereto, and including any amendment
thereof.
(o) Properties. (i) Each of the Company and the Subsidiaries
has good and marketable title to, or in the case of leased property and
leased tangible assets have valid and enforceable leasehold interests
in, all of its material properties and tangible assets, except for such
properties and tangible assets as are no longer used or useful in the
conduct of its businesses or as have been disposed of in the ordinary
course of business and except for Permitted Liens and for defects in
title, easements and restrictive covenants that individually or in the
aggregate have not materially interfered with, and could not reasonably
be expected to materially interfere with, the ability of the Company
and the Subsidiaries to use such property and assets in the business of
the Company and the Subsidiaries as presently conducted and as proposed
by the Company and the Subsidiaries to be conducted. All such material
properties and tangible assets, other than properties and tangible
assets in which the Company or any of the Subsidiaries has a leasehold
interest, are free and clear of all Liens, except for Permitted Liens.
For purposes of this Section 3.01(o), the term "property" shall not
include any Intellectual Property.
(ii) The material properties and tangible assets
owned or leased by the Company and the Subsidiaries, or which
they otherwise have the right to use, are sufficient (subject
to normal wear and tear) to operate their businesses in
substantially the same manner as they are presently conducted
and as proposed by the Company and the Subsidiaries to be
conducted.
(iii) Section 3.01(o)(iii) of the Company Letter sets
forth a complete and accurate list as of the date of this
Agreement of all real property and interests in real property
leased by the Company or any of the Subsidiaries (each such
property, a "Leased Real Property"). Neither the Company nor
any of the Subsidiaries owns in fee any real property or
interests in real property.
(iv) With respect to each Leased Real Property, as of
the date of this Agreement (A) neither the Company nor any
Subsidiary has subleased, licensed or otherwise granted anyone
the right to use or occupy such Leased Real Property or any
portion thereof and (B) neither the
32
Company nor any Subsidiary has collaterally assigned or
granted any other security interest in any such leasehold
estate or any interest therein.
(v) Each of the Company and the Subsidiaries is in
compliance in all material respects with the terms of all
material leases to Leased Real Property to which it is a party
and under which it is in occupancy, and each such material
lease is a legal, valid and binding agreement of the Company
or a Subsidiary, as the case may be and, to the knowledge of
the Company, of each other party thereto, enforceable against
the Company or such Subsidiary, as the case may be, and, to
the knowledge of the Company, against the other party or
parties thereto, in each case, in accordance with its terms,
except as the enforceability thereof may be limited by
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or other similar Laws relating to the enforcement
of creditors' rights generally and by general principles of
equity. Each of the Company and the Subsidiaries enjoys
peaceful and undisturbed possession in all material respects
under all the leases to Leased Real Property to which it is a
party and under which it is in occupancy.
(p) Intellectual Property. (i) Section 3.01(p)(i) of the
Company Letter sets forth a complete and accurate list of all patents,
registered trademarks, tradenames, service marks, registered copyrights
and pending applications for any of the foregoing owned by the Company
or any of the Subsidiaries as of the date of this Agreement. The
Company has made available to Parent complete and accurate copies of,
and Section 3.01(p)(i) of the Company Letter sets forth a complete and
accurate list of, all material Contracts under which the Company or any
of the Subsidiaries is either a licensee or licensor of any
Intellectual Property and which are in effect as of the date of this
Agreement, other than (except with respect to licenses or rights
referred to in item (ii)(K) below) nonexclusive licenses granted to or
by the Company or a Subsidiary in the ordinary course of business of
the Company and the Subsidiaries consistent with past practice.
(ii) (A) The Company and each of the Subsidiaries
owns, or is licensed or otherwise has the right to use, free
and clear of any Liens, and subject to the terms and
conditions of any license therefor (which terms and conditions
do not restrict the Company or the Subsidiaries from
conducting their business as presently conducted), all
Intellectual Property necessary for or material to the conduct
of its business as presently conducted.
(B) All material issued patents, pending
patent applications, registered trademarks and
pending applications therefor, registered tradenames,
registered service marks, registered copyrights and
pending applications therefor of the Company or any
of the Subsidiaries have been duly registered and/or
filed, as
33
applicable, with or issued by each applicable
Governmental Entity in each jurisdiction selected by
the Company for issuance or registration, all
necessary affidavits of continuing use with respect
thereto have been filed, and all necessary
maintenance fees with respect thereto have been paid,
except to the extent that the Company has made a
business judgment prior to the date of this Agreement
not to continue to register or maintain (or prosecute
applications for) patents, registered copyrights,
registered trademarks or registered service marks
which are not currently used by the Company or any of
the Subsidiaries.
(C) To the knowledge of the Company, none of
the Company or any of the Subsidiaries or any of its
or their products or services has infringed upon or
otherwise violated, or is infringing upon or
otherwise violating the Intellectual Property rights
of any third party (excluding any infringement that
is not reasonably likely to have a material adverse
effect on a material product or service of the
Company or any Subsidiary or to result in a material
liability to the Company or any Subsidiary).
(D) There is no suit, action, or proceeding
pending or, to the knowledge of the Company,
threatened, or, to the knowledge of the Company, any
claim or investigation pending or threatened, with
respect to, and the Company has not been notified in
writing of, any possible infringement or other
violation in any material respect by the Company or
any of the Subsidiaries or any of its or their
products or services of the Intellectual Property
rights of any third party.
(E) To the knowledge of the Company, no
person or any product or service of any person is
infringing upon or otherwise violating in any
material respect any Intellectual Property rights of
the Company or any of the Subsidiaries.
(F) The Company and the Subsidiaries have
taken commercially reasonable steps to maintain in
confidence the material trade secrets and
confidential information of the Company and the
Subsidiaries in all material respects consistent with
procedures customarily used in the Company's industry
to protect rights of like importance. Each of the
former or current
34
members of management or key personnel of the Company
or any of the Subsidiaries, including all former and
current employees, agents, consultants and
independent contractors known to the Company to have
contributed to or participated in the conception and
development of Intellectual Property owned or
intended to be owned by the Company or any of the
Subsidiaries, have assigned or otherwise transferred
to the Company, as necessary for the Company and the
Subsidiaries to conduct their respective businesses
as currently conducted, all ownership and other
rights of any nature whatsoever (to the extent
permitted by Law) of such person in any material
Intellectual Property that is owned or intended to be
owned by the Company or any of the Subsidiaries,
except where the failure to do so is not reasonably
likely to have a material adverse effect on a
material product or service of the Company or any
Subsidiary or to result in a material liability to
the Company or any Subsidiary, and none of the former
or current members of management or key personnel of
the Company or any of the Subsidiaries, including all
former and current employees, agents, consultants and
independent contractors known to the Company to have
contributed to or participated in the conception and
development of Intellectual Property owned or
intended to be owned by the Company or any of the
Subsidiaries, has a valid claim against the Company
or any of the Subsidiaries in connection with the
involvement of such person in the conception and
development of any material Intellectual Property
that is owned or intended to be owned by the Company
or any of the Subsidiaries, and no such claim is
pending or, to the knowledge of the Company,
threatened, in each case other than claims that are
not reasonably likely to have a material adverse
effect on a material product or service of the
Company or any Subsidiary or to result in a material
liability to the Company or any Subsidiary. To the
knowledge of the Company, none of the current
employees of the Company or any of the Subsidiaries
has any patents issued or applications pending for
any device, process, design or invention of any kind
now used or needed by the Company or any of the
Subsidiaries in furtherance of their business as
presently conducted, which patents or applications
have not been assigned (or are not contractually
obligated to be assigned) to the Company or any of
the Subsidiaries.
35
(G) The execution and delivery of
this Agreement by the Company do not, and
the consummation by the Company of the
transactions contemplated by this Agreement
and the compliance by the Company with the
provisions of this Agreement will not,
conflict with, or result in any violation
of, or default (with or without notice or
lapse of time or both) under, or give rise
to any right or license relating to, any
material Intellectual Property owned or used
by the Company or any of the Subsidiaries or
with respect to which the Company or any of
the Subsidiaries now has any agreement with
any third party, or any right of
termination, cancellation or acceleration of
any material Intellectual Property right or
obligation set forth in any agreement to
which the Company or any of the Subsidiaries
is a party, or the loss or encumbrance of
any material Intellectual Property or
material benefit related thereto, or result
in the creation of any Lien in or upon any
material Intellectual Property or right,
except for such conflicts, violations,
defaults, rights, licenses, losses,
encumbrances or Liens as are not reasonably
likely to have a material adverse effect on
a material product or service of the Company
or any Subsidiary or to result in a material
liability to the Company or any Subsidiary.
(H) To the extent Third Party
Software is (I) currently distributed to
customers of the Company or any of the
Subsidiaries by the Company or any of the
Subsidiaries or (II) made available by the
Company or any of the Subsidiaries to
customers of the Company or any of the
Subsidiaries under a hosting, outsourcing or
similar arrangement, (1) the Company and the
Subsidiaries have obtained all licenses
necessary for such distribution or making
available, except where the failure to
obtain any such license is not reasonably
likely to have a material adverse effect on
a material product or service of the Company
or any Subsidiary or to result in a material
liability to the Company or any Subsidiary,
(2) the Company's use of such Third Party
Software has not obligated the Company to
make any source code of the Company
available to any third party and (3) no
royalties or payments in excess of $100,000
are due. Section 3.01(p)(ii)(H) of the
Company Letter contains a complete list of
such material Third Party Software, and
identifies the Contract pursuant to which
36
the Company is licensed to distribute or
make available such Third Party Software.
(I) None of the source code or
other material trade secrets (other than
trade secrets with respect to which the
Company knowingly made a business judgment
prior to the date of this Agreement to not
keep such trade secrets confidential) of the
Company or any of the Subsidiaries has been
published or disclosed by the Company or any
of the Subsidiaries to any third party,
except pursuant to a written non-disclosure
Contract or covenant, or, to the knowledge
of the Company, by any third party to any
other third party, except pursuant to
licenses or other Contracts or covenants
requiring such third party to keep such
trade secrets confidential, in each case
subject to customary and commercially
reasonable exceptions.
(J) Neither the Company nor any of
the Subsidiaries has assigned, sold or
otherwise transferred ownership of any
material issued patent, patent application,
registered trademark or application
therefor, service mark, registered copyright
or application therefor or any other
material Intellectual Property since October
1, 2003, other than assignments, sales or
transfers between or among the Company and
its wholly-owned Subsidiaries.
(K) No licenses or rights have been
granted to a third party to distribute the
source code for, or to use any source code
to create Derivative Works of, any product
currently marketed by, commercially
available from or under development by the
Company or any of the Subsidiaries for which
the Company possesses the source code.
(L) Each of the Company and the
Subsidiaries has created and has safely
stored in a commercially reasonable manner
back-up copies of all the material Software
of the Company and each of the Subsidiaries.
(iii) For purposes of this Agreement, "Derivative
Work" shall have the meaning set forth in 17 U.S.C. Section
101.
(iv) For purposes of this Agreement, "Intellectual
Property" shall mean Software, trademarks, service marks,
brand names, certification marks, trade dress, assumed names,
domain names, trade names and other
37
indications of business origin, the goodwill associated with
the foregoing and registrations in any jurisdiction of, and
applications in any jurisdiction to register, the foregoing,
including any extension, modification or renewal of any such
registration or application; inventions, discoveries and
ideas, whether patentable or not in any jurisdiction; patents,
applications for patents (including divisions, provisionals,
continuations, continuations in-part and renewal
applications), and any renewals, extensions or reissues
thereof, in any jurisdiction; non-public information, trade
secrets, know-how, formulae, processes, procedures, research
records, records of invention, software and confidential
information, whether patentable or not in any jurisdiction and
rights in any jurisdiction to limit the use or disclosure
thereof by any person; writings and other works, whether
copyrightable or not in any jurisdiction, and any renewals or
extensions thereof; any similar intellectual property or
proprietary rights; and any claims or causes of action of the
owner of such intellectual property or proprietary rights
(whether pending or threatened or which could be filed)
arising out of any infringement or misappropriation of any of
the foregoing. For purposes of this Agreement, "Software"
shall mean all types of computer software programs, including
operating systems, application programs, software tools,
firmware and software imbedded in equipment, including both
object code and source code. The term "Software" shall also
include all written or electronic data, documentation, and
materials that explain the structure or use of Software or
that were used in the development of Software or are used in
the operation of the Software including logic diagrams, flow
charts, procedural diagrams, error reports, manuals and
training materials, look-up tables and databases. For purposes
of this Agreement, "Third Party Software" shall mean Software
with respect to which a third party holds any copyright or
other ownership right (and therefore, such Software is not
owned exclusively by the Company or any of the Subsidiaries).
(q) Receivables. As of the date of this Agreement,
all the Receivables (i) represent actual indebtedness or other
obligations incurred by the applicable account debtors and
(ii) have arisen from bona fide transactions. The Baseline
Financials reflect appropriate reserves for doubtful accounts,
in accordance with GAAP, as of the most recent date specified
therein. For purposes of this Agreement, "Receivables" shall
mean all receivables constituting the right of the Company or
any of the Subsidiaries to receive payments in respect of
goods or services.
(r) Insurance. The Company or the Subsidiaries
maintain policies of fire and casualty, liability and other
forms of insurance in such amounts, with such deductibles and
against such risks and losses as are customary for businesses
in the Company's and the Subsidiaries' business. All such
insurance policies are in full force and effect, all premiums
due and payable thereon have been paid, and no written notice
of cancelation or termination has been received with respect
to any such policy which has not been replaced
38
on substantially similar terms prior to the date of such
cancelation. There is no material claim pending under any such
policies as to which coverage has been disputed.
(s) State Takeover Statutes; Company Articles. The
Board of Directors of the Company has taken all actions
necessary, if any, so that the restrictions contained in (i)
Chapters 110C, 110D and 110F of the Massachusetts General Laws
and (ii) Article 6A of the Company Articles ("Article 6A"), in
each case to the extent, if any, such restrictions would
otherwise be applicable to the execution, delivery or
performance of this Agreement, the consummation of the Merger
or the other transactions contemplated by this Agreement or
compliance with the terms of this Agreement, shall not so
apply. A majority of the Board of Directors of the Company and
a majority of the "Disinterested Directors" (as defined in
Article 6A) have determined (assuming the accuracy of the
representations and warranties of Parent and Sub in Section
3.02(e) below) that none of Parent, Sub or any of their
respective affiliates is an "Interested Stockholder" (as
defined in Article 6A) such that subsection (a)(1) of such
Article 6A would apply to the execution, delivery or
performance of this Agreement, the consummation of the Merger
or any other transaction contemplated by this Agreement or
compliance with the terms hereof. No other "control share
acquisition", "interested stockholder", "fair price",
"moratorium" or other state takeover or similar statute or
regulation or other similar provision of the Company Articles
or the Company Bylaws is, or at the Effective Time will be,
applicable to the execution, delivery or performance of this
Agreement, the consummation of the Merger or the other
transactions contemplated by this Agreement or compliance with
the terms of this Agreement.
(t) Company Rights Agreement. The Company has taken
all actions necessary to (i) render the Company Rights
Agreement inapplicable to the execution, delivery or
performance of this Agreement, the consummation of the Merger
and the other transactions contemplated by this Agreement and
compliance with the terms of this Agreement, (ii) ensure that
(A) none of Parent, Sub or any other subsidiary of Parent is
an "Acquiring Person" (as defined in the Company Rights
Agreement), (B) a "Distribution Date" or a "Stock Acquisition
Date" (as such terms are defined in the Company Rights
Agreement) does not occur and (C) the Company Rights to
purchase Series A Junior Participating Preferred Stock issued
under the Company Rights Agreement do not become exercisable,
in the case of clauses (A), (B) and (C), solely by reason of
the execution, delivery or performance of this Agreement, the
consummation of the Merger or the other transactions
contemplated by this Agreement or compliance with the terms of
this Agreement and (iii) provide that the "Expiration Date"
(as defined in the Company Rights Agreement) shall occur
immediately prior to the Effective Time.
39
(u) Voting Requirements. The affirmative vote at the
Stockholders Meeting or any adjournment or postponement
thereof of the holders of a majority of the shares of Company
Common Stock outstanding and entitled to vote as of the record
date for the Stockholders Meeting (or as of the new record
date, if applicable, with respect to any adjournment or
postponement thereof) in favor of approving this Agreement
(the "Stockholder Approval") is the only vote of the holders
of any class or series of the Company's capital stock
necessary to approve this Agreement or the consummation of the
Merger and the other transactions contemplated by this
Agreement.
(v) Brokers; Schedule of Fees and Expenses. No
broker, investment banker, financial advisor or other person,
other than Goldman, Sachs & Co., the fees and expenses of
which will be paid by the Company, is entitled to any
broker's, finder's, financial advisor's or other similar fee
or commission in connection with the Merger or any of the
other transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Company. The Company
has provided Parent with complete and accurate copies of all
agreements under which any such fees or commissions are
payable and all indemnification and other agreements related
to the engagement of the persons to whom such fees are
payable. The fees and expenses of any accountant, broker,
financial advisor, consultant, legal counsel or other person
retained by the Company in connection with this Agreement or
the transactions contemplated by this Agreement incurred or to
be incurred by the Company in connection with this Agreement
and the transactions contemplated by this Agreement will not
be inconsistent with the fees and expenses set forth in
Section 3.01(v) of the Company Letter.
(w) Opinion of Financial Advisor. The Board of
Directors of the Company has received the written opinion of
Goldman, Sachs & Co. dated as of the date of this Agreement
and addressed to the Board of Directors of the Company to the
effect that, as of the date of this Agreement, and based upon
and subject to the limitations, qualifications and assumptions
set forth therein, the Merger Consideration to be received by
the stockholders of the Company pursuant to this Agreement is
fair to such stockholders from a financial point of view, a
copy of which opinion the Company has delivered to Parent.
SECTION 3.02. Representations and Warranties of
Parent and Sub. Parent and Sub represent and warrant to the Company as
follows:
(a) Organization. Each of Parent and Sub is a
corporation duly organized, validly existing and in good
standing under the Laws of the jurisdiction of its
organization and has all requisite corporate power and
authority to carry on its business as now being conducted.
(b) Authority; Noncontravention. Parent and Sub have
the requisite corporate power and authority to execute and
deliver this Agreement, to consummate the Merger and the other
transactions contemplated by this
40
Agreement and to comply with the provisions of this Agreement.
The execution and delivery of this Agreement by Parent and
Sub, the consummation by Parent and Sub of the Merger and the
other transactions contemplated by this Agreement and the
compliance by Parent and Sub with the provisions of this
Agreement have been duly authorized by all necessary corporate
action on the part of Parent and Sub and no other corporate
proceedings on the part of Parent or Sub are necessary to
authorize this Agreement, to comply with the terms of this
Agreement or to consummate the Merger and the other
transactions contemplated by this Agreement. This Agreement
has been duly executed and delivered by Parent and Sub and,
assuming the due execution and delivery of this Agreement by
the Company, constitutes a valid and binding obligation of
Parent and Sub, enforceable against Parent and Sub in
accordance with its terms. The execution and delivery of this
Agreement, the consummation of the Merger and the other
transactions contemplated by this Agreement and compliance by
Parent and Sub with the provisions of this Agreement do not
and will not conflict with, or result in any violation or
breach of, or default (with or without notice or lapse of time
or both) under, or give rise to a right of, or result in,
termination, cancelation or acceleration of any obligation or
to a loss of a material benefit under, or result in the
creation of any Lien in or upon any of the properties or
assets of Parent or Sub under, or give rise to any increased,
additional, accelerated or guaranteed rights or entitlements
under, any provision of (i) the Certificate of Incorporation
or Bylaws (or similar organizational documents) of Parent or
Sub, (ii) any Contract or Permit to which Parent or Sub is a
party or bound by or their respective properties or assets are
bound by or subject to or (iii) subject to the governmental
filings and other matters referred to in the following
sentence, any Law or Judgment, in each case, applicable to
Parent or Sub or their respective properties or assets, other
than, in the case of clauses (ii) and (iii), any such
conflicts, violations, breaches, defaults, rights, results,
losses, Liens or entitlements that individually or in the
aggregate are not reasonably likely to (x) impair in any
material respect the ability of each of Parent and Sub to
perform its obligations under this Agreement or (y) prevent,
materially impede or materially delay the consummation of the
Merger or the other transactions contemplated by this
Agreement. No consent, approval, order or authorization of,
registration, declaration or filing with, or notice to, any
Governmental Entity is required by or with respect to Parent
or Sub in connection with the execution and delivery of this
Agreement by Parent and Sub, the consummation by Parent and
Sub of the Merger or the other transactions contemplated by
this Agreement or the compliance by Parent and Sub with the
provisions of this Agreement, except for (i) the filing of a
premerger notification and report form under the HSR Act and
the filings and receipt, termination or expiration, as
applicable, of such other approvals or waiting periods
required under any other applicable competition, merger
control, antitrust or similar Law, (ii) the filing of the
Articles of Merger with the Secretary of the Commonwealth of
Massachusetts and appropriate documents with the relevant
authorities of other states in which the Company
41
or any of the Subsidiaries is qualified to do business and
(iii) such other consents, approvals, orders, authorizations,
registrations, declarations, filings and notices, the failure
of which to be obtained or made individually or in the
aggregate are not reasonably likely to impair in any material
respect the ability of each of Parent and Sub to perform its
obligations under this Agreement or prevent, materially impede
or materially delay the consummation of the Merger or the
other transactions contemplated by this Agreement.
(c) Information Supplied. None of the information
supplied or to be supplied by Parent or Sub specifically for
inclusion or incorporation by reference in the Proxy Statement
will (except to the extent revised or superseded by amendments
or supplements contemplated hereby), at the date the Proxy
Statement is first mailed to the Company's stockholders, at
the time of the Stockholders Meeting or at the time of any
amendment or supplement thereof, contain any untrue statement
of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which
they are made, not misleading.
(d) Interim Operations of Sub. Sub was formed solely
for the purpose of engaging in the Merger and the other
transactions contemplated by this Agreement and has engaged in
no business other than in connection with the Merger and the
other transactions contemplated by this Agreement.
(e) Beneficial Ownership of Company Stock. None of
Parent, Sub or any of their respective affiliates (other than
any retirement, pension, medical or other benefit plan, where
a fiduciary of the beneficiaries of such plan exercises
independent investment oversight over the assets of such plan)
is, or has been since August 1, 2004, the beneficial owner,
directly or indirectly, of more than fifteen percent (15%) of
the shares of Company Common Stock outstanding as of the date
of determination. For purposes of this paragraph, Parent, Sub
and their respective affiliates shall not be deemed to be the
beneficial owner of any shares of Company Common Stock due to
the execution and delivery of this Agreement and the
determination of "beneficial owner" shall be as set forth in
Article 6A.
ARTICLE IV
Covenants Relating to Conduct of Business
SECTION 4.01. Conduct of Business. (a) Conduct of
Business by the Company. During the period from the date of this
Agreement to the Effective Time, except with the prior written consent
of Parent (which shall not be unreasonably delayed) or as specifically
contemplated by this Agreement or the Company Letter, the Company
shall, and shall cause each of the Subsidiaries to, carry on their
respective businesses in the ordinary course consistent with past
practice and use commercially reasonable efforts to comply with all
applicable Laws and, to the extent consistent therewith, use
42
commercially reasonable efforts to keep available the services of their
present officers, software developers and other employees and to
preserve their assets and technology and preserve their relationships
with customers, suppliers, licensors, licensees, distributors and
others having business dealings with them and maintain their
franchises, rights and Permits. Without in any way limiting the
generality of the foregoing, during the period from the date of this
Agreement to the Effective Time, except as specifically contemplated by
this Agreement or as set forth in Section 4.01(a) of the Company Letter
(with specific reference to the subsection of this Section 4.01 to
which the information stated in such disclosure relates; provided that
information contained in any subsection of Section 4.01 of the Company
Letter shall be deemed to be disclosed with respect to any other
subsection of this Section 4.01 to the extent that it is readily
apparent on the face of such disclosure that such information is
applicable to such other subsection of this Section 4.01) or with the
prior written consent of Parent (which shall not be unreasonably
delayed), the Company shall not, and shall not permit any of the
Subsidiaries to:
(i) (A) declare, set aside or pay any dividends on,
or make any other distributions (whether in cash, stock or
property) in respect of, any of its capital stock or other
equity or voting interests, except for dividends or
distributions by a direct or indirect wholly-owned Subsidiary
to its parent, (B) split, combine or reclassify any of its
capital stock or other equity or voting interests, or issue or
authorize the issuance of any other securities in respect of,
in lieu of or in substitution for shares of its capital stock
or other equity or voting interests, (C) purchase, redeem or
otherwise acquire any shares of capital stock or any other
securities of the Company or any of the Subsidiaries or any
options, warrants, calls or rights to acquire any such shares
or other securities (including any Stock Options, or
Restricted Shares, except pursuant to the forfeiture or
repurchase conditions of such Restricted Shares as in effect
on the date of this Agreement) or (D) take any action that
would result in any amendment, modification or change that is
adverse to the Company or any Subsidiary of any term of any
indebtedness (other than accounts payable to trade creditors;
provided that any amendment, modification or change to the
terms thereof shall be made in the ordinary course of business
consistent with past practice) of the Company or any of the
Subsidiaries;
(ii) issue, deliver, sell, pledge or otherwise
encumber any shares of its capital stock, any other equity or
voting interests or any securities convertible into, or
exchangeable for, or any options, warrants, calls or rights to
acquire, any such stock, interests or securities or any stock
appreciation rights, phantom stock awards or other rights that
are linked in any way to the value of Company Common Stock or
the value of the Company or any part thereof (other than the
issuance of shares of Company Common Stock upon the exercise
of Stock Options or rights under the ESPP outstanding as of
the date of this Agreement and only if and to the extent
required by their terms as in effect on the date of this
Agreement);
43
(iii) amend or propose to amend its Articles of
Organization or bylaws (or similar organizational documents);
(iv) acquire (A) by merging or consolidating with, or
by purchasing all or a substantial portion of the assets of,
or by purchasing all or a substantial equity or voting
interest in, or by any other manner, any business or person or
division thereof or (B) any other assets other than immaterial
assets acquired in the ordinary course of business;
(v) sell, lease, license, sell and lease back,
mortgage or otherwise encumber or subject to any Lien or
otherwise dispose of any of its material properties or assets
(including any shares of capital stock, equity or voting
interests or other rights, instruments or securities), except
the licensing of its Intellectual Property and Software and
sales of inventory and products or used equipment, in each
such case in the ordinary course of business consistent with
past practice and except for Permitted Liens;
(vi) (A) repurchase, prepay or incur any indebtedness
or guarantee any indebtedness of another person (other than
the Company or a wholly-owned Subsidiary) or issue or sell any
debt securities or options, warrants, calls or other rights to
acquire any debt securities of the Company or any of the
Subsidiaries, (B) guarantee any debt securities of another
person, enter into any "keep well" or other Contract to
maintain any financial statement or similar condition of
another person (other than the Company or a wholly-owned
Subsidiary) or enter into any arrangement having the economic
effect of any of the foregoing or (C) make any loans, advances
or capital contributions to, or investments in, any other
person, other than (1) the Company or any direct or indirect
wholly-owned Subsidiary or (2) immaterial loans and advances
to employees of the Company (other than employees who are also
directors or executive officers of the Company) in the
ordinary course of business consistent with past practice;
(vii) incur or commit to incur any capital
expenditures, or any obligations or liabilities in connection
therewith, that individually are in excess of $250,000 or in
the aggregate are in excess of $1,000,000;
(viii) (A) pay, discharge, settle or satisfy any
claims (including any claims of stockholders and any
stockholder litigation relating to this Agreement or any
transaction contemplated by this Agreement or otherwise),
liabilities or obligations (whether absolute, accrued,
asserted or unasserted, contingent or otherwise), other than
the payment, discharge, settlement or satisfaction in the
ordinary course of business consistent with past practice or
as required by their terms as in effect on the date of this
Agreement, of claims, liabilities or obligations reserved
against in the Company's most recent financial statements
contained in the Baseline Financials (for amounts not in
excess of such reserves) or incurred since the date of such
financial statements in the ordinary course of business
consistent with past practice, in each case, the payment,
discharge, settlement or satisfaction of which does not
include any obligation (other than the
44
payment of money) to be performed by the Company or the
Subsidiaries following the Closing Date, (B) knowingly waive
the right to enforce, relinquish, release, transfer or assign
(except for transfer or assignment to the Company or a
Subsidiary) any right the value of which is material to the
business of the Company and the Subsidiaries, taken as a
whole, or (C) knowingly waive any material benefits of, or
agree to modify in any adverse respect, or fail to enforce, or
consent to any material matter with respect to which its
consent is required under, any confidentiality, standstill or
similar Contract to which the Company or any of the
Subsidiaries is a party;
(ix) enter into any lease or sublease of real
property (whether as a lessor, sublessor, lessee or sublessee)
or modify or amend (other than in an immaterial respect) or
exercise any right to renew any lease or sublease of real
property;
(x) modify or amend in any material respect or
accelerate, terminate or cancel any material Contract or
affirmatively waive any material right to enforce, relinquish,
release, transfer or assign any material rights or claims
thereunder, in each case in a manner that is adverse to the
Company;
(xi) enter into any Contract that is not in the
ordinary course of business or that is inconsistent with past
practice;
(xii) except as required to ensure that any Benefit
Plan or Benefit Agreement in effect on the date of this
Agreement is not then out of compliance with applicable Law or
as specifically required pursuant to this Agreement, (A)
adopt, enter into, terminate, amend or modify any Benefit Plan
or Benefit Agreement, (B) increase in any manner the
compensation or benefits of, or pay any bonus to, or grant any
loan to, any Company Personnel, except as required to comply
with any Benefit Plan or Benefit Agreement in effect on the
date of this Agreement, (C) pay or provide to any Company
Personnel any compensation or benefit not provided for under a
Benefit Plan or Benefit Agreement as in effect on the date of
this Agreement, other than the payment of base compensation in
the ordinary course of business consistent with past practice,
(D) grant any awards under any Benefit Plan (including the
grant of stock options, stock appreciation rights, performance
units, restricted stock, stock purchase rights or other
stock-based or stock-related awards) or remove or modify
existing restrictions in any Benefit Plan or Benefit Agreement
or awards made thereunder, (E) take any action to fund or in
any other way secure the payment of compensation or benefits
under any Benefit Plan or Benefit Agreement, except as
required to comply with any Benefit Plan or Benefit Agreement
in effect on the date of this Agreement, (F) take any action
to accelerate the time of payment or vesting of any
compensation or benefits under any Benefit Plan or Benefit
Agreement or (G) make any material determination under any
Benefit Plan or Benefit Agreement that is inconsistent with
the ordinary course of business or past practice;
(xiii) form any subsidiary of the Company;
45
(xiv) enter into any material Contract containing any
provisions having the effect of providing that the
consummation of the Merger or the other transactions
contemplated by this Agreement or compliance by the Company
with the provisions of this Agreement will conflict with,
result in any violation or breach of, or constitute a default
(with or without notice or lapse of time or both) under, such
Contract, or give rise under such Contract to any right of, or
result in, a termination, right of first refusal, material
amendment, revocation, cancelation or material acceleration,
or a loss of a material benefit or the creation of any Lien
(other than Permitted Liens) upon any of the properties or
assets of the Company, Parent or any of their respective
subsidiaries, or to any increased, guaranteed, accelerated or
additional rights or entitlements of any person, except to the
extent such conflicts, results, defaults, rights, losses or
entitlements are required by applicable Law;
(xv) enter into any Contract containing any material
restriction on the ability of the Company or any of the
Subsidiaries to assign all or any portion of its rights,
interests or obligations thereunder, unless such restriction
does not apply to any assignment to Parent and any of its
subsidiaries in connection with or following the consummation
of the Merger and the other transactions contemplated by this
Agreement;
(xvi) take any action (or knowingly omit to take any
action) if such action (or known omission) is reasonably
likely to result in (A) any representation and warranty of the
Company set forth in this Agreement that is qualified as to
materiality becoming untrue (as so qualified) or (B) any such
representation and warranty that is not so qualified becoming
untrue in any material respect;
(xvii) except as required by applicable Law, adopt or
enter into any collective bargaining agreement or other labor
union Contract applicable to the employees of the Company or
any of the Subsidiaries or terminate the employment of any
Company Personnel who has an employment, severance or similar
agreement or arrangement with the Company or any of the
Subsidiaries;
(xviii) write-down any of its material assets,
including any Intellectual Property, or make any change in any
financial or tax accounting principle, method or practice
other than those required by GAAP or applicable Law;
(xix) except in the ordinary course of business
consistent with past practice, engage in (A) any promotional
sales or discount activity with any customers or distributors
with the effect of accelerating to prior fiscal quarters
(including the current fiscal quarter) sales to the trade or
otherwise that would otherwise be expected to occur in
subsequent fiscal quarters, (B) any practice which would have
the effect of accelerating to prior fiscal quarters (including
the current fiscal quarter) collections of receivables that
would otherwise be expected to be made in subsequent fiscal
quarters, (C) any practice which would have the effect of
postponing to subsequent fiscal quarters payments by the
Company or any of the Subsidiaries that would otherwise be
expected to be made in prior fiscal
46
quarters (including the current fiscal quarter) or (D) any
other promotional sales or discount activity;
(xx) take any action or fail to take any action which
action or failure to act would result in the material loss or
reduction in value of the Intellectual Property of the Company
and the Subsidiaries, taken as a whole;
(xxi) enter into, extend or renew (A) any Contract or
amendment thereof which, if executed prior to the date of this
Agreement would have been required to have been disclosed
pursuant to Section 3.01(i)(i)(A), (B), (D), (G)(2), (J)(2) or
(L), (B) any Contract or amendment thereof that grants any
party the right or ability to access, license or use all or a
material portion of the Intellectual Property of the Company
and the Subsidiaries, other than in the ordinary course of
business consistent with past practice, or as expressly
permitted by Section 4.02(a) below, or (C) any Contract
providing for the services of any dealer, distributor, sales
representative or similar representative; provided, however,
that solely for purposes of this clause (C) (and not clause
(A) above) the Company may enter into, extend or renew any
Contract providing for the services of any dealer,
distributor, sales representative or similar representative,
provided, that with respect to this clause (C), in each case
(x) such entry, extension or renewal is in the ordinary course
of business and is not inconsistent with past practice and (y)
if the entry, extension or renewal is other than on standard
terms and conditions, including any terms and conditions
relating to geographic exclusivity, the Company shall have
provided Parent with prior written notice of the material
terms of the proposed Contract, extension or renewal and not
less than 48 hours to comment on such terms;
(xxii) enter into any Contract or material amendment
to a Contract which, if executed prior to the date of this
Agreement would have been required to have been disclosed
pursuant to Section 3.01(i)(i)(E), (F), (H), (I), (K), (M), or
(O)-(Q), other than any Contract or amendment entered into in
the ordinary course of business of the Company and the
Subsidiaries consistent with past practice;
(xxiii) authorize any of, or commit, resolve, vote or
agree to take any of the foregoing actions.
(b) Certain Tax Matters. During the period
from the date of this Agreement to the Effective Time, (i) the Company
and each of the Subsidiaries shall timely file all material Tax Returns
("Post-Signing Returns") required to be filed by each such entity
during such period (after taking into account any extensions) and all
Post-Signing Returns shall be complete and accurate in all material
respects; (ii) the Company and each of the Subsidiaries will timely pay
all Taxes that are due and payable prior to the Effective Time; (iii)
the Company will accrue a reserve in its books and records and
financial statements in accordance with GAAP and past practice for all
Taxes payable by the Company or any of the Subsidiaries for which no
Post-Signing Return or payment is due prior to the Effective Time; (iv)
the Company will promptly notify Parent of any material suit, claim,
action, investigation, proceeding or audit pending against or with
47
respect to the Company or any of the Subsidiaries in respect of any Tax
and will not settle or compromise any such suit, claim, action,
investigation, proceeding or audit without Parent's prior written
consent, which consent shall not be unreasonably withheld, conditioned
or delayed; (v) none of the Company or any of the Subsidiaries will
make or change any material Tax election without Parent's consent,
which consent shall not be unreasonably withheld, conditioned or
delayed; and (vi) the Company and each of the Subsidiaries will retain
all books, documents and records necessary for the preparation of Tax
Returns and Tax audits. The Company shall deliver to Parent at or prior
to the Closing a certificate, in form and substance satisfactory to
Parent, duly executed and acknowledged, certifying that the payment of
the Merger Consideration pursuant to the terms of this Agreement is
exempt from withholding pursuant to the Foreign Investment in Real
Property Tax Act.
SECTION 4.02. No Solicitation. (a) Notwithstanding any
provision in this Agreement to the contrary, the Company shall not, nor
shall it permit any of the Subsidiaries to, nor shall it authorize or
permit any director, officer or employee of the Company or any of the
Subsidiaries or any investment banker, attorney, accountant or other
advisor or representative of the Company or any of the Subsidiaries to,
directly or indirectly (and it shall instruct and cause each applicable
Subsidiary, if any, to instruct each such director, officer, employee,
investment banker, attorney, accountant or other advisor or
representative of the Company or any of the Subsidiaries not to), (i)
solicit, initiate or knowingly encourage, or take any other action
knowingly to facilitate, any Takeover Proposal or any inquiries or the
making of any proposal that could reasonably be expected to lead to a
Takeover Proposal or (ii) enter into, continue or otherwise participate
in any discussions or negotiations regarding, or furnish to any person
(or any representative thereof) any information with respect to, or
otherwise knowingly cooperate in any way with any person (or any
representative thereof) with respect to, any Takeover Proposal;
provided, however, that at any time prior to obtaining the Stockholder
Approval, the Board of Directors of the Company may, in response to a
bona fide written Takeover Proposal that such Board of Directors
determines in good faith constitutes or could reasonably be expected to
lead to a Superior Proposal, and which Takeover Proposal was not
solicited by or on behalf of the Company or any Subsidiary after the
date of this Agreement and did not otherwise result from a breach of
this Section 4.02, and subject to compliance with Section 4.02(c) and
the other provisions of this Agreement, (A) furnish or cause the
Subsidiaries to furnish information with respect to the Company and the
Subsidiaries to the person making such Takeover Proposal (and its
representatives) pursuant to an agreement which contains terms that are
no less restrictive than those contained in the Confidentiality
Agreement dated April 27, 2006 between Parent and the Company (as it
may be amended from time to time, the "Confidentiality Agreement");
provided that all such information had been or is provided on a prior
or concurrent basis to Parent and (B) participate in discussions or
negotiations with the person making such Takeover Proposal (and its
representatives) regarding such Takeover Proposal. Without limiting the
generality of the foregoing, it is understood that any violation of the
restrictions set forth in the preceding sentence by any director,
officer or employee of the Company or any of the Subsidiaries or any
investment banker, attorney, accountant or other advisor or
representative of the Company or any of the Subsidiaries shall be
deemed to be a breach of this Section 4.02(a) by the Company.
48
For purposes of this Agreement, the term "Takeover Proposal"
means any inquiry, proposal or offer from any person (other than Parent or Sub)
relating to, or that could reasonably be expected to lead to, any direct or
indirect acquisition, in one transaction or a series of transactions, including
by way of any merger, consolidation, tender offer, exchange offer, stock
acquisition, asset acquisition, binding share exchange, business combination,
recapitalization, liquidation, dissolution, joint venture, license agreement or
similar transaction, of (i) assets or businesses that constitute or represent
15% or more of the total revenue, net income, EBITDA or assets of the Company
and the Subsidiaries, taken as a whole, or (ii) 15% or more of the outstanding
shares of Company Common Stock or of any class of capital stock of, or other
equity or voting interests in, one or more of the Company's Subsidiaries which,
in the aggregate, directly or indirectly hold the assets or businesses referred
to in clause (i) above, in each case other than the Merger.
For purposes of this Agreement, the term "Superior Proposal"
means any bona fide written offer which was unsolicited after the date of this
Agreement by or on behalf of the Company or any Subsidiary and did not otherwise
result from a breach of Section 4.02(a) made by a third party which, if accepted
by the Company would be binding upon the third party and which, if consummated,
would result in such third party (or in the case of a direct merger between such
third party and the Company, the stockholders of such third party) acquiring,
directly or indirectly, more than 50% of the voting power of the Company Common
Stock or all or substantially all the assets of the Company and the
Subsidiaries, taken as a whole, and which offer, in the good faith judgment of
the Board of Directors of the Company (after consultation with a financial
advisor of nationally recognized reputation and outside legal counsel) (i) would
provide a higher value to the stockholders of the Company than the consideration
payable in the Merger (taking into account all of the terms and conditions of
such proposal and this Agreement (including any changes to the terms of this
Agreement proposed by Parent in response to such Superior Proposal or
otherwise)) and (ii) is reasonably capable of being completed, taking into
account all financial, legal, regulatory and other aspects of such proposal.
(b) Neither the Board of Directors of the Company nor any
committee thereof shall (or shall agree, resolve or vote to) (i) withdraw or
modify in a manner adverse to Parent or Sub, or propose publicly to withdraw or
modify in a manner adverse to Parent or Sub, the recommendation by such Board of
Directors or any such committee of this Agreement or the Merger or recommend, or
propose publicly to recommend, the approval of any Takeover Proposal (any such
action or any such resolution or vote or agreement to take such action being
referred to herein as an "Adverse Recommendation Change"), (ii) approve or
recommend any Takeover Proposal, or propose the approval or recommendation of
any Takeover Proposal or (iii) cause or permit the Company to enter into any
letter of intent, memorandum of understanding, agreement in principle,
acquisition agreement, merger agreement, option agreement, joint venture
agreement, partnership agreement or other agreement (each, an "Acquisition
Agreement") constituting or related to, or which is intended by the Company to
or is reasonably likely to lead to, any Takeover Proposal (other than a
confidentiality agreement referred to in Section 4.02(a)). Notwithstanding the
foregoing, at any time prior to the Stockholder
49
Approval, the Board of Directors of the Company, or a duly authorized committee
of the Board of Directors may, and may agree, resolve or vote to, in response to
a Superior Proposal or an Intervening Event, effect an Adverse Recommendation
Change, provided that the Board of Directors of the Company or such committee
determines in good faith, after consultation with its outside legal counsel and
a financial advisor of nationally recognized reputation, that the failure to do
so is reasonably likely to result in a breach of its fiduciary duties to the
stockholders of the Company under applicable Law, and provided, further, that
the Board of Directors of the Company or such committee may not effect such an
Adverse Recommendation Change unless (i) the Board of Directors of the Company
or such committee shall have first provided prior written notice to Parent (an
"Adverse Recommendation Change Notice") that it is prepared to effect an Adverse
Recommendation Change in response to a Superior Proposal or an Intervening
Event, which notice shall, in the case of a Superior Proposal, attach the most
current version of any written agreement relating to the transaction that
constitutes such Superior Proposal, and, in the case of an Intervening Event,
attach information describing such Intervening Event in reasonable detail, and
(ii) Parent does not make, within five business days after the receipt of such
notice, a proposal that would, in the good faith judgment of the Board of
Directors of the Company or such committee (after consultation with a financial
advisor of national reputation and outside legal counsel), (A) cause the offer
previously constituting a Superior Proposal to no longer constitute a Superior
Proposal or (B) obviate the need for an Adverse Recommendation Change as a
result of an Intervening Event. The Company agrees that, during the five
business day period prior to its effecting an Adverse Recommendation Change, the
Company and its officers, directors and representatives shall negotiate in good
faith with Parent and its officers, directors, and representatives regarding any
revisions to the terms of the transaction contemplated by this Agreement
proposed by Parent.
For purposes of this Agreement the term "Intervening Event"
means an event, unknown to the Board of Directors of the Company as of the date
hereof (or, if known, the material consequences of which are not known to or
understood by the Board of Directors of the Company as of the date hereof),
which event (or any material consequence of which) becomes known (or understood)
to or by the Board of Directors of the Company prior to the Stockholder Approval
and which causes the Board of Directors of the Company or a duly authorized
committee thereof to conclude in good faith, after consultation with its outside
legal counsel and a financial advisor of nationally recognized reputation, that
its failure to effect an Adverse Recommendation Change is reasonably likely to
result in a breach of its fiduciary duties to the stockholders of the Company
under applicable Law; provided, however, that in no event shall the receipt,
existence or terms of a Takeover Proposal or any matter relating thereto or
consequence thereof constitute an Intervening Event.
(c) In addition to the obligations of the Company set forth in
paragraphs (a) and (b) of this Section 4.02, the Company shall as promptly as
reasonably practicable, and in any event within 24 hours after the receipt
thereof, advise Parent orally and in writing of (i) any Takeover Proposal or any
request for information or inquiry that the Company believes in good faith could
reasonably be expected to lead to or contemplates a Takeover Proposal and (ii)
the terms and conditions of such Takeover
50
Proposal or a reasonable description (which in the good faith judgment of the
Company is complete) of such request or inquiry (including any subsequent
amendment or other modification to such terms and conditions or such request or
inquiry) and the identity of the person making any such Takeover Proposal
request or inquiry. Commencing upon the provision of any notice referred to
above, once, and not more than once, each day at mutually reasonably agreeable
times, the Company (or its outside counsel) shall (i) advise and confer with
Parent (or its outside counsel) regarding the progress of negotiations
concerning any Takeover Proposal, the material resolved and unresolved issues
related thereto and any other matters identified with reasonable specificity by
Parent (or its outside counsel) and the material details (including material
amendments or proposed amendments as to price and other material terms) of any
such Takeover Proposal, request or inquiry and (ii) promptly upon receipt or
delivery thereof, provide Parent (or its outside counsel) with copies of all
documents and written communications relating to such Takeover Proposal
exchanged between the Company or any of its officers, directors, employees,
investment bankers, attorneys, accountants or other advisors or representatives,
on the one hand, and the party making a Takeover Proposal or any of its
officers, directors, employees, investment bankers, attorneys, accountants or
other advisors or representatives, on the other hand.
(d) Nothing contained in this Section 4.02 or elsewhere in
this Agreement shall prohibit the Company from (i) taking and disclosing to its
stockholders a position contemplated by Rule 14d-9 and Rule 14e-2(a) promulgated
under the Exchange Act or (ii) making any disclosure to the Company's
stockholders if, in the good faith judgment of the Board of Directors of the
Company, failure so to disclose is reasonably likely to result in a breach of
applicable Law; provided, however, that in no event shall the Company or its
Board of Directors or any committee thereof take, agree, resolve or vote to take
any action prohibited by Section 4.02(b).
SECTION 4.03. Conduct by Parent. During the period from the
date of this Agreement to the Effective Time, except as consented to in writing
by the Company prior to such action or as specifically contemplated by this
Agreement, Parent shall not, and shall not permit any of its subsidiaries to,
take any action (or knowingly omit to take any action) if such action (or known
omission) is reasonably likely to result in (a) any representation and warranty
of Parent or Sub set forth in this Agreement that is qualified as to materiality
becoming untrue (as so qualified) or (b) any such representation and warranty
that is not so qualified becoming untrue in any material respect.
ARTICLE V
Additional Agreements
SECTION 5.01. Preparation of the Proxy Statement; Stockholders
Meeting. (a) Subject to the reasonable cooperation of Parent, as promptly as
practicable following the date of this Agreement, the Company shall prepare and,
no later than the tenth business day following the date of this Agreement, file
with the SEC the preliminary Proxy Statement. Notwithstanding anything contained
in this Agreement to the contrary, absent any Legal Restraint which has the
effect of preventing such action,
51
the Company shall file with the SEC the definitive Proxy Statement and shall
cause the mailing of the definitive Proxy Statement to the stockholders of the
Company to occur on or prior to the 10th calendar day (or, if such calendar day
is not a business day, the first business day subsequent to such calendar day)
immediately following the filing of the preliminary Proxy Statement with the
SEC. Each of the Company and Parent shall use reasonable best efforts to respond
as promptly as practicable to any comments of the SEC or its staff with respect
to the Proxy Statement. Each of the Company and Parent shall furnish all
information concerning such person to the other as may be reasonably requested
in connection with the preparation, filing and distribution of the Proxy
Statement. The Company shall promptly notify Parent upon the receipt of any
comments from the SEC or its staff or any request from the SEC or its staff for
amendments or supplements to the Proxy Statement and shall provide Parent with
copies of all correspondence between it and its representatives, on the one
hand, and the SEC and its staff, on the other hand. Notwithstanding the
foregoing, prior to filing or mailing the Proxy Statement (or any amendment or
supplement thereto) or responding to any comments of the SEC or its staff with
respect thereto, the Company (i) shall provide Parent an opportunity to review
and comment on such document or response, (ii) shall include in such document or
response all comments reasonably proposed by Parent and (iii) shall not file or
mail such document or respond to the SEC prior to receiving the approval of
Parent, which approval shall not be unreasonably withheld, conditioned or
delayed, and in any event, which approval will be provided not later than three
business days following a written request therefor. If at any time prior to the
Stockholders Meeting, any information relating to the Company, Parent or any of
their respective affiliates, officers or directors, shall be discovered by the
Company or Parent which should be set forth in an amendment or supplement to the
Proxy Statement, so that the Proxy Statement shall not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading, the party which
discovers such information shall promptly notify the other parties hereto and an
appropriate amendment or supplement describing such information shall be filed
with the SEC and, to the extent required by applicable Law, disseminated to the
stockholders of the Company. Each of Parent and the Company shall bear one-half
of the cost of printing and mailing the Proxy Statement and any amendment or
supplement thereto; provided that if an Adverse Recommendation Change shall have
occurred, the Company shall bear 100% of such cost.
(b) The Company agrees that the Proxy Statement will comply as
to form in all material respects with the requirements of the Exchange Act and
that none of the information included or incorporated by reference in the Proxy
Statement will (except to the extent revised or superseded by amendments or
supplements contemplated hereby), at the date the Proxy Statement is filed with
the SEC or mailed to the stockholders of the Company or at the time of the
Stockholders Meeting, or at the time of any amendment or supplement thereof,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading, except that no covenant is made by the Company with respect to
statements made or incorporated by reference therein based on information
supplied or to be supplied by
52
Parent or Sub specifically for inclusion or incorporation by reference in the
Proxy Statement. Parent agrees that none of such information will (except to the
extent revised or superseded by amendments or supplements contemplated hereby),
at the date the Proxy Statement is filed with the SEC or mailed to the
stockholders of the Company or at the time of the Stockholders Meeting, or at
the time of any amendment or supplement thereof, contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading.
(c) The Company shall, as promptly as practicable after the
date of this Agreement, establish a record date (which will be as promptly as
reasonably practicable following the date of this Agreement) for, duly call,
give notice of, convene and hold a meeting of its stockholders, which meeting
the Company shall, absent any Legal Restraint which has the effect of preventing
such action, cause to occur on the 20th calendar day (or, if such calendar day
is not a business day, the first business day subsequent to such calendar day)
immediately following the mailing of the Proxy Statement (the "Stockholders
Meeting"), for the purpose of obtaining the Stockholder Approval, regardless of
whether any Adverse Recommendation Change has occurred at any time; provided,
however, that the Company may extend the date of the Stockholders Meeting to the
extent (and only to the extent) (i) necessary in order to obtain a quorum of its
stockholders and the Company shall use its reasonable best efforts to obtain
such a quorum as promptly as practicable or (ii) the Company reasonably
determines that such delay is required by applicable Law to comply with comments
made by the SEC with respect to the Proxy Statement. The notice of such
Stockholders Meeting shall state that a resolution to approve this Agreement
will be considered at the Stockholders Meeting. Subject to Section 4.02(b), the
Board of Directors of the Company shall recommend to holders of the Company
Common Stock that they approve this Agreement, and shall include such
recommendation in the Proxy Statement. Without limiting the generality of the
foregoing, the Company agrees that its obligations pursuant to this Section
5.01(c) shall not be affected by the commencement, public proposal, public
disclosure or communication to the Company or any other person of any Takeover
Proposal.
SECTION 5.02. Access to Information; Confidentiality. (a)
Subject to compliance with applicable Laws and Judgments, the Company shall, and
shall cause each of the Subsidiaries to, afford to Parent and to Parent's
officers, employees, investment bankers, attorneys, accountants, consultants and
other advisors and representatives all reasonable access upon reasonable advance
notice and during normal business hours during the period prior to the Effective
Time or the termination of this Agreement to all their respective properties,
assets, books, records, Contracts, Permits, documents, information, officers and
employees, and during such period the Company shall, and shall cause each of the
Subsidiaries to, make available to Parent any information concerning its
business as Parent may reasonably request (including the work papers of
PricewaterhouseCoopers LLP, subject to the requirements of
PricewaterhouseCoopers LLP). Subject to compliance with applicable Laws and
Judgments, during the period prior to the Effective Time, Parent may (but shall
not be required to), following reasonable notice to the Company, contact and
interview any Company Personnel and review the personnel records and such other
information
53
concerning such Company Personnel as Parent may reasonably request, in each case
subject to such reasonable conditions as the Company shall specify. No
investigation by Parent or any of its officers, directors, employees, investment
bankers, attorneys, accountants or other advisors or representatives and no
other receipt of information by Parent or its officers, directors, employees,
investment bankers, attorneys, accountants or other advisors or representatives
shall operate as a waiver or otherwise affect any representation or warranty of
the Company or any covenant or other provision in this Agreement; provided that
for the avoidance of doubt, the information set forth in the Company Letter
shall qualify the representations and warranties of the Company set forth in
Article III and the covenants of the Company set forth in Section 4.01, as and
to the extent provided for in the first sentence of Section 3.01 or in Section
4.01(a), as applicable. Except as required by any applicable Law or Judgment,
Parent will hold, and will direct and cause its officers, employees, investment
bankers, attorneys, accountants and other advisors and representatives to hold,
any and all information received from the Company, the Subsidiaries and their
respective directors, officers, employees, investment bankers, attorneys,
accountants and other advisors and representatives confidential in accordance
with the Confidentiality Agreement.
(b) Without limiting the generality of the foregoing, during
the period prior to the Effective Time, the Company shall, and shall cause each
of the Subsidiaries to, as and to the extent reasonably requested by Parent,
provide Parent with (i) a materially complete and accurate list of all licenses
issued by the Federal Communications Commission (the "FCC") and held by the
Company or any of the Subsidiaries (the "FCC Licenses"), (ii) materially
complete and accurate copies of each FCC License, (iii) if available, the
address and physical location of the device(s) covered by each FCC License, (iv)
if available, a written description of the purpose of the device(s) covered by
each FCC License, (v) materially complete and accurate copies of any Notices of
Apparent Liability for Forfeiture issued by the FCC against the Company or any
of the Subsidiaries and (vi) all reasonably available information in the
possession of the Company or a Subsidiary necessary for Parent to make an
independent determination that the Company and the Subsidiaries have complied
with FCC rules regarding changes of ownership control of the FCC Licenses
(including descriptions of any transactions that effected a change of ownership
or control of the FCC Licenses (including any intracompany reorganizations) and
corporate organizational charts depicting the ownership structure of the holder
of the FCC Licenses before and after any such change of ownership or control).
(c) Subject to applicable Law, the Company and Parent shall,
and shall cause each of their respective subsidiaries to, cooperate to ensure an
orderly transition and integration process in connection with the Merger and the
other transactions contemplated by this Agreement in order to minimize the
disruption to, and preserve the value of, the business of the Surviving
Corporation and its subsidiaries.
SECTION 5.03. Reasonable Best Efforts; Consultation and
Notice. (a) Upon the terms and subject to the conditions set forth in this
Agreement, each of the parties hereto agrees to use its reasonable best efforts
to take, or cause to be taken, all actions, that are necessary, proper or
advisable to consummate and make effective the
54
Merger and the other transactions contemplated by this Agreement, including
using its reasonable best efforts to accomplish the following: (i) the taking of
all reasonable actions necessary to cause the conditions precedent set forth in
Article VI to be satisfied, (ii) the obtaining of all necessary actions or
nonactions, waivers, consents, approvals, orders and authorizations from, and
the giving of any necessary notices to, Governmental Entities and the making of
all necessary registrations, declarations and filings (including filings under
the HSR Act and other registrations, declarations and filings with, or notices
to, Governmental Entities, if any), (iii) the taking of all reasonable steps to
provide any supplemental information requested by a Governmental Entity,
including participating in meetings with officials of such entity in the course
of its review of this Agreement, the Merger or the other transactions
contemplated by this Agreement, (iv) the taking of all reasonable steps as may
be necessary to avoid any suit, claim, action, investigation or proceeding of
the type described in Section 6.02(c) by any Governmental Entity or third party
and (v) the obtaining of all necessary consents, approvals or waivers from third
parties, other than consents, approvals and waivers the absence of which will
not impair the ability of Parent to conduct the material business operations of
the Company and the Subsidiaries, taken as a whole (provided that Parent does
not reasonably object to not obtaining such consent, approval or waiver). In
connection with and without limiting the generality of the foregoing, each of
the Company and its Board of Directors shall, if any state takeover statute or
similar statute or regulation is or becomes applicable to this Agreement or any
of the Merger and the other transactions contemplated by this Agreement, use its
reasonable best efforts to ensure that the Merger and the other transactions
contemplated by this Agreement may be consummated as promptly as practicable on
the terms contemplated by this Agreement and otherwise to minimize the effect of
such statute or regulation on this Agreement, the Merger and the other
transactions contemplated by this Agreement. Notwithstanding the foregoing or
any other provision of this Agreement to the contrary, in no event shall Parent
or Sub be obligated to, and the Company and the Subsidiaries shall not without
the prior written consent of Parent, agree or proffer to divest or hold
separate, or enter into any licensing or similar arrangement with respect to,
any assets (whether tangible or intangible) or any portion of any business of
Parent, the Company or any of their respective subsidiaries. Notwithstanding the
foregoing or any other provision of this Agreement to the contrary, in no event
shall Parent or any of its subsidiaries be obligated to litigate or participate
in the litigation of any suit, claim, action, investigation or proceeding,
whether judicial or administrative, brought by any Governmental Entity (i)
challenging or seeking to restrain or prohibit the consummation of the Merger or
seeking to obtain from Parent or any of its subsidiaries any damages in relation
therewith; (ii) seeking to prohibit or limit in any respect, or place any
conditions on, the ownership or operation by the Company, Parent or any of their
respective affiliates of all or any portion of the business or assets or any
product of the Company or the Subsidiaries or Parent or its subsidiaries or to
require any such person to dispose of, license (whether pursuant to an exclusive
or nonexclusive license) or hold separate all or any portion of the business or
assets or any product of the Company or the Subsidiaries or Parent or its
subsidiaries, in each case as a result of or in connection with the Merger or
any of the other transactions contemplated by this Agreement; (iii) seeking to
directly or indirectly impose limitations on the ability of Parent or any of its
affiliates to acquire or hold, or exercise full rights of ownership of,
55
any shares of Company Common Stock or any shares of common stock of the
Surviving Corporation, including the right to vote the Company Common Stock or
the shares of common stock of the Surviving Corporation on all matters properly
presented to the stockholders of the Company or the Surviving Corporation,
respectively; or (iv) seeking to (A) directly or indirectly prohibit Parent or
any of its affiliates from effectively controlling in any respect any of the
business or operations of the Company or the Subsidiaries or (B) directly or
indirectly prevent the Company or the Subsidiaries from operating any of their
business in substantially the same manner as operated by the Company and the
Subsidiaries immediately prior to the date of this Agreement. The Company and
Parent shall provide such assistance, information and cooperation to each other
as is reasonably required to obtain any such actions, nonactions, waivers,
consents, approvals, orders and authorizations or to give any such notices or to
make any such registrations, declarations and filings or to provide such
information and, in connection therewith, shall notify the other person promptly
following the receipt of any comments from any Governmental Entity and of any
request by any Governmental Entity for amendments, supplements or additional
information in respect of any registration, declaration or filing with, or
notice to, such Governmental Entity, shall supply the other person with copies
of all correspondence between such person or any of its representatives, on the
one hand, and any Governmental Entity, on the other hand.
(b) (i) In connection with the continuing operation of the
business of the Company and the Subsidiaries between the date of this Agreement
and the Effective Time, subject to applicable Law, the Company shall consult in
good faith on a reasonably regular basis with Parent to report material
(individually or in the aggregate) operational developments, the general status
of relationships with customers and resellers, the general status of ongoing
operations and other matters reasonably requested by Parent pursuant to
procedures reasonably requested by Parent; provided, however, that no such
consultation shall affect the representations, warranties, covenants, agreements
or obligations of the parties (or remedies with respect thereto) or the
conditions to the obligations of the parties under this Agreement.
(ii) Except as prohibited by applicable Law, the Company shall
promptly notify Parent in writing of:
(A) the occurrence of any matter or event that (1)
is, or that is reasonably likely to be, material (individually
or in the aggregate) to the business, assets, properties,
financial condition or results of operations of the Company
and the Subsidiaries, taken as a whole or (2) is reasonably
likely to result in any condition to the transactions
contemplated hereby and set forth in Section 6.02 not being
satisfied;
(B) the failure of the Company to perform in any
material respect any obligation to be performed by it under
this Agreement;
(C) any notice or other communication from any person
(other than a Governmental Entity) alleging that the consent
of such person is
56
required in connection with the transactions contemplated by
this Agreement;
(D) any notice or other communication from any Major
Customer or Major Supplier to the effect that such Major
Customer or Major Supplier is terminating or otherwise
modifying its relationship with Company or any of the
Subsidiaries in a manner that is adverse in any material
respect to the Company or any Subsidiary as a result of the
transactions contemplated by this Agreement;
(E) any material notice or other material
communication from any Governmental Entity in connection with
the Merger, and a copy of any such notice or communication
shall be furnished to Parent together with the Company's
written notice;
(F) any filing made by the Company with any
Governmental Entity in connection with the transactions
contemplated by this Agreement, and a copy of any such filing
shall be furnished to Parent (other than portions of such
filing that include confidential information not directly
related to the transactions contemplated by this Agreement)
together with the Company's written notice; and
(G) any actions, suits or proceedings commenced or,
to its knowledge, threatened, or, to its knowledge, any claims
or investigations commenced or threatened, against, relating
to or involving or otherwise affecting the Company or any of
the Subsidiaries that, if pending on the date of this
Agreement, would have been required to have been disclosed
pursuant to Section 3.01(h), or that relate to the
consummation of the transactions contemplated by this
Agreement;
provided, however, that no such notification shall affect the representations,
warranties, covenants, agreements or obligations of the parties (or remedies
with respect thereto) or the conditions to the obligations of the parties under
this Agreement.
(iii) Except as prohibited by applicable Law, Parent shall
promptly notify the Company in writing of:
(A) the occurrence of any matter or event that is
reasonably likely to result in any condition to the
transactions contemplated hereby and set forth in Section 6.03
not being satisfied;
(B) any notice or other communication from any person
(other than a Governmental Entity) alleging that the consent
of such person is required in connection with the transactions
contemplated by this Agreement;
(C) any material notice or other material
communication from any Governmental Entity in connection with
the Merger, and a copy of any
57
such notice or communication shall be furnished to the Company
together with Parent's written notice;
(D) any filing made by Parent with any Governmental
Entity in connection with the transactions contemplated by
this Agreement, and a copy of any such filing shall be
furnished to the Company (other than portions of such filing
that include confidential information not directly related to
the transactions contemplated by this Agreement) together with
Parent's written notice; and
(E) any actions, suits or proceedings commenced or,
to its knowledge, threatened, or, to its knowledge, any claims
or investigations commenced or threatened, that relate to the
Company or any Subsidiary or the consummation of the
transactions contemplated by this Agreement;
provided, however, that no such notification shall affect the representations,
warranties, covenants, agreements or obligations of the parties (or remedies
with respect thereto) or the conditions to the obligations of the parties under
this Agreement.
(c) Without limiting the generality of the foregoing, the
Company shall give Parent the opportunity to participate, at Parent's expense,
in the defense of any claim or litigation against the Company and/or its
directors relating to the transactions contemplated by this Agreement and will
obtain the prior written consent of Parent prior to settling or satisfying any
such claim or litigation, it being understood and agreed that this Section
5.03(c) shall not give Parent the right to direct such defense.
SECTION 5.04. Equity Awards. (a) As soon as practicable
following the date of this Agreement, the Company agrees that the Board of
Directors of the Company (or, if appropriate, any committee administering the
Company Stock Plans) shall adopt such resolutions or take such other actions
(including obtaining any required consents) as may be required to effect the
following:
(i) (A) not less than 10 days prior to the Effective Time,
each outstanding Stock Option shall automatically accelerate so that
each such Stock Option shall become fully exercisable for all shares of
Company Common Stock at the time subject to such Stock Option and may
be exercised by the holder thereof for any or all of such shares, (B)
upon the Effective Time, all outstanding Stock Options under the 1994
Stock Option Plan shall be canceled, with the holder of each Stock
Option becoming entitled to receive, in full satisfaction of the rights
of such holder with respect thereto, an amount in cash equal to (x) the
excess, if any, of the Merger Consideration over the exercise price per
share of Company Common Stock subject to such Stock Option, multiplied
by (y) the number of shares of Company Common Stock subject to such
Stock Option; provided that all amounts payable pursuant to this clause
(i) shall be subject to any required withholding of taxes or proof of
eligibility for exemption therefrom and shall be paid at or as soon as
practicable following the Effective Time, without interest and (C) each
holder of a Stock Option that is outstanding as of the Effective Time
under the
58
1999 Equity Incentive Plan (each, a "1999 Option") shall no longer have
an option to acquire shares of Company Common Stock immediately
following the Effective Time pursuant to such 1999 Option, and in lieu
thereof, such holder shall have the right to receive, on the same terms
and conditions as were applicable to such 1999 Option (including
exercise, expiration and forfeiture), an amount in cash, if any, equal
to (x) the excess, if any, of the Merger Consideration over the
exercise price per share of Company Common Stock that was subject to
such 1999 Option, multiplied by (y) the number of shares of Company
Common Stock that were subject to such 1999 Option immediately prior to
the Effective Time; provided that all amounts payable pursuant to this
clause (C) shall be subject to any required withholding of taxes or
proof of eligibility for exemption therefrom;
(ii) each provision in each Benefit Plan and Benefit Agreement
providing for the issuance, transfer or grant of any shares of Company
Common Stock or any Stock Options, Restricted Shares or any other
interests in respect of any capital stock (including any "phantom"
stock or stock appreciation rights) of the Company shall be deleted
prior to the Effective Time, and the Company shall ensure, that
following the Effective Time, there shall be no rights to acquire
shares of Company Common Stock, Stock Options, Restricted Shares or any
other interests in respect of any capital stock (including any
"phantom" stock or stock appreciation rights) of the Company or the
Surviving Corporation;
(iii) each Restricted Share outstanding at the Effective Time
shall be converted at the Effective Time into the right to receive an
amount of cash equal to the Merger Consideration (each Restricted
Share, as so converted, a "Restricted Share Cash Amount"), the payments
of which shall be subject to, and such amounts shall be payable to the
holder of such Restricted Share (each, an "RS Holder") in accordance
with, Section 5.04(c) hereof; and
(iv) except as expressly required pursuant to this Section
5.04, take such action as necessary under the Company Stock Plans to
ensure that all restrictions or limitations on transfer and vesting,
all forfeiture restrictions, all repurchase rights with respect to the
Restricted Shares, to the extent that such restrictions or limitations
shall not have already lapsed, and all other terms thereof, shall
remain in full force and effect with respect to the corresponding
Restricted Share Cash Amounts after giving effect to the Merger,
subject to the terms of the grant of such Restricted Shares as in
effect immediately prior to the Effective Time.
(b) The Company shall take any actions with respect to the ESPP
as are necessary to provide that (i) participation in the ESPP shall be limited
to those employees who were participants on the date of this Agreement, (ii)
such participants may not increase their payroll deduction elections or purchase
elections from those in effect on the date of this Agreement, (iii)
participants' accumulated payroll deductions outstanding immediately before the
Effective Time under the then-current offering period in effect under the ESPP
(each, an "ESPP Offering Period") shall be used to purchase Company Common Stock
immediately prior to the Effective Time, and participants shall have no
59
further rights under such Offering Period, (iv) there shall not be any
additional "Grant Dates" (as defined in the ESPP) commencing following the date
of this Agreement under the ESPP and (v) the ESPP be suspended following the
close of the current ESPP Offering Period and shall terminate, effective upon
the last business day before the Effective Time (but after the purchases
described in clause (iii) above).
(c) Subject to the Offer Letters, each RS Holder shall be
entitled to receive from Parent such RS Holder's Applicable RS Portion (as
defined below) after each Lapse Date (as defined below); provided that if the RS
Holder is not employed by Parent or any of its affiliates on a Lapse Date (other
than any termination of employment that results in the occurrence of a Lapse
Date pursuant to such terms and conditions as were applicable to such Restricted
Shares immediately prior to the Effective Time), the RS Holder shall not be
entitled to receive the Applicable RS Portion for such Lapse Date and any
subsequent Lapse Date. For purposes hereof, (i) "Applicable RS Portion" means,
in respect of each RS Holder, an amount equal to the product of the Merger
Consideration and the number of Restricted Shares held by such RS Holder at the
Effective Time that would have vested or with respect to which the Company's
right to repurchase would have lapsed on the applicable Lapse Date, and (ii)
"Lapse Date" means, in respect of any Restricted Shares, each date on which such
shares would have vested or the Company's right to repurchase such shares would
have lapsed pursuant to such terms and conditions as were applicable to such
Restricted Shares immediately prior to the Effective Time, giving effect to the
acceleration in vesting of such Restricted Shares that will take place pursuant
to Section 16(b) of the 1999 Equity Incentive Plan as a result of the change in
control of the Company at the Effective Time.
SECTION 5.05. Indemnification, Exculpation and Insurance. (a)
Parent and Sub agree that all rights to indemnification, advancement of expenses
and exculpation from liabilities for acts or omissions occurring at or prior to
the Effective Time (and rights for advancement of expenses) now existing in
favor of the current or former directors or officers of the Company and the
Subsidiaries as provided in their respective articles of organization or bylaws
(or comparable organizational documents) and any indemnification or other
agreements of the Company as in effect on the date of this Agreement shall be
assumed by the Surviving Corporation in the Merger, without further action, at
the Effective Time and shall survive the Merger and shall continue in full force
and effect in accordance with their terms.
(b) In the event that the Surviving Corporation or any of its
successors or assigns (i) consolidates with or merges into any other person and
is not the continuing or surviving corporation or entity of such consolidation
or merger or (ii) transfers or conveys all or substantially all its properties
and assets to any person, or if Parent dissolves the Surviving Corporation then,
and in each such case, Parent shall cause proper provision to be made so that
the successors and assigns of the Surviving Corporation assume the obligations
set forth in this Section 5.05.
(c) For six years after the Effective Time, Parent shall
maintain in effect the Company's current directors' and officers' liability
insurance covering each person currently covered by the Company's directors' and
officers' liability insurance policy for
60
acts or omissions occurring prior to the Effective Time on terms that are no
less favorable than those of such policy in effect on the date of this
Agreement, which insurance shall, prior to the Closing, be in effect and prepaid
for such six year period; provided, that in no event shall Parent be required to
pay, with respect to the entire six year period following the Effective Time,
premiums for insurance under this Section 5.05(c) which in the aggregate exceed
300% of the aggregate premiums paid by the Company for the period from March 18,
2006, to, and including, March 18, 2007, for such purpose (which premiums for
such period are hereby represented and warranted by the Company to be $640,500);
provided that Parent shall nevertheless be obligated to provide such coverage,
with respect to the entire six year period following the Effective Time, as may
be obtained for such 300% amount. For the avoidance of doubt, nothing in this
Section 5.05(c) shall require Parent to make expenditures exceeding $1,921,500
in the aggregate.
(d) The provisions of this Section 5.05 (i) are intended to be
for the benefit of, and will be enforceable by, each indemnified party, his or
her heirs and his or her representatives and (ii) are in addition to, and not in
substitution for, any other rights to indemnification or contribution that any
such person may have by contract or otherwise.
SECTION 5.06. Fees and Expenses. (a) Except as expressly set
forth in the last sentence of Section 5.01(a) or this Section 5.06, all fees and
expenses incurred in connection with this Agreement, the Merger and the other
transactions contemplated by this Agreement shall be paid by the party incurring
such fees or expenses, whether or not the Merger is consummated.
(b) In the event that (i) a Takeover Proposal has become known
to the Company or any person has publicly announced an intention (whether or not
conditional and whether or not withdrawn) to make a Takeover Proposal or a
Takeover Proposal otherwise becomes known to the stockholders of the Company and
thereafter (A) this Agreement is terminated by either Parent or the Company
pursuant to Section 7.01(b)(i) or Section 7.01(b)(iii) (provided in the case of
termination pursuant to Section 7.01(b)(iii), that such Takeover Proposal shall
have been publicly announced or disclosed or otherwise become known to the
stockholders of the Company or any person shall have publicly announced the
intention to make a Takeover Proposal (whether or not conditional and whether or
not withdrawn)), and (B) prior to the date that is 12 months after such
termination, the Company or any of the Subsidiaries enters into any Acquisition
Agreement with respect to any Takeover Proposal or any Takeover Proposal is
consummated (solely for purposes of this Section 5.06(b)(i)(B), the term
"Takeover Proposal" shall have the meaning set forth in the definition of
Takeover Proposal contained in Section 4.02(a) except that all references to 15%
shall be deemed references to 40%) or (ii) this Agreement is terminated by
Parent pursuant to Section 7.01(c) or 7.01(d) then the Company shall pay Parent
a fee equal to $23,000,000 (the "Termination Fee") by wire transfer of same-day
funds to an account designated by Parent (A) in the case of a termination by
Parent pursuant to Section 7.01(c) or 7.01(d), within two business days after
such termination and (B) in the case of a payment as a
61
result of any event referred to in Section 5.06(b)(i)(B), no later than the
first to occur of such events.
(c) The Company acknowledges that the agreements contained in
this Section 5.06 are an integral part of the transactions contemplated by this
Agreement, and that, without these agreements, Parent would not enter into this
Agreement; accordingly, if the Company fails promptly to pay the amounts due
pursuant to this Section 5.06, and, in order to obtain such payment, Parent
commences a suit that results in a judgment against the Company for the amounts
set forth in this Section 5.06, the Company shall pay to Parent its reasonable
costs and expenses (including reasonable attorneys' fees and expenses) in
connection with such suit and any appeal relating thereto, together with
interest on the amounts set forth in this Section 5.06 at the prime rate of
Citibank, N.A. in effect on the date such payment was required to be made.
SECTION 5.07. Public Announcements. The parties agree that the
initial press release to be issued with respect to the transactions contemplated
by this Agreement shall be in the form heretofore agreed to by the parties.
Parent and Sub, on the one hand, and the Company, on the other hand, shall, to
the extent at all reasonably practicable, consult with each other before making,
and give each other a reasonable opportunity to review and comment upon, any
press release or other public statements with respect to this Agreement, the
Merger and the other transactions contemplated by this Agreement, and shall not
issue any such press release or make any such public statement prior to such
reasonably practicable consultation, except as may be required by applicable
Law, court process or by obligations pursuant to any listing agreement with any
national securities exchange or national securities quotation system.
SECTION 5.08. Sub Compliance. Parent shall cause Sub to comply
with all of Sub's obligations under this Agreement.
SECTION 5.09. Company Rights Agreement. The Board of Directors
of the Company shall take all further actions (in addition to those referred to
in Section 3.01(t)) requested by Parent in order to render the Company Rights
inapplicable to the execution, delivery and performance of this Agreement, the
consummation of the Merger and the other transactions contemplated by this
Agreement and compliance with the terms of this Agreement. Except as provided
above with respect to the execution, delivery and performance of this Agreement,
the consummation of the Merger and the other transactions contemplated by this
Agreement and compliance with the terms of this Agreement, the Board of
Directors of the Company shall not, without the prior written consent of Parent,
amend, modify, take any action with respect to, or make any determination under,
the Company Rights Agreement.
SECTION 5.10. Certain Pre-Closing Actions. Prior to the
Closing, the Company shall take all actions set forth on Section 5.10 of the
Company Letter.
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ARTICLE VI
Conditions Precedent
SECTION 6.01. Conditions to Each Party's Obligation to Effect
the Merger. The respective obligation of each party to effect the Merger is
subject to the satisfaction or waiver on or prior to the Closing Date of the
following conditions:
(a) Stockholder Approval. The Stockholder Approval shall have
been obtained.
(b) Antitrust. Any waiting period (and any extension thereof)
applicable to the Merger under the HSR Act shall have been terminated or shall
have expired and any other material approval or waiting period under any other
applicable competition, merger control, antitrust or similar Law shall have been
obtained or terminated or shall have expired.
(c) No Injunctions or Legal Restraints. No temporary
restraining order, preliminary or permanent injunction or other Judgment issued
by any court of competent jurisdiction or other legal restraint or prohibition
(collectively, "Legal Restraints") which has the effect of preventing the
consummation of the Merger shall be in effect.
SECTION 6.02. Conditions to Obligations of Parent and Sub. The
obligations of Parent and Sub to effect the Merger are further subject to the
satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) Representations and Warranties. The representations and
warranties of the Company contained herein that are qualified as to materiality
shall be true and correct (as so qualified), and the representations and
warranties of the Company contained herein that are not so qualified shall be
true and correct in all material respects, in each case as of the date of this
Agreement and as of the Closing Date with the same effect as though made as of
the Closing Date, except that the accuracy of representations and warranties
that by their terms speak as of a specified date will be determined as of such
date. Parent shall have received a certificate signed on behalf of the Company
by the chief executive officer and chief financial officer of the Company to
such effect.
(b) Performance of Obligations of the Company. The Company
shall have performed in all material respects all obligations required to be
performed by it under this Agreement at or prior to the Closing Date, and Parent
shall have received a certificate signed on behalf of the Company by the chief
executive officer and the chief financial officer of the Company to such effect.
(c) No Litigation. There shall not be pending any claim, suit,
action or proceeding brought or threatened by any third party that has a
reasonable likelihood of success or by any Governmental Entity (i) challenging
or seeking to restrain or prohibit the consummation of the Merger or seeking to
obtain from Parent or any of its subsidiaries any damages relating to the Merger
or that are material (individually or in the aggregate) in relation to the value
of the Company and the Subsidiaries, taken as a whole;
63
(ii) seeking to prohibit or limit in any respect, or place any conditions on,
the ownership or operation by the Company, Parent or all or any of their
respective affiliates of all or any portion of the business or assets or any
product of the Company or the Subsidiaries or Parent or its subsidiaries or to
require any such person to dispose of, license (whether pursuant to an exclusive
or nonexclusive license) or hold separate all or any portion of the business or
assets or any product of the Company or the Subsidiaries or Parent or its
subsidiaries, in each case as a result of or in connection with the transactions
contemplated by this Agreement; (iii) seeking to impose limitations on the
ability of Parent or any of its affiliates to acquire or hold, or exercise full
rights of ownership of, any shares of Company Common Stock or any shares of
common stock of the Surviving Corporation, including the right to vote the
Company Common Stock or the shares of common stock of the Surviving Corporation
on all matters properly presented to the stockholders of the Company or the
Surviving Corporation, respectively; or (iv) seeking to (A) prohibit Parent or
any of its affiliates from effectively controlling in any respect any of the
business or operations of the Company or the Subsidiaries or (B) prevent the
Company or the Subsidiaries from operating any of their business in
substantially the same manner as operated by the Company and the Subsidiaries
prior to the date of this Agreement.
(d) Legal Restraint. No Legal Restraint that is reasonably
likely to result, directly or indirectly, in any of the effects referred to in
clauses (i) through (iv) of paragraph (c) of this Section 6.02 shall be in
effect.
(e) No Material Adverse Effect. Since the date of this
Agreement, there shall not have occurred a Material Adverse Effect on or with
respect to the Company. Parent shall have received a certificate signed on
behalf of the Company by the chief executive officer and the chief financial
officer of the Company to such effect.
SECTION 6.03. Conditions to Obligation of the Company. The
obligation of the Company to effect the Merger is further subject to the
satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) Representations and Warranties. The representations and
warranties of Parent and Sub contained herein that are qualified as to
materiality shall be true and correct (as so qualified), and the representations
and warranties of Parent and Sub contained herein that are not so qualified
shall be true and correct in all material respects, in each case as of the date
of this Agreement and as of the Closing Date with the same effect as though made
as of the Closing Date, except that the accuracy of representations and
warranties that by their terms speak as of a specified date will be determined
as of such date. The Company shall have received a certificate signed on behalf
of Parent by an authorized signatory of Parent to such effect.
(b) Performance of Obligations of Parent and Sub. Parent and
Sub shall have performed in all material respects all its obligations required
to be performed by them under this Agreement at or prior to the Closing Date,
and the Company shall have received a certificate signed on behalf of Parent by
an authorized signatory of Parent to such effect.
64
SECTION 6.04. Frustration of Closing Conditions. None of the
Company, Parent or Sub may rely on the failure of any condition set forth in
Section 6.01, 6.02 or 6.03, as the case may be, to be satisfied if such failure
was caused by such party's breach of Section 5.03 or any other provision of this
Agreement.
ARTICLE VII
Termination, Amendment and Waiver
SECTION 7.01. Termination. This Agreement may be terminated,
and the Merger contemplated hereby may be abandoned, at any time prior to the
Effective Time, whether before or after the Stockholder Approval has been
obtained upon written notice (other than in the case of Section 7.01(a) below)
from the terminating party to the non-terminating party specifying the
subsection of this Section 7.01 pursuant to which such termination is effected:
(a) by mutual written consent of Parent, Sub and the Company;
(b) by either Parent or the Company:
(i) if the Merger shall not have been consummated by December
31, 2006 (the "Termination Date") for any reason; provided that neither
Parent nor the Company shall have the right to terminate this Agreement
under this Section 7.01(b)(i) if any breach of this Agreement by such
party shall have been a principal cause of the failure of the Merger to
have been consummated by the Termination Date (and such other party
shall not have breached any of its representations, warranties,
covenants or other agreements contained in this Agreement, which breach
would give rise to the failure of a condition set forth, in the case
where such other party is Parent, in Section 6.03(a) or (b), or, in the
case where such other party is the Company, in Section 6.02(a) or (b));
(ii) if any Legal Restraint having the effect set forth in
Section 6.01(c) shall be in effect and shall have become final and
nonappealable; or
(iii) the Stockholders Meeting shall have been held (and not
adjourned) in accordance with this Agreement, and the Stockholder
Approval shall not have been obtained thereat;
(c) by Parent in the event the Board of Directors of the
Company (or a committee thereof) has delivered an Adverse Recommendation Change
Notice or an Adverse Recommendation Change has occurred;
(d) by Parent in the event the Board of Directors of the
Company fails to publicly reaffirm its recommendation of the approval of this
Agreement within ten business days of the Company's receipt of a written request
by Parent for such reaffirmation, which written request will not be made by
Parent more than twice unless a Takeover Proposal has been made known to the
Company or its stockholders or any person has publicly announced an intention
(whether or not conditional and whether or
65
not withdrawn) to make a Takeover Proposal or a Takeover Proposal otherwise
becomes known to the stockholders of the Company;
(e) by Parent if (i) any event shall have occurred which is
not capable of being cured prior to the Termination Date and would result in any
condition set forth in Section 6.02 not being satisfied prior to the Termination
Date, (ii) the Company shall have breached any of its representations,
warranties, covenants or other agreements contained in this Agreement, which
breach would give rise to the failure of a condition set forth in Section
6.02(a) or (b) and which breach is capable of being cured by the Company by the
Termination Date, but the Company does not commence to cure such breach within
10 business days after its receipt of written notice thereof from Parent and
diligently pursue such cure thereafter or (iii) any Legal Restraint having any
of the effects referred to in clauses (i) through (iv) of Section 6.02(c) shall
be in effect and shall have become final and nonappealable; provided, however,
that Parent shall not have the right to terminate this Agreement under this
Section 7.01(e) if any breach of this Agreement by Parent shall have been a
principal cause of the failure of such condition to be satisfied; or
(f) by the Company, if (i) any event shall have occurred which
is not capable of being cured prior to the Termination Date and would result in
any condition set forth in Section 6.03 not being satisfied prior to the
Termination Date (but only after taking into account any ability of Parent or
Sub to cure any breach of any representation, warranty, covenant or other
agreement herein prior to the Termination Date) or (ii) Parent or Sub shall have
breached any of its representations, warranties, covenants or other agreements
contained in this Agreement, which breach would give rise to the failure of a
condition set forth in Section 6.03(a) or (b) and which breach is capable of
being cured by Parent or Sub by the Termination Date, but Parent or Sub, as
applicable, does not commence to cure such breach within 10 business days after
its receipt of written notice thereof from the Company and diligently pursue
such cure thereafter; provided, however, that the Company shall not have the
right to terminate this Agreement under this Section 7.01(f) if any breach of
this Agreement by the Company shall have been a principal cause of the failure
of such condition to be satisfied.
SECTION 7.02. Effect of Termination. In the event of
termination of this Agreement by either or both of the Company and Parent as
provided in Section 7.01, this Agreement shall forthwith become void and have no
effect, without any liability or obligation on the part of Parent, Sub or the
Company except under the last sentence of Section 5.01(a), the last sentence of
Section 5.02(a), Section 5.06, this Section 7.02 and Article VIII and except for
any willful or intentional material breach by a party of any of its
representations, warranties, covenants or agreements set forth in this Agreement
(which willful or intentional material breach and liability therefor shall not
be affected by termination of this Agreement or any payment of the Termination
Fee pursuant to Section 5.06(b)).
SECTION 7.03. Amendment. This Agreement may be amended by the
parties hereto at any time, whether before or after the Stockholder Approval has
been obtained; provided, however, that after the Stockholder Approval has been
obtained, there shall be made no amendment that by Law requires further approval
by stockholders
66
of the parties without the further approval of such stockholders. This Agreement
may not be amended except by an instrument in writing signed on behalf of each
of the parties hereto.
SECTION 7.04. Extension; Waiver. At any time prior to the
Effective Time, the parties may (a) extend the time for the performance of any
of the obligations or other acts of the other parties, (b) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto or (c) waive compliance with any of the
agreements or conditions contained herein; provided, however, that after the
Stockholder Approval has been obtained, there shall be made no waiver that by
Law requires further approval by stockholders of the parties without the further
approval of such stockholders. Any agreement on the part of a party to any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed on behalf of such party which sets forth the substance of such extension
or waiver. The failure or delay by any party to this Agreement to assert any of
its rights under this Agreement or otherwise shall not constitute a waiver of
such rights nor shall any single or partial exercise by any party to this
Agreement of any of its rights under this Agreement preclude any other or
further exercise of such rights or any other rights under this Agreement.
ARTICLE VIII
General Provisions
SECTION 8.01. Nonsurvival of Representations and Warranties.
None of the representations and warranties in this Agreement or in any
instrument delivered pursuant to this Agreement shall survive the Effective
Time. This Section 8.01 shall not limit any covenant or agreement of the parties
which by its terms contemplates performance after the Effective Time.
SECTION 8.02. Notices. All notices or other communications
required or permitted to be given hereunder shall be in writing and shall be
delivered by hand or sent by facsimile or sent, postage prepaid, by registered,
certified or express mail or reputable overnight courier service and shall be
deemed given when so delivered by hand or sent by facsimile, or if mailed, three
days after mailing (one business day in the case of express mail or overnight
courier service), as follows (or at such other address for a party as shall be
specified by such party by notice given in accordance with this Section 8.02):
if to Parent or Sub, to:
International Business Machines Corporation
New Orchard Road
Armonk, NY 10504
Attention: David L. Johnson
Facsimile: (914) 499-7803
67
with a copy to:
Cravath, Swaine & Moore LLP
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019
Attention: Scott A. Barshay, Esq.
George F. Schoen, Esq.
Facsimile: (212) 474-3700
if to the Company, to:
MRO Software, Inc.
100 Crosby Drive
Bedford, MA 01730
Attention: Norman E. Drapeau, Jr.
Facsimile: (781) 280-2225
with a copy to:
Foley Hoag LLP
Seaport World Trade Center West
155 Seaport Boulevard
Boston, MA 02210
Attention: Robert W. Sweet, Jr., Esq.
John D. Hancock, Esq.
Facsimile: (617) 832-7000
SECTION 8.03. Definitions. For purposes of this Agreement:
(a) "affiliate" means, with respect to any person, any other
person directly or indirectly controlling, controlled by or under common control
with such first person.
(b) "Company Letter" means the letter dated August 3, 2006
delivered by the Company to Parent.
(c) as it relates to the Company, "knowledge" means, with
respect to any matter in question, the actual knowledge after reasonable
inquiry, of any officer of the Company listed in Section 8.03(d) of the Company
Letter.
(d) "Material Adverse Effect" on or with respect to the
Company means any state of facts, change, development, event, occurrence, action
or omission that individually or in the aggregate has or is reasonably likely to
(i) result in a material adverse effect on the business, assets, properties,
financial condition or results of
68
operations of the Company and the Subsidiaries, taken as a whole or (ii) result
in a material impairment on the ability of the Company and the Subsidiaries to
operate their businesses immediately after the Closing in substantially the same
manner as they were operated immediately prior to the date of this Agreement;
provided, however, that no state of facts, change, development, event,
occurrence, action or omission to the extent resulting from any of the following
shall be deemed to constitute, in and of itself, a Material Adverse Effect, nor
shall it be taken into consideration when determining whether there has occurred
a Material Adverse Effect: (A) general, legal, market (including capital
market), economic or political conditions affecting the industries in which the
Company participates, provided that such conditions do not have a materially
disproportionate adverse impact on the Company and the Subsidiaries, taken as a
whole, in relation to other companies in the industry in which the Company
operates, (B) the pendency or announcement of this Agreement, including any
reaction of any customer, employee, supplier, reseller, alliance partner or
channel partner or other constituency to the identity of Parent or any of the
transactions contemplated hereby, (C) any suit, claim, action or proceeding that
does not have a reasonable likelihood of success on the merits, whether
commenced or threatened, which asserts allegations of a breach of fiduciary duty
relating to this Agreement, violations of securities Laws in connection with the
Proxy Statement or otherwise in connection with any of the transactions
contemplated by this Agreement, (D) any action required to comply with the rules
and regulations of the SEC or the SEC comment process as such process applies to
the Proxy Statement (or any other documents on which the Company may receive
such comments in connection with any review of the Proxy Statement by the SEC or
its staff), (E) any decrease in the market price or trading volume of the
Company Common Stock (it being understood that the underlying cause or causes of
any such decrease may be deemed to constitute, in and of itself or themselves, a
Material Adverse Effect and may be taken into consideration when determining
whether a Material Adverse Effect has occurred), (F) the Company's failure to
meet any internal or published projections, forecasts or other predictions or
published industry analyst expectations of financial performance (it being
understood that the underlying cause or causes of any such failure may be deemed
to constitute, in and of itself and themselves, a Material Adverse Effect and
may be taken into consideration when determining whether a Material Adverse
Effect has occurred), (G) any change in applicable accounting requirements or
principles which occurs or becomes effective after the date of this Agreement
(including changes with respect to requirements to expense stock options), (H)
actions or omissions of the Company or any Subsidiary taken with the prior
written approval or consent of Parent or (I) any act or threat of terrorism or
war anywhere in the world, any armed hostilities or terrorist activities
anywhere in the world, any threat or escalation of armed hostilities or
terrorist activities anywhere in the world or any governmental or other response
or reaction to any of the foregoing, provided that no such event shall have had
a materially disproportionate adverse impact on the Company and the
Subsidiaries, taken as a whole, in relation to other companies in the industry
in which the Company operates.
(e) "Permit" means any certificate, permit, license,
franchise, approval, concession, qualification, registration, certification or
similar authorization from any Governmental Entity.
69
(f) "person" means any natural person, corporation, limited
liability company, partnership, joint venture, trust, business association,
unincorporated association, Governmental Entity or other entity.
(g) a "subsidiary" of any person shall mean any other person
(i) more than 50% of whose outstanding shares or securities representing the
right to vote for the election of directors or other managing authority of such
other person are, now or hereafter, owned or controlled, directly or indirectly,
by such first person, but such other person shall be deemed to be a subsidiary
only so long as such ownership or control exists, or (ii) which does not have
outstanding shares or securities with such right to vote, as may be the case in
a partnership, joint venture or unincorporated association, but more than 50% of
whose ownership interest representing the right to make the decisions for such
other person is, now or hereafter, owned or controlled, directly or indirectly,
by such first person, but such other person shall be deemed to be a subsidiary
only so long as such ownership or control exists.
(h) a "Subsidiary" means each subsidiary of the Company.
(i) a "wholly-owned Subsidiary" means any Subsidiary, all of
the equity and voting interests of which are directly or indirectly owned by the
Company, other than any such interest that is de minimis in nature, is required
by applicable law or regulation to be owned by a person other than the Company
or a Subsidiary and which has no economic or management rights or entitlements.
SECTION 8.04. Exhibits and Schedules; Interpretation. The
headings contained in this Agreement or in any Exhibit or Schedule hereto and in
the table of contents to this Agreement are for reference purposes only and
shall not affect the meaning or interpretation of this Agreement. Any
capitalized terms used in any Schedule or Exhibit but not otherwise defined
therein, shall have the meaning as defined in this Agreement. When a reference
is made in this Agreement to an Article, Section, Subsection, Exhibit or
Schedule, such reference shall be to a Section or Article of, or an Exhibit or
Schedule to, this Agreement unless otherwise indicated. For all purposes hereof,
the terms "include", "includes" and "including" shall be deemed followed by the
words "without limitation". The words "hereof", "hereto", "hereby", "herein" and
"hereunder" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement. The term "or" is not exclusive. The word "extent" in the phrase "to
the extent" shall mean the degree to which a subject or other thing extends, and
such phrase shall not mean simply "if". The definitions contained in this
Agreement are applicable to the singular as well as the plural forms of such
terms. Any agreement or instrument defined or referred to herein or in any
agreement or instrument that is referred to herein means such agreement or
instrument as from time to time amended, modified or supplemented. Any Law
referred to herein means such Law as from time to time amended, modified or
supplemented. References to a person are also to its permitted successors and
assigns.
SECTION 8.05. Counterparts. This Agreement may be executed in
one or more counterparts (including by facsimile), all of which shall be
considered one and
70
the same agreement and shall become effective when one or more such counterparts
have been signed by each of the parties and delivered to the other parties.
SECTION 9.06. Entire Agreement; No Third-Party Beneficiaries.
This Agreement and the Company Letter (a) constitute the entire agreement, and
supersedes all prior agreements and understandings, both written and oral, among
the parties with respect to the subject matter of this Agreement, except for the
Confidentiality Agreement and (b) except for the provisions of Section 5.05 is
not intended to confer upon any person other than the parties hereto (and their
respective successors and assigns) any rights (legal, equitable or otherwise)
or remedies, whether as third party beneficiaries or otherwise.
SECTION 8.07. Governing Law. This Agreement shall be governed
by, and construed in accordance with, the Laws of the State of New York,
regardless of the Laws that might otherwise govern under applicable principles
of conflicts of Laws thereof, except to the extent the laws of the Commonwealth
of Massachusetts are mandatorily applicable to this Agreement, the Merger or the
Articles of Merger.
SECTION 8.08. Assignment. Neither this Agreement nor any of
the rights, interests or obligations hereunder shall be assigned, in whole or in
part, by operation of Law or otherwise by any of the parties without the prior
written consent of the other parties, except that Sub may assign, in its sole
discretion, any of or all its rights, interests and obligations under this
Agreement to Parent or to any direct or indirect wholly-owned subsidiary of
Parent, but no such assignment shall relieve Sub of any of its obligations
hereunder. Subject to the preceding sentence, this Agreement shall be binding
upon, inure to the benefit of and be enforceable by, the parties hereto and
their respective successors and assigns.
SECTION 8.09. Consent to Jurisdiction; Service of Process;
Venue. Each of the parties hereto irrevocably and unconditionally submits to the
exclusive jurisdiction of the United States District Court for the Southern
District of New York, and, if such federal court does not have or declines
jurisdiction, to any New York State court sitting in the County of New York, for
the purposes of any suit, action or other proceeding arising out of this
Agreement or any transaction contemplated hereby (and agrees that no such
action, suit or proceeding relating to this Agreement shall be brought by it or
any of its subsidiaries except in such courts). In the event of an action filed
in any New York State court sitting in the County of New York, each party
commits to designate such action as appropriate for assignment to the Commercial
Division. Each of the parties further agrees that, to the fullest extent
permitted by applicable Law, service of any process, summons, notice or document
by U.S. registered mail to such person's respective address set forth above
shall be effective service of process for any action, suit or proceeding in New
York with respect to any matters to which it has submitted to jurisdiction as
set forth above in the immediately preceding sentence. Each of the parties
hereto irrevocably and unconditionally waives (and agrees not to plead or
claim), any objection to the laying of venue of any action, suit or proceeding
arising out of this Agreement or the Merger or the other transactions
contemplated by this Agreement in (a) any New York State court sitting in the
County of New York or (b) the United States District Court for the Southern
71
District of New York, or that any such action, suit or proceeding brought in any
such court has been brought in an inconvenient forum.
SECTION 8.10. Waiver of Jury Trial. Each party hereto hereby
waives, to the fullest extent permitted by applicable Law, any right it may have
to a trial by jury in respect of any suit, action or other proceeding directly
or indirectly arising out of, under or in connection with this Agreement. Each
party hereto (a) certifies that no representative, agent or attorney of any
other party has represented, expressly or otherwise, that such party would not,
in the event of any action, suit or proceeding, seek to enforce the foregoing
waiver and (b) acknowledges that it and the other parties hereto have been
induced to enter into this Agreement, by, among other things, the mutual waiver
and certifications in this Section 8.10.
SECTION 8.11. Enforcement. The parties agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties hereto shall be entitled to
an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions of this Agreement in the
applicable court referenced in Section 8.09, this being in addition to any other
remedy to which they are entitled at Law or in equity.
SECTION 8.12. Consents and Approvals. For any matter under
this Agreement requiring the consent or approval of any party to be valid and
binding on the parties hereto, such consent or approval must be in writing and
executed and delivered to the other parties by a person duly authorized by such
party to do so.
SECTION 8.13. Severability. If any provision of this Agreement
or the application of any such provision to any person or circumstance shall be
held invalid, illegal or unenforceable in any respect by a court of competent
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision hereof.
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IN WITNESS WHEREOF, Parent, Sub and the Company have caused
this Agreement to be signed by their respective officers thereunto duly
authorized, all as of the date first written above.
INTERNATIONAL BUSINESS MACHINES CORPORATION,
by
/s/ David L. Johnson
--------------------------------------
Name: David L. Johnson
Title: Vice President, Corporate
Development
KENNESAW ACQUISITION CORPORATION,
by
/s/ David L. Johnson
--------------------------------------
Name: David L. Johnson
Title: Director
MRO SOFTWARE, INC.,
by
/s/ Norman E. Drapeau, Jr.
--------------------------------------
Name: Norman E. Drapeau, Jr.
Title: President & CEO
73